<PAGE>
As filed with the Securities and Exchange Commission on October 21, 1999
Registration No. 333-87161
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
Under
the Securities Act of 1933
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GETTHERE.COM, INC.
(Exact name of Registrant as specified in its charter)
---------------
<TABLE>
<S> <C> <C>
Delaware 7372 93-1184437
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
4045 Campbell Avenue
Menlo Park, California 94025
(650) 752-1500
(Address, including zip code, and telephone number, including area code, of
the Registrant's principal executive offices)
---------------
GADI MAIER
President and Chief Executive Officer
GetThere.com, Inc.
4045 Campbell Avenue
Menlo Park, California 94025
(650) 752-1500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
Scott C. Dettmer, Esq. Richard A. Fink, Esq.
Bennett L. Yee, Esq. Timothy R. Curry, Esq.
Jonathan J. Noble, Esq. Jonathan P. Shanberge, Esq.
Robin J. Reilly, Esq. J. Omar Mahmud, Esq.
Gunderson Dettmer Stough Patrick J. O'Loughlin, Esq.
Villeneuve Franklin & Hachigian, LLP Brobeck, Phleger & Harrison LLP
155 Constitution Drive Two Embarcadero Place
Menlo Park, California 94025 2200 Geng Road
(650) 321-2400 Palo Alto, California 94303-0913
(650) 424-0160
</TABLE>
---------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the specific date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Maximum
Title of Each Class of Amount Proposed Maximum Aggregate Amount of
Securities to be to be Offering Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee(3)
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<S> <C> <C> <C> <C>
Common Stock, ($0.0001
par value)............. 5,750,000 $14.00 $80,500,000 $22,379
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</TABLE>
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(1) Includes 750,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purposes of determining the registration fee
pursuant to Rule 457(a) promulgated under the Securities Act of 1933.
(3) Of this amount, $20,850 has been previously paid.
-----------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to such Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information contained in this preliminary prospectus is not complete and +
+we may change it. We may not sell these securities or accept your offer to +
+buy them until the documentation filed with the SEC relating to these +
+securities has been declared effective by the SEC. This prospectus is not an +
+offer to sell these securities or our solicitation of your offer to buy these +
+securities in any jurisdiction where that would not be permitted or legal. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION -- October 21, 1999
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PRELIMINARY PROSPECTUS
, 1999
[LOGO OF GETTHERE.COM APPEARS HERE]
5,000,000 Shares of Common Stock
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GetThere.com, Inc.:
. We are a provider of Internet-based travel procurement and supply services,
primarily for businesses and travel suppliers.
. GetThere.com, Inc.
4045 Campbell Avenue
Menlo Park, California 94025
(650) 752-1500
Proposed Symbol & Market:
. GTHR/Nasdaq National Market
The Offering:
. We are offering 5,000,000 shares of our common stock. The underwriters have
reserved 500,000 of these shares to sell to a subsidiary of United Air Lines.
. The underwriters have an option to purchase an additional 750,000 shares from
GetThere.com to cover over-allotments.
. This is our initial public offering. We anticipate that the initial public
offering price will be between $12.00 and $14.00 per share.
. We plan to use the net proceeds from this offering for working capital,
purchase of property and equipment and other general corporate purposes.
. Closing: , 1999.
<TABLE>
-----------------------------------------------------
<S> <C> <C>
Per Share Total
---------------------------------------------------
Public offering price: $ $
Underwriting fees:
Proceeds to GetThere.com:
</TABLE>
---------------------------------------------------
This investment involves risk. See "Risk Factors" beginning on Page 6.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
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Donaldson, Lufkin & Jenrette
Salomon Smith Barney
Bear, Stearns & Co. Inc.
WR Hambrecht + Co
<PAGE>
Description of Graphics--Inside Front Cover
At top of page, there is text that reads "Internet-Based Business-to-Business
Travel Procurement and Supply Solutions."
Underneath the text is the words "GT Exchange"
Underneath those words is a box with text inside that reads "Provides
businesses, suppliers and their travelers with the ability to:
. Create profiles reflecting travel preferences
. Access airline, car rental and hotel information and availability
. Access their privately negotiated or publicly available pricing
. Create and ticket travel reservations
. Access travel-related information such as news, weather and maps
. Collect and analyze travel data twenty-four hours a day, seven days a
week."
There are arrows coming out of the box pointing to two screen shots.
At lower left side of page, there is a screen shot of the Nike travel booking
Web site. Above the screen shot, there is a title that reads "Businesses use
ITN Global Manager." Immediately below the title, there is text that reads
"Accessed by employees through a corporate Intranet." Immediately below the
screen shot, there is text in bullet points that reads:
Businesses use our services to:
. Reduce costs
. Enforce policy and contract compliance
. Increase employee productivity
. Provide real-time reporting and analysis
At lower right side of page, there is a screen shot of the United Air Lines
consumer Web site. Above the screen shot, there is a title that reads
"Suppliers use ITN FlightRez." Immediately below the title, there is text that
reads "Accessed by customers through a supplier's Web site." Immediately below
the screen shot, there is text that reads:
Suppliers use our services to:
. Increase revenue opportunities
. Reduce sales and distribution costs
. Enhance consumer service
. Increase customer loyalty
Framing the page, there is a partial customer list that includes the
following customers: Boeing, Nokia, United Air Lines, TRAVEL.com, Cendant,
American Express, Texas Instruments, Chevron, Nike, Nabisco, Kodak, CNN
Interactive, Trip.com, Credit Suisse First Boston, Lauda Airlines, Digital
Mall/CompuTravel, PeopleSoft, Airlines.com, National Airlines, Toyota, Airlines
of the Web, Hewlett-Packard, Tektronix, 4Websites, PriceWaterhouseCoopers,
Inteletravel, HP/Verifone, Travelnow, Procter & Gamble, Lawrence Berkeley Labs,
IEEE, AAA Travel, MindSpring, NationsBank, University of California at
Berkeley, Atevo, Xetrox, Uniglobe, Ambassador Travel, MemberWorks.
<PAGE>
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of the
prospectus or any sale of the common stock. In this prospectus, unless the
context indicates otherwise, the Company, GetThere.com, we, us and our refer to
GetThere.com, Inc., a Delaware corporation.
ITN is our registered trademark. GetThere.com, ITN Global Manager, ITN
FlightRez and GT Exchange are our trademarks. This prospectus also contains
trademarks of other companies.
We were incorporated in the State of California as Internet Travel Network on
August 7, 1995 and changed our name to GetThere.com, Inc. on July 16, 1999. Our
principal headquarters are located at 4045 Campbell Ave., Menlo Park,
California 94025, and our telephone number is (650) 752-1500. Information
contained on our Web site is not a part of this prospectus.
Unless otherwise indicated, all information in this prospectus:
. assumes no exercise of the underwriters' option to purchase an
additional 750,000 shares of common stock;
. gives effect to the conversion of all of our outstanding shares of
series A, B, C and E convertible preferred stock into shares of
common stock upon the closing of this offering;
. gives effect to our reincorporation from California to Delaware, to
become effective prior to the completion of this offering; and
. assumes the effectiveness of our amended and restated certificate of
incorporation in the State of Delaware upon the completion of this
offering.
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 24
Dividend Policy.......................................................... 24
Capitalization........................................................... 25
Dilution................................................................. 26
Selected Financial Data.................................................. 27
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 28
Business................................................................. 41
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Management................................................................. 53
Relationships and Related Transactions..................................... 65
Principal Stockholders..................................................... 70
Description of Capital Stock............................................... 72
Shares Eligible for Future Sale............................................ 79
Underwriting............................................................... 81
Legal Matters.............................................................. 84
Experts.................................................................... 84
Additional Information..................................................... 84
Index to Financial Statements.............................................. F-1
</TABLE>
i
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and our financial statements and the related notes appearing elsewhere
in this prospectus.
GetThere.com
GetThere.com is a provider of Internet-based travel procurement and supply
services, primarily for businesses and travel suppliers. Our services enable
users to make airline, hotel and car rental reservations and to purchase
airline tickets over the Internet. Our services also provide users with access
to valuable travel information, such as airline, hotel, car rental, news,
weather, maps and pricing information. Through our ITN Global Manager service,
which is sold to businesses, we provide a Web site for each business that
enables its employees to make travel-related reservations and to purchase
airline tickets over the Internet. Through our ITN FlightRez service, which is
sold to travel suppliers such as airlines, we provide a Web site that enables
travel suppliers to sell travel products and services over the Internet. In
addition, we provide Web sites to Internet-based content and electronic
commerce providers and travel agencies that enable them to sell travel products
and services over the Internet. We derive our revenues primarily from
transaction fees and commissions when reservations are made or airline tickets
are purchased using our services. Our largest customers, as measured by fees
paid to us, include businesses with significant travel expenditures such as
Texas Instruments, Nabisco, Hewlett Packard, Nike, and Credit Suisse First
Boston, travel suppliers such as United Air Lines, Lauda Airlines, National
Airlines and Internet-based companies such as TRAVEL.com, Computravel,
Travelzoo, TRIP.com and CNN Interactive.
In 1998, there were approximately 1.4 billion total airline passengers
worldwide as reported by the International Airtransport Association. According
to the American Express 1998 Survey of Business Travel Management, U.S.
businesses in 1998 completed 154 million air travel transactions and U.S.
business expenditures for airline tickets, car rentals and lodging exceeded
$122 billion. Forrester Research estimates that online expenditures for
business travel will grow from $5 billion in 1999 to $38 billion in 2003.
We believe the current market for the procurement and supply of travel-
related goods and services is characterized by numerous inefficiencies that
contribute to higher costs. These inefficiencies are largely the result of the
involvement of multiple intermediaries and limited access by businesses and
travel suppliers to valuable travel-related information. Accordingly,
businesses may find it more difficult to negotiate favorable contracts with
travel suppliers, monitor employee compliance with corporate travel policies
and direct purchases to preferred travel suppliers. These inefficiencies may
also limit the ability of travel suppliers to establish personalized
relationships with customers, minimize excess capacity and maximize the
effectiveness of customer loyalty programs, such as frequent flier programs. In
addition, the labor intensive nature of the travel procurement and supply
processes decreases productivity and contributes to higher costs.
Our services are designed to reduce current inefficiencies in the travel
procurement and supply process by decreasing the role of intermediaries, such
as travel agents, by providing customers with valuable travel information and
by enabling the internal procurement and supply processes of our customers to
become quicker and more efficient. ITN Global Manager is designed to enable our
business customers to reduce costs, increase productivity and provide real-time
data analysis and reporting. ITN FlightRez is designed to enable our travel
supplier customers to increase revenue opportunities, reduce sales and
distribution costs, enhance customer service and increase customer loyalty.
Our objective is to be the leading provider of Internet-based procurement and
supply services for travel and other indirect goods and services. Key elements
of our strategy are to:
. expand our customer base;
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<PAGE>
. increase the rates of adoption of our services by our business customers;
. aggressively pursue other travel markets;
. extend our technology leadership; and
. leverage technology and relationships into markets for other indirect
goods and services.
On September 14, 1999, we entered into an agreement with American Express
Travel Related Services Company, Inc. under which American Express has agreed
to promote and sell our Internet-based travel procurement services to its
customers and potential customers. American Express will promote and market
these services to large, middle market and small businesses. In addition,
commencing January 27, 2000, American Express will exclusively use our services
for the procurement and supply of travel on its consumer Web sites, such as
www.americanexpress.com. We have also agreed to transfer the rights to the
domain names www.itn.net and www.itn.com to American Express. See "Business--
Relationship with American Express."
Since July 31, 1999, we issued:
. an aggregate of 1,875,423 shares of series C convertible preferred stock
at a purchase price of $5.125 per share to American Express, America West
Airlines and Air Canada;
. an aggregate of 5,041,076 shares of series E convertible preferred stock
at a purchase price of $12.50 per share to American Express, United Air
Lines, through its wholly owned subsidiary Covia LLC, America West
Airlines, Air Canada, MeriTech Capital and ITN Joint Venture;
. one share of series D3 convertible preferred stock at a purchase price of
$12.50 to American Express, which entitles American Express to elect one
member to our board of directors;
. a warrant to purchase up to 375,000 shares of common stock at a purchase
price of $16.50 per share to American Express;
. a warrant to purchase up to 1,650,000 shares of our series C convertible
preferred stock at a purchase price of $5.125 per share to Northwest
Airlines;
. warrants to purchase up to an aggregate of 1,136,821 shares of series C
convertible preferred stock at a purchase price of $11.20 per share to
United Air Lines; and
. warrants to purchase up to an aggregate of 2,160,046 shares of series E
convertible preferred stock to American Express, America West Airlines
and Air Canada. These warrants include:
. a warrant to American Express to purchase 730,023 shares of series E
convertible preferred stock at a purchase price of $21.00 per share;
. a warrant to American Express to purchase 730,023 shares of series E
convertible preferred stock at a purchase price of $31.00 per share;
. a warrant to America West Airlines to purchase 500,000 shares of
series E convertible preferred stock at a purchase price of $12.50 per
share; and
. a warrant to Air Canada to purchase 200,000 shares of series E
convertible preferred stock at a purchase price of $12.50 per share.
For a description of these transactions, see "Business--Customers,"
"Business--Relationship with American Express," "Relationships and Related
Transactions" and Note 11 of Notes to Financial Statements.
In addition to the other information contained in this Prospectus, the
discussion of risk factors on pages 6 to 23 of this Prospectus should be
considered carefully in evaluating an investment in our common stock. The
2
<PAGE>
risks of investing include the following factors: our evolving business model;
our continuing net losses; our fluctuating operating results; our amortization
of stock-based compensation and charges associated with our securities
issuances; our long and varying sales cycle; intense competition; our
dependence on United Air Lines; our need to increase adoption rates; our
limited experience with widespread deployment; our failure to manage our
operations; our dependence on our ITN Global Manager and ITN FlightRez
services; our inability to address customer complaints; our dependence on
travel service providers; our ability to access computer reservation systems; a
decline in the travel industry; our failure to expand internationally; our
inability to integrate our new management team; our inability to maintain third
party relations with parties that manage and maintain our systems; our
inability to provide products that provide customer features and functionality;
our inability to protect our intellectual property rights or infringement of
the intellectual property rights of others; year 2000 risks; software or system
defects; significant credit card fraud; failure to achieve wide market
acceptance of online travel procurement; and volatility of our common stock
price.
3
<PAGE>
The Offering
<TABLE>
<C> <S>
Common stock offered by GetThere.com....... 5,000,000 shares
Common stock to be outstanding after the
offering.................................. 32,045,425 shares
Use of proceeds............................ Working capital, purchase of
property and equipment and other
general corporate purposes. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol..... GTHR
</TABLE>
The number of shares to be outstanding after this offering is based on:
. 7,663,730 shares of our common stock outstanding as of July 31, 1999;
. 5,000,000 shares of our common stock to be sold in this offering;
. 11,731,314 shares of our common stock issuable upon conversion of our
series A, B and C convertible preferred stock outstanding as of July
31, 1999;
. 6,916,500 shares of our common stock issuable upon conversion of our
series C and E convertible preferred stock issued after July 31, 1999;
. 163,951 shares of common stock issued after July 31, 1999;
. one share of our series D3 convertible preferred stock;
. conversion of a promissory note of $1.65 million plus accrued interest
into 162,077 shares of our common stock; and
. 407,852 shares of our common stock issuable upon the exercise of
outstanding warrants which would otherwise terminate upon the
completion of this offering.
The number of shares outstanding after this offering excludes:
. 12,491,190 shares of our common stock reserved for issuance under our
1996 stock plan, of which 3,781,810 shares are subject to options
outstanding as of July 31, 1999, with a weighted average exercise
price of $1.33 per share;
. 1,442,825 shares of our common stock subject to options granted after
July 31, 1999, with a weighted average exercise price of $8.94 per
share;
. 7,704,503 shares of our common stock issuable upon exercise of
outstanding warrants, with a weighted average exercise price of $10.62
per share;
. one share each of our authorized series D1 and D2 convertible
preferred stock;
. 5,000,000 shares of our common stock reserved for issuance under our
1999 stock incentive plan;
. 2,500,000 shares of our common stock reserved for issuance under our
1999 employee stock purchase plan; and
. 750,000 shares of our common stock available for issuance under our
1999 directors' stock option plan, of which options to purchase an
aggregate of 250,000 shares of our common stock will be issued upon
the effectiveness of this offering.
See "Capitalization," "Management--Employee Benefit Plans" and Notes 6, 7, 8
and 11 of Notes to Financial Statements.
4
<PAGE>
Summary Financial Information
The following table summarizes the statement of operations and balance sheet
data for our business. For a more detailed explanation of this financial data,
see "Selected Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our financial statements
located elsewhere in this prospectus. The pro forma data reflects the following
assumptions:
. receipt of approximately $72.6 million in proceeds from the issuance of
our series C and series E convertible preferred stock, of which $9.6
million was raised from the sale of 1,875,423 shares of series C
convertible preferred stock at $5.125 per share and $63.0 million was
raised from the sale of 5,041,077 shares of series E convertible
preferred stock at $12.50 per share;
. conversion of all 18,647,814 shares of our series A, B, C and E
convertible preferred stock into 18,647,814 shares of our common stock
upon the completion of this offering, which is a one-for-one conversion
ratio;
. issuance of one share of our series D3 convertible preferred stock;
. conversion of a promissory note of $1.65 million plus accrued interest
into 162,077 shares of our common stock; and
. issuance of 407,852 shares of our common stock upon the exercise of
outstanding warrants which would otherwise terminate upon the completion
of this offering.
In addition, the pro forma as adjusted balance sheet data assumes the sale of
5,000,000 shares of our common stock in this offering at an assumed initial
public offering price of $13.00 per share, after deducting estimated
underwriting discounts, commissions and offering expenses, and the application
of the resulting net proceeds.
<TABLE>
<CAPTION>
Fiscal Year Ended Six Months Ended
January 31, July 31,
-------------------------- -----------------
1997 1998 1999 1998 1999
(unaudited)
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenues.................. $ 582 $ 3,001 $ 6,447 $ 2,709 $ 5,598
Gross profit.................... 448 1,321 2,155 1,086 1,625
Loss from operations............ (3,470) (6,328) (15,822) (6,410) (20,195)
Net loss........................ $(3,437) $(6,358) $(15,649) $(6,492) $(20,344)
Net loss per share:
Basic and diluted............. $ (1.22) $ (1.81) $ (3.99) $ (1.71) $ (5.02)
Weighted average shares....... 2,827 3,537 3,957 3,823 4,071
Pro forma net loss per share:
Basic and diluted............. $ (1.05) $ (1.26)
Weighted average shares....... 14,917 16,199
</TABLE>
<TABLE>
<CAPTION>
As of July 31, 1999
--------------------------
Pro
Pro Forma As
Actual Forma Adjusted
(In thousands, unaudited)
<S> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and short-term investments.. $ 6,541 $80,022 $138,672
Working capital (deficit).......................... (2,203) 71,278 129,928
Total assets....................................... 18,939 92,420 151,070
Long-term obligations, net of current portion...... 7,014 5,364 5,364
Redeemable convertible preferred stock and
warrants.......................................... 35,215 -- --
Total stockholders' equity (deficit)............... (33,490) 76,856 135,534
</TABLE>
5
<PAGE>
RISK FACTORS
You should carefully consider the risks and uncertainties described below
before buying shares in this offering. These risks and uncertainties are not
the only ones facing our company. Additional risks and uncertainties that we
are unaware of or currently deem immaterial may also become important factors
that may harm our business.
Risks Related to Our Business
It is difficult to evaluate our business because our business model is
evolving.
We were incorporated on August 7, 1995. Prior to 1996, our business was
focused on providing travel-related services to consumers from our www.itn.net
Web site and other consumer-related Web sites. In 1996, we began focusing on
our services for businesses and travel suppliers. We introduced ITN Global
Manager for businesses in 1996 and ITN FlightRez for travel suppliers in 1997.
As a result, it is difficult to accurately forecast our revenues, and we have
limited meaningful historical financial data on which to plan operating
expenses. In addition, the revenues and income potential of our business and
market are unproven. Changing our focus from the consumer business to providing
Internet-based travel procurement and supply services for businesses and travel
suppliers may not have a positive effect on, or may harm, our business or
operating results. In order for our new business model to become commercially
successful, we must:
. grow our base of both business and travel supplier customers;
. increase adoption rates by our existing business customers;
. successfully implement sales and marketing initiatives;
. provide timely and effective customer service and technical support; and
. anticipate and adapt to the evolving online travel services market.
We will devote a significant amount of our resources to satisfy our obligations
under our agreement with American Express.
We recently entered into an agreement with American Express under which
American Express has agreed to promote and sell customized, co-branded versions
of our Internet-based travel procurement services to its customers and
potential customers. This relationship is likely to evolve over time and
require the use of a significant amount of our resources, including our
management and technical personnel. This devotion of a significant amount of
our resources to this relationship could impair our ability to develop other
aspects of our business, which could seriously harm our results of operations
if we are unable to generate a significant amount of revenues from our
agreement with American Express. American Express Company, the parent of
American Express Travel Related Services, is traded under the symbol "AXP", and
its file number under the Exchange Act of 1934, as amended, is 001-07657. See
"Business--Relationship with American Express."
We have incurred significant net losses to date and expect to continue to incur
net losses for the foreseeable future.
Since our inception we have incurred significant net losses and negative cash
flow. We expect net losses and negative cash flow to continue for the
foreseeable future, and we may never be profitable. We incurred net losses of
$20.3 million for the six months ended July 31, 1999, $15.6 million for our
fiscal year ended January 31, 1999 and $6.4 million for our fiscal year ended
January 31, 1998. As of July 31, 1999, we had an accumulated deficit of $45.9
million. We anticipate that our losses will increase significantly from current
levels as we continue to increase our operating expenses in each of our
operating expense categories. In addition, we expect the rate at which these
losses will be incurred will increase significantly from current
6
<PAGE>
levels, particularly in the quarter ending October 31, 1999. We expect these
additional costs and expenses to be related to:
. transitioning the use of our www.itn.net Web site to American Express;
. developing and implementing the American Express travel procurement
services for businesses;
. developing Web sites for Northwest Airlines and America West Airlines;
. establishing and integrating our recently acquired call center in Fort
Lauderdale, Florida;
. enhancing our Internet-based travel procurement and supply services;
. continuing to develop our services, computer network and the systems that
we use to process travel-related transactions;
. recruiting and training additional personnel, particularly customer
service, technical support and engineering personnel;
. moving our headquarters to Menlo Park, California;
. establishing an engineering development center in Dallas, Texas;
. developing the GetThere.com brand, as well as other marketing and
promotional activities; and
. developing relationships with strategic business partners.
Unless we generate and sustain substantially higher revenues while
maintaining reasonable expense levels, we will continue to incur significant
net losses. Even if we increase revenues we may experience price competition or
increased expenses which would lower our gross margins or cause us to incur net
losses. Furthermore, if we ever do achieve profitability or reduce our net
losses, we may not sustain this result on a quarterly or annual basis in the
future. See "Selected Financial Data" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
Our quarterly operating results may fluctuate in future periods and we may fail
to meet expectations.
We believe that quarter-to-quarter comparisons of our revenues and operating
results are not necessarily meaningful because of quarterly fluctuations, and
that such comparisons may not be accurate indicators of future performance. The
operating results of companies in the travel and electronic commerce industries
have in the past experienced significant quarter-to-quarter fluctuations. We
will likely experience similar fluctuations due to a number of factors,
including:
. varying adoption rates of our services;
. the timing and expense of expanding our operations;
. our ability to attract new customers, retain existing customers and
satisfy customer demand;
. the mix of transaction revenues and professional service revenues;
. the mix of transaction revenues from businesses, travel suppliers and
other customers;
. our ability to achieve market acceptance of new services and upgrades;
. product introductions by us;
. our ability to attract, integrate and retain key personnel;
. changes in our pricing policies;
. our ability to upgrade and develop our systems and infrastructure without
disrupting our operations;
7
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. technical difficulties with our systems or system down time;
. difficulties accessing computer reservation systems or travel suppliers'
systems; and
. costs related to the acquisition of businesses or technologies.
In addition, we expect our quarterly operating results to fluctuate due to
factors beyond our control, including:
. unforeseen events affecting the travel or electronic commerce industries;
. product introductions by our competitors;
. changes in the rate of Internet usage and electronic commerce;
. changes in inventory availability from suppliers or commission rates paid
by travel suppliers; and
. changes in the pricing policies of our competitors.
We currently expect that a majority of our revenues for the foreseeable
future will come from fees paid to us by our customers who have implemented our
ITN Global Manager and ITN FlightRez services and from commissions earned from
travel suppliers. The volume and timing of these fees and commissions are
difficult to predict because the market for our services in its infancy. As
with other companies in our industry, our operating expenses, which include
sales and marketing, research and development and general and administrative
expenses, are based on our expectations of future revenues and are relatively
fixed in the short term. As a result, a delay in generating or recognizing
revenue for any reason could cause significant variations in our operating
results from quarter to quarter and could result in greater than expected
operating losses. Consequently, in future quarters our operating results may
fall below the expectations of public market analysts and investors and, as a
result, the price of our common stock may fall.
As a result of the acquisition of a call center in Fort Lauderdale, Florida
in July 1999 and the start-up costs associated with integrating the call
center, we expect our gross margins to decrease in the quarter ending October
31, 1999. We will incur significant costs related to the move of our corporate
headquarters from Palo Alto, California to Menlo Park, California, which we
expect to accomplish in the fall of 1999. As a result of these events, we
expect our net losses to be significantly higher for the quarter ending
October 31, 1999.
Our business is subject to seasonal fluctuations.
We have experienced and expect to continue to experience seasonality in our
business, reflecting seasonal fluctuations in the travel industry, Internet
usage and advertising expenditures. Business travel bookings typically decline
during the fourth quarter of each calendar year due to decreased business
travel during the holiday season. Consumer travel bookings typically increase
during the second quarter of each calendar year in anticipation of summer
travel. Internet usage and the rate of such usage typically decline during the
summer. In addition, advertising sales in traditional media, such as broadcast
and cable television, generally decline in the first and third quarters of each
year. Depending on the extent to which the Internet is accepted as an
advertising medium, seasonality in the level of advertising expenditures could
become more pronounced for Internet-based advertising. Seasonality in the
travel industry, Internet usage and advertising expenditures will cause
quarterly fluctuations in our operating results and could significantly harm
our business and operating results.
Our results of operations will be harmed by charges associated with our payment
of stock-based compensation and charges associated with other securities
issuances by us.
We expect to incur a significant amount of amortization in future periods,
which will negatively effect our operating results. We expect to amortize
approximately $6.5 million of stock-based compensation for the quarter ending
October 31, 1999 and may incur additional amortizable charges in the future in
connection with grants of stock-based compensation at below market value. In
addition, in August and September 1999, we sold an aggregate of 1,875,423
shares of series C convertible preferred stock at a purchase price of $5.125
per share.
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We expect to record a charge in an amount equal to the difference between the
fair value of the series C convertible preferred stock and the amount paid for
the stock. In August and September 1999, we issued a warrant to purchase an
aggregate of 375,000 shares of common stock, a warrant to purchase an aggregate
of 1,136,821 shares of series C convertible preferred stock and warrants to
purchase an aggregate of 2,160,046 shares of series E convertible preferred
stock. As a result of issuing these warrants in connection with the sale of our
preferred stock, our earnings per share will be adversely affected until the
closing of this offering. See Note 11 of Notes to Financial Statements.
In addition, in August 1999, we issued a warrant to purchase up to 1,650,000
shares of our series C convertible preferred stock to Northwest Airlines at an
exercise price of $5.125 per share. The exercise of this warrant is subject to
the satisfaction of certain specified conditions prior to August 27, 2001. We
will record an expense for the Northwest Airlines warrant to the extent the
exercise price is lower than the market value of our common stock if and when
the specified conditions are achieved. We cannot currently quantify the amount
of this expense, however, based on the assumed initial public offering price of
$13.00, the fair value of this warrant is approximately $16.4 million. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Our long and variable sales cycle depends upon factors outside our control and
could cause us to expend significant time and resources prior to earning
associated revenues.
The typical sales cycle of our services is long and unpredictable, requires
pre-purchase evaluation by a significant number of employees in our customers'
organizations and involves a significant investment decision by our customers.
Our sales cycle is affected by the business conditions and budgetary cycles of
each prospective customer. Many of our potential customers are large
enterprises that generally take longer to make significant purchases. Moreover,
a purchase decision by a potential customer typically requires the approval of
several senior decision makers. Our sales cycle for our larger business
customers and travel suppliers is generally between six and nine months,
although it has on occasion lasted significantly longer. These lengthy sales
cycles will have a negative impact on the timing of our revenues, especially
our realization of transaction revenues, and may cause our revenues and
operating results to vary significantly from period to period.
Many of our customers test the technical fit of our services prior to
entering into a full services contract with us by undertaking a pilot program.
Some of our pilot programs have taken over a year to complete and require us to
commit significant resources with no certainty that a sale will result.
We have not yet reached a definitive agreement regarding providing our
solutions for Northwest Airlines' primary Web site, www.nwa.com. We may not
reach a definitive agreement with Northwest Airlines or successfully implement
our services on its www.nwa.com Web site or America West Airlines' Web site.
Because implementation of our travel procurement and supply services is time
consuming, there may be significant delays between the sale and deployment of
our services.
The implementation and deployment of our services require a significant
commitment of resources by us and by our customers. Prior to full
implementation, most of our customers undertake a lengthy process to integrate
our services into their systems. The timing of deployment depends upon the:
. complexity of our customers' current systems and intended application and
the required implementation and customization efforts;
. technical and engineering capabilities of our customers;
. resources that our customers are willing to dedicate to implement travel
procurement or supply services;
. budgetary constraints of our customers;
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. availability of our development, training and support organizations to
provide technical support to our customers; and
. decision by some customers to implement a pilot program prior to full
deployment of our services.
Because of the number of factors influencing the integration and deployment
processes, we expect that the period between selling our services and the time
our customers deploy applications based on our services will vary widely. We
have experienced and expect to continue to experience delays in the deployment
of our services. Any delays may have a negative impact on our recognition of
revenues, especially our recognition of transaction revenues, and could
significantly harm our business and operating results.
The market for Internet-based travel procurement and supply services is highly
competitive and we may not be able to compete effectively.
The market for Internet-based travel procurement and supply services is new,
highly competitive and rapidly evolving, and we expect competition to intensify
in the future. Increased competition is likely to result in price reductions,
reduced gross profits and loss of market share, any of which could harm our
revenues and operating results. We currently, or potentially may, compete with
a variety of companies. Our primary competition currently comes from or is
anticipated to come from companies in the following categories:
. providers of online travel products and services to businesses, such as
Sabre BTS, Oracle Corporation's eTravel, XTRA On Line, American Express
AXI and Microsoft;
. other online providers of indirect goods and services such as Ariba and
Commerce One; and
. traditional travel service providers, including travel agencies.
In addition, we compete with consumer Web sites, such as Microsoft's Expedia
and Sabre's Travelocity, which recently announced the acquisition of Preview
Travel.
Some of our competitors and potential competitors have longer operating
histories and significantly greater financial resources and name recognition
than we do. In addition, many of these companies have more technical, marketing
and sales personnel and more established customer support and professional
services organizations than we do. They may also enter into strategic or
commercial relationships with larger, more established and well-financed
companies.
Furthermore, as new participants enter the online travel procurement and
supply market, we will face increased competition. Potential competitors, such
as online providers of indirect goods and services, may incorporate online
travel-related services into their existing product offerings. It is also
possible that new competitors or alliances among our competitors may emerge and
rapidly acquire significant market share. Our competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements than we can, which could cause our services to become obsolete.
Our failure to compete effectively would harm our business and operating
results. See "Business--Competition."
We rely on United Air Lines for a significant portion of our transaction
revenues, and the termination of this relationship would adversely affect our
business.
United Air Lines, one of our principal stockholders, has been our primary
travel supplier customer since November 1997. In fiscal 1999 and for the six
months ended July 31, 1999, we derived $1.6 million and $1.9 million directly
and zero and $319,000 indirectly from United Air Lines, accounting for an
aggregate of 24.8% and 39.5% of our total revenues. During these periods,
United Air Lines has also accounted for substantially all of our revenues from
our travel supplier customers. We expect that in the near term the percentage
of our revenues derived from United Air Lines will increase. Our services
agreement with United Air Lines can be terminated by us or United Air Lines for
any reason by providing the other party with notice
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180 days prior to termination. In addition, as our primary customer, we
dedicate a significant amount of our resources to United Air Lines. Any
disruption of our relationship with United Air Lines could leave us with excess
overhead, as well as with a loss of significant revenue, either of which would
significantly harm our business and operating results as well as our reputation
for providing services to travel suppliers. The public filings of UAL
Corporation, the parent of United Air Lines, can be found at www.sec.gov. UAL
Corporation is traded under the symbol "UAL", and its file number under the
Exchange Act of 1934, as amended, is 001-06033. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Relationships and Related Transactions."
We may not be able to significantly increase the use of our services after our
services have been implemented by our customers.
Employees of our business customers and patrons of our travel supplier
customers and other customers have been slow to increase the use of our
services after implementation. Although we assist our customers in developing
programs to increase the use of our services, the adoption of our services is
largely outside of our control and primarily dependent on our customers'
efforts and ability to promote the use of our services. If the use of our
services does not increase significantly, we may not be able to achieve or
sustain growth in our business. Furthermore, any failure to increase the use of
our services would limit our ability to increase revenues from customers, which
would significantly harm our business and operating results.
We have limited experience with widespread deployment of our travel procurement
and supply services.
Only a limited number of our customers have deployed ITN Global Manager and
ITN FlightRez on a large scale. Our primary source of revenue is expected to
come from transaction fees derived from the use of ITN Global Manager and ITN
FlightRez; therefore, our ability to support large numbers of transactions is
critical to our success. Our ability to provide effective and timely support
for our services depends on our ability to:
. attract, train, integrate and retain sufficient engineering personnel;
. establish effective customer support and technical organizations;
. enhance our systems and technology to add functionality and scalability;
. provide sufficient training to our customers, including training on
systems usage and Web site configuration;
. test and document the performance of our systems;
. provide adequate data storage; and
. efficiently integrate our technology with the systems of our customers.
If we cannot support large-scale deployments, our business and operating
results will be significantly harmed.
In addition, our customers require ITN Global Manager and ITN FlightRez to be
highly scalable. We must be able to rapidly accommodate a large increase in the
number of users. If we are unable to achieve this level of scalability in a
timely manner, our business and operating results could be significantly
harmed.
We have experienced significant growth in our business in recent periods, and
failure to manage our growth could strain our management and other resources.
Our ability to successfully offer our services and implement our business
plan in a rapidly evolving market requires an effective planning and management
process. We may fail to successfully offer our services and develop new
customer relationships, which could significantly harm our business and
operating results. In
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addition, we are integrating the operations of our recently acquired call
center in Fort Lauderdale, Florida, moving our headquarters from Palo Alto,
California to Menlo Park, California and planning to establish an engineering
development facility in Dallas, Texas. These efforts will be expensive and will
put a significant strain on our management and other resources. We continue to
increase the scope of our operations and grow our headcount substantially. At
January 31, 1998, we had a total of 74 employees, and at October 15, 1999, we
had a total of 271 employees. We expect to hire a significant number of new
employees in the near future. This growth has placed, and our anticipated
future operations will continue to place, a significant strain on our
management, systems and resources and on our internal training capabilities. If
we fail to effectively manage our growth, our business and operating results
will be significantly harmed.
To manage future growth effectively, we must maintain and enhance our
financial and accounting systems and controls, manage expanded operations and
attract, train, integrate and retain key employees, including those in our
engineering, operations, sales and marketing and support organizations. We
currently have a relatively small professional services and customer support
organization. We will need to increase our customer service and support staff
to serve new customers and the expanding needs of our existing customers.
However, hiring qualified professional services and customer support personnel,
as well as sales, marketing, administrative and research and development
personnel, is very competitive in our industry, particularly in the San
Francisco Bay Area, where we are headquartered, due to the high demand for
people with the necessary technical skills and understanding of the Internet.
We expect to face greater difficulty attracting these personnel with equity
incentives as a public company than we did as a privately held company. We may
not be able to attract, integrate, assimilate or retain highly qualified
personnel in the future. Our business will not continue to grow and could be
significantly harmed if we are unable to attract qualified personnel.
Our operating results are substantially dependent on the success of ITN Global
Manager and ITN FlightRez, and a reduction in sales or our inability to
significantly increase sales of our services, including sales of our ITN Global
Manager and ITN FlightRez, would significantly harm our business.
We expect to derive a substantial portion of our revenues from ITN Global
Manager and ITN FlightRez. In the six months ended July 31, 1999 and in the
fiscal year ended January 31, 1999, ITN Global Manager and ITN FlightRez
collectively accounted for 54.8% and 45.7% of our total revenues, and we expect
this dependence to remain the same or increase in the future. We need to
significantly increase sales of our services, including sales of ITN Global
Manager and ITN FlightRez . Our services may not successfully compete with
those of our competitors, and we may not be able to enhance our services or
develop new services to meet customer needs. In addition, we have in the past
offered equity rights to potential customers in connection with the sale of our
services. In the future, we expect to decrease offering equity rights to these
potential customers which may make sales of our services more difficult.
Furthermore, businesses and travel suppliers may choose to develop their own
Internet-based travel services. If we are unable to generate revenues from
either ITN Global Manager or ITN FlightRez, our business and operating results
would be significantly harmed.
We have received a high level of complaints regarding our traveler support
services.
Our financial success depends to a large extent on our ability to respond
quickly and effectively to travelers' inquiries regarding specific travel
transactions and the use of our services. However, travelers and customers
seeking telephone customer support from us have experienced delays before being
connected to our traveler support staff. In addition, our traveler support
staff has not always been able to answer travelers' questions. This problem has
become more pronounced due to the increasing complexity of travel services
provided, such as the integration of affinity programs. As a result, we have
received an increased number of complaints regarding our traveler support
services. Our ability to provide an acceptable level of traveler support and
therefore maintain our customer relationships largely depends upon our ability
to successfully attract, integrate, train and retain additional traveler
support personnel. Although we have purchased an additional call center in Fort
Lauderdale, Florida in order to handle a higher volume of calls, this call
center may not be fully operational until the end of 1999. The operations of
this call center may not be integrated into our business in a
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timely or effective manner. Our two call centers may not sufficiently handle
future growth. Furthermore, unless our traveler support staff is adequately
trained to effectively respond to travelers' questions, travelers may continue
to experience frustration with our traveler support, which could lead to a loss
of business. Any failure to improve the support we provide to travelers could
significantly harm our business and operating results.
We rely on suppliers of travel services and products for our revenues, and
these suppliers are not obligated to use our services or pay us commissions.
We are dependent on airlines, hotels, car rental companies and other
providers of travel services in order to offer our business customers access to
travel products and services. None of these suppliers are obligated to sell
their products or services through us. Some travel service providers may decide
not to sell their services online or through our services. Some travel service
providers have initiated direct online distribution channels and, in some
cases, have offered reduced rates directly to major business customers. If
these travel suppliers restrict our access to their products and services or
otherwise make our solutions unnecessary or less attractive to travelers, we
would experience significant harm to our business and operating results.
Revenues derived from some of our customers are dependent on the commissions
customarily paid by travel suppliers for purchases made through our travel
procurement services. These travel suppliers are not obligated to pay any
specified commissions or to pay commissions at all. As a result, travel
suppliers may reduce current commission rates or eliminate such commissions
entirely, which could significantly harm our business and operating results.
Our travel procurement services depend on our ability to access computer
reservation systems.
Our travel procurement services are limited to those travel suppliers whose
services and products are available through the computer reservation systems we
access. These travel suppliers may not continue to sell services or products
through the computer reservation systems to which we have access. In addition,
we may not be able to extend our existing relationships to a wider array of
travel services or maintain or establish new relationships with computer
reservation systems. Our failure to do so would significantly harm our business
and operating results.
We currently transact a significant amount of our business through the
Galileo International computer reservation system. If our agreement to use the
Galileo International system were terminated, we would be unable to process
travel transactions for a significant number of our customers. Our agreement
with Galileo terminates on June 30, 2001, although either party to the
agreement may terminate the agreement if the other party becomes insolvent or
ceases or suspends its operations, or if the other party fails to perform its
obligations under the agreement and this failure continues for a period of 30
business days. If not previously terminated, the agreement may be extended
beyond June 30, 2001 on a month-to-month basis for up to an additional six
months at our election. In addition, we currently do not have a direct
connection with the Sabre computer reservation system. Companies seeking to use
our services through the Sabre computer reservation system need to provide
their own connection to Sabre. As a result, companies using Sabre may find our
services less attractive.
A decline in the travel industry will significantly harm our business.
Our business and future growth are dependent on the travel industry. We
currently derive substantially all of our revenues from our Internet-based
travel procurement and supply services. The travel industry is sensitive to
changes in economic conditions and tends to decline during general economic
downturns and recessions. The travel industry is also highly susceptible to
events beyond our control, such as fuel price escalation, travel related
accidents, extreme weather conditions, labor disputes, terrorist activities,
the outbreak or threat of military hostilities and other adverse occurrences.
Any decline in the travel industry would significantly harm our business and
operating results.
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related accidents, extreme weather conditions, labor disputes, terrorist
activities, the outbreak or threat of military hostilities and other adverse
occurrences. Any decline in the travel industry would significantly harm our
business and operating results.
Our strategy to provide our services in the market for Internet-based
procurement and supply of indirect goods and services is unproven and may fail.
One of our strategies is to apply our existing expertise in the travel market
to provide services for the Internet-based procurement and supply of other
indirect goods and services. The pursuit of this strategy may cause us to
expend significant time and resources on the development of new services.
However, this strategy may not be successful. If we are unsuccessful, we may
not be able to recover the costs and expenses associated with developing and
implementing this strategy. In addition, the time and attention of our
management will have been diverted. Consequently, our business and operating
results may be significantly harmed.
In addition, the markets for Internet-based procurement and supply of
indirect goods and services are extremely competitive. Several companies have
been competing in the Internet-based procurement and supply of indirect goods
and services markets for the past several years and consequently have a larger
customer base than we do. We may not be successful in selling our services to
their existing customers or competing for future customers. We expect that
competition in these markets will intensify as current competitors expand their
product offerings and new competitors enter these markets. Because there are
relatively low barriers to entry in the electronic commerce market, competition
from other established and emerging companies may develop in the future. When
and if we enter markets for the Internet-based procurement and supply of
indirect goods and services other than travel, we may not be able to compete
successfully.
Our strategy to expand internationally may not succeed and makes us much more
susceptible to risks from international operations.
Although we currently derive substantially all of our revenues from sales in
the U.S., we intend to increase our international sales capabilities and
operational presence. We currently have two sales people in the United Kingdom,
and we are primarily focusing our international sales efforts in Europe.
However, we may not successfully increase our international sales capabilities
and operations. Our international business activities are subject to a variety
of risks, including:
. reduced intellectual property protection in some countries could allow
others using our technology to compete against us or otherwise
misappropriating our intellectual property;
. the incurrence of significant penalties if we do not comply with a wide
variety of complex foreign laws and treaties;
. difficulty in integrating international operations with existing
operations;
. difficulty in staffing and managing international operations;
. the loss of revenues and asset values resulting from currency
fluctuations;
. higher costs due to licenses, tariffs and other trade barriers;
. longer sales and payment cycles and greater difficulties in collecting
accounts receivable; and
. interruptions in our operations due to political and economic
instability.
Because of our limited international operations to date, we have not yet
suffered any significant adverse consequences due to these risks. The expansion
of our international sales capability and operations, however, will require
significant capital and other resources, may divert the attention of our
management and will further expose us to these risks. To date, we have not
adopted a hedging program to protect us from risks associated
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with currency fluctuations. To the extent that we are unable to successfully
expand internationally or manage the expansion of our business into
international markets, our business and operating results could be harmed.
Our executive officers and certain key personnel are critical to our business,
and many of these officers and key personnel have only recently joined us and
may not remain with us in the future.
The loss of one or more of our executive officers or other key personnel
could significantly harm our business and operating results. Our future success
depends on the continued services and performance of our senior management and
other key personnel, particularly Gadi Maier, our president and chief executive
officer, and Ken Pelowski, our chief operating officer and chief financial
officer. Almost all of our senior management joined us recently, including Mr.
Maier, who joined us in December 1998, and Mr. Pelowski, who joined us in April
1999. In addition, between December 1998 and May 1999, we hired our vice
presidents of engineering, human resources, marketing, sales and services.
Because our management team has only worked together for a short period of
time, we do not know if our managers will effectively integrate into our
operations or work well together. Any of our officers or key personnel can quit
at any time, and we cannot prevent them from joining our competitors or
otherwise competing with us. We do not have "key person" life insurance
policies covering any of our employees. If we are unable to retain or integrate
any key personnel, or if any key personnel join a competitor or otherwise
compete with us, our business and operating results could be significantly
harmed. See "Management."
We rely on Exodus Communications to host and maintain our systems.
We rely on Exodus Communications to provide us with and maintain the
facilities, power and climate control necessary to operate our computer
hardware and software. Exodus Communications currently provides these hosting
and maintenance services for our computer hardware used to process travel-
related transactions. Our agreement with Exodus Communications has a term of
six months and is automatically renewable for additional six month terms. This
agreement may be terminated by either party upon 60 days' notice to the other
party. If Exodus Communications fails to adequately host or maintain our
systems, our services could be disrupted and our business and operating results
could be significantly harmed.
We incorporate software licensed from third parties and any defects or
significant interruption in the availability of these products could harm our
business.
We rely on third-party software for the development of our products and
services. For example, we use Netscape Enterprise Server to configure
presentation layers of each unique Web site, and our platforms are based on
commercially-supported versions of the UNIX operating system. Some of the
software we license from third parties would be difficult to replace. This
software may not continue to be available on commercially reasonable terms or
at all. The loss or inability to maintain any of these technology licenses
could result in delays in the sale of our solutions until equivalent
technology, if available, is identified, licensed and integrated. Such delays
could harm our business. We may not be able to replace the functionality
provided by third-party software currently offered with our solutions if that
software is found to be obsolete, defective or incompatible with future
versions of our solutions or if that software is discontinued or upgraded in
such a way that it becomes incompatible with our solutions. In addition, if
this third-party software is not adequately maintained or updated it may become
incompatible with our current solutions. The absence of, or any significant
delay in, the replacement of third-party software could result in delayed or
lost sales and increased costs and could harm our business and operating
results.
We may not be able to develop services that contain the features and
functionality our customers demand.
Our success largely depends upon our ability to accurately determine the
features and functionality required by our customers and to design and
implement services in a timely and efficient manner. If we fail to accurately
determine the features and functionality that our customers require and enhance
our existing services
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or develop new services, our current and potential customers will not buy them.
To date, we have designed our services based in large part on feedback from a
limited number of current and potential customers. Therefore, the features and
functionality of our solutions may not adequately satisfy future customer
demands. Some of our customers may also require us to develop customized
features or capabilities, which would increase our costs and consume our
limited resources. In addition, we may not be able to develop customized
features in a cost-effective manner. Any failure to develop services that
contain the features and functionality our customers demand could harm our
business and operating results.
If we do not respond to rapid technological changes by introducing new
services, our services could become obsolete and our business would be
seriously harmed.
The development of our services entails significant technical, financial and
business risks. We may not be able to successfully implement new technologies
or adapt our services to customer requirements or emerging industry standards.
The Internet and electronic commerce are characterized by:
. rapid technological change;
. changes in user and customer requirements and preferences;
. frequent new product and service introductions embodying new
technologies; and
. the emergence of new industry standards and practices.
Any of these factors could render our services obsolete. Our success will
depend, in part, on our ability to respond to technological advances and
emerging industry standards and practices on a cost-effective and timely basis
by licensing technology, enhancing our services and developing new solutions.
We must continue to modify and enhance our services to keep pace with changes
in hardware and software platforms, programming languages and database
technologies. As a result, uncertainties related to the timing and nature of
new product announcements, introductions or modifications by vendors of
operating systems, applications software and Internet browsers could harm our
business and operating results. If we fail to modify or improve our services in
response to evolving industry standards, our services could rapidly become
obsolete, which would harm our business and operating results.
If the protection of our trademarks and other proprietary rights is inadequate,
our business could be harmed.
Our copyrights, service marks, trademarks, trade dress, trade secrets and
similar intellectual property and proprietary information are critical to our
success. We rely on trademark and copyright law, trade secret protection and
confidentiality or license agreements with our employees, customers, partners
and others to protect our proprietary rights. These legal protections afford
only limited protection for our trade secrets and other intellectual property.
In addition, effective patent, trademark, service mark, copyright and trade
secret protection may not be available in every country in which we offer our
solutions. Our means of protecting our proprietary rights may not be adequate.
In addition, despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use our
solutions or technology and our competitors could independently develop similar
technology.
We have filed applications for United States trademark registrations for,
among other trademarks, "GetThere," "ITN Global Manager" and "ITN FlightRez."
We may not be able to secure these registrations.
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It is also possible that our competitors or others will adopt service names
similar to ours, thereby impeding our ability to build brand identity and
possibly leading to customer confusion. Furthermore, the relationship between
regulations governing domain names and laws protecting trademarks and similar
proprietary rights is unclear. Therefore, we may be unable to prevent third
parties from acquiring domain names that are similar to, infringe upon or
otherwise decrease the value of our trademarks and other proprietary rights.
Policing unauthorized use of our intellectual property is difficult, and we
cannot be certain that the steps we have taken will prevent misappropriation of
our technology. Furthermore, litigation may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets and
domain names and to determine the validity and scope of the proprietary rights
of others. If third parties prepare and file applications in the United States
that claim trademarks used or registered by us, we may oppose those
applications and be required to participate in proceedings before the United
States Patent and Trademark Office to determine priority of rights to the
trademarks, which could result in substantial costs to us. Any litigation,
arbitration or priority proceeding to protect our trademarks and other
proprietary rights, even if not adverse, could result in substantial costs,
diversion of development resources and diversion of technical and management
personnel and could significantly harm our business and operating results.
Our business may be harmed if we are found to infringe proprietary rights of
others.
Third parties may claim infringement by us with respect to past, current or
future proprietary rights. We expect that participants in our industry will be
increasingly subject to infringement claims as the number of services and
competitors in our industry segment grows. Any such claim, whether meritorious
or not, could be time-consuming, result in costly litigation or arbitration and
diversion of technical and management personnel or require us to develop non-
infringing technology or to enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may not be available on terms
acceptable to us, or at all, and could significantly harm our business and
operating results.
We may be subject to potential trade name or trademark infringement claims
brought by owners of other registered trademarks or trademarks that incorporate
variations of the terms GetThere, ITN Global Manager, ITN FlightRez or GT
Exchange. Any claims or customer confusion related to our trademarks, or our
failure to obtain trademark registration, would harm our business. We are aware
of a pending trademark application in the European Union filed by a company for
the mark GETTHERE!. We have discussed the rights related to this mark with this
company, but we have not resolved this matter. If it is determined that this
mark is validly held by this company, we may be unable to use the mark in the
European Union, which could significantly harm our ability to expand our brand
awareness and business operations in the European Union. We also use, and our
customers use, trade names, trademarks and other similar intellectual property
of travel suppliers on Web sites supported or hosted by us. This use may result
in claims of infringement or misuse brought by the owners of this intellectual
property. Any claims or disputes of this type may also damage the relationships
we have with travel suppliers and preclude us from using travel supplier trade
names and other intellectual property, either of which could significantly harm
our business and operating results.
If we engage in acquisitions, we will incur a variety of costs, and the
anticipated benefits of the acquisition may never be realized.
We have acquired and may in the future attempt to acquire businesses,
technologies, services or products that we believe are a strategic fit with our
business. No material acquisition is currently being pursued. The process of
integrating an acquired business, technology, service or product may result in
unforeseen operating difficulties and expenditures and may divert significant
management attention from the ongoing development of our business, which could
impair our relationships with our current employees, customers and strategic
partners. Moreover, we may be unable to maintain uniform standards, controls,
procedures and policies in connection with any acquisition, and we may fail to
realize the anticipated benefits of any acquisition. Future acquisitions could
result in potentially dilutive issuances of equity securities, the incurrence
of debt, contingent
17
<PAGE>
liabilities and amortization expenses related to goodwill and other intangible
assets, any of which could significantly harm our business and operating
results.
In addition, recent proposed changes in the Financial Accounting Standards
Board rules for merger accounting may affect our ability to make acquisitions
and harm our business results if we complete any acquisitions. For example,
elimination of the "pooling" method of accounting for mergers could increase
the amount of goodwill that we would be required to record if we merge with
another company, which would significantly harm our future operating results.
Furthermore, accounting rule changes that reduce the availability of write-offs
for in-process research and development costs in connection with an acquisition
could result in the capitalization and amortization of such costs and
negatively impact our operating results in future periods.
Year 2000 issues present technological risks, could cause disruptions to our
business and could harm our sales.
We may experience negative consequences from year 2000 problems, including
material costs caused by undetected errors or defects in the technology used in
our internal systems. Many currently installed computer systems and software
products are coded to accept only two digit entries in the date code field.
Beginning in the year 2000, these code fields will need to accept four digit
entries to distinguish the year 2000 and 21st century dates from other 20th
century dates. If we fail to adequately address year 2000 issues, or third
parties that maintain our systems, such as Exodus Communications, fail to
adequately address year 2000 issues, we may be unable to provide services to
our customers, which would be similar to experiencing a general Internet
failure. Moreover, if our competitors do not experience similar year 2000
problems, we will be at a relative competitive disadvantage. This competitive
disadvantage could result in:
. delay or loss of revenues;
. cancellation of customer contracts;
. diversion of development resources;
. diversion of technical and management personnel;
. damage to our reputation;
. increased service and warranty costs; and
. litigation costs.
Our online services were designed to be year 2000 compliant. Our internal
systems, including those used to deliver our services, utilize third-party
hardware and software. We have begun the process of contacting the vendors of
these infrastructure products in order to gauge their year 2000 compliance and
have received responses from approximately 90% of these vendors. Based on
vendors' representations received thus far, we believe that the third-party
hardware and software we use is year 2000 compliant. We have not yet received a
response from Exodus Communications. In addition, the external systems on which
we rely, such as computer reservation systems, may not be year 2000 compliant,
which may significantly harm our business and operating results.
We expect to spend less than $50,000 to address year 2000 issues. Our
estimates of these costs were derived utilizing a number of assumptions,
including the assumption that we have already identified any significant year
2000 issues. However, these assumptions may not be accurate, and actual results
could differ materially from those anticipated. We are currently developing
contingency plans to identify and correct year 2000 problems. Although we
expect to complete our contingency plans by the end of November 1999, we may
not be able to complete our preparations by this time. In addition, any plan
that we implement may not be sufficient to identify and address all year 2000
problems that may affect our systems.
If we discover that any of our systems need modification, or any of our
third-party hardware and software is not year 2000 compliant, we will try to
make modifications to our systems on a timely basis. We cannot
18
<PAGE>
assure you that we will be able to modify these products, services and systems
in a timely, cost-effective or successful manner, and the failure to do so
could significantly harm our business and operating results. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Year
2000 Readiness."
Software defects could impair our ability to provide our services to our
customers.
Our services are implemented based on our proprietary technology. Complex
proprietary technology like ours frequently contain defects or errors that may
be detected only when the technology is in use. Further, we often render
implementation, consulting and other technical services, which typically
involve working with sophisticated software, computing and networking systems.
From time to time, we experience software bugs which disrupt our operations,
but, to date, these disruptions have not significantly impaired our ability to
provide our services. However, we could fail to meet project milestones in a
timely manner or meet customer expectations as a result of any future defects
or errors. Any defect or failure to meet project milestones for services could
result in loss of or delay in revenues, loss of market share, failure to
achieve market acceptance, diversion of development resources, harm to our
reputation, increased insurance costs or increased service and warranty costs.
To address these problems, we may need to expend significant capital and
resources that may not have been budgeted, and such problems may divert
technical and management personnel, which could significantly harm our business
and operating results.
Online security failures could harm our business and operating results.
The secure transmission of confidential information over the Internet is a
significant risk to electronic commerce. The secure transmission of proprietary
or confidential information over the Internet is essential to establish and
maintain confidence in the procurement and supply of travel-related services
and other indirect goods and services. We rely on specialized technology to
provide the security necessary for secure transmission of confidential
information. However, advances in computer capabilities, new discoveries in
security technology, breakdowns in our security technology or other events or
developments may result in a compromise or breach of the algorithms we use to
protect customer and transaction data. Despite our implementation of security
measures, our servers are vulnerable to such security breaches, which could
lead to interruptions in our business, delays in access to our solutions, loss
of data or the inability to accept and confirm customer reservations. A third
party that is able to circumvent our security systems could steal customer data
or other confidential or proprietary information or cause interruptions in our
operations or those of our customers, thus causing damage to our reputation and
loss of customers. Security breaches could also expose us to a risk of loss or
litigation and possible liability for failing to secure confidential or
proprietary customer information. Our insurance coverage may not be adequate to
reimburse us for losses caused by security breaches, and our security measures
may not prevent security breaches. As a result, we may be required to expend a
significant amount of financial and other resources to protect against security
breaches or to alleviate any problems that they may cause. These issues may
divert technical and management personnel. Security concerns and security
breaches of our solutions, as well as the products and services of others,
could significantly harm our business and operating results.
Our systems are subject to external events that may impact our ability to
conduct our business operations.
Currently, some of our systems are located in leased facilities in Palo Alto,
California and some are hosted by Exodus Communications in Santa Clara,
California and Sterling, Virginia. Our systems and operations are vulnerable to
damage or interruption from fire, flood, power loss, telecommunications
failure, break-in, earthquake and similar events. Palo Alto and Santa Clara are
located on a primary fault line. We currently do not have a disaster recovery
plan and do not carry sufficient business interruption insurance to compensate
us for losses that may occur.
19
<PAGE>
Product liability claims could harm our business.
Our customers utilize our services for their travel procurement and supply
needs. Any errors, defects or other performance problems could result in
financial or other damages to our customers and prompt them to bring a product
liability claim against us. Although our license agreements with customers
typically contain provisions designed to limit our exposure to product
liability claims, these contractual limitations on liability may not be
enforceable. A product liability claim brought against us, even if
unsuccessful, would likely result in substantial costs and diversion of
resources, management and other personnel and could significantly harm our
business and operating results.
If we experience significant credit card fraud, we will incur increased costs.
If we fail to adequately control fraudulent credit card transactions, our
revenues and results of operations would be harmed because we do not carry
insurance against this risk. Under current credit card practices, we are liable
for fraudulent credit card transactions because we do not obtain a cardholder's
signature.
Our officers, directors and entities affiliated with our officers and directors
will beneficially own approximately 38% of our common stock following the
completion of this offering.
Our executive officers, directors and entities affiliated with our executive
officers and directors will, in the aggregate, beneficially own approximately
38% of our outstanding common stock following the completion of this offering.
Although these stockholders in the aggregate own less than 50% of our common
stock, if they act together, they will be able to influence matters requiring
stockholder approval, including the election of directors and the approval of
mergers or other business combination transactions. To the extent these
stockholders can prevent the approval of a merger or acquisition, other
stockholders may not be able to recognize a premium on their shares. See
"Principal Stockholders" and "Description of Capital Stock."
United Air Lines and American Express will have significant influence over our
management and business decisions.
Covia, a wholly owned subsidiary of United Air Lines and the beneficial owner
of approximately 29% of our common stock following the completion of this
offering, holds an option to purchase one share each of our series D1 and
series D2 convertible preferred stock which, if exercised, would provide Covia
the right to elect two members to our board of directors. Consequently, Covia
could have significant influence over our management and business decisions.
For a discussion of our relationship with United Air Lines and Covia, see
"Relationships and Related Transactions."
American Express, the beneficial owner of approximately 15% of our common
stock following the completion of this offering, holds one share of our series
D3 convertible preferred stock and has the right to elect one representative to
our board of directors. For a discussion of this right and American Express'
expected representative, see "Management--Executive Officers and Directors."
We are subject to anti-takeover provisions that could delay or prevent an
acquisition of our company.
Provisions of our certificate of incorporation, bylaws and Delaware law could
make it more difficult for a third party to acquire us, even if doing so would
be beneficial to our stockholders. See "Description of Capital Stock." We have
implemented a classified board. In addition, some of our stockholders,
including United Air Lines, American Express, America West Airlines and Air
Canada are subject to a standstill agreement preventing them from acquiring
more than a specified percentage of our voting securities. This standstill
agreement will have the effect of making it more difficult for these
stockholders to acquire us. See "Relationships and Related Transactions--Equity
Financings and Stockholders Arrangements" and "Description of Capital Stock--
Certificate of Incorporation and Bylaws."
20
<PAGE>
We do not intend to pay any dividends.
We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future. In
addition, our lending facilities contain certain restrictions on our ability to
pay dividends.
Risks Related to the Electronic Commerce Market
Our business depends upon online travel procurement achieving market
acceptance.
The online market for travel products and services is in its infancy. We may
not be able to convince a large number of businesses to utilize online travel
procurement methods instead of traditional methods. Furthermore, businesses
that have implemented our online services experience low adoption rates by
their employees. Specific factors that could prevent widespread business
acceptance of online travel procurement methods include:
. competition from traditional travel procurement systems, such as travel
agencies;
. entrenched travel procurement systems;
. failure to provide adequate customer service;
. reliability of access to the Internet;
. lack of security on the Internet; and
. the development of Internet infrastructure and performance.
As a result of such factors, we may not be able to gain commercial acceptance
of our online travel services. Any failure to achieve acceptance of our online
travel services could significantly harm our business and operating results.
Our revenues may decrease if Internet usage growth or Internet infrastructure
development does not occur as projected.
The use of the Internet as a means to provide procurement and supply services
is integral to our business model. The use of the Internet as a means of
transacting business is relatively new and has not been accepted by all
customers in the markets we have targeted. As a result, the market may not
accept products and services that rely on the Internet, such as ours. If the
growth rate of Internet usage in our targeted markets is less than expected our
revenues will suffer. The Internet as a means of conducting business may not
continue to grow at a rate similar to its historical rate, if at all.
In addition, the Internet may not be accepted as a viable long-term
commercial marketplace for a number of reasons, including potentially
inadequate development of the necessary network infrastructure or delayed
development of enabling technologies and performance improvements. Our success
will depend, in large part, upon third parties maintaining the Internet
infrastructure to provide a reliable network backbone with the speed, data
capacity, security and hardware necessary for reliable Internet access and
services. The recent growth in Internet traffic has caused frequent periods of
decreased performance. If Internet usage continues to grow rapidly, the
infrastructure may not be able to support these demands and the performance and
reliability of the Internet may decline. If outages or delays on the Internet
occur frequently or increase in frequency, overall Internet usage including
usage of our services could grow more slowly or decline. Our ability to
increase the speed and scope of our services to customers is ultimately limited
by and depends upon the speed and reliability of both the Internet and our
customers' internal networks. Furthermore, changes in, or insufficient
availability of, telecommunications services to support the Internet also could
result in slower response times and adversely affect usage of the Internet
generally and by our customers in particular. Consequently, the emergence and
growth of the market for our services depends upon improvements being made to
the entire Internet infrastructure as well as to our individual customers'
networking infrastructures to alleviate
21
<PAGE>
overloading and congestion. If these improvements are not made, the ability of
our customers to utilize our services will be hindered, which will
significantly harm our business and operating results.
Future regulation of the Internet may slow its growth, resulting in decreased
demand for our solutions and increased costs of doing business.
Laws and regulations directly applicable to communications or commerce over
the Internet are becoming more prevalent, including legislation governing
privacy, copyrights and taxation. 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 us to
additional state sales and income taxes. The European Union recently enacted
privacy regulations. Laws governing the Internet, however, remain largely
unsettled, even in areas where there has been some legislative action. It may
take years to determine whether and to what extent existing laws such as those
governing intellectual property, privacy, libel and taxation apply to the
Internet. In addition, the growth and development of the market for online
commerce may prompt calls for more stringent consumer protection laws, both in
the United States and abroad, the result of which may be to impose additional
burdens on companies conducting business online. The adoption or modification
of laws or regulations relating to the Internet could significantly harm our
business and operating results.
Risks Related to this Offering
There has been no prior market for our common stock, and the price of our stock
will be volatile.
Before this offering, there was no public trading market for our common
stock, and an active trading market for our common stock may not develop or be
sustained after this offering. The initial public offering price will be
determined by negotiations between the representatives of the underwriters and
us and may not be indicative of the price that will prevail in the public
market after this offering. The public market price of our common stock could
fall below the initial public offering price. See "Underwriting."
In addition, the market price for our common stock is likely to be highly
volatile, particularly since the market for Internet-related stocks has
experienced extreme price and volume fluctuations. We expect our stock price to
be subject to wide fluctuations as a result of a variety of factors, including
factors beyond our control. Such factors include:
. actual or anticipated variations in our quarterly operating results;
. announcements of technological innovations or new products or services by
us or by our competitors;
. publicity about our company, our services, our competitors or electronic
commerce in general;
. changes in our financial estimates by securities analysts;
. conditions or trends in the Internet and electronic commerce industries;
. changes in the economic performance and/or market valuations of other
Internet, electronic commerce or travel companies;
. announcements by us or by our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments;
. additions or departures of key personnel;
. releases of lock-up or other transfer restrictions on our outstanding
shares of common stock or sales of additional shares of common stock; and
. potential litigation.
Because of this volatility, it is likely that we will fail to meet the
expectations of our stockholders or of securities analysts at some time in the
future, resulting in a decline in our stock price.
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<PAGE>
Future sales of shares could affect our stock price.
If our stockholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our common stock
could fall. Such sales also might make it more difficult for us to sell equity
or equity-related securities in the future, at a time and price that we deem
appropriate. Based on shares outstanding as of October 15, 1999, upon
completion of this offering we will have outstanding 32,045,425 shares of
common stock, assuming no exercise of the underwriters' over-allotment option.
Other than the shares of common stock sold in this offering, no shares will be
eligible for sale in the public market immediately. Substantially all of our
existing stockholders will be subject to agreements with the underwriters or
with us that restrict their ability to transfer their stock for 180 days from
the date of this prospectus. After these agreements expire, approximately an
additional 19,966,847 shares will be eligible for sale in the public market
assuming no exercise of options. See "Shares Eligible for Future Sale" for a
further description regarding shares that will become eligible for sale at
future dates after this offering.
Investors in this offering will suffer immediate and substantial dilution.
The initial public offering price of our common stock is expected to be
substantially higher than the book value per share of our outstanding common
stock. As a result, if you purchase common stock in this offering, you will
incur immediate, substantial dilution in pro forma net tangible book value of
$8.84 per share. In addition, we have issued options and warrants to acquire
common stock at prices significantly below the initial public offering price of
our common stock. In particular, after this offering we will have outstanding
warrants to purchase 7,704,503 shares of our common stock. To the extent these
outstanding options and warrants are ultimately exercised, there will be
further dilution to investors in this offering. See "Dilution" and "Description
of Capital Stock--Warrants."
We have substantial discretion as to how to use the proceeds from this
offering.
Our management has broad discretion as to how to spend the proceeds from this
offering and may spend the proceeds in ways with which our stockholders may not
agree. We cannot predict that investments of the proceeds will yield a
favorable or any return. See "Use of Proceeds."
23
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the 5,000,000 shares of
common stock we are selling in this offering will be approximately $58.7
million, at an assumed initial public offering price of $13.00 per share, after
deducting the estimated underwriters' discounts and offering expenses. If the
underwriters' option to purchase an additional 750,000 shares of common stock
is exercised in full, we estimate that the aggregate net proceeds will be
approximately $67.7 million.
The primary purpose of this offering is to obtain additional working capital.
We intend to use the net proceeds of this offering for working capital, the
purchase of property and equipment and other general corporate purposes. We
have not yet committed any of the net proceeds for any particular use. In
addition, we may use a portion of the net proceeds to acquire or make
investments in complementary products, technologies or businesses. We have no
present commitments or agreements with respect to any of these kinds of
acquisitions or investments. Pending the above uses, we plan to invest the net
proceeds of this offering in short-term, investment-grade, interest-bearing
securities. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock and do
not anticipate paying any cash dividends on our capital stock in the
foreseeable future. In addition, our lending facilities contain restrictions on
our ability to pay dividends.
24
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of GetThere.com as
of July 31, 1999 and the pro forma and pro forma as adjusted capitalization of
GetThere.com:
<TABLE>
<CAPTION>
July 31, 1999
-------------------------------
Pro Pro Forma
Actual Forma As Adjusted
(In thousands, unaudited)
<S> <C> <C> <C>
Cash and cash equivalents...................... $ 3,306 $ 76,787 $135,437
======== ======== ========
Long-term liabilities, less current portion.... 7,014 5,364 5,364
-------- -------- --------
Redeemable convertible preferred stock and
warrants, $0.0001 par value, 25,100,000 shares
authorized, 11,731,714 shares outstanding,
actual; 10,000,000 shares authorized, one
share outstanding, pro forma; and 10,000,000
shares authorized, one share outstanding, pro
forma as adjusted............................. 35,215 -- --
Stockholders' equity (deficit)
Common stock, $0.0001 par value, 50,000,000
shares authorized, 7,663,730 shares issued
and outstanding, actual; 200,000,000 shares
authorized, 26,852,496 shares outstanding,
pro forma; and 200,000,000 shares
authorized, shares issued and
outstanding, pro forma as adjusted.......... -- 2 3
Additional paid-in capital................... 51,821 162,165 220,814
Note receivable from stockholder............. (2,707) (2,707) (2,707)
Unearned compensation........................ (36,628) (36,628) (36,628)
Accumulated deficit.......................... (45,976) (45,976) (45,976)
-------- -------- --------
Total stockholders' equity (deficit)....... (33,490) 76,856 135,506
-------- -------- --------
Total capitalization..................... $ 8,739 $ 82,220 $140,870
======== ======== ========
</TABLE>
For a description of the assumptions underlying the pro forma and pro forma
as adjusted data, see "Prospectus Summary--Summary Financial Information."
25
<PAGE>
DILUTION
The pro forma net tangible book value of our common stock on July 31, 1999
was $74.1 million, or approximately $2.76 per share. Pro forma net tangible
book value per share represents the amount of our total tangible assets less
total liabilities divided by the number of shares of common stock outstanding
on a pro forma basis. For a description of the assumptions underlying the pro
forma data, see "Prospectus Summary--Summary Financial Information." Dilution
in pro forma net tangible book value per share represents the difference
between the amount per share paid by purchasers of shares of our common stock
in this offering and the pro forma net tangible book value per share of our
common stock immediately afterwards. After giving effect to our sale of
5,000,000 shares of common stock offered by this prospectus at an assumed
initial public offering price of $13.00 per share and after deducting the
estimated underwriting discounts and offering expenses payable by us, our pro
forma net tangible book value would have been $132.8 million, or approximately
$4.16 per share. This represents an immediate increase in pro forma net
tangible book value of $1.40 per share to existing stockholders and an
immediate dilution in pro forma net tangible book value of $8.84 per share to
new investors.
<TABLE>
<S> <C> <C>
Estimated initial public offering price per share............. $13.00
Pro forma net tangible book value per share as of July 31,
1999....................................................... $2.76
Increase per share attributable to new investors............ 1.40
-----
Adjusted pro forma net tangible book value per share after the
offering..................................................... 4.16
------
Dilution in pro forma net tangible book value per share to new
investors.................................................... $ 8.84
======
</TABLE>
This table excludes all options and warrants that will remain outstanding
upon completion of this offering. As of July 31, 1999, there were options
outstanding to purchase a total 3,781,810 shares of common stock, with a
weighted average exercise price of $1.33 per share. As of September 14, 1999,
there were warrants outstanding to purchase 7,704,503 shares of our common and
convertible preferred stock with a weighted average exercise price of $10.62
per share. The exercise of outstanding options and warrants having an exercise
price less than the offering price would increase the dilutive effect to new
investors.
The following table sets forth, as of July 31, 1999, on the pro forma basis
described above, the differences between the number of shares of common stock
purchased from us, the total price and the average price per share paid by
existing stockholders and by the new investors, before deducting estimated
underwriting discounts and offering expenses payable by us, assuming an initial
public offering price of $13.00 per share.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ -------------------- Price
Per
Number Percent Amount Percent Share
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 27,045,425 84.3% $162,128,000 71.4% $ 6.04
New investors................ 5,000,000 15.7 65,000,000 28.6 13.00
---------- ----- ------------ -----
Total...................... 32,045,425 100.0% $227,128,000 100.0% $ 7.12
========== ===== ============ ===== ======
</TABLE>
The existing stockholder amounts in the table above have been calculated on a
pro forma basis.
If the underwriters' over-allotment option is exercised in full, the number
of shares held by new public investors will be increased to 5,750,000 or
approximately 17.6% of the total numbers of shares of our common stock
outstanding after this offering.
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<PAGE>
SELECTED FINANCIAL DATA
The selected statement of operations data presented below for the years ended
January 31, 1997, 1998 and 1999, and the balance sheet data as of January 31,
1998 and 1999 are derived from our financial statements, which have been
audited and are included elsewhere in this prospectus. The balance sheet data
as of January 31, 1997 is derived from audited financial statements not
included in this prospectus. The statement of operations data for the period
from inception to January 31, 1996 and the six months ended July 31, 1998 and
1999 and the balance sheet data at January 31, 1996 and July 31, 1999 are
derived from our unaudited financial statements. In the opinion of management,
the unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of our results
of operations for such periods and financial condition at such dates. The
historical results presented below are not necessarily indicative of the
results to be expected for any future period. The selected financial data set
forth is qualified in its entirety by, and should be read in conjunction with,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes thereto included elsewhere
in this prospectus.
<TABLE>
<CAPTION>
Inception Six Months
through Years Ended January 31, Ended July 31,
January 31, -------------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
1996 1997 1998 1999 1998 1999
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
(In thousands, except per share data)
Statement of Operations
Data:
Revenues:
Transaction........... $ 129 $ 253 $ 2,098 $ 4,932 $ 2,090 $ 4,862
Professional service.. 14 329 903 1,515 619 736
------ ------- ------- -------- ------- --------
Total revenues....... 143 582 3,001 6,447 2,709 5,598
Cost of revenues........ 17 134 1,680 4,292 1,623 3,973
------ ------- ------- -------- ------- --------
Gross profit............ 126 448 1,321 2,155 1,086 1,625
Operating expenses:
Research and
development.......... 118 906 2,266 4,113 1,726 1,819
Sales and marketing... 109 1,030 2,393 5,732 2,522 3,612
General and
administrative....... 81 1,962 2,887 6,127 2,687 6,973
Stock-based
compensation......... -- 20 103 2,005 561 9,416
------ ------- ------- -------- ------- --------
Total operating
expenses............ 308 3,918 7,649 17,977 7,496 21,820
------ ------- ------- -------- ------- --------
Loss from operations.... (182) (3,470) (6,328) (15,822) (6,410) (20,195)
Interest income
(expense), net......... -- 33 (30) 173 (82) (149)
------ ------- ------- -------- ------- --------
Net loss................ $ (182) $(3,437) $(6,358) $(15,649) $(6,492) $(20,344)
====== ======= ======= ======== ======= ========
Basic and diluted net
loss per share......... $(0.06) $ (1.22) $ (1.81) $ (3.99) $ (1.71) $ (5.02)
Shares used in computing
basic and diluted net
loss per share......... 3,000 2,827 3,537 3,957 3,823 4,071
Pro forma basic and
diluted net loss per
share.................. $ (1.05) $ (1.26)
Shares used in computing
pro forma basic and
diluted net loss per
share.................. 14,917 16,199
</TABLE>
<TABLE>
<CAPTION>
As of January 31,
-------------------------------------- As of July 31,
1996 1997 1998 1999 1999
(unaudited) (unaudited)
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents
and short-term
investments............ $ 3 $ 579 $ 1,332 $ 15,802 $ 6,541
Working capital
(deficit).............. (143) (152) (842) 12,089 (2,203)
Total assets............ 146 1,426 4,390 20,806 18,939
Total stockholders'
deficit................ (185) (3,558) (9,854) (23,612) (33,490)
</TABLE>
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This prospectus contains forward-looking statements, the accuracy of which
involve risks and uncertainties. We use words such as "anticipates,"
"believes," "plans," "expects," "future," "intends" and similar expressions to
identify forward-looking statements. This prospectus also contains forward-
looking statements attributed to certain third parties relating to their
estimates regarding the growth of the Internet and electronic commerce markets.
Prospective investors should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. GetThere.com's
actual results could differ materially from those anticipated in these forward-
looking statements for many reasons, including the risks faced by GetThere.com
described in "Risk Factors" and elsewhere in this prospectus. You should read
the following discussion in conjunction with the "Selected Financial Data" and
our financial statements and related notes included elsewhere in this
prospectus.
Overview
We are a provider of Internet-based travel procurement and supply services
primarily for businesses and travel suppliers. Our business model has developed
over time to increasingly focus on the business-to-business market. We were
incorporated in August 1995 as Internet Travel Network Inc., and we changed our
name to GetThere.com, Inc. in July 1999. In 1995, we launched our www.itn.net
Web site, an Internet-based travel reservation system targeted at consumers and
small businesses. In response to interest from Internet-based content and
electronic commerce providers and travel agencies, we began to offer travel
services for these companies' Web sites. In 1996, we introduced ITN Global
Manager. In 1997, we introduced ITN FlightRez. In 1998, we continued to expand
our customer base for our ITN Global Manager service, and we expanded our
relationship with United Air Lines to include online offerings of unused
capacity and the ability to provide online one-way ticket upgrades. In 1999, we
continued to expand our relationship with United Air Lines by offering online
frequent flyer mileage redemption. We recently entered into a commercial
agreement with American Express Travel Related Services.
Our business customer base has grown from 14 at April 30, 1997 to 53 at July
31, 1999. Our travel supplier customer base has grown from zero at April 30,
1997 to five at July 31, 1999, including United Air Lines, the second largest
North American airline in terms of the number of passengers. The number of
travel-related transactions that we have processed has grown from approximately
18,000 in the quarter ending April 30, 1997 to approximately 306,000 in the
quarter ending July 31, 1999.
We generate revenues primarily from processing travel-related transactions,
such as booking and ticketing reservations, and performing professional
services. These revenues are generated from business customers using our ITN
Global Manager service, from travel suppliers using our ITN FlightRez service
and from other customers. Transaction revenues are comprised of fees and
commissions earned in connection with making travel related reservations and
purchasing airline tickets and providing related traveler support services for
customers asking technical and travel assistance. In addition, our transaction
revenues include fees received from computer reservation system companies for
making travel reservations on that computer reservation system, hosting fees
charged to gain access to our services and the sale of advertising on our
www.itn.net Web site and the Web sites of some of our customers. Transaction
revenues are recognized as the transactions are performed or when the
commission is received or, with respect to hosting fees, when invoiced. In the
case of advertising, we recognize revenues on a per impression basis after a
specified minimum number of impressions have been delivered. Professional
service revenues primarily consist of implementation and customization fees
associated with the deployment and on-going customization of our solutions.
Professional service revenues are recognized as performed.
Under our agreement with American Express, we will be entitled to receive
fixed quarterly payments. A portion of the fixed payments will be subject to
reimbursement if a specified number of visitors to www.itn.net
28
<PAGE>
and www.itn.com do not register on American Express' site. In addition, we will
be entitled to receive transaction fees with guaranteed annual minimums. Our
annual minimums are subject to reduction based upon failure to meet specified
development timetables.
Our gross margins are affected by numerous factors, such as the mix of
transaction revenues and professional service revenues, and the mix of
transaction revenues from our customers. We generally receive higher gross
margins on transaction revenues than from professional service revenues and
higher gross margins from business customers than from travel supplier
customers. Our gross margins are also affected by personnel and infrastructure
expenditures, which are expected to increase substantially in the future. As a
result, our gross margins will decrease unless we are able to significantly
increase our revenues. Furthermore, we will incur greater costs of revenues due
to the costs of developing and operating our recently acquired traveler support
center in Fort Lauderdale, Florida. These costs may negatively impact our gross
margins for the quarter ending October 31, 1999 and may also have a negative
impact on our gross margins in subsequent quarters.
Stock-based compensation represents the difference between the deemed fair
value of our common stock on the date options were granted or stock was issued
and the exercise or purchase price of our options or stock. This amount is
included as a reduction of stockholders' equity and is amortized over the
vesting period of the individual options or stock, generally four years. We
recorded amortization of stock-based compensation in the amount of $2.0 million
for the year ended January 31, 1999 and $9.4 million for the six months ended
July 31, 1999 in connection with the grant of certain stock options and
issuances of stock to employees and other service providers. As of July 31,
1999, we had a total of $36.5 million remaining to be amortized over the
corresponding vesting periods of the stock options or stock. We anticipate the
amortization of stock-based compensation will approximate $21.2 million for
fiscal 2000 (including the $9.4 million recorded for the six months ended
July 31, 1999), $14.6 million for fiscal 2001, $7.7 million for fiscal 2002,
$3.3 million for fiscal 2003 and $430,000 for fiscal 2004, which includes the
impact of option grants subsequent to July 31, 1999.
In August and September 1999, we sold an aggregate of 1,875,423 shares of
series C convertible preferred stock at a purchase price of $5.125 per share.
We expect to record expenses of $13.8 million, equal to the difference between
the fair value of the series C convertible preferred stock at that date ($12.50
per share) and the amount paid for the stock ratably over a three year period.
We entered into these equity transactions primarily for the purpose of inducing
these companies to invest in us and, secondarily, to utilize our travel
service. Our objective is to build brand awareness, achieve market penetration,
acquire industry knowledge and develop business relationships with significant
travel suppliers through these transactions. We viewed this inducement as an
essential part of shaping and executing our business plan and sales and
marketing strategy since these investors provide us with additional knowledge
and leverage in the travel supply industry.
In addition, in August 1999, we issued a warrant to purchase up to 1,650,000
shares of our series C convertible preferred stock to Northwest Airlines at an
exercise price of $5.125 per share. The exercise of this warrant is subject to
the satisfaction of certain specified conditions prior to August 27, 2001
including the execution of a definitive travel supplier agreement for Northwest
Airlines' primary Web site, www.nwa.com, and the adoption of our services on
this Web site. We will record an expense for the Northwest Airlines warrant if
and when the specified conditions are achieved. We cannot currently quantify
the amount of expense that ultimately will be recorded, however, based on the
assumed initial public offering price, the fair value of this warrant is $16.4
million. After the value is ultimately determined and the performance
conditions are achieved, the value will be amortized ratably over a three year
period. See "Risk Factors--Our results of operations will be harmed by charges
associated with our payment of stock-based compensation and charges associated
with other securities issuances by us.
We have incurred significant operating losses since our inception and, as of
July 31, 1999, had an accumulated deficit of $46.0 million. We anticipate that
our losses will continue to increase significantly for the forseeable future as
we continue to increase our operating expenses. For example, we expect to
increase
29
<PAGE>
operating expenses to support our strategic relationship with American Express
and the development and implementation of a Web site for Northwest Airlines
through which Northwest Airlines intends to offer low fare tickets.
Furthermore, if we expand our relationship with Northwest Airlines by
implementing our services for Northwest Airlines' primary Web site,
www.nwa.com, we expect to incur significant additional expenses. We have
relocated our corporate headquarters from Palo Alto, California to Menlo Park,
California, and have recently established an engineering design center in
Dallas, Texas.
As a result of our compensation expenses, expenses associated with the recent
issuances of our securities, and other operating expenses related to the growth
of our business, we expect our net loss and net loss attributable to common
stockholders for the quarter ending October 31, 1999 to increase significantly.
In addition, we expect the rate at which future losses will be incurred will
increase significantly from current levels.
We have never recorded a provision for income taxes. As of July 31, 1999, we
had net operating loss carry-forwards for federal income tax purposes of
approximately $19.8 million and for state income tax purposes of approximately
$13.8 million. These federal and state income tax loss carry-forwards are
available to reduce future taxable income and expire at various dates through
2019. We cannot assure you that we will be able to generate sufficient taxable
income to utilize these income tax loss carry-forwards. In addition, under the
provisions of the Internal Revenue Code, certain changes in our ownership may
limit the amount of net operating loss carry-forwards that we may utilize
annually to offset taxable income in the future.
United Air Lines, one of our principal stockholders through its wholly owned
subsidiary Covia LLC, directly accounted for $1.9 million and $1.6 million or
approximately 33.8% and 24.8% of our total revenues for the six months ended
July 31, 1999 and for the fiscal year ended January 31, 1999. Our service
agreement with United Air Lines can be terminated by either party for any
reason by providing the other party with 180 days prior notice. Because a
significant amount of our revenues has been and is expected to continue to be
derived from United Air Lines, we are dependent on our relationship with United
Air Lines. We expect that in the near term the percentage of our revenues
derived from United Air Lines will increase. Any disruption of this
relationship would significantly harm our business and operating results.
We have experienced and expect to continue to experience seasonality in our
business, reflecting seasonal fluctuations in the travel industry, Internet
usage and advertising expenditures. Business travel bookings typically decline
during the fourth quarter of each calendar year due to decreased business
travel during the holiday season. Furthermore, consumer travel bookings
typically increase during the second quarter of each calendar year in
anticipation of summer travel. Internet usage and the rate of growth of such
usage typically decline during the summer.
30
<PAGE>
Results of Operations
The following table sets forth our results of operations as a percentage of
revenues:
<TABLE>
<CAPTION>
Six Months
Fiscal Year Ended Ended
January 31, July 31,
------------------------ ---------------
1997 1998 1999 1998 1999
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Transaction..................... 43.5% 69.9% 76.5% 77.2% 86.9%
Professional service............ 56.5 30.1 23.5 22.8 13.1
------ ------ ------ ------ ------
Total revenues................ 100.0 100.0 100.0 100.0 100.0
Cost of revenues.................. 23.0 56.0 66.6 59.9 71.0
------ ------ ------ ------ ------
Gross margin...................... 77.0 44.0 33.4 40.1 29.0
Operating expenses:
Research and development........ 155.7 75.5 63.8 63.7 32.5
Sales and marketing............. 177.0 79.8 88.9 93.1 64.5
General and administrative...... 337.1 96.2 95.0 99.2 124.5
Stock-based compensation........ 3.4 3.4 31.1 20.7 168.2
------ ------ ------ ------ ------
Total operating expenses...... 673.2 254.9 278.8 276.7 389.7
------ ------ ------ ------ ------
Loss from operations.............. (596.2) (210.9) (245.4) (236.6) (360.7)
Interest income (expense), net.... 5.7 (1.0) 2.7 (3.0) (2.7)
------ ------ ------ ------ ------
Net loss.......................... (590.5)% (211.9)% (242.7)% (239.6)% (363.4)%
====== ====== ====== ====== ======
</TABLE>
Comparison of Six Months Ended July 31, 1998 and 1999
Revenues. Revenues increased 106.6% from $2.7 million for the six months
ended July 31, 1998 to $5.6 million for the six months ended July 31, 1999 due
primarily to increased transactions from business customers and travel supplier
customers. Transaction revenues increased 132.6% from $2.1 million for the six
months ended July 31, 1998 to $4.9 million for the six months ended July 31,
1999. This increase was primarily due to an increase in the number of
transactions processed which resulted from increased adoption rates of our
products with existing customers, the addition of new customers, and the growth
in hosting revenues from new and existing customers as our installed base has
grown. Transactions increased 164.7% from 204,000 for the six months ended July
31, 1998 to 540,000 for the six months ended July 31, 1999. Professional
service revenues increased 18.9% from $619,000 for the six months ended July
31, 1998 to $736,000 for the six months ended July 31, 1999. This increase was
primarily due to increased implementation services to support the growth in our
customer base and, to a lesser extent, increased customization services for our
existing customers.
Cost of Revenues. Cost of revenues is predominately comprised of transaction
and personnel costs. These costs include costs associated with outside
consultants, commission sharing with some of our customers, printing and
delivery costs of tickets, computer reservation system charges, advertising
agency fees and personnel costs associated with operating our transaction
systems and providing traveler support. Our cost of revenues increased from
$1.6 million or 59.9% of revenues for the six months ended July 31, 1998 to
$4.0 million or 71.0% of revenues for the six months ended July 31, 1999. This
increase in dollars resulted primarily from personnel expenses related to the
hiring and training of additional personnel, equipment and material purchases
and outside consultants. Our gross margins declined from 40.1% for the six
months ended July 31, 1998 to 29.0% for the six months ended July 31, 1999 due
to our investments in additional personnel and infrastructure to increase our
transaction processing capacity in anticipation of future growth.
Research and Development. Research and development expenses consist
principally of personnel costs, equipment expenses, recruiting costs and
consulting fees relating to the development and enhancement of our solutions.
Research and development expenses increased from $1.7 million or 63.7% of
revenues for the six
31
<PAGE>
months ended July 31, 1998 to $1.8 million or 32.5% of revenues for the six
months ended July 31, 1999. This increase in dollars was due primarily to the
addition of personnel and was partially offset by a reduction in consulting
fees and other expenses. We believe that continued investment in research and
development is critical to attaining our strategic objectives and, as a result,
we expect research and development expenses to increase significantly in
absolute dollars for the foreseeable future. We have recently established a
second engineering development center in Dallas, Texas. For the quarters ending
October 31, 1999 and January 31, 2000, we expect to increase the number of
personnel in our California and Texas engineering development centers. These
events are expected to significantly increase our research and development
expenditures.
Sales and Marketing. Sales and marketing expenses consist primarily of
payroll and related expenses, sales commissions, consulting fees, advertising,
public relations and promotional expenditures and costs relating to the
distribution and sale of our solutions, including travel and entertainment
expenses. Sales and marketing expenses increased from $2.5 million or 93.1% of
revenues for the six months ended July 31, 1998 to $3.6 million or 64.5% of
revenues for the six months ended July 31, 1999. This increase in dollars was
due primarily to the addition of personnel, increased promotional and
advertising expenditures, and costs associated with the sale and distribution
of our solutions. We expect to significantly increase our sales and marketing
activities including establishing additional sales offices globally as well as
increasing our sales and marketing expenditures both domestically and
internationally, particularly with respect to advertising expenditures. As a
result, we expect our sales and marketing expenses will increase significantly
in absolute dollars for the foreseeable future.
General and Administrative. General and administrative expenses consist of
payroll and related expenses for management, accounting and administrative
personnel, depreciation of equipment and software, insurance, recruiting,
professional services, facilities and other general corporate expenses. General
and administrative expenses increased from $2.7 million or 99.2% of revenues
for the six months ended July 31, 1998 to $7.0 million or 124.5% of revenues
for the six months ended July 31, 1999. This increase in dollars was due
primarily to the accelerated depreciation of leasehold improvements associated
with our current facilities, an increase in the number of employees focused on
general and administrative functions, and an increase in consulting services,
recruiting costs, depreciation and other general corporate expenses. To
accommodate our growth in headcount, we moved our corporate headquarters to
Menlo Park, California in the quarter ending October 31, 1999. We expect to
incur non-recurring expenditures related to the move, particularly in the
quarter ending October 31, 1999, and increased ongoing expenditures related to
this new facility. We expect general and administrative expenses to increase in
dollars in future periods as we expand our staff and incur additional costs
related to the growth of our business and the administration of a public
company.
Stock-Based Compensation. We recorded aggregate stock-based compensation of
$561,000 for the six months ended July 31, 1998 and $9.4 million for the six
months ended July 31, 1999.
Interest Income (Expense), Net. Interest income (expense), net includes
income from our cash investments, net of expenses related to our financing
obligations. Our interest expense of approximately $82,000 for the six months
ended July 31, 1998 increased to approximately $149,000 for the six months
ended July 31, 1999. This increase was attributable to an increase in interest
paid on financing obligations and a decrease in interest income due to lower
invested cash balances.
Comparison of Fiscal Years Ended January 31, 1997, 1998 and 1999
Revenues. Revenues increased 415.6% from $582,000 for the fiscal year ended
January 31, 1997 to $3.0 million for the fiscal year ended January 31, 1998,
due primarily to an increase in the number of transactions from businesses,
Internet-based content and electronic commerce providers and travel agencies.
Transaction revenues increased 729.2% from $253,000 for the fiscal year ended
January 31, 1997 to $2.1 million for the fiscal year ended January 31, 1998.
This increase was primarily due to an increase in the number of transactions
processed which resulted from increased use of our services by our existing
customers,
32
<PAGE>
and the addition of new customers. Professional service revenues increased
174.5% from $329,000 for the fiscal year ended January 31, 1997 to $903,000 for
the fiscal year ended January 31, 1998. The increase resulted primarily from
growth in the number of new customers, including services provided to United
Air Lines in the second-half of the fiscal year ended January 31, 1998.
Revenues increased 114.8% from $3.0 million for the fiscal year ended January
31, 1998 to $6.4 million for the fiscal year ended January 31, 1999, due
primarily to an increase in the number of transactions from businesses, travel
suppliers, Internet-based content and electronic commerce providers and travel
agencies. Transaction revenues increased 135.1% from $2.1 million for the
fiscal year ended January 31, 1998 to $4.9 million for the fiscal year ended
January 31, 1999. This increase was primarily due to an increase in the number
of transactions processed which resulted from increased use of our services by
our existing customers, the addition of new customers, and the growth in
hosting revenues from new and existing customers. The number of transactions
grew 294.6% from 130,000 for the fiscal year ended January 31, 1998 to 513,000
for the fiscal year ended January 31, 1999. Professional service revenues
increased 67.8% from $903,000 for the fiscal year ended January 31, 1998 to
$1.5 million for the fiscal year ended January 31, 1999. This increase was
primarily due to an increase in the number of custom development projects for
new and existing customers and growth in the number of new customers.
Cost of Revenues. Cost of revenues increased from $134,000 or 23.0% of
revenues for the fiscal year ended January 31, 1997 to $1.7 million or 56.0% of
revenues for the fiscal year ended January 31, 1998. This increase in dollars
primarily resulted from hiring and training of additional personnel for
customer support, professional services and data center operations, and costs
associated with integrating our dedicated traveler support center during the
second half of the year ended January 31, 1998. Cost of revenues increased to
$4.3 million or 66.6% of revenues for the fiscal year ended January 31, 1999.
This increase in dollars primarily resulted from the hiring and training of
additional personnel for customer support, professional services and data
center operations.
Gross margins declined from 77.0% for the fiscal year ended January 31, 1997
to 44.0% for the fiscal year ended January 31, 1998. This decrease was
primarily due to an increase in spending associated with the addition of our
traveler support organization and investments in additional personnel and
infrastructure in anticipation of future growth. Gross margins declined further
to 33.4% for the fiscal year ended January 31, 1999 due to our investment in
additional personnel and infrastructure to add transaction processing capacity
in anticipation of future growth.
Research and Development. Research and development expenses increased from
$906,000 or 155.7% of revenues for the fiscal year ended January 31, 1997 to
$2.3 million or 75.5% of revenues for the fiscal year ended January 31, 1998
and to $4.1 million or 63.8% of revenues for the fiscal year ended January 31,
1999. These increases in dollars were primarily due to the addition of
personnel, equipment and consulting fees to support the continued development
of our services.
Sales and Marketing. Sales and marketing expenses increased from $1.0 million
or 177.0% of revenues for the fiscal year ended January 31, 1997 to $2.4
million or 79.8% of revenues for the fiscal year ended January 31, 1998 and to
$5.7 million or 88.9% of revenues for the fiscal year ended January 31, 1999.
These increases in dollars were primarily due to the addition of personnel,
increased promotional and advertising expenditures, and increased expenses
associated with the sale and distribution of our services.
General and Administrative. General and administrative expenses increased
from $2.0 million or 337.1% of revenues for the fiscal year ended January 31,
1997 to $2.9 million or 96.2% of revenues for the fiscal year ended January 31,
1998. This increase in dollars was primarily due to an increase in the number
of employees and related recruiting costs, depreciation and other general
corporate expenses, partially offset by a decrease in professional services.
General and administrative expenses increased to $6.1 million or 95.0% of
revenues for the fiscal year ended January 31, 1999. This increase in dollars
primarily resulted from an increase in personnel
33
<PAGE>
and related recruiting costs, depreciation, an increase in professional
services and other general corporate expenses.
Stock-based Compensation. We recorded aggregate stock-based compensation of
$20,000 in the fiscal year ended January 31, 1997, $103,000 in the fiscal year
ended January 31, 1998, and $2.0 million in the fiscal year ended January 31,
1999.
Interest Income (Expense), Net. Our interest income was $33,000 for the
fiscal year ended January 31, 1997, declining to interest expense of $30,000
for the fiscal year ended January 31, 1998 and then increasing to interest
income of $173,000 for the fiscal year ended January 31, 1999. The decrease for
the year ended January 31, 1998 was due to an increase in interest paid on
financing obligations and a decrease in interest income resulting from lower
invested cash balances. The increase to net interest income in the year ended
January 31, 1999 was due to an increase in interest income due to higher
invested cash balances resulting from our series C convertible preferred stock
financing.
34
<PAGE>
Selected Quarterly Results of Operations
The following tables set forth our unaudited statement of operations data for
each of the six most recent quarters, and the percentage of total revenues
represented by each item. This data has been derived from unaudited financial
statements which, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of this information when read in conjunction with our annual
audited financial statements and related notes. You should not draw any
conclusions about our future results from the results of operations for any
quarter.
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------------------------
April 30, July 31, Oct. 31, Jan. 31, April 30, July 31,
1998 1998 1998 1999 1999 1999
(In thousands, unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Transaction........... $ 1,057 $ 1,033 $ 1,372 $ 1,470 $ 1,930 $ 2,932
Professional service.. 253 366 451 445 380 356
------- ------- ------- ------- ------- --------
Total revenues...... 1,310 1,399 1,823 1,915 2,310 3,288
Cost of revenues........ 763 860 1,258 1,411 1,655 2,318
------- ------- ------- ------- ------- --------
Gross profit............ 547 539 565 504 655 970
Operating expenses:
Research and
development.......... 829 897 1,065 1,322 873 946
Sales and marketing... 1,270 1,252 1,520 1,690 1,580 2,032
General and
administrative....... 1,269 1,418 1,762 1,678 2,376 4,597
Stock-based
compensation......... 170 391 479 965 3,523 5,893
------- ------- ------- ------- ------- --------
Total operating
expenses........... 3,538 3,958 4,826 5,655 8,352 13,468
------- ------- ------- ------- ------- --------
Loss from operations.... (2,991) (3,419) (4,261) (5,151) (7,697) (12,498)
Interest income
(expense), net......... (111) 29 140 115 (12) (137)
------- ------- ------- ------- ------- --------
Net loss................ $(3,102) $(3,390) $(4,121) $(5,036) $(7,709) $(12,635)
======= ======= ======= ======= ======= ========
<CAPTION>
As a Percentage of Total Revenues
---------------------------------------------------------------
April 30, July 31, Oct. 31, Jan. 31, April 30, July 31,
1998 1998 1998 1999 1999 1999
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Transaction........... 80.7 % 73.8 % 75.3 % 76.8 % 83.5 % 89.2 %
Professional service.. 19.3 26.2 24.7 23.2 16.5 10.8
------- ------- ------- ------- ------- --------
Total revenues...... 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenues........ 58.2 61.5 69.0 73.7 71.6 70.5
------- ------- ------- ------- ------- --------
Gross margin............ 41.8 38.5 31.0 26.3 28.4 29.5
Operating expenses:
Research and
development.......... 63.3 64.1 58.4 69.0 37.8 28.8
Sales and marketing... 97.0 89.5 83.4 88.3 68.4 61.8
General and
administrative....... 96.8 101.3 96.7 87.6 102.9 139.8
Stock-based
compensation......... 13.0 28.0 26.3 50.4 152.5 179.2
------- ------- ------- ------- ------- --------
Total operating
expenses........... 270.1 282.9 264.8 295.3 361.6 409.6
------- ------- ------- ------- ------- --------
Loss from operations.... (228.3) (244.4) (233.8) (269.0) (333.2) (380.1)
Interest income
(expense), net......... (8.5) 2.1 7.7 6.0 (0.5) (4.2)
------- ------- ------- ------- ------- --------
Net loss................ (236.8)% (242.3)% (226.1)% (263.0)% (333.7)% (384.3)%
======= ======= ======= ======= ======= ========
</TABLE>
35
<PAGE>
The number of transactions that we process has increased in all of the
quarters presented due to the addition of new customers and increased adoption
by our existing customers. Transaction revenues grew in conjunction with growth
in the number of transactions processed by us except in the quarter ending July
31, 1998, which was negatively impacted by the reduction in the commission rate
paid by several airlines to all travel agencies. Professional service revenues
are driven by implementations for new customers, and customer specific projects
for new and existing customers. Because the growth in the number of our
customers has fluctuated, and because these projects vary, professional service
revenues have fluctuated on a quarter-to-quarter basis. The decline in gross
margin from the quarter ending April 30, 1998 through the quarter ending
January 31, 1999 was primarily attributable to a reduction in commission rates
paid by airlines, a reduction in implementation pricing and an increase in
infrastructure related expenditures. The increase in gross margin during the
quarters ended April 30, 1999 and July 31, 1999, was primarily attributable to
transaction volumes increasing faster than costs.
Research and development expenses increased in the quarters ended October 31,
1998 and January 31, 1999 primarily due to fees paid to consultants for
developing the capabilities of our data center. The decline in research and
development expenses as a percentage of revenues from the quarter ended January
31, 1999 through the quarter ended July 31, 1999, was primarily a result of the
completion of the data center review by outside consultants and slower than
expected hiring of technical staff. We expect research and development spending
to increase from current levels. The decline in sales and marketing expenses as
a percentage of revenues from the quarter ended January 31, 1999 through the
quarter ended July 31, 1999 was primarily the result of an increase in
transaction revenues and a decrease in personnel related costs. General and
administrative expenses decreased in the quarter ended January 31, 1999 due to
fewer salaries paid as a result of management departures. These salary expenses
increased in the following quarter due to increased hiring, particularly of
management personnel. The increase in general and administrative expenses as a
percentage of revenues from the quarter ended January 31, 1999 through the
quarter ended July 31, 1999 was attributable primarily to accelerated
depreciation of leasehold improvements associated with our current facility, an
increase in general and administrative employees and an increase in consulting
fees and depreciation expense.
We believe that quarter-to-quarter comparisons of our revenues and operating
results are not necessarily meaningful, and that such comparisons may not be
accurate indicators of future performance. The operating results of companies
in the travel and electronic commerce industries have in the past experienced
significant quarter-to-quarter fluctuations. We expect our revenues and
operating results to vary significantly from quarter to quarter due to a number
of factors, including:
. our ability to satisfy customer demand, retain existing customers and
attract new customers;
. varying adoption rates of our solutions;
. the timing and expense of expanding our operations;
. the mix of transaction revenues and professional service revenues;
. the mix of transaction revenues from our customers;
. our ability to obtain market acceptance of new solutions and upgrades;
. product introductions by us and our competitors;
. our ability to attract, integrate and retain key personnel;
. changes in the rate of Internet usage and electronic commerce;
. changes in our pricing policies or the pricing policies of our
competitors;
. changes in inventory availability from travel suppliers or commission
rates paid by travel suppliers;
. our ability to upgrade and develop our systems and infrastructure without
disrupting our operations;
. technical difficulties with our systems or system down time;
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. difficulties accessing computer reservation systems or travel suppliers'
systems;
. costs related to the acquisition of businesses or technologies; and
. unforeseen events affecting the travel or electronic commerce industries.
Furthermore, we currently expect that a majority of our revenues for the
foreseeable future will come from fees and commissions paid to us by our
customers using our ITN Global Manager, ITN FlightRez and other services. The
volume and timing of these fees and commissions are difficult to predict
because the online market for these products and services is in its infancy. As
with other companies in our industry, our operating expenses, which include
sales and marketing, research and development, general and administrative
expenses, and stock-based compensation are based on our expectations of future
revenues and are relatively fixed in the short term. As a result, a delay in
generating or recognizing revenues for any reason could cause significant
variations in our operating results from quarter to quarter and could result in
greater than expected operating losses. Consequently, in future quarters our
operating results may fall below the expectations of public market analysts and
investors and, as a result, the price of our common stock may fall.
Additionally, despite our sequential quarterly revenue growth during fiscal
1999, we expect future growth rates to decline. You should not draw any
conclusions about our future growth rates from our historical growth rates.
Liquidity and Capital Resources
We have financed our operations primarily through private sales of capital
stock, bank loans and equipment leases. From inception through July 31, 1999,
we have raised approximately $35.9 million through the sale of preferred stock.
As of July 31, 1999, we had $6.5 million in cash, cash equivalents and short-
term investments, and $(2.2) million in working capital. As a result of
financing agreements for the sale of our series C and series E convertible
preferred stock entered into in August and September 1999, we raised $72.6
million in net proceeds.
Net cash used in operating activities was $3.0 million for the fiscal year
ended January 31, 1997 and was attributable primarily to our net loss of $3.4
million. Net cash used in operating activities was $4.6 million for the fiscal
year ended January 31, 1998 and was attributable primarily to our net loss of
$6.4 million, an increase in accounts receivable of $627,000 partially offset
by an increase in deferred revenue of $591,000 resulting from increased
revenues, and an increase in accounts payable and accrued liabilities of $1.2
million resulting from increased expenses. Net cash used in operating
activities was $11.4 million for the fiscal year ended January 31, 1999 and was
attributable primarily to our net loss of $15.6 million, partially offset by
depreciation and amortization of $1.5 million, and amortization of unearned
compensation of $2.0 million. Net cash used in operating activities was
$5.1 million for the six months ended July 31, 1998 and was attributable
primarily to our net loss of $6.5 million, partially offset by depreciation and
amortization of $633,000, and amortization of unearned compensation of
$561,000. Net cash used in operating activities was $6.9 million for the six
months ended July 31, 1999 and was attributable primarily to our net loss of
$20.3 million, partially offset by depreciation and amortization of $1.8
million, amortization of unearned compensation of $9.4 million, and an increase
in accounts payable and accrued liabilities of $2.8 million resulting from
increased expenses.
Net cash used in investing activities was $737,000 for the fiscal year ended
January 31, 1997, was $2.0 million for the fiscal year ended January 31, 1998
and was $10.5 million for the fiscal year ended January 31, 1999 and was
primarily attributable to short-term investing of cash to generate interest
income and the acquisition of property and equipment, which consists primarily
of computer equipment, leasehold improvements, and furniture and fixtures.
Property and equipment purchases were $637,000 for the fiscal year ended
January 31, 1997, $2.0 million for the fiscal year ended January 31, 1998 and
$2.9 million for the fiscal year ended January 31, 1999. Additionally,
$7.5 million of cash was used for short-term investing to generate interest
income during the fiscal year ended January 31, 1999. Net cash used in
investing activities of $7.0 million for the six months ended July 31, 1998 was
primarily attributable to $1.9 million used for purchases of
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property and equipment and $5.1 million for short-term investing to generate
interest income. Net cash used in investing activities of $1.7 million for the
six months ended July 31, 1999 was primarily attributable to $5.2 million for
purchases of property and equipment, $800,000 for the acquisition of the assets
of our Florida call center and the conversion of $4.3 million of short-term
investments into cash.
Net cash provided by financing activities was $4.3 million for the fiscal
year ended January 31, 1997 and was primarily attributable to issuing $4.2
million of preferred stock and warrants. Net cash provided by financing
activities of $7.3 million for the fiscal year ended January 31, 1998 was
primarily attributable to issuing $6.5 million of preferred stock and warrants
and securing $838,000 of capital lease and bank net borrowings. Net cash
provided by financing activities for the fiscal year ended January 31, 1999 of
$28.8 million is primarily attributable to issuing $25.2 million of preferred
stock and warrants and securing $3.7 million of capital lease net borrowings.
Net cash provided by financing activities for the six months ended July 31,
1998 of $28.3 million was primarily attributable to issuing $25.2 million of
preferred stock and warrants and securing $3.1 million of capital lease net
borrowings. Net cash provided by financing activities for the six months ended
July 31, 1999 of $3.6 million was primarily attributable to $3.5 million of
capital lease net borrowings.
Computer equipment is our largest category of purchases of property and
equipment, and we expect to continue to invest significantly in computer
equipment to support the growth in the number of transactions we process and
the amount of data we store in our systems. In addition, we are currently in
the process of establishing additional data center operations in Virginia at
Exodus Communications to accommodate our needs for redundant systems and
additional processing capability to better serve our customers in the eastern
portion of the United States and Europe. We are also establishing an
engineering development center in Texas to further develop our services. The
Virginia data center operations and the planned Texas engineering development
center are expected to increase our expenditures for new property and
equipment. We also moved to a larger facility during October 1999, which will
increase our expenditures for new property and equipment.
We have a term loan for borrowings of up to $500,000 for purchases of
property and equipment. The outstanding principal balance is due in equal
monthly installments of $16,000 ending in October 2000 together with interest
at the bank's prime rate plus 1.75% (9.5% at January 31, 1999). At July 31,
1999, $234,000 was outstanding under this term loan. Borrowings are secured by
all our assets except leased assets. The term loan requires us to meet certain
financial covenants including quick ratio, tangible net worth and profitability
requirements. We also have two equipment lease lines. One lease line is for
$2.1 million and is fully drawn. Our other lease line is for $5.8 million, $5.2
million of which was used at July 31, 1999.
We expect to experience significant growth in our operating expenses,
particularly in sales and marketing, general and administrative and research
and development expenses in the foreseeable future. As a result, we expect
operating expenses and purchases of property and equipment will constitute the
majority of the future use of our cash resources. In addition, we may use our
cash resources to acquire or make investments in complementary products,
technologies or businesses. We believe our current cash resources, without the
proceeds from the sale of the common stock in this offering, will be sufficient
to meet our working capital and operating expenditures for the next 12 months.
After that point, we may need to obtain additional equity or debt financing to
meet our cash resource needs. In the event that additional financing is
required, it is uncertain whether or not we would be able to obtain financing
on acceptable terms.
Year 2000 Readiness
Many computers, software and other equipment include computer code in which
calendar year data is abbreviated to only two digits. As a result of this
design decision, some of these systems could fail to operate or fail to produce
correct results if "00" is interpreted to mean 1900, rather than 2000. These
problems are widely expected to increase in frequency and severity as the year
2000 approaches, and are commonly referred to as the "year 2000 problem."
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General Readiness Assessment. The year 2000 problem may affect the network
infrastructure, computers, software and other equipment that we use, operate or
maintain for our operations. As a result, we have formalized our year 2000
compliance plan, to be implemented by a team of employees, led by Dr. Eric
Sirkin, our vice president of engineering, responsible for the implementation
of our year 2000 projects and reporting their status to our board of directors.
Additionally, according to our year 2000 compliance plan, the project team has
compiled a listing of all mission-critical items, both internally developed and
externally purchased, which may be impacted by the year 2000 problem. We are in
the process of obtaining verification or validation from any independent third
parties whose products and services are deemed mission-critical to our
processes to assess and correct any of our year 2000 problems or the costs
associated with these products and services. We expect to have all third party
verifications, or replacement of the related item, completed by the end of
November 1999. We believe we have identified most of the major computers,
software applications and related equipment used in connection with our
internal operations that will need to be evaluated to determine if they must be
modified, upgraded or replaced to minimize the possibility of a material
disruption to our business. We expect to resolve any year 2000 problems before
the occurrence of any material disruption of our business.
Assessment of Infrastructure. Beginning in August 1998, we began assessing
the ability of our internally developed and other technologies to operate
properly in the year 2000. We have tested the ability of our internal and other
systems to handle travel-based reservations, bookings, credit card
authorization and other features of our solutions for year 2000 compliance. We
believe that our current internally developed technologies are year 2000
compliant. Additionally, as we design and develop new products, we test them
for year 2000 compliance and the ability to distinguish between various date
formats.
Systems Other than Information Technology Systems. In addition to computers
and related systems, the operation of office and facilities equipment, such as
fax machines, telephone switches, security systems and other common devices may
be affected by the year 2000 problem. We are currently contacting all related
third party suppliers or testing the related items. We expect to have this
process completed and necessary replacements implemented by the end of November
1999.
Costs of Remediation. We estimate the total cost of completing any required
modifications, upgrades or replacements of our internal systems will not exceed
$50,000, most of which we expect to incur during fiscal 2000. This estimate is
being monitored and we will revise it as additional information becomes
available.
Based on the activities described above, we do not believe that the year 2000
problem will significantly harm our business or operating results. In addition,
we have not deferred any material information technology projects or equipment
purchases, as a result of our year 2000 problem activities.
Suppliers and Service Providers. As part of our year 2000 plan, we have
requested that our third-party suppliers and service providers used in the
delivery of our services identify any potential year 2000 problems.
Approximately 90% of our requests have been answered in writing with the third
party suppliers and service providers indicating that they are year 2000
compliant. However, we have limited or no control over the actions of these
third-party suppliers. While we expect that we will be able to resolve any
significant year 2000 problems with these third parties, these suppliers might
not resolve any or all year 2000 problems before the occurrence of a material
disruption to the operation of our business. Any failure of these third parties
to resolve year 2000 problems with their systems in a timely manner could
significantly harm our business and operating results.
Most Likely Consequences of Year 2000 Problems. We expect to identify and
resolve all year 2000 problems that could significantly harm our business and
operating results. However, we believe that it is not possible to determine
with complete certainty that all year 2000 problems affecting us have been
identified or corrected. The number of devices and systems that could be
affected and the interactions among these devices and systems are too numerous
to address. In addition, no one can accurately predict which year 2000 problem-
related failures will occur or the severity, timing, duration, or financial
consequences of these potential failures. As a result, we believe that the
following consequences may be possible:
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. operational inconveniences and inefficiencies for us, our suppliers and
our customers could divert management's time and attention and financial
and human resources from ordinary business activities;
. business disputes and claims due to year 2000 problems experienced by our
customers and attributed to our services or performance; and
. allegations that we failed to comply with the terms of contracts or
industry standards of performance, some of which could result in
litigation or contract termination.
Contingency Plans. We are currently developing contingency plans to be
implemented if our efforts to identify and correct year 2000 problems affecting
our internal systems are not effective. We expect to complete our contingency
plans by the end of November 1999. Depending on the systems affected, these
plans could include:
. short to medium-term use of backup equipment and software or other
redundant systems;
. increased work hours for our personnel or the hiring of additional
information technology staff; and
. the use of contract personnel to correct, on an accelerated basis, any
year 2000 problems that arise or to provide interim alternate solutions
for information system deficiencies.
Our failure to implement of any of these contingency plans could
significantly harm our business and operating results.
Quantitative and Qualitative Disclosures about Market Risk
Most of our cash equivalents, short-term investments and capital lease
obligations are at fixed interest rates, and therefore the fair value of these
instruments is affected by changes in market interest rates. As of July 31,
1999, all of our cash equivalents mature within 90 days and all of our short-
term investments mature by April 2000. Because our investment portfolio is
primarily comprised of short-term instruments, an immediate 10% change in
interest rates would not have a material effect on the fair market value of our
portfolio, therefore, we would not expect our operating results or cash flows
to be affected to any significant degree by the effect of a sudden change in
market interest rates on our securities portfolio.
Recent Accounting Pronouncements
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1 ("SOP 98-1"), "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 is effective for
financial statements for years beginning after December 15, 1998 and provides
guidance on accounting for the costs incurred for computer software developed
or obtained for internal use including the requirement to capitalize specified
costs and the amortization of such costs. We have adopted the provisions of SOP
98-1 in the fiscal year beginning February 1, 1999. The adoption of SOP 98-1 is
not expected to have a material effect on our results of operations, financial
position or cash flows.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133 is effective for all fiscal quarters beginning with the quarter ending July
31, 1999. In July 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133" which deferred the effective date until the fiscal
quarter ending July 31, 2000. The adoption of SFAS No. 133 is not expected to
have a material effect on our results of operations, financial position or cash
flows.
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BUSINESS
Overview
GetThere.com is a provider of Internet-based travel procurement and supply
services primarily for businesses and travel suppliers. Through our Global
Manager service, which is sold to businesses, we provide a Web site that
enables employees to make travel reservations and purchase airline tickets over
the Internet. Through our ITN FlightRez service, which is sold to travel
suppliers such as airlines, we provide a Web site that enables travel suppliers
to sell travel products and services over the Internet. In addition, we provide
a service that enables Internet-based content and electronic commerce providers
and travel agencies to offer travel-related products and services over the
Internet. Our largest customers, as measured by fees paid to us, include
businesses with significant travel expenditures such as Texas Instruments,
Nabisco, Hewlett Packard, Nike and Credit Suisse First Boston, travel suppliers
such as United Air Lines, Lauda Airlines and National Airlines, and Internet-
based companies such as TRAVEL.com, Computravel, Travelzoo, TRIP.com and CNN
Interactive.
Industry Background
Growth of Electronic Commerce
The Internet is dramatically changing the way people worldwide communicate,
share information and conduct commerce. The success of the Internet for
consumer-related electronic commerce is encouraging businesses to utilize
Internet-based services to simplify their business-to-business and business-to-
consumer transactions. Forrester Research estimates that the business-to-
business electronic commerce market in the United States will grow from $43.0
billion in 1999 to $1.3 trillion in 2003. Internet-based services enable
companies to increase revenues, lower costs and improve profitability by
enabling one-to-one marketing, increasing customer acquisition opportunities,
and streamlining business processes, such as the internal procurement and
supply of indirect goods and services.
Procurement and Supply of Indirect Goods and Services
Indirect goods and services include travel, entertainment, information
technology, telecommunications equipment, professional services and office
supplies and equipment. Killen & Associates, a research firm, estimates that
indirect goods and services expenditures are the largest segment of corporate
expenditures, representing approximately 33% of a typical company's total
revenues.
We believe the process of procuring and supplying indirect goods and services
is plagued by numerous inefficiencies, including:
. multiple layers of intermediaries, such as agents and distributors, which
lead to higher costs and indirect communication between businesses and
suppliers;
. the inability to monitor compliance with corporate procurement policies,
including the inability to control "rogue purchasing," which occurs when
personnel do not follow internal purchasing guidelines;
. the inability to maximize economies of scale by enforcing purchasing
through preferred suppliers; and
. labor-intensive processes which result in higher costs and lower employee
productivity.
Travel Procurement and Supply Market
In 1998, there were approximately 1.4 billion total airline passengers
worldwide as reported by the International Airtransport Association. According
to the American Express 1998 Survey of Business Travel Management, U.S.
business expenditures for airline tickets, car rentals and lodging exceeded
$122 billion in 1998. According to the same survey, businesses in the U.S.
completed approximately 154 million air travel
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transactions in 1998, representing expenditures of approximately $73 billion.
Forrester Research estimates that travel will be the second largest spending
category for online business-to-business services in 1999, representing
approximately 23% of this market.
In general, businesses purchase travel-related goods and services through a
traditional procurement channel that involves numerous intermediaries including
travel agents, computer reservation systems and credit card issuers. We believe
the involvement of these intermediaries creates numerous inefficiencies and
makes it difficult for businesses to obtain complete and timely information
regarding their travel expenditures. Consequently, businesses often experience
difficulty:
. negotiating favorable contracts with preferred travel suppliers;
. monitoring employee compliance with corporate procurement policies,
including controlling rogue purchasing; and
. directing purchases to preferred travel suppliers to take advantage of
negotiated contracts and volume discounts.
In addition, these intermediaries increase transaction costs by charging fees
in connection with each purchase or reservation, with travel agency fees often
representing a majority of these costs. For example, we believe the purchase of
a single $500 airline ticket by a business generally includes a computer
reservation system fee of approximately $10 and a credit card processing fee of
approximately $10. In addition to the $500 ticket price, we believe that the
business also generally pays a travel agency fee of approximately $40.
Travel suppliers also incur significant costs and lost revenue opportunities
due to the control by intermediaries of valuable transaction and customer
information. In particular, the existence of multiple intermediaries often
limits the ability of travel suppliers to effectively:
. establish one-to-one personalized relationships with travelers;
. minimize excess capacity, such as unsold airline seats and empty hotel
rooms; and
. maximize the effectiveness of affinity programs.
Furthermore, the traditional travel procurement and supply process is labor
intensive, resulting in lower employee productivity and higher costs for both
businesses and travel suppliers. Deloitte & Touche estimates that the
procurement process for the purchase of a single airline ticket by a business
involves at least three people and takes an average of 46 minutes. Due to the
complexity and inefficiency inherent in this process, we believe that
businesses and travel suppliers will increasingly utilize Internet-based
solutions to reduce inefficiencies and costs.
Opportunity for an Internet-Based Travel Procurement and Supply Service
Forrester Research estimates that online business travel expenditures will
grow from $5 billion in 1999 to $38 billion in 2003. Accordingly, we believe
there is a significant market opportunity for a comprehensive Internet-based
service that reduces the inefficiencies in the travel procurement and supply
process for businesses and travel suppliers. This service should facilitate the
distribution of travel-related goods and services and provide businesses and
travel suppliers with tools for the complete and timely analysis and reporting
of travel-related information. Furthermore, the service should be easy to
implement and compatible with businesses' and travel suppliers' existing
technology.
The GetThere.com Solution
GetThere.com is a provider of Internet-based travel procurement and supply
services primarily for businesses and travel suppliers. We provide fully-
managed travel reservation and booking services that enable businesses and
travel suppliers to reduce current inefficiencies in the travel procurement and
supply process.
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Our services can operate independently of third-party travel agencies and are
not dependent on any single computer reservation system.
Our services use our proprietary technology, the GT Exchange, to provide
businesses, suppliers and travelers with the ability to:
. create profiles reflecting travel preferences;
. access airline, car rental and hotel information and availability;
. access their privately negotiated or publicly available pricing;
. create and ticket travel reservations;
. access travel-related information such as news, weather and maps; and
. collect and analyze travel data.
Our ITN Global Manager service is designed to enable businesses with
significant travel expenditures to reduce travel costs, increase employee
productivity and analyze and report travel data. Our ITN FlightRez service is
designed to enable travel suppliers, such as airlines, to increase revenue
opportunities, reduce costs and enhance customer service. In addition, we
provide a service that is designed to enable Internet-based content and
electronic commerce providers and travel agencies to offer travel-related goods
and services over the Internet.
Benefits to Businesses
Reduce costs. ITN Global Manager utilizes the Internet to further automate
the travel procurement process and decrease the role of intermediaries. Our
service is designed to enable businesses to significantly reduce travel-related
costs, such as travel agency fees, by reducing the number of people and the
time involved in processing travel-related transactions. In addition, our
service is designed to lower travel costs by enforcing the use of preferred
travel suppliers and negotiated rates. ITN Global Manager also provides data
analysis and reporting features that enable businesses to enforce corporate
travel policies and facilitate the negotiation of favorable contracts with
preferred travel suppliers. The ability to monitor travel-related purchases
also helps businesses control against rogue purchasing, which generally
accounts for a significant portion of travel expenditures.
Increase productivity. ITN Global Manager is designed to enable businesses to
increase productivity by streamlining their internal travel procurement
processes. We believe that by automating the travel procurement process, our
service enables businesses to reduce the amount of time it takes to execute
travel transactions and reduce the number of individuals involved. Also,
business travelers can use our services to procure travel-related goods and
services, 24 hours a day, seven days a week.
Provide real-time data analysis and reporting. ITN Global Manager is designed
to enable businesses to collect, analyze and report on their current and
historical travel data for both online and agency-generated reservations.
Businesses can utilize this information for planning and strategic purposes,
including negotiating volume discounts with travel suppliers. ITN Global
Manager also allows businesses to analyze useful real-time metrics, such as
cost per mile, compliance with travel policies and adoption rates of online
travel technologies. ITN Global Manager provides online access to this
information in a variety of customer-specific, user-friendly formats.
Benefits to Travel Suppliers
Increase revenue opportunities. ITN FlightRez is designed to provide travel
suppliers with an Internet-based sales channel enabling them to directly
interact with travelers using the Internet, 24 hours a day, seven days a week.
This service provides travel suppliers with the information needed to build
traveler profiles, to analyze traveler usage patterns and preferences and to
develop one-to-one personalized relationships. These relationships enable
travel suppliers to market directly to their customers by publishing,
distributing and selling special online-only promotional fares directly to
them. In addition, the traveler information we provide is designed to enhance
travel suppliers' ability to sell unused capacity to targeted travelers,
resulting in increased revenues and improved inventory management.
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Reduce sales and distribution costs. ITN FlightRez is designed to enable
travel suppliers to reduce sales and distribution costs by allowing them to
sell directly to travelers over the Internet, thereby reducing or eliminating
travel agency fees. By further automating their reservation processes, travel
suppliers can reduce the high labor costs inherent in traditional processes. In
addition, travel-related information can be distributed online, thereby
reducing the costs of printing and distribution.
Enhance customer service and increase customer loyalty. ITN FlightRez is
designed to enable travel suppliers to provide their customers with real-time
access to travel information, including current flight information, historical
reservation bookings, flight status updates and seat maps. Additionally, ITN
FlightRez can be adjusted to provide other useful travel-related information,
such as news, weather, maps, driving directions, hotel locations and other
destination information. In addition, our solution can be customized to allow
travelers to join a travel supplier's customer loyalty program, obtain account
balances and redeem award travel online. We believe these features enhance
customer service and increase customer loyalty. Furthermore, our solutions can
be customized to enable travel suppliers to provide their customers with the
ability to make other airline, car rental and hotel reservations so that
travelers can book an entire travel itinerary from the travel supplier's Web
site.
Benefits to Internet-based Content and Electronic Commerce Providers and
Travel Agencies
We also provide our services to Internet-based content and electronic
commerce providers and travel agencies that want to offer travel-related goods
and services online. Our services allow these companies to offer travel
reservation capabilities to attract more visitors and generate new travel-
related revenues. In addition, our service allows travel agencies to extend
their existing sales channel. Our service offers a variety of completely
outsourced and hosted capabilities, including online booking, transaction
processing, traveler support, and ticket fulfillment and delivery. Our service
is designed to enable our customers to quickly and easily add online travel
capabilities to their Web sites.
Our Strategy
Our objective is to be the leading provider of Internet-based procurement and
supply solutions for travel and other indirect goods and services. Key elements
of our strategy include:
Expand our customer base. Our current marketing activities focus on
advertising in trade publications and participating in trade shows. We intend
to continue to build our sales and marketing capabilities by adding personnel
and conducting marketing campaigns that strengthen our brand and increase our
penetration of businesses with significant travel expenditures, travel
suppliers and potential Internet-based companies. We target customers that
purchase or supply large volumes of travel-related goods and services and that
are increasingly using the Internet as a business tool. We intend to provide
these customers with high-quality transaction processing capabilities, data
analysis and reporting tools and customer support. In addition, we intend to
leverage our contacts in the travel industry in order to generate new
customers.
Increase adoption rates of our solutions by our business customers. We
provide professional services that are designed to help our business customers
develop internal programs to increase adoption rates of our ITN Global Manager
service. We intend to work with our business customers to implement customer
loyalty programs designed to encourage travelers to use our service. In
addition, we intend to enhance the content and information available through
our service such as providing improved directions and maps, and more up to date
information to further improve the user experience and increase customer
retention.
Aggressively pursue other travel markets. We currently have a sales office in
the United Kingdom that has conducted limited market development activities in
Europe and is focused on supporting existing customers. We intend to grow our
sales and marketing capabilities to target the substantial opportunities
represented by small-to-medium sized businesses and seek new customers in
international markets. In addition, we will continue to pursue strategic
relationships to accelerate our penetration of these markets. For example,
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we recently signed an agreement with American Express that makes us the
preferred provider of Internet-based travel procurement solutions for their
small, middle and international markets.
Further develop our technology. Our architecture is designed to be reliable,
scalable and is flexible to meet the specific needs of a customer in order to
meet the evolving demands of the travel procurement and supply market. We
intend to continue to develop additional features and functionality.
Leverage technology and relationships into markets for other indirect goods
and services. We believe that the architecture of our travel procurement and
supply services is extendable to markets for other indirect goods and services,
such as information technology and telecommunications equipment, professional
services and office supplies. Furthermore, we believe that the relationships we
have developed with our business customers will enable us to extend our
solutions into markets for other indirect goods and services and provide us
with significant cross-selling opportunities.
Services
We provide Internet-based travel procurement and supply services for
businesses, travel suppliers and other customers. Our services are fully
managed by us, can be readily deployed from a limited number of users to a
large number of users, can be easily adjusted to meet the specific needs of a
customer and allow our customers the freedom to select their preferred computer
reservation system and travel agency.
ITN Global Manager. ITN Global Manager is a full service Internet-based
travel reservation and airline ticket purchasing service for businesses. This
service combines sophisticated cost, supplier, and travel policy management
features with an easy to follow, user-friendly interface. Our service is
adjustable to add our customers' corporate travel policies, which typically
include travel class options, travel supplier preferences, hotel room rates and
car rental prices.
ITN Global Manager provides corporate travel managers with the capability to
easily:
. change computer reservation systems;
. change, update and enforce multi-level corporate travel policies;
. view current status of volume-based negotiated contracts;
. specify preferred and non-preferred vendors;
. enforce use of preferred vendors and negotiated rates;
. generate travel reports in a variety of formats;
. analyze current and historical travel activity for online and travel
agency-generated reservations;
. monitor traveler use and purchasing behavior; and
. determine ticketing methods based on time and cost saving criteria.
ITN Global Manager provides travelers with the capability to easily:
. book a complete travel itinerary, including airlines, hotels and car
rentals;
. save profiles and preferences;
. adjust itineraries as travel plans change;
. view real-time airline seat maps and reserve a specific seat;
. receive customized maps and driving directions based on their travel
itineraries;
. review previous travel itineraries;
. compare and choose ticket prices;
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. make reservations for multiple travelers; and
. comply with corporate travel policies.
ITN FlightRez. ITN FlightRez is an Internet-based airline ticket purchasing
and travel reservation service designed for travel suppliers. This service
allows travel suppliers to serve travelers directly from the travel suppliers'
Web sites. ITN FlightRez allows a travel supplier to selectively present fares,
integrate programs designed to promote customer loyalty, and provide traveler
support, 24 hours a day, seven days a week. In addition, ITN FlightRez allows
the flexibility to design a Web site in accordance with the design
specifications of the travel supplier.
ITN FlightRez enables the travel supplier to offer:
. a customer-specific user interface;
. reservation capabilities for multiple airlines, hotels and car rental
agencies;
. a low-fare search engine which allows travelers to compare prices;
. discounted fares and sales promotions;
. targeted direct marketing campaigns through e-mail;
. electronic-ticketing capabilities;
. real-time seat maps for selection and reservation of specific seats;
. maps and driving directions based on travelers' itineraries; and
. access to previous travel itineraries.
Services for Other Customers. We provide an Internet-based airline ticket
purchasing and travel reservation service that offers the same capabilities as
our ITN FlightRez service to Internet-based content and electronic commerce
providers and travel agencies.
Professional Services. Our professional services organization provides the
following services which are an integral part of our comprehensive solution:
. design, customization, implementation and maintenance of our travel
procurement and supply solutions;
. training and education programs designed to promote enterprise-wide
adoption of our solutions; and
. technical support, implementation of product upgrades, and integration of
added functionality to meet our customers' evolving needs.
Traveler Support. We provide ticket printing and delivery and telephone
support to travelers. Our objective is to assist travelers in resolving any
technical, functional or travel-related questions. This support is provided
from a traveler support center located in Palo Alto, California. We have also
recently purchased a call center located in Fort Lauderdale, Florida, which
will enable us to expand our customer support services across a wider range of
time zones. We expect that this support center will be operational in late
1999.
Customers
We primarily target businesses with significant travel expenditures, travel
suppliers and Internet-based content and electronic commerce providers and
travel agencies.
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Businesses. As of October 15, 1999, we had 61 business customers. The table
below represents our largest business customers as measured by fees paid to us
over the twelve months preceding October 1999:
<TABLE>
<S> <C>
Boeing Nike
Chevron PeopleSoft
Chiron PricewaterhouseCoopers
Credit Suisse First Boston State Farm Insurance
Hewlett-Packard Tektronix
Institute of Electrical and Electronics Engineers Texas Instruments
Kirkland Toyota
Kodak VeriFone
Lawrence Berkeley National Laboratory Xerox
Nabisco
NationsBank
</TABLE>
Travel suppliers and Internet-based customers. Our top five travel supplier
customers, as measured by fees paid to us over the twelve months preceding
October 1999, are All Nippon Airways, Lauda Airlines, National Airlines, United
Air Lines and Virgin Atlantic Airways. We are developing a Web site for
Northwest Airlines through which Northwest Airlines intends to offer low fare
tickets. In addition, we are seeking to extend our relationship with Northwest
Airlines by implementing our services for Northwest Airlines' primary Web site,
www.nwa.com. We are also developing America West Airlines' Web site with our
services. Our top five Internet-based content and electronic commerce providers
and travel agencies, as measured by fees paid to us over the twelve months
preceding October 1999, are TRAVEL.com, Computravel, Travelzoo, TRIP.com and
CNN Interactive.
We might not enter into a definitive agreement with Northwest Airlines
regarding its primary Web site, and America West Airlines might not adopt our
services for its Web site. See "Risk Factors--We rely on suppliers of travel
services and products."
Agreement with American Express
On September 14, 1999, we entered into an agreement with American Express
under which American Express has agreed to promote and market our Internet-
based travel procurement services to their customers and potential customers.
These promotional and marketing efforts will include the placement of our name
on American Express' travel-related Web sites and in American Express'
promotional and marketing materials. Once we have completed development
according to American Express' specifications, American Express will market
these services to large, middle market and small business customers as well as
consumers as described below:
. Large businesses with the highest volumes of corporate air travel
expenditures: American Express will promote and vigorously market, except
in the United Kingdom and Germany, our services to at least 30% of a
specified list of the world's largest companies during the first year,
increasing to 37.5% of these companies in the second year and 45% of
these companies in the third year.
. Middle market businesses: American Express will promote and vigorously
market our services for a period of three years.
. Small businesses: American Express will exclusively use our services on
its Web sites targeting small businesses for a period of three years.
. Consumers: Starting January 27, 2000, American Express will exclusively
use our services on its Web sites targeting consumers for a two-year
period. In addition, commencing January 27, 2000, we will
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transfer the rights to the domain names, www.itn.net and www.itn.com, our
consumer-oriented Web site, and the associated customer information, to
American Express.
Under the agreement, we will be entitled to receive fixed quarterly payments.
A portion of the fixed payments will be subject to reimbursement if a specified
number of visitors to www.itn.net and www.itn.com do not register on American
Express' site. In addition, we will be entitled to receive transaction fees
with guaranteed annual minimums. Our annual minimums are subject to reduction
based upon failure to meet certain development timetables. However, we might
not realize any benefit from our recent agreement with American Express, and
our relationship with American Express may not be successful.
Sales and Marketing
We market and sell our solutions to our customers primarily through a direct
sales force with offices in the United States and the United Kingdom. Our
target customers include businesses with significant travel expenditures,
travel suppliers and other customers. For potential business customers, our
sales efforts generally target the chief financial officer, the chief
information officer and the corporate travel manager. Within travel suppliers,
we generally target the officer responsible for distribution and the chief
information officer. The centralization of travel procurement decisions allows
us to penetrate most businesses on an enterprise-wide basis, which enables us
to grow our revenues with a smaller sales force than would otherwise be
possible. In addition, we believe that the relationships that we develop with
senior executives through the sales process will facilitate our ability to
extend our services into markets for other indirect goods and services.
Our sales and marketing activities are aimed at educating customers and
potential customers about the advantages of our services. Our marketing program
includes our Web site, seminars, direct mailings, trade shows, advertising and
public relations events. Our marketing organization assesses industry trends
and analyzes customer and industry feedback in order to help provide product
direction to our development organizations. We collect data directly from
customer visits and our sales force, as well as through customer advisory
meetings, forums and participation in industry trade organizations. In
addition, we work with some of our customers to promote our services to others.
For example, United Air Lines has promoted ITN FlightRez to its Star Alliance
partners and American Express has agreed to sell and promote versions of our
services.
Technology
Our travel procurement and supply services incorporate proprietary technology
and technology licensed from third parties. Our services are designed to be
highly adjustable and scaleable--in other words, readily deployable to a
limited number of users or to a high volume of users. All of our services use
our proprietary GT Exchange technology. GT Exchange combines a proprietary
database of information relating to travel services, individual traveler
preferences, and company-specific travel information, with connectivity to
computer reservation services, travel suppliers and the Web sites that
customers use to access our services. GT Exchange provides business customers
using our ITN Global Manager service with the ability to make reservations,
purchase airline tickets, and access and analyze their travel related
information. GT Exchange also provides our travel supplier customers using our
ITN FlightRez service with the ability to offer Internet-based travel
reservations and ticket purchasing and the ability to access and analyze
consumer travel information.
Highly adjustable architecture. As of July 31, 1999, we hosted more than 200
travel booking Web sites running similar executable application codes
configured for a customer's set of business rules and the appearance and
navigation of the customer's Web site. This system can be rapidly deployed and
adjusted for each customer. The architecture relies on a three-layer system
design, which enables the customization of each Web site. The presentation
layer is served by Netscape Enterprise Server software with the dynamic
rendering of Web pages done by a combination of a proprietary command
language/interpreter, HTML and Javascript. Most of the business logic rules in
the application layer can be readily adjusted by either our personnel or by
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our customers. All adjustment is done with special security access through a
Web browser. The data layer is managed in either a commercial relational or a
proprietary database, depending on the nature of the database records.
Scalable platforms. In order to design a highly scalable and reliable
environment, we use only commercially-supported versions of the Unix operating
system. All application and Web servers run on Sun Microsystem's Solaris and
Hewlett Packard's HP-UX operating systems. We continually evaluate our capacity
needs to better meet customer demand for scalability.
Data center operations. In addition to our data center in Palo Alto,
California, we have data centers at Exodus Communications' facilities in Santa
Clara, California and Sterling, Virginia. Communication between the two Exodus
centers takes place across a portion of a fiber optic line. This network design
enables automatic switching of data paths in the event of an outage on one of
the network switches. Routers enable our customers to access these data centers
through either the Internet, a dedicated T1 line or other leased-line circuits.
We balance traffic across the various Web servers and across these data
centers.
Development methodology. Our services are developed using commercially
available compilers, debuggers and profiling tools. All of our releases are
preceded by a rigorous testing process. In addition, we schedule and release
upgrades to our services on a regular basis.
We currently license third-party technology and will continue to evaluate
third-party technology for integration into our services. For example, we
license data analysis and reporting software from Cognos, Inc. for our
services.
Competition
The market for Internet-based travel procurement and supply services is new,
intensely competitive and rapidly evolving and we expect competition to
intensify in the future. Increased competition is likely to result in price
reductions, reduced gross profits and loss of market share, any of which could
harm our revenues and results of operations. We currently, or potentially may,
compete with a variety of companies. Our primary competition currently comes
from or is anticipated to come from companies in the following categories:
. providers of online travel products and services to businesses, such as
Sabre BTS, Oracle Corporation's eTravel, XTRA On Line, American Express
AXI and Microsoft;
. other online providers of indirect goods and services such as Ariba and
Commerce One; and
. traditional travel service providers, including travel agencies.
In addition, we compete with consumer Web sites, such as Microsoft's Expedia,
Sabre's Travelocity, which recently announced the acquisition of Preview
Travel.
We believe the principal factors on which we compete include:
. cost effectiveness of our services;
. flexibility to operate with multiple travel agencies and computer
reservation systems;
. ease of implementation and customization;
. data analysis and reporting capabilities;
. traveler and technical support;
. convenience and ease of use;
. selection of services;
. reliability and speed of fulfillment; and
. price.
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Some of our competitors and potential competitors have longer operating
histories and significantly greater financial resources and name recognition
than we do and may enter into strategic or commercial relationships with
larger, more established and well-financed companies. In addition, many of
these companies may have more technical and marketing personnel, and more
established customer support and professional services organizations than we
do. Furthermore, as new participants enter the online travel procurement and
supply market, we will face increased competition. Potential competitors, such
as online providers of indirect goods and services, may incorporate online
travel-related services into their existing product offerings. It is also
possible that new competitors or alliances among our competitors may emerge and
rapidly acquire significant market share. Our competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements than we can, which could cause our services to become obsolete.
Intellectual Property and Other Proprietary Rights
We depend on our ability to develop and maintain the proprietary aspects of
our technology. To protect our proprietary technology, we rely primarily on a
combination of contractual provisions, confidentiality procedures, trade
secrets and patent, copyright and trademark laws.
We seek to protect our trade secrets through a number of means, including but
not limited to, requiring those persons with access to our proprietary
information, including all of our employees and consultants, to execute
confidentiality agreements with us and restricting access to our source code,
trade secrets and other intellectual property. We seek to protect our services,
documentation and other written materials under trade secret and copyright
laws, which afford only limited protection. We cannot assure you that any of
our proprietary rights will be viable or of value in the future since the
validity, enforceability and type of protection of proprietary rights in
Internet-related industries are uncertain and constantly evolving.
We presently have one U.S. patent application pending. It is possible that
any pending or future patents, if issued, may be successfully challenged, or
that no patents will be issued from our pending patent application. It is also
possible that we may not develop proprietary services or technologies that are
patentable, that any patent issued to us may not provide us with any
competitive advantages, or that the patents of others will seriously harm our
ability to do business.
ITN is registered as a trademark in the United States. We have filed
trademark applications in the United States for GetThere.com, ITN FlightRez and
ITN Global Manager. We have filed trademark applications in the European Union
for GetThere, ITN FlightRez and ITN Global Manager. In addition, we have filed
a trademark application in Tunisia for GetThere. The above mentioned trademark
applications are subject to review by the applicable governmental authority,
may be opposed by private parties and may not be issued. In addition, any
claims or customer confusion related to our trademark, or our failure to obtain
trademark registration, would harm our business and operating results. We are
aware of a pending trademark application in the European Union filed by a
company for the mark GETTHERE!. We have discussed the rights related to this
mark with this company and have not resolved this matter. If it is determined
that the mark is validly held by this company, we may be unable to use the mark
in the European Union, which could significantly harm our ability to expand our
brand awareness in the European Union.
We rely on technology that we license from third parties, including software
that is integrated with internally developed software and systems. If we are
unable to continue to license any of this software on commercially reasonable
terms, we will face delays in releases of our software until equivalent
technology can be identified, licensed or developed, and integrated into our
current services. These delays, if they occur, could seriously harm our
business.
Despite our efforts to protect our proprietary rights, unauthorized parties
may copy aspects of our services or obtain and use information that we regard
as proprietary. In addition, the laws of some foreign countries do not protect
our proprietary rights to as great an extent as do the laws of the United
States. Our means of
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protecting our proprietary rights may not be adequate and our competitors may
independently develop similar technology, duplicate our solutions or design
around patents issued to us or our other intellectual property.
There has been a substantial amount of litigation in the Internet industry
regarding intellectual property rights. It is possible that in the future third
parties may claim that we or our current or potential future services infringe
their intellectual property. We expect that providers of electronic commerce
solutions will increasingly be subject to infringement claims as the number of
products and competitors in our industry segment grows and the functionality of
products in different industry segments overlaps. Any claims, with or without
merit, could be time-consuming, result in costly litigation, cause delays in
releases of our services or require us to enter into royalty or licensing
agreements. Royalty or licensing agreements, if required, may not be available
on terms acceptable to us or at all, which could seriously harm our business.
Government Regulation
Certain segments of the travel industry are heavily regulated by the United
States and international governments, and accordingly our solutions are
affected by such regulations. For example, we are subject to United States
Department of Transportation regulations prohibiting unfair and deceptive
practices. In addition, Department of Transportation regulations concerning the
display and presentation of information that are currently applicable to the
computer reservation systems could be extended to us in the future, as well as
other laws and regulations aimed at protecting consumers accessing online
travel services. In California, under the Seller of Travel Act, we are required
to register as a seller of travel, comply with certain disclosure requirements
and participate in California's restitution fund.
We are also subject to regulations applicable to businesses generally and
laws or regulations directly applicable to online commerce. 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 covering issues such as user privacy, pricing,
content, copyrights, distribution, antitrust and characteristics and quality of
products and services. For example, some consumer organizations have raised
concerns claiming that favorable pricing terms provided by travel suppliers
solely to online users is unfair and discriminatory against those without
Internet access. Furthermore, the growth and development of the market for
electronic commerce may lead to more stringent consumer protection laws that
may impose additional burdens on 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 decrease the demand for our
solutions and services and increase our cost of doing business.
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
electronic commerce, and new state tax regulations may subject us 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
currently apply to our business or the application of existing laws and
regulations to the Internet and commercial online services could significantly
harm our business and operating results.
Employees
At October 15, 1999, we had a total of 271 employees. None of our employees
is subject to a collective bargaining agreement and we believe that our
relations with our employees are good.
Our future operating results depend in significant part on the continued
service of our key technical, sales and senior management personnel, none of
whom are bound to serve us for any specified term. Our future success also
depends on our ability to attract and retain highly qualified technical, sales
and senior management
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personnel. Competition for these personnel is intense, and we may not be able
to retain our key technical, sales and senior management personnel or attract
these personnel in the future. We have experienced difficulty in recruiting
qualified technical, sales and senior management personnel, and we expect to
experience these difficulties in the future. If we are unable to hire and
retain qualified personnel in the future, our business and operating results
could be significantly harmed.
Facilities
Our principal executive offices are located in Menlo Park, California, where
we lease approximately 66,000 square feet under a lease that expires in May
2004. We also lease approximately 6,000 square feet of office space in Palo
Alto, California, under leases with varying expiration dates through March
2001. We have recently acquired a call center located in Fort Lauderdale,
Florida, where we lease approximately 10,000 square feet under leases with
varying expiration dates through May 2001. We also have a sales office in the
United Kingdom, where we lease approximately 300 square feet under a lease that
expires in September 1999. We have entered into a lease for approximately 5,000
square feet for an engineering development center in Dallas, Texas.
Legal Proceedings
We are not aware of any pending legal proceedings against us that,
individually or in the aggregate, would significantly harm our business and
operating results. In the future, we may be party to litigation arising in the
course of our business, including claims that we allegedly infringe third-party
intellectual property rights. These claims, even if not meritorious, could be
time consuming, result in costly litigation or arbitration and divert the
attention of management.
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MANAGEMENT
Executive Officers and Directors
Our executive officers and directors and their ages as of October 15, 1999
are as follows:
<TABLE>
<CAPTION>
Name Age Position
<C> <C> <S>
Gadi Maier.......................... 42 President, Chief Executive Officer
and Director
Kenneth R. Pelowski................. 40 Chief Operating Officer, Chief
Financial Officer and Director
Eric Sirkin......................... 47 Vice President of Engineering
Daniel Whaley....................... 30 Chief Technical Officer and
Director
Richard D.C. Whilden................ 66 Chairman of the Board and Director
Jeffrey D. Brody.................... 39 Director
William R. Hambrecht................ 64 Director
John Ueberroth...................... 56 Director
Dale J. Vogel....................... 55 Director
</TABLE>
Gadi Maier has served as president, chief executive officer and as a director
since January 1999. From August 1997 to December 1998, he served as chief
executive officer of Memco Software, which provides security technology as well
as UNIX and NT security software. Prior to Memco, Mr. Maier served as vice-
president and general manager for Cisco Systems' Internet Business Unit from
June 1996 to August 1997. From September 1988 to June 1996, Mr. Maier worked at
Oracle Corporation, where he held various senior management positions,
including founder of Oracle/Japan, general manager for new technologies, and
head of worldwide sales and operations for the Network Computer Division. Mr.
Maier received his B.S. in natural resource economics as well as his M.B.A. in
marketing and finance from the University of California, Berkeley.
Kenneth R. Pelowski has served as chief operating officer and chief financial
officer since April 1999 and as a director since October 1999. From September
1997 to March 1999, he served as executive vice president and chief financial
officer of Preview Travel, a company that provides online travel services for
small business and leisure travelers. From July 1996 to August 1997, Mr.
Pelowski served as vice president of corporate development for General
Instruments. From March 1995 to July 1996, he worked at Quantum Corporation,
where he served as vice president for corporate planning and development. Prior
to this, Mr. Pelowski spent seven years at Sun Microsystems, where he served as
senior director for corporate development. Mr. Pelowski holds a B.S.E. in
electrical engineering from the University of Michigan, an M.S.E. in computer
engineering from Wayne State University, and an M.B.A. from the University of
Michigan.
Eric Sirkin has served as vice president of engineering since December 1998.
From August 1998 to December 1998, he acted as vice-president of engineering at
Filanet Corporation, which creates networking products for computer systems.
From December 1997 to April 1998, Dr. Sirkin served as vice president of
product development at Signafy Corporation, a software application company.
From January 1991 to March 1997, Dr. Sirkin served as director of interactive
media systems at Apple Computer, Inc. Earlier in his eighteen-year career in
the computer industry, Dr. Sirkin held various positions at Xerox Palo Alto
Research Corporation and Zoran Corporation. Dr. Sirkin received his B.S.C. in
chemistry from the University of Wisconsin at Madison and his Ph.D in chemistry
from the University of California, Berkeley.
Daniel Whaley is one of the founders of GetThere.com and has served as a
director since August 1995. He is currently serving as our chief technical
officer. Previously, he has held the positions of president and vice president
of engineering. Prior to founding GetThere.com, Mr. Whaley served as vice
president of Sunnyside Computing from March 1994 to April 1995. He holds a B.A.
in English from the University of Illinois.
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Richard D.C. Whilden has served as chairman of the board of directors and as
a director of GetThere.com since May 1996. He served as our chief executive
officer from March 1998 until January 1999. Mr. Whilden currently serves as a
principal of the Contrarian Group, an investment management company. He is a
director of Ambassadors International, Inc., an educational travel, travel
services and performance improvement company, and also served as the managing
director for the recently completed Council on California Competitiveness. Mr.
Whilden was formerly chairman and chief executive officer of Independent
Bancorp of Arizona, which was sold to Norwest Bank in 1995. Prior to that he
was an executive vice president for TRW where he was responsible for all of
TRW's consumer credit reporting and related information services businesses.
Earlier at TRW he had extensive management responsibilities in their aerospace
division. Mr. Whilden successfully developed a major spacecraft program at
NASA, for which he was awarded the Public Service Medal. Mr. Whilden received
his B.S. in business from the University of the Redlands.
Jeffrey D. Brody has served as a director since April 1996. Mr. Brody has
been employed at Brentwood Venture Capital since April 1994, and has been a
general partner since October 1995. From December 1988 to April 1994, Mr. Brody
was senior vice president of Comdisco Ventures, a venture leasing company. Mr.
Brody is a member of the board of directors of Concur Technologies and
NextCard, Inc., and serves on the compensation committee for both companies.
Mr. Brody also serves on the board of directors of several private companies.
He received his B.S. in engineering from the University of California,
Berkeley, and his M.B.A. from the Stanford University Graduate School of
Business.
William R. Hambrecht has served as a director since May 1998. He is currently
the chairman and chief executive officer of WR Hambrecht + Co, a full service
Internet investment bank, which he founded in 1998. Prior to this, Mr.
Hambrecht was with Hambrecht & Quist, an investment banking firm specializing
in high growth technology companies, which he co-founded in 1968. He sits on
the board of KQED, Inc., San Francisco's public radio and television station,
and Beacon Education Management, which manages charter schools. Mr. Hambrecht
holds a B.A. from Princeton University.
John Ueberroth has served as a director since April 1996. Mr. Ueberroth has
served as president, chief executive officer, and a director of Ambassadors
International, Inc., an educational travel, travel services and performance
improvement company, since 1995, and as president of Ambassadors Performance
Group, Inc. since April 1999. Since 1989, Mr. Ueberroth has been a principal of
The Contrarian Group, an investment management company. From 1990 to 1993, he
served as chairman and chief executive officer of Hawaiian Airlines. From 1980
to 1989, Mr. Ueberroth served as president of Carlson Travel Group. He
currently serves as co-chairman and is a director of SatoTravel. Mr. Ueberroth
received his B.S. in business administration from the University of California,
Berkeley, and his M.B.A. from the University of Southern California. Mr.
Ueberroth also served as a Lieutenant in the United States Navy.
Dale J. Vogel has served as a director since April 1997. Mr. Vogel is
currently a partner with U.S. Venture Partners, and has been with the firm
since April 1990. From July 1984 until April 1990, Mr. Vogel was a partner with
Norwest Venture Capital. He served as president of K2 Corporation from 1980
until 1984. Mr. Vogel serves on the boards of Concur Technologies and Gymboree
Corporation, and currently serves on several private company boards. Mr. Vogel
received his B.S. in industrial engineering from San Jose State University, and
his M.B.A. from Harvard Business School.
Classified Board of Directors
Our certificate of incorporation provides for a classified board of directors
consisting of three classes of directors, each serving staggered three-year
terms. As a result, only a portion of our directors will be elected each year.
To implement the classified structure, prior to the completion of this
offering, four of the directors will be elected to one-year terms, four of the
directors will be elected to two-year terms and four of the directors will be
elected to three-year terms. Upon the completion of these terms, directors will
be elected for three-year terms. See "Description of Capital Stock--
Antitakeover Effects of Provisions of the Certificate of Incorporation, Bylaws,
Delaware Law and Standstill Agreement."
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Rights to Elect Directors
Under our certificate of incorporation, each of the series D1, series D2 and
series D3 convertible preferred stock is entitled to elect one director to our
board of directors. Each of these series has only one share authorized.
American Express owns the series D3 convertible preferred share, and, as
discussed below, United Air Lines, through its wholly owned subsidiary Covia
LLC, has an option to purchase the series D1 and series D2 convertible
preferred shares. American Express, as the holder of the one outstanding share
of series D3 convertible preferred stock, has the right to elect a person to
our board of directors.
Under the terms of our shareholders agreement, so long as Covia (and/or
United Air Lines or an entity controlling or controlled by United Air Lines)
holds at least 3,651,430 shares of our common stock (assuming exercise of any
warrants to purchase our common stock currently held by Covia) and Covia does
not hold our series D1 convertible preferred stock or series D2 convertible
preferred stock, we will use our best efforts to nominate for election to our
board of directors one person that is an independent industry representative or
a representative of one of our strategic partners that is satisfactory to
United Air Lines. In addition, under the terms of our shareholders agreement we
will also invite, subject to our fiduciary obligations, a representative of
United Air Lines to attend our board of directors meetings in a nonvoting
observer capacity. These rights terminate upon the earlier of the following:
. Covia purchases our series D1 or D2 convertible preferred stock;
. Covia (and/or United Air Lines or an entity controlling or controlled by
United Air Lines) holds less than 3,651,430 shares of our common stock
(assuming exercise of any warrants to purchase our common stock
currently held by Covia);
. May 10, 2001;
. a breach of the standstill agreement by a party to the agreement other
than Covia or United Air Lines, unless the breach is unintentional and
cured within a specified time; or
. a third party's:
. commencement of or publicly announced intention to acquire 15% or
more of our outstanding stock (or 10% or more of our outstanding
stock in the case of certain specified companies);
. acquisition or beneficial ownership of 15% or more of our
outstanding stock (or 10% or more of our outstanding stock in the
case of certain specified companies), provided that the third party
has also filed a Schedule 13D reserving the right to hold the
securities with the purpose of changing or influencing control over
us;
. acquisition of all or substantially all of our assets;
. filing a notification under the Hart-Scott-Rodino Act reflecting an
intent to acquire all or substantially all of our assets;
. agreement to acquire us or public announcement of its intention to
acquire us;
. solicitation of proxies in opposition to any proxy solicitation
being conducted by us;
. public announcement of its intention to do any of the foregoing
actions; or
. entering into substantive discussions with our board of directors or
any of our executive officers with knowledge of any four members of
our board of directors regarding any of the foregoing actions.
In addition, we have granted an option to Covia to purchase one share of our
series D1 convertible preferred stock and one share of our series D2
convertible preferred stock at an exercise price of $10.00 per share. Covia
must hold at least 2,434,287 shares of our capital stock in order to exercise
its right to purchase the share of series D1 convertible preferred stock. Covia
must hold at least 3,651,430 shares of our capital stock in order to exercise
its right to purchase the share of series D2 convertible preferred stock. If
Covia purchases the share of series D1 convertible preferred stock, Covia will
have the right to elect a person to our board of directors so long as Covia
holds the share of Series D1 convertible preferred stock. If Covia purchases
the share of series D2 convertible preferred stock, Covia will have the right
to elect another person to our board of directors so long as Covia holds the
share of series D2 convertible preferred stock. Furthermore, if Covia purchases
either the share of series D1 convertible preferred stock or the share of
series D2 convertible
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preferred stock, our obligation to nominate a board member satisfactory to
United Air Lines and the right to have a representative of United Air Lines to
attend our board of directors meetings will terminate.
The option to purchase our series D1 convertible or series D2 convertible
preferred stock will terminate on the earlier of:
. May 10, 2001;
. a breach of the standstill agreement by a party to the agreement other
than Covia or United Air Lines, unless the breach is unintentional and
cured within a specified time;
. a third party's:
. commencement of or publicly announced intention to acquire 15% or
more of our outstanding stock (or 10% or more of our outstanding
stock in the case of certain specified companies);
. acquisition or beneficial ownership of 15% or more of our outstanding
stock (or 10% or more of our outstanding stock in the case of certain
specified companies), provided that the third party has also filed a
Schedule 13D reserving the right to hold the securities with the
purpose of changing or influencing control over us;
. acquisition of all or substantially all our assets;
. filing a notification under the Hart-Scott-Rodino Act reflecting an
intent to acquire all or substantially all of our assets;
. agreement to acquire us or public announcement of its intention to
acquire us;
. solicitation of proxies in opposition to any proxy solicitation being
conducted by us;
. public announcement of its intention to do any of the foregoing
actions; or
. entering into substantive discussions with our board of directors or
any of our executive officers with knowledge of any four members of
our board of directors regarding any of the foregoing actions;
. Covia's breach of its standstill agreement with us;
. Covia's transfer or attempt to transfer the option to an entity that does
not control or is not controlled by United Air Lines; or
. Covia holding less than 2,434,287 shares of our common stock (assuming
exercise of warrants currently held by Covia).
In addition, we have the right to repurchase the series D1 and D2 convertible
preferred stock at Covia's original purchase price upon the occurrence of any
of the events specified above.
We also have the right to repurchase the share of series D1 convertible
preferred stock if Covia holds less than 2,434,287 shares of our common stock
and the right to repurchase the share of Series D2 convertible preferred stock
if Covia holds less than 3,651,430 shares of our common stock (in each case
assuming the exercise of warrants currently held by Covia).
On the date when either an arbitrator or court determines that the director
elected by the holder of series D3 convertible preferred stock unreasonably
refused to recuse himself or herself from any meeting of our board of directors
or a committee of the board following a request for recusal made by a majority
of the remainder of the board, the holder of series D3 convertible preferred
stock will take all necessary action to convert the share of series D3
preferred stock into a share of our common stock.
For a description of the rights of our series D1 convertible preferred stock,
series D2 convertible preferred stock and series D3 convertible preferred
stock, including conversion rights, see "Description of Capital Stock."
Board Committees
The board of directors has established a compensation committee and an audit
committee.
Audit Committee. The audit committee of the board of directors has
responsibility for reviewing and monitoring our corporate financial reporting
and external audits, including out internal control functions, the
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results and scope of the annual audit and other services provided by our
independent auditors and our compliance with legal matters that have a
significant impact on our financial reports. The audit committee also consults
with management and our independent auditors before the presentation of
financial statements to stockholders and, as appropriate, initiates inquiries
into aspects of our financial affairs. In addition, the audit committee has the
responsibility to consider and recommend the appointment of, and to review fee
arrangements with, our independent auditors. The current members of the audit
committee are Messrs. Whilden and Vogel.
Compensation Committee. The compensation committee of the board of directors
reviews and makes recommendations to the board regarding all forms of
compensation provided to our executive officers and directors, including stock
compensation and loans. In addition, the compensation committee reviews and
makes recommendations on bonus and stock compensation arrangements for all of
our employees. As part of these responsibilities the compensation committee
also administers or will administer our 1996 stock plan, 1999 equity incentive
plan and 1999 employee stock purchase plan. The current members of the
compensation committee are Messrs. Brody, Ueberroth and Vogel.
Director Compensation
Although we reimburse members of the board of directors for their out-of-
pocket expenses associated with their participation as members of the board of
directors, directors receive no cash compensation for their service as
directors or for their service on any committee of the board of directors. We
may, in the future, adopt a cash compensation plan for non-employee members of
our board of directors. Non-employee directors are eligible to receive
automatic grants of options to purchase shares of our common stock. For more
information see "Stock Plans--1999 Directors' Stock Option Plan."
Compensation Committee Interlocks and Insider Participation
None of our executive officers serve on the board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of our board or compensation committee, nor has any such
interlocking relationship existed in the past.
Indemnification of Directors and Executive Officers and Limitation of Liability
As permitted by the Delaware General Corporation Law, our amended and
restated certificate of incorporation provides that no director will be
personally liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability:
. for any breach of the director's duty of loyalty to us or our
stockholders;
. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law; and
. for any transaction from which the director derived an improper personal
benefit.
Our amended and restated bylaws further provide that we must indemnify our
directors and executive officers and may indemnify our other officers and
employees and agents to the fullest extent permitted by Delaware law. We
currently maintain liability insurance for our officers and directors, and have
received approval from our board to purchase additional directors' and
officers' liability coverage with respect to our initial public offering.
We have entered into indemnification agreements with each of our directors
and officers. These agreements require us, among other things, to indemnify
such directors and officers for certain expenses
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(including attorneys' fees), judgments, fines, penalties and settlement amounts
incurred by any such person in any threatened, pending or completed action,
suit, proceeding or alternative dispute resolution mechanism by reason of any
event or occurrence arising out of such person's services as a director or
officer of GetThere.com or any other entity for which such services are
performed at the request of GetThere.com.
There is no pending litigation or proceeding involving any of our directors,
officers, employees or agents as to which indemnification is being sought. We
are not aware of any pending or threatened litigation or proceeding that might
result in a claim for such indemnification.
Executive Compensation
The following table sets forth information regarding the compensation for the
fiscal year ended January 31, 1999, of each individual who served as our chief
executive officer during that fiscal year and our other executive officers who
served as executive officers at the end of that fiscal year. These individuals
are collectively referred to as Named Executive Officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
-------------------- -------------------------
Restricted Securities
Stock Underlying
Name and Principal Position Salary ($) Bonus ($) Award(s) ($) Options (#)
<S> <C> <C> <C> <C>
Gadi Maier(1).................. 20,769 -- -- 100,000
president and chief executive
officer
Richard D.C. Whilden(2)........ 237,827 -- 104,000(3) --
former president and chief
executive officer
Kenneth G. Swanton(4).......... 233,358 15,000 -- --
former president and chief
executive officer
Eric R. Sirkin(5).............. 22,212 -- -- 450,000
vice president of engineering
Daniel Whaley.................. 155,385 4,000 -- --
chief technical officer
</TABLE>
- ---------------------
(1) Mr. Maier became an employee on December 28, 1998, and became our president
and chief executive officer on January 11, 1999. His current annual salary
is $240,000.
(2) Mr. Whilden served as our president and chief executive officer on an
interim basis from March 11, 1998, to January 11, 1999. The amount shown as
Mr. Whilden's salary includes $35,250 paid to him for services rendered as
a member of our board of directors.
(3) This award covered 650,000 restricted shares of our common stock of which
162,500 shares were fully vested at the time of the award. During the
period from March 10, 1998 through March 9, 1999, the remaining unvested
shares vested at the rate of 13,542 for each month of continuous service
completed by Mr. Whilden in any capacity. During the period from March 10,
1999 through March 9, 2000, the shares vest at the rate of 27,083 for each
month of continuous service. All of the shares vest on March 10, 2000, if
Mr. Whilden's service is continuous until that date. As of January 31,
1999, Mr. Whilden held 650,000 shares of our restricted stock with an
aggregate value on that date of $650,000. The shares currently do not pay
dividends but have the same dividend rights as the other shares of our
common stock.
(4) Mr. Swanton served as our president and chief executive officer until March
11, 1998. He remained an employee until August 31, 1998.
(5) Dr. Sirkin became an employee on December 7, 1998. His current annual
salary is $165,000.
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Option Grants in Last Fiscal Year
The table below sets forth each grant of stock options to each of the Named
Executive Officers during the fiscal year ended January 31, 1999.
The exercise price of each option was equal to the fair market value of our
common stock as valued by the board of directors on the date of grant. The
exercise price may be paid in cash, in shares of our common stock valued at
fair market value on the exercise date or through a cashless exercise procedure
involving a same-day sale of the purchased shares. Some of our officers may
also pay the exercise price with a promissory note. The fair market value of
our common stock was estimated by the board of directors on the basis of the
purchase price paid by investors for shares of our preferred stock (taking into
account the liquidation preferences and other rights, privileges and
preferences associated with the preferred stock) and an evaluation by the board
of our revenues, operating history and prospects.
The potential realizable value is calculated based on the ten-year term of
the option at the time of grant. Stock price appreciation of 5% and 10% is
assumed pursuant to rules promulgated by the Securities and Exchange Commission
and does not represent our prediction of our stock price performance. The
potential realizable values at 5% and 10% appreciation are calculated by
assuming that the estimated fair market value on the date of grant appreciates
at the indicated rate for the entire term of the option and that the option is
exercised at the exercise price and sold on the last day of its term at the
appreciated price. The initial public offering price is higher than the
estimated fair market value on the date of grant, and the potential realizable
value of the option grants would be significantly higher than the numbers shown
in the table if future stock prices were projected to the end of the option
term by applying the same annual rates of stock price appreciation to the
initial public offering price.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
--------------------------------------------------- ---------------------
Percent of
Number of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year(1) Price ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Gadi Maier.............. 100,000(2) 6.43% 1.00 12/27/2008 62,889 159,374
Richard D.C. Whilden.... -- -- -- -- -- --
Kenneth G. Swanton...... -- -- -- -- -- --
Eric R. Sirkin.......... 450,000(3) 28.95% 1.00 12/16/2008 283,003 717,184
Daniel Whaley........... -- -- -- -- -- --
</TABLE>
- ---------------------
(1) Based on a total of 1,554,250 option shares granted to our employees under
our 1996 stock incentive plan during fiscal 1999.
(2) This option is exercisable at any time. However, we may repurchase the
shares acquired by exercising the option at the original exercise price if
the optionee's service terminates before the shares vest. The shares vest
on the earliest of (a) the date when the optionee completes 12 months of
continuous service, (b) the date of the optionee's death, (c) termination
of the optionee's service due to disability or (d) the date when
GetThere.com is subject to a change in control.
(3) This option is exercisable at any time with respect to 100,000 shares,
became exercisable on January 1, 1999, with respect to 100,000 shares,
becomes exercisable on January 1, 2000, with respect to 100,000 shares,
becomes exercisable on January 1, 2001, with respect to 100,000 shares and
becomes exercisable on January 1, 2002, with respect to the remaining
50,000 shares. We may repurchase the shares acquired by exercising the
option at the original exercise price if the optionee's service terminates
before the shares vest. 56,250 of the shares vest when the optionee
completes six months of continuous service. 9,375 of the shares vest when
the optionee completes each month of continuous service thereafter, until
all shares are vested after four years of service. The shares vest in full
if GetThere.com is subject to a change in control.
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<PAGE>
Fiscal Year End Option Values
The following table sets forth, for each Named Executive Officer, the number
and value of securities underlying options that were held by him as of January
31, 1999. No options were exercised by Named Executive Officers in the year
ended January 31, 1999.
Amounts shown under the column "Value of Unexercised In-the-Money Options at
Fiscal Year End" are based on the fair market value of our common stock at
January 31, 1999, as determined by our board of directors at that time, $1.00
per share, less the exercise price payable for such shares. The fair market
value of our common stock at January 31, 1999 was estimated by the board of
directors on the basis of the purchase price paid by investors for shares of
our preferred stock, taking into account the liquidation preferences and other
rights, privileges and preferences associated with the preferred stock, and an
evaluation by the board of our revenues, operating history and prospects. The
initial public offering price is higher than the estimated fair market value on
January 31, 1999, and the value of unexercised options would be higher than the
numbers shown in the table if the value were calculated by subtracting the
exercise price from the initial public offering price.
Mr. Maier's options are immediately exercisable for all of the option shares,
and Dr. Sirkin's options become exercisable over time as described above. We
may repurchase the shares acquired by exercising any of these options at the
original exercise price if the optionee's service terminates before the shares
vest as described above. The heading "Vested" refers to shares that are no
longer subject to repurchase, and the heading "Unvested" refers to shares that
remain subject to repurchase as of January 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year End (#) Year End ($)
---------------------- --------------------
Name Vested Unvested Vested Unvested
<S> <C> <C> <C> <C>
Gadi Maier......................... -- 100,000 -- --
Richard D.C. Whilden............... -- -- -- --
Kenneth G. Swanton................. -- -- -- --
Eric R. Sirkin..................... -- 450,000 -- --
Daniel Whaley...................... -- -- -- --
</TABLE>
Employment Agreements and Change of Control Arrangements
Gadi Maier. We entered into an employment agreement, dated January 11, 1999,
with Gadi Maier, our president and chief executive officer. Under the
agreement, Mr. Maier's annual salary may not be less than $240,000, and he is
entitled to an annual bonus of at least $60,000. The agreement further provides
that Mr. Maier will receive options to purchase 1,743,675 shares of our common
stock at an exercise price of $1.00 per share, which was the fair market value
at the time of grant (as determined by our board of directors). One-seventh of
the option shares vests when he completes 12 months of service, and the balance
vests in a series of equal installments when he completes each of his first 48
months of service. All or part of the option shares will vest on an accelerated
basis if Mr. Maier's service terminates because of his death or disability or
if GetThere.com is subject to a change in control. Mr. Maier has registration
rights with respect to his option shares. If Mr. Maier is actually or
constructively discharged without cause, he is entitled to a lump sum severance
benefit equal to his base salary and minimum bonus for a period of nine months
(if the discharge occurs before January 12, 2000) or a period of 12 months (if
the discharge occurs on or after January 12, 2000). During the same period,
group insurance coverage will continue and Mr. Maier will be subject to a non-
competition covenant. We will also reimburse Mr. Maier for a part of any excise
tax imposed on him under section 4999 of the Internal Revenue Code as the
result of a severance payment or option acceleration following a change in
control.
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Kenneth R. Pelowski. We entered into an employment agreement with our chief
operating officer and chief financial officer, Kenneth R. Pelowski, dated March
25, 1999. Under the agreement, he is entitled to an annual salary of $175,000
and a cash bonus of up to $50,000 per year. He was also entitled to an option
to purchase 500,000 shares of our common stock with an exercise price of $1.00
per share, which was the fair market value at the time of grant (as determined
by our board of directors). These shares are subject to our standard vesting
schedule, which provides that one-eighth of the shares vest after six months of
service and the balance vests in equal monthly installments over the next 42
months of continuous service. If Mr. Pelowski is actually or constructively
discharged within 18 months after GetThere.com is subject to a change in
control, then all shares vest. We will reimburse Mr. Pelowski for a part of any
excise tax imposed on him under section 4999 of the Internal Revenue Code as
the result of a severance payment or option acceleration following a change in
control. In connection with his employment with us, Mr. Pelowski assigned a
business concept to us. In return, we granted him 125,000 restricted shares of
our common stock. These shares vest in 24 equal monthly installments commencing
on March 29, 1999, subject to Mr. Pelowski's continuing service.
Eric R. Sirkin. On November 16, 1998, we entered into an agreement with Eric
R. Sirkin, our vice president of engineering. Under the agreement, Dr. Sirkin's
minimum salary is $165,000 per year. He was also entitled to receive an option
covering 450,000 shares of our common stock. The agreement further provides
that these shares will vest in full if GetThere.com is subject to a change in
control. If we terminate Dr. Sirkin's employment without cause, he is entitled
to four months' salary.
Richard D.C. Whilden. We entered into an agreement dated March 1, 1999, with
Richard D.C. Whilden, the chairman of our board of directors and our former
president and chief executive officer. Under the agreement, Mr. Whilden
remained a full-time employee until March 15, 1999. During the following 12
months, Mr. Whilden is obligated to make himself available to provide
consulting services. He is receiving a retainer of $5,000 per month for up to
two days of consulting per month. Additional services are compensated at the
rate of $2,000 per day. Either we or Mr. Whilden may terminate the consulting
services at any time, but the $5,000 monthly retainer will continue through
December 1999 if we terminate the consulting services before that date.
Moreover, if Mr. Whilden's service as a consultant or director terminates for
any reason other than voluntary resignation before March 15, 2000, then he will
receive service credit through that date for purposes of vesting in his
restricted shares of our common stock. Under the agreement, the 650,000
restricted shares granted to Mr. Whilden in 1998 are vesting at an accelerated
rate (27,083 shares per month during the period from March 1999 to March 2000)
and will be fully vested on March 10, 2000, if his service continues until
then. All of these shares vest if GetThere.com is subject to a change in
control.
Kenneth G. Swanton. We entered into an agreement dated March 11, 1998, with
Kenneth G. Swanton, our former president and chief executive officer, and
amended that agreement on June 30, 1998. Under that agreement, as amended, Mr.
Swanton resigned as our president and chief executive officer on March 11,
1998, but remained employed as the vice chairman of our board of directors
until August 31, 1998. As vice chairman, Mr. Swanton was paid an annual salary
of $225,000. Mr. Swanton received severance payments at the same rate until
January 31, 1999, and group insurance coverage also continued until that date.
For purposes of determining the vested portion of the restricted shares that we
had granted to Mr. Swanton, his service was deemed to continue until September
10, 1998.
Stock Plans
1999 Stock Incentive Plan
Share Reserve. Our board of directors adopted our 1999 stock incentive plan
on August 16, 1999, subject to stockholders approval. We have reserved five
million shares of our common stock for issuance under the 1999 stock incentive
plan. On February 1 of each year, starting with the year 2001, the number of
shares in the reserve will automatically increase by 4% of the total number of
shares of common stock that are outstanding at that time or, if less, by three
million shares. In general, if options or shares awarded under the 1999 stock
incentive plan are forfeited, then those options or shares will again become
available for awards under the 1999 stock incentive plan. We have not yet
granted any options under the 1999 stock incentive plan.
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Administration. The compensation committee of our board of directors
administers the 1999 stock incentive plan. The committee has the complete
discretion to make all decisions relating to the interpretation and operation
of our 1999 stock incentive plan. The committee has the discretion to determine
who will receive an award, what type of award it will be, how many shares will
be covered by the award, what the vesting requirements will be (if any), and
what the other features and conditions of each award will be. The compensation
committee may also reprice outstanding options and modify outstanding awards in
other ways.
Eligibility. The following groups of individuals are eligible to participate
in the 1999 stock incentive plan:
. employees;
. members of our board of directors who are not employees; and
. consultants.
Types of Award. The 1999 stock incentive plan provides for the following
types of award:
. incentive stock options to purchase shares of our common stock;
. nonstatutory stock options to purchase shares of our common stock; and
. restricted shares of our common stock.
Options. An optionee who exercises an incentive stock option may qualify for
favorable tax treatment under Section 422 of the Internal Revenue Code of 1986.
On the other hand, nonstatutory stock options do not qualify for such favorable
tax treatment. The exercise price for incentive stock options granted under the
1999 Stock Incentive Plan may not be less than 100% of the fair market value of
our common stock on the option grant date. In the case of nonstatutory stock
options, the minimum exercise price is 70% of the fair market value of our
common stock on the option grant date. Optionees may pay the exercise price by
using:
. cash;
. shares of common stock that the optionee already owns;
. a full-recourse promissory note, except that the par value of newly
issued shares must be paid in cash;
. an immediate sale of the option shares through a broker designated by us;
or
. a loan from a broker designated by us, secured by the option shares.
Options vest at the time or times determined by the compensation committee.
In most cases, our options vest over the four-year period following the date of
grant. Options generally expire 10 years after they are granted, except that
they generally expire earlier if the optionee's service terminates earlier. The
1999 stock incentive plan provides that no participant may receive options
covering more than five million shares in the same year.
Restricted Shares. Restricted shares may be awarded under the 1999 stock
incentive plan in return for:
. cash;
. a full-recourse promissory note, except that the par value of newly
issued shares must be paid in cash;
. services already provided to us; and
. in the case of treasury shares only, services to be provided to us in the
future.
Restricted shares vest at the time or times determined by the compensation
committee.
Change in Control. The compensation committee determines to what extent an
option or restricted stock award under the 1999 stock incentive plan will vest
on an accelerated basis if GetThere.com is subject to a change in control.
Vesting could accelerate in full, or it could apply only to a part of an award.
Accelerated vesting could occur immediately after the change in control, or it
could be contingent upon the involuntary or
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constructive discharge of the participant following the change in control. In
general, all awards will vest in full upon a change in control if the surviving
corporation fails to assume the award or to replace it with a comparable award.
A change in control includes:
. a merger of GetThere.com after which our stockholders own 50% or less of
the surviving corporation (or its parent company);
. a sale of all or substantially all of our assets;
. a proxy contest that results in the replacement of more than one-half of
our directors over a 24-month period; or
. an acquisition of 50% or more of our outstanding stock by any person or
group.
Amendments or Termination. Our board may amend or terminate the 1999 stock
incentive plan at any time. If our board of directors amends the plan, it does
not need to ask for stockholder approval of the amendment unless applicable law
requires it. The 1999 stock incentive plan will continue in effect
indefinitely, unless the board decides to terminate the plan earlier.
1999 Employee Stock Purchase Plan
Share Reserve and Administration. Our board of directors adopted our 1999
employee stock purchase plan on August 16, 1999, subject to stockholder
approval. Our 1999 employee stock purchase plan is intended to qualify under
Section 423 of the Internal Revenue Code. We have reserved 2,500,000 shares of
our common stock for issuance under the plan. On June 1 of each year, starting
with the year 2000, the number of shares in the reserve will automatically be
restored to 2,500,000. In other words, the reserve will be increased by the
number of shares that have been issued under the 1999 employee stock purchase
plan during the prior 12-month period. The plan will terminate automatically on
August 15, 2009, unless it is extended by the board of directors and the
extension is approved by a vote of the stockholders. The plan will be
administered by the compensation committee of our board of directors.
Eligibility. All of our employees are eligible to participate if they are
employed by us for more than 20 hours per week and for more than five months
per year. Eligible employees may begin participating in the 1999 employee stock
purchase plan at the start of any offering period. Each offering period lasts
24 months. Overlapping offering periods start on June 1 and December 1 of each
year. However, the first offering period will start on the effective date of
this offering and end on November 30, 2001.
Amount of Contributions. Our 1999 employee stock purchase plan permits each
eligible employee to purchase common stock through payroll deductions. Each
employee's payroll deductions may not exceed 15% of the employee's cash
compensation. Purchases of our common stock will occur on May 31 and November
30 of each year. Each participant may purchase up to 3,000 shares on any
purchase date (6,000 shares per year). But the value of the shares purchased in
any calendar year (measured as of the beginning of the applicable offering
period) may not exceed $25,000.
Purchase Price. The price of each share of common stock purchased under our
1999 employee stock purchase plan will be 85% of the lower of:
. the fair market value per share of common stock on the date immediately
before the first day of the applicable offering period, or
. the fair market value per share of common stock on the purchase date.
In the case of the first offering period, the price per share under the plan
will be 85% of the lower of:
. the price per share to the public in this offering, or
. the fair market value per share of common stock on the purchase date.
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Other Provisions. Employees may end their participation in the 1999 employee
stock purchase plan at any time. Participation ends automatically upon
termination of employment with GetThere.com. If a change in control of
GetThere.com occurs, our 1999 employee stock purchase plan will end and shares
will be purchased with the payroll deductions accumulated to date by
participating employees, unless the plan is assumed by the surviving
corporation or its parent. Our board of directors may amend or terminate the
1999 employee stock purchase plan at any time. If our board increases the
number of shares of common stock reserved for issuance under the plan (except
for the automatic increases described above), it must seek the approval of our
stockholders.
1999 Directors' Stock Option Plan
Share Reserve. Our board of directors adopted our 1999 directors' stock
option plan on August 16, 1999, subject to stockholder approval. We have
reserved 750,000 shares of our common stock for issuance under the plan. On
February 1 of each year, starting with the year 2001, the number of shares in
the reserve will automatically be restored to 750,000. In other words, the
reserve will be increased by the number of shares that have been granted under
the 1999 directors' stock option plan during the prior 12-month period. In
general, if options granted under the 1999 directors' stock option plan are
forfeited, then those options will again become available for grants under the
plan. The directors' stock option plan will be administered by the compensation
committee of our board of directors, although all grants under the plan are
automatic and non-discretionary.
Initial Grants. Only the non-employee members of our board of directors will
be eligible for option grants under the 1999 directors' stock option plan. Each
non-employee director will receive an initial option to buy 50,000 shares on
the effective date of this offering. Each non-employee director who first joins
our board after the effective date of this offering will receive an initial
option for 50,000 shares. That grant will occur when the director takes office.
The initial options vest in equal monthly installments over the four-year
period following the date of grant, except that all vesting for the first six
months occurs at the close of that six-month period.
Annual Grants. At the time of each of our annual stockholders' meetings,
beginning in 2000, each non-employee director who will continue to be a
director after that meeting will automatically be granted an annual option for
12,500 shares of our common stock. However, a new non-employee director who is
receiving the 50,000-share initial option will not receive the 12,500 share
annual option in the same calendar year. The annual options vest in equal
monthly installments over the one-year period following the date of grant.
Other Option Terms. The exercise price of each non-employee director's option
will be equal to the fair market value of our common stock on the option grant
date. A director may pay the exercise price by using cash, shares of common
stock that the director already owns, or an immediate sale of the option shares
through a broker designated by us. The non-employee directors' options have a
10-year term, except that they expire one year after a director leaves the
board (if earlier). If a change in control of GetThere.com occurs, a non-
employee director's option granted under the 1999 directors' stock option plan
will become fully vested. Vesting also accelerates in the event of the
optionee's death or disability.
Amendments or Termination. Our board may amend or terminate the 1999
directors' stock option plan at any time. If our board amends the plan, it does
not need to ask for stockholder approval of the amendment unless applicable law
requires it. The 1999 directors' stock option plan will continue in effect
indefinitely, unless the board decides to terminate the plan.
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<PAGE>
RELATIONSHIPS AND RELATED TRANSACTIONS
Equity Financings and Stockholders Arrangements
Since February 1, 1996, we have issued and sold shares of our preferred stock
to the following persons who are our principal stockholders, executive officers
or directors.
<TABLE>
<CAPTION>
Shares of Shares of Shares of Shares of
Series A Series B Series C Series E Value
Convertible Convertible Convertible Convertible Amount at $13.00
Investor Preferred Stock Preferred Stock Preferred Stock Preferred Stock Paid per Share
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
United Air Lines ....... -- -- 4,060,875 1,500,000 $39,562 $72,291
Entities affiliated with
Brentwood Associates .. 1,985,353 512,048 -- -- $ 3,099 $32,466
American Express........ -- -- 875,423 2,121,076 $31,000 $38,955
Entities affiliated with
U.S. Venture Partners.. -- 2,409,639 -- -- $ 4,000 $31,325
ITN Joint Venture....... 1,544,163 -- -- 80,000 $ 2,750 $21,114
Hambrecht 1980 Revocable
Trust.................. -- -- 25,000 -- $ 128 $ 325
WR Hambrecht + Co....... -- -- 25,000 -- $ 128 $ 325
</TABLE>
Shares held by all affiliated persons and entities have been aggregated.
Share numbers and purchase price information are reflected on an as if
converted into shares of common stock basis. See "Principal Stockholders" for
more detail on shares held by these purchasers. The per share purchase price
for the series A convertible preferred stock was $1.13. The per share purchase
price for the series B convertible preferred stock was $1.66. The per share
price for the series C convertible preferred stock was $5.125. The per share
purchase price for the series E convertible preferred stock was $12.50. Dale J.
Vogel, one of our directors, is an affiliate of each of the entities affiliated
with U.S. Venture Partners. Jeffrey D. Brody, one of our directors, is a
general partner of Brentwood Venture Capital and as such is an affiliate of
each of the entities affiliated with Brentwood Associates. John Ueberroth, one
of our directors, is an affiliate of the ITN Joint Venture. William R.
Hambrecht, one of our directors, is trustee of the Hambrecht 1980 Revocable
Trust and chairman and chief executive officer of WR Hambrecht + Co.
In addition to the shares listed above, we issued the following warrants:
. a warrant to purchase 51,205 shares of our series B convertible preferred
stock at an exercise price of $1.66 per share to entities affiliated with
Brentwood Associates;
. a warrant to purchase 240,964 shares of our series B convertible
preferred stock at an exercise price of $1.66 per share to entities
affiliated with U.S. Venture Partners; and
. a warrant to purchase 375,000 shares of our common stock at an exercise
price of $16.50 per share, a warrant to purchase 730,023 shares of our
series E convertible preferred stock at an exercise price of $21.00 per
share and a warrant to purchase 730,023 shares of our series E
convertible preferred stock at an exercise price of $31.00 per share to
American Express.
65
<PAGE>
<TABLE>
<CAPTION>
Warrants Warrants Warrants Warrants
for for for for
Warrants Series A Series B Series C Series E
for Convertible Convertible Convertible Convertible
Common Preferred Preferred Preferred Preferred Aggregate Value at
Stock Stock Stock Stock Stock Consideration $13.00 per Share
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
United Air Lines........ -- -- -- 3,369,058 -- $24,181 $43,798
Entitles affiliated with
Brentwood Associates... -- -- 51,205 -- -- $ 85 $ 666
American Express........ 375,000 -- -- -- 1,460,046 $44,149 $23,856
Entities affiliated with
U.S., Venture
Partners............... -- -- 240,964 -- -- $ 400 $ 3,133
</TABLE>
For a description of warrants we issued to United Air Lines, see "--United
Air Lines."
Under the terms of our shareholders agreement, United Air Lines and a number
of our stockholders, including chief technical officer Dan Whaley, Richard D.C.
Whilden, chairman of our board of directors, entities affiliated with Brentwood
Associates, ITN Joint Venture, entities affiliated with U.S. Venture Partners
and Covia, are subject to a standstill agreement. Under the standstill
agreement, the above investors agree that they will not:
. acquire, attempt to acquire or participate in the acquisition of voting
securities that places their holdings of our voting securities above a
specified percentage;
. participate in the solicitation of proxies in opposition to any proxy
solicitation being conducted by us; or
. enter into any agreements or substantive discussions with any third party
regarding the acquisition of our business or the solicitation of proxies.
The standstill agreement terminates on the earlier of:
. May 10, 2001;
. a breach by a party to the agreement other than United Air Lines or
Covia, unless the breach is unintentional and cured within specified
times; or
. a third party's:
. commencement of or publicly announced intention to acquire or
beneficially own 15% or more of our outstanding stock (or 10% or more
of our outstanding stock in the case of certain specified companies);
. acquisition or beneficial ownership of 15% or more of our outstanding
stock (or 10% or more of our outstanding stock in the case of certain
specified companies), provided that the third party has also filed a
Schedule 13D reserving the right to hold the securities with the
purpose of changing or influencing control over us;
. acquisition of all or substantially all of our assets;
. agreement to acquire us or public announcement of its intention to
acquire us;
. solicitation of proxies in opposition to any proxy solicitation being
conducted by us; or
. entering into substantive discussions with our board of directors or
any of our executive officers with knowledge of any four members of
our board of directors regarding any of the foregoing actions.
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<PAGE>
In addition, American Express is subject to a standstill agreement. Under
this agreement, it has agreed that it will not:
. acquire, attempt to acquire or participate in the acquisition of voting
securities that places their holdings of our voting securities above a
specified percentage;
. participate in the solicitation of proxies in opposition to any proxy
solicitation being conducted by us; or
. enter into any agreements or substantive discussions with any third
party regarding the acquisition of our business or the solicitation of
proxies.
The standstill agreement terminates on the earlier of:
. May 10, 2001;
. a breach of the standstill agreement by any of the parties other than
American Express, unless the breach is unintentional and is cured within
specified times;
. an occurrence of a termination event as it is defined in our amended and
restated shareholders agreement, dated September 14, 1999; or
. a third party's:
. commencement of or publicly announced intention to acquire or
beneficially own 12.5% or more of our outstanding stock (or 10% or
more of our outstanding stock in the case of certain specified
companies, or 30% or more of our outstanding stock if the third
party is United Air Lines or any of its affiliates);
. acquisition of beneficial ownership of 12.5% or more of our
outstanding stock (or 10% or more of our outstanding stock in the
case of certain specified companies, or 30% or more of our
outstanding stock if the third party is United Air Lines or any of
its affiliates), provided that the third party has also filed a
Schedule 13D reserving the right to hold the securities with the
purpose of changing or influencing control over us;
. filing of a notification and report form under the Hart-Scott-Rodino
Act, reflecting an intent to acquire all or substantially all of our
assets;
. acquisition of all or substantially all our assets;
. agreement to acquire us or substantially all of our assets, or to
beneficially own 12.5% or more of our outstanding stock, if the
third party has not also entered into a similar standstill
agreement;
. solicitation of proxies in opposition to any proxy solicitation
being conducted by us; or
. public announcement of its intention to undertake any of the
foregoing actions.
Employment-Related Agreements
In connection with Mr. Pelowski's employment with us, he assigned a business
concept to us. In return, we issued to him 125,000 restricted shares of common
stock. These shares vest in 24 equal monthly installments commencing on March
29, 1999, subject to Mr. Pelowski's continuing service with us.
Some of our executive officers have entered into employment agreements with
us. See "Management--Employment Agreements and Change of Control Arrangements."
We have entered into an indemnification agreement with each of our executive
officers and directors. See "Management--Indemnification of Officers and
Directors."
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<PAGE>
Options Granted to Executive Officers Since January 31, 1999
The following table sets forth information regarding the number of options
granted and stock issued to our executive officers since January 31, 1999, the
end of our most recent fiscal year.
<TABLE>
<CAPTION>
Number of Options Granted
Executive Officers Since January 31, 1999
<S> <C>
Gadi Maier......................................... 1,700,000
Kenneth R. Pelowski................................ 800,000
Eric R. Sirkin..................................... 225,000
Daniel Whaley...................................... 315,000
</TABLE>
American Express
In September 1999, we entered into a Web services and travel agreement under
which American Express has agreed to promote and sell customized, co-branded
versions of our Internet-based travel procurement solutions to their customers
and potential customers. See "Business--Relationship with American Express."
In September 1999, American Express purchased one share of our series D3
convertible preferred stock. As the holder of the outstanding share of series
D3 convertible preferred stock, American Express has the right to elect a
representative to our board of directors. See "Management--Executive Officers
and Directors."
United Air Lines
In November 1997, we entered into a services agreement with United Air Lines,
the parent company of Covia, under which we agreed, at specified fees, to host
and provide support for a set of customized world wide web pages through which
United Air Lines customers may access our reservation system. In addition,
United Air Lines agreed to pay us various fees for customization and
miscellaneous services.
In connection with our sale of 4,060,875 shares of series C convertible
preferred stock to Covia in May 1998, we also sold Covia the right to have us
grant Covia a warrant to purchase up to 807,698 shares of series C convertible
preferred stock at a price of $0.01 per share. In addition, we granted Covia
the right to have us grant Covia an option to purchase, at its choice, up to
2,473,392 shares of series C convertible preferred stock at a price of $5.125
per share or, for a purchase price of $5.125 per share, a warrant to purchase
up to 2,473,392 shares of series C convertible preferred stock at an exercise
price of $0.01 per share. As a result of an unsatisfied contingency contained
in the series C preferred stock purchase agreement, Covia no longer has a right
to receive an option for 2,473,392 shares of series C convertible preferred
stock or a warrant for 2,473,392 shares of series C convertible preferred
stock, and instead Covia currently has the right to receive either an option to
purchase 1,424,539 shares of series C convertible preferred stock or a warrant
to purchase 1,424,539 shares of series C convertible preferred stock. These
options terminate on the earlier of November 10, 2000 or the date we are
acquired by another company.
Also, in connection with Covia's purchase of our series C convertible
preferred stock, we granted Covia an option to purchase one share of series D1
convertible preferred stock and one share of series D2 convertible preferred
stock at a price of $10.00 per share. Each of the series D1 convertible
preferred stock and the series D2 convertible preferred stock carries with it
the right to elect one member to our board of directors. For a description of
the terms of this option and the rights and obligations related into our series
D1 convertible preferred stock and series D2 convertible preferred stock, see
"Management--Executive Officer and Directors" and "Description of Capital
Stock."
Our shareholders agreement provides that if Covia exercises its options to
purchase a share of series D1 convertible preferred stock or series D2
convertible preferred stock, it will participate, either in person or by proxy,
in shareholders' meetings and will vote these shares in favor of any proposal
approved by our board of directors and submitted to the shareholders, provided
the proposal is not for the purpose of nominating,
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<PAGE>
electing, or removing board members. Covia has agreed not to exercise any
dissenters' rights or transfer either the D1 or D2 shares during any period
prohibited by pooling accounting treatment rules.
Covia has also agreed, in the event we decide to sell our business, to
participate, either in person or by proxy, in any shareholders' meeting
regarding the sale, and to vote its shares in favor of the sale. Covia will not
exercise any dissenters' rights or transfer either the series D1 convertible
preferred stock or series D2 convertible preferred stock shares for 120 days
prior to the sale. Covia's obligation to vote in favor of our decision to sell
our business commences upon the earlier of August 10, 2000 or the termination
of our commercial relationship with United Air Lines by us as a result of
United Air Lines' nonperformance or by United Air Lines for any or no reason.
In connection with Covia's purchase of 1,500,000 shares of our series E
convertible preferred stock on September 14, 1999, we issued to Covia a warrant
to purchase 1,136,821 shares of our series C convertible preferred stock at an
exercise price of $11.20 per share.
All future transactions, including loans, if any, between us and our
officers, directors, principal stockholders and their affiliates will be
approved by a majority of the board of directors, including a majority of the
independent and disinterested outside directors on the board of directors, and
will continue to be on terms no less favorable to us than could be obtained
from unaffiliated third parties.
Indebtedness of Management
The following executive officers and relatives of executive officers
delivered to us full-recourse promissory notes to purchase restricted stock
under the 1996 stock incentive plan. The full principal amount and accrued
interest under each note remain outstanding. The terms of the notes are
summarized below:
<TABLE>
<S> <C> <C> <C> <C>
Highest Loan Balance
During Period From Loan Balance
February 1, 1998 to on August 31, Date of
Name August 31, 1999 1999 Maturity Interest Rate
Gadi Maier.. $1,010,227 $1,010,227 June 21, 2004 5.37%
Kenneth R.
Pelowski... 507,797 507,797 May 12, 2004 (1) 5.22
Eric
Sirkin..... 282,863 282,863 June 21, 2004 (1) 5.37
Al Whaley... 141,707 141,707 June 21, 2004 (1) 5.37
Daniel
Whaley..... 318,221 318,221 June 21, 2004 5.37
</TABLE>
(1) Also becomes due 180 days after employment with us terminates for any
reason.
Messrs. Maier, Pelowski, Sirkin and Daniel Whaley are executive officers. Al
Whaley is a co-founder and former chief technical officer.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of October 15, 1999. The information is
provided with respect to:
. each person who is known to us to own beneficially more than 5% of the
outstanding shares of common stock;
. each of our directors;
. each of our Named Executive Officers; and
. all of our directors and executive officers as a group.
Applicable percentage ownership in the following table is based on 27,045,424
shares of common stock outstanding as of October 15, 1999, as adjusted to
reflect the conversion of all outstanding shares of series A, B, C and E
convertible preferred stock upon the closing of this offering, conversion of a
promissory note of $1.65 million plus accrued interest into 162,077 shares of
our common stock and the exercise of warrants to purchase 407,852 shares of our
common stock.
The numbers shown in the table below assume no exercise by the underwriters
of their over-allotment option. GetThere.com has granted the underwriters an
option to purchase up to 750,000 shares to cover over-allotments, if any.
Unless otherwise indicated, the address for each listed stockholder is c/o
GetThere.com, 4045 Campbell Avenue, Menlo Park, CA 94025.
Except as otherwise indicated by footnote, and subject to community property
laws where applicable, the persons named in the table below have sole voting
and investment power with respect to all of the shares of common stock shown as
beneficially owned.
Principal Stockholders Table
<TABLE>
<CAPTION>
Percentage of
Shares
Beneficially
Number of Owned(1)
Shares -----------------
Beneficially Prior to After
Directors and Executive Officers Owned Offering Offering
<S> <C> <C> <C>
Gadi Maier(2).................................. 1,800,000 6.67% 5.62%
Kenneth R. Pelowski(3)......................... 800,000 3.03 2.55
Daniel Whaley(4)............................... 1,315,000 5.02 4.21
Eric Sirkin(5)................................. 405,000 1.54 1.29
Richard D.C. Whilden(6)........................ 833,250 3.18 2.67
Jeffrey D. Brody(7)............................ 2,563,606 9.78 8.21
William R. Hambrecht(8)........................ 65,000 0.25 0.21
John Ueberroth(9).............................. 1,869,163 7.13 5.99
Dale J. Vogel(10).............................. 2,665,603 10.17 8.54
Executive officers and directors as a group (9
persons)(11).................................. 12,316,622 44.98 38.04
5% Stockholders
United Air Lines (12).......................... 8,929,935 34.08 28.62
American Express(13)........................... 4,831,547 18.44 15.48
Entities associated with Brentwood
Associates(14)................................ 2,548,606 9.73 8.17
Entities associated with U.S.Venture
Partners(15).................................. 2,650,603 10.12 8.49
ITN Joint Venture(16).......................... 1,624,163 6.20 5.20
</TABLE>
- ---------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power
with respect to the securities. Shares of common stock subject to options,
warrants or other rights to purchase which are currently exercisable or
are
70
<PAGE>
exercisable within 60 days after September 14, 1999 are deemed outstanding
for purposes of computing the percentage ownership of the persons holding
such options, warrants or other rights, but are not deemed outstanding for
purposes of computing the percentage ownership of any other person.
(2) Includes personal options immediately exercisable for 800,000 shares.
159,256 of Mr. Maier's shares and options to purchase shares were vested
as of July 31, 1999.
(3) Includes personal options immediately exercisable for 175,000 shares, of
which no shares were vested as of July 31, 1999.
(4) 1,052,500 shares were vested as of July 31, 1999.
(5) Includes personal options immediately exercisable for 125,000 shares, of
which 29,166 shares were vested as of July 31, 1999.
(6) Includes personal options immediately exercisable for 15,000 shares.
799,238 of Mr. Whilden's shares and options to purchase shares were
vested as of July 31, 1999.
(7) Includes 2,437,160 shares held of record by Brentwood Associates, VII,
L.P. and 60,241 shares of record held by Brentwood Affiliates Fund, L.P.,
and assumes the exercise of warrants for a total of 51,205 shares held by
both entities. Mr. Brody is the general partner of both the Brentwood
Associates fund and the Brentwood Affiliates Fund. Mr. Brody disclaims
beneficial interest in such shares, except as to his pecuniary interest
in both entities. Also includes personal options immediately exercisable
for 15,000 shares, of which 1,562 shares were vested as of July 31, 1999.
(8) Includes 25,000 shares held of record by the 1980 Hambrecht Revocable
Trust and 25,000 shares held of record by WR Hambrecht + Co. Also
includes personal options immediately exercisable for 15,000 shares.
16,145 of Mr. Hambrecht's shares and options to purchase shares were
vested as of July 31, 1999.
(9) Includes 1,624,163 shares held of record by ITN Joint Venture. Mr.
Ueberroth currently serves as President of Ambassadors International,
Inc., which owns stock in the ITN Joint Venture. Mr. Ueberroth exercises
voting and investment control over these shares. He disclaims beneficial
ownership of these shares, except to the extent of his pecuniary interest
in Ambassadors International, Inc. Also includes personal options
immediately exercisable for 15,000 shares, of which 1,562 shares were
vested as of July 31, 1999.
(10) Includes 2,168,675 shares held of record by U.S. Venture Partners V,
L.P., 120,482 shares held of record by USVP V International, L.P.,
53,012 shares held of record by USVP V Entrepreneur Partners, L.P., and
67,470 shares held of record by 2180 Associates Fund V, L.P.
(collectively, the "USVP Entities"). Also assumes the exercise of
warrants for 240,964 shares held by the USVP entities. Mr. Vogel has an
"assignee interest in" and is referred to as a "venture partner" of
Presidio Management Group V, LLC, which is the General partner of each
of the USVP Entities. Mr. Vogel does not share voting or disposition
control over these holdings. He disclaims beneficial interest in such
shares, except as to his pecuniary interest therein arising as a result
of his "assignee interest in" Presidio Management Group V, LLC. Also
includes personal options immediately exercisable for 15,000 shares, of
which 1,562 shares were vested as of July 31, 1999.
(11) Includes personal options immediately exerciseable for 1,175,000 shares.
(12) Includes rights to purchase or warrants to purchase 3,369,060 shares. The
address of Covia is 1200 East Algonquin Road, Elk Grove Township,
Illinois 60007.
(13) Includes warrants for 1,835,046 shares. The address of American Express
is American Express Tower, World Financial Center, New York, New York
10285.
(14) Includes 2,437,160 shares held of record by Brentwood Associates, VII,
L.P. and 60,241 shares of record held by Brentwood Affiliates Fund, L.P.,
and assumes the exercise of warrants for a total of 51,205 shares held by
both entities. The address of Brentwood Associates is 3000 Sand Hill
Road, Building 1, Suite 260, Menlo Park, California 94025.
(15) Includes 2,168,675 shares held of record by U.S. Venture Partners V,
L.P., 120,482 shares held of record by U.S.V.P. V International, L.P.,
53,012 shares held of record by USVP V Entrepreneur Partners, L.P., and
67,470 shares held of record by 2180 Associates Fund V, L.P. Also assumes
the exercise of warrants for 240,964 shares held by the USVP Entities.
The address of U.S. Venture Partners is 2180 Sand Hill Road, Menlo Park,
California 94025.
(16) The address of ITN Joint Venture is c/o Ambassadors International Inc.,
1071 Camelback Street, Newport Beach, California 92660-3228.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
At the closing of this offering, our authorized capital stock will consist of
200,000,000 shares of common stock and 10,000,000 shares of preferred stock. We
have designated one share of series D1 convertible preferred stock, one share
of series D2 convertible preferred stock and one share of series D3 convertible
preferred stock. As of July 31, 1999, 7,663,730 shares of common stock were
issued and outstanding and 11,731,314 shares of preferred stock, convertible
into 11,731,314 shares of common stock upon the completion of the offering,
were issued and outstanding. As of July 31, 1999, we had 117 stockholders.
The following description of our capital stock does not purport to be
complete and is subject to and qualified in its entirety by our amended and
restated certificate of incorporation to be effective after the closing of this
offering, our bylaws and the provisions of applicable Delaware law.
Common Stock
Each holder of common stock is entitled to one vote for each share on all
matters to be voted upon by the stockholders.
Subject to the preferences to which holders of any shares of preferred stock
issued after the offering may be entitled, holders of the common stock are
entitled to receive ratably such dividends and other distributions, if any,
that the board of directors may, from time to time, declare out of funds
legally available therefor. See "Dividend Policy." In the event of our
liquidation, dissolution or winding up, subject to the rights of holders of
series D1 convertible preferred stock, series D2 convertible preferred stock
and series D3 convertible preferred stock, holders of common stock would be
entitled to share in any of our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock.
Holders of common stock have no preemptive or conversion rights or other
subscription rights, nor are there any redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are, and
the shares of common stock offered by us in this offering, when issued and paid
for, will be, fully paid and nonassessable. The rights, preferences and
privileges of the holders of the common stock are subject to, and may be
adversely affected by, the rights of the holders of our series D1, D2, or D3
convertible preferred stock, or any shares of preferred stock that we may
designate in the future.
Preferred Stock
Upon completion of this offering, other than one share of series D3
convertible preferred stock, no shares of preferred stock will be outstanding.
However, United Air Lines, through its wholly owned subsidiary Covia, holds an
option to purchase one share of series D1 convertible preferred stock and one
share of series D2 convertible preferred stock. See "Certain Transactions--
United Air Lines" for a description of the terms of the option.
Each holder of series D1 convertible preferred stock, series D2 convertible
preferred stock and series D3 convertible preferred stock is entitled to vote
on all matters to be voted upon by the stockholders. Each holder of series D1
convertible preferred stock, series D2 convertible preferred stock and series
D3 convertible preferred stock is entitled to the number of votes equal to the
number of shares of common stock into which a share of series D1 convertible
preferred stock, series D2 convertible preferred stock and series D3
convertible preferred stock could be converted at the record date for
determination of the stockholders entitled to vote on matters to be voted upon
by the stockholders. In addition, so long as any shares of series D1
convertible preferred stock are outstanding, we may not take any action that
adversely affects the rights of the series D1 convertible preferred stock or
that increases the authorized number of shares of series D1 convertible
preferred stock without the approval of the holder of series D1 convertible
preferred stock. So long as any shares of series D2 convertible preferred stock
are outstanding, we may not take any action that adversely affects the
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<PAGE>
rights of the series D2 convertible preferred stock or that increases the
authorized number of shares of series D2 convertible preferred stock without
the approval of the holder of series D2 convertible preferred stock. So long as
any shares of series D3 convertible preferred stock are outstanding, we may not
take any action that adversely affects the rights of the series D3 convertible
preferred stock or that increases the authorized number of shares of series D3
convertible preferred stock.
Also, so long as a share of series D1 convertible preferred stock remains
outstanding, one member of our board of directors will be elected by the holder
of series D1 convertible preferred stock. So long as a share of series
D2 convertible preferred stock remains outstanding, one member of our board of
directors will be elected by the holders of series D2 convertible preferred
stock. So long as a share of series D3 convertible preferred stock remains
outstanding, one member of our board of directors will be elected by the
holders of the series D3 convertible preferred stock.
Subject to the rights of preferred stock that may be authorized and issued
after this offering, holders of series D1 convertible preferred stock, series
D2 convertible preferred stock and series D3 convertible preferred stock are
entitled to receive ratably with holders of common stock such dividends and
other distributions, if any, that the board of directors may, from time to
time, declare out of funds legally available therefor. See "Dividend Policy."
In the event of our liquidation, dissolution or winding up, each holder of
series D1 convertible preferred stock and series D2 convertible preferred stock
will be entitled to $10.00 per share, and each holder of series D3 convertible
preferred stock will be entitled to $12.50 per share as adjusted for stock
splits, consolidations and the like, prior to any distribution to holders of
common stock.
Each share of series D1 convertible preferred stock, series D2 convertible
preferred stock and series D3 convertible preferred stock is convertible, at
the option of the holder, into one share of common stock, subject to
proportional adjustments for stock splits, combinations, dividends and the
like. Each share of series D1 convertible preferred stock and series D2
convertible preferred stock will automatically convert into one share of common
stock, subject to proportional adjustments for stock splits, combinations,
dividends and the like, upon a termination event, as it is defined in the
shareholders' agreement. This event is defined as the earlier of:
. May 10, 2001;
. a breach of the standstill agreement by a party to the agreement other
than Covia or United Air Lines, unless the breach is unintentional and
cured within specified times;
. a third party's:
. commencement or publicly announced intention to acquire or
beneficially own 15% or more of our outstanding stock (or 10% or more
of our outstanding stock in the case of certain specified companies);
. acquisition or beneficial ownership of 15% or more of our outstanding
stock (or 10% or more of our outstanding stock in the case of certain
specified companies), provided that the third party has also filed a
Schedule 13D reserving the right to hold the securities with the
purpose of changing or influencing control over us;
. acquisition of all or substantially all our assets;
. filing a notification under the Hart-Scott-Rodino Act reflecting an
intent to acquire all or substantially all of our assets;
. agreement to acquire us or public announcement of its intention to
acquire us;
. solicitation of proxies in opposition to any proxy solicitation being
conducted by us;
. public announcement of its intention to do any of the foregoing
actions; or
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<PAGE>
. entering into substantive discussions with our board of directors or
any of our executive officers with knowledge of any four members of
our board of directors regarding any of the foregoing actions;
. Covia's breach of its standstill agreement with us;
. Covia's transfer or attempt to transfer the option to an entity that does
not control or is controlled by United Air Lines; or
. Covia holding less than 2,434,287 shares of our common stock (assuming
exercise of warrants currently held by Covia).
In addition, each share of series D1 convertible preferred stock will
automatically convert to common stock upon the earlier of:
. the date the holder holds less than 2,434,287 shares of our common stock
(assuming exercise of any warrants to purchase our common stock held by
the holder at a purchase price of $0.01 or less); or
. the date the holder transfers the series D1 convertible preferred stock
without our prior written consent to an entity that does not control us
or is not controlled by us.
Likewise, each share of series D2 convertible preferred stock will
automatically convert to common stock upon the earlier of:
. the date the holder holds less than 3,651,430 shares of our common stock
(assuming exercise of any warrants to purchase our common stock held by
the holder at a purchase price of $0.001 or less); or
. the date the holder transfers the series D2 convertible preferred stock
without our prior written consent to an entity that does not control us
or is not controlled by us.
Each share of series D3 convertible preferred stock will automatically
convert into one share of common stock, subject to proportional adjustments for
stock splits, combinations, dividends and the like, upon a termination event,
as it is defined in the standstill agreement. This event is defined as the
earlier of:
.May 10, 2001;
. a breach of the standstill agreement by any of the parties other than
American Express, unless the breach is unintentional and is cured within
specified times;
. an occurrence of a termination event as it is defined in our amended and
restated shareholders agreement; or
. a third party's:
. commencement or publicly announced intention to acquire or
beneficially own 12.5% or more of our outstanding stock (or 10% more
of our outstanding stock in the case of certain specified companies,
or 30% or more of our outstanding stock if the third party is United
Air Lines or any of its affiliates);
. acquisition or beneficial ownership of 12.5% or more of our
outstanding stock (or 10% or more of our outstanding stock in the case
of certain specified companies, or 30% or more of our outstanding
stock if the third party is United Air Lines or any of its
affiliates), provided that the third party has also filed a Schedule
13D reserving the right to hold the securities with the purpose of
changing or influencing control over us;
. filing of a notification and report form under the Hart-Scott-Rodino
Act, reflecting an intent to acquire all or substantially all of our
assets;
. acquisition of all or substantially all our assets;
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<PAGE>
. agreement to acquire us or substantially all of our assets, or to
beneficially own 12.5% or more of our outstanding stock, if the third
party has not also entered into a similar standstill agreement;
. solicitation of proxies in opposition to any proxy solicitation being
conducted by us; or
. public announcement of its intention to undertake any of the foregoing
actions.
In addition, each share of series D3 convertible preferred stock will
automatically convert to common stock upon the earlier of:
. the date that the holder thereof transfers the series D3 convertible
preferred without our written consent except to a related party of
American Express;
. beginning with the first day of the second financial quarter following
the commencement of sales by American Express pursuant to the Web
services and travel agreement between us and American Express, on the
last day of any subsequent three consecutive financial quarters during
which American Express' sales of our solutions pursuant to the Web
services and travel agreement to the Global 950 (as defined in the Web
services and travel agreement) total less than twenty five percent (25%)
in such three consecutive financial quarter periods of American Express'
total sales of on-line solutions similar to those provided by the
Reservation System, as defined in the Web services and travel agreement,
to new accounts within the Global 950;
. eighteen (18) months following the closing of this offering; or
. the date of the consummation of a liquidation of our business.
In addition, the series D3 convertible preferred stock will automatically
convert to common stock:
. if we consummate this offering on or before the later of (x) December 31,
1999, or (y) the consummation of the next bona fide sale of our
securities to investors in an arms-length transaction with gross
aggregate proceeds of at least $10,000,000, in each case the "pay to play
date", on the date that the holder of the share of series D3 convertible
preferred stock holds a percentage of our common stock (calculated
assuming (1) the conversion of all then-outstanding preferred stock into
common stock, (2) the issuance of the number of shares of common stock
issuable upon conversion of the securities issuable upon exercise of
outstanding warrants to purchase our securities held by the holder of the
share of series D3 convertible preferred stock and (3) the issuance of
all shares of common stock issuable upon the exercise of all options
vested as of such date exercisable for shares of our common stock) equal
to less than the difference of (x) the percentage of our common stock
held by the holder of the share of series D3 convertible preferred stock
immediately after the consummation of this offering minus (y) 1.0%; or
. if we do not consummate this offering on or before the pay to play date,
on the date that the holder of the share of series D3 convertible
preferred stock holds a percentage of our common stock (calculated
assuming (1) the conversion of all then-outstanding preferred stock into
common stock, (2) the issuance of the number of shares of common stock
issuable upon conversion of the securities issuable upon exercise of
outstanding warrants to purchase our securities held by the holder of the
share of series D3 convertible preferred stock and (3) the issuance of
all shares of common stock issuable upon the exercise of all options
vested as of such date exercisable for shares of our common stock) equal
to less than the difference of (x) the percentage of our common stock
held by the holder on the date that American Express is issued shares of
our series E convertible preferred stock, minus (y) 1.0%.
In addition, our board of directors is authorized, subject to any limitations
prescribed by law, without stockholder approval, to fix or alter the rights,
preferences and privileges, including voting rights, conversion rights,
dividend rights, redemption privileges and liquidation preferences of any
unissued series of preferred stock and to issue such designated series of
preferred stock. The rights of the holders of the common stock will be subject
to, and may be adversely affected by, the rights of the holders of any such
preferred stock that may be issued in the future. The issuance of preferred
stock, while providing flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of entrenching our board of
directors and
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<PAGE>
making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, a majority of our outstanding voting
stock. We have no present plans to issue any shares or designate any additional
series of preferred stock.
Warrants
Upon completion of the offering, we will have outstanding warrants and rights
to acquire warrants exercisable for an aggregate of 7,704,503 shares of common
stock, at a weighted average exercise price of $10.62 per share. These warrants
have net exercise provisions under which the holder may, in lieu of payment of
the exercise price in cash, surrender the warrant and receive a net amount of
shares, based on their fair market value of the common stock at the time of
exercise of the warrant, after deducting the exercise price of the warrant.
These warrants expire on dates ranging from two years from the closing of this
offering to five years from the closing of this offering. These warrants and
rights to acquire warrants include:
. a warrant to initially purchase up to 1,650,000 shares of our series C
convertible preferred stock to Northwest Airlines at a price of $5.125
per share. The exercisability of the warrant is subject to implementing
our solutions on Northwest Airlines' primary Web site, www.nwa.com. The
number of shares exercisable under this warrant is subject to adjustment
based on the timing of implementing our solutions on the www.nwa.com Web
site. If our solutions are implemented on this Web site within 12 months
of the issuance of the warrant, the warrant will be exercisable for
1,650,000 shares of common stock. If our solutions are implemented on
this Web site after 12 months but on or prior to 18 months after the
warrant issuance date, the warrant will be exercisable for 1,500,000
shares of common stock. If our solutions are implemented on this Web
site after 18 months but on or prior to 24 months after the warrant
issue date, the warrant will be exercisable for 1,250,000 shares of
common stock. If our solutions are not implemented on this Web site
within 24 months after the warrant issuance date, the warrant will not
be exercisable for any shares and will terminate;
. a warrant to American Express to purchase 375,000 shares of common stock
at an exercise price of $16.50 per share, a warrant to purchase 730,023
shares of our series E convertible preferred stock at an exercise price
of $21.00 per share and a warrant to purchase 730,023 shares of our
series E convertible preferred stock at an exercise price of $31.00 per
share;
. a warrant to America West Airlines to purchase 500,000 shares of our
series E convertible preferred stock at an exercise price of $12.50 per
share, a warrant to Air Canada to purchase 200,000 shares of our series
E convertible preferred stock at an exercise price of $12.50 per share
and a warrant to Covia to purchase 1,136,821 shares of our series C
convertible preferred stock at $11.20 per share; and
. we have granted Covia the right to have us grant United Air Lines an
option to purchase, at its choice, up to 1,424,539 shares of series C
convertible preferred stock at a price of $5.125 per share or, for a
purchase price of $5.125 per share, a warrant to purchase up to
1,424,539 shares of Series C convertible preferred stock at an exercise
price of $0.01 per share. In addition, we sold Covia the right to have
us grant United Air Lines a warrant to purchase 807,698 shares of series
C convertible preferred stock at a price of $0.01 per share.
Antitakeover Effects of Provisions of the Certificate of Incorporation, Bylaws,
Delaware Law and Standstill Agreement
Certificate of Incorporation and Bylaws
We have adopted provisions in our amended and restated certificate of
incorporation and in our amended and restated bylaws that:
. provide for a classified board of directors that results in only
approximately one-third of our directors being elected at each annual
meeting of stockholders;
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<PAGE>
. eliminate the right of stockholders to call a special meeting of
stockholders or bring matters before a special meeting of stockholders;
. require stockholders to give us advance notice of their intent to
nominate directors or bring matters before an annual meeting of
stockholders;
. eliminate the ability of stockholders to take action by written consent;
and
. permit the board of directors to create one or more series of preferred
stock and to issue the shares thereof.
These provisions could adversely affect the rights of the holders of common
stock by delaying, deferring or preventing a change in control. These
provisions are intended to enhance the likelihood of continuity and stability
in the composition of the board of directors and in the policies formulated by
the board of directors and to discourage certain types of transactions that may
involve an actual or threatened change of control. These provisions are
designed to reduce our vulnerability to an unsolicited acquisition proposal and
to discourage certain tactics that may be used in proxy fights. However, such
provisions could have the effect of discouraging others from making tender
offers for our shares and, as a consequence, they also may inhibit fluctuations
in the market price of our shares that could result from actual or rumored
takeover attempts. Such provisions also may have the effect of preventing
changes in our management.
Delaware Anti-Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law, which,
subject to certain exceptions, prohibits a publicly held Delaware corporation
from engaging in any "business combination" with any "interested stockholder"
for a period of three years following the date that such stockholder became an
interested stockholder, unless:
. prior to that date, the board of directors approved either the business
combination or the transaction that resulted in the stockholder becoming
an interested stockholder;
. upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned by directors, officers
and certain employee stock plans; and
. on or subsequent to such date, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66~% of the outstanding voting stock that is not owned by the
interested stockholder.
Section 203 defines "business combination" to include:
. any merger or consolidation involving the corporation and the interested
stockholder;
. any sale, transfer, pledge or other disposition of 10% or more of our
assets involving the interested stockholder;
. subject to certain exceptions, any transaction that results in the
issuance or transfer by us of any of our stock to the interested
stockholder;
. any transaction involving us that has the effect of increasing the
proportionate share of the stock of any class or series beneficially
owned by the interested stockholder; and
. the receipt by the "interested stockholder" of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, Section 203 defines an interested stockholder as an entity or
person beneficially owning 15% or more of our outstanding voting stock and any
entity or person affiliated with or controlling or controlled by such entity or
person.
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<PAGE>
In addition, some of our stockholders are subject to standstill agreements
preventing them from acquiring over a specified percentage of our voting
securities. These standstill agreements will have the effect of making us more
difficult to be acquired by these stockholders. For a discussion of these
standstill agreements, see "Certain Transactions--Equity Financings and
Stockholders Arrangements."
Registration Rights
After this offering, the holders of 20,257,882 shares of common stock will be
entitled to certain rights with respect to the registration of these shares
under the Securities Act. Under the terms of our investors' rights agreement
between us and the holders of registrable securities, if we propose to register
any of our securities under the Securities Act, either for our own account or
for the account of other security holders exercising registration rights, these
holders are entitled to notice of such registration and are entitled to include
their shares of such common stock in the registration. Additionally, holders of
17,523,597 shares of the registrable securities are also entitled to certain
demand registration rights under which they may require us to file a
registration statement under the Securities Act at our expense with respect to
our shares of common stock, and we are required to use our best efforts to
effect such registration. Further, the holders of such demand rights may
require us to file additional registration statements on Form S-3. All of these
registration rights are subject to certain conditions and limitations, among
them the right of the underwriters of an offering to limit the number of shares
included in such registration and our right not to effect a requested
registration within six months following the initial public offering of our
securities, including this offering.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our common stock is ChaseMellon
Shareholder Services.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering (assuming no exercise of the underwriters'
overallotment option), we will have an aggregate of 32,045,425 shares of common
stock outstanding, based upon the shares outstanding as of October 15, 1999,
assuming no exercise of outstanding options. Of the total outstanding shares,
the 5,000,000 shares sold in this offering will be freely tradable without
restriction or further registration under the Securities Act of 1933, as
amended, except that any shares held by our affiliates, as that term is defined
under the Securities Act, may generally only be sold in compliance with the
limitations of Rule 144 described below.
Sales of Restricted Shares
The remaining 27,045,424 shares of common stock are deemed restricted shares
under Rule 144. Sale in the public market of these restricted shares is limited
by restrictions under the Securities Act and lock-up agreements or similar
arrangements under which the holders of such shares have agreed not to sell or
otherwise dispose of any of their shares for a period of 180 days after the
date of this prospectus without the prior written consent of Donaldson, Lufkin
& Jenrette Securities Corporation. On the date of this prospectus, no shares
other than the 5,000,000 shares offered hereby will be eligible for sale in the
public market. Beginning 180 days after the date of this prospectus, or earlier
with the consent of Donaldson, Lufkin & Jenrette Securities Corporation,
19,966,847 restricted shares will become available for sale in the public
market, subject to certain limitations of Rule 144 of the Securities Act.
The following table shows approximately when the 27,045,424 shares of our
common stock that are not being sold in this offering, but which will be
outstanding when this offering is complete, will be eligible for sale in the
public market:
Eligibility of Restricted Shares for Sale in the Public Market
<TABLE>
<CAPTION>
Number of
Date Shares
<S> <C>
At the effective date................................................ 0
180 days after the effective date.................................... 19,966,847
From time to time after 180 days after the effective date............ 7,078,577
</TABLE>
Resale of 4,317,825 of the restricted shares that will become available for
sale in the public market starting 180 days after the effective date of this
offering will be limited by volume and other resale restrictions under Rule 144
of the Securities Act because the holders are our affiliates.
In general, under Rule 144 of the Securities Act as currently in effect,
beginning 90 days after this offering, a person (or persons whose shares are
aggregated) who has beneficially owned restricted shares for at least one year,
including a person who may be deemed an affiliate, is entitled to sell within
any three-month period a number of shares that does not exceed the greater of
1% of the then-outstanding shares of our common stock (approximately 320,454
shares after giving effect to this offering) and the average weekly trading
volume of our common stock on the Nasdaq National Market during the four
calendar weeks preceding such sale. Sales under Rule 144 of the Securities Act
are subject to certain restrictions relating to manner of sale, notice and the
availability of current public information about us. A person who is not our
affiliate at any time during the 90 days preceding a sale, and who has
beneficially owned shares for at least two years, would be entitled to sell
such shares immediately following this offering without regard to the volume
limitations, manner of sale provisions or notice or other requirements of Rule
144 of the Securities Act. However, the transfer agent may require an opinion
of counsel that a proposed sale of shares comes within the terms of Rule 144 of
the Securities Act prior to effecting a transfer of such shares.
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<PAGE>
Prior to this offering, there has been no public market for our common stock
and no predictions can be made of the effect, if any, that the sale or
availability for sale of shares of additional common stock will have on the
market price of our common stock. Nevertheless, sales of substantial amounts of
such shares in the public market, or the perception that such sales could
occur, could adversely affect the market price of the common stock and could
impair our future ability to raise capital through an offering of our equity
securities.
Options
As of October 15, 1999, options to purchase a total of 4,715,355 shares of
common stock pursuant to the 1996 stock incentive plan were exercisable. All of
the shares subject to options are subject to lock-up agreements or similar
arrangements. An additional 5,000,000 shares of common stock were reserved as
of August 16, 1999 for future option grants or direct issuances under the 1999
stock incentive plan, 2,500,000 shares of common stock were reserved as of
August 16, 1999 under our 1999 employee stock purchase plan and 750,000 shares
of common stock were reserved as of August 16, 1999 under our 1999 directors'
stock option plan. See "Management--Stock Plans" and Notes 8 and 11 of Notes to
Consolidated Financial Statements.
We intend to file a registration statement on Form S-8 under the Securities
Act to register all shares of common stock subject to outstanding stock options
and common stock issued or issuable under our 1996 and 1999 stock incentive
plans and our 1999 employee stock purchase plan. We expect to file such a
registration statement shortly after the closing of this offering. Such
registration statement is expected to become effective upon filing. Shares
covered by this registration statement will thereupon be eligible for sale in
the public markets, subject to the lock-up agreements.
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UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement, the underwriters named below, for whom Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Smith Barney Inc., Bear, Stearns & Co. Inc. and
WR Hambrecht + Co are acting as representatives, have severally agreed to
purchase, and GetThere.com has agreed to sell to them, severally, the
respective number of shares of common stock set forth opposite their respective
names below:
<TABLE>
<CAPTION>
Number of
Underwriters: Shares
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...............
Salomon Smith Barney Inc. ........................................
Bear, Stearns & Co. Inc. .........................................
WR Hambrecht + Co ................................................
---------
Total........................................................... 5,000,000
=========
</TABLE>
The underwriting agreement provides that the obligations of the underwriters
to purchase and accept delivery of the shares of common stock in the offering
are subject to approval by their counsel of legal matters concerning the
offering and to conditions precedent that must be satisfied by GetThere.com.
The underwriters are obligated to purchase and accept delivery of all the
shares of common stock in the offering, other than those shares covered by the
over-allotment option described below, if any are purchased.
The underwriting agreement provides that the underwriters will severally
agree to purchase shares of common stock from GetThere.com at $ per share
and propose to make a public offering of those shares at the initial public
offering price set forth on the cover of this prospectus. If the shares are
sold at the initial public offering price, the underwriters will receive a fee,
referred to as the underwriting fee, of $ per share.
In addition to offering part of the shares of common stock directly to the
public at the initial public offering price, the underwriters plan to offer
part of the shares to dealers, including the underwriters, at such price less a
concession not in excess of $ per share. The underwriters may allow, and
such dealers may re-allow, to other dealers a concession not in excess of
$ per share. After the initial offering of the common stock, the public
offering price and other selling terms may be changed by the representatives of
the underwriters at any time without notice. The underwriters do not intend to
confirm sales to any accounts over which they exercise discretionary authority.
The underwriting agreement provides that GetThere.com will grant to the
underwriters an option, exercisable for 30 days after the date of this
prospectus, to purchase, from time to time, in whole or in part, up to an
aggregate of 750,000 additional shares of common stock at the initial public
offering price less underwriting discounts and commission. The underwriters may
exercise the option solely to cover over-allotments, if any, made in connection
with the offering. To the extent that the underwriters exercise the option,
each underwriter will become obligated, subject to conditions contained in the
underwriting agreement, to purchase its pro rata portion of such additional
shares based on the underwriters' percentage underwriting commitment as
indicated in the above table.
The underwriting agreement also provides that GetThere.com will indemnify the
underwriters against liabilities which may arise in connection with the
offering, including liabilities under the Securities Act of 1933, and
contribute to payments that the underwriters may be required to make.
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As required by the underwriting agreement, each of GetThere.com's officers,
directors and other stockholders, option holders and warrant holders who hold
in the aggregate 39,736,667 shares of common stock and options (including
shares held by officers and directors) have agreed not to:
. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock, other than shares
acquired in the initial public offering or on the Nasdaq National Market,
or any securities convertible into or exercisable or exchangeable for
common stock; or
. enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock, whether any such transaction described above is to be
settled by delivery of common stock or other securities, in cash, or
otherwise.
Donaldson, Lufkin & Jenrette Securities Corporation may choose to release
some of these shares from such restrictions prior to the expiration of the 180-
day lock-up period, although it has no current intention of doing so.
In addition, during such 180-day period, GetThere.com has also agreed not to
file any registration statement with respect to, and each of its executive
officers, directors and stockholders of GetThere.com have agreed not to make
any demand for, or exercise any right with respect to, the registration of any
shares of common stock or any securities convertible into or exercisable or
exchangeable for common stock without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation.
The following table sets forth the items of compensation considered to be
underwriting compensation under the rules of the National Association of
Securities Dealers:
<TABLE>
<CAPTION>
Total
-----------------------------
Per Without With
Share Over-Allotment Over-Allotment
<S> <C> <C> <C>
Underwriting fees paid by us.............
Expenses payable by us...................
---- ---- ----
Total..................................
==== ==== ====
</TABLE>
Prior to the offering, there has been no established trading market for the
common stock. The initial public offering price of the shares of common stock
offered will be determined by negotiation among GetThere.com and the
underwriters. The factors to be considered in determining the initial public
offering price include:
. our history and the prospects for the industry in which we compete;
. our past and present operations;
. our historical results of operations;
. our prospects for future earnings;
. the recent market prices of securities of generally comparable companies;
and
. the general condition of the securities markets at the time of the
offering.
Other than in the United States, no action has been taken by GetThere.com or
the underwriters that would permit a public offering of the shares of common
stock offered in any jurisdiction where action for that purpose is required.
The shares of common stock offered may not be offered or sold, directly or
indirectly, nor may this prospectus or any other offering material or
advertisements in connection with the offer and sale of any such shares of
common stock be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with the applicable rules and
regulations of such jurisdiction. Persons into whose
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possession this prospectus comes are advised to inform themselves about and
observe any restrictions relating to the offering and the distribution of this
prospectus. This prospectus does not constitute an offer to sell or a
solicitation of any offer to buy any shares of common stock offered in any
jurisdiction in which such an offer or a solicitation is unlawful.
In connection with the offering, the underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the common stock.
Specifically, the underwriters may over-allot the offering, creating a
syndicate short position. The underwriters may bid for and stabilize the price
of the common stock. In addition, the underwriting syndicate may reclaim
selling concessions from syndicate members and selected dealers if they
repurchase previously distributed common stock in syndicate covering
transactions, in stabilizing transactions or otherwise. These activities may
stabilize or maintain the market price of the common stock above independent
market levels. The underwriters are not required to engage in these activities,
and may end any of these activities at any time.
A limited number of shares allocated to WR Hambrecht + Co will be distributed
in this offering through the use of the Internet. WR Hambrecht + Co will post
on its Web site (www.wrhambrecht.com) a brief description of the offering which
contains only the information permitted under Rule 134. Visitors to this Web
site will have access to the preliminary prospectus by links on the Web site.
WR Hambrecht + Co will accept conditional offers to purchase shares from
account holders that are determined eligible to participate. In the event that
the demand for shares exceeds the amount of shares allocated to it, WR
Hambrecht + Co will, at the request of GetThere.com, first allocate shares to
persons with an established relationship with GetThere.com. If any shares
remain, WR Hambrecht + Co will allocate them to individual and institutional
account holders, considering the following criteria: trading history of the
account with respect to initial public offerings, post-offering activity in
previous offerings and tenure of the account.
The underwriters have reserved for sale, at the initial public offering
price, up to 250,000 shares of the common stock to be sold in the offering for
officers, employees, advertisers, vendors and other persons selected by
GetThere.com. The underwriters have also reserved for sale, at the initial
public offering price, up to 500,000 shares of the common stock to be sold in
the offering to Covia, a wholly owned subsidiary of United Air Lines. The
number of shares available for sale to the general public will be reduced to
the extent Covia or these entities purchase these reserved shares. Any reserved
shares not so purchased will be offered by the underwriters to the general
public on the same basis as other shares sold in this offering.
WR Hambrecht + Co is an investment banking firm formed as a limited liability
company in February 1998. In addition to this offering, WR Hambrecht + Co has
engaged in the business of public and private equity investing and financial
advisory services since its inception. The chairman and chief executive officer
of WR Hambrecht + Co, William R. Hambrecht, has 40 years of experience in the
securities industry. Mr. Hambrecht is a director of GetThere.com and
beneficially owns 50,000 shares and options to acquire an additional 15,000
shares of GetThere.com common stock.
83
<PAGE>
LEGAL MATTERS
The validity of the shares of common stock being offered by GetThere.com will
be passed upon for GetThere.com by Gunderson Dettmer Stough Villeneuve Franklin
& Hachigian, LLP, Menlo Park, California, which has acted as our counsel in
connection with this offering. Certain legal matters in connection with this
offering will be passed upon for the underwriters by Brobeck, Phleger &
Harrison LLP, Palo Alto, California.
EXPERTS
The financial statements as of January 31, 1999 and 1998 and for each of the
three years in the period ended January 31, 1999 included in this Prospectus
have been so included in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firms as experts in
auditing and accounting.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 with respect to the common stock being offered. This
prospectus, which forms a part of the registration statement, does not contain
all of the information set forth in the registration statement. For further
information with respect to us and our common stock, reference is made to the
registration statement. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily complete, and,
in each instance, reference is made to the copy of such contract or document
filed as an exhibit to the registration statement, and each such statement is
qualified in all respects by such reference.
Copies of the registration statement may be examined without charge at the
Public Reference Section of the Securities and Exchange Commission, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and the Securities and
Exchange Commission's Regional Offices located at Seven World Trade Center,
13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any portion of
the registration statement can be obtained from the Public Reference Section of
the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, upon payment of certain prescribed fees. The Securities and
Exchange Commission maintains a Web site that contains registration statements,
reports, proxy and information statements and other information regarding
registrants (including us) that file electronically. The address of such Web
site is http://www.sec.gov.
We intend to distribute annual reports containing audited financial
statements and will make copies of quarterly reports available for the first
three quarters of each fiscal year containing unaudited interim financial
statements.
84
<PAGE>
GETTHERE.COM, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................................... F-2
Balance Sheet.............................................................. F-3
Statement of Operations.................................................... F-4
Statement of Stockholders' Deficit......................................... F-5
Statement of Cash Flows.................................................... F-6
Notes to Financial Statements.............................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The reincorporation described in Note 1 of the financial statements had not
been consummated at September 13, 1999. When it has been consummated, we will
be in a position to furnish the following report:
"To the Board of Directors and Stockholders
of GetThere.com, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of stockholders' deficit and of cash flows present fairly, in all
material respects, the financial position of GetThere.com, Inc. at January 31,
1998 and 1999, and the results of its operations and its cash flows for each
of the three years in the period ended January 31, 1999, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards, which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above."
/s/ PricewaterhouseCoopers LLP
San Jose, California
September 13, 1999
F-2
<PAGE>
GETTHERE.COM, INC.
BALANCE SHEET
(In thousands, except per share data)
<TABLE>
<CAPTION>
January 31, Pro Forma
----------------- July 31, July 31,
1998 1999 1999 1999
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents............ $ 1,332 $ 8,268 $ 3,306 $ 4,161
Short-term investments............... -- 7,534 3,235 3,235
Accounts receivable, net............. 774 1,203 863 863
Prepaid expenses and other current
assets.............................. 78 136 593 593
------- -------- -------- -------
Total current assets............... 2,184 17,141 7,997 8,852
Property and equipment, net............ 2,158 3,621 7,352 7,352
Other assets........................... 48 44 46 46
Restricted cash (Note 5)............... -- -- 805 805
Intangible assets...................... -- -- 2,739 2,739
------- -------- -------- -------
$ 4,390 $ 20,806 $ 18,939 $19,794
======= ======== ======== =======
LIABILITIES, REDEEMABLE
CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
- ----------------------------------
Current liabilities:
Borrowings........................... $ 469 $ 328 $ 234 $ 234
Accounts payable..................... 1,271 1,000 3,264 3,264
Accrued liabilities.................. 358 1,339 2,637 2,637
Deferred revenue..................... 755 1,072 1,120 1,120
Capital lease obligations, current... 173 1,313 2,945 2,945
------- -------- -------- -------
Total current liabilities.......... 3,026 5,052 10,200 10,200
Convertible note payable............... -- -- 1,650 1,650
Capital lease obligations, long-term... 434 3,235 5,364 5,364
------- -------- -------- -------
3,460 8,287 17,214 17,214
------- -------- -------- -------
Redeemable convertible preferred stock
and warrants (Note 6)................. 10,784 35,131 35,215 --
------- -------- -------- -------
Commitments (Note 5)
Stockholders' equity (deficit):
Common stock; $.0001 par value;
50,000 shares authorized; 3,920,
4,544 and 7,664 (unaudited) and
19,803 (unaudited) shares issued and
outstanding at January 31, 1998 and
1999, July 31, 1999 and pro forma,
respectively........................ -- -- -- 1
Additional paid-in capital........... 499 9,523 51,821 87,890
Note receivable from stockholders.... -- -- (2,707) (2,707)
Unearned compensation................ (370) (6,503) (36,628) (36,628)
Accumulated deficit.................. (9,983) (25,632) (45,976) (45,976)
------- -------- -------- -------
Total stockholders' equity
(deficit)......................... (9,854) (22,612) (33,490) 2,580
------- -------- -------- -------
$ 4,390 $ 20,806 $ 18,939 $19,794
======= ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
GETTHERE.COM, INC.
STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended Six Months Ended
January 31, July 31,
-------------------------- -----------------
1997 1998 1999 1998 1999
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Transaction................... $ 253 $ 2,098 $ 4,932 $ 2,090 $ 4,862
Professional service.......... 329 903 1,515 619 736
------- ------- -------- ------- --------
Total revenues.............. 582 3,001 6,447 2,709 5,598
Cost of revenues............... 134 1,680 4,292 1,623 3,973
------- ------- -------- ------- --------
Gross profit................... 448 1,321 2,155 1,086 1,625
------- ------- -------- ------- --------
Operating expenses:
Research and development...... 906 2,266 4,113 1,726 1,819
Sales and marketing........... 1,030 2,393 5,732 2,522 3,612
General and administrative.... 1,962 2,887 6,127 2,687 6,973
Stock-based compensation...... 20 103 2,005 561 9,416
------- ------- -------- ------- --------
Total operating expenses.... 3,918 7,649 17,977 7,496 21,820
------- ------- -------- ------- --------
Loss from operations........... (3,470) (6,328) (15,822) (6,410) (20,195)
Interest income (expense),
net........................... 33 (30) 173 (82) (149)
------- ------- -------- ------- --------
Net loss....................... (3,437) (6,358) (15,649) (6,492) (20,344)
Accretion of series B and C
redeemable convertible
preferred stock............... -- (51) (139) (55) (84)
------- ------- -------- ------- --------
Net loss attributable to common
stockholders.................. $(3,437) $(6,409) $(15,788) $(6,534) $(20,449)
======= ======= ======== ======= ========
Basic and diluted net loss per
share......................... $ (1.22) $ (1.81) $ (3.99) $ (1.71) $ (5.02)
======= ======= ======== ======= ========
Shares used in computing basic
and diluted net loss per
share......................... 2,827 3,537 3,957 3,823 4,071
======= ======= ======== ======= ========
Pro forma basic and diluted net
loss per share................ $ (1.05) $ (1.26)
======== ========
Shares used in computing pro
forma basic and diluted net
loss per share................ 14,917 16,199
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
GETTHERE.COM, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
(In thousands)
<TABLE>
<CAPTION>
Note
Common Stock Additional Receivable Total
-------------- Paid-In from Unearned Accumulated Stockholders'
Shares Amount Capital Stockholders Compensation Deficit Deficit
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 31,
1996................... 3,000 $ -- $ 3 $ -- $ -- $ (188) $ (185)
Issuance of common
stock.................. 335 -- 34 -- -- -- 34
Issuance of restricted
common stock for
services............... 437 -- 59 -- (59) -- --
Issuance of warrant in
connection with
equipment lease line... -- -- 10 -- -- -- 10
Unearned compensation... -- -- 14 -- (14) -- --
Amortization of unearned
compensation........... -- -- -- -- 20 -- 20
Net loss................ -- -- -- -- -- (3,437) (3,427)
----- ----- ------- ------- -------- -------- --------
Balance at January 31,
1997................... 3,772 -- 120 -- (53) (3,625) (3,558)
Issuance of common stock
for services........... 40 -- 6 -- (6) -- --
Exercise of common stock
options................ 108 -- 10 -- -- -- 10
Accretion of series B
and C redeemable
convertible preferred
stock.................. -- -- (51) -- -- -- (51)
Unearned compensation... -- -- 414 -- (414) -- --
Amortization of unearned
compensation........... -- -- -- -- 103 -- 103
Net loss................ -- -- -- -- -- (6,358) (6,358)
----- ----- ------- ------- -------- -------- --------
Balance at January 31,
1998................... 3,920 -- 499 -- (370) (9,983) (9,854)
Issuance of restricted
common stock for
services............... 692 -- 1,118 -- (1,118) -- --
Issuance of warrant in
connection with
equipment lease line... -- -- 13 -- -- -- 13
Exercise of common stock
options................ 83 -- 12 -- -- -- 12
Issuance of common stock
option in connection
with preferred stock -- -- 1,000 -- -- -- 1,000
Accretion of series B
and C redeemable
convertible preferred
stock.................. -- -- (139) -- -- -- (139)
Unearned compensation... -- -- 7,035 -- (7,035) -- --
Amortization of unearned
compensation........... -- -- -- -- 2,005 -- 2,005
Forfeiture of common
stock.................. (151) -- (15) -- 15 -- --
Net loss................ -- -- -- -- -- (15,649) (15,649)
----- ----- ------- ------- -------- -------- --------
Balance at January 31,
1999................... 4,544 -- 9,523 -- (6,503) (25,632) (22,612)
Exercise of common stock
options in exchange for
notes receivable
(unaudited)............ 2,707 -- 2,707 (2,707) -- -- --
Issuance of restricted
common stock for
employment
(unaudited)............ 125 -- 1,186 -- (1,186) -- --
Issuance of warrant in
connection with
equipment and lease
line................... -- -- 15 -- -- -- 15
Exercise of common stock
options (unaudited).... 288 -- 119 -- -- -- 119
Accretion of series B
and C redeemable
convertible preferred
stock (unaudited)...... -- -- (84) -- -- -- (84)
Unearned compensation
(unaudited)............ -- -- 38,355 -- (38,355) -- --
Amortization of unearned
compensation
(unaudited)............ -- -- -- -- 9,416 -- 9,416
Net loss (unaudited).... -- -- -- -- -- (20,344) (20,344)
----- ----- ------- ------- -------- -------- --------
Balance at July 31, 1999
(unaudited)............ 7,664 $ -- $51,821 $(2,707) $(36,628) $(45,976) $(33,490)
===== ===== ======= ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
GETTHERE.COM, INC.
STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended Six Months Ended
January 31, July 31,
-------------------------- -----------------
1997 1998 1999 1998 1999
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss....................... $(3,437) $(6,358) $(15,649) $(6,492) $(20,344)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization................ 119 413 1,462 633 1,828
Common stock issued for
services.................... 11 6 559 130 1,625
Amortization of unearned
compensation................ 9 97 1,446 431 7,791
Provision for doubtful
accounts.................... 74 82 508 212 115
Non-cash interest expense.... 20 72 261 137 175
Changes in assets and
liabilities:
Accounts receivable......... (209) (627) (937) (420) 345
Restricted cash............. -- -- -- -- (805)
Accounts payable............ 323 951 (271) (790) 2,264
Accrued liabilities......... (99) 259 981 803 564
Deferred revenue............ 164 591 317 394 48
Prepaid expenses and other
assets..................... 8 (73) (54) (137) (459)
------- ------- -------- ------- --------
Net cash used in operating
activities............... (3,017) (4,587) (11,377) (5,099) (6,853)
------- ------- -------- ------- --------
Cash flows from investing
activities:
Purchase of property and
equipment..................... (637) (2,006) (2,925) (1,914) (5,234)
Acquisition of businesses...... (100) -- -- -- (800)
Proceeds from sale of short-
term investments.............. -- -- -- -- 4,299
Purchase of short-term
investments................... -- -- (7,534) (5,126) --
------- ------- -------- ------- --------
Net cash used in investing
activities................ (737) (2,006) (10,459) (7,040) (1,735)
------- ------- -------- ------- --------
Cash flows from financing
activities:
Proceeds from issuance of
series A redeemable
convertible preferred stock... 4,200 -- -- -- --
Proceeds from issuance of
series B redeemable
convertible preferred stock
and warrants.................. -- 6,498 -- -- --
Proceeds from issuance of
series C redeemable
convertible preferred stock,
options and warrants.......... -- -- 25,208 25,208 --
Proceeds from borrowings on
capital lease obligations..... 118 494 3,972 3,261 4,308
Principal payments on capital
lease obligations............. (22) (125) (279) (113) (707)
Proceeds from (payment of) bank
borrowings.................... -- 469 (141) (47) (94)
Proceeds from issuance of
common stock.................. 34 10 12 5 119
------- ------- -------- ------- --------
Net cash provided by
financing activities..... 4,330 7,346 28,772 28,314 3,626
------- ------- -------- ------- --------
Net increase (decrease) in cash
and cash equivalents.......... 576 753 6,936 16,175 (4,962)
Cash and cash equivalents at
beginning of period........... 3 579 1,332 1,332 8,268
------- ------- -------- ------- --------
Cash and cash equivalents at
end of period................. $ 579 $ 1,332 $ 8,268 $17,507 $ 3,306
======= ======= ======== ======= ========
Supplemental disclosure of cash
flow information:
Cash paid for interest......... $ 19 $ 57 $ 339 $ 166 $ 220
======= ======= ======== ======= ========
Supplemental non-cash investing
and financing activities:
Warrants issued to acquire
redeemable convertible
preferred stock............... $ 10 $ 363 $ 4,139 $ 4,139 $ --
======= ======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company
GetThere.com, Inc. ("GetThere" or the "Company") was incorporated as Internet
Travel Network in California on August 7, 1995. The Company changed its name to
GetThere.com on July 15, 1999.
GetThere.com is a provider of Internet-based travel procurement and supply
solutions primarily for businesses and travel suppliers. The Company's
Internet-based solutions are designed to reduce current inefficiencies in the
travel procurement and supply process by decreasing the role of intermediaries,
such as travel agents, by providing customers with valuable travel information
and by streamlining the internal procurement and supply processes of the
Company's customers. The Company offers corporate customers a service that
allows the Corporation's employees to gain access to a restricted web site
where they can make travel reservations. GetThere.com customizes the web site,
provides the software and servers which processes the reservation, provides
reports on reservation activities, answers phone inquiries and either prints
and delivers tickets, or passes the reservation to the Company's travel agent
for ticketing. The Company offers Travel Suppliers and other customers a public
web site where customers can make travel reservations. GetThere.com provides
the software and servers that process the reservation, provides phone and email
based traveler support, prints and delivers tickets, and provides reporting on
travel activities.
Reincorporation
In August 1999, the Company's Board of Directors authorized the
reincorporation of the Company in the State of Delaware. As a result of the
reincorporation, the Company is authorized to issue 200 million shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par value
preferred stock. The Board of Directors has the authority to issue undesignated
preferred stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof. Share and per share information for each
of the periods presented has been retroactively adjusted to reflect the
reincorporation.
Unaudited interim results
The accompanying balance sheet as of July 31, 1999, the statement of
operations and of cash flows for the six months ended July 31, 1999 and 1998
and the statement of stockholders' deficit for the six months ended July 31,
1999 are unaudited. In the opinion of management, these statements have been
prepared on the same basis as the audited financial statements and include all
adjustments, consisting only of normal recurring adjustments, necessary for the
fair presentation of the results of these periods. The data disclosed in the
notes to the financial statements for these periods is unaudited.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue recognition
All revenues arise from providing internet-based services. Transaction
revenues are largely derived from on-line orders, hosting fees, advertising,
and traveler support services. Hosting fees are charged to gain access to the
Company's on-line travel reservation service. Support fees are charged to
customers who elect to utilize traveler support services, and are earned on
either a fixed monthly basis or per minute of call time used. Revenues from on-
line hotel and car reservations are recognized when the commission is received.
Revenues from on-line air travel reservations are recognized upon the
completion of the transaction. Completion is generally defined as either the
placement of an order with a third party supplier or the fulfillment of an
order by printing and delivering tickets, depending upon the nature of the
agreement with the customer. Hosting fees are recognized monthly when invoiced.
Advertising revenues are primarily derived from advertising contracts in which
the Company is obligated to
F-7
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
provide a minimum number of "impressions" or times that an advertisement is
viewed. Advertising revenues are recognized as a percentage of completion of
the guaranteed minimum number of impressions is achieved, provided that no
significant obligations remain. If obligations remain, revenues from
advertising are deferred until such obligations are fulfilled. Revenues from
traveler support services are recognized as the services are performed.
Professional service revenues are primarily derived from fees for
implementation and customization of customer web sites utilizing the Company's
technology. These fees are recognized over the term of the project based upon
the project's state of completion. Payments received in advance of the
performance of services are recorded as deferred revenue. Provisions are made
in full for any contracts during the period in which a loss on a particular
contract becomes probable.
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 transaction systems, traveler support and travel service center.
Costs associated with outside consultants, commission sharing with ePartners,
content licensing, printing and delivery costs of tickets, computer reservation
service charges and advertising agency fees are also included as cost of
revenues. It is impracticable for the Company to allocate the costs of
facilities or other expense items that are not directly attributable to revenue
generation activities; these common costs and expenses are primarily included
in general and administrative expenses.
Cash, cash equivalents and short-term investments
The Company considers all highly liquid investments purchased with a maturity
of three months or less at the date of acquisition to be cash equivalents;
those with original maturities greater than three months and current maturities
less than twelve months from the balance sheet date are considered short-term
investments.
Both cash equivalents and short-term investments are considered available-
for-sale securities and are carried at cost, which approximates fair value. The
following schedule summarizes the estimated fair value of the Company's cash,
cash equivalents and short-term investments (in thousands):
<TABLE>
<CAPTION>
January 31, July 31,
------------- -----------
1998 1999 1999
(unaudited)
<S> <C> <C> <C>
Cash and cash equivalents:
Cash.................................................. $ 286 $ 367 $ --
Money market funds.................................... 1,046 3,725 3,306
Corporate debt securities............................. -- 4,176 --
------ ------ ------
$1,332 $8,268 $3,306
====== ====== ======
Short-term investments:
Certificates of deposit............................... $ 629 $ --
Corporate debt securities............................. 997 --
Foreign debt securities............................... 1,019 --
U.S. government debt securities....................... 4,889 3,235
------ ------
$7,534 $3,235
====== ======
</TABLE>
Concentration of credit risk
Financial instruments that potentially subject the Company to a concentration
of credit risk consist of cash, cash equivalents, short-term investments and
accounts receivable. Cash, cash equivalents and short-term
F-8
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
investments are deposited with high credit, quality financial institutions. The
Company's accounts receivable are derived from revenue earned from customers
located primarily in the United States. The Company performs credit evaluations
of its customers' financial condition and, generally, requires no collateral.
The Company maintains an allowance for doubtful accounts receivable based upon
the expected collectibility of such accounts.
For fiscal year 1997, Customers A and B accounted for 18% and 13% of the
Company's revenues, respectively. For fiscal year 1998, Customer B accounted
for 12% of the Company's revenues. For fiscal year 1999, Customer C accounted
for 25% of the Company's revenues. For the six months ended July 31, 1998 and
1999 (unaudited) Customer C accounted for 21% and 34% of the Company's revenue,
respectively. No other customer accounted for 10% or more of revenues during
fiscal years 1997, 1998 and 1999.
At January 31, 1998, Customers B, C and D accounted for 11%, 12% and 14% of
the total accounts receivable, respectively. At January 31, 1999, Customers C,
D and E accounted for 19%, 13% and 13% of the total accounts receivable,
respectively. At July 31, 1999, Customer C accounted for 23% (unaudited) of the
total accounts receivable. No other customer accounted for 10% or more of the
Company's total accounts receivable at the respective balance sheet dates.
Fair value of instruments
The Company's financial instruments including cash and cash equivalents,
short-term investments, accounts receivable, accounts payable and accrued
liabilities are carried at cost, which approximate fair value due to the short-
term maturity of these instruments. The carrying value of the Company's capital
leases approximate fair market value because of prevailing interest rates.
Redeemable preferred stocks are recorded at their redemption amounts which is
considered to approximate fair value.
Capitalization of internal-use software costs
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1 ("SOP 98-1"), "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 is effective for
financial statements for years beginning after December 15, 1998 and provides
guidance on accounting for the costs incurred for computer software developed
or obtained for internal use including the requirement to capitalize specified
costs and amortization of such costs. The Company adopted the provisions of SOP
98-1 in its fiscal year beginning February 1, 1999.
Property and equipment
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, generally
three years. Leasehold improvements are amortized over the shorter of the
remaining term of the lease or the estimated useful lives of the assets.
Impairment of long-lived assets
The Company periodically evaluates the carrying value of long-lived assets to
be held and used, including but not limited to, capital assets and intangible
assets, when events and circumstances warrant such a review. The carrying value
of a long-lived asset is considered impaired when the anticipated undiscounted
cash flow from such asset is separately identifiable and is less than its
carrying value. In that event, a loss is recognized based on the amount by
which the carrying value exceeds the fair value of the long-lived asset. Fair
value is determined primarily using the anticipated cash flows discounted at a
rate commensurate with the risk involved. Losses on long-lived assets to be
disposed of are determined in a similar manner, except that fair values are
reduced for the cost of disposal. No losses from impairment have been
recognized in the financial statements.
F-9
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Advertising
Advertising is expensed as incurred. Advertising and public relations
expenses for the fiscal years ended January 31, 1997, 1998 and 1999 and for the
six months ended July 31, 1998 and 1999 totaled $401,000, $536,000, $1,077,000,
$461,000 (unaudited) and $545,000 (unaudited), respectively.
Stock-based compensation
The Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of Accounting Principles Board Opinion No. 25
("APB 25"), "Accounting for Stock Issued to Employees" using the multiple
option approach and complies with the disclosure provisions of Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-
Based Compensation."
The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of SFAS 123 and the Emerging Issues Task Force
in Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or In Conjunction with Selling, Goods or
Services."
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 future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. 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, if necessary, by the amount of any tax benefits that, based on
available evidence, are not expected to be realized.
Net loss per share
The Company computes net loss per share in accordance with Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share" and
SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS
128 and SAB 98, basic net loss per share is computed by dividing the net loss
attributed to common stockholders for the period by the weighted average number
of shares of common stock outstanding during the period excluding shares of
Common Stock subject to repurchase. Such shares of common stock subject to
repurchase aggregated:
<TABLE>
<S> <C> <C> <C> <C>
Six Months Ended July
Year Ended January 31, 31,
---------------------------------------------- --------------------------------------
1997 1998 1999 1998 1999
------- ------- ------- ------- ---------
(Unaudited)
318,409 275,464 401,831 646,178 3,033,378
</TABLE>
These shares primarily vest with the passage of time subject to continued
employment by certain executives.
F-10
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following table sets forth the computation of basic and diluted net loss
per share for the periods indicated:
<TABLE>
<CAPTION>
Six Months Ended July
Year Ended January 31, 31,
-------------------------------------- -------------------------
1997 1998 1999 1998 1999
(unaudited)
<S> <C> <C> <C> <C> <C>
Numerator:
Net loss attributable
to common
stockholders......... $(3,437,000) $(6,409,000) $(15,788,000) $(6,534,000) $(20,449,000)
Denominator:
Weighted average
shares............... 3,201,768 3,873,540 4,474,073 4,420,963 5,423,907
Weighted average
unvested shares of
common stock subject
to repurchase........ (374,484) (337,005) (516,681) (597,882) (1,352,820)
----------- ----------- ------------ ----------- ------------
Denominator for basic
and diluted
calculation............ 2,827,284 3,536,535 3,957,392 3,823,081 4,071,087
=========== =========== ============ =========== ============
Net loss per share:
Basic and diluted..... $ (1.22) $ (1.81) $ (3.99) $ (1.71) $ (5.02)
=========== =========== ============ =========== ============
</TABLE>
The following table sets forth potential shares of common stock that are not
included in the diluted net loss per share calculation above because to do so
would be anti-dilutive for the periods indicated:
<TABLE>
<CAPTION>
Six Months Ended July
Year Ended January 31, 31,
------------------------------ ---------------------
1997 1998 1999 1998 1999
(unaudited)
<S> <C> <C> <C> <C> <C>
Weighted average effect of
common stock equivalents
Series A preferred
stock.................. 2,764,787 3,705,991 3,705,991 3,705,991 3,705,991
Series B preferred
stock.................. -- 3,098,938 3,914,448 3,914,448 3,914,448
Series C preferred
stock.................. -- -- 2,948,085 1,370,292 4,110,875
Warrants and options to
purchase
redeemable convertible
preferred stock........ 13,235 351,386 2,814,579 1,857,594 3,772,171
Shares of common stock
subject
to repurchase.......... 374,484 337,005 516,681 597,882 1,352,820
Common stock options.... 57,156 544,136 1,188,637 1,032,144 3,197,445
--------- --------- ---------- ---------- ----------
3,209,662 8,037,456 15,088,421 12,478,351 20,053,750
========= ========= ========== ========== ==========
</TABLE>
Pro forma net loss per share (unaudited)
Pro forma net loss per share is computed using the weighted average number of
shares of common stock outstanding, including the pro forma effects of the
automatic conversion of the Company's series A, B and C preferred stock and the
exercise of series B and E warrants into shares of the Company's common stock
effective upon the closing of the Company's initial public offering as if such
conversion occurred at the beginning of the period, or at the date of issuance,
if later. The resulting pro forma adjustment for the fiscal year ended January
31, 1999 and the six months ended July 31, 1999 includes (i) an increase in the
weighted average shares used to compute the basic net loss per share of
10,959,969 and 12,127,654, respectively, and (ii) a decrease in the net loss
attributable to common stockholders for the accretion of redeemable convertible
preferred stock of $139,000 and $55,000, respectively. The calculation of
diluted net loss per share excludes
F-11
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
potential shares of common stock as the effect of their inclusion would be
antidilutive. Pro forma potential common stock consists of common stock subject
to repurchase rights and incremental shares of common stock issuable upon the
exercise of stock options.
Pro forma stockholders' equity (unaudited)
Effective upon the closing of the Company's initial public offering, the
outstanding shares of series A, B and C preferred stock will automatically
convert into 3,705,991, 3,914,448, 4,110,875 shares of common stock,
respectively. In addition, 407,852 warrants to purchase Series B and E
preferred stock will be exercised to purchase the same number of shares of
common stock. Proceeds from this exercise will total $855,000. Also effective
upon the closing of the Company's initial public offering, the outstanding
warrants for 17,647, 86,225 and 3,281,090 shares of series A, B and C preferred
stock, respectively, will automatically convert to outstanding warrants for the
same number of shares of common stock. The pro forma effects of these
transactions are unaudited and have been reflected in the accompanying pro
forma balance sheet at July 31, 1999.
Comprehensive income
Effective February 1, 1998, the Company adopted the provisions of Statements
of Financial Accounting Standard No. 130 ("SFAS 130"), "Reporting Comprehensive
Income". SFAS 130 establishes standards for reporting comprehensive income and
its components in financial statements. Comprehensive income, as defined,
includes all changes in equity (net assets) during a period from nonowner
sources. To date, the Company has not had any transactions that are required to
be reported in comprehensive income.
Segment information
Effective February 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosures about
Segments of an Enterprise and Related Information." The Company identifies its
operating segments based on business activities and management responsibility.
During the fiscal years ended January 31, 1997, 1998 and 1999, the Company
operated in a single business segment providing internet-based services.
Recent accounting pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133 is effective for all fiscal quarters beginning with the quarter ending July
31, 1999. In July 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133" which deferred the effective date until the fiscal
quarter ending July 31, 2000. The adoption of SFAS No. 133 is not expected to
have a material effect on the Company's results of operations, financial
position or cash flows.
In April 1998, the AICPA issued SOP 98-5 "Reporting on the Costs of Start-Up
Activities." Start-up activities are defined broadly as those one-time
activities related to opening a new facility, introducing a new product or
service, commencing some new operation or organizing a new entity. Under SOP
98-5, the cost of start-up activities should be expensed as incurred. SOP 98-5
is effective February 1, 1999 and the Company does not expect its adoption to
have a material effect on their combined results of operations, financial
position or cash flows.
F-12
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
NOTE 2--RELATED PARTY TRANSACTIONS:
During the fiscal years ended January 31, 1998 and 1999 and the six months
ended July 31, 1998 and 1999, the Company provided services to United Air
Lines, an investor of the Company. Services provided to the investor totaled
(in thousands):
<TABLE>
<CAPTION>
Six Months
Year Ended Ended July
January 31, 31,
------------ ------------
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Transaction revenues.............................. $ 47 $1,143 $488 $1,633
Professional service revenues..................... 145 351 83 258
----- ------ ----- ------
Total $192 $1,494 $571 $1,891
===== ====== ===== ======
</TABLE>
Amounts due from the investor totaled $111,000, $336,000 and $322,000
(unaudited) at January 31, 1998 and 1998 and July 31, 1999, respectively. There
were no material related party transactions in fiscal 1997.
NOTE 3--BALANCE SHEET COMPONENTS:
<TABLE>
<CAPTION>
January 31, July 31,
--------------- -----------
1998 1999 1999
(in thousands) (unaudited)
<S> <C> <C> <C>
Accounts receivable:
Accounts receivable........................... $ 929 $ 1,743 $ 1,400
Less: Allowance for doubtful accounts......... (155) (540) (537)
------ ------- -------
$ 774 $ 1,203 $ 863
====== ======= =======
Property and equipment, net:
Computer equipment............................ $2,367 $ 4,055 $ 8,988
Furniture and fixtures........................ 311 537 657
Leasehold improvements........................ 12 1,023 1,529
------ ------- -------
2,690 5,615 11,174
Less: Accumulated depreciation and
amortization................................. (532) (1,994) (3,822)
------ ------- -------
$2,158 $ 3,621 $ 7,352
====== ======= =======
Equipment subject to capital leases included above, totaled $2,161,000,
$5,244,000 and $9,448,000 (unaudited) at January 31, 1998 and 1999 and July 31,
1999, respectively. Accumulated amortization on such equipment totaled
$400,000, $1,614,000 and $2,817,000 (unaudited) at January 31, 1998 and 1999
and July 31, 1999, respectively.
<CAPTION>
January 31, July 31,
--------------- -----------
1998 1999 1999
(in thousands) (unaudited)
<S> <C> <C> <C>
Accrued liabilities:
Payroll and related expenses.................. $ 250 $ 724 $ 683
Acquisition accruals.......................... -- -- 616
Other......................................... 108 615 1,338
------ ------- -------
$ 358 $ 1,339 $ 2,637
====== ======= =======
</TABLE>
F-13
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
NOTE 4--BORROWINGS:
In April 1997, the Company entered into a financing agreement with a bank,
which provides for a term loan with borrowings up to $500,000 of capital
expenditure purchases. The outstanding principal balance is due in equal
monthly installments of $16,000 ending on October 2000 together with interest
at the bank's prime rate plus 1.75% (9.5% at January 31, 1999). At January 31,
1999, $328,000 was outstanding under this term loan.
Borrowings are secured by all of the Company's assets except leased assets.
The term loan requires the Company to meet certain financial covenants
including quick ratio, tangible net worth and profitability requirements. At
January 31, 1999, the Company was in compliance with the covenants of this
agreement.
Equipment lease line
In April 1996, the Company entered into an equipment financing arrangement
which provided for borrowings of up to $250,000, secured by the assets
acquired. In conjunction with the financing agreement, the Company issued a
warrant to purchase 17,647 additional shares of series A redeemable convertible
preferred stock with an exercise price of $1.1333 per share. The warrant can be
exercised up to the earlier of May 2003 and two years from the effective date
of the Company's initial public offering. The Company determined that the fair
value of the warrant approximated $10,000 using the Black Scholes model and has
recorded the fair value as additional interest expense. In February 1998, the
Company extended the equipment lease line to $3,250,000 through January 1999.
The conditions and covenants of the extended agreement remain unchanged from
the previous agreement. In association with this extension, the Company issued
a warrant to purchase 54,216 shares of series B redeemable convertible
preferred stock for $1.66 per share. The Company determined that the fair value
of the warrant approximated $13,000 using the Black Scholes model and has
recorded the fair value as additional interest expense.
In March 1997, the Company entered into another equipment financing
arrangement which provided for borrowings of up to $500,000, secured by the
assets acquired. In February 1998, the Company extended the equipment lease
line to $2,100,000 through January 1999. The conditions and covenants of the
extended agreement remain unchanged from the previous agreement. In association
with this extension, the Company issued warrants to purchase 28,916 shares of
series B redeemable convertible preferred stock for $1.66 per share. The
Company determined the fair value of the warrant approximated $15,000 using the
Black Scholes model and has recorded the fair value as additional interest
expense.
In June 1999, the Company entered into an agreement to extended the Company's
then current $3,250,000 equipment lease line to $5,750,000 through June 2000.
The conditions and covenants of the extended agreement remain unchanged from
the previous agreement. In association with this extension, the Company issued
warrants to purchase 19,500 shares of series B convertible preferred stock at a
price equal to 85% of the next financing in excess of $10,000,000. The Company
will determine the fair value of the warrant using the Black Scholes model and
will record the fair value as additional interest expense during the quarter
ending October 31, 1999.
NOTE 5--COMMITMENTS:
Leases
The Company leases office space and equipment under noncancelable operating
and capital leases with various expiration dates through the year 2004. Rent
expense for the years ended January 31, 1997, 1998 and 1999 and for the six
months ended July 31, 1998 and 1999 totaled $99,000, $196,000, $463,000,
$197,000 (unaudited) and $467,000 (unaudited), respectively.
F-14
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
In May 1999, the Company entered into an operating lease for new office
facilities in Menlo Park, California that expires in May 2004. Under the terms
of this agreement, $805,000 of cash was pledged as collateral on an outstanding
letter of credit and was classified as restricted cash at July 31, 1999
(unaudited). The restricted cash balance will be reduced by $109,000 after the
first year of the lease and by $174,000 each year thereafter provided no event
of default has occurred. The Company was in compliance with such covenants at
July 31, 1999 (unaudited).
In association with the lease arrangement, the Company issued warrants to
purchase 16,407 share of series E convertible preferred stock at an exercise
price equal to the next equity financing or $10 per share if the Company fails
to close a financing by September 30, l999. The Company determined that the
fair value of the warrant approximated $28,000 using the Black Scholes model
with an exercise price of $10 and has recorded the fair value as additional
interest expense in the second quarter of fiscal 2000.
Future minimum lease payments under all noncancelable operating and capital
leases, as of January 31, 1999 and including a new office space operating lease
executed in May, 1999, are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
Fiscal Year Ending January 31, ------- ---------
(in thousands)
<S> <C> <C>
2000....................................................... $1,633 $1,103
2001....................................................... 1,926 1,420
2002....................................................... 1,438 1,375
2003....................................................... 102 1,419
2004....................................................... -- 1,468
Thereafter................................................. -- 495
------ ------
5,099 $7,280
======
Less: Amount representing interest......................... 551
------
4,548
Less: Current portion...................................... 1,313
------
Long-term portion of capital lease obligations............. $3,235
======
</TABLE>
The Company has entered into employment agreements with certain officers and
employees of the Company. The agreements generally provide for annual bonuses
and incentive stock options as determined by the board of directors as well as
covenants not-to-compete during the employment term and for a period
thereafter. The employment agreements also generally provide for severance in
the event the individual is terminated without cause.
NOTE 6--REDEEMABLE CONVERTIBLE PREFERRED STOCK AND WARRANTS:
At January 31, 1999 and July 31, 1999 (unaudited), redeemable convertible
preferred stock consisted of the following:
<TABLE>
<CAPTION>
Liquidation
Shares and
---------------------- Redemption
Series Designated Outstanding Amount
<S> <C> <C> <C>
A......................................... 4,000,000 3,705,991 $ 4,200,000
B......................................... 4,500,000 3,914,448 6,498,000
C......................................... 10,099,998 4,110,875 21,068,000
D1........................................ 1 -- --
D2........................................ 1 -- --
---------- ---------- -----------
18,600,000 11,731,314 $31,766,000
========== ========== ===========
</TABLE>
F-15
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The holders of redeemable convertible preferred stock are entitled to various
rights and preferences as follows:
Voting
Each share of series A, B, C, D1, D2, D3 and E has voting rights equal to the
equivalent number of shares of common stock into which it is convertible. The
holders of series D1, D2 and D3 also have the right to each elect one Board
seat.
Dividends
Holders of series A, B, C and E redeemable convertible preferred stock are
entitled to receive noncumulative dividends at the per annum rate of $0.079331,
$0.1162, $0.35875 and $0.875 per share, respectively, when and if declared by
the board of directors. These dividends are payable in preference to any
declaration or payment of any dividend on common stock, series D1 convertible
preferred stock, series D2 convertible preferred stock or series D3 convertible
preferred stock. The board from inception through January 31, 1999 has declared
no dividends on the redeemable convertible preferred stock or common stock.
Liquidation
In the event of any liquidation, dissolution or winding up of the Company,
including a merger, acquisition or sale of assets where the beneficial owners
of the Company's common stock and redeemable convertible preferred stock own
less than a majority of the resulting voting power of the surviving entity, the
holders of series A, B, C, D1, D2, D3 and E are entitled to receive an amount
equal to $1.1333, $1.66, $5.125, $10, $10, $12.50 and $12.50 per share plus any
declared but unpaid dividends, respectively. If the assets and funds thus
distributed are insufficient to permit full payment, all assets and funds will
be distributed ratably among the holders of series A, B, C, D1, D2, D3 and E
convertible preferred stock in proportion to their full preferential amounts.
After payment has been made to the holders of the redeemable convertible
preferred stock, all remaining assets of the Company will be distributed
ratably among the holders of all classes of stock based on the number of shares
held by each holder. Distribution rights for the holders of the redeemable
convertible preferred stock, as described, will cease at such time as the
holders of the series A and B shares receive an aggregate of $4.5332 and $4.98
per share, respectively.
Redemption
Upon the request of the holders of the majority of the outstanding shares of
series A, B, C, and E at any time prior to sixty days before April 23, 2002,
the shares are redeemable in four annual installments beginning not earlier
than April 23, 2002 and continuing thereafter on the first, second and third
anniversaries of the initial redemption date. The shares may be redeemed at a
price equal to the original issue price, subject to adjustments for dilution
and declared and unpaid dividends. The difference between the carrying value
and the redemption value of the redeemable convertible preferred stock results
primarily from the value attributed to the series B warrants and series C
options granted.
Conversion
Each share of series A, B, C, D1, D2, D3 and E redeemable convertible
preferred stock is convertible, at the option of the holder, according to a
conversion ratio, subject to adjustment for dilution. Each share of series A,
B, C, D1, D2, D3 and E redeemable convertible preferred stock automatically
converts into the number of shares of common stock into which such shares are
convertible at the then effective conversion ratio (currently one to one) upon:
(1) the closing of a public offering of common stock at a price per share of at
least $6.50 with gross proceeds of at least $15,000,000, or (2) the consent of
the holders of at least 75% of redeemable convertible preferred stock.
F-16
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Warrants and Options for Redeemable Convertible Preferred Stock
In connection with the issuance of series B redeemable convertible preferred
stock on April 17, 1997, the Company issued warrants to purchase 391,445
additional shares of series B redeemable convertible preferred stock with an
exercise price of $1.66 per share. The warrants can be exercised prior to April
2002. The Company determined the fair value of the warrants approximated
$338,000 using the Black Scholes pricing model. As discussed above, this amount
is being accreted ratably over the life of the instrument.
In April 1997, the Company issued a warrant to purchase 30,120 additional
shares of series B redeemable convertible preferred stock with an exercise
price of $1.66 per share in conjunction with a banking arrangement. The warrant
can be exercised prior to April 15, 2002. The Company determined the fair value
of the warrants approximated $25,000 and has recorded the fair value as
additional interest expense in 1997.
In connection with the issuance of series C redeemable convertible preferred
stock in May 1998, the Company is required, at the request of the holder, to
immediately issue a warrant to purchase 807,698 additional shares of series C
redeemable convertible preferred stock with an exercise price of $0.01 per
share. Proceeds from the warrant totaled $4,139,000. The Company determined
that the fair value of the warrant approximated the proceeds using the Black
Scholes pricing model and included such amount in redeemable convertible
preferred stock in the fiscal 1999 financial statements. The warrant is
exercisable immediately and has an indefinite exercise period. Upon the closing
of a public offering in which the Company's outstanding series C redeemable
convertible preferred stock is converted into common stock, the warrant will be
exercisable for the number of shares of common stock that would have resulted
from the conversion of the warrant immediately prior to such public offering.
In addition, on this date the Company granted the holder an option to purchase,
at its choice, up to 2,473,392 shares of series C preferred stock at a price of
$5.125 per share or, for a purchase price of $5.125 per share, a warrant to
purchase up to 2,473,392 shares of series C preferred stock at an exercise
price of $0.01 per share. As a result of an unsatisfied contingency, the holder
currently has the right to receive either an option to purchase 1,424,539
shares of series C preferred stock or a warrant to purchase 1,424,539 shares of
series C preferred stock. These options terminate on the earlier of November
10, 2000 or the date the Company is acquired. The Company valued the fixed
portion of the option grant on the date of issuance at approximately $940,000
using the Black Scholes pricing model. As discussed above, a portion of the
total proceeds received was allocated to this instrument which resulted in a
discount on the series C preferred stock that is being accreted ratably over
the period from issuance until the first redemption date.
NOTE 7--COMMON STOCK:
The Company's amended Certificate of Incorporation authorizes the issuance of
50,000,000 shares of $.0001 par value common stock. The Company had reserved
shares of the authorized common stock for future issuance as follows:
<TABLE>
<CAPTION>
January July 31,
31, 1999 1999
(unaudited)
<S> <C> <C>
Conversion of series A preferred Stock............... 4,000,000 4,000,000
Conversion of series B preferred Stock............... 4,500,000 4,500,000
Conversion of series C preferred Stock............... 10,099,998 10,098,998
Conversion of series D1 preferred Stock.............. 1 1
Conversion of series D2 preferred Stock.............. 1 1
Exercise of stock options under stock option plan.... 2,601,190 7,491,190
---------- ----------
21,201,190 26,090,190
========== ==========
</TABLE>
F-17
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The Company has granted stock to certain founders and employees under a
restricted stock plan. As of July 31, 1999, the Company had 340,689 shares of
common stock that were subject to certain repurchase rights by the Company. The
Company's right to repurchase such shares declines on a percentage basis,
usually over three years, based on the length of the employees continual
employment with the Company.
NOTE 8--EMPLOYEE BENEFIT PLANS:
401(k) Savings Plan
The Company has a savings plan (the "Savings Plan") that qualifies as a
deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
Under the Savings Plan, participating employees may defer a percentage (not to
exceed 25%) of their eligible pretax earnings up to the Internal Revenue
Service's annual contribution limit. All employees on the United States payroll
of the Company are eligible to participate in the Savings Plan. The Company is
not required to contribute to the Savings Plan and has made no contributions
since the plan's inception.
Stock Option Plan
In May, 1996, the Company's board of directors adopted the 1996 Stock Option
Plan (the "Plan") under which 1,341,190 shares of the Company's common stock
had been reserved for issuance of options. The Plan provides for the granting
of options to employees and consultants of the Company. In the fiscal years
ended January 31, 1998 and 1999 and for the six months ended July 31, 1999, the
Company had reserved an additional 800,000 shares, 460,000 shares and 4,890,000
shares (unaudited), respectively, for issuance under the Plan. Options granted
under the Plan may be either incentive stock options ("ISO") or nonqualified
stock options ("NSO"). ISOs may be granted only to Company employees (including
officers and directors). NSOs may be granted either to Company employees or
consultants.
At the July 27, 1999 meeting, the board of directors approved an increase in
the maximum number of shares of common stock authorized for issuance under the
1996 Stock Incentive Plan from 7,491,190 to 12,491,190 shares. This amendment
requires stockholder approval.
Options under the plans may be granted for periods up to ten years and at
prices no less than 85% of the estimated fair value of the shares on the date
of grant as determined by the Board of Directors provided, however, that (i)
the exercise price of an ISO may not be less than 100% of the estimated fair
value of the shares on the date of grant, and (ii) the exercise price of an ISO
granted to a 10% shareholder may not be less than 110% of the estimated fair
value of shares on the date of grant. Options are exercisable immediately,
subject to repurchase rights held by the Company which lapse over a maximum
period of ten years, at such times and under such conditions as determined by
the board of directors. Options generally vest at a rate of 12.5% after six
months and 2.08% per month thereafter.
F-18
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following table summarizes the activity under the Plan for the fiscal
years ended January 31, 1998, 1999 and the six months ended July 31, 1999:
<TABLE>
<CAPTION>
Fiscal Year Ended January 31,
--------------------------------------------------------- Six Months Ended
1997 1998 1999 July 31, 1999
----------------- ------------------- ------------------- --------------------
Weighted Weighted Weighted Weighted
Average Average Average Average
Exercise Exercise Exercise Exercise
Shares Price Shares Price Shares Price Shares Price
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period.............. -- $ -- 448,950 $0.10 1,081,525 $0.14 2,085,292 $0.65
Granted................. 477,350 0.10 965,350 0.15 1,554,250 0.83 5,024,047 1.35
Exercised............... -- -- (108,261) 0.10 (82,933) 0.13 (2,994,930) 0.94
Cancelled............... (28,400) 0.10 (224,514) 0.11 (467,550) 0.18 (332,599) 0.81
------- --------- --------- ----------
Outstanding at end of
period................. 448,950 0.10 1,081,525 0.14 2,085,292 0.65 3,781,810 1.33
======= ========= ========= ==========
Options exercisable at
end of period.......... 448,950 1,081,525 1,915,292 3,511,810
======= ========= ========= ==========
Weighted average fair
value of options
granted during the
period................. $0.07 $0.81 $3.88 $6.80
===== ===== ===== =====
</TABLE>
Certain of the options exercised during the six months ended July 31, 1999
were issued in exchange for notes receivable, which are full recourse and
additionally collateralized by the underlying shares of common stock and other
personal property. These notes receivable are payable on the earlier of June
21, 2004 or 180 days after the borrower's employment with the Company
terminates for any reason and bear interest at rates ranging from 5.22% to
5.37% of the unpaid principal balance each year. These notes receivable have
been included in stockholders' equity.
The following table summarizes information about stock options outstanding
and exercisable at January 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding at Options Exercisable
January 31, 1999 at January 31, 1999
-------------------------------- --------------------
Weighted
Average
Remaining Weighted Weighted
Number of Contractual Average Number of Average
Shares Life Exercise Shares Exercise
Exercise Prices Outstanding (Years) Price Exercisable Price
<S> <C> <C> <C> <C> <C>
$ 0.10................ 233,750 7.9 $0.10 233,750 $0.10
$ 0.16................ 455,086 8.8 $0.16 455,086 $0.16
$ 0.60................ 366,456 9.3 $0.60 366,456 $0.60
$ 1.00................ 1,030,000 9.8 $1.00 860,000 $1.00
--------- ---------
2,085,292 1,915,292
========= =========
</TABLE>
F-19
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following table summarizes information about stock options outstanding
and exercisable at July 31, 1999 (unaudited):
<TABLE>
<CAPTION>
Options Outstanding at July Options Exercisable
31, 1999 at July 31, 1999
-------------------------------- --------------------
Weighted
Average
Remaining Weighted Weighted
Number of Contractual Average Number of Average
Shares Life Exercise Shares Exercise
Exercise Prices Outstanding (Years) Price Exercisable Price
<S> <C> <C> <C> <C> <C>
$ 0.10................ 152,202 7.3 $0.10 152,202 $0.10
$ 0.16................ 280,442 8.2 $0.16 280,442 $0.16
$ 0.60................ 329,216 8.8 $0.60 329,216 $0.60
$ 1.00................ 2,519,050 9.6 $1.00 2,249,050 $1.00
$ 3.00................ 311,400 10.0 $3.00 311,400 $3.00
$ 7.00................ 189,500 10.0 $7.00 189,500 $7.00
--------- ---------
3,781,810 3,511,810
========= =========
</TABLE>
Fair value disclosures
Had compensation costs for the Company's option plan been determined based on
the fair value at the grant dates using the minimum value model as prescribed
by SFAS 123, the Company's pro forma net loss for the fiscal years ended
January 31, 1997, 1998 and 1999 would have been $(3,942,000), $(6,440,000) and
$(16,543,000), respectively, which represents an increase in the net loss
attributable to common stockholders of $(5,000), $(31,000) and $(755,000),
respectively. In addition, the pro forma basic and diluted net loss per share
under SFAS 123 would have been $(1.22), $(1.82) and $(4.18), respectively for
the periods presented. The fair value of each option is estimated on the date
of grant using the minimum value method with the following assumptions:
<TABLE>
<CAPTION>
Fiscal Year Ended
January 31,
-------------------
1997 1998 1999
<S> <C> <C> <C>
Expected life (years)................................... 4 4 4
Risk-free interest rate................................. 6.23% 6.48% 5.14%
Dividend yield.......................................... 0% 0% 0%
</TABLE>
Because the determination of the fair value granted after the Company becomes
a public entity will include an expected volatility factor and because
additional option grants are expected to be made each year, the compensation
expense for the three years ended January 31, 1999 are not representative of
the pro forma effects of option grants on reported net income (loss) for future
years.
Unearned compensation
In connection with certain stock option grants the Company recognized
unearned compensation which is being amortized over the vesting periods of the
related options, usually four years. The total unearned compensation recorded
by the Company from August 7, 1995 (inception) through July 31, 1999 was
$47,159,000. The fair value per share used to calculate unearned compensation
was derived by reference to the preferred stock values, reduced by a nominal
discount factor. Future compensation charges are subject to reduction for any
employee who terminated employment prior to the expiration of such employee's
option vesting period. The amortization of unearned compensation during the
fiscal year ended January 31, 1997, 1998
F-20
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
and 1999 and the six months ended July 31, 1999 totaled $5,000, $87,000,
$1,919,000 and $8,753,000 (unaudited), respectively. Additionally, the Company
recorded unearned compensation for restricted common stock granted to service
providers, which is being amortized over the related vesting period.
NOTE 9--INCOME TAXES:
No provision for income taxes was recorded from inception through January 31,
1999 as the Company incurred net operating losses during the period.
The components of the Company's net deferred tax assets consist of the
following:
<TABLE>
<CAPTION>
January 31,
----------------
1998 1999
(in thousands)
<S> <C> <C>
Net operating loss carryforwards........................... $ 3,082 $ 7,920
Other reserves and accruals................................ 215 545
------- -------
Total deferred tax assets.................................. 3,297 8,465
Less: valuation allowance.................................. (3,297) (8,465)
------- -------
$ -- $ --
======= =======
</TABLE>
Management believes, based on the available objective evidence, that
sufficient uncertainty exists regarding the realization of the deferred tax
assets such that a full valuation allowance has been recorded.
At January 31, 1999, the Company had approximately $19,800,000 of federal and
$13,750,000 of state net operating tax loss carryforwards available to offset
future taxable income. Such carryforwards expire in varying amounts through
2019. Under the Tax Reform Act of 1986, the amounts of and the benefit from net
operating loss carryforwards may be impaired or limited in certain
circumstances. Events which may cause limitations in the utilization of net
operating losses in any one year include, but are not limited to, a cumulative
stock ownership change of greater than 50%, as defined, over a three year
period. Such change may have occurred as a result of the preferred stock
issuances.
NOTE 10--ACQUISITION:
In July 1999, the Company entered into an agreement to purchase certain
assets of Oasis Reservation Services, Inc. in Fort Lauderdale, Florida. The
purchase price totaled $2.45 million comprised of $800,000 cash and a
$1,650,000 convertible note. The note bears interest at a rate of 5% per annum
and is payable in full on April 14, 2000. The note is convertible into
redeemable convertible preferred stock or common stock of the Company. The note
holder may elect to convert this note into shares of equity securities issued
by the Company, either through a private placement or an initial public
offering at the price of the respective offering. This right shall terminate on
the earlier of the note maturity date or the closing of the IPO. The note shall
be convertible into the number of shares of equity securities based on the
principal amount of the note plus accrued and unpaid interest divided by the
price paid for the equity securities by third parties.
This acquisition was accounted for using the purchase method of accounting.
The aggregate purchase price was allocated to the net assets acquired, based
upon their respective fair market value with the remainder allocated to
intangible assets, including goodwill. The Company is amortizing goodwill and
other intangible assets on a straight-line basis over 24 months.
F-21
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following summarizes the unaudited pro forma results of operations, on a
combined basis, as if the acquisition occurred as of the beginning of each of
the periods presented, after including the impact of certain adjustments such
as amortization of costs in excess of net assets acquired:
<TABLE>
<CAPTION>
Fiscal
Year-Ended Six months
January 31, Ended July 31,
1999 1999
(in thousands, except
per share data)
<S> <C> <C>
Net revenues...................................... $ 6,447 $ 5,598
Net loss.......................................... (16,464) (20,928)
Basic and diluted net loss per share.............. $ (4.16) $ (5.14)
</TABLE>
The unaudited pro forma results are not necessarily indicative of the results
of the operations that would have been reported had the acquisition occurred
prior to the beginning of the period presented. In addition, they are not
intended to be indicative of future results.
NOTE 11--SUBSEQUENT EVENTS:
Employee and Director Benefit Plans
On August 16, 1999, the board of directors approved the 1999 stock incentive
plan under which 5,000,000 shares of common stock have been reserved. On each
February 1, commencing with the year 2001, the number of shares in reserve will
automatically increase by 4% of the total number of shares of common stock that
are outstanding at that time or, if less, by 3,000,000 shares.
In August 1999, the Company adopted the 1999 employee stock purchase plan
under which 2,500,000 shares have been reserved for issuance thereafter. On
each June 1, the number of shares in reserve will automatically be restored to
2,500,000 (in other words, the reserve will be increased by the number of
shares that were issued in the prior 12 months). The plan permits purchases of
common stock via payroll deductions. The maximum payroll deduction is 15% of
the employee's cash compensation. Purchases of the common stock will occur on
May 31 and November 30 of each year. The price of each share purchased will be
85% of the lower of:
.The fair market value per share of common stock on the date immediately
before the first day of the applicable offering period; or
.The fair market value per share of common stock on the purchase date.
In August, the board of directors also adopted the 1999 directors' stock
option plan and 750,000 shares of common stock were reserved for issuance under
this plan. On each February 1, starting with the year 2001, the number of
shares in reserve will automatically be restored to 750,000. Non-employee
members of the board of directors will be eligible for option grants under the
1999 directors' stock option plan. Each non-employee director who joins the
board after the effective date of the plan will receive an initial option of
50,000 shares. The initial options vest 25% at the end of year one, and the
balance in 36 equal monthly installments. At each annual stockholder's meeting,
beginning in 2000, each non-employee director will automatically be granted an
annual option for 12,500 shares of the common stock. A new non-employee
director who receives the initial option will not receive the 12,500 share
annual option in the same calendar year. These options vest in equal monthly
installments over the one-year period following the date of the grant. The
exercise price of the option will be equal to the fair market value of the
common stock on the option grant date. The non-employee directors' options have
a 10-year term, and expire one year after a director leaves the board. Upon a
change of control of the Company, the options become fully vested. Vesting also
accelerates in the event of the optionee's death or disability.
The above plans are subject to stockholder approval.
F-22
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Initial public offering
In August, 1999, the Company's board of directors authorized management to
file a registration statement with the Securities and Exchange Commission to
permit the Company to sell shares of its common stock to the public.
Financing Activities
On August 27, 1999, the Company sold to America West Airlines ("AWA") 500,000
shares of its series C preferred stock at $5.125 per share.
On August 27, 1999, a warrant to purchase 1,650,000 shares of the Company's
series C preferred stock with an exercise price of $5.125 per share was issued
to Northwest Airlines ("NWA"). This warrant becomes fully vested and
exercisable at the date NWA begins to use the Company's travel solution on the
nwa.com Web site.
On September 14, 1999, the Company sold 500,000 shares of its series E
preferred stock to AWA at a price per share of $12.50 and issued AWA a warrant
to purchase 500,000 shares of its series E preferred stock with an exercise
price of $12.50 per share. This warrant was fully vested and exercisable on
October 1, 1999 and has an exercise period of 3 years from the vesting date.
The relative fair value of the warrant was calculated to be $3.1 million using
the Black Scholes pricing model. As a result, $3.1 million of the total
proceeds received from the sale of the series E preferred stock ($6.25 million)
was allocated to the warrant with the remainder being allocated to preferred
stock. The discount between the carrying amount and redemption value of the
preferred stock will be accreted ratably over the period until the first
redemption date.
On September 14, 1999, the Company sold 200,000 shares of its series E
preferred stock to Air Canada Airlines ("ACA") at a price per share of $12.50.
The Company also sold to ACA 500,000 shares of its series C preferred stock at
a price per share of $5.125 and issued to ACA a warrant to purchase 200,000
shares of its series E preferred stock with an exercise price of $12.50 per
share. This warrant was fully vested at the date of issuance and is exercisable
30 days after the date of issuance and has an exercise period of 3 years from
the date of first exerciseability. In the event that a commercial agreement is
not reached between ACA and the Company by November 15, 1999, the Company at
its option may repurchase the series C and E preferred stock issued to ACA at a
price per share equal to the original issue price plus a 6% interest charge
from the date of the sale to the date of repurchase. In addition, the preferred
stock warrant issued to ACA will terminate in the event that the Company
exercises its repurchase option with regard to the series C and E preferred
shares.
On September 14, 1999, the Company and American Express ("AMEX") entered into
an agreement whereby the Company agreed to sell to AMEX 875,423 shares of its
series C preferred stock at a price per share of $5.125. The Company also
agreed to sell to AMEX 2,121,076 shares of its series E preferred stock at a
price per share of $12.50. AMEX also purchased one share of series D3 preferred
stock for $12.50. As the holder of the outstanding share of series D3 preferred
stock, AMEX has the right to elect a representative to the board of directors.
In addition, on September 14, 1999, the Company issued the following fully
vested and exercisable stock warrants to AMEX:
. a warrant to purchase up to 730,023 shares of the Company's series E
preferred stock at an exercise price of $21.00 per share. This warrant
becomes exercisable 30 days after the date of issuance and has an
exercise period of 2 years.
F-23
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
. a warrant to purchase 730,023 shares of the Company's series E preferred
stock at an exercise price of $31.00 per share. This warrant becomes
exercisable 30 days after the date of issuance and has an exercise period
of 3 years.
. a warrant to purchase 375,000 shares of the Company's common stock at an
exercise price of $16.50 per share. This warrant becomes exercisable 30
days after the date of issuance and has an exercise period of 120 days
from the date of issuance.
In connection with the sale of the Company's series E preferred stock on
September 14,1999, the Company sold 1,500,000 shares of series E preferred
stock at a price per share of $12.50 to Covia and issued to Covia a warrant to
purchase 1,136,821 shares of the Company's common stock at an exercise price of
$11.20 per share. The equity instruments sold were unbundled and the aggregate
proceeds of $18.75 million allocated to each separate instrument based on the
relative fair values. The warrant has a fair value of $7.5 million using the
Black Scholes pricing model. As a result, $11.25 and $7.5 million proceeds was
allocated to the preferred stock and warrant, respectively. The preferred stock
will be classified as temporary equity and accreted to the redemption value
until the first redemption date (May 2008).
In addition, on September 14, 1999, the Company sold 720,000 shares of series
E preferred stock at a price per share of $12.50 to two venture capital funds.
Summary of proceeds allocated to the detachable securities issued
contemporaneously with preferred stock:
<TABLE>
<CAPTION>
Series Gross Detachable Value
Holder/Date of Stock Proceeds Security Allocated
- ----------- -------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Covia--5/98..................... Series C $24,951,436 Warrant/Option $ 5,200,000
AWA--9/99....................... Series E 6,250,000 Warrant 3,100,000
AMEX--9/99...................... Series E 26,513,450 Warrants 5,000,000
Covia--9/99..................... Series E 18,750,000 Warrant 7,500,000
----------- -----------
$76,646,886 $20,800,000
=========== ===========
</TABLE>
Management determined that the fair value of the Company's series C preferred
stock at September 14, 1999 was $12.50 per share. The issuance price for the
series C preferred stock in August and September 1999 was $5.125 per share. The
difference between the fair value and the issuance price will be recorded as an
intangible asset. The intangible asset will be recorded at the issuance date of
the stock and amortized over the estimated period to be benefited (three
years).
With respect to the sale of the series C preferred stock to American Express
Travel Related Services Company, America West Airlines and Air Canada Airlines
the commitment date for purposes of measuring the value of the intangible asset
was the date of issuance of these shares. The calculation of the value of the
intangible asset related to these shares is as follows:
<TABLE>
<CAPTION>
Fair Value Amount of
Series of Number of at Price Per Intangible
Stock Shares Sold Issue Date Share Asset
--------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
AMEX..................... Series C 875,423 $12.50 $5.125 $ 6,456,245
AWA...................... Series C 500,000 $12.50 $5.125 3,687,500
ACA...................... Series C 500,000 $12.50 $5.125 3,687,500
-----------
$13,831,245
===========
</TABLE>
F-24
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The value related to the stock warrant issued to NWA will be classified as an
intangible asset and amortized over a three year period in a manner similar to
the intangible asset discussed above. The warrant is not exercisable until such
date as NWA migrates its primary Web site to the Company's travel solution and
the lack of a significant disincentive for nonperformance in the agreement with
NWA, a performance commitment does not exist with regard to the NWA warrants
under EITF 96-18, paragraph 5. The value of the warrants issued to NWA will be
measured on the date that the NWA Web site is migrated to the Company's travel
solution. The Company will disclose the value of this warrant over the interim
reporting periods.
The amortization of the stock warrant value related to the intangible asset
will be included in operating expenses.
F-25
<PAGE>
Description of Graphics--Inside Back Cover
At top of the page, there is a title that reads "Customers Use our Solutions
to: Reduce Costs; Increase Productivity; Provide Real-Time Data Analysis."
At upper left side of the page, there is a screen shot of a Web page
depicting the booking of flight reservations. Immediately above the screen
shot, there is a title that reads "Search" and immediately below the screen
shot, there is a caption that reads "Travelers can book real-time reservations
using preferred vendors and negotiated rates." Opposite the screen shot, there
is a quotation, titled "Chevron," that reads " "Our research suggested that
ease-of-use was essential to the adoption of an online travel solution and
GetThere.com delivered. We hope to have wide adoption by our travelers using
the system in the future.'--Nancy Godfrey, Travel Administration Manager."
At middle right side of the page, there is a screen shot of a Web page
depicting a real-time airline seat map. Immediately above the screen shot,
there is a title that reads "Select" and immediately below the screen shot,
there is a caption that reads "Travelers can select their seats from a real-
time seat map supplied by the airline so they can pick any available seat."
Opposite the screen shot, there is a quotation, titled "Hewlett-Packard," that
reads " "Our VeriFone subsidiary installed GetThere.com's solution and has
achieved an adoption rate of more than 60%. This has led to savings of up to
15% on airline tickets.'--Joe Beyers, Vice President and General Manager,
Internet Business Unit."
At lower left side of the page, there is a screen shot of a Web page
depicting real-time data reporting. Immediately above the screen shot, there is
a title that reads "Report" and immediately below the screen shot, there is a
caption that reads "Travel managers get real-time reporting of their actual
travel spending, allowing them to manage budgets and meet supplier contracts."
Opposite the screen shot, there is a quotation, titled "Nabisco," that reads "
"Whether guiding us through implementation or customizing our product, the
GetThere.com team listened to our requirements and built a solution that
exceeded our expectations.'--Deborah Maxwell, Senior Manager, Travel."
At the lower right corner of the page, there is the GetThere.com logo.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
, 1999
[GETTHERE.COM LOGO]
5,000,000 Shares of Common Stock
----------------------
PROSPECTUS
----------------------
Donaldson, Lufkin & Jenrette
Salomon Smith Barney
Bear, Stearns & Co. Inc.
WR Hambrecht + Co
- -------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as
to matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where
that would not be permitted or legal. Neither the delivery of this prospectus
nor any sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of
GetThere.com have not changed since the date hereof.
- -------------------------------------------------------------------------------
Until , 1999 (25 days after the date of this prospectus), all dealers
that effect transactions in these shares of common stock may be required to
deliver a prospectus. This is in addition to the dealer's obligation to
deliver a prospectus when acting as an underwriter and with respect to its
unsold allotments or subscriptions.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of common stock being registered. All amounts are estimates
except the SEC registration fee and the NASD filing fees.
<TABLE>
<S> <C>
SEC Registration fee............................................. $ 20,850
NASD fee......................................................... 8,000
Nasdaq National Market initial listing fee....................... 50,000
Printing and engraving........................................... 400,000
Legal fees and expenses of the Company........................... 600,000
Accounting fees and expenses..................................... 500,000
Blue sky fees and expenses....................................... 5,000
Transfer agent fees.............................................. 15,000
Miscellaneous.................................................... 201,150
----------
Total.......................................................... $1,800,000
==========
</TABLE>
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's board of directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933
(the "Act"). Article Six of the Registrant's Bylaws provides for mandatory
indemnification of its directors and officers and permissible indemnification
of employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. The Registrant's Amended and Restated Certificate of
Incorporation provides that, pursuant to Delaware law, its directors shall not
be liable for monetary damages for breach of the directors' fiduciary duty as
directors to the Registrant and its stockholders. This provision in the
Amended and Restated Certificate of Incorporation does not eliminate the
directors' fiduciary duty, and in appropriate circumstances equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Registrant for
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws. The Registrant has
entered into Indemnification Agreements with its officers and directors, a
form of which is attached as Exhibit 10.1 hereto and incorporated herein by
reference. The Indemnification Agreements provide the Registrant's officers
and directors with further indemnification to the maximum extent permitted by
the Delaware General Corporation Law. The Registrant maintains liability
insurance for its directors and officers. Reference is also made to Section 7
of the Underwriting Agreement contained in Exhibit 1.1 hereto, indemnifying
officers and directors of the Registrant against certain liabilities, and
Section 5.6 of the Amended and Restated Investor Rights Agreement contained in
Exhibit 4.1 hereto, indemnifying certain of the Company's stockholders,
including controlling stockholders, against certain liabilities.
Item 15. Recent Sales of Unregistered Securities
Since August 1995 (inception), the Registrant has issued and sold the
following securities:
1. On August 7, 1995, the Registrant issued and sold an aggregate of
3,000,000 shares of our common stock to three founders of the Company, Al
Whaley, Dan Whaley and Bruce Yoxsimer for an aggregate purchase
II-1
<PAGE>
price of $3,000. This issuance of securities was deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as a transaction by an issuer not involving a public offering.
2. On April 23, 1996, the Registrant issued and sold 3,529,516 shares of
series A preferred stock for an aggregate purchase price of $4,000,000 to
Brentwood Associates VII, LP and ITN Joint Venture under a stock purchase
agreement. At a second closing on June 4, 1996, the Registrant issued and sold
176,475 shares of series A preferred stock for an aggregate purchase price of
$199,999 to B. Kipling and Mary Hagopian, Trustees, Timothy M. and Melissa J.
Pennington, Trustees, Margaret Leinen, Jonathan Alan Kessler, Kevin J.
McQuillan, James Yoxsimer, the 351 North San Mateo Associates Profit Sharing
Plan, Pamela Yoxsimer Holden and Frank A. Holden under a stock purchase
agreement. This issuance of securities was deemed exempt from registration
under the Securities Act in reliance on Section 4(2) of such Securities Act as
a transaction by an issuer not involving a public offering.
3. On April 23, 1996, the Registrant issued and sold 335,256 shares of
common stock to the Contrarian Group for an aggregate purchase price of
$33,526 (the value of services rendered). This issuance of securities was
deemed exempt from registration under the Securities Act in reliance on
Section 4(2) of such Securities Act as a transaction by an issuer not
involving a public offering.
4. On May 1, 1996, the Registrant issued a warrant to purchase 17,647 shares
of our series A preferred stock with an exercise price of $1.1333 per share to
Comdisco, Inc. in consideration for Comdisco's performance under a Master
Lease Agreement and Equipment Schedule dated April 2, 1996. This issuance of
securities was deemed exempt from registration under the Securities Act in
reliance on Section 4(2) of such Securities Act as a transaction by an issuer
not involving a public offering.
5. On April 15, 1997 the Registrant issued two warrants to purchase a total
of 30,120 shares of our series B preferred stock at an exercise price of
$1.133 per share to Imperial Bank in consideration for its performance under a
loan agreement. This issuance of securities was deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as a transaction by an issuer not involving a public offering.
6. On April 18, 1997, the Registrant issued and sold 3,914,448 shares of
series B preferred stock for an aggregate purchase price of $6,497,984 to U.S.
Venture Partners V, L.P., USVP International, L.P., 2180 Associates Fund V,
L.P., USVP V Entrepreneur Partners, L.P., Brentwood Associates VII, L.P.,
Brentwood Affiliates Fund, L.P., Norwest Equity Partners V, Charter Ventures
II, L.P. and Bayview Investors Ltd. under a stock purchase agreement. Each of
the nine investors was also granted a warrant to purchase series B preferred
stock in an amount totalling 10% of the number of shares it purchased in the
series B round at an exercise price of $1.66 per share. The total number of
shares available for purchase in these warrants is 391,445. This issuance of
securities was deemed exempt from registration under the Securities Act in
reliance on Section 4(2) of such Securities Act as a transaction by an issuer
not involving a public offering.
7. On February 20, 1998, the Registrant issued a warrant to purchase 28,916
shares of our series B preferred stock with an exercise price of $1.66 per
share to Phoenix Leasing, Inc. in consideration for its performance under a
loan agreement. This issuance of securities was deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as a transaction by an issuer not involving a public offering.
8. On February 23, 1998, the Registrant issued a warrant to purchase 54,216
shares of our series B preferred stock with an exercise price of $1.66 per
share to Comdisco, Inc. in consideration for its performance under several
lease agreements. This issuance of securities was deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as a transaction by an issuer not involving a public offering.
9. On May 14, 1998, the Registrant issued and sold 4,044,297 shares of our
series C preferred stock for an aggregate purchase price of $20,727,022 to
Covia under a stock purchase agreement. In addition, the
II-2
<PAGE>
Registrant granted a right to that investor to have the Registrant issue it a
warrant for 807,698 shares of series C preferred stock at an exercise price of
$0.01 per share for a purchase price of $4,139,452. At a subsequent closing on
May 29, 1998, the Registrant issued and sold an additional 66,578 shares of
our series C preferred stock for an aggregate purchase price of $341,212 to
The Hambrecht 1980 Revocable Trust and W.R. Hambrecht & Co., LLC under a stock
purchase agreement. This issuance of securities was deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as a transaction by an issuer not involving a public offering.
10. On June 7, 1999, the Registrant issued a warrant to purchase 16,407
shares of our series E preferred stock with an exercise price that will be
equal to the price of preferred equity securities sold to investors in our
next transaction. If the Registrant's next transaction did not close prior to
September 30, 1999, the exercise price would be $10.00 per share. The warrant
was issued to Souroush Kabouli in consideration for the value of real estate
services rendered. This issuance of securities was deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as a transaction by an issuer not involving a public offering.
11. On June 29, 1999, the Registrant issued a warrant to purchase 19,500
shares of our series B preferred stock with an exercise price of 85% of the
purchase price of securities offered in the Registrant's next round of
financing or the price to the public in the Registrant's initial public
offering. If neither of these events occur prior to November 12, 1999, then
the exercise price shall be $5.125 per share. The warrant was issued to
Comdisco, Inc. in consideration for their performance under several lease
agreements. This issuance of securities was deemed exempt from registration
under the Securities Act in reliance on Section 4(2) of such Securities Act as
a transaction by an issuer not involving a public offering.
12. On July 15, 1999, the Registrant issued a convertible promissory note
with a principal amount of $1,650,000 to Eastern Air Lines. This note is
convertible at the option of the holder into shares of series E preferred
stock at a price of $12.50 per share. This issuance of securities was deemed
exempt from registration under the Securities Act in reliance on Section 4(2)
of such Securities Act as a transaction by an issuer not involving a public
offering.
13. On August 27, 1999 the Registrant issued and sold 500,000 shares of
series C preferred stock for an aggregate purchase price of $2,562,500 to Air
Canada under a stock admission agreement. This issuance of securities was
deemed exempt from registration under the Securities Act in reliance on
Section 4(2) of such Securities Act as a transaction by an issuer not
involving a public offering.
14. Also on August 27, 1999, the Registrant issued a contingent warrant to
purchase up to 1,650,000 shares of series C preferred stock with an exercise
price of $5.125 per share to Northwest Airlines. This issuance of securities
was deemed exempt from registration under the Securities Act in reliance on
Section 4(2) of such Securities Act as a transaction by an issuer not
involving a public offering.
15. On September 14, 1999, the Registrant issued and sold 1,375,423 shares
of our series C preferred stock to Air Canada and American Express for an
aggregate purchase price of $7,049,043 under stock purchase agreements. This
issuance of securities was deemed exempt from registration under the
Securities Act in reliance on Section 4(2) of such Securities Act as a
transaction by an issuer not involving a public offering.
16. On September 14, 1999, the Registrant issued and sold 5,041,076 shares
of our series E preferred stock to America West Airlines, Inc., Covia,
American Express, ITN Joint Venture, MeriTech Capital Affiliates L.P.,
Meritech Capital Partners L.P. and Air Canada and one share of series D3
preferred stock to American Express investors for an aggregate purchase price
of $63,013,463 under stock purchase agreements. This issuance of securities
was deemed exempt from registration under the Securities Act in reliance on
Section 4(2) of such Securities Act as a transaction by an issuer not
involving a public offering.
17. On September 14, the Registrant issued a warrant to purchase 1,136,821
shares of series C preferred stock with an exercise price of $11.20 per share
to Covia. This issuance of securities was deemed exempt from
II-3
<PAGE>
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as a transaction by an issuer not involving a public offering.
18. On September 14, 1999, the Registrant issued two warrants to purchase a
total of 1,460,046 shares of series E preferred stock to American Express. The
exercise price for these shares ranges from $21.00 to $31.00. In addition, the
Registrant issued a warrant to American Express to purchase a total of 375,000
common shares at a price of $16.50 per share. This issuance of securities was
deemed exempt from registration under the Securities Act in reliance on
Section 4(2) of such Securities Act as a transaction by an issuer not
involving a public offering.
19. On September 14, 1999, the Registrant issued a warrant to purchase
500,000 shares of series E preferred stock with an exercise price of $12.50
per share to America West Airlines. This issuance of securities was deemed
exempt from registration under the Securities Act in reliance on Section 4(2)
of such Securities Act as a transaction by an issuer not involving a public
offering.
20. On September 14, 1999, the Registrant issued a warrant to purchase
200,000 shares of series E preferred stock with an exercise price of $12.50
per share to Air Canada. This issuance of securities was deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as a transaction by an issuer not involving a public offering.
21. As of September 12, 1999, the Registrant had granted options to purchase
9,493,798 shares of common stock to employees, consultants and other service
providers of the Registrant under its 1996 Stock Plan, of which 3,814,600
shares have been exercised, assuming no exercise of stock options after July
31, 1999. This issuance of securities was deemed exempt from registration
under the Securities Act in reliance upon Rule 701 promulgated under Section
3(b) of such Securities Act as a transaction under a compensation benefit plan
and contract relating to compensation as provided under Rule 701.
Outstanding shares of common stock, series A preferred stock, series B
preferred stock, series C preferred stock, series D1 preferred stock, series
D2 preferred stock, series D3 preferred stock, and series E preferred stock
will be converted into shares of common stock on a one-to-one basis. The
recipients of securities in each transaction represented their intentions to
acquire the securities for investment only and not with a view to or for sale
in connection with any distribution and appropriate legends were affixed to
the share certificates issued in these transactions. All recipients had
adequate access, through their relationships with us, to information about us.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1 Initial Form of Underwriting Agreement.
2.1 Form of Agreement and Plan of Reincorporation.
3.1 Amended and Restated Certificate of Incorporation of the Registrant,
to be effective upon reincorporation of the Registrant into the state
of Delaware.
3.2* Amended and Restated Certificate of Incorporation of the Registrant to
be filed immediately upon the closing of the offering.
3.3 Current Articles of Incorporation of the Registrant's Predecessor
Entity.
3.4 Current Amended and Restated Bylaws of the Registrant's Predecessor
Entity.
3.5 Amended and Restated Bylaws of the Registrant, to be effective upon
reincorporation of the Registrant into the state of Delaware.
3.6* Amended and Restated Bylaws of the Registrant, to be filed immediately
upon the closing of the offering.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
4.1 Amended and Restated Investors' Rights Agreement.
4.2 Specimen Certificate of the Registrant's common stock.
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP, counsel to the Registrant.
10.1** Form of Indemnification Agreement entered into between the Registrant
and its directors and officers.
10.2** 1996 Stock Incentive Plan (as amended and restated on February 16,
1999).
10.3** 1999 Stock Incentive Plan.
10.4** 1999 Directors' Stock Option Plan.
10.5** 1999 Employee Stock Purchase Plan.
10.6** Employment Agreement between Gadi Maier and the Registrant, dated
January 11, 1999.
10.7** Employment Agreement between Eric Sirkin and the Registrant, dated
November 16, 1998.
10.8** Employment Agreement between Kenneth R. Pelowski and the Registrant,
dated March 25, 1999.
10.9** Employment Agreement between Richard D.C. Whilden and the Registrant,
dated March 1, 1999.
10.10** Commercial Lease Agreement for facility at 445 Sherman Avenue, Palo
Alto, California.
10.11** Commercial Lease Agreements (as amended) for facilities at 451
Sherman Avenue, Palo Alto, California.
10.12** Commercial Lease Agreement for facility at 453 Sherman Avenue, Palo
Alto, California.
10.13** Gross Lease and Amended Sublease for facility at 390 Cambridge
Avenue, Palo Alto, California.
10.14** Commercial Lease Agreement for facility at 4045 Campbell Avenue,
Menlo Park, California.
10.15** Commercial Lease Agreement for call center facility in Fort
Lauderdale, Florida.
10.16**+ Services Agreement between United Airlines and the Registrant.
10.17**+ Subscriber Services Agreement between Apollo Galileo USA Partnership
and the Registrant.
10.18**+ Web Services and Travel Agreement between American Express and the
Registrant.
10.19+ Amended and Restated Shareholders Agreement.
10.20 Standstill and Bring Along Agreement between American Express and the
Registrant.
10.21** Master Lease Agreement between Comdisco, Inc. and the Registrant.
10.22** Master Equipment Lease between Phoenix Leasing, Inc. and the
Registrant.
10.23** General Security Agreement between Imperial Bank, Inc. and the
Registrant.
10.24** Form of Warrant issued to Comdisco, Inc. by the Registrant.
10.25** Form of Warrant issued to Phoenix Leasing, Inc. by the Registrant.
10.26** Form of Warrant issued to Imperial Bank, Inc. by the Registrant.
10.27** Form of Warrant which may be issued to Covia by the Registrant.
10.28 Form of Nonstatutory Stock Option Agreement issued to Covia by the
Registrant.
10.29 Form of Warrant issued to Covia by the Registrant.
10.30 Form of Warrant issued to Northwest Airlines by the Registrant.
10.31 Form of Warrant issued to America West Airlines by the Registrant.
10.32 Form of Warrant issued to Air Canada by the Registrant.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.33 Form of Warrant issued to American Express for 730,023 shares of
preferred stock by the Registrant.
10.34 Form of Warrant issued to American Express for another 730,023 shares
of preferred stock by the Registrant.
10.35 Form of Warrant issued to American Express for 375,000 shares of
common stock by the Registrant.
10.36 Internet Data Center Services Agreement between Exodus Communications,
Inc. and the Registrant.
10.37+ FlightRez Agreement between Northwest Airlines and the Registrant.
10.38+ Services Agreement between America West Airlines and the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP, counsel to the Registrant. Reference is made to Exhibit 5.1.
24.1** Power of Attorney.
27.1** Financial Data Schedule dated January 31, 1998 and January 31, 1999 .
27.2** Financial Data Schedule dated January 31, 1997.
27.3** Financial Data Schedule dated July 31, 1998 and July 31, 1999.
</TABLE>
- ---------------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment requested as to certain portions of these exhibits.
(b) Financial Statement Schedule
Schedule II--Valuations and Qualifying accounts.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
Item 17. Undertakings
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Delaware General Corporation Law, the Amended and Restated
Certificate of Incorporation or the Bylaws of the Registrant, Indemnification
Agreements entered into between the Registrant and its officers and directors,
the Underwriting Agreement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered hereunder, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-6
<PAGE>
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 2 to the Form S-1 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Menlo Park, State of California, on this 21st day of
October, 1999.
GETTHERE.COM, INC.
By: /s/ Gadi Maier
__________________________________
Gadi Maier
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
/s/ Gadi Maier President, Chief Executive October 21, 1999
______________________________________ Officer and Director
Gadi Maier (Principal Executive
Officer)
/s/ Kenneth R. Pelowski Chief Operating Officer October 21, 1999
______________________________________ and Chief Financial
Kenneth R. Pelowski Officer and Director
(Principal Financial and
Accounting Officer)
* Chief Technical Officer October 21, 1999
______________________________________ and Director
Daniel Whaley
* Chairman of the Board October 21, 1999
______________________________________
Richard D.C. Whilden
* Director October 21, 1999
______________________________________
Jeffrey D. Brody
* Director October 21, 1999
______________________________________
William R. Hambrecht
* Director October 21, 1999
______________________________________
John Ueberroth
* Director October 21, 1999
______________________________________
Dale J. Vogel
</TABLE>
*By: /s/ Gadi Maier
________________________________
Gadi Maier
*By: /s/ Kenneth R. Pelowski
________________________________
Kenneth R. Pelowski
II-8
<PAGE>
GETTHERE.COM
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to Balance at
beginning costs and end of
of period expenses Deductions period
<S> <C> <C> <C> <C>
Year ended 31 January, 1997
Allowance for doubtful accounts.. (11) (88) 25 (74)
Allowance for sales returns...... -- -- -- --
Deferred tax asset valuation
allowance....................... (99) (828) -- (927)
Year ended 31 January, 1998
Allowance for doubtful accounts.. (74) (99) 18 (155)
Allowance for sales returns...... -- -- -- --
Deferred tax asset valuation
allowance....................... (927) (2,370) -- (3,297)
Year ended 31 January, 1999
Allowance for doubtful accounts.. (155) (390) 5 (540)
Allowance for sales returns...... -- (30) -- (30)
Deferred tax asset valuation
allowance....................... (3,297) (5,168) -- (8,465)
Six months ended 31 July, 1998
Allowance for doubtful accounts.. (155) (198) (13) (366)
Allowance for sales returns...... -- -- -- --
Deferred tax asset valuation
allowance....................... (3,297) -- (2,240) (5,537)
Six months ended 31 July, 1999
Allowance for doubtful accounts.. (540) (116) 119 (537)
Allowance for sales returns...... (30) -- -- (30)
Deferred tax asset valuation
allowance....................... (8,465) (4,093) -- (12,558)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1 Initial Form of Underwriting Agreement.
2.1 Form of Agreement and Plan of Reincorporation.
3.1 Amended and Restated Certificate of Incorporation of the Registrant,
to be effective upon reincorporation of the Registrant into the state
of Delaware.
3.2* Amended and Restated Certificate of Incorporation of the Registrant
to be filed immediately upon the closing of the offering.
3.3 Current Articles of Incorporation of the Registrant's Predecessor
Entity.
3.4 Current Amended and Restated Bylaws of the Registrant's Predecessor
Entity.
3.5 Amended and Restated Bylaws of the Registrant, to be effective upon
reincorporation of the Registrant into the State of Delaware.
3.6* Amended and Restated Bylaws of the Registrant, to be filed
immediately upon the closing of the offering.
4.1 Amended and Restated Investors' Rights Agreement.
4.2 Specimen Certificate of the Registrant's common stock.
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP, counsel to the Registrant.
10.1** Form of Indemnification Agreement entered into between the Registrant
and its directors and officers.
10.2** 1996 Stock Incentive Plan (as amended and restated on February 16,
1999).
10.3** 1999 Stock Incentive Plan.
10.4** 1999 Directors' Stock Option Plan.
10.5** 1999 Employee Stock Purchase Plan.
10.6** Employment Agreement between Gadi Maier and the Registrant, dated
January 11, 1999.
10.7** Employment Agreement between Eric Sirkin and the Registrant, dated
November 16, 1998.
10.8** Employment Agreement between Kenneth R. Pelowski and the Registrant,
dated March 25, 1999.
10.9** Employment Agreement between Richard D.C. Whilden and the Registrant,
dated March 1, 1999.
10.10** Commercial Lease Agreement for facility at 445 Sherman Avenue, Palo
Alto, California.
10.11** Commercial Lease Agreements (as amended) for facilities at 451
Sherman Avenue, Palo Alto, California.
10.12** Commercial Lease Agreement for facility at 453 Sherman Avenue, Palo
Alto, California.
10.13** Gross Lease and Amended Sublease for facility at 390 Cambridge
Avenue, Palo Alto, California.
10.14** Commercial Lease Agreement for facility at 4045 Campbell Avenue,
Menlo Park, California.
10.15** Commercial Lease Agreement for call center facility in Fort
Lauderdale, Florida.
10.16**+ Services Agreement between United Airlines and the Registrant.
10.17**+ Subscriber Services Agreement between Apollo Galileo USA Partnership
and the Registrant.
10.18**+ Web Services and Travel Agreement between American Express and the
Registrant.
10.19+ Amended and Restated Shareholders Agreement.
10.20 Standstill and Bring Along Agreement between American Express and the
Registrant.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.21** Master Lease Agreement between Comdisco, Inc. and the Registrant.
10.22** Master Equipment Lease between Phoenix Leasing, Inc. and the
Registrant.
10.23** General Security Agreement between Imperial Bank, Inc. and the
Registrant.
10.24** Form of Warrant issued to Comdisco, Inc. by the Registrant.
10.25** Form of Warrant issued to Phoenix Leasing, Inc. by the Registrant.
10.26** Form of Warrant issued to Imperial Bank, Inc. by the Registrant.
10.27** Form of Warrant which may be issued to Covia by the Registrant.
10.28 Form of Nonstatutory Stock Option Agreement issued to Covia by the
Registrant.
10.29 Form of Warrant issued to Covia by the Registrant.
10.30 Form of Warrant issued to Northwest Airlines by the Registrant.
10.31 Form of Warrant issued to America West Airlines by the Registrant.
10.32 Form of Warrant issued to Air Canada by the Registrant.
10.33 Form of Warrant issued to American Express for 730,023 shares of
preferred stock by the Registrant.
10.34 Form of Warrant issued to American Express for another 730,023 shares
of preferred stock by the Registrant.
10.35 Form of Warrant issued to American Express for 375,000 shares of
common stock by the Registrant.
10.36 Internet Data Center Services Agreement between Exodus Communications,
Inc. and the Registrant.
10.37+ FlightRez Agreement between Northwest Airlines and the Registrant.
10.38+ Services Agreement between America West Airlines and the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP, counsel to the Registrant. Reference is made to Exhibit 5.1.
24.1** Power of Attorney.
27.1** Financial Data Schedule dated January 31, 1998 and January 31, 1999.
27.2** Financial Data Schedule dated January 31, 1997.
27.3** Financial Data Schedule dated July 31, 1998 and July 31, 1999.
</TABLE>
- ---------------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment requested as to certain portions of these exhibits.
<PAGE>
EXHIBIT 1.1
_________ Shares
GetThere.com, Inc.
Common Stock
UNDERWRITING AGREEMENT
----------------------
____________, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON SMITH BARNEY, INC.
BEAR, STEARNS & CO. INC.
WR HAMBRECHT & CO.
As representatives of the
several Underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
GetThere.com, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell ___________ shares of its common stock, $0.0001 par value per
share (the "Firm Shares"), to the several underwriters named in Schedule I
hereto (the "Underwriters"). The Company also proposes to issue and sell to the
several Underwriters not more than an additional __________ shares of its common
stock, $0.0001 par value per share (the "Additional Shares"), if requested by
the Underwriters as provided in Section 2 hereof. The Firm Shares and the
Additional Shares are hereinafter referred to collectively as the "Shares".
Shares of the Company's common stock outstanding after giving effect to the
sales contemplated hereby are hereinafter referred to as the "Common Stock".
SECTION 1. Registration Statement and Prospectus. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the
1
<PAGE>
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-1, including a prospectus, relating to the Shares. The registration
statement, as amended at the time it became effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to as
the "Registration Statement"; and the prospectus in the form first used to
confirm sales of Shares is hereinafter referred to as the "Prospectus". If the
Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Act registering
additional shares of Common Stock (a "Rule 462(b) Registration Statement"),
then, unless otherwise specified, any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462(b) Registration Statement.
SECTION 2. Agreements to Sell and Purchase and Lock-Up Agreements. On the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
at a price per Share of $__________ (the "Purchase Price") the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell the Additional Shares and the Underwriters shall have the right to
purchase, severally and not jointly, up to __________ Additional Shares from the
Company at the Purchase Price. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase
Additional Shares in whole or in part from time to time by giving written notice
thereof to the Company within 30 days after the date of this Agreement. You
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof, which date shall be
a business day (i) no earlier than two business days after such notice has been
given (and, in any event, no earlier than the Closing Date (as hereinafter
defined)) and (ii) no later than ten business days after such notice has been
given. If any Additional Shares are to be purchased, each Underwriter,
severally and not jointly, agrees to purchase from the Company the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
you may determine) which bears the same proportion to the total number of
Additional Shares to be purchased from the Company as the number of Firm Shares
set forth opposite the name of such Underwriter in Schedule I bears to the total
number of Firm Shares.
The Company hereby agrees not to (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise), except to the Underwriters pursuant to this Agreement, for a
period of 180 days after the date of the Prospectus without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation. Notwithstanding
the foregoing,
2
<PAGE>
during such period (i) the Company may grant stock options pursuant to the
Company's existing stock option plan and (ii) the Company may issue shares of
Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof. The Company also agrees not to file any
registration statement with respect to any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock for
a period of 180 days after the date of the Prospectus without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation. The Company
shall, prior to or concurrently with the execution of this Agreement, deliver an
agreement executed by (i) each of the directors and officers of the Company and
(ii) each stockholder listed on Annex I hereto to the effect that such person
will not, during the period commencing on the date such person signs such
agreement and ending 180 days after the date of the Prospectus, without the
prior written consent of Donaldson, Lufkin & Jenrette Corporation, (A) engage in
any of the transactions described in the first sentence of this paragraph or (B)
make any demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock.
The Company hereby agrees: (i) to issue stop-transfer instructions to the
transfer agent for the Common Stock with respect to any transaction or
contemplated transaction that would constitute a breach of or default under any
applicable lock-up agreement, and (ii) upon written request of Donaldson, Lufkin
& Jenrette Securities Corporation, to release from the lock-up agreements those
shares of Common Stock held by those holders set forth in such request. In
addition, except with the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation, the Company hereby agrees (i) not to amend or terminate,
or waive any right under, any lock-up agreement or take any other action that
would, directly or indirectly, have the same effect as an amendment or
termination, or waiver of any right under, any lock-up agreement that would
permit any holder of shares of Common Stock, or securities convertible into or
exercisable or exchangeable for Common Stock, subject to a lock-up agreement to
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, make any short sale of, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or enter into any swap or
other arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any Common Stock (regardless of whether any of
the transactions described is to be settled by the delivery of Common Stock, or
such other securities, in cash or otherwise) prior to the expiration of 180 days
after the date of the Prospectus, (ii) not to release any such stop-transfer
instruction as described in (i) above prior to the expiration of 180 days after
the date of the Prospectus, and (iii) not to consent to any sale, short sale,
grant of any option for the purchase of, or other disposition or transfer of
shares of Common Stock, or securities convertible into or exercisable or
exchangeable for Common Stock, subject to a lock-up agreement.
SECTION 3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. Delivery and Payment. The Shares shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as
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Donaldson, Lufkin & Jenrette Securities Corporation shall request no later than
two business days prior to the applicable Closing Date (as defined below). The
Company shall deliver the Shares, with any transfer taxes thereon duly paid by
the Company, to Donaldson, Lufkin & Jenrette Securities Corporation through the
facilities of The Depository Trust Company ("DTC"), for the respective accounts
of the several Underwriters, against payment to the Company of the Purchase
Price therefore by wire transfer of Federal or other funds immediately available
in New York City. The certificates representing the Shares shall be made
available for inspection not later than 9:30 a.m., New York City time, on the
business day prior to the applicable Closing Date at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of delivery
and payment for the Firm Shares shall be 9:30 a.m., New York City time, on
____________, 1999 or such other time on the same or such other date as
Donaldson, Lufkin & Jenrette Securities Corporation and the Company shall agree
in writing. The time and date of delivery for the Firm Shares are hereinafter
referred to as the "Initial Closing Date". The time and date of delivery and
payment for any Additional Shares to be purchased by the Underwriters shall be
9:30 a.m., New York City time, on the date specified in the applicable exercise
notice given by you pursuant to Section 2 or such other time on the same or such
other date as Donaldson, Lufkin & Jenrette Securities Corporation and the
Company shall agree in writing. The time and date of delivery for any Additional
Shares, if not the Initial Closing Date, are hereinafter referred to as an
"Option Closing Date". The Initial Closing Date and each Option Closing Date are
each hereinafter referred to as a "Closing Date".
The documents to be delivered on each Closing Date on behalf of the parties
hereto pursuant to Section 8 of this Agreement shall be delivered at the offices
of Brobeck, Phleger & Harrison LLP, Two Embarcadero Place, 2200 Geng Road, Palo
Alto, CA 94303 and the Shares shall be delivered at the Designated Office, all
on the applicable Closing Date.
SECTION 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective, (iv) if the Company is required to
file a Rule 462(b) Registration Statement after the effectiveness of this
Agreement, when the Rule 462(b) Registration Statement has become effective and
(v) of the happening of any event during the period referred to in Section 5(d)
below which makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires any additions to or changes
in the Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you five signed copies of the Registration Statement as
first filed with the Commission and of each amendment to it, including all
exhibits, and to furnish to you and each Underwriter designated by you such
number of conformed copies of the Registration
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Statement as so filed and of each amendment to it, without exhibits, as you may
reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the Commission
within the applicable period specified in Rule 424(b) under the Act; during the
period specified in Section 5(d) below, not to file any further amendment to the
Registration Statement and not to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to which you
shall reasonably object after being so advised; and, during such period, to
prepare and file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or amendment or supplement to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
(d) Prior to 10:00 a.m., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish in New York City to each Underwriter and any dealer as many
copies of the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event shall occur
or condition shall exist as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented, will not in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with applicable law, and to furnish to each
Underwriter and to any dealer as many copies thereof as such Underwriter or
dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you and
counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such registration or qualification in effect so
long as required for distribution of the Shares and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, however, that the Company shall
not be required in connection therewith to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Prospectus, the Registration
Statement, any preliminary prospectus or the offering or sale of the Shares, in
any jurisdiction in which it is not now so subject.
(g) To mail and make generally available to its stockholders as soon as
practicable an earnings statement covering the twelve-month period ending
December 31, 2000 that shall
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satisfy the provisions of Section 11(a) of the Act, and to advise you in writing
when such statement has been so made available.
(h) During the period of three years after the date of this Agreement, to
furnish to you as soon as available copies of all reports or other
communications furnished to the record holders of Common Stock or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other information
concerning the business and financial condition of the Company and its
subsidiaries as you may from time to time reasonably request.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel and
the Company's accountants in connection with the registration and delivery of
the Shares under the Act and all other fees and expenses in connection with the
preparation, printing, filing and distribution of the Registration Statement
(including financial statements and exhibits), any preliminary prospectus, the
Prospectus and all amendments and supplements to any of the foregoing, including
the mailing and delivering of copies thereof to the Underwriters and dealers in
the quantities specified herein, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) all costs of printing or producing this
Agreement and any other agreements or documents in connection with the offering,
purchase, sale or delivery of the Shares, (iv) all expenses in connection with
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states and all costs of printing or
producing any Preliminary and Supplemental Blue Sky Memoranda in connection
therewith (including the filing fees and fees and disbursements of counsel for
the Underwriters in connection with such registration or qualification and
memoranda relating thereto), (v) the filing fees and reasonable fees and
disbursements of counsel for the Underwriters in connection with the review and
clearance of the offering of the Shares by the National Association of
Securities Dealers, Inc., (vi) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and expenses incident to the listing of the Shares on
the Nasdaq National Market, (vii) the cost of printing certificates representing
the Shares, (viii) the costs and charges of any transfer agent, registrar and/or
depositary, and (ix) all other costs and expenses incident to the performance of
the obligations of the Company hereunder for which provision is not otherwise
made in this Section.
(j) To use its best efforts to list for quotation the Shares on the Nasdaq
National Market and to maintain the listing of the Shares on the Nasdaq National
Market for a period of three years after the date of this Agreement.
(k) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the applicable Closing Date and to satisfy all conditions precedent to the
delivery of the Shares.
(l) If the Registration Statement at the time of the effectiveness of this
Registration Statement with the Commission registering the Shares not so covered
in compliance with Rule 462(b) by 10:00 p.m., New York
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City time, on the date of this Agreement and to pay to the Commission the filing
fee for such Rule 462(b) Registration Statement at the time of the filing
thereof or to give irrevocable instructions for the payment of such fee pursuant
to Rule 111(b) under the Act.
(m) To comply with all registration, filing and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which may
from time to time be applicable to the Company; and, at a minimum, during the
period of three years after the date of this Agreement, to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of its Common Stock a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
independent public accountants, and to mail and make generally available as soon
as practicable after the end of each quarterly period (except for the last
quarterly period of each fiscal year) to such holders, a consolidated balance
sheet, a consolidated statement of operations and a consolidated statement of
cash flows (and similar financial reports of all unconsolidated subsidiaries, if
any) as of the end of and for such period, and for the period from the beginning
of such year to the close of such quarterly period, together with comparable
information for the corresponding periods of the preceding year.
(n) To comply with all provisions of all undertakings contained in the
Registration Statement, including, without limitation, to use the net proceeds
received by it from the sale of the Shares pursuant to this Agreement in the
manner specified in the Prospectus under the caption "Use of Proceeds".
(o) Prior to any Closing Date, that it will not, directly or indirectly,
issue any press release or other communication and will not hold any press
conference or event with respect to the Company, or its financial condition,
results of operations, business, properties, assets or prospects, or this
offering, without your prior written consent; provided, however, that such prior
written consent will not be necessary if (i) such press release would be issued
in the ordinary course of the Company's business and does not relate to the
market for the Company's Common Stock or (ii) (A) Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian informs the Company that such press release or
press conference or event is legally advisable and (B) the Company uses
reasonable efforts to consult with you in advance in regard to the proposed
press release or press conference or event.
SECTION 6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than any Rule
462(b) Registration Statement to be filed by the Company after the effectiveness
of this Agreement); any Rule 462(b) Registration Statement filed after the
effectiveness of this Agreement will become effective no later than 10:00 p.m.,
New York City time, on the date of this Agreement; and no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or threatened by the Commission.
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(b) (i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement), when it became effective, did not contain and, as amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement (other than
any Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act
(including, without limitation, that all matters required to be set forth or
disclosed under "Certain Transactions" are set forth or disclosed in the
Prospectus), (iii) if the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement and any amendments thereto, when they become effective
(A) will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (B) will comply in all material respects with the Act
and (iv) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the Act, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in any
preliminary prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(d) Each of the Company and its subsidiaries has been duly incorporated,
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to carry
on its business as described in the Prospectus and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Registration
Statement.
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(f) All the outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights; and the Shares have been duly
authorized and, when issued and delivered to the Underwriters against payment
therefor as provided by this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights. All outstanding shares of capital stock of the
Company were issued in compliance with all applicable federal and state
securities laws.
(g) All of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature.
(h) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(i) Neither the Company nor any of its subsidiaries is in violation of its
respective charter or by-laws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound.
(j) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound, (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property, (iv) result
in the suspension, termination or revocation of any Authorization (as defined
below) of the Company or any of its subsidiaries or any other impairment of the
rights of the holder of any such Authorization or (v) result in integration of
the offering or sale of the Shares with any other offering of the Company's
securities.
(k) The Company owns or possesses, or can acquire on reasonable terms, all
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, system or procedures), trademarks, service marks and
trade names ("Intellectual Property") currently employed by it in connection
with the business now operated by it except where the failure to own or possess
or otherwise be able to acquire such intellectual property would not, singly or
in the aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operation of
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the Company; and except as disclosed in the Registration Statement (specifically
including, but not limited to, the disclosure under the caption "Risk Factors"),
the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any of such intellectual property
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company.
(l) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers, stockholders, customers
or suppliers of the Company, on the other hand, which is required by the Act to
be described in the Registration Statement or the Prospectus which is not so
described.
(m) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(n) There are no legal or governmental proceedings pending or threatened
to which the Company or any of its subsidiaries is or could be a party or to
which any of their respective property is or could be subject that are required
to be described in the Registration Statement or the Prospectus and are not so
described; nor are there any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are not
so described or filed as required.
(o) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), any provisions of the
Employee Retirement Income Security Act of 1974, as amended, or any provisions
of the Foreign Corrupt Practices Act, or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a material adverse effect on the business, prospects, financial
condition or results of operation of the Company and its subsidiaries, taken as
a whole.
(p) Each of the Company and its subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals (each, an
"Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. Each such Authorization is valid and in full
force and effect and each of the Company and its subsidiaries is in compliance
with all the terms
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and conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such Authorization;
and such Authorizations contain no restrictions that are burdensome to the
Company or any of its subsidiaries; except where such failure to be valid and in
full force and effect or to be in compliance, the occurrence of any such event
or the presence of any such restriction would not, singly or in the aggregate,
have a material adverse effect on the business, prospects, financial condition
or results of operations of the Company and its subsidiaries, taken as a whole.
(q) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
Authorization, any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate, have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(r) This Agreement has been duly authorized, executed and delivered by the
Company.
(s) Pricewaterhouse Coopers LLP are independent public accountants with
respect to the Company and its subsidiaries as required by the Act.
(t) The consolidated financial statements included in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), together
with related schedules and notes, present fairly the consolidated financial
position, results of operations and changes in financial position of the Company
and its subsidiaries on the basis stated therein at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; the supporting schedules, if any, included in the
Registration Statement present fairly in accordance with generally accepted
accounting principles the information required to be stated therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are, in all material respects, accurately presented and prepared.
(u) The Company is not and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(v) Except as disclosed in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares registered
pursuant to the Registration Statement.
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(w) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
and (iii) neither the Company nor any of its subsidiaries has incurred any
material liability or obligation, direct or contingent.
(x) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(y) Each certificate signed by any officer of the Company and delivered to
the Underwriters or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
(z) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged; and the Company (i) has
not received notice from any insurer or agent of such insurer that substantial
capital improvements or other material expenditures will have to be made in
order to continue such insurance or (ii) has no reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers at a cost that would
not have a material adverse effect on the business, prospects, financial
conditions or results of operations of the Company.
(aa) The pro forma financial statement of the Company and the related notes
thereto set forth in the Registration Statement of the Prospectus (and any
supplement or amendment thereto) have been prepared on a basis consistent with
the historical financial statements of the Company, give effect to the
assumptions used in the preparation thereof on a reasonable basis and in good
faith and present fairly the historical and proposed transactions contemplated
by the Registration and the Prospectus. Such pro forma financial statements have
been prepared in accordance with the applicable requirements of Rule 11-02 of
Regulation S-X promulgated by the Commission. The other pro forma financial and
statistical information and data set forth in the Registration Statement and the
Prospectus ( and any supplement or amendment thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with the pro
forma financial statements.
(bb) All material tax returns required to be filed by the Company in any
jurisdiction have been filed, other than those filings being contested in good
faith, and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company have been paid, other than
those being contested in good faith and for which adequate reserves have been
provided.
(cc) Year 2000 Preparedness. There are no issues related to the Company's,
or any of its subsidiaries', preparedness for the Year 2000 that (i) are of a
character required to be described or referred to in the Registration Statement
or Prospectus by the Act which have not
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been accurately described in the Registration Statement or Prospectus or (ii)
might reasonably be expected to have a material adverse effect on their
properties, assets or rights. All internal computer systems and each Constituent
Component (as defined below) of those systems and all computer-related products
and each Constituent Component (as defined below) of those products of the
Company and each of its subsidiaries fully comply with Year 2000 Qualification
Requirements. "Year 2000 Qualifications Requirements" means that the internal
computer systems and each Constituent Component (as defined below) of those
systems and all computer-related products and each Constituent Component (as
defined below) of those products of the Company and each of its subsidiaries (i)
have been reviewed to confirm that they store, process (including sorting and
performing mathematical operations, calculations and computations), input and
output data containing date and information correctly regardless of whether the
date contains dates and times before, on or after January 1, 2000, (ii) have
been designated to ensure date and time entry recognition and calculations, and
date data interface values that reflect the century, (iii) accurately manage and
manipulate data involving dates and times, including single century formulas and
multi-century formulas, and will not cause an abnormal ending scenario within
the application or generate incorrect values or invalid results involving such
dates, (iv) accurately process any date rollover, and (v) accept and respond to
two-digit year date input in a manner that resolves any ambiguities as to the
century. "Constituent Component" means all software (including operating
systems, programs, packages and utilities), firmware, hardware, networking
components, and peripherals provided as part of the configuration. The Company
has inquired of material vendors as to their preparedness for the Year 2000 and
has disclosed in the Registration Statement or Prospectus any issues that might
reasonably be expected to result in any material adverse change.
(dd) Labor Matters. To the best of Company's knowledge, no labor
disturbance by the employees of the Company or any of its subsidiaries exists or
is imminent; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers that might be
expected to have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company.
(ee) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
(ff) No Unlawful Contributions or Other Payments. Neither the Company nor
any of its subsidiaries nor, to the best of the Company's knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution or
other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be
disclosed in the Prospectus.
SECTION 7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
its directors, its officers and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and judgments (including, without limitation, any legal or other
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expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), the Prospectus (or any amendment or supplement thereto) or
any preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Underwriter furnished in writing to the Company by such Underwriter
through you expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter who failed to deliver a Prospectus, as then
amended or supplemented, (so long as the Prospectus and any amendments or
supplements thereto was provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery on or
prior to the Closing Date) to the person asserting any losses, claims, damages,
liabilities or judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in such preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in the Prospectus, as so amended or supplemented, and such
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to such Underwriter but only with
reference to information relating to such Underwriter furnished in writing to
the Company by such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 7(a) and 7(b), the Underwriter shall not be required to assume
the defense of such action pursuant to this Section 7(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
such Underwriter). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the
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indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Donaldson, Lufkin
& Jenrette Securities Corporation, in the case of parties indemnified pursuant
to Section 7(a), and by the Company, in the case of parties indemnified pursuant
to Section 7(b). The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its written consent if the
settlement is entered into more than twenty business days after the indemnifying
party shall have received a request from the indemnified party for reimbursement
for the fees and expenses of counsel (in any case where such fees and expenses
are at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 7 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause 7(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (after deducting
underwriting discounts and commissions, but before deducting expenses) received
by the Company, and the total underwriting discounts and commissions received by
the Underwriters, bear to the total price to the public of the Shares, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company on the one hand and the Underwriters on the other
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hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(e) The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
(b) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(c) above;
if the Company is required to file a Rule 462(b) Registration Statement after
the effectiveness of this Agreement, such Rule 462(b) Registration Statement
shall have become effective by 10:00 p.m., New York City time, on the date of
this Agreement; and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending before or contemplated by
the Commission.
(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by Gadi Maier and Kenneth R. Pelowski, in their respective
capacities as the President
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and Chief Executive Officer and Chief Operating Officer and Chief Financial
Officer of the Company, satisfactory to you, confirming the matters set forth in
Sections 6(v), 8(a), 8(b) and 8(d) (other than with respect to your judgment and
the practicability of marketing the Shares), that the Company has complied with
all of the agreements and satisfied all of the conditions herein contained and
required to be complied with or satisfied by the Company on or prior to the
Closing Date and as to such other matters as you may reasonably request.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 8(d)(i),
8(d)(ii) or 8(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel for the Underwriters), dated the Closing Date, of Gunderson
Dettmer Stough Villeneuve Franklin & Hachigian, counsel for the Company, to the
effect that:
(i) each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power
and authority to carry on its business as described in the Prospectus and
to own, lease and operate its properties;
(ii) each of the Company and its subsidiaries is duly qualified and
is in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on the
business, prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole;
(iii) all the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights;
(iv) the Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor as provided by this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights;
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(v) all of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature;
(vi) the Company has the corporate power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to the
Underwriters; and this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(viii) the Registration Statement has become effective under the
Act, no stop order suspending its effectiveness has been issued and no
proceedings for that purpose are, to the best of such counsel's knowledge
after due inquiry, pending before or contemplated by the Commission;
(ix) the statements under the captions "Recent Developments",
"Risk Factors -Future sale of shares could affect our stock price",
"Capitalization", "Business - Relationship with American Express", "Certain
Transactions", "Description of Capital Stock", "Shares Eligible for Future
Sale" and "Underwriting" in the Prospectus and Items 14 and 15 of Part II
of the Registration Statement, insofar as such statements constitute a
summary of the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal
matters, documents and proceedings;
(x) neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws and, to the best of such
counsel's knowledge after due inquiry, neither the Company nor any of its
subsidiaries is in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Company and
its subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or their respective property is bound;
(xi) the execution, delivery and performance of this Agreement by
the Company, the compliance by the Company with all the provisions hereof
and the consummation of the transactions contemplated hereby will not (A)
require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various
states), (B) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of the Company or
any of its subsidiaries or any indenture, loan agreement, mortgage, lease
or other agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
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subsidiaries or their respective property is bound, (C) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree
of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property or (D)
result in the suspension, termination or revocation of any Authorization of
the Company or any of its subsidiaries or any other impairment of the
rights of the holder of any such Authorization;
(xii) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any
of its subsidiaries is or could be a party or to which any of their
respective property is or could be subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described, or of any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not so described or filed as required;
(xiii) neither the Company nor any of its subsidiaries has violated
any Environmental Law, any provisions of the Employee Retirement Income
Security Act of 1974, as amended, or any provisions of the Foreign Corrupt
Practices Act, or the rules and regulations promulgated thereunder, except
for such violations which, singly or in the aggregate, would not have a
material adverse effect on the business, prospects, financial condition or
results of operation of the Company and its subsidiaries, taken as a whole;
(xiv) each of the Company and its subsidiaries has such
Authorizations of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations
and all courts and other tribunals, including, without limitation, under
any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except
where the failure to have any such Authorization or to make any such filing
or notice would not, singly or in the aggregate, have a material adverse
effect on the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole; each such
Authorization is valid and in full force and effect and each of the Company
and its subsidiaries is in compliance with all the terms and conditions
thereof and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time
or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except where such
failure to be valid and in full force and effect or to be in compliance,
the occurrence of any such event or the presence of any such restriction
would not, singly or in the aggregate, have a material adverse effect on
the business,
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prospects, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole;
(xv) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be, an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended;
(xvi) to the best of such counsel's knowledge after due inquiry,
there are no contracts, agreements or understandings between the Company
and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities
of the Company or to require the Company to include such securities with
the Shares registered pursuant to the Registration Statement;
(xvii) (A) the Registration Statement and the Prospectus and any
supplement or amendment thereto (except for the financial statements and
other financial data included therein as to which no opinion need be
expressed) comply as to form with the Act, (B) such counsel has no reason
to believe that at the time the Registration Statement became effective or
on the date of this Agreement, the Registration Statement and the
prospectus included therein (except for the financial statements and other
financial data as to which such counsel need not express any belief)
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (C) such counsel has no reason to
believe that the Prospectus, as amended or supplemented, if applicable
(except for the financial statements and other financial data, as
aforesaid) contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(xviii) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all Intellectual Property currently employed
by them in connection with the business now operated by them except where
the failure to own or possess or otherwise be able to acquire such
Intellectual Property would not, singly or in the aggregate, have a
material adverse effect on the business, prospects, financial condition or
results of operation of the Company and its subsidiaries, taken as a whole;
and, to the best of such counsel's knowledge after due inquiry, neither the
Company nor any of its subsidiaries has received any notice of infringement
of or conflict with asserted rights of others with respect to any of such
Intellectual Property which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a material adverse
effect on the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole; and
(xix) the Shares to be sold under this Agreement to the Underwriters
are duly authorized for quotation on the Nasdaq National Market.
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The opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian
described in Section 8(e) above shall be rendered to you at the request of the
Company and shall so state therein.
(f) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Brobeck, Phleger & Harrison, LLP, counsel for the Underwriters,
as to the matters referred to in Sections 8(e)(iv), 8(e)(vi), 8(e)(ix) (but only
with respect to the statements under the caption "Description of Capital Stock"
and "Underwriting") and 8(e)(xvii).
In giving such opinions with respect to the matters covered by Section
8(e)(xvii) [counsel for the Company] and [counsel for the Underwriters] may
state that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification except as specified.
(g) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from PricewaterhouseCoopers LLP,
independent public accountants, containing the information and statements of the
type ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(h) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(i) The Shares shall have been duly listed for quotation on the Nasdaq
National Market.
(j) The Company shall not have failed on or prior to the Closing Date to
perform or comply with any of the agreements herein contained and required to be
performed or complied with by the Company on or prior to the Closing Date.
(k) [Patent Opinion?]
The several obligations of the Underwriters to purchase any Shares
hereunder are further subject to the delivery to you on the applicable Closing
Date of such other documents, satisfactory to you, as you may reasonably request
with respect to the good standing of the Company, the due authorization and
issuance of such Additional Shares and other matters related to the issuance of
such Additional Shares.
SECTION 9. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) the
suspension or material limitation
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of trading in securities or other instruments on the New York Stock Exchange,
the American Stock Exchange, the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange, the Chicago Board of Trade or the Nasdaq National Market or
limitation on prices for securities or other instruments on any such exchange or
the Nasdaq National Market, (iii) the suspension of trading of any securities of
the Company on any exchange or in the over-the-counter market, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If, on the applicable Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase the Firm Shares or Additional Shares, as the
case may be, which it has or they have agreed to purchase hereunder on such date
and the aggregate number of Firm Shares or Additional Shares, as the case may
be, which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the total number of Firm
Shares or Additional Shares, as the case may be, to be purchased on such date by
all Underwriters, each non-defaulting Underwriter shall be obligated severally,
in the proportion which the number of Firm Shares set forth opposite its name in
Schedule I bears to the total number of Firm Shares which all the non-defaulting
Underwriters have agreed to purchase, or in such other proportion as you may
specify, to purchase the Firm Shares or Additional Shares, as the case may be,
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase on such date; provided that in no event shall the number of Firm
Shares or Additional Shares, as the case may be, which any Underwriter has
agreed to purchase pursuant to Section 2 hereof be increased pursuant to this
Section 9 by an amount in excess of one-ninth of such number of Firm Shares or
Additional Shares, as the case may be, without the written consent of such
Underwriter. If, on the Initial Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Firm Shares and the aggregate number of Firm
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased by all Underwriters and
arrangements satisfactory to you and the Company for purchase of such Firm
Shares are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter and
the Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Initial Closing Date, but in no event for longer than seven days, in order that
the required changes, if any, in the Registration Statement and the Prospectus
or any other documents or arrangements may be effected. If, on an Option
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Additional Shares to be purchased on such date, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
such Additional Shares or (ii) purchase not less than the number of Additional
Shares that such non-defaulting Underwriters would have been obligated to
purchase on such date in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting
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Underwriter from liability in respect of any default of any such Underwriter
under this Agreement.
SECTION 10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to
GetThere.com, Inc., 445 Sherman Avenue, Palo Alto, California 94306, and (ii) if
to any Underwriter or to you, to you c/o Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or directors of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or directors of the Company or any person controlling the Company, (ii)
acceptance of the Shares and payment for them hereunder and (iii) termination of
this Agreement.
If for any reason the Shares are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 9), the Company agrees to reimburse the several
Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by them. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has agreed
to pay pursuant to Section 5(i) hereof. The Company also agrees to reimburse
the several Underwriters, their directors and officers and any persons
controlling any of the Underwriters for any and all fees and expenses
(including, without limitation, the fees disbursements of counsel) incurred by
them in connection with enforcing their rights hereunder (including, without
limitation, pursuant to Section 7 hereof).
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Underwriters, the
Underwriters' directors and officers, any controlling persons referred to
herein, the Company's directors and the Company's officers who sign the
Registration Statement and their respective successors and assigns, all as and
to the extent provided in this Agreement, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Shares from any of the
several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
23
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
GETTHERE.COM, INC.
By:
-------------------------------------
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON SMITH BARNEY, INC.
BEAR, STEARNS & CO. INC.
WR HAMBRECHT & CO.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By
-----------------------------------
24
<PAGE>
SCHEDULE I
----------
Underwriters Number of Firm Shares
to be Purchased
Donaldson, Lufkin & Jenrette
Securities Corporation
Salomon Smith Barney, Inc.
Bear, Stearns & Co. Inc.
WR Hambrecht & Co.
Total
<PAGE>
Annex I
[Insert names of stockholders of the Company who will be required to sign lock
ups]
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
OF GETTHERE.COM, INC.,
A DELAWARE CORPORATION
AND
GETTHERE.COM,
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER, dated as of _____, 1999, (the
"Agreement"), is between GetThere.com, Inc., a Delaware corporation ("GetThere-
Delaware") and GetThere.com, a California corporation ("GetThere-California").
GetThere-Delaware and GetThere-California are sometimes referred to herein as
the "Constituent Corporations."
R E C I T A L S
---------------
A. GetThere-Delaware is a corporation duly organized and existing under
the laws of the State of Delaware and has an authorized capital stock of
77,087,946 shares, 50,000,000 of which are designated "Common Stock," par value
$0.0001 per share, and 27,087,946 of which are designated "Preferred Stock," par
value $0.0001 per share, 4,000,000 of which have been designated Series A
Preferred Stock, 4,500,000 of which have been designated Series B Preferred
Stock, 11,236,821 of which have been designated Series C Preferred Stock, 1 of
which has been designated Series D1 Preferred Stock, 1 of which has been
designated Series D2 Preferred Stock, 1 of which has been designated Series D3
Preferred Stock and 7,351,122 of which have been designated Series E Preferred
stock. As of the date of this Agreement, 100 shares of Common Stock are issued
and outstanding, all of which are held by GetThere-California. No shares of
Preferred Stock are issued and outstanding.
B. GetThere-California is a corporation duly organized and existing
under the laws of the State of California and has an authorized capital stock of
77,087,946 shares, 50,000,000 of which are designated "Common Stock," and
27,087,946 of which are designated "Preferred Stock," of which 4,000,000 have
been designated Series A Preferred Stock, 4,500,000 of which have been
designated Series B Preferred Stock, 11,236,821 of which have been designated
Series C Preferred Stock, 1 of which has been designated Series D1 Preferred
Stock, 1 of which has been designated Series D2 Preferred Stock, 1 of which has
been designated Series D3 Preferred Stock and 7,351,122 of which have been
designated Series E Preferred Stock. As of October 14, 1999, 7,814,848 shares of
Common Stock, 3,705,991 shares of Series A Preferred Stock, 3,914,448 shares of
Series B Preferred Stock, 4,610,875 shares of Series C Preferred Stock and
1,420,000 shares of Series E Preferred Stock were issued and outstanding. No
shares of Series D1 Preferred, Series D2 Preferred or Series D3 Preferred were
outstanding.
C. The Board of Directors of GetThere-California has determined that,
for the purpose of effecting the reincorporation of GetThere-California in the
State of Delaware, it is advisable and in the best interests of GetThere-
California that GetThere-California merge with and into GetThere-Delaware upon
the terms and conditions herein provided.
<PAGE>
D. The respective Boards of Directors of GetThere-Delaware and
GetThere-California have approved this Agreement and have directed that this
Agreement be submitted to a vote of their respective sole stockholder and
shareholders, and executed by the undersigned officers.
E. GetThere-Delaware is a wholly owned subsidiary of GetThere-
California.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, GetThere-Delaware and GetThere-California hereby agree,
subject to the terms and conditions hereinafter set forth, as follows:
I. MERGER
1.1. Merger. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the California Corporations Code, GetThere-
California shall be merged with and into GetThere-Delaware (the "Merger"), the
separate existence of GetThere-California shall cease and GetThere-Delaware
shall be, and is herein sometimes referred to as, the "Surviving Corporation,"
and the name of the Surviving Corporation shall be "GetThere.com, Inc."
1.2. Filing and Effectiveness. The Merger shall become effective when
------------------------
the following actions shall have been completed:
(a) This Agreement and the Merger shall have been adopted and
approved by the shareholders of GetThere-California and the sole stockholder of
GetThere-Delaware in accordance with the requirements of the Delaware General
Corporation Law and the California Corporations Code;
(b) All of the conditions precedent to the consummation of the
Merger specified in this Agreement shall have been satisfied or duly waived by
the party entitled to satisfaction thereof; and
(c) An executed Certificate of Ownership and Merger or an
executed counterpart of this Agreement meeting the requirements of the Delaware
General Corporation Law shall have been filed with the Secretary of State of the
State of Delaware.
The date and time when the Merger shall become effective, as aforesaid,
is herein called the "Effective Date of the Merger."
1.3. Effect of the Merger. Upon the Effective Date of the Merger, the
--------------------
separate existence of GetThere-California shall cease and GetThere-Delaware, as
the Surviving Corporation (i) shall continue to possess all of its assets,
rights, powers and property as constituted immediately prior to the Effective
Date of the Merger, (ii) shall be subject to all actions previously taken by its
and GetThere-California's Board of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of GetThere-
California, including all shares of any subsidiary held by GetThere-California,
in the manner more fully set
2
<PAGE>
forth in Section 259 of the Delaware General Corporation Law, (iv) shall
continue to be subject to all of the debts, liabilities and obligations of
GetThere-Delaware as constituted immediately prior to the Effective Date of the
Merger, and (v) shall succeed, without other transfer, to all of the debts,
liabilities and obligations of GetThere-California in the same manner as if
GetThere-Delaware had itself incurred them, all as more fully provided under the
applicable provisions of the Delaware General Corporation Law and the California
Corporations Code.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1. Certificate of Incorporation. The Amended and Restated
----------------------------
Certificate of Incorporation of GetThere-Delaware as in effect immediately prior
to the Effective Date of the Merger shall continue in full force and effect as
the Certificate of Incorporation of the Surviving Corporation until duly amended
in accordance with the provisions thereof and applicable law.
2.2. Bylaws. The Bylaws of GetThere-Delaware as in effect
------
immediately prior to the Effective Date of the Merger shall continue in full
force and effect as the Bylaws of the Surviving Corporation until duly amended
in accordance with the provisions thereof and applicable law.
2.3. Directors and Officers. The directors and officers of GetThere-
----------------------
Delaware immediately prior to the Effective Date of the Merger shall be the
directors and officers of the Surviving Corporation until their successors shall
have been duly elected and qualified or until as otherwise provided by law, the
Amended and Restated Certificate of Incorporation of the Surviving Corporation
or the Bylaws of the Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1. GetThere-California Common Shares. Upon the Effective Date of
---------------------------------
the Merger, each share of GetThere-California Common Stock, no par value, issued
and outstanding immediately prior to the Merger shall, by virtue of the Merger
and without any action by the Constituent Corporations, the holder of such
shares or any other person, be converted into and exchanged for one (1) fully
paid and nonassessable share of Common Stock, par value $0.0001 per share, of
the Surviving Corporation. No fractional share interests of the Surviving
Corporation's Common Stock shall be issued but shall, instead, be paid in cash
or check by GetThere-Delaware to the holder of such shares in that amount equal
to the fair market value of such fractional shares.
3.2. GetThere-California Preferred Shares. Upon the Effective Date
------------------------------------
of the Merger, (i) each share of Series A Preferred Stock of GetThere-
California, no par value, issued and outstanding immediately prior to the Merger
shall, by virtue of the Merger and without any action by the Constituent
Corporations, the holder of such shares or any other person, be converted into
or exchanged for one (1) fully paid and nonassessable shares of Series A
Preferred Stock of the Surviving Corporation, par value $0.0001 per share. The
rights, preferences and privileges of the Series A Preferred Stock of the
Surviving Corporation are as set forth in the Certificate of Incorporation of
the Surviving Corporation; (ii) each share of Series B Preferred
3
<PAGE>
Stock of GetThere-California, no par value, issued and outstanding immediately
prior to the Merger shall, by virtue of the Merger and without any action by the
Constituent Corporations, the holder of such shares or any other person, be
converted into or exchanged for one (1) fully paid and nonassessable share of
Series B Preferred Stock of the Surviving Corporation, par value $0.0001 per
share; (iii) each share of Series C Preferred Stock of GetThere-California, no
par value, issued and outstanding immediately prior to the Merger shall, by
virtue of the Merger and without any action by the Constituent Corporations, the
holder of such shares or any other person, be converted into or exchanged for
one (1) fully paid and nonassessable share of Series C Preferred Stock of the
Surviving Corporation, par value $0.0001 per share; (iv) each share of Series D1
Preferred Stock of GetThere-California, no par value, issued and outstanding
immediately prior to the merger shall, by virtue of the Merger and without any
action by the Constituent Corporations, the holder of such shares or any other
person, be converted into or exchanged for one (1) fully paid and nonassessable
share of Series D1 Preferred Stock of the Surviving Corporation, par value
$0.0001 per share; (v) each share of Series D2 Preferred Stock of GetThere-
California, no par value, issued and outstanding immediately prior to the merger
shall, by virtue of the Merger and without any action by the Constituent
Corporations, the holder of such shares or any other person, be converted into
or exchanged for one (1) fully paid and nonassessable share of Series D2
Preferred Stock of the Surviving Corporation, par value $0.0001 per share; (vi)
each share of Series D3 Preferred Stock of GetThere-California, no par value,
issued and outstanding immediately prior to the merger shall, by virtue of the
Merger and without any action by the Constituent Corporations, the holder of
such shares or any other person, be converted into or exchanged for one (1)
fully paid and nonassessable share of Series D3 Preferred Stock of the Surviving
Corporation, par value $0.0001 per share; (vii) each share of Series E Preferred
Stock of GetThere-California, no par value, issued and outstanding immediately
prior to the merger shall, by virtue of the Merger and without any action by the
Constituent Corporations, the holder of such shares or any other person, be
converted into or exchanged for one (1) fully paid and nonassessable share of
Series E Preferred Stock of the Surviving Corporation, par value $0.0001 per
share. No fractional share interests of the Surviving Corporation's Preferred
Stock shall be issued but shall, instead, be paid in cash or check by GetThere-
Delaware to the holder of such shares in that amount equal to the fair market
value of such fractional shares.
3.3. GetThere-California 1996 Stock Incentive Plan.
---------------------------------------------
(a) Upon the Effective Date of the Merger, the Surviving
Corporation shall assume the obligations of GetThere-California under its 1996
Stock Incentive Plan (the "1996 Plan"). Each outstanding and unexercised option
to purchase one (1) share of Common Stock of GetThere-California (an "Option")
under the 1996 Plan, subject to the provisions in paragraph (b) of this section
3.3, shall be converted into an option to purchase one (1) share of the
Surviving Corporation's Common Stock (a "New Option") on the same terms as
described above.
(b) Following the Effective Date of the Merger, the number of
shares of the Surviving Corporation's Common Stock to which an Option holder
would be otherwise entitled upon exercise of an assumed Option shall be rounded
down to the nearest whole number.
4
<PAGE>
In addition, no "additional benefits" (within the meaning of Section 424(a)(2)
of the Internal Revenue Code of 1986, as amended) shall be accorded to the
optionees pursuant to the assumption of their options.
3.4. Warrants. Upon the Effective Date of the Merger, the Surviving
--------
Corporation shall assume the obligations of GetThere-California, under its
issued and outstanding warrants to purchase Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series E Preferred Stock and Common
Stock ("Warrants"). The number of shares issuable upon exercise of the Warrants
shall be adjusted such that each (1) share of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series E Preferred Stock or Common
stock issuable upon exercise of the Warrant, as the case may be, shall be
converted into Warrants to purchase one (1) share of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series E Preferred Stock or
Common Stock, as the case may be.
3.5. Rights to Have Series D1 and D2 Preferred Stock Issued. Upon
------------------------------------------------------
the Effective Date of the Merger, the right to have 1 share of Series D1
Preferred Stock of GetThere-California issued will be converted into or
exchanged into the right to have 1 share of Series D1 Preferred Stock of
GetThere-Delaware issued. The right to have 1 share of Series D2 Preferred Stock
of GetThere-California issued will be converted into or exchanged into the right
to have 1 share of Series D2 Preferred Stock of GetThere-Delaware issued.
3.6. All Other Rights to Acquire Securities of GetThere-California.
-------------------------------------------------------------
Upon the Effective Date of the Merger, all other rights outstanding to acquire
Securities of GetThere-California Preferred Stock shall be assumed and shall
represent the right to acquire a like number of the securities of GetThere-
Delaware.
3.7. GetThere-Delaware Common Stock. Upon the Effective Date of the
------------------------------
Merger, each share of Common Stock, par value $0.0001 per share, of GetThere-
Delaware issued and outstanding immediately prior thereto shall, by virtue of
the Merger and without any action by GetThere-Delaware, the holder of such
shares or any other person, be canceled and returned to the status of authorized
but unissued shares.
3.8. Exchange of Certificates. After the Effective Date of the
------------------------
Merger, each holder of an outstanding certificate representing shares of
GetThere-California Common Stock or Preferred Stock may be asked to surrender
the same for cancellation to an exchange agent, whose name will be delivered to
holders prior to any requested exchange (the "Exchange Agent"), and each such
holder shall be entitled to receive in exchange therefor a certificate or
certificates representing the number of shares of the Surviving Corporation's
Common Stock or Preferred Stock, as the case may be, into which the surrendered
shares were converted as herein provided. Until so surrendered, each outstanding
certificate theretofore representing shares of GetThere-California Common Stock
or Preferred Stock shall be deemed for all purposes to represent the number of
shares of the Surviving Corporation's Common Stock or Preferred Stock,
respectively, into which such shares of GetThere-California Common Stock or
Preferred Stock, as the case may be, were converted in the Merger.
5
<PAGE>
The registered owner on the books and records of the Surviving
Corporation or the Exchange Agent of any such outstanding certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to the Surviving Corporation or the Exchange Agent, have
and be entitled to exercise any voting and other rights with respect to and to
receive dividends and other distributions upon the shares of Common Stock or
Preferred Stock of the Surviving Corporation represented by such outstanding
certificate as provided above.
Each certificate representing Common Stock or Preferred Stock of the
Surviving Corporation so issued in the Merger shall bear the same legends, if
any, with respect to the restrictions on transferability as the certificates of
GetThere-California so converted and given in exchange therefore, unless
otherwise determined by the Board of Directors of the Surviving Corporation in
compliance with applicable laws, or other such additional legends as agreed upon
by the holder and the Surviving Corporation.
If any certificate for shares of GetThere-Delaware stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, that such transfer otherwise be proper and comply with
applicable securities laws and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of issuance of
such new certificate in a name other than that of the registered holder of the
certificate surrendered or establish to the satisfaction of GetThere-Delaware
that such tax has been paid or is not payable.
IV. GENERAL
4.1. Covenants of GetThere-Delaware. GetThere-Delaware covenants and
------------------------------
agrees that it will, on or before the Effective Date of the Merger,
(a) Qualify to do business as a foreign corporation in the
State of California and in connection therewith irrevocably appoint an agent for
service of process as required under the provisions of Section 2105 of the
California Corporations Code.
(b) File any and all documents with the California Franchise
Tax Board necessary for the assumption by GetThere-Delaware of all of the
franchise tax liabilities of GetThere-California.
(c) Take such other actions as may be required by the
California Corporations Code.
4.2. Further Assurances. From time to time, as and when required by
------------------
GetThere-Delaware or by its successors or assigns, there shall be executed and
delivered on behalf of GetThere-California such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other actions
as shall be appropriate or necessary in order to vest or perfect in or conform
of record or otherwise by GetThere-Delaware the title to
6
<PAGE>
and possession of all the property, interests, assets rights, privileges,
immunities, powers, franchises and authority of GetThere-California and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of GetThere-Delaware are fully authorized in the name and on behalf of
GetThere-California or otherwise to take any and all such action and to execute
and deliver any and all such deeds and other instruments.
4.3. Abandonment. At any time before the Effective Date of the
-----------
Merger, this Agreement may be terminated and the Merger may be abandoned for any
reason whatsoever by the Board of Directors of either GetThere-California or of
GetThere-Delaware, or of both, notwithstanding the approval of this Agreement by
the shareholders of GetThere-California.
4.4. Amendment. The Boards of Directors of the Constituent
---------
Corporations may amend this Agreement at any time prior to the filing of this
Agreement (or certificate in lieu thereof) with the Secretary of State of the
State of Delaware, provided that an amendment made subsequent to the adoption of
this Agreement by the stockholders of either Constituent Corporation shall not:
(1) alter or change the amount or kind of shares, securities, cash, property
and/or rights to be received in exchange for or on conversion of all or any of
the shares of any class or series thereof of such Constituent Corporation, (2)
alter or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (3) alter or change any of the
terms and conditions of this Agreement if such alteration or change would
adversely affect the holders of any class or series of capital stock of any
Constituent Corporation.
4.5. Registered Office. The registered office of the Surviving
-----------------
Corporation in the State of Delaware is 15 E. North Street, Dover, Delaware
19901 and Incorporating Services, Ltd. is the registered agent of the Surviving
Corporation at such address.
4.6. Agreement. Executed copies of this Agreement will be on file
---------
at the principal place of business of the Surviving Corporation at 4045 Campbell
Avenue, Menlo Park, CA 94025 and copies thereof will be furnished to any
stockholder of either Constituent Corporation, upon request and without cost.
4.7. Governing Law. This Agreement shall in all respects be
-------------
construed, interpreted and enforced in accordance with and governed by the laws
of the State of Delaware and, so far as applicable, the merger provisions of the
California Corporations Code.
4.8. Counterparts. In order to facilitate the filing and recording
------------
of this Agreement, the same may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
7
<PAGE>
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of GetThere-Delaware and GetThere-
California is hereby executed on behalf of each of such two corporations and
attested by their respective officers thereunto duly authorized.
GETTHERE.COM, INC.,
a Delaware corporation
By:-------------------------------------
Gadi Maier,
President and Chief Executive Officer
ATTEST:
- -----------------------------------
Scott C. Dettmer,
Secretary
GETTHERE.COM
a California corporation
By:
-------------------------------------
Gadi Maier
President and Chief Executive Officer
ATTEST:
- -----------------------------------
Scott C. Dettmer,
Secretary
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
GETTHERE.COM, inc.
a Delaware corporation
(Pursuant to Sections 228, 242 and 245
of the Delaware General Corporation Law)
Gadi Maier and Kenneth Pelowski hereby certify that:
ONE: They are the duly elected and acting President and Chief
Executive Officer and Secretary, respectively, of GetThere.com, Inc. a Delaware
corporation (the "Corporation").
TWO: The Corporation's Certificate of Incorporation are hereby
amended and restated to read as follows:
ARTICLE I
The name of the Corporation is GetThere.com, Inc.
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is 15 E. North Street, in the city of Dover, County of Kent. The name
of its registered agent at such address is Incorporating Services, Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation is authorized to issue is Seventy-Seven Million
Eighty-Seven Thousand Nine Hundred Forty-Six (77,087,946) shares, Fifty Million
(50,000,000) shares of which shall be Common Stock (the "Common Stock") and
Twenty-Seven Million Eighty-Seven Thousand Nine Hundred Forty-Six (27,087,946)
shares of which shall be Preferred Stock (the "Preferred Stock").
B. A description of the respective classes and series of stock and a
statement of the designations, preferences, voting powers, relative,
participating, optional or
<PAGE>
other special rights and privileges, and the qualifications, limitations and
restrictions of the Preferred Stock and Common Stock are as follows:
1. Designation and Amount. The Preferred Stock authorized by this
----------------------
Amended and Restated Certificate of Incorporation may be issued from time to
time in one or more series. The first series shall be designated Series A
Preferred Stock (the "Series A Preferred"), which series shall consist of Four
Million (4,000,000) shares, the second series shall be designated Series B
Preferred Stock (the "Series B Preferred"), which series shall consist of Four
Million Five Hundred Thousand (4,500,000) shares, the third series shall be
designated Series C Preferred Stock (the "Series C Preferred"), which series
shall consist of Eleven Million Two Hundred Thirty-Six Thousand Eight Hundred
Twenty-One (11,236,821) shares, the fourth series shall be designated Series D1
Preferred Stock ("Series D1 Preferred"), which series shall consist of One (1)
share, the fifth series shall be designated Series D2 Preferred Stock ("Series
D2 Preferred"), which series shall consist of One (1) share, the sixth series
shall be designated Series D3 Preferred Stock ("Series D3 Preferred"), which
series shall consist of One (1) share and the seventh series shall be designated
Series E Preferred Stock (the "Series E Preferred"), which series shall consist
of Seven Million Three Hundred Fifty-One Thousand One Hundred Twenty-Two
(7,351,122) shares.
The Board of Directors of the Corporation (the "Board") is hereby
authorized to fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon additional series of Preferred Stock, and the number
of shares constituting any such series and the designation thereof, or any of
them. Subject to compliance with applicable protective voting rights which have
been or may be granted to Preferred Stock or series thereof in Certificates of
Determination or in this Amended and Restated Certificate of Incorporation
("Protective Provisions"), but notwithstanding any other rights of any series of
Preferred Stock, the rights, privileges, preferences and restrictions of any
such additional series may be subordinate to, pari passu with (including,
---- -----
without limitation, inclusion in provisions with respect to liquidation and
acquisition preferences, redemption and/or approval of matters by vote or
written consent), or senior to any of those of any present or future class or
series of Preferred Stock or Common Stock. Subject to compliance with applicable
Protective Provisions, the Board is also authorized to increase or decrease the
number of shares of any series (other than Series A Preferred, Series B
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series
D3 Preferred and Series E Preferred), prior or subsequent to the issue of that
series (but not below the number of shares of such series then outstanding). In
case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
2. Dividends and Distributions.
---------------------------
(a) Subject to the rights of series of Preferred Stock that may
from time to time come into existence and the provisions for adjustment
hereinafter set forth, each holder of shares of Series A Preferred, each holder
of shares of Series B Preferred, each holder of shares of Series C Preferred and
each holder of Series E Preferred shall be entitled to receive, when, as and if
declared by the Board out of funds legally available for such purpose, an annual
cash dividend in the amount of $0.079331 per share of Series A Preferred,
$0.1162 per share of Series B Preferred, $0.35875 per share of Series C
Preferred and $0.875 per share
<PAGE>
of Series E Preferred (as adjusted to reflect any stock split, stock dividend,
combination, recapitalization and the like (collectively, a "Recapitalization")
with respect to such series of Preferred Stock), prior and in preference to any
declaration or payment of any dividend (payable other than in Common Stock) on
the Common Stock, Series D1 Preferred, Series D2 Preferred or Series D3
Preferred of the Corporation. Such dividends shall not be cumulative, and no
right shall accrue to holders of such shares of Preferred Stock by reason of the
fact that dividends on such shares are not declared or paid in any year.
(b) Notwithstanding Section 2(a) hereof, the Corporation may at
any time, out of funds legally available therefor, repurchase shares of Common
Stock of the Corporation (i) issued to or held by employees, directors or
consultants of the Corporation or its subsidiaries upon termination of their
employment or services, pursuant to any agreement providing for such right of
repurchase, or (ii) issued to or held by any person subject to the Corporation's
right of first refusal to purchase such shares where the purchase is pursuant to
the exercise of such right of first refusal, in either case whether or not
dividends on the Preferred Stock shall have been declared and paid or funds set
aside therefor. The holders of Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred expressly waive their rights, if any, as they relate to the
repurchase of shares upon termination of employment or pursuant to a right of
first refusal.
3. Liquidation Rights. Subject to the rights of series of Preferred
------------------
Stock that may from time to time come into existence, in the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, distributions shall be made to the holders of Series A Preferred,
Series B Preferred, Series C Preferred, Series D1 Preferred, Series D2
Preferred, Series D3 Preferred and Series E Preferred in respect of such Series
A Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and Series E Preferred before any amount shall
be paid to the holders of Common Stock in respect of such Common Stock, in the
following manner:
(a) Series A Preferred, Series B Preferred, Series C Preferred,
-----------------------------------------------------------
Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and Series E
- --------------------------------------------------------------------------
Preferred. The holders of the Series A Preferred, Series B Preferred, Series C
- ---------
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred shall be entitled to be paid out of the assets and surplus
funds of the Corporation available for distribution to shareholders of the
Corporation, prior and in preference to any distribution of any of the assets
and surplus funds of the Corporation to the holders of the Common Stock, an
amount per share equal to (i) $1.1333 (the "Original Series A Issue Price"), as
adjusted for any Recapitalization, for each outstanding share of Series A
Preferred plus all declared and unpaid dividends, if any, on such share, (ii)
$1.66 (the "Original Series B Issue Price"), as adjusted for any
Recapitalization, for each outstanding share of Series B Preferred plus all
declared and unpaid dividends, if any, on such share, (iii) $5.125 (the
"Original Series C Issue Price"), as adjusted for any Recapitalization, for each
outstanding share of Series C Preferred plus all declared and unpaid dividends,
if any, on such share, (iv) $10.00 (the "Original Series D1 Issue Price"), as
adjusted for any Recapitalization, for each outstanding share of Series D1
Preferred plus all declared and unpaid dividends, if any, on such share, (v)
$10.00 (the "Original Series D2 Issue Price"), as adjusted for any
Recapitalization, for each outstanding share of Series D2 Preferred
<PAGE>
plus all declared and unpaid dividends, if any, on such share, (vi) $12.50 (the
"Original Series D3 Issue Price"), as adjusted for any Recapitalization, for
each outstanding share of Series D3 Preferred plus all declared and unpaid
dividends, if any, on such share and (vii) $12.50 (the "Original Series E Issue
Price"), as adjusted for any Recapitalization, for each outstanding share of
Series E Preferred plus all declared and unpaid dividends, if any, on such
share. If, upon the occurrence of a liquidation, dissolution or winding up, the
assets and funds thus distributed among the holders of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D1 Preferred, Series D2
Preferred, Series D3 Preferred and Series E Preferred shall be insufficient to
permit the payment to such holders of their full aforesaid liquidation
preferences, then the entire assets and funds of the Corporation legally
available for distribution to the holders of capital stock shall be distributed
ratably among the holders of the Series A Preferred, Series B Preferred, Series
C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred in proportion to the full preferential amounts each such
holder is otherwise entitled to receive under this Section 3(a).
(b) Common Stock, Series A Preferred and Series B Preferred. If
-------------------------------------------------------
assets are remaining after payment of the full preferential amount with respect
to the Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred and
set forth in Section 3(a) above, then the holders of the Series A Preferred,
Series B Preferred and Common Stock shall be entitled to share ratably in all
such remaining assets and surplus funds in proportion to the number of shares of
Common Stock held by each such holder (treating all shares of Series A Preferred
and Series B Preferred as if converted into Common Stock) until, with respect to
the holders of the Series A Preferred and Series B Preferred, such holders shall
have received an aggregate of $4.5332 per share and $4.98 per share,
respectively (including amounts paid pursuant to Section 3(a) above);
thereafter, subject to the rights of series of Preferred Stock that may from
time to time come into existence, if assets or surplus funds remain in this
Corporation, the holders of the Common Stock of this Corporation shall receive
all of the remaining assets or surplus funds of this Corporation in proportion
to the number of shares of Common Stock held by each.
(c) Events Deemed a Liquidation. For purposes of this Section 3,
---------------------------
a liquidation, dissolution or winding up of the Corporation shall be deemed to
be occasioned by and to include (i) the consolidation or merger of the
Corporation with or into any other corporation, (ii) a transaction in which
outstanding shares of the Corporation are exchanged for securities or other
consideration issued, or caused to be issued, by an acquiring corporation or its
subsidiary (other than a transaction consummated for the sole purpose of
reincorporating the Corporation into another state), or (iii) the sale by the
Corporation of all or substantially all of its assets (or any series of related
transactions resulting in the sale or other transfer of all or substantially all
of its assets), unless, in each case, (A) the shareholders of the Corporation
------
immediately prior to any such transaction (or series of related transactions)
are holders of a majority of the voting equity securities of the surviving or
acquiring corporation immediately thereafter and (B) each of the shareholders of
the Corporation immediately prior to any such transaction (or series of related
transactions) holds the same pro rata share of such majority of the voting
equity securities of the surviving or acquiring corporation as each hold of the
Corporation immediately prior to such transaction (or series of related
transactions). For purposes of the calculations in the previous sentence, equity
securities which any stockholder or the Corporation
<PAGE>
owned immediately prior to such transaction as a stockholder of another party to
the transaction shall be disregarded.
(d) Valuation of Securities and Property. In the event the
------------------------------------
Corporation proposes to distribute assets other than cash in connection with any
liquidation, dissolution or winding up of the Corporation (or any other event
deemed a liquidation, dissolution or winding up pursuant to Section 3(c)), the
value of the assets to be distributed to the holders of shares of Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and Series E Preferred shall be determined in
good faith by the Board. Any securities not subject to investment letter or
similar restrictions on free marketability shall be valued as follows:
(i) If traded on a securities exchange or through the
Nasdaq National Market system, the value shall be deemed to the average of the
security's closing prices on such exchange or system over the thirty (30) day
period ending three (3) days prior to the distribution;
(ii) If actively traded over-the-counter, the value shall
be deemed to be the average of the closing bid prices over the thirty (30) day
period ending three (3) days prior to the distribution; and
(iii) If there is no active public market, the value shall
be the fair market value thereof as determined in good faith by the Board.
The method of valuation of securities subject to investment letter or
other restrictions on free marketability shall be adjusted to make an
appropriate discount from the market value determined as above in clauses (i),
(ii) or (iii) to reflect the fair market value thereof as determined in good
faith by the Board. The holders of at least 50% of the outstanding Series A
Preferred, Series B Preferred, Series C Preferred or Series E Preferred shall
have the right to challenge any determination by the Board of fair market value
pursuant to this Section 3(d), in which case the determination of fair market
value shall be made by an independent appraiser selected jointly by the Board
and the challenging parties, the cost of such appraisal to be borne by the
Corporation.
(e) The Corporation shall give each holder of record of Preferred
Stock written notice of any impending liquidation, dissolution or winding up of
the Corporation (or any other event deemed a liquidation, dissolution or winding
up pursuant to Section 3(c)) not later than twenty (20) days prior to the
shareholders' meeting called to approve such transaction, or twenty (20) days
prior to the closing of such transaction, whichever is earlier, and shall also
notify such holders in writing of the final approval of such transaction. The
first of such notices shall describe the material terms and conditions of the
impending transaction and the provisions of this paragraph III(B)(3), and the
Corporation shall thereafter give such holders prompt notice of any material
changes to such terms and conditions. Any such transaction shall in no event be
consummated sooner than twenty (20) days after the Corporation has given the
first notice provided for herein or sooner than ten (10) days after the
Corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of at least a majority of the
<PAGE>
voting power of all then outstanding shares of such Preferred Stock which are
entitled to such notice rights or similar notice rights.
4. Redemption Rights. Subject to the rights of series of Preferred
-----------------
Stock that may from time to time come into existence, the holders of Series A
Preferred, Series B Preferred, Series C Preferred and Series E Preferred, have
redemption rights as follows:
(a) Holder's Redemption Rights.
--------------------------
(i) Upon the receipt by the Corporation of a written
request (a "Redemption Notice") at any time prior to sixty (60) days before the
sixth anniversary of April 23, 1996 (the "Original Issue Date") from the holders
of at least seventy percent (70%) of the then-outstanding shares of Series A
Preferred, Series B Preferred, Series C Preferred and Series E Preferred (voting
together as a single class) that all of such holders' shares of Preferred Stock
be redeemed, the Corporation shall redeem (unless prevented by law) all of the
shares of Series A Preferred, Series B Preferred, Series C Preferred and Series
E Preferred then held by each holder of Series A Preferred, Series B Preferred,
Series C Preferred and Series E Preferred (a "Preferred Holder") in the manner
and on the dates referenced in Section 4(a)(iii) below.
(ii) The price to be paid for each share of Series A
Preferred redeemed pursuant to this Section 4 shall be $1.1333 per share (as
adjusted for any Recapitalization) plus an amount equal to all declared and
unpaid dividends on such share (the "Series A Redemption Price"). The price to
be paid for each share of Series B Preferred redeemed pursuant to this Section 4
shall be $1.66 per share (as adjusted for any Recapitalization) plus an amount
equal to all declared and unpaid dividends on such share (the "Series B
Redemption Price"). The price to be paid for each share of Series C Preferred
redeemed pursuant to this Section 4 shall be $5.125 per share (as adjusted for
any Recapitalization) plus an amount equal to all declared and unpaid dividends
on such share (the "Series C Redemption Price"). The price to be paid for each
share of Series E Preferred redeemed pursuant to this Section 4 shall be $12.50
per share (as adjusted for any Recapitalization) plus an amount equal to all
declared and unpaid dividends on such share (the "Series E Redemption Price").
(iii) Once the redemption rights of the Preferred Holders
under this Section 4(a) have been exercised in accordance with the terms of
Section 4(a)(i), then the Corporation shall redeem and each Preferred Holder
shall sell to the Corporation (A) 25% of the Series A Preferred, Series B
Preferred, Series C Preferred and/or Series E Preferred held by the Preferred
Holder on the sixth anniversary date of the Original Issue Date; (B) 33 1/3% of
the remaining Series A Preferred, Series B Preferred, Series C Preferred and/or
Series E Preferred held by the Preferred Holder on the seventh anniversary date
of the Original Issue Date; (C) 50% of the remaining Series A Preferred, Series
B Preferred, Series C Preferred and/or Series E Preferred held by the Preferred
Holder on the eighth anniversary date of the Original Issue Date; and (D) 100%
of the remaining Series A Preferred, Series B Preferred, Series C Preferred
and/or Series E Preferred held by the Preferred Holder on the ninth anniversary
date of the Original Issue Date (each such anniversary date, a "Designated
<PAGE>
Redemption Date"). From and after each Designated Redemption Date with respect
to which the redemption rights under this Section 4(a) have been exercised
(unless default shall be made by the Corporation in the payment of the
Redemption Price as herein provided, in which event such rights shall be or
become exercisable until such default is cured), all rights of the holders of
the Series A Preferred, Series B Preferred, Series C Preferred and Series E
Preferred to be redeemed on such Designated Redemption Date pursuant to this
Section 4(a) shall cease with respect to such shares except the right to receive
payment in full of the Redemption Price for such shares upon surrender of
certificates representing such shares and such shares shall not thereafter be
transferable on the books of the Corporation or be deemed outstanding for any
purpose. Shares of the Series A Preferred, Series B Preferred, Series C
Preferred and Series E Preferred redeemed by the Corporation pursuant to this
Section 4(a) shall be deemed retired and may not under any circumstances
thereafter be reissued or otherwise disposed of by the Corporation.
(iv) At any time on or after any Designated Redemption
Date, the Preferred Holders shall be entitled to receive payment of the
Redemption Price therefore upon actual delivery to the Corporation or its agents
of the certificates representing the shares to be redeemed. If upon any
Designated Redemption Date the assets of the Corporation available for
redemption shall be insufficient to pay all Preferred Holders the full amounts
to which they shall be entitled pursuant to this Section 4(a), the Corporation
shall use those funds as it shall have legally available to redeem the maximum
possible number of shares of Series A Preferred, Series B Preferred, Series C
Preferred and Series E Preferred among the holders of such shares to be redeemed
in proportion to the full redemption amounts each such holder would otherwise be
entitled to receive under this Section 4(a), and the remainder of the shares of
the Series A Preferred, Series B Preferred, Series C Preferred and Series E
Preferred required to be redeemed shall remain outstanding and entitled to the
rights, preferences and privileges provided herein, and shall be redeemed on the
earliest practicable date next following the day on which the Corporation shall
first have funds legally available for the redemption of such shares.
5. Conversion. Subject to the rights of series of Preferred Stock
----------
that may from time to time come into existence, the holders of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and Series E Preferred have conversion rights
as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred, Series B
----------------
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series
D3 Preferred and Series E Preferred shall initially be convertible, at the
option of the holder thereof, at any time after the date of issuance of such
share, at the office of the Corporation or any transfer agent for the Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred or Series E Preferred, into the number of
fully paid and nonassessable shares of Common Stock which results from dividing
the Original Series A Issue Price, the Original Series B Issue Price, the
Original Series C Issue Price, the Original Series D1 Issue Price, the Original
Series D2 Issue Price, the Original Series D3 Issue Price or the Original Series
E Issue Price, as the case may be, by the Conversion Price (determined as
hereinafter provided) per share in effect for such series of Preferred Stock at
the time of conversion. The initial Conversion Price per share of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred,
<PAGE>
Series D3 Preferred and Series E Preferred shall be the Original Series A Issue
Price, the Original Series B Issue Price, the Original Series C Issue Price, the
Original Series D1 Issue Price, the Original Series D2 Issue Price, the Original
Series D3 Issue Price and the Original Series E Issue Price, respectively;
provided, however, that the Conversion Price per share of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and Series E Preferred shall be subject to
adjustment from time to time as provided in Section 5(d) hereof. Upon conversion
pursuant to this section or Section 5(b) hereof, all declared and unpaid
dividends on the Series A Preferred, Series B Preferred, Series C Preferred,
Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and Series E
Preferred shall be paid in cash, to the extent legally permitted.
(b) Automatic Conversion.
--------------------
(i) Each share of Series A Preferred, Series B Preferred,
Series C Preferred and Series E Preferred shall automatically be converted into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Original Series A Issue Price, the Original Series B
Issue Price, the Original Series C Issue Price or the Original Series E Issue
Price, as the case may be, by the Conversion Price at the time in effect for
such series of Preferred Stock immediately upon the earlier of (i) the
Corporation's offer and sale of its securities in a firm commitment underwritten
public offering pursuant to an effective registration statement on Form S-1 (or
any successor to such form) under the Securities Act of 1933, as amended, the
public offering price of which is not less than $6.50 per share (as adjusted to
reflect any Recapitalization) and the aggregate gross proceeds to the Company of
which are not less than $15,000,000, or (ii) the date specified by written
consent or agreement of the holders of at least seventy-five percent (75%) of
the then outstanding shares of Series A Preferred, Series B Preferred, Series C
Preferred and Series E Preferred, voting together as a class and not as separate
series and on an as-converted basis.
(ii) Each share of Series D1 Preferred, Series D2 Preferred
and Series D3 Preferred shall automatically be converted into such number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
the Original Series D1 Issue Price, the Original Series D2 Issue Price or the
Original Series D3 Issue Price, as the case may be, by the Conversion Price at
the time in effect for such series of Preferred Stock immediately upon the
occurrence, in the case of the Series D1 Preferred and Series D2 Preferred, of a
Section 12(e) Termination Event, as such term is defined in Section 12(e) of
that certain Amended and Restated Shareholders Agreement by and among the
Corporation and the shareholders who are parties thereto dated as of the date
when shares of Series C Preferred are first issued by the Corporation (the
"Amended and Restated Shareholders Agreement"), and, in the case of the Series
D3 Preferred, of a Section 4(e) Termination Event, as such term is defined in
the Standstill and Bring Along Agreement by and among the Corporation and the
shareholders who are parties thereto dated as of the date when shares of Series
E Preferred are first issued by the Corporation. In addition, the Series D1
Preferred shall automatically be converted into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Original
Series D1 Issue Price by the Conversion Price at the time in effect for such
series of Preferred Stock immediately upon the earlier of (A) the date that the
holder thereof ceases to hold at least 2,434,287 shares of Applicable Common
Stock (as defined in subsection 5(b)(iii) below), or (B) the date that the
holder thereof transfers the Series D1 Preferred, except to a
<PAGE>
Related Party of the holder (as defined in subsection 5(b)(iii) below). In
addition, the Series D2 Preferred shall automatically be converted into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing the Original Series D2 Issue Price by the Conversion Price at the
time in effect for such series of Preferred Stock immediately upon the earlier
of (A) the date that the holder thereof ceases to hold at least 3,651,430 shares
of Applicable Common Stock, or (B) the date that the holder thereof transfers
the Series D2 Preferred, except to a Related Party of the holder. In addition,
the Series D3 Preferred shall automatically be converted into such number of
fully paid and nonassessable shares of Common Stock as is determined by dividing
the Original Series D3 Issue Price by the Conversion Price at the time in effect
for such series of Preferred Stock (the "D3 Conversion Shares") immediately upon
the earlier of (A) [Reserved] (B) the date that the holder thereof transfers the
Series D3 Preferred, except to an AmEx Related Party of the holder (as defined
in subsection 5(b)(iii) below), (C) beginning with the first day of the second
financial quarter following the commencement of sales by American Express
pursuant to the Web Services and Travel Agreement between the Corporation and
American Express Travel Related Services Company, Inc. ("AmEx") (the "Commercial
Agreement"), on the last day of any subsequent three consecutive financial
quarters during which AmEx's sales of the Corporation's products and services
pursuant to the Commercial Agreement to the Global 950 (as defined in the
Commercial Agreement) total less than twenty five percent (25%) in such three
consecutive financial quarter periods of AmEx's total sales of on-line products
and services similar to those provided by the Reservation System (as defined in
the Commercial Agreement) to new accounts (i.e. accounts not previously under
contract with AmEx for the provision of on-line products and services similar to
those provided by the Reservation System) within the Global 950, (D) eighteen
(18) months following the closing of the Corporation's offer and sale of its
securities in a firm commitment underwritten public offering, (E) the date of
the consummation of a Liquidation of the Corporation, as defined in Article
III(B)(3)(c) above, and (F) [Reserved] (provided, however, that notwithstanding
any such conversion of such Series D3 Preferred pursuant to this Article
III.B.5(b)(ii), the director elected by the holder of the Series D3 Preferred
Stock shall continue to serve as a director of the Corporation until his
resignation, death or removal in accordance with these Amended and Restated
Articles of Incorporation). In addition to Article III.B.5(b)(ii)(A) through
(F), above, the Series D3 Preferred shall automatically be converted into the D3
Conversion Shares (i) if and only if the Corporation consummates an initial
public offering of its securities on or before the later of (x) December 31,
1999, or (y) the consummation of the next bona fide sale of securities of the
Corporation to investors in an arms-length transaction with gross aggregate
proceeds to the Corporation of at least $10,000,000 (in each case the "Pay to
Play Date"), on the date that the holder of the share of Series D3 Preferred
Stock holds a percentage of the Common Stock of the Company (calculated assuming
(1) the conversion of all then-outstanding Preferred Stock into Common Stock,
(2) the issuance of the number of shares of Common Stock issuable upon
conversion of the securities issuable upon exercise of outstanding warrants to
purchase securities of the Corporation held by the holder of the share of Series
D3 Preferred Stock and (3) the issuance of all shares of Common Stock issuable
upon the exercise of all options vested as of such date exercisable for shares
of the Corporation's Common Stock) equal to less than the difference of (x) the
percentage of the Common Stock of the Company held by the holder of the share of
Series D3 Preferred Stock immediately after the consummation of the Company's
initial public offering (the "IPO") minus (y) 1.0% or (ii) if the Corporation
-----
does not consummate an initial public offering of its securities on or before
the Pay
<PAGE>
to Play Date, on the date that the holder of the share of Series D3 Preferred
Stock holds a percentage of the Common Stock of the Company (calculated assuming
(1) the conversion of all then-outstanding Preferred Stock into Common Stock,
(2) the issuance of the number of shares of Common Stock issuable upon
conversion of the securities issuable upon exercise of outstanding warrants to
purchase securities of the Corporation held by the holder of the share of Series
D3 Preferred Stock and (3) the issuance of all shares of Common Stock issuable
upon the exercise of all options vested as of such date exercisable for shares
of the Corporation's Common Stock) equal to less than the difference of (x) the
percentage of the Common Stock of the Company held by the holder of on the AmEx
Subsequent Closing Date (as defined in that certain Preferred Stock and Warrant
Purchase Agreement between the Corporati on and the Investors listed on Schedule
--------
A thereto, dated September 14, 1999), minus (y) 1.0%.
- - -----
(iii) For purposes of subsection 5(b)(ii) above, "Applicable
Common Stock" shall mean the shares of Common Stock held by a shareholder or
issuable to such shareholder upon conversion of Preferred Stock held by such
shareholder (on an as-converted basis and as adjusted for any Recapitalization,
and treating all outstanding warrants to purchase Preferred Stock (or the Common
Stock issuable upon conversion thereof) at a per share exercise price of $0.01
or less held by such shareholder on an as-exercised basis). For purposes of
subsection 5(b)(ii) above, "Related Party" shall mean (A) any corporation
directly controlled by, controlling, or under common control with (to the extent
of more than fifty percent (50%) of its issued capital stock entitled to vote
for the election of directors) a shareholder of the Corporation, or (ii) any
partnership directly controlled by, controlling, or under common control with
(to the extent of more than fifty percent (50%) of its voting power or otherwise
having power to control its general activities) a shareholder of the
Corporation, but in each case only for so long as such ownership or control
shall continue. For purposes of subsection 5(b)(ii) above, "AmEx Related Party"
shall mean (A) any corporation directly controlled by, controlling, or under
common control with (to the extent of more than fifty percent (50%) of its
issued capital stock entitled to vote for the election of directors) a
shareholder of the Corporation, or (ii) any partnership directly controlled by,
controlling, or under common control with (to the extent of more than fifty
percent (50%) of its voting power or otherwise having power to control its
general activities) a shareholder of the Corporation, but in each case only for
so long as such ownership or control shall continue.
(c) Mechanics of Conversion. Before any holder of Preferred Stock
-----------------------
shall be entitled to convert the same into shares of Common Stock and to receive
the certificate or certificates therefor, he or she shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Preferred Stock and shall give
written notice to the Corporation at such office that he or she elects to
convert the same; provided, however, that in the event of an automatic
conversion pursuant to Section 5(b) hereof, the outstanding shares of Preferred
Stock shall be converted automatically without any further action by the holders
of such shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; and provided further that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such automatic conversion unless and until
the certificates evidencing such shares of Preferred Stock are either delivered
to the Corporation or its transfer agent as provided above, or the holder
notifies the Corporation or its transfer agent that such certificates have been
lost, stolen or destroyed and executes an agreement satisfactory to the
<PAGE>
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates. The Corporation shall, as soon as practicable
after such delivery, or after the execution and delivery of such agreement and
indemnification, issue and deliver at such office to such holder of Preferred
Stock, a certificate or certificates for the number of shares of Common Stock to
which he or she shall be entitled as aforesaid and a check payable to the holder
in the amount of any declared and unpaid dividends payable pursuant to Section
5(a) hereof, if any. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Preferred Stock to be converted, or, in the case of automatic
conversion, immediately prior to the occurrence of the event leading to such
automatic conversion, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on such date.
(d) Conversion Price Adjustments of Preferred Stock for Certain
-----------------------------------------------------------
Dilutive Issuances, Splits and Combinations.
- -------------------------------------------
(i) The Conversion Price of the Series C Preferred and
Series E Preferred shall be subject to adjustment from time to time as follows:
(A) If the Corporation shall issue, after the
applicable date upon which any shares of Series C Preferred or Series E
Preferred, respectively, were first issued (the "Purchase Date"), any Additional
Stock (as defined below) without consideration or for a consideration per share
less than the Conversion Price for such series in effect immediately prior to
the issuance of such Additional Stock, the Conversion Price for such series in
effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this clause (i)) be adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance (including shares of Common Stock deemed to be issued pursuant to
subsection 5(d)(i)(E)(1) or (2)) plus the number of shares of Common Stock that
the aggregate consideration received by the Corporation for such issuance would
purchase at such Conversion Price; and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issuance
(including shares of Common Stock deemed to be issued pursuant to subsection
5(d)(i)(E)(1) or (2)) plus the number of shares of such Additional Stock issued
by the Corporation.
(B) No adjustment of the Conversion Price for the
Series C Preferred or the Series E Preferred, as the case may be, shall be made
in an amount less than one cent per share, provided that any adjustments that
are not required to be made by reason of the foregoing shall be carried forward
and shall be either taken into account in any subsequent adjustment made prior
to three (3) years from the date of the event giving rise to the adjustment
being carried forward, or shall be made at the end of three (3) years from the
date of the event giving rise to the adjustment being carried forward. Except to
the limited extent provided for in subsections 5(d)(i)(E)(3) and 5(d)(i)(E)(4),
no adjustment of such Conversion Price pursuant to this subsection 5(d)(i) shall
have the effect of increasing the Conversion Price above the Conversion Price in
effect immediately prior to such adjustment. No adjustment of such Conversion
Price shall have the effect of increasing the Conversion Price above the
Conversion Price in effect on the Purchase Date.
(C) In the case of the issuance of Common Stock for
cash, the consideration received by the Corporation shall be deemed to be the
amount of cash paid therefor before deducting any reasonable discounts,
commissions or other expenses allowed, paid or incurred by the Corporation for
any underwriting or otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, the consideration
received by the Corporation other than cash shall be deemed to be the fair
market value thereof as determined by the Board of Directors in good faith,
irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on
or after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe for
such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 5(d)(i) and subsection 5(d)(ii):
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of time,
but without taking into account potential antidilution adjustments) of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for an
aggregate consideration equal to the total consideration (determined in the
manner provided in subsections 5(d)(i)(C) and (d)(i)(D)), if any, received by
the Corporation upon the issuance of such options or rights plus the minimum
amount of additional consideration payable to the Corporation upon exercise of
such options or rights for the Common Stock covered thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable (i) upon conversion of, or in exchange for (assuming
the satisfaction of any conditions to convertibility or exchangeability,
including, without limitation, the passage of time, but without taking into
account potential antidilution adjustments), any such convertible or
exchangeable securities or (ii) upon the exercise of options to purchase or
rights to subscribe for such convertible or exchangeable securities and
subsequent conversion or exchange thereof, shall be deemed to have been issued
at (x) the time such securities or such options or rights were issued and (y)
for a consideration equal to the consideration, if any, received by the
Corporation for any such securities or such options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
minimum amount of additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such securities or the exercise
of any related such options or rights and the conversion or exchange of the
securities acquired upon exercise thereof (the consideration in each case to be
determined in the manner provided in subsections 5(d)(i)(C) and 5(d)(i)(D)).
(3) In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable to the
<PAGE>
Corporation upon exercise of such options or rights or upon conversion of or in
exchange for any convertible or exchangeable securities, including, but not
limited to, a change resulting from the antidilution provisions thereof (unless
such options or rights or convertible or exchangeable securities were merely
deemed to be included in the numerator and denominator for purposes of
determining the number of shares of Common Stock outstanding for purposes of
subsection 5(d)(i)(A)), the Conversion Price of the Series C Preferred and
Series E Preferred, to the extent in any way affected by or computed using such
options, rights or securities, shall be recomputed to reflect such change, but
no further adjustment shall be made for the actual issuance of Common Stock or
any payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.
(4) Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price of the Series C Preferred and Series E
Preferred, to the extent in any way affected by or computed using such options,
rights or securities or options or rights related to such securities (unless
such options or rights were merely deemed to be included in the numerator and
denominator for purposes of determining the number of shares of Common Stock
outstanding for purposes of subsection 5(d)(i)(A)), shall be recomputed to
reflect the issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities that remain in effect) actually issued
upon the exercise of such options or rights, upon the conversion or exchange of
such securities or upon the exercise of the options or rights related to such
securities.
(5) The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to subsections
5(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change,
termination or expiration of the type described in either subsection
5(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common
Stock issued (or deemed to have been issued pursuant to subsection 5(d)(i)(E))
by the Corporation after the Purchase Date, other than:
(A) any shares of Common Stock issuable or issued
pursuant to a transaction described in subsection 5(d)(iii) hereof;
(B) any shares of Common Stock issuable or issued to
employees, consultants, directors, vendors or other service providers of the
Corporation directly or pursuant to a stock option plan or restricted stock
plan, in either case approved by the Board of Directors of the Corporation;
(C) any shares of Common Stock issuable or issued
(I) in a firm commitment underwritten public offering before or in connection
with which all outstanding shares of Preferred Stock will be converted to Common
Stock or (II) upon exercise of warrants or rights granted to underwriters in
connection with such public offering;
<PAGE>
(D) any shares of Common Stock issuable or issued
upon conversion of any shares of Series A Preferred, Series B Preferred, Series
C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred or
Series E Preferred, or as dividends or distributions on any shares of Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred or Series E Preferred;
(E) up to 250,000 shares of Common Stock issuable or
issued upon exercise (and, if applicable, conversion) of warrants issued to
persons or entities with which the Corporation has business relationships,
including without limitation banks and equipment lessors, provided such
issuances are for other than primarily equity financing purposes and such
issuances have been approved by the Corporation's Board of Directors;
(F) any shares of Common Stock issued or issuable
upon exercise (and, if applicable, conversion) of (i) any warrants to purchase
Series C Preferred at a per share exercise price of $0.01 or less, (ii) any
options to purchase Series D1 Preferred or Series D2 Preferred or (iii) any
warrants to purchase Series C Preferred Stock, Series E Preferred Stock or
Common Stock issued pursuant to that certain Preferred Stock and Warrant
Purchase Agreement dated September 14, 1999, (iv) any shares of Preferred Stock
issued pursuant to that certain Preferred Stock and Warrant Purchase Agreement
dated September 14, 1999, (v) that certain warrant to purchase shares of Series
C Preferred Stock issued to Northwest Airlines, Inc. on August 27, 1999, and
(vi) that certain Convertible Promissory Note issued to Eastern Air Lines, Inc.
on July 15, 1999.
(iii) In the event the Corporation should at any time or
from time to time after the Purchase Date fix a record date for the effectuation
of a stock split, subdivision or reclassification of the outstanding shares of
Common Stock or the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, stock split, subdivision or reclassification if no
record date is fixed), the Conversion Price of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series
D3 Preferred and Series E Preferred shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of each share of such
series shall be increased in proportion to such increase of the aggregate number
of shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents, with the number of shares issuable with respect to
Common Stock Equivalents determined from time to time in the manner provided for
deemed issuances in subsection 5(d)(i)(E).
(iv) If the number of shares of Common Stock outstanding at
any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion
<PAGE>
Price for the Series A Preferred, Series B Preferred, Series C Preferred, Series
D1 Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred
shall be appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares.
(v) In the case, at any time after the date hereof, of any
capital reorganization or any reclassification of the stock of the Corporation
(other than as a result of a stock dividend, stock split or subdivision or
combination of shares), or the consolidation or merger of the Corporation with
or into another entity (other than a consolidation or merger (i) in which the
Corporation is the continuing entity and which does not result in any change in
the percentage ownership of Common Stock or Common Stock Equivalents held by the
shareholders of the Corporation just prior to such consolidation or merger, or
(ii) which is treated as a liquidation pursuant to Section 3(c)), or of the sale
or other disposition of all or substantially all the properties and assets of
the Corporation (other than a sale or other disposition which is treated as a
liquidation pursuant to Section 3(c)), the shares of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D1 Preferred, Series D2
Preferred, Series D3 Preferred and Series E Preferred shall, after such
reorganization, reclassification, consolidation, merger, sale or other
disposition, be convertible into the kind and number of shares of stock or other
securities or property of the Corporation or otherwise to which such holder
would have been entitled if, immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition, it had
converted its shares of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and/or
Series E Preferred into Common Stock. The provisions of this subsection 5(d)(v)
shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or other dispositions for so long as this
subsection 5(d)(v) remains in effect.
(e) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D1 Preferred, Series D2
Preferred, Series D3 Preferred and Series E Preferred pursuant to this Section
5, the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred,
Series D2 Preferred, Series D3 Preferred and Series E Preferred a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series A Preferred, Series B
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series
D3 Preferred or Series E Preferred furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Price of the Series A Preferred, Series B Preferred, Series
C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred or
Series E Preferred at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time would
be received upon the conversion of the Series A Preferred, Series B Preferred,
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
Preferred or Series E Preferred.
(f) Status of Converted Stock. In case any shares of Series A
-------------------------
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2
<PAGE>
Preferred, Series D3 Preferred or Series E Preferred shall be converted pursuant
to this Section 5, the shares so converted shall be canceled, shall not be
reissuable and shall cease to be a part of the authorized capital stock of the
Corporation.
(g) Fractional Shares. In lieu of any fractional shares to which
-----------------
the holder of Series A Preferred, Series B Preferred, Series C Preferred, Series
D1 Preferred, Series D2 Preferred, Series D3 Preferred or Series E Preferred
would otherwise be entitled upon conversion, the Corporation shall pay to the
holder cash equal to such fraction multiplied by the fair market value of one
share of Common Stock as determined by the Board. The number of whole shares
issuable to each holder upon such conversion shall be determined on the basis of
the number of shares of Common Stock issuable upon conversion of the total
number of shares of Series A Preferred, Series B Preferred, Series C Preferred,
Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and/or Series E
Preferred held by such holder at the time of conversion into Common Stock.
(h) Miscellaneous.
-------------
(i) All calculations under this Section 5 shall be made to
the nearest cent or to the nearest one hundredth (1/100) of a share, as the case
may be.
(ii) The holders of at least 50% of the outstanding Series
A Preferred, Series B Preferred, Series C Preferred or Series E Preferred shall
have the right to challenge any determination by the Board of fair value
pursuant to this Section 5, in which case such determination of fair value shall
be made by an independent appraiser selected jointly by the Board and the
challenging parties, the cost of such appraisal to be borne by the Corporation.
(iii) No adjustment in the Conversion Prices of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and Series E Preferred need be made if such
adjustment would result in a change in such Conversion Price of less than $0.01.
Any adjustment of less than $0.01 which is not made shall be carried forward and
shall be made at the time of and together with any subsequent adjustment which,
on a cumulative basis, amounts to an adjustment of $0.01 or more in such
Conversion Price.
(i) No Impairment. The Corporation will not through any
-------------
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance of performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 5 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Series A Preferred, Series B Preferred,
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
Preferred or Series E Preferred against impairment.
(j) Reservation of Stock Issuable Upon Conversion. The
---------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued
<PAGE>
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series A Preferred, Series B Preferred, Series C Preferred, Series
D1 Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and Series E Preferred. If at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then-outstanding shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series D1 Preferred, Series D2
Preferred, Series D3 Preferred and Series E Preferred, the Corporation will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
6. Voting Rights.
-------------
(a) Subject to the rights of series of Preferred Stock that may
from time to time come into existence and except as otherwise required by law or
by these Articles of Incorporation, the holder of each share of Common Stock
issued and outstanding shall have one vote, and the holder of each share of
Series A Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred,
Series D2 Preferred, Series D3 Preferred and Series E Preferred issued and
outstanding shall be entitled to the number of votes equal to the number of
shares of Common Stock into which such share of Series A Preferred, Series B
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series
D3 Preferred and Series E Preferred could be converted at the record date for
determination of the shareholders entitled to vote on such matters, or, if no
such record date is established, at the date such vote is taken or any written
consent of shareholders is solicited, such votes to be counted together with all
other shares of stock of the Corporation having general voting power and not
separately as a class. Fractional votes by the holders of Series A Preferred,
Series B Preferred, Series C Preferred, Series D1 Preferred, Series D2
Preferred, Series D3 Preferred and Series E Preferred shall not, however, be
permitted, and any fractional voting rights shall (after aggregating all shares
of Common Stock into which shares of Series A Preferred, Series B Preferred,
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
Preferred and Series E Preferred held by each holder could be converted) be
rounded to the nearest whole number (with one-half being rounded downward).
(b) Notwithstanding the provisions of Section 6(a), and prior to
the conversion of all outstanding shares of Series A Preferred, Series B
Preferred, Series C Preferred and Series E Preferred into Common Stock pursuant
to the provisions of Section 5, at each annual or special meeting called for the
purpose of electing directors, (i) for so long as any shares of Series A
Preferred remain outstanding, two (2) members of the Board shall be elected by
the holders of Series A Preferred, voting as a separate class; (ii) for so long
as any shares of Series B Preferred remain outstanding, one (1) member of the
Board shall be elected by the holders of the Series B Preferred, voting as a
separate class; (iii) one (1) member of the Board shall be elected by the
holders of the Common Stock, voting as a separate class, provided that, in
addition to such member to be elected by the holders of the Common Stock, (A) if
no shares of Series A Preferred remain outstanding, then two (2) additional
members of the Board shall be elected by the holders of Common Stock, voting as
a separate class, and (B) if no shares
<PAGE>
of Series B Preferred Stock remain outstanding, then one (1) additional member
of the Board shall be elected by the holders of Common Stock, voting as a
separate class; (iv) two (2) members of the Board shall be elected by the
holders of the Common Stock and Preferred Stock, voting together as a single
class; (v) if and for so long as a share of Series D1 Preferred remains
outstanding, one (1) member of the Board shall be elected by the holder of the
Series D1 Preferred, provided that if no share of Series D1 Preferred remains
outstanding, then one (1) member of the Board shall be elected by the vote of
the holders of the Common Stock, Series A Preferred and Series B Preferred,
voting together as a single class; (vi) if and for so long as a share of Series
D2 Preferred remains outstanding, one (1) member of the Board shall be elected
by the holder of the Series D2 Preferred; (vii) for so long as a share of Series
D3 Preferred remains outstanding, one (1) member of the Board shall be elected
by the holder of the Series D3 Preferred (and from September 14, 1999 until such
date when the designee of the holder of the Series D3 Preferred shall fill a
seat on the Board or such date when all shares of Series D3 Preferred are
converted into Common Stock, there shall be a vacancy maintained on the Board,
which vacancy shall be reserved for the Board designee of the holder of the
Series D3 Preferred); (viii) from the period when the shares of Series D1
Preferred and Series D2 Preferred become outstanding until the earlier of such
later date when such shares are converted into Common Stock or when the
designees of the holder of the Series D1 Preferred and Series D2 Preferred shall
fill seats on the Board, there shall be two (2) vacancies maintained on the
Board, which vacancies shall be reserved for the Board designees of the holder
of the Series D1 Preferred and the Series D2 Preferred; and (ix) the remaining
members of the Board, if any, shall be elected by the holders of the Common
Stock and Preferred Stock, voting together as a single class. Following the
conversion of all outstanding shares of Series A Preferred, Series B Preferred,
Series C Preferred and Series E Preferred into Common Stock pursuant to the
provisions of Section 5 hereof, at each annual or special meeting called for the
purpose of electing directors, (i) if and for so long as a share of Series D1
Preferred remains outstanding, one (1) member of the Board shall be elected by
the holder of the Series D1 Preferred; (ii) if and for so long as a share of
Series D2 Preferred remains outstanding, one (1) member of the Board shall be
elected by the holder of the Series D2 Preferred; (iii) if and for so long as a
share of Series D3 Preferred remains outstanding, one (1) member of the Board
shall be elected by the holder of Series D3 Preferred; and (iv) the remaining
members of the Board, if any, shall be elected by the holders of the Common
Stock, voting as a single and separate class. In the case of any vacancy in the
office of a director elected by a specified group of shareholders, a successor
shall be elected to hold office for the unexpired term of such director by the
affirmative vote of the shares of such specified group given at a special
meeting of such shareholders duly called or by an action by written consent for
that purpose, and any such vacancy thereby created, may be filled by the vote of
the holders at such meeting or in such consent. In addition, in the case of any
vacancy in the office of a director to be elected by the holder of the Series D3
Preferred, when such holder of the Series D3 Preferred designates an individual
to fill such director vacancy, as soon as practical after the designation, the
Board shall appoint such designee to fill the vacancy. In addition, in the case
of any vacancy in the office of a director to be elected by the holder of the
Series D1 Preferred or Series D2 Preferred, when such holder of the Series D1
Preferred or Series D2 Preferred designates individuals to fill such director
vacancies, as soon as practical after such designation, the Board shall appoint
such designee or designees to fill the applicable vacancy or vacancies. In the
event of the automatic conversion of the Series D1, Series D2 or Series D3
Preferred into Common Stock pursuant to Section 5(b)(ii), the director(s)
serving as director(s)
<PAGE>
appointed by such converted Series D1, Series D2 or Series D3 Preferred shall
immediately thereafter be treated as directors elected pursuant to Section
6(b)(ix) above by the holders of Common Stock and Preferred Stock, voting as a
single class.
7. Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Preferred Stock, at least twenty (20) days prior to
the date specified therein, a notice specifying the date on which any such
record is to be taken from the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
8. Notices. Any notice required by the provisions of these Articles
-------
to be given to the holders of Preferred Stock shall be deemed given when
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his or her address appearing on the books of this
Corporation.
9. Protective Provisions.
---------------------
(a) Subject to the rights of series of Preferred Stock that may
from time to time come into existence, so long as any shares of Series A
Preferred are outstanding, the Corporation shall not, without first obtaining
the approval of the holders of a majority of the then-outstanding shares of such
Series A Preferred, voting as a separate series, take any action (including
amendment of the Certificate of Incorporation or Bylaws) that adversely affects
the rights, preferences, privileges or limitations of the Series A Preferred;
(b) Subject to the rights of series of Preferred Stock that may
from time to time come into existence, so long as any shares of Series B
Preferred are outstanding, the Corporation shall not, without first obtaining
the approval of the holders of a majority of the then-outstanding shares of such
Series B Preferred, voting as a separate series, take any action (including
amendment of the Certificate of Incorporation or Bylaws) that adversely affects
the rights, preferences, privileges or limitations of the Series B Preferred;
(c) Subject to the rights of series of Preferred Stock that may
from time to time come into existence, if and for so long as a share of Series
D1 Preferred remains outstanding, the Corporation shall not, without first
obtaining the approval of the holder of the Series D1 Preferred, take any action
(including amendment of the Certificate of Incorporation or Bylaws) that
adversely affects the rights, preferences, privileges or limitations of the
Series D1 Preferred or that increases the authorized number of shares of Series
D1 Preferred;
(d) Subject to the rights of series of Preferred Stock that may
from time to time come into existence, if and for so long as a share of Series
D2 Preferred remains outstanding, the Corporation shall not, without first
obtaining the approval of the holder of the Series D2 Preferred, take any action
(including amendment of the Certificate of
<PAGE>
Incorporation or Bylaws) that adversely affects the rights, preferences,
privileges or limitations of the Series D2 Preferred or that increases the
authorized number of shares of Series D2 Preferred;
(e) Subject to the rights of series of Preferred Stock that may
from time to time come into existence, if and for so long as a share of Series
D3 Preferred remains outstanding, the Corporation shall not, without first
obtaining the approval of the holder of the Series D3 Preferred, take any action
(including amendment of the Certificate of Incorporation or Bylaws) that
adversely affects the rights, preferences, privileges or limitations of the
Series D3 Preferred or that increases the authorized number of shares of Series
D3 Preferred;
(f) Subject to the rights of series of Preferred Stock that may
from time to time come into existence, so long as any shares of Series C
Preferred are outstanding, the Corporation shall not, without first obtaining
the approval of the holders of a majority of the then outstanding shares of such
Series C Preferred take any action (including amendment of the Certificate of
Incorporation or Bylaws) that:
(i) changes the rights, preferences, privileges or
limitations of the Series C Preferred;
(ii) creates any new class or series of shares that has a
preference over the Series C Preferred with respect to voting, dividends,
redemption, conversion or liquidation preferences;
(iii) reclassifies any shares of capital stock of the
Corporation into shares having a preference over the Series C Preferred with
respect to voting, dividends, redemption, conversion or liquidation preferences;
(iv) authorizes any dividend or other distribution with
respect to Common Stock (other than a dividend payable in Common Stock or as
authorized by Section 2(b));
(v) increases or decreases the authorized number of shares
of Series A Preferred, Series B Preferred, Series C or Series E Preferred;
(vi) permits the sale of shares held by the Corporation in
a subsidiary of the Corporation; or
(vii) results in the repurchase of shares of the
Corporation's Common Stock or Preferred Stock in any twelve (12) month period
for an aggregate amount in excess of $25,000, exclusive of repurchases from
directors, employees, consultants or other service providers of the Corporation
pursuant to the terms of their stock purchase or stock restriction agreements.
(g) Subject to the rights of series of Preferred Stock that may
from time to time come into existence, so long as any shares of Series E
Preferred are outstanding, the Corporation shall not, without first obtaining
the approval of the holders of
<PAGE>
66 2/3% of the then outstanding shares of such Series E Preferred take any
action (including amendment of the Articles of Incorporation or Bylaws) that:
(i) changes the rights, preferences, privileges or
limitations of the Series E Preferred;
(ii) creates any new class or series of shares that has a
preference over the Series E Preferred with respect to voting, dividends,
redemption, conversion or liquidation preferences;
(iii) reclassifies any shares of capital stock of the
Corporation into shares having a preference over the Series E Preferred with
respect to voting, dividends, redemption, conversion or liquidation preferences;
(iv) authorizes any dividend or other distribution with
respect to Common Stock (other than a dividend payable in Common Stock or as
authorized by Section 2(b));
(v) increases or decreases the authorized number of shares
of Series A Preferred, Series B Preferred, Series C Preferred or Series E
Preferred;
(vi) permits the sale of shares held by the Corporation in
a subsidiary of the Corporation; or
(vii) results in the repurchase of shares of the
Corporation's Common Stock or Preferred Stock in any twelve (12) month period
for an aggregate amount in excess of $25,000, exclusive of repurchases from
directors, employees, consultants or other service providers of the Corporation
pursuant to the terms of their stock purchase or stock restriction agreements.
ARTICLE V
A director of the Corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporation action
further eliminating or limiting the personal liability of directors then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law as so amended.
Any repeal or modification of the foregoing provisions of this Article V
by the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time, or increase
the liability of any director of this Corporation
<PAGE>
with respect to any acts or omissions of such director occurring prior to, such
repeal or modification.
ARTICLE VI
To the fullest extent permitted by applicable law, this Corporation is
also authorized to provide indemnification of (and advancement of expenses to)
such agents (and any other persons to which Delaware law permits this
Corporation to provide indemnification) through Bylaw provisions, agreements
with such agents or other persons, vote of stockholders or disinterested
directors or otherwise, in excess of the indemnification and advancement
otherwise permitted by Section 145 of the General Corporation Law of the State
of Delaware, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to this
Corporation, its stockholders, and others.
Any repeal or modification of any of the foregoing provisions of this
Article VI shall not adversely affect any right or protection of a director,
officer, agent or other person existing at the time of, or increase the
liability of any director of this Corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to such repeal or
modification.
ARTICLE VII
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
THREE: That thereafter said amendment and restatement was duly adopted
in accordance with the provisions of Section 242 and Section 245 of the General
Corporation Law by obtaining a majority vote of the Common Stock and Preferred
Stock, in favor of said amendment and restatement in the manner set forth in
Section 222 of the General Corporation law.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this certificate on
October ____, 1999.
------------------------------------------
Gadi Maier
President and Chief Executive Officer
------------------------------------------
Kenneth Pelowski
Secretary
<PAGE>
Exhibit 3.3
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
GETTHERE.COM
Matthew Ackerman and Kenneth Pelowski hereby certify that:
1. They are the duly elected and acting Vice President of Finance and
Operations and Secretary, respectively, of GetThere.com, a California
corporation (the "Corporation").
2. The Corporation's Articles of Incorporation are hereby amended and
restated to read as follows:
I
The name of the Corporation is GetThere.com.
II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business,
or the practice of a profession permitted to be incorporated by the California
Corporations Code.
III
A. This Corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the Corporation is authorized to issue is
Seventy-Seven Million Eighty-Seven Thousand Nine Hundred Forty-Six
(77,087,946) shares, Fifty Million (50,000,000) shares of which shall be
Common Stock (the "Common Stock") and Twenty-Seven Million Eighty-Seven
Thousand Nine Hundred Forty-Six (27,087,946) shares of which shall be
Preferred Stock (the "Preferred Stock").
B. A description of the respective classes and series of stock
and a statement of the designations, preferences, voting powers, relative,
participating, optional or other special rights and privileges, and the
qualifications, limitations and restrictions of the Preferred Stock and Common
Stock are as follows:
1. Designation and Amount. The Preferred Stock
----------------------
authorized by this Amended and Restated Articles of Incorporation may be
issued from time to time in one or more series. The first series shall be
designated Series A Preferred Stock (the "Series A Preferred"), which series
shall consist of Four Million (4,000,000) shares, the second series shall be
designated Series B Preferred Stock (the "Series B Preferred"), which series
shall consist of Four Million Five Hundred Thousand (4,500,000) shares, the
third series shall be designated Series C Preferred Stock (the "Series C
Preferred"), which series shall consist of Eleven Million Two Hundred Thirty-
Six Thousand Eight Hundred Twenty-One (11,236,821) shares, the fourth series
shall be designated Series D1 Preferred Stock ("Series D1 Preferred"), which
series shall consist of One (1) share, the fifth series shall be designated
Series D2 Preferred Stock ("Series D2 Preferred"), which series shall
<PAGE>
consist of One (1) share, the sixth series shall be designated Series D3
Preferred Stock ("Series D3 Preferred"), which series shall consist of One (1)
share and the seventh series shall be designated Series E Preferred Stock (the
"Series E Preferred"), which series shall consist of Seven Million Three
Hundred Fifty-One Thousand One Hundred Twenty-Two (7,351,122) shares.
The Board of Directors of the Corporation (the "Board") is hereby
authorized to fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon additional series of Preferred Stock, and the number
of shares constituting any such series and the designation thereof, or any of
them. Subject to compliance with applicable protective voting rights which have
been or may be granted to Preferred Stock or series thereof in Certificates of
Determination or in these Amended and Restated Articles of Incorporation
("Protective Provisions"), but notwithstanding any other rights of any series
of Preferred Stock, the rights, privileges, preferences and restrictions of
any such additional series may be subordinate to, pari passu with (including,
without limitation, inclusion in provisions with respect to liquidation and
acquisition preferences, redemption and/or approval of matters by vote or
written consent), or senior to any of those of any present or future class or
series of Preferred Stock or Common Stock. Subject to compliance with
applicable Protective Provisions, the Board is also authorized to increase or
decrease the number of shares of any series (other than Series A Preferred,
Series B Preferred, Series C Preferred, Series D1 Preferred, Series D2
Preferred, Series D3 Preferred and Series E Preferred), prior or subsequent to
the issue of that series (but not below the number of shares of such series then
outstanding). In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status which they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
2. Dividends and Distributions.
---------------------------
(a) Subject to the rights of series of Preferred
Stock that may from time to time come into existence and the provisions for
adjustment hereinafter set forth, each holder of shares of Series A Preferred,
each holder of shares of Series B Preferred, each holder of shares of Series C
Preferred and each holder of Series E Preferred shall be entitled to receive,
when, as and if declared by the Board out of funds legally available for such
purpose, an annual cash dividend in the amount of $0.079331 per share of
Series A Preferred, $0.1162 per share of Series B Preferred, $0.35875 per
share of Series C Preferred and $0.875 per share of Series E Preferred (as
adjusted to reflect any stock split, stock dividend, combination,
recapitalization and the like (collectively, a "Recapitalization") with
respect to such series of Preferred Stock), prior and in preference to any
declaration or payment of any dividend (payable other than in Common Stock) on
the Common Stock, Series D1 Preferred, Series D2 Preferred or Series D3
Preferred of the Corporation. Such dividends shall not be cumulative, and no
right shall accrue to holders of such shares of Preferred Stock by reason of
the fact that dividends on such shares are not declared or paid in any year.
(b) Notwithstanding Section 2(a) hereof, the
Corporation may at any time, out of funds legally available therefor,
repurchase shares of Common Stock of the Corporation (i) issued to or held by
employees, directors or consultants of the Corporation or its subsidiaries
upon termination of their employment or services, pursuant to
2
<PAGE>
any agreement providing for such right of repurchase, or (ii) issued to or
held by any person subject to the Corporation's right of first refusal to
purchase such shares where the purchase is pursuant to the exercise of such
right of first refusal, in either case whether or not dividends on the
Preferred Stock shall have been declared and paid or funds set aside therefor.
The holders of Series A Preferred, Series B Preferred, Series C Preferred,
Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and Series E
Preferred expressly waive their rights, if any, as described in California
Corporations Code Sections 502, 503 and 506 as they relate to the repurchase
of shares upon termination of employment or pursuant to a right of first
refusal.
3. Liquidation Rights. Subject to the rights of series of
------------------
Preferred Stock that may from time to time come into existence, in the event
of any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, distributions shall be made to the holders of Series
A Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred,
Series D2 Preferred, Series D3 Preferred and Series E Preferred in respect of
such Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred
before any amount shall be paid to the holders of Common Stock in respect of
such Common Stock, in the following manner:
(a) Series A Preferred, Series B Preferred,
--------------------------------------
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
- -----------------------------------------------------------------------
Preferred and Series E Preferred. The holders of the Series A Preferred,
- --------------------------------
Series B Preferred, Series C Preferred, Series D1 Preferred, Series D2
Preferred, Series D3 Preferred and Series E Preferred shall be entitled to be
paid out of the assets and surplus funds of the Corporation available for
distribution to shareholders of the Corporation, prior and in preference to
any distribution of any of the assets and surplus funds of the Corporation to
the holders of the Common Stock, an amount per share equal to (i) $1.1333 (the
"Original Series A Issue Price"), as adjusted for any Recapitalization, for
each outstanding share of Series A Preferred plus all declared and unpaid
dividends, if any, on such share, (ii) $1.66 (the "Original Series B Issue
Price"), as adjusted for any Recapitalization, for each outstanding share of
Series B Preferred plus all declared and unpaid dividends, if any, on such
share, (iii) $5.125 (the "Original Series C Issue Price"), as adjusted for any
Recapitalization, for each outstanding share of Series C Preferred plus all
declared and unpaid dividends, if any, on such share, (iv) $10.00 (the
"Original Series D1 Issue Price"), as adjusted for any Recapitalization, for
each outstanding share of Series D1 Preferred plus all declared and unpaid
dividends, if any, on such share, (v) $10.00 (the "Original Series D2 Issue
Price"), as adjusted for any Recapitalization, for each outstanding share of
Series D2 Preferred plus all declared and unpaid dividends, if any, on such
share, (vi) $12.50 (the "Original Series D3 Issue Price"), as adjusted for any
Recapitalization, for each outstanding share of Series D3 Preferred plus all
declared and unpaid dividends, if any, on such share and (vii) $12.50 (the
"Original Series E Issue Price"), as adjusted for any Recapitalization, for
each outstanding share of Series E Preferred plus all declared and unpaid
dividends, if any, on such share. If, upon the occurrence of a liquidation,
dissolution or winding up, the assets and funds thus distributed among the
holders of the Series A Preferred, Series B Preferred, Series C Preferred,
Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and Series E
Preferred shall be insufficient to permit the payment to such holders of their
full aforesaid liquidation preferences, then the entire assets and funds of
the Corporation legally available for distribution to the holders of capital
stock shall be distributed ratably among the holders of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and Series E
3
<PAGE>
Preferred in proportion to the full preferential amounts each such holder is
otherwise entitled to receive under this Section 3(a).
(b) Common Stock, Series A Preferred and Series B
---------------------------------------------
Preferred. If assets are remaining after payment of the full preferential
- ---------
amount with respect to the Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred and set forth in Section 3(a) above, then the holders of
the Series A Preferred, Series B Preferr ed and Common Stock shall be entitled
to share ratably in all such remaining assets and surplus funds in proportion
to the number of shares of Common Stock held by each such holder (treating all
shares of Series A Preferred and Series B Preferred as if converted into
Common Stock) until, with respect to the holders of the Series A Preferred and
Series B Preferred, such holders shall have received an aggregate of $4.5332
per share and $4.98 per share, respectively (including amounts paid
pursuant to Section 3(a) above); thereafter, subject to the rights of series
of Preferred Stock that may from time to time come into existence, if assets
or surplus funds remain in this Corporation, the holders of the Common Stock
of this Corporation shall receive all of the remaining assets or surplus funds
of this Corporation in proportion to the number of shares of Common Stock held
by each.
(c) Events Deemed a Liquidation. For purposes of
---------------------------
this Section 3, a liquidation, dissolution or winding up of the Corporation
shall be deemed to be occasioned by and to include (i) the consolidation or
merger of the Corporation with or into any other corporation, (ii) a transaction
in which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by an acquiring
corporation or its subsidiary (other than a transaction consummated for the so
le purpose of reincorporating the Corporation into another state), or (iii)
the sale by the Corporation of all or substantially all of its assets (or any
series of related transactions resulting in the sale or other transfer of all
or substantially all of its assets), unless, in each case, (A) the
------
shareholders of the Corporation immediately prior to any such transaction (or
series of related transactions) are holders of a majority of the voting equity
securities of the surviving or acquiring corporation immediately thereafter
and (B) each of the shareholders of the Corporation immediately prior to any
such transaction (or series of related transactions) holds the same pro rata
share of such majority of the voting equity securities of the surviving or
acquiring corporation as each hold of the Corporation immediately prior to
such transaction (or series of related transactions). For purposes of the
calculations in the previous sentence, equity securities which any stockholder
or the Corporation owned immediately prior to such transaction as a
stockholder of another party to the transaction shall be disregarded.
(d) Valuation of Securities and Property. In the
------------------------------------
event the Corporation proposes to distribute assets other than cash in
connection with any liquidation, dissolution or winding up of the Corporation
(or any other event deemed a liquidation, dissolution or winding up pursuant
to Section 3(c)), the value of the assets to be distributed to the holders of
shares of Series A Preferred, Series B Preferred, Series C Preferred, Series
D1 Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred
shall be determined in good faith by the Board. Any securities not subject to
investment letter or similar restrictions on free marketability shall be
valued as follows:
4
<PAGE>
(i) If traded on a securities exchange or
through the Nasdaq National Market system, the value shall be deemed to the
average of the security's closing prices on such exchange or system over the
thirty (30) day period ending three (3) days prior to the distribution;
(ii) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid prices over the
thirty (30) day period ending three (3) days prior to the distribution; and
(iii) If there is no active public market,
the value shall be the fair market value thereof as determined in good faith
by the Board.
The method of valuation of securities subject to investment letter or
other restrictions on free marketability shall be adjusted to make an
appropriate discount from the market value determined as above in clauses (i),
(ii) or (iii) to reflect the fair market value thereof as determined in good
faith by the Board. The holders of at least 50% of the outstanding Series A
Preferred, Series B Preferred, Series C Preferred or Series E Preferred shall
have the right to challenge any determination by the Board of fair market value
pursuant to this Section 3(d), in which case the determination of fair market
value shall be made by an independent appraiser selected jointly by the Board
and the challenging parties, the cost of such appraisal to be borne by the
Corporation.
(e) The Corporation shall give each holder of
record of Preferred Stock written notice of any impending liquidation,
dissolution or winding up of the Corporation (or any other event deemed a
liquidation, dissolution or winding up pursuant to Section 3(c)) not later
than twenty (20) days prior to the shareholders' meeting called to approve
such transaction, or twenty (20) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the impending transaction
and the provisions of this paragraph III(B)(3), and the Corporation shall
thereafter give such holders prompt notice of any material changes to such
terms and conditions. Any such transaction shall in no event be consummated
sooner than twenty (20) days after the Corporation has given the first notice
provided for herein or sooner than ten (10) days after the Corporation has
given notice of any material changes provided for herein; provided, however,
that such periods may be shortened upon the written consent of the holders of
at least a majority of the voting power of all then outstanding shares of such
Preferred Stock which are entitled to such notice rights or similar notice
rights.
4. Redemption Rights. Subject to the rights of series
-----------------
of Preferred Stock that may from time to time come into existence, the holders
of Series A Preferred, Series B Preferred, Series C Preferred and Series E
Preferred, have redemption rights as follows:
(a) Holder's Redemption Rights.
--------------------------
(i) Upon the receipt by the Corporation of a
written request (a "Redemption Notice") at any time prior to sixty (60) days
before the sixth
5
<PAGE>
anniversary of April 23, 1996 (the "Original Issue Date") from the holders of
at least seventy percent (70%) of the then-outstanding shares of Series A
Preferred, Series B Preferred, Series C Preferred and Series E Preferred
(voting together as a single class) that all of such holders' shares of
Preferred Stock be redeemed, the Corporation shall redeem (unless prevented by
law) all of the shares of Series A Preferred, Series B Preferred, Series C
Preferred and Series E Preferred then held by each holder of Series A
Preferred, Series B Preferred, Series C Preferred and Series E Preferred (a
"Preferred Holder") in the manner and on the dates referenced in Section
4(a)(iii) below.
(ii) The price to be paid for each share of
Series A Preferred redeemed pursuant to this Section 4 shall be $1.1333 per
share (as adjusted for any Recapitalization) plus an amount equal to all
declared and unpaid dividends on such share (the "Series A Redemption Price").
The price to be paid for each share of Series B Preferred redeemed pursuant to
this Section 4 shall be $1.66 per share (as adjusted for any Recapitalization)
plus an amount equal to all declared and unpaid dividends on such share (the
"Series B Redemption Price"). The price to be paid for each share of Series C
Preferred redeemed pursuant to this Section 4 shall be $5.125 per share (as
adjusted for any Recapitalization) plus an amount equal to all declared and
unpaid dividends on such share (the "Series C Redemption Price"). The price to
be paid for each share of Series E Preferred redeemed pursuant to this Section
4 shall be $12.50 per share (as adjusted for any Recapitalization) plus an
amount equal to all declared and unpaid dividends on such share (the "Series E
Redemption Price").
(iii) Once the redemption rights of the
Preferred Holders under this Section 4(a) have been exercised in accordance
with the terms of Section 4(a)(i), then the Corporation shall redeem and each
Preferred Holder shall sell to the Corporation (A) 25% of the Series A
Preferred, Series B Preferred, Series C Preferred and/or Series E Preferred
held by the Preferred Holder on the sixth anniversary date of the Original
Issue Date; (B) 33 1/3% of the remaining Series A Preferred, Series B
Preferred, Series C Preferred and/or Series E Preferred held by the Preferred
Holder on the seventh anniversary date of the Original Issue Date; (C) 50% of
the remaining Series A Preferred, Series B Preferred, Series C Preferred
and/or Series E Preferred held by the Preferred Holder on the eighth
anniversary date of the Original Issue Date; and (D) 100% of the remaining
Series A Preferred, Series B Preferred, Series C Preferred and/or Series E
Preferred held by the Preferred Holder on the ninth anniversary date of the
Original Issue Date (each such anniversary date, a "Designated Redemption
Date"). From and after each Designated Redemption Date with respect to which
the redemption rights under this Section 4(a) have been exercised (unless
default shall be made by the Corporation in the payment of the Redemption
Price as herein provided, in which event such rights shall be or become
exercisable until such default is cured), all rights of the holders of the
Series A Preferred, Series B Preferred, Series C Preferred and Series E
Preferred to be redeemed on such Designated Redemption Date pursuant to this
Section 4(a) shall cease with respect to such shares except the right to
receive payment in full of the Redemption Price for such shares upon surrender
of certificates representing such shares and such shares shall not thereafter
be transferable on the books of the Corporation or be deemed outstanding for
any purpose. Shares of the Series A Preferred, Series B Preferred, Series C
Preferred and Series E Preferred redeemed by the Corporation pursuant to this
Section 4(a) shall be deemed retired and may not under any circumstances
thereafter be reissued or otherwise disposed of by the Corporation.
6
<PAGE>
(iv) At any time on or after any Designated
Redemption Date, the Preferred Holders shall be entitled to receive payment of
the Redemption Price therefore upon actual delivery to the Corporation or its
agents of the certificates representing the shares to be redeemed. If upon any
Designated Redemption Date the assets of the Corporation available for
redemption shall be insufficient to pay all Preferred Holders the full amounts
to which they shall be entitled pursuant to this Section 4(a), the Corporation
shall use those funds as it shall have legally available to redeem the maximum
possible number of shares of Series A Preferred, Series B Preferred, Series C
Preferred and Series E Preferred among the holders of such shares to be
redeemed in proportion to the full redemption amounts each such holder would
otherwise be entitled to receive under this Section 4(a), and the remainder of
the shares of the Series A Preferred, Series B Preferred, Series C Preferred
and Series E Preferred required to be redeemed shall remain outstanding and
entitled to the rights, preferences and privileges provided herein, and shall
be redeemed on the earliest practicable date next following the day on which
the Corporation shall first have funds legally available for the redemption of
such shares.
5. Conversion. Subject to the rights of series of
----------
Preferred Stock that may from time to time come into existence, the holders of
the Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A
----------------
Preferred, Series B Preferred,Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and Series E Preferred shall initially be
convertible, at the option of the holder thereof, at any time after the date
of issuance of such share, at the office of the Corporation or any transfer
agent for the Series A Preferred, Series B Preferred, Series C Preferred,
Series D1 Preferred, Series D2 Preferred, Series D3 Preferred or Series E
Preferred, into the number of fully paid and nonassessable shares of Common
Stock which results from dividing the Original Series A Issue Price, the
Original Series B Issue Price, the Original Series C Issue Price, the Original
Series D1 Issue Price, the Original Series D2 Issue Price, the Original Series
D3 Issue Price or the Original Series E Issue Price, as the case may be, by
the Conversion Price (determined as hereinafter provided) per share in effect
for such series of Preferred Stock at the time of conversion. The initial
Conversion Price per share of the Series A Preferred, Series B Preferred,
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
Preferred and Series E Preferred shall be the Original Series A Issue Price,
the Original Series B Issue Price, the Original Series C Issue Price, the
Original Series D1 Issue Price, the Original Series D2 Issue Price, the
Original Series D3 Issue Price and the Original Series E Issue Price,
respectively; provided, however, that the Conversion Price per share of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred
shall be subject to adjustment from time to time as provided in Section 5(d)
hereof. Upon conversion pursuant to this section or Section 5(b) hereof, all
declared and unpaid dividends on the Series A Preferred, Series B Preferred,
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
Preferred and Series E Preferred shall be paid in cash, to the extent legally
permitted.
7
<PAGE>
(b) Automatic Conversion.
--------------------
(i) Each share of Series A Preferred, Series
B Preferred, Series C Preferred and Series E Preferred shall automatically be
converted into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Original Series A Issue Price, the
Original Series B Issue Price, the Original Series C Issue Price or the
Original Series E Issue Price, as the case may be, by the Conversion Price at
the time in effect for such series of Preferred Stock immediately upon the
earlier of (i) the Corporation's offer and sale of its securities in a firm
commitment underwritten public offering pursuant to an effective registration
statement on Form S-1 (or any successor to such form) under the Securities Act
of 1933, as amended, the public offering price of which is not less than $6.50
per share (as adjusted to reflect any Recapitalization) and the aggregate
gross proceeds to the Company of which are not less than $15,000,000, or (ii)
the date specified by written consent or agreement of the holders of at least
seventy-five percent (75%) of the then outstanding shares of Series A
Preferred, Series B Preferred, Series C Preferred and Series E Preferred,
voting together as a class and not as separate series and on an as-converted
basis.
(ii) Each share of Series D1 Preferred,
Series D2 Preferred and Series D3 Preferred shall automatically be converted
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Original Series D1 Issue Price, the Original Series
D2 Issue Price or the Original Series D3 Issue Price, as the case may be, by
the Conversion Price at the time in effect for such series of Preferred Stock
immediately upon the occurrence, in the case of the Series D1 Preferred and
Series D2 Preferred, of a Section 12(e) Termination Event, as such term is
defined in Section 12(e) of that certain Amended and Restated Shareholders
Agreement by and among the Corporation and the shareholders who are parties
thereto dated as of the date when shares of Series C Preferred are first
issued by the Corporation (the "Amended and Restated Shareholders Agreement"),
and, in the case of the Series D3 Preferred, of a Section 4(e) Termination
Event, as such term is defined in the Standstill and Bring Along Agreement by
and among the Corporation and the shareholders who are parties thereto dated
as of the date when shares of Series E Preferred are first issued by the
Corporation. In addition, the Series D1 Preferred shall automatically be
converted into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Original Series D1 Issue Price by the
Conversion Price at the time in effect for such series of Preferred Stock
immediately upon the earlier of (A) the date that the holder thereof ceases to
hold at least 2,434,287 shares of Applicable Common Stock (as defined in
subsection 5(b)(iii) below), or (B) the date that the holder thereof transfers
the Series D1 Preferred, except to a Related Party of the holder (as defined
in subsection 5(b)(iii) below). In addition, the Series D2 Preferred shall
automatically be converted into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing the Original Series D2
Issue Price by the Conversion Price at the time in effect for such series of
Preferred Stock immediately upon the earlier of (A) the date that the holder
thereof ceases to hold at least 3,651,430 shares of Applicable Common Stock,
or (B) the date that the holder thereof transfers the Series D2 Preferred,
except to a Related Party of the holder. In addition, the Series D3 Preferred
shall automatically be converted into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Original
Series D3 Issue Price by the Conversion Price at the time in effect for such
series of Preferred Stock (the "D3 Conversion Shares") immediately upon the
earlier of (A) [Reserved] (B) the date that the holder thereof transfers the
Series D3
8
<PAGE>
Preferred, except to an AmEx Related Party of the holder (as defined in
subsection 5(b)(iii) below), (C) beginning with the first day of the second
financial quarter following the commencement of sales by American Express
pursuant to the Web Services and Travel Agreement between the Corporation and
American Express Travel Related Services Company, Inc. ("AmEx") (the
"Commercial Agreement"), on the last day of any subsequent three consecutive
financial quarters during which AmEx's sales of the Corporation's products and
services pursuant to the Commercial Agreement to the Global 950 (as defined in
the Commercial Agreement) total less than twenty five percent (25%) in such
three consecutive financial quarter periods of AmEx's total sales of on-line
products and services similar to those provided by the Reservation System (as
defined in the Commercial Agreement) to new accounts (i.e. accounts not
previously under contract with AmEx for the provision of on-line products and
services similar to those provided by the Reservation System) within the
Global 950, (D) eighteen (18) months following the closing of the
Corporation's offer and sale of its securities in a firm commitment
underwritten public offering, (E) the date of the consummation of a
Liquidation of the Corporation, as defined in Article III(B)(3)(c) above, and
(F) [Reserved] (provided, however, that notwithstanding any such conversion of
such Series D3 Preferred pursuant to this Article III.B.5(b)(ii), the director
elected by the holder of the Series D3 Preferred Stock shall continue to serve
as a director of the Corporation until his resignation, death or removal in
accordance with these Amended and Restated Articles of Incorporation). In
addition to Article III.B.5(b)(ii)(A) through (F), above, the Series D3
Preferred shall automatically be converted into the D3 Conversion Shares (i)
if and only if the Corporation consummates an initial public offering of its
securities on or before the later of (x) December 31, 1999, or (y) the
consummation of the next bona fide sale of securities of the Corporation to
investors in an arms-length transaction with gross aggregate proceeds to the
Corporation of at least $10,000,000 (in each case the "Pay to Play Date"), on
the date that the holder of the share of Series D3 Preferred Stock holds a
percentage of the Common Stock of the Company (calculated assuming (1) the
conversion of all then-outstanding Preferred Stock into Common Stock, (2) the
issuance of the number of shares of Common Stock issuable upon conversion of
the securities issuable upon exercise of outstanding warrants to purchase
securities of the Corporation held by the holder of the share of Series D3
Preferred Stock and (3) the issuance of all shares of Common Stock issuable
upon the exercise of all options vested as of such date exercisable for shares
of the Corporation's Common Stock) equal to less than the difference of (x)
the percentage of the Common Stock of the Company held by the holder of the
share of Series D3 Preferred Stock immediately after the consummation of the
Company's initial public offering (the "IPO") minus (y) 1.0% or (ii) if the
-----
Corporation does not consummate an initial public offering of its securities
on or before the Pay to Play Date, on the date that the holder of the share of
Series D3 Preferred Stock holds a percentage of the Common Stock of the
Company (calculated assuming (1) the conversion of all then-outstanding
Preferred Stock into Common Stock, (2) the issuance of the number of shares of
Common Stock issuable upon conversion of the securities issuable upon exercise
of outstanding warrants to purchase securities of the Corporation held by the
holder of the share of Series D3 Preferred Stock and (3) the issuance of all
shares of Common Stock issuable upon the exercise of all options vested as of
such date exercisable for shares of the Corporation's Common Stock) equal to
less than the difference of (x) the percentage of the Common Stock of the
Company held by the holder of on the AmEx Subsequent Closing Date (as defined
in that certain Preferred Stock and Warrant Purchase Agreement between the
Corporation and the Investors listed on Schedule A thereto,dated September 14,
----------
1999), minus (y) 1.0%.
-----
9
<PAGE>
(iii) For purposes of subsection 5(b)(ii)
above, "Applicable Common Stock" shall mean the shares of Common Stock held by
a shareholder or issuable to such shareholder upon conversion of Preferred
Stock held by such shareholder (on an as-converted basis and as adjusted for
any Recapitalization, and treating all outstanding warrants to purchase
Preferred Stock (or the Common Stock issuable upon conversion thereof) at a
per share exercise price of $0.01 or less held by such shareholder on an as-
exercised basis). For purposes of subsection 5(b)(ii) above, "Related Party"
shall mean (A) any corporation directly controlled by, controlling, or under
common control with (to the extent of more than fifty percent (50%) of its
issued capital stock entitled to vote for the election of directors) a
shareholder of the Corporation, or (ii) any partnership directly controlled
by, controlling, or under common control with (to the extent of more than
fifty percent (50%) of its voting power or otherwise having power to control
its general activities) a shareholder of the Corporation, but in each case
only for so long as such ownership or control shall continue. For purposes of
subsection 5(b)(ii) above, "AmEx Related Party" shall mean (A) any corporation
directly controlled by, controlling, or under common control with (to the
extent of more than fifty percent (50%) of its issued capital stock entitled
to vote for the election of directors) a shareholder of the Corporation, or
(ii) any partnership directly controlled by, controlling, or under common
control with (to the extent of more than fifty percent (50%) of its voting
power or otherwise having power to control its general activities) a
shareholder of the Corporation, but in each case only for so long as such
ownership or control shall continue.
(c) Mechanics of Conversion. Before any holder of
-----------------------
Preferred Stock shall be entitled to convert the same into shares of Common
Stock and to receive the certificate or certificates therefor, he or she shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Preferred Stock and
shall give written notice to the Corporation at such office that he or she
elects to convert the same; provided, however, that in the event of an
automatic conversion pursuant to Section 5(b) hereof, the outstanding shares
of Preferred Stock shall be converted automatically without any further action
by the holders of such shares and whether or not the certificates representing
such shares are surrendered to the Corporation or its transfer agent; and
provided further that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such
automatic conversion unless and until the certificates evidencing such shares
of Preferred Stock are either delivered to the Corporation or its transfer
agent as provided above, or the holder notifies the Corporation or its
transfer agent that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such certificates.
The Corporation shall, as soon as practicable after such delivery, or after
the execution and delivery of such agreement and indemnification, issue and
deliver at such office to such holder of Preferred Stock, a certificate or
certificates for the number of shares of Common Stock to which he or she shall
be entitled as aforesaid and a check payable to the holder in the amount of
any declared and unpaid dividends payable pursuant to Section 5(a) hereof, if
any. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the shares of Preferred
Stock to be converted, or, in the case of automatic conversion, immediately
prior to the occurrence of the event leading to such automatic conversion, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
10
<PAGE>
(d) Conversion Price Adjustments of Preferred
-----------------------------------------
Stock for Certain Dilutive Issuances, Splits and Combinations.
- -------------------------------------------------------------
(i) The Conversion Price of the Series C
Preferred and Series E Preferred shall be subject to adjustment from time
to time as follows:
(A) If the Corporation shall issue,
after the applicable date upon which any shares of Series C Preferred or
Series E Preferred, respectively, were first issued (the "Purchase Date"), any
Additional Stock (as defined below) without consideration or for a
consideration per share less than the Conversion Price for such series in
effect immediately prior to the issuance of such Additional Stock, the
Conversion Price for such series in effect immediately prior to each such
issuance shall forthwith (except as otherwise provided in this clause (i)) be
adjusted to a price determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance (including shares of Common
Stock deemed to be issued pursuant to subsection 5(d)(i)(E)(1) or (2)) plus
the number of shares of Common Stock that the aggregate consideration received
by the Corporation for such issuance would purchase at such Conversion Price;
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance (including shares of Common
Stock deemed to be issued pursuant to subsection 5(d)(i)(E)(1) or (2)) plus
the number of shares of such Additional Stock issued by the Corporation.
(B) No adjustment of the Conversion
Price for the Series C Preferred or the Series E Preferred, as the case may
be, shall be made in an amount less than one cent per share, provided that any
adjustments that are not required to be made by reason of the foregoing shall
be carried forward and shall be either taken into account in any subsequent
adjustment made prior to three (3) years from the date of the event giving
rise to the adjustment being carried forward, or shall be made at the end of
three (3) years from the date of the event giving rise to the adjustment being
carried forward. Except to the limited extent provided for in subsections
5(d)(i)(E)(3) and 5(d)(i)(E)(4), no adjustment of such Conversion Price
pursuant to this subsection 5(d)(i) shall have the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to
such adjustment. No adjustment of such Conversion Price shall have the effect
of increasing the Conversion Price above the Conversion Price in effect on the
Purchase Date.
(C) In the case of the issuance of
Common Stock for cash, the consideration received by the Corporation shall be
deemed to be the amount of cash paid therefor before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.
(D) In the case of the issuance of the
Common Stock for a consideration in whole or in part other than cash, the
consideration received by the Corporation other than cash shall be deemed to
be the fair market value thereof as determined by the Board of Directors in
good faith, irrespective of any accounting treatment.
11
<PAGE>
(E) In the case of the issuance
(whether before, on or after the applicable Purchase Date) of options to
purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock or options to purchase or
rights to subscribe for such convertible or exchangeable securities, the
following provisions shall apply for all purposes of this subsection 5(d)(i)
and subsection 5(d)(ii):
(1) The aggregate maximum number
of shares of Common Stock deliverable upon exercise (assuming the satisfaction
of any conditions to exercisability, including without limitation, the passage
of time, but without taking into account potential antidilution adjustments)
of such options to purchase or rights to subscribe for Common Stock shall be
deemed to have been issued at the time such options or rights were issued and
for an aggregate consideration equal to the total consideration (determined in
the manner provided in subsections 5(d)(i)(C) and (d)(i)(D)), if any, received
by the Corporation upon the issuance of such options or rights plus the
minimum amount of additional consideration payable to the Corporation upon
exercise of such options or rights for the Common Stock covered thereby.
(2) The aggregate maximum number of
shares of Common Stock deliverable (i) upon conversion of, or in exchange for
(assuming the satisfaction of any conditions to convertibility or
exchangeability, including, without limitation, the passage of time, but
without taking into account potential antidilution adjustments), any such
convertible or exchangeable securities or (ii) upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof, shall be deemed to
have been issued at (x) the time such securities or such options or rights
were issued and (y) for a consideration equal to the consideration, if any,
received by the Corporation for any such securities or such options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the minimum amount of additional consideration, if any, to be
received by the Corporation upon the conversion or exchange of such securities
or the exercise of any related such options or rights and the conversion or
exchange of the securities acquired upon exercise thereof (the consideration
in each case to be determined in the manner provided in subsections 5(d)(i)(C)
and 5(d)(i)(D)).
(3) In the event of any change in
the number of shares of Common Stock deliverable or in the consideration
payable to the Corporation upon exercise of such options or rights or upon
conversion of or in exchange for any convertible or exchangeable securities,
including, but not limited to, a change resulting from the antidilution
provisions thereof (unless such options or rights or convertible or
exchangeable securities were merely deemed to be included in the numerator and
denominator for purposes of determining the number of shares of Common Stock
outstanding for purposes of subsection 5(d)(i)(A)), the Conversion Price of
the Series C Preferred and Series E Preferred, to the extent in any way
affected by or computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of
such securities.
12
<PAGE>
(4) Upon the expiration of any
such options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the Series C
Preferred and Series E Preferred, to the extent in any way affected by or
computed using such options, rights or securities or options or rights related
to such securities (unless such options or rights were merely deemed to be
included in the numerator and denominator for purposes of determining the
number of shares of Common Stock outstanding for purposes of subsection
5(d)(i)(A)), shall be recomputed to reflect the issuance of only the number of
shares of Common Stock (and convertible or exchangeable securities that remain
in effect) actually issued upon the exercise of such options or rights, upon
the conversion or exchange of such securities or upon the exercise of the
options or rights related to such securities.
(5) The number of shares of Common
Stock deemed issued and the consideration deemed paid therefor pursuant to
subsections 5(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect
any change, termination or expiration of the type described in either
subsection 5(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares
of Common Stock issued (or deemed to have been issued pursuant to subsection
5(d)(i)(E)) by the Corporation after the Purchase Date, other than:
(A) any shares of Common Stock issuable
or issued pursuant to a transaction described in subsection 5(d)(iii)
hereof;
(B) any shares of Common Stock issuable
or issued to employees, consultants, directors, vendors or other service
providers of the Corporation directly or pursuant to a stock option plan or
restricted stock plan, in either case approved by the Board of Directors of
the Corporation;
(C) any shares of Common Stock issuable
or issued (I) in a firm commitment underwritten public offering before or in
connection with which all outstanding shares of Preferred Stock will be
converted to Common Stock or (II) upon exercise of warrants or rights granted
to underwriters in connection with such public offering;
(D) any shares of Common Stock issuable
or issued upon conversion of any shares of Series A Preferred, Series B
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred,
Series D3 Preferred or Series E Preferred, or as dividends or distributions on
any shares of Series A Preferred, Series B Preferred, Series C Preferred,
Series D1 Preferred, Series D2 Preferred, Series D3 Preferred or Series E
Preferred;
(E) up to 250,000 shares of Common
Stock issuable or issued upon exercise (and, if applicable, conversion) of
warrants issued to persons or entities with which the Corporation has business
relationships, including without limitation banks and equipment lessors,
provided such issuances are for other than primarily
13
<PAGE>
equity financing purposes and such issuances have been approved by the
Corporation's Board of Directors;
(F) any shares of Common Stock issued or
issuable upon exercise (and, if applicable, conversion) of (i) any warrants to
purchase Series C Preferred at a per share exercise price of $0.01 or less, (ii)
any options to purchase Series D1 Preferred or Series D2 Preferred or (iii) any
warrants to purchase Series C Preferred Stock, Series E Preferred Stock or
Common Stock issued pursuant to that certain Preferred Stock and Warrant
Purchase Agreement dated September 14, 1999 (iv) any shares of Preferred Stock
issued pursuant to that certain Preferred Stock and Warrant Purchase Agreement
dated September 14, 1999, (v) that certain warrant to purchase shares of Series
C Preferred Stock issued to Northwest Airlines, Inc. on August 27 1999, and (vi)
that certain Convertible Promissory Note issued to Eastern Air Lines, Inc. on
July 15, 1999;
(iii) In the event the Corporation should at
any time or from time to time after the Purchase Date fix a record date for
the effectuation of a stock split, subdivision or reclassification of the
outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such dividend
distribution, stock split, subdivision or reclassification if no record date
is fixed), the Conversion Price of the Series A Preferred, Series B Preferred,
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
Preferred and Series E Preferred shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of each share of such
series shall be increased in proportion to such increase of the aggregate
number of shares of Common Stock outstanding and those issuable with respect
to such Common Stock Equivalents, with the number of shares issuable with
respect to Common Stock Equivalents determined from time to time in the manner
provided for deemed issuances in subsection 5(d)(i)(E).
(iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination
of the outstanding shares of Common Stock, then, following the record date of
such combination, the Conversion Price for the Series A Preferred, Series B
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred,
Series D3 Preferred and Series E Preferred shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each share
of such series shall be decreased in proportion to such decrease in
outstanding shares.
(v) In the case, at any time after the date
hereof, of any capital reorganization or any reclassification of the stock of
the Corporation (other than as a result of a stock dividend, stock split or
subdivision or combination of shares), or the consolidation or merger of the
Corporation with or into another entity (other than a consolidation or merger
(i) in which the Corporation is the continuing entity and which does not
result in any change in the percentage ownership of Common Stock or Common
Stock Equivalents held by the shareholders of the Corporation just prior to
such consolidation or merger, or (ii) which is treated as a liquidation
pursuant to Section 3(c)), or of the sale or other disposition of all or
substantially all the properties and assets of the Corporation (other than a
sale or other disposition which is treated as a liquidation pursuant to
Section 3(c)), the shares of the Series A Preferred, Series B Preferred,
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
Preferred and Series E Preferred shall, after such reorganization,
reclassification,
14
<PAGE>
consolidation, merger, sale or other disposition, be convertible into the kind
and number of shares of stock or other securities or property of the
Corporation or otherwise to which such holder would have been entitled if,
immediately prior to such reorganization, reclassification, consolidation,
merger, sale or other disposition, it had converted its shares of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D1 Preferred, Series
D2 Preferred, Series D3 Preferred and/or Series E Preferred into Common Stock.
The provisions of this subsection 5(d)(v) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales or other
dispositions for so long as this subsection 5(d)(v) remains in effect.
(e) Certificate as to Adjustments. Upon the
-----------------------------
occurrence of each adjustment or readjustment of the Conversion Price of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred
pursuant to this Section 5, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof
and furnish to each holder of Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of any
holder of Series A Preferred, Series B Preferred, Series C Preferred, Series
D1 Preferred, Series D2 Preferred, Series D3 Preferred or Series E Preferred
furnish or cause to be furnished to such holder a like certificate setting
forth (i) such adjustments and readjustments, (ii) the Conversion Price of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred or Series E Preferred at
the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon the
conversion of the Series A Preferred, Series B Preferred, Series C Preferred,
Series D1 Preferred, Series D2 Preferred, Series D3 Preferred or Series E
Preferred.
(f) Status of Converted Stock. In case any shares
-------------------------
of Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred or Series E Preferred
shall be converted pursuant to this Section 5, the shares so converted shall
be canceled, shall not be reissuable and shall cease to be a part of the
authorized capital stock of the Corporation.
(g) Fractional Shares. In lieu of any fractional
-----------------
shares to which the holder of Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred or
Series E Preferred would otherwise be entitled upon conversion, the
Corporation shall pay to the holder cash equal to such fraction multiplied by
the fair market value of one share of Common Stock as determined by the Board.
The number of whole shares issuable to each holder upon such conversion shall
be determined on the basis of the number of shares of Common Stock issuable
upon conversion of the total number of shares of Series A Preferred, Series B
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred,
Series D3 Preferred and/or Series E Preferred held by such holder at the time
of conversion into Common Stock.
15
<PAGE>
(h) Miscellaneous.
-------------
(i) All calculations under this Section 5
shall be made to the nearest cent or to the nearest one hundredth (1/100) of a
share, as the case may be.
(ii) The holders of at least 50% of the
outstanding Series A Preferred, Series B Preferred, Series C Preferred or
Series E Preferred shall have the right to challenge any determination by the
Board of fair value pursuant to this Section 5, in which case such
determination of fair value shall be made by an independent appraiser selected
jointly by the Board and the challenging parties, the cost of such appraisal
to be borne by the Corporation.
(iii) No adjustment in the Conversion Prices
of the Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred
need be made if such adjustment would result in a change in such Conversion
Price of less than $0.01. Any adjustment of less than $0.01 which is not made
shall be carried forward and shall be made at the time of and together with
any subsequent adjustment which, on a cumulative basis, amounts to an
adjustment of $0.01 or more in such Conversion Price.
(i) No Impairment. The Corporation will not
-------------
through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance of performance of any
of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the
provisions of this Section 5 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of Series A Preferred, Series B Preferred, Series C Preferred, Series
D1 Preferred, Series D2 Preferred, Series D3 Preferred or Series E Preferred
against impairment.
(j) Reservation of Stock Issuable Upon Conversion.
---------------------------------------------
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Series A Preferred, Series B
Preferred, Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series
D3 Preferred and Series E Preferred, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred. If at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of all then-
outstanding shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred, the Corporation will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
16
<PAGE>
6. Voting Rights.
-------------
(a) Subject to the rights of series of Preferred
Stock that may from time to time come into existence and except as otherwise
required by law or by these Articles of Incorporation, the holder of each
share of Common Stock issued and outstanding shall have one vote, and the
holder of each share of Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred issued and outstanding shall be entitled to the number of
votes equal to the number of shares of Common Stock into which such share of
Series A Preferred, Series B Preferred, Series C Preferred, Series D1
Preferred, Series D2 Preferred, Series D3 Preferred and Series E Preferred
could be converted at the record date for determination of the shareholders
entitled to vote on such matters, or, if no such record date is established,
at the date such vote is taken or any written consent of shareholders is
solicited, such votes to be counted together with all other shares of stock of
the Corporation having general voting power and not separately as a class.
Fractional votes by the holders of Series A Preferred, Series B Preferred,
Series C Preferred, Series D1 Preferred, Series D2 Preferred, Series D3
Preferred and Series E Preferred shall not, however, be permitted, and any
fractional voting rights shall (after aggregating all shares of Common Stock
into which shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D1 Preferred, Series D2 Preferred, Series D3 Preferred and
Series E Preferred held by each holder could be converted) be rounded to the
nearest whole number (with one-half being rounded downward).
(b) Notwithstanding the provisions of Section
6(a), and prior to the conversion of all outstanding shares of Series A
Preferred, Series B Preferred, Series C Preferred and Series E Preferred into
Common Stock pursuant to the provisions of Section 5, at each annual or
special meeting called for the purpose of electing directors, (i) for so long
as any shares of Series A Preferred remain outstanding, two (2) members of the
Board shall be elected by the holders of Series A Preferred, voting as a
separate class; (ii) for so long as any shares of Series B Preferred remain
outstanding, one (1) member of the Board shall be elected by the holders of
the Series B Preferred, voting as a separate class; (iii) one (1) member of
the Board shall be elected by the holders of the Common Stock, voting as a
separate class, provided that, in addition to such member to be elected by the
holders of the Common Stock, (A) if no shares of Series A Preferred remain
outstanding, then two (2) additional members of the Board shall be elected by
the holders of Common Stock, voting as a separate class, and (B) if no shares
of Series B Preferred Stock remain outstanding, then one (1) additional member
of the Board shall be elected by the holders of Common Stock, voting as a
separate class; (iv) two (2) members of the Board shall be elected by the
holders of the Common Stock and Preferred Stock, voting together as a single
class; (v) if and for so long as a share of Series D1 Preferred remains
outstanding, one (1) member of the Board shall be elected by the holder of the
Series D1 Preferred, provided that if no share of Series D1 Preferred remains
outstanding, then one (1) member of the Board shall be elected by the vote of
the holders of the Common Stock, Series A Preferred and Series B Preferred,
voting together as a single class; (vi) if and for so long as a share of
Series D2 Preferred remains outstanding, one (1) member of the Board shall be
elected by the holder of the Series D2 Preferred; (vii) for so long as a share
of Series D3 Preferred remains outstanding, one (1) member of the Board shall
be elected by the holder of the Series D3 Preferred (and from September 14,
1999 until such date when the designee of the holder of the Series D3
Preferred shall fill a seat on the Board or such date when all shares of
Series D3
17
<PAGE>
Preferred are converted into Common Stock, there shall be a vacancy
maintained on the Board, which vacancy shall be reserved for the Board
designee of the holder of the Series D3 Preferred); (viii) from the period
when the shares of Series D1 Preferred and Series D2 Preferred become
outstanding until the earlier of such later date when such shares are
converted into Common Stock or when the designees of the holder of the Series
D1 Preferred and Series D2 Preferred shall fill seats on the Board, there
shall be two (2) vacancies maintained on the Board, which vacancies shall be
reserved for the Board designees of the holder of the Series D1 Preferred and
the Series D2 Preferred; and (ix) the remaining members of the Board, if any,
shall be elected by the holders of the Common Stock and Preferred Stock,
voting together as a single class. Following the conversion of all outstanding
shares of Series A Preferred, Series B Preferred, Series C Preferred and
Series E Preferred into Common Stock pursuant to the provisions of Section 5
hereof, at each annual or special meeting called for the purpose of electing
directors, (i) if and for so long as a share of Series D1 Preferred remains
outstanding, one (1) member of the Board shall be elected by the holder of the
Series D1 Preferred; (ii) if and for so long as a share of Series D2 Preferred
remains outstanding, one (1) member of the Board shall be elected by the
holder of the Series D2 Preferred; (iii) if and for so long as a share of
Series D3 Preferred remains outstanding, one (1) member of the Board shall be
elected by the holder of Series D3 Preferred; and (iv) the remaining members
of the Board, if any, shall be elected by the holders of the Common Stock,
voting as a single and separate class. In the case of any vacancy in the
office of a director elected by a specified group of shareholders, a successor
shall be elected to hold office for the unexpired term of such director by the
affirmative vote of the shares of such specified group given at a special
meeting of such shareholders duly called or by an action by written consent
for that purpose, and any such vacancy thereby created, may be filled by the
vote of the holders at such meeting or in such consent. In addition, in the
case of any vacancy in the office of a director to be elected by the holder of
the Series D3 Preferred, when such holder of the Series D3 Preferred
designates an individual to fill such director vacancy, as soon as practical
after the designation, the Board shall appoint such designee to fill the
vacancy. In addition, in the case of any vacancy in the office of a director
to be elected by the holder of the Series D1 Preferred or Series D2 Preferred,
when such holder of the Series D1 Preferred or Series D2 Preferred designates
individuals to fill such director vacancies, as soon as practical after such
designation, the Board shall appoint such designee or designees to fill the
applicable vacancy or vacancies. In the event of the automatic conversion of
the Series D1, Series D2 or Series D3 Preferred into Common Stock pursuant to
Section 5(b)(ii), the director(s) serving as director(s) appointed by such
converted Series D1, Series D2 or Series D3 Preferred shall immediately
thereafter be treated as directors elected pursuant to Section 6(b)(ix) above
by the holders of Common Stock and Preferred Stock, voting as a single class.
7. Notices of Record Date. In the event of any taking
----------------------
by the Corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class
or any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Preferred Stock, at least twenty (20)
days prior to the date specified therein, a notice specifying the date on
which any such record is to be taken from the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
18
<PAGE>
8. Notices. Any notice required by the provisions of
-------
these Articles to be given to the holders of Preferred Stock shall be
deemed given when deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his or her address appearing on the
books of this Corporation.
9. Protective Provisions.
---------------------
(a) Subject to the rights of series of Preferred
Stock that may from time to time come into existence, so long as any shares of
Series A Preferred are outstanding, the Corporation shall not, without first
obtaining the approval of the holders of a majority of the then-outstanding
shares of such Series A Preferred, voting as a separate series, take any
action (including amendment of the Articles of Incorporation or Bylaws) that
adversely affects the rights, preferences, privileges or limitations of the
Series A Preferred;
(b) Subject to the rights of series of Preferred
Stock that may from time to time come into existence, so long as any shares of
Series B Preferred are outstanding, the Corporation shall not, without first
obtaining the approval of the holders of a majority of the then-outstanding
shares of such Series B Preferred, voting as a separate series, take any
action (including amendment of the Articles of Incorporation or Bylaws) that
adversely affects the rights, preferences, privileges or limitations of the
Series B Preferred;
(c) Subject to the rights of series of Preferred
Stock that may from time to time come into existence, if and for so long as a
share of Series D1 Preferred remains outstanding, the Corporation shall not,
without first obtaining the approval of the holder of the Series D1 Preferred,
take any action (including amendment of the Articles of Incorporation or
Bylaws) that adversely affects the rights, preferences, privileges or
limitations of the Series D1 Preferred or that increases the authorized number
of shares of Series D1 Preferred;
(d) Subject to the rights of series of Preferred
Stock that may from time to time come into existence, if and for so long as a
share of Series D2 Preferred remains outstanding, the Corporation shall not,
without first obtaining the approval of the holder of the Series D2 Preferred,
take any action (including amendment of the Articles of Incorporation or
Bylaws) that adversely affects the rights, preferences, privileges or
limitations of the Series D2 Preferred or that increases the authorized number
of shares of Series D2 Preferred;
(e) Subject to the rights of series of Preferred
Stock that may from time to time come into existence, if and for so long as a
share of Series D3 Preferred remains outstanding, the Corporation shall not,
without first obtaining the approval of the holder of the Series D3 Preferred,
take any action (including amendment of the Articles of Incorporation or
Bylaws) that adversely affects the rights, preferences, privileges or
limitations of the Series D3 Preferred or that increases the authorized number
of shares of Series D3 Preferred;
(f) Subject to the rights of series of Preferred
Stock that may from time to time come into existence, so long as any shares of
Series C Preferred are
19
<PAGE>
outstanding, the Corporation shall not, without first obtaining the approval of
the holders of a majority of the then outstanding shares of such Series C
Preferred take any action (including amendment of the Articles of Incorporation
or Bylaws) that:
(i) changes the rights, preferences,
privileges or limitations of the Series C Preferred;
(ii) creates any new class or series of
shares that has a preference over the Series C Preferred with respect to
voting, dividends, redemption, conversion or liquidation preferences;
(iii) reclassifies any shares of capital
stock of the Corporation into shares having a preference over the Series C
Preferred with respect to voting, dividends, redemption, conversion or
liquidation preferences;
(iv) authorizes any dividend or other
distribution with respect to Common Stock (other than a dividend payable
in Common Stock or as authorized by Section 2(b));
(v) increases or decreases the authorized
number of shares of Series A Preferred, Series B Preferred, Series C or
Series E Preferred;
(vi) permits the sale of shares held by the
Corporation in a subsidiary of the Corporation; or
(vii) results in the repurchase of shares of
the Corporation's Common Stock or Preferred Stock in any twelve (12) month
period for an aggregate amount in excess of $25,000, exclusive of repurchases
from directors, employees, consultants or other service providers of the
Corporation pursuant to the terms of their stock purchase or stock restriction
agreements.
(g) Subject to the rights of series of Preferred
Stock that may from time to time come into existence, so long as any shares of
Series E Preferred are outstanding, the Corporation shall not, without first
obtaining the approval of the holders of 66 2/3% of the then outstanding
shares of such Series E Preferred take any action (including amendment of the
Articles of Incorporation or Bylaws) that:
(i) changes the rights, preferences,
privileges or limitations of the Series E Preferred;
(ii) creates any new class or series of
shares that has a preference over the Series E Preferred with respect to
voting, dividends, redemption, conversion or liquidation preferences;
(iii) reclassifies any shares of capital
stock of the Corporation into shares having a preference over the Series E
Preferred with respect to voting, dividends, redemption, conversion or
liquidation preferences;
20
<PAGE>
(iv) authorizes any dividend or other
distribution with respect to Common Stock (other than a dividend payable
in Common Stock or as authorized by Section 2(b));
(v) increases or decreases the authorized
number of shares of Series A Preferred, Series B Preferred, Series C
Preferred or Series E Preferred;
(vi) permits the sale of shares held by the
Corporation in a subsidiary of the Corporation; or
(vii) results in the repurchase of shares of
the Corporation's Common Stock or Preferred Stock in any twelve (12) month
period for an aggregate amount in excess of $25,000, exclusive of repurchases
from directors, employees, consultants or other service providers of the
Corporation pursuant to the terms of their stock purchase or stock restriction
agreements.
IV
A. The liability of the directors of the Corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law.
B. The Corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the California Corporations Code) through
bylaw provisions, agreements with the agents, vote of shareholders or
disinterested directors, or otherwise, in excess of the indemnification
otherwise permitted by Section 317 of the California Corporations Code,
subject only to the limits set forth in Section 204 of the California
Corporations Code with respect to actions for breach of duty to the
Corporation or its shareholders. The Corporation is further authorized to
provide insurance for agents as set forth in Section 317 of the California
Corporations Code, provided that, in cases where the Corporation owns all or a
portion of the shares of the company issuing the insurance policy, the company
and/or the policy must meet one of the two sets of conditions set forth in
Section 317, as amended.
C. Any repeal or modification of the foregoing provisions of
this Article IV by the shareholders of this Corporation shall not adversely
affect any right or protection of an agent of this Corporation existing at the
time of such repeal or modification.
* * *
1. The foregoing amendment and restatement of the
Articles of Incorporation has been duly approved by the Board of the
Corporation.
2. The foregoing amendment and restatement of the
Articles of Incorporation has been duly approved by the holders of the
requisite number of shares of the Corporation in accordance with the
Corporation's Articles of Incorporation and Sections 902 and 903 of the
California Corporations Code. The total number of outstanding shares of each
class entitled to vote with respect to the foregoing amendment was 7,754,148
shares of Common Stock, 3,705,991 shares of Series A Preferred, 3,914,448
shares of Series B Preferred and 4,610,875 shares of Series C Preferred. No
shares of Series D1 Preferred or Series D2 Preferred
21
<PAGE>
were outstanding. The number of shares voting in favor of the amendment and
restatement equaled or exceeded the vote required, such required vote being a
majority of the outstanding shares of Common Stock, a majority of the
outstanding shares of Series A Preferred, a majority of the outstanding shares
of Series B Preferred and a majority of the outstanding shares of Series C
Preferred.
22
<PAGE>
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct and of our own knowledge.
Executed at Palo Alto, California, on September ___, 1999.
/s/ Matthew Ackerman
-------------------------------------------
Matthew Ackerman, Vice President of Finance
and Operations
/s/ Ken Pelowski
-------------------------------------------
Ken Pelowski, Secretary
<PAGE>
EXHIBIT 3.4
BYLAWS
OF
INTERNET TRAVEL NETWORK
(A California corporation)
(As Adopted August 7, 1995)
<PAGE>
TABLE OF CONTENTS
Page No.
--------
ARTICLE 1 OFFICES...................................................... 1
1.1 Principal Office............................................. 1
1.2 Other Offices................................................ 1
ARTICLE II DIRECTORS.................................................... 1
2.1 Exercise of Corporate Powers................................. 1
2.2 Number....................................................... 1
2.3 Need Not Be Shareholders..................................... 2
2.4 Compensation................................................. 2
2.5 Election and Term of Office.................................. 2
2.6 Vacancies.................................................... 2
2.7 Removal...................................................... 3
2.8 Powers and Duties............................................ 3
ARTICLE III MEETINGS OF DIRECTORS........................................ 5
3.1 Place of Meetings............................................ 5
3.2 Regular Meetings............................................. 5
3.3 Special Meetings............................................. 5
3.4 Notice of Special Meetings................................... 6
3.5 Quorum....................................................... 6
3.6 Conference Telephone......................................... 6
3.7 Waiver of Notice and Consent................................. 6
3.8 Action Without a Meeting..................................... 6
3.9 Committees................................................... 7
ARTICLE VI COMMITTEES................................................... 7
4.1 Appointment and Procedure.................................... 7
4.2 Executive Committee Powers................................... 7
4.3 Powers of Other Committees................................... 7
4.4 Limitations on Powers of Committees.......................... 7
ARTICLE V OFFICERS..................................................... 8
5.1 Election and Qualifications.................................. 8
5.2 Term of Office and Compensation.............................. 8
5.3 Chief Executive Officer...................................... 8
5.4 Chairman of the Board........................................ 9
5.5 President.................................................... 9
5.6 President Pro Tem............................................ 9
5.7 Vice President............................................... 9
5.8 Secretary.................................................... 9
i
<PAGE>
5.9 Chief Financial Officer...................................... 10
5.10 Instruments in Writing....................................... 11
ARTICLE VI INDEMNIFICATIONS............................................. 11
6.1 Indemnification of Directors and Officers.................... 11
6.2 Advancement of Expenses...................................... 12
6.3 Non-Exclusivity of Rights.................................... 12
6.4 Indemnification Contracts.................................... 12
6.5 Effect of Amendment.......................................... 12
ARTICLE VII MEETINGS OF, AND REPORTS TO, SHAREHOLDERS.................... 12
7.1 Place of Meetings............................................ 12
7.2 Annual Meetings.............................................. 13
7.3 Special Meetings............................................. 13
7.4 Notice of Meetings........................................... 13
7.5 Consent to Shareholders' Meetings............................ 14
7.6 Quorum....................................................... 14
7.7 Adjourned Meetings........................................... 14
7.8 Voting Rights................................................ 15
7.9 Action by Written Consents................................... 15
7.10 Election of Directors........................................ 16
7.11 Proxies...................................................... 16
7.12 Inspectors of Election....................................... 17
7.13 Annual Reports............................................... 17
ARTICLE VII SHARES AND SHARE CERTIFICATES................................ 18
8.1 Shares Held By Company....................................... 18
8.2 Certificates for Shares...................................... 18
8.3 Lost Certificates............................................ 18
8.4 Restrictions on Transfer of Shares........................... 18
ARTICLE IX CONSTRUCTION OF BYLAWS WITH REFERENCE
TO PROVISIONS OF LAW......................................... 19
9.1 Bylaw Provisions Construed as Additional
and with Provisions of Law................................... 19
9.2 Bylaw Provisions Contrary to or Inconsistent
with Provisions of Law....................................... 19
ARTICLE X CERTIFICATION, ADOPTION, AMENDMENT
OR REPEAL OF BYLAWS.......................................... 19
10.1 By Shareholders.............................................. 19
10.2 By the Board of Directors.................................... 19
10.3 Certification and Inspection of Bylaws....................... 20
ii
<PAGE>
BYLAWS
OF
INTERNET TRAVEL NETWORK
(a California corporation)
As Adopted August 7, 1995
ARTICLE I
OFFICES
1.1 Principal Office. The principal executive office for the
----------------
transaction of the business of this corporation (the "Company") shall be located
-------
at such place as the Board of Directors may from time to time decide. The Board
of Directors is hereby granted full power and authority to change the location
of the principal executive office from one location to another.
1.2 Other Offices. One or more branch or other subordinate offices
-------------
may at any time be fixed and located by the Board of Directors at such place or
places within or outside the State of California as it deems appropriate.
ARTICLE II
DIRECTORS
2.1 Exercise of Corporate Powers. Except as otherwise provided by
----------------------------
these Bylaws, by the Articles of Incorporation of the Company or by the laws of
the State of California now or hereafter in force, the business and affairs of
the Company shall be managed and all corporate powers shall be exercised by or
under the ultimate direction of a board of directors (the "Board of Directors").
2.2 Number. The authorized number of directors of the Company shall
------
initially be three (3). The authorized number of directors may be varied from
time to time by resolution of the Board of Directors, provided that the minimum
authorized number shall be not less than 3 and the maximum authorized number
shall not be more than 5. Until changed by an amendment of this Section by the
shareholders of the Company, the authorized number of directors of the Company
may be varied by the Board of Directors, as opposed to being fixed, within the
range of the minimum and the maximum authorized numbers of directors provided
above. Any amendment to these Bylaws reducing such minimum number of authorized
directors to a number less than five (5) cannot be adopted if the votes cast
against its adoption at a meeting, or the shares not consenting in the case of
action by written consent, are equal to more than 16-2/3% of the outstanding
shares entitled to vote.
<PAGE>
2.3 Need Not Be Shareholders. The directors of the Company need not
------------------------
be shareholders of this Company.
2.4 Compensation. Directors and members of committees may receive
------------
such compensation, if any, for their services as may be fixed or determined by
resolution of the Board of Directors. Nothing herein contained shall be
construed to preclude any director from serving the Company in any other
capacity and receiving compensation therefor.
2.5 Election and Term of Office. The directors shall be elected
---------------------------
annually by the shareholders at the annual meeting of the shareholders. The term
of office of the directors shall begin immediately after their election and
shall continue until the next annual meeting of the shareholders and until their
respective successors are elected. A reduction of the authorized number of
directors shall not shorten the term of any incumbent director or remove any
incumbent director prior to the expiration of such director's term of office.
2.6 Vacancies. A vacancy or vacancies on the Board of Directors
---------
shall exist:
(a) in the case of the death of any director; or
(b) in the case of the resignation or removal of any director;
or
(c) if the authorized number of directors is increased; or
(d) if the shareholders fail, at any annual meeting of
shareholders at which any director is elected, to elect the full authorized
number of directors at that meeting.
The Board of Directors may declare vacant the office of a director if he or she
is declared of unsound mind by an order of court or convicted of a felony or if,
within 60 days after notice of his or her election, he or she does not accept
the office. Any vacancy, except for a vacancy created by removal of a director
as provided in Section 2.7 hereof, may be filled by a person selected by a
majority of the remaining directors then in office, whether or not less than a
quorum, or by a sole remaining director. Vacancies occurring in the Board of
Directors by reason of removal of directors shall be filled only by approval of
shareholders. The shareholders may elect a director at any time to fill any
vacancy not filled by the directors. Any such election by the written consent
of shareholders, other than to fill a vacancy created by removal, requires the
consent of shareholders holding a majority of the outstanding shares entitled to
vote. If, after the filling of any vacancy by the directors, the directors then
in office who have been elected by the shareholders shall constitute less than a
majority of the directors then in office, any holder or holders of an aggregate
of 5% or more of the total number of shares at that time having the right to
vote for such directors may call a special meeting of shareholders to be held to
elect the entire Board of Directors. The term of office of any director then in
office shall terminate upon the election of such director's successor. Any
director may resign effective upon giving written notice to the Chairman of the
Board, if any, the President, the Secretary or the Board of Directors, unless
the notice specifies a later time for the effectiveness of such resignation.
After the notice is given and if the resignation is effective at a future time,
a successor may be elected or appointed to take office when the resignation
becomes effective.
2
<PAGE>
2.7 Removal. The entire Board of Directors or any individual
-------
director may be removed from office without cause by an affirmative vote of
shareholders holding a majority of the outstanding shares entitled to vote. If
the entire Board of Directors is not removed, however, then no individual
director shall be removed if the votes cast against removal of that director,
plus the votes not consenting in writing to such removal, would be sufficient to
elect that director if voted cumulatively in an election at which the following
were true:
(a) the same total number of votes were cast, or, if such action
is taken by written consent, all shares entitled to vote were voted; and
(b) the entire number of directors authorized at the time of the
director's most recent election were then being elected.
If any or all directors are so removed, new directors may be elected at the same
meeting or at a subsequent meeting. If at any time a class or series of shares
is entitled to elect one or more directors under authority granted by the
Articles of Incorporation, the provisions of this Section 2.7 shall apply to the
vote of that class or series and not to the vote of the outstanding shares as a
whole.
2.8 Powers and Duties. Without limiting the generality or extent of
-----------------
the general corporate powers to be exercised by the Board of Directors pursuant
to Section 2.1 of these Bylaws, it is hereby provided that the Board of
Directors shall have full power with respect to the following matters:
(a) To purchase, lease and acquire any and all kinds of
property, real, personal or mixed, and at its discretion to pay therefor in
money, in property and/or in stocks, bonds, debentures or other securities of
the Company.
(b) To enter into any and all contracts and agreements which in
its judgment may be beneficial to the interests and purposes of the Company.
(c) To fix and determine and to vary from time to time the
amount or amounts to be set aside or retained as reserve funds or as working
capital of the Company or for maintenance, repairs, replacements or enlargements
of its properties.
(d) To declare and pay dividends in cash, shares and/or property
out of any funds of the Company at the time legally available for the
declaration and payment of dividends on its shares.
(e) To adopt such rules and regulations for the conduct of its
meetings and the management of the affairs of the Company as it may deem proper.
(f) To prescribe the manner in which and the person or persons
by whom any or all of the checks, drafts, notes, bills of exchange, contracts
and other corporate instruments shall be executed.
3
<PAGE>
(g) To accept resignations of directors; to declare vacant the
office of a director as provided in Section 2.6 hereof; and, in case of vacancy
in the office of directors, to fill the same to the extent provided in Section
2.6 hereof.
(h) To create offices in addition to those for which provision
is made by law or these Bylaws; to elect and remove at pleasure all officers of
the Company, fix their terms of office, prescribe their titles, powers and
duties, limit their authority and fix their salaries in any way it may deem
advisable that is not contrary to law or these Bylaws.
(i) To designate one or more persons to perform the duties and
exercise the powers of any officer of the Company during the temporary absence
or disability of such officer.
(j) To appoint or employ and to remove at pleasure such agents
and employees as it may see fit, to prescribe their titles, powers and duties,
limit their authority and fix their salaries in any way it may deem advisable
that is not contrary to law or these Bylaws.
(k) To fix a time in the future, which shall not be more than 60
days nor less than 10 days prior to the date of the meeting nor more than 60
days prior to any other action for which it is fixed, as a record date for the
determination of the shareholders entitled to notice of and to vote at any
meeting, or entitled to receive any payment of any dividend or other
distribution, or allotment of any rights, or entitled to exercise any rights in
respect of any other lawful action; and in such case only shareholders of record
on the date so fixed shall be entitled to notice of and to vote at the meeting
or to receive the dividend, distribution or allotment of rights or to exercise
the rights, as the case may be, notwithstanding any transfer of any shares on
the books of the Company after any record date fixed as aforesaid. The Board of
Directors may close the books of the Company against transfers of shares during
the whole or any part of such period.
(l) To fix and locate from time to time the principal office for
the transaction of the business of the Company and one or more branch or other
subordinate offices of the Company within or without the State of California; to
designate any place within or without the State of California for the holding of
any meeting or meetings of the shareholders or the Board of Directors, as
provided in Sections 3.1 and 7.1 hereof; to adopt, make and use a corporate
seal, and to prescribe the forms of certificates for shares and to alter the
form of such seal and of such certificates from time to time as in its judgment
it may deem best, provided such seal and such certificates shall at all times
comply with the provisions of law now or hereafter in effect.
(m) To authorize the issuance of shares of stock of the Company
in accordance with the laws of the State of California and the Articles of
Incorporation.
(n) Subject to the limitation provided in Section 10.2 hereof,
to adopt, amend or repeal from time to time and at any time these Bylaws and any
and all amendments thereof.
4
<PAGE>
(o) To borrow money, make guarantees of indebtedness or other
obligations of third parties and incur indebtedness on behalf of the Company,
including the power and authority to borrow money from any of the shareholders,
directors or officers of the Company; and to cause to be executed and delivered
therefor in the corporate name promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges (or other transfers of property as security or
collateral for a debt), or other evidences of debt and securities therefor; and
the note or other obligation given for any indebtedness of the Company, signed
officially by any officer or officers thereunto duly authorized by the Board of
Directors, shall be binding on the Company.
(p) To approve a loan of money or property to any officer or
director of the Company or any parent or subsidiary company, guarantee the
obligation of any such officer or director, or approve an employee benefit plan
authorizing such a loan or guaranty to any such officer or director; provided
that, on the date of approval of such loan or guaranty, the Company has
outstanding shares held of record by 100 or more persons. Such approval shall
require a determination by the Board of Directors that the loan or guaranty may
reasonably be expected to benefit the Company and must be by vote sufficient
without counting the vote of any interested director.
(q) Generally to do and perform every act and thing whatsoever
that may pertain to the office of a director or to a board of directors.
ARTICLE III
MEETINGS OF DIRECTORS
3.1 Place of Meetings. Meetings (whether regular, special or
-----------------
adjourned) of the Board of Directors of the Company shall be held at the
principal executive office of the Company or at any other place within or
outside the State of California which may be designated from time to time by
resolution of the Board of Directors or which is designated in the notice of the
meeting.
3.2 Regular Meetings. Regular meetings of the Board of Directors
----------------
shall be held after the adjournment of each annual meeting of the shareholders
(which regular directors' meeting shall be designated the "Regular Annual
Meeting") and at such other times as may be designated from time to time by
resolution of the Board of Directors. Notice of the time and place of all
regular meetings shall be given in the same manner as for special meetings,
except that no such notice need be given if (a) the time and place of such
meetings are fixed by the Board of Directors or (b) the Regular Annual Meeting
is held at the principal executive office of this Corporation and on the date
specified by the Board of Directors.
3.3 Special Meetings. Special meetings of the Board of Directors may
----------------
be called at any time by the Chairman of the Board, if any, or the President, or
any Vice President, or the Secretary or by any two or more directors.
5
<PAGE>
3.4 Notice of Special Meetings. Special meetings of the Board of
--------------------------
Directors shall be held upon no less than 4 days' notice by mail or 48 hours'
notice delivered personally or by telephone or telegraph to each director.
Notice need not be given to any director who signs a waiver of notice or a
consent to holding the meeting or an approval of the minutes thereof, whether
before or after the meeting, or who attends the meeting without protesting,
prior thereto or at its commencement, the lack of notice to such director. All
such waivers, consents and approvals shall be filed with the corporate records
or made a part of the minutes of the meeting. Any oral notice given personally
or by telephone may be communicated either to the director or to a person at the
home or office of the director who the person giving the notice has reason to
believe will promptly communicate it to the director. A notice or waiver of
notice need not specify the purpose of any meeting of the Board of Directors. If
the address of a director is not shown on the records of the Company and is not
readily ascertainable, notice shall be addressed to him or her at the city or
place in which meetings of the directors are regularly held. If a meeting is
adjourned for more than 24 hours, notice of any adjournment to another time or
place shall be given prior to the time of the adjourned meeting to all directors
not present at the time of adjournment.
3.5 Quorum. A majority of the authorized number of directors
------
constitutes a quorum of the Board of Directors for the transaction of business.
Every act or decision done or made by a majority of the directors present at a
meeting duly held at which a quorum is present is the act of the Board of
Directors subject to provisions of law relating to interested directors and
indemnification of agents of the Company. A majority of the directors present,
whether or not a quorum is present, may adjourn any meeting to another time and
place. A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for such meeting.
3.6 Conference Telephone. Members of the Board of Directors may
--------------------
participate in a meeting through use of conference telephone or similar
communications equipment, so long as all directors participating in such meeting
can hear one another. Participation in a meeting pursuant to this Section
constitutes presence in person at such meeting.
3.7 Waiver of Notice and Consent. The transactions of any meeting of
----------------------------
the Board of Directors, however called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum is present, and if, either before or after the meeting, each of the
directors not present signs a written waiver of notice, a consent to holding
such meeting or an approval of the minutes thereof. All such waivers, consents
and approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
3.8 Action Without a Meeting. Any action required or permitted by
------------------------
law to be taken by the Board of Directors may be taken without a meeting, if all
members of the Board of Directors shall individually or collectively consent in
writing to the taking of such action. Such written consent or consents shall be
filed with the minutes of the proceedings of the Board of Directors. Such action
by written consent shall have the same force and effect as a unanimous vote of
such directors at a duly held meeting.
6
<PAGE>
3.9 Committees. The provisions of this Article apply also to
----------
committees of the Board of Directors and action by such committees.
ARTICLE IV
COMMITTEES
4.1 Appointment and Procedure. The Board of Directors may, by
-------------------------
resolution adopted by a majority of the authorized number of directors, appoint
from among its members one or more committees, including without limitation an
executive committee, an audit committee and a compensation committee, of two or
more directors. Each committee may make its own rules of procedure subject to
Section 3.9 hereof, and shall meet as provided by such rules or by a resolution
adopted by the Board of Directors (which resolution shall take precedence). A
majority of the members of the committee shall constitute a quorum, and in every
case the affirmative vote of a majority of all members of the committee shall be
necessary to the adoption of any resolution.
4.2 Executive Committee Powers. During the intervals between the
--------------------------
meetings of the Board of Directors, the Executive Committee, if any, in all
cases in which specific directions shall not have been given by the Board of
Directors, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Company in
such manner as the Executive Committee may deem best for the interests of the
Company.
4.3 Powers of Other Committees. Other committees shall have such
--------------------------
powers as are given them in a resolution of the Board of Directors.
4.4 Limitations on Powers of Committees. No committee shall have the
-----------------------------------
power to act with respect to:
(a) any action for which the laws of the State of California
also require shareholder approval or approval of the outstanding shares;
(b) the filling of vacancies on the Board of Directors or in any
committee;
(c) the fixing of compensation of the directors for serving on
the Board of Directors or on any committee;
(d) the amendment or repeal of these Bylaws or the adoption of
new Bylaws;
(e) the amendment or repeal of any resolution of the Board of
Directors which by its express terms is not amendable or repealable;
7
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(f) a distribution to the shareholders of the Company, except at
a rate or in a periodic amount or within a price range as set forth in the
Articles of Incorporation or determined by the Board of Directors; and
(g) the appointment of other committees of the Board of
Directors or the members thereof.
ARTICLE V
OFFICERS
5.1 Election and Qualifications. The officers of the Company shall
---------------------------
consist of a President and/or a Chief Executive Officer, a Secretary, a Chief
Financial Officer and such other officers, including, but not limited to, a
Chairman of the Board of Directors, one or more Vice Presidents, a Treasurer,
and Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers,
as the Board of Directors shall deem expedient, who shall be chosen in such
manner and hold their offices for such terms as the Board of Directors may
prescribe. Any number of offices may be held by the same person. Any Vice
President, Assistant Treasurer or Assistant Secretary, respectively, may
exercise any of the powers of the President, the Chief Financial Officer or the
Secretary, respectively, as directed by the Board of Directors, and shall
perform such other duties as are imposed upon him or her by these Bylaws or the
Board of Directors.
5.2 Term of Office and Compensation. The term of office and salary
-------------------------------
of each of said officers and the manner and time of the payment of such salaries
shall be fixed and determined by the Board of Directors and may be altered by
said Board of Directors from time to time at its pleasure, subject to the
rights, if any, of any officer under any contract of employment. Any officer may
resign at any time upon written notice to the Company, without prejudice to the
rights, if any, of the Company under any contract to which the officer is a
party. If any vacancy occurs in any office of the Company, the Board of
Directors may appoint a successor to fill such vacancy.
5.3 Chief Executive Officer. Subject to the control of the Board of
-----------------------
Directors and such supervisory powers, if any, as may be given by the Board of
Directors, the powers and duties of the Chief Executive Officer of the Company
are:
(a) To act as the general manager and, subject to the control of
the Board of Directors, to have general supervision, direction and control of
the business and affairs of the Company.
(b) To preside at all meetings of the shareholders and, in the
absence of the Chairman of the Board of Directors or if there be no Chairman, at
all meetings of the Board of Directors.
(c) To call meetings of the shareholders and meetings of the
Board of Directors to be held at such times and, subject to the limitations
prescribed by law or by these Bylaws, at such places as he or she shall deem
proper.
8
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(d) To affix the signature of the Company to all deeds,
conveyances, mortgages, leases, obligations, bonds, certificates and other
papers and instruments in writing which have been authorized by the Board of
Directors or which, in the judgment of the Chief Executive Officer, should be
executed on behalf of the Company; to sign certificates for shares of stock of
the Company; and, subject to the direction of the Board of Directors, to have
general charge of the property of the Company and to supervise and control all
officers, agents and employees of the Company.
The President shall be the Chief Executive Officer of the Company
unless the Board of Directors shall designate the Chairman of the Board or
another officer to be the Chief Executive Officer. If there is no President,
then the Chairman of the Board shall be the Chief Executive Officer.
5.4 Chairman of the Board. The Chairman of the Board of Directors,
---------------------
if there be one, shall have the power to preside at all meetings of the Board of
Directors and shall have such other powers and shall be subject to such other
duties as the Board of Directors may from time to time prescribe.
5.5 President. Subject to the supervisory powers of the Chief
---------
Executive Officer, if not the President, and to such supervisory powers as may
be given by the Board of Directors to the Chairman of the Board, if one is
elected, or to any other officer, the President shall have the general powers
and duties of management usually vested in the office of president of a
corporation and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws.
5.6 President Pro Tem. If neither the Chairman of the Board of
-----------------
Directors, the President, nor any Vice President is present at any meeting of
the Board of Directors, a President pro tem may be chosen by the directors
present at the meeting to preside and act at such meeting. If neither the
President nor any Vice President is present at any meeting of the shareholders,
a President pro tem may be chosen by the shareholders present at the meeting to
preside at such meeting.
5.7 Vice President. The titles, powers and duties of the Vice
--------------
President or Vice Presidents, if any, shall be as prescribed by the Board of
Directors. In case of the resignation, disability or death of the President, the
Vice President, or one of the Vice Presidents, shall exercise all powers and
duties of the President. If there is more than one Vice President, the order in
which the Vice Presidents shall succeed to the powers and duties of the
President shall be as fixed by the Board of Directors.
5.8 Secretary. The powers and duties of the Secretary are:
---------
(a) To keep a book of minutes at the principal executive office
of the Company, or such other place as the Board of Directors may order, of all
meetings of its directors and shareholders with the time and place of holding of
such meeting, whether regular or special, and, if special, how authorized, the
notice thereof given, the names of those present at
9
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directors' meetings, the number of shares present or represented at
shareholders' meetings and the proceedings thereof.
(b) To keep the seal of the Company and to affix the same to all
instruments which may require it.
(c) To keep or cause to be kept at the principal executive
office of the Company, or at the office of the transfer agent or agents, a
record of the shareholders of the Company, giving the names and addresses of all
shareholders and the number and class of shares held by each, the number and
date of certificates issued for shares and the number and date of cancellation
of every certificate surrendered for cancellation.
(d) To keep a supply of certificates for shares of the Company,
to fill in all certificates issued, and to make a proper record of each such
issuance; provided that, so long as the Company shall have one or more duly
appointed and acting transfer agents of the shares, or any class or series of
shares, of the Company, such duties with respect to such shares shall be
performed by such transfer agent or transfer agents.
(e) To transfer upon the share books of the Company any and all
shares of the Company; provided that, so long as the Company shall have one or
more duly appointed and acting transfer agents of the shares, or any class or
series of shares, of the Company, such duties with respect to such shares shall
be performed by such transfer agent or transfer agents, and the method of
transfer of each certificate shall be subject to the reasonable regulations of
the transfer agent to whom the certificate is presented for transfer and, if the
Company then has one or more duly appointed and acting registrars, subject to
the reasonable regulations of the registrar to which a new certificate is
presented for registration; and, provided further, that no certificate for
shares of stock shall be issued or delivered or, if issued or delivered, shall
have any validity whatsoever until and unless it has been signed or
authenticated in the manner provided in Section 8.2 hereof.
(f) To make service and publication of all notices that may be
necessary or proper in connection with meetings of the Board of Directors of the
shareholders of the Company. In case of the absence, disability, refusal or
neglect of the Secretary to make service or publication of any notices, then
such notices may be served and/or published by the President or a Vice
President, or by any person thereunto authorized by either of them, or by the
Board of Directors, or by the holders of a majority of the outstanding shares of
the Company.
(g) Generally to do and perform all such duties as pertain to
such office and as may be required by the Board of Directors.
5.9 Chief Financial Officer. The powers and duties of the Chief
-----------------------
Financial Officer are:
(a) To supervise and control the keeping and maintaining of
adequate and correct accounts of the Company's properties and business
transactions, including accounts
10
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of its assets, liabilities, receipts, disbursements, gains, losses, capital,
surplus and shares. The books of account shall at all reasonable times be open
to inspection by any director.
(b) To have the custody of all funds, securities, evidences of
indebtedness and other valuable documents of the Company and, at his or her
discretion, to cause any or all thereof to be deposited for the account of the
Company with such depository as may be designated from time to time by the Board
of Directors.
(c) To receive or cause to be received, and to give or cause to
be given, receipts and acquittances for monies paid in for the account of the
Company.
(d) To disburse, or cause to be disbursed, all funds of the
Company as may be directed by the President or the Board of Directors, taking
proper vouchers for such disbursements.
(e) To render to the President or to the Board of Directors,
whenever either may require, accounts of all transactions as Chief Financial
Officer and of the financial condition of the Company.
(f) Generally to do and perform all such duties as pertain to
such office and as may be required by the Board of Directors.
5.10 Instruments in Writing. All checks, drafts, demands for money,
----------------------
notes and written contracts of the Company shall be signed by such officer or
officers, agent or agents, as the Board of Directors may from time to time
designate. No officer, agent, or employee of the Company shall have the power to
bind the Company by contract or otherwise unless authorized to do so by these
Bylaws or by the Board of Directors.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification of Directors and Officers. The Company shall
-----------------------------------------
indemnify each person who was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding") by reason of
the fact that such person is or was a director or officer of the Company, or is
or was serving at the request of the Company as a director or officer of another
foreign or domestic corporation, partnership, joint venture, trust or other
enterprise, or was a director or of officer of a foreign or domestic corporation
which was a predecessor corporation of the Company or of another enterprise at
the request of such predecessor corporation, to the fullest extent permitted by
the California Corporations Code, against all expenses, including, without
limitation, attorneys' fees and any expenses of establishing a right to
indemnification, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such Proceeding, and such indemnification
shall continue as to a person who has ceased to be such a director or officer,
and shall inure to the benefit of the heirs, executors and administrators of
such person; provided, however, that the Company shall indemnify any such person
seeking
11
<PAGE>
indemnity in connection with a Proceeding (or part thereof) initiated by such
person only if such Proceeding (or part thereof) was authorized by the Board of
Directors of the Company.
6.2 Advancement of Expenses. The Company shall pay all expenses
-----------------------
incurred by such a director or officer in defending any Proceeding as they are
incurred in advance of its final disposition; provided, however, that the
payment of such expenses incurred by a director or officer in advance of the
final disposition of a Proceeding shall be made only upon receipt by the Company
of an agreement by or on behalf of such director or officer to repay such amount
if it shall be determined ultimately that such person is not entitled to be
indemnified under this Article VI or otherwise; and provided further that the
Company shall not be required to advance any expenses to a person against whom
the Company brings an action, alleging that such person committed an act or
omission not in good faith or that involved intentional misconduct or a knowing
violation of law, or that was contrary to the best interest of the Company, or
derived an improper personal benefit from a transaction.
6.3 Non-Exclusivity of Rights. The rights conferred on any person in
-------------------------
this Article VI shall not be deemed exclusive of any other rights that such
person may have or hereafter acquire under any statute, by law, agreement, vote
of shareholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. Additionally, nothing in this Article VI shall limit the ability of the
Company, in its discretion, to indemnify or advance expenses to persons whom the
Company is not obligated to indemnify or advance expenses to pursuant to this
Article VI.
6.4 Indemnification Contracts. The Board of Directors is authorized
-------------------------
to cause the Company to enter into a contract with any director, officer,
employee or agent of the Company, or any person serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, providing for
indemnification rights equivalent to or, if the Board of Directors so
determines, greater than (to the extent permitted by the Company's Articles of
Incorporation and the California Corporations Code) those provided for in this
Article VI.
6.5 Effect of Amendment. Any amendment, repeal or modification of
-------------------
any provision of this Article VI shall be prospective only, and shall not
adversely affect any right or protection conferred on a person pursuant to this
Article VI and existing at the time of such amendment, repeal or modification.
ARTICLE VII
MEETINGS OF, AND REPORTS TO, SHAREHOLDERS
7.1 Place of Meetings. Meetings (whether regular, special or
-----------------
adjourned) of the shareholders of the Company shall be held at the principal
executive office for the transaction of business of the Company, or at any place
within or outside the State of California which may be designated by written
consent of all the shareholders entitled to vote thereat, or which may be
designated by resolution of the Board of Directors. Any meeting shall be valid
wherever held if
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<PAGE>
held by the written consent of all the shareholders entitled to vote thereat,
given either before or after the meeting and filed with the Secretary of the
Company.
7.2 Annual Meetings. The annual meetings of the shareholders shall
---------------
be held at the place provided pursuant to Section 7.1 hereof and at such time in
a particular year as may be designated by written consent of all the
shareholders entitled to vote thereat or which may be designated by resolution
of the Board of Directors of the Company. Said annual meetings shall be held for
the purpose of the election of directors, for the making of reports of the
affairs of the Company and for the transaction of such other business as may
properly come before the meeting.
7.3 Special Meetings. Special meetings of the shareholders for any
----------------
purpose or purposes whatsoever may be called at any time by the President, the
Chairman of the Board of Directors or by the Board of Directors, or by two or
more members thereof, or by one or more holders of shares entitled to cast not
less than 10% of the votes at the meeting. Upon request in writing sent by
registered mail to the Chairman of the Board of Directors, President, Vice
President or Secretary, or delivered to any such officer in person, by any
person entitled to call a special meeting of shareholders, it shall be the duty
of such officer forthwith to cause notice to be given to the shareholders
entitled to vote that a meeting will be held at a time requested by the person
or persons calling the meeting, which (except where called by the Board of
Directors) shall be not less than 35 days nor more than 60 days after the
receipt of such request. If the notice is not given within 20 days after receipt
of the request, the person entitled to call the meeting may give the notice.
Notices of meetings called by the Board of Directors shall be given in
accordance with Section 7.4.
7.4 Notice of Meetings. Notice of any meeting of shareholders shall
------------------
be given in writing not less than 10 (or, if sent by third-class mail, 30) nor
more than 60 days before the date of the meeting to each shareholder entitled to
vote thereat by the Secretary or an Assistant Secretary, or such other person
charged with that duty, or if there be no such officer or person, or in case of
his or her neglect or refusal, by any director or shareholder. The notice shall
state the place, date and hour of the meeting and (a) in the case of a special
meeting, the general nature of the business to be transacted, and no other
business may be transacted, or (b) in the case of the annual meeting, those
matters which the Board of Directors, at the time of the mailing of the notice,
intends to present for action by the shareholders, but any proper matter may be
presented at the meeting for such action, except that notice must be given or
waived in writing of any proposal relating to approval of contracts between the
Company and any director of the Company, amendment of the Articles of
Incorporation, reorganization of the Company or winding up of the affairs of the
Company. The notice of any meeting at which directors are to be elected shall
include the names of nominees intended at the time of the notice to be presented
by the Board of Directors for election. Notice of a shareholders' meeting or any
report shall be given to any shareholder, either (a) personally or (b) by first-
class mail, or, in case the Company has outstanding shares held of record by 500
or more persons on the record date for the shareholders' meeting, notice may be
sent by third-class mail, or other means of written communication, charges
prepaid, addressed to such shareholder at such shareholder's address appearing
on the books of the Company or given by such shareholder to the Company for the
13
<PAGE>
purpose of notice. If a shareholder gives no address or no such address appears
on the books of the Company, notice shall be deemed to have been given if sent
by mail or other means of written communication addressed to the place where the
principal executive office of the Company is located, or if published at least
once in a newspaper of general circulation in the county in which such office is
located. The notice or report shall be deemed to have been given at the time
when delivered personally or deposited in the United States mail, postage
prepaid, or sent by other means of written communication and addressed as
hereinbefore provided. An affidavit or declaration of delivery or mailing of any
notice or report in accordance with the provisions of this Section 7.4, executed
by the Secretary, Assistant Secretary or any transfer agent, shall be prima
facie evidence of the giving of the notice or report. If any notice or report
addressed to the shareholder at the address of such shareholder appearing on the
books of the Company is returned to the Company by the United States Postal
Service marked to indicate that the United States Postal Service is unable to
deliver the notice or report to the shareholder at such address, all future
notices or reports shall be deemed to have been duly given without further
mailing if the same shall be available for the shareholder upon written demand
of the shareholder at the principal executive office of the Company for a period
of one year from the date of the giving of the notice or report to all other
shareholders.
7.5 Consent to Shareholders' Meetings'. The transactions of any
----------------------------------
meeting of shareholders, however called and noticed, and wherever held, are as
valid as though they had taken place at a meeting duly held after regular call
and notice, if the following conditions are met:
(a) a quorum is present, either in person or by proxy, and
(b) either before or after the meeting, each of the shareholders
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to the holding of such meeting or an approval of
the minutes thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall constitute both a waiver of notice of
and presence at such meeting, except: (a) when the person objects, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened; or (b) when the person expressly makes an
objection at some time during the meeting to the consideration of matters
required by law to be included in the notice but not so included.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of shareholders need be specified in any written waiver of
notice, consent to the holding of the meeting or approval of the minutes
thereof, except as to approval of contracts between the Company and any of its
directors, amendment of the Articles of Incorporation, reorganization of the
Company or winding up the affairs of the Company.
7.6 Quorum. The presence in person or by proxy of the holders of a
------
majority of the shares entitled to vote at any meeting of the shareholders shall
constitute a quorum for the transaction of business. Shares shall not be counted
to make up a quorum for a meeting if voting
14
<PAGE>
of such shares at the meeting has been enjoined or for any reason they cannot be
lawfully voted at the meeting. Shareholders present at a duly called or held
meeting at which a quorum is present may continue to transact business until
adjournment notwithstanding the withdrawal of enough shareholders to leave less
than a quorum, if any action taken (other than adjournment) is approved by at
least a majority of the shares required to constitute a quorum. Except as
provided herein, the affirmative vote of a majority of the shares represented
and voting at a duly held meeting at which a quorum is present (which shares
voting affirmatively also constitute at least a majority of the required quorum)
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required.
7.7 Adjourned Meetings. Any shareholders' meeting, whether or not a
------------------
quorum is present, may be adjourned from time to time by the vote of a majority
of the shares, the holders of which are either present in person or represented
by proxy thereat, but, except as provided in Section 7.6 hereof, in the absence
of a quorum, no other business may be transacted at such meeting. When a meeting
is adjourned for more than 45 days or if after adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at a meeting. Except as
aforesaid, it shall not be necessary to give any notice of the time and place of
the adjourned meeting or of the business to be transacted thereat other than by
announcement at the meeting at which such adjournment is taken. At any adjourned
meeting the shareholders may transact any business which might have been
transacted at the original meeting.
7.8 Voting Rights. Only persons in whose names shares entitled to
-------------
vote stand on the stock records of the Company at:
(a) the close of business on the business day immediately
preceding the day on which notice is given; or
(b) if notice is waived, at the close of business on the
business day immediately preceding the day on which the meeting is held; or
(c) if some other day be fixed for the determination of
shareholders of record pursuant to Section 2.8(k) hereof, then on such other
day, shall be entitled to vote at such meeting.
The record date for determining shareholders entitled to give consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors has been taken, shall be the day on which the first written consent
is given. In the absence of any contrary provision in the Articles of
Incorporation or in any applicable statute relating to the election of directors
or to other particular matters, each such person shall be entitled to one vote
for each share.
7.9 Action by Written Consents. Any action which may be taken at any
--------------------------
annual or special meeting of shareholders may be taken without a meeting and
without prior notice, if a consent in writing, setting forth the action so
taken, shall be signed by holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were
15
<PAGE>
present and voted. Unless the consents of all shareholders entitled to vote have
been solicited in writing, the Company shall provide notice of any shareholder
approval obtained without a meeting by less than unanimous written consent to
those shareholders entitled to vote but who have not yet consented in writing at
least 10 days before the consummation of the following actions authorized by
such approval: (a) contracts between the Company and any of its directors; (b)
indemnification of any person; (c) reorganization of the Company; or (d)
distributions to shareholders upon the winding-up of the affairs of the Company.
In addition, the Company shall provide, to those shareholders entitled to vote
who have not consented in writing, prompt notice of the taking of any other
corporate action approved by the shareholders without a meeting by less than
unanimous written consent. All notices given hereunder shall conform to the
requirements of Section 7.4 hereto and applicable law. When written consents are
given with respect to any shares, they shall be given by and accepted from the
persons in whose names such shares stand on the books of the Company at the time
such respective consents are given, or their proxies. Any shareholder giving a
written consent (including any shareholder's proxy holder, or a transferee of
the shares or a personal representative of the shareholder, or their respective
proxy holders) may revoke the consent by a writing. This writing must be
received by the Company prior to the time that written consents of the number of
shares required to authorize the proposed action have been filed with the
Secretary of the Company. Such revocation is effective upon its receipt by the
Secretary of the Company. Notwithstanding anything herein to the contrary, and
subject to Section 305(b) of the California Corporations Code, directors may not
be elected by written consent except by unanimous written consent of all shares
entitled to vote for the election of directors.
7.10 Election of Directors. Every shareholder entitled to vote at
---------------------
any election of directors of the Company may cumulate such shareholder's votes
and give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which the shareholder's shares are
normally entitled, or distribute the shareholder's votes on the same principle
among as many candidates as such shareholder thinks fit. No shareholder,
however, may cumulate such shareholder's votes for one or more candidates unless
such candidate's or candidates' names have been placed in nomination prior to
the voting and the shareholder has given notice at the meeting, prior to voting,
of such shareholder's intention to cumulate such shareholder's votes. If any one
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination. The candidates receiving the highest number of
affirmative votes of the shares entitled to be voted for them up to the number
of directors to be elected by such shares shall be declared elected. Votes
against the director and votes withheld shall have no legal effect. Election of
directors need not be by ballot except upon demand made by a shareholder at the
meeting and before the voting begins.
7.11 Proxies. Every person entitled to vote or execute consents
-------
shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or such person's duly
authorized agent and filed with the Secretary of the Company. No proxy shall be
valid (a) after revocation thereof, unless the proxy is specifically made
irrevocable and otherwise conforms to this Section and applicable law, or (b)
after the expiration of eleven months from the date thereof, unless the person
executing it specifies therein the length of time for which such proxy is to
continue in force. Revocation may be effected by a
16
<PAGE>
writing delivered to the Secretary of the Company stating that the proxy is
revoked or by a subsequent proxy executed by the person executing the prior
proxy and presented to the meeting, or as to any meeting by attendance at the
meeting and voting in person by the person executing the proxy. A proxy is not
revoked by the death or incapacity of the maker unless, before the vote is
counted, a written notice of such death or incapacity is received by the
Secretary of the Company. In addition, a proxy may be revoked, notwithstanding a
provision making it irrevocable, by a transferee of shares without knowledge of
the existence of the provision unless the existence of the proxy and its
irrevocability appears on the certificate representing such shares.
7.12 Inspectors of Election. Before any meeting of shareholders, the
----------------------
Board of Directors may appoint any persons other than nominees for office as
inspectors of election. This appointment shall be valid at the meeting and at
any subsequent meeting that is a continuation of the meeting at which the
persons were originally appointed to be inspectors. If no inspectors of election
are so appointed, the Chairman of the meeting may, and on the request of any
shareholder or a shareholder's proxy shall, appoint inspectors of election at
the meeting. The number of inspectors shall be either one or three. If
inspectors are appointed at a meeting on the request of one or more shareholders
or proxies, the holders of a majority of shares or their proxies present at the
meeting shall determine whether one or three inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the Chairman of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy. These
inspectors shall:
(a) determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots, or consents;
(c) hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
7.13 Annual Reports. Provided that the Company has 100 or fewer
--------------
shareholders, the making of annual reports to the shareholders is dispensed with
and the requirement that such annual reports be made to shareholders is
expressly waived, except as may be directed from time to time by the Board of
Directors or the President.
17
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ARTICLE VII
SHARES AND SHARE CERTIFICATES
8.1 Shares Held By the Company. Shares in other companies standing
--------------------------
in the name of the Company may be voted or represented and all rights incident
thereto may be exercised on behalf of the Company by any officer of the Company
authorized to do so by resolution of the Board of Directors.
8.2 Certificates for Shares. There shall be issued to every holder
-----------------------
of shares in the Company a certificate or certificates signed in the name of the
Company by the Chairman of the Board, if any, or the President or a Vice
President and by the Chief Financial Officer or an Assistant Chief Financial
Officer or the Secretary or any Assistant Secretary, certifying the number of
shares and the class or series of shares owned by the shareholder. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the Company
with the same effect as if such person were an officer, transfer agent or
registrar at the date of issue.
8.3 Lost Certificates. Where the owner of any certificate for shares
-----------------
of the Company claims that the certificate has been lost, stolen or destroyed, a
new certificate shall be issued in place of the original certificate if the
owner (a) so requests before the Company has notice that the original
certificate has been acquired by a bona fide purchaser and (b) satisfies any
reasonable requirements imposed by the Company, including without limitation the
filing with the Company of an indemnity bond or agreement in such form and in
such amount as shall be required by the President or a Vice President of the
Company. The Board of Directors may adopt such other provisions and restrictions
with reference to lost certificates, not inconsistent with applicable law, as it
shall in its discretion deem appropriate.
8.4 Restrictions on Transfer of Shares.
----------------------------------
(a) Before any shareholder of the Company may sell, assign,
gift, pledge or otherwise transfer any shares of the Company's capital stock,
such shareholder shall first notify the Company in writing of such transfer and
such transfer may not be effected unless and until legal counsel for the Company
has concluded that such transfer, when effected as proposed by such shareholder
(i) will comply with all applicable provisions of any applicable state and
federal securities laws, including but not limited to the Securities Act of
1933, as amended, and the California Corporate Securities Law of 1968, as
amended, and (ii) will not jeopardize, terminate or adversely affect the
Company's status as an S Corporation, if applicable, as that term is defined in
the Internal Revenue Code of 1986, as amended. The Company may require that
certificates representing shares of stock of the Company be endorsed with a
legend describing the restrictions set forth in this Section.
(b) If (i) any two or more shareholders of the Company shall
enter into any agreement abridging, limiting or restricting the rights of any
one or more of them to sell,
18
<PAGE>
assign, transfer, mortgage, pledge, hypothecate or transfer on the books of the
Company any or all of the shares of the Company held by them, and if a copy of
said agreement shall be filed with the Company, or if (ii) shareholders entitled
to vote shall adopt any Bylaw provision abridging, limiting or restricting the
rights of any shareholders mentioned above, then, and in either of such events,
all certificates of shares of stock subject to such abridgments, limitations or
restrictions shall have a reference thereto endorsed thereon by an officer of
the Company and such certificates shall not thereafter be transferred on the
books of the Company except in accordance with the terms and provisions of such
as the case may be; however, no restriction shall be binding with respect to
shares issued prior to adoption of the restriction unless the holders of such
shares voted in favor of, or consented in writing to, the restriction.
ARTICLE IX
CONSTRUCTION OF BYLAWS WITH
REFERENCE TO PROVISIONS OF LAW
9.1 Bylaw Provisions Construed as Additional and Supplemental to
------------------------------------------------------------
Provisions of Law. All restrictions, limitations, requirements and other
- -----------------
provisions of these Bylaws shall be construed, insofar as possible, as
supplemental and additional to all provisions of law applicable to the subject
matter thereof and shall be fully complied with in addition to the said
provisions of law unless such compliance shall be illegal.
9.2 Bylaw Provisions Contrary to or Inconsistent with Provisions of
---------------------------------------------------------------
Law. Any article, section, subsection, subdivision, sentence, clause or phrase
- ---
of these Bylaws which, upon being construed in the manner provided in Section
9.1 hereof, shall be contrary to or inconsistent with any applicable provision
of law, shall not apply so long as said provisions of law shall remain in
effect, but such result shall not affect the validity or applicability of any
other portion of these Bylaws, it being hereby declared that these Bylaws, and
each article, section, subsection, subdivision, sentence, clause or phrase
thereof, would have been adopted irrespective of the fact that any one or more
articles, sections, subsections, subdivisions, sentences, clauses or phrases is
or are illegal.
ARTICLE X
CERTIFICATION, ADOPTION, AMENDMENT OR REPEAL OF BYLAWS
10.1 By Shareholders. Bylaws may be adopted, amended or repealed by
---------------
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote. Bylaws specifying or changing a fixed number of directors or
the maximum or minimum number or changing from a fixed to a variable board or
vice versa may be adopted only by the shareholders.
10.2 By the Board of Directors. Subject to the right of shareholders
-------------------------
to adopt, amend or repeal Bylaws, and other than a Bylaw or amendment thereof
specifying or changing a fixed number of directors or the maximum or minimum
number or changing from a fixed to a variable board or vice versa, these Bylaws
may be adopted, amended or repealed by the Board of
19
<PAGE>
Directors. A Bylaw adopted by the shareholders may restrict or eliminate the
power of the Board of Directors to adopt, amend or repeal Bylaws.
10.3 Certification and Inspection of Bylaws. The Company shall keep
--------------------------------------
at its principal executive office the original or a copy of these Bylaws as
amended or otherwise altered to date, which shall be open to inspection by the
shareholders at all reasonable times during office hours.
20
<PAGE>
CERTIFICATE OF AMENDMENT
OF
THE BYLAWS OF
GETTHERE.COM
A California Corporation
The undersigned, Kenneth Pelowski, hereby certifies that:
1. He is the duly elected, qualified and acting Secretary of GetThere.com,
a California corporation (the "Company").
2. Effective as of October 13, 1999, Section 2.2 of the Company's Bylaws
was amended in its entirety to read as follows:
Section 2.2. Number. "The authorized number of directors of the
----------- ------
Company shall be eleven (11) until changed by an amendment of the
Articles of Incorporation or these Bylaws amending this Section 2.2
duly adopted by a vote or written consent of holders of a majority of
the outstanding shares; provided that if the authorized number of
directors is five or more, any proposal to reduce the authorized
number of directors to a number less than five cannot be adopted if
the votes cast against its adoption at a meeting, or the shares not
consenting in the case of action of written consent, are equal to more
than sixteen and two-thirds percent (16-2/3%) of the outstanding
shares entitled to vote."
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment on this _____ day of October, 1999.
--------------------------------------------
Kenneth Pelowski,
Secretary
<PAGE>
EXHIBIT 3.5
BYLAWS OF
GETTHERE.COM, INC.
(A DELAWARE CORPORATION)
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. OFFICES...................................................... 1
ARTICLE II. MEETINGS OF STOCKHOLDERS..................................... 1
ARTICLE III. DIRECTORS.................................................... 3
ARTICLE IV. NOTICES...................................................... 5
ARTICLE V. OFFICERS..................................................... 5
ARTICLE VI. CERTIFICATE OF STOCK......................................... 8
ARTICLE VII. GENERAL PROVISIONS........................................... 9
ARTICLE VIII. AMENDMENTS................................................... 11
ARTICLE IX. LOANS TO OFFICERS............................................ 11
<PAGE>
BYLAWS
OF
GETTHERE.COM, INC.
ARTICLE I
OFFICES
1.1 The registered office shall be in the City of Dover, County of
Kent, State of Delaware.
1.2 The corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 All meetings of the stockholders for the election of directors
shall be held in the City of Menlo Park State of California, at such place as
may be fixed from time to time by the Board of Directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
2.2 Annual meetings of stockholders, commencing with the year 2000,
shall be held at such date and time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which they
shall elect by a plurality vote a Board of Directors, and transact such other
business as may properly be brought before the meeting.
2.3 Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not fewer than ten (10) nor more than sixty (60) days before the date of
the meeting.
2.4 The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
<PAGE>
2.5 Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called by the president and shall be called by the president or secretary
at the request in writing of a majority of the Board of Directors, or at the
request in writing of stockholders owning at least ten percent (10%) in amount
of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
2.6 Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not fewer than ten (10) nor more than sixty (60) days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
2.7 Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
2.8 The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted that might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.9 When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
2.10 Unless otherwise provided in the certificate of incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
2.11 Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking
2
<PAGE>
of the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
3.1 The number of directors that shall constitute the whole Board of
Directors shall be determined by resolution of the Board of Directors or by the
stockholders at the annual meeting of the stockholders, except as provided in
Section 3.2 of this Article, and each director elected shall hold office until
his successor is elected and qualified. Directors need not be stockholders.
3.2 Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole Board of Directors (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
(10%) of the total number of the shares at the time outstanding having the right
to vote for such directors, summarily order an election to be held to fill any
such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office.
3.3 The business of the corporation shall be managed by or under the
direction of its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
3.4 The Board of Directors of the corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
3.5 The first meeting of each newly elected Board of Directors shall
be held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected Board of Directors,
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors.
3.6 Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board of Directors.
3
<PAGE>
3.7 Special meetings of the Board of Directors may be called by the
president on two (2) days' notice to each director by mail or forty-eight (48)
hours notice to each director either personally or by telegram; special meetings
shall be called by the president or secretary in like manner and on like notice
on the written request of two (2) directors unless the Board of Directors
consists of only one director, in which case special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of the sole director.
3.8 At all meetings of the Board of Directors a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
3.9 Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting,
if all members of the Board of Directors or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee.
3.10 Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board of Directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
COMMITTEES OF DIRECTORS
-----------------------
3.11 The Board of Directors may designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to the following matters: (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by the
General
4
<PAGE>
Corporation Law of Delaware to be submitted to stockholders for approval or (ii)
adopting, amending or repealing any provision of these bylaws.
3.11 Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
-------------------------
3.12 Unless otherwise restricted by the certificate of incorporation or
these bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
--------------------
3.13 Unless otherwise restricted by the certificate of incorporation or
these bylaws, any director or the entire Board of Directors may be removed, with
or without cause, by the holders of a majority of shares entitled to vote at an
election of directors.
ARTICLE IV
NOTICES
4.1 Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
4.2 Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
5.1 The officers of the corporation shall be chosen by the Board of
Directors and shall be a president, treasurer and a secretary. The Board of
Directors may elect from among its members a Chairman of the Board and a Vice
Chairman of the Board. The Board of Directors may also choose one or more vice-
presidents, assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these bylaws otherwise provide.
5
<PAGE>
5.2 The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president, a treasurer, and a secretary
and may choose vice-presidents.
5.3 The Board of Directors may appoint such other officers and agents
as it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
5.4 The salaries of all officers and agents of the corporation shall
be fixed by the Board of Directors.
5.5 The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation
shall be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
-------------------------
5.6 The Chairman of the Board, if any, shall preside at all meetings
of the Board of Directors and of the stockholders at which he shall be present.
He shall have and may exercise such powers as are, from time to time, assigned
to him by the Board of Directors and as may be provided by law.
5.7 In the absence of the Chairman of the Board, the Vice Chairman of
the Board, if any, shall preside at all meetings of the Board of Directors and
of the stockholders at which he shall be present. He shall have and may exercise
such powers as are, from time to time, assigned to him by the Board of Directors
and as may be provided by law.
THE PRESIDENT AND VICE-PRESIDENTS
---------------------------------
5.8 The president shall be the chief executive officer of the
corporation; and in the absence of the Chairman and Vice Chairman of the Board
he shall preside at all meetings of the stockholders and the Board of Directors;
he shall have general and active management of the business of the corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect.
5.9 He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
5.10 In the absence of the president or in the event of his inability
or refusal to act, the vice-president, if any, (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
6
<PAGE>
THE SECRETARY AND ASSISTANT SECRETARY
-------------------------------------
5.11 The secretary shall attend all meetings of the Board of Directors
and all meetings of the stockholders and record all the proceedings of the
meetings of the corporation and of the Board of Directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or president,
under whose supervision he shall be. He shall have custody of the corporate seal
of the corporation and he, or an assistant secretary, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
5.12 The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
--------------------------------------
5.13 The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
5.14 He shall disburse the funds of the corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the president and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as treasurer and of the financial condition of the corporation.
5.15 If required by the Board of Directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
5.16 The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
7
<PAGE>
ARTICLE VI
CERTIFICATE OF STOCK
6.1 Every holder of stock in the corporation shall be entitled to have
a certificate, signed by, or in the name of the corporation by, the Chairman or
Vice Chairman of the Board of Directors, or the president or a vice-president
and the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by him in
the corporation.
Certificates may be issued for partly paid shares and in such case upon
the face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
6.2 Any of or all the signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
-----------------
6.3 The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
8
<PAGE>
TRANSFER OF STOCK
-----------------
6.4 Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
------------------
6.5 In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholder or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
-----------------------
6.6 The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
---------
7.1 Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
7.2 Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
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CHECKS
------
7.3 All checks or demands for money and notes of the corporation shall
be signed by such officer or officers or such other person or persons as the
Board of Directors may from time to time designate.
FISCAL YEAR
-----------
7.4 The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
SEAL
----
7.5 The Board of Directors may adopt a corporate seal having inscribed
thereon the name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
---------------
7.6 The corporation shall, to the fullest extent authorized under the
laws of the State of Delaware, as those laws may be amended and supplemented
from time to time, indemnify any director made, or threatened to be made, a
party to an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of being a director of the corporation or a predecessor
corporation or, at the corporation's request, a director or officer of another
corporation; provided, however, that the corporation shall indemnify any such
agent in connection with a proceeding initiated by such agent only if such
proceeding was authorized by the Board of Directors of the corporation. The
indemnification provided for in this Section 7.6 shall: (i) not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement or vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
another capacity while holding such office, (ii) continue as to a person who has
ceased to be a director, and (iii) inure to the benefit of the heirs, executors
and administrators of such a person. The corporation's obligation to provide
indemnification under this Section 7.6 shall be offset to the extent of any
other source of indemnification or any otherwise applicable insurance coverage
under a policy maintained by the corporation or any other person.
Expenses incurred by a director of the corporation in defending a civil
or criminal action, suit or proceeding by reason of the fact that he is or was a
director of the corporation (or was serving at the corporation's request as a
director or officer of another corporation) shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized by relevant sections of the General Corporation Law of
Delaware. Notwithstanding the foregoing, the corporation shall not be required
to advance such expenses to an agent who is a party to an action, suit or
proceeding brought by the corporation and approved by a majority of the Board of
Directors of the corporation that alleges willful misappropriation of corporate
assets by such agent, disclosure of confidential information in violation of
such agent's fiduciary or
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<PAGE>
contractual obligations to the corporation or any other willful and deliberate
breach in bad faith of such agent's duty to the corporation or its stockholders.
The foregoing provisions of this Section 7.6 shall be deemed to be a
contract between the corporation and each director who serves in such capacity
at any time while this bylaw is in effect, and any repeal or modification
thereof shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought based in whole or in part upon any
such state of facts.
The Board of Directors in its discretion shall have power on behalf of
the corporation to indemnify any person, other than a director, made a party to
any action, suit or proceeding by reason of the fact that he, his testator or
intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 7.6 of all directors,
officers and employees who are determined by the corporation or otherwise to be
or to have been "fiduciaries" of any employee benefit plan of the corporation
that may exist from time to time, Section 145 of the General Corporation Law of
Delaware shall, for the purposes of this Section 7.6, be interpreted as follows:
an "other enterprise" shall be deemed to include such an employee benefit plan,
including without limitation, any plan of the corporation that is governed by
the Act of Congress entitled "Employee Retirement Income Security Act of 1974,"
as amended from time to time; the corporation shall be deemed to have requested
a person to serve an employee benefit plan where the performance by such person
of his duties to the corporation also imposes duties on, or otherwise involves
services by, such person to the plan or participants or beneficiaries of the
plan; excise taxes assessed on a person with respect to an employee benefit plan
pursuant to such Act of Congress shall be deemed "fines."
ARTICLE VIII
AMENDMENTS
8.1 These bylaws may be altered, amended or repealed or new bylaws may
be adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the certificate of incorporation at any
regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the Board of Directors by the certificate or incorporation it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal bylaws.
ARTICLE IX
LOANS TO OFFICERS
9.1 The corporation may lend money to, or guarantee any obligation of,
or otherwise assist any officer or other employee of the corporation or of its
subsidiaries, including any officer or employee who is a Director of the
corporation or its subsidiaries, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be
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expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these bylaws shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
12
<PAGE>
CERTIFICATE OF SECRETARY OF
GETTHERE.COM, INC.
The undersigned, Kenneth R. Pelowski, hereby certifies that he is the
duly elected and acting Secretary of GetThere.com, Inc., a Delaware corporation
(the "Corporation"), and that the Bylaws attached hereto constitute the Bylaws
of said Corporation as duly adopted by Action by Written Consent by the
Directors on _______ ___, ______.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name
this _____ day of _______, _____.
------------------------------------------
Kenneth R. Pelowski
Secretary
<PAGE>
Exhibit 4.1
GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This Amended and Restated Investor Rights Agreement (the "Agreement")
is made as of September 14, 1999 by and among GetThere.com, a California
corporation (the "Company"), and the persons and entities listed on the Schedule
of Investors attached as Schedule A hereto (the "Investors").
----------
R E C I T A L S
WHEREAS, certain of the Investors (the "Prior Investors") possess
registration and other rights granted pursuant to the Amended and Restated
Investor Rights Agreement among the Company and the parties listed on the
Schedule of Investors attached thereto, dated May 10, 1998 (the "Prior
Agreement"), entered into in connection with the Series C Preferred Stock,
Warrant and Option Purchase Agreement among the Company and the parties listed
on the Schedule of Investors attached thereto, dated May 10, 1998 (the "Series C
Agreement");
WHEREAS, except for Section 9 thereof, the Prior Agreement may be
amended, and any provision therein waived, with the written consent of the
Company and the holders of sixty-six and two-thirds percent of the Registrable
Securities (as such term is defined in the Prior Agreement) of the Company then
outstanding, and the Prior Investors constitute the holders of more than sixty-
six and two-thirds percent of the currently outstanding Registrable Securities
of the Company;
WHEREAS, Section 9 of the Prior Agreement grants a right of first
refusal to the Prior Investors with respect to New Securities (as such term is
defined in the Prior Agreement) proposed to be issued and sold by that Company;
WHEREAS, Section 9 of the Prior Agreement may be amended, or the
observance thereof may be waived, with the written consent of the Company and
the holders of sixty-six and two-thirds percent of Preferred and Conversion
Stock (as such terms are defined therein) then outstanding or deemed to be
outstanding, and the Prior Investors constitute at least sixty-six and two-
thirds percent of such Preferred and Conversion Stock;
WHEREAS, the Company and certain Investors (the "Series E Investors")
are parties to that certain Preferred Stock and Warrant Purchase Agreement of
even date herewith (the "Purchase Agreement");
WHEREAS, in order to induce the Company to enter into the Purchase
Agreement and to induce the Series E Investor to invest funds in the Company
pursuant to the Purchase Agreement, the Prior Investors desire to amend and
restate all rights granted to them under the Prior Agreement, to terminate the
Prior Agreement, and to replace the Prior Agreement in its entirety as set forth
herein;
<PAGE>
WHEREAS, the Series E Investor and the Company have agreed, pursuant
to the Purchase Agreement, to enter into this Agreement and the obligations of
the Company and the Series E Investor under the Purchase Agreement are
conditioned, among other things, upon the execution and delivery of this
Agreement by the Investors and the Company; and
WHEREAS, the Company desires to grant, and the Investors desire to be
granted, the rights created herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, all parties hereto agree as follows:
1. Certain Definitions. All capitalized terms used and not otherwise
-------------------
defined herein shall have the meanings given them in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following respective
meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act of 1933, as
amended (the "Securities Act").
"Conversion Stock" means the Common Stock issued or issuable pursuant
to conversion of the Preferred Stock.
"Holder" shall mean (i) any Investor holding Registrable Securities,
and (ii) any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 5.9 hereof; provided,
however, that each share of Conversion Stock issued or issuable upon exercise of
the Series E Warrants (as defined below) shall not be deemed to be a Registrable
Security for purposes of determining whether the minimum dollar amount set forth
in Section 5.3 hereof is satisfied until the date 180 days after the issuance of
such shares upon exercise of the Series E Warrants, whereupon such shares shall
be included in any such determination; provided, however, that Conversion Stock
issued or issuable upon exercise of the Series E Warrants shall be Registrable
Securities for all other purposes and at all times under this Agreement (except
as provided for in the definition of "Initiating Holders" in this Section 1).
"Initiating Holders" shall mean (i), at any time prior to the time the
Company has effected a registration pursuant to Section 5.1(a) hereof and such
registration has been declared effective, any Holders who in the aggregate hold
not less than 30% of the Registrable Securities; or (ii), at any time after the
Company has effected a registration pursuant to Section 5.1(a) hereof and such
registration has been declared effective, any Holders who in the aggregate hold
not less than 20% of the Registrable Securities; provided, however, that each
share of Conversion Stock issued or issuable upon exercise of the Series E
Warrants (as defined below) shall not be deemed to be a Registrable Security for
purposes of determining whether the minimum percentage holdings of Registrable
Securities held by Initiating Holders is satisfied until the date 180 days after
the issuance of such shares upon exercise of the Series E Warrants, whereupon
such shares shall be included in any such determination; provided further,
however, that Conversion Stock issued or issuable upon exercise of the Series E
Warrants shall be Registrable Securities for all
2
<PAGE>
other purposes and at all times under this Agreement (except as provided for in
the definition of "Holder" in this Section 1).
"Preferred Stock" shall mean (i) the shares of Preferred Stock of the
Company originally issued pursuant to the Series A Preferred Stock Purchase
Agreement among the Company and the parties listed on the Schedule of Purchasers
attached thereto, dated April 23, 1996 (the "Series A Agreement"), the Series B
Agreement, the Series C Agreement (including shares issuable upon exercise of
that certain Warrant for Series C Preferred Stock, dated as of August 27, 1999),
that certain Series C Preferred Stock Admission Agreement between the Company
and America West Airlines, Inc. dated August 27, 1999, the Purchase Agreement,
(ii) for purposes of Sections 1, 2, 5.2, 5.4 through 5.9, 5.11, 11, and 13
through 19 only, any shares of Preferred Stock of the Company issued or issuable
upon exercise of either any warrants or options outstanding to purchase shares
of Series A Preferred Stock or Series B Preferred Stock, (iii) any shares of
Preferred Stock of the Company issued upon exercise of either the Warrant, the
Option or the Option Warrant issued pursuant to the Series C Agreement (as such
terms are defined therein) or upon exercise, conversion or exchange of any
exercisable, convertible or exchangeable securities issued upon exercise of the
Warrant, the Option or the Option Warrant, (iv) any shares of Preferred Stock
issued or issuable upon exercise of the Two Year Series E Warrant and the Three
Year Series E Warrant issued pursuant to the Purchase Agreement (as defined
therein and together, the "Series E Warrants"), (v) for purposes of Sections 1,
2, 5.2, 5.4 through 5.9, 5.11, 11, and 13 through 19 only, any shares of
Preferred Stock or Common Stock of the Company issued or issuable upon exercise
of the One Hundred Twenty Day Common Stock Warrant, the America West Warrant,
the Air Canada Warrant, or the Covia Warrant issued pursuant to the Purchase
Agreement (as defined therein).
"Registrable Securities" means the Conversion Stock and any Common
Stock of the Company issued or issuable in respect of the Conversion Stock upon
any stock split, dividend, recapitalization, or similar event, or any Common
Stock otherwise issuable with respect to the Conversion Stock; provided,
however, that shares of Conversion Stock or other securities shall only be
treated as Registrable Securities if and so long as they have not been (a) sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (b) sold in a single transaction exempt from
the registration and prospectus delivery requirements of the Securities Act so
that all transfer restrictions and restrictive legends with respect thereto are
removed prior to any such sale.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 5.1, 5.2 and
5.3 hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company) and including the fees and disbursements of a single counsel for
Holders (if counsel for the Company does not represent the Holders).
3
<PAGE>
"Related Party" shall mean (i) any corporation directly controlled by,
controlling, or under common control with (to the extent of more than fifty
percent (50%) of its issued capital stock entitled to vote for the election of
directors) the holder of any shares of Preferred Stock and/or Conversion Stock,
or (ii) any partnership or limited liability company directly controlled by,
controlling, or under common control with (to the extent of more than fifty
percent (50%) of its voting power or otherwise having power to control its
general activities) the holder of any shares of Preferred Stock and/or
Conversion Stock, but in each case only for so long as such ownership or control
shall continue.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and, except as set forth under "Registration Expenses," all fees and
disbursements of counsel for any Holder.
2. Restrictions on Transferability. The Preferred Stock, the
-------------------------------
Conversion Stock and any other securities issued in respect of the Preferred
Stock or the Conversion Stock upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event shall not be sold,
assigned, transferred or pledged except upon the conditions specified in this
Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act. The Investors will cause any proposed
purchaser, assignee, transferee, or pledgee of any such shares held by the
Investors to agree to take and hold such securities subject to the provisions
and upon the conditions specified in this Agreement.
3. Restrictive Legend. Each certificate representing (i) the
------------------
Preferred Stock, (ii) the Conversion Stock, and (iii) any other securities
issued in respect of the Preferred Stock or the Conversion Stock upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar event,
shall (unless otherwise permitted by the provisions of Section 4 below) be
stamped or otherwise imprinted with a legend in substantially the following form
(in addition to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL OF THE HOLDER REASONABLY ACCEPTABLE TO THE COMPANY
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
4
<PAGE>
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
COPIES OF THE AGREEMENTS COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
Each Investor and/or Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Preferred Stock or
the Common Stock in order to implement the restrictions on transfer established
in this Agreement.
4. Notice of Proposed Transfer. The holder of each certificate
---------------------------
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership, (ii) in transactions
involving the distribution without consideration of Restricted Securities by the
Investor to any of its partners, retired partners, members or retired members or
to the estate of any of its partners, retired partners, members or retired
members, (iii) in transactions involving the transfer without consideration of
Restricted Securities by the Investor during his lifetime by way of gift or on
death by will or intestacy, (iv) in transactions involving the transfer or
distribution of Restricted Securities by a corporation to any Related Party, or
(v) in transactions in compliance with Rule 144 promulgated under the Securities
Act), unless there is in effect a registration statement under the Securities
Act covering the proposed transfer, the holder thereof shall give written notice
to the Company of such holder's intention to effect such transfer, sale,
assignment or pledge. Each such notice shall describe the manner and
circumstances of the proposed transfer, sale, assignment or pledge in sufficient
detail, and shall be accompanied, at such holder's expense by either (A) a
written opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company addressed to the Company, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (B) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144, except in unusual circumstances. Each
certificate evidencing the Restricted Securities transferred as above provided
shall bear, except if such transfer is made pursuant to Rule 144, the
appropriate restrictive legend set forth in Section 3 above, except that such
certificate shall not bear such restrictive legend if, in the opinion of counsel
for such holder and the Company, such legend is not required in order to
establish compliance with any provision of the Securities Act.
5
<PAGE>
5. Registration Rights.
-------------------
5.1 Demand Registration.
-------------------
(a) Demand for Registration. In case the Company shall receive
-----------------------
from Initiating Holders a written request that the Company file a registration
statement on Form S-1 pursuant to the Securities Act covering the registration
of at least twenty-five percent (25%) of the Registrable Securities then
outstanding, or any lesser number of shares if the anticipated aggregate
offering price net of underwriting discounts and commissions would exceed Ten
Million Dollars ($10,000,000), the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect
such registration, qualification or compliance (including, without limitation,
filing post-effective amendments, appropriate qualification under applicable
blue sky or other state securities laws and appropriate compliance with
applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within 20 days after receipt of the notice described in clause (i) above from
the Company; provided, however, that the Company shall not be obligated to take
any action to effect any such registration, qualification or compliance pursuant
to this Section 5.1:
(A) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(B) prior to the earlier of June 30, 2001 or six months
after the effective date of the Company's first registered public offering of
its stock;
(C) if the Company, within ten (10) days of the receipt
of the request of the Initiating Holders, gives notice of its bona fide
intention to effect the filing of a registration statement with the Commission
within sixty (60) days of receipt of such request, in which case Holders shall
have the registration rights specified in Section 5.2 hereof subject to any
limitations set forth in such Section 5.2;
(D) during the period starting with the date of filing
of, and ending on the date 180 days immediately following the effective date of,
any registration statement pertaining to securities of the Company, provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective;
(E) after the Company has effected three such
registrations pursuant to this Section 5.1(a) and such registrations have been
declared effective;
6
<PAGE>
provided, however, that if, in any such registration, as a result of limitations
- -------- -------
imposed by the underwriters pursuant to Section 5.1(b) hereof, the Holders are
required to reduce the number of shares included in such registration below 75%
of the amount of Registrable Securities originally requested to be included in
such registration by the Holders participating in such registration, the Company
shall be obligated to effect an additional registration pursuant to this Section
5.1(a);
(F) within six (6) months after the Company has
effected a registration pursuant to this Section 5.1(a); or
(G) if the Company shall furnish to such Initiating
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its shareholders for a registration statement to be filed at
the date filing would be required, in which case the Company's obligation to use
its best efforts to register, qualify or comply under this Section 5.1 shall be
deferred for a period not to exceed 90 days from the date of receipt of written
request from the Initiating Holders, provided that the Company may not exercise
this deferral right more than once during any twelve (12) month period.
Subject to the foregoing clauses (A) through (G), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
------------
Section 5.1 is for a public offering involving an underwriting, the Company
shall so advise the Holders as part of the notice given pursuant to Section
5.1(a)(i), and the right of any Holder to registration pursuant to Section 5.1
shall be conditioned upon such Holder's participation in such underwriting
arrangements, and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent requested shall be limited to the extent provided
herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Holders proposing to distribute their
securities through such underwriting, but subject to the Company's reasonable
approval. Notwithstanding any other provision of this Section 5.1, if the
managing underwriter advises the Holders proposing to distribute their
securities through such underwriting in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Company shall so
advise all Holders of Registrable Securities, and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among all Holders in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Holders at the
time of filing the registration statement. No Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of
the underwriting, such person may elect to withdraw therefrom by written notice
to the Company,
7
<PAGE>
the managing underwriter and the Initiating Holders. The Registrable Securities
and/or other securities so withdrawn shall also be withdrawn from registration,
and such Registrable Securities shall not be transferred in a public
distribution prior to 180 days after the effective date of such registration, or
such other shorter period of time as the underwriters may require. If the
underwriter has not limited the number of Registrable Securities to be
underwritten, the Company may include securities for its own account (or for the
account of other shareholders) in such registration if the underwriter so agrees
and if the number of Registrable Securities that would otherwise have been
included in such registration and underwriting will not thereby be limited.
5.2 Company Registration.
--------------------
(a) Notice of Registration. If at any time or from time to time
----------------------
the Company shall determine (but without any obligation to do so) to register
any of its equity securities, including a registration pursuant to Section 5.1
hereof, either for its own account or for the account of a security holder or
holders, other than (A) a registration relating solely to employee benefit
plans, or (B) a registration relating solely to a Rule 145 transaction, the
Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within thirty (30) days after receipt of such written notice
from the Company by any Holder.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 5.2(a)(i). In such event the right of any Holder to
registration pursuant to Section 5.2 shall be conditioned upon such Holder's
participation in such underwriting, and the inclusion of Registrable Securities
in the underwriting shall be limited to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision of this Section 5.2, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration (i) in the case of
the Company's initial public offering, to zero, and (ii) in the case of any
other offering, to an amount no less than 33-1/3% of all shares to be included
in such offering; provided however, that any such limitation or "cutback" shall
----------------
be first applied to all shares proposed to be sold in such offering other than
for the account of the Company which are not Registrable Securities. The
Company shall so advise all Holders and other holders distributing their
securities through such underwriting, and the number of shares of Registrable
Securities or other securities that may be
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<PAGE>
included in the registration and underwriting shall be first allocated among all
the Holders in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities held by such Holder at the time of filing the
Registration Statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company may round the number of shares allocated
to any Holder or holder to the nearest 100 shares.
If any Holder disapproves of the terms of any such underwriting, he
may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 180 days after the effective date
of the registration statement thereto, or such other shorter period of time as
the underwriters may require.
(c) Right to Terminate Registration. The Company shall have
-------------------------------
the right to terminate or withdraw any registration initiated by it under this
Section 5.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
5.3 Registration on Form S-3.
------------------------
(a) If any Holder or Holders request that the Company file
a registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which would equal or exceed Two
Million Dollars ($2,000,000), and the Company is a registrant entitled to use
Form S-3 to register the Registrable Securities for such an offering, the
Company shall use its best efforts to cause such Registrable Securities to be
registered for the offering on such form and to cause such Registrable
Securities to be qualified in such jurisdictions as such Holder or Holders may
reasonably request; provided, however, that the Company shall not be required to
effect more than two registrations pursuant to this Section 5.3 in any twelve
(12) month period. The Company shall, after its initial public offering, use
commercially reasonable efforts to become entitled to use Form S-3. The Company
shall inform other Holders of the proposed registration and offer them the
opportunity to participate. In the event the registration is proposed to be part
of a firm commitment underwritten public offering, the substantive provisions of
Section 5.1(b) shall be applicable to each such registration initiated under
this Section 5.3.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 5.3:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(ii) if the Company, within ten (10) days of the
receipt of the request of the initiating Holders, gives notice of its bona fide
intention to effect the filing of a registration statement with the Commission
within sixty (60) days of receipt of such request;
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<PAGE>
(iii) during the period starting with the date of
filing of, and ending on the date 180 days immediately following the effective
date of, any registration statement pertaining to securities of the Company,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective; or
(iv) if the Company shall furnish to such Holder or
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its shareholders for registration statements to be filed at
the date filing would be required, in which case the Company's obligation to use
its best efforts to file a registration statement shall be deferred for a period
not to exceed 90 days from the receipt of the request to file such registration
by such Holder or Holders, provided that the Company may not exercise this
deferral right more than once during any twelve (12) month period.
5.4 Expenses of Registration. All Registration Expenses
------------------------
incurred in connection with (i) two registrations pursuant to Section 5.1 and
two registrations pursuant to Section 5.3 and (ii) all registrations pursuant to
Section 5.2 shall be borne by the Company. Unless otherwise stated, all other
expenses incurred in connection with registrations pursuant to Section 5.3 of
this Agreement and all other Selling Expenses relating to securities registered
on behalf of the Holders shall be borne by the Holders pro rata on the basis of
the number of shares so registered. Notwithstanding the foregoing, the Company
shall not be required to effect or to pay any Registration Expenses of any
registration begun pursuant to Sections 5.1 or 5.3, the request of which has
been subsequently withdrawn by Holders of a number of shares of Registrable
Securities such that there are no Holders of Registrable Securities intending to
participate in the registration sufficient to request such a registration, in
which case such expenses shall be borne by the Holders of securities (including
Registrable Securities) requesting or causing such withdrawal; provided further,
however, that if at the time of such withdrawal, the Holders have learned of a
material adverse change in the condition, business or prospects of the Company
from that known to the Holders at the time of their request, then the Holders
shall not be required to pay any of such Registration Expenses and shall retain
their rights pursuant to Sections 5.1 and 5.3.
5.5 Registration Procedures. In the case of each
-----------------------
registration, qualification or compliance effected by the Company pursuant to
this Agreement, the Company will keep each Holder advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
(a) Prepare and file with the Commission a
registration statement with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for at least
one hundred twenty (120) days or until the distribution described in the
registration statement has been completed, whichever first occurs; and
(b) Furnish to the Holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as
10
<PAGE>
such Holders and underwriters may reasonably request in order to facilitate the
public offering of such securities.
(c) Use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(d) In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
(e) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and at the request of any such Holder, prepare and furnish to
such Holder a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchaser of Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing.
(f) Prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration
statement.
(g) Provide a transfer agent and registrar for
all Registrable Securities registered pursuant to such registration statement
and a CUSIP number for all such Registrable Securities, in each case not later
than the effective date of such registration.
(h) Furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Agreement, on
the date that such Registrable Securities are delivered for sale in connection
with a registration pursuant to this Agreement, (i) an opinion, dated such date,
of the counsel representing the Company for the purposes of such registration,
in form and substance as is customarily given to underwriters in an underwritten
public offering, and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters.
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<PAGE>
5.6 Indemnification.
--- ---------------
(a) The Company will indemnify each Holder of
Registrable Securities included in a registration pursuant to this Agreement,
each of its officers and directors and partners, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, with respect
to which registration, qualification or compliance has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), state securities law or any rule or regulation promulgated under such
laws applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers, directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by any Holder, controlling person or underwriter and stated to be
specifically for use therein; provided, however, that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any such
untrue statement, alleged untrue statement, omission or alleged omission made in
a preliminary prospectus, such indemnity agreement shall not inure to the
benefit of any underwriter, or any Holder, if there is no underwriter, if a copy
of the final prospectus filed with the Commission pursuant to its Rule 424(b)
was timely delivered to such underwriter, or to any Holder, if there is no
underwriter, and was not furnished to the person asserting the loss, liability,
claim or damage at or prior to the time such action is required by the
Securities Act, and if such final prospectus cured the untrue statement, alleged
untrue statement, omission of alleged omission giving rise to the loss,
liability, claim or damage.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such registration statement, each person who controls the
Company or such underwriter within the meaning of Section 15 of the Securities
Act, and each other such Holder, each of its officers, directors and partners
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or
12
<PAGE>
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred, as such expenses are incurred, in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this Section 5.6(b) shall be limited in an amount equal to the
net proceeds of the shares sold by such Holder. In no event will any Holder be
required to enter into any agreement or undertaking for the benefit of the
Company in connection with any registration under this Section 5 providing for
any indemnification or contribution obligations on the part of such Holder
greater than such Holder's obligations under this Section 5.6 (b).
(c) Each party entitled to indemnification under this
Section 5.6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action, and provided further that the Indemnifying Party shall not
assume the defense for matters as to which representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to actual or potential differing interests between them, but
shall instead in such event pay the fees and costs of separate counsel for the
Indemnified Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section
5.6 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim damage, or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information
13
<PAGE>
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission.
5.7 Information by Holder. The Holder or Holders of
---------------------
Registrable Securities included in any registration shall furnish to the Company
such information regarding such Holder or Holders, the Registrable Securities
held by them and the distribution proposed by such Holder or Holders as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
5.8 Rule 144 Reporting. With a view to making available
------------------
the benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available,
as those terms are understood and defined in Rule 144 under the Securities Act,
at all times after the effective date that the Company becomes subject to the
reporting requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as a Holder owns any Restricted
Securities, to furnish to such Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public) and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing the Holder
to sell any such securities without registration.
5.9 Transfer of Registration Rights. The rights to
-------------------------------
cause the Company to register securities granted Investors under Sections 5.1,
5.2 and 5.3 may be assigned to a transferee or assignee in connection with any
transfer or assignment of Registrable Securities by the Investor provided that:
(i) such transfer is otherwise effected in accordance with applicable securities
laws, (ii) such assignee or transferee acquires at least 25% of the shares of
Registrable Securities initially held by the assignor or transferor
(appropriately adjusted for recapitalizations, stock splits, stock dividends and
the like), (iii) written notice is promptly given to the Company, (iv) such
transferee agrees to be bound by the provisions of this Agreement and (v) such
assignee or transferee is not a direct or indirect competitor of the Company.
Notwithstanding the foregoing, the rights to cause the Company to register
securities may be assigned to (A) any affiliated partnership or constituent
partner or retired partner of an Investor which is a partnership or any
affiliated member or retired member of an Investor which is a limited liability
14
<PAGE>
company, (B) a family member or trust for the benefit of an Investor who is an
individual or (C) any wholly-owned subsidiary of the assignor or transferor,
provided written notice thereof is promptly given to the Company, the transferee
agrees to be bound by the provisions of this Agreement and the transferee is not
a direct or indirect competitor of the Company.
5.10 Limitations on Subsequent Registration Rights.
---------------------------------------------
From and after the date of this Agreement, the Company shall not, without the
prior written consent of Holders holding more than fifty percent (50%) of the
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company which would allow such holder or
prospective holder to (i) require the Company to effect a registration, prior to
the date set forth in Section 5.1 (a) (ii) (B) or (ii) include any securities in
any registration filed under Section 5.1 hereof, unless, under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of such securities will
not diminish the amount of Registrable Securities which are included in such
registration and includes a market standoff agreement substantially in the form
of Section 11 hereof as a term.
5.11 Termination of Registration Rights. The rights
----------------------------------
granted pursuant to Section 5.1 of this Agreement shall terminate as to any
Holder at such time as such Holder (i) can sell all of his Registrable
Securities pursuant to Rule 144(k) promulgated under the Securities Act or (ii)
can sell all of his Registrable Securities pursuant to Rule 144 promulgated
under the Securities Act in any ninety (90) day period. The rights granted
pursuant to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate as to
all Holders five (5) years after the consummation of the sale of securities
pursuant to a registration statement filed by the Company under the Securities
Act in connection with the firm commitment underwritten offering of its
securities to the general public.
6. Financial Information.
---------------------
(a) The Company will provide the following
reports to each holder of at least 250,000 shares of Preferred Stock and/or
Conversion Stock (as adjusted for subsequent stock splits, stock dividends,
combinations and other recapitalizations):
(i) As soon as practicable after the end of
each fiscal year, and in any event within 120 days thereafter, balance sheets of
the Company, as of the end of such fiscal year, and income statements and
statements of cash flows and shareholders' equity of the Company, for such year,
prepared in accordance with generally accepted accounting principles, all in
reasonable detail and audited by independent public accountants of national
standing selected by the Company.
(ii) As soon as practicable after the end of
each month, and in any event within 30 days thereafter, an unaudited balance
sheet of the Company as of the end of each such month, and unaudited income
statements and statements of cash flows of the Company for such period and for
the current fiscal year to date, prepared in accordance with generally accepted
accounting principles (other than for accompanying notes), subject to changes
resulting from year-end audit adjustments, in reasonable detail and signed by
the Chief Financial
15
<PAGE>
Officer or President of the Company certifying that they fairly and accurately
present the financial condition and results of operation of the Company.
(iii) At least thirty days prior to the
beginning of each fiscal year, an annual budget adopted by the Company's Board
of Directors for the fiscal year, and, as soon as practicable, any revised
annual budget prepared and adopted by the Board of Directors of the Company.
7. Visitation and Inspection.
-------------------------
(a) The Company will afford to each holder of
Preferred Stock and/or Conversion Stock reasonable access during normal business
hours to the Company's accounting books and records and minutes of proceedings
of the shareholders and the Board and committees of the Board, and all
information distributed to the Board, for a purpose reasonably related to such
holder's interests as a shareholder of the Company.
(b) The Company will afford to each holder of
shares of Preferred Stock and/or Conversion Stock the right, upon advance
notice, to meet periodically with the Company's principal executive officer or
chief financial officer during mutually agreeable business hours to discuss and
make recommendations regarding the conduct of the Company's business and
affairs.
8. Confidentiality. Notwithstanding the foregoing, the
---------------
Company is not required to disclose trade secrets or confidential information
pursuant to Section 6 or Section 7.
9. Right of First Refusal.
----------------------
(a) The Company hereby grants to each holder of at
least 250,000 shares of Preferred Stock and/or Conversion Stock (as adjusted for
subsequent stock splits, stock dividends, combinations and other
recapitalizations) (each such holder referred to herein as a "Qualified
Investor"), the right of first refusal to purchase its Pro Rata Share (as
defined in this Section 9) of New Securities (as defined in this Section 9)
which the Company may, from time to time, propose to sell and issue. A "Pro Rata
Share," for purposes of this right of first refusal, is the ratio that (i) the
sum of the number of shares of Common Stock then held by each Qualified Investor
and the number of shares of Common Stock issuable upon conversion of the
Preferred Stock then held by such Qualified Investor bears to (ii) the sum of
the total number of shares of Common Stock then outstanding and the number of
shares of Common Stock issuable upon exercise or conversion of all then
outstanding securities exercisable for or convertible into, directly or
indirectly, Common Stock. For purposes of this Section 9 only, American Express
Travel Related Services Company, Inc. ("AmEx") shall be deemed to be a `holder'
and to hold the Series C Preferred Stock and Series E Preferred Stock of the
Company to be purchased by AmEx at the AmEx Subsequent Closing (as such term is
defined in the Purchase Agreement) beginning on the Initial Closing Date (as
such term is defined in the Purchase Agreement); provided, however, that if the
AmEx Subsequent Closing does not occur on or prior to November 30, 1999, then
AmEx shall no longer be considered a `holder' or to hold such securities for
purposes of this Section 9 after November 30, 1999. For purposes of this Section
9 only, Covia LLC ("Covia") shall be deemed to be a `holder' and to hold the
Series E Preferred
16
<PAGE>
Stock of the Company to be purchased by Covia at the Covia Subsequent Closing
(as such term is defined in the Purchase Agreement) beginning on the Initial
Closing Date; provided, however, that if the Covia Subsequent Closing does not
occur on or prior to November 30, 1999, then Covia shall no longer be considered
a `holder' or to hold such securities for purposes of this Section 9 after
November 30, 1999.
(b) Except as set forth below, "New Securities" shall
mean any shares of capital stock of the Company, including Common Stock and any
series of preferred stock, whether now authorized or not, and rights, options or
warrants to purchase said shares of Common Stock or preferred stock, and
securities of any type whatsoever that are, or may become, convertible into or
exchangeable for said shares of Common Stock or preferred stock. Notwithstanding
the foregoing, "New Securities" does not include (i) any Conversion Stock, (ii)
any Common Stock offered to the public pursuant to a registration statement
under the Securities Act in connection with the Company's initial firm
commitment public offering, (iii) any securities issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of all or
substantially all of the assets of such corporation or other reorganization
whereby the Company or its shareholders own more than fifty percent (50%) of the
voting power of the surviving or successor corporation, (iv) any shares of the
Company's Common Stock or related options, warrants or other rights to purchase
such Common Stock issued on or after inception of the Company to employees,
officers and directors of, and consultants to, the Company, pursuant to
arrangements approved by the Board of Directors of the Company, (v) any
securities previously or subsequently issued pursuant to any rights, agreements,
exchangeable securities or convertible securities, including without limitation
options and warrants, provided that the rights of first refusal established by
this Section 9 applied with respect to the initial sale or grant by the Company
of such rights, agreements, exchangeable securities or convertible securities,
(vi) any stock issued in connection with any stock split, stock dividend or
recapitalization by the Company, (vii) up to 250,000 shares of stock or related
warrants or other securities or rights, issued after the date of this Agreement,
to persons or entities with which the Company has business relationships,
including without limitation banks and equipment lessors, provided such
issuances are for other than primarily equity financing purposes and such
issuances have been approved by the Company's Board of Directors, (viii) the
Shares, the Warrant, the Option, the Option Warrant, and any Subsequent Shares
issued pursuant to the Series C Agreement (each as defined in the Series C
Agreement), (ix) any Exchange Warrant (as defined in that certain Amended and
Restated Shareholders Agreement dated as of the date hereof by and between the
Company and the shareholders of the Company who are signatories thereto (the
"Restated Shareholders Agreement")) or the shares of Preferred Stock or Common
Stock issued or issuable upon exercise thereof or (x) the Shares, the Warrants
and the Conversion Shares (each as defined in the Purchase Agreement) issued
pursuant to the Purchase Agreement.
(c) In the event the Company proposes to undertake an
issuance of New Securities, it shall give each Qualified Investor written notice
of its intention, describing the amount and type of New Securities, and the
price and terms upon which the Company proposes to issue the same. Each
Qualified Investor shall have twenty (20) days from the date of receipt of any
such notice to agree to purchase up to its respective Pro Rata Share of such New
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased. If any Qualified
17
<PAGE>
Investor fails to agree to purchase its full Pro Rata Share within such twenty
(20) day period, the Company will give the Qualified Investor(s) who did so
agree (the "Electing Qualified Investor(s)") notice of the number of New
Securities which were not subscribed for. Such notice may be by telephone if
followed by written confirmation within two days. The Electing Qualified
Investor(s) shall have ten (10) days from the date of such second notice to
agree to purchase their Pro Rata Share of all or any part of the New Securities
not purchased by such other Qualified Investor(s). For the purpose of this
second election under this Section 9(c), shares held by Qualified Investor(s)
other than Electing Qualified Investor(s) shall be excluded from clause (ii) for
the definition of "Pro Rata Share" contained in Section 9(a).
(d) In the event all of the New Securities are not
elected to be purchased by the Qualified Investor(s), or any of them, within ten
(10) days after the second notice pursuant to Section 9(c) above, the Company
shall have ninety (90) days thereafter to sell the New Securities not elected to
be purchased by the Qualified Investor(s) at the price and upon the terms no
more favorable to the purchasers of such securities than specified in the
Company's notice. In the event the Company has not sold the New Securities
within said ninety (90) day period, the Company shall not thereafter issue or
sell any New Securities without first offering such securities in the manner
provided above.
(e) The right of first refusal hereunder is not
assignable except by each of such Qualified Investor(s) to any party who
acquires at least 250,000 shares of the Preferred Stock and/or Conversion Stock
(appropriately adjusted for recapitalizations, stock splits, stock dividends and
the like).
10. Termination of Covenants. The covenants set forth in
------------------------
Sections 6, 7, 9, 12.1 and 12.3 shall terminate and be of no further force or
effect upon the consummation of a firm commitment underwritten public offering
with aggregate offering proceeds to the Company, net of underwriting discounts
and commissions, of at least $15,000,000 or at such time as the Company is
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, as
amended, whichever shall occur first.
11. Standoff Agreement. In connection with the initial firm
------------------
commitment public offering of the Company's securities, each Investor and Holder
agrees, upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
securities of the Company (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed one hundred eighty (180)
days) from the effective date of such registration, as may be requested by the
underwriters, provided that all officers, directors and shareholders of the
Company who own, or hold options exercisable for, an aggregate of at least one
percent (1%) of the capital stock of the Company also agree to such
restrictions. The Investors and Holders agree that the Company may instruct its
transfer agent to place stop-transfer notations in its records to enforce the
provisions of this Section 11.
18
<PAGE>
12. Additional Covenants of the Company.
-----------------------------------
12.1 Reserved Employee Shares. The 12,491,190 shares of Common
------------------------
Stock currently reserved for management and employees under the Stock Plan (as
defined below), and any additional shares of Common Stock hereafter reserved for
management and employees under an amendment to the Stock Plan approved by the
Board of Directors and/or the shareholders of the Company, if necessary (the
"Employee Shares"), shall be issued from time to time pursuant to the 1996 Stock
Incentive Plan approved and adopted by the Board of Directors on July 2, 1996,
as amended (the "Stock Plan") or such other arrangements, contracts or plans as
are reasonably recommended by management and approved by the Board of Directors.
Unless otherwise agreed to by a majority of the Directors who are not then
employees of the Company, Employee Shares issued after the date of this
Agreement and subject to options issued under the Stock Plan or other approved
plans will vest, until the option holder's employment with or service to the
Company terminates, over a four year period on terms no more favorable than, for
each option grant, one-eighth of such shares at the end of six (6) months of
service from the vesting commencement date (unless more favorable vesting terms
are required by law or regulatory agency) and one-forty-eighth of such shares on
a monthly basis thereafter. Unless otherwise approved by the Board of Directors,
all officers, directors and employees of or consultants to, the Company
acquiring Employee Shares after the date of this Agreement other than pursuant
to an option will execute a stock restriction agreement with the Company under
which the Company will retain the right to repurchase the unvested shares, over
a four-year vesting period which shall lapse on terms no more favorable than,
for each stock grant, one-eighth of such shares at the end of six (6) months of
service from the vesting commencement date and one-forty-eighth of such shares
on a monthly basis thereafter, for the original purchase price in the event the
holder's employment with or service to the Company terminates for any reason.
Pursuant to the option agreement or restricted stock agreement, as the case may
be, the Company shall retain a right of first refusal with respect to all such
Employee Shares subject to such agreement (which right shall terminate and be of
no further force or effect upon the consummation of a firm commitment
underwritten public offering or at such time as the Company is required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act, whichever shall
first occur), and the holder shall agree to a market standoff provision
substantially identical to the market standoff provision contained in Section 11
hereof.
12.2 Employee Proprietary Information and Inventions Agreement.
---------------------------------------------------------
The Company shall require all future officers, directors, and employees of, and
consultants to, the Company and its Subsidiaries to execute and deliver an
Employee Proprietary Information and Inventions Agreement in substantially the
form approved by the Company's Board of Directors.
13. Determination of Share Amounts and Percentages. For the purposes
----------------------------------------------
of determining the minimum holdings set forth in this Agreement, including
without limitation the minimum holdings pursuant to Sections 5.9, 6(a), 9(a) and
9(e), the following rules shall govern:
(a) Shares held by any Related Party of the holder shall be
deemed held by such holder, and any holder which is a partnership shall be
deemed to hold any shares of Preferred Stock and/or Conversion Stock originally
purchased by such holder and subsequently distributed to partners of such
holder, which have not been resold by such partners.
19
<PAGE>
(b) When shares of Preferred Stock are counted together with
shares of Conversion Stock or shares of Common Stock, shares of Preferred Stock
shall be counted on an as-converted into Common Stock basis, and the term
"Conversion Stock" shall mean only the shares of Common Stock which have been
issued pursuant to conversion of Preferred Stock.
14. Amendment.
---------
(a) Except as expressly provided herein, any provision of this
Agreement may be amended or the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities then
outstanding or deemed to be outstanding subject to or enjoying the rights under
the provisions being amended or waived. Any amendment or waiver effected in
accordance with this Section 14(a) shall be binding upon each Investor and each
Holder of Registrable Securities at the time outstanding or deemed to be
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and the Company.
(b) Any provision of Section 9 of this Agreement may be amended
or the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of 66 2/3% of Preferred and Conversion
Stock then outstanding or deemed to be outstanding. Any amendment or waiver
effected in accordance with this Section 14(b) shall be binding upon each
Investor and each holder of Registrable Securities at the time outstanding or
deemed to be outstanding (including securities into which such securities are
convertible), each future holder of all such securities, and the Company.
15. Governing Law. This Agreement and the legal relations between the
-------------
parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of California. The parties hereto agree to submit to
the jurisdiction of the federal and state courts of the State of California with
respect to the breach or interpretation of this Agreement or the enforcement of
any and all rights, duties, liabilities, obligations, powers, and other
relations between the parties arising under this Agreement.
16. Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties regarding the matters set forth
herein. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon the successors, assigns,
heirs, executors and administrators of the parties hereto.
17. Notices. All notices and other communications required or
-------
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery to the party to be notified, or upon receipt if delivered
by confirmed facsimile transmission or by overnight delivery using a nationally
recognized courier service, or three (3) days after deposit with the United
States mail, by registered or certified mail, postage prepaid, addressed (a) if
to an Investor, at such Investor's address as set forth on the Schedule of
Investors attached hereto, or at such other address as such Investor shall have
furnished to the Company in writing in accordance with this Section 17, (b) if
to any other holder of Preferred Stock or Conversion Stock, at such
20
<PAGE>
address as such holder shall have furnished the Company in writing in accordance
with this Section 17, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder thereof who has so
furnished an address to the Company, or (c) if to the Company, at its principal
office.
18. Attorneys' Fees. In the event that any suit or action is
---------------
instituted to enforce any provision in this Agreement, the prevailing party
shall be entitled to all costs and expenses of maintaining such suit or action,
including reasonable attorney's fees.
19. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
20. Warrant Holders. Notwithstanding any other term of this
---------------
Agreement, a holder of any warrants outstanding to purchase shares of the
Company's Series A Preferred Stock or Series B Preferred Stock, upon the
Company's receipt of a fully executed signature page to this Agreement from such
holder on or after the date first written above, shall become a party to this
Agreement with the same effect as though it had executed this Agreement on and
as of the date first written above; provided that (i) such holder shall be a
--------
party to this Agreement only for purposes of Sections 1, 2, 5.2, 5.4 through
5.9, 5.11, 11, and 13 through 19 of this Agreement, and (ii) such holder
specifically shall not be a party for purposes of any other section of this
---------
Agreement.
21. Effectiveness. This Agreement will only become effective (a) upon
-------------
the Initial Closing, as that term is defined in the Purchase Agreement, and (b)
its execution and delivery by the parties listed on the signature pages attached
hereto. Upon the effectiveness of this Agreement, this agreement shall be
binding upon each party to this Agreement, including, without limitation, those
parties that are not signatories to the Amended and Restated Investor Rights
Agreement. This Agreement will terminate if such Initial Closing has not been
effected on or before November 30, 1999.
21
<PAGE>
IN WITNESS WHEREOF, this Agreement is hereby executed as of the date
first above written.
COMPANY:
GETTHERE.COM
By: /s/ Kenneth Pelowski
-------------------------------------
Kenneth Pelowski,
Chief Operating Officer and
Chief Financial Officer
Address: GetThere.com
445 Sherman Avenue
Palo Alto, CA 94306
Attn: Kenneth Pelowski
INVESTORS:
COVIA LLC
By: /s/ Frederic F. Brace
-------------------------------------
Frederic F. Brace,
Vice President
Address: c/o United Air Lines, Inc.
World Headquarters - WHQLD
P.O. Box 66100
Chicago, IL 60666
Attn: General Counsel
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
U.S. Venture Partners V, L.P.
USVP V International, L.P.
2180 Associates Fund V, L.P.
USVP V Entrepreneur Partners, L.P.
By: Presidio Management Group V, L.L.C.
Its: General Partner
By: /s/ Michael P. Maher
-------------------------------------
Name: Michael P. Maher
-----------------------------------
Title: Attorney-In-Fact
----------------------------------
Address: U.S. Venture Partners
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94025
Attn: Michael P. Maher
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
BRENTWOOD ASSOCIATES VII, L.P.
By: Brentwood VII Ventures, L.P.
Its: General Partner
By: /s/ Jeffrey D. Brody
-------------------------------------
Jeffrey D. Brody,
General Partner
Address: Brentwood Associates
3000 Sand Hill Road
Building 1, Suite 260
Menlo Park, CA 94025
Attn: Jeffrey D. Brody
BRENTWOOD AFFILIATES FUND, L.P.
By: Brentwood VII Ventures, L.P.
Its: General Partner
By: /s/ Jeffrey D. Brody
-------------------------------------
Jeffrey D. Brody,
General Partner
Address: Brentwood Associates
3000 Sand Hill Road
Building 1, Suite 260
Menlo Park, CA 94025
Attn: Jeffrey D. Brody
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
ITN JOINT VENTURE,
a California Joint Venture
By: Ambassadors International, Inc.,
a Joint Venturer
By: /s/ John A. Ueberroth
--------------------------------------
John A. Ueberroth,
President
Address: c/o Contrarian Group
500 Newport Center Drive, Suite 900
Newport Beach, CA 92660
Attn: John A. Ueberroth
AMERICAN EXPRESS TRAVEL
RELATED SERVICES COMPANY, INC.
By: /s/ Anne Busquet
--------------------------------------
Name: Anne Busquet
------------------------------------
Title: President AERS
-----------------------------------
Address: World Financial Center
New York, NY 10285
Attn: Lawrence Kutscher
Tel: (212) 640-1381
Fax: (212) 619-8610
With a copy to:
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, NY 10103
Attn: Martin H. Levenglick
Tele: (212) 506-5325
Fax: (212) 506-5151
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
AMERICA WEST AIRLINES, INC.
By: /s/ Scott Kirby
-------------------------------------
Scott Kirby
Vice President of Revenue Management
Address: America West Airlines, Inc.
Revenue Management
4000 East Sky Harbor Boulevard
Mail Stop CH-VRM
Phoenix, Arizona 85034-3899
Attention: Scott Kirby
With a copy to:
Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, California 94111-3580
Attention: Jamie Chung
AIR CANADA
By: /s/ Paul Brotto
-------------------------------------
Name: Paul Brotto
-------------------------------------
Title: Sr. V.P. Business Development
-------------------------------------
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
MeriTech Capital Partners L.P.
By: MeriTech Capital Associates L.L.C.
its General Partner
By: MeriTech Management Associates L.L.C.
a managing member
By: /s/ Paul Madera
-------------------------------------
Paul Madera, a managing member
MeriTech Capital Affiliates L.P.
By: MeriTech Capital Associates L.L.C.
its General Partner
By: MeriTech Management Associates L.L.C.
a managing member
By: /s/ Paul Madera
-------------------------------------
Paul Madera, a managing member
Address: 428 University Avenue
Palo Alto, California 94301
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
EACH OF THE SIGNATORIES BELOW IS A PARTY TO
THIS AGREEMENT ONLY FOR PURPOSES OF SECTIONS 1,
2, 5.2, 5.4 THROUGH 5.9, 5.11, 11, AND 13
THROUGH 19 OF THIS AGREEMENT, AND SPECIFICALLY
NOT FOR ANY OTHER SECTION OF THIS AGREEMENT:
---
[PHOENIX LEASING, INC.]
By:
----------------------------------
[NAME]
[TITLE]
Address:
--------------------------------------
--------------------------------------
--------------------------------------
Attn:
---------------------------------
[COMDISCO, INC.]
By:
-----------------------------------
[NAME]
[TITLE]
Address:
--------------------------------------
--------------------------------------
--------------------------------------
Attn:
---------------------------------
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
[IMPERIAL BANK]
By:
-----------------------------------
[NAME]
[TITLE]
Address:
--------------------------------------
--------------------------------------
--------------------------------------
Attn:
---------------------------------
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
<PAGE>
SCHEDULE A
----------
SCHEDULE OF INVESTORS
Covia LLC
c/o United Air Lines, Inc.
World Headquarters - WHQLD
P.O. Box 66100
Chicago, IL 60666
Attn: General Counsel
U.S. Venture Partners V, L.P.
USVP V International, L.P.
2180 Associates Fund V, L.P.
USVP V Entrepreneur Partners, L.P.
c/o U.S. Venture Partners
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94025
Attn: Michael P. Maher
Brentwood Associates VII, L.P.
Brentwood Affiliates Fund, L.P.
c/o Brentwood Associates
3000 Sand Hill Road
Building 1, Suite 260
Menlo Park, CA 94025
Attn: Jeffrey D. Brody
Norwest Equity Partners V
c/o Norwest Venture Capital
245 Lytton Avenue, Suite 250
Palo Alto, CA 94301
Charter Ventures II, L.P.
525 University Avenue, Suite 1500
Palo Alto, CA 94301
Attn: A. Barr Dolan
Bayview Investors Ltd.
c/o Robertson Stephens & Co.
555 California Street
San Francisco, CA 94104
S-1
<PAGE>
ITN Joint Venture
c/o Contrarian Group
500 Newport Center Drive, Suite 900
Newport Beach, CA 92660
Attn: John A. Ueberroth
Hambrecht 1980 Revocable Trust
c/o W.R. Hambrecht & Co., LLC
550 Fifteenth Street
San Francisco, CA 94103
Attn: Sharon Smith
W.R. Hambrecht & Co., LLC
550 Fifteenth Street
San Francisco, CA 94103
Attn: Sharon Smith
American Express Travel Related
Services Company, Inc.
American Express Tower
World Financial Center
New York, NY 10285
Attn: Lawrence Kutscher
Gadi Maier
c/o GetThere.Com
445 Sherman Avenue
Palo Alto, CA 94306
Meritech Capital Partners L.P.
428 University Avenue
Palo Alto, CA 94301
Meritech Capital Affiliates L.P.
428 University Avenue
Palo Alto, CA 94301
America West Airlines, Inc.
Revenue Management
4000 East Sky Harbor Boulevard
Mail Stop CH-VRM
Phoenix, AZ 85034-3899
Air Canada
S-2
<PAGE>
Each of the entities listed below is a party to this Agreement only for purposes
----
of Sections 1, 2, 5.2, 5.4 through 5.9, 5.11, 11, and 13 through 19 of this
Agreement, and specifically not for any other section of this Agreement:
---
[Phoenix Leasing, Inc.]
- -------------------------------------
- -------------------------------------
- -------------------------------------
Attn:
--------------------------------
[Comdisco, Inc.]
- -------------------------------------
- -------------------------------------
- -------------------------------------
Attn:
--------------------------------
[Imperial Bank]
- -------------------------------------
- -------------------------------------
- -------------------------------------
Attn:
--------------------------------
S-3
<PAGE>
AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
This AMENDMENT NO. 1 to the Amended and Restated Investor Rights
Agreement (the "Investor Rights Agreement") dated September 14, 1999, by and
among GetThere.com, a California corporation (the "Company") and the persons and
entities listed on Schedule A thereto, each of which is herein referred to as an
----------
"Investor," and to the Amended and Restated Shareholders Agreement (the
"Shareholders Agreement") dated September 14, 1999, by and among the Company,
the Founders (as defined in the Shareholders Agreement) and the Investors (as
defined in the Shareholders Agreement) is entered into by the Company, the
Founders, and the Investors whose names are set forth on the signature pages
hereto.
WITNESSETH:
WHEREAS, the parties hereto are parties to the Investor Rights
Agreement and the Shareholders Agreement;
WHEREAS, the parties hereto desire to amend the Investor Rights
Agreement to add Eastern Air Lines, Inc. as a party to the Investor Rights
Agreement and the Shareholders Agreement; and
WHEREAS, for purposes of amending said agreements, the undersigned:
(i) with respect to the Investor Rights Agreement, constitute the holders of
sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities (as
defined in the Investor Rights Agreement) and (ii) with respect to the
Shareholders Agreement, hold the number of shares required under Section 15(f)
of the Shareholders Agreement.
NOW, THEREFORE, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, agree as follows:
ARTICLE I
Amendment to the Investor Rights Agreement
1. The definition of `Preferred Stock' under Section 1 is hereby
amended to add the following language at the end of the paragraph:
", (vi) shares of Common Stock of the Company issued upon
conversion of that certain convertible promissory note issued to
Eastern Air Lines, Inc. by the Company on July 15, 1999."
<PAGE>
2. Section 5.3(a) is hereby amended to add the following language at
the end of the section:
"Provided, however, that if the Holder requesting that the
Company file a registration statement on Form S-3 pursuant to this Section 5.3
is Eastern Air Lines, Inc. and such request covers all securities of the Company
held by Eastern Air Lines, Inc., then the Two Million Dollar ($2,000,000)
threshhold set forth above shall not apply to such request, although all other
requirements and limitations of this Section 5.3 shall remain in full force and
effect with regard to such request."
ARTICLE II
Amendment to Shareholders Agreement
1. The Shareholders Agreement is hereby amended to add Eastern Air
Lines, Inc. as an `Investor' to the Shareholders Agreement.
Miscellaneous
1. Except as amended by this Amendment, all terms and provisions of
the Investor Rights Agreement and Shareholders Agreement continue in full force
and effect and unchanged and are hereby confirmed in all respects.
2. This Amendment may be signed in multiple counterparts, each of
which shall be an original, with the same effect as if the signatures were upon
the same instrument.
2
<PAGE>
EXHIBIT 4.2
===============================================================================
COMMON STOCK [LOGO OF GETTHERE.COM] COMMON STOCK
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE SEE REVERSE FOR CERTAIN
IN NEW YORK, NY OR RIDGEFIELD PARK, NJ DEFINITIONS AND A STATEMENT
AS TO THE RIGHTS,
PREFERENCES, PRIVILEGES AND
RESTRICTIONS ON SHARES
CUSIP 374266 10 4
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK,
$0.0001 PAR VALUE PER SHARE, OF
GetThere.com, Inc.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
[CORPORATE SEAL OF GETTHERE.COM, INC.]
/s/ Kenneth R. Pelowski /s/ Gadi Maier
SECRETARY PRESIDENT AND CHIEF
EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
================================================================================
<PAGE>
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights as established, from time to time, by the Certificate of
Incorporation of the Corporation and by any certificate of determination, the
number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge
from the Secretary of the Corporation at the principal office of the
Corporation.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED
THE CORPORATION WILL REQUIRE A BOND INDEMNITY AS A CONDITION TO THE ISSUANCE OF
A REPLACEMENT CERTIFICATE.
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
TEN ENT - as tenants by the entireties
JP TEN - as joint tenants with right of survivorship and not as tenants
in common
COMM PROP - as community property
UNIF GIFT MIN ACT-....................Custodian....................
(Cust) (Minor)
under Uniform Gifts to Minors Act.................
(State)
UNIF TRF MIN ACT- ....................Custodian (until age..........)
(Cust)
...........................under Uniform Transfers
(Minor)
to Minors Act.....................................
(State)
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 TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the common stock represented by the within Certificate,
and do hereby irrevocably 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 ____________________________
X__________________________________
X__________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By_________________________________
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 MEDALLION GUARANTEE PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
EXHIBIT 5.1
October 19, 1999
GetThere.com, Inc.
4045 Campbell Avenue
Menlo Park, CA 94025
Re: Registration Statement on Form S-1
----------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 (File No. 333-
87161) originally filed by GetThere.com, Inc. (the "Company") with the
Securities and Exchange Commission (the "Commission") on September 15, 1999, as
thereafter amended or supplemented (the "Registration Statement"), in connection
with the registration under the Securities Act of 1933, as amended, of up to
5,750,000 shares of the Company's Common Stock (the "Shares"). The Shares,
which include an over-allotment option granted by the Company to the
Underwriters to purchase up to 750,000 additional shares of the Company's Common
Stock, are to be sold to the Underwriters by the Company as described in the
Registration Statement for resale to the public. As your counsel in connection
with this transaction, we have examined the proceedings taken and are familiar
with the proceedings proposed to be taken by you in connection with the sale and
issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares being sold by the Company and upon completion of the proceedings being
taken in order to permit such transactions to be carried out in accordance with
the securities laws of the various states where required, the Shares being sold
by the Company, when issued and sold in the manner described in the Registration
Statement and in accordance with the resolutions adopted by the Board of
Directors of the Company, will be legally and validly issued, fully paid and
non-assessable.
We consent to the use of this opinion as an exhibit to said Registration
Statement and further consent to the use of our name wherever appearing in said
Registration Statement, including the prospectus constituting a part thereof,
and in any amendment or supplement thereto.
Very truly yours,
/s/ GUNDERSON DETTMER STOUGH VILLENEUVE FRANKLIN & HACHIGIAN, LLP
-------------------------------------------------------------
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
<PAGE>
EXHIBIT 10.19
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (the "Agreement") is
made and entered into as of this 14th day of September, 1999 by and among
GetThere.com, a California corporation (the "Company"); Daniel Whaley and Bruce
Yoxsimer (together with Al Whaley, each a "Founder" and collectively, the
"Founders"); Richard D.C. Whilden ("Whilden"); those purchasers of Series A
Preferred Stock of the Company who are signatories to this Agreement
(collectively, the "Series A Investors"); those purchasers of Series B Preferred
Stock of the Company who are signatories to this Agreement (collectively, the
"Series B Investors"); United Air Lines, Inc., a Delaware corporation
("United"); Covia LLC, a Delaware limited liability company and a wholly owned
subsidiary of United ("Covia"), and those purchasers of Series C Preferred
Stock, Series D3 Preferred Stock and Series E Preferred Stock who are
signatories to this Agreement (collectively, the "Series E Investors" and
together with the Founders, Whilden, the Series A Investors, the Series B
Investors, United and Covia, the "Investors").
RECITALS
--------
WHEREAS, the Company, the Founders, the Series A Investors, the Series
B Investors and United possess voting and other rights granted pursuant to that
certain Amended and Restated Shareholders Agreement dated May 10, 1998 by and
between the Company, the Founders, the Series A Investors, the Series B
Investors, United and Covia (the "Prior Agreement") entered into in connection
with that certain Series C Preferred Stock, Warrant and Option Purchase
Agreement dated May 10, 1998 by and between the Company and Covia (the "Series C
Agreement");
WHEREAS, each of the Founders is the owner of that number of shares of
Common Stock of the Company ("Common Stock") set forth opposite such Founder's
name on the Schedule of Shareholders attached hereto as Schedule A (the
"Shares"); ----------
WHEREAS, Whilden is the owner of that number of shares of Common Stock
set forth opposite his name on the Schedule of Shareholders attached hereto as
Schedule A;
- ----------
WHEREAS, the Company sold and issued an aggregate of 3,705,991 shares
of the Series A Preferred Stock of the Company ("Series A Preferred Stock") to
Series A Investors pursuant to the Series A Agreement and each of the Series A
Investors is the owner of that number of shares of Series A Preferred Stock set
forth opposite such Series A Investor's name on the Schedule of Shareholders
attached hereto as Schedule A;
----------
WHEREAS, the Company sold and issued an aggregate of 3,914,448 shares
of the Series B Preferred Stock of the Company ("Series B Preferred Stock")
pursuant to the Series B Agreement and subsequently granted warrants exercisable
for an aggregate of 391,445 shares of Series B Preferred Stock to the Series B
Investors, and each of the Series B Investors is the owner of that number of
shares of and warrants exercisable for that number of shares of Series B
Preferred Stock set forth opposite such Series B Investor's name on the Schedule
of Shareholders attached hereto as Schedule A;
----------
- --------
[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
WHEREAS, the Company sold and issued to Covia, subject to the terms of
the Series C Agreement, (i) 4,060,875 shares (together with the securities to be
purchased by Covia pursuant to the Purchase Agreement, as defined below, the
"Covia Shares") of the Series C Preferred Stock of the Company ("Series C
Preferred Stock"), (ii) a warrant (the "Warrant") exercisable for up to 807,698
shares of Series C Preferred Stock, (iii) an option (the "Option") exercisable
for (A) up to 2,473,392 shares of Series C Preferred Stock or (B) a warrant that
is in turn exercisable for up to 2,473,392 shares of Series C Preferred Stock
(the "Option Warrant"), and (iv) an option (the "Series D Option") to purchase
Series D1 Preferred Stock and Series D2 Preferred Stock;
WHEREAS, the Company desires to issue and sell to the Series E
Investors, subject to the terms of the Preferred Stock and Warrant Purchase
Agreement of even date herewith (the "Purchase Agreement"), (i) One (1) share of
its Series D3 Preferred Stock (the "Series D3 Preferred"); (ii) up to One
Million Three Hundred Seventy-Five Thousand Four Hundred Twenty-Three
(1,375,423) shares of its Series C Preferred Stock (the "Series C Preferred");
(iii) up to Five Million Forty-One Thousand Seventy-Six (5,041,076) shares of
its Series E Preferred Stock (the "Series E Preferred"); (iv) warrants
exercisable for up to Two Million One Hundred Sixty Thousand Forty-Six
(2,160,046) shares of Series E Preferred Stock, (v) warrants exercisable for
Three Hundred Seventy-Five Thousand (375,000) shares of Common Stock, and (vi)
warrants exercisable for up to One Million One Hundred Thirty-Six Thousand Eight
Hundred Twenty-One (1,136,821) shares of Series C Preferred Stock (together with
the warrants exercisable for Series E Preferred Stock and the warrants
exercisable for Common Stock, the "Warrants");
WHEREAS, the Company and the Series E Investors intend that the
Series E Investors become a party to this Agreement upon the purchase of the
Series C Preferred Stock, the Series D3 Preferred Stock, the Series E Preferred
Stock and the Warrants at the closing under the Purchase Agreement (the
"Closing");
WHEREAS, in order to induce the Company to sell the Series C Preferred
Stock, the Series D3 Preferred Stock and the Series E Preferred Stock and to
induce the Series E Investors to invest funds in the Company by purchasing the
Series C Preferred Stock, the Series D3 Preferred Stock, Series E Preferred
Stock and the Warrants under the Purchase Agreement, the Founders, the Company,
the Series A Investors, the Series B Investors, United and Covia, desire to
amend and restate all rights granted to them under the Prior Agreement, and to
replace the Prior Agreement in its entirety as set forth herein;
WHEREAS, the Series E Investors and the Company have agreed, pursuant
to the Purchase Agreement, to enter into this Agreement to set forth their
agreement and understandings with respect to the matters set forth herein; and
WHEREAS, the Amended and Restated Articles of Incorporation of the
Company provide that, prior to the conversion of all outstanding shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series E Preferred Stock into Common Stock pursuant to the provisions of Section
5 thereof, at each annual or special meeting called for the purpose of electing
directors of the Company, (i) two (2) members of the Board of Directors shall be
elected by the holders of Series A Preferred Stock, voting as a separate class
(for
2
<PAGE>
purposes of this Agreement, each a "Series A Board Seat" and collectively the
"Series A Board Seats"); (ii) one (1) member of the Board of Directors shall be
elected by the holders of the Series B Preferred Stock, voting as a separate
class (for purposes of this Agreement, the "Series B Board Seat"); (iii) one (1)
member of the Board of Directors shall be elected by the holders of the Common
Stock, voting as a separate class (for purposes of this Agreement, the "Founder
Board Seat"); (iv) two (2) members of the Board of Directors shall be elected by
the holders of the Common Stock and Preferred Stock, voting together as a single
class (for purposes of this Agreement, each a "Class Board Seat" and
collectively, the "Class Board Seats"); (v) if and for so long as a share of
Series D1 Preferred Stock remains outstanding, one (1) member of the Board shall
be elected by the holder of the Series D1 Preferred Stock, voting as a separate
class (the "Series D1 Board Seat"), provided that if no share of Series D1
Preferred Stock remains outstanding, then one (1) member of the Board of
Directors shall be elected by the holders of the Common Stock, Series A
Preferred Stock and Series B Preferred Stock, voting together as a single class
(for purposes of this Agreement, the "Outside Director Seat"); (vi) if and for
so long as a share of Series D2 Preferred Stock remains outstanding, one (1)
member of the Board shall be elected by the holder of the Series D2 Preferred
Stock (the "Series D2 Board Seat"); and (vii) for so long as a share of Series
D3 Preferred Stock remains outstanding, one (1) member of the Board shall be
elected by the holder of the Series D3 Preferred Stock, voting as a separate
class (for purposes of this Agreement the "Series D3 Board Seat");
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
AGREEMENT
---------
1. Board of Directors.
------------------
a. At each annual or special meeting of the shareholders of the
Company at which directors are to be elected or in each written consent of the
shareholders of the Company to be obtained in lieu of any such meeting, the
Founders, Whilden, the Series A Investors, the Series B Investors, United,
Covia, and the Series E Investors (as such terms are defined in Section 14
below, and for purposes of this Agreement, each a "Voting Party" and
collectively, the "Voting Parties"), hereby agree to vote that number of shares
of the capital stock of the Company as to which they have beneficial ownership
as of the time of the record date for such election, that is sufficient to, and
shall take all other actions necessary to, elect and appoint to the Board of
Directors of the Company (the "Board") the following persons: (i) two (2)
members to fill the Series A Board Seats as shall be designated by the consent
of a majority of the shares of Series A Preferred Stock (or shares of Common
Stock acquired upon conversion thereof) held by the Series A Investors; (ii) one
(1) member to fill the Series B Board Seat as shall be designated by the consent
of a majority of the shares of Series B Preferred Stock (or shares of Common
Stock acquired upon conversion thereof) held by the Series B Investors; (iii)
one (1) member to fill the Founder Board Seat as shall be designated by the
consent of a majority of the shares of Common Stock held by the Founders; (iv)
subject to Section 1(k) below and subject to American Express Company or
American Express Travel Related Services, Inc. (collectively, "AmEx") notifying
the Company and the Board that AmEx wishes to fill the Series D3 Board Seat
pursuant to Section 1(l) below, one (1) member to fill the Series D3 Board Seat
as shall be designated by the holder of the share of Series D3 Preferred Stock,
which designee shall
3
<PAGE>
initially be Jonathan Linen and thereafter, if at all, an executive officer of
AmEx serving in a business operations capacity and on the Policy and Planning
Committee of American Express Company (or a comparable successor committee); (v)
the person then serving as the duly appointed Chief Executive Officer of the
Company to fill one (1) of the Class Board Seats; (vi) one (1) member to fill
the second Class Board Seat as shall be designated by the consent of a majority
of the shares of Common Stock and Preferred Stock (or shares of Common Stock
acquired upon conversion thereof) held by the Voting Parties, such shares voting
together as one class, not as separate classes or series, and on an as-converted
basis; (vii) subject to Section 1(c) below, one (1) member, designated by Covia,
to fill the Outside Director Seat that is an independent industry representative
or a representative of a strategic partner of the Company that is, for so long
as Covia (and/or a United Related Party) hold(s) at least 2,434,287 shares of
Common Stock Equivalents (as the terms "United Related Party" and "Common Stock
Equivalents" are defined in Section 15(h) below), satisfactory to United and
that is, in any event, designated by the consent of both (A) a majority of the
Common Stock held by the Founders and Whilden, voting together as a separate
class, and (B) a majority of the Series A Preferred Stock and Series B Preferred
Stock (or shares of Common Stock acquired upon conversion thereof) held by the
Series A Investors and Series B Investors, respectively, voting together as a
separate class; and (viii) subject to Covia exercising the Series D Option, one
(1) member, designated by Covia, to fill the Series D1 Board Seat and one (1)
member, designated by Covia, to fill the Series D2 Board Seat. For purposes of
this Section 1, any determination or designation to be made by the consent of a
majority of the shares of Series A Preferred Stock or Series B Preferred Stock
held by the Series A Investors or Series B Investors, respectively, either by
voting together as a class with other series of Preferred Stock or by voting as
a separate series, shall be made by the consent of Series A Investors or Series
B Investors, as the case may be, holding a majority of the shares of Common
Stock issued or issuable upon conversion of such shares of Series A Preferred
Stock or Series B Preferred Stock, respectively, and any determination or
designation by such majority shall be binding on the remaining Series A
Investors or Series B Investors, respectively. Any determination or designation
to be made by the consent of a majority of the shares of Common Stock held by
the Founders, voting as a separate class, shall be made by the consent of the
Founder or Founders holding a majority of the shares of Common Stock held by all
of the Founders, and any determination or designation by such majority shall be
binding on the remaining Founder or Founders.
b. As of the time of the Initial Closing:
(i) the initial appointees of the Series A Investors under
subsection 1(a)(i) shall be Jeffrey D. Brody and John Ueberroth;
(ii) the initial appointee of the Series B Investors under
subsection 1(a)(ii) shall be Dale J. Vogel;
(iii) the initial appointee of the Founders under subsection
1(a)(iii) shall be Daniel Whaley;
(iv) the initial AmEx Board Observer (as defined below) shall
be Jonathan Linen;
4
<PAGE>
(v) the Chief Executive Officer of the Company appointed under
subsection 1(a)(v) shall be Gadi Maier;
(vi) the initial member elected under subsection 1(a)(vi) shall
be Richard D.C. Whilden; and
(vii) the initial member elected under subsection 1(a)(vii)
shall be William R. Hambrecht.
c. The terms of subsection (vii) (but not subsections (i) through
(vi)) of Section 1(a) above shall terminate in their entirety and be of no
further force or effect immediately upon the earlier to occur of (i) such time
as Covia purchases Series D1 Preferred Stock or Series D2 Preferred Stock of the
Company by exercising the Series D Option in accordance with the terms and
conditions thereof or (ii) a Section 12(e) Termination Event (as defined in
Section 12(e) below).
d. Any of the directors elected to the Board pursuant to the terms
hereof and serving in such capacities may be removed from the Board in the
manner allowed by law and in accordance with the Company's Articles of
Incorporation and Bylaws and this Agreement, at any time with or without cause
or for any reason or no reason, but with respect to a director designated
pursuant to subsections 1(a)(i) through 1(a)(vii) above, only upon the vote or
written consent of the shareholders entitled to designate such director. Nothing
in this Agreement in any way modifies or terminates the "at will" nature of the
relationship of any director, officer, employee of, or consultant or other
service provider to, the Company.
e. In the event that any director elected to the Board pursuant to
the terms hereof ceases for any reason to serve as a member of the Board, the
Company and each of the Voting Parties agree to take all such action as is
reasonable and necessary within fifteen (15) days thereafter, including the
voting of all shares of capital stock of the Company by each of the Voting
Parties as to which they have beneficial ownership, to cause the election or
appointment of such other substitute person to the Board in accordance with the
agreements set forth in this Section 1. The Company shall promptly give each of
the Voting Parties written notice of any election to or appointment of, or
change in composition of, the Board.
f. Subject to the provisions of Section 2 below, the Company and
each of the Voting Parties agree not to take any actions which would materially
and adversely affect the provisions of this Agreement or the intentions of the
parties with respect to the composition of the Board as herein stated.
g. Notwithstanding the foregoing, all of the provisions of this
Section 1 shall terminate in their entirety and be of no further force or effect
on the date upon which the Company consummates (i) a consolidation or merger of
the Company with or into any other corporation or corporations in which the
shareholders of the Company immediately prior to such transaction(s) own, as a
result of such transaction(s), less than a majority of the voting securities of
the successor or surviving corporation immediately thereafter, or (ii) a sale of
all or substantially all of the assets or business of the Company in one or more
related transactions (such events referred to herein collectively as a "Sale of
the Company").
5
<PAGE>
h. Notwithstanding the foregoing, upon the earlier to occur of (i)
the date upon which the Company or a parent of the Company consummates a sale of
securities pursuant to a registration statement filed by the Company under the
Securities Act of 1933, as amended (the "Act"), in connection with the firm
commitment underwritten offering of its securities to the general public (an
"Initial Public Offering") or (ii) the date upon which the Company first becomes
subject to the periodic reporting requirements of Section 12(g) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (a "Reporting
Company Event"), the following provisions will apply:
(i) Sections 1(a) through 1(e) shall terminate in their
entirety and be of no further force or effect;
(ii) For so long as Covia (and/or a United Related Party)
hold(s) at least 3,651,430 shares of Common Stock Equivalents (as defined in
Section 15(h) below) and has not purchased Series D1 Preferred Stock or Series
D2 Preferred Stock of the Company by exercising the Series D Option in
accordance with the terms and conditions thereof, the Company shall, for each
annual or special meeting of shareholders at which directors are to be elected,
use its best efforts to nominate for election to the Company's Board of
Directors one (1) person that is an independent industry representative or a
representative of a strategic partner of the Company that is satisfactory to
United, provided that the Company receives a written notice setting forth the
name(s) of any such person satisfactory to United, signed by an authorized
officer of United, at least fifteen (15) days prior to the record date set for
any such meeting of shareholders.
(iii) Notwithstanding the foregoing, Section 1(h)(ii) shall
terminate in its entirety and be of no further force or effect immediately upon
the earlier to occur of (A) such time as Covia purchases Series D1 Preferred
Stock or Series D2 Preferred Stock of the Company by exercising the Series D
Option in accordance with the terms and conditions thereof, (B) such time as
Covia (and/or a United Related Party) no longer hold(s) at least 3,651,430
shares of Common Stock Equivalents or (C) a Section 12(e) Termination Event.
i. The director designated under subsection 1(a)(iv) shall be
entitled to serve on the Executive Committee of the Board, if any. The directors
filling the Series D1 Board Seat and the Series D2 Board Seat, if any, shall be
entitled to serve on the Executive Committee of the Board, if any. The director
designated under subsection 1(h)(ii), if any, shall be entitled to serve on the
Executive Committee of the Board, if any.
j. The Company reserves the right to withhold information from the
director designated under subsection 1(a)(iv) and to request such director to
recuse himself or herself from any Board or Committee meeting or portion thereof
upon a request made by a majority of the remainder of the Board, such request
being a reasonable, good faith decision made with due deliberation by such
majority and the basis for which decision has been communicated in writing to
such director and to AmEx prior to the request for recusal.
k. Notwithstanding anything to the contrary herein, the terms of
subsection (iv) (but not subsections (i) through (iii) or subsections (v)
through (vii)) of Section 1(a), Section 1(i) and Section 2(b) shall terminate in
their entirety and be of no further
6
<PAGE>
force or effect, and the term of office of the director designated under
subsection 1(a)(iv), if any, shall terminate, immediately upon the earlier to
occur of (A) such time as no shares of Series D3 Preferred Stock remain
outstanding, (B) the date that the holder thereof transfers the Series D3
Preferred, except to an AmEx Related Party of the holder (as defined in the
Amended and Restated Articles of Incorporation of the Company), (C) beginning
with the first day of the second financial quarter following the commencement of
sales by American Express Travel Related Services Company, Inc. pursuant to the
Web Services and Travel Agreement between the Company and American Express
Travel Related Services Company, Inc. (the "Commercial Agreement"), on the last
day of any subsequent three consecutive financial quarters during which AmEx's
sales of the Company's products and services pursuant to the Commercial
Agreement to the Global 950 (as defined in the Commercial Agreement) total less
than twenty five percent (25%) in such three consecutive financial quarter
period of AmEx's total sales of on-line products and services similar to those
provided by the Reservation System (as defined in the Commercial Agreement) to
new accounts (i.e. accounts not previously under contract with AmEx for the
provision of on-line products and services similar to those provided by the
Reservation System) within the Global 950, (D) eighteen (18) months following
the closing of the Company's offer and sale of its securities in a firm
commitment underwritten public offering or (E) the date of the consummation of a
Liquidation of the Company, as defined in Article III(B)(3)(c) above. In
addition to (A) through (E), above, the terms of subsection (iv) (but not
subsections (i) through (iii) or subsections (v) through (vii)) of Section 1(a),
Section 1(i) and Section 2(b) shall terminate in their entirety and be of no
further force or effect, and the term of office of the director designated under
subsection 1(a)(iv), if any, shall terminate (i) if and only if the Company
consummates an initial public offering of its securities on or before the later
of (x) December 31, 1999, or (y) the consummation of the next bona fide sale of
securities of the Company to investors in an arms-length transaction with gross
aggregate proceeds to the Company of at least $10,000,000 (in each case the "Pay
to Play Date"), on the date that the holder of the share of Series D3 Preferred
Stock holds a percentage of the Common Stock of the Company (calculated assuming
(1) the conversion of all then-outstanding Preferred Stock into Common Stock,
(2) the issuance of the number of shares of Common Stock issuable upon
conversion of the securities issuable upon exercise of outstanding warrants to
purchase securities of the Corporation held by the holder of the share of Series
D3 Preferred Stock and (3) the issuance of all shares of Common Stock issuable
upon the exercise of all options vested as of such date exercisable for shares
of the Company's Common Stock) equal to less than the difference of (x) the
percentage of the Common Stock of the Company held by the holder of the share of
Series D3 Preferred Stock immediately after the consummation of the IPO minus
(y) 1.0% or (ii) if the Company does not consummate an initial public offering
of its securities on or before the Pay to Play Date, on the date that the holder
of the share of Series D3 Preferred Stock holds a percentage of the Common Stock
of the Company (calculated assuming (1) the conversion of all then-outstanding
Preferred Stock into Common Stock, (2) the issuance of the number of shares of
Common Stock issuable upon conversion of the securities issuable upon exercise
of outstanding warrants to purchase securities of the Corporation held by the
holder of the share of Series D3 Preferred Stock and (3) the issuance of all
shares of Common Stock issuable upon the exercise of all options vested as of
such date exercisable for shares of the Company's Common Stock) equal to less
than the difference of (x) the percentage of the Common Stock of the Company
held by the holder on the AmEx Subsequent Closing Date (as
7
<PAGE>
defined in the Series D3 and Series E Preferred Stock and Warrant Purchase
Agreement) minus (y) 1.0%.
-----
l. So long as AmEx holds shares of Series D3 Preferred Stock, AmEx
shall have the right to request the Company and the Board, by written
notification setting forth the identity of the AmEx Board designee, to fill the
Series D3 Board Seat with such designee of AmEx. Upon such notification, the
Company shall use its best efforts to cause the Board to appoint the AmEx
designee to fill the Series D3 Board Seat and the Board shall use its best
efforts effect such appointment.
m. In the event of the automatic conversion of the Series D1, Series
D2 or Series D3 Preferred into Common Stock pursuant to the Amended and Restated
Articles of Incorporation of the Company, the director(s) serving as director(s)
appointed by the holders of such converted Series D1, Series D2 or Series D3
Preferred shall immediately thereafter be treated as directors elected pursuant
to Article III.B.6(b)(ix) of such Amended and Restated Articles of
Incorporation.
2. Board Observers.
---------------
a. United Board Observer.
---------------------
(i) For so long as Covia (and/or a United Related Party) hold(s)
at least 3,651,430 shares of Common Stock Equivalents (as defined in Section
15(h) below) and has not purchased Series D1 Preferred Stock or Series D2
Preferred Stock of the Company by exercising the Series D Option in accordance
with the terms and conditions thereof, the Company shall invite United to send
at United's own expense one (1) representative of United (the "United Board
Observer") to attend, in a nonvoting observer capacity, each meeting of its
Board of Directors; provided, however, that United and the United Board Observer
shall agree to hold in confidence and trust and to act in the same fiduciary
manner required of members of the Company's Board of Directors with respect to
all information provided and opportunities disclosed or described in connection
with or at such meetings (collectively, "United Fiduciary Obligations"); and,
provided further, that the Company reserves the right to withhold any
information and to exclude the United Board Observer from any meeting or portion
thereof if the Company reasonably believes access to such information or
attendance at such meeting or portion thereof could adversely affect the
attorney-client privilege between the Company and its counsel. United agrees,
and any United Board Observer will agree, to hold in confidence and trust and
not use or disclose any confidential information provided to or learned by it
thereby, and such obligations and the United Fiduciary Obligations described
above will survive any termination of this Section 2 or this Agreement.
(ii) The rights (but not the obligations) of United under this
Section 2 shall not be assignable and shall terminate as to United and the
United Board Observer and be of no further force or effect immediately upon the
earlier to occur of:
(A) such time as Covia purchases Series D1 Preferred Stock
or Series D2 Preferred Stock of the Company by exercising the Series D Option in
accordance with the terms and conditions thereof;
8
<PAGE>
(B) the Sale of the Company; or
(C) a Section 12(e) Termination Event.
b. AmEx Board Observer.
-------------------
(i) Subject to Section 1(k) and so long as the Series D3 Board
Seat has not yet been filled with an AmEx Board designee pursuant to Section
1(l), the Company shall invite AmEx to send at AmEx's own expense one (1)
representative of AmEx who shall initially be Jonathan Linen and thereafter, if
at all, an executive officer of AmEx serving in a business operations capacity
and on the Policy and Planning Committee of American Express Company (or a
comparable successor committee) (the "AmEx Board Observer") to attend, in a
nonvoting observer capacity, each meeting of its Board of Directors; provided,
however, that AmEx and the AmEx Board Observer shall agree to hold in confidence
and trust and to act in the same fiduciary manner required of members of the
Company's Board of Directors with respect to all information provided and
opportunities disclosed or described in connection with or at such meetings
(collectively, "AmEx Fiduciary Obligations"); and, provided further, that the
Company reserves the right to withhold any information and to request such AmEx
Board Observer to recuse himself or herself from any Board or Committee meeting
or portion thereof upon a request made by a majority of the Board, such request
being a reasonable, good faith decision made with due deliberation by such
majority and the basis for which decision has been communicated in writing to
such AmEx Board Observer and to AmEx prior to the request for recusal. AmEx
agrees, and any AmeEx Board Observer will agree, to hold in confidence and trust
and not use or disclose any confidential information provided to or learned by
it thereby, and such obligations and the AmEx Fiduciary Obligations described
above will survive any termination of this Section 2 or this Agreement.
(ii) The rights (but not the obligations) of AmEx under this
Section 2 shall not be assignable and shall terminate as to AmEx and the
AmExBoard Observer and be of no further force or effect immediately upon the
earlier to occur of:
(A) the Sale of the Company;
(B) a Section 4(e) Termination Event as defined in the
Standstill and Bring Along Agreement by and among the Company and the Series E
Investors, dated as of the date hereof (the "Standstill Agreement"); or
(C) the date on which a neutral, third-party arbitrator
mutually chosen by the Company and by AmEx or a court of law with proper
jurisdiction determines that the AmEx Board Observer unreasonably refused to
recuse himself or herself from any meeting of the Company's Board of Directors
or a committee thereof following a request for recusal made by a majority of the
remainder of the Board, such request being a reasonable, good faith decision
made with due deliberation by such majority and the basis for which decision has
been communicated in writing to such AmEx Board Observer and to AmEx prior to
the request for recusal.
3. Reserved.
--------
9
<PAGE>
4. Reserved.
--------
5. Reserved.
--------
6. Changes in Stock. If, from time to time during the term of this
----------------
Agreement:
a. there is a dividend of any security, stock split or other change
in the character or amount of any of the outstanding securities of the Company,
or
b. there is any consolidation or merger of the Company with or into
any other entity immediately following which shareholders of the Company hold
more than 50% of the voting equity securities of the surviving corporation,
provided that each of the shareholders of the Company immediately prior to any
such transaction (or series of related transactions) holds the same pro rata
share of such majority of the voting equity securities of the surviving
corporation as each held of the Company immediately prior to such transaction
(or series of related transactions)
then, in any of such events, any and all new, substituted or additional
securities or other property to which any Founder is entitled by reason of his
ownership of the Shares shall be immediately subject to the provisions of this
Agreement and be included in the word "Shares" for all purposes of this
Agreement with the same force and effect as the Shares presently subject to this
Agreement and with respect to which such securities or property were
distributed.
7. Legends. All stock certificates of the parties hereto representing
-------
any shares of Common Stock or Preferred Stock subject to the provisions of this
Agreement shall have endorsed thereon a legend to substantially the following
effect:
"THE VOTING RIGHTS OF, AND THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN RESTRICTIONS AS SET FORTH IN AN AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT. A COPY OF SUCH AGREEMENT IS ON FILE AT THE CORPORATION'S
PRINCIPAL PLACE OF BUSINESS AND ITS REGISTERED OFFICE."
8. Transferees.
-----------
a. All transferees or assignees of shares of capital stock of the
Company from the Founders, Whilden, the Investors or any other party to this
Agreement shall be bound by and subject to all of the terms and conditions of
this Agreement and, by execution of an Adoption Agreement substantially in the
form attached hereto as Schedule D and in accordance with the terms of Section
----------
15(c), shall become a party to this Agreement with the same effect as though it
had executed this Agreement on the date first written above.
b. Notwithstanding Section 8(a) above, all rights and obligations
hereunder with respect to any shares of capital stock of the Company held by the
Founders, Whilden, the Investors or any other party to this Agreement shall
terminate as to such shares and be of no further force or effect immediately
upon the sale of such shares following an Initial Public Offering or Reporting
Company Event pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or under Rule 144 promulgated thereunder.
10
<PAGE>
c. Upon the sale by the Company of Common Stock or Preferred
Stock to any Investor or other investor, including, without limitation, the
issuance of shares of Series E Preferred Stock upon exercise of the Warrants and
the issuance of shares of Series C Preferred Stock upon exercise of the Warrant,
the Option, the Option Warrant or the Exchange Warrant (as defined in Section 13
below), or the issuance of any exercisable, convertible or exchangeable
securities issued upon exercise thereof, each holder of such shares of Preferred
Stock shall, by execution of an Adoption Agreement substantially in the form
attached hereto as Schedule D and in accordance with the terms of Section 15(c),
----------
but without any further action required on the part of the Company, the
Founders, Whilden, the Investors or any other party to this Agreement, become a
party to this Agreement and shall thereafter hold any shares of Common Stock or
Preferred Stock held by such person subject to all of the terms, conditions and
rights set forth in this Agreement.
9. Reserved.
--------
10. Veto Rights.
-----------
a. Subject to Section 10(b) below, the Company shall not,
without first obtaining the written consent of United, take any of the following
actions:
(i) effect a Sale of the Company at any time prior to
August 10, 1999;
(ii) appoint any new Chief Executive Officer, Chief
Operating Officer or Vice President of Product Development (or such other
employee with principal responsibility for product development) of the Company
at any time prior to August 10, 1999, provided that such consent of United shall
not be unreasonably withheld or delayed by United; or
(iii) issue any shares of capital stock of the Company
for equity financing purposes to any entity identified on the Non-Approved
Investors List attached hereto as Schedule B (each entity to be hereinafter
----------
referred to as a "Non-Approved Investor" and collectively as the "Non-Approved
Investors") at any time before the earlier to occur of an Initial Public
Offering or August 10, 2000.
b. Notwithstanding the foregoing, such United veto rights
described in this Section 10 will expire in their entirety and be of no further
force and effect immediately upon the earlier to occur of:
(i) such time as the commercial relationship between
the Company and United, as evidenced by the Services Agreement (United Contract
140401) between United and the Company dated November 20, 1997 or any successor
agreement thereto or any new commercial agreement between United and the Company
entered into following the date hereof (collectively, the "Commercial
Relationship"), is terminated either (A) by the Company for United's non-
performance of its obligations under the terms and conditions of the Commercial
Relationship, or (B) by United at any time without cause; or
(ii) such time as Covia (and/or a United Related Party)
no longer owns the Minimum Equity Interest (as defined in Section 15(h) below).
11
<PAGE>
c. Subject to Section 10(d) below, the Company shall not,
without first obtaining the written consent of AmEx, issue any shares of capital
stock of the Company for equity financing purposes to any entity identified on
the Non-Approved AmEx Investors List attached hereto as Schedule E (each entity
----------
to be hereinafter referred to as a "Non Approved AmEx Investor" and collectively
as the "Non Approved AmexEx Investors") at any time before the earlier to occur
of an Initial Public Offering or August 10, 2000.
d. Notwithstanding the foregoing, such AmEx veto rights
described in this Section 10(c) will expire in their entirety and be of no
further force and effect immediately upon such time as the commercial
relationship between the Company and American Express Travel Related Services
Company, Inc., as evidenced by the Web Services and Travel Agreement by and
between the Company and American Express Travel Related Services Company, Inc.,
dated the date hereof, or any successor agreement thereto or any new commercial
agreement between American Express Travel Related Services Company, Inc. and the
Company entered into following the date hereof (collectively, the "AmEx
Commercial Relationship") is terminated.
11. Bring Along Provision upon a Sale of the Company.
------------------------------------------------
a. In the event that a Sale of the Company (as defined above)
is approved by (A) the Board of Directors of the Company, (B) the holders of a
majority of the then-outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, and Common Stock (including, for
purposes of such majority approval, any shares of Common Stock or Preferred
Stock issuable upon exercise of any warrants for such stock then held by Covia,
giving effect to such shares as though Covia had exercised such warrants and
such shares were outstanding on the date of such approval) voting together as a
single class, not as separate classes or series, and on an as-converted basis,
and (C) if applicable, Covia, pursuant to Section 10 hereof, then, each of the
Voting Parties (excluding AmEx solely for the purposes of this Section 11)
hereby agree to:
(i) vote that number of shares of the capital stock of
the Company as to which they have beneficial ownership as of the time of the
record date for such Sale of the Company;
(ii) not exercise any dissenters' rights under
applicable law at any time for such Sale of the Company;
(iii) refrain from transferring any securities of the
Company, the acquirer, or any other applicable company during any period
prohibited by then applicable "pooling of interests" accounting treatment rules,
whether before or after the Sale of the Company, provided that such period of
restriction prior to the closing of a Sale of the Company shall not exceed one
hundred twenty (120) days; and
(iv) after receiving proper notice of such meeting
("Meeting Notice"), be present, in person or by proxy, along with any of their
respective affiliated entities, as holders of shares of voting securities, at
all meetings of shareholders of the Company to vote on the approval of a Sale of
the Company so that all shares of voting securities beneficially
12
<PAGE>
owned by such shareholders and/or their affiliated entities may be counted for
the purposes of determining the presence of a quorum at such meetings.
b. Notwithstanding the foregoing, Covia shall only be subject
to the terms and conditions of Section 11(a) after the earlier to occur of:
(i) such time as the Commercial Relationship is
terminated either (A) by the Company for United's non-performance of its
obligations under the terms and conditions of the Commercial Relationship, or
(B) by United at any time without cause; or
(ii) August 10, 2000;
and further provided that in the event of a Sale of the Company to a
Covia Non-Approved Investor set forth on Schedule B attached hereto, Covia shall
----------
have the right and option, in Covia's sole discretion, to elect to abstain from
voting in favor of a Sale of the Company to such buyer and shall not be required
to be present, in person or by proxy, along with any of their respective
affiliated entities, as holders of shares of voting securities as otherwise
required by Section 11(a)(iv) above.
12. Ownership and Control Restrictions.
----------------------------------
a. Standstill and Control Agreement. Notwithstanding any other
--------------------------------
provision of this Agreement or the rights of first refusal held by any Investor
under that certain Amended and Restated Investor Rights Agreement dated of even
date herewith (the "Investor Rights Agreement"), without the prior approval of
an executive officer of the Company, each party to this Agreement (excluding
AmEx solely for the purposes of this Section 12), and any entity which becomes a
party to this Agreement pursuant to Sections 8(a), 8(c), or 15(c) hereof or
otherwise, including each of their respective affiliates or associates (in
either case as defined in Rule 12b-2 of the 1934 Act) (each a "Standstill
Investor" and collectively, the "Standstill Investors") covenant and agree that
they will not (and each party and its affiliates or associates will not assist
or encourage any other party to), directly or indirectly:
(i) acquire or agree, offer, seek or propose to
acquire, cause to be acquired or commence any tender or exchange offer seeking
to acquire beneficial ownership (as defined in Rule 13d-3 of the 1934 Act,
without regard to the 60 day provision in paragraph (d)(1)(i) thereof) of any
securities of the Company entitled to vote with respect to the election of any
directors of the Company ("Voting Securities"), any securities convertible into,
exchangeable for, or exercisable for, or that may become any Voting Securities
or any other right to acquire Voting Securities (such Voting Securities and
rights to acquire Voting Securities are collectively referred to herein as
"Securities"), if after such acquisition the Securities then beneficially owned
by such Standstill Investor represent more than such Standstill Investor's
Threshold Percentage (as set forth in Schedule A attached hereto) of the
----------
Company's then outstanding Securities (assuming the conversion, exchange and/or
exercise of all convertible, exchangeable and exercisable Securities); provided,
however, that any Standstill Investor shall be permitted to commence a tender or
exchange offer seeking to acquire beneficial ownership (as defined in Rule 13d-3
of the 1934 Act, without regard to the 60 day provision in paragraph (d)(1)(i)
thereof) of all, but not less than all, of the then outstanding shares of
capital stock of the
13
<PAGE>
Company so long as each holder of any capital stock has the right to tender or
exchange any of the capital stock held by them to such Standstill Investor at
the same price and on the same terms as any other holder of any capital stock;
or
(ii) make, or in any way participate, in any
solicitation of proxies or consents with respect to any Voting Securities,
become a "participant" in any "election contest" (as such terms are defined or
used in Rule 14a-11 under the 1934 Act) with respect to the Company in each
case, in opposition to any proxy solicitation subject to such Rule 14a-11 being
conducted by the Company (providing that the foregoing shall not prohibit any
communication not amounting to a solicitation of proxies); or call or attempt to
call any meeting of the shareholders of the Company for the purpose of
proposing, nominating or supporting for election to the Board of Directors of
the Company or vote or cause to be voted any Voting Securities in favor of: (A)
any persons other than as contemplated to be elected pursuant to the terms of
----------
Section 1, provided and to the extent that such section is still in full force
and effect, or pursuant to the voting rights of the Series D1 Preferred Stock,
Series D2 Preferred Stock or Series D3 Preferred Stock of the Company, if any
shares of each or all are then outstanding; or (B) if subsequent to the Initial
Public Offering of the Company, any persons whose nominations have not been
approved by a majority of the Board of Directors of the Company except for that
----------
number of persons that would constitute the same percentage (the "Board
Representation Percentage") or any lesser percentage of the total authorized
number of directors of the Company to be elected at the Company's next special
or annual meeting of shareholders (an "Election of Directors") as the percentage
obtained by dividing (x) the aggregate number of Securities outstanding and held
by such Standstill Investor as of the record date for such Election of Directors
by (y) the aggregate number of Securities of the Company outstanding as of the
record date for such Election of Directors; provided that, for purposes of this
-------------
calculation, (i) if such Standstill Investor's Board Representation Percentage
would entitle such Standstill Investor to propose, nominate or support for
election to the Board of Directors a total number of persons that either
includes a fractional number of persons or is a fractional number that is less
than one (1) person, then such total number shall be rounded to the nearest
whole number of persons or to zero (0) persons, respectively and (ii) such total
number shall be reduced by the sum of (x) the number of persons that is to be
elected under subsection 1(a)(vii), provided that such subsection is still in
full force and effect, or that United or Covia may nominate or support for
election to the Board of Directors of the Company pursuant to the voting rights
of the Series D1 Preferred Stock or Series D2 Preferred Stock of the Company, if
either or both are then outstanding and (y) the number of persons that is to be
elected under subsection 1(a)(iv) pursuant to the voting rights of the Series D3
Preferred Stock of the Company, if such Series D3 Preferred Stock is then
outstanding.
(iii) enter into any arrangements, agreements or
understandings or substantive discussions or substantive negotiations with any
third party with respect to any of the matters described in paragraphs (i) or
(ii) of this Section 12(a) with respect to the Company.
b. Notice of Voting Securities Purchases and Sales. Each
-----------------------------------------------
Standstill Investor shall advise the Company pursuant to the terms of Section
15(g) as to its plans to acquire or dispose of beneficial ownership of Voting
Securities, or rights thereto, reasonably in advance of any such action.
14
<PAGE>
c. Acts in Concert with Others. No Standstill Investor shall
---------------------------
join a partnership, limited partnership, syndicate or other group, or otherwise
act in concert with any third person, for the purpose of acquiring, holding,
voting or disposing of Voting Securities, or rights thereto.
d. Other Standstill Agreements. The Company covenants that it
---------------------------
will not enter into any other standstill agreement with any party containing
terms more favorable to such party than the terms of this Section 12.
e. Termination. The provisions of this Section 12 shall
-----------
terminate upon delivery to the Company of a written notice, signed by an officer
of United, setting forth the reason for such termination and the applicable
termination provisions of this Agreement, at any time following the earlier to
occur of (such termination referred to as a "Section 12(e) Termination Event"):
(i) May 10, 2001;
(ii) the breach of this Section 12 by any of the parties
hereto other than United or Covia (provided that the party which committed such
breach shall remain subject to the terms of subsections 12(a) through 12(d)
hereof), unless such breach is unintentional and is cured within ten (10)
business days from the date that such breach first becomes known to the Company
(provided that the provision of such opportunity to cure does not prejudice or
hinder the right of any other party hereto); or
(iii) such time as any corporation, partnership,
individual, trust, unincorporated association, or other entity or "person" (as
defined in Section 13(d)(3) of the 1934 Act), other than a party hereto (a
"Third Party"), shall have:
(a) commenced, or publicly announced an intention
to commence, a tender offer or exchange offer for any shares of any class of
capital stock of the Company, the consummation of which would result in
"beneficial ownership" (as defined under the 1934 Act) by such Third Party
(together with all such Third Party's "affiliates" and "associates" (as such
terms are defined in the 1934 Act)) of fifteen percent (15%) or more of the
capital stock of the Company (as measured on a fully diluted basis, assuming the
conversion, exercise or exchange of any of the then outstanding securities
convertible, exercisable or exchangeable for, or any other rights to acquire
shares of, capital stock of the Company) (collectively, for purposes of this
Section 12(e), the "Capital Stock"), or of ten percent (10%) or more of the
Capital Stock if such Third Party is a Non-Approved Investor (as defined in
Section 10 above);
(b) acquired beneficial ownership of shares of any
class of capital stock of the Company which, when aggregated with any shares of
any class of capital stock of the Company already owned by such Third Party, its
affiliates and associates, would result in the aggregate beneficial ownership by
such Third Party, its affiliates and associates of fifteen percent (15%) or more
of the Capital Stock (or ten percent (10%) or more of the Capital Stock if such
Third Party is a Non-Approved Investor), provided that such Third Party (except
for a Third Party that is a Non-Approved Investor) has also filed a Schedule 13D
with the
15
<PAGE>
Securities and Exchange Commission in which it reserves the right to acquire or
hold the Company's securities with a purpose or effect of changing or
influencing control of the Company or in connection with or as a participant in
any transaction having that purpose or effect;
(c) filed a Notification and Report Form under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, reflecting an
intent to acquire all or substantially all of the Company's assets;
(d) acquired all or substantially all of the
assets of the Company;
(e) entered into an agreement with the Company
which contemplates (A) the Sale of the Company or (B) the acquisition of (x) all
or substantially all of the assets of the Company by such Third Party or (y)
beneficial ownership of fifteen percent (15%) or more of the Capital Stock by
such Third Party if such Third Party has not also entered into a standstill
agreement with the Company containing terms that are at least as restrictive to
such party as the terms of this Section 12;
(f) solicited "proxies" in a "solicitation"
subject to the proxy rules under the 1934 Act, executed any written consent or
become a "participant" in any "solicitation" (as such terms are defined in
Regulation 14A under the 1934 Act), in opposition to any proxy solicitation
being conducted by the Company, in each case with respect to any class of
capital stock of the Company;
(g) publicly announced a proposal or intention to
undertake any of the actions enumerated in the foregoing subsections (a) through
(f);
(h) entered into substantive negotiations or
substantive discussions with the Board of Directors of the Company, or with an
executive officer of the Company, with the knowledge of at least four (4) of the
members of the Company's Board of Directors, concerning any of the actions
enumerated in the foregoing subsections (a) through (f); or
(iv) a Section 4(e) Termination Event as set forth in
the Standstill Agreement.
13. Repurchase of Covia Shares. Provided that Covia's percentage ownership
--------------------------
interest of any Voting Securities of the Company does not then exceed the 24.9%
Limit (as defined below), as soon as practicable but at least fifteen (15) days
prior to the Company's repurchasing or redeeming any of the then outstanding
shares of capital stock of the Company or taking any similar action (a
"Triggering Action"), the effect of which would cause Covia to hold in excess of
twenty-four and nine-tenths percent (24.9%) of all of the then outstanding
Voting Securities of the Company (such percentage ownership limit referred to
herein as the "24.9% Limit"), the Company shall provide written notice (the
"Triggering Notice") to United of its intent to take such action and,
thereafter, the Company shall, upon the written request of United (the
"Repurchase Request") and subject to compliance with all applicable laws,
repurchase from Covia at a repurchase price of $.01 per share and in exchange
for an Exchange Warrant (as
16
<PAGE>
defined below), that number of Covia Shares (or any shares of Common Stock
issued upon conversion of such Covia Shares) (the "Repurchase Shares") necessary
so that Covia's percentage ownership interest of any Voting Securities of the
Company does not exceed the 24.9% Limit; provided that:
a. the closing of the repurchase of the Repurchase Shares
pursuant to this Section 13 shall take place on the date designated by the
Company, which date shall not be later than the date the Triggering Action is
consummated (the "Repurchase Closing Date"). Upon the Repurchase Closing Date,
the Company shall pay the repurchase price for the Repurchase Shares pursuant to
this Section 13 by delivery of a check or wire transfer of funds in the
aggregate amount of the repurchase price for such Repurchase Shares; provided,
however, that in the event that United or Covia is indebted to the Company for
any sums, the total of such sums may be offset by the Company. In addition to
such payment, the Company shall issue to Covia on the Repurchase Closing Date a
warrant to purchase the same number and class (and series, if applicable) of
shares as the Repurchase Shares at a per share exercise price of $0.01 in the
form attached as Exhibit E to the Series C Purchase Agreement (with such
adjustments to the number and class and/or series of shares purchasable under
such form of warrant as are necessary to effect the intent of the foregoing) (an
"Exchange Warrant");
b. in the event that Repurchase Shares are to be repurchased
pursuant to this Section 13, United, Covia and their successors and assigns
covenant and agree that they shall take all steps necessary to deliver to the
Company for cancellation any stock certificate(s) representing the Repurchase
Shares and to obtain all required third-party, governmental and regulatory
consents and approvals and take all other actions necessary to facilitate the
consummation of such repurchase prior to the Repurchase Closing Date;
c. immediately upon the repurchase of the Repurchase Shares
and prior to any later exercise of the Exchange Warrant under the terms thereof,
Covia shall cease to be entitled to any rights of a shareholder with respect to
the Repurchase Shares, including (without limitation) the right to vote such
Repurchase Shares, receive dividends or other distributions thereon, exercise
preemptive rights or be notified of shareholder meetings;
d. notwithstanding the above provisions of this Section 13, in
the event that United does not deliver a Repurchase Request to the Company prior
to the time and date of the Triggering Action set forth in any Triggering
Notice, then the Company shall not have any obligation under this Section 13 to
repurchase any Covia Shares at the time and date that such Triggering Action is
consummated;
e. this Section 13 shall terminate in its entirety and be of
no further force or effect upon a Sale of the Company.
14. Termination. Notwithstanding any other termination provisions
-----------
specifically set forth herein with respect to a specific section or sections of
this Agreement, this Agreement shall terminate in its entirety and be of no
further force or effect upon the earlier to occur of:
a. an agreement to terminate is entered into in writing by:
(i) the Company, (ii) the holders of a majority of the outstanding Shares then
held by the Founders and
17
<PAGE>
Whilden, (iii) the holders of a majority of the Common Stock issued or issuable
upon conversion of Preferred Stock then outstanding and held by the Investors,
(iv) United and (v) AmEx;
b. the Sale of the Company; or
c. May 10, 2008.
15. Miscellaneous.
-------------
a. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California applicable to
contracts made among residents of, and wholly to be performed in, the State of
California.
b. Further Instruments. From time to time, each party hereto
-------------------
shall execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
c. Binding Effect. In addition to any restriction on transfer
--------------
that may be imposed by any other agreement by which any party hereto may be
bound, and except as set forth in Section 15(q) or another section herein, this
Agreement shall be binding upon and shall inure to the benefit of each of the
parties hereto, their respective heirs (if applicable), successors and assigns
and to such additional individuals or entities that may become shareholders of
the Company and that desire to become parties hereto; provided that for any such
transfer of rights and obligations to be effective, such shareholder shall have
executed and delivered an Adoption Agreement substantially in the form attached
hereto as Schedule D (an "Adoption Agreement"). Upon the execution and delivery
----------
of an Adoption Agreement by any transferee of a party to this Agreement or any
shareholder reasonably acceptable to the Company (each, for purposes of this
Section 15(c), a "New Shareholder"):
(i) such New Shareholder shall become a party hereto
with the same effect as though it had executed this Agreement on the date first
written above; and
(ii) in accordance with Section 12 hereof, such New
Shareholder shall be deemed to be a "Standstill Investor" and the Company shall
amend the attached Schedule A, on and as of the date of such Adoption Agreement,
----------
to reflect such New Shareholder's name and Threshold Percentage and/or any other
change resulting from such New Shareholder's ownership interest, including
without limitation any change in the name(s) and/or Threshold Percentage(s) of
any party or parties to this Agreement.
By their execution of this Agreement or any Adoption Agreement, each of the
parties hereto appoints the Company as its attorney-in-fact for the purposes of
executing any Adoption Agreement which may be required to be delivered hereunder
and/or amending Schedule A hereto pursuant to the terms of this Section 15(c).
----------
d. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18
<PAGE>
e. Entire Agreement; Termination of Prior Agreement. This
------------------------------------------------
Agreement shall become effective and shall constitute and contain the entire
agreement of the parties hereto, superseding any and all prior negotiations,
correspondence, understandings and agreements among the parties respecting the
subject matter hereof, and the Prior Agreement shall be terminated and all
rights granted under the Prior Agreement shall be superseded and replaced in
their entirety by the terms set forth herein, upon (A) the execution of this
----
Agreement by (i) the Company, (ii) each of the Founders, (iii) Whilden, (iv) the
holders of a majority of the shares of Common Stock issued or issuable upon
conversion of Preferred Stock then outstanding and held by the Series A
Investors, Series B Investors, Series E Investors and any assignees of such
Investors (as provided for in Section 8 hereof), (iv) United and (v) Covia, and
(B) the Initial Closing (as defined in the Purchase Agreement).
f. Amendments and Waivers. Section 1 of this Agreement may be
----------------------
amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of (i) the Company, (ii) the holders of a majority of the
outstanding Shares then held by the Founders and Whilden, (iii) the holders of a
majority of the Common Stock issued or issuable upon conversion of Preferred
Stock then outstanding and held by the Investors and assignees of the Investors
(as provided for in Section 8 hereof), and (iv) United, if and for so long as
Covia (and/or a United Related Party) hold(s) at least 2,434,287 shares of
Common Stock Equivalents (as defined in Section 15(h) below). Section 2 of this
Agreement may be amended or the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of (i) the Company, (ii) the holders of a majority
of the outstanding Shares then held by the Founders and Whilden, (iii) the
holders of a majority of the Common Stock issued or issuable upon conversion of
Preferred Stock then outstanding and held by the Investors and assignees of the
Investors (as provided for in Section 8 hereof), and (iv) United, if and for so
long as Covia (and/or a United Related Party) hold(s) at least 3,651,430 shares
of Common Stock Equivalents. Sections 6, 7 and 8 of this Agreement may be
amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of (i) the Company, (ii) the holders of a majority of the
outstanding Shares then held by the Founders and Whilden, (iii) the holders of a
majority of the Common Stock issued or issuable upon conversion of Preferred
Stock then outstanding and held by the Investors and assignees of the Investors
(as provided for in Section 8 hereof), and (iv) United, if and for so long as
Covia (and/or a United Related Party) hold(s) the Minimum Equity Interest (as
such term is defined in Section 15(h) below). Sections 10, 11, 12, 13, 14, and
15 of this Agreement may be amended or the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of (i) the Company, (ii) the
holders of a majority of the outstanding Shares then held by the Founders and
Whilden, (iii) the holders of a majority of the Common Stock issued or issuable
upon conversion of Preferred Stock then outstanding and held by the Investors
and assignees of the Investors (as provided for in Section 8 hereof) (excluding,
however, any such Common Stock held by the Series E Investors in connection with
an amendment or waiver of Sections 11 and 12), and (iv) United. Any amendment or
waiver effected in accordance with this Section 15(f) shall be binding upon the
Company, each of the Founders, Series A Investors, Series B Investors, Series E
Investors, Whilden, United, Covia and each holder of Preferred Stock and any
Common Stock issued upon conversion thereof to whom the rights have been
transferred by any Investors in accordance with Section 8 hereof.
Notwithstanding the
19
<PAGE>
foregoing, any amendment or waiver of any section of this Agreement, in addition
to the consents set forth above, also requires the written consent of AmEx.
g. Notices, etc. All notices and other communications required
------------
or permitted hereunder shall be in writing and shall be deemed effectively given
(i) upon personal delivery to the party to be notified, (ii) upon confirmed
electronic facsimile ("fax") transmission to the fax number for any party as
specified below, or (iii) three (3) days after deposit with the United States
mail, by registered or certified mail, postage prepaid, in each case addressed
or faxed (A), if to an Investor, to such Investor's address or fax number, as
the case may be, set forth on the signature pages attached to this Agreement, or
at such other address or fax number, as the case may be, as such Investor shall
have furnished to the Company in writing in accordance with this Section 15(g),
(B), if to any other holder of the Preferred Stock and Common Stock issued upon
conversion thereof to whom any rights under this Agreement have been transferred
in accordance with Sections 8 and 15(c) hereof, to such address or fax number,
as the case may be, as such holder shall have furnished the Company in writing
in accordance with Section 15(c), or, until any such holder so furnishes an
address or fax number to the Company, then to the address or fax number, as the
case may be, of the last holder thereof who has so furnished an address or fax
number to the Company, (C), if to a Founder, to such address or fax number, as
the case may be, as such Founder shall have last furnished the Company in
writing, or (D), if to the Company, to the address or fax number, as the case
may be, of its principal offices.
h. Certain Definitions. For purposes of this Agreement,
-------------------
"United Related Party" shall mean (i) United, (ii) any corporation or limited
liability company directly controlled by, controlling, or under common control
with (to the extent of more than fifty percent (50%) of its issued capital stock
entitled to vote for the election of directors) United, or (iii) any partnership
directly controlled by, controlling, or under common control with (to the extent
of more than fifty percent (50%) of its voting power or otherwise having power
to control its general activities) United, but in each case only for so long as
such ownership or control shall continue. For purposes of this Agreement, "AmEx
Related Party" shall mean (i) any corporation or limited liability company
directly controlled by, controlling, or under common control with (to the extent
of more than fifty percent (50%) of its issued capital stock entitled to vote
for the election of directors) AmEx, or (ii) any partnership directly controlled
by, controlling, or under common control with (to the extent of more than fifty
percent (50%) of its voting power or otherwise having power to control its
general activities) AmEx, but in each case only for so long as such ownership or
control shall continue. For purposes of this Agreement, "Common Stock
Equivalents" shall mean the Company's Common Stock issued or issuable upon
conversion of Series C Preferred Stock of the Company (as adjusted for any
subsequent stock splits, subdivisions, combinations, reclassifications,
reorganizations and the like, and treating all Series C Preferred Stock of the
Company on an as-converted basis and treating all outstanding warrants to
purchase Series C Preferred Stock (or the Common Stock issuable upon conversion
thereof) at a per share exercise price of $0.01 or less held by such holder on
an as-exercised basis). For purposes of this Agreement, the term "Minimum Equity
Interest" shall be defined as follows:
(i) if prior to the consummation of the sale of the
-----
Subsequent Shares (as such term is defined in the Series C Agreement), then
"Minimum Equity Interest"
20
<PAGE>
shall mean that Covia (and/or a United Related Party) hold(s) not less than
ninety percent (90%) of the sum of:
(A) 4,044,297 shares of Series C Preferred Stock
purchased pursuant to the Series C Agreement (or such number of shares of Common
Stock issued upon conversion thereof), less any of such shares repurchased by
the Company pursuant to Section 13 hereof; plus
(B) 807,698 shares of Series C Preferred Stock (or
such number of shares of Common Stock issued or issuable upon conversion
thereof) issued or issuable upon exercise of the Warrant; plus
(C) any shares of Series C Preferred Stock (or
such number of shares of Common Stock issued or issuable upon conversion
thereof) or Common Stock, in either case, issued or issuable upon exercise of
any and all Exchange Warrants originally issued to Covia by the Company pursuant
to Section 13 hereof; plus
(D) any securities (or the number of shares of
Common Stock issued or issuable upon conversion thereof) purchased by Covia
pursuant to the Purchase Agreement, including any securities (or the number of
shares of Common Stock issued or issuable upon conversion thereof) issued or
issuable upon the exercise of warrants issued to Covia pursuant to the Purchase
Agreement.
(ii) if after the consummation of the sale of the
-----
Subsequent Shares (as such term is defined in the Series C Agreement), then
"Minimum Equity Interest" shall mean that Covia (and/or a United Related Party)
hold(s) not less than ninety percent (90%) of the sum of:
(A) 4,060,875 shares of Series C Preferred Stock
purchased pursuant to the Series C Agreement (or such number of shares of Common
Stock issued upon conversion thereof), less any of such shares repurchased by
the Company pursuant to Section 13 hereof; plus
(B) 807,698 shares of Series C Preferred Stock (or
such number of shares of Common Stock issued or issuable upon conversion
thereof) issued or issuable upon exercise of the Warrant; plus
(C) any shares of Series C Preferred Stock (or
such number of shares of Common Stock issued or issuable upon conversion
thereof) or Common Stock, in either case, issued or issuable upon exercise of
any and all Exchange Warrants originally issued to Covia by the Company pursuant
to Section 13 hereof; plus
(D) any securities (or the number of shares of
Common Stock issued or issuable upon conversion thereof) purchased by Covia
pursuant to the Purchase Agreement, including any securities (or the number of
shares of Common Stock issued or issuable upon conversion thereof) issued or
issuable upon the exercise of warrants issued to Covia pursuant to the Purchase
Agreement.
21
<PAGE>
i. Grant of Proxy. Should the provisions of this Agreement be
--------------
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement.
j. Manner of Voting. The voting of shares pursuant to this
----------------
Agreement may be effected in person, by proxy, by written consent, or in any
other manner permitted by applicable law.
k. Stock Splits, Stock Dividends, etc. In the event of any
----------------------------------
issuance of shares of the Company's voting securities hereafter to any of the
Parties hereto (including, without limitation, in connection with any stock
split, stock dividend, recapitalization, reorganization, or the like), such
shares shall become subject to this Agreement and shall be endorsed with the
legend set forth in Section 7.
l. No Liability for Election of Recommended Directors. Neither
--------------------------------------------------
the Company, the Founders, Whilden, the Investors, nor any officer, director,
stockholder, partner, employee or agent of such party, makes any representation
or warranty as to the fitness or competence of the nominee or designee of any
party hereunder to serve on the Company's Board by virtue of such party's
execution of this Agreement or by the act of such party in voting for such
nominee pursuant to this Agreement.
m. Specific Enforcement. It is agreed and understood that
--------------------
monetary damages would not adequately compensate an injured party for the breach
of this Agreement by any party hereto (or the permitted transferees or assignees
of any party hereto that is bound by the provisions of this Agreement), that
this Agreement shall be specifically enforceable, and that any breach or
threatened breach of this Agreement shall be the proper subject of a temporary
or permanent injunction or restraining order. Further, each such party hereto
waives any claim or defense that there is an adequate remedy at law for such
breach or threatened breach.
n. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
o. Voting of Series D1 Preferred Stock, Series D2 Preferred
--------------------------------------------------------
Stock and Series D3 Preferred Stock. In the event that any proposal that has
- -----------------------------------
been approved by the Board of Directors of the Company (the "Board"), other than
a proposal for the express purpose of nominating, electing or removing members
of the Board, is submitted to the shareholders of the Company for approval,
United, Covia and AmEx, and their successors and assigns, hereby agree to:
(i) vote that number of shares of Series D1 Preferred
Stock, Series D2 Preferred Stock or Series D3 Preferred Stock of the Company as
to which they have beneficial ownership as of the time of the record date for
the approval of such proposal;
(ii) not exercise any dissenters' rights under
applicable law at any time regarding such proposal, including, but not limited
to, any proposal regarding a Sale of
22
<PAGE>
the Company, if such right is available to such holder with respect to any
Series D1 Preferred Stock, Series D2 Preferred Stock or Series D3 Preferred
Stock of the Company as to which they have beneficial ownership for the approval
of such proposal;
(iii) refrain from transferring any Series D1 Preferred
Stock, Series D2 Preferred Stock or Series D3 Preferred Stock of the Company as
to which they have beneficial ownership or securities of the acquirer or any
other applicable company during any period prohibited by then applicable
"pooling of interests" accounting treatment rules, whether before or after a
Sale of the Company, provided that any such period of restriction prior to the
closing of a Sale of the Company shall not exceed one hundred twenty (120) days;
and
(iv) after receiving proper notice of such meeting, be
present, in person or by proxy, along with any of their respective affiliated
entities, as holders of shares of voting securities, at all meetings of
shareholders of the Company to vote on the approval of such proposal so that all
shares of Series D1 Preferred Stock, Series D2 Preferred Stock or Series D3
Preferred Stock of the Company as to which they and/or their affiliated entities
have beneficial ownership may be counted for the purposes of determining the
presence of a quorum at such meetings.
p. Share Number Adjustments. Unless otherwise set forth herein,
------------------------
wherever any provision of this Agreement sets forth a specific number of shares
of the Company's Capital Stock (as defined herein), such number shall be
appropriately adjusted upon the occurrence of any stock splits, dividends,
combinations, reclassifications, recapitalizations, reorganizations and the like
with respect to the Company's Capital Stock.
q. Nonassignment of Rights. The rights (but not the
-----------------------
obligations) provided to United and/or Covia herein under Sections 1, 2, 10, 11,
12, 13, 14, and 15, shall not be assignable without the prior, express written
consent of the Company, except in the case of an assignment to a United Related
Party (as defined in Section 15(h) above). The rights (but not the obligations)
provided to AmEx herein under Sections 1, 2, 10, and 15, shall not be assignable
without the prior, express written consent of the Company, except in the case of
an assignment to an AmEx Related Party (as defined in Section 15(h) above).
r. Effectiveness. This Agreement will only become effective for
-------------
the parties hereto upon (a) the Initial Closing, as that term is defined in the
Purchase Agreement, and (b) its execution and delivery by the parties listed on
the signature pages attached hereto. Upon the effectiveness of this Agreement,
this agreement shall be binding upon each party to this Agreement, including,
without limitation, those parties that are not signatories to the Prior
Agreement. This Agreement will terminate if such Initial Closing has not been
effected on or before November 30, 1999.
23
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
COMPANY:
GETTHERE.COM,
a California corporation
By: /s/ Kenneth Pelowski
---------------------------------
Kenneth Pelowski,
Chief Operating Officer and Chief
Financial Officer
Address: GetThere.com
445 Sherman Avenue
Palo Alto, CA 94306
Attn: Kenneth Pelowski
"FOUNDERS":
/s/ Daniel Whaley
- -----------------------------------
DANIEL WHALEY
/s/ Bruce Yoxsimer
- -----------------------------------
BRUCE YOXSIMER
"WHILDEN":
/s/ Richard D.C. Whilden
- -----------------------------------
RICHARD D.C. WHILDEN
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
<PAGE>
UNITED AIR LINES, INC.
By: /s/ Frederic F. Brace
---------------------------------
Frederic F. Brace,
Vice President
Address: World Headquarters - WHQLD
P.O. Box 66100
Chicago, IL 60666
Attn: General Counsel
COVIA LLC
By: /s/ Frederic F. Brace
---------------------------------
Frederic F. Brace,
Vice President
Address: c/o United Air Lines, Inc.
World Headquarters - WHQLD
P.O. Box 66100
Chicago, IL 60666
Attn: General Counsel
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
<PAGE>
U.S. Venture Partners V, L.P.
USVP V International, L.P.
2180 Associates Fund V, L.P.
USVP V Entrepreneur Partners, L.P.
By: Presidio Management Group V, L.L.C.
Its: General Partner
By: /s/ Michael P. Maher
--------------------------------------------
Name: Michael P. Maher
------------------------------------------
Title: Attorney-In-Fact
-----------------------------------------
Address: U.S. Venture Partners
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94025
Attn: Michael P. Maher
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC.
By: /s/ Anne Busquet
--------------------------------------------
Name: Anne Busquet
------------------------------------------
Title: President, AERS
-----------------------------------------
Address: American Express Tower
World Financial Center
New York, NY 10285
Attn: Lawrence Kutscher
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
<PAGE>
BRENTWOOD ASSOCIATES VII, L.P.
By: Brentwood VII Ventures, L.P.
Its: General Partner
By: /s/ Jeffrey D. Brody
------------------------------------------
Jeffrey D. Brody,
General Partner
Address: Brentwood Associates
3000 Sand Hill Road
Building 1, Suite 260
Menlo Park, CA 94025
Attn: Jeffrey D. Brody
BRENTWOOD AFFILIATES FUND, L.P.
By: Brentwood VII Ventures, L.P.
Its: General Partner
By: /s/ Jeffrey D. Brody
------------------------------------------
Jeffrey D. Brody,
General Partner
Address: Brentwood Associates
3000 Sand Hill Road
Building 1, Suite 260
Menlo Park, CA 94025
Attn: Jeffrey D. Brody
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
<PAGE>
ITN JOINT VENTURE,
a California Joint Venture
By: Ambassadors International, Inc.,
a Joint Venturer
By: /s/ John A. Ueberroth
-----------------------------------
John A. Ueberroth,
President
Address: c/o Contrarian Group
500 Newport Center Drive, Suite 900
Newport Beach, CA 92660
Attn: John A. Ueberroth
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
<PAGE>
MeriTech Capital Partners L.P.
By: MeriTech Capital Associates L.L.C.
its General Partner
By: MeriTech Management Associates L.L.C.
a managing member
By: /s/ Paul Madera
--------------------------------------
Paul Madera, a managing member
MeriTech Capital Affiliates L.P.
By: MeriTech Capital Associates L.L.C.
its General Partner
By: MeriTech Management Associates L.L.C.
a managing member
By: /s/ Paul Madera
--------------------------------------
Paul Madera, a managing member
Address: 428 University Avenue
Palo Alto, California 94301
Tel: (650) 330-5472
Fax: (650) 614-4882
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
<PAGE>
AMERICA WEST AIRLINES, INC.
By: /s/ Scott Kirby
--------------------------------
Scott Kirby
Vice President of Revenue Management
Address: America West Airlines, Inc.
Revenue Management
4000 East Sky Harbor Boulevard
Mail Stop CH-VRM
Phoenix, Arizona 85034-3899
Attention: Scott Kirby
With a copy to:
Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, California 94111-3580
Attention: Jamie Chung
AIR CANADA
By: /s/ Paul Brotto
-------------------------------
Name: Paul Brotto
-------------------------------
Title: Sr. V.P. Business Development
-------------------------------
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
<PAGE>
/s/ Al Whaley
- -------------------------------
AL WHALEY
SIGNATURE PAGE TO GETTHERE.COM
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
<PAGE>
SCHEDULE A
----------
SCHEDULE OF SHAREHOLDERS
<TABLE>
<CAPTION>
Number Threshold
Shareholder Class of Shares of Shares* Percentage
----------- --------------- ---------- ----------
<S> <C> <C> <C>
"Founders"
- ----------
Whaley, Al Common Stock 1,000,000 5.11%
Whaley, Daniel Common Stock 1,000,000 5.11%
Yoxsimer, Bruce N. Common Stock 1,000,000 5.11%
"Whilden"
- ---------
Richard D.C. Whilden Common Stock 818,250 4.18%
"Series A Investors"
- --------------------
Brentwood Associates VII, L.P. Preferred Stock 1,985,353 10.15%
ITN Joint Venture Preferred Stock 1,544,163 7.90%
"Series B Investors"
- --------------------
U.S. Venture Partners V, L.P. Preferred Stock 2,385,543 12.20%
USVP V International, L.P. Preferred Stock 132,530 0.68%
2180 Associates Fund V, L.P. Preferred Stock 74,217 0.38%
USVP V Entrepreneur Partners, L.P. Preferred Stock 58,313 0.30%
Brentwood Associates VII, L.P. Preferred Stock 496,988 2.54%
Brentwood Affiliates Fund, L.P. Preferred Stock 66,265 0.34%
"Covia" and/or "United Related Party"
- -------------------------------------
Covia LLC Preferred Stock 4,851,995 30.00%**
</TABLE>
* The term "Shares" includes any and all shares issuable upon exercise of
outstanding warrants to purchase shares of Preferred Stock held by such
Shareholder (assuming, for purposes of this calculation, that the issuance of
the Warrant to Covia is an outstanding warrant).
** This number has been set at 30% and was not calculated using the formula that
was used to determine the Threshold Percentages listed for the other
Shareholders.
S-1
<PAGE>
SCHEDULE B
----------
NON-APPROVED INVESTORS LIST
[*]
- ----------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
S-2
<PAGE>
SCHEDULE D
----------
ADOPTION AGREEMENT
This Adoption Agreement ("Adoption Agreement") is executed by the
undersigned (the "Shareholder") pursuant to the terms of that certain Amended
and Restated Shareholders Agreement dated September 14, 1999 (the "Shareholders
Agreement") by and among GetThere.com, a California corporation (the "Company")
and certain of its shareholders. Capitalized terms used but not defined herein
shall have the respective meanings ascribed to such terms in the Shareholders
Agreement. By the execution of this Adoption Agreement, the Shareholder agrees
as follows:
(a) Acknowledgment. Shareholder acknowledges that Shareholder is
--------------
acquiring certain shares of the capital stock of the Company (the "Stock"),
subject to the terms and conditions of the Shareholders Agreement.
(b) Agreement. Shareholder (i) agrees that the Stock acquired by
---------
Shareholder shall be bound by and subject to the terms of the Shareholders
Agreement, and (ii) hereby adopts the Shareholders Agreement with the same force
and effect as if the Shareholder were originally a party thereto.
(c) Notice. Any notice required or permitted by the Shareholders
------
Agreement shall be given to Shareholder at the address listed beside
Shareholder's signature below.
(d) Share Ownership and Threshold Percentage. For purposes of the
----------------------------------------
Schedule of Shareholders attached as Schedule A to the Shareholders Agreement,
the Shareholder currently owns ______________ shares of the
_____________________________ of the Company and such Shareholder's Threshold
Percentage shall initially be ______________________ percent (____%).
EXECUTED AND DATED this ______ day of _________________, ____.
SHAREHOLDER:
By:
--------------------------------------
Name and Title
Address:
--------------------------------
--------------------------------
Accepted and Agreed on behalf of all the
parties to the Shareholders Agreement:
- -------------------------------------
COMPANY:
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
S-5
<PAGE>
SCHEDULE E
----------
Those entities and individuals that are from time to time listed on Exhibit AA
----------
to the Web Services and Travel Agreement between American Express Travel Related
Services Company, Inc. and the Company, pursuant to Section 10.4 thereof.
S-6
<PAGE>
AMENDMENT NO. 1 TO
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
This AMENDMENT NO. 1 to the Amended and Restated Investor Rights
Agreement (the "Investor Rights Agreement") dated September 14, 1999, by and
among GetThere.com, a California corporation (the "Company") and the persons and
entities listed on Schedule A thereto, each of which is herein referred to as an
----------
"Investor," and to the Amended and Restated Shareholders Agreement (the
"Shareholders Agreement") dated September 14, 1999, by and among the Company,
the Founders (as defined in the Shareholders Agreement) and the Investors (as
defined in the Shareholders Agreement) is entered into by the Company, the
Founders, and the Investors whose names are set forth on the signature pages
hereto.
WITNESSETH:
WHEREAS, the parties hereto are parties to the Investor Rights
Agreement and the Shareholders Agreement;
WHEREAS, the parties hereto desire to amend the Investor Rights
Agreement to add Eastern Air Lines, Inc. as a party to the Investor Rights
Agreement and the Shareholders Agreement; and
WHEREAS, for purposes of amending said agreements, the undersigned:
(i) with respect to the Investor Rights Agreement, constitute the holders of
sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities (as
defined in the Investor Rights Agreement) and (ii) with respect to the
Shareholders Agreement, hold the number of shares required under Section 15(f)
of the Shareholders Agreement.
NOW, THEREFORE, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, agree as follows:
ARTICLE I
Amendment to the Investor Rights Agreement
1. The definition of `Preferred Stock' under Section 1 is hereby
amended to add the following language at the end of the paragraph:
", (vi) shares of Common Stock of the Company issued upon
conversion of that certain convertible promissory note issued to
Eastern Air Lines, Inc. by the Company on July 15, 1999."
<PAGE>
2. Section 5.3(a) is hereby amended to add the following language at
the end of the section:
"Provided, however, that if the Holder requesting that the
Company file a registration statement on Form S-3 pursuant to this Section 5.3
is Eastern Air Lines, Inc. and such request covers all securities of the Company
held by Eastern Air Lines, Inc., then the Two Million Dollar ($2,000,000)
threshhold set forth above shall not apply to such request, although all other
requirements and limitations of this Section 5.3 shall remain in full force and
effect with regard to such request."
ARTICLE II
Amendment to Shareholders Agreement
1. The Shareholders Agreement is hereby amended to add Eastern Air
Lines, Inc. as an `Investor' to the Shareholders Agreement.
Miscellaneous
1. Except as amended by this Amendment, all terms and provisions of
the Investor Rights Agreement and Shareholders Agreement continue in full force
and effect and unchanged and are hereby confirmed in all respects.
2. This Amendment may be signed in multiple counterparts, each of
which shall be an original, with the same effect as if the signatures were upon
the same instrument.
2
<PAGE>
Exhibit 10.20
STANDSTILL AND BRING ALONG AGREEMENT
THIS STANDSTILL AND BRING ALONG AGREEMENT (the "Agreement") is made
and entered into as of this 14th day of September, 1999 by and among
GetThere.com, a California corporation (the "Company") and American Express
Travel Related Services Company, Inc. ("American Express" or the "Series E
Investor").
RECITALS
--------
WHEREAS, the Company desires to issue and sell to the Series E
Investor and other investors, subject to the terms of the Preferred Stock and
Warrant Purchase Agreement of even date herewith (the "Purchase Agreement"), (i)
One (1) share of its Series D3 Preferred Stock (the "Series D3 Preferred"); (ii)
up to One Million Three Hundred Seventy-Five Thousand Four Hundred Twenty-Three
(1,375,423) shares of its Series C Preferred Stock (the "Series C Preferred");
(iii) up to Five Million Forty-One Thousand Seventy-Six (5,041,076) shares of
its Series E Preferred Stock (the "Series E Preferred"); (iv) warrants
exercisable for up to Two Million One Hundred Sixty Thousand Forty-Six
(2,160,046) shares of Series E Preferred Stock, (v) warrants exercisable for
Three Hundred Seventy-Five Thousand (375,000) shares of Common Stock, and (vi)
warrants exercisable for up to One Million One Hundred Thirty-Six Thousand Eight
Hundred Twenty-One (1,136,821) shares of Series C Preferred Stock (together with
the warrants exercisable for Series E Preferred Stock and the warrants
exercisable for Common Stock, the "Warrants"); and
WHEREAS, in order to induce the Company to sell the Shares and the
Warrants and to induce the Series E Investor and other investors to invest funds
in the Company by purchasing the Shares and the Warrants under the Purchase
Agreement, the Company and the Series E Investor have agreed to enter into this
Agreement to set forth their agreement and understandings with respect to the
matters set forth herein at the initial closing under the Purchase Agreement
(the "Closing").
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
AGREEMENT
---------
1. Legends. All stock certificates of the parties hereto
-------
representing any shares of Common Stock or Preferred Stock subject to the
provisions of this Agreement shall have endorsed thereon a legend to
substantially the following effect:
"THE VOTING RIGHTS OF, AND THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN RESTRICTIONS AS SET FORTH IN A STANDSTILL AND BRING ALONG
AGREEMENT. A COPY OF SUCH AGREEMENT IS ON FILE AT THE CORPORATION'S PRINCIPAL
PLACE OF BUSINESS AND ITS REGISTERED OFFICE."
<PAGE>
2. Transferees.
-----------
a. All transferees or assignees of shares of capital stock of the Company
from the Series E Investor or any other party to this Agreement shall be bound
by and subject to all of the terms and conditions of this Agreement and, by
execution of an Adoption Agreement substantially in the form attached hereto as
Schedule B and in accordance with the terms of Section 8(c), shall become a
- ----------
party to this Agreement with the same effect as though it had executed this
Agreement on the date first written above.
b. Notwithstanding Section 2(a) above, all rights and obligations
hereunder with respect to any shares of capital stock of the Company held by the
Series E Investor or any other party to this Agreement shall terminate as to
such shares and be of no further force or effect immediately upon the sale of
such shares following the firm commitment underwritten offering of the Company's
securities to the general public (the "Initial Public Offering") or the date
upon which the Company first becomes subject to the periodic reporting
requirements of Section 12(g) or 15(d) of the Securities Exchange Act of 1934,
as amended (the "1934 Act") pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "1933 Act"), or under Rule 144
promulgated thereunder.
c. Upon the sale by the Company of Common Stock or Preferred Stock to the
Series E Investor or assignee or successor thereof, including, without
limitation, the issuance of shares of Series E Preferred Stock or Common Stock
upon exercise of the Warrants, or the issuance of any exercisable, convertible
or exchangeable securities issued upon exercise thereof, each holder of such
shares of Preferred Stock or Common Stock shall, by execution of an Adoption
Agreement substantially in the form attached hereto as Schedule B and in
----------
accordance with the terms of Section 8(c), but without any further action
required on the part of the Company or the Series E Investor or any other party
to this Agreement, become a party to this Agreement and shall thereafter hold
any shares of Common Stock or Preferred Stock held by such person subject to all
of the terms, conditions and rights set forth in this Agreement.
3. Bring Along Provision upon a Sale of the Company.
------------------------------------------------
a. In the event that a Sale of the Company (as defined below) is approved
by (i) the Board of Directors of the Company and as to which a fairness opinion
has been rendered by a nationally recognized investment banking firm to the
effect that the consideration to be received in the Sale of the Company is fair
to the shareholders of the Company from a financial point of view subject to
customary qualifications, limitations and restrictions and (ii) (x) if prior to
the Initial Public Offering, holders of a majority of the outstanding Common
Stock, Series A Preferred Stock and Series B Preferred Stock, voting together as
a single class, and excluding any shares of Common Stock issued upon conversion
of Series C, Series D1, Series D2, Series D3 or Series E Preferred Stock or (y)
if after the Initial Public Offering, holders of at least thirty percent (30%)
of the then outstanding shares of Common Stock of the Company (excluding any
shares of Common Stock issued or issuable upon conversion of the Series C,
Series D1, Series D2, Series D3 or Series E Preferred Stock), vote in favor of
or consent to such Sale of the Company, the Series E Investor hereby agrees to:
2
<PAGE>
(i) vote that number of shares of the capital stock of the Company
as to which they have beneficial ownership as of the time of the record date for
such Sale of the Company;
(ii) not exercise any dissenters' rights under applicable law at any
time for such Sale of the Company;
(iii) refrain, if required by applicable law, rule or regulation or
accounting principle in order to affect a valid "pooling of interests" business
combination, from transferring any securities of the Company, the acquirer, or
any other applicable company during any period prohibited by then applicable
"pooling of interests" accounting treatment rules after the Sale of the Company,
during the minimum period required by such rules; and
(iv) after receiving proper notice of such meeting ("Meeting
Notice"), be present, in person or by proxy, along with any of their respective
affiliated entities, as holders of shares of voting securities, at all meetings
of shareholders of the Company to vote on the approval of a Sale of the Company
so that all shares of voting securities beneficially owned by such shareholders
and/or their affiliated entities may be counted for the purposes of determining
the presence of a quorum at such meetings.
b. Notwithstanding the foregoing, American Express and any American
Express Entity (as defined below) shall only be subject to the terms and
conditions of Section 3(a) and receive the benefits of Section 3(d) until the
date fifteen and a half (15 1/2) months following the date hereof and provided,
that in the event of a Sale of the Company to an American Express Non-Approved
Buyer set forth on Exhibit A attached hereto, American Express and any
---------
American Express Entity shall have the right and option, in American Express's
sole discretion, to elect to abstain from voting in favor of a Sale of the
Company to such buyer and shall not be required to be present, in person or by
proxy, along with any of their respective affiliated entities, as holders of
shares of voting securities as otherwise required by Section 3(a)(iv) above.
c. A "Sale of the Company" shall mean (i) a consolidation or merger of
the Company with or into any other corporation or corporations in which the
shareholders of the Company immediately prior to such transaction(s) own, as a
result of such transaction(s), less than a majority of the voting securities of
the successor or surviving corporation immediately thereafter, (ii) a
consolidation or merger of the Company with or into any other corporation or
corporations in which a shareholder (or group of affiliated shareholders) of the
Company who owned less than fifty percent (50%) of the outstanding voting
securities of the Company immediately prior to the transaction(s), as a result
of such transaction(s), owns more than fifty percent (50%) of the outstanding
securities of the successor or surviving corporation immediately thereafter;
provided, however, that this clause (ii) shall not be deemed to be a "Sale of
the Company" if the acquiring shareholder is in breach of any standstill or
similar agreement between such shareholder and the Company in connection with
such consolidation or merger, or (iii) a sale of all or substantially all of the
assets or business of the Company in one or more related transactions.
3
<PAGE>
d. Other Bring Along Agreements. The Company shall enter into a
----------------------------
bring along agreement with any person or entity, or group of related persons or
entities (that is not a financial institution acquiring capital stock of the
Company solely for investment purposes and which (with its affiliates) does not
have nor reasonably expects to have any business relationship with the Company
other than as a passive investor), who or which acquire(s) fifteen percent (15%)
or more of the outstanding capital stock of the Company (a "Subsequent Major
Purchaser") in a sale or issuance, or group of related sales or issuances, by
the Company on and after the date hereof (unless such sale or issuance by the
Company is to underwriters in connection with the Company's initial public
offering); provided, however, that if the Company enters into a bring along
agreement with a Subsequent Major Purchaser that is less restrictive than the
bring along agreement in this Section 3, then the Company shall, as a condition
to the issuance of securities to such Subsequent Major Purchaser, amend the
provisions of this Section 3 to be substantially similar to the bring along
provisions applicable to the Subsequent Major Purchaser. If the Company does not
enter into a bring along agreement with a Subsequent Major Purchaser, then this
Section 3 shall terminate and shall be of no further force and effect.
4. Ownership and Control Restrictions.
----------------------------------
a. Standstill and Control Agreement. Notwithstanding any other
--------------------------------
provision of this Agreement or the rights of first refusal held by any Series E
Investor under that certain Amended and Restated Investor Rights Agreement dated
of even date herewith (the "Investor Rights Agreement"), without the prior
approval of an executive officer of the Company or the prior approval of the
Board of Directors of the Company, each party to this Agreement, and any entity
which becomes a party to this Agreement pursuant to Sections 2(a), 2(c) or 6(c)
hereof or otherwise, including each of their respective affiliates or associates
(in either case as defined in Rule 12b-2 of the 1934 Act) (each a "Standstill
Investor" and collectively, the "Standstill Investors") covenant and agree that
they will not (and each party will not knowingly assist or encourage any other
party to), directly or indirectly:
(i) acquire or agree, offer, seek, exercise any option or
propose to acquire, cause to be acquired or commence any tender or exchange
offer seeking to acquire beneficial ownership (as defined in Rule 13d-3 of the
1934 Act, without regard to the 60 day provision in paragraph (d)(1)(i) thereof)
of any securities of the Company entitled to vote with respect to the election
of any directors of the Company ("Voting Securities"), any securities
convertible into, exchangeable for, or exercisable for, or that may become any
Voting Securities or any other right to acquire Voting Securities (such Voting
Securities and rights to acquire Voting Securities are collectively referred to
herein as "Securities"), if after such acquisition the Voting Securities then
beneficially owned by such Standstill Investor represent more than such
Standstill Investor's Threshold Percentage (as set forth in Schedule A
----------
attached hereto) of the Company's then outstanding Voting Securities; provided
that the shares issuable upon exercise or exchange of the AmEx Warrants (as such
term is defined in the Purchase Agreement) shall not be deemed to be "Voting
Securities" unless issued and outstanding upon exercise of the AmEx Warrants;
provided, further, however, that any Standstill Investor shall be permitted to
commence a tender or exchange offer seeking to acquire beneficial ownership (as
defined in Rule 13d-3 of the 1934 Act, without regard to the 60 day provision in
paragraph (d)(1)(i) thereof) of all, but not less than all, of the then
outstanding shares of capital stock of the Company so long as each holder of any
such capital stock has the right to tender or exchange any
4
<PAGE>
of the capital stock held by such holder to such Standstill Investor at the same
price and on the same terms as any other holder of any capital stock; or
(ii) make, or in any way participate, in any solicitation of
proxies or consents with respect to any Voting Securities, become a
"participant" in any "election contest" (as such terms are defined or used in
Rule 14a-11 under the 1934 Act) with respect to the Company in each case, in
opposition to any proxy solicitation subject to such Rule 14a-11 being conducted
by the Company (providing that the foregoing shall not prohibit any
communication not amounting to a solicitation of proxies); or call or attempt to
call any meeting of the shareholders of the Company for the purpose of
proposing, nominating or supporting for election to the Board of Directors of
the Company or vote or cause to be voted any Voting Securities in favor of: (A)
any persons other than as contemplated to be elected pursuant to the terms of
----------
Section 1 of that certain Amended and Restated Shareholders Agreement by and
among the Company and certain shareholders of even date herewith (the
"Shareholders Agreement"), provided and to the extent that such section is still
in full force and effect, or pursuant to the voting rights of the Series D1
Preferred Stock, Series D2 Preferred Stock or Series D3 Preferred Stock of the
Company, if any shares of each or all are then outstanding; or (B) if subsequent
to the Initial Public Offering of the Company, any persons whose nominations
have not been approved by a majority of the Board of Directors of the Company
except for that number of persons that would constitute the same percentage (the
- ----------
"Board Representation Percentage") or any lesser percentage of the total
authorized number of directors of the Company to be elected at the Company's
next special or annual meeting of shareholders (an "Election of Directors") as
the percentage obtained by dividing (x) the aggregate number of Securities
outstanding and held by such Standstill Investor as of the record date for such
Election of Directors by (y) the aggregate number of Securities of the Company
outstanding as of the record date for such Election of Directors; provided that,
-------------
for purposes of this calculation, (i) if such Standstill Investor's Board
Representation Percentage would entitle such Standstill Investor to propose,
nominate or support for election to the Board of Directors a total number of
persons that either includes a fractional number of persons or is a fractional
number that is less than one (1) person, then such total number shall be rounded
to the nearest whole number of persons or to zero (0) persons, respectively and
(ii) such total number shall be reduced by the sum of (x) the number of persons
that is to be elected under subsection 1(a)(vii) of the Shareholders Agreement,
provided that such subsection is still in full force and effect, or that United
Air Lines, Inc. or Covia LLC may nominate or support for election to the Board
of Directors of the Company pursuant to the voting rights of the Series D1
Preferred Stock or Series D2 Preferred Stock of the Company, if either or both
are then outstanding and (y) the number of persons that is to be elected under
subsection 1(a)(iv) of the Shareholders Agreement pursuant to the voting rights
of the Series D3 Preferred Stock of the Company, if such Series D3 Preferred
Stock is then outstanding.
(iii) enter into any arrangements, agreements or substantive
negotiations with any third party with respect to any of the matters described
in paragraphs (i) or (ii) of this Section 4(a) with respect to the Company.
b. Notice of Voting Securities Purchases and Sales. Each
-----------------------------------------------
Standstill Investor shall advise the Company pursuant to the terms of Section
8(g) as to its plans to acquire or dispose of beneficial ownership of Voting
Securities, or rights thereto, reasonably in advance of any such action.
5
<PAGE>
c. Acts in Concert with Others. No Standstill Investor shall join a
---------------------------
partnership, limited partnership, syndicate or other group unaffiliated with
such Standstill Investor, or otherwise act in concert with any third person
unaffiliated with such Standstill Investor, for the purpose of acquiring,
holding, voting or disposing of Voting Securities, or rights thereto.
d. Other Standstill Agreements. The Company shall enter into a
---------------------------
standstill agreement with any Subsequent Major Purchaser in a sale or issuance,
or a group of related sales or issuances, by the Company of securities of the
Company on and after the date hereof (unless such sale or issuance by the
Company is to underwriters in connection with the Company's initial public
offering); provided, however, that if the Company enters into a standstill
agreement with a Subsequent Major Purchaser that is less restrictive than the
standstill agreement in this Section 4, then the Company shall, as a condition
to the issuance of securities to such Subsequent Major Purchaser, amend the
provisions of this Section 4 to be substantially similar to the standstill
provisions applicable to the Subsequent Major Purchaser. If the Company does not
enter into a standstill agreement with a Subsequent Major Purchaser, then this
Section 4 shall terminate and shall be of no further force or effect.
e. Termination. The provisions of this Section 4 shall terminate
-----------
upon the earlier to occur of (such termination referred to as a "Section 4(e)
Termination Event"):
(i) May 10, 2001;
(ii) the breach of this Section 4 by any of the parties hereto
other than American Express (provided that the party which committed such breach
shall remain subject to the terms of subsections 4(a) through 4(d) hereof),
unless such breach is unintentional and is cured within ten (10) business days
from the date that such breach first becomes known to the Company (provided that
the provision of such opportunity to cure does not prejudice or hinder the right
of any other party hereto);
(iii) such time as any corporation, partnership, individual,
trust, unincorporated association, or other entity or "person" (as defined in
Section 13(d)(3) of the 1934 Act), other than a party hereto (a "Third Party"),
shall have:
(a) commenced, or publicly announced an intention to
commence, a tender offer or exchange offer for any shares of any class of
capital stock of the Company, the consummation of which would result in
"beneficial ownership" (as defined under the 1934 Act) by such Third Party
(together with all such Third Party's "affiliates" and "associates" (as such
terms are defined in the 1934 Act)) of twelve and a half percent (12.5%) or more
of the capital stock of the Company (as measured on a fully diluted basis,
assuming the conversion, exercise or exchange of any of the then outstanding
securities convertible, exercisable or exchangeable for, or any other rights to
acquire shares of, capital stock of the Company) (collectively, for purposes of
this Section 4(e), the "Capital Stock") or of ten percent (10%) or more of the
Capital Stock if such Third Party is an American Express Non-Approved Buyer (as
defined in Section 3(b) above) or of thirty percent (30%) or more of the Capital
Stock if such Third Party is United Air Lines, Inc. or any of its affiliates;
6
<PAGE>
(b) acquired beneficial ownership of shares of any class
of capital stock of the Company which, when aggregated with any shares of any
class of capital stock of the Company already owned by such Third Party, its
affiliates and associates, would result in the aggregate beneficial ownership by
such Third Party, its affiliates and associates of twelve and a half percent
(12.5%) or more of the Capital Stock (or ten percent (10%) or more of the
Capital Stock if such Third Party is an American Express Non-Approved Buyer or
thirty percent (30%) or more of the Capital Stock is such Third Party is United
Air Lines, Inc. or any of its affiliates), provided that such Third Party
-------------
(except for a Third Party that is an American Express Non-Approved Buyer) has
also filed a Schedule 13D with the Securities and Exchange Commission in which
it reserves the right to acquire or hold the Company's securities with a purpose
or effect of changing or influencing control of the Company or in connection
with or as a participant in any transaction having that purpose or effect;
(c) filed a Notification and Report Form under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, reflecting an
intent to acquire all or substantially all of the Company's assets;
(d) acquired all or substantially all of the assets of
the Company;
(e) entered into an agreement with the Company which
contemplates (A) the Sale of the Company or (B) the acquisition of (x) all or
substantially all of the assets of the Company by such Third Party or (y)
beneficial ownership of twelve and a half percent (12.5%) or more of the Capital
Stock by such Third Party if such Third Party has not also entered into a
standstill agreement with the Company containing terms that are at least as
restrictive to such party as the terms of this Section 4;
(f) solicited "proxies" in a "solicitation" subject to
the proxy rules under the 1934 Act, executed any written consent or become a
"participant" in any "solicitation" (as such terms are defined in Regulation 14A
under the 1934 Act), in opposition to any proxy solicitation being conducted by
the Company, in each case with respect to any class of capital stock of the
Company;
(g) publicly announced a proposal or intention to
undertake any of the actions enumerated in the foregoing subsections (a) through
(f).
(iv) the occurrence of a Section 12(e) Termination Event (as
defined in the Shareholders Agreement) resulting from other than subsection
12(e)(iii)(h) of the Shareholders Agreement;
(v) notwithstanding the foregoing, the actions enumerated in
the foregoing subsections 4(e)(iii)(a) through 4(e)(iii)(g) and the occurrence
of a Section 12(e) Termination Event shall not constitute a Section 4(e)
Termination Event and the terms of this Section 4 shall continue to apply to the
Company and the parties hereto upon the earlier to occur of (A) the date such
Third Party (as defined herein or the Shareholders Agreement, as applicable)
publicly announces the abandonment or termination of such action or (B) in the
case of an action set forth in subsections (iii)(a), (iii)(c), (iii)(e),
(iii)(f) and (iii)(g) of this Section 4(e) or
7
<PAGE>
subsections (iii)(a), (iii)(c), (iii)(e), (iii)(f) and (iii)(g) of Section 12(e)
of the Shareholders Agreement, forty five (45) days following the initiation of
such action if the transaction contemplated by such action has not closed by
such date; provided, however, that if such transaction is still pending after
the forty-five (45) days following the initiation of such action, then during
the time when such transaction is still pending, this subclause (B) shall not
apply and the actions enumerated in the foregoing subsections shall constitute a
Section 4(e) Termination Event.
f. The Standstill Investor will not be required to
dispose of any Securities, to the extent that the Securities beneficially owned
by such Standstill Investor represent more than such Standstill Investor's
Threshold Percentage, and ownership of such Securities over the Standstill
Investor's Threshold Percentage shall not be deemed to be a violation of this
Agreement, (i) as a result of a recapitalization of the Company or a repurchase,
redemption or exchange of securities of the Company or any other action taken by
the Company and/or (ii) as part of a transaction on behalf of American Express's
Profit Sharing Retirement Plan, 401(k) Savings Plan, or any successor any
additional retirement plans thereto (collectively, the "Retirement Plans") where
the Company's shares in such Retirement Plans are voted by a trustee for the
benefit of American Express employees, and/or (iii) to the extent that such
Securities were purchased subsequent to a Section 4(e) Termination Event and
prior to the reinstatement of this Section 4 pursuant to Section 4(e)(v) hereof.
g. The limitations set forth in Section 4 hereof, (i)
shall not prohibit or apply to any investments made by any American Express
Entity (as defined below) in the ordinary course of its investment advisory,
discretionary money management, asset management, annuity or similar business
now or hereafter conducted or to any investment for the account of customers of
any American Express Entity or made by or for the account of clients of an
American Express Entity or made by or for the account of funds or pools of
assets advised or underwritten by any American Express Entity, (ii) shall not
prohibit or apply to investments by or for the account of any partnerships in
which an American Express Entity has an interest, and (iii) shall not restrict
any American Express Entity from engaging in or providing any banking services
to any third parties, including, without limitation, commercial banking,
correspondent banking, private banking, investment banking, merchant banking or
bridge financing services or any similar services from engaging in or providing
brokerage, dealing or securities advisory activities with respect to securities
of the Company, provided that in each such case that such actions described in
the preceding clauses (i), (ii) and (iii) are not made pursuant to or in
connection with the receipt of information, instruction or control by the Series
E Investor.
h. As used in this Agreement, the term "American Express
Entity" shall include, and the foregoing limitation shall apply only to (i)
American Express and its wholly owned subsidiaries and, only for so long as
American Express Company shall own at least 50% of American Express (ii)
American Express Company and its wholly owned subsidiaries.
5. Right of Notice. The Company shall give written notice
---------------
to American Express at least two (2) business days prior to the execution by the
Company of any letter of intent, no-shop agreement, lock-up or definitive
agreement in connection with a Sale of the Company (the "Proposed Execution"),
and American Express shall have the right and
8
<PAGE>
opportunity to present a competing bid to the duly convened Board of Directors
of the Company at any time during the two (2) business days prior to the
Proposed Execution. The provisions of this Section 5 shall terminate fifteen and
a half (15 1/2) months following the date hereof.
6. Veto Rights.
-----------
a. Subject to Section 6(b) below, the Company shall not, without
first obtaining the written consent of American Express, issue any shares of
capital stock of the Company for equity financing purposes to any American
Express Non-Approved Buyer at any time before the earlier to occur of (i) an
Initial Public Offering, (ii) May 10, 2000, (iii) such time as American Express
and all American Express Entities in the aggregate hold(s) that number of shares
of the Company's outstanding Common Stock and Preferred Stock equal to less than
nine percent (9.0%) of the sum of (x) of the Company's then outstanding Common
Stock and Preferred Stock and (y) shares of Common Stock issuable upon exercise
of all options vested as of such date exercisable for shares of the Company's
Common Stock.
b. Notwithstanding the foregoing, such American Express veto
rights described in this Section 6 will expire in their entirety and be of no
further force and effect immediately upon such time as the commercial
relationship between the Company and American Express, as evidenced by the Web
Services and Travel Agreement by and between the Company and American Express,
dated the date hereof, or any successor agreement thereto or any new commercial
agreement between American Express and the Company entered into following the
date hereof (collectively, the "AmEx Commercial Relationship"), is terminated by
American Express without cause or by the Company following a material breach by
American Express.
c. For purposes of this Section 6 only, American Express shall
be deemed to hold the shares of Preferred Stock or the securities issuable upon
conversion thereof of the Company as set forth in Schedule A of the Purchase
----------
Agreement (excluding any shares issuable upon exercise of the AmEx
Warrants, as defined in the Purchase Agreement) beginning on the Initial Closing
Date (as such term is defined in the Purchase Agreement); provided, however,
that if the AmEx Subsequent Closing (as such term is defined in the Purchase
Agreement) does not occur on or prior to November 30, 1999, then AmEx shall no
longer be deemed to hold such shares for purposes of this Section 6 after
November 30, 1999.
7. Termination. Notwithstanding any other termination provisions
-----------
specifically set forth herein with respect to a specific section or sections of
this Agreement, this Agreement shall terminate in its entirety and be of no
further force or effect upon the earlier to occur of:
a. an agreement to terminate is entered into in writing by: (i)
the Company and (ii) the holders of a majority of the Common Stock issued or
issuable upon conversion of Preferred Stock then outstanding and held by the
Series E Investor;
b. the Sale of the Company; or
c. May 10, 2008.
9
<PAGE>
8. Miscellaneous.
-------------
a. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California applicable to
contracts made among residents of, and wholly to be performed in, the State of
California.
b. Further Instruments. From time to time, each party hereto
-------------------
shall execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
c. Binding Effect. In addition to any restriction on transfer
--------------
of Capital Stock that may be imposed by any other agreement by which any party
hereto may be bound, and except as set forth herein, this Agreement shall be
binding upon and shall inure to the benefit of each of the parties hereto, their
respective heirs (if applicable), successors and assigns and to such additional
individuals or entities that may become shareholders of the Company and that
desire to become parties hereto; provided that for any such transfer of rights
and obligations to be effective, such shareholder shall have executed and
delivered an Adoption Agreement substantially in the form attached hereto as
Schedule B (an "Adoption Agreement"). Upon the execution and delivery of an
- ----------
Adoption Agreement by any transferee of a party to this Agreement or any
shareholder reasonably acceptable to the Company (each, for purposes of this
Section 8(c), a "New Shareholder"):
(i) such New Shareholder shall become a party hereto with the
same effect as though it had executed this Agreement on the date first written
above; and
(ii) in accordance with Section 4 hereof, such New Shareholder
shall be deemed to be a "Standstill Investor" and the Company shall amend the
attached Schedule A, on and as of the date of such Adoption Agreement, to
----------
reflect such New Shareholder's name and Threshold Percentage and/or any other
change resulting from such New Shareholder's ownership interest, including
without limitation any change in the name(s) and/or Threshold Percentage(s) of
any party or parties to this Agreement.
By their execution of this Agreement or any Adoption Agreement, each of the
parties hereto appoints the Company as its attorney-in-fact for the purposes of
executing any Adoption Agreement which may be required to be delivered hereunder
and/or amending Schedule A hereto pursuant to the terms of this Section 8(c).
----------
d. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
e. Entire Agreement; Termination of Prior Agreement. This
------------------------------------------------
Agreement shall become effective and shall constitute and contain the entire
agreement of the parties hereto, superseding any and all prior negotiations,
correspondence, understandings and agreements among the parties respecting the
subject matter hereof, upon (A) the execution of this Agreement by (i) the
----
Company and (ii) the Series E Investors, and (B) the AmEx Subsequent Closing
Date (as defined in the Purchase Agreement); provided, however, that Section 6
hereto
10
<PAGE>
shall become effective upon the fulfillment of (i) and (ii) of this Section 8(e)
and the Initial Closing Date (as defined in the Purchase Agreement).
f. Amendments and Waivers. Any section of this Agreement may
----------------------
be amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and American Express. Any amendment or waiver
effected in accordance with this Section 8(f) shall be binding upon the Company,
American Express and each holder of Preferred Stock and any Common Stock issued
upon conversion thereof to whom the rights have been transferred American
Express in accordance with Section 2 hereof.
g. Notices, etc. All notices and other communications required
------------
or permitted hereunder shall be in writing and shall be deemed effectively given
(i) upon personal delivery to the party to be notified, (ii) upon confirmed
electronic facsimile ("fax") transmission to the fax number for any party as
specified below, or (iii) three (3) days after deposit with the United States
mail, by registered or certified mail, postage prepaid, in each case addressed
or faxed (A), if to a Series E Investor, to such Series E Investor's address or
fax number, as the case may be, set forth on the signature pages attached to
this Agreement, or at such other address or fax number, as the case may be, as
such Series E Investor shall have furnished to the Company in writing in
accordance with this Section 8(g), (B) if to any other holder of the Preferred
Stock and Common Stock issued upon conversion thereof to whom any rights under
this Agreement have been transferred in accordance with Sections 2 and 8(c)
hereof, to such address or fax number, as the case may be, as such holder shall
have furnished the Company in writing in accordance with Section 8(c), or, until
any such holder so furnishes an address or fax number to the Company, then to
the address or fax number, as the case may be, of the last holder thereof who
has so furnished an address or fax number to the Company or (C), if to the
Company, to the address or fax number, as the case may be, set forth on the
signature pages hereto.
h. Certain Definitions. For purposes of this Agreement,
-------------------
"American Express Related Party" shall mean (i) any corporation or limited
liability company directly controlled by, controlling, or under common control
with (to the extent of more than fifty percent (50%) of its issued capital stock
entitled to vote for the election of directors) American Express, or (ii) any
partnership directly controlled by, controlling, or under common control with
(to the extent of more than fifty percent (50%) of its voting power or otherwise
having power to control its general activities) American Express, but in each
case only for so long as such ownership or control shall continue.
i. Grant of Proxy. Should the provisions of this Agreement be
--------------
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement.
j. Manner of Voting. The voting of shares pursuant to this
----------------
Agreement may be effected in person, by proxy, by written consent, or in any
other manner permitted by applicable law.
k. Stock Splits, Stock Dividends, etc. In the event of any
----------------------------------
issuance of shares of the Company's voting securities hereafter to any of the
Parties hereto (including,
11
<PAGE>
without limitation, in connection with any stock split, stock dividend,
recapitalization, reorganization, or the like), such shares shall become subject
to this Agreement and shall be endorsed with the legend set forth in Section 1.
l. Specific Enforcement. It is agreed and understood that
--------------------
monetary damages would not adequately compensate an injured party for the breach
of this Agreement by any party hereto (or the permitted transferees or assignees
of any party hereto that is bound by the provisions of this Agreement), that
this Agreement shall be specifically enforceable, and that any breach or
threatened breach of this Agreement shall be the proper subject of a temporary
or permanent injunction or restraining order. Further, each such party hereto
waives any claim or defense that there is an adequate remedy at law for such
breach or threatened breach.
m. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
n. Share Number Adjustments. Unless otherwise set forth
------------------------
herein, wherever any provision of this Agreement sets forth a specific number of
shares of the Company's Capital Stock (as defined herein), such number shall be
appropriately adjusted upon the occurrence of any stock splits, dividends,
combinations, reclassifications, recapitalizations, reorganizations and the like
with respect to the Company's Capital Stock.
o. Nonassignment of Rights. The rights (but not the
-----------------------
obligations) provided to American Express herein under Sections 4, 5, 6, 7 and
8, shall not be assignable without the prior, express written consent of the
Company, except in the case of an assignment to an American Express Related
Party (as defined in Section 7(h) above).
p. Termination. This Agreement will terminate if the AmEx
-----------
Subsequent Closing has not been effected on or before November 30, 1999.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
COMPANY:
GETTHERE.COM,
a California corporation
By: /s/ Kenneth Pelowski
--------------------------------
Kenneth Pelowski,
Chief Operating Officer and
Chief Financial Officer
Address: GetThere.com
445 Sherman Avenue
Palo Alto, CA 94306
Attn: Kenneth Pelowski
AMERICAN EXPRESS TRAVEL RELATED SERVICES
COMPANY, INC.
By: /s/ Anne Busquet
--------------------------------
Name: Anne Busquet
------------------------------
Title: President, AERS
-----------------------------
Address: American Express Tower
World Financial Center
New York, NY 10285
Attn: Lawrence Kutscher
SIGNATURE PAGE TO GETTHERE.COM
STANDSTILL AND BRING ALONG AGREEMENT
<PAGE>
SCHEDULE A
----------
SCHEDULE OF SHAREHOLDERS
<TABLE>
<CAPTION>
Number Threshold
Shareholder Class of Shares of Shares Percentage
----------- --------------- --------- -----------
<S> <C> <C> <C>
"American Express" and/or "American
----------------------------------
Express Related Party"
---------------------
American Express Travel Related Preferred Stock [--------] 15%
Services Company, Inc.
</TABLE>
S-1
<PAGE>
SCHEDULE B
----------
ADOPTION AGREEMENT
This Adoption Agreement ("Adoption Agreement") is executed by the
undersigned (the "Shareholder,") pursuant to the terms of that certain
Standstill and Bring Along Agreement dated as of September 14, 1999 (the
"Standstill and Bring Along Agreement") by and among GetThere.com, a California
corporation (the "Company") and certain of its shareholders. Capitalized terms
used but not defined herein shall have the respective meanings ascribed to such
terms in the Shareholders Agreement. By the execution of this Adoption
Agreement, the Shareholder agrees as follows:
(a) Acknowledgment. Shareholder acknowledges that Shareholder is
--------------
acquiring certain shares of the capital stock of the Company (the "Stock"),
subject to the terms and conditions of the Standstill and Bring Along Agreement.
(b) Agreement. Shareholder (i) agrees that the Stock acquired by
---------
Shareholder shall be bound by and subject to the terms of the Standstill and
Bring Along Agreement, and (ii) hereby adopts the Standstill and Bring Along
Agreement with the same force and effect as if the Shareholder were originally a
party thereto.
(c) Notice. Any notice required or permitted by the Standstill and
------
Bring Along Agreement shall be given to Shareholder at the address listed beside
Shareholder's signature below.
(d) Share Ownership and Threshold Percentage. For purposes of the
----------------------------------------
Schedule of Shareholders attached as Schedule A to the Standstill and Bring
Along Agreement, the Shareholder currently owns ______________ shares of the
_____________________________ of the Company and such Shareholder's Threshold
Percentage shall initially be fifteen percent (15%).
EXECUTED AND DATED this ______ day of _________________, ____.
SHAREHOLDER:
By:
-------------------------------------
Name and Title
Address:
-------------------------------
-------------------------------
Accepted and Agreed on behalf of all the
parties to the Standstill and Bring Along Agreement:
- ---------------------------------------------------
COMPANY:
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
S-2
<PAGE>
Exhibit 10.28
EXHIBIT F
---------
INTERNET TRAVEL NETWORK
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (this "Option Agreement") is
made and entered into as of this ____ day of _______________, ____, by and
between Internet Travel Network, a California corporation (the "Company"), and
Covia LLC (the "Optionee"), pursuant to the terms of that certain Series C
Preferred Stock, Warrant and Option Purchase Agreement by and between the
Company and the Optionee dated May 10, 1998 (the "Purchase Agreement").
1. Grant of Option. The Company hereby grants to the Optionee an
---------------
option (the "Option"), at the Optionee's election, to either:
(a) purchase up to 2,464,970 shares of Series C Preferred Stock
(the "Shares") at an exercise price per Share of $5.125 (the "Share Exercise
Price"), or at an aggregate exercise price of $12,632,971.25 for all of the
Shares (the "Aggregate Exercise Price"), subject to the terms, definitions and
provisions of this Agreement; or
(b) purchase a warrant exercisable for up to 2,464,970 Shares, in
the form attached hereto as Exhibit B-2 (the "Warrant"), subject to the terms,
-----------
definitions and provisions of this Agreement. The exercise price under this
Option for such Warrant shall be the product determined by multiplying (x) the
Share Exercise Price by (y) the number of Shares, up to 2,464,970 Shares, that
Optionee elects to have exercisable under such Warrant (such product referred to
herein as the "Warrant Exercise Price"). The Shares exercisable under the
Warrant shall be exercisable at a per share exercise price of $.01 per Share.
2. Term of Option. The Option may be exercised at any time on or
--------------
before the earlier to occur of:
(a) a Sale of the Company (as defined below), or
(b) November 10, 2000,
(such date being referred to herein as the "Expiration Date") and may be
exercised during such term only in accordance with the terms and conditions of
the Option set forth herein. For purposes of this Section 2, a "Sale of the
Company" shall mean the date upon which the Company consummates (i) a
consolidation or merger of the Company with or into any other corporation or
corporations in which the stockholders of the Company immediately prior to such
transaction(s) own, as a result of such transactions(s), less than a majority of
the voting securities of the successor or surviving corporation immediately
thereafter, or (ii) a sale of all or substantially all of the assets or business
of the Company in one or more related transactions. In
<PAGE>
the event of a Sale of the Company, the Company shall notify the holder of the
Option in writing at least twenty (20) days prior to the consummation of such
event.
3. Exercise of Option. The Option shall be exercisable during its
------------------
term as follows:
(a) Right to Exercise.
-----------------
(i) The Option, subject to the limitations set forth
herein, may be exercised in whole or in part prior to the Expiration Date.
(ii) The Option may not be exercised for a fraction of a
Share.
(iii) In no event may the Option be exercised after the
Expiration Date.
(iv) The Option shall initially not be exercisable for
1,045,281 of such Shares or for a Warrant exercisable for 1,045,281 of the
Shares, as the case may be (collectively, the "Contingent Exercise Shares"), and
shall only become exercisable for such Contingent Exercise Shares if and when
all or any portion of the 2,438,988 shares of Series C Preferred Stock (the
"Supplier Shares") are purchased (each time of purchase referred to herein as a
"Supplier Purchase Date") pursuant to the terms of the Purchase Agreement and
that certain Amended and Restated Shareholders Agreement by and among the
Company and certain shareholders of the Company, dated May 10, 1998 (the
"Shareholders Agreement").
(v) In the event Optionee effects a partial exercise prior
to the first Supplier Purchase Date, the Company shall allocate the first Shares
acquired, or which may be acquired upon exercise of the Warrant, in full to the
Shares that are not Contingent Exercise Shares.
(vi) On and after the first Supplier Purchase Date and on
and after any subsequent Supplier Purchase Dates, the portion of the Contingent
Exercise Shares that may thereon or thereafter be acquired, or for which a
Warrant may be purchased, by Optionee will be that number, rounded down to the
nearest whole number, equal to the product of (x) the aggregate number of
Supplier Shares that have been purchased as of such time, multiplied by (y)
0.428571428 (which number represents the quotient obtained by dividing
1,045,281, the initial total amount of Contingent Exercise Shares, by 2,438,988
the total number of Supplier Shares that may be purchased under the terms of the
Purchase Agreement and Shareholders Agreement).
(b) Method of Exercise. The Option shall be exercisable by a
------------------
written notice and agreement which shall state Optionee's election to exercise
the Option to purchase (i) the Shares (such notice and agreement to be in the
form attached hereto as Exhibit A) or (ii) the Warrant (such notice and
---------
agreement to be in the form attached hereto as Exhibit B-1) and shall state the
-----------
number of Shares, whether to be issued directly or to be issuable upon exercise
of the Warrant, as the case may be, in respect of which the Option is being
exercised, and such other representations and agreements as to the Optionee's
investment intent with respect to such
2
<PAGE>
Shares or Warrant (including the Shares issuable upon exercise of the
Warrant) as may be required by the Company pursuant to the provisions of
this Agreement, including without limitation any required by such Exhibit A
---------
or Exhibit B-1. Such written notice and agreement shall be signed by the
-----------
Optionee, shall be delivered in person or by certified mail to the
President of the Company and shall be accompanied by full payment of the
Exercise Price for such Shares or Warrant as set forth herein. The Option
shall be deemed to be exercised upon receipt by the Company of such written
notice and agreement and the full payment of such Exercise Price.
No Shares, or Shares issuable upon exercise of the Warrant, as the
case may be, will be issued pursuant to the exercise of the Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of the Nasdaq Stock Market, Inc. or any stock exchange, if
applicable, upon which the Shares, or the Shares issuable upon exercise of the
Warrant, as the case may be, may then be listed.
4. Method of Payment. Payment of the Share Exercise Price or Warrant
-----------------
Exercise Price, as the case may be, shall be by any of the following, or a
combination thereof, at the election of the Optionee:
(a) certified check; or
(b) electronic funds transfer.
5. Restrictions on Exercise. The Option may not be exercised if the
------------------------
issuance of such Shares or Warrant, as the case may be, upon such exercise would
constitute a violation of any applicable federal or state securities or other
law or regulation. As a condition to the exercise of the Option, the Company may
require Optionee to make any representation and warranty to the Company as may
be required by any such law or regulation, including without limitation any
required by Exhibit A or Exhibit B-1 attached hereto.
--------- -----------
6. Transfer Restrictions On Shares. The Shares and Warrant subject to
-------------------------------
the Option, including the Shares issuable upon exercise of the Warrant,
shall be subject to the following restrictions:
(a) Securities Law Restrictions. If the offering and sale of any
---------------------------
Shares or the Warrant have not been registered under the Securities Act of 1933,
as amended (the "1933 Act"), or have not been registered or qualified under the
securities laws of any state, the Company may impose any necessary restrictions
upon the sale, pledge or other transfer of such Shares or Warrant (including the
placement of appropriate legends on the Warrant or on stock certificates
representing any Shares or the imposition of stop-transfer instructions) if, in
the judgment of the Company, such restrictions are necessary or desirable in
order to achieve compliance with the 1933 Act, the securities laws of any state
or any other law.
(b) Market Stand-Off. In connection with any underwritten public
----------------
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the Company's initial
public offering, the Optionee shall not directly or indirectly sell, make any
short sale of, loan, hypothecate, pledge, offer, grant or sell
3
<PAGE>
any option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect to, the Warrant or any
Shares acquired (directly or by exercise of the Warrant) under this Agreement
without the prior written consent of the Company or its underwriters. Such
restriction (the "Market Stand-Off") shall be in effect for such period of time
following the date of the final prospectus for the offering as may be requested
by the Company or such underwriters. In no event, however, shall such period
exceed 180 days. In the event of the declaration of a stock dividend, a spin-
off, a stock split, an adjustment in conversion ratio, a recapitalization or a
similar transaction affecting the Company's outstanding securities without
receipt of consideration, any new, substituted or additional securities which
are by reason of such transaction distributed with respect to any Shares subject
to the Market Stand-Off, or into which such Shares thereby become convertible,
shall immediately be subject to the Market Stand-Off. In order to enforce the
Market Stand-Off, the Company may impose stop-transfer instructions with respect
to the Warrant or Shares acquired (directly or by exercise of the Warrant) under
this Agreement until the end of the applicable stand-off period. The Company's
underwriters shall be beneficiaries of the agreement set forth in this Section
6(b). This Section 6(b) shall not apply to Shares registered in the public
offering under the 1933 Act.
(c) Investment Intent at Grant. The Optionee represents and
--------------------------
agrees that the Shares to be acquired upon exercise of the Option will be
acquired for investment, and not with a view to the sale or distribution
thereof.
(d) Investment Intent at Exercise. In the event that the sale of
-----------------------------
any Shares or the Warrant is not registered under the 1933 Act but an exemption
is available which requires an investment representation or other
representation, the Optionee shall represent and agree at the time of exercise
that the Shares or Warrant being acquired upon exercising the Option are being
acquired for investment, and not with a view to the sale or distribution
thereof, and shall make such other representations as are deemed necessary or
appropriate by the Company and its counsel.
(e) Legends. All certificates evidencing Shares purchased under
-------
this Agreement shall bear the following legend:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).
THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY
OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
4
<PAGE>
All certificates evidencing Shares purchased under this Agreement in an
unregistered transaction shall bear the following legend (and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law):
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(f) Removal of Legends. If, in the opinion of the Company and its
------------------
counsel, any legend placed on a stock certificate representing Shares sold under
this greement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.
(g) Administration. Any determination by the Company and its
--------------
counsel in connection with any of the matters set forth in this Section 6 shall
be conclusive and binding on the Optionee and all other persons.
7. Adjustment of Exercise Price and Number of Shares. The number of
-------------------------------------------------
and kind of securities purchasable upon exercise of the Option and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the
----------------------------------------------
Company shall a any time prior to the expiration of the term of the Option
subdivide its Series C Preferred Stock, by stock split or otherwise, or combine
its Series C Preferred Stock, or issue additional shares of its Series C
Preferred Stock or Common Stock as a dividend with respect to any shares of its
Series C Preferred Stock, the number of Shares issuable on the exercise of the
Option shall forthwith be proportionately increased in the case of a subdivision
or stock dividend, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the purchase price payable per
share, but the aggregate purchase price payable for the total number of Shares
purchasable under the Option (as adjusted) shall remain the same.
(b) Reclassification, Reorganization and Consolidation. Except
--------------------------------------------------
for a Sale of the Company, in case of any reclassification, capital
reorganization, or change in the Series C Preferred Stock of the Company (other
than as a result of a subdivision, combination, or stock dividend provided for
in Section 7(a) above), then, as a condition of such reclassification,
reorganization, or change, lawful provision shall be made, and duly executed
documents evidencing the same from the Company or its successor shall be
delivered to the holder of the Option, so that the holder of the Option shall
have the right at any time prior to the expiration of the term of the Option to
purchase, at a total price equal to that payable upon the exercise of the
Option, the kind and amount of shares of stock and other securities and property
receivable in connection with such reclassification, reorganization, or change
by a holder of the same number
5
<PAGE>
of shares of Series C Preferred Stock as were purchasable by the holder of the
Option immediately prior to such reclassification, reorganization, or change. In
any such case appropriate provisions shall be made with respect to the rights
and interest of the holder of the Option so that the provisions hereof shall
thereafter be applicable with respect to any shares of stock or other securities
and property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the purchase price per share payable hereunder, provided that the
aggregate purchase price shall remain the same.
(c) Conversion of Preferred Stock. Immediately prior to the
-----------------------------
closing of any public offering of the Company's equity securities in which the
Company's outstanding Preferred Stock is converted into Common Stock, any
portion of the Option not then exercised will thereafter be exercisable for the
number of shares of the Company's Common Stock that would have resulted from the
conversion, pursuant to the Company's Articles of Incorporation in effect as of
the consummation of such public offering, of the maximum number of shares of
Preferred Stock that could have been acquired by the holder of the Option upon
the exercise of the unexpired portion of the Option immediately prior to such
public offering.
(d) Notice of Adjustment. When any adjustment is required to be
--------------------
made in the number or kind of shares purchasable upon exercise of the Option, or
in the Exercise Price, the Company shall promptly notify the holder of such
event and of the number of shares of Series C Preferred Stock or other
securities or property thereafter purchasable upon exercise of this Option.
(e) No Impairment. The Company and the holder of the Option will
-------------
not, by any voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company or the holder of the Option, respectively, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 7 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Company and the holder of the Option against
impairment.
8. Registration Rights. The Shares issued upon exercise of this
-------------------
Option, or upon exercise of the Warrant, and any securities issuable upon
conversion of such Shares, are Registrable Securities, as such term is defined
in that certain Amended and Restated Investors' Rights Agreement, dated May 10,
1998, by and among the Company and the Investors listed on Schedule A thereto
----------
(the "Restated Rights Agreement"), and possess registration rights as
described in such agreement.
9. Successors and Assigns. The terms and provisions of this Option
----------------------
Agreement shall inure to the benefit of, and be binding upon, the Company and
the Optionee and their respective successors and assigns.
10. Amendments and Waivers. Any term of this Option Agreement may be
----------------------
amended and the observance of any term of this Option Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Optionee. Any
waiver or amendment effected in accordance
6
<PAGE>
with this Section 10 shall be binding upon each current and future holder of
the Option and the Company.
11. Captions. The section and subsection headings of this Option
--------
Agreement are inserted for convenience only and shall not constitute a part of
this Option Agreement in construing or interpreting any provision hereof.
12. Governing Law. This Option Agreement shall be governed by the laws
-------------
of the State of California as applied to agreements among California residents
made and to be performed entirely within the State of California.
13. Entire Agreement. This Option Agreement constitutes the entire
----------------
contract between the parties hereto with regard to the Option and it supersedes
any other agreements, representations or understandings (whether oral or written
and whether express or implied) which relate to the Option granted hereunder.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Option Agreement as
of the year and date set forth above.
INTERNET TRAVEL NETWORK,
a California corporation
By:
-----------------------------------------
Signature
Name:
-----------------------------------------
Title:
-----------------------------------------
Optionee has reviewed this Option Agreement in its entirety, has had
an opportunity to obtain the advice of counsel, including Optionee's tax
advisors, prior to executing this Option Agreement and fully understands all
provisions of the Option.
OPTIONEE:
COVIA LLC
By:
-----------------------------------------
Signature
Name:
----------------------------------------
Title:
----------------------------------------
8
<PAGE>
EXHIBIT A
---------
NOTICE AND AGREEMENT OF OPTION EXERCISE FOR
SHARES OF SERIES C PREFERRED STOCK
OF
INTERNET TRAVEL NETWORK
Internet Travel Network
445 Sherman Avenue
Palo Alto, CA 94306
Attention: President
1. Exercise of Option. Effective as of __________________, ____, the
------------------
undersigned ("Optionee") hereby elects, by execution and delivery of this Notice
and Agreement of Option Exercise (this "Agreement"), to exercise Optionee's
option to purchase _______________ shares of the Series C Preferred Stock (the
"Shares") of Internet Travel Network, a California corporation (the "Company"),
pursuant to that certain Nonstatutory Stock Option Agreement by and between the
Company and the Optionee dated ________________, _____ (the "Option Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee
---------------------------
has received, read and understood the Option Agreement and agrees to abide by
and be bound by its terms and conditions. Optionee represents that Optionee is
purchasing the Shares for Optionee's own account for investment and not with a
view to, or for sale in connection with, a distribution of any of such Shares.
3. Compliance with Securities Laws. Optionee understands and
-------------------------------
acknowledges that the Shares have not been registered under the Securities Act
of 1933, as amended (the "1933 Act"), and, notwithstanding any other provision
of the Option Agreement to the contrary, the exercise of any rights to purchase
any Shares is expressly conditioned upon compliance with the 1933 Act, all
applicable state securities laws and all applicable requirements of any stock
exchange or over-the-counter market on which the Company's stock may be listed
or traded at the time of exercise and transfer. Optionee agrees to cooperate
with the Company to ensure compliance with such laws.
4. Federal Restrictions on Transfer. Optionee understands that the
--------------------------------
Shares have not been registered under the 1933 Act and therefore cannot be
resold and must be held indefinitely unless they are registered under the 1933
Act or unless an exemption from such registration is available and that the
certificate(s) representing the Shares may bear a legend to that effect. The
Optionee understands that, except as otherwise set forth in the Restated Rights
Agreement (as such term is defined in the Option Agreement), the Company is
under no obligation to register the Shares and that an exemption may not be
available or may not permit Optionee to transfer Shares in the amounts or at the
times proposed by Optionee. Specifically, Optionee has been advised that Rule
144 promulgated under the 1933 Act, which permits certain
<PAGE>
resales of unregistered securities, is not presently available with respect to
the Shares and, in any event requires that the Shares be paid for and then be
held for at least one year (and in some cases two years) before they may be
resold under Rule 144.
5. Rights as Shareholder. Until the stock certificate evidencing such
---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly, but
in any event not later than thirty (30) days after the Option is exercised
pursuant to the terms of the Option Agreement. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued.
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the Company
-------
shall cause legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares with any
other legends that may be required by state or federal securities laws:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).
THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY
OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
A-2
<PAGE>
(b) Stop-Transfer Notices. Optionee agrees that, in order t0o
---------------------
ensure-compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or of the Option Agreement
or (ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
8. Market Standoff Agreement. In connection with any underwritten
-------------------------
public offering by the Company of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the Company's initial
public offering, the Optionee shall not directly or indirectly sell, make any
short sale of, loan, hypothecate, pledge, offer, grant or sell any option or
other contract for the purchase of, purchase any option or other contract for
the sale of, or otherwise dispose of or transfer, or agree to engage in any of
the foregoing transactions with respect to, any Shares acquired under this
Agreement without the prior written consent of the Company or its underwriters.
Such restriction (the "Market Stand-Off") shall be in effect for such period of
time following the date of the final prospectus for the offering as may be
requested by the Company or such underwriters. In no event, however, shall such
period exceed 180 days. In the event of the declaration of a stock dividend, a
spin-off, a stock split, an adjustment in conversion ratio, a recapitalization
or a similar transaction affecting the Company's outstanding securities without
receipt of consideration, any new, substituted or additional securities which
are by reason of such transaction distributed with respect to any Shares subject
to the Market Stand-Off, or into which such Shares thereby become convertible,
shall immediately be subject to the Market Stand-Off. In order to enforce the
Market Stand-Off, the Company may impose stop-transfer instructions with respect
to the Shares acquired under this Agreement until the end of the applicable
stand-off period. The Company's underwriters shall be beneficiaries of the
agreement set forth in this Section 8. This Section 8 shall not apply to Shares
registered in the public offering under the 1933 Act.
9. Successors and Assigns. The Company may assign any of its rights
----------------------
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
10. Interpretation. Any dispute regarding the interpretation of this
--------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Board shall be final
and binding on the Company and on Optionee.
11. Governing Law; Severability. This Agreement shall be governed by
---------------------------
and construed in accordance with the laws of the State of California excluding
that body of law
A-3
<PAGE>
pertaining to conflicts of law. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
12. Notices. Any notice required or permitted hereunder shall be given
-------
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
13. Further Instruments. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
14. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
full Exercise Price (as such term is defined in the Option Agreement) for the
Shares.
15. Entire Agreement. The Option Agreement is incorporated herein by
----------------
reference. This Agreement and the Option Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and is governed by California law except for that body of law pertaining
to conflict of laws.
Submitted by: Accepted by:
COVIA LLC INTERNET TRAVEL NETWORK
By: By:
----------------------------------- ----------------------------
Name: Name:
--------------------------------- ---------------------------
Title: Title:
-------------------------------- --------------------------
Address: Address:
- ------- -------
- -------------------------------------- 445 Sherman Avenue
Palo Alto, CA 94306
- --------------------------------------
A-4
<PAGE>
EXHIBIT B-1
-----------
NOTICE AND AGREEMENT OF OPTION EXERCISE FOR A
WARRANT TO PURCHASE SHARES OF SERIES C PREFERRED STOCK
OF
INTERNET TRAVEL NETWORK
Internet Travel Network
445 Sherman Avenue
Palo Alto, CA 94306
Attention: President
1. Exercise of Option. Effective as of __________________, ____, the
------------------
undersigned ("Optionee") hereby elects, by execution and delivery of this Notice
and Agreement of Option Exercise (this "Agreement"), to exercise Optionee's
option to purchase a warrant exercisable at $0.01 per share in the form attached
hereto as Exhibit B-2 (the "Warrant") for _________________ shares of the
-----------
Series C Preferred Stock of Internet Travel Network, a California corporation
(the "Company"), pursuant to the Nonstatutory Stock Option Agreement by and
between the Company and the Optionee dated __________________, ____ (the "Option
------
Agreement"). The shares of Series C Preferred Stock issuable upon exercise of
- ---------
the Warrant shall be referred to herein as the "Shares."
2. Representations of Optionee. Optionee acknowledges that Optionee
---------------------------
has received, read and understood the Option Agreement and agrees to abide by
and be bound by its terms and conditions. Optionee represents that Optionee is
purchasing the Warrant for Optionee's own account for investment and not with a
view to, or for sale in connection with, a distribution of any of such Warrant
or Shares.
3. Compliance with Securities Laws. Optionee understands and
-------------------------------
acknowledges that neither the Warrant nor the Shares have been registered under
the Securities Act of 1933, as amended (the "1933 Act"), and, notwithstanding
any other provision of the Option Agreement to the contrary, the exercise of any
rights to purchase the Warrant or any Shares is expressly conditioned upon
compliance with the 1933 Act, all applicable state securities laws and all
applicable requirements of any stock exchange or over-the-counter market on
which the Company's stock may be listed or traded at the time of exercise and
transfer. Optionee agrees to cooperate with the Company to ensure compliance
with such laws.
4. Federal Restrictions on Transfer. Optionee understands that neither
--------------------------------
the Warrant nor the Shares have been registered under the 1933 Act and therefore
cannot be resold and must be held indefinitely unless registered under the 1933
Act or unless an exemption from such registration is available and that the
Warrant and the certificate(s) representing the Shares may bear a legend to that
effect. The Optionee understands that, except as otherwise set forth in the
Restated Rights Agreement (as such term is defined in the Option Agreement), the
Company is under no obligation to register the Warrant or the Shares and that an
exemption may not be
<PAGE>
available or may not permit Optionee to transfer the Warrant or the Shares in
the amounts or at the times proposed by Optionee. Specifically, Optionee has
been advised that Rule 144 promulgated under the 1933 Act, which permits certain
resales of unregistered securities, is not presently available with respect to
the Warrant or the Shares and, in any event requires that the Warrant or the
Shares be paid for and then be held for at least one year (and in some cases two
years) before they may be resold under Rule 144.
5. Rights as Shareholder. As the holder of the Warrant, Optionee
---------------------
understands that it is not a shareholder and has no right to vote or receive
dividends or no other rights as a shareholder exist, notwithstanding the
exercise of the Option. Upon subsequent exercise of the Warrant, the Company
shall issue (or cause to be issued) a stock certificate for the Shares promptly,
but in any event not later than thirty (30) days after the Warrant is exercised
pursuant to the terms of the Option Agreement. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company), Optionee shall have no right
to vote or receive dividends or any other rights as a shareholder.
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Warrant or Shares. Optionee represents that Optionee has consulted with any
tax advisor Optionee deems advisable in connection with the purchase or
disposition of the Warrant or Shares and that Optionee is not relying on the
Company for any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon the Warrant and any certificate(s) evidencing ownership of the
Shares together with any other legends that may be required by state or federal
securities laws:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).
THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY
OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL,
B-2
<PAGE>
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books the Warrant or Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement, (ii) to
treat as owner of such Warrant or Shares any purchaser or other transferee to
whom such Warrant or Shares shall have been so transferred or (iii) to accord
the right to vote or pay dividends to any purchaser or other transferee to whom
the Shares shall have been so transferred.
8. Market Standoff Agreement. In connection with any underwritten
-------------------------
public offering by the Company of its equity securities pursuant to an effective
registration statement filed under the 1933 Act, including the Company's initial
public offering, the Optionee shall not directly or indirectly sell, make any
short sale of, loan, hypothecate, pledge, offer, grant or sell any option or
other contract for the purchase of, purchase any option or other contract for
the sale of, or otherwise dispose of or transfer, or agree to engage in any of
the foregoing transactions with respect to, the Warrant or any Shares acquired
(directly or by exercise of the Warrant) under this Agreement without the prior
written consent of the Company or its underwriters. Such restriction (the
"Market Stand-Off") shall be in effect for such period of time following the
date of the final prospectus for the offering as may be requested by the Company
or such underwriters. In no event, however, shall such period exceed 180 days.
In the event of the declaration of a stock dividend, a spin-off, a stock split,
an adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company's outstanding securities without receipt of consideration,
any new, substituted or additional securities which are by reason of such
transaction distributed with respect to any Shares subject to the Market Stand-
Off, or into which such Shares thereby become convertible, shall immediately be
subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the
Company may impose stop-transfer instructions with respect to the Warrant or any
Shares acquired (directly or by exercise of the Warrant) under this Agreement
until the end of the applicable stand-off period. The Company's underwriters
shall be beneficiaries of the agreement set forth in this Section 8. This
Section 8 shall not apply to Shares registered in the public offering under the
1933 Act.
9. Successors and Assigns. The Company may assign any of its rights
----------------------
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
B-3
<PAGE>
10. Interpretation. Any dispute regarding the interpretation of this
--------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Board shall be final
and binding on the Company and on Optionee.
11. Governing Law; Severability. This Agreement shall be governed by
---------------------------
and construed in accordance with the laws of the State of California excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
12. Notices. Any notice required or permitted hereunder shall be
-------
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
13. Further Instruments. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
14. Delivery of Payment. Optionee herewith delivers to the Company
-------------------
the full Exercise Price (as such term is defined in the Option Agreement) for
the Warrant.
15. Entire Agreement. The Option Agreement is incorporated herein by
----------------
reference. This Agreement and the Option Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and is governed by California law except for that body of law pertaining
to conflict of laws.
<TABLE>
<CAPTION>
Submitted by: Accepted by:
<S> <C>
COVIA LLC INTERNET TRAVEL NETWORK
By: By:
-------------------------------- -----------------------------
Name: Name:
------------------------------ ---------------------------
Title: Title:
----------------------------- --------------------------
Address: Address:
- ------- -------
445 Sherman Avenue
- ----------------------------------- Palo Alto, CA 94306
- -----------------------------------
</TABLE>
B-4
<PAGE>
EXHIBIT B-2
-----------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL OF THE HOLDER, REASONABLY SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
WPC-1 Dated: __________________, ______
INTERNET TRAVEL NETWORK
WARRANT TO PURCHASE SHARES OF SERIES C PREFERRED STOCK
------------------------------------------------------
This Warrant is issued to Covia LLC (the "Investor") by Internet
Travel Network, a California corporation (the "Company"), in connection with the
Investor's exercise of the Option granted under, and as such term is defined in,
that certain Nonstatutory Stock Option Agreement dated as of _________________,
_____ (the "Option Agreement").
1. Purchase of Shares. Subject to (i) the validity and enforceability
------------------
of the representations and warranties made by the Investor for the benefit of
the Company upon exercise of the Option under the terms of the Option Agreement,
which such representations and warranties were true and correct when made and
shall be true and correct as of the date of this Warrant with the same force and
effect as if they had been made on and as of the date of this Warrant, and (ii)
the terms and conditions hereinafter set forth, the Investor (and any subsequent
holder of this Warrant) is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company
______________________________ (__________) duly authorized, validly issued,
fully paid and nonassessable shares of Series C Preferred Stock of the Company,
as more fully described below. The shares of Series C Preferred Stock issuable
pursuant to this Section 1 (the "Shares") shall also be subject to adjustment
pursuant to Section 8 hereof.
2. Exercise Price. The exercise price for the Shares shall be $0.01
--------------
per share. Such exercise price shall be subject to adjustment pursuant to
Section 8 hereof (such price, as adjusted from time to time, is herein referred
to as the "Exercise Price").
3. Exercise Period. This Warrant is immediately exercisable and it
---------------
shall remain exercisable indefinitely; provided, however, that in the event of
(a) the sale of all or
<PAGE>
substantially all the assets of the Company, or (b) the merger of the Company
into or consolidation with any other entity, after which the shareholders of the
Company prior to such transaction own less than 50% of the voting power of the
acquiring or surviving entity after such transaction, this Warrant shall, on the
date of the consummation such event, terminate and no longer be exercisable. In
the event of a proposed transaction of the kind described above, the Company
shall notify the holder of the Warrant in writing at least twenty (20) days
prior to the consummation of such event or transaction.
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(1) the surrender of the Warrant, together with a duly executed
copy of the form of subscription attached hereto, to the Secretary
of the Company at its principal offices; and
(2) subject to Section 5 below, the payment to the Company in
cash or by check or wire transfer of the amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Net Exercise. In lieu of exercising this Warrant with the payment
------------
referenced in Section 4 above, the holder of this Warrant may elect to receive
shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election, in which event the Company shall issue to
the holder hereof a number of shares of Series C Preferred Stock computed using
the following formula:
Y (A - B)
---------
X = A
Where
X = The number of shares of Series C Preferred Stock to be issued to
the holder of this Warrant upon a net exercise.
Y = The number of shares of Series C Preferred Stock purchasable
under this Warrant (or the portion of this Warrant being
canceled).
A = The fair market value of one share of the Company's Series C
Preferred Stock.
B = The Exercise Price (as adjusted to the date of such
calculations).
For purposes of this Paragraph 5, if the Company's Common Stock is
then actively traded (i) over-the-counter, (ii) on a securities exchange or
(iii) through the Nasdaq National Market (either of (ii) or (iii) an
"Exchange"), the fair market value of Series C Preferred
<PAGE>
Stock shall mean the average of the closing bid and asked prices of the Common
Stock into which the Series C Preferred Stock is then convertible as quoted in
the over-the-counter market in which the Common Stock is then traded or the
closing price quoted on any Exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western Edition of The Wall Street
Journal for the ten trading days immediately prior to the date of the net
exercise of the Warrant (or such shorter period of time during which such stock
was traded over-the-counter or on such exchange). If the Common Stock is not
traded on the over-the-counter market or on an Exchange, the fair market value
shall be the price per share that the Company could obtain from a willing buyer
for shares of Series C Preferred Stock sold by the Company from authorized but
unissued shares, as such prices shall be determined in good faith by the
Company's Board of Directors. Notwithstanding the previous terms of this
paragraph, (i) in the event that the Warrant is exercised in connection with the
initial public offering of the Common Stock of the Company, the fair market
value of the Series C Preferred Stock shall be the per share offering price of
the Common Stock to the public as listed on the cover page of the effective
registration statement for such offering, and (ii) in the case of a sale or
merger of the Company as described under Section 3(a) or (b) hereof, the fair
market value of the Series C Preferred Stock shall be the value determined in
good faith by the Company's Board of Directors.
6. Certificates for Shares. Upon the exercise of the purchase rights
-----------------------
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice. In case the
holder shall exercise this Warrant with respect to less than all of the Shares
that may be purchased under this Warrant, the Company shall execute a new
warrant in the form of this Warrant for the balance of such Shares and deliver
such new warrant to the holder of this Warrant.
7. Reservation and Issuance of Shares. The Company covenants that it
----------------------------------
will at all times keep available such number of authorized shares of its Series
C Preferred Stock, free from all preemptive rights with respect thereto, which
will be sufficient to permit the exercise of this Warrant for the full number of
Shares specified herein. The Company further covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of
-------------------------------------------------
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the
----------------------------------------------
Company shall at any time prior to the expiration of this Warrant subdivide its
Series C Preferred Stock, by stock split or otherwise, or combine its Series C
Preferred Stock, or issue additional shares of its Series C Preferred Stock or
Common Stock as a dividend with respect to any shares of its Series C Preferred
Stock, the number of Shares issuable on the exercise of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or
<PAGE>
proportionately decreased in the case of a combination. Appropriate
adjustments shall also be made to the purchase price payable per share, but the
aggregate purchase price payable for the total number of Shares purchasable
under this Warrant (as adjusted) shall remain the same. Any adjustment under
this Section 8(a) shall become effective at the close of business on the date
the subdivision or combination becomes effective, or as of the record date of
such dividend, or in the event that no record date is fixed, upon the making of
such dividend.
(b) Reclassification, Reorganization and Consolidation. In
--------------------------------------------------
case of any reclassification, capital reorganization, or change in the Series C
Preferred Stock of the Company (other than as a result of a subdivision,
combination, or stock dividend provided for in Section 8(a) above), then, as a
condition of such reclassification, reorganization, or change, lawful provision
shall be made, and duly executed documents evidencing the same from the Company
or its successor shall be delivered to the holder of this Warrant, so that the
holder of this Warrant shall have the right at any time prior to the expiration
of this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property receivable in connection with such reclassification,
reorganization, or change by a holder of the same number of shares of Series C
Preferred Stock as were purchasable by the holder of this Warrant immediately
prior to such reclassification, reorganization, or change. In any such case
appropriate provisions shall be made with respect to the rights and interest of
the holder of this Warrant so that the provisions hereof shall thereafter be
applicable with respect to any shares of stock or other securities and property
deliverable upon exercise hereof, and appropriate adjustments shall be made to
the purchase price per share payable hereunder, provided that the aggregate
purchase price shall remain the same.
(c) Conversion of Preferred Stock. Immediately prior to the
-----------------------------
closing of any public offering of the Company's equity securities in which the
Company's outstanding Preferred Stock is converted into Common Stock, any
portion of this Warrant not then exercised will thereafter be exercisable for
the number of shares of the Company's Common Stock that would have resulted from
the conversion, pursuant to the Company's Articles of Incorporation in effect
immediately prior to the consummation of such public offering, of the maximum
number of shares of Preferred Stock that could have been acquired by the holder
of this Warrant upon the exercise of the unexpired portion of this Warrant
immediately prior to such public offering.
(d) Notice of Adjustment. When any adjustment is required to
--------------------
be made in the number or kind of shares purchasable upon exercise of the
Warrant, or in the Warrant Price, the Company shall promptly notify the holder
of such event and of the number of shares of Series C Preferred Stock or other
securities or property thereafter purchasable upon exercise of this Warrant.
(e) No Impairment. The Company and the holder of this
-------------
Warrant will not, by any voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company or the holder of this Warrant, respectively, but will at all times in
good faith assist in the carrying out of all the
<PAGE>
provisions of this Section 8 and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Company and the
holder of this Warrant against impairment.
9. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the holder of this Warrant shall
not be required to pay that portion of the Exercise Price for any such
fractional shares.
10. No Stockholder Rights. Prior to exercise of this Warrant, the
---------------------
holder shall not be entitled to any rights of a stockholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and, except as explicitly stated herein, such
holder shall not be entitled to any notice or other communication concerning the
business or affairs of the Company.
11. Standoff Agreement. In connection with the initial public
------------------
offering of the Company's securities, each holder of this Warrant agrees, upon
request of the Company or the underwriters managing any such offering of the
Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any securities of the
Company, including without limitation this Warrant, any shares of Series C
Preferred Stock issued or issuable upon exercise of this Warrant and any shares
of Common Stock issued or issuable in lieu of or upon conversion of such shares
of Series C Preferred Stock (other than those included in the registration
statement filed in connection with the offering), without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed one hundred eighty (180) days) from the effective date of
the registration statement filed in connection with the offering as may be
requested by the underwriters. The holder of this Warrant agrees that the
Company may instruct its transfer agent to place stop-transfer notations in its
records to enforce the provisions of this Section 11.
12. Registration Rights. The Shares issuable upon exercise of this
-------------------
Warrant, and any securities issuable upon conversion of such Shares, are
Registrable Securities, as such term is defined in that certain Amended and
Restated Investors' Rights Agreement, dated May 14, 1998, by and among the
Company and the Investors listed on Schedule A thereto, and possess registration
----------
rights as described in such agreement.
13. Successors and Assigns. The terms and provisions of this Warrant
----------------------
and the Option Agreement shall inure to the benefit of, and be binding upon, the
Company and the holder hereof and their respective successors and assigns.
14. Amendments and Waivers. Any term of this Warrant may be amended
----------------------
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the holder of this Warrant. Any waiver or
amendment effected in accordance with this Section 13 shall be binding upon each
current and future holder of this Warrant and the Company.
<PAGE>
15. Notices. Any notices or certificates sent by the Company to the
-------
holder of this Warrant or notices or other documents sent by the holder of this
Warrant to the Company shall be deemed delivered if delivered in person or by
registered mail (return receipt requested) addressed, if to the holder, to such
holder's address shown in the Company's records (as the same may be changed from
time to time by notice from the holder), and if to the Company, to Internet
Travel Network, 453 Sherman Avenue, Palo Alto, CA 94306, Attn: President (as the
same may be changed from time to time by notice from the Company).
16. Transferability of Warrant. This Warrant may not be transferred
--------------------------
or assigned in whole or in part without compliance with all applicable federal
and state securities laws by the transferor and the transferee (including the
delivery of investment representation letters and legal opinions satisfactory to
the Company, if such are requested by the Company).
17. Captions. The section and subsection headings of this Warrant are
--------
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
18. Governing Law. This Warrant shall be governed by the laws of the
-------------
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
INTERNET TRAVEL NETWORK
By:
----------------------------------------
Richard D.C. Whilden,
President and Chief Executive Officer
Address: 445 Sherman Avenue
Palo Alto, CA 94306
<PAGE>
SUBSCRIPTION
------------
Internet Travel Network
445 Sherman Avenue
Palo Alto, CA 94306
Attention: Corporate Secretary
The undersigned hereby elects to purchase, pursuant to the provisions
of the Warrant to Purchase Shares of Series C Preferred Stock dated
__________________, ______ issued by Internet Travel Network (the "Company") and
held by the undersigned, ___________ shares of Series C Preferred Stock of the
Company.
Payment of the exercise price per share required under such Warrant
accompanies this Subscription.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
Date: By:
------------------- ---------------------------------------
Print Name:
-------------------------------
Address:
------------------------------------------
------------------------------------------
------------------------------------------
Exact Name in which shares should be registered:
- ------------------------------------
<PAGE>
Exhibit 10.29
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
WARRANT TO PURCHASE PREFERRED STOCK
of
GETTHERE.COM
Void after September 14, 2002
This Warrant is issued to Covia LLC, or its registered assigns
("Holder") by GetThere.com, a California corporation (the "Company"), on
September 14, 1999 (the "Warrant Issue Date"). This Warrant is issued pursuant
to the terms of that certain Preferred Stock and Warrant Purchase Agreement
dated as of the Warrant Issue Date, a copy of which is attached hereto as
Attachment A (the "Purchase Agreement").
- ------------
1. Purchase Shares. Subject to the terms and conditions hereinafter
---------------
set forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company up to One
Million One Hundred Thirty-Six Thousand Eight Hundred Twenty-One (1,136,821)
fully paid and nonassessable shares of Series C Preferred Stock of the Company,
as constituted on the Warrant Issue Date (the "Preferred Stock"). The number of
shares of Preferred Stock issuable pursuant to this Section 1 (the "Shares")
shall be subject to adjustment pursuant to Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $11.20,
--------------
as adjusted from time to time pursuant to Section 8 hereof (the "Exercise
Price").
3. Exercise Period. This Warrant shall be exercisable, in whole or in
---------------
part, during the term commencing on the Warrant Issue Date and ending at 5:00
p.m. on September 14, 2002; provided, however, that in the event of (a) the
closing of the Company's sale or transfer of all or substantially all of its
assets or (b) the closing of the acquisition of the Company by another entity by
means of merger, consolidation or other transaction or series of related
transactions, resulting in the exchange of the outstanding shares of the
Company's capital stock unless (i) the shareholders of the Company immediately
prior to such transaction or series of related transactions are holders of a
majority of the voting equity securities of the surviving or acquiring
corporation immediately thereafter and (ii) each of such shareholders
immediately prior to such transaction or series of related transactions holds
the same pro rata share of such
<PAGE>
majority of the voting equity securities of the surviving or acquiring
corporation as each hold of the Company immediately prior to such transaction or
series of related transactions, this Warrant shall, on the date of such event,
no longer be exercisable and become null and void. In the event of a proposed
transaction of the kind described above, the Company shall notify the Holder at
least twenty (20) days prior to the consummation of such event or transaction.
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Election attached hereto, to the Secretary of
the Company at its principal offices; and
(b) the payment to the Company of a cash amount equal to the
aggregate Exercise Price for the number of Shares being purchased, such
amount to be paid by check or wire transfer.
5. Net Exercise. In lieu of exercising this Warrant pursuant to
------------
Section 4, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder hereof a number
of shares of Preferred Stock computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Preferred Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of Shares in respect of which the net issue
election is made;
A = The fair market value of one share of the Preferred Stock at
the time the net issue election is made;
B = The Exercise Price (as adjusted to the date of the net
issuance).
For purposes of this Section 5, the fair market value of one share of Preferred
Stock (or, to the extent all such Preferred Stock has been converted into the
Company's Common Stock) as of a particular date shall be determined as follows:
(i) if traded on a securities exchange or through the Nasdaq Stock Market, the
value shall be deemed to be the average of the closing prices of the securities
on such exchange over the thirty (30) day period ending three (3) days prior to
the net exercise election; (ii) if traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) day period ending three (3) days prior to the
net exercise; and (iii) if there is no active public market, the value shall be
the fair market value thereof, as determined in good faith by the Board of
Directors of the
2
<PAGE>
Company; provided, that, if the Warrant is being exercised upon the closing of
the initial public offering of the Company, the value will be the initial "Price
to Public" of one share of such Preferred Stock (or of the aggregate number of
shares of Common Stock issuable upon conversion of such Preferred Stock)
specified in the final prospectus with respect to such offering.
6. Certificates for Shares. Upon the exercise of the purchase rights
-----------------------
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the subscription notice. In case the holder shall exercise this
Warrant with respect to less than all of the Shares that may be purchased under
this Warrant, the Company shall execute a new warrant in the form of this
Warrant for the balance of such Shares and deliver such new warrant to the
holder of this Warrant.
7. Issuance of Shares. The Company covenants that it will at all
------------------
times keep available such number of authorized shares of its Series C Preferred
Stock, free from all preemptive rights with respect thereto, which will be
sufficient to permit the exercise of this Warrant for the full number of Shares
specified herein. The Company covenants that the Shares, when issued pursuant to
the exercise of this Warrant, will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of
-------------------------------------------------
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
----------------------------------------------
shall at any time prior to the expiration of this Warrant subdivide its
Preferred Stock, by split-up or otherwise, or combine its Preferred Stock, or
issue additional shares of its Preferred Stock or Common Stock as a dividend
with respect to any shares of its Preferred Stock, the number of Shares issuable
on the exercise of this Warrant shall forthwith be proportionately increased in
the case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 8(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case
--------------------------------------------------
of any reclassification, capital reorganization, or change in the Preferred
Stock of the Company (other than as a result of a subdivision, combination, or
stock dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property
3
<PAGE>
receivable in connection with such reclassification, reorganization, or change
by a holder of the same number of shares of Preferred Stock as were purchasable
by the Holder immediately prior to such reclassification, reorganization, or
change. In any such case appropriate provisions shall be made with respect to
the rights and interest of the Holder so that the provisions hereof shall
thereafter be applicable with respect to any shares of stock or other securities
and property deliverable upon exercise hereof, and appropriate adjustments shall
be made to the purchase price per share payable hereunder, provided the
aggregate purchase price shall remain the same.
(c) Immediately prior to the closing of any public offering of the
Company's equity securities in which all of the Company's outstanding Preferred
Stock is converted into Common Stock (provided, however, that any shares of
Series D1, D2 or D3 Preferred Stock which are not converted into Common Stock in
such public offering shall not be included in the conditions of this subsection
8(c)), any portion of this Warrant then not exercised will thereafter be
exercisable for the number of shares of the Company's Common Stock that would
have resulted from the conversion, pursuant to the Company's Articles of
Incorporation as of such public offering, of the maximum number of shares of
Preferred Stock that could have been acquired by the Holder upon the exercise of
the unexpired portion of this Warrant immediately prior to such public offering.
(d) Notice of Adjustment. When any adjustment is required to be
--------------------
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Warrant Price, the Company shall promptly notify the holder of such
event and of the number of shares of Preferred Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
(e) No Impairment. The Company and the holder of this Warrant will
-------------
not, by any voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company or the holder of this Warrant, respectively, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 8
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Company and the holder of this Warrant against
impairment.
9. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the
---------------------
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 10 shall limit the right of the Holder to be
provided the Notices required under this Warrant.
11. Registration Rights. The Shares issuable upon exercise of this
-------------------
Warrant, and any securities issuable upon conversion of such Shares, possess
certain "piggyback"
4
<PAGE>
registration rights as set forth in Section 5.2 of that certain Amended and
Restated Investors' Rights Agreement, dated the Warrant Issue Date, by and among
the Company and the Investors listed on Schedule A thereto.
----------
12. Transfers of Warrant. Subject to compliance with applicable
--------------------
federal and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the holders one or more appropriate
new warrants.
13. Successors and Assigns. The terms and provisions of this Warrant
----------------------
and the Purchase Agreement shall inure to the benefit of, and be binding upon,
the Company and the Holders hereof and their respective successors and assigns.
14. Amendments and Waivers. Any term of this Warrant may be amended
----------------------
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
15. Notices. All notices required under this Warrant and shall be
-------
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one business day after being
sent, when sent by professional overnight courier service, or (iv) five days
after posting when sent by registered or certified mail. Notices to the Company
shall be sent to the principal office of the Company (or at such other place as
the Company shall notify the Holder hereof in writing). Notices to the Holder
shall be sent to the address of the Holder on the books of the Company (or at
such other place as the Holder shall notify the Company hereof in writing).
16. Attorneys' Fees. If any action of law or equity is necessary to
---------------
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
17. Captions. The section and subsection headings of this Warrant are
--------
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
18. Governing Law. This Warrant shall be governed by the laws of the
-------------
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
19. Termination Date. This Warrant shall terminate, not be exercisable
----------------
for any shares of Preferred Stock (or any other securities of the Company) and
be null and void on the earliest of (i) the date when both the Holder and the
Company consent in writing to terminate the
5
<PAGE>
Warrant or (ii) the date three (3) years from the Warrant Issue Date (such
earliest date shall herein be referred to as the "Termination Date").
6
<PAGE>
IN WITNESS WHEREOF, GetThere.com caused this Warrant to be executed by
an officer thereunto duly authorized.
GETTHERE.COM
By:
-----------------------------------------------
Kenneth Pelowski,
Chief Operating Officer and Chief Financial
Officer
SIGNATURE PAGE TO GETTHERE.COM
COVIA SERIES C WARRANT
<PAGE>
NOTICE OF EXERCISE
------------------
To: GetThere.com
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________________ shares of Series C Preferred Stock of
_________________, pursuant to the terms of the attached Warrant
and payment of the Exercise Price per share required under such
Warrant accompanies this notice;
OR
________ (b) Exercise the attached Warrant for [all of the shares] [________
of the shares] [cross out inapplicable phrase] purchasable under
the Warrant pursuant to the net exercise provisions of Section 5
of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
_________________________________________
By:
_______________________________________
[NAME]
Address:
____________________________________________
____________________________________________
Date:
______________________
Name in which shares should be registered:
___________________________________________
<PAGE>
Exhibit 10.30
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
WARRANT TO PURCHASE PREFERRED STOCK
of
GETTHERE.COM
This Warrant is issued to Northwest Airlines, Inc., a Minnesota
corporation, or its registered assigns ("Holder") by GetThere.com, a California
corporation (the "Company"), on August ___, 1999 (the "Warrant Issue Date").
1. Purchase Shares. Subject to the terms and conditions hereinafter
---------------
set forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company up to that
number of fully paid and nonassessable shares of Series C Preferred Stock of the
Company set forth in Section 2 hereto, as constituted on the Warrant Issue Date
(the "Preferred Stock").
2. Initial Number of Shares. This Warrant shall initially be
------------------------
exercisable for: (i) one million six hundred fifty thousand (1,650,000) shares
of Preferred Stock if the Implementation Conditions (as defined in Section 4
hereto) are completed on or prior to the one year anniversary of the Warrant
Issue Date, (ii) one million five hundred thousand (1,500,000) shares of
Preferred Stock if the Implementation Conditions are completed after the one
year anniversary of the Warrant Issue Date but on or prior to the date five
hundred forty-seven (547) days after the Warrant Issue Date, or (iii) one
million two hundred fifty thousand (1,250,000) shares of Preferred Stock if the
Implementation Conditions are completed after the five hundred forty-seven (547)
days after the Warrant Issue Date but on or prior to the second year anniversary
of the Warrant Issue Date, subject to Section 4 hereof. The number of shares of
Preferred Stock issuable pursuant to this Section 2 (the "Shares") shall be
subject to adjustment pursuant to Section 9 hereof.
If the Holder's Website, NWA.com, has not begun processing
transactions utilizing the Company's Booking Engine by the dates set forth in
Section 2 above as a result of the Company's delay or failure to perform its
obligations under the Licensing Agreement (including but not limited to the
conditions contained in the Functional Requirements Document attached hereto as
Attachment A), then each of the periods set forth in Section 2 above shall be
- ------------
extended for a number of days equal to the period of such delay or failure;
provided, however,
<PAGE>
that any such extension of the periods set forth in Section 2 shall not be for
more than ninety (90) days.
3. Exercise Price. The purchase price for the Shares shall be $5.125,
--------------
as adjusted from time to time pursuant to Section 10 hereof (the "Exercise
Price").
4. Exercise Period. This Warrant shall be exercisable, in whole or in
---------------
part, during the term commencing on the date that (i) Holder and the Company
enter into an agreement on the terms and conditions set forth on Attachment B or
------------
such other terms mutually agreed upon by Holder and the Company (the "License
Agreement") and (ii) the Holder's Website has begun processing transactions
utilizing the Company's Booking Engine (such date hereinafter referred to as the
"Vesting Date" and such conditions (i) and (ii) hereinafter referred to as the
"Implementation Conditions") and ending at 5:00 p.m. on the fourth (4th)
anniversary of the Warrant Issue Date (the "Expiration Date"); provided,
however, that in the event of any sale, transfer, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company resulting in the transfer of 50% or more
of the outstanding voting power of the Company (the "Acquisition"), upon the
closing of such Acquisition the successor entity shall assume the obligations of
this Warrant, and, if the Implementation Conditions have been satisfied prior to
the consummation of the Acquisition, this Warrant shall be exercisable in whole
or in part for the same securities or cash as would have been received for the
Shares if the Holder had exercised the Warrant at or immediately prior to the
closing of such Acquisition. If the Implementation Conditions have not been
satisfied prior to the consummation of the Acquisition, the Holder's ability to
exercise the assumed Warrant shall continue to be subject to such Implementation
Conditions and the successor entity shall assume the obligations of the Company
pursuant to the provisions of this Warrant and the Implementation Conditions.
Notwithstanding the foregoing, the successor entity shall not be
required to assume the obligations of this Warrant in the event that the
Implementation Conditions have been satisfied and five percent (5%) or more of
the value of the consideration to be received by the shareholders of the Company
in an Acquisition is in the form of cash (the "Cash Acquisition"). If the
Implementation Conditions have been satisfied and the Company proposes to enter
into a Cash Acquisition, the Holder shall notify the Company within ten (10)
days of receiving notice from the Company about the Cash Acquisition as to
whether the Holder intends to exercise the Warrant pursuant to Section 6 hereto
or by paying cash for the exercise price of the Warrant. If the Holder fails to
notify the Company in the requisite time period, the Warrant shall be deemed to
have been automatically exercised pursuant to Section 6 hereto immediately prior
to the consummation of such Cash Acquisition and thereafter Holder shall
participate in the Cash Acquisition as a holder of the Shares (or other
securities issuable upon exercise of this Warrant) on the same terms as other
holders of the same class of securities of the Company; and following the
consummation of a Cash Acquisition, this Warrant and all rights hereunder shall
terminate.
In the event of a proposed Acquisition, the Company shall notify the
holder of the Warrant at least twenty (20) days prior to the consummation of
such event or transaction.
2
<PAGE>
5. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 2 and Section 30, the Holder may
exercise, in whole or in part, the purchase rights evidenced hereby. Such
exercise shall be effected by:
(a) the surrender of the Warrant, together with a duly
executed copy of the form of Notice of Election attached hereto, to the
Secretary of the Company at its principal offices; and
(b) the payment to the Company by check or wire transfer of an
amount equal to the aggregate Exercise Price for the number of Shares being
purchased.
Upon receipt of such items, the Company shall issue to the Holder a
certificate for the number of shares of Preferred Stock purchased. The Holder,
upon exercise of the Warrant, shall be deemed to have become the holder of the
shares represented thereby (and such shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which the
Warrant is exercised. In the event of any exercise of the rights represented by
the Warrant, certificates for the shares so purchased shall be delivered to the
Holder or its designee (with appropriate restrictive legends if applicable)
within ten (10) days after receipt of such notice and, unless the Warrant has
been fully exercised or expired, a new Warrant representing the remaining
portion of the Warrant and the underlying shares, if any, with respect to which
this Warrant shall not then have been exercised shall also be issued to the
Holder as soon as possible, but in any event within such ten (10) day period.
6. Net Exercise. In lieu of exercising this Warrant pursuant to
------------
Section 5, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder hereof a number
of shares of Preferred Stock computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Preferred Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of Shares in respect of which the net issue
election is made;
A = The fair market value of one share of the Preferred Stock at
the time the net issue election is made;
B = The Exercise Price (as adjusted to the date of the net
issuance).
For purposes of this Section 6, the fair market value of one share of Preferred
Stock (or, to the extent all such Preferred Stock has been converted into the
Company's Common Stock, the fair market value of one share of Common Stock) as
of a particular date shall be determined as follows: (i) if traded on a
securities exchange or through the Nasdaq National Market, the value
3
<PAGE>
shall be deemed to be the average of the closing prices of the securities on
such exchange over the ten (10) day period ending three (3) days prior to the
net exercise election; (ii) if traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the ten (10) day period ending three (3) days prior to the net
exercise; and (iii) if there is no active public market, the value shall be the
fair market value thereof, as determined in good faith by the Board of Directors
of the Company (the "Board), but if the Holder does not approve of the
determination by the Board, then by a nationally recognized investment banking
firm selected by the Company and approved by Holder which approval shall not be
unreasonably withheld, which investment banking firm shall determine such value
based on the Company as a going concern; provided, however, that if the Warrant
is being exercised simultaneously with the closing of the issuance and sale of
shares of Common Stock of the Company in the Company's first underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, the value will be the initial "Price to Public" of one
share of such Preferred Stock (or Common Stock issuable upon conversion of such
Preferred Stock) specified in the final prospectus with respect to such
offering.
7. Representations and Warranties.
------------------------------
A. Holder. The Holder hereby represents and warrants that:
------
(a) Authorization. The Holder has full power and authority to
-------------
enter into this Warrant and the Amendment and Waiver Agreement (as defined in
Section 8 hereto), and this Warrant and the Amendment and Waiver Agreement
constitute its valid and legally binding obligation, enforceable in accordance
with their terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.
(b) Purchase Entirely for Own Account. This Warrant is being
---------------------------------
issued to such Holder in reliance upon such Holder's representation to the
Company, which by such Holder's execution of this Warrant such Holder hereby
confirms, that this Warrant, the Preferred Stock to be received by such Holder
upon exercise of this Warrant and the Common Stock issuable upon conversion
thereof (collectively, the "Securities") will be acquired for investment for
such Holder's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Warrant, such Holder further represents that such
Holder does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Securities.
(c) Disclosure of Information. The Holder further represents
-------------------------
that it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the Warrant, the securities
underlying the Warrant, and the business, properties, prospects and financial
condition of the Company.
4
<PAGE>
(d) Investment Experience. The Holder is experienced in
---------------------
evaluating companies such as the Company and acknowledges that it can bear the
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Securities. If other than an individual, Holder
also represents it has not been organized for the purpose of acquiring the
Securities.
(e) Accredited Investor. The Holder is an "accredited
-------------------
investor" within the meaning of Securities and Exchange Commission ("SEC") Rule
501 of Regulation D, as presently in effect.
(f) Restricted Securities. The Holder understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, such Holder represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
(g) Further Limitations on Disposition. Without in any way
----------------------------------
limiting the representations set forth above, such Holder further agrees not to
make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Section 6, provided and to the extent this Section is then applicable,
and:
(i) There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(ii) (A) Such Holder shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such securities under the Act.
It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
(iii) Notwithstanding the provisions of Paragraphs (i)
and (ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder (A) that is a partnership to a partner of
such partnership or a retired partner of such partnership who retires after the
date hereof, or to the estate of any such partner or retired partner or the
transfer by gift, will or intestate succession of any partner to his or her
spouse or to the siblings, lineal descendants or ancestors of such partner or
his or her spouse, or (B) to any entity that is controlled by, controls or is
under common control with the Holder, if the transferee agrees in writing to be
subject to the terms hereof to the same extent as if he or she were an original
Holder hereunder.
5
<PAGE>
(h) Legends. It is understood that the certificates evidencing
-------
the Securities may bear one or all of the following legends:
(i) "These securities have not been registered under
the Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(ii) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
B. Company. The Company hereby represents and warrants that:
-------
(a) The Company has full power and authority to enter into
this Warrant, and this Warrant constitutes its valid and legally binding
obligation, enforceable in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies;
(b) The Shares, when issued upon exercise of the Warrant, will
be convertible at any time at the option of the holder of such Shares at the
conversion price and by means of the conversion mechanisms set forth in the
Amended and Restated Articles of Incorporation of the Company (the "Articles");
(c) The Shares are entitled to receive all conversion price
adjustments that shares of stock of the same class and series as the Shares are
entitled to receive under the Articles, irrespective of whether the Holder has
exercised the Warrant at the time when any such conversion price adjustments are
affected; and
(d) The Company is not in violation or default in any material
respect of any provision of its Amended and Restated Articles of Incorporation
or Bylaws, or in any material respect of any instrument, judgment, order, writ,
decree or contract to which it is a party or by which it is bound, or, to the
best of its knowledge, of any provision of any federal or state statute, rule or
regulation applicable to the Company. The execution, delivery and performance of
this Warrant and the Amendment and Waiver Agreement (as defined in Section 8
hereto), and the consummation of the transactions contemplated hereby and
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, order, writ, decree or
contract or an event that results in the creation of any lien, charge or
encumbrance upon any assets of the Company or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company, its business or operations
or any of its assets or properties.
6
<PAGE>
8. Admission, Amendment, Waiver and Consent Agreement. Prior to
--------------------------------------------------
the issuance of this Warrant by the Company, Holder shall execute the Admission,
Amendment, Waiver and Consent Agreement (the "AAWC Agreement") in the form
attached hereto as Attachment C.
------------
9. Issuance of Shares. The Company covenants that the Shares, when
------------------
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
10. Adjustment of Exercise Price and Number of Shares. The number
-------------------------------------------------
of and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If
----------------------------------------------
the Company shall at any time prior to the expiration of this Warrant subdivide
its Preferred Stock, by split-up or otherwise, or combine its Preferred Stock,
or issue additional shares of its Preferred Stock or Common Stock as a dividend
with respect to any shares of its Preferred Stock, the number of Shares issuable
on the exercise of this Warrant shall forthwith be proportionately increased in
the case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 10(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation.
--------------------------------------------------
In case of any reclassification, capital reorganization, or change in the
Preferred Stock of the Company (other than as a result of a subdivision,
combination, or stock dividend provided for in Section 10(a) above), then, as a
condition of such reclassification, reorganization, or change, lawful provision
shall be made, and duly executed documents evidencing the same from the Company
or its successor shall be delivered to the Holder, so that the Holder shall have
the right at any time prior to the expiration of this Warrant to purchase, at a
total price equal to that payable upon the exercise of this Warrant, the kind
and amount of shares of stock and other securities and property receivable in
connection with such reclassification, reorganization, or change by a holder of
the same number of shares of Preferred Stock as were purchasable by the Holder
immediately prior to such reclassification, reorganization, or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any shares of stock or other securities and property
deliverable upon exercise hereof, and appropriate adjustments shall be made to
the purchase price per share payable hereunder, provided the aggregate purchase
price shall remain the same. Notwithstanding the foregoing, in the event that
the outstanding shares of Preferred Stock of this Company are converted into
Common Stock upon the initial public offering of the Company, this Warrant shall
become exercisable, subject to the terms and conditions of this Warrant, for
shares of Common Stock.
7
<PAGE>
(c) Notice of Adjustment. When any adjustment is
--------------------
required to be made in the number or kind of shares purchasable upon exercise of
the Warrant, or in the Warrant Price, the Company shall issue a certificate
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated and
the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to Holder. The Company shall give
written notice to the Holder at least 10 days prior to the date on which the
Company closes its books or takes a record for determining rights to receive any
dividends or distributions.
11. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
12. No Shareholder Rights. Prior to exercise of this Warrant, the
---------------------
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 12 shall limit the right of the Holder to be
provided the Notices required under this Warrant. Notwithstanding the preceding
language of this Section 12, the Company shall, twenty (20) days prior to
amending the Amended and Restated Articles of Incorporation of the Company to
adversely affect the rights, preferences, privileges or limitations of the
Series C Preferred Stock, notify the Holder in writing and provide Holder with
any information or materials provided to the holders of the Series C Preferred
Stock regarding any such proposed amendment.
13. Transfers of Warrant. Subject to compliance with applicable
--------------------
federal and state securities laws, this Warrant and all rights (but only with
all related obligations) hereunder are transferable in whole or in part by the
Holder upon the prior written consent of the Company; provided however that
consents for transfers to any parent company or subsidiary company of the Holder
will not be unreasonably withheld. The transfer shall be recorded on the books
of the Company upon (i) the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, (ii) the payment to the Company of all
transfer taxes and other governmental charges imposed on such transfer and (iii)
such transferee's agreement in writing to be bound by and subject to the terms
and conditions of this Warrant. In the event of a partial transfer, the Company
shall issue to the holders one or more appropriate new warrants.
14. Successors and Assigns. The terms and provisions of this
----------------------
Warrant and the Purchase Agreement shall inure to the benefit of, and be binding
upon, the Company and the Holder hereof and their respective successors and
assigns.
15. "Market Stand-Off" Agreement. In connection with the initial
----------------------------
public offering of the Company's securities, each holder of this Warrant agrees,
upon request of the Company or the underwriters managing any such offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of
8
<PAGE>
any securities of the Company, including without limitation this Warrant, any
shares of Series C Preferred Stock issued or issuable upon exercise of this
Warrant and any shares of Common Stock issued or issuable in lieu of or upon
conversion of such shares of Series C Preferred Stock (other than those included
in the registration statement filed in connection with the offering), without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days) from
the effective date of the registration statement filed in connection with the
offering as may be requested by the underwriters. The holder of this Warrant
agrees that the Company may instruct its transfer agent to place stop-transfer
notations in its records to enforce the provisions of this Section 15.
16. Registration Rights. Pursuant to the AAWC Agreement, upon
-------------------
exercise of this Warrant, the Holder shall become a party to the Investor Rights
Agreement for purposes of Sections 1, 2, 5.2, 5.4 through 5.9, 6, 7, 9 through
11, and 13 through 19, and the Holder specifically shall not be a party for
---------
purposes of any other sections of the Investor Rights Agreement.
17. Amendments and Waivers. Any term of this Warrant may be amended
----------------------
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder. Any waiver or amendment effected
in accordance with this Section 17 shall be binding upon each holder of any
Shares purchased under this Warrant at the time outstanding (including
securities into which such Shares have been converted), each future holder of
all such Shares, and the Company.
18. Notices. All notices required under this Warrant and shall be
-------
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one (1) day after being sent,
when sent by professional overnight courier service, or (iv) five (5) days after
posting when sent by registered or certified mail. Notices to the Company shall
be sent to the principal office of the Company (or at such other place as the
Company shall notify the Holder hereof in writing). Notices to the Holder shall
be sent to the address of the Holder set forth below (or at such other place as
the Holder shall notify the Company hereof in writing):
Northwest Airlines, Inc.
5101 Northwest Drive
St. Paul, MN 55111-3034
Attn: Chief Financial Officer
With copy to:
Northwest Airlines, Inc.
5101 Northwest Drive
St. Paul, MN 55111-3034
Attn: General Counsel
9
<PAGE>
19. Attorneys' Fees. If any action of law or equity is necessary to
---------------
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
20. Captions. The section and subsection headings of this Warrant
--------
are inserted for convenience only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.
21. Governing Law. This Warrant shall be governed by the laws of
-------------
the State of California as applied to agreements among California residents made
and to be performed entirely within the State of California.
22. Survival. The warranties, representations and covenants
--------
contained in or made pursuant to this Warrant shall survive the execution,
delivery and exercise, if any, of this Warrant.
23. Reservation of Shares. The Company will at all times have
---------------------
authorized and reserved a sufficient number of shares of Preferred Stock (and a
sufficient number of Common Stock into which the shares of Preferred Stock
underlying the Warrant are convertible at any time at the option of the holder
of Preferred Stock) to provide for the exercise of the rights to purchase the
shares of Preferred Stock and the conversion of such shares into Common Stock as
provided in this Warrant and the Amended and Restated Articles of Incorporation
of the Company.
24. Redemption. Except as specifically provided herein, the Warrant
----------
is not redeemable by the Company at any time.
25. Severability. If any one or more of the provisions contained
------------
herein, or the application thereof in any circumstance, is held invalid, illegal
and unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
26. Counterparts. The Warrant may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
27. Saturdays, Sundays, Holidays, Etc. If the last or appointed day
---------------------------------
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or a legal holiday.
28. Lost Warrant. The Company covenants to the Holder that, upon
------------
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction, upon receipt of an indemnity
10
<PAGE>
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of this Warrant, the Company will make and
deliver a new Warrant of like tenor, in lieu of the lost, stolen destroyed or
mutilated document.
29. Subsequent Warrants. The Company covenants that it will not
-------------------
issue warrants to other companies primarily engaged in the businesses of car
rentals, hotel accommodations, airline travel and/or booking reservations for
any of the preceding (the "New Warrant") that are more favorable than this
Warrant with regard to (a) length of exercise period of the New Warrant; (b)
exercise price of the shares for which the New Warrant is exercisable; or (c)
number of shares for which the New Warrant is exercisable, unless the Company
either receives the prior written consent of the Holder or amends the applicable
provisions of this Warrant so that this Warrant becomes equivalent to the New
Warrant with regard to (a), (b) and (c) of this Section 29; provided, however,
that the Company shall have no obligation to comply with this Section 29 or to
modify this Warrant in connection with any warrants issued after the date one
(1) year from the Warrant Issue Date.
30. Shareholders Agreement. Prior to the issuance of this Warrant,
----------------------
the Holder shall execute an adoption agreement substantially of the form
attached hereto as Attachment D (the "Adoption Agreement"), which Adoption
------------
Agreement shall make the Holder a party to that certain Amended and Restated
Shareholders Agreement dated May 10, 1999 as a "New Shareholder" pursuant to
Section 16(c) of such agreement upon exercise of this Warrant by the Holder.
31. Termination Date. This Warrant shall terminate, not be
----------------
exercisable for any shares of Preferred Stock (or any other securities of the
Company) and be null and void on the earliest of (i) the second year anniversary
of the Warrant Issue Date (or the date after the second year anniversary if
there was a date adjustment pursuant to Section 2 above), if the Implementation
Conditions are not completed on or prior to such second year anniversary (or
adjusted second year anniversary), (ii) the date when both the Holder and the
Company consent in writing to terminate the Warrant, or (iii) the date four (4)
years from the Warrant Issue Date (such earliest date shall herein be referred
to as the "Termination Date").
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by an officer thereunto duly authorized.
GETTHERE.COM
By:
---------------------------------------
Kenneth Pelowski
Chief Financial Officer
NORTHWEST AIRLINES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
<PAGE>
NOTICE OF EXERCISE
------------------
To: GETTHERE.COM
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________________ shares of Series C Preferred Stock of
GetThere.com, pursuant to the terms of the attached Warrant and
payment of the Exercise Price per share required under such
Warrant accompanies this notice;
OR
________ (b) Exercise the attached Warrant for [all of the shares] [________
of the shares] [cross out inapplicable phrase] purchasable under
the Warrant pursuant to the net exercise provisions of Section 6
of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
------------------------------------------
By:
---------------------------------------
[NAME]
Address:
------------------------------------------
------------------------------------------
Date:
-----------------
Name in which shares should be registered:
- ------------------------------------------
<PAGE>
Exhibit 10.31
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
WARRANT TO PURCHASE PREFERRED STOCK
of
GETTHERE.COM
Void after September 14, 2002
This Warrant is issued to America West Airlines, Inc., or its
registered assigns ("Holder") by GetThere.com, a California corporation (the
"Company"), on September 14, 1999 (the "Warrant Issue Date"). This Warrant is
issued pursuant to the terms of that certain Preferred Stock and Warrant
Purchase Agreement dated as of the Warrant Issue Date, a copy of which is
attached hereto as Attachment A (the "Purchase Agreement").
------------
1. Purchase Shares. Subject to the terms and conditions hereinafter
---------------
set forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company up to Five
Hundred Thousand (500,000) fully paid and nonassessable shares of Series E
Preferred Stock of the Company, as constituted on the Warrant Issue Date (the
"Preferred Stock"). The number of shares of Preferred Stock issuable pursuant to
this Section 1 (the "Shares") shall be subject to adjustment pursuant to
Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $12.50,
--------------
as adjusted from time to time pursuant to Section 8 hereof (the "Exercise
Price").
3. Exercise Period. This Warrant shall be exercisable, in whole or in
---------------
part, during the term commencing on October 1, 1999 and ending at 5:00 p.m. on
September 14, 2002; provided, however, that in the event of (a) the closing of
the Company's sale or transfer of all or substantially all of its assets or (b)
the closing of the acquisition of the Company by another entity by means of
merger, consolidation or other transaction or series of related transactions,
resulting in the exchange of the outstanding shares of the Company's capital
stock unless (i) the shareholders of the Company immediately prior to such
------
transaction or series of related transactions are holders of a majority of the
voting equity securities of the surviving or acquiring corporation immediately
thereafter and (ii) each of such shareholders immediately prior to such
transaction or series of related transactions holds the same pro rata share of
such majority of the voting equity securities of the surviving or acquiring
corporation as each hold of the Company
<PAGE>
immediately prior to such transaction or series of related transactions, this
Warrant shall, on the date of such event, no longer be exercisable and become
null and void. In the event of a proposed transaction of the kind described
above, the Company shall notify the Holder at least twenty (20) days prior to
the consummation of such event or transaction.
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Election attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of a cash amount equal to the
aggregate Exercise Price for the number of Shares being purchased, such amount
to be paid by check or wire transfer.
5. Net Exercise. In lieu of exercising this Warrant pursuant to
------------
Section 4, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder hereof a number
of shares of Preferred Stock computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Preferred Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of Shares in respect of which the net issue
election is made;
A = The fair market value of one share of the Preferred Stock at
the time the net issue election is made;
B = The Exercise Price (as adjusted to the date of the net
issuance).
For purposes of this Section 5, the fair market value of one share of Preferred
Stock (or, to the extent all such Preferred Stock has been converted into the
Company's Common Stock) as of a particular date shall be determined as follows:
(i) if traded on a securities exchange or through the Nasdaq Stock Market, the
value shall be deemed to be the average of the closing prices of the securities
on such exchange over the thirty (30) day period ending three (3) days prior to
the net exercise election; (ii) if traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) day period ending three (3) days prior to the
net exercise; and (iii) if there is no active public market, the value shall be
the fair market value thereof, as determined in good faith by the Board of
Directors of the Company; provided, that, if the Warrant is being exercised upon
the closing of the initial public
2
<PAGE>
offering of the Company, the value will be the initial "Price to Public" of one
share of such Preferred Stock (or of the aggregate number of shares of Common
Stock issuable upon conversion of such Preferred Stock) specified in the final
prospectus with respect to such offering.
6. Certificates for Shares. Upon the exercise of the purchase rights
-----------------------
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the subscription notice. In case the holder shall exercise this
Warrant with respect to less than all of the Shares that may be purchased under
this Warrant, the Company shall execute a new warrant in the form of this
Warrant for the balance of such Shares and deliver such new warrant to the
holder of this Warrant.
7. Issuance of Shares. The Company covenants that it will at all
------------------
times keep available such number of authorized shares of its Series E Preferred
Stock, free from all preemptive rights with respect thereto, which will be
sufficient to permit the exercise of this Warrant for the full number of Shares
specified herein. The Company covenants that the Shares, when issued pursuant to
the exercise of this Warrant, will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of
-------------------------------------------------
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the
----------------------------------------------
Company shall at any time prior to the expiration of this Warrant subdivide its
Preferred Stock, by split-up or otherwise, or combine its Preferred Stock, or
issue additional shares of its Preferred Stock or Common Stock as a dividend
with respect to any shares of its Preferred Stock, the number of Shares issuable
on the exercise of this Warrant shall forthwith be proportionately increased in
the case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 8(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
--------------------------------------------------
any reclassification, capital reorganization, or change in the Preferred Stock
of the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the
3
<PAGE>
same number of shares of Preferred Stock as were purchasable by the Holder
immediately prior to such reclassification, reorganization, or change. In any
such case appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any shares of stock or other securities and property
deliverable upon exercise hereof, and appropriate adjustments shall be made to
the purchase price per share payable hereunder, provided the aggregate purchase
price shall remain the same.
(c) Immediately prior to the closing of any public offering of the
Company's equity securities in which all of the Company's outstanding Preferred
Stock is converted into Common Stock (provided, however, that any shares of
Series D1, D2 or D3 Preferred Stock which are not converted into Common Stock in
such public offering shall not be included in the conditions of this subsection
8(c)), any portion of this Warrant then not exercised will thereafter be
exercisable for the number of shares of the Company's Common Stock that would
have resulted from the conversion, pursuant to the Company's Articles of
Incorporation as of such public offering, of the maximum number of shares of
Preferred Stock that could have been acquired by the Holder upon the exercise of
the unexpired portion of this Warrant immediately prior to such public offering.
(d) Notice of Adjustment. When any adjustment is required to be made
--------------------
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Warrant Price, the Company shall promptly notify the holder of such event
and of the number of shares of Preferred Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
(e) No Impairment. The Company and the holder of this Warrant will
-------------
not, by any voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company or the holder of this Warrant, respectively, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 8
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Company and the holder of this Warrant against
impairment.
9. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the Holder
---------------------
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the Notices required under this Warrant.
11. Registration Rights. The Shares issuable upon exercise of this
-------------------
Warrant, and any securities issuable upon conversion of such Shares, possess
certain "piggyback" registration rights as set forth in Section 5.2 of that
certain Amended and Restated Investors'
4
<PAGE>
Rights Agreement, dated the Warrant Issue Date, by and among the Company and the
Investors listed on Schedule A thereto.
----------
12. Transfers of Warrant. Subject to compliance with applicable federal
--------------------
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the holders one or more appropriate
new warrants.
13. Successors and Assigns. The terms and provisions of this Warrant and
----------------------
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
14. Amendments and Waivers. Any term of this Warrant may be amended and
----------------------
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
15. Notices. All notices required under this Warrant and shall be deemed
-------
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one BUSINESS day after being sent,
when sent by professional overnight courier service, or (iv) five days after
posting when sent by registered or certified mail. Notices to the Company shall
be sent to the principal office of the Company (or at such other place as the
Company shall notify the Holder hereof in writing). Notices to the Holder shall
be sent to the address of the Holder on the books of the Company (or at such
other place as the Holder shall notify the Company hereof in writing).
16. Attorneys' Fees. If any action of law or equity is necessary to
---------------
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
17. Captions. The section and subsection headings of this Warrant are
--------
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
18. Governing Law. This Warrant shall be governed by the laws of the
-------------
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
19. Termination Date. This Warrant shall terminate, not be exercisable
----------------
for any shares of Preferred Stock (or any other securities of the Company) and
be null and void on the earliest of (i) the date when both the Holder and the
Company consent in writing to terminate the Warrant, (ii) the date when the
Company exercises its rights under Section 1 of that certain Letter Agreement
between the Holder, the Company and Air Canada, dated September __, 1999,
5
<PAGE>
or (iii) the date three (3) years from the Warrant Issue Date (such earliest
date shall herein be referred to as the "Termination Date").
6
<PAGE>
IN WITNESS WHEREOF, GetThere.com caused this Warrant to be executed by
an officer thereunto duly authorized.
GETTHERE.COM
By:
-----------------------------------------
Kenneth Pelowski,
Chief Operating Officer and Chief Financial
Officer
SIGNATURE PAGE TO GETTHERE.COM
AMERICA WEST AIRLINES, INS. WARRANT
<PAGE>
NOTICE OF EXERCISE
------------------
To: GetThere.com
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________________ shares of Series E Preferred Stock of
_________________, pursuant to the terms of the attached Warrant
and payment of the Exercise Price per share required under such
Warrant accompanies this notice;
OR
________ (b) Exercise the attached Warrant for [all of the shares] [________
of the shares] [cross out inapplicable phrase] purchasable under
the Warrant pursuant to the net exercise provisions of Section 5
of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
-----------------------------------------
By:
--------------------------------------
[NAME]
Address:
-----------------------------------------
-----------------------------------------
Date:
----------------
Name in which shares should be registered:
- ------------------------------------------
<PAGE>
Exhibit 10.32
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
WARRANT TO PURCHASE PREFERRED STOCK
of
GETTHERE.COM
Void after September 14, 2002
This Warrant is issued to Air Canada, or its registered assigns
("Holder") by GetThere.com, a California corporation (the "Company"), on
September 14, 1999 (the "Warrant Issue Date"). This Warrant is issued pursuant
to the terms of that certain Preferred Stock and Warrant Purchase Agreement
dated as of the Warrant Issue Date, a copy of which is attached hereto as
Attachment A (the "Purchase Agreement").
- ------------
1. Purchase Shares. Subject to the terms and conditions hereinafter
---------------
set forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company up to Two
Hundred Thousand (200,000) fully paid and nonassessable shares of Series E
Preferred Stock of the Company, as constituted on the Warrant Issue Date (the
"Preferred Stock"). The number of shares of Preferred Stock issuable pursuant to
this Section 1 (the "Shares") shall be subject to adjustment pursuant to
Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $12.50,
--------------
as adjusted from time to time pursuant to Section 8 hereof (the "Exercise
Price").
3. Exercise Period. This Warrant shall be exercisable, in whole or in
---------------
part, during the term commencing on October 25, 1999 and ending at 5:00 p.m. on
September 14, 2002; provided, however, that in the event of (a) the closing of
the Company's sale or transfer of all or substantially all of its assets or (b)
the closing of the acquisition of the Company by another entity by means of
merger, consolidation or other transaction or series of related transactions,
resulting in the exchange of the outstanding shares of the Company's capital
stock unless (i) the shareholders of the Company immediately prior to such
------
transaction or series of related transactions are holders of a majority of the
voting equity securities of the surviving or acquiring corporation immediately
thereafter and (ii) each of such shareholders immediately prior to such
transaction or series of related transactions holds the same pro rata share of
such majority of the voting equity securities of the surviving or acquiring
corporation as each hold of the Company
<PAGE>
immediately prior to such transaction or series of related transactions, this
Warrant shall, on the date of such event, no longer be exercisable and become
null and void. In the event of a proposed transaction of the kind described
above, the Company shall notify the Holder at least twenty (20) days prior to
the consummation of such event or transaction.
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Election attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of a cash amount equal to the
aggregate Exercise Price for the number of Shares being purchased, such amount
to be paid by check or wire transfer.
5. Net Exercise. In lieu of exercising this Warrant pursuant to
------------
Section 4, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder hereof a number
of shares of Preferred Stock computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Preferred Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of Shares in respect of which the net issue
election is made;
A = The fair market value of one share of the Preferred Stock at
the time the net issue election is made;
B = The Exercise Price (as adjusted to the date of the net
issuance).
For purposes of this Section 5, the fair market value of one share of Preferred
Stock (or, to the extent all such Preferred Stock has been converted into the
Company's Common Stock) as of a particular date shall be determined as follows:
(i) if traded on a securities exchange or through the Nasdaq Stock Market, the
value shall be deemed to be the average of the closing prices of the securities
on such exchange over the thirty (30) day period ending three (3) days prior to
the net exercise election; (ii) if traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) day period ending three (3) days prior to the
net exercise; and (iii) if there is no active public market, the value shall be
the fair market value thereof, as determined in good faith by the Board of
Directors of the Company; provided, that, if the Warrant is being exercised upon
the closing of the IPO, the value
2
<PAGE>
will be the initial "Price to Public" of one share of such Preferred Stock (or
of the aggregate number of shares of Common Stock issuable upon conversion of
such Preferred Stock) specified in the final prospectus with respect to such
offering.
6. Certificates for Shares. Upon the exercise of the purchase rights
-----------------------
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the subscription notice. In case the holder shall exercise this
Warrant with respect to less than all of the Shares that may be purchased under
this Warrant, the Company shall execute a new warrant in the form of this
Warrant for the balance of such Shares and deliver such new warrant to the
holder of this Warrant.
7. Issuance of Shares. The Company covenants that it will at all
------------------
times keep available such number of authorized shares of its Series E Preferred
Stock, free from all preemptive rights with respect thereto, which will be
sufficient to permit the exercise of this Warrant for the full number of Shares
specified herein. The Company covenants that the Shares, when issued pursuant to
the exercise of this Warrant, will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of
-------------------------------------------------
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the
----------------------------------------------
Company shall at any time prior to the expiration of this Warrant subdivide its
Preferred Stock, by split-up or otherwise, or combine its Preferred Stock, or
issue additional shares of its Preferred Stock or Common Stock as a dividend
with respect to any shares of its Preferred Stock, the number of Shares issuable
on the exercise of this Warrant shall forthwith be proportionately increased in
the case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 8(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case
--------------------------------------------------
of any reclassification, capital reorganization, or change in the Preferred
Stock of the Company (other than as a result of a subdivision, combination, or
stock dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Preferred Stock as were purchasable by the Holder immediately prior
3
<PAGE>
to such reclassification, reorganization, or change. In any such case
appropriate provisions shall be made with respect to the rights and interest of
the Holder so that the provisions hereof shall thereafter be applicable with
respect to any shares of stock or other securities and property deliverable upon
exercise hereof, and appropriate adjustments shall be made to the purchase price
per share payable hereunder, provided the aggregate purchase price shall remain
the same.
(c) Immediately prior to the closing of any public offering of
the Company's equity securities in which all of the Company's outstanding
Preferred Stock is converted into Common Stock (provided, however, that any
shares of Series D1, D2 or D3 Preferred Stock which are not converted into
Common Stock in such public offering shall not be included in the conditions of
this subsection 8(c)), any portion of this Warrant then not exercised will
thereafter be exercisable for the number of shares of the Company's Common Stock
that would have resulted from the conversion, pursuant to the Company's Articles
of Incorporation as of such public offering, of the maximum number of shares of
Preferred Stock that could have been acquired by the Holder upon the exercise of
the unexpired portion of this Warrant immediately prior to such public offering.
(d) Notice of Adjustment. When any adjustment is required to be
--------------------
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Warrant Price, the Company shall promptly notify the holder of such
event and of the number of shares of Preferred Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
(e) No Impairment. The Company and the holder of this Warrant
-------------
will not, by any voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company or the holder of this Warrant, respectively, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 8
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Company and the holder of this Warrant against
impairment.
9. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the
---------------------
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 10 shall limit the right of the Holder to be
provided the Notices required under this Warrant.
11. Registration Rights. The Shares issuable upon exercise of this
-------------------
Warrant, and any securities issuable upon conversion of such Shares, possess
certain "piggyback" registration rights as set forth in Section 5.2 of that
certain Amended and Restated Investors'
4
<PAGE>
Rights Agreement, dated the Warrant Issue Date, by and among the Company and the
Investors listed on Schedule A thereto.
----------
12. Transfers of Warrant. Subject to compliance with applicable
--------------------
federal and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the holders one or more appropriate
new warrants.
13. Successors and Assigns. The terms and provisions of this Warrant
----------------------
and the Purchase Agreement shall inure to the benefit of, and be binding upon,
the Company and the Holders hereof and their respective successors and assigns.
14. Amendments and Waivers. Any term of this Warrant may be amended
----------------------
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
15. Notices. All notices required under this Warrant and shall be
-------
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one business day after being
sent, when sent by professional overnight courier service, or (iv) five days
after posting when sent by registered or certified mail. Notices to the Company
shall be sent to the principal office of the Company (or at such other place as
the Company shall notify the Holder hereof in writing). Notices to the Holder
shall be sent to the address of the Holder on the books of the Company (or at
such other place as the Holder shall notify the Company hereof in writing).
16. Attorneys' Fees. If any action of law or equity is necessary to
---------------
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
17. Captions. The section and subsection headings of this Warrant are
--------
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
18. Governing Law. This Warrant shall be governed by the laws of the
-------------
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
19. Termination Date. This Warrant shall terminate, not be
----------------
exercisable for any shares of Preferred Stock (or any other securities of the
Company) and be null and void on the earliest of (i) the date when both the
Holder and the Company consent in writing to terminate the Warrant, (ii) the
date when either the Holder or the Company exercises its rights under that
certain Letter Agreement between the Holder, the Company and America West
Airlines, Inc.,
5
<PAGE>
dated September __, 1999, or (iii) the date three (3) years from the Warrant
Issue Date (such earliest date shall herein be referred to as the "Termination
Date").
6
<PAGE>
IN WITNESS WHEREOF, GetThere.com caused this Warrant to be executed by
an officer thereunto duly authorized.
GETTHERE.COM
By: /s/ Kenneth Pelowski
-----------------------------------------------
Kenneth Pelowski,
Chief Operating Officer and Chief Financial
Officer
SIGNATURE PAGE TO GETTHERE.COM
AIR CANADA WARRANT
<PAGE>
NOTICE OF EXERCISE
------------------
To: GetThere.com
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________________ shares of Series E Preferred Stock of
_________________, pursuant to the terms of the attached Warrant
and payment of the Exercise Price per share required under such
Warrant accompanies this notice;
OR
________ (b) Exercise the attached Warrant for [all of the shares] [________
of the shares] [cross out inapplicable phrase] purchasable under
the Warrant pursuant to the net exercise provisions of Section 5
of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
_________________________________________
By:______________________________________
[NAME]
Address: _________________________________________
_________________________________________
Date:________________
Name in which shares should be registered:
__________________________________________
<PAGE>
Exhibit 10.33
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
WARRANT TO PURCHASE PREFERRED STOCK
of
GETTHERE.COM
Void after September 14, 2002
This Warrant is issued to American Express Travel Related Services
Company, Inc., a Delaware corporation ("Amex"), or its registered assigns
("Holder") by GetThere.com, a California corporation (the "Company"), on
September 14, 1999 (the "Warrant Issue Date"). This Warrant is issued pursuant
to that certain Preferred Stock and Warrant Purchase Agreement dated as of the
Warrant Issue Date, a copy of which is attached hereto as Attachment A (the
------------
"Purchase Agreement").
1. Purchase Shares. Subject to the terms and conditions hereinafter
---------------
set forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company up to Seven
Hundred Thirty Thousand Twenty-Three (730,023) fully paid and nonassessable
shares of Series E Preferred Stock of the Company, as constituted on the Warrant
Issue Date (the "Preferred Stock"). The number of shares of Preferred Stock
issuable pursuant to this Section 1 (the "Shares") shall be subject to
adjustment pursuant to Section 10 hereof.
2. Exercise Price. The purchase price for the Shares shall be $31.00,
--------------
as adjusted from time to time pursuant to Section 9 hereof (the "Exercise
Price").
3. Exercise Period. This Warrant shall be exercisable, in whole or in
---------------
par during the term commencing on the date thirty (30) days after the Warrant
Issue Date and ending at 5:00 p.m. on September 14, 2002; provided, however,
that in the event of (a) the closing of the Company's sale or transfer of all or
substantially all of its assets, or (b) the closing of the acquisition of the
Company by another entity by means of merger, consolidation or other transaction
or series of related transactions, resulting in the exchange of the outstanding
shares of the Company's capital stock unless (i) the shareholders of the Company
immediately prior to such transaction or series of related transactions are
holders of a majority of the voting equity securities of the surviving or
acquiring corporation immediately thereafter and (ii) each of such shareholders
immediately prior to such transaction or series of related transactions holds
the
<PAGE>
same pro rata share of such majority of the voting equity securities of the
surviving or acquiring corporation as each hold of the Company immediately prior
to such transaction or series of related transactions, this Warrant shall, on
the date of such event, no longer be exercisable and become null and void. In
the event of a proposed transaction of the kind described above, the Company
shall notify the Holder at least twenty (20) days prior to the consummation of
such event or transaction; provided, however, that the Holder shall in any event
have at least forty (40) days after the Warrant Issue Date to exercise this
Warrant. Notwithstanding the foregoing, in the event of the termination of Web
Services and Travel Agreement by and between the Company and the Holder dated
the date hereof (i) as the result of a material breach of such agreements by
Amex or (ii) by Amex without cause, this Warrant shall immediately upon such
termination no longer be exercisable and become null and void.
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Election attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Net Exercise. In lieu of exercising this Warrant pursuant to
------------
Section 4, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder hereof a number
of shares of Preferred Stock computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Preferred Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of Shares in respect of which the net issue
election is made;
A = The fair market value of one share of the Preferred Stock at
the time the net issue election is made;
B = The Exercise Price (as adjusted to the date of the net
issuance).
For purposes of this Section 5, the fair market value of one share of
Preferred Stock as of a particular date shall be determined as follows: (i) if
traded on a securities exchange or through the Nasdaq Stock Market, the value
shall be deemed to be the average of the closing prices of the securities on
such exchange over the thirty (30) day period ending three (3) days
2
<PAGE>
prior to the net exercise election; (ii) if traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty (30) day period ending three (3) days prior to
the net exercise; and (iii) if there is no active public market, the value shall
be the fair market value thereof, as determined in good faith by the Board of
Directors of the Company; provided, that, if the Warrant is being exercised upon
the closing of the IPO, the value will be the initial "Price to Public" of one
share of such Preferred Stock specified in the final prospectus with respect to
such offering. Notwithstanding any of the preceding, only thirty percent (30%)
of the total number of Shares initially issuable upon exercise of this Warrant
(which number is subject to adjustment pursuant to Section 9 hereof) may be
exercised by the Holder pursuant to this Section 5. The remaining seventy
percent (70%) are only exercisable pursuant to Section 4 hereof.
6. Representations and Warranties of Holder. The Holder hereby
----------------------------------------
represents and warrants that:
(a) Authorization. The Holder has full power and authority to
-------------
enter into this Warrant, and this Warrant constitutes its valid and legally
binding obligation, enforceable in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
(b) Purchase Entirely for Own Account. This Warrant is being
---------------------------------
issued to such Holder in reliance upon such Holder's representation to the
Company, which by such Holder's execution of this Warrant such Holder hereby
confirms, that this Warrant, the Preferred Stock to be received by such Holder
upon exercise of this Warrant and the Common Stock issuable upon conversion
thereof (collectively, the "Securities") will be acquired for investment for
such Holder's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Warrant, such Holder further represents that such
Holder does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Securities.
(c) Disclosure of Information. Such Holder further represents
-------------------------
that it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Securities and
the business, properties, prospects and financial condition of the Company.
(d) Investment Experience. Such Holder is an investor in
---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Securities.
If other than an individual, Holder also represents it has not been organized
for the purpose of acquiring the Securities.
3
<PAGE>
(e) Accredited Investor. Such Holder is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
(f) Restricted Securities. Such Holder understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, such Holder represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
(g) Further Limitations on Disposition. Without in any way
----------------------------------
limiting the representations set forth above, such Holder further agrees not to
make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Section 5, provided and to the extent this Section is then applicable,
and:
(i) There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(ii) (A) Such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such securities under the Act.
It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
(iii) Notwithstanding the provisions of Paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder (A) that is a partnership to a partner of
such partnership or a retired partner of such partnership who retires after the
date hereof, or to the estate of any such partner or retired partner or the
transfer by gift, will or intestate succession of any partner to his or her
spouse or to the siblings, lineal descendants or ancestors of such partner or
his or her spouse, or (B) to any entity that is controlled by, controls or is
under common control with the Holder, if the transferee agrees in writing to be
subject to the terms hereof to the same extent as if he or she were an original
Holder hereunder.
(h) Legends. It is understood that the certificates evidencing
-------
the Securities may bear one or all of the following legends:
(i) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities
4
<PAGE>
under such Act or an opinion of counsel satisfactory to the Company that such
registration is not required or unless sold pursuant to Rule 144 of such Act."
(ii) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
7. Certificates for Shares. Upon the exercise of the purchase rights
-----------------------
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the subscription notice. In case the holder shall exercise this
Warrant with respect to less than all of the Shares that may be purchased under
this Warrant, the Company shall execute a new warrant in the form of this
Warrant for the balance of such Shares and deliver such new warrant to the
holder of this Warrant.
8. Issuance of Shares. The Company covenants that it will at all
------------------
times keep available such number of authorized shares of its Series E Preferred
Stock, free from all preemptive rights with respect thereto, which will be
sufficient to permit the exercise of this Warrant for the full number of Shares
specified herein. The Company covenants that the Shares, when issued pursuant to
the exercise of this Warrant, will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issuance thereof.
9. Adjustment of Exercise Price and Number of Shares. The number of
-------------------------------------------------
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the
----------------------------------------------
Company shall at any time prior to the expiration of this Warrant subdivide its
Preferred Stock, by split-up or otherwise, or combine its Preferred Stock, or
issue additional shares of its Preferred Stock or Common Stock as a dividend
with respect to any shares of its Preferred Stock, the number of Shares issuable
on the exercise of this Warrant shall forthwith be proportionately increased in
the case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 8(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case
--------------------------------------------------
of any reclassification, capital reorganization, or change in the Preferred
Stock of the Company (other than as a result of a subdivision, combination, or
stock dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the
5
<PAGE>
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property receivable in connection with such reclassification,
reorganization, or change by a holder of the same number of shares of Preferred
Stock as were purchasable by the Holder immediately prior to such
reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. When any adjustment is required to be
--------------------
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Warrant Price, the Company shall promptly notify the holder of such
event and of the number of shares of Preferred Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
(d) No Impairment. The Company and the holder of this Warrant
-------------
will not, by any voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company or the holder of this Warrant, respectively, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 9
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Company and the holder of this Warrant against
impairment.
10. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
11. No Shareholder Rights. Prior to exercise of this Warrant, the
---------------------
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 10 shall limit the right of the Holder to be
provided the Notices required under this Warrant; provided further, however, the
Company will afford to the Holder the right, upon advance notice, to meet
periodically with the Company's chief financial officer during mutually
agreeable business hours to discuss the Company's business and affairs.
12. Transfers of Warrant. Subject to compliance with applicable
--------------------
federal and state securities laws, this Warrant and all rights (but only with
all related obligations) hereunder are transferable in whole or in part by the
Holder upon the prior written consent of the Company. The transfer shall be
recorded on the books of the Company upon (i) the surrender of this Warrant,
properly endorsed, to the Company at its principal offices, (ii) the payment to
the Company of all transfer taxes and other governmental charges imposed on such
transfer and (iii) such transferee's agreement in writing to be bound by and
subject to the terms and conditions of this Warrant. In the event of a partial
transfer, the Company shall issue to the holders one or more appropriate new
warrants.
6
<PAGE>
13. Successors and Assigns. The terms and provisions of this Warrant
----------------------
and the Purchase Agreement shall inure to the benefit of, and be binding upon,
the Company and the Holders hereof and their respective successors and assigns.
14. "Market Stand-Off" Agreement. In connection with the initial
---------------------------
public offering of the Company's securities, each holder of this Warrant agrees,
upon request of the Company or the underwriters managing any such offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any securities of the
Company, including without limitation this Warrant, any shares of Series E
Preferred Stock issued or issuable upon exercise of this Warrant and any shares
of Common Stock issued or issuable in lieu of or upon conversion of such shares
of Series E Preferred Stock (other than those included in the registration
statement filed in connection with the offering), without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed one hundred eighty (180) days) from the effective date of
the registration statement filed in connection with the offering as may be
requested by the underwriters. The holder of this Warrant agrees that the
Company may instruct its transfer agent to place stop-transfer notations in its
records to enforce the provisions of this Section 14.
15. Registration Rights. The Shares issuable upon exercise of this
-------------------
Warrant, and any securities issuable upon conversion of such Shares, possess
certain "demand" and "piggyback" registration rights as set forth in Sections
5.1, 5.2 and 5.3, respectively, of that certain Amended and Restated Investors'
Rights Agreement, dated the Warrant Issue Date, by and among the Company and the
Investors listed on Schedule A thereto.
16. Amendments and Waivers. Any term of this Warrant may be amended
----------------------
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder. Any waiver or amendment effected
in accordance with this Section shall be binding upon each holder of any Shares
purchased under this Warrant at the time outstanding (including securities into
which such Shares have been converted), each future holder of all such Shares,
and the Company.
17. Notices. All notices required under this Warrant and shall be
-------
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one (1) business day after
being sent, when sent by professional overnight courier service, or (iv) five
(5) days after posting when sent by registered or certified mail. Notices to the
Company shall be sent to the principal office of the Company (or at such other
place as the Company shall notify the Holder hereof in writing). Notices to the
Holder shall be sent to the address of the Holder on the books of the Company
(or at such other place as the Holder shall notify the Company hereof in
writing).
18. Attorneys' Fees. If any action of law or equity is necessary to
---------------
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
7
<PAGE>
19. Captions. The section and subsection headings of this Warrant are
--------
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
20. Governing Law. This Warrant shall be governed by the laws of the
-------------
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
21. Survival. The warranties, representations and covenants contained
--------
in or made pursuant to this Warrant shall survive the execution, delivery and
exercise, if any, of this Warrant.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by an officer thereunto duly authorized.
GETTHERE.COM
By:
_______________________________________________
Kenneth Pelowski,
Chief Operating Officer and Chief Financial
Officer
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY,
INC.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
SIGNATURE PAGE TO GETTHERE.COM
WARRANT FOR SERIES E PREFERRED
<PAGE>
NOTICE OF EXERCISE
------------------
To: GETTHERE.COM
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________________ shares of Series E Preferred Stock of
GetThere.com, pursuant to the terms of the attached Warrant and
payment of the Exercise Price per share required under such
Warrant accompanies this notice;
OR
________ (b) Exercise the attached Warrant for [all of the shares] [________
of the shares] [cross out inapplicable phrase] purchasable under
the Warrant pursuant to the net exercise provisions of Section 5
of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
_________________________________________
By:
______________________________________
[NAME]
Address:__________________________________________
__________________________________________
Date:_____________________
Name in which shares should be registered:
__________________________________________
<PAGE>
Exhibit 10.34
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
WARRANT TO PURCHASE PREFERRED STOCK
of
GETTHERE.COM
Void after September 14, 2001
This Warrant is issued to American Express Travel Related Services
Company, Inc., a Delaware corporation ("Amex"), or its registered assigns
("Holder") by GetThere.com, a California corporation (the "Company"), on
September 14, 1999 (the "Warrant Issue Date"). This Warrant is issued pursuant
to that certain Preferred Stock and Warrant Purchase Agreement dated as of the
Warrant Issue Date, a copy of which is attached hereto as Attachment A (the
------------
"Purchase Agreement").
1. Purchase Shares. Subject to the terms and conditions hereinafter
---------------
set forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company up to Seven
Hundred Thirty Thousand Twenty-Three (730,023) fully paid and nonassessable
shares of Series E Preferred Stock of the Company, as constituted on the Warrant
Issue Date (the "Preferred Stock"). The number of shares of Preferred Stock
issuable pursuant to this Section 1 (the "Shares") shall be subject to
adjustment pursuant to Section 10 hereof.
2. Exercise Price. The purchase price for the Shares shall be $21.00,
--------------
as adjusted from time to time pursuant to Section 9 hereof (the "Exercise
Price").
3. Exercise Period. This Warrant shall be exercisable, in whole or in
---------------
part, during the term commencing on the date thirty (30) days after the Warrant
Issue Date and ending at 5:00 p.m. on September 14, 2001; provided, however,
that in the event of (a) the closing of the Company's sale or transfer of all or
substantially all of its assets, or (b) the closing of the acquisition of the
Company by another entity by means of merger, consolidation or other transaction
or series of related transactions, resulting in the exchange of the outstanding
shares of the Company's capital stock unless (i) the shareholders of the Company
------
immediately prior to such transaction or series of related transactions are
holders of a majority of the voting equity securities of the surviving or
acquiring corporation immediately thereafter and (ii) each of such shareholders
immediately prior to such transaction or series of related transactions holds
the
<PAGE>
same pro rata share of such majority of the voting equity securities of the
surviving or acquiring corporation as each hold of the Company immediately prior
to such transaction or series of related transactions, this Warrant shall, on
the date of such event, no longer be exercisable and become null and void. In
the event of a proposed transaction of the kind described above, the Company
shall notify the Holder at least twenty (20) days prior to the consummation of
such event or transaction; provided, however, that the Holder shall in any event
have at least forty (40) days after the Warrant Issue Date to exercise this
Warrant. Notwithstanding the foregoing, in the event of the termination of the
Web Services and Travel Agreement by and between the Company and the Holder
dated the date hereof (i) as a result of a material breach of such agreements by
Amex or (ii) by Amex without cause, this Warrant shall immediately upon such
termination no longer be exercisable and become null and void.
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Election attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
5. Net Exercise. In lieu of exercising this Warrant pursuant to
------------
Section 4, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder hereof a number
of shares of Preferred Stock computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Preferred Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of Shares in respect of which the net issue
election is made;
A = The fair market value of one share of the Preferred Stock at
the time the net issue election is made;
B = The Exercise Price (as adjusted to the date of the net
issuance).
For purposes of this Section 5, the fair market value of one share of
Preferred Stock as of a particular date shall be determined as follows: (i) if
traded on a securities exchange or through the Nasdaq Stock Market, the value
shall be deemed to be the average of the closing prices of the securities on
such exchange over the thirty (30) day period ending three (3) days
2
<PAGE>
prior to the net exercise election; (ii) if traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty (30) day period ending three (3) days prior to
the net exercise; and (iii) if there is no active public market, the value shall
be the fair market value thereof, as determined in good faith by the Board of
Directors of the Company; provided, that, if the Warrant is being exercised upon
the closing of the IPO, the value will be the initial "Price to Public" of one
share of such Preferred Stock specified in the final prospectus with respect to
such offering. Notwithstanding any of the preceding, only thirty percent (30%)
of the total number of Shares initially issuable upon exercise of this Warrant
(which number is subject to adjustment pursuant to Section 9 hereof) may be
exercised by the Holder pursuant to this Section 5. The remaining seventy
percent (70%) are only exercisable pursuant to Section 4 hereof.
6. Representations and Warranties of Holder. The Holder hereby
----------------------------------------
represents and warrants that:
(a) Authorization. The Holder has full power and authority to
-------------
enter into this Warrant, and this Warrant constitutes its valid and legally
binding obligation, enforceable in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
(b) Purchase Entirely for Own Account. This Warrant is being
---------------------------------
issued to such Holder in reliance upon such Holder's representation to the
Company, which by such Holder's execution of this Warrant such Holder hereby
confirms, that this Warrant, the Preferred Stock to be received by such Holder
upon exercise of this Warrant and the Common Stock issuable upon conversion
thereof (collectively, the "Securities") will be acquired for investment for
such Holder's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Warrant, such Holder further represents that such
Holder does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Securities.
(c) Disclosure of Information. Such Holder further represents
-------------------------
that it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Securities and
the business, properties, prospects and financial condition of the Company.
(d) Investment Experience. Such Holder is an investor in
---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Securities.
If other than an individual, Holder also represents it has not been organized
for the purpose of acquiring the Securities.
3
<PAGE>
(e) Accredited Investor. Such Holder is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
(f) Restricted Securities. Such Holder understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, such Holder represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
(g) Further Limitations on Disposition. Without in any way
----------------------------------
limiting the representations set forth above, such Holder further agrees not to
make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Section 5, provided and to the extent this Section is then applicable,
and:
(i) There is then in effect a Registration Statement under
the Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(ii) (A) Such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (B) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such securities under the Act.
It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
(iii) Notwithstanding the provisions of Paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder (A) that is a partnership to a partner of
such partnership or a retired partner of such partnership who retires after the
date hereof, or to the estate of any such partner or retired partner or the
transfer by gift, will or intestate succession of any partner to his or her
spouse or to the siblings, lineal descendants or ancestors of such partner or
his or her spouse, or (B) to any entity that is controlled by, controls or is
under common control with the Holder, if the transferee agrees in writing to be
subject to the terms hereof to the same extent as if he or she were an original
Holder hereunder.
(h) Legends. It is understood that the certificates evidencing
-------
the Securities may bear one or all of the following legends:
(i) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities
4
<PAGE>
under such Act or an opinion of counsel satisfactory to the Company that such
registration is not required or unless sold pursuant to Rule 144 of such Act."
(ii) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
7. Certificates for Shares. Upon the exercise of the purchase rights
-----------------------
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the subscription notice. In case the holder shall exercise this
Warrant with respect to less than all of the Shares that may be purchased under
this Warrant, the Company shall execute a new warrant in the form of this
Warrant for the balance of such Shares and deliver such new warrant to the
holder of this Warrant.
8. Issuance of Shares. The Company covenants that it will at all times
------------------
keep available such number of authorized shares of its Series E Preferred Stock,
free from all preemptive rights with respect thereto, which will be sufficient
to permit the exercise of this Warrant for the full number of Shares specified
herein. The Company covenants that the Shares, when issued pursuant to the
exercise of this Warrant, will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issuance thereof.
9. Adjustment of Exercise Price and Number of Shares. The number of and
-------------------------------------------------
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
----------------------------------------------
shall at any time prior to the expiration of this Warrant subdivide its
Preferred Stock, by split-up or otherwise, or combine its Preferred Stock, or
issue additional shares of its Preferred Stock or Common Stock as a dividend
with respect to any shares of its Preferred Stock, the number of Shares issuable
on the exercise of this Warrant shall forthwith be proportionately increased in
the case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 8(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
--------------------------------------------------
any reclassification, capital reorganization, or change in the Preferred Stock
of the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the
5
<PAGE>
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property receivable in connection with such reclassification,
reorganization, or change by a holder of the same number of shares of Preferred
Stock as were purchasable by the Holder immediately prior to such
reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. When any adjustment is
--------------------
required to be made in the number or kind of shares purchasable upon exercise of
the Warrant, or in in the the Warrant Price, the Company shall promptly notify
the holder of such event and of the number of shares of Preferred Stock or other
securities or property thereafter purchasable upon exercise of this Warrant.
(d) No Impairment. The Company and the holder of this
-------------
Warrant will not, by any voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company or the holder of this Warrant, respectively, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 9
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Company and the holder of this Warrant against
impairment.
10. No Fractional Shares or Scrip. No fractional shares or
-----------------------------
scrip representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
11. No Shareholder Rights. Prior to exercise of this Warrant,
---------------------
the Holder shall not be entitled to any rights of a shareholder with respect to
the Shares, including (without limitation) the right to vote such Shares,
receive dividends or other distributions thereon, exercise preemptive rights or
be notified of shareholder meetings, and such holder shall not be entitled to
any notice or other communication concerning the business or affairs of the
Company. However, nothing in this Section 10 shall limit the right of the Holder
to be provided the Notices required under this Warrant; provided further,
however, the Company will afford to the Holder the right, upon advance notice,
to meet periodically with the Company's chief financial officer during mutually
agreeable business hours to discuss the Company's business and affairs.
12. Transfers of Warrant. Subject to compliance with applicable
--------------------
federal and state securities laws, this Warrant and all rights (but only with
all related obligations) hereunder are transferable in whole or in part by the
Holder upon the prior written consent of the Company. The transfer shall be
recorded on the books of the Company upon (i) the surrender of this Warrant,
properly endorsed, to the Company at its principal offices, (ii) the payment to
the Company of all transfer taxes and other governmental charges imposed on such
transfer and (iii) such transferee's agreement in writing to be bound by and
subject to the terms and conditions of this Warrant. In the event of a partial
transfer, the Company shall issue to the holders one or more appropriate new
warrants.
6
<PAGE>
13. Successors and Assigns. The terms and provisions of this
----------------------
Warrant and the Purchase Agreement shall inure to the benefit of, and be binding
upon, the Company and the Holders hereof and their respective successors and
assigns.
14. "Market Stand-Off" Agreement. In connection with the
---------------------------
initial public offering of the Company's securities, each holder of this Warrant
agrees, upon request of the Company or the underwriters managing any such
offering of the Company's securities, not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any securities of
the Company, including without limitation this Warrant, any shares of Series E
Preferred Stock issued or issuable upon exercise of this Warrant and any shares
of Common Stock issued or issuable in lieu of or upon conversion of such shares
of Series E Preferred Stock (other than those included in the registration
statement filed in connection with the offering), without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed one hundred eighty (180) days) from the effective date of
the registration statement filed in connection with the offering as may be
requested by the underwriters. The holder of this Warrant agrees that the
Company may instruct its transfer agent to place stop-transfer notations in its
records to enforce the provisions of this Section 14.
15. Registration Rights. The Shares issuable upon exercise of
-------------------
this Warrant, and any securities issuable upon conversion of such Shares,
possess certain "demand" and "piggyback" registration rights as set forth in
Section 5.1, 5.2 and 5.3, respectively, of that certain Amended and Restated
Investors' Rights Agreement, dated the Warrant Issue Date, by and among the
Company and the Investors listed on Schedule A thereto.
----------
16. Amendments and Waivers. Any term of this Warrant may be
----------------------
amended and the observance of any term of this Warrant may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Holder. Any
waiver or amendment effected in accordance with this Section shall be binding
upon each holder of any Shares purchased under this Warrant at the time
outstanding (including securities into which such Shares have been converted),
each future holder of all such Shares, and the Company.
17. Notices. All notices required under this Warrant and shall
-------
be deemed to have been given or made for all purposes (i) upon personal
delivery, (ii) upon confirmation receipt that the communication was successfully
sent to the applicable number if sent by facsimile; (iii) one (1) business day
after being sent, when sent by professional overnight courier service, or (iv)
five (5) days after posting when sent by registered or certified mail. Notices
to the Company shall be sent to the principal office of the Company (or at such
other place as the Company shall notify the Holder hereof in writing). Notices
to the Holder shall be sent to the address of the Holder on the books of the
Company (or at such other place as the Holder shall notify the Company hereof in
writing).
18. Attorneys' Fees. If any action of law or equity is
---------------
necessary to enforce or interpret the terms of this Warrant, the prevailing
party shall be entitled to its reasonable attorneys' fees, costs and
disbursements in addition to any other relief to which it may be entitled.
7
<PAGE>
19. Captions. The section and subsection headings of this
--------
Warrant are inserted for convenience only and shall not constitute a part of
this Warrant in construing or interpreting any provision hereof.
20. Governing Law. This Warrant shall be governed by the laws
-------------
of the State of California as applied to agreements among California residents
made and to be performed entirely within the State of California.
21. Survival. The warranties, representations and covenants
--------
contained in or made pursuant to this Warrant shall survive the execution,
delivery and exercise, if any, of this Warrant.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by an officer thereunto duly authorized.
GETTHERE.COM
By:
-------------------------------------------
Kenneth Pelowski
Chief Operating Officer and Chief Financial
Officer
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY,
INC.
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
<PAGE>
NOTICE OF EXERCISE
------------------
To: GETTHERE.COM
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________________ shares of Series E Preferred Stock of
GetThere.com, pursuant to the terms of the attached Warrant and
payment of the Exercise Price per share required under such
Warrant accompanies this notice;
OR
________ (b) Exercise the attached Warrant for [all of the shares] [________
of the shares] [cross out inapplicable phrase] purchasable under
the Warrant pursuant to the net exercise provisions of Section 5
of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
_________________________________________
By:______________________________________
[NAME]
Address: _________________________________________
_________________________________________
Date:_______________
Name in which shares should be registered:
_________________________________________
<PAGE>
Exhibit 10.35
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
of
GETTHERE.COM
This Warrant is issued to American Express Travel Related Services
Company, Inc., or its registered assigns ("Holder") by GetThere.com, a
California corporation (the "Company"), on September 14, 1999 (the "Warrant
Issue Date"). This Warrant is issued pursuant to the terms of that certain
Preferred Stock and Warrant Purchase Agreement dated as of the Warrant Issue
Date, a copy of which is attached hereto as Attachment A (the "Purchase
------------
Agreement").
1. Purchase Shares. Subject to the terms and conditions hereinafter
---------------
set forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company up to Three
Hundred Seventy-Five Thousand (375,000) fully paid and nonassessable shares of
Common Stock of the Company, as constituted on the Warrant Issue Date (the
"Common Stock"). The number of shares of Common Stock issuable pursuant to this
Section 1 (the "Shares") shall be subject to adjustment pursuant to Section 7
hereof.
2. Exercise Price. The purchase price for the Shares shall be
--------------
$16.50 per share, as adjusted from time to time pursuant to Section 7 hereof
(the "Exercise Price").
3. Exercise Period. This Warrant shall be exercisable, in whole
---------------
or in part, during the term commencing on the date thirty (30) days after the
Warrant Issue Date and ending at 5:00 p.m. on date one hundred twenty (120) days
after the Warrant Issue Date; provided, however, that in the event of (a) the
closing of the Company's sale or transfer of all or substantially all of its
assets, or (b) the closing of the acquisition of the Company by another entity
by means of merger, consolidation or other transaction or series of related
transactions, resulting in the exchange of the outstanding shares of the
Company's capital stock unless (i) the shareholders of the Company immediately
------
prior to such transaction or series of related transactions are holders of a
majority of the voting equity securities of the surviving or acquiring
corporation immediately thereafter and (ii) each of such shareholders
immediately prior to such
<PAGE>
transaction or series of related transactions holds the same pro rata share of
such majority of the voting equity securities of the surviving or acquiring
corporation as each hold of the Company immediately prior to such transaction or
series of related transactions, this Warrant shall, on the date of such event,
no longer be exercisable and become null and void. In the event of a proposed
transaction of the kind described above, the Company shall notify the Holder at
least twenty (20) days prior to the consummation of such event or transaction;
provided, however, that the Holder shall in any event have at least forty (40)
days after the Warrant Issue Date to exercise this Warrant. Notwithstanding the
foregoing, in the event of the termination of the Web Services and Travel
Agreement by and between the Company and the Holder, dated the date hereof (i)
as a result of a material breach of such agreements by Amex or (ii) by Amex
without cause, this Warrant shall immediately upon such termination no longer be
exercisable and become null and void.
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Election attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Certificates for Shares. Upon the exercise of the purchase
-----------------------
rights evidenced by this Warrant, one or more certificates for the number of
Shares so purchased shall be issued as soon as practicable thereafter (with
appropriate restrictive legends, if applicable), and in any event within thirty
(30) days of the delivery of the subscription notice. In case the holder shall
exercise this Warrant with respect to less than all of the Shares that may be
purchased under this Warrant, the Company shall execute a new warrant in the
form of this Warrant for the balance of such Shares and deliver such new warrant
to the holder of this Warrant.
6. Issuance of Shares. The Company covenants that it will at all
------------------
times keep available such number of authorized shares of its Common Stock , free
from all preemptive rights with respect thereto, which will be sufficient to
permit the exercise of this Warrant for the full number of Shares specified
herein. The Company covenants that the Shares, when issued pursuant to the
exercise of this Warrant, will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issuance thereof.
7. Adjustment of Exercise Price and Number of Shares. The number
-------------------------------------------------
of and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the
----------------------------------------------
Company shall at any time prior to the expiration of this Warrant subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Preferred Stock or
2
<PAGE>
Common Stock as a dividend with respect to any shares of its Common Stock, the
number of Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination. Appropriate adjustments
shall also be made to the purchase price payable per share, but the aggregate
purchase price payable for the total number of Shares purchasable under this
Warrant (as adjusted) shall remain the same. Any adjustment under this Section
7(a) shall become effective at the close of business on the date the subdivision
or combination becomes effective, or as of the record date of such dividend, or
in the event that no record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In
--------------------------------------------------
case of any reclassification, capital reorganization, or change in the Common
Stock of the Company (other than as a result of a subdivision, combination, or
stock dividend provided for in Section 7(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. When any adjustment is required to
--------------------
be made in the number or kind of shares purchasable upon exercise of the
Warrant, or in the Warrant Price, the Company shall promptly notify the holder
of such event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
(d) No Impairment. The Company and the holder of this Warrant
-------------
will not, by any voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company or the holder of this Warrant, respectively, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 7
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Company and the holder of this Warrant against
impairment.
8. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
9. No Shareholder Rights. Prior to exercise of this Warrant, the
---------------------
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon,
3
<PAGE>
exercise preemptive rights or be notified of shareholder meetings, and such
holder shall not be entitled to any notice or other communication concerning the
business or affairs of the Company. However, nothing in this Section 9 shall
limit the right of the Holder to be provided the Notices required under this
Warrant.
10. Transfers of Warrant. Subject to compliance with applicable
--------------------
federal and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the holders one or more appropriate
new warrants.
11. Registration Rights. The Shares issuable upon exercise of this
-------------------
Warrant, and any securities issuable upon conversion of such Shares, possess
certain "piggyback" registration rights as set forth in Section 5.2 of that
certain Amended and Restated Investors' Rights Agreement, dated the Warrant
Issued Date, by and among the Company and the Investors listed on Schedule A
----------
thereto.
12. Successors and Assigns. The terms and provisions of this
----------------------
Warrant and the Purchase Agreement shall inure to the benefit of, and be binding
upon, the Company and the Holders hereof and their respective successors and
assigns.
13. Amendments and Waivers. Any term of this Warrant may be
----------------------
amended and the observance of any term of this Warrant may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be
-------
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one business day after being
sent, when sent by professional overnight courier service, or (iv) five days
after posting when sent by registered or certified mail. Notices to the Company
shall be sent to the principal office of the Company (or at such other place as
the Company shall notify the Holder hereof in writing). Notices to the Holder
shall be sent to the address of the Holder on the books of the Company (or at
such other place as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary
---------------
to enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Captions. The section and subsection headings of this Warrant
--------
are inserted for convenience only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.
4
<PAGE>
17. Governing Law. This Warrant shall be governed by the laws of
-------------
the State of California as applied to agreements among California residents made
and to be performed entirely within the State of California.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by an officer thereunto duly authorized.
GETTHERE.COM
By:
--------------------------------------------
Kenneth Pelowski
Chief Operating Officer and Chief Financial
Officer
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY,
INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
SIGNATURE PAGE TO GETTHERE.COM
ONE HUNDRED TWENTY DAY COMMON STOCK WARRANT
<PAGE>
NOTICE OF EXERCISE
------------------
To: GetThere.com:
The undersigned hereby elects to purchase _________________ shares of
Common Stock of GetThere.com, pursuant to the terms of the attached Warrant and
payment of the Exercise Price per share required under such Warrant accompanies
this notice;
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
------------------------------------
By:
---------------------------------
[NAME]
Address:
-------------------------------------
-------------------------------------
Date:
----------------------
Name in which shares should be registered:
- -----------------------------------------
<PAGE>
Exhibit 10.36
Exodus Communications, Inc.
Internet Data Center Services Agreement
This Internet Data Center Services Agreement (this "Agreement") is made
effective as of the Submission Date (March 31, 1999) indicated in the initial
Internet Data Center Services Order Form accepted by Exodus, by and between
Exodus Communications, Inc. ("Exodus") and the customer identified below
("Customer").
Parties:
Customer Name: INTERNET TRAVEL NETWORK
Address: 445 Sherman Avenue
Palo Alto, CA 94306
Phone: (650) 614-6355
Fax: (650) 614-6390
Exodus Communications, Inc.
2650 San Tomas Expressway
Santa Clara, CA 95051
Phone: (408) 346-2200
Fax: (408) 346-2420
1. Internet Data Center Services.
Subject to the terms and conditions of this Agreement, during the term of this
Agreement, Exodus will provide to Customer the services described in the
Internet Data Center Services Order Form(s) ("IDC Services Order Form(s)")
accepted by Exodus, or substantially similar services if such substantially
similar services would provide Customer with substantially similar benefits and
are approved by Customer ("Internet Data Center Services"). All IDC Services
Order Forms accepted by Exodus are incorporated herein by this reference, each
as of the Submission Date indicated in such form.
2. Fees and Billing.
2.1 Fees. Customer will pay all fees due according to the IDC Services
Order Form(s).
2.2 Billing Commencement. Billing for Internet Data Center Services, other
than Setup Fees, indicated in the initial IDC Services Order Form shall commence
on the earlier to occur of (i) the "Installation Date" indicated in the initial
IDC Services Order Form, regardless of whether Customer has commenced use of the
Internet Data Center Services, unless Customer is unable to install the Customer
Equipment and/or use the Internet Data Center Services by the Installation Date
due to the fault of Exodus, then billing will not begin until the date Exodus
has remedied such fault and (ii) the date the "Customer Equipment" (Customer's
computer hardware and other tangible equipment, as identified in the Customer
Equipment List which is incorporated herein by this reference) is placed by
Customer in the "Customer Area" (the portion(s) of the Internet Data Centers, as
defined in Section 3.1 below, made available to Customer hereunder for the
placement of Customer Equipment) and is operational. All Setup Fees will be
billed upon receipt of a Customer signed IDC Services Order Form. In the event
that Customer orders additional Internet Data Center Services, billing for such
services shall commence on the date Exodus first provides such additional
Internet Data Center Services to Customer or as otherwise agreed to by Customer
and Exodus.
2.3 Billing and Payment Terms. Customer will be billed monthly in advance
of the provision of Internet Data Center Services, and payment of such fees will
be due within thirty (30) days of the date of each Exodus invoice. All payments
will be made in U.S. dollars. Late payments hereunder will accrue interest at a
rate of one and one-half percent (1 1/2%) per month, or the highest rate allowed
by applicable law, whichever is lower.
2.4 Taxes. All payments required by this Agreement are exclusive of all
national, state, municipal or other governmental excise, sales, value-added,
use, personal property, and occupational taxes, excises, withholding taxes and
obligations and other levies now in force or enacted in the future, all of which
Customer will be responsible for and will pay in full, except for taxes based on
Exodus' net income.
3. Customer's Obligations.
3.1 Compliance with Law and Rules and Regulations. Customer agrees that
Customer will use best efforts to comply at all times with all applicable laws
and regulations and Exodus' general rules and regulations relating to its
provision of Internet Data Center Services, as updated by Exodus from time to
time ("Rules and Regulations"). Customer acknowledges that Exodus exercises no
control whatsoever over the content of the information passing through its sites
containing the Customer Area and equipment and facilities used by Exodus to
provide Internet Data Center Services ("Internet Data Centers"), and that it is
the sole responsibility of Customer to ensure that the information it transmits
and receives complies with all applicable laws and regulations.
3.2 Customer's Costs. Customer agrees that it will be solely responsible,
and at Exodus's request will reimburse Exodus, for all costs and expenses (other
than those included as part of the Internet Data Center Services and except as
otherwise expressly provided herein) it incurs in connection with this
Agreement; provided that such costs have been identified and agreed to in
advance in writing by Customer.
3.3 Access and Security. Customer will be fully responsible for any
charges, costs, expenses (other than those included in the Internet Data Center
Services), and third party claims that may result from its use of, or access to,
the Internet Data Centers and/or the Customer Area including but not limited to
any unauthorized use of any access devices provided by Exodus hereunder. Except
with the advanced written consent of Exodus, Customer's access to the Internet
Data Centers will be limited solely to the individuals identified and authorized
by Customer to have access to the Internet Data Centers and the Customer Area in
accordance with this Agreement, as identified in the Customer Registration Form,
as amended from time to time, which is hereby incorporated by this reference
("Representatives").
3.4 No Competitive Services. Customer may not resell Exodus' Internet Data
Center Services without Exodus' prior written approval. Customer's customers may
not have physical access to the Internet Data Center.
3.5 Insurance.
(a) Minimum Levels. Both parties will keep in full force and effect during
the term of this Agreement: (i) comprehensive general liability insurance in an
amount not less than $1 million per occurrence for bodily injury and property
damage; (ii) employer's liability insurance in an amount not less than $1
million per occurrence; and (iii) workers' compensation insurance in an amount
not less than that required by applicable law.
(b) Certificates of Insurance. Prior to installation of any Customer
Equipment in the Customer Area, both parties will furnish each other with
certificates of insurance which evidence the minimum levels of insurance set
forth above.
(c) Naming Exodus as an Additional Insured. Both parties agrees that prior
to the installation of any Customer Equipment, such party will cause its
insurance provider(s) to name the other party as an additional insured and
notify Exodus in writing of the effective date thereof.
4. Confidential Information.
4.1 Confidential Information. Each party acknowledges that it will have
access to certain confidential information of the other party concerning the
other party's business, plans, customers, technology, and products, including
the terms and conditions of this Agreement ("Confidential Information").
Confidential Information will include, but not be limited to, each party's
proprietary software and customer information. Each party agrees that it will
not use in any way, for its own account or the account of any third party,
except as expressly permitted by this Agreement, nor disclose to any third party
(except as required by law or to that party's attorneys, accountants and other
advisors as reasonably necessary), any of the other party's Confidential
Information and will take reasonable precautions to protect the confidentiality
of such information.
4.2 Exceptions. Information will not be deemed Confidential Information
hereunder if such information: (i) is known to the receiving party prior to
receipt from the disclosing party directly or indirectly from a source other
than one having an obligation of confidentiality to the disclosing party; (ii)
becomes known (independently of disclosure by the disclosing party) to the
receiving party directly or indirectly from a source other than one having an
obligation of confidentiality to the disclosing party; (iii) becomes publicly
known or otherwise ceases to be secret or confidential, except through a breach
of this Agreement by the receiving party; or (iv) is independently developed by
the receiving party without use of the other party's Confidential Information.
5. Representations and Warranties.
5.1 Warranties by Customer.
(a) Customer Equipment. Customer represents and warrants that it owns or
has the legal right and authority, and will continue to own or maintain the
legal right and authority during the term of this Agreement, to place and use
the Customer Equipment as contemplated by this Agreement. Customer further
represents and warrants that its placement, arrangement, and use of the Customer
Equipment in the Internet Data Center complies with the Customer Equipment
Manufacturer's environmental and other specifications.
(b) Customer's Business. Customer represents and warrants that Customer's
services, products, materials, data, information and Customer Equipment used by
Customer in connection with this Agreement as well as Customer's and its
permitted customers' and users' use of the Internet Data Center Services
(collectively, "Customer's Business") does not as of the Installation Date, and
will not during the term of this Agreement operate in any manner that would
violate any applicable law or regulation.
(c) Rules and Regulations. Customer has read the Rules and Regulations and
represents and warrants that Customer and Customer's Business are currently in
full compliance with the Rules and Regulations, and will remain in material
compliance with such Rules and Regulations at all times during the term of this
Agreement.
(d) Breach of Warranties. In the event of any material breach of any of
the foregoing warranties and such breach was caused by Customer's failure for
reasons within Customer's reasonable control, in addition to any other remedies
available at law or in equity, Exodus will have the right, in Exodus' sole
discretion, to suspend any related Internet Data Center Services, following
prompt written notice received by Customer and the provision of a period of at
least five (5) days in which to cure such breach, if such suspension of services
is deemed reasonably necessary by Exodus to prevent any material harm to Exodus
and its business.
5.2 Warranties and Disclaimers by Exodus.
5.2(a) Service Level Warranty. In the event Customer experiences
any of the following and such inability was caused by Exodus' failure to provide
Internet Data Center Services for reasons within Exodus' reasonable control and
not as a result of any actions or
Nonstandard Internet Travel Network 4/8/99
EXODUS COMMUNICATIONS, INC. CONFIDENTIAL AND PROPRIETARY (rev 6/98)
<PAGE>
inactions of Customer or any third parties (including Customer Equipment and
third party equipment), Exodus will, upon Customer's request in accordance with
paragraph (iii) below, credit Customer's account as described below:
(i) Inability to Access the Internet (Downtime). If Customer
is unable to transmit and receive information from Exodus' Internet Data Centers
(i.e., Exodus' LAN and WAN) to other portions of the Internet because Exodus
failed to provide the Internet Data Center Services for more than fifteen (15)
consecutive minutes, Exodus will credit Customer's account the pro-rata
connectivity charges (i.e., all bandwidth related charges) for one (1) day of
service, up to an aggregate maximum credit of connectivity charges for seven (7)
days of service in any one calendar (1) month. Exodus' scheduled maintenance of
the Internet Data Centers and Internet Data Center Services, as described in the
Rules and Regulations, shall not be deemed to be a failure of Exodus to provide
Internet Data Center Services. For purposes of the foregoing, "unable to
transmit and receive" shall mean sustained packet loss in excess of 50% based on
Exodus' measurements.
(ii) Packet Loss and Latency. Exodus does not proactively
monitor the packet loss or transmission latency of specific customers. Exodus
does, however, proactively monitor the aggregate packet loss and transmission
latency within its LAN and WAN. In the event that Exodus discovers (either from
its own efforts or after being notified by Customer) that Customer is
experiencing packet loss in excess of one percent (1%) ("Excess Packet Loss") or
transmission latency in excess of 120 milliseconds round trip time (based on
Exodus' measurements) between any two Internet Data Centers within Exodus' U.S.
network (collectively, "Excess Latency", and with Excess Packet Loss "Excess
Packet Loss/Latency"), and Customer notifies Exodus (or confirms that Exodus has
notified Customer), Exodus will take all actions necessary to determine the
source of the Excess Packet Loss/Latency.
(A) Time to Discover Source of Excess Packet
Loss/Latency; Notification of Customer. Within two (2) hours of discovering the
existence of Excess Packet Loss/Latency, Exodus will determine whether the
source of the Excess Packet Loss/Latency is limited to the Customer Equipment
and the Exodus equipment connecting the Customer Equipment to Exodus' LAN
("Customer Specific Packet Loss/Latency"). If the Excess Packet Loss/Latency is
not a Customer Specific Packet Loss/Latency, Exodus will determine the source of
the Excess Packet Loss/Latency within two (2) hours after determining that it is
not a Customer Specific Packet Loss/Latency. In any event, Exodus will notify
Customer of the source of the Excess Packet Loss/Latency within sixty (60)
minutes after identifying the source.
(B) Remedy of Excess Packet Loss/Latency. If the
Excess Packet Loss/Latency remedy is within the sole control of Exodus, Exodus
will remedy the Excess Packet Loss/Latency within two (2) hours of determining
the source of the Excess Packet Loss/Latency. If the Excess Packet Loss/Latency
is caused from outside of the Exodus LAN or WAN, Exodus will notify Customer and
will use commercially reasonable efforts to notify the party(ies) responsible
for the source and cooperate with it(them) to resolve the problem as soon as
possible.
(C) Failure to Determine Source and/or Resolve
Problem. In the event that Exodus is unable to determine the source of and
remedy the Excess Packet Loss/Latency within the time periods described above
(where Exodus was solely in control of the source), Exodus will credit
Customer's account the pro-rata connectivity charges for one (1) day of service
for every two (2) hours after the time periods described above that it takes
Exodus to resolve the problem, up to an aggregate maximum credit of connectivity
charges for seven (7) days of service in any one (1)month.
(iii) Customer Must Request Credit: To receive any of the
credits described in this section 5.2(a), Customer must notify Exodus within
fifteen (15) business days from the time Customer becomes eligible to receive a
credit. Failure to comply with this requirement will forfeit Customer's right to
receive a credit.
(iv) Remedies Shall Not Be Cumulative; Maximum Credit: In the
event that Customer is entitled to multiple credits hereunder arising from the
same event, such credits shall not be cumulative and Customer shall be entitled
to receive only the maximum single credit available for such event. In no event
will Exodus be required to credit Customer in any one (1) calendar month
connectivity charges in excess of seven (7) days of service. A credit shall be
applied only to the month in which there was the incident that resulted in the
credit. Customer shall not be eligible to receive any credits for periods in
which Customer received any Internet Data Center Services free of charge.
(v) Termination Option for Chronic Problems: If, in any single
calendar month, Customer would be able to receive credits totaling fifteen (15)
or more days (but for the limitation in paragraph (iv) above) resulting from
three (3) or more events during such calendar month or, if any single event
entitling customer to credits under paragraph 5.2(a)(i) exists for a period of
eight (8) consecutive hours, then, Customer may immediately terminate this
Agreement for cause and without penalty by notifying Exodus. Termination will be
effective upon receipt of notice by Exodus.
This warranty does not apply to any Internet data center services that expressly
exclude this warranty (as described in the specification sheets for such
products). This Section 5.2(a) states customer's sole and exclusive remedy for
any failure by Exodus to provide Internet Data Center Services.
(b) No Other Warranty. Except for the express warranty set out in
subsection (a) above and (d) below, the Internet Data Center Services are
provided on an "as is" basis, and Customer's use of the Internet Data Center
Services is at its own risk. Exodus does not make, and hereby disclaims, any and
all other Express and/or implied warranties, including, but not limited to,
warranties of merchantability, fitness for a particular purpose, noninfringement
and title, and any warranties arising from a course of dealing, usage, or trade
practice. Exodus does not warrant that the Internet Data Center Services will be
uninterrupted, error-free, or completely secure.
(c) Disclaimer of Actions Caused by and/or Under the Control of Third
Parties. Exodus does not and cannot control the flow of data to or from Exodus'
Internet Data Centers and other portions of the internet. Such flow depends in
large part on the performance of internet services provided or controlled by
third parties. At times, actions or inactions caused by these third parties can
produce situations in which Exodus' customers' connections to the Internet (or
portions thereof) may be impaired or disrupted. Although Exodus will use
commercially reasonable efforts to take actions it deems appropriate to remedy
and avoid such events, exodus cannot guarantee that they will not occur.
Accordingly, Exodus disclaims any and all liability resulting from or related to
such events.
(d) Exodus represents and warrants that it has the legal right and
authority, and will continue to maintain the legal right and authority during
the term of this Agreement, to provide the Internet Data Center Services as
contemplated by this Agreement.
Exodus represents and warrants that Exodus' Internet Data Center Services,
products, materials, data, information used by Customer in connection with this
Agreement do not as of the Installation Date, and will not during the term of
this Agreement operate in any manner that would violate any applicable law or
regulation. Exodus represents and warrants that a) the Internet Data Center
Services will be "ADA compliant" including without limitation providing at least
36 inches of space between rack aisles and racks and b) that the Internet Data
Center will be kept at all times at temperatures at or below seventy-three
degrees farenheit. In the event of a breach of this subsection (d), Customer
shall provide written notification to Exodus with thirty (30) days to cure.
Customer's sole remedy for failure to cure such breach is termination.
6. Limitations of Liability.
6.1 Personal Injury. Each Representative and any other persons visiting
the Internet Data Centers does so at its own risk and Exodus assumes no
liability whatsoever for any harm to such persons resulting from any cause other
than exodus' negligence or willful misconduct resulting in personal injury to
such persons during such a visit.
6.2 Damage to Customer Equipment or Business. Exodus assumes no liability
for any damage to, or loss relating to, Customer's Business resulting from any
cause whatsoever. Certain Customer Equipment, including but not limited to
Customer Equipment located on CyberRacks, may be directly accessible by other
customers. Exodus assumes no liability for any damage to, or loss of, any
Customer Equipment resulting from any cause other than exodus' negligence or
willful misconduct. To the extent Exodus is liable for any damage to, or loss
of, the Customer Equipment for any reason, such liability will be limited solely
to the then-current replacement value of the Customer Equipment.
6.3 Exclusions. Except as specified in Sections 6.1 and 6.2, in no event
will Exodus be liable to Customer, any Representative, or any third party for
any claims arising out of or related to this Agreement, Customer Equipment,
Customer's Business or otherwise, and any lost revenue, lost profits,
replacement goods, loss of technology, rights or services, incidental, punitive,
indirect or consequential damages, loss of data, or interruption or loss of use
of service or of any Customer Equipment or Customer's Business, even if advised
of the possibility of such damages, whether under theory of contract, tort
(including negligence), strict liability or otherwise.
6.4 Maximum Liability. Notwithstanding anything to the contrary in this
Agreement, Exodus's maximum aggregate liability to Customer related to or in
connection with this Agreement will be limited to the total amount paid by
Customer to Exodus hereunder for the prior Twelve (12) month period.
6.5 Customer's Insurance. [Intentionally omitted]
6.6 Basis of the Bargain; Failure of Essential Purpose. Customer
acknowledges that Exodus has set its prices and entered into this Agreement in
reliance upon the limitations of liability and the disclaimers of warranties and
damages set forth herein, and that the same form an essential basis of the
bargain between the parties. The parties agree that the limitations and
exclusions of liability and disclaimers specified in this Agreement will survive
and apply even if found to have failed of their essential purpose.
7. Indemnification.
7.1 Exodus' Indemnification of Customer. Exodus will indemnify, defend and
hold Customer harmless from and against any and all costs, liabilities, losses,
and expenses (including, but not limited to, reasonable attorneys' fees)
(collectively, "Losses") resulting from any claim, suit, action, or proceeding
(each, an "Action") brought against Customer alleging (i) the infringement of
any intellectual property rights (but excluding any infringement contributorily
caused by Customer's Business or Customer Equipment) and (ii) personal injury to
Customer's Representatives from Exodus's negligence or willful misconduct.
7.2 Customer's Indemnification of Exodus. Customer will indemnify, defend
and hold Exodus, its affiliates and customers harmless from and against any and
all Losses resulting from or arising out of any Action brought against Exodus,
its affiliates or customers by third parties alleging claims: (a) with respect
to the Customer's Business: (i) infringement or misappropriation of any
intellectual property rights (but excluding any infringement contributorily
caused by Exodus' Internet Data Center Services; (ii) defamation, libel,
Nonstandard Internet Travel Network 4/8/99
EXODUS COMMUNICATIONS, INC. CONFIDENTIAL AND PROPRIETARY (rev 6/98)
<PAGE>
slander, obscenity, pornography, or violation of the rights of privacy or
publicity; or (iii) spamming, or any other offensive, harassing or illegal
conduct or violation of the Rules and Regulations; and (b) any damage or
destruction to the Customer Area, the Internet Data Centers or the equipment of
Exodus or any other customer by Customer or Representative(s) or Customer's
designees.
7.3 Notice. Each party will provide the other party prompt written notice
upon of the existence of any such event of which it becomes aware, and an
opportunity to participate in the defense thereof.
8. Term and Termination.
8.1 Term. This Agreement will be effective for a period of six months (6)
from the Installation Date, unless earlier terminated according to the
provisions of this Section 8. The Agreement will automatically renew for
additional terms of six (6) months each. Customer will be allowed the option to
renew this contract for an additional period of two years.
8.2 Termination.
(a) For Convenience.
(i) By Customer During First Thirty Days. Customer may terminate this
Agreement for convenience by providing written notice to Exodus at any time
during the thirty (30) day period beginning on the Installation Date.
(ii) By Either Party. Either party may terminate this Agreement for
convenience at any time effective after the first (1st) six month anniversary of
the Installation Date by providing sixty (60) days' prior written notice to the
other party at any time thereafter.
(b) (b) For Cause. Either party will have the right to terminate this
Agreement if: (i) the other party breaches any material term or
condition of this Agreement and fails to cure such breach within
thirty (30) days after receipt of written notice of the same, except
in the case of failure to pay fees, which must be cured within five
(5) days after receipt of written notice from Exodus; (ii) the other
party becomes the subject of a voluntary petition in bankruptcy or any
voluntary proceeding relating to insolvency, receivership,
liquidation, or composition for the benefit of creditors; or (iii) the
other party becomes the subject of an involuntary petition in
bankruptcy or any involuntary proceeding relating to insolvency,
receivership, liquidation, or composition for the benefit of
creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing.
8.3 No Liability for Termination. Neither party will be liable to the
other for any termination or expiration of this Agreement in accordance with its
terms.
8.4 Effect of Termination. Upon the effective date of expiration or
termination of this Agreement: (a) Exodus will immediately cease providing the
Internet Data Center Services; (b) any and all payment obligations of Customer
under this Agreement will become due immediately; (c) within sixty (60) days
after such expiration or termination, each party will return all Confidential
Information of the other party in its possession at the time of expiration or
termination and will not make or retain any copies of such Confidential
Information except as required to comply with any applicable legal or accounting
record keeping requirement; and (d) Customer will remove from the Internet Data
Centers all Customer Equipment and any of its other property within the Internet
Data Centers as soon as possible but within seven (7) days of such expiration or
termination and return the Customer Area to Exodus in the same condition as it
was on the Installation Date, normal wear and tear excepted. If Customer does
not remove such property within such seven (7) period, Exodus will have the
option to (i) move any and all such property to secure storage and charge
Customer for the cost of such removal and storage, and/or (ii) liquidate the
property in any reasonable manner.
8.5 Customer Equipment as Security. [Intentionally Omitted]
8.6 Survival. The following provisions will survive any expiration or
termination of the Agreement: Sections 2, 3, 4, 5, 6, 7, 8 and 9.
9. Miscellaneous Provisions.
9.1 Force Majeure. Except for the obligation to pay money, neither party
will be liable for any failure or delay in its performance under this Agreement
due to any cause beyond its reasonable control, including act of war, acts of
God, earthquake, flood, embargo, riot, sabotage, labor shortage or dispute,
governmental act or failure of the Internet, provided that the delayed party:
(a) gives the other party prompt notice of such cause, and (b) uses its
reasonable commercial efforts to correct promptly such failure or delay in
performance.
9.2 No Lease. This Agreement is a services agreement and is not intended
to and will not constitute a lease of any real or personal property. Customer
acknowledges and agrees that (i) it has been granted only a license to occupy
the Customer Space and use the Internet Data Centers and any equipment provided
by Exodus in accordance with this Agreement, (ii) Customer has not been granted
any real property interest in the Customer Space or Internet Data Centers, and
(iii) Customer has no rights as a tenant or otherwise under any real property or
landlord/tenant laws, regulations, or ordinances. For good cause, including the
exercise of any rights under Section 8.5 above, Exodus may suspend the right of
any Representative or other person to visit the Internet Data Centers.
9.3 Marketing. Customer agrees that Exodus may refer to Customer by trade
name and trademark, and may briefly describe Customer's Business, in Exodus'
marketing materials and web site. Customer hereby grants Exodus a license to use
any Customer trade names and trademarks solely in connection with the rights
granted to Exodus pursuant to this Section 9.3.
9.4 Government Regulations. Customer will not export, re-export, transfer,
or make available, whether directly or indirectly, any regulated item or
information to anyone outside the U.S. in connection with this Agreement without
first complying with all export control laws and regulations which may be
imposed by the U.S. Government and any country or organization of nations within
whose jurisdiction Customer operates or does business.
9.5 Non-Solicitation. During the period beginning on the Installation Date
and ending on the first anniversary of the termination or expiration of this
Agreement in accordance with its terms, Customer agrees that it will not
intentionally solicit or attempt to solicit for employment any persons employed
by Exodus during such period.
9.6 Governing Law; Dispute Resolution, Severability; Waiver. This
Agreement is made under and will be governed by and construed in accordance with
the laws of the State of California (except that body of law controlling
conflicts of law) and specifically excluding from application to this Agreement
that law known as the United Nations Convention on the International Sale of
Goods. Any dispute relating to the terms, interpretation or performance of this
Agreement (other than claims for preliminary injunctive relief or other pre-
judgment remedies) will be resolved at the request of either party through
binding arbitration. Arbitration will be conducted in Santa Clara County,
California, under the rules and procedures of the Judicial Arbitration and
Mediation Society ("JAMS"). The parties will request that JAMS appoint a single
arbitrator possessing knowledge of online services agreements; however the
arbitration will proceed even if such a person is unavailable. In the event any
provision of this Agreement is held by a tribunal of competent jurisdiction to
be contrary to the law, the remaining provisions of this Agreement will remain
in full force and effect. The waiver of any breach or default of this Agreement
will not constitute a waiver of any subsequent breach or default, and will not
act to amend or negate the rights of the waiving party.
9.7 Assignment; Notices. Neither party may assign its rights or delegate
its duties under this Agreement either in whole or in part without the prior
written consent of the other party, except that either party may assign this
Agreement in whole as part of a corporate reorganization, consolidation, merger,
or sale of substantially all of its assets. Any attempted assignment or
delegation without such consent will be void. This Agreement will bind and inure
to the benefit of each party's successors and permitted assigns. Any notice or
communication required or permitted to be given hereunder may be delivered by
hand, deposited with an overnight courier, sent by confirmed facsimile, or
mailed by registered or certified mail, return receipt requested, postage
prepaid, in each case to the address of the receiving party indicated on the
signature page hereof, or at such other address as may hereafter be furnished in
writing by either party hereto to the other. Such notice will be deemed to have
been given as of the date it is delivered, mailed or sent, whichever is earlier.
Notwithstanding the above, Exodus may assign this agreement in whole or in part
in connection with a grant of security interest to lenders participating in a
senior secured credit facility syndicated by Goldman, Sachs and Co.
9.8 Relationship of Parties. Exodus and Customer are independent
contractors and this Agreement will not establish any relationship of
partnership, joint venture, employment, franchise or agency between Exodus and
Customer. Neither Exodus nor Customer will have the power to bind the other or
incur obligations on the other's behalf without the other's prior written
consent, except as otherwise expressly provided herein.
9.9 Entire Agreement; Counterparts. This Agreement, including all
documents incorporated herein by reference, constitutes the complete and
exclusive agreement between the parties with respect to the subject matter
hereof, and supersedes and replaces any and all prior or contemporaneous
discussions, negotiations, understandings and agreements, written and oral,
regarding such subject matter. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
Customer's and Exodus' authorized representatives have read the foregoing and
all documents incorporated therein and agree and accept such terms effective as
of the date first above written.
CUSTOMER EXODUS COMMUNICATIONS, INC.
Signature: /s/ Al Whaley Signature: /s/ Sue Irvine
--------------------- -------------------
Print Name: Al Whaley Print Name: Sue Irvine
--------------------- -------------------
Title: CTO Title: 5/4/99
--------------------- -------------------
Nonstandard Internet Travel Network 4/8/99
EXODUS COMMUNICATIONS, INC. CONFIDENTIAL AND PROPRIETARY (rev 6/98)
<PAGE>
Internet Travel Networks
Data Center Solution
Order Form
Customer: Internet Travel Network
Date: March 31, 1999
Form: 0331-KH
Santa Clara IDC Services:
------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Product Number Description Qty. Unit Non- ITN
(Detailed description attached) Price recurring Monthly
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EXO-RACK-100 CyberRack (19" or 23" Full-Rack)* 60 $ 950 $57,000
- ------------------------------------------------------------------------------------------------------------
EXO-RACK-100SU CyberRack Setup 60 $ 825 $49,500
- ------------------------------------------------------------------------------------------------------------
EXO-FAST-U5 5 Mbps base Fast Ethernet with 100 1 $3,250 $ 3,250
Mbps burstability.**
- ------------------------------------------------------------------------------------------------------------
EXO-FAST-SU Fast Ethernet Setup 1 $3,850 $ 3,850
- ------------------------------------------------------------------------------------------------------------
EXO-BGP-30 BGP Setup 1 $1,500 $ 1,500
- ------------------------------------------------------------------------------------------------------------
EXO-XCON-RDDS3 DS3 Cross-connection 1 $ 550 $ 550
- ------------------------------------------------------------------------------------------------------------
EXO-XCON-RTI TI Cross-connection 3 $ 550 $ 1,650
- ------------------------------------------------------------------------------------------------------------
EXO-POWER-SU Power Circuit Setup 4 N/A N/A
- ------------------------------------------------------------------------------------------------------------
EXO-POWER-30 30 Amp Power Circuit--208V 4 $ 400 $ 1,600
- ------------------------------------------------------------------------------------------------------------
EXO-CSLT-OS System Administration (Hourly) 1 $ 125 $ 125
- ------------------------------------------------------------------------------------------------------------
Total $57,175 $61,850
- ------------------------------------------------------------------------------------------------------------
</TABLE>
COMMENTS: ITN has first right of refusal for the space behind the existing wall
next to their pre-determined cage location. ITN will have one week following
written notification (of availability of the adjacent space behind the wall) to
commit to the amount of space desired before this first right of refusal will
become null and void. This pre-determined cage location is reserved for ITN only
if this order is signed and submitted on or before March 31, 1999. Installation
charges for above services under "Santa Clara Services" will be billed based on
a standard configuration and shall include products outlined below. Cage spacing
is based on mutually agreed upon terms. Additional 20 amp circuits are available
at $260 setup fee each, $299 per month. Above pricing is valid for DC and Santa
Clara IDCs for 12 months. This order is contingent upon ITN and Exodus reaching
mutual agreement on the terms and conditions of the IDC agreement and of the
floor layout.
CUSTOMER'S INITIALS AW
--
<PAGE>
*Specifications to be included in the pricing for each rack of ITN Data Center
Space:
* Secure Area
* 1 Rack
* 4 Shelves
* Wiring Channels
* Wiring Patch Panel
* Power Distribution Bar
* 1 POTS line cross connect
* 1 Dedicated 20 Amp Power Circuits
All installation, equipment and service fees, above the standard configuration
shall be charged to ITN at a rate of Exodus cost plus 5%.
**Bandwidth usage above the 1 Mbps base will be billed under the terms described
below for "Bandwidth Billing Model"
BANDWIDTH BILLING MODEL
- -----------------------
Exodus Communications will provide 1 Mbps Fast Ethernet Connections to ITN's
colocation environment within Exodus Internet Data Center. On a monthly basis,
Exodus will take the sum bandwidth of the connections and apply it to the usage
measurement described below.
Variable Usage above 1 Mbps shall be billed on the following:
- --------------------------------------------------------------------------------
Product Number Description QTY. ITN Price
- --------------------------------------------------------------------------------
EXO-FAST-VU10 Variable Usage Cost per Megabit Above 5 Per $650
Mbps Base Amount ($/megabit) for 1 to 25 Megabit
Mbps Base
See note below
- --------------------------------------------------------------------------------
All bandwidth services provide full duplex, switch port connections. In
addition, daily web based bandwidth reporting is included for all products. ITN
will be billed for additional bandwidth used based on the 95% bandwidth
measurement and billing policy.
95% Usage Based Bandwidth Measurement:
- -------------------------------------
The Exodus monitoring system will record 5 minute average samples of the total
line usage (input and output) of your co-location network line over a period of
a month. At the end of the month the samples are sorted and the top 5% samples
of the total line usage are discarded. The highest remaining value is used as
the basis for the bandwidth usage rate for that month and is referred to as the
"95 percentile".
CUSTOMER'S INITIALS /s/ AW
--
EXODUS COMMUNICATIONS, INC. PROPRIETARY AND CONFIDENTIAL
<PAGE>
EXODUS COMMUNICATIONS, INC.
INTERNET DATA CENTER SERVICES ORDER FORM
SERVICES AND PRICES
Customer Name: Internet Travel Network
Form Date: 3/31/99
Form No.: 0331-KH
IMPORTANT INFORMATION:
- ---------------------
(1) By submitting this Internet Data Center Services Order Form (Form) to
Exodus Communications, Inc., (Exodus), Customer hereby places an order for
the Internet Data Center Services described herein pursuant to the terms
and conditions of the Internet Data Center Services Agreement between
Customer and Exodus (IDC Agreement).
(2) Billing, with the exception of Setup Fees, will commence on the earlier of
the Installation Date indicated below or the date Customer actually
installs its equipment or Exodus begins providing Internet Data Center
Services. All Setup will be billed upon receipt of a Customer signed IDC
Services Order Form.
(3) Exodus will provide the Internet Data Center Services pursuant to the terms
and conditions of the IDC Agreement, which incorporates this Form. The
terms of this Form supersede, and by accepting this Form Exodus hereby
rejects, any conflicting or additional terms provided by Customer in
connection with Exodus' provision of Internet Data Center Services. If
there is a conflict between this Form and any other Form provided by
Customer and accepted by Exodus, the Form with the latest date will
control.
(4) Exodus will not be bound by or required to provide Internet Data Center
Services pursuant to this Form or the IDC Agreement until each is signed by
an authorized representative of Exodus.
Customer to complete:
- --------------------
CUSTOMER HAS READ, UNDERSTANDS AND HEREBY SUBMITS THIS ORDER.
Installation Date: April 8, 1999
------------------------
Submitted By: /s/ Al Whaley Submission Date: March 31, 1999
------------------------ (Effective Date of IDC Agreement)
(Authorized Signature)
Print Name: Al Whaley
------------------------
Title: CTO
------------------------
Exodus Communications, Inc. Acceptance
- --------------------------------------
/s/ Sue Irvine Date: 5/4/99
- -------------------------- ------------------
(Authorized
<PAGE>
EXHIBIT 10.37
INTERNET TRAVEL NETWORK
GET THERE.COM FLIGHTREZ AGREEMENT
This Agreement is made as of August ___, 1999 ("Effective Date") between
GetThere.com, Inc., a California corporation with its principal place of
business at 445 Sherman Avenue, Palo Alto, CA 94306 ("GT") and Northwest
Airlines, Inc., a Minnesota corporation with its principal place of business at
5101 Northwest Drive, St. Paul, MN 55111 ("Company"). GT and Company are
sometimes referred to herein as a "Party" or collectively referred to as the
Parties
BACKGROUND: GT develops and markets travel-related technology and services for
use in connection with the World Wide Web. The GT Reservation System permits
customers to access real-time Computer Reservation System ("CRS") inventory and
make travel reservations via the World Wide Web. Company wishes to provide its
customers with access to the GT Reservation System via screens displaying Air
Outlet Consolidator's logos.
GT is in the business of developing web sites and Company wishes to jointly
develop with GT the Air Outlet Center web site ("Air Outlet Center Site" as
defined herein). GT is in the business of hosting web sites and Company wishes
to have GT host the Air Outlet Center Site. GT is in the business of providing
e-mail delivery of confirmation of travel plans made through the GT CRS and
Company wishes to have GT provide such e-mail confirmation to Company's
customers.
GT presented Company with a proposal, attached as Attachment G and Company
relied on such proposal in determining GT's ability and statements contained
therein formed the basis of the decision to award this contract to GT.
Now, Therefore, in consideration of the mutual agreements herein contained, and
other valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties, intending to be legally bound, agree as follows:
1. Definitions.
-----------
1.1 "Acceptance" means as set forth in Section 4.5.
1.2 "Additional Services" means any additional services which may be acquired
by Company under the terms of this Agreement and pursuant to a mutually
acceptable Statement of Work for Additional Services.
1.3 "ARC" means the Airline Reporting Commission.
1.4 "Booking" means the creation of a PNR within the database of the
applicable CRS and all changes and cancellations relating to such PNR.
1.5 "Co-Branded" means GT's logo and the phrase "Powered by Get There.com"
will be prominently displayed on every page of the Private Label Site.
1.6 "Content" means the Company specific content as set forth in Attachment A
("Company Content") delivered by Company to GT for use in the Private Label
Site.
1.7 "CRS" means a computer reservation system implemented by the GT
Reservation System.
1.8 "Company Client" means a customer of Company's that utilizes the Private
Label Site.
1.9 "Defaulting Party" means as set forth in Section 21.1
1.10 "Event of Default" means as set forth in Section 21.1
1.11 "FlightREZ Product" means the GT Booking engine that enable airlines to
serve travelers directly.
1.12 "Fulfillment" means as set forth in Exhibit F.
1.13 "ISP" means the Internet Service Provider chosen solely by GT to provide
them the System.
1.14 "GT Reservation System" means GT's proprietary booking engine that
provides access to a real time CRS in order to make travel reservations via the
world wide web.
1.15 "Non-Defaulting Party" means as set forth in Section 21.1.
1.16 "Order" means Company's standard Purchase Order or any other document
referencing and incorporating the terms and conditions of this Agreement and
describing any Additional Services being ordered. Any preprinted terms and
conditions on Company's standard Purchase Order or other documents will be
replaced and superseded in entirety by the terms and conditions of this
Agreement. Notwithstanding the foregoing sentence, an Order may set forth
modifications and additions to the terms and conditions of this Agreement
provided, however, that such modifications and additions will only be effective
if agreed upon in writing by GT and Company set forth as an addendum to the
Order.
1.17 "PNR" means a single passenger name record containing sufficient
information to process a travel reservation.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
1.18 "Price List" means a schedule of Service Fees as set forth in Attachment C
hereby incorporated by into this Agreement by this reference.
1.19 "Private Label Site" means the set of world wide web pages, also referred
to herein as the Air Outlet Center Site, hosted by GT through which a Company
Client may access the GT Reservation System via screens displaying the Company
Content and incorporating product features as set forth in Attachment B.
1.20 "Services" means and duties or work including labor, consulting, training
implementation, Fulfillment, support, maintenance,, and other miscellaneous
services as may be provided by GT or any of GT's subcontractors or agents to
Company under this Agreement.
1.21 "Service Fee" means as set forth in Attachment C.
1.22 "Service Level" means the mutually agreed upon, quantifiable criteria for
assessing performance of the Private Label Site as set forth in Attachment D.
1.23 "Service Level Compliance" means, as applicable, GT's successful
performance in accordance with the Service Level as measured against the
quantifiable criteria set forth in Attachment D. The calculation of Service
Level Compliance will exclude downtime related to Company's databases, any
utilized CRS, internet backbone or mapping software vendors and any of the
causes set forth in Section 28 or caused by any act or omission of Company.
1.24 "Statement of Work" means GT's description of work as and attached here to
as Attachment E.
1.25 "Statement of Work for Additional Services" means a document describing
the specifications of Additional Services as may be attached to an Order
pursuant to the mutual agreement of the parties. The Statement or Work will
include a detailed description of Additional Services, a performance schedule
(including all major deliverables and milestones), GT and Company
responsibilities in conjunction with the performance of the Additional Services.
In addition, the Statement of Work may include items such as account and project
management requirements, performance reporting and any other special provisions
or requirements related to Additional Services.
1.26 "System" means Private Label Site, the GT Reservation System and/or ISP
provided by GT hereunder.
1.27 "Ticket" means the issuance of ARC documents by GT as required for each
PNR. Such issuance may be in the form of an email confirmation (for air, car or
hotel), electronic confirmation (e.g. E-Ticket) or authorized ARC paper
collateral (for air travel).
1.28 "Update" means any related updates of Company Content as defined herein.
1.29 "Upgrade" means any GT FlightREZ product enhancements developed by GT
during the Initial Term or any successive six month renewal periods of this
Agreement.
2. Rules of Construction.
2.1 The following rules of construction apply to this Agreement:
2.2 The singular includes the plural and the plural includes the singular;
2.3 "include" and "including" are not limiting;
2.4 "hereby", "herein", "hereof", "hereunder", "the Agreement", "this
Agreement" or any like words refer to this Agreement;
2.5 A reference to a law includes any amendment or modification to such law and
any rules or regulations issued there under or any law enacted in substitution
or replacement therefore;
2.6 A reference herein to a Section, Exhibit, Attachment, Appendix or Schedule
without further reference is a reference to the relevant Section, Exhibit,
Attachment, Appendix or Schedule of this Agreement;
2.7 Any right may be exercised at any time and from time to time unless
specified otherwise herein;
2.8 The headings of the Sections and portions thereof are for convenience only
and will not affect the meaning of this Agreement; and
2.9 Any reference to days will mean calendar days unless specifically noted
otherwise.
3. Content and License Rights.
--------------------------
3.1 GT grants to Company a world-wide, non-exclusive, non-transferable, non-
sublicensable, royalty-free license during the term of this Agreement to use the
FlightREZ Product in connection with the Private Label Site. Company
acknowledges GT's proprietary rights set forth in Section 16.
3.2 Company will provide GT with the Content necessary to implement the Private
Label Site. Company grants to GT a world-wide, non-exclusive, royalty-free
license during the term of this Agreement to use, reproduce, electronically
distribute, publicly display, and publicly perform the Content delivered to GT
by Company only in connection with the Private Label Site. GT acknowledges that
Company owns all right, title and interest in and to the Content.
2
<PAGE>
4. Functionality and Implementation.
--------------------------------
4.1 Other than the Design and Set-up fee set forth in Exhibit C, the Private
Label Site will implement, at no additional cost to Company, GT's airline
product features as described in Attachment B ("AIRLINE PRIVATE LABEL PRODUCT
FEATURES") including searching and retrieving airline travel information and
booking airline Tickets.
4.2 GT and Company will use diligent efforts to mutually develop the Private
Label Site to meet the requirements set forth in Attachment B.
4.3 GT will host the Private Label Site. GT acknowledges that Company relies
on GT's ability and discretion in choosing an ISP.
4.4 Company and GT will use commercially reasonable efforts to implement the
Private Label Site in accordance with the Statement of Work within the time
frames set forth on Attachment C. Implementation is understood to mean
providing the Private Label Site to Company in order for testing to occur (and
in turn -- acceptance) as set forth in Section 4.5 below. If GT does not
implement the Private Label Site within such time frame through no fault of
Company, Company may either (i) extend the time frame for implementation or (ii)
terminate this Agreement with no amount owing to GT (which will be Company's
sole and exclusive remedy).
4.5 Acceptance of the Private Label Site will be deemed to have occurred within
thirty (30) days of release of the site by GT to Company, unless otherwise
communicated by Company to GT in writing. In the event that Company
communicates any nonconformance in the Private Label Site to GT in writing, GT
will use reasonable commercial efforts to promptly correct or remedy such
nonconformance and retender the Private Label Site for further testing. If
Company fails to provide GT with notice of nonconformance within fifteen (15)
business days of retender or any subsequent retender, the Private Label Site
will be deemed Accepted and the last day will be deemed the "Date of
Acceptance." If the Date of Acceptance has not occurred by the date sixty (60)
days from the date of implementation as set forth in Section 4.4 above Company
will within ten (10) calendar days thereafter to, notify GT in writing of its
election to do either of the following: a) instruct GT to correct any
deficiencies and retender the Private Label Site for testing as often as
necessary to achieve Acceptance or b) terminate this Agreement in its entirety
as Company's sole and exclusive remedy. Notwithstanding the above, release of
the Private Label Site to its Company Clients to perform live bookings will be
considered Acceptance of the Private Label Site by the Company. Failure to
object prior to the Date of Acceptance will not limit GT's obligations to
correct material non-conforming conditions later discovered pursuant to this
Agreement The Design and Set Up Fee as stated in Attachment C will be due and
owing to GT on the Date of Acceptance. The acceptance processes set forth
within this Section 4.5 will also govern the acceptance procedure for Additional
Services, Section 4.9.
4.6 After initial implementation to incorporate Content, GT will have no
obligation to perform further development or customization, other than as set
forth herein. Any look and feel modifications to the Private Label Site will
be made as mutually agreed upon by GT and the Company at no cost to Company.
Such look and feel modifications will be completed within five (5) days after GT
and Company agree. GT will deliver to Company at no cost, annually up to two
(2) revisions to or additions of the Airline Private Label Product Features as
defined in Section 4.1.. Such revisions are more than the look and feel
modifications as described above.
4.7 Company may provide GT Updates for the Private Label Site. GT agrees to
use diligent efforts to implement such Updates within twenty-four (24) hours of
receipt of the Content, provided however, the Content required for such Updates
will be substantially in the format mutually agreed upon between GT and Company
and as reflected on Attachment A. GT will implement such Updates at no
additional cost to Company.
4.8 GT will provide, general maintenance to the Private Label Site and GT
Reservation System during the terms of this Agreement, which shall be performed
during off-peak hours, as determined by GT in its sole discretion. GT will
notify Company in writing, via e-mail or other method as mutually agreed upon,
so that from the time of Company's receipt of such notification at least twenty-
four (24) hours passes before performance of any maintenance that will
materially interferes with the Company Client's Private Label Site experience.
Not withstanding the aforementioned, GT will not perform maintenance work
during time periods as provided in writing by Company to GT.
4.9 In the event Company requests Additional Services from GT and such
Additional Services does not relate to the timeliness of the Content Update as
set forth above in Section 4.7, or look and feel Private Label Site
modifications or the two (2) Private Label Site revisions as set forth in
Section 4.6 above, Company and GT will follow procedures as set forth in Section
4.5 above. Fees for Additional Services will be as set forth in Attachment C and
due and owing to GT upon the Date of Acceptance.
4.10 During the term of this Agreement, GT agrees to use reasonable commercial
efforts to provide to Company, , Upgrades to the Private Label Site, at the same
or no cost to Company as generally made available to customers using the GT
FlightREZ Product.
5. Service Level Compliance.
------------------------
5.1 GT will comply with the Service Levels as set forth in Attachment D so as
to achieve Service Level Compliance. In the event GT falls below the Service
Levels set forth in Attachment D Company may (i) agree to discuss an alternate
remedy, or (ii) terminate this
3
<PAGE>
Agreement in accordance with Section 20.6 and such termination is Company's sole
and exclusive remedy for breach of this Section.
5.2 GT will provide a report on Fulfillment in a mutually acceptable format.
GT will provide reports to Company, detailing performance in connection with
Service Level Compliance objectives as stated in Attachment D.
6. Access.
------
6.1 Company will assign a Universal Resource Locator (URL) for the Private
Label Site.
6.2 GT will be solely responsible for all the necessary computer hardware,
software, modems, connections to the internet and other items as are needed for
hosting and maintaining the Private Label Site (herein referred to as
"Equipment"). GT will be solely responsible for all costs associated with the
aforementioned Equipment for hosting and maintaining the Private Label Site. In
the event hosting and maintaining the Private Label Site requires additional
communications connections to GT, the CRS or the internet, GT will be solely
responsible for all costs associated with such connections for hosting and
maintaining the Private Label Site. GT will maintain management control of any
hardware, and costs associated with such hardware, required to support the
Private Label Site within GT's data center. Company and Company Clients will be
solely responsible for all necessary computer hardware, software, modems, and
connections to the internet and other items as are needed for accessing the
Private Label Site.
7. Technical First and Second Level Support.
----------------------------------------
7.1 GT will provide first level end-user travel related support to Company
Clients, as set forth in Attachment H.
7.2 GT will provide Company with its standard second tier technical support for
the Private Label Site(s) as set forth in Attachment D at no cost. Such support
will include, but not be limited to, telephone support to Company's designated
support contact twenty-four (24) hours a day, seven days a week.
8. Bookings. GT will book to the applicable CRS and email a confirmation, if
--------
possible, to the Company Client for each Booking made through the Private Label
Site within two (2) hours for such Booking. GT will keep records of such
Bookings. GT will accumulate and invoice all Tickets fulfilled from Bookings on
the Private Label Site directly to Company on a monthly basis, which will
include a monthly report of such Bookings. Such report will contain the Company
Client's name, the number of travelers, the PNR number and the Booking date.
9. Payments.
--------
9.1 Other than the Design and Set-up fee set forth in Attachment C, Company
will receive at no additional cost, all the Airline Private Label Site Product
Features set forth in Attachment B hereto. If Company requires the
implementation of any Additional Services, including additional features not
listed in Attachment B or the Statement of Work, then Company will pay the
additional fees as set forth in Attachment C.
9.2 Except as otherwise stated herein, all payments undisputed in good faith
due to GT hereunder (other than the initial Design and Set-up Fee) will be made
within forty-five (45) days of Company's receipt of GT's invoice. Late payments
will bear interest at 1.0% per month or the maximum rate permitted by law,
whichever is less.
9.3 Currency. Unless specifically agreed upon otherwise and set forth in the
Order, all payments hereunder will be made in United States currency.
9.4 Reimbursable Expenses. If agreed to in writing by the Parties, Company
will reimburse GT for reasonable, actual, out-of-pocket expenses incurred by GT
in conjunction with out of town travel required for GT to perform the Services,
provided that such travel is approved in advance by Company's representative.
Company will, at its option, provide GT with Coach Class space available or
other Tickets for air travel on Northwest Airlines or reimburse GT for Coach
Class, round trip air travel. GT will utilize Northwest Airlines air
transportation unless specifically approved otherwise, on a case by case basis,
by Company's representative. Other reimbursable expenses will be limited to
reasonable and actual expenses for lodging, meals, local transportation, and
incidentals only as are required by GT in the performance of its obligations
hereunder. Unless specifically agreed upon otherwise by Company's
representative, rental car expenses will only be reimbursed if the car is
necessary for GT to complete its obligations hereunder. Receipts will be
required for any expenditure totaling US $25.00 or more. Air travel, hotel and
rental car expenses will only be reimbursed if reservations are made through
Company's representative, unless Company declines to make such reservations.
Notwithstanding the foregoing, the Parties may agree upon, in advance of any
travel, a per diem payment in lieu of reimbursement.
10. Adjustments to Charges. The prices set forth in Attachment C will be fixed
----------------------
for the duration of the Initial Term set forth in Section 20.1. Thereafter such
charges may, upon ninety (90) days prior written notice, be adjusted by GT.
However any increase in any fee will be limited to five percent (5%) in any
twelve (12) month period.
11. Audit. GT agrees that all of its books and records relating to the
-----
Services provided hereunder will be maintained for not less than two (2) years
after the delivery of Services and will, upon reasonable cause and notice, be
subject to inspection and audit at Company's expense by an independent certified
public accountant employed by Company solely for this purpose and reasonably
acceptable to GT. As a condition to such examination, the independent public
accountant selected by Company will execute a written agreement, reasonably
satisfactory in form and substance to GT, to maintain in
4
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confidence all information obtained during the course of any such examination
except for disclosure to Company and GT as necessary for the above purpose and
will only conduct such audit during regular business hours.
12. Expenses. Except as otherwise provided herein, each Party agrees to bear
--------
its own costs and expenses in connection with preparation, execution and
delivery of this Agreement and all documents and instruments executed pursuant
hereto, including, but not limited to, legal and accounting fees and expenses.
13. Collection. If GT is required to institute any proceeding to obtain
----------
payment and prevails in such proceeding, Company agrees to pay the costs and
expenses (including reasonable attorney's fees) incurred by GT in connection
therewith.
14. Disputes. If Company in good faith disputes any invoice rendered or amount
--------
paid, Company will remit the portion not in dispute in a timely manner and will
deliver to GT a statement stating the specific basis for the dispute in detail
sufficient to enable GT to evaluate Company's claim. The Parties will use all
reasonable efforts to resolve such dispute expeditiously. If Company so
notifies GT of a disputed amount, the time for paying the disputed portion of
the invoice will be extended by a period of time equal to the time between GT's
receipt of such notice from Company and the resolution of such dispute.
15. Warranties and Disclaimers.
--------------------------
15.1 Each of GT and Company warrants to the other that it has the right to
enter into this Agreement and perform its obligations hereunder. Without
limiting the generality of foregoing, Company warrants to GT that it now has
and/or will have the right to provide GT with all Content to be provided with
respect to this Agreement.
15.2 If there is an error in posting fares and a Company Client purchases an
incorrectly priced ticket, and Company can document that such error was caused
by GT's negligence, Company will be entitled to receive the difference in the
amount collected and the actual correct fare and any related taxes, including
but not limited to associated passenger facility charges, sales and use taxes,
stamp taxes, excise taxes, APHIS user fees, value added taxes (in the nature of
a sales or use tax), gross receipt taxes (in the nature of sales or use tax) and
U.S. Customs and Immigration user fees. Such a refund shall be Company's sole
and exclusive remedy for such errors. GT's maximum liability to Company will be
the aggregate of the amount of money paid to GT by Company for the Private Label
Site during the six month period prior to the date on which the documented error
caused by GT's negligence arose.
15.3 GT is and will remain a member of ARC in good standing throughout the term
of this Agreement.
15.4 EXCEPT AS PROVIDED ABOVE, ALL INFORMATION, TECHNOLOGY AND SERVICES
PROVIDED BY GT HEREUNDER ARE PROVIDED "AS IS" WITHOUT ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, GT EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO SUCH INFORMATION, TECHNOLOGY
AND SERVICES.
16. Proprietary Rights.
------------------
16.1 GT represents that GT owns all right, title, and interest in and to all
components of the Private Label Site, not to include Content provide by Company,
and GT Reservation System, including all derivatives of and modifications
thereto and Company acknowledges this representation.
16.2 Nothing in this Agreement will give Company any right or license to use,
reproduce, display or distribute (electronically or otherwise) any technology or
intellectual property rights in the GT Reservation System.
16.3 GT reserves the right to display its copyright, standard trademark graphic
and disclaimer on the Private Label Site in a manner and format to be mutually
agreed upon by GT and Company.
16.4 Company will determine all terms and conditions of Company travel services
offered through the Private Label Site.
17. Indemnity.
---------
17.1 Except for any third party claims addressed by Section 17.2 below, each
Party will indemnify the other Party for amounts spent in defense and amounts
actually awarded in third party suits arising solely out of that Party's
negligence and/or willful misconduct in accordance with the activities
contemplated by this Agreement, provided however that the party seeking
indemnification will give the indemnifying party prompt notice in writing of
such suit or proceeding, the indemnifying party will have complete control of
the settlement and defense and the party seeking indemnification will provide
any information and assistance reasonably requested by the indemnifying party
(at the indemnifying party's expense).
17.2 Infringement Indemnity. As of the Effective Date, GT warrants and agrees
that it will defend any suit or proceeding that may arise against Company for
alleged infringement of any U.S. copyright or patent relating to the use of the
GT Reservation System, and that GT will indemnify and hold harmless the Company
against any loss, including damages, costs and expenses (including attorney
fees) that may be incurred by the assertion of any such patent or copyright
claims by a third party; provided however that Company will give GT prompt
notice in writing of such suit or proceeding, GT will have complete control of
the settlement and defense and Company will provide any information and
assistance reasonably requested by GT (at GT's expense) GT will obtain
5
<PAGE>
Company's consent for any settlement that would result in direct liability to
the Company. The foregoing obligation does not apply with respect to services
not supplied by GT (e.g. third party software, services, telecommunications or
technology) but does include any and all third party software that may be
embedded in the GT Reservation System. In the event such a claim by a third
party causes Company's quiet enjoyment and use of the GT Reservation System to
be seriously endangered or disrupted, GT will, at GT's option: (a) replace the
GT Reservation System, without additional charge, with a compatible,
functionally equivalent and non-infringing system; (b) modify the GT Reservation
System to avoid the infringement; (c) obtain a license to continue use of the GT
Reservation System for the term of this Agreement and pay any additional fees
required for such a license; or (d) if none of the foregoing alternatives are
practical even after GT's best efforts, GT will refund to the Company all
amounts for Design and Set-up Fees and the Additional Services paid by the
Company to GT (up to [*]), and both parties will have the right to immediately
terminate the Agreement.
17.3 As of the Effective Date, GT has no knowledge of any existing infringement
of its rights to provide the GT Reservation System or Services, nor of any
dispute as to the ownership or any other matter that might affect the validity,
continuance, ownership or value thereof or GT's ability to enter into this
Agreement.
17.4 Company's sole and exclusive remedy for any liability to Company resulting
from any infringement is indemnification and or termination as set forth herein.
18. Insurance.
---------
18.1 GT will maintain insurance, with an insurance company satisfactory to
Company, in the following amounts:
(i) Worker's Compensation - Statutory Limit
---------------------
(ii) Employers Liability - $500,000
-------------------
(iii) Commercial General Liability - $2,000,000 Combined Single Limit
----------------------------
Insurance per occurrence. (This is a minimum amount. Airport requirements
or the nature of the work may necessitate higher limits, but in no event
to exceed $5,000,000.) Commercial General Liability insurance will include
policies for: personal injury; insured contractual liability; completed
operations/product liability; naming Company as an additional insured; and
provide severability of interest, cross liability and independent
contractor's coverage.
(iv) Business Auto Policy - $1,000,000 Combined Single Limit. Such insurance
--------------------
to cover owned, non-owned and hired vehicles when doing work on Company's
premises.
18.2 GT agrees to insure (or self-insure) all losses to its owned or leased
tools and equipment used in the provision of the Services and agrees to obtain
an endorsement from its insurance carrier waiving its right of subrogation
against Company.
18.3 If requested by Company, Certificates of Insurance will be delivered to
Company evidencing compliance with the insurance terms of this Agreement. All
of the above insurance will be written through a company or companies
satisfactory to Company, and the Certificates of Insurance will be of a type
that unconditionally obligates the insurer to notify Company in writing at least
thirty (30) days in advance of the effective date of any material change in or
cancellation of such insurance. GT's failure to provide or to maintain the
insurance required during the term of this Agreement will be deemed an Event of
Default in accordance with Section 21.1.
19. Limitation on Damages. Except as stated in Section 17.2 above, not
---------------------
withstanding any other provisions in this Agreement, GT's maximum liability to
Company will be the aggregate of the amount of money paid to GT by Company for
the Private Label Site during the six month period prior to the date on which
the cause of action arose. Except as stated in Section 17.2 above, in no event
will either Party be liable to the other under contract, negligence, strict
liability or any other legal or equitable theory for any cost of procurement of
substitute goods, technology, services or rights, for loss or corruption of
data, for any incidental, indirect, special, or consequential damages.
20. Term and Termination of Agreement.
---------------------------------
20.1 Unless terminated earlier as provided herein, this Agreement will begin on
the Effective Date and continue for an initial period of one year from the Date
of Acceptance (the "Initial Term"). Thereafter, this Agreement will
automatically renew for successive periods of six (6) months unless either Party
gives written notice of its intent not to renew to the other Party no later than
ninety (90) days prior to the end of the Initial Term or any such six (6) month
renewal period.
20.2 Either Party may terminate this Agreement upon sixty (60) days written
notice in the event the other Party breaches any material term (such material
term will not include Service Level failures for purposes of this Section 20.2.
Termination for Service Level failure are provide in Section 20.6) of this
Agreement and such breach continues without cure for a period of sixty (60) days
following specific written notice by the Non-Defaulting Party to the Defaulting
Party of such breach and request for termination.
20.3 This Agreement may also be terminated by either Party without cause by
giving ninety (90) days prior written notice to the other Party.
20.4 Company may terminate any Additional Service under any Order, in whole or
in part, for convenience upon
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
6
<PAGE>
giving at least thirty (30) days prior written notice. In such event, Company
will reimburse GT on a time basis for all work performed by GT up to the
effective date of termination. Payment of all outstanding invoices will be made
up to and including the last day of the Additional Service. Company will not be
liable for any costs incurred by GT in connection with the termination of
Additional Services other than payment for Additional Services provided prior to
the effective date of termination.
20.5 Exercise by either Party of its right to terminate this Agreement under
this Section 20 or under any other provision of this Agreement will not affect
or impair such Party's right to enforce its other rights or remedies under this
Agreement. All obligations of each Party that have accrued before termination or
that are of a continuing nature will survive termination.
20.6 In the event GT falls below the Service Level standards set forth in
Attachment D twice in a quarter (a quarter being three consecutive calendar
months), Company may terminate this Agreement with thirty (30) days prior
written notice to GT.
20.7 .Sections 13, 15, 16, 17, 19 through 22, 28, and 31 through 46 will
survive any termination or expiration of this Agreement. Any payment obligations
which exist as of the termination or expiration of this Agreement will remain in
effect.Post-Termination Obligations. In the event Company provides GT with
notice that Company intends to terminate this Agreement, GT agrees to provide
Services, as requested by Company, in a good faith and business like manner,
under the terms and conditions of this Agreement for a minimum of ninety (90)
days from the date such termination is effective. GT will in good faith and in a
business like manner provide Services and work with another supplier and Company
to structure a smooth changeover during any transition period from GT provided
Services to any other supplier of services. The obligations of GT under this
Section 20.8 are subject to the timely payment by Company of all accrued fees
and expenses under this Agreement, including, without limitation, the fees and
expenses due GT pursuant to this Section 20.8. GT will be paid its then current
rates for work performed after termination.
21. Default; Remedies.
-----------------
21.1 Events of Default. Each of the situations set forth below will constitute
an event of default (an "Event of Default") hereunder. The term "Defaulting
Party" will be defined as the Party responsible for the Event of Default and the
term "Non-Defaulting Party" will be defined as the Party not responsible for the
Event of Default:
(i) Either Party will fail to make any payment required under this Agreement
when due and such failure will continue uncured for a period of sixty
(60) days after receipt of written notice of such non-payment;
(ii) Either Party will default in the performance of any other material
covenant contained herein and such default will continue uncured for a
period of sixty (60) days after receipt of written notice thereof;
(iii) Any representation or warranty made by either Party herein will prove to
have been false or misleading in any material respect when made and has
materially harmed the Non-Defaulting Party; and
(iv) In the event that either of the Parties become insolvent or bankrupt or
make an assignment for the benefit of creditors, if an order of
sequestration or liquidation is made against the Parties or if the Parties
try to take advantage of a statute relating to insolvency, bankruptcy or
arrangements with creditors.
21.2 Remedies. If an Event of Default occurs under this Agreement, the Non-
Defaulting Party may proceed by appropriate court action to recover reasonable
damages for the breach against the Defaulting Party.
22. Confidentiality. Both Parties to this Agreement acknowledge that it or its
---------------
employees may be exposed to or acquire information in connection with this
Agreement that is proprietary or confidential to the other Party or third
parties to whom either Party has a duty of confidentiality. Except as set forth
below, any and all information relating to the business of either party or its
clients or customers and other information obtained by either Party or its
employees or subcontractors in the performance of this Agreement will be deemed
to be confidential and proprietary information provided all such material is
clearly labeled as "Confidential" or "Proprietary". Notwithstanding the above,
Company Clients' names, travel destinations, itineraries, technical data,
implementation plans, traveler profiles (including credit card information), and
travel contracts will be considered confidential information regardless of
whether it is labeled as such provided that GT is not prohibited from (i) using
or disclosing such information, externally, in an aggregate or statistical
composite form or (ii) using or disclosing such information to its auditors,
attorneys, potential investors and acquirers, or as required by law and/or
statute. Except as provided herein, each Party agrees to hold confidential
information in strict confidence and not to disclose such information to third
parties or to use such information for any purpose whatsoever other than as
necessary to perform under this Agreement. Furthermore, except as needed to
perform the obligations provided herein, or as otherwise set forth in this
Section, GT agrees that Company Clients' personal data and credit card
information will not be provided to any third party and in no event shall such
information be sold, rented, traded or otherwise distributed to any third party
by GT without Company Clients' prior written consent. Each Party will require
that each of its employees, subcontractors, potential investors and acquirers
who may be exposed to such proprietary and confidential information execute a
non-disclosure agreement containing terms at least as protective of the parties'
confidential information as set forth in this Section 21.3.
7
<PAGE>
Either Party's confidential information will not include (i) information that is
now or subsequently becomes publicly available without breach of this Agreement
by the receiving Party, (ii) information made available to either Party from
other sources without any obligation of confidentiality, (iii) information that
is already in either Party's possession not subject to an obligation of
confidentiality, (iv) information that is independently developed by either
Party without reference to any confidential information and (v) information that
is disclosed pursuant to an order or a court or governmental agency as so
required by such order, provided that the receiving Party will make reasonable
efforts to first notify the disclosing Party of such order and afford the
disclosing party the opportunity to seek a protective order relating to such
disclosure.
23. Year 2000 Compliance.
--------------------
23.1 GT represents and warrants that the GT Reservations System, and Equipment
utilized by GT as set forth in section 6.2 and Service (collectively hereby
referred to as "GT Products" )are Year 2000 complaint. In order to be deemed
Year 2000 compliant, the GT Products must meet the following requirements: (a)
the ability to manage and manipulate Date Data, specifically including Date Data
from more than one century; (b) all Date Data (whether received from users,
systems, applications or other sources) must include an indication of century in
each instance; and (c) all date related outputs and results, in any form, must
include an indication of century in each instance. As used in this Section 22,
the term "Date Data" means any data or input, which includes an indication of
date. Upon reasonable prior notice, GT will provide adequate assurances of Year
2000 compliance to Company in the form of evidence of Year 2000 compliance
testing, including the results of GT's compliance testing efforts for the
Services covered under this Agreement. In the event that GT fails to provide
adequate, timely Year 2000 compliance testing evidence to Company, GT will
promptly effectuate such Year 2000 compliance testing in accordance with
Company's request.
23.2 No representation or warranty, however, is made with respect to any third
party technology being used in combination with technology provided by GT,
including without limitation, third party software, services, telecommunications
or technology. To the extent there is a breach of this Section 22, Company will
provide notification to GT of such breach and GT will expend efforts within a
reasonable period of time in which to cure such breach at GT's sole expense.
This will be Company's sole and exclusive remedy for breach of this provision.
24. Service Warranty.
----------------
24.1 GT warrants that it will perform all Services in a good, workmanlike, and
safe manner. GT will properly supervise all phases of the Services being
performed, to guard and protect Company against all defects in materials and
workmanship, and to ensure completion of the Services in accordance with the
terms of this Agreement. In the event the Services provided by GT hereunder do
not conform to the warranties set forth above, GT will promptly notify Company
and re-perform such non-conforming Services at GT's expense. Such re-performance
is Company's sole and exclusive remedy for non-conformance with the warranties
provided herein.
24.2 GT warrants that it has the experience, knowledge and skill to
successfully perform the Services described in this Agreement at a level of
expertise of other suppliers that present themselves to have similar experience,
knowledge and skill. In the event that Company in good faith determines that GT
does not have the experience, GT's sole remedy for a breach of this Section,
will be termination.
25. GT's Employees; Supervision and Subcontractors.
----------------------------------------------
25.1 The Parties acknowledge and agree that GT, and any individual utilized by
GT to perform GT's obligations under this Agreement, is an independent
contractor and not an employee of Company and that GT will have no authority to
bind Company or otherwise incur liability on behalf of Company. Company will
have no obligation whatsoever to provide any employee benefits or privileges of
any kind or nature to GT, including, without limitation, insurance benefits,
pension benefits or travel privileges. Further, GT agrees that Company is not
responsible to collect or withhold federal, state or local taxes, including,
without limitation, income taxes, social security taxes, unemployment taxes or
Medicare taxes, and that any and all taxes imposed, assessed or levied as a
result of payments made to GT pursuant to this Agreement or the fees, and any
penalties assessed on or against such taxes, will be paid by GT, or if paid by
Company, GT will reimburse Company upon demand. GT will further reimburse
Company upon demand for any costs incurred by Company to pay for employee
benefits upon GT or any individuals utilized by GT to perform its obligations
under this Agreement. Reimbursement for any costs associated with the foregoing
will be considered an adjustment to the price of Services contracted for in this
Agreement.
25.2 Subcontractors. In the event any of the Services provided by GT hereunder
are to be performed by a subcontractor, such subcontractor will be required to
execute a written non-disclosure agreement containing provisions at least as
protective of Company's confidential information as is set forth in Section 21.3
of this Agreement, and GT will remain primarily liable for work performed by any
subcontractor.
25.3 List of Personnel/Removal. If any one of GT's or GT's subcontractors or
subcontractor's employees does not demonstrate adequate performance capability
in Company's good faith judgment, or is disruptive in any way, Company may
request to have such person, removed. Whether or not such person is removed, is
at GT's sole discretion. In the event of a removal, if such removal occurs
within the first five (5) working days after
8
<PAGE>
such person commences the performance of Services, GT will not invoice Company
for any hours worked by such removed person. If such removal occurs after the
first five (5) working days but within the first fifteen (15) working days after
such person commences the performance of Services, GT will invoice Company for
50% of the hours worked by such removed person. If such removal occurs at any
time thereafter, GT will invoice Company for all hours worked by such removed
person.
26. Publicity and Marketing. Both Parties agree to cooperate with each other
-----------------------
so that each Party may issue a press release concerning this Agreement, provided
that each Party must provide written approval of any press release prior to its
release, which will not be unreasonably withheld. Company agrees that it may be
designated as a "reference account" for GT's online travel technology solution
to certain potential customers, upon terms to be mutually agreed by the Parties
hereto. GT will not include any reference to Company in any marketing materials,
customer lists or other documents distributed to third parties, except as
otherwise stated herein, without Company's prior written consent which will not
be unreasonably withheld or delayed.
27. Clearances, Permits and Code Compliance. If applicable, GT will at its
---------------------------------------
expense obtain all clearances, permits, fees and professional licenses necessary
to perform the Services under this Agreement. GT will comply with all federal,
state and local statutes, laws, ordinances, regulations, rules, codes and orders
bearing on the conduct of the work enacted or adopted by any federal, state,
local, municipal or other authority or governmental body having jurisdiction, or
any rules or regulations of any insurance company, board of fire underwriters,
bureau or similar body applicable to the Services to be performed hereunder and
will notify Company if this Agreement is at variance therewith.
28. Time of the Essence. The Parties acknowledge that time is of the essence
-------------------
in performance of their obligations under
29. Force Majeure. Neither Party will be responsible for delays in or
-------------
suspension of performance caused by acts of God or governmental authority,
strikes or labor disputes of such Party, fires or other loss of production
facilities, breach by suppliers of supply agreements, or other such causes
beyond the reasonable control, and not the result of the fault or neglect, of
that Party. In the event of a strike or work stoppage by GT's personnel, or any
occurrence beyond GT's control that curtails GT's ability to provide the
Services set forth herein, GT will use its best efforts to redirect, reassign or
transfer work to unaffected GT operations or to a qualified subcontractor. A
strike or work stoppage by Company's personnel will not relieve GT of its
obligations to perform Services under this Agreement. Notwithstanding anything
in this Section 28 to the contrary, in the event that GT delays or suspends
performance pursuant to this Section 28, and such delay or suspension continues
for thirty (30) days, then, at any time thereafter, Company may terminate this
Agreement, in whole or in part, immediately upon written notice.
30. Fulfillment. GT's travel office will finalize all travel transactions,
-----------
collect payments, manage accounting and provide for the delivery of documents in
accordance with the provisions of Attachment F. Company will pay to GT the per
Ticket transaction fee as set forth in Attachment C, which will be invoiced by
GT to Company on a monthly basis in accordance with Section 8.
31. Taxes.
-----
31.1 Except as provided herein, Company will pay all sales and use taxes that
are lawfully imposed by any governmental authority in the United States and are
based on or measured by any payments of Company pursuant to this Agreement, and
for which no exemption is available. GT will pay all taxes that are: (i)
lawfully imposed on GT by any governmental authority outside of the United
States; or (ii) on, based on, or measured by, gross or net income or gross or
net receipts (including any capital gains taxes or minimum taxes) of GT, or
taxes which are capital, doing business, excess profits, net worth, or franchise
taxes of GT. GT will pay any interest, additions to tax, or penalties associated
-
with the taxes set forth in (i) or (ii) above. GT also will pay any interest,
additions to tax, or penalties caused by or arising out of the willful
misconduct or negligence of GT.
31.2 No sales tax will be collected by GT if: (i) a specific exemption applies
to (a) the Services purchased hereunder, or (b) any transaction occurring
pursuant to this Agreement, (ii) Company provides evidence to GT in a form
satisfactory to GT or the applicable taxing authority that Company has been
authorized by the applicable taxing authority to make tax payments directly to
it, or (iii) GT is obligated to pay the taxes provided in 31.1(i) or (ii). GT
will promptly, upon receipt from any tax authority of any levy, notice,
assessment, or withholding of any tax for which Company may be obligated, notify
Company in writing directed to the following address: Senior Tax Counsel,
Northwest Airlines, Inc., Dept. A4450, 5101 Northwest Drive, St. Paul, MN
55111-3034.
31.3 If under the applicable law of the taxing jurisdiction, Company is allowed
-
to contest directly any tax for which Company may be obligated, then Company
will be entitled at its own expense and in its own name, to contest the
imposition, validity, applicability or amount of such tax and, to the extent
permitted by law, withhold payment during pendency of such contest. If company
is not permitted by law to contest such tax in its own name, upon Company's
request, GT will in good faith and using best efforts, at Company's expense,
contest the imposition, validity, applicability or amount of such tax. GT will:
(i) supply Company with such information and documentation reasonably requested
by Company as are necessary or advisable for Company to control or participate
in any proceeding to the extent permitted herein, and (ii) make all reasonable
efforts to assist Company with evidentiary and procedural development of any
such proceeding or contest. GT will in good faith and using best efforts, assist
Company with the accumulation of information and documentation requested by
Company to recover or seek a refund of any sales or use tax paid by
9
<PAGE>
Company as a result of its purchases pursuant to this Agreement.
31.4 Upon Company's request, GT will delineate all fees among the component
portions of the Services contracted for in this Agreement. Such "component
portions" for purposes of section 31.4 include, but are not limited to, (i)
maintenance, including upgrades and enhancements, (ii) installation, (iii)
support, and (iv) training and related manuals.
31.5 Passenger Taxes. GT shall be responsible for collecting (1) any taxes
---------------
pursuant to Section 4261 of the Internal Revenue Code, as amended or succeeded,
("Section 4261 Taxes") on any amounts paid by the customers of the Air Outlet
Center to GT or the Air Outlet Center, and (2) any passenger facility charges,
stamp taxes, excise taxes (including segment fees), value added taxes (in the
nature of a sales or use tax), gross receipts taxes (in the nature of a sales or
use tax), APHIS user fees, U.S. Customs user fees, U.S. Immigration user fees,
security charges, and any other taxes and/or user fees imposed by any domestic
or foreign governmental entity on a per passenger basis provided that such
charges, taxes, or fees are typical of those collected at point of sale ("Other
Collected Taxes") on any amounts paid by the customers of the Air Outlet Center
to GT or the Air Outlet Center. GT shall then remit such Section 4261 Taxes and
such Other Collected Taxes to the Company through the use of ARC and in full
compliance with all procedures established by ARC.
32. Right To Assurance. If Company, in good faith, has reason to question GT's
------------------
intent or ability to perform, Company may request that GT give written assurance
of intent to perform. In the event that a request is made and no assurance is
given within ten (10) days, Company may treat this failure as an anticipatory
repudiation of this Agreement and terminate this Agreement thereafter upon
written notice as it's sole remedy.
33. Liens. GT will keep the Company's premises, improvements, machinery,
-----
equipment and any other property of Company free and clear from any and all
liens arising out of the performance of Services hereunder by GT. GT will obtain
properly executed waivers and releases from all subcontractors or other persons
entitled to liens for Services furnished in accordance with this Agreement. GT
hereby indemnifies Company against and will hold Company harmless from any and
all costs, expenses, losses and all damages resulting from the filing of any
such liens against Company including, but not limited to, attorneys' fees.
34. Governing Law. The provisions of this Agreement will be construed,
-------------
interpreted and enforced in accordance with, and any dispute arising out of or
in connection with this Agreement, including any action in tort, will be
governed by, the laws of the State of New York, without regard to any choice of
law provisions. Each of the Parties hereby irrevocably consents to the
jurisdiction of the United States District Court for the District of New York
and the courts of the State of New York in any suit, action, or proceeding
brought against such Party by the other Party and related to or in connection
with this Agreement or any transaction contemplated hereby. The Parties agree
that any litigation relating directly or indirectly to this Agreement must be
determined by a judge sitting alone and both Parties hereby expressly agree to
waive any and all rights to a jury trial.
35. Non-Waiver. Failure of either Party to insist upon strict performance of
----------
any of the terms and conditions herein will not be deemed a waiver of any rights
or remedies that such Party will have and will not be deemed a waiver of any
subsequent default of the terms and conditions hereof. The receiving of any
Services under this Agreement will not be deemed or be a waiver of any right
Company has for any failure by GT to comply with any of the provisions of this
Agreement.
36. Third Party Rights. Nothing contained in this Agreement will or is
------------------
intended to create or will be construed to create any right in or any duty or
obligation by either Party to any third party. There are no third party
beneficiaries of this Agreement.
37. Amendments. This Agreement may be changed, modified or amended from time
----------
to time only by express written agreement of the Parties executed by their
authorized representatives.
38. Notices. Notices under the terms of this Agreement will be validly given
-------
if in writing and sent by prepaid certified mail, return receipt requested, or
by facsimile transmission or by courier, prepaid, to the addresses set forth
below or such other addresses as specifically required by this Agreement:
If to Company: Copy to:
Northwest Airlines, Inc. Northwest Airlines, Inc.
Mailstop J4210 Mailstop A1180
5101 Northwest Drive 5101 Northwest Drive,
St. Paul, MN 55111-3034 St. Paul, MN 55111-3034
Attn.: Director Corporate Attn.: E.V.P., Genera
Purchasing - IS Counsel & Secretary
Fax: (612) 726-3040 Fax: (612) 726-7123
Or, if by courier to: Copy to:
Northwest Airlines, Inc. Northwest Airlines, Inc
Mailstop J4210, Mailstop A1180,
1500 Tower View Road 2700 Lone Oak Parkway
Eagan, MN 55121 Eagan, Minnesota 55121
Attn.: Director Corporate Attn.: E.V.P., General
Purchasing - IS Counsel & Secretary
If to GT: Copy to:
Chief Financial Officer Sr. Contracts Admin.
GetThere.com GetThere.com
445 Sherman Ave. 445 Sherman Ave.
Palo Alto, CA 94306 Palo Alto, CA 94306
Notices will be effective on the first business day following receipt thereof.
Notices sent by certified mail or courier will be deemed received on the date of
delivery as indicated on the return receipt or delivery notice; notices
10
<PAGE>
sent by facsimile will be deemed received on the date transmitted.
39. Severability. If any provision of this Agreement will be declared illegal,
------------
void, or otherwise unenforceable, the remaining provisions will remain in full
force and effect. The Parties also agree to promptly replace the illegal, void
or otherwise unenforceable provision with a substitute provision that will
satisfy the intent of the Parties. This Agreement will not be construed against
the Party preparing it, but will be construed as if both Parties jointly
prepared it and any uncertainty or ambiguity will not be interpreted against
either Party.
40. Further Assurances. Each of the Parties hereto will from time to time
------------------
promptly and duly execute and deliver all documents and take such action as may
be necessary or desirable in order to effectively carry out the intent and
purposes of this Agreement, to protect the interests of the Parties hereto, and
to establish, protect and perfect the rights, remedies and interests granted or
intended to be granted hereunder.
41. Counterparts. This Agreement may be executed in multiple counterparts,
------------
each of which, when so executed, will be deemed to be an original copy hereof,
and all such counterparts together will constitute but one single agreement.
42. Survival. All agreements, obligations, covenants, terms, conditions,
--------
representations and warranties made in this Agreement will survive the execution
and delivery of this Agreement until all obligations of the Parties are fully
performed.
43. Non-Discrimination and Federal Contract Compliance. Company is a
--------------------------------------------------
government contractor, and the Parties agree, as a condition of this Agreement,
to comply with the Equal Employment Opportunity and Affirmative Action clauses
as set forth in Executive Order 11246, the Vietnam-Era Veterans' Readjustment
Act of 1974, the Rehabilitation Act of 1973, and implementing regulations at 41
CFR 60-1.14(a), 41 CFR 6-741.5, and 41 CFR 60-250.4 and that the provisions of
such laws and regulations are hereby adopted and incorporated into this
Agreement by reference.
44. Complete Agreement. The terms, conditions and provisions of this
------------------
Agreement, together with the descriptions, specifications, exhibits, the
Addendum and Attachments annexed hereto and by this reference made a part of
this Agreement, constitute the entire agreement between the Parties and will
supersede all previous communications, representations, or agreements, either
oral or written, between the Parties with respect to the subject matter of this
Agreement. Any additional or different terms exchanged in invoices, letters,
forms or other documents are hereby deemed to be material alterations and notice
of objection to them and rejection of them is hereby given. Company assumes no
responsibility for Additional Services performed unless a signed and authorized
Order is issued by Company and provided to GT.
45. Reporting. Except as otherwise set forth in Section 21.3, notwithstanding
---------
anything to the contrary, nothing contained herein will restrict GT from
complying with industry reporting requirements.
46. Assignment. Neither party will have any right or ability to assign,
----------
transfer, or sublicense any obligations or benefit under this Agreement without
the written consent of the other (and any such attempt will be void), except
that a party may assign and transfer this Agreement and its rights and
obligations hereunder to any third party who succeeds to substantially all its
business or assets.
IN WITNESS WHEREOF, the Parties by their authorized representatives have
executed this Agreement as of the date first above written.
NORTHWEST AIRLINES, INC.
Signature:________________________________
Name:_____________________________________
Title:____________________________________
Date:_____________________________________
GETTHERE.COM, INC.
Signature:________________________________
Name:_____________________________________
Title:____________________________________
Date:_____________________________________
11
<PAGE>
ATTACHMENT A
COMPANY CONTENT
. Air Outlet Center Content to be provided by Company in standard electronic
format according to specifications provided by GT
Content includes the following:
. Air Outlet Center Site logo
. An origin and destination city pair
. Pricing information to include the range of air fares for city
pairs
. Pricing information for all Company coded flights and Company's
alliance partners to the extent Company is the exclusive agent
for such alliance partners, including, but not limited to, KLM
12
<PAGE>
ATTACHMENT B
AIRLINE PRIVATE LABEL PRODUCT FEATURES
- --------------------------------------------------------------------------------
FEATURE EXPLANATION
- --------------------------------------------------------------------------------
Air Availability Bias Display The GT air availability system can be
set to only display specific airline
flights, all available flights or
preferred carriers only. Multiple leg,
open-jaw trips are supported under the
multi-leg reservation display option.
The Company Client have the option to
select round-trip or one-way in the
flight display options.
- --------------------------------------------------------------------------------
Hotel Booking Capability Hotel functionality can be biased to
display specific airline preferences or
can be masked completely.
- --------------------------------------------------------------------------------
Car Booking Capability Car functionality can be biased to
display specific airline preferences or
can be masked completely.
- --------------------------------------------------------------------------------
Low Fare Search Presents alternate routing and lower
fare options to the Company Client
provided that the airline host system
supports this functionality through the
CRS.
- --------------------------------------------------------------------------------
Booking History Enables access to previous bookings.
- --------------------------------------------------------------------------------
Itinerary Changes and Enables Company Client to change or
Cancellations cancel itineraries before Ticket
issuance has occurred.
- --------------------------------------------------------------------------------
Seat Maps Displays GT Java applet seat map feature
enabling Company Client to select their
desired seat location provided that this
functionality is supported by the CRS or
the airline host system directly.
- --------------------------------------------------------------------------------
Distressed Inventory Enables specific airline to sell off
Distribution System distressed inventory for specific
markets.
- --------------------------------------------------------------------------------
Distressed Inventory Broadcasts specials to registered
Distribution System Company Clients via e-mail. Carrier may
determine schedule.
E-mail Broadcast
- --------------------------------------------------------------------------------
Market Based Preferences Enables specific airline to bias
availability in a given market.
- --------------------------------------------------------------------------------
Calendar Online reference calendar.
- --------------------------------------------------------------------------------
Trip Recall Enables Company Clients to automatically
store routine travel itineraries
reducing overall time to complete the
reservation process.
- --------------------------------------------------------------------------------
Secondary Profiles Capability to store preferences for
additional travelers.
- --------------------------------------------------------------------------------
Hotel Maps Capability to plot all available hotels
within a dynamically generated map.
Currently available in North America.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Driving Directions Provides Company Clients with point to
point driving directions. Currently
available in North America (Vendor to be
discussed)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Electronic Ticketing Defaults electronic Ticketing for
designated carriers providing that the
flight segment display returned from the
CRS is clearly identified as being E-
Ticketable.
- --------------------------------------------------------------------------------
Intelligent Ticket Delivery Options Enables administrator to configure
Ticketing options available to the
Company Client and the conditions under
which each option is visible.
- --------------------------------------------------------------------------------
International Pricing The system will present the price in
local currency and USD based on the
departure point of the traveler,
provided this information is available
through the CRS.
- --------------------------------------------------------------------------------
Multiple Passenger Bookings Enables multiple passengers to travel on
a single PNR.
- --------------------------------------------------------------------------------
Airport Name Recognition Recognizes airport proximity for a
designated city name, spelling errors
and city confirmation when more than one
(i.e., San Francisco = SFO) airport exists for a departure point.
- --------------------------------------------------------------------------------
Customer Help System Assists the Company Client at each stage
of the reservation process.
- --------------------------------------------------------------------------------
Credit Card Encryption Ensures that the Company Client's credit
(Both SSL & SHTTP supported) card is encrypted using full 128-bit
encryption for all transactions.
- --------------------------------------------------------------------------------
Firewall IP Packet Security Provides IP packet filtering security.
- --------------------------------------------------------------------------------
Branded Low Fare Ticker Java applet displays fares based on the
designated home airport registered by
the Company Client for all available low
fares.
- --------------------------------------------------------------------------------
Online Password Changes Enables the Company Client to change
their password to access the site.
- --------------------------------------------------------------------------------
Dynamic PNR Recognition Site may be configured to drop
and Routing reservations to multiple Pseudo City
codes based on fulfillment parameters
established by carrier.
- --------------------------------------------------------------------------------
Guest Access Enables Company Clients to perform
availability requests and preview
without registering.
- --------------------------------------------------------------------------------
Destination Content Provides local destination content,
weather, airport information, etc.
- --------------------------------------------------------------------------------
User Profile Enables Company Clients to designate
(travel preference customization) preferred air, car and hotel vendors,
frequent flyer numbers, seating
preferences and display options.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FEATURE EXPLANATION
- --------------------------------------------------------------------------------
Customized Availability Display Enables Company Clients to configure the
(Novice and Expert) availability display option for either
novice or expert mode. The novice mode
presents simple availability, the expert
mode presents availability based on
specific classes of service for each
flight segment.
- --------------------------------------------------------------------------------
Reservation Status Bar Dynamic display indicates to the Company
(indicates to the Company Client the Client the current stage of the
specific stage in the reservation reservation process.
process)
- --------------------------------------------------------------------------------
Code Share Display Identifies code share flights throughout
the booking process using reasonable
commercial efforts to comply with
Department of Transportation
regulations.
- --------------------------------------------------------------------------------
Fare/Rate Rule Display Displays CRS-based rate and fare rules
for air and car process using reasonable
commercial efforts to comply with ATPCo
rate and fare rules.
- --------------------------------------------------------------------------------
Configurable Ticketing Time Customized Ticketing deadlines per
Line Requirement carrier guidelines.
- --------------------------------------------------------------------------------
Fare Mail Enables Company Clients to enter
favorite destinations and enter the fare
that they would be willing to pay to
travel to that destination. Company
Clients are notified via email by the
system when GT detects a fare within
fare range they have entered and with
the frequency they select (e.g., daily,
bi-weekly, weekly, bi-monthly, etc.)
- --------------------------------------------------------------------------------
Applicable CRS Worldspan. Company and GT will work
together to establish connectivity from
GT to Worldspan in a mutually beneficial
fashion on terms to be determined.
- --------------------------------------------------------------------------------
Registration Page Page to be created to allow Company
Clients to register. Company Clients
will need to register in order to
purchase Tickets.
- --------------------------------------------------------------------------------
<PAGE>
ATTACHMENT C
Price List
GT Co-branded CRS Based Airline Reservation System Private Label Site
Design and Set-up Fee [*]
Monthly [*]
Maintenance Fee
Per [*] Transaction Fee [*] if GT is providing fulfillment and support*
Implementation Date Within 45 days of EXECUTION OF THIS Agreement and
delivery of all required Content
* Monthly minimum of [*]/month, which will not apply until Date of
Acceptance for Phase II of the deliverables as set forth in the
Statement of Work.
Commissions earned on hotel and car Bookings are [*].
Additional Services Service Fees
Programming Hourly Fee [*]
HTML Coding Hourly Fee [*]
Graphic Design Hourly Fee [*]
Special Consulting Hourly Fee [*]
Email Distribution of Fares [*] per 100,000 messages per
mailing (min.$1,000/mailing)
Prices apply per pseudo city or off-site location, unless otherwise specified.
1-800# Expenses: Company will pay for all initial set-up, monthly hook up and
---
monthly minute charges/fees of the 1-800#. Company will also pay any applicable
taxes related to the 1-800#. Such 1-800# will be considered Company's property.
Company grants GT the use of such 1-800# for the term of this Agreement as
necessary for the telephone support as set forth in Attachment H.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS
<PAGE>
ATTACHMENT D
SERVICE LEVELS /PERFORMANCE MEASURES
1. Technical Support Services Service Levels. In accordance with Section 7.2,
-----------------------------------------
GT will provide second tier support services to Company, including the
following:
Telephone Hot-Line Support; Acknowledgement of System Failures: GT will provide
- --------------------------------------------------------------
telephone hot-line support services to Company's designated program
administrator and appropriate Company contact person twenty-four hours a day,
seven days a week. Such support will include reasonable consultation on the
operation and utilization of the Private Label Site and problem resolution for a
System Failure as reported by the Company or Company's designated program
administrator. Such support will also include without limitation guaranteed
acknowledgement of Severity Level 1 and 2 problems within one (1) business hour
of problems reported by Company. Such acknowledgement may be by fax, phone, or
e-mail to Company program administrator and appropriate Company contact person.
If GT fails to maintain the foregoing support services to Company, Company may,
in its sole discretion (i) agree to discuss an alternate remedy, or (ii)
terminate this Agreement as set forth in Section 5.1.
2. Service Levels/Service Level Compliance objectives for the GT System
---------------------------------------------------------------------
(a) Problem Definition "PAR" means Problem Action Request. PAR(s) are
------------------
determined by severity of the System Failure. Severity levels are defined
as follows:
(i) Severity Level 1 will be defined as a "CRITICAL PROBLEM" wherein the
System is not operational or has a critical loss of capability such as
the inability to browse or book, frequency of failure precludes
productive use, or critical job/data integrity defect.
(ii) Severity Level 2 will be defined as a "MAJOR PROBLEM " wherein the
System is operational but with capability that is severely or
moderately degraded such as the inability to run a major application
within the System, non-critical product feature or function that does
not work, or failure that requires on-going intervention to maintain
productive use.
(iii) Severity Level 3 will be defined as a "MINOR PROBLEM" wherein the
System is operational, with no significant impact to performance.
Response Times*
- ---------------
GT will meet the following response times:
(i) sixty (60) minutes for acknowledgment of a Severity Level 1 Problem;
(ii) two (2) hours for acknowledgment of a Severity Level II Problem.
(iii) next calendar day for Severity Level III Problem
*GT management will respond to all Company program administration telephone
calls within one (1) calendar day.
(c) Service Level Compliance: GT will implement the following problem
investigation and resolution correction procedures:
Severity Level I Problems:
---------------------------
GT will promptly initiate the following procedures: (1) assign senior GT
engineers to correct the CRITICAL PROBLEM; (2) notify senior GT management that
such CRITIAL PROBLEM have been reported and that steps are being taken to
correct the CRITICAL PROBLEM; (3) provide Company with periodic reports every
four (4) hours on the status of the corrections; and (4) exercise all
commercially reasonable efforts on an urgent first priority basis to provide
Company with a workaround or fix.
<PAGE>
Severity Level II Errors:
-------------------------
GT will exercise all commercially reasonable efforts to provide Company with a
workaround and to include the fix for the MAJOR PROBLEM in the next Upgrade or
sooner to the GT Reservation System or Private Label Site. In the event GT fails
to provide such workaround or fix, Company may, in its sole discretion, either
(i) discuss an alternate remedy, or (ii) terminate this Agreement pursuant to
Section 5.1.
Severity Level III Problems:
----------------------------
GT may include the fix for the MINOR PROBLEM in the next Upgrade or
sooner to the GT Reservation System or Private Label Site.
(d) GT Support Location All Technical Support services will be provided from
----------------
GT's facility unless otherwise requested by the Company upon reasonable
belief that such services must be provided at Company's facilities,
subject to the terms set forth in Section 9.4.
SERVICE LEVEL COMPLIANCE for System availability: **
The target System availability for the System will be 100%, as measured on a
calendar month basis. In the event of a failure by GT to maintain an average
minimum System availability of 97.5% twice in a quarter (a quarter being three
consecutive calendar months), Company may, in its sole discretion, either (i)
terminate this Agreement as set forth in Section 20.6 (ii) agree to discuss an
alternate remedy.
**(When determining where any Service Level Compliance has been met, the
measurement above shall not include system unavailability related to
maintenance, which shall not exceed five ( 5) hours in a thirty day period,
Company's databases, any utilized CRS, internet backbone, mapping software
vendors, any of the causes set forth in Section 28 or caused by any act or
omission of Company.
Reporting Company acknowledges that as of the Effective Date of this Agreement
- ---------
that GT is currently in the process of evaluating mechanisms which will enable
GT to automate, track, monitor and provide Company with reports detailing the
monthly results of PAR and System availability. GT agrees to use best commercial
efforts to implement such mechanisms required to provide such reports by January
1, 2000. Upon the completion of such implementation, GT will deliver such
reports to Company on terms and conditions to be mutually agreed upon.
<PAGE>
ATTACHMENT E
STATEMENT OF WORK
<PAGE>
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
ATTACMENT E
Northwest Air Outlet Center
Statement of Work
Version 4.0
August 16, 1999
Author: [email protected], 612-727-0942
And Rob Martin, [email protected], 630-665-3562
- --------------------------------------------------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
------------------------------------
<PAGE>
Table of Contents
<TABLE>
<S> <C>
A. Introduction/Business Need............................................... 3
B. Market and User Base..................................................... 3
C. Dependencies............................................................. 3
D. Overview of Existing System.............................................. 2
E. Overview of Proposed System.............................................. 4
F. Requirements............................................................. 5
Administrator requirements............................................... 5
Functional requirements.................................................. 4
Performance requirements................................................. 5
Security Requirements.................................................... 5
Hardware, Communications and Database requirements....................... 5
Capacity requirements.................................................... 5
Data storage requirements................................................ 6
Additional Services...................................................... 6
Support Requirements..................................................... 6
Training................................................................. 6
G. Summary of Benefits...................................................... 6
H. Deliverables/Acceptance Criteria......................................... 6
Phase I.................................................................. 7
Phase II................................................................. 7
Key Development Items.................................................... 7
</TABLE>
<PAGE>
Air Outlet Center
Statement of Work
A. Introduction/Business Need
Air Outlet Center ("AOC") is a non Northwest branded product that sells
discounted airfares in non-hub markets. Currently sold via newspaper
advertisements, Company is seeking a solution to sell the product via the
internet.
B. Market and User Base
Company's target market is the price sensitive passenger found in non-hub
domestic cities.
C. Dependencies
. Company currently sells AOC tickets in [*] cities with [*] markets.
Complicating factors include seasonality (2 seasons) and fare class (V
and Q) which combine to make [*] individual fares on file at the time
of this writing. The ability to show fare ranges and city pair options
is critical to the support of the product.
. Fares are generally updated weekly via ATPCO. It is anticipated that
adjustments during the week could be required, in addition to the
weekly update. AOC fares are private fares filed with SecuRates. Access
to SecuRates is required.
. There is a five-day advance purchase requirement.
. Company Clients will not be aware that this is a Company product.
Northwest branding does not appear anywhere in the advertisements or
via sales vehicles.
. Worldspan will be the CRS.
. E-ticket required
. Fares are round-trip. Open-jaw, one-way or multi-city PNRs are not
allowed.
D. Overview of Existing System
Air Outlet Center Site
Company currently does not have this product for sale on the internet
Alternate sales vehicles
Company posts newspaper advertisements in several metropolitan areas
around the country. Currently Company Clients are advised to call an 800
number to book their reservations. MLT WorldVacations handles all calls as
Air Outlet Center.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
E. Overview of Proposed System
The proposed solution with GT would offer AOC Company Clients the option
of booking on-line.
Company administrator
. As administrator, Company has authority and responsibility to manage
setting changes on the Air Outlet Center Site.
. Changes such as the weekly/semi weekly fare and city changes will be
provided to GT in standard electronic format according to
specifications provided by GT as stated in Attachment A. Changes are
expected during normal business hours
. Some look and feel changes are available via the admin tool. Other
changes will be coordinated with GT in accordance with Section 4.6.
GT
. The Air Outlet Center Site will reside on GT servers
. All equipment and communication lines provided by GT
. GT will handle Ticketing and Fulfillment of AOC PNRs
. GT will provide first level support to Company Clients
. Confirmation of Ticket purchase sent via e-mail
. GT will comply with DOT requirements
. The Company Home/Welcome page created by GT will include:
1. Registered user and Guest Login (Company Client will be
required to register if completing purchase).
2. Lost Password assistance
3. Links to FAQs
4. Header and footer with optional links to weather,
mapquest.com, city information
- The Air Outlet Center Site will contain all the functionality
listed within this Statement of Work with the features described
in attachment B of the Agreement
- Car and hotel booking functionality will be activated
Passenger/Company client interface flow
. Company Client enters www.airoutlet.com which will be re-directed to GT
-----------------
. Company Client arrives at Air Outlet Center Site welcome/home page
. Enter Air Outlet Center Site by guest log-in or member log-in
. Pick origin city by a pull down menu which takes company client to next
page
. Chart appears with destination options (no fares at this point) and
Company Client selects destination city
. Company Client to pick departure and return date and number of
passengers
. If an invalid date is picked, or if the fare is no longer available,
the Company Client will be instructed to go back and reselect.
. No "open search" of air availability will be offered to Company Clients
. Company coded flights and Company's alliance partners to the extent
Company is the exclusive agent for such alliance partners, including
but not limited to KLM.
. Actual fare per person with terms and conditions to appear after the
Company Client selects their flights
. If Company Client chooses to purchase, they will be required to
register at this point if not already a member
. After registering, Company Client will be returned to same page in
booking process
. E-ticketing will be the only option presented to Company Clients
. Confirmation e-mail with required information is sent, where possible
<PAGE>
F. Requirements
Administrator requirements
ITN Program Manager:
. Set up database and Air Outlet Center Site to support Company's
special fares
. Setup Company booking SID (Pseudo City Code) (1P - will be the
partition in Worldspan)
. Create, configure and maintain internet Air Outlet Center Site
. Configure Air Outlet Center Site with appropriate low fare search
entries which include fares loaded in SecuRate
. Coordinate satisfactory completion of customized web pages with
GT's web design team
. Load fares and test Air Outlet Center Site's faring accuracy
. Conduct weekly implementation meetings
. Provide point of contact for Company to escalate calls
Company administrator:
. File fares through ATPCO and provide fare information (with
reasonable advance warning) in format acceptable to GT (see
additional attachment as an example). This file can be sent
via e-mail attachment, via courier on diskette, or File Transfer
Protocol
. Handle ongoing updates to the SecuRate "table" in Worldspan for
air fares
. Provide GT with SecuRate entries for pricing itineraries
. Participate in weekly implementation meetings
. Maintain those Air Outlet Center Site configurations and text
fields which can be administered by the Company
. Access and create custom reports regarding customer usage via
GT's admin link
. Create and maintain graphics for all portions of the product
. Create a list of all internet links for the product (links off-
site such as map.quest)
. Signs off on all web page changes and final Air Outlet Center
Site acceptance
. Provide point of contact for all issues escalated to Company
Functional requirements
Registration:
. Company Client will not be required to register to search Air
Outlet Center Site and review fare options. If customer wishes to
purchase ticket, they will be required to register at that time
. Company Client will have the option to register from Air Outlet
Center Site welcome/home page
. Previously registered Company Clients will be provided option to
sign into Air Outlet Center Site with password from Air Outlet
Center Site's home/welcome page or at point of purchase
. The Company Client, or person paying for the ticket does not have
to be passenger
. E-mail sign up for promotions is added to registration page
. Registration should include Company Client billing information
including:
- First name, middle initial, last name
- Phone number
- E-mail address
- Billing address
- Passenger name if different than Company Client
- Mailing address if different from billing address
<PAGE>
- Emergency contact name and phone number
Booking Flights
. Advance purchase requirement of 5 days. Company reserves the right
to increase or decrease this advance purchase requirement.
. Option to hold reservation without ticketing is not available at
this time
. No changes to air Bookings are allowed through the Air Outlet
Center Site after ticketing
. Itineraries will be priced using Worldspan's SecuRate product.
Pricing entries include appending an "SR" designation
. GT will utilize Worldspan's credit card validation functionality
to ensure all charges are permissible.
Refunding Ticketed Trips
. Tickets are non-refundable/non-transferrable
. Tickets may be applied toward new ticket with a $100.00 service
fee
Reports
. Company administrator has access to all standard and custom
reports via admin tool provided by GT
. Reports are requested from GT regarding up-time and system
performance. It is understood that this will initially be ad-hoc
reporting available upon request by Company and GT is in the
process of developing a tool for automated performance reports
Performance requirements
. GT's system is monitored, 24 hours a day, 7 days a week. Software
monitors system outages and alerts the 24x7 staff of any problems.
. Service Level Agreements to be found in attachment D of the
Agreement
Security Requirements
. GT is in the process of migrating to SMI transactions which we
expect to be complete in the second quarter of 2000.
. Redundant versions of some GT databases are running now and we
expected completion by the end of 2000.
. All Company Clients will be registered with unique member id and
password
. Credit card information is two-way encrypted and displayed to
company clients as "ON FILE" so that the number is not travelling
across the internet.
Hardware/System Architecture
. The Air Outlet Center Site will not reside on a dedicated server
but will reside on GT's web of servers.
. Access to the Air Outlet Center Site is handled through Cisco
routers which dynamically balance traffic loads for optimum
performance
Capacity requirements
. With Current Bookings of 500-600 tickets per week through the phone
center, GT has sufficient capacity to handle AOC's projected on-
line volume at start up as we now have over 30 Worldspan lines.
<PAGE>
Data storage requirements
. All Company databases are located on a separate internal network
with separate logical databases for all customer profiles
. GT maintains separate operational and employee subnets
. GT maintains comprehensive "access list" filtering on all Cisco
routers that form our firewall
Support Requirements
. GT is responsible for maintenance and problem resolution of the
hardware and operating systems at all GT data centers
Training
. Up to 2 days of train the trainer onsite instruction to administer
and support the Air Outlet Center Site will be provided to Company
. Training to include step by step description of administration
pages and how each affects product behavior
G. Summary of Benefits
. Gives Company the opportunity to compete with other low fare
internet providers by offering Company Clients discounted air fares
. Allows Company to reward Company Clients with upgrades and other
incentives based upon their volume through the Air Outlet Center
Site or other criteria in their profile.
. Company gains the opportunity to channel revenue from other
competitive booking tools to this product
. Removes responsibility from Company for maintaining additional
hardware for web applications (servers, routers, etc)
. Provides Company with a completely scalable product that will
handle more Company Clients as traffic grows
I. Deliverables/Acceptance Criteria
Phase 1
GT:
. Project plan with estimated delivery date and cost
. Air Outlet Center Site with pages described in passenger/Company
Client interface flow and Company name and graphics
. Display the maximum number of city pairs allowed by GT's system
today
. Development of ability to handle 5 day advance purchase (expected
to require 45 days)
. Up to 2 day session for train the trainer
. Escalation procedures
. Quality Assurance (QA) test plan
. Documentation of GT's QA test results including any known issues
. Detailed listing of upcoming planned enhancements
. Sample FAQ's
. Air Outlet Center Site walk-through for final acceptance
<PAGE>
Company
. Name of product
. Graphics
. Review customization and finalization of FAQ's
. Participation in setting standards for and testing functionality
and use of the product
. Market Plan for future of product including capacity requirements
. Advance notice of promotional activity (planned increase in
traffic)
. Assignment of administrative and maintenance staff to the product
. E-mail address and any group distribution for Feedback (support
addresses)
. Sign off of acceptance criteria and that Air Outlet Center Site is
behaving as expected
Phase II
. GT will increase capacity to handle a virtually unlimited number of
contracts/city pairs by the end of 1999
. GT will be able to handle the display of airfares along with each
market by the end of 1999
. As GT makes enhancements to the product, Company will be afforded
the opportunity to take advantage of these enhancements
Key Development Items
Required for PHASE I
. Ability to handle the 5 day advance purchase requirement
Required for PHASE II
. Ability to handle contracts for additional city pairs
. Ability to display a fare range with each city pair or market
<PAGE>
ATTACHMENT F
AIRLINE TICKET FULFILLMENT
AND CAR AND HOTEL CONFIRMATIONS
1. Fulfillment. GT will provide all Ticketing and Fulfillment services in
accordance with DOT requirements to Company Clients using the Private Label
Site, including:
. Airline Tickets
. Car rental Booking confirmations
. Hotel Booking confirmations
2. Hours of Operation. GT will provide travel fulfillment services as defined
herein to Company Clients twenty-four hours a day, Monday through Friday.
GT will provide travel fulfillment services from 8:00 a.m. to 1:00 a.m. on
Saturday and Sunday Pacific Standard Time.
3. Airline Ticket Delivery. GT will Ticket all airline Bookings made by
Company Clients on the Private Label Site. Unless the scheduled Booking
requires paper Tickets, GT will send an email electronic confirmation ('E-
Ticket") where permissible to the email address that the Company Client
indicates in his/her profile on the Private Label Site. In the event paper
Tickets are required at GT's discretion, GT will send paper Tickets by
regular U.S. mail to the address that the Company Client indicates on the
Private Label Site. In the event a Company Client requires or requests
faster delivery of airline Tickets, GT will send such Tickets by Federal
Express or an overnight carrier to the address that the Company Client
indicates on the Private Label Site and to charge such Company Client for
such services. Any charges for delivery will be recorded and billed
directly to the Company Client.
4. Car and Hotel Confirmation Delivery. GT will send confirmations for car
rental and/or hotel Bookings with the accompanying airline Tickets as
stated above. Unless the scheduled Booking requires faster delivery, GT
will send confirmations for car or hotel Bookings to the email address that
the Company Client indicates on the Private Label Site or, at GT's sole
discretion, by regular U.S. mail. In the event a Company Client requires
confirmation of a car and/or hotel Booking be delivered in hard copy, GT
agrees to send such Booking confirmation by Federal Express or an overnight
carrier to the address that the Company Client indicates on the Private
Label Site and to charge such Company Client for such services. Any other
charges for delivery will be recorded and billed on a regular basis.
5. Reports. As stated in Section 5.2
<PAGE>
ATTACHMENT G
GT PROPOSAL
Product Description:
Northwest Airlines would like to provide a non-Northwest Airlines branded travel
reservation site that will allow for the distribution of low price, promotional
fares. These low fares will be managed through the SecuRate program available in
the Worldspan CRS. Fulfillment of these reservations could be done either
through Northwest airlines or through a third party provider. This has yet to be
determined. The default will be to E-Ticket and tickets will either be purchased
immediately or held for twenty-four hours.
Questions:
1. Create a U.S. point of sale booking product using the Worldspan CRS
ITN currently provides point of sale products on all major CRS systems;
Worldspan, Apollo/Galileo, Sabre and Amadeus. As well, ITN has the capability to
provide this point of sale product in a service bureau fashion, ensuring that
Northwest Airlines benefits from all large scale operational issues such as
capacity planning, redundancy, security, etc.
2. Customer registration may be required
ITN can provide a system that either requires registration, or allows guest
access based on Northwest Airlines requirements. This functionality is available
today. Guest access allows a site visitor to actually complete the reservation
without actually having completed a profile. However, the user is required to
provide some mandatory data necessary for the completion of a PNR.
3. Customer selects origin, destination, date(s) of travel, time(s) of day,
number of passengers and passenger type (adult, senior, child, infant)
Today, the ITN booking interface prompts a user to input the following
information on the flight availability request page: Origin, destination, date,
time as well as multiple sorting options. Although these options may not be
necessary based on the nature of this site, they include sorting criteria such
as:
Price, time, fewest number of connections, most miles, etc.
4. The product will price itineraries using Worldspan's SecuRate product.
Pricing entries include appending an SR designation.
The SecuRate pricing functionality is be utilized today by ITN in the corporate
environment. This is fully functional today. If ITN is to provide reservation
services to Northwest over a non proprietary Worldspan circuit, ITN would first
need to emulate a given pseudo city code then add the SR designation.
5. Only NW and NW airlink flights will be returned.
ITN will provide Northwest with a configurable site containing all biasing
capabilities. Northwest Airlines and Northwest airlink carriers will be the only
vendors allowed. Should there be no available NW or NW airlink flights in a
given market, there will be no flight availability provided.
6. E-Ticket required where available
E-Ticket is the current default in the ITN system today. However, this is
completely configurable by Northwest Airlines
<PAGE>
7. Reserve and 24-hour hold options available
This feature is currently not available and would need to be developed and
released at a subsequent phase. ITN has, however, already completed both the
functional abstract and the technical specification to complete this work and
feel that it could be implemented in a relatively short timeframe.
8. If 24-hour hold is chosen, customer should have the ability to return to
the Internet to purchase.
N/A
9. Credit card validation must be done whether purchasing or placing on 24-
hour hold
ITN provides a basic mod 10 credit card number validation check. This
essentially matches the number sequence against the type of card. This does not
validate that the card is valid from either from a credit limit standpoint or
legal standing (lost or stolen) standpoint. However, the actual card validation
and approval process occurs at time of purchase. This function is provided
through the CRS.
10. Ticketing and fulfillment could either be done directly through ITN or we
may require that ITN queue the reservation to NW for fulfillment (TBD)
ITN is capable today of either providing the fulfillment services for Northwest,
or queuing the reservation to NW for direct fulfillment. Upon request, ITN can
provide a proposal for the fulfillment of these tickets. Our fulfillment center,
located in Palo Alto, California is currently providing fulfillment for
approximately sixty independent organizations.
11. If NW provides the fulfillment, the PNR must be formatted according to NW's
specifications
ITN has developed a tool referred to as the PNR Editor. The PNR Editor allows an
organization to build a PNR to exacting standards, maintaining all mandatory and
optional edits to the PNR thus maintaining the integrity of the data contained
therein.
The PNR is also compatible with mid-office products such as an automated quality
control system. For example, fare, seat and upgrade checking can all be built in
the PNR Editor so that when the QC system picks up the record, the interface is
streamlined and seamless.
12. Provide option to allow purchaser to be different that passenger
This functionality is available today. Either through the Travel Arranger
functionality, where an individual actually designates another to be the
authorized user and booker, or through secondary profiles. Secondary profiles
allow one user to build, maintain and manage profiles and travel for multiple
individuals. For example, a user might create a primary profile for themselves,
while building secondary profiles for their spouse and children.
13. Collect customer and billing information including first name, middle
initial, last name, phone number, email address, billing address, passenger
name (if different than purchaser) mailing address (if different than
billing).
These fields are all available in the standard ITN product. This information can
either be stored in the profile and moved into the record at the time of
booking, or it can be gathered at the time of booking. Information can be
streamed to Northwest on a regular basis using a mutually acceptable method of
data transfer.
<PAGE>
14. Customer preferences should be available including: meal selection, sat
selection, frequent traveler program (NW and partners only) and frequent
traveler number
This functionality is all currently available. This information can either be
stored in the profile and moved into the record at the time of booking, or it
can be gathered at the time of booking. Somewhat generic seat preferences can be
stored in the profile, however, ITN provides seat selection capabilities through
a fully interactive seat map program. If this program is not used, a generic
request will be made based on default preference stored in the profile.
15. Quick booking feature would be nice to have. This means, NW could pass
through origin, destination, dates of travel, times of day, number of
passengers, through a URL and ITN would return the availability display
(similar to Roundtrip Fare Finder product on nwa.com)
This functionality is currently available. It does require that Northwest
provide the data to ITN in ITN acceptable formatting. Details of the URL data
formats can be provided at a later date.
<PAGE>
Additional Features of the ITN Consolidator Site
. Accesses of a single GDS (i.e. Apollo, Galileo, Worldspan or Sabre)
. Online help section
. Reservations are queued, as well as e-mailed
. User feedback form
. Full year online interactive calendar
. Optional SSL Encryption
. Agency Information control
. Online payment
. Airport/city name auto-misspell detection
. Password protected User Profiles with private user database, stored
contact, air, car and hotel preference, frequent flyer numbers
. Password protected Administration area
. Site Security Control
. Access, performance and Booking statistics updated daily
. PNR Documentation control
. Low Fare Search, dependant on GDS
. Car and Hotel Corporate Discount Codes if Applicable
. Special Ticketing/Travel Instructions
. Multiple Availability Sorting Options
. Interface Customization Editor
. Fully Programmatic PNR Construction
. Seat Maps
. Travel Arranger
. Trip Templates
. Ability to change a PNR
<PAGE>
FEES AND PAYMENT
<TABLE>
<S> <C>
ITN Consolidator Site
Design and Set-Up Fee $ [*]
Monthly Access Fee $ [*]
Fee per Booking $ [*]
PNR Changes $ [*] per change/
$ [*] cap per Booking fee
</TABLE>
iii.1 Fees for Optional Services
<TABLE>
<S> <C>
Hotel Mapping & Driving Directions (annual fee) $ [*]
** Hotel Mapping & Driving Directions annual fee waived by ITN.
Programming Hourly Fee $ [*]
HTML Coding Hourly Fee $ [*]
Graphic Design Hourly Fee $ [*]
Special Consulting Hourly Fee $ [*]
Hotel Database Load (post-implementation) $ [*]
Air Contract Load (post-implementation) [*] per contract
</TABLE>
Prices apply per pseudo city unless otherwise specified. For all Engineering
Fees, estimates will be provided and work will not be initiated without a signed
authorization from Company accepting the estimate. All fees for optional
services are subject to change at any time without prior notice to Company.
(i) Delivery Schedule
<TABLE>
<S> <C>
Delivery of Completed Consolidator Site................. [*] weeks from the definitive signing of
the agreement and receipt of all content as
described below and labeled Company Content
</TABLE>
(ii) Company Content
. Company logo or unique graphic and/or descriptive nomenclature to be provided
by Company in standard electronic format according to specifications provided
by ITN;
. Licensee's corporate travel policy information; negotiated airfares; car
rental rates; preferred hotel properties, rates, and descriptive information
to be used in the biasing of the user interface's display of information to
be provided by Company in standard electronic format according to
specifications provided by ITN;
. Designation of travel agency service provider(s) for the transmission of
Booking information via designed GDS electronic queues or e-mail;
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
ATTACHMENT H
TECHNICAL / CUSTOMER SUPPORT
1. Technical/Customer Support. GT agrees to provide first level technical
and customer support to end-users of the Private Label Site(s) as
further described below. GT will use best commercial efforts to make
this support available 24 hours a day, seven days a week, 365 days a
year, by a unique Company telephone number and electronic mail. In
addition, GT agrees to use commercially reasonable efforts to ensure
that support phone calls will not exceed a hold time of more than two
(2) minutes and GT will respond to electronic mail within twenty-four
(24) hours of receipt of such electronic mail.
. Provide a unique local number that Company's toll free 800 number
dedicated to Technical / Customer Telephone Support will be
directed toward.
. Provide a unique Company email address dedicated to Technical /
Customer Email Support
. Provide technical and end-user support on network connection,
firewall and server issues based upon information from Company
regarding network operations.
. Troubleshoot world wide web connection problems
. Provide basic customer training/navigation assistance
. Assist with registration, password and user profile issues
. Provide technical and user support on air, car and hotel bookings
. Provide voicemail and electronic mail support for customer
inquiries
. Logging of calls, electronic mails and voicemail inquiries
. Escalation of critical issues internally within GT
. Reference calls that are travel agency related to Company's
designate corporate agency
. Provide ongoing updates to the Company account manager regarding
outstanding issues
. Ongoing testing of the Private Label Site(s)
2 Reports. GT will use reasonable commercial efforts to provide the
following reports to Company within seven (7) days of each month end,
listing the statistics for that month:
Telephone Support
-----------------
Number of telephone calls answered through the unique Company
support line
Call Length (Total minutes and average call length)
Summary regarding type of inquiry (e.g. password; basic
navigation; FOP, CRS Profile, and other miscellaneous error
messages; attempts to change reservations on weekends)
Summary of proposed resolution
Email Support
-------------
Number of electronic mails received
Summary regarding type of inquiry (e.g. password; basic
navigation; FOP, CRS Profile, and other miscellaneous error
messages; attempts to change reservations on weekends)
Summary of proposed resolution
The format of these reports may be revised from time to time to include
additional or different information, as mutually agreed upon by Company and GT
<PAGE>
EXHIBIT 10.38
GETTHERE.COM
GT SERVICES AGREEMENT
This Agreement is made as of October 13, 1999 ("Effective Date") between
GetThere.com, a California corporation with its principal place of business at
4045 Campbell Avenue, Menlo Park, CA 94025 ("GT") and America West Airlines,
Inc., a Delaware corporation with its principal place of business at 4000 E. Sky
Harbor Boulevard, Phoenix, AZ 85034 ("Company").
Background
GT develops and markets travel-related technology and services for use in
connection with the World Wide Web. The GT Reservation System permits customers
to access real-time ARS and CRS inventory and make travel reservations via the
World Wide Web. Company wishes GT to provide online airline ticket reservation
and ticketing services, and other ancillary reservation and ticketing services,
through access to the GT Reservation System via screens displaying its logos and
other Company-specific information.
GT and COMPANY agree as follows:
1. Certain Definitions.
1.1 "ARS" means the EDS Shares Airline Reservations System.
1.2 "Booking" means the creation of a PNR within the database of the
applicable CRS or ARS and all changes and cancellations relating to such PNR.
1.3 "Company Client" means a customer of Company's that utilizes the
Private Label Site.
1.4 "Content" means the Company specific content as set forth in
Attachment A ("Company Content") delivered by Company to GT for use in the
Private Label Site.
1.5 "CRS" means a computer reservation system other than ARS implemented
or accessed by the GT Reservation System to process ticket reservation and
purchasing.
1.6 "Data Center" means the GT facilities where the servers and equipment
necessary to host, operate, manage and maintain the Private Label Site and the
GT Reservation System are located.
1.7 "GT Reservation System" means GT's proprietary booking engine that
provides access to ARS or to another CRS in order to make travel reservations
via the World Wide Web.
1.8 "PNR" means a single passenger name record (which can include multiple
names and segments) containing sufficient information to process a travel
reservation.
1.9 "Private Label Site" means a set of World Wide Web pages through which
a Company Client may access the GT Reservation System via screens displaying the
Content.
2. Content and License Rights.
2.1 GT License. GT grants to Company a world-wide, non-exclusive, non-
transferable, non-sublicensable, royalty-free license during the term of this
Agreement to access, and to permit its employees, contractors, and Company
Clients to access and use the Private Label Site and the GT Reservation System.
Company acknowledges GT's proprietary rights set forth in Section 11.1.
[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
1.
<PAGE>
2.2 Company License. Company will provide GT with the Content for the
Private Label Site as further described in the SOW (as defined below). Company
grants to GT a world-wide, non-exclusive, royalty-free license during the term
of this Agreement to reproduce, electronically distribute and publicly display
the Content delivered to GT by Company only on the Private Label Site in
accordance with Company's instructions. GT acknowledges that Company owns all
right, title and interest in and to the Content.
3. Implementation and Further Updates to Functionality and Performance.
3.1 Assistance and Coordination. Company will (i) cause EDS to install a
physical connection from ARS to the Data Center and provide information with
respect thereto reasonably necessary to enable GT to use the connection; (ii)
facilitate GT's access to ARS and reasonably available personnel who can assist
GT in understanding ARS so that GT can develop the code required to communicate
with ARS, (iii) perhaps install dedicated lease lines if required between
Company and the Data Center for updating Frequent Flyer information as set forth
in the SOW, and (iv) provide such other items and assistance as may be
reasonably necessary to enable GT to implement the Private Label Site, as
expressly set forth in the SOW (as defined in Section 3.2 below). If after no
less than twenty one (21) days after the anticipated installation date discussed
in Section 3.2, such physical connection is not installed, or if GT is unable to
obtain the specified assistance from Company for a period of twenty-one (21)
consecutive days, and GT has used its diligent, good faith efforts to have such
connection or lines installed or obtain such access or assistance, and GT has
kept Company continuously informed regarding its inability to do so, GT will
have the right to terminate this Agreement without penalty and with no cause of
action against Company. In the event of any such termination, GT shall refund to
Company [*], [*], or [*] of the License Fee paid by Company if the termination
occurs in the first, second, or third month respectively during the term of this
Agreement.
3.2 Implementation. GT will implement the Private Label Site no later than
February 15, 2000 ("Delivery Date"), in accordance in all material respects with
the specifications set forth in the Statement of Work ("SOW") contained in
Attachment B hereto. The Delivery Date shall be extended one day for each day
after November 1, 1999 that the ARS physical connection referred to in Section
3.1 is not installed and shall otherwise be extended to account for delays
resulting from Company's failure to obtain the access or assistance referred to
in Section 3.1, or, upon mutual written agreement, to account for other delays
in the implementation process and changes in the SOW agreed to by the parties.
Implementation is understood to mean GT's providing Company what GT reasonably
and in good faith believes to be a fully functional version of the Private Label
Site that operates in accordance in all material respects with the
specifications in the SOW and that is ready to be acceptance tested as set forth
in Section 3.3 below. Company approval of such tests (and in turn acceptance)
shall not be unreasonably withheld.
3.3 Acceptance. Acceptance of the Private Label Site will be deemed to
have occurred at the end of fifteen (15) days after the Delivery Date, unless
prior thereto notice of rejection is communicated by Company to GT in writing.
Company may reject the Private Label Site only if it fails in some material
respect to meet the specifications in the SOW. If Company properly rejects the
Private Label Site, GT will correct or remedy such nonconformance as soon as
reasonably possible but in no event in more than thirty days (30) days after
receipt of notice of rejection. When it has made the necessary corrections, GT
will again deliver the Private Label Site to Company and the
acceptance/rejection/correction provisions above shall be reapplied until the
Private Label Site is accepted or the other remedies are selected, as set forth
below; provided that, as Company's sole remedy for GT's breach of Section 3.2 or
3.3 Company may, after the second or any subsequent rejection under this Section
3.3, either (i) with GT's agreement, have the GT Reservation System implemented
with another CRS-based system of GT's choice, until such time as GT can
implement the GT Reservation System with ARS; (ii) extend the time frame for
acceptance of the GT Reservation System with ARS; or (iii) terminate this
Agreement and receive a full refund of all amounts paid, with no further payment
obligations thereafter to GT. If Company chooses the alternative described in
clause (i), GT will reimburse Company for the difference, if any, between the
transaction fees charged to Company's by the CRS based system and the
transaction fees that would have been charged to Company if it had used ARS. The
Cut-Over Date shall be the date Company releases the Private Label Site to
Company Clients to perform live Bookings or the date mutually agreed upon by the
parties but shall occur as soon as possible following the date that the Private
Label Site is accepted as provided above. Failure by Company to object or notify
prior to acceptance will not limit GT's obligations to correct material non-
conforming conditions later discovered pursuant
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
2.
<PAGE>
to this Agreement. The acceptance processes set forth within this Section 3.3
will also govern the acceptance procedure for implementation of special features
set forth in Section 8.3. Notwithstanding anything to the contrary in this
Section 3.3, GT shall not be deemed to be in breach of Sections 3.2 or 3.3 if
its failure to perform any obligation provided for herein or therein is a result
of Company's failure to cause EDS to install the ARS physical connection as
required under Section 3.1, or to perform any of its other obligations under
Sections 3.1, 3.2 or 3.3, in any material respect or of any matter beyond GT's
reasonable control as specified in Section 13.1.
3.4 Operation. GT will operate the Private Label Site from and after the
Cut-Over Date in all material respects in accordance with the operational
specifications contained in the SOW and the system availability requirements set
forth in Attachment D.
3.5 Further Development Obligations. After acceptance of the Private Label
Site, GT shall have no obligation to perform further development or
customization work except as set forth in this Section 3, Section 10, or as may
be required pursuant to Attachment D. Any modifications or updates to the
Private Label Site will be made at the Optional Services Fees set forth in
Exhibit C, subject to this Section 3, Section 10 and Company's right to receive
such modifications or updates free of charge as set forth in this Agreement. GT
acknowledges and agrees that it is obligated to provide such development or
customization work in accordance with and subject to the procedures set forth in
this Section 3 up to [*] hours of development time per contract year, as
provided in Attachment C.
3.6 Upgrades. GT agrees to offer and provide to Company any updates and
upgrades to the GT Reservation System and related upgrades to the Private Label
Site that GT creates, licenses or acquires and makes available generally to its
comparable customers using comparable GT products and services. All such updates
and upgrades shall be free of charge unless GT makes such updates or upgrades
generally available to comparable GT customers using comparable GT products and
services only at an additional price. GT agrees to make any such update or
upgrade for which it charges additional prices available to Company at a price
no greater than the amount Company would pay if it had commissioned such update
or upgrade as a separate development project under this Agreement. If
implementation of such updates or upgrades can be made on Company's behalf only
following special configuration work by GT because of customized configurations
previously adopted by Company, the parties shall agree upon appropriate Optional
Service Fees pursuant to the procedure set forth in Section 3.7 and in
Attachment C. The provision of any such implementation work by GT may be counted
as part of the one thousand (1,000) hours of services to be provided by GT at no
charge if Company so elects.
3.7 Project Management and Change Methodology. The parties will use the
following project management methodology in developing any software under this
Section 3 specifically for the purpose of operating the Private Label Site,
either for any changes to the specifications for the initial implementation in
the SOW or for any additional projects following the Cut Over Date: (i) project
definition - Company will supply a written description of the proposed project
or change order and its purpose; (ii) Requirements document - to be developed by
Company either alone or with GT personnel; (iii) Cost analysis - within fifteen
(15) days following receipt of the project definition document and the
requirements document (if different), GT will use its reasonable commercial
efforts to provide Company a detailed written list of all projected project
fees, costs and expenses, together with an initial description of the necessary
engineering specifications and development schedule to achieve the project or to
enact the change order; (iv) Company may then elect to proceed with the project
for the price, specifications and schedule agreed upon by the parties; (v) GT
will include any such project or projects in its regular releases and in two
additional releases each year ; (vi) upon completion of a project (excluding
changes to the initial implementation, which is addressed in Sections 3.2 and
3.3 above), the parties shall conduct acceptance testing and verification for
the project in accordance with the written specifications agreed upon by the
parties or in accordance with the procedures of Section 3.3 above; (vii) only
upon acceptance pursuant to Section 3 will GT implement the results of the
project in the Private Label Site; and (viii) Post Mortem - the parties will
meet to discuss issues and improvements that may be designed into development
process for future projects. Nothing in this Section 3.7 will be deemed to
require GT to accept or undertake any project or development effort that it is
not required to accept or undertake by another provision of this Agreement.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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3.8 New Functionality. GT will obtain Company's approval, which will not
be unreasonably withheld, before it integrates any new functionality into the GT
Reservation System or the Private Label Site. GT will provide Company access to
one or more test servers for the purpose of understanding and testing such
functionality. Notwithstanding the foregoing, GT reserves the right to integrate
any new functionality, modifications or reliability or performance improvements
into its basic application without prior approval of Company, so long as such
modifications do not adversely affect Company's or Company's Clients' use of the
GT Reservations System or the Private Label Site.
3.9 Content Uploads. GT will provide Company with 24X7 access to the
Private Label Site in order to enable Company to modify the Content of the
Private Label Site as Company chooses. Company will be solely responsible for
the Content it uploads or modifies. GT will provide password security that will
enable Company to designate individuals who are allowed to update content. GT
shall not modify the Content or remove or upload Content from or to the Private
Label Site without the prior written consent of Company.
3.10 Time of Essence. Each party acknowledges that time is of the essence
in performance of its obligations hereunder.
3.11 Pooling Development Efforts. GT will invite Company to participate in
user groups that GT may create or facilitate among GT's online reservations
customers. GT may facilitate and undertake joint development efforts by similar
users where the users agree to share the costs and fees for such joint
development efforts. Company may, for a premium price and other terms and
conditions to be determined on a project-by-project basis, require that any
development project funded solely by Company remain licensed or implemented
solely for Company. In the event that another GT customer in the same industry
designates a project for its sole use, Company has the right to initiate a
development project for the same or equivalent functionality or performance as
that implemented for or licensed to the other GT customer on terms and
conditions agreeable to the parties and for the fees set forth in Attachment C.
Company acknowledges that any such development effort would involve code
independently developed by GT, that GT would not use any intellectual or other
proprietary rights owned by or licensed exclusively to such other customer, and
that the project would likely be conducted and priced as if GT had not
previously undertaken such work.
3.12 Advertising. Subject to this Section 3.12 and the SOW, GT shall have
the sole and exclusive right to procure and display third party advertising on
the Private Label Site for [*] of the page views throughout the Site (the
"Exclusivity") during the first two years of the Agreement beginning on the Cut-
Over Date, and thereafter until such right is terminated as provided below.
Company shall provide space on each page of the Site at the location and in the
dimensions provided in the SOW, and GT shall have the right to display such
advertising in the format specified in the SOW. The revenue from all such
advertising shall be shared as provided in Attachment C. GT's Exclusivity shall
terminate six (6) months after it receives written notice from Company (such
termination not to be effective before the end of the second full year of the
Agreement after the Cut-Over Date) that Company has decided not to have any
advertising displayed on the Site or has decided that it will procure and
display all advertising on the Site using its own internal resources and not
through a third party ("Termination Notice"). GT's Exclusivity shall also
terminate thirty (30) days after it receives written notice from Company (such
termination not to be effective before the end of the second full year of the
Agreement after the Cut-Over Date) that Company intends to accept a bona fide
offer from another party to enter into an agreement with such party pursuant to
which the party would have the sole and exclusive right to procure and display
third party advertising on the Site for at least [*] of the page views
throughout the Site ("Third Party Offer Notice"), unless GT notifies Company in
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writing that it agrees to the revenue sharing and other material terms and
conditions of the proposed agreement. If it does so agree, it's Exclusivity
shall continue until it is terminated as provided above or until it receives
another Third Party Offer Notice (which will not be given before the end of six
months from the date of the most recent prior Third Party Notice), in which
event the same rights and procedures specified above shall apply. Any Third
Party Offer Notice by Company shall include the advertising revenue sharing and
other material terms and conditions of the proposed agreement with the third
party. Company can reject any such advertising that it reasonably and in good
faith deems to be inappropriate, and GT agrees not to display any advertisements
for airline competitors of Company.
4. Access.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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4.1 URL's. Company will assign one or more Universal Resource Locators
(URL) for the Private Label Site, which GT will promptly implement.
4.2 Access Equipment. Except as otherwise provided in this Section 4.2 or
in Section 10.5 or Section 13.1 (regarding matters beyond its reasonable
control), GT is responsible for all equipment, servers, software and
communications within its Data Centers. GT is not responsible for (i) the ARS
(except for the interface of the ARS to the GT Reservation System and the
physical connection within the Data Centers to the ARS); (ii) the transmission
to the Data Center of the Content (except for the physical connection within the
Data Centers to the leased lines transmitting the Content); (iii) Company's or
Company Client's access to ARS, the Content or any other data supplied by
Company or to the Internet; or (iv) any equipment needed by Company or Company
Clients to access the Internet. In the event access to the Private Label Site
requires additional communications connections to GT, the Content or other data
ARS or the Internet, Company shall be responsible for the reasonable costs
associated with such connections, as set forth in Attachment C. To the extent
that provisioning of such access results in GT incurring additional time, cost,
or expense, GT and Company will agree upon fees due for such implementation.
5. Reports.
5.1 Database Reports. GT shall provide Company written reports in
electronic form no less frequently than once every day detailing PNR
information.
5.2 Performance Reports. GT shall provide Company written reports in
electronic form no less frequently than once every month detailing the
performance of the Private Label Site and the GT Reservation System during the
last review cycle. Such report shall include summaries of all Company customer
support requests and their resolution, all system down time, both scheduled and
unscheduled, any errors or non-conformities reported or discovered in the
Private Label Site or the GT Reservation System, any latency, bandwidth,
equipment, communication or other problems, a status report on all Company
current development projects, and such other performance characteristics and
measurements as the parties may agree to from time to time.
6. Technical Support. GT shall provide Company with the technical support for
the Private Label Site as set forth in Attachment D.
7. Bookings. GT will queue to Company a live PNR via ARS for each Booking made
through the Private Label Site that will serve as confirmation to Company of
each Booking made through the Private Label Site and will keep records of such
Bookings.
8. Payments.
8.1 Fees. During the initial and any renewal term of this Agreement
Company shall pay GT the Fees set forth in Attachment C. If the Agreement is
renewed, GT may increase the Private Label Site Management Fees ("License Fees")
for any year in any renewal term by not more than [*] [*] over the License Fees
in effect during the preceding year.
8.2 Server and Communications Costs. Company shall pay the Server and
Communications Costs as calculated in Attachment C.
8.3 Optional Services Fees. If GT provides any special features in
accordance with the procedures set forth in Section 3.7, Company shall pay the
associated Optional Services Fees set forth in Attachment C. [*] hours of such
services for each year of the term of the Agreement shall be provided as
specified in Attachment C at no charge. GT will invoice Company every thirty
(30) days for Optional Service Fees incurred or based upon project milestone
attainment, as mutually agreed by the parties for each project.
8.4 Payment. Except as otherwise stated herein, all payments due GT
hereunder shall be made within thirty (30) days of the date of GT's invoice.
Company shall pay GT for all sales, use and other taxes and similar charges
based on or arising from this Agreement or its performance, other than taxes
based on GT's net income, that GT invoices Company. Any such taxes will be
listed separately on each invoice. Late payments for any amounts
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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due hereunder will bear interest at one and a half percent (1.5%) per month or
the maximum rate permitted by law, whichever is less.
8.5 Commissions and Advertising Revenue. Hotel and Car Commissions and
advertising revenue due to Company, as set forth in Attachment C, shall be paid
by GT on a quarterly basis. Revenue owed by GT may be paid or applied as a
credit to Company monthly invoices, as elected by Company.
8.6 Expenses. In addition to the Optional Services Fees set forth in
Attachment C, Company shall reimburse GT for reasonable expenses incurred for
meals, lodging, and travel (air coach rates) previously authorized in writing by
Company and incurred as a result of implementation of special features required
by Company outside of the Palo Alto, California area. GT shall invoice Company
for these expenses and Company shall pay GT within thirty (30) days of the date
of GT's invoice.
8.7 Air Travel. GT will notify Company before making any air travel
arrangements involving services to be performed under or other matters relating
to this Agreement. Company will attempt to book any such travel on Company
aircraft. If Company cannot do so, it will authorize GT to book travel on
another carrier.
8.8 Disputed Amounts. If Company in good faith disputes any portion of a
GT invoice, Company will timely pay GT all undisputed amounts. Within thirty
(30) days of invoice date for an invoice on which a disputed amount appears,
Company will: (i) notify GT in writing of the specific items in dispute; (ii)
will describe in detail Company's reason for disputing each such item; and (iii)
in the event that the disputed amount (or the aggregate of amounts previously
disputed by Company) exceeds fifty thousand dollars ($50,000), will deposit such
disputed amount into an escrow account. Within fifteen (15) days of GT's receipt
of such notice, the parties will negotiate in good faith to reach settlement on
any items that are the subject of such dispute. If Company does not notify GT of
any items in dispute within such thirty (30) day period, Company will be deemed
to have approved and accepted such invoice, except to the extent that an audit
as described in Section 9.1 reveals inaccuracies in any invoice not reasonably
discernible through commercially reasonable scrutiny in the course of Company's
payment processing system.
9. Audit Rights.
9.1 Record Keeping; Audit Rights. GT agrees that it will maintain its
books and records relating to the fees and other costs and expenses paid by
Company under this Agreement for not less than five (5) years after they have
been paid, and will, upon reasonable cause and notice, permit such books and
records to be examined, at Company's expense, by an independent certified public
accountant retained by Company reasonably acceptable to GT solely for the
purpose of confirming the accuracy of such Fees, costs and expenses. As a
condition to such examination, the independent public accountant will execute a
written agreement, reasonably satisfactory in form and substance to GT, to
maintain in confidence all information obtained during the course of the
examination except for disclosure to Company and GT as necessary for the above
purpose and will only conduct such examination during regular business hours. If
errors of five percent (5%) or more are discovered as a result of such
examination, GT shall reimburse Company for the expense of such examination and
pay the difference immediately.
9.2 Technical Audits.
(a) Employees of Company and its auditors who are from time to time
designated by Company and who agree in writing to the security and
confidentiality obligations and procedures reasonably required by GT shall be
provided with reasonable access to any facility at which services are being
performed to enable them to audit GT's performance of services and other matters
relevant to this Agreement, including (i) verifying the accuracy of GT's charges
to Company and (ii) verifying that services are being provided in accordance
with this Agreement, including any applicable performance criteria, standards
and milestones.
(b) Such audits may be conducted once every year during normal business
hours; provided, however, that the parties may agree to more frequent audits as
deemed reasonably necessary. Company will provide GT with reasonable prior
written notice of an audit. GT will cooperate in the audit, will make the
information reasonably required to conduct the audit available on a timely basis
and will assist the designated employees of
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Company or its auditors as reasonably necessary. All information learned or
exchanged in connection with the conduct of an audit, as well as the results of
any audit, is confidential and will be subject to Section 14.
(c) Following an audit, Company will conduct an exit conference with GT to
discuss issues identified in the audit that person to GT, and Company will give
GT a copy of any portion of the audit report pertaining to GT. The parties will
review each GT audit issue and will mutually agree: (i) what, if any, actions
will be taken in response to such audit issues, when and by whom and (ii) which
Party will be responsible for the cost of taking the actions necessary to
resolve such issues. Any such determination will be based on the following
criteria: (A) who caused the original deficiency; (B) who has contractual
responsibility for the improvement of internal controls; and (C) who set the
standards against which the audit is conducted. GT will not be responsible for
the cost of an audit, unless otherwise agreed to in writing by the parties.
10. Warranties And Disclaimers.
10.1 Title Warranty; Authorization. Each of GT and Company warrants to the
other that it has the right to enter into this Agreement and perform its
obligations hereunder. Without limiting the generality of foregoing, Company
warrants to GT that it now has and/or will have the right to provide GT with all
Content to be provided with respect to this Agreement. In addition, and without
limiting the first sentence above, GT represents and warrants that it has all
necessary right, title and interest to undertake the activities and perform the
services required of it under this Agreement.
10.2 Performance Warranty. GT warrants that the GT Reservation System and
the Private Label Site will function and perform in all material respects in
accordance with the specifications contained in the SOW, as the SOW may be
amended and updated by mutual agreement of the parties. If Company notifies GT
of a breach of the foregoing warranty, or if GT otherwise becomes aware of a
breach of the foregoing warranty, GT shall implement the problem investigation
and correction procedures specified in Attachment D at no cost to Company.
10.3 Year 2000 Warranty. GT warrants that the GT Reservations System will
(a) manage and manipulate date data involving all dates (including leap years)
from the 20th and 21st centuries without functional or data abnormality related
to such dates; (b) manage and manipulate date data involving all dates
(including leap years) from the 20th and 21st centuries without inaccurate
results related to such dates; and (c) have user interfaces and date data fields
formatted (or inferred) to distinguish between dates (including leap years) from
the 20th and 21st centuries. No representation or warranty, however, is made
with respect to any third party technology, other than as incorporated or used
in the Data Centers, being used in combination with the GT Reservation System,
including without limitation, third party software, services, telecommunications
or technology, and this warranty is subject to the condition that any such third
party technology outside the Data Centers will properly and correctly exchange
data with the GT Reservation System and will be year 2000 compliant. To the
extent there is a breach of this Section 10.3 GT shall implement the problem
investigation and correction procedures specified in Attachment D at no cost to
Company.
10.4 Harmful Code. GT represents and warrants to Company that, as of the
Delivery Date, to the best of its knowledge, software utilized by GT in
providing the service does not contain computer instructions, circuitry or other
technological means whose purpose is to disrupt, damage or interfere with any
use of either party's computer and communications facilities or equipment
("Harmful Code") and it has used commercially reasonable efforts to prevent the
introduction of such "Harmful Code" to the services prior to delivery to or use
by Company. For the purposes of this warranty, Harmful Code shall include,
without limitation, any code containing viruses, Trojan horses, worms, or like
destructive code or code that self-replicates. To the extent there is a breach
of this Section 10.4 GT shall implement the problem investigation and correction
procedures specified in Attachment D at no cost to Company.
10.5 Exemptions. Company acknowledges and agrees that GT shall not be
responsible for Private Label Site or GT Reservation System unavailability due
to (i) outages caused by the failure of public telecommunications network or
(ii) errors in coding in, or any other aspect of, HTML or the electronic files
containing ARS or Content supplied by Company, (iii) unauthorized use or misuse
by users of the Private Label Site unless such misuse is foreseeable or common;
or (iv) EDS's failure to provide access to the ARS or the physical
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connectivity from ARS to the Data Center. During the term of this Agreement,
every quarter, Company shall provide GT with a six (6) month rolling forecast of
the total transaction volumes on the Private Label Site ("Forecast"). If the
actual transaction volume is twenty percent (20%) greater than the Forecast,
then GT shall not be responsible for failure to meet the availability
requirements specified in Section 2 of Attachment D; provided however, that GT
shall use its commercially reasonable efforts to meet such availability
requirements.
10.6 Disclaimer. EXCEPT AS PROVIDED ABOVE, ALL INFORMATION, TECHNOLOGY AND
SERVICES PROVIDED BY GT HEREUNDER ARE PROVIDED "AS IS" WITHOUT ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, GT EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT WITH
RESPECT TO SUCH INFORMATION, TECHNOLOGY AND SERVICES.
11. Proprietary Rights.
11.1 Ownership. Company acknowledges that, as between the parties, GT owns
all right, title, and interest in and to all components of the Private Label
Site (excluding the Content) and the GT Reservation System, and the interface to
ARS, now or hereafter existing, including all improvements and derivatives
thereof and modifications thereto. GT acknowledges that, as between the parties,
Company owns all right, title and interest in and to the Content now or
hereafter existing, including all improvements and derivatives thereof and
modifications thereto.
11.2 Use Restrictions. Except as otherwise specifically provided in this
Agreement, nothing in this Agreement shall give Company any right or license to
use, reproduce, display or distribute (electronically or otherwise) any
technology or intellectual property rights in the GT Reservation System. Except
as otherwise specifically provided in this Agreement, nothing in this Agreement
shall give GT any right or license of any kind to use the Content, any
trademarks, logos, service marks or trade marks of Company, or any data supplied
by a Company client or discoverable about a Company client by way of its use of
the Private Label Site.
11.3 "Powered by GT." GT reserves the right to display its copyright,
standard trademark graphic, the phrase "Powered by GT" and standard disclaimer
on the Private Label Site in a manner and format to be mutually agreed upon by
GT and Company.
11.4 Trademark License. Subject to the terms and conditions set forth in
the Agreement and solely for the purposes hereof, Company grants GT a non-
transferable, non-exclusive license, without right of sublicense, to place the
Company trademarks, trade names, service marks and logos ("Marks") on the
Private Label Site as directed by Company. In no event may GT alter or remove
any Marks unless such alteration or removal is approved in advance in writing by
Company. Except for the right to use the Marks as set forth in this Section
11.4, nothing contained in this Agreement shall be construed to grant GT any
right, title or interest in or to the Marks. GT acknowledges Company's exclusive
ownership of the Marks and the renown of such Marks worldwide. GT agrees not to
take any action inconsistent with such ownership and further agrees to take, at
Company's reasonable expense, any action which Company reasonably requests to
establish and preserve Company's exclusive rights in and to its Marks. GT shall
not adopt, use or attempt to register any trademarks or trade names that are
confusingly similar to the Marks or in such a way as to create combination marks
with the Marks. If, in Company's reasonable discretion, GT's use of the Marks
does not meet Company's then-current trademark usage policy, or the Private
Label Site and associated services are performing in a manner that Company
believes negatively affects the value of the Marks, GT will, at Company's
request, undertake the necessary remediation, as set forth in Sections 3 or 10
or as otherwise agreed by the parties.
11.5 GT Indemnity. Except as provided in Section 11.6, GT shall indemnify,
defend and hold Company harmless from and against any and all liabilities,
losses, damages, costs and expenses (including, without limitation, reasonable
attorneys' fees) incurred by Company on account of such third party's claim of
infringement or misappropriation resulting from Company's or Company Clients'
use of the GT Reservation System or the Private Label Site (excluding Content)
of any U.S. patent, copyright, trademark or trade secret or other proprietary
right; provided however that Company shall give GT prompt notice in writing of
such suit or proceeding, GT shall
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have complete control of the settlement and defense thereof, and Company shall
provide any information and assistance reasonably requested by GT (at GT's
expense). Notwithstanding the foregoing, GT shall not settle or compromise any
claim hereunder in a manner that does not unconditionally release Company from
liability or that adversely affects the provision of services hereunder without
first obtaining Company's prior written consent. The foregoing obligation does
not apply with respect to the GT Reservation System or portions or components
thereof or services (i) not supplied by GT (e.g. third party software, services,
telecommunications or technology); or (ii) that are combined with other
products, processes or materials not supplied by GT where the alleged
infringement relates to such combination. GT shall also not have any obligation
with respect to further damages arising from Company's continued use of
infringing intellectual property after GT has provided and implemented
modifications to the GT Reservation System or the Private Label Site, as
applicable, that do not continue to infringe upon or misappropriate the third
party's claimed rights and that meet in all material respects the requirements
of the SOW, as amended, and GT has notified Company in writing that the purpose
of the modification is to avoid further infringement or misappropriation. In the
event such a claim by a third party causes Company's quiet enjoyment and use of
the GT Reservation System to be seriously endangered or disrupted, or if either
party reasonably believes that such is likely, GT will, at its option, do one of
the following: (a) replace the GT Reservation System, without additional charge,
with a compatible, functionally equivalent and non-infringing system; (b) modify
the GT Reservation System to avoid the infringement; (c) obtain a license to
continue use of the GT Reservation System for the term of this Agreement and pay
any additional fees required for such a license; or (d) if none of the foregoing
alternatives are practical, indemnify Company as set forth above and terminate
this Agreement for convenience.
11.6 Company Indemnity. Company shall indemnify, defend and hold GT
harmless from and against any and all liabilities, losses, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees) incurred by
GT on account of such third party's claim of infringement resulting from use or
display of the Content or from use of the ARS (excluding the interface developed
by GT hereunder) of any U.S. patent, trade secret trademark or copyright or
other proprietary right; provided however that GT shall give Company prompt
notice in writing of such suit or proceeding, Company shall have complete
control of the settlement and defense thereof, and GT shall provide any
information and assistance reasonably requested by Company (at Company's
expense). Notwithstanding the foregoing, Company shall not settle or compromise
any claim hereunder in a manner that does not unconditionally release GT from
liability without first obtaining GT's prior written consent. The foregoing
obligation does not apply with respect to Content (i) not supplied by Company;
or (ii) that is combined with other products, processes or materials not
supplied by Company where the alleged infringement relates to such combination.
12. Term and Termination of Agreement.
12.1 Term. Unless terminated earlier as provided herein, this Agreement
shall begin on the Effective Date and continue for an initial period of four (4)
years from the Cut Over Date. Thereafter, this Agreement shall automatically
renew for two (2) years unless either party gives notice of its intent not to
renew no later than one (1) year prior to the end of the initial term.
12.2 Termination for Cause. Either party may terminate this Agreement upon
ninety (90) days written notice in the event the other party breaches any
material term of this Agreement and such breach continues without cure for the
duration of the notice period.
12.3 Termination for Convenience. This Agreement may also be terminated by
either party without cause by giving one (1) year prior written notice to the
other party.
12.4 Survival. Sections 1, 4 (during the transition period described in
Section 12.5), 5 (during the transition period), 6 (during the transition
period), 7 (during the transition period), 8 (except that Sections 8.2 and 8.3
shall survive only during the transition period), 9.1, 9.2 (during the
transition period), 10, 11 (during the transition period), 12, 13, 14, 16, 18,
19 and 20 will survive any termination or expiration of this Agreement. Any
payment obligations that exist as of the termination or expiration of this
Agreement shall remain in effect.
12.5 Post-Termination Obligations. In the event of termination of this
Agreement, GT agrees to continue to operate the Private Label Site under the
terms and conditions of this Agreement, for a minimum of one
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(1) year from the date such termination is effective. GT will also work with
suppliers identified by Company and Company to structure a smooth changeover
from GT to any other supplier of services. Without limiting the foregoing, GT
will provide a secure one-time FTP feed of the Company's existing user database
in a comma-delimited form GT will assist in cutover from the Private Label Site
as requested, including establishing a pointer from its main site to the new
sites indicated by Company for a period of ninety (90) days following transition
from the Private Label Site. The obligations of GT under this Section 12.5 are
subject to the timely payment by Company of all accrued fees and expenses under
this Agreement, including, without limitation, the fees and expenses due GT
pursuant to this Section 12.5. Notwithstanding the foregoing, GT shall have no
obligations under this Section 12.6 if it has terminated this Agreement as a
result of Company's breach of its obligations to pay any Fees or other amounts
due under this Agreement unless Company pays GT in advance the fees and expenses
due GT pursuant to this Section 12.6.
13. Limitation of Liability.
13.1 Limitation of GT Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT
OR OTHERWISE, AND EXCEPT FOR BODILY INJURY, GT SHALL NOT BE LIABLE OR OBLIGATED
WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT OR UNDER CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR ANY OTHER LEGAL OR EQUITABLE THEORY (I) FOR ANY
AMOUNTS IN EXCESS OF THE AGGREGATE LICENSE FEES PAID TO GT BY COMPANY FOR THE
PRIVATE LABEL SITE DURING THE NINE MONTHS PRIOR TO THE CAUSE OF ACTION, (II) FOR
ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES; (III) FOR LOST PROFITS; OR (IV) FOR ANY
MATTER BEYOND ITS REASONABLE CONTROL. FOR PURPOSES OF SECTION 3.3, ATTACHMENT D
AND THIS SECTION 13.1, THE EVENTS SPECIFIED IN SECTION THE SECOND SENTENCE OF
SECTION 4.2 AND IN SECTION 10.5 SHALL BE DEEMED, WITHOUT LIMITATION, TO BE
MATTERS BEYOND GT's REASONABLE CONTROL, AND FAILURES OF OR DEFECTS IN COMPUTERS
OR OTHER EQUIPMENT OR SOFTWARE USED TO OPERATE THE PRIVATE LABEL SITE MAINTAINED
BY GT, OR FOR GT BY ANY THIRD PARTY PURSUANT TO AN AGREEMENT BETWEEN GT AND SUCH
THIRD PARTY, SHALL NOT BE DEEMED TO BE MATTERS BEYOND GT's REASONABLE CONTROL.
SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR
CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION AND EXCLUSIONS MAY NOT APPLY TO
COMPANY. FOR PURPOSES OF THIS SECTION 13.1 AND SECTION 13.2, INCIDENTAL DAMAGES
SHALL NOT INCLUDE COST OF COVER OR OTHER MITIGATION COSTS.
13.2 Limitation of Company Liability. NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT OR OTHERWISE, AND EXCEPT FOR BODILY INJURY OR BREACHES OF SECTIONS 8.1
THROUGH 8.6, COMPANY SHALL NOT BE LIABLE OR OBLIGATED WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT OR UNDER CONTRACT, NEGLIGENCE, STRICT LIABILITY
OR ANY OTHER LEGAL OR EQUITABLE THEORY (I) FOR ANY AMOUNTS IN EXCESS OF THE
AGGREGATE OF FEES PAID OR PAYABLE TO GT BY COMPANY FOR THE PRIVATE LABEL SITE
DURING THE NINE MONTHS PRIOR TO THE CAUSE OF ACTION, (II) FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES, OR (III) FOR LOST PROFITS (EXCEPT FOR FEES PAYABLE BY
COMPANY TO GT UNDER THIS AGREEMENT). SOME STATES DO NOT ALLOW THE EXCLUSION OR
LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION AND
EXCLUSIONS MAY NOT APPLY TO GT.
14. Confidentiality. Each party to this Agreement acknowledges that it or its
employees may be exposed to or acquire information in connection with this
Agreement that is proprietary or confidential to the other party or third
parties to whom either party has a duty of confidentiality. Except as set forth
below, any and all information relating to the business of either party or its
clients or customers and other information obtained by either party or its
employees in the performance of this Agreement shall be deemed to be
confidential and proprietary information provided all such material is clearly
labeled as "Confidential" or "Proprietary." Except as otherwise provided herein,
each party agrees to hold the Confidential information of the other party in
confidence and not to disclose such information to third parties or to use such
information for any purpose whatsoever and to advise each of its employees who
may be exposed to such proprietary and confidential information of their
obligations to keep such information confidential. Notwithstanding the above:
(A) nothing contained in this Section 14 or elsewhere in this
10.
<PAGE>
Agreement shall restrict GT from complying with industry reporting requirements;
(B) the terms of this Agreement, Company Client's names, travel destinations,
itineraries, technical data, implementation plans, traveler profiles, and travel
contracts shall be considered Confidential information of Company regardless of
whether such information is labeled as such; (C) neither party is prohibited
from (i) under confidence, using or disclosing Confidential Information to third
parties as required to perform its obligations under this Agreement, (ii) using
or disclosing such Information externally in an aggregate or statistical
composite form (provided that such Information is combined with other similar
information and does not specifically identify the Information as specific to
Company), or (iii) in confidence, using or disclosing such Information to its
auditors or attorneys, or to investors or potential investors or other financing
sources and their advisors, or in connection with a merger or acquisition or
proposed merger or acquisition; and (C) Confidential Information shall not
include (i) information that is now or subsequently becomes publicly available
without breach of this Agreement by the receiving party, (ii) information made
available to either party from other sources without any obligation of
confidentiality, (iii) information that is already in either party's possession
not subject to an obligation of confidentiality, (iv) information that is
independently developed by either party without reference to any confidential
information, and (v) information that is required to be disclosed pursuant to
any law or any rule or regulation of a governmental agency or any order of a
court or governmental agency provided that the receiving party shall first
notify the disclosing party of such disclosure requirement or order and uses
reasonable efforts to obtain confidential treatment or a protective order. Upon
termination of this Agreement, the receiving party will at its option return to
the disclosing party or destroy all Confidential Information of the disclosing
party and all documents or media containing any such Confidential Information
and any and all copies or extracts thereof, except that the receiving party may
retain one copy of all such Confidential Information solely for archival legal
purposes.
15. Publicity And Marketing. Both parties agree to cooperate with each other so
that each party may issue a press release concerning this Agreement, provided
that each party must approve any press release prior to its release, which shall
not be unreasonably withheld. Notwithstanding anything to the contrary herein,
GT may file the Letter of Intent between the parties dated as of August 22,
1999, regarding the subject matter of this Agreement, or may file this
Agreement, as an exhibit to its registration statement on Form S-1 as required
by the Securities and Exchange Commission. Company agrees that it may be
designated as a "reference account" for GT's online travel technology solution
to certain potential customers, upon terms to be mutually agreed by the parties
hereto.
16. User Data.
16.1 Ownership. As between the parties, Company shall own all user data
regarding all users of the Private Label Site and any tickets or services
purchasable via the Private Label Site.
16.2 Use Restrictions. GT shall not use for any purpose other than as
expressly set forth herein or expressly permitted in writing by Company, or
disclose to any third party any user data related to the Private Label Site.
Notwithstanding the foregoing, GT shall be entitled to use aggregated PNR data,
page hits and user sessions data for all users collectively of GT services, so
long as such data is not aggregated on an airline by airline basis.
17. Source Code Escrow. Within thirty (30) days after execution of this
Agreement, GT will place in escrow pursuant to the terms of an escrow agreement
substantially in the form attached as Attachment E (the "Escrow Agreement"), all
source code and related documentation necessary for maintenance and/or support
of the GT Reservation System as it exists on the Effective Date of this
Agreement. GT will update the escrow deposit and related documentation within
thirty (30) days following acceptance of the Private Label Site with the source
code and related documentation for the GT Reservation System (collectively the
"Escrow Materials"), and will continue to update the escrow deposit thereafter
with any new or modified source code and related documentation necessary for
maintenance and/or support of the GT Reservation System at least twice per year
and will notify Company in writing when it does so. All escrow agent fees will
be borne by Company. If GT files Chapter 11 or Chapter 7 bankruptcy or ceases
its business operations without a successor, then GT shall grant Company an
irrevocable (until GT emerges from Chapter 11 bankruptcy and is capable of
performing its obligations under Section 3.4), perpetual (until GT emerges from
Chapter 11 and is capable of performing its obligations under Section 3.4),
worldwide license to use or have used only internally in furtherance of the
purposes of this Agreement the Escrow Materials (until GT emerges from Chapter
11 and is capable of performing its obligations under Section 3.4) to the
Private Label Site and the GT Reservation System and shall authorize any Escrow
Agent under the Escrow Agreement to
11.
<PAGE>
release such Escrow Materials (until GT emerges from Chapter 11 bankruptcy and
is capable of performing its obligations under Section 3.4, at which time
Company will return all Escrow Materials to the Escrow Agent) pursuant to the
Escrow Agreement.
18. Account Managers.
(a) GT will designate one person as the Account Manager for Company under
this Agreement. The Account Manager shall be the primary contact for all matters
arising under this Agreement and shall be primarily responsible for the delivery
of services and the daily management and decision making responsibility.
(b) Company will designate one senior level person as the primary contract
for GT under this Agreement. This person shall have authority to make daily
decisions, shall be the primary contact for all matters arising under this
Agreement, shall have signature authority, shall facilitate payments due from
Company, and shall facilitate work with and assistance by Company's reservations
system vendor.
19. Warrant. Notwithstanding any language to the contrary in that certain
warrant held by Company to purchase shares of the Series E Preferred Stock of GT
dated September 14, 1999 (the "AmericaWest Warrant"), GT and Company hereby
covenant and agree as follows: (i) the America West Warrant is not exercisable
and Company will not take actions to exercise it on or prior to September 14,
2001; (ii) in the event that the AmericaWest Warrant does become exercisable
according to the terms of this Section 19, it shall remain exercisable by
Company until and including September 14, 2003; and (iii) the AmericaWest
Warrant shall terminate and be null and void if GT terminates this Agreement
pursuant to Section 12.2 because of a breach of this Agreement by Company
occurring on or prior to September 14, 2001, or if Company terminates this
Agreement pursuant to Section 12.3 on or prior to September 14, 2001.
20. General. For all purposes of this Agreement, each party shall be and act as
an independent contractor and not as partner, joint venturer, or agent of the
other and shall not bind nor attempt to bind the other to any contract. All
notices under this Agreement shall be in writing, and shall be deemed given when
personally delivered, when sent by confirmed fax, or three days after being sent
by prepaid certified or registered U.S. mail to the address of the party to be
noticed as set forth herein or such other address as such party last provided to
the other by written notice. Neither party shall have any right or ability to
assign, transfer, or sublicense any obligations or benefit under this Agreement
without the written consent of the other (and any such attempt shall be void),
except that a party may assign and transfer this Agreement and its rights and
obligations hereunder to any third party who succeeds to substantially all its
business or assets. The failure of either party to enforce its rights under this
Agreement at any time for any period shall not be construed as a waiver of such
rights. It is the intention of the parties that this Agreement be controlling
over additional or different terms of any purchase order, confirmation, invoice
or similar document, even if accepted in writing by both parties, and that
waivers and amendments shall be effective only if made by non-pre-printed
agreements clearly understood by both parties to be an amendment or waiver. This
Agreement supersedes all proposals, oral or written, all negotiations,
conversations, or discussions between or among parties relating to the subject
matter of this Agreement and all past dealing or industry custom. No changes,
modifications, or waivers are to be made to this Agreement unless evidenced in
writing and signed for and on behalf of both parties. In the event that any
provision of this Agreement shall be determined to be illegal or unenforceable,
that provision will be limited or eliminated to the minimum extent necessary so
that this Agreement shall otherwise remain in full force and effect and
enforceable. This Agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to the conflicts of law
provisions thereof. In any action or proceeding to enforce rights under this
Agreement, the prevailing party will be entitled to recover costs and attorneys
fees. Headings herein are for convenience of reference only and shall in no way
affect interpretation of the Agreement.
America West Airlines, Inc. Getthere.Com, INC.
Signature:____________________ Signature:_________________________
Name:_________________________ Name: Kenneth R. Pelowski
12.
<PAGE>
Title:_____________________ Title: Chief Operating and Chief
Financial Officer
Date: October 13, 1999 Date: October 13, 1999
13.
<PAGE>
Attachment A
COMPANY CONTENT
. Company logo to be provided by Company in standard electronic format
according to specifications provided by GT.
. All text, data, passenger name records, pictures, sound, and graphics that
Company provides.
1.
<PAGE>
Attachment B
SITE SPECIFICATIONS
Statement of Work
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
Login/Profile . The site will support user registration
and user profiles
. There will not be an indicator regarding
"guest" access. Anyone will be able to
enter the site.
. The profile entry will be on the booking
page, not the home page.
- --------------------------------------------------------------------------------
Schedule/Availability Request . Speedy flight search from home page - no
(from Home page - Process 1) login required, simple O&D's
- --------------------------------------------------------------------------------
. Roundtrip option
- --------------------------------------------------------------------------------
. One Way option
- --------------------------------------------------------------------------------
. Multi City option
- --------------------------------------------------------------------------------
. Departure City selection field . Site will restrict departure and arrival
city options to a list of that is
supported by America West's flight
schedules
. Departure field will be displayed as a
drop down box
- --------------------------------------------------------------------------------
. Destination City selection . Site will restrict departure and arrival
field city options to a list of that is
supported by America West's flight
schedules
. Destination city will be displayed as a
drop down box
- --------------------------------------------------------------------------------
. Date selection: month, date . Will be displayed as a drop down box
selection field
- --------------------------------------------------------------------------------
. Time selection: month, date . Will be displayed as a drop down box
selection field
- --------------------------------------------------------------------------------
. Passenger Count selection . Up to nine passengers
field
- --------------------------------------------------------------------------------
Schedule/Availability Request
(from Reserv page - Process 2)
- --------------------------------------------------------------------------------
. Roundtrip option
- --------------------------------------------------------------------------------
. One Way option
- --------------------------------------------------------------------------------
. Multi City option
- --------------------------------------------------------------------------------
1.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
. Departure City selection field . Site will restrict departure and arrival
city options to a list of that is
supported by America West's flight
schedules
. Departure field will be displayed as a
drop down box
- --------------------------------------------------------------------------------
. Destination City selection . Site will restrict departure and arrival
field city options to a list of that is
supported by America West's flight
schedules
. Destination city will be displayed as a
drop down box
- --------------------------------------------------------------------------------
. Date selection: month, date . Will be displayed as a drop down box
selection field
- --------------------------------------------------------------------------------
. Time selection: month, date . Will be displayed as a drop down box
selection field
- --------------------------------------------------------------------------------
. Sort results by
- --------------------------------------------------------------------------------
- sort by Price (lowest
to highest)
- --------------------------------------------------------------------------------
- sort by Time (closest
to inquiry)
- --------------------------------------------------------------------------------
. Passenger Count selection . Up to nine passengers
field
- --------------------------------------------------------------------------------
. Class/pricing options . Customers will be able to search by
selection field: Y-lowest avail restricted and unrestricted flights and
fare, Y-non-restricted fare, class of service (for example: first
Biz, First class)
- --------------------------------------------------------------------------------
. Calendar
- --------------------------------------------------------------------------------
. # of Flights Displayed . AWA will be able to select # of flights
displayed.
- --------------------------------------------------------------------------------
. Option to login . Provide pax with option to login and use
existing profile
- --------------------------------------------------------------------------------
. Travel links . Links to destination information will be
provided. Links will be chosen by AWA
- --------------------------------------------------------------------------------
. Display status bar
- --------------------------------------------------------------------------------
. Hint for lower priced flights
- --------------------------------------------------------------------------------
Schedule Display
- --------------------------------------------------------------------------------
. All outbound options . AWA will be allowed to select the number
displayed first of flights it wants displayed
- --------------------------------------------------------------------------------
. All return options displayed . AWA will be allowed to select the number
second of flights it wants displayed
- --------------------------------------------------------------------------------
. Select flight . Customers will have the ability to make
selection based on origin and destination
points not based on individual segments
- --------------------------------------------------------------------------------
2.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
. Airline name display . Site will restrict display to AWA, AWA
Express, and CO flights from specified
Origin and Destination cities
- --------------------------------------------------------------------------------
. Flight Number display
- --------------------------------------------------------------------------------
. Equipment type display
- --------------------------------------------------------------------------------
. Depart time display
- --------------------------------------------------------------------------------
. Departure city display . Display hyperlink to information about
city in a flying window so that pax do not
interrupt their session
- --------------------------------------------------------------------------------
. Arrival time display
- --------------------------------------------------------------------------------
. Arrival City display . Display hyperlink to information about
city in a flying window so that pax do not
interrupt their session
- --------------------------------------------------------------------------------
. Code Share Display . Booking engine will display and provide
the ability to sell code share flights.
. Site will restrict display to AWA, AWA
Express, and CO flights from specified
Origin and Destination cities
. HP, HP Express, HP* and CO connecting
flights will be shown.
. Web specials are viewed . Limitations may apply based on the number
through a separate schedule of uniquely discounted airfares
request form. Only flights . GT capable of doing specials based on
where special availability is wildcards and able to do system wide
present are displayed. sales.
- --------------------------------------------------------------------------------
. Web specials are highlighted . Proprietary fares will be integrated with
on the availability display published fares in schedule and pricing
display.
- --------------------------------------------------------------------------------
. Multiple Passenger Bookings . 9 passengers can be booked at one time
- --------------------------------------------------------------------------------
. Stops display
- --------------------------------------------------------------------------------
. On-time percentage . This will not be displayed, but will be
optional for future use
- --------------------------------------------------------------------------------
. Flight Duration/Elapsed Time
display
- --------------------------------------------------------------------------------
Selecting Flights for Pricing
- --------------------------------------------------------------------------------
. Display with est. prices . Optional for future use
- --------------------------------------------------------------------------------
. Display with no prices
- --------------------------------------------------------------------------------
Fare Display/Pricing . Display a pricing summary after the user
selects all flights for their itinerary.
. GT will scope the ability to price with
schedule display
- --------------------------------------------------------------------------------
. Pricing Display
- --------------------------------------------------------------------------------
3.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
. All fares will be displayed when O&D's are
selected - including: proprietary,
specials, published, unpublished,
codeshare, International
- --------------------------------------------------------------------------------
. International Pricing . International pricing is dependent upon
fare capability of SHARES ARS
- --------------------------------------------------------------------------------
. Flight Number display
- --------------------------------------------------------------------------------
. Equipment type display
- --------------------------------------------------------------------------------
. Depart time display
- --------------------------------------------------------------------------------
. Depart city display . Display hyperlink to information about
city in a flying window so that pax do not
interrupt their session
- --------------------------------------------------------------------------------
. Arrival time display
- --------------------------------------------------------------------------------
. Arrival City display . Display hyperlink to information about
city in a flying window so that pax do not
interrupt their session
- --------------------------------------------------------------------------------
. Class: (coach, biz, first)
- --------------------------------------------------------------------------------
. Total Airfare display
- --------------------------------------------------------------------------------
. Penalty requirements . Display of airfare penalty information is
dependent upon the online system's ability
to obtain it from SHARES in a manner that
can be displayed to the user
- --------------------------------------------------------------------------------
. Link to hints if airfare
seems too high
- --------------------------------------------------------------------------------
. Selecting Fares . After the implementation of a low fare
search, when the user clicks on a fare,
site will go to itinerary review page.
- --------------------------------------------------------------------------------
. Link to fare rules (text file . Require customers to click "agree" to the
scraped from tariff rule in rules before they continue to point of
SHARES) purchase.
. This will be included in the initial
launch
- --------------------------------------------------------------------------------
. Reservation Status Bar
- --------------------------------------------------------------------------------
Updates to Existing Records
- --------------------------------------------------------------------------------
. PNR Modify . Customers will be able to modify existing
reservations online - capability to allow
customers to change their itineraries
online
- --------------------------------------------------------------------------------
. Itinerary Cancellations . GT will enable itinerary cancellations on
all fares - restricted and unrestricted.
- --------------------------------------------------------------------------------
Tariff Rule Per Segment
- --------------------------------------------------------------------------------
. Instant eticketing . Site will support the use of instant
eticketing
. Eligibility for use of eticketing based on
- --------------------------------------------------------------------------------
4.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
airline
- --------------------------------------------------------------------------------
. Identical Text from published . Fare rules will be displayed in an
tariff rule in CRS. unfiltered manner based on their content
in SHARES
- --------------------------------------------------------------------------------
Collect Passenger information
Form/Itinerary Review
- --------------------------------------------------------------------------------
. Frequent flier number . Frequent flyer numbers automatically
entered into reservation based on user
profile if profile exists. If no profile
exists, there will be a text box where FF
number can be filled in
. A drop down menu on the ref page will
allow users to indicate whether they are
using an AWA or CO FF#. This will be
included in the initial launch
. If CO is selected, GT will provide the
capability to have "-co" appended to the
number. This will be included in the
initial launch
- --------------------------------------------------------------------------------
. Link to seatmaps . Customers will be able to pick their seats
from a fully functional and accurate
seatmap if such seat map information is
available from SHARES
- --------------------------------------------------------------------------------
. Special air service requests
- --------------------------------------------------------------------------------
Credit Card Information . Credit card will be the only form of
Form/Validation payment for online ticket purchases upon
implementation
. AVS done through SHARES real time
validation will occur
- --------------------------------------------------------------------------------
. Credit card type selection . Limited to Visa, MC, Amex, Discover
field
- --------------------------------------------------------------------------------
. Name on card (text box)
- --------------------------------------------------------------------------------
. Credit card number (text box)
- --------------------------------------------------------------------------------
. Expiration date (text box)
- --------------------------------------------------------------------------------
. CID verification text entry . A conditional field will be available for
field (currently Amex only) CID numbers
- --------------------------------------------------------------------------------
. Credit Card Encryption . Credit card data will be encrypted with
industry standard Triple DES encryption
- --------------------------------------------------------------------------------
. Credit Card Verification . Will support verification functionality as
provided by SHARES
- --------------------------------------------------------------------------------
Billing and Delivery
- --------------------------------------------------------------------------------
5.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
Information Form
- --------------------------------------------------------------------------------
. Pre-populated with profile . Billing and delivery information will be
information pre-populated for those pax who have an
existing profile.
. Customers will not be required to fill out
a profile, therefore, billing and delivery
information can be filled out through text
boxes without requiring a profile.
- --------------------------------------------------------------------------------
. First, Last Name (text box)
- --------------------------------------------------------------------------------
. Street Address(text box)
- --------------------------------------------------------------------------------
. City(text box)
- --------------------------------------------------------------------------------
. State selection field
- --------------------------------------------------------------------------------
. Postal code(text box)
- --------------------------------------------------------------------------------
. Email(text box)
- --------------------------------------------------------------------------------
. Day, Home Phone(text box)
- --------------------------------------------------------------------------------
. Delivery limited to instant
etickets
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
. Calendar
- --------------------------------------------------------------------------------
. World Clock
- --------------------------------------------------------------------------------
Receipt Confirmation
(ACCESS TO AWA ONLY)
- --------------------------------------------------------------------------------
. Electronic Ticketing . Electronic Ticketing will be the only
option available for purchases
- --------------------------------------------------------------------------------
. Fulfillment queue . GT will put PNR data from E-Tickets
purchased on site into a queue for AWA
fulfillment
- --------------------------------------------------------------------------------
. E-Mail confirmation . All customers that have provided a correct
email address will receive an email
confirmation after making a purchase.
. Email addresses will be collected in
passenger information.
- --------------------------------------------------------------------------------
Confirmation CONTENT:
- --------------------------------------------------------------------------------
. Passenger names
- --------------------------------------------------------------------------------
. Ticket Number Dependent upon availability from SHARES
- --------------------------------------------------------------------------------
. Base fare Dependent upon availability from SHARES
- --------------------------------------------------------------------------------
. Tax Dependent upon availability from SHARES
- --------------------------------------------------------------------------------
. PFC Dependent upon availability from SHARES
- --------------------------------------------------------------------------------
. Total
- --------------------------------------------------------------------------------
. Itinerary
- --------------------------------------------------------------------------------
. Form of payment (cc type,
last 4 digits of cc#)
- --------------------------------------------------------------------------------
6.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
. Frequent flier numbers
- --------------------------------------------------------------------------------
. Fare Calculation Dependent upon availability from SHARES
- --------------------------------------------------------------------------------
. Restrictions Dependent upon availability from SHARES
- --------------------------------------------------------------------------------
. Check in requirements AWA to supply text
- --------------------------------------------------------------------------------
. Refund Information AWA to supply text
- --------------------------------------------------------------------------------
. Summary of Incorporated Terms AWA to supply text
- --------------------------------------------------------------------------------
. Advice to international AWA to supply text
passengers on limitation of
liability
- --------------------------------------------------------------------------------
. International baggage AWA to supply text
liability limitation
- --------------------------------------------------------------------------------
. Link to book another ticket
- --------------------------------------------------------------------------------
. Link to home
- --------------------------------------------------------------------------------
Flight Status Information . GT will enable customers to view flight
information.
. This information will include Flight #,
departure time, arrival time, and gate
information as available from SHARES.
- --------------------------------------------------------------------------------
. Airline- HP only
- --------------------------------------------------------------------------------
. Flight Number (text box)
- --------------------------------------------------------------------------------
. Gate Information
- --------------------------------------------------------------------------------
. Departure Date: -1, now, +1
(drop down list)
- --------------------------------------------------------------------------------
Web Registration
- --------------------------------------------------------------------------------
. Online Password Changes
- --------------------------------------------------------------------------------
. Frequent flier number (text
box)
- --------------------------------------------------------------------------------
. User name
- --------------------------------------------------------------------------------
. Title selection field
- --------------------------------------------------------------------------------
. First name (text box)
- --------------------------------------------------------------------------------
. Middle initial (text box)
- --------------------------------------------------------------------------------
. Last name (text box)
- --------------------------------------------------------------------------------
. Suffix selection field
- --------------------------------------------------------------------------------
. Address
- --------------------------------------------------------------------------------
. Street 1 and 2 (text box)
- --------------------------------------------------------------------------------
. City
- --------------------------------------------------------------------------------
. State
- --------------------------------------------------------------------------------
. Postal code
- --------------------------------------------------------------------------------
. Country selection field
- --------------------------------------------------------------------------------
. Phone
- --------------------------------------------------------------------------------
7.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
. Country code, Area code,
Phone, Ext (text boxes)
- --------------------------------------------------------------------------------
. Email (text box)
- --------------------------------------------------------------------------------
. Forgotten password question
(text box)
- --------------------------------------------------------------------------------
. Forgotten password answer
(text box)
- --------------------------------------------------------------------------------
. Sign up for email newsletter
- --------------------------------------------------------------------------------
Marketing/Promotions
- --------------------------------------------------------------------------------
. E-mail Broadcast - weekly . Weekly email broadcast service will be
specials available for both of AWA's Surf `n Go
lists.
. Additional email notifications will be
sent out to specific email members per
AWA's request. Additional emails are not
to exceed 1 additional email per week.
. Existing email addresses will be
integrated into GT email system.
. Customers will be able to subscribe,
unsubscribe, and change email address via
site
. AWA will send GT copy for email to be
delivered each week, GT will then
distribute to distribution list.
. Weekly statistics will be provided by GT
to AWA regarding new subscribers, #
unsubscribed, cumulative totals, and any
additional feedback provided.
. GT and AWA to determine schedule for
delivering email. GT will be able to send
email within 24 hours of receipt.
- --------------------------------------------------------------------------------
. Fare Sales .
. AWA personnel trained in the use of GT's
Contract Editor will be authorized to
update AWA's proprietary fares.
. AWA will have sole responsibility for fare
changes made through the Contract Editor
and will be responsible for quality
assurance testing of data entries.
. The number of AWA fare sales will be
limited by the maximum number of fare
sales supported by the Contract Editor.
- --------------------------------------------------------------------------------
8.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
. Sale includes the ability to restrict
fares to specific flight numbers, travel
dates, and ticketing dates.
. GT will provide the ability to run 10
simultaneous sales that have similar, non-
contradictory fare rules at any one
time..
. Sale capabilities include: zap off ($'s
and percent), proprietary fares, specials
based on time, class of service, or date.
Ability to control advance purchase,
travel dates, and terms and conditions.
- --------------------------------------------------------------------------------
. E-Certificates . Phase I E-certificate functionality will
enable customers with a single, special
promotion code URL address to access
special private fares.
. GT will update these fares as specified by
AWA on a weekly basis.
. Phase I implementation will support only a
single e-certificate program at any one
time.
- --------------------------------------------------------------------------------
. Announcements through content . AWA will have sole ownership of all
Content displayed on site and sent via
email to the email subscriber base.
- --------------------------------------------------------------------------------
Other Issues/Application
Requirements
- --------------------------------------------------------------------------------
. Advertising . The area across the top of each site page
will be a dedicated space for third party
advertising. The height of this area will
be at least as high as that of the Preview
Travel and Expedia web site as of the
Effective Date of this Agreement.
. This top of the page space will be enabled
for delivery of at least one banner and
one ad button (similar to Preview Travel)
in the case of high usage pages.
- --------------------------------------------------------------------------------
. Car/Hotel Fulfillment . GT will provide the ability for customers
on the AWA site to purchase car/hotel
reservations.
. GT will fulfill all car/hotel tickets.
. Link to cars/hotels will be a closed
commerce loop, so pax does not leave site.
. Option to purchase car/hotel will be
presented throughout the site
- --------------------------------------------------------------------------------
. Data Reports . Global observer will provide daily PNR
- --------------------------------------------------------------------------------
9.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
summary information.
. AWA will receive PNR data real time when
released as a GT booking engine feature.
AWA will be responsible for parsing and
storing the software, GT will provide the
real-time access using HTTPD and SSL when
released as a GT booking engine feature.
. AWA will receive a weekly file with
updated customer profiles. [Push of PNR
data will be part of Phase II.]
. AWA will receive trend reports on site
traffic on a daily basis. Data will
include # of visitors, impressions, top
entry pages, and other site traffic
information
. GT will provide AWA a on-line access to
site traffic information.
- --------------------------------------------------------------------------------
. Frequent Flyer Information . Ability to identify bookings requiring
bonus miles
- --------------------------------------------------------------------------------
. PNR Internet Booking Indicator . An indicator that the PNR is from the
internet will be added to the PNR (assumes
a remarks line in the ARS)
- --------------------------------------------------------------------------------
. Redundancy/Backups . AWA will provide lines to GT with the
redundancy level that AWA requires.
. GT will provide full back up support for
AWA on a daily basis.
- --------------------------------------------------------------------------------
. Separate lines to SHARES from . If more than one data center is required
each site to meet traffic demands, a separate,
redundant line will be connected to each
data center.
- --------------------------------------------------------------------------------
. Adequate line capacity to . Adequate line capacity/bandwidth will be
SHARES and the Internet provided by AWA for connection to SHARES..
Adequacy to be determined by 3rd party
traffic monitoring and analysis service to
meet competitive response times.
. GT will contract no less than 2 separate,
independent communications carriers to
provide redundant connection to Internet.
AWA will provide connection to SHARES.
- --------------------------------------------------------------------------------
. Bandwidth . Hosting fee will be dependent upon data
requests and server responses as indicated
in Exhibit C based on PNR bookings. There
will be no limits to the amount (byte
size) of
- --------------------------------------------------------------------------------
10.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
data served within reasonable limits for
internet performance.
- --------------------------------------------------------------------------------
. Security (facilities & . GT will provide certified firewalls
firewall encrypted) between the Internet and AWA information
in the servers.
. GT will monitor security events and
periodically poll each server. GT will
notify AWA of any security breaches
detected.
. GT will provide AWA with a secure login id
and password for access to the AWA
administrative area of the web site.
. GT will provide annual independent
security audits to be performed by an
independent web site security auditor that
meets industry standards for security
auditing as requested by AWA at the
expense of AWA
. GT hosts its services at a facility which
is secured on a 24X7 basis.
. GT will provide for a secured, firewall-
protected database, content and
applications.
. All transmitted customer information and
credit card information will be secured
and encrypted through industry standard
secure SSL encryption technologies
integrated into standard browsers and
commercial HTTP servers (the customer must
select secure connections).
. Credit card numbers and user passwords
will be stored on the database in an
encrypted form.
- -------------------------------------------------------------------------------
. Multiple Browser Support . GT will support its product operating
through the following browsers: Netscape
3.X and 4.X, IE 3.X, 4.X and 5.X and AOL
Version 3.X and 4.X.
- --------------------------------------------------------------------------------
. Peak Capacity Capabilities . GT engineers the Private Label Site to
accommodate peaks of 35% over Company
forecast of average predicted daily use.
Line capacity should never exceed 75% of
peak capacity during peak periods. GT's
ability to meet the preceding capacity
levels are predicated on site traffic
within 20% of AWA's rolling six month
forecasts.
- --------------------------------------------------------------------------------
. Scheduled Downtime . Today, GT does not schedule downtime.
- --------------------------------------------------------------------------------
11.
<PAGE>
- --------------------------------------------------------------------------------
PHASE I FUNCTIONALITY Comments
- --------------------------------------------------------------------------------
However, in the event that GT does
schedule downtime in the future, GT will
schedule such downtime between 12am and
4am Pacific Time. GT will notify Company
one week in advance of such scheduled
downtime. The system will not be down for
greater than thirty (30) minutes without
Company prior approval and scheduled
outages will not be greater than two (2)
hours in one calendar month. Scheduled
outages that exceed the planned timeframe
will be considered unscheduled. This
scheduled downtime will not be included in
measurement of system availability as
listed in Attachment D.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PHASE II FUNCTIONALITY . The following items will be included as
part of PHASE II implementation. [*]
. The target date for Delivery of PHASE II
functionality is [*] after the Delivery of
Phase I. Delivery of individual functions
may be phased in after the Phase I
implementation date.
- --------------------------------------------------------------------------------
. Refunds . Customers will be able to process refunds
on the site
- --------------------------------------------------------------------------------
. Access to PNR data . GT will enable push of passenger detail
PNR data 30 days after Phase I
implementation
- --------------------------------------------------------------------------------
. E-Certificates . GT will enable the use of Phase II
E-Certificates
- --------------------------------------------------------------------------------
. Online FF Account Access . Feature development dependent upon timely
installation of dedicated lease line from
AWA FF database to GT Data Center
- --------------------------------------------------------------------------------
. FF Redemption Bookings . Feature development dependent upon timely
installation of dedicated lease line from
AWA FF database to GT Data Center
- --------------------------------------------------------------------------------
. FF Email Flight Change . Feature development dependent upon timely
notification installation of dedicated lease line from
AWA FF database to GT Data Center
- --------------------------------------------------------------------------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
12.
<PAGE>
- --------------------------------------------------------------------------------
. FF Upgrades . Feature development dependent upon timely
installation of dedicated lease line from
AWA FF database to GT Data Center
- --------------------------------------------------------------------------------
. Approximated Low Fare Search . GT will make all commercially reasonable
efforts to complete this for Phase I.
. Customer able to price up to 4 RTs with
one query
. Customer will select flights based on O&D
not on segments
. Customer will be able to select fare
desired from this list
. This function will be delivered for
testing [*] days after the initial
implementation of Phase I functionality.
- --------------------------------------------------------------------------------
. Low Fare Search (Optional) . AW will have the option of using a portion
of the [*] of development time to
implement a low fare search through
SHARES. Alternatively, GT can implement a
low fare search through an alternate CRS
for an additional fee for alternate CRS
utilization.
- --------------------------------------------------------------------------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
13.
<PAGE>
Attachment C
FEES
The following Fees are to be paid by Company to GT, unless otherwise indicated:
Private Label Site Management Fees* [*] for 1st year (1/2 paid upon
execution)
[*] for 2nd year
[*] for 3rd year
[*] for 4th year
Server and Communications Costs [*] per PNR
Advertising Revenue [*] of the gross revenues to Company
Hotel and Car Commission** [*] to Company
Dedicated Company ARS line and Other
Company Hardware and Software, if any [*]
*Company shall pay a pro-rata portion of the yearly License Fee each quarter in
advance.
**GT shall pay to Company [*] of the Hotel and Car Commission actually received
from car and hotel reservations made through the Private Label Site, less sales,
use, excise and other taxes and duties.
Fees for Optional Services***
Programming Hourly Fee [*]
HTML Coding Hourly Fee [*]
Graphic Design Hourly Fee [*]
Special Consulting Hourly Fee [*]
Email Distribution of Fares [*] per 100,000 messages per mailing
(min.$1,000/mailing).
***[*] of Fees for Optional Services per contract year will be at no charge to
Company. Any portion of the [*] free hours remaining unused at the end of the
contract year will be forfeited except if the hours remain unused due to the
fault of GT.
For all Fees for Optional Services, estimates will be provided and work will not
be initiated without a signed authorization from Company accepting the estimate.
All fees for Optional Services are subject to change at any time with prior
notice to Company; provided that Fees for Optional Services will not increase at
a rate greater than 10% per annum.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
1.
<PAGE>
Attachment D
1. Technical Support Services.
GT will provide support services to Company, including the following:
1.1 Telephone Hot-Line Support; Acknowledgement of GT Reservation System
Failures. GT will provide telephone hot-line support services to Company's
designated support contact twenty-four (24) hours a day, seven (7) days a week.
Such support will include reasonable consultation on the operation and
utilization of the Private Label Site and problem resolution for failures of the
GT Reservation System as reported by the Company.
1.2 Problem Definition. "PAR" means Problem Action Request. PAR(s) will be
determined by the severity of the Private Label Site or GT Reservation System
failure. Severity levels are defined as follows:
Severity Level 1 shall be defined as a "Critical Problem" wherein the
Private Label Site is not operational (such as Global Observer) or has a
critical loss of capability such as the inability to browse or book, frequency
of failure precludes productive use, or critical job/data integrity defect.
Severity Level 2 shall be defined as a "Major Problem" wherein the Private
Label Site is operational but with capability that is severely or moderately
degraded such as the inability to run a major application within the GT
Reservation System, non-critical product feature or function that does not work,
or failure that requires on-going intervention to maintain productive use.
Severity Level 3 shall be defined as a "Minor Problem" wherein the Private
Label Site is operational, with no significant impact to performance.
1.3 Response Times
GT shall acknowledge a Severity Level 1 Problem within sixty (60) minutes.
GT shall exercise all commercially reasonable efforts to meet the following
response times for a Severity Level II or III Problem:
. two (2) hours for acknowledgment of a Severity Level II Problem
. next calendar day for Severity Level III Problem
GT acknowledgement may be by fax, phone, or e-mail to Company program
administrator. All technical support services will be provided from GT's
facility unless otherwise requested by Company upon reasonable belief that
such services must be provided at Company's facilities subject to the terms
and conditions of Sections 8.6 and 8.7 of this Agreement.
1.
<PAGE>
1.4 Problem Resolution.
GT shall implement the following problem investigation and resolution
correction procedures:
Severity Level I Problems:
GT shall promptly initiate the following procedures: (1) assign senior GT
engineers to correct the Critical Problem; (2) notify senior GT management that
such a Critical Problem has been reported and that steps are being taken to
correct the Critical Problem; (3) provide Company with periodic reports every
four (4) hours on the status of the corrections; and (4) provide either (a)
problem resolution or (b) a plan to achieve problem resolution within thirty-six
(36) hours. In the case that GT's plan for resolution or the actual time to
resolution exceed one week of system downtime, Company will have the right to
terminate this Agreement pursuant to Section 12.2 (Termination for Cause).
Severity Level II Problem:
GT shall exercise all commercially reasonable efforts to provide Company
with a workaround and to include the fix for the Major Problem in the next
upgrade to the Private Label Site or the GT Reservation System.
Severity Level III Problems:
GT may include the fix for the Minor Problem in the next upgrade to the
Private Label Site or the GT Reservation System, unless it reasonably believes
that there is insufficient time before release of the next update to add the
fix, in which case it shall include the fix in the update following the next
update.
2. GT Reservation System Availability. During the term of this Agreement, GT
shall use commercially reasonable efforts to ensure that the Private Label
Site and the GT Reservation System are available and able to accurately
process the Company's employees inquiries for browsing and Booking a
minimum of ninety-nine percent (99%) of the time over a two month period.
If system availability falls below 99% for either (a) nine months during a
twelve month period or (b) any consecutive six month period due to failures
that are GT's responsibility during such period and Company has provided a
Forecast accurate to within 20% during such period, Company will have the
right to terminate this Agreement pursuant to Section 12.2 (Termination for
Cause).
3. Information Backup. As part of the service that GT provides Company, GT
will make a complete backup of Company information stored in connection
with operation of the Private Label Site at least once a day. Upon
Company's reasonable request, GT shall provide Company a complete
electronic copy of such information
When determining whether any of the preceding performance measurements for
problem response time and system availability have been met, the measurements
above shall not include
2.
<PAGE>
failures related to hardware or software systems outside of the reasonable
control of GT, as determined in accordance with Section 13.1 of the Agreement.
3.
<PAGE>
Attachment E
ESCROW AGREEMENT
Master Number ______________________
This Agreement is effective October __, 1999 among DSI Technology Escrow
Services, Inc. ("DSI"), GetThere.Com Inc.("Depositor") and any additional party
signing the Acceptance Form attached to this Agreement ("Preferred
Beneficiary"), who collectively may be referred to in this Agreement as "the
parties."
A. Depositor and Preferred Beneficiary have entered or will enter into a
service agreement, license agreement, development agreement, and/or other
agreement regarding certain proprietary technology of Depositor (referred to in
this Agreement as the "Service Agreement") which provides for the escrow of
current and complete software, source code, documentation and other matters
related to and required to operate, maintain and update the GT Reservation
System as defined in the Service Agreement (collectively, the "Deposit
Materials").
B. Depositor desires to avoid disclosure of its proprietary technology except
under certain limited circumstances.
C. The availability of the proprietary technology of Depositor is critical to
Preferred Beneficiary in the conduct of its business and, therefore, Preferred
Beneficiary needs access to the proprietary technology under certain limited
circumstances.
D. Depositor and Preferred Beneficiary desire to establish an escrow with DSI
to provide for the retention, administration and controlled access of certain
proprietary technology materials of Depositor.
E. The parties desire this Agreement to be supplementary to the Service
Agreement pursuant to 11 United States [Bankruptcy] Code, Section 365(n).
ARTICLE 1 -- DEPOSITS
1.1 Obligation to Make Deposit. Upon the signing of this Agreement by the
--------------------------
parties, including the signing of the Acceptance Form, Depositor shall deliver
to DSI the proprietary technology and other materials ("Deposit Materials")
required to be deposited by the Service Agreement or, if the Service Agreement
does not identify the materials to be deposited with DSI, then such materials
will be identified on an Exhibit A. If Exhibit A is applicable, it is to be
prepared and signed by Depositor and Preferred Beneficiary. DSI shall have no
obligation with respect to the preparation, signing or delivery of Exhibit A.
1.2 Identification of Tangible Media. Prior to the delivery of the Deposit
--------------------------------
Materials to DSI, Depositor shall conspicuously label for identification each
document, magnetic tape,
1.
<PAGE>
disk, or other tangible media upon which the Deposit Materials are written or
stored. Additionally, Depositor shall complete Exhibit B to this Agreement by
listing each such tangible media by the item label description, the type of
media and the quantity. The Exhibit B must be signed by Depositor and delivered
to DSI with the Deposit Materials. Unless and until Depositor makes the initial
deposit with DSI, DSI shall have no obligation with respect to this Agreement,
except the obligation to notify the parties regarding the status of the deposit
account as required in Section 2.2 below.
1.3 Deposit Inspection. When DSI receives the Deposit Materials and the Exhibit
------------------
B, DSI will conduct a deposit inspection by visually matching the labeling of
the tangible media containing the Deposit Materials to the item descriptions and
quantity listed on the Exhibit B. In addition to the deposit inspection,
Preferred Beneficiary may elect to cause a verification of the Deposit Materials
in accordance with Section 1.6 below.
1.4 Acceptance of Deposit. At completion of the deposit inspection, if DSI
---------------------
determines that the labeling of the tangible media matches the item descriptions
and quantity on Exhibit B, DSI will date and sign the Exhibit B and mail a copy
thereof to Depositor and Preferred Beneficiary. If DSI determines that the
labeling does not match the item descriptions or quantity on the Exhibit B, DSI
will (a) note the discrepancies in writing on the Exhibit B; (b) date and sign
the Exhibit B with the exceptions noted; and (c) mail a copy of the Exhibit B to
Depositor and Preferred Beneficiary. DSI's acceptance of the deposit occurs upon
the signing of the Exhibit B by DSI. Delivery of the signed Exhibit B to
Preferred Beneficiary is Preferred Beneficiary's notice that the Deposit
Materials have been received and accepted by DSI.
1.5 Depositor's Representations. Depositor represents as follows:
---------------------------
a. Depositor lawfully possesses all of the Deposit Materials deposited
with DSI;
b. With respect to all of the Deposit Materials, Depositor has the right
and authority to grant to DSI and Preferred Beneficiary the rights as
provided in this Agreement;
c. The Deposit Materials are not subject to any lien or other
encumbrance;
d. The Deposit Materials consist of the proprietary technology and other
materials identified either in the Service Agreement or Exhibit A,
as the case may be; and
e. The Deposit Materials are readable and useable in their current form
or, if the Deposit Materials are encrypted, the decryption tools and
decryption keys have also been deposited.
1.6 Verification. Preferred Beneficiary shall have the right, at Preferred
------------
Beneficiary's expense, to cause a verification of any Deposit Materials. A
verification determines, in different levels of detail, the accuracy,
completeness, sufficiency and quality of the Deposit Materials. If a
verification is elected after the Deposit Materials have been delivered to DSI,
then only DSI, or
2.
<PAGE>
at DSI's election an independent person or company selected and supervised by
DSI, may perform the verification.
1.7 Deposit Updates. Unless otherwise provided by the Service Agreement,
---------------
within thirty (30) days of the installation of any new update to the GT
Reservation System (or any other substantial modification thereto), or within
six (6) months of the last deposit hereunder, whichever is sooner, Depositor
shall deliver to DSI for deposit in accordance with this Agreement , any and all
updates or other changes to the Deposit Materials which correspond to changes,
if any, made to the GT Reservation System or shall notify DSI that no changes
were made during the preceding period. Such updates or other changes will be
added to the existing deposit. All deposit updates and other changes shall be
listed on a new Exhibit B and the new Exhibit B shall be signed by Depositor.
Each Exhibit B will be held and maintained separately within the escrow account.
An independent record will be created which will document the activity for each
Exhibit B. The processing of all deposit updates or other changes shall be in
accordance with Sections 1.2 through 1.6 above. All references in this Agreement
to the Deposit Materials shall include the initial Deposit Materials and any
updates or other changes.
1.8 Removal of Deposit Materials. The Deposit Materials may be removed and/or
----------------------------
exchanged only on written instructions signed by Depositor and Preferred
Beneficiary, or as otherwise provided in this Agreement.
ARTICLE 2 -- CONFIDENTIALITY AND RECORD KEEPING
2.1 Confidentiality. DSI shall maintain the Deposit Materials in a secure,
---------------
environmentally safe, locked facility which is accessible only to authorized
representatives of DSI. DSI shall have the obligation to reasonably protect the
confidentiality of the Deposit Materials. Except as provided in this Agreement,
DSI shall not disclose, transfer, make available, or use the Deposit Materials.
DSI shall not disclose the content of this Agreement to any third party. If DSI
receives a subpoena or other order of a court or other judicial tribunal
pertaining to the disclosure or release of the Deposit Materials, DSI will
immediately notify the parties to this Agreement. It shall be the responsibility
of Depositor and/or Preferred Beneficiary to challenge any such order; provided,
however, that DSI does not waive its rights to present its position with respect
to any such order. DSI will not be required to disobey any court or other
judicial tribunal order. (See Section 7.5 below for notices of requested
orders.)
2.2 Status Reports. DSI will issue to Depositor and Preferred Beneficiary a
--------------
report profiling the account history at least semi-annually. DSI may provide
copies of the account history pertaining to this Agreement upon the request of
any party to this Agreement.
2.3 Audit Rights. During the term of this Agreement, Depositor and Preferred
------------
Beneficiary shall each have the right to inspect the written records of DSI
pertaining to this Agreement. Any inspection shall be held during normal
business hours and following reasonable prior notice.
ARTICLE 3 -- GRANT OF RIGHTS TO DSI
3.
<PAGE>
3.1 Title to Media. Depositor hereby transfers to DSI the title to the media
--------------
upon which the proprietary technology and materials are written or stored.
However, this transfer does not include the ownership of the proprietary
technology and materials contained on the media such as any copyright, trade
secret, patent or other intellectual property rights.
3.2 Right to Make Copies. DSI shall have the right to make copies of the
--------------------
Deposit Materials as reasonably necessary to perform this Agreement. DSI shall
copy all copyright, nondisclosure, and other proprietary notices and titles
contained on the Deposit Materials onto any copies made by DSI. With all Deposit
Materials submitted to DSI, Depositor shall provide any and all instructions as
may be necessary to duplicate the Deposit Materials including but not limited to
the hardware and/or software needed.
3.3 Right to Transfer Upon Release. Depositor hereby grants to DSI the right to
------------------------------
transfer Deposit Materials to Preferred Beneficiary upon any release of the
Deposit Materials for use by Preferred Beneficiary in accordance with Section
4.5. Except upon such a release or as otherwise provided in this Agreement, DSI
shall not transfer the Deposit Materials.
ARTICLE 4 -- RELEASE OF DEPOSIT
4.1 Release Conditions. As used in this Agreement, "Release Condition" shall
------------------
mean a release condition as described in the Acceptance Form.
4.2 Filing For Release. If Preferred Beneficiary believes in good faith that a
------------------
Release Condition has occurred, Preferred Beneficiary may provide to DSI written
notice of the occurrence of the Release Condition and a request for the release
of the Deposit Materials. Upon receipt of such notice, DSI shall provide a copy
of the notice to Depositor by overnight courier.
4.3 Contrary Instructions. From the date DSI mails the notice requesting
---------------------
release of the Deposit Materials, Depositor shall have ten (10) business days to
deliver to DSI Contrary Instructions. "Contrary Instructions" shall mean the
written representation by Depositor that a Release Condition has not occurred or
has been cured. Upon receipt of Contrary Instructions, DSI shall send a copy to
Preferred Beneficiary by commercial express mail. Additionally, DSI shall notify
both Depositor and Preferred Beneficiary that there is a dispute to be resolved
pursuant to the Dispute Resolution section of this Agreement (Section 7.3).
Subject to Section 5.2, DSI will continue to store the Deposit Materials without
release pending (a) joint instructions from Depositor and Preferred Beneficiary;
(b) resolution pursuant to the Dispute Resolution provisions described in
Section 7.3; or (c) order of a court.
4.4 Release of Deposit. If DSI does not receive Contrary Instructions from the
------------------
Depositor, DSI is authorized to release the Deposit Materials to the Preferred
Beneficiary or, if more than one beneficiary is registered to the deposit, to
release a copy of the Deposit Materials to the Preferred Beneficiary. However,
DSI is entitled to receive any fees due DSI before making the release. Any
copying expense in excess of $300 will be chargeable to Preferred Beneficiary.
4.
<PAGE>
Upon any such release, the escrow arrangement will terminate as it relates to
the Depositor and Preferred Beneficiary involved in the release.
4.5 Right to Use Following Release. Preferred Beneficiary has the right to use
------------------------------
the Deposit Materials for the sole purpose of continuing the benefits afforded
to Preferred Beneficiary by the Service Agreement; provided, however, that
Preferred Beneficiary agrees not to exercise this right until it has received
the Deposit Materials upon their release in accordance with this Article 4.
Preferred Beneficiary shall be obligated to maintain the confidentiality of the
released Deposit Materials.
ARTICLE 5 -- TERM AND TERMINATION
5.1 Term of Agreement. The initial term of this Agreement is for a period of
-----------------
one year. Thereafter, this Agreement shall automatically renew from year-to-year
unless (a) Depositor and Preferred Beneficiary jointly instruct DSI in writing
that the Agreement is terminated; (b) Preferred Beneficiary instructs DSI in
writing that the Agreement is terminated as it relates to Preferred Beneficiary;
or (c) the Agreement is terminated by DSI for nonpayment in accordance with
Section 5.2. If the Acceptance Form has been signed at a date later than this
Agreement, the initial term of the Acceptance Form will be for one year with
subsequent terms to be adjusted to match the anniversary date of this Agreement.
If the deposit materials are subject to another escrow agreement with DSI, DSI
reserves the right, after the initial one year term, to adjust the anniversary
date of this Agreement to match the then prevailing anniversary date of such
other escrow arrangements.
5.2 Termination for Nonpayment. In the event of the nonpayment of fees owed to
--------------------------
DSI, DSI shall provide written notice of delinquency to the parties to this
Agreement affected by such delinquency. Any such party shall have the right to
make the payment to DSI to cure the default. If the past due payment is not
received in full by DSI within one month of the date of such notice, then at any
time thereafter DSI shall have the right to terminate this Agreement to the
extent it relates to the delinquent party by sending written notice of
termination to such affected parties. DSI shall have no obligation to take any
action under this Agreement so long as any payment due to DSI remains unpaid.
5.3 Disposition of Deposit Materials Upon Termination. Upon termination of this
-------------------------------------------------
Agreement, DSI shall destroy, return, or otherwise deliver the Deposit Materials
in accordance with Depositor's instructions. If there are no instructions, DSI
may, at its sole discretion, destroy the Deposit Materials or return them to
Depositor. DSI shall have no obligation to return or destroy the Deposit
Materials if the Deposit Materials are subject to another escrow agreement with
DSI.
5.4 Survival of Terms Following Termination. Upon termination of this
---------------------------------------
Agreement, the following provisions of this Agreement shall survive:
a. Depositor's Representations (Section 1.5);
b. The obligations of confidentiality with respect to the Deposit
Materials;
5.
<PAGE>
c. The rights granted in the sections entitled Right to Transfer Upon
Release (Section 3.3) and Right to Use Following Release (Section
4.5), if a release of the Deposit Materials has occurred prior to
termination;
d. The obligation to pay DSI any fees and expenses due;
e. The provisions of Article 7; and
f. Any provisions in this Agreement which specifically state they survive
the termination or expiration of this Agreement.
ARTICLE 6 -- DSI'S FEES
6.1 Fee Schedule. DSI is entitled to be paid its standard fees and expenses
------------
applicable to the services provided. DSI shall notify the party responsible for
payment of DSI's fees at least 90 days prior to any increase in fees. For any
service not listed on DSI's standard fee schedule, DSI will provide a quote
prior to rendering the service, if requested.
6.2 Payment Terms. DSI shall not be required to perform any service unless the
-------------
payment for such service and any outstanding balances owed to DSI are paid in
full. Fees are due upon receipt of a signed contract or receipt of the Deposit
Materials whichever is earliest. If invoiced fees are not paid, DSI may
terminate this Agreement in accordance with Section 5.2. Late fees on past due
amounts shall accrue interest at the rate of one and one-half percent per month
(18% per annum) from the date of the invoice.
ARTICLE 7 -- LIABILITY AND DISPUTES
7.1 Right to Rely on Instructions. DSI may act in reliance upon any
-----------------------------
instruction, instrument, or signature reasonably believed by DSI to be genuine.
DSI may assume that any employee of a party to this Agreement who gives any
written notice, request, or instruction has the authority to do so. DSI shall
not be responsible for failure to act as a result of causes beyond the
reasonable control of DSI.
7.2 Indemnification. DSI shall be responsible to perform its obligations under
---------------
this Agreement and to act in a reasonable and prudent manner with regard to this
escrow arrangement. Provided DSI has acted in the manner stated in the preceding
sentence, Depositor and Preferred Beneficiary each agree to indemnify, defend
and hold harmless DSI from any and all claims, actions, damages, arbitration
fees and expenses, costs, attorney's fees and other liabilities incurred by DSI
relating in any way to this escrow arrangement.
7.3 Dispute Resolution. Any dispute relating to or arising from this Agreement
------------------
shall be resolved by arbitration under the Commercial Rules of the American
Arbitration Association.
6.
<PAGE>
Depositor and Preferred Beneficiary will each select one arbitrator and a third
arbitrator will be selected unanimously by the two arbitrators selected by the
parties. If the two arbitrators selected by the parties are unable to select the
third arbitrator within ten (10) days of the appointment of the two arbitrators,
the parties consent to the selection of the third arbitrator by the AAA
administrator. Unless otherwise agreed by Depositor and Preferred Beneficiary,
arbitration will take place in Palo Alto, California, USA. Any court having
jurisdiction over the matter may enter judgment on the award of the arbitrators.
Service of a petition to confirm the arbitration award may be made by First
Class mail or by commercial express mail, to the attorney for the party or, if
unrepresented, to the party at the last known business address.
7.4 Controlling Law. This Agreement is to be governed and construed in
---------------
accordance with the laws of the State of California, without regard to its
conflict of law provisions.
7.5 Notice of Requested Order. If any party intends to obtain an order from
-------------------------
the arbitrator or any court of competent jurisdiction which may direct DSI to
take, or refrain from taking any action, that party shall:
a. Give DSI at least two business days' prior notice of the hearing;
b. Include in any such order that, as a precondition to DSI's obligation,
DSI be paid in full for any past due fees and be paid for the
reasonable value of the services to be rendered pursuant to such
order; and
c. Ensure that DSI not be required to deliver the original (as opposed to
a copy) of the Deposit Materials if DSI may need to retain the
original in its possession to fulfill any of its other escrow duties.
ARTICLE 8 -- GENERAL PROVISIONS
8.1 Entire Agreement. This Agreement, which includes the Acceptance Form and
----------------
the Exhibits described herein, embodies the entire understanding among all of
the parties with respect to its subject matter and supersedes all previous
communications, representations or understandings, either oral or written. DSI
is not a party to the Service Agreement between Depositor and Preferred
Beneficiary and has no knowledge of any of the terms or provisions of any such
Service Agreement. DSI's only obligations to Depositor or Preferred Beneficiary
are as set forth in this Agreement. No amendment or modification of this
Agreement shall be valid or binding unless signed by all the parties hereto,
except that Exhibit A need not be signed by DSI, Exhibit B need not be signed by
Preferred Beneficiary and the Acceptance Form need only be signed by the parties
identified therein.
8.2 Notices. All notices, invoices, payments, deposits and other documents and
-------
communications shall be given to the parties at the addresses specified in the
attached Exhibit C and Acceptance Form. It shall be the responsibility of the
parties to notify each other as provided in this Section in the event of a
change of address. The parties shall have the right to
7.
<PAGE>
rely on the last known address of the other parties. Unless otherwise provided
in this Agreement, all documents and communications may be delivered by First
Class mail.
8.3 Severability. In the event any provision of this Agreement is found to be
------------
invalid, voidable or unenforceable, the parties agree that unless it materially
affects the entire intent and purpose of this Agreement, such invalidity,
voidability or unenforceability shall affect neither the validity of this
Agreement nor the remaining provisions herein, and the provision in question
shall be deemed to be replaced with a valid and enforceable provision most
closely reflecting the intent and purpose of the original provision.
8.4 Successors. This Agreement shall be binding upon and shall inure to the
----------
benefit of the successors and assigns of the parties. However, DSI shall have no
obligation in performing this Agreement to recognize any successor or assign of
Depositor or Preferred Beneficiary unless DSI receives clear, authoritative and
conclusive written evidence of the change of parties.
8.
<PAGE>
8.5 Regulations. Depositor and Preferred Beneficiary are responsible for and
-----------
warrant compliance with all applicable laws, rules and regulations, including
but not limited to customs laws, import, export, and re-export laws and
government regulations of any country from or to which the Deposit Materials may
be delivered in accordance with the provisions of this Agreement.
GetThere.com Inc. DSI Technology Escrow Services, Inc.
By:_________________________________ By:_________________________________
Name: Kenneth Pelowski Name:_______________________________
Title: Chief Operating Officer & CFO Title:______________________________
Date:_______________________________ Date:_______________________________
9.
<PAGE>
PREFERRED BENEFICIARY
ACCEPTANCE FORM
Account Number [*]
Depositor, Preferred Beneficiary and DSI Technology Escrow Services, Inc.
("DSI"), hereby acknowledge that America West Airlines, Inc. is the Preferred
Beneficiary referred to in the Master Preferred Escrow Agreement effective
October ___________, 1999 with DSI as the escrow agent and GetThere.com Inc. as
the Depositor. Preferred Beneficiary hereby agrees to be bound by all provisions
of such Agreement.
Depositor and Preferred Beneficiary agree that the Release Conditions referred
to in Section 4.1 of the Agreement are Depositor's filing under Chapter 7 or
Chapter 11 of the Bankruptcy Code or ceasing its business operations without a
successor.
Depositor hereby enrolls Preferred Beneficiary to the following account(s):
Account Name Account Number
- ------------ --------------
GetThere.com Inc. [*]
- --------------------------------- -----------------------------------
_________________________________ ___________________________________
_________________________________ ___________________________________
Notices and communications to Preferred
Beneficiary should be addressed to: Invoices should be addressed to:
Company Name: AW to supply ___________________________________
Address:_________________________ ___________________________________
_________________________ ___________________________________
_________________________ ___________________________________
Designated Contact:______________ Contact:___________________________
Telephone:_______________________ ___________________________________
Facsimile:_____ P.O.#, if required:________________
America West Airlines, Inc. GetThere.com Inc.
Preferred Beneficiary Depositor
By: _____________________________ By: _______________________________
Name:____________________________ Name:______________________________
Title:___________________________ Title:_____________________________
Date:____________________________ Date:______________________________
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
10.
<PAGE>
DSI Technology Escrow Services, Inc.
- ------------------------------------
By: _____________________________
Name:____________________________
Title:___________________________
Date:____________________________
11.
<PAGE>
EXHIBIT A
MATERIALS TO BE DEPOSITED
Account Number [*]
Depositor represents to Preferred Beneficiary that Deposit Materials delivered
to DSI shall consist of the following: all current and complete software, source
code, documentation and other matters related to and required to operate,
maintain and update the GT Reservation System as defined in the Service
Agreement.
Depositor Preferred Beneficiary
By:______________________________ By:________________________________
Name:____________________________ Name:______________________________
Title:___________________________ Title:_____________________________
Date:____________________________ Date:______________________________
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
12.
<PAGE>
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIALS
Depositor Company Name GetThere.com Inc.________________________________________
Account Number [*]______________________________________________________________
Product Name GetThere.com System Sources ________________ Version 4.2 __________
(Product Name will appear on Account History report)
DEPOSIT MATERIAL DESCRIPTION:
<TABLE>
<CAPTION>
Quantity Media Type & Size Label Description of Each Separate Item
(Please use other side if additional space is needed)
<S> <C> <C>
______ Disk 3.5" or ____
DAT TAPE 4____MM
______ CD-ROM
2_____ Data cartridge tape ____ 4.2 Templates
_______ 4.2 Source
_______ TK 70 or ____ tape
_______ Magnetic tape ____
_______ Documentation
_______ Other ______________________
</TABLE>
PRODUCT DESCRIPTION:
Operating System Solaris 2.6____________________________________________________
Hardware Platform Sun AXMP______________________________________________________
DEPOSIT COPYING INFORMATION:
Is the media encrypted? Yes / No If yes, please include any passwords and the
decryption tools.
Encryption tool name____________________________________ Version _______________
Hardware required_______________________________________________________________
Software required_______________________________________________________________
<TABLE>
<S> <C>
I certify for Depositor that the above described DSI has inspected and accepted the above
Deposit Materials have been transmitted to DSI: materials (any exceptions are noted above):
Signature_______________________________________ Signature_________________________________________
Print Name______________________________________ Print Name________________________________________
</TABLE>
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
13.
<PAGE>
<TABLE>
<S> <C>
Date____________________________________________ Date Accepted_____________________________________
Exhibit B#________________________________________
</TABLE>
Send materials to: DSI, 9265 Sky Park Court, Suite 202, San Diego, CA 92123
(858) 499-1600
14.
<PAGE>
EXHIBIT C
DESIGNATED CONTACT
Master Number ______________________
Notices and communications
should be addressed to: Invoices should be addressed to:
Company Name:______________________ ________________________________________
Address:___________________________ ________________________________________
___________________________ ________________________________________
___________________________ ________________________________________
Designated Contact:________________ Contact:________________________________
Telephone:_________________________ ________________________________________
Facsimile:_________________________ P.O.#, if required:_____________________
Requests to change the designated contact should be given in writing by the
designated contact or an authorized employee.
<TABLE>
<S> <C>
Contracts, Deposit Materials and notices to Invoice inquiries and fee remittances
DSI should be addressed to: to DSI should be addressed to:
DSI DSI
Contract Administration Accounts Receivable
Suite 202 Suite 1450
9265 Sky Park Court 425 California Street
San Diego, CA 92123 San Francisco, CA 94104
Telephone: (858) 499-1600 (415) 398-7900
Facsimile: (858) 694-1919 (415) 398-7914
Date:_________________________________
</TABLE>
15.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated September 13, 1999, relating to the financial statements and
financial statements schedule of GetThere.com, Inc., which appear in such
Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
San Jose, California
October 21, 1999
