<PAGE>
As filed with the Securities and Exchange Commission on September 15, 1999
Registration No. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
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>
445 Sherman Avenue
Palo Alto, California 94306
(650) 614-6300
(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.
445 Sherman Avenue
Palo Alto, California 94306
(650) 614-6300
(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.
Steven P. Chen, Esq. J. Omar Mahmud, Esq.
Robin J. Reilly, Esq. Patrick J. O'Loughlin, Esq.
Gunderson Dettmer Stough Brobeck, Phleger & Harrison LLP
Villeneuve Franklin & Hachigian, LLP Two Embarcadero Place
155 Constitution Drive 2200 Geng Road
Menlo Park, California 94025 Palo Alto, California 94303-0913
(650) 321-2400 (650) 424-0160
</TABLE>
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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
<TABLE>
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<CAPTION>
Proposed Aggregate
Title of Each Class of Maximum Amount of
Securities to be Registered Offering Price(/1/) Registration Fee
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<S> <C> <C>
Common Stock, $0.0001 par value....... $75,000,000 $20,850
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933,
as amended.
-----------
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 -- September 15, 1999
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PROSPECTUS
, 1999
[LOGO OF GETTHERE.COM APPEARS HERE]
Shares of Common Stock
- --------------------------------------------------------------------------------
GetThere.com, Inc.:
. We are a leading provider of Internet-based travel procurement and supply
solutions primarily for businesses and travel suppliers.
. GetThere.com, Inc.
445 Sherman Avenue
Palo Alto, California 94306
(650) 614-6300
Proposed Symbol & Market:
. GTHR/Nasdaq National Market
The Offering:
. We are offering shares of our common stock.
. The underwriters have an option to purchase an additional 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 $ and $ 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>
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<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.
- --------------------------------------------------------------------------------
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 Travel Procurement
and Supply Solutions."
On upper left side of page, there is a graphic depicting three cubes, each
containing the GetThere.com logo, with two arrows pointing to the two screen
shots below.
Opposite the graphic, there is a title that reads "GetThere.com Solutions."
Under this title is text in bullet points that reads:
. Fully-hosted applications delivered via Internet/Intranet
. Real-time information, sales and data analysis
. 24 x 7 technical support
. Redundant, fault-tolerant servers and systems
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."
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 solutions 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." 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 solutions 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, 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 and ITN
FlightRez 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 445 Sherman Ave., Palo Alto, California
94306, and our telephone number is (650) 614-6300. 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 shares of common stock;
. gives effect to the conversion of all of our outstanding shares of
series A, B, C and E 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;
. assumes the effectiveness of our amended and restated certificate of
incorporation in the State of Delaware upon the completion of this
offering; and
. assumes the termination of the waiting period under the Hart-Scott-
Rodino Act in connection with the sale of securities to American
Express Travel Related Services Company, Inc. and Covia LLC, a
subsidiary of United Air Lines.
<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................................................................. 40
</TABLE>
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<CAPTION>
Page
<S> <C>
Management................................................................. 51
Certain Transactions....................................................... 63
Principal Stockholders..................................................... 67
Description of Capital Stock............................................... 69
Shares Eligible for Future Sale............................................ 76
Underwriting............................................................... 78
Legal Matters.............................................................. 81
Experts.................................................................... 81
Additional Information..................................................... 81
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
Our Business
GetThere.com is a leading provider of Internet-based travel procurement and
supply solutions primarily for businesses and travel suppliers. Our 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 our customers.
We derive our revenues primarily by processing travel-related transactions such
as booking and ticketing reservations. Our solutions include ITN Global Manager
for businesses, ITN FlightRez for travel suppliers, and our solution for
Internet-based content and electronic commerce providers and travel agencies,
which we refer to as ePartners. Our customers include businesses with
significant travel expenditures such as Chevron, Credit Suisse First Boston,
Nike, PeopleSoft and Texas Instruments, travel suppliers such as United Air
Lines, Lauda Airlines and National Airlines, and ePartners such as Cendant, CNN
Interactive, TRIP.com and TRAVEL.com. We have recently entered into commercial
relationships with American Express Travel Related Services and Northwest
Airlines. In addition, we have recently entered into non-binding letters of
intent with America West Airlines and Air Canada to implement our solutions on
their Web sites. See "--Recent Developments."
ITN Global Manager is an Internet-based travel reservation and booking
solution designed to enable our business customers to:
Reduce costs: ITN Global Manager is designed to enable businesses to
reduce travel-related costs by decreasing the role of intermediaries and by
providing the information needed to enforce the use of preferred travel
suppliers, to negotiate better rates with travel suppliers and to monitor
travel-related purchases.
Increase productivity: ITN Global Manager is designed to enable
businesses to increase productivity by streamlining their internal travel
procurement processes and by reducing the number of individuals involved.
Provide real-time data analysis and reporting: ITN Global Manager is
designed to enable businesses to collect, analyze and report their current
and historical travel data for planning and strategic purposes.
ITN FlightRez is an Internet-based travel reservation and booking solution
designed to enable our travel supplier customers to:
Increase revenue opportunities: ITN FlightRez is designed to enable
travel suppliers to increase revenue opportunities by enabling them to sell
directly to travelers over the Internet, by providing the information
necessary to develop personalized direct marketing capabilities and by
enhancing their ability to sell unused capacity.
Reduce sales and distribution costs: ITN FlightRez is designed to enable
travel suppliers to reduce sales and distribution costs by allowing travel
suppliers to sell directly to travelers over the Internet, to further
automate reservation processes and to use the Internet to distribute
travel-related information.
Enhance customer service and increase customer loyalty: ITN FlightRez is
designed to enable travel suppliers to enhance customer service and
increase customer loyalty by providing travelers with the ability to redeem
award travel online and to easily access travel-related information.
1
<PAGE>
In addition, our solution for ePartners is designed to enable Internet-based
content and electronic commerce providers and travel agencies to quickly and
easily offer travel-related goods and services online.
Our Market Opportunity
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.
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. These inefficiencies make it more
difficult for businesses to negotiate favorable contracts with travel
suppliers, monitor employee compliance with corporate travel policies and
direct purchases to preferred travel suppliers. These inefficiencies also limit
the ability of travel suppliers to establish personalized relationships with
customers, minimize excess capacity and maximize the effectiveness of affinity
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.
We believe that there is a significant market opportunity for a comprehensive
Internet-based travel solution that addresses the current inefficiencies
related to the procurement and supply of travel-related goods and services.
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 are to:
Expand our customer base: We intend to increase our penetration of
businesses with significant travel expenditures, travel suppliers and
ePartners by enhancing our sales and marketing capabilities, enhancing the
functionality of our solutions and leveraging our relationships within the
travel industry.
Increase adoption rates of our solutions by our business customers: We
intend to increase adoption rates of our ITN Global Manager solution by
assisting our business customers in developing internal programs that
encourage the use of our solution and by enhancing the content and
information available through our solution.
Aggressively pursue other travel markets: We plan to address the
substantial opportunities presented by small-to-medium sized businesses and
international markets by continuing to build our sales and marketing
capabilities and by pursuing strategic partnerships, such as our recent
strategic relationship with American Express.
Extend our technology leadership: We intend to continue to develop new
features and functionality for our solutions to maintain and extend our
position as a technology leader.
Leverage technology and relationships into markets for other indirect
goods and services: We believe that our technology can be extended to
address markets for other indirect goods and services and that we can
leverage our customer relationships to gain entry into these markets.
2
<PAGE>
Recent Developments
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 customized, co-branded versions of our Internet-based
travel procurement solutions to its customers and potential customers. American
Express will promote and market these solutions to large, middle market and
small businesses. In addition, commencing January 27, 2000, American Express
will exclusively use our solutions 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."
On August 27, 1999, we entered into an agreement with Northwest Airlines to
develop a Web site through which Northwest Airlines intends to offer low fare
tickets. In addition, we issued a warrant to Northwest Airlines that becomes
exercisable if and when we enter into a definitive travel supplier agreement
for Northwest Airlines' primary Web site, www.nwa.com, and this Web site adopts
our solution. See "Description of Capital Stock--Warrants."
On August 27, 1999, we entered into a non-binding letter of intent with
America West Airlines to implement our solution on America West Airlines' Web
site, www.americawest.com.
On September 14, 1999, we entered into a non-binding letter of intent with
Air Canada to implement our solution on Air Canada's Web site,
www.aircanada.ca.
In August and September 1999, we agreed to sell:
. an aggregate of 1,875,423 shares of series C preferred stock to American
Express, America West Airlines and Air Canada;
. an aggregate of 5,041,077 shares of series E preferred stock to American
Express, United Air Lines, through its wholly owned subsidiary Covia LLC,
America West Airlines, Air Canada, MeriTech Capital and ITN Joint
Venture;
. a warrant to purchase up to 375,000 shares of common stock to American
Express;
. warrants to purchase up to an aggregate of 2,786,821 shares of series C
preferred stock to United Air Lines and Northwest Airlines; and
. warrants to purchase up to an aggregate of 2,160,046 shares of series E
preferred stock to American Express, America West Airlines and Air
Canada.
The sale of securities to American Express and United Air Lines is subject to
the filing and termination of the waiting period under the Hart-Scott-Rodino
Act.
For a description of these transactions, see "Business--Customers,"
"Business--Relationship with American Express," "Certain Transactions" and Note
11 of Notes to Financial Statements.
3
<PAGE>
The Offering
<TABLE>
<C> <S>
Common stock offered by GetThere.com....... shares
Common stock to be outstanding after the
offering.................................. 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;
. 11,731,314 shares of our common stock issuable upon conversion of our
series A, B and C 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 preferred stock issued after July 31, 1999;
. one share of our series D3 preferred stock;
. conversion of a promissory note of $1.65 million plus accrued interest
into 133,100 shares of our series E preferred 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;
. 872,325 shares of our common stock subject to options granted after
July 31, 1999, with a weighted average exercise price of $7.00 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 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 preferred stock in August and September 1999;
. conversion of all shares of series A, B, C and E preferred stock into
18,647,814 shares of our common stock upon the completion of this
offering;
. issuance of one share of our series D3 preferred stock;
. conversion of a promissory note of $1.65 million plus accrued interest
into 133,100 shares of series E preferred 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
shares of our common stock in this offering at an assumed initial
public offering price of $ 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........................ $(3,427) $(6,358) $(15,636) $(6,479) $(20,329)
Net loss per share:
Basic and diluted............. $ (1.21) $ (1.81) $ (3.97) $ (1.70) $ (5.00)
Weighted average shares....... 2,827 3,537 3,957 3,823 4,071
Pro forma net loss per share:
Basic and diluted............. $ (1.05) $ (1.25)
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 $
Working capital (deficit).......................... (2,203) 71,278
Total assets....................................... 18,939 92,420
Long-term obligations, net of current portion...... 7,014 5,364
Redeemable convertible preferred stock and
warrants.......................................... 36,094 --
Total stockholders' equity (deficit)............... (34,369) 76,856
</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 we have a limited operating
history.
We were incorporated on August 7, 1995 and have a limited operating history.
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. You should also consider the risks and difficulties
frequently encountered by early-stage companies in new and rapidly evolving
markets. Some of these risks and uncertainties relate to our ability to:
. effectively integrate our new management team and attract and retain
other qualified personnel;
. effectively manage our growth;
. respond to actions taken by our competitors; and
. integrate businesses, technologies and services that we may acquire.
We cannot assure you that we will successfully address these risks and
uncertainties. Our failure to do so could significantly harm our business and
operating results.
Our business model is evolving, and we only recently began focusing on
providing Internet-based travel procurement and supply solutions for businesses
and travel suppliers.
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 solutions for businesses and travel
suppliers. We introduced ITN Global Manager for businesses in 1996 and ITN
FlightRez for travel suppliers in 1997. Although we expect to derive most of
our future revenues from the use of our solutions by businesses and travel
suppliers, our business model, including fee and cost structure, is in the
early stages of development and may change. In addition, we cannot assure you
that changing our focus from the consumer business to providing Internet-based
travel procurement and supply solutions for businesses and travel suppliers
will have a positive effect on, or will not 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.
As part of our evolving business model, 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
solutions 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. We cannot assure
you we will realize any benefit from our recent agreement with American Express
or that our ongoing relationship with American Express will be successful. See
"Business--Relationship with American Express."
6
<PAGE>
We have not achieved profitability and expect to continue to incur net losses
for the foreseeable future.
Since our inception, we have never been profitable and 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 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
solutions for businesses;
. entering into and implementing travel supplier relationships with
Northwest Airlines, America West Airlines and Air Canada;
. establishing and integrating our recently acquired call center in Fort
Lauderdale, Florida;
. enhancing our Internet-based travel procurement and supply solutions;
. continuing to develop our solutions, 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.
Our ability to become profitable depends on our ability to generate and
sustain substantially higher revenues while maintaining reasonable expense
levels. Even if we increase revenues we may experience price competition or
increased expenses which would lower our gross margins and profitability.
Furthermore, if we ever do achieve profitability, we may not sustain or
increase profitability 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.
General. 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:
. varying adoption rates of our solutions;
. 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;
7
<PAGE>
. the mix of transaction revenues from businesses, travel suppliers and
ePartners;
. our ability to achieve market acceptance of new solutions and upgrades;
. product introductions by us and by 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 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;
. 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.
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, ITN FlightRez and ePartner solutions 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 solutions is 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.
Seasonality. 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 the amortization of stock-based
compensation and charges associated with other securities issuances.
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 preferred stock at a purchase price of $5.125 per share. We
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expect to record a charge in an amount equal to the difference between the fair
value of the series C preferred stock at the time the redemption features of
the series C preferred stock terminate 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 preferred stock and warrants to purchase an aggregate of
2,160,046 shares of series E preferred stock. There may be significant charges
associated with these issuances.
In addition, in August 1999, we issued a warrant to purchase up to 1,650,000
shares of our series C 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 it may be significant and could be recorded in any
quarter through October 31, 2001. 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 solutions 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 solutions 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. See
"Business--Sales and Marketing."
We recently entered into non-binding letters of intent with America West
Airlines and Air Canada to adopt our solutions. Although we have entered into
an agreement with Northwest Airlines to develop a Web site through which
Northwest Airlines intends to offer low fare tickets, we have not yet reached a
definitive agreement regarding providing our solutions for Northwest Airlines'
primary Web site, www.nwa.com. We cannot assure you that Northwest Airlines'
www.nwa.com Web site, or that America West Airlines or Air Canada will adopt
our solutions.
Because implementation of our travel procurement and supply solutions is time
consuming, there may be significant delays between the sale and deployment of
our solutions.
The implementation and deployment of our solutions 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 solutions 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 solutions;
. 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 solutions.
Because of the number of factors influencing the integration and deployment
processes, we expect that the period between selling our solutions and the time
our customers deploy applications based on our solutions will vary widely. We
have experienced and expect to continue to experience delays in the deployment
of our solutions. Any delays in the deployment of our solutions 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 solutions is highly
competitive and we may not be able to compete effectively.
The market for Internet-based travel procurement and supply solutions 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, Inc.
and Commerce One, Inc.; and
. traditional travel service providers, including travel agencies.
In addition, we compete with consumer Web sites, such as Microsoft's Expedia,
Sabre's Travelocity and 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 solutions 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 180 days prior to
termination. In addition, as our primary customer, we dedicate a significant
amount of our
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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 solutions to travel
suppliers. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Certain Transactions."
We need to significantly increase the adoption rate of our solutions and we
depend on our customers to drive adoption rates.
We have experienced low adoption rates by employees of our business customers
and patrons of our travel supplier and ePartner customers. Although we assist
our customers in developing programs to increase adoption rates, the adoption
of our solutions is largely outside of our control and primarily dependent on
our customers' efforts and ability to promote the use of our solutions. If
adoption rates do not improve significantly, we may not be able to achieve or
sustain growth in our business. Furthermore, any failure to improve adoption
rates 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 solutions.
Only a limited number of our customers have deployed ITN Global Manager and
ITN FlightRez solutions 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 solutions 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 our ITN Global Manager and ITN FlightRez
solutions 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 solutions and implement our business
plan in a rapidly evolving market requires an effective planning and management
process. We recently entered into agreements with American Express and
Northwest Airlines. We also recently entered into a nonbinding letters of
intent with America West Airlines and Air Canada. In addition, we are seeking
to extend our relationship with Northwest Airlines by implementing our
solutions for Northwest Airlines' primary Web site www.nwa.com, and to enter
into relationships with other possible airline customers. We may fail to
develop any of these relationships, which could significantly harm our business
and operating results. In addition, we
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are establishing, hiring personnel for and 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
have grown our headcount substantially. At January 31, 1998, we had a total of
74 employees, and at July 31, 1999, we had a total of 231 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 our ITN
Global Manager and ITN FlightRez solutions, and a reduction in sales or our
inability to significantly increase sales of these solutions would
significantly harm our business.
We expect to derive a substantial portion of our revenues from our ITN Global
Manager and ITN FlightRez solutions. In the six months ended July 31, 1999 and
in the fiscal year ended January 31, 1999, these solutions 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 solutions. Our solutions may not
successfully compete with those of our competitors, and we may not be able to
enhance our solutions or develop new solutions to meet customer needs. In
addition, we have in the past offered equity rights to potential customers in
connection with the sale of our solutions. In the future, we expect to decrease
offering equity rights to these potential customers which may make sales of our
solutions 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 need to sufficiently address complaints regarding our traveler support.
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 solutions. 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. 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.
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 solutions. 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 our ePartners are dependent on the commissions
customarily paid by travel suppliers for purchases made through our travel
procurement solutions. 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 solutions depend on our ability to access computer
reservation systems.
Our travel procurement solutions are limited to those travel suppliers whose
services and products are available through the computer reservation systems we
access. We cannot assure you that travel suppliers will 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, particularly
users of our consumer Web site and our ePartners. In addition, we currently do
not have a direct connection with the Sabre computer reservation system.
Companies seeking to use our solutions through the Sabre computer reservation
system need to provide their own connection to Sabre. As a result, companies
using Sabre may find our solutions 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 solutions. 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.
Our strategy to provide solutions for the 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 solutions 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 solutions and
services. However,
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we cannot assure you that this strategy will be successful. If we are
unsuccessful, we may not be able to recoup 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 solutions 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 cannot assure you that we
will 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. 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;
. compliance 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;
. currency fluctuations;
. licenses, tariffs and other trade barriers;
. longer sales and payment cycles;
. greater difficulties in collecting accounts receivable;
. political and economic instability;
. variations in seasonality in travel markets;
. potentially adverse tax consequences; and
. unexpected changes in local laws and regulations.
The expansion of our international sales capability and operations will
require significant capital and other resources and may divert the attention of
our management. To date, we have not adopted a hedging program to protect us
from risks associated 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
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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 third parties to host and maintain our systems.
We rely on third parties, particularly Exodus Communications, to host and
maintain our systems. If these third parties fail to adequately host or
maintain our systems or are no longer able or willing to provide us with these
services, we will be required to develop these services internally or to seek
other third parties to provide these services. We cannot assure you that we
will be able to develop these services in a timely or cost-effective manner, or
at all. We also cannot be sure that other third parties will be willing or able
to provide us with these services, or that these services will be provided to
us on a timely or effective basis or on terms acceptable to us. If we are
unable to develop these services or find other third parties to provide them,
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 solutions 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 solutions in a timely and efficient manner. If we fail to accurately
determine the features and functionality that our customers require and enhance
our existing solutions or develop new solutions, our current and potential
customers will not buy them. To date, we have designed our solutions based in
large part on feedback from a limited number of current and potential
customers. Therefore, we cannot assure you that the features and functionality
of our solutions will 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 cannot assure you that we will be able to develop customized features in a
cost-effective manner. Any failure to develop solutions that contain the
features and functionality our customers demand could harm our business and
operating results.
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If we do not respond to rapid technological changes by introducing new
solutions, our solutions and services could become obsolete and as a result our
business would be seriously harmed.
The development of our solutions entails significant technical, financial and
business risks. We may not be able to successfully implement new technologies
or adapt our solutions 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 solutions 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 solutions and developing new solutions.
We must continue to modify and enhance our solutions 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 solutions
in response to evolving industry standards, our solutions 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. 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 solutions 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
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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 or ITN FlightRez. Any
claims or customer confusion related to our trademark, 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 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.
17
<PAGE>
Year 2000 issues present technological risks, could cause disruptions to our
business and could harm our sales.
We cannot assure you that we will not 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. As a result, computer systems
and software products used by many companies may need to be upgraded to solve
this problem. Errors or defects resulting from year 2000 problems that affect
our products or services 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 solutions were designed to be year 2000 compliant. Our internal
systems, including those used to deliver our solutions, 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.
Based on vendors' representations received thus far, we believe that the third-
party hardware and software we use is year 2000 compliant, although we have not
heard from all of these vendors. 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 October 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. We believe that the most likely worst-
case scenario is that the Internet fails and we are unable to offer our
solutions.
If we discover that any of our solutions need modification, or any of our
third-party hardware and software is not year 2000 compliant, we will try to
make modifications to our solutions and systems on a timely basis. We cannot
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 and system and online security failures could harm our
business and operating results.
Our Internet-based travel procurement and supply solution depends on the
efficient and uninterrupted operation of our computer and communications
hardware systems. In addition, we must provide a high level of security for the
transactions we execute. We rely on internally and externally developed
technology to provide secure transmission of confidential information. Any
breach of these security measures would likely damage our reputation and result
in the loss of customers, which would harm our business and operating results.
18
<PAGE>
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.
Our solutions 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.
We could fail to meet project milestones in a timely manner or meet customer
expectations as a result of any 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.
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 we cannot assure you
that our security measures will 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.
Product liability claims could harm our business.
Our customers use our solutions 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, diversion of resources,
and diversion of 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.
19
<PAGE>
Our officers, directors and entities affiliated with our officers and directors
will be able to exert significant control over GetThere.com.
Our executive officers, directors and entities affiliated with our executive
officers and directors will, in the aggregate, beneficially own approximately
% of our outstanding common stock following the completion of this offering.
These stockholders, if acting together, will be able to significantly influence
all matters requiring stockholder approval, including the election of directors
and the approval of mergers or other business combination transactions. See
"Principal Stockholders" and "Description of Capital Stock."
Covia, a wholly owned subsidiary of United Air Lines and the beneficial owner
of % 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 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 "Certain Transactions."
American Express, the beneficial owner of % of our common stock following
the completion of this offering, 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." 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 "Certain
Transactions--Equity Financings and Stockholders Arrangements" and "Description
of Capital Stock--Certificate of Incorporation and Bylaws."
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, solutions 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 solutions 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.
20
<PAGE>
As a result of such factors, we may not be able to gain commercial acceptance
of our online travel solutions. Any failure to achieve acceptance of our online
travel solutions 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
solutions 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. We cannot assure you that the use of the Internet as a
means of conducting business will 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 solutions and services could grow more slowly or decline. Our
ability to increase the speed and scope of our solutions and 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 overloading and congestion.
If these improvements are not made, the ability of our customers to utilize our
solution 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
21
<PAGE>
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, solutions or
services by us or by our competitors;
. publicity about our company, our solutions or 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.
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 July 31, 1999, upon completion
of this offering we will have outstanding shares of common
stock, assuming no exercise of the underwriters' over-allotment option. Other
than the shares of common stock sold in this offering, 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, an
additional 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. In
addition, we have issued options and warrants to acquire common stock at prices
significantly below the initial public offering price of
22
<PAGE>
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."
You should not rely on forward-looking statements because they are inherently
uncertain.
You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify these
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. You
should not place undue reliance on these forward-looking statements, which
apply only as of the date of this prospectus. Our actual results could differ
materially from those anticipated in these forward-looking statements for many
reasons, including the risks faced by us described above and elsewhere in this
prospectus.
23
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the shares of common
stock we are selling in this offering will be approximately $ million, at
an assumed initial public offering price of $ per share, after deducting
the estimated underwriters' discounts and offering expenses. If the
underwriters' option to purchase an additional shares of common stock is
exercised in full, we estimate that such net proceeds will be approximately
$ 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. 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 $
======== ======== =====
Long-term liabilities, less current portion.... 7,014 5,346
-------- -------- -----
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............................. 36,094 --
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
Additional paid-in capital................... 50,904 162,127
Note receivable from stockholder............. (2,707) (2,707)
Unearned compensation........................ (36,628) (36,628)
Accumulated deficit.......................... (45,938) (45,938)
-------- -------- -----
Total stockholders' equity (deficit)....... (34,369) 76,856
-------- -------- -----
Total capitalization..................... $ 8,739 $ 82,220 $
======== ======== =====
</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
shares of common stock offered by this prospectus at an assumed initial public
offering price of $ 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 $ million, or approximately $ per
share. This represents an immediate increase in pro forma net tangible book
value of $ per share to existing stockholders and an immediate dilution in
pro forma net tangible book value of $ per share to new investors.
<TABLE>
<S> <C> <C>
Estimated initial public offering price per share.............. $
Pro forma net tangible book value per share as of July 31,
1999........................................................ $2.76
Increase per share attributable to new investors.............
-----
Adjusted pro forma net tangible book value per share after the
offering......................................................
-----
Dilution in pro forma net tangible book value per share to new
investors..................................................... $
=====
</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
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, 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 per share.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ -------------------- Price
Per
Number Percent Amount Percent Share
<S> <C> <C> <C> <C> <C>
Existing stockholders........ 26,852,496 % $162,128,000 % $6.04
New investors................
---------- --- ------------ ---
Total...................... 100% $ 100%
========== === ============ ===
</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 or
approximately % of the total numbers of shares of our common stock
outstanding after this offering.
26
<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......... -- 43 (30) 186 (69) (134)
------ ------- ------- -------- ------- --------
Net loss................ $ (182) $(3,427) $(6,358) $(15,636) $(6,479) $(20,329)
====== ======= ======= ======== ======= ========
Basic and diluted net
loss per share......... $(0.06) $ (1.21) $ (1.81) $ (3.97) $ (1.70) $ (5.00)
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) $ (1.25)
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) (23,541) (34,369)
</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 leading provider of Internet-based travel procurement and supply
solutions 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, which we call
our ePartners, we began to private label and co-brand our travel solutions. In
1996, we introduced ITN Global Manager, an Internet-based travel procurement
solution for businesses. In 1997, we introduced ITN FlightRez, an Internet-
based travel supplier solution. In 1998, we continued to expand our customer
base for our ITN Global Manager solution, 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 commercial relationships with American
Express Travel Related Services and Northwest Airlines and entered into non-
binding letters of intent with America West Airlines and Air Canada to
implement our solutions on their Web sites.
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 solution, from travel suppliers using our ITN FlightRez solution
and from ePartners using our ePartner solution. Transaction revenues are
comprised of fees and commissions earned in connection with the booking or
ticketing of a reservation and providing related traveler support services. In
addition, our transaction revenues include fees received from computer
reservation system companies, hosting fees and the sale of advertising on our
www.itn.net Web site and the Web sites of some of our ePartners. 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
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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 businesses, travel suppliers and ePartners. We
generally receive higher gross margins on transaction revenues than from
professional service revenues, higher gross margins from business customers
than from travel supplier customers, and higher gross margins from travel
supplier customers than from ePartners. 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 preferred stock at a purchase price of $5.125 per share. We expect to
record a charge in an amount equal to the difference between the fair value of
the series C preferred stock at the time the redemption features of the series
C preferred stock terminate 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 preferred stock and warrants to purchase an aggregate of 2,160,046
shares of series E preferred stock. There may be significant charges associated
with these issuances.
In addition, in August 1999, we issued a warrant to purchase up to 1,650,000
shares of our series C 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 it may be significant and could be recorded in any
quarter through October 31, 2001. See "Risk Factors--Our results of operations
will be harmed by the amortization of stock-based compensation and other stock
issuances."
We have incurred significant operating losses since our inception and, as of
July 31, 1999, had an accumulated deficit of $45.9 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 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 solutions for Northwest Airlines' primary Web site,
www.nwa.com or enter into definitive agreements with America West Airlines or
Air Canada, we expect to incur significant additional expenses. We are also
relocating our corporate headquarters from Palo Alto, California to Menlo Park,
California, and have recently established an engineering design center in
Dallas, Texas.
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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.
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.... 7.4 (1.0) 2.9 (2.6) (2.4)
------ ------ ------ ------ ------
Net loss.......................... (588.8)% (211.9)% (242.5)% (239.2)% (363.1)%
====== ====== ====== ====== ======
</TABLE>
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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, travel supplier
customers and ePartners. 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 ePartners, 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 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
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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 expect to move 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 $69,000 for the six months
ended July 31, 1998 increased to approximately $134,000 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 and
ePartners. 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 adoption rates of our
solutions by our existing customers, 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 customer
implementations, 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 and ePartners. 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
adoption rates of our solutions 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
implementations for 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, implementation 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, implementation services and data
center operations.
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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 solutions.
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 solutions.
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 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 $43,000 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 $186,000 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 preferred stock financing.
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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) 42 140 115 (12) (122)
------- ------- ------- ------- ------- --------
Net loss................ $(3,102) $(3,377) $(4,121) $(5,036) $(7,709) $(12,620)
======= ======= ======= ======= ======= ========
<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) 3.0 7.7 6.0 (0.5) (3.7)
------- ------- ------- ------- ------- --------
Net loss................ (236.8)% (241.4)% (226.1)% (263.0)% (333.7)% (383.8)%
======= ======= ======= ======= ======= ========
</TABLE>
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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 customization projects for
new and existing customers. Because the growth in the number of our customers
has fluctuated, and because customization work varies, 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 businesses, travel suppliers and
ePartners;
. 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 ePartner solutions.
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. During August and
September 1999 we entered into financing agreements for the sale of our series
C and series E redeemable convertible preferred stock. As of September 14, 1999
net proceeds from the sale of series C and series E preferred stock were $22.9
million. Upon termination of the waiting period under the Hart-Scott-Rodino
Act, we expect to receive additional net proceeds of $49.8 million from the
sale of series C and series E preferred stock.
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
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million for the six months ended July 31, 1998 was primarily attributable to
$1.9 million used for purchases of 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 currently planning to
establish an engineering development center in Texas to further develop our
solutions. 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 anticipate moving to a larger facility
during the quarter ending October 31, 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 the proceeds from the sale of the common
stock in this offering and our current cash resources 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
October 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 solutions and 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 October
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. As part of our year 2000 plan, we intend to contact third-party
suppliers of components used in the delivery of our services to identify and,
to the extent possible, resolve issues involving the year 2000 problem.
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
. serious business disputes alleging 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 October 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 leading provider of Internet-based travel procurement and
supply solutions primarily for businesses and travel suppliers. Our ITN Global
Manager solution is designed to enable businesses with significant travel
expenditures to reduce travel costs, increase employee productivity and analyze
travel data. Our ITN FlightRez solution is designed to enable travel suppliers,
such as airlines, to increase revenue opportunities, reduce costs and enhance
customer service. In addition, we provide a solution that is designed to enable
our ePartners, which are Internet-based content and electronic commerce
providers and travel agencies, to offer travel-related goods and services over
the Internet. Our customers include businesses with significant travel
expenditures such as Chevron, Credit Suisse First Boston, Nike, PeopleSoft and
Texas Instruments, travel suppliers such as United Air Lines, Lauda Airlines
and National Airlines, and ePartners such as Cendant, CNN Interactive, TRIP.com
and TRAVEL.com. We have recently entered into commercial relationships with
American Express Travel Related Services and Northwest Airlines. In addition,
we have recently entered into non-binding letters of intent with America West
Airlines and Air Canada to implement our solutions on their Web sites.
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 solutions 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 solutions 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.
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. 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 Solution
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
solution that reduces the inefficiencies in the travel procurement and supply
process for businesses and travel suppliers. Such a solution 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 solution should be
easy to implement and compatible with businesses' and travel suppliers'
existing technology.
The GetThere.com Solution
GetThere.com is a leading provider of Internet-based travel procurement and
supply solutions primarily for businesses and travel suppliers. Our fully-
hosted travel reservation and booking solutions enable businesses and travel
suppliers to reduce current inefficiencies in the travel procurement and supply
processes. Our solutions
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can operate independently of third-party travel agencies and are not dependent
on any single computer reservation system. Our ITN Global Manager solution 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 solution is designed to enable travel suppliers, such
as airlines, to increase revenue opportunities, reduce costs and enhance
customer service. In addition, we provide a solution that is designed to enable
our ePartners 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
solution is designed to enable businesses to significantly reduce travel-
related costs, such as ticket costs and travel agency fees. Our solution is
also designed to maximize procurement economies of scale and 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 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 throughout the travel procurement process. We believe
that our solution enables businesses to reduce the amount of time it takes to
execute a travel transaction by streamlining their internal travel procurement
processes and reducing the number of individuals involved. Also, business
travelers can use our solutions 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 customizable, 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.
Our solution 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.
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 is configurable to provide other useful travel-related information,
such as city maps, driving directions, hotel
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locations and other destination information. In addition, our solution can be
customized to allow travelers to join a travel supplier's affinity 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 ePartners
We provide our ePartner solution to Internet-based content and electronic
commerce providers and travel agencies that want to offer travel-related goods
and services online. Our solution allows ePartners to offer travel reservation
capabilities to attract more visitors and generate new travel-related revenues.
In addition, our solution allows travel agencies to extend their existing sales
channel. Our solution offers a variety of completely outsourced and hosted
capabilities, including online booking, transaction processing, traveler
support, and ticket fulfillment and delivery. Our solution is designed to
enable our partners 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. We intend to continue to build our sales and
marketing capabilities and strengthen our brand in order to rapidly increase
our penetration of businesses with significant travel expenditures, travel
suppliers and potential ePartners. 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. By providing high-quality transaction
processing capabilities, data analysis and reporting tools and customer
support, we believe that businesses, travel suppliers and ePartners will
increasingly rely on us for their travel solutions. 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 consulting services that are designed to help our business customers
develop internal programs to increase adoption rates of our ITN Global Manager
solution. We also intend to work with our business customers to implement
affinity programs designed to encourage travelers to use our solution. In
addition, we intend to enhance the content and information available through
our solution to further improve the user experience and increase customer
retention.
Aggressively pursue other travel markets. We are developing our sales and
marketing capabilities to target the substantial opportunities represented by
small-to-medium sized businesses and international markets. In addition to
building these capabilities internally, we will continue to pursue strategic
relationships to accelerate our penetration of these markets. For example, 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.
Extend our technology leadership. Our architecture is designed to be robust,
customizable, reliable and scalable to meet the evolving demands of the travel
procurement and supply market. We intend to continue to develop additional
features and functionality in order to maintain our position as a technology
leader.
Leverage technology and relationships into markets for other indirect goods
and services. We believe that the architecture of our travel procurement and
supply solutions 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.
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Solutions and Services
We provide Internet-based travel procurement and supply solutions for
businesses, travel suppliers and ePartners. All of our solutions are fully-
hosted, scalable and customizable 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 booking solution for businesses. This solution combines
sophisticated cost, supplier, and travel policy management features with an
intuitive user-friendly interface. Our solution is configurable to incorporate
our customer's 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 method 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;
. book reservations for multiple travelers; and
. comply with corporate travel policies.
ITN FlightRez. ITN FlightRez is an Internet-based booking and reservation
solution designed for travel suppliers. This solution allows travel suppliers
to serve travelers directly from the travel suppliers' Web sites. ITN FlightRez
allows a travel supplier to selectively present fares, integrate affinity
programs, 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 customized and branded front-end user interface;
. booking capabilities for multiple airlines, hotels and car rental
agencies;
. a low-fare search engine which allows travelers to compare prices;
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. discounted fares and sales promotions;
. targeted direct marketing campaigns through e-mail;
. E-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.
ePartner Solution. Our ePartner solution is an Internet-based booking and
reservation solution that offers the same capabilities as our ITN FlightRez
solution 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 ticketing, fulfillment 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
Businesses. We primarily target businesses with significant travel
expenditures, travel suppliers and potential ePartners. As of August 31, 1999,
we had 53 business customers. The table below is a representative list of our
current business customers:
<TABLE>
<S> <C>
Boeing Nokia
Chevron PeopleSoft
Credit Suisse First Boston Procter & Gamble
Hewlett-Packard PricewaterhouseCoopers
Institute of Electrical and Electronics
Engineers Tektronix
Kodak Texas Instruments
Lawrence Berkeley National Laboratory Toyota
Nabisco University of California, Berkeley
NationsBank VeriFone
Nike Xerox
</TABLE>
Lucent Technologies became one of our customers in June 1999. In addition,
Cisco Systems has chosen ITN Global Manager as its travel procurement solution
and is currently in a pilot program evaluating ITN Global Manager prior to full
deployment. There can be no assurance, however, that the pilot program will be
successful or that full deployment will be achieved.
Travel suppliers and ePartners. Our travel supplier customers are All Nippon
Airways, Lauda Air, National Airlines, United Air Lines and Virgin Atlantic
Airways. Our ePartners include Cendant, TRAVEL.com, Computravel, TRIP.com and
CNN Interactive.
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On August 27, 1999, we entered into an agreement with Northwest Airlines to
develop a Web site through which Northwest Airlines intends to offer low fare
tickets. We are seeking to extend our relationship with Northwest Airlines to
implement our solutions on its primary Web site, www.nwa.com.
On August 27, 1999, we entered into a non-binding letter of intent with
America West Airlines to implement our solutions on America West Airlines' Web
site, www.americawest.com.
On September 14, 1999, we entered into a non-binding letter of intent with
Air Canada to implement our solutions on Air Canada's Web site,
www.aircanada.ca.
We might not enter into definitive agreements with America West Airlines or
Air Canada regarding these Web sites, or Northwest Airlines might not adopt our
solution for its primary Web site, www.nwa.com. See "Risk Factors--We rely on
suppliers of travel services and products."
Relationship 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 customized, co-
branded versions of our Internet-based travel procurement solutions to their
customers and potential customers. Once we have completed development according
to American Express' specifications, American Express will market these
solutions 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 co-branded solution 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 co-branded solution for a period of three years.
. Small businesses: American Express will exclusively use our co-branded
solution on its Web sites targeting small businesses for a period of
three years.
. Consumers: Starting January 27, 2000, American Express will exclusively
use our co-branded solution on its Web sites targeting consumers for a
two-year period. In addition, commencing January 27, 2000, we will
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 ePartners. 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 solution purchase 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
solutions into other indirect goods and services.
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Our sales and marketing activities are aimed at educating customers and
potential customers about the advantages of our solutions. 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 solutions 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
customized, co-branded versions of our solutions.
Technology
Our travel procurement and supply solutions incorporate proprietary
technology and technology licensed from third parties. Our solutions are
designed to be highly configurable, scalable and robust.
Highly configurable 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
configured 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 configured by either our personnel or by
our customers. All configuration is done with special security access through a
Web browser. The data layer is hosted 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 robust
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' hosting 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
fault tolerant, redundant network design enables automatic switching of data
paths in the event of an outage on one of the network switches. Redundant
routers enable our customers to access these data centers through either the
Internet, a dedicated T1 line or other leased-line circuits. We load balance
traffic across the various Web servers and across these data centers.
Development methodology. Our solutions 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 solutions on a regular basis.
We currently license third-party technology and will continue to evaluate
third-party technology for integration into our solutions. For example, we
license data analysis and reporting software from Cognos, Inc. for our
solutions.
Competition
The market for Internet-based travel procurement and supply solutions 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
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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, Inc.
and Commerce One, Inc.; and
. traditional travel service providers, including travel agencies.
In addition, we compete with consumer Web sites, such as Microsoft's Expedia,
Sabre's Travelocity and Preview Travel.
We believe the principal factors on which we compete include:
. cost effectiveness of our solutions;
. 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 products and services;
. reliability and speed of fulfillment; and
. price.
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 solutions 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
solutions, 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
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is also possible that we may not develop proprietary solutions 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 solutions. 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 solutions 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 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 solutions 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 solutions 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
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<PAGE>
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 July 31, 1999, we had a total of 231 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 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 Palo Alto, California, where
we lease approximately 21,000 square feet under leases with varying expiration
dates through March 2001. We intend to move our headquarters to Menlo Park,
California, where we lease approximately 66,000 square feet under a lease that
expires in May 2004. 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 July 31, 1999 are
as follows:
<TABLE>
<CAPTION>
Name Age Position
<C> <C> <S>
Gadi Maier.......................... 42 President, Chief Executive Officer
and Director
Kenneth R. Pelowski................. 39 Chief Operating Officer and Chief
Financial Officer
Eric Sirkin......................... 46 Vice President of Engineering
Daniel Whaley....................... 30 Chief Technical Officer and
Director
Richard D.C. Whilden................ 65 Chairman of the Board and Director
Jeffrey D. Brody.................... 39 Director
William R. Hambrecht................ 63 Director
John Ueberroth...................... 56 Director
Dale J. Vogel....................... 55 Director
</TABLE>
Gadi Maier has served as president and chief executive officer 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. 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.
Under our certificate of incorporation, each of the series D1, series D2 and
series D3 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 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 preferred shares. American Express, as the holder of
the one outstanding share of series D3 preferred stock, has the right to elect
a person to our board of directors. We expect that after the completion of this
offering, Jonathan S. Linen will be appointed to our board of directors as the
series D3 preferred stock representative. Mr. Linen serves as the vice chairman
of American Express, a position he has held since August 1993. From March 1992
to August 1993, Mr. Linen served as president and chief operating officer of
American Express Travel Related Services. From June 1990 to March 1992, he
served as president and chief executive officer of The Shearson Lehman Brothers
Division of Shearson Lehman Brothers, Inc.
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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 preferred stock or series D2 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 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 preferred stock and one share of our series D2 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 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
preferred stock. If Covia purchases the share of series D1 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 preferred stock. If Covia purchases the
share of series D2 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
preferred stock.
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Furthermore, if Covia purchases either the share of series D1 preferred stock
or the share of series D2 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 or series D2 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 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 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 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).
For a description of the rights of our series D1 preferred stock, series D2
preferred stock and series D3 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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<PAGE>
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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<PAGE>
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
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<PAGE>
vesting could occur immediately after the change in control, or it could be
contingent upon the involuntary or 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
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<PAGE>
. the fair market value per share of common stock on the purchase date.
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 year
occurs at the close of that year.
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 (unless the accounting rules applicable to a pooling
of interests preclude acceleration). 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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CERTAIN 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
Investor Preferred Stock Preferred Stock Preferred Stock Preferred Stock
<S> <C> <C> <C> <C>
United Air Lines ....... -- -- 4,060,875 1,500,000
Entities affiliated with
Brentwood Associates .. 1,985,353 512,048 -- --
American Express........ -- -- 875,423 2,121,077
Entities affiliated with
U.S. Venture Partners.. -- 2,409,639 -- --
ITN Joint Venture....... 1,544,163 -- -- 80,000
Hambrecht 1980 Revocable
Trust.................. -- -- 25,000 --
WR Hambrecht + Co....... -- -- 25,000 --
</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 preferred stock was $1.13. The per share purchase price for
the series B preferred stock was $1.66. The per share price for the series C
preferred stock was $5.125. The per share purchase price for the series E
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 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 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 preferred stock at an exercise price of $21.00 per share and a
warrant to purchase 730,023 shares of our series E preferred stock at an
exercise price of $31.00 per share to American Express.
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.
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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.
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;
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. 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."
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
preferred stock. As the holder of the outstanding share of series D3 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 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 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
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
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<PAGE>
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 preferred
stock or a warrant for 2,473,392 shares of series C preferred stock, and
instead Covia 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 we are acquired by another company.
Also, in connection with Covia's purchase of our series C preferred stock, we
granted Covia an option to purchase one share of series D1 preferred stock and
one share of series D2 preferred stock at a price of $10.00 per share. Each of
the series D1 preferred stock and the series D2 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 preferred stock and series D2 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 preferred stock or series D2 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, 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 preferred
stock or series D2 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
preferred stock on September 14, 1999, we issued to Covia a warrant to purchase
1,136,821 shares of our series C 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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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of September 14, 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 26,852,496
shares of common stock outstanding as of September 14, 1999, as adjusted to
reflect the conversion of all outstanding shares of series A, B, C and E
preferred stock upon the closing of this offering as well as 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 shares to cover over-allotments, if any.
Unless otherwise indicated, the address for each listed stockholder is c/o
GetThere.com, 445 Sherman Avenue, Palo Alto, CA 94306.
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 6.51%
Daniel Whaley(3)............................... 1,315,000 4.90
Eric Sirkin(4)................................. 405,000 1.50
Richard D.C. Whilden(5)........................ 833,250 3.10
Jeffrey D. Brody(6)............................ 2,563,606 9.54
William R. Hambrecht(7)........................ 65,000 0.24
John Ueberroth(8).............................. 1,869,163 6.96
Dale J. Vogel(9)............................... 2,665,603 9.92
Executive officers and directors as a group (9
persons)(10).................................. 12,316,622 43.94
5% Stockholders
United Air Lines (11).......................... 8,929,935 33.26
American Express(12)........................... 4,831,547 17.99
Entities associated with Brentwood
Associates(13)................................ 2,548,606 9.49
Entities associated with U.S.Venture
Partners(14).................................. 2,650,603 9.87
ITN Joint Venture(15).......................... 1,624,163 6.05
</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
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<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) 1,052,500 shares were vested as of July 31, 1999.
(4) Includes personal options immediately exercisable for 125,000 shares, of
which 29,166 shares were vested as of July 31, 1999.
(5) 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.
(6) 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.
(7) 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.
(8) 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.
(9) 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.
(10) Includes personal options immediately exerciseable for 1,175,000 shares.
(11) 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.
(12) Includes warrants for 1,835,046 shares. The address of American Express
is American Express Tower, World Financial Center, New York, New York
10285.
(13) 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.
(14) 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.
(15) The address of ITN Joint Venture is c/o Ambassadors International Inc.,
1071 Camelback Street, Newport Beach, California 92660-3228.
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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 preferred stock, one share of series D2
preferred stock and one share of series D3 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 preferred stock, series D2 preferred stock and series D3 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
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 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 preferred stock and one share of series D2 preferred
stock. See "Certain Transactions--United Air Lines" for a description of the
terms of the option.
Each holder of series D1 preferred stock, series D2 preferred stock and
series D3 preferred stock is entitled to vote on all matters to be voted upon
by the stockholders. Each holder of series D1 preferred stock, series D2
preferred stock and series D3 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 preferred stock, series D2 preferred stock and series D3 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 preferred stock are
outstanding, we may not take any action that adversely affects the rights of
the series D1 preferred stock or that increases the authorized number of shares
of series D1 preferred stock without the approval of the holder of series D1
preferred stock. So long as any shares of series D2 preferred stock are
outstanding, we may not take any action that adversely affects the rights of
the series D2 preferred stock or that increases the authorized number of shares
of series D2 preferred stock without the approval of the holder of series D2
preferred stock. So long as any shares of series D3 preferred stock are
outstanding, we may not take any action that adversely affects the rights of
the series D3 preferred stock or that increases the authorized number of shares
of series D3 preferred stock.
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<PAGE>
Also, so long as a share of series D1 preferred stock remains outstanding,
one member of our board of directors will be elected by the holder of series D1
preferred stock. So long as a share of series D2 preferred stock remains
outstanding, one member of our board of directors will be elected by the
holders of series D2 preferred stock. So long as a share of series D3 preferred
stock remains outstanding, one member of our board of directors will be elected
by the holders of the series D3 preferred stock.
Subject to the rights of preferred stock that may be authorized and issued
after this offering, holders of series D1 preferred stock, series D2 preferred
stock and series D3 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 preferred stock and series
D2 preferred stock will be entitled to $10.00 per share, and each holder of
series D3 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 preferred stock, series D2 preferred stock and series
D3 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 preferred stock
and series D2 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
. 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).
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<PAGE>
In addition, each share of series D1 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 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 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 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 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;
. 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 preferred stock will automatically
convert to common stock upon the earlier of:
. the date that the holder thereof transfers the series D3 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
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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;
. the date of the consummation of a liquidation of our business; or
. the date on which a neutral, third-party arbitrator mutually chosen by us
and American Express or a court of law determines that the director
elected by the holder of the series D3 preferred stock unreasonably
refused to recuse himself or herself from any meeting of our 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 director and to American Express prior to the request for
recusal.
In addition, the series D3 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 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 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 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 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 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
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 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.
72
<PAGE>
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
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 preferred stock at an exercise price of $21.00
per share and a warrant to purchase 730,023 shares of our series E
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 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
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 preferred stock at
$11.20 per share; and
. we have granted Covia the right to have us grant Covia an option to
purchase, at its choice, up to 1,424,539 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 1,424,539 shares of Series
C preferred stock at an exercise price of $0.01 per share. In addition,
we sold Covia the right to have us grant Covia a warrant to purchase
807,698 shares of series C 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:
. 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
73
<PAGE>
. 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.
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."
74
<PAGE>
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
.
75
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering (assuming no exercise of the underwriters'
overallotment option), we will have an aggregate of shares of common
stock outstanding, based upon the shares outstanding as of September 14, 1999,
assuming no exercise of outstanding options. Of the total outstanding shares,
the 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 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 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,
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 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....................................................
180 days after the effective date........................................
One year after the effective date........................................
</TABLE>
Resale of 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
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.
76
<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 July 31, 1999, options to purchase a total of 3,511,810 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.
77
<PAGE>
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............................................................
======
</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. We expect that the
underwriting fee will be 7% of the initial public offering price.
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 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.
78
<PAGE>
As required by the underwriting agreement, each of GetThere.com's officers,
directors and other stockholders and option holders who hold in the aggregate
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
79
<PAGE>
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.
The underwriters have reserved for sale, at the initial public offering
price, up to 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 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.
80
<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.
81
<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 36,060 36,094 --
------- -------- -------- -------
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........... 489 8,571 50,904 87,852
Note receivable from stockholders.... -- -- (2,707) (2,707)
Unearned compensation................ (370) (6,503) (36,628) (36,628)
Accumulated deficit.................. (9,973) (25,609) (45,938) (45,938)
------- -------- -------- -------
Total stockholders' equity
(deficit)......................... (9,854) (23,541) (34,369) 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........................... 43 (30) 186 (69) (134)
------- ------- -------- ------- --------
Net loss....................... (3,427) (6,358) (15,636) (6,479) (20,329)
Accretion of series B
redeemable convertible
preferred stock............... -- (51) (68) (34) (34)
------- ------- -------- ------- --------
Net loss attributable to common
stockholders.................. $(3,427) $(6,409) $(15,704) $(6,513) $(20,363)
======= ======= ======== ======= ========
Basic and diluted net loss per
share......................... $ (1.21) $ (1.81) $ (3.97) $ (1.70) $ (5.00)
======= ======= ======== ======= ========
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) $ (1.25)
======== ========
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) -- --
Unearned compensation... -- -- 14 -- (14) -- --
Amortization of unearned
compensation........... -- -- -- -- 20 -- 20
Net loss................ -- -- -- -- -- (3,427) (3,427)
----- ----- ------- ------- -------- -------- --------
Balance at January 31,
1997................... 3,772 -- 110 -- (53) (3,615) (3,558)
Issuance of common stock
for services........... 40 -- 6 -- (6) -- --
Exercise of common stock
options................ 108 -- 10 -- -- -- 10
Accretion of series B
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 -- 489 -- (370) (9,973) (9,854)
Issuance of restricted
common stock for
services............... 692 -- 1,118 -- (1,118) -- --
Exercise of common stock
options................ 83 -- 12 -- -- -- 12
Accretion of series B
redeemable convertible
preferred stock........ -- -- (68) -- -- -- (68)
Unearned compensation... -- -- 7,035 -- (7,035) -- --
Amortization of unearned
compensation........... -- -- -- -- 2,005 -- 2,005
Forfeiture of common
stock.................. (151) -- (15) -- 15 -- --
Net loss................ -- -- -- -- -- (15,636) (15,636)
----- ----- ------- ------- -------- -------- --------
Balance at January 31,
1999................... 4,544 -- 8,571 -- (6,503) (25,609) (23,541)
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) -- --
Exercise of common stock
options (unaudited).... 288 -- 119 -- -- -- 119
Accretion of series B
redeemable convertible
preferred stock
(unaudited)............ -- -- (34) -- -- -- (34)
Unearned compensation
(unaudited)............ -- -- 38,355 -- (38,355) -- --
Amortization of unearned
compensation
(unaudited)............ -- -- -- -- 9,416 -- 9,416
Net loss (unaudited).... -- -- -- -- -- (20,329) (20,329)
----- ----- ------- ------- -------- -------- --------
Balance at July 31, 1999
(unaudited)............ 7,664 $ -- $50,904 $(2,707) $(36,628) $(45,938) $(34,369)
===== ===== ======= ======= ======== ======== ========
</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....................... $(3,427) $(6,358) $(15,636) $(6,479) $(20,329)
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.... 10 72 248 124 160
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.
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. Revenues from on-line orders are recognized upon
the completion of the transaction or when the commission is received.
Completion is generally defined as either the placement of an order with a
third party supplier or the fulfillment of an order, 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 ratably over the term of the
advertising campaign provided that no significant 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>
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......... $(3,427,000) $(6,409,000) $(15,704,000) $(6,513,000) $(20,363,000)
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..... $ (1.21) $ (1.81) $ (3.97) $ (1.70) $ (5.00)
=========== =========== ============ =========== ============
</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 $68,000 and $34,000, 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.
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 and D2 has voting rights equal to the
equivalent number of shares of common stock into which it is convertible. The
holders of series D1 and D2 also have the right to each elect one Board seat.
Dividends
Holders of series A, B and C redeemable convertible preferred stock are
entitled to receive noncumulative dividends at the per annum rate of $0.079331,
$0.1162 and $0.35875 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 preferred stock or series D2
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 and D2 are entitled to receive an amount equal to
$1.1333, $1.66, $5.125, $10 and $10 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 and C 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 and C 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 granted.
Conversion
Each share of series A, B, C, D1 and D2 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 and
D2 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
F-16
<PAGE>
GETTHERE.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
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.
Warrants and Options for Redeemable Convertible Preferred Stock
In connection with the issuance of series B redeemable convertible preferred
stock, 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, 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, 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 we are acquired by another company.
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
===== ===== =====
</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 $(3,432,000), $(6,440,000) and
$(16,459,000), 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 $(1.21), $(1.82) and $(4.16), 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.......................................... (16,451) (20,913)
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
In August and September 1999, the Company agreed to sell:
. 1,875,423 shares of series C preferred stock at $5.125 per share to
American Express, America West Airlines and Air Canada;
. 5,041,077 shares of series E preferred stock at $12.50 per share to
American Express, Covia LLC, a subsidiary of United Air Lines, America
West Airlines, Air Canada, MeriTech Capital and ITN Joint Venture;
. A warrant to purchase up to 375,000 shares of common stock at $16.50 per
share to American Express;
. Warrants to purchase up to 2,786,821 shares of series C preferred stock
at $11.20 and $5.125 per share to Covia LLC and Northwest Airlines,
respectively; and
. Warrants to purchase up to 2,160,046 shares of series E preferred stock
at an average exercise price of approximately $26.00 per share to
American Express and at $12.50 per share to America West Airlines and Air
Canada.
F-23
<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]
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............................................. *
Legal fees and expenses of the Company............................. *
Accounting fees and expenses....................................... *
Directors and Officers Liability Insurance......................... *
Blue sky fees and expenses......................................... 5,000
Transfer agent fees................................................ 15,000
Miscellaneous...................................................... *
--------
Total............................................................ $*
========
</TABLE>
-----------------------
*To be filed by amendment.
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.
II-1
<PAGE>
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 for an
aggregate purchase price of $3,000.
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 a
group of investors 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 a group of
investors under a stock purchase agreement.
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).
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.
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.
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 a
group of nine investors 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.
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.
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.
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 one
investor under a stock purchase agreement. In addition, the 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 two investors
under a stock purchase agreement.
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 a real estate broker in consideration for the value of real
estate services rendered.
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.
II-2
<PAGE>
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.
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 one
investor under a stock admission agreement.
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.
15. On September 14, 1999, the Registrant issued and sold 1,375,423 shares
of our series C preferred stock to two investors for an aggregate purchase
price of $7,049,043 under stock purchase agreements.
16. On September 14, 1999, the Registrant issued and sold 5,041,076 shares
of our series E preferred stock and one share of series D3 preferred stock to
a group of six investors for an aggregate purchase price of $63,013,463 under
stock purchase agreements.
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.
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.
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.
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.
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.
The sale of the above securities was deemed to be exempt from registration
under the Securities Act in reliance upon Section 4(2) of the Securities Act
or Regulation D promulgated thereunder, or Rule 701 promulgated under Section
3(b) of the Securities Act as transactions by an issuer not involving any
public offering or transactions under compensation benefit plans and contracts
relating to compensation as provided under Rule 701. 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* Form of Underwriting Agreement.
2.1* Agreement and Plan of Reorganization.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
3.1* Amended and Restated Certificate of Incorporation of the Registrant,
to be filed after reincorporation of the Registrant into the state of
Delaware.
3.2* Amended and Restated Certificate of Incorporation of the Registrant to
be filed immediately prior to the offering.
3.4* Amended and Restated Bylaws of the Registrant.
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 Galileo International, LLC 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 LLC 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.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
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.
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. See page II-6.
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.
+ 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.
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-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Palo
Alto, State of California, on this 15th day of September, 1999.
GETTHERE.COM, INC.
By: /s/ Gadi Maier
__________________________________
Gadi Maier
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Gadi Maier and Kenneth R. Pelowski, and
each of them, his or her true and lawful attorneys-in-fact and agents with
full power of substitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective on filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or her or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
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 September 15, 1999
______________________________________ Officer and Director
Gadi Maier (Principal Executive
Officer)
/s/ Kenneth R. Pelowski Chief Operating Officer September 15, 1999
______________________________________ and Chief Financial
Kenneth R. Pelowski Officer (Principal
Financial and Accounting
Officer)
/s/ Daniel Whaley Chief Technical Officer September 15, 1999
______________________________________ and Director
Daniel Whaley
/s/ Richard D.C. Whilden Chairman of the Board September 15, 1999
______________________________________
Richard D.C. Whilden
/s/ Jeffrey D. Brody Director September 15, 1999
______________________________________
Jeffrey D. Brody
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
/s/ William R. Hambrecht Director September 15, 1999
______________________________________
William R. Hambrecht
/s/ John Ueberroth Director September 15, 1999
______________________________________
John Ueberroth
/s/ Dale J. Vogel Director September 15, 1999
______________________________________
Dale J. Vogel
</TABLE>
II-7
<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* Form of Underwriting Agreement.
2.1* Agreement and Plan of Reorganization.
3.1* Amended and Restated Certificate of Incorporation of the Registrant,
to be filed after reincorporation of the Registrant into the state of
Delaware.
3.2* Amended and Restated Certificate of Incorporation of the Registrant to
be filed immediately prior to the offering.
3.4* Amended and Restated Bylaws of the Registrant.
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 Galileo International, LLC 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.
</TABLE>
<PAGE>
EXHIBIT 10.1
INTERNET TRAVEL NETWORK
INDEMNIFICATION AGREEMENT
-------------------------
This Indemnification Agreement ("Agreement") is made as of this ___ day of
_________, 1999, by and between Internet Travel Network, a California
corporation (the "Company"), and the indemnitees on the signature page hereto
(each individually referred to as an "Indemnitee").
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers, directors and
major shareholders to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited;
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee or its representatives, to serve as
officers and directors of the Company and to indemnify its officers, directors
and major shareholders so as to provide them with the maximum protection
permitted by law; and
WHEREAS, the Company and Indemnitee believe that additional protection
should be made available to the current officers, directors and shareholders of
the Company in order to induce Indemnitee and the other officers, directors and
shareholders of the Company to continue to serve as, or have their
representatives serve as, officers and directors.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
---------------
(a) Third Party Proceedings. The Company shall indemnify
-----------------------
Indemnitee if Indemnitee is or was 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 (other than
an action by or in the right of the Company) by reason of the fact
that Indemnitee is or was a shareholder, director, officer, employee
or agent of the Company, or any subsidiary of the Company, by reason
of any action or inaction on the part of Indemnitee while an officer,
director or shareholder or by reason of the fact that Indemnitee is or
was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in
<PAGE>
settlement (if such settlement is approved in advance by the Company,
which approval shall not be unreasonably withheld) actually and
reasonably incurred by Indemnitee in connection with such action or
proceeding if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct
was unlawful. The termination of any action or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or
---------------
its equivalent, shall not, of itself, create a presumption that (i)
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of
the Company, or (ii) with respect to any criminal action or
proceeding, Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.
(b) Proceedings By or in the Right of the Company. The Company shall
---------------------------------------------
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or proceeding by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, shareholder, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while an
officer, director or shareholder or by reason of the fact that Indemnitee is or
was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) and, to the fullest
extent permitted by law, amounts paid in settlement, in each case to the extent
actually and reasonably incurred by Indemnitee in connection with the defense or
settlement of such action or proceeding if Indemnitee acted in good faith and in
a manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company and its shareholders, except that no indemnification
shall be made in respect of any claim, issue or matter as to which Indemnitee
shall have been finally adjudicated by court order or judgment to be liable to
the Company in the performance of Indemnitee's duty to the Company and its
shareholders unless and only to the extent that the court in which such action
or proceeding is or was pending shall determine upon application that, in view
of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for expenses and then only to the extent that the court
shall determine.
2. Expenses: Indemnification Procedure.
-----------------------------------
(a) Advancement of Expenses. The Company shall advance all
-----------------------
expenses incurred by Indemnitee in connection with the investigation,
defense, settlement or appeal of any civil or criminal action or
proceeding referenced in Section 1(a) or (b) hereof (but not amounts
actually paid in settlement of any such action or proceeding which
amounts are not considered expenses which can be advanced). Indemnitee
hereby undertakes to repay such amounts advanced only if, and to the
extent that, it shall ultimately be determined that Indemnitee is not
entitled to be indemnified by the Company as authorized hereby. The
advances to be made hereunder shall be paid by the Company to
Indemnitee within forty-five
<PAGE>
(45) days following delivery of a written request therefor by
Indemnitee to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
--------------------------------
precedent to his right to be indemnified under this Agreement, give the Company
notice in writing as soon as reasonably practicable of any claim made against
Indemnitee for which indemnification is or will be sought under this Agreement.
Notice to the Company shall be directed to the Chief Executive Officer of the
Company at the address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to Indemnitee). Notice
shall be deemed received three business days after the date postmarked if sent
by domestic certified or registered mail, properly addressed; otherwise notice
shall be deemed received when such notice shall actually be received by the
Company. In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power.
(c) Procedure. Any indemnification and advances provided for in
---------
Section 1 and this Section 2 shall be made no later than forty-five (45) days
after receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the Company's Restated
Articles of Incorporation or Bylaws providing for indemnification, is not paid
in full by the Company within forty-five (45) days after a written request for
payment thereof has first been received by the Company, Indemnitee may, but need
not, at any time thereafter bring an action against the Company to recover the
unpaid amount of the claim and, subject to Section 12 of this Agreement,
Indemnitee shall also be entitled to be paid for the expenses (including
attorneys' fees) of bringing such action. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
connection with any action or proceeding in advance of its final disposition)
that Indemnitee has not met the standards of conduct which make it permissible
under applicable law for the Company to indemnify Indemnitee for the amount
claimed, but the burden of proving such defense shall be on the Company and
Indemnitee shall be entitled to receive interim payments of expenses pursuant to
Subsection 2(a) unless and until such defense may be finally adjudicated by
court order or judgment from which no further right of appeal exists. It is the
parties' intention that if the Company contests Indemnitee's right to
indemnification, the question of Indemnitee's right to indemnification shall be
for the court to decide, and neither the failure of the Company (including its
Board of Directors, any committee or subgroup of the Board of Directors,
independent legal counsel, or its shareholders) to have made a determination
that indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met the applicable standard of conduct required by applicable
law, nor an actual determination by the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its shareholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice of
------------------
a claim pursuant to Section 2(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of
<PAGE>
the Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be obligated
--------------------
under Section 2(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, which approval shall
not be unreasonably withheld, upon the delivery to Indemnitee of written notice
of its election so to do. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same proceeding,
provided that (i) Indemnitee shall have the right to employ his counsel in any
such proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not, in fact, have employed counsel to assume the
defense of such proceeding, then the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.
3. Additional Indemnification Rights: Nonexclusivitv.
-------------------------------------------------
(a) Scope. Notwithstanding any other provision of this
-----
Agreement, the Company hereby agrees to indemnify the Indemnitee to the
fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions
of this Agreement, the Company's Restated Articles of Incorporation,
the Company's Bylaws or by statute. In the event of any change, after
the date of this Agreement, in any applicable law, statute or rule
which expands the right of a California corporation to indemnify a
member of its Board of Directors, an officer, shareholder or other
corporate agent, such changes shall be ipso facto, within the purview
of Indemnitee's rights and Company's obligations, under this Agreement.
In the event of any change in any applicable law, statute or rule which
narrows the right of a California corporation to indemnify a member of
its Board of Directors, an officer, shareholder or other corporate
agent, such changes, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement shall have no effect on
this Agreement or the parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this Agreement
--------------
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Restated Articles of Incorporation, its Bylaws, any
agreement, any vote of shareholders or disinterested Directors, the Corporation
Law of the State of California, or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while holding such
office. The indemnification provided under this Agreement shall continue as to
Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though he may have ceased to serve in such capacity at the time of
any action, suit or other covered proceeding.
<PAGE>
4. Partial Indemnification. If Indemnitee is entitled under any provision
------------------------
of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or
reasonably incurred by him in the investigation, defense, appeal or
settlement of any civil or criminal action or proceeding, but not,
however, for the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion of such expenses, judgments, fines
or penalties to which Indemnitee is entitled.
5. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge that
---------------------
in certain instances, Federal law or applicable public policy may
prohibit the Company from indemnifying its directors, shareholders and
officers under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the
future to undertake with the Securities and Exchange Commission to
submit the question of indemnification to a court in certain
circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.
6. Officer and Director Liability Insurance. The Company shall, from time
----------------------------------------
to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability insurance, each Indemnitee serving in the
capacity as a director shall be named as an insured in such a manner as to
provide such Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's directors, if Indemnitee is a director; or of
the Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, if Indemnitee is not an officer or
director but is a key employee. Notwithstanding the foregoing, the Company shall
have no obligation to obtain or maintain such insurance if the Company
determines in good faith that such insurance is not reasonably available, if the
premium costs for such insurance are disproportionate to the amount of coverage
provided, if the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit, or if Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the Company.
7. Severability Nothing in this Agreement is intended to require
------------
or shall be construed as requiring the Company to do or fail to do any
act in violation of applicable law. The Company's inability, pursuant to
court order, to perform its obligations under this Agreement shall not
constitute a breach of this Agreement. The provisions of this Agreement
shall be severable as provided in this Section 7. If this Agreement or
any portion hereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Company shall nevertheless indemnify
Indemnitee to the full extent permitted by any applicable portion of
this Agreement that shall not have been invalidated, and the balance of
<PAGE>
this Agreement not so invalidated shall be enforceable in accordance
with its terms.
8. Exceptions. Any other provision herein to the contrary
----------
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Excluded Acts. To indemnify Indemnitee for any acts or omissions
-------------
or transactions from which a director may not be relieved of liability under the
California General Corporation Law; or
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
------------------------------
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 317 of the California Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such suit; or
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
------------------
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(d) Insured Claims. To indemnify Indemnitee for expenses or
--------------
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company; or
(e) Claims Under Section 16(b). To indemnify Indemnitee for expenses
--------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
9. Construction of Certain Phrases.
-------------------------------
(a) For purposes of this Agreement, references to the
"Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence
had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that if Indemnitee is
or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
Indemnitee shall
<PAGE>
stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving corporation as Indemnitee would
have with respect to such constituent corporation if its separate
existence had continued.
(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interests of the Company" as referred to in this Agreement.
10. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original.
11. Binding Effect; Successors and Assigns. This Agreement shall be
--------------------------------------
binding upon the Company and its successors and assigns (including any
direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business or assets of the
Company), and shall inure to the benefit of Indemnitee and
Indemnitee's estate, heirs, legal representatives and assigns. The
Company shall require and cause any successor (whether direct or
indirect, and whether by purchase, merger, consolidation or otherwise)
to all, substantially all, or a substantial part, of the business or
assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken
place. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as a director, officer, employee or
agent (as applicable) of the Company or of any other enterprise at the
Company's request.
12. Attorneys' Fees. In the event that any action is instituted by
---------------
Indemnitee under this Agreement to enforce or interpret any of the
terms hereof, Indemnitee shall be entitled to be paid all costs and
expenses, including reasonable attorneys' fees, incurred by Indemnitee
with respect to such action, unless as a part of such action, the
court of competent jurisdiction determines that each of the material
assertions made by Indemnitee as a basis for such action were not made
in good faith or were frivolous. In the event of an action instituted
by or in the name of the Company under this Agreement or to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be paid all costs and expenses, including reasonable
attorneys' fees, incurred by Indemnitee in defense of such action
(including with respect to Indemnitee's counterclaims and cross-claims
made in such action), unless as a part of such action the court
determines that each
<PAGE>
of Indemnitee's material defenses to such action were made in bad
faith or were frivolous.
13. Notice. All notices, requests, demands and other communications under
------
this Agreement shall be in writing, shall be effective upon receipt,
and shall be delivered by Federal Express or a similar courier,
personal delivery, certified or registered air mail, or by facsimile
transmission. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by
written notice.
14. Consent to Jurisdiction. The Company and Indemnitee each hereby
-----------------------
irrevocably consent to the jurisdiction of the courts of the State of
California for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree
that any action instituted under this Agreement shall be brought only
in the state courts of the State of California.
15. Choice of Law. This Agreement shall be governed by and its provisions
-------------
construed in accordance with the laws of the State of California, as
applied to contracts between California residents entered into and to
be performed entirely within California.
16. Severability. The provisions of this Agreement shall be severable in
------------
the event that any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable,
and the remaining provisions shall remain enforceable to the fullest
extent permitted by law. Furthermore, to the fullest extent possible,
the provision of this Agreement (including, without limitations, each
portion of this Agreement containing any provision held to be invalid,
void or otherwise unenforceable, that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
17. Subrogation. In the event of payment under this Agreement, the Company
-----------
shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required
and shall do all acts that may be necessary to secure such rights and
to enable to corporation effectively to bring suit to enforce such
rights.
18. Continuation of Indemnification. All agreements and obligations of the
-------------------------------
Company contained herein shall continue during the period that
Indemnitee is a director, officer or agent of the Company and shall
continue thereafter so long as Indemnitee shall be subject to any
possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal, arbitrational, administrative or
investigative, by reason of the fact that Indemnitee was serving in
the capacity referred to herein.
<PAGE>
19. Amendment and Termination. Subject to Section 17, no amendment,
-------------------------
modification, termination or cancellation of this Agreement shall be
effective unless in writing signed by both parties hereto.
20. Integration and Entire Agreement. This Agreement sets forth the entire
--------------------------------
understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings
and agreements relating to the subject matter hereof between the
parties hereto.
21. No Construction as Employment Agreement. Nothing contained in this
---------------------------------------
Agreement shall be construed as giving Indemnitee any right to be
retained in the employ of the Company or any of its subsidiaries or
affiliated entities.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
[COMPANY NAME]
By: _____________________________
Title:___________________________
AGREED TO AND ACCEPTED
INDEMNITEES
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
<PAGE>
EXHIBIT 10.2
GetThere.com
1996 Stock Incentive Plan
As Amended and Restated on February 26, 1999
As Amended on February 16, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
SECTION 1. ESTABLISHMENT AND PURPOSE.............................. 1
SECTION 2. ADMINISTRATION......................................... 1
(a) Committees of the Board of Directors......................... 1
(b) Authority of the Board of Directors.......................... 1
SECTION 3. ELIGIBILITY............................................ 1
(a) General Rule................................................. 1
(b) Ten-Percent Shareholders..................................... 1
SECTION 4. STOCK SUBJECT TO PLAN.................................. 2
(a) Basic Limitation............................................. 2
(b) Additional Shares............................................ 2
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES................ 2
(a) Stock Purchase Agreement..................................... 2
(b) Duration of Offers and Nontransferability of Rights.......... 2
(c) Purchase Price............................................... 2
(d) Withholding Taxes............................................ 3
(e) Restrictions on Transfer of Shares and Minimum Vesting....... 3
SECTION 6. TERMS AND CONDITIONS OF OPTIONS........................ 3
(a) Stock Option Agreement....................................... 3
(b) Number of Shares............................................. 3
(c) Exercise Price............................................... 3
(d) Withholding Taxes............................................ 3
(e) Exercisability............................................... 4
(g) Basic Term................................................... 4
(h) Nontransferability........................................... 4
(i) Termination of Service (Except by Death)..................... 4
(j) Leaves of Absence............................................ 5
(k) Death of Optionee............................................ 5
(l) No Rights as a Shareholder................................... 5
(m) Modification, Extension and Assumption of Options............ 5
(n) Restrictions on Transfer of Shares and Minimum Vesting....... 5
SECTION 7. PAYMENT FOR SHARES..................................... 6
(a) General Rule................................................. 6
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(b) Surrender of Stock........................................... 6
(c) Services Rendered............................................ 6
(d) Promissory Note.............................................. 6
(e) Exercise/Sale................................................ 6
(f) Exercise/Pledge.............................................. 6
SECTION 8. ADJUSTMENT OF SHARES................................... 7
(a) General...................................................... 7
(b) Mergers and Consolidations................................... 7
(c) Reservation of Rights........................................ 7
SECTION 9. SECURITIES LAWS REQUIREMENTS........................... 7
(a) General...................................................... 7
(b) Financial Reports............................................ 8
SECTION 10. NO RETENTION RIGHTS................................... 8
SECTION 11. DURATION AND AMENDMENTS............................... 8
(a) Term of the Plan............................................. 8
(b) Right to Amend or Terminate the Plan......................... 8
(c) Effect of Amendment or Termination........................... 8
SECTION 12. DEFINITIONS........................................... 8
</TABLE>
<PAGE>
GetThere.com 1996 Stock Incentive Plan
SECTION 1. ESTABLISHMENT AND PURPOSE.
The purpose of the Plan is to offer selected individuals an opportunity to
acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing Shares of the Company's Stock. The Plan provides
both for the direct award or sale of Shares and for the grant of Options to
purchase Shares. Options granted under the Plan may include Nonstatutory Options
as well as ISOs intended to qualify under Section 422 of the Code.
Capitalized terms are defined in Section 12.
SECTION 2. ADMINISTRATION.
(a) Committees of the Board of Directors. The Plan may be administered by
one or more Committees. Each Committee shall consist of two or more members of
the Board of Directors who have been appointed by the Board of Directors. Each
Committee shall have such authority and be responsible for such functions as the
Board of Directors has assigned to it. If no Committee has been appointed, the
entire Board of Directors shall administer the Plan. Any reference to the Board
of Directors in the Plan shall be construed as a reference to the Committee (if
any) to whom the Board of Directors has assigned a particular function.
(b) Authority of the Board of Directors. Subject to the provisions of the
Plan, the Board of Directors shall have full authority and discretion to take
any actions it deems necessary or advisable for the administration of the Plan.
All decisions, interpretations and other actions of the Board of Directors shall
be final and binding on all Purchasers, all Optionees and all persons deriving
their rights from a Purchaser or Optionee.
SECTION 3. ELIGIBILITY.
(a) General Rule. Only Employees, Outside Directors and Consultants shall
be eligible for the grant of Options or the direct award or sale of Shares. Only
Employees shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An individual who owns more than 10% of the
total combined voting power of all classes of outstanding stock of the Company,
its Parent or any of its Subsidiaries shall not be eligible for designation as
an Optionee or Purchaser unless (i) the Exercise Price is at least 110% of the
Fair Market Value of a Share on the date of grant, (ii) the Purchase Price (if
any) is at least 100% of the Fair Market Value of a Share and (iii) in the case
of an ISO, such ISO by its terms is not exercisable after the expiration of five
years from the date of grant. For purposes of this Subsection (b), in
determining stock ownership, the attribution rules of Section 424(d) of the Code
shall be applied.
1
<PAGE>
SECTION 4. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. The aggregate number of Shares that may be issued
under the Plan (upon exercise of Options or other rights to acquire Shares)
shall not exceed 12,491,190 Shares,/1/ subject to adjustment pursuant to Section
8. The number of Shares that are subject to Options or other rights outstanding
at any time under the Plan shall not exceed the number of Shares that then
remain available for issuance under the Plan. The Company, during the term of
the Plan, shall at all times reserve and keep available sufficient Shares to
satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purposes of the Plan. In the event that Shares issued under
the Plan are reacquired by the Company pursuant to any forfeiture provision,
right of repurchase or right of first refusal, such Shares shall again be
available for the purposes of the Plan, except that the aggregate number of
Shares which may be issued upon the exercise of ISOs shall in no event exceed
12,491,190 Shares (subject to adjustment pursuant to Section 8).
SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) Stock Purchase Agreement. Each award or sale of Shares under the Plan
(other than upon exercise of an Option) shall be evidenced by a Stock Purchase
Agreement between the Purchaser and the Company. Such award or sale shall be
subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions which are not inconsistent with the Plan and
which the Board of Directors deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
(b) Duration of Offers and Nontransferability of Rights. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Purchaser within 30 days after the grant of such right
was communicated to the Purchaser by the Company. Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.
(c) Purchase Price. The Purchase Price of Shares to be offered under the
Plan shall not be less than 85% of the Fair Market Value of such Shares, and a
higher percentage may be required by Section 3(b). Subject to the preceding
sentence, the Purchase Price shall be determined by the Board of Directors at
its sole discretion. The Purchase Price shall be payable in a form described in
Section 7.
________________________
/1/ Includes (a) the 800,000-share increase approved by the Board of Directors
and the shareholders in April 1997, (b) the 350,000-share increase approved by
the Board of Directors and the shareholders in April 1998, (c) the 110,000-share
increase approved by the Board of Directors on December 17, 1998, and by the
shareholders on February 26, 1999, (d) the 100,000-share increase approved by
the Board of Directors on December 28, 1998, and by the shareholders on February
26, 1999, (e) the 4,790,000-share increase approved by the Board of Directors
and the shareholders on February 26, 1999, and (f) the 5,000,000-share increase
approved by the Board of Directors and the shareholders on August 16, 1999.
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(d) Withholding Taxes. As a condition to the purchase of Shares, the
Purchaser shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase.
(e) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares
awarded or sold under the Plan shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Purchase Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. In the case
of a Purchaser who is not an officer of the Company, an Outside Director or a
Consultant, any right to repurchase the Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
at least as rapidly as 20% per year over the five-year period commencing on the
date of the award or sale of the Shares. Any such right may be exercised only
within 90 days after the termination of the Purchaser's Service for cash or for
cancellation of indebtedness incurred in purchasing the Shares.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Board of Directors deems appropriate for inclusion
in a Stock Option Agreement. The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, and a higher percentage may
be required by Section 3(b). The Exercise Price of a Nonstatutory Option shall
not be less than 85% of the Fair Market Value of a Share on the date of grant,
and a higher percentage may be required by Section 3(b). Subject to the
preceding two sentences, the Exercise Price under any Option shall be determined
by the Board of Directors at its sole discretion. The Exercise Price shall be
payable in a form described in Section 7.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise. The Optionee shall
also make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with the disposition of Shares acquired by
exercising an Option.
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(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant, an Option shall become exercisable at least as rapidly as 20% per
year over the five-year period commencing on the date of the grant. Subject to
the preceding sentence, the exercisability provisions of any Stock Option
Agreement shall be determined by the Board of Directors at its sole discretion.
(f) Basic Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed 10 years from the date of grant, and a shorter
term may be required by Section 3(b). Subject to the preceding sentence, the
Board of Directors at its sole discretion shall determine when an Option is to
expire.
(g) Nontransferability. No Option shall be transferable by the Optionee
other than by beneficiary designation, will or the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by the Optionee or by the Optionee's guardian or legal representative. No
Option or interest therein may be transferred, assigned, pledged or hypothecated
by the Optionee during the Optionee's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.
(h) Termination of Service (Except by Death). If an Optionee's Service
terminates for any reason other than the Optionee's death, then the Optionee's
Options shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (g) above;
(ii) The date three months after the termination of the Optionee's
Service for any reason other than Disability, or such later date as the
Board of Directors may determine; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Disability, or such later date as the Board of
Directors may determine.
The Optionee may exercise all or part of the Optionee's Options at any time
before the expiration of such Options under the preceding sentence, but only to
the extent that such Options had become exercisable before the Optionee's
Service terminated (or became exercisable as a result of the termination) and
the underlying Shares had vested before the Optionee's Service terminated (or
vested as a result of the termination). The balance of such Options shall lapse
when the Optionee's Service terminates. In the event that the Optionee dies
after the termination of the Optionee's Service but before the expiration of the
Optionee's Options, all or part of such Options may be exercised (prior to
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired such Options directly from the Optionee by
beneficiary designation, bequest or inheritance, but only to the extent that
such Options had become exercisable before the Optionee's Service terminated (or
became exercisable as a result of the termination) and the underlying Shares had
vested before the Optionee's Service terminated (or vested as a result of the
termination).
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(i) Leaves of Absence. For purposes of Subsection (i) above, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of Service for this purpose is expressly required by the terms of such
leave or by applicable law (as determined by the Company).
(j) Death of Optionee. If an Optionee dies while the Optionee is in
Service, then the Optionee's Options shall expire on the earlier of the
following dates:
(i) The expiration date determined pursuant to Subsection (g) above;
or
(ii) The date 12 months after the Optionee's death.
All or part of the Optionee's Options may be exercised at any time before the
expiration of such Options under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Options directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that such Options had become exercisable
before the Optionee's death or became exercisable as a result of the death. The
balance of such Options shall lapse when the Optionee dies.
(k) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by the Optionee's Option until such person becomes entitled to receive
such Shares by filing a notice of exercise and paying the Exercise Price
pursuant to the terms of such Option.
(l) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Board of Directors may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another issuer) in return for the grant of
new Options for the same or a different number of Shares and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair the Optionee's rights
or increase the Optionee's obligations under such Option.
(m) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares
issued upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Option Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant:
(i) Any right to repurchase the Optionee's Shares at the original
Exercise Price upon termination of the Optionee's Service shall lapse at
least as rapidly as 20% per year over the five-year period commencing on
the date of the option grant;
(ii) Any such right may be exercised only for cash or for cancellation
of indebtedness incurred in purchasing the Shares; and
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<PAGE>
(iii) Any such right may be exercised only within 90 days after the
later of (A) the termination of the Optionee's Service or (B) the date of
the option exercise.
SECTION 7. PAYMENT FOR SHARES.
(a) General Rule. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in cash or cash equivalents at the time
when such Shares are purchased, except as otherwise provided in this Section 7.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, all or any part of the Exercise Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the Optionee.
Such Shares shall be surrendered to the Company in good form for transfer and
shall be valued at their Fair Market Value on the date when the Option is
exercised. The Optionee shall not surrender, or attest to the ownership of,
Shares in payment of the Exercise Price if such action would cause the Company
to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes.
(c) Services Rendered. At the discretion of the Board of Directors,
Shares may be awarded under the Plan in consideration of services rendered to
the Company, a Parent or a Subsidiary prior to the award.
(d) Promissory Note. To the extent that a Stock Option Agreement or Stock
Purchase Agreement so provides, all or a portion of the Exercise Price or
Purchase Price (as the case may be) of Shares issued under the Plan may be paid
with a full-recourse promissory note. The Shares shall be pledged as security
for payment of the principal amount of the promissory note and interest thereon.
The interest rate payable under the terms of the promissory note shall not be
less than the minimum rate (if any) required to avoid the imputation of
additional interest under the Code. Subject to the foregoing, the Board of
Directors (at its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note.
(e) Exercise/Sale. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to a securities broker approved by the Company to sell Shares and to deliver all
or part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
(f) Exercise/Pledge. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to pledge Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.
6
<PAGE>
SECTION 8. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4, (ii) the number of Shares covered
by each outstanding Option or (iii) the Exercise Price under each outstanding
Option.
(b) Mergers and Consolidations. In the event that the Company is a party
to a merger or consolidation, outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement, without the Optionees'
consent, may provide for:
(i) The continuation of such outstanding Options by the Company (if
the Company is the surviving corporation);
(ii) The assumption of the Plan and such outstanding Options by the
surviving corporation or its parent;
(iii) The substitution by the surviving corporation or its parent of
options with substantially the same terms for such outstanding Options; or
(iv) The cancellation of such outstanding Options without payment of
any consideration.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee or Purchaser shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 9. SECURITIES LAW REQUIREMENTS.
(a) General. Shares shall not be issued under the Plan unless the
issuance and delivery of such Shares comply with (or are exempt from) all
applicable requirements of law, including (without limitation) the Securities
Act of 1933, as amended, the rules and regulations promulgated thereunder, state
securities laws and regulations, and the regulations of any stock exchange or
other securities market on which the Company's securities may then be traded.
7
<PAGE>
(b) Financial Reports. The Company each year shall furnish to Optionees,
Purchasers and shareholders who have received Stock under the Plan its balance
sheet and income statement, unless such Optionees, Purchasers or shareholders
are key Employees whose duties with the Company assure them access to equivalent
information. Such balance sheet and income statement need not be audited.
SECTION 10. NO RETENTION RIGHTS.
Nothing in the Plan or in any right or Option granted under the Plan shall
confer upon the Purchaser or Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company (or any Parent or Subsidiary employing or retaining
the Purchaser or Optionee) or of the Purchaser or Optionee, which rights are
hereby expressly reserved by each, to terminate his or her Service at any time
and for any reason, with or without cause.
SECTION 11. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, amended and restated as set forth herein,
shall become effective on February 26, 1999 (the date of its adoption by the
Board of Directors and approval by the Company's shareholders). The Plan shall
terminate automatically on February 25, 2009, and may be terminated on any
earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 8), or
which materially changes the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Company's shareholders.
Shareholder approval shall not be required for any other amendment of the Plan.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan.
SECTION 12. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the Company,
as constituted from time to time.
(b) "Change in Control" shall mean:
(i) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if persons
who were not shareholders of the Company immediately prior to such merger,
consolidation or other reorganization own immediately after such merger,
consolidation or other reorganization 50% or more of the voting power of
the
8
<PAGE>
outstanding securities of each of (A) the continuing or surviving entity
and (B) any direct or indirect parent corporation of such continuing or
surviving entity;
(ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets; or
(iii) Any transaction as a result of which any person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended), directly or indirectly, of securities of the
Company representing more than 50% of the total voting power represented by
the Company's then outstanding voting securities. For purposes of this
Paragraph (iii), the term "person" shall have the same meaning as when used
in sections 13(d) and 14(d) of such Act but shall exclude (A) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or of a Parent or Subsidiary and (B) a corporation owned directly
or indirectly by the shareholders of the Company in substantially the same
proportions as their ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean a committee of the Board of Directors, as
described in Section 2(a).
(e) "Company" shall mean GetThere.com, a California corporation.
(f) "Consultant" shall mean a person who performs bona fide services for
the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.
(g) "Disability" shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
(h) "Employee" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.
(i) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Board of Directors in
the applicable Stock Option Agreement.
(j) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.
9
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(k) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.
(l) "Nonstatutory Option" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(m) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(n) "Optionee" shall mean an individual who holds an Option.
(o) "Outside Director" shall mean a member of the Board of Directors who
is not an Employee.
(p) "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
(q) "Plan" shall mean this GetThere.com 1996 Stock Incentive Plan.
(r) "Purchase Price" shall mean the consideration for which one Share may
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Board of Directors.
(s) "Purchaser" shall mean an individual to whom the Board of Directors
has offered the right to acquire Shares under the Plan (other than upon exercise
of an Option).
(t) "Service" shall mean service as an Employee, Outside Director or
Consultant.
(u) "Share" shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).
(v) "Stock" shall mean the Common Stock of the Company.
(w) "Stock Option Agreement" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to the Optionee's Option.
(x) "Stock Purchase Agreement" shall mean the agreement between the
Company and a Purchaser who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(y) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined
10
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voting power of all classes of stock in one of the other corporations in such
chain. A corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.
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EXHIBIT 10.3
GetThere.com
1999 Stock Incentive Plan
(As Adopted Effective ______ __, 1999)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. INTRODUCTION................................................ 1
ARTICLE 2. ADMINISTRATION.............................................. 1
2.1 Committee Composition......................................... 1
2.2 Committee Responsibilities.................................... 1
2.3 Committee for Non-Officer Grants.............................. 1
ARTICLE 3. SHARES AVAILABLE FOR GRANTS................................. 2
3.1 Basic Limitation.............................................. 2
3.2 Annual Increase in Shares..................................... 2
3.3 Additional Shares............................................. 2
ARTICLE 4. ELIGIBILITY................................................. 2
4.1 Nonstatutory Stock Options and Restricted Shares.............. 2
4.2 Incentive Stock Options....................................... 2
ARTICLE 5. OPTIONS..................................................... 2
5.1 Stock Option Agreement........................................ 2
5.2 Number of Shares.............................................. 3
5.3 Exercise Price................................................ 3
5.4 Exercisability and Term....................................... 3
5.5 Effect of Change in Control................................... 3
5.6 Modification or Assumption of Options......................... 3
5.7 Buyout Provisions............................................. 3
ARTICLE 6. PAYMENT FOR OPTION SHARES................................... 4
6.1 General Rule.................................................. 4
6.2 Surrender of Stock............................................ 4
6.3 Exercise/Sale................................................. 4
6.4 Exercise/Pledge............................................... 4
6.5 Promissory Note............................................... 4
6.6 Other Forms of Payment........................................ 4
ARTICLE 7. RESTRICTED SHARES........................................... 4
7.1 Restricted Stock Agreement.................................... 4
7.2 Payment for Awards............................................ 5
7.3 Vesting Conditions............................................ 5
7.4 Voting and Dividend Rights.................................... 5
ARTICLE 8. PROTECTION AGAINST DILUTION................................. 5
8.1 Adjustments................................................... 5
8.2 Dissolution or Liquidation.................................... 5
</TABLE>
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<TABLE>
<S> <C>
8.3 Reorganizations........................................... 6
ARTICLE 9. DEFERRAL OF DELIVERY OF SHARES.......................... 6
ARTICLE 10. AWARDS UNDER OTHER PLANS............................... 6
ARTICLE 11. LIMITATION ON RIGHTS................................... 6
11.1 Retention Rights......................................... 6
11.2 Stockholders' Rights..................................... 6
11.3 Regulatory Requirements.................................. 7
ARTICLE 12. WITHHOLDING TAXES...................................... 7
12.1 General.................................................. 7
12.2 Share Withholding........................................ 7
ARTICLE 13. LIMITATION ON PAYMENTS................................. 7
13.1 Scope of Limitation...................................... 7
13.2 Basic Rule............................................... 8
13.3 Reduction of Payments.................................... 8
13.4 Overpayments and Underpayments........................... 8
13.5 Related Corporations..................................... 9
ARTICLE 14. FUTURE OF THE PLAN..................................... 9
14.1 Term of the Plan......................................... 9
14.2 Amendment or Termination................................. 9
ARTICLE 15. DEFINITIONS............................................ 9
ARTICLE 16. EXECUTION.............................................. 12
</TABLE>
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GetThere.com
1999 Stock Incentive Plan
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board effective as of the date of the
Company's initial public offering. The purpose of the Plan is to promote the
long-term success of the Company and the creation of stockholder value by (a)
encouraging Employees, Outside Directors and Consultants to focus on critical
long-range objectives, (b) encouraging the attraction and retention of
Employees, Outside Directors and Consultants with exceptional qualifications and
(c) linking Employees, Outside Directors and Consultants directly to stockholder
interests through increased stock ownership. The Plan seeks to achieve this
purpose by providing for Awards in the form of Restricted Shares or Options
(which may constitute incentive stock options or nonstatutory stock options).
The Plan shall be governed by, and construed in accordance with, the
laws of the State of Delaware (except their choice-of-law provisions).
ARTICLE 2. ADMINISTRATION.
2.1 Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of two or more directors of
the Company, who shall be appointed by the Board. In addition, the composition
of the Committee shall satisfy:
(a) Such requirements as the Securities and Exchange Commission
may establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(b) Such requirements as the Internal Revenue Service may
establish for outside directors acting under plans intended to qualify for
exemption under section 162(m)(4)(C) of the Code.
2.2 Committee Responsibilities. The Committee shall (a) select the
Employees, Outside Directors and Consultants who are to receive Awards under the
Plan, (b) determine the type, number, vesting requirements and other features
and conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons.
2.3 Committee for Non-Officer Grants. The Board may also appoint a
secondary committee of the Board, which shall be composed of one or more
directors of the Company who need not satisfy the requirements of Section 2.1.
Such secondary committee may administer the Plan with respect to Employees and
Consultants who are not considered officers or directors of
<PAGE>
the Company under section 16 of the Exchange Act, may grant Awards under the
Plan to such Employees and Consultants and may determine all features and
conditions of such Awards. Within the limitations of this Section 2.3, any
reference in the Plan to the Committee shall include such secondary committee.
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Options and Restricted Shares awarded under the Plan shall not exceed (a) five
million plus (b) the additional Common Shares described in Sections 3.2 and 3.3.
The limitations of this Section 3.1 and Section 3.2 shall be subject to
adjustment pursuant to Article 8.
3.2 Annual Increase in Shares. As of February 1 of each year, commencing
with the year 2001, the aggregate number of Options and Restricted Shares that
may be awarded under the Plan shall automatically increase by a number equal to
the lesser of (a) four percent of the total number of Common Shares then
outstanding or (b) three million.
3.3 Additional Shares. If Options granted under the Plan are forfeited or
terminate for any other reason before being exercised, then the corresponding
Common Shares shall again become available for the grant of Options or
Restricted Shares under the Plan. If Common Shares issued upon the exercise of
Options granted under the Plan are forfeited, then such Common Shares shall
again become available for the grant of NSOs and Restricted Shares under the
Plan. If Restricted Shares issued under the Plan are forfeited, then the
corresponding Common Shares shall again become available for the grant of NSOs
and Restricted Shares under the Plan. The aggregate number of Common Shares that
may be issued under the Plan upon the exercise of ISOs shall not be increased
when Restricted Shares or other Common Shares are forfeited.
ARTICLE 4. ELIGIBILITY.
4.1 Nonstatutory Stock Options and Restricted Shares. Only Employees,
Outside Directors and Consultants shall be eligible for the grant of NSOs and
Restricted Shares.
4.2 Incentive Stock Options. Only Employees who are common-law employees
of the Company, a Parent or a Subsidiary shall be eligible for the grant of
ISOs. In addition, an Employee who owns more than 10% of the total combined
voting power of all classes of outstanding stock of the Company or any of its
Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in section 422(c)(6) of the Code are satisfied.
ARTICLE 5. OPTIONS.
5.1 Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are
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not inconsistent with the Plan. The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical. A Stock Option
Agreement may provide that a new Option will be granted automatically to the
Optionee when he or she exercises a prior Option and pays the Exercise Price in
the form described in Section 6.2.
5.2 Number of Shares. Each Stock Option Agreement shall specify the number
of Common Shares subject to the Option and shall provide for the adjustment of
such number in accordance with Article 8. Options granted to any Optionee in a
single fiscal year of the Company shall not cover more than five million Common
Shares, subject to adjustment in accordance with Article 8.
5.3 Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price; provided that the Exercise Price under an ISO shall in no event be less
than 100% of the Fair Market Value of a Common Share on the date of grant and
the Exercise Price under an NSO shall in no event be less than 70% of the Fair
Market Value of a Common Share on the date of grant. In the case of an NSO, a
Stock Option Agreement may specify an Exercise Price that varies in accordance
with a predetermined formula while the NSO is outstanding.
5.4 Exercisability and Term. Each Stock Option Agreement shall specify the
date or event when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option; provided that the term of an ISO shall in no event exceed 10 years from
the date of grant. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee's service.
5.5 Effect of Change in Control. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become exercisable
as to all or part of the Common Shares subject to such Option in the event that
a Change in Control occurs with respect to the Company or in the event that the
Optionee is subject to an Involuntary Termination within 18 months after a
Change in Control. However, in the case of an ISO, the acceleration of
exercisability shall not occur without the Optionee's written consent. In
addition, acceleration of exercisability may be required under Section 8.3.
5.6 Modification or Assumption of Options. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.
5.7 Buyout Provisions. The Committee may at any time (a) offer to buy out
for a payment in cash or cash equivalents an Option previously granted or (b)
authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.
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ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 General Rule. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash or cash equivalents at the time
when such Common Shares are purchased, except as follows:
(a) In the case of an ISO granted under the Plan, payment shall
be made only pursuant to the express provisions of the applicable Stock
Option Agreement. The Stock Option Agreement may specify that payment may
be made in any form(s) described in this Article 6.
(b) In the case of an NSO, the Committee may at any time accept
payment in any form(s) described in this Article 6.
6.2 Surrender of Stock. To the extent that this Section 6.2 is applicable,
all or any part of the Exercise Price may be paid by surrendering, or attesting
to the ownership of, Common Shares that are already owned by the Optionee. Such
Common Shares shall be valued at their Fair Market Value on the date when the
new Common Shares are purchased under the Plan. The Optionee shall not
surrender, or attest to the ownership of, Common Shares in payment of the
Exercise Price if such action would cause the Company to recognize compensation
expense (or additional compensation expense) with respect to the Option for
financial reporting purposes.
6.3 Exercise/Sale. To the extent that this Section 6.3 is applicable, all
or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to a
securities broker approved by the Company to sell all or part of the Common
Shares being purchased under the Plan and to deliver all or part of the sales
proceeds to the Company.
6.4 Exercise/Pledge. To the extent that this Section 6.4 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to
pledge all or part of the Common Shares being purchased under the Plan to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.
6.5 Promissory Note. To the extent that this Section 6.5 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) a full-recourse promissory
note. However, the par value of the Common Shares being purchased under the
Plan, if newly issued, shall be paid in cash or cash equivalents.
6.6 Other Forms of Payment. To the extent that this Section 6.6 is
applicable, all or any part of the Exercise Price and any withholding taxes may
be paid in any other form that is consistent with applicable laws, regulations
and rules.
ARTICLE 7. RESTRICTED SHARES.
7.1 Restricted Stock Agreement. Each grant of Restricted Shares under the
Plan shall be evidenced by a Restricted Stock Agreement between the recipient
and the Company.
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Such Restricted Shares shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Restricted Stock Agreements entered into under the
Plan need not be identical.
7.2 Payment for Awards. Subject to the following sentence, Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
full-recourse promissory notes, past services and future services. To the extent
that an Award consists of newly issued Restricted Shares, the consideration
shall consist exclusively of cash, cash equivalents or past services rendered to
the Company (or a Parent or Subsidiary) or, for the amount in excess of the par
value of such newly issued Restricted Shares, full-recourse promissory notes, as
the Committee may determine.
7.3 Vesting Conditions. Each Award of Restricted Shares may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Restricted Stock Agreement. A
Restricted Stock Agreement may provide for accelerated vesting in the event of
the Participant's death, disability or retirement or other events. The Committee
may determine, at the time of granting Restricted Shares or thereafter, that all
or part of such Restricted Shares shall become vested in the event that a Change
in Control occurs with respect to the Company or in the event that the
Participant is subject to an Involuntary Termination within 18 months after a
Change in Control.
7.4 Voting and Dividend Rights. The holders of Restricted Shares awarded
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders. A Restricted Stock Agreement, however, may require
that the holders of Restricted Shares invest any cash dividends received in
additional Restricted Shares. Such additional Restricted Shares shall be subject
to the same conditions and restrictions as the Award with respect to which the
dividends were paid.
ARTICLE 8. PROTECTION AGAINST DILUTION.
8.1 Adjustments. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of (a) the number of Options and Restricted Shares
available for future Awards under Article 3, (b) the limitation set forth in
Section 5.2, (c) the number of Common Shares covered by each outstanding Option
or (d) the Exercise Price under each outstanding Option. Except as provided in
this Article 8, a Participant shall have no rights by reason of any issue by the
Company of stock of any class or securities convertible into stock of any class,
any subdivision or consolidation of shares of stock of any class, the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class.
8.2 Dissolution or Liquidation. To the extent not previously exercised,
Options shall terminate immediately prior to the dissolution or liquidation of
the Company.
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8.3 Reorganizations. In the event that the Company is a party to a merger
or other reorganization, outstanding Options and Restricted Shares shall be
subject to the agreement of merger or reorganization. Such agreement shall
provide for (a) the continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation, (b) the assumption of the outstanding
Awards by the surviving corporation or its parent or subsidiary, (c) the
substitution by the surviving corporation or its parent or subsidiary of its own
awards for the outstanding Awards, (d) full exercisability or vesting and
accelerated expiration of the outstanding Awards or (e) settlement of the full
value of the outstanding Awards in cash or cash equivalents followed by
cancellation of such Awards.
ARTICLE 9. DEFERRAL OF DELIVERY OF SHARES.
The Committee (in its sole discretion) may permit or require an
Optionee to have Common Shares that otherwise would be delivered to such
Optionee as a result of the exercise of an Option converted into amounts
credited to a deferred compensation account established for such Optionee by the
Committee as an entry on the Company's books. Such amounts shall be determined
by reference to the Fair Market Value of such Common Shares as of the date when
they otherwise would have been delivered to such Optionee. A deferred
compensation account established under this Article 9 may be credited with
interest or other forms of investment return, as determined by the Committee. An
Optionee for whom such an account is established shall have no rights other than
those of a general creditor of the Company. Such an account shall represent an
unfunded and unsecured obligation of the Company and shall be subject to the
terms and conditions of the applicable agreement between such Optionee and the
Company. If the conversion of Options is permitted or required, the Committee
(in its sole discretion) may establish rules, procedures and forms pertaining to
such conversion, including (without limitation) the settlement of deferred
compensation accounts established under this Article 9.
ARTICLE 10. AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such
awards may be settled in the form of Common Shares issued under this Plan. Such
Common Shares shall be treated for all purposes under the Plan like Restricted
Shares and shall, when issued, reduce the number of Common Shares available
under Article 3.
ARTICLE 11. LIMITATION ON RIGHTS.
11.1 Retention Rights. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an Employee,
Outside Director or Consultant. The Company and its Parents, Subsidiaries and
Affiliates reserve the right to terminate the service of any Employee, Outside
Director or Consultant at any time, with or without cause, subject to applicable
laws, the Company's certificate of incorporation and by-laws and a written
employment agreement (if any).
11.2 Stockholders' Rights. A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock certificate for such
Common Shares is issued or, in the case of an
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Option, the time when he or she becomes entitled to receive such Common Shares
by filing a notice of exercise and paying the Exercise Price. No adjustment
shall be made for cash dividends or other rights for which the record date is
prior to such time, except as expressly provided in the Plan.
11.3 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.
ARTICLE 12. WITHHOLDING TAXES.
12.1 General. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.
12.2 Share Withholding. The Committee may permit a Participant to satisfy
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Common Shares that otherwise would be
issued to him or her or by surrendering all or a portion of any Common Shares
that he or she previously acquired. Such Common Shares shall be valued at their
Fair Market Value on the date when they are withheld or surrendered.
ARTICLE 13. LIMITATION ON PAYMENTS.
13.1 Scope of Limitation. This Article 13 shall apply to an Award only if:
(a) The independent auditors most recently selected by the Board
(the "Auditors") determine that the after-tax value of such Award to the
Participant, taking into account the effect of all federal, state and local
income taxes, employment taxes and excise taxes applicable to the
Participant (including the excise tax under section 4999 of the Code), will
be greater after the application of this Article 13 than it was before the
application of this Article 13; or
(b) The Committee, at the time of making an Award under the Plan
or at any time thereafter, specifies in writing that such Award shall be
subject to this Article 13 (regardless of the after-tax value of such Award
to the Participant).
If this Article 13 applies to an Award, it shall supersede any contrary
provision of the Plan or of any Award granted under the Plan.
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13.2 Basic Rule. In the event that the Auditors determine that any payment
or transfer by the Company under the Plan to or for the benefit of a Participant
(a "Payment") would be nondeductible by the Company for federal income tax
purposes because of the provisions concerning "excess parachute payments" in
section 280G of the Code, then the aggregate present value of all Payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
Article 13, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Company because of section 280G
of the Code.
13.3 Reduction of Payments. If the Auditors determine that any Payment
would be nondeductible by the Company because of section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Participant within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Article 13, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Article 13 shall be binding upon
the Company and the Participant and shall be made within 60 days of the date
when a Payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.
13.4 Overpayments and Underpayments. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount which is subject to taxation under section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Participant, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
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13.5 Related Corporations. For purposes of this Article 13, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.
ARTICLE 14. FUTURE OF THE PLAN.
14.1 Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of the Company's initial public offering. The Plan shall
remain in effect until it is terminated under Section 14.2, except that no ISOs
shall be granted on or after the 10/th /anniversary of the later of (a) the date
when the Board adopted the Plan or (b) the date when the Board adopted the most
recent increase in the number of Common Shares available under Article 3 which
was approved by the Company's stockholders.
14.2 Amendment or Termination. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Awards shall be granted under the Plan
after the termination thereof. The termination of the Plan, or any amendment
thereof, shall not affect any Award previously granted under the Plan.
ARTICLE 15. DEFINITIONS.
15.1 "Affiliate" means any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own not less than 50% of such entity.
15.2 "Award" means any award of an Option or a Restricted Share under the
Plan.
15.3 "Board" means the Company's Board of Directors, as constituted from
time to time.
15.4 "Cause" shall mean (a) the unauthorized use or disclosure of the
confidential information or trade secrets of the Company, which use or
disclosure causes material harm to the Company, (b) conviction of, or a plea of
"guilty" or "no contest" to, a felony under the laws of the United States or any
state thereof, (c) gross negligence or (d) continued failure to perform assigned
duties after receiving written notification from the Board. The foregoing,
however, shall not be deemed an exclusive list of all acts or omissions that the
Company (or the Parent, Subsidiary or Affiliate employing the Participant) may
consider as grounds for the discharge of the Participant without Cause.
15.5 "Change in Control" shall mean:
(a) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if
persons who were not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization own immediately after such
merger, consolidation or other reorganization 50% or more of the voting
power of the outstanding securities of each of (i) the continuing or
surviving entity and (ii) any direct or indirect parent corporation of such
continuing or surviving entity;
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(b) The sale, transfer or other disposition of all or
substantially all of the Company's assets;
(c) A change in the composition of the Board, as a result of
which 50% or fewer of the incumbent directors are directors who either (i)
had been directors of the Company on the date 24 months prior to the date
of the event that may constitute a Change in Control (the "original
directors") or (ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so
approved; or
(d) Any transaction as a result of which any person is the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing at least
50% of the total voting power represented by the Company's then outstanding
voting securities. For purposes of this Subsection (d), the term "person"
shall have the same meaning as when used in sections 13(d) and 14(d) of the
Exchange Act but shall exclude (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of a Parent or
Subsidiary and (ii) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
15.6 "Code" means the Internal Revenue Code of 1986, as amended.
15.7 "Committee" means a committee of the Board, as described in Article
2.
15.8 "Common Share" means one share of the common stock of the Company.
15.9 "Company" means GetThere.com, a Delaware corporation.
15.10 "Consultant" means a consultant or adviser who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in Section 4.2.
15.11 "Employee" means a common-law employee of the Company, a Parent, a
Subsidiary or an Affiliate.
15.12 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
15.13 "Exercise Price" means the amount for which one Common Share may be
purchased upon exercise of an Option, as specified in the applicable Stock
Option Agreement.
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15.14 "Fair Market Value" means the market price of Common Shares,
determined by the Committee in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in The Wall Street Journal. Such determination
-----------------------
shall be conclusive and binding on all persons.
15.15 "Involuntary Termination" means the termination of the Participant's
service by reason of:
(a) The involuntary discharge of the Participant by the Company
(or the Parent, Subsidiary or Affiliate employing him or her) for reasons
other than Cause; or
(b) The voluntary resignation of the Participant following (i) a
material adverse change in his or her title or duties with the Company (or
the Parent, Subsidiary or Affiliate employing him or her), (ii) a material
reduction in his or her base salary or (iii) receipt of notice that his or
her principal workplace will be relocated by more than 35 miles.
15.16 "ISO" means an incentive stock option described in section 422(b) of
the Code.
15.17 "NSO" means a stock option not described in sections 422 or 423 of
the Code.
15.18 "Option" means an ISO or NSO granted under the Plan and entitling
the holder to purchase Common Shares.
15.19 "Optionee" means an individual or estate who holds an Option.
15.20 "Outside Director" shall mean a member of the Board who is not an
Employee. Service as an Outside Director shall be considered employment for all
purposes of the Plan, except as provided in Section 4.2.
15.21 "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
15.22 "Participant" means an individual or estate who holds an Award.
15.23 "Plan" means this GetThere.com 1999 Stock Incentive Plan, as amended
from time to time.
15.24 "Restricted Share" means a Common Share awarded under the Plan.
15.25 "Restricted Stock Agreement" means the agreement between the Company
and the recipient of a Restricted Share that contains the terms, conditions and
restrictions pertaining to such Restricted Share.
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15.26 "Stock Option Agreement" means the agreement between the Company and
an Optionee that contains the terms, conditions and restrictions pertaining to
his or her Option.
15.27 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
ARTICLE 16. EXECUTION.
To record the adoption of the Plan by the Board on August 16, 1999,
the Company has caused its duly authorized officer to execute this document in
the name of the Company.
GetThere.com
By: ________________________________
Title: _____________________________
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EXHIBIT 10.4
GetThere.com
1999 Directors' Stock Option Plan
(As Adopted Effective _______ __, 1999)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. INTRODUCTION....................................... 1
ARTICLE 2. ADMINISTRATION..................................... 1
2.1 Committee Composition................................ 1
2.2 Committee Responsibilities........................... 1
ARTICLE 3. SHARES AVAILABLE FOR GRANTS........................ 1
3.1 Basic Limitation..................................... 1
3.2 Annual Increase in Shares............................ 1
3.3 Additional Shares.................................... 2
ARTICLE 4. AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.. 2
4.1 Eligibility.......................................... 2
4.2 Initial Grants....................................... 2
4.3 Annual Grants........................................ 2
4.4 Accelerated Exercisability........................... 2
4.5 Exercise Price....................................... 2
4.6 Term................................................. 3
4.7 Affiliates of Non-Employee Directors................. 3
4.8 Stock Option Agreement............................... 3
ARTICLE 5. PAYMENT FOR OPTION SHARES.......................... 3
5.1 Cash................................................. 3
5.2 Surrender of Stock................................... 3
5.3 Exercise/Sale........................................ 3
5.4 Other Forms of Payment............................... 3
ARTICLE 6. PROTECTION AGAINST DILUTION........................ 3
6.1 Adjustments.......................................... 3
6.2 Dissolution or Liquidation........................... 4
9.3 Reorganizations...................................... 4
ARTICLE 7. LIMITATION ON RIGHTS............................... 4
7.1 Stockholders' Rights................................. 4
7.2 Regulatory Requirements.............................. 4
7.3 Withholding Taxes.................................... 4
ARTICLE 8. FUTURE OF THE PLAN................................. 5
8.1 Term of the Plan..................................... 5
8.2 Amendment or Termination............................. 5
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 9. DEFINITIONS........................................ 5
ARTICLE 10. EXECUTION.......................................... 7
</TABLE>
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GetThere.com
1999 Directors' Stock Option Plan
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board effective as of the date of the
Company's initial public offering. The purpose of the Plan is to promote the
long-term success of the Company and the creation of stockholder value by (a)
encouraging Non-Employee Directors to focus on critical long-range objectives,
(b) encouraging the attraction and retention of Non-Employee Directors with
exceptional qualifications and (c) linking Non-Employee Directors directly to
stockholder interests through increased stock ownership. The Plan seeks to
achieve this purpose by providing for automatic and non-discretionary grants of
Options to Non-Employee Directors.
The Plan shall be governed by, and construed in accordance with, the
laws of the State of Delaware (except their choice-of-law provisions).
ARTICLE 2. ADMINISTRATION.
2.1 Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of two or more directors of
the Company, who shall be appointed by the Board. In addition, the composition
of the Committee shall satisfy such requirements as the Securities and Exchange
Commission may establish for administrators acting under plans intended to
qualify for exemption under Rule 16b-3 (or its successor) under the Exchange
Act.
2.2 Committee Responsibilities. The Committee shall interpret the Plan
and make all decisions relating to the operation of the Plan. The Committee may
adopt such rules or guidelines as it deems appropriate to implement the Plan.
The Committee's determinations under the Plan shall be final and binding on all
persons.
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Common Shares subject to Options granted under the Plan shall not exceed (a)
750,000 plus (b) the additional Common Shares described in Sections 3.2 and 3.3.
The limitations of this Section 3.1 and Section 3.2 shall be subject to
adjustment pursuant to Article 6.
3.2 Annual Increase in Shares. As of February 1 of each year, commencing
with the year 2001, the aggregate number of Common Shares available for the
grant of Options under the Plan shall automatically be increased by the number
necessary to cause the total number of Common Shares then available to be
restored to 750,000.
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3.3 Additional Shares. If Options are forfeited or terminate for any
other reason before being exercised, then the Common Shares subject to such
Options shall again become available for the grant of Options under the Plan.
ARTICLE 4. AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.
4.1 Eligibility. Only Non-Employee Directors shall be eligible for the
grant of Options under the Plan.
4.2 Initial Grants. Each Non-Employee Director who is a member of the
Board on the date of the Company's initial public offering shall on such date
receive a one-time grant of an Option covering 50,000 Common Shares. Each Non-
Employee Director who first becomes a member of the Board after the date of the
Company's initial public offering shall receive a one-time grant of an Option
covering 50,000 Common Shares (subject to adjustment under Article 6). Such
Option shall be granted on the date when such Non-Employee Director first joins
the Board. Subject to the Non-Employee Director's continuing service, Options
granted under this Section 4.2 shall become exercisable in equal monthly
installments over the 48-month period commencing on the date of grant, except
that all of the first six installments shall become exercisable on the date six
months after the date of grant. A Non-Employee Director who previously was an
Employee shall not receive a grant under this Section 4.2.
4.3 Annual Grants. Upon the conclusion of each regular annual meeting of
the Company's stockholders held in the year 2000 or thereafter, each Non-
Employee Director who will continue serving as a member of the Board thereafter
shall receive an Option covering 12,500 Common Shares (subject to adjustment
under Article 6), except that such Option shall not be granted in the calendar
year in which the same Non-Employee Director received the Option described in
Section 4.2. Subject to the Non-Employee Director's continuing service, Options
granted under this Section 4.3 shall become exercisable in equal monthly
installments over the 12-month period commencing on the date of grant. A Non-
Employee Director who previously was an Employee shall be eligible to receive
grants under this Section 4.3.
4.4 Accelerated Exercisability. All Options granted to a Non-Employee
Director under this Article 4 shall also become exercisable in full in the event
of:
(a) The termination of such Non-Employee Director's service
because of death or total and permanent disability; or
(b) A Change in Control with respect to the Company.
In addition, acceleration of exercisability may be required by Section 6.3.
4.5 Exercise Price. The Exercise Price under all Options granted to a
Non-Employee Director under this Article 4 shall be equal to 100% of the Fair
Market Value of a Common Share on the date of grant, payable in one of the forms
described in Article 5.
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4.6 Term. All Options granted to a Non-Employee Director under this
Article 4 shall terminate on the earlier of (a) the 10th anniversary of the date
of grant or (b) the date 12 months after the termination of such Non-Employee
Director's service for any reason.
4.7 Affiliates of Non-Employee Directors. The Committee may provide that
the Options that otherwise would be granted to a Non-Employee Director under
this Article 4 shall instead be granted to an affiliate of such Non-Employee
Director. Such affiliate shall then be deemed to be a Non-Employee Director for
purposes of the Plan, provided that the service-related vesting and termination
provisions pertaining to the Options shall be applied with regard to the service
of the Non-Employee Director.
4.8 Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan.
ARTICLE 5. PAYMENT FOR OPTION SHARES.
5.1 Cash. All or any part of the Exercise Price may be paid in cash or
cash equivalents.
5.2 Surrender of Stock. All or any part of the Exercise Price may be paid
by surrendering, or attesting to the ownership of, Common Shares that are
already owned by the Optionee. Such Common Shares shall be valued at their Fair
Market Value on the date when the new Common Shares are purchased under the
Plan. The Optionee shall not surrender, or attest to the ownership of, Common
Shares in payment of the Exercise Price if such action would cause the Company
to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes.
5.3 Exercise/Sale. All or any part of the Exercise Price and any
withholding taxes may be paid by delivering (on a form prescribed by the
Company) an irrevocable direction to a securities broker approved by the Company
to sell all or part of the Common Shares being purchased under the Plan and to
deliver all or part of the sales proceeds to the Company.
5.4 Other Forms of Payment. At the sole discretion of the Committee, all
or any part of the Exercise Price and any withholding taxes may be paid in any
other form that is consistent with applicable laws, regulations and rules.
ARTICLE 6. PROTECTION AGAINST DILUTION.
6.1 Adjustments. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of (a) the number of Common Shares available for
future grants under
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Article 3, (b) the number of Options to be granted to Non-Employee Directors
under Article 4, (c) the number of Common Shares covered by each outstanding
Option or (d) the Exercise Price under each outstanding Option. Except as
provided in this Article 6, an Optionee shall have no rights by reason of any
issue by the Company of stock of any class or securities convertible into stock
of any class, any subdivision or consolidation of shares of stock of any class,
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class.
6.2 Dissolution or Liquidation. To the extent not previously exercised,
Options shall terminate immediately prior to the dissolution or liquidation of
the Company.
6.3 Reorganizations. In the event that the Company is a party to a merger
or other reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization. Such agreement shall provide for (a) the
continuation of the outstanding Options by the Company, if the Company is a
surviving corporation, (b) the assumption of the outstanding Options by the
surviving corporation or its parent or subsidiary, (c) the substitution by the
surviving corporation or its parent or subsidiary of its own options for the
outstanding Options, (d) full exercisability and accelerated expiration of the
outstanding Options or (e) settlement of the full value of the outstanding
Options in cash or cash equivalents followed by cancellation of such Options.
ARTICLE 7. LIMITATION ON RIGHTS.
7.1 Stockholders' Rights. A Optionee shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Option prior to the time when he or she becomes entitled
to receive such Common Shares by filing a notice of exercise and paying the
Exercise Price. No adjustment shall be made for cash dividends or other rights
for which the record date is prior to such time, except as expressly provided in
the Plan.
7.2 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Option prior to the satisfaction of all legal requirements relating to
the issuance of such Common Shares, to their registration, qualification or
listing or to an exemption from registration, qualification or listing.
7.3 Withholding Taxes. To the extent required by applicable federal,
state, local or foreign law, an Optionee or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding
tax obligations that arise in connection with the Plan. The Company shall not
be required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.
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ARTICLE 8. FUTURE OF THE PLAN.
8.1 Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of the Company's initial public offering. The Plan shall
remain in effect until it is terminated under Section 8.2.
8.2 Amendment or Termination. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Options shall be granted under the
Plan after the termination thereof. The termination of the Plan, or any
amendment thereof, shall not affect any Option previously granted under the
Plan.
ARTICLE 9. DEFINITIONS.
9.1 "Board" means the Company's Board of Directors, as constituted from
time to time.
9.2 "Change in Control" means:
(a) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if persons
who were not stockholders of the Company immediately prior to such merger,
consolidation or other reorganization own immediately after such merger,
consolidation or other reorganization 50% or more of the voting power of the
outstanding securities of each of (i) the continuing or surviving entity and
(ii) any direct or indirect parent corporation of such continuing or surviving
entity;
(b) The sale, transfer or other disposition of all or
substantially all of the Company's assets;
(c) A change in the composition of the Board, as a result of
which 50% or fewer of the incumbent directors are directors who either (i) had
been directors of the Company on the date 24 months prior to the date of the
event that may constitute a Change in Control (the "original directors") or (ii)
were elected, or nominated for election, to the Board with the affirmative votes
of at least a majority of the aggregate of the original directors who were still
in office at the time of the election or nomination and the directors whose
election or nomination was previously so approved; or
(d) Any transaction as a result of which any person is the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing at least 50% of the
total voting power represented by the Company's then outstanding voting
securities. For purposes of this Subsection (d), the term "person" shall have
the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act
but shall exclude (i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of a Parent or Subsidiary and (ii) a
corporation
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owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the common stock
of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
9.3 "Code" means the Internal Revenue Code of 1986, as amended.
9.4 "Committee" means a committee of the Board, as described in Article 2.
9.5 "Common Share" means one share of the common stock of the Company.
9.6 "Company" means GetThere.com, a Delaware corporation.
9.7 "Employee" means a common-law employee of the Company, a Parent or a
Subsidiary.
9.8 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
9.9 "Exercise Price" means the amount for which one Common Share may be
purchased upon exercise of such Option, as specified in the applicable Stock
Option Agreement.
9.10 "Fair Market Value" means the market price of Common Shares,
determined by the Committee in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in The Wall Street Journal, except that the Fair
-----------------------
Market Value on the date of the Company's initial public offering shall be equal
to the price of Common Shares to the public in such offering. Such
determination shall be conclusive and binding on all persons.
9.11 "Non-Employee Director" means a member of the Board who is not an
Employee.
9.12 "Option" means an option granted under the Plan and entitling the
holder to purchase Common Shares. Options do not qualify as incentive stock
options described in section 422(b) of the Code.
9.13 "Optionee" means an individual or estate who holds an Option.
9.14 "Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.
9.15 "Plan" means this GetThere.com 1999 Directors' Stock Option Plan, as
amended from time to time.
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9.16 "Stock Option Agreement" means the agreement between the Company and
an Optionee that contains the terms, conditions and restrictions pertaining to
his or her Option.
9.17 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan
shall be considered a Subsidiary commencing as of such date.
ARTICLE 10. EXECUTION.
To record the adoption of the Plan by the Board on August 16, 1999,
the Company has caused its duly authorized officer to execute this document in
the name of the Company.
GetThere.com
By:____________________________
Title:_________________________
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EXHIBIT 10.5
GetThere.com
1999 Employee Stock Purchase Plan
(As Adopted Effective _______ __, 1999)
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 1. PURPOSE OF THE PLAN......................................... 1
SECTION 2. ADMINISTRATION OF THE PLAN.................................. 1
(a) Committee Composition....................................... 1
(b) Committee Responsibilities.................................. 1
SECTION 3. ENROLLMENT AND PARTICIPATION................................ 1
(a) Offering Periods............................................ 1
(b) Accumulation Periods........................................ 1
(c) Enrollment.................................................. 1
(d) Duration of Participation................................... 1
(e) Applicable Offering Period.................................. 2
SECTION 4. EMPLOYEE CONTRIBUTIONS...................................... 2
(a) Frequency of Payroll Deductions............................. 2
(b) Amount of Payroll Deductions................................ 2
(c) Changing Withholding Rate................................... 2
(d) Discontinuing Payroll Deductions............................ 3
(e) Limit on Number of Elections................................ 3
SECTION 5. WITHDRAWAL FROM THE PLAN.................................... 3
(a) Withdrawal.................................................. 3
(b) Re-Enrollment After Withdrawal.............................. 3
SECTION 6. CHANGE IN EMPLOYMENT STATUS................................. 3
(a) Termination of Employment................................... 3
(b) Leave of Absence............................................ 3
(c) Death....................................................... 3
SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES........................ 4
(a) Plan Accounts............................................... 4
(b) Purchase Price.............................................. 4
(c) Number of Shares Purchased.................................. 4
(d) Available Shares Insufficient............................... 4
(e) Issuance of Stock........................................... 4
(f) Unused Cash Balances........................................ 5
(g) Stockholder Approval........................................ 5
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.............................. 5
(a) Five Percent Limit.......................................... 5
(b) Dollar Limit................................................ 5
</TABLE>
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<TABLE>
<S> <C>
SECTION 9. RIGHTS NOT TRANSFERABLE..................................... 6
SECTION 10. NO RIGHTS AS AN EMPLOYEE.................................... 6
SECTION 11. NO RIGHTS AS A STOCKHOLDER.................................. 6
SECTION 12. SECURITIES LAW REQUIREMENTS................................. 6
SECTION 13. STOCK OFFERED UNDER THE PLAN................................ 7
(a) Authorized Shares........................................... 7
(b) Anti-Dilution Adjustments................................... 7
(c) Reorganizations............................................. 7
SECTION 14. AMENDMENT OR DISCONTINUANCE................................. 7
SECTION 15. DEFINITIONS................................................. 7
(a) Accumulation Period......................................... 7
(b) Board....................................................... 7
(c) Code........................................................ 7
(d) Committee................................................... 7
(e) Company..................................................... 8
(f) Compensation................................................ 8
(g) Corporate Reorganization.................................... 8
(h) Eligible Employee........................................... 8
(i) Exchange Act................................................ 8
(j) Fair Market Value........................................... 8
(k) IPO......................................................... 9
(l) Offering Period............................................. 9
(m) Participant................................................. 9
(n) Participating Company....................................... 9
(o) Plan........................................................ 9
(p) Plan Account................................................ 9
(q) Purchase Price.............................................. 9
(r) Stock....................................................... 9
(s) Subsidiary.................................................. 9
SECTION 15. EXECUTION................................................... 9
</TABLE>
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GetThere.com
1999 Employee Stock Purchase Plan
SECTION 1. PURPOSE OF THE PLAN.
The Plan was adopted by the Board effective as of the date of the IPO. The
purpose of the Plan is to provide Eligible Employees with an opportunity to
increase their proprietary interest in the success of the Company by purchasing
Stock from the Company on favorable terms and to pay for such purchases through
payroll deductions. The Plan is intended to qualify under section 423 of the
Code.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of one or more directors of
the Company, who shall be appointed by the Board.
(b) Committee Responsibilities. The Committee shall interpret the Plan and
make all other policy decisions relating to the operation of the Plan. The
Committee may adopt such rules, guidelines and forms as it deems appropriate to
implement the Plan. The Committee's determinations under the Plan shall be final
and binding on all persons.
SECTION 3. ENROLLMENT AND PARTICIPATION.
(a) Offering Periods. While the Plan is in effect, two overlapping
Offering Periods shall commence in each calendar year. The Offering Periods
shall consist of the 24-month periods commencing on each June 1 and December 1,
except that the first Offering Period shall commence on the date of the IPO and
end on November 30, 2001.
(b) Accumulation Periods. While the Plan is in effect, two Accumulation
Periods shall commence in each calendar year. The Accumulation Periods shall
consist of the six-month periods commencing on each June 1 and December 1,
except that the first Accumulation Period shall commence on the date of the IPO
and end on May 31, 2000.
(c) Enrollment. Any individual who, on the day preceding the first day of
an Offering Period, qualifies as an Eligible Employee may elect to become a
Participant in the Plan for such Offering Period by executing the enrollment
form prescribed for this purpose by the Committee. The enrollment form shall be
filed with the Company at the prescribed location not later than five business
days prior to the commencement of such Offering Period.
(d) Duration of Participation. Once enrolled in the Plan, a Participant
shall continue to participate in the Plan until he or she ceases to be an
Eligible Employee, withdraws from the Plan under Section 5(a) or reaches the end
of the Accumulation Period in which his or her employee contributions were
discontinued under Section 4(d) or 8(b). A Participant who
<PAGE>
discontinued employee contributions under Section 4(d) or withdrew from the Plan
under Section 5(a) may again become a Participant, if he or she then is an
Eligible Employee, by following the procedure described in Subsection (c) above.
A Participant whose employee contributions were discontinued automatically under
Section 8(b) shall automatically resume participation at the beginning of the
earliest Accumulation Period ending in the next calendar year, if he or she then
is an Eligible Employee.
(e) Applicable Offering Period. For purposes of calculating the Purchase
Price under Section 7(b), the applicable Offering Period shall be determined as
follows:
(i) Once a Participant is enrolled in the Plan for an Offering
Period, such Offering Period shall continue to apply to him or her until the
earliest of (A) the end of such Offering Period, (B) the end of his or her
participation under Subsection (d) above or (C) re-enrollment for a subsequent
Offering Period under Paragraph (ii) or (iii) below.
(ii) In the event that the Fair Market Value of Stock on the last
trading day before the commencement of the Offering Period for which the
Participant is enrolled is higher than on the last trading day before the
commencement of any subsequent Offering Period, the Participant shall
automatically be re-enrolled for such subsequent Offering Period.
(iii) Any other provision of the Plan notwithstanding, the Company
(at its sole discretion) may determine prior to the commencement of any new
Offering Period that all Participants shall be re-enrolled for such new Offering
Period.
(iv) When a Participant reaches the end of an Offering Period but
his or her participation is to continue, then such Participant shall
automatically be re-enrolled for the Offering Period that commences immediately
after the end of the prior Offering Period.
SECTION 4. EMPLOYEE CONTRIBUTIONS.
(a) Frequency of Payroll Deductions. A Participant may purchase shares of
Stock under the Plan solely by means of payroll deductions. Payroll deductions,
as designated by the Participant pursuant to Subsection (b) below, shall occur
on each payday during participation in the Plan.
(b) Amount of Payroll Deductions. An Eligible Employee shall designate on
the enrollment form the portion of his or her Compensation that he or she elects
to have withheld for the purchase of Stock. Such portion shall be a whole
percentage of the Eligible Employee's Compensation, but not less than 1% nor
more than 15%.
(c) Changing Withholding Rate. If a Participant wishes to change the rate
of payroll withholding, he or she may do so by filing a new enrollment form with
the Company at the prescribed location at any time. The new withholding rate
shall be effective as soon as
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<PAGE>
reasonably practicable after such form has been received by the Company. The new
withholding rate shall be a whole percentage of the Eligible Employee's
Compensation, but not less than 1% nor more than 15%.
(d) Discontinuing Payroll Deductions. If a Participant wishes to
discontinue employee contributions entirely, he or she may do so by filing a new
enrollment form with the Company at the prescribed location at any time.
Payroll withholding shall cease as soon as reasonably practicable after such
form has been received by the Company. (In addition, employee contributions may
be discontinued automatically pursuant to Section 8(b).) A Participant who has
discontinued employee contributions may resume such contributions by filing a
new enrollment form with the Company at the prescribed location. Payroll
withholding shall resume as soon as reasonably practicable after such form has
been received by the Company.
(e) Limit on Number of Elections. No Participant shall make more than two
elections under Subsection (c) or (d) above during any Accumulation Period.
SECTION 5. WITHDRAWAL FROM THE PLAN.
(a) Withdrawal. A Participant may elect to withdraw from the Plan by
filing the prescribed form with the Company at the prescribed location at any
time before the last day of an Accumulation Period. As soon as reasonably
practicable thereafter, payroll deductions shall cease and the entire amount
credited to the Participant's Plan Account shall be refunded to him or her in
cash, without interest. No partial withdrawals shall be permitted.
(b) Re-Enrollment After Withdrawal. A former Participant who has withdrawn
from the Plan shall not be a Participant until he or she re-enrolls in the Plan
under Section 3(c). Re-enrollment may be effective only at the commencement of
an Offering Period.
SECTION 6. CHANGE IN EMPLOYMENT STATUS.
(a) Termination of Employment. Termination of employment as an Eligible
Employee for any reason, including death, shall be treated as an automatic
withdrawal from the Plan under Section 5(a). (A transfer from one Participating
Company to another shall not be treated as a termination of employment.)
(b) Leave of Absence. For purposes of the Plan, employment shall not be
deemed to terminate when the Participant goes on a military leave, a sick leave
or another bona fide leave of absence, if the leave was approved by the Company
in writing. Employment, however, shall be deemed to terminate 90 days after the
Participant goes on a leave, unless a contract or statute guarantees his or her
right to return to work. Employment shall be deemed to terminate in any event
when the approved leave ends, unless the Participant immediately returns to
work.
(c) Death. In the event of the Participant's death, the amount credited to
his or her Plan Account shall be paid to a beneficiary designated by him or her
for this purpose on the prescribed form or, if none, to the Participant's
estate. Such form shall be valid only if it was filed with the Company at the
prescribed location before the Participant's death.
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SECTION 7. PLAN ACCOUNTS AND PURCHASE OF SHARES.
(a) Plan Accounts. The Company shall maintain a Plan Account on its books
in the name of each Participant. Whenever an amount is deducted from the
Participant's Compensation under the Plan, such amount shall be credited to the
Participant's Plan Account. Amounts credited to Plan Accounts shall not be
trust funds and may be commingled with the Company's general assets and applied
to general corporate purposes. No interest shall be credited to Plan Accounts.
(b) Purchase Price. The Purchase Price for each share of Stock purchased
at the close of an Accumulation Period shall be the lower of:
(i) 85% of the Fair Market Value of such share on the last trading
day in such Accumulation Period; or
(ii) 85% of the Fair Market Value of such share on the last trading
day before the commencement of the applicable Offering Period (as
determined under Section 3(e)) or, in the case of the first Offering Period
under the Plan, 85% of the price at which one share of Stock is offered to
the public in the IPO.
(c) Number of Shares Purchased. As of the last day of each Accumulation
Period, each Participant shall be deemed to have elected to purchase the number
of shares of Stock calculated in accordance with this Subsection (c), unless the
Participant has previously elected to withdraw from the Plan in accordance with
Section 5(a). The amount then in the Participant's Plan Account shall be
divided by the Purchase Price, and the number of shares that results shall be
purchased from the Company with the funds in the Participant's Plan Account.
The foregoing notwithstanding, no Participant shall purchase more than 3,000
shares of Stock with respect to any Accumulation Period nor more than the
amounts of Stock set forth in Sections 8(b) and 13(a). The Committee may
determine with respect to all Participants that any fractional share, as
calculated under this Subsection (c), shall be (i) rounded down to the next
lower whole share or (ii) credited as a fractional share.
(d) Available Shares Insufficient. In the event that the aggregate number
of shares that all Participants elect to purchase during an Accumulation Period
exceeds the maximum number of shares remaining available for issuance under
Section 13(a), then the number of shares to which each Participant is entitled
shall be determined by multiplying the number of shares available for issuance
by a fraction, the numerator of which is the number of shares that such
Participant has elected to purchase and the denominator of which is the number
of shares that all Participants have elected to purchase.
(e) Issuance of Stock. Certificates representing the shares of Stock
purchased by a Participant under the Plan shall be issued to him or her as soon
as reasonably practicable after the close of the applicable Accumulation Period,
except that the Committee may determine that such shares shall be held for each
Participant's benefit by a broker designated by the Committee (unless the
Participant has elected that certificates be issued to him or her). Shares may
be registered in the name of the Participant or jointly in the name of the
Participant and his or her spouse as joint tenants with right of survivorship or
as community property.
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(f) Unused Cash Balances. An amount remaining in the Participant's Plan
Account that represents the Purchase Price for any fractional share shall be
carried over in the Participant's Plan Account to the next Accumulation Period.
Any amount remaining in the Participant's Plan Account that represents the
Purchase Price for whole shares that could not be purchased by reason of
Subsection (c) above, Section 8(b) or Section 13(a) shall be refunded to the
Participant in cash, without interest.
(g) Stockholder Approval. Any other provision of the Plan notwithstanding,
no shares of Stock shall be purchased under the Plan unless and until the
Company's stockholders have approved the adoption of the Plan.
SECTION 8. LIMITATIONS ON STOCK OWNERSHIP.
(a) Five Percent Limit. Any other provision of the Plan notwithstanding,
no Participant shall be granted a right to purchase Stock under the Plan if such
Participant, immediately after his or her election to purchase such Stock, would
own stock possessing more than 5% of the total combined voting power or value of
all classes of stock of the Company or any parent or Subsidiary of the Company.
For purposes of this Subsection (a), the following rules shall apply:
(i) Ownership of stock shall be determined after applying the
attribution rules of section 424(d) of the Code;
(ii) Each Participant shall be deemed to own any stock that he or she
has a right or option to purchase under this or any other plan; and
(iii) Each Participant shall be deemed to have the right to purchase
3,000 shares of Stock under this Plan with respect to each Accumulation
Period.
(b) Dollar Limit. Any other provision of the Plan notwithstanding, no
Participant shall purchase Stock with a Fair Market Value in excess of the
following limit:
(i) In the case of Stock purchased during an Offering Period that
commenced in the current calendar year, the limit shall be equal to (A)
$25,000 minus (B) the Fair Market Value of the Stock that the Participant
previously purchased in the current calendar year (under this Plan and all
other employee stock purchase plans of the Company or any parent or
Subsidiary of the Company).
(ii) In the case of Stock purchased during an Offering Period that
commenced in the immediately preceding calendar year, the limit shall be
equal to (A) $50,000 minus (B) the Fair Market Value of the Stock that the
Participant previously purchased (under this Plan and all other employee
stock purchase plans of the Company or any parent or Subsidiary of the
Company) in the current calendar year and in the immediately preceding
calendar year.
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(iii) In the case of Stock purchased during an Offering Period that
commenced in the second preceding calendar year, the limit shall be equal
to (A) $75,000 minus (B) the Fair Market Value of the Stock that the
Participant previously purchased (under this Plan and all other employee
stock purchase plans of the Company or any parent or Subsidiary of the
Company) in the current calendar year and in the two preceding calendar
years.
For purposes of this Subsection (b), the Fair Market Value of Stock shall be
determined in each case as of the beginning of the Offering Period in which such
Stock is purchased. Employee stock purchase plans not described in section 423
of the Code shall be disregarded. If a Participant is precluded by this
Subsection (b) from purchasing additional Stock under the Plan, then his or her
employee contributions shall automatically be discontinued and shall resume at
the beginning of the earliest Accumulation Period ending in the next calendar
year (if he or she then is an Eligible Employee).
SECTION 9. RIGHTS NOT TRANSFERABLE.
The rights of any Participant under the Plan, or any Participant's interest
in any Stock or moneys to which he or she may be entitled under the Plan, shall
not be transferable by voluntary or involuntary assignment or by operation of
law, or in any other manner other than by beneficiary designation or the laws of
descent and distribution. If a Participant in any manner attempts to transfer,
assign or otherwise encumber his or her rights or interest under the Plan, other
than by beneficiary designation or the laws of descent and distribution, then
such act shall be treated as an election by the Participant to withdraw from the
Plan under Section 5(a).
SECTION 10. NO RIGHTS AS AN EMPLOYEE.
Nothing in the Plan or in any right granted under the Plan shall confer
upon the Participant any right to continue in the employ of a Participating
Company for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Participating Companies or of the
Participant, which rights are hereby expressly reserved by each, to terminate
his or her employment at any time and for any reason, with or without cause.
SECTION 11. NO RIGHTS AS A STOCKHOLDER.
A Participant shall have no rights as a stockholder with respect to any
shares of Stock that he or she may have a right to purchase under the Plan until
such shares have been purchased on the last day of the applicable Accumulation
Period.
SECTION 12. SECURITIES LAW REQUIREMENTS.
Shares of Stock shall not be issued under the Plan unless the issuance and
delivery of such shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange or other
securities market on which the Company's securities may then be traded.
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SECTION 13. STOCK OFFERED UNDER THE PLAN.
(a) Authorized Shares. The number of shares of Stock available for
purchase under the Plan shall be 2,500,000 (subject to adjustment pursuant to
this Section 13). On June 1 of each year, commencing with June 1, 2000, the
aggregate number of shares of Stock available for purchase during the life of
the Plan shall automatically be increased by the number of shares necessary to
cause the number of shares then available for purchase to be restored to
2,500,000 (subject to adjustment pursuant to this Section 13).
(b) Anti-Dilution Adjustments. The aggregate number of shares of Stock
offered under the Plan, the 3,000-share limitation described in Section 7(c) and
the price of shares that any Participant has elected to purchase shall be
adjusted proportionately by the Committee for any increase or decrease in the
number of outstanding shares of Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, any other increase
or decrease in such shares effected without receipt or payment of consideration
by the Company, the distribution of the shares of a Subsidiary to the Company's
stockholders or a similar event.
(c) Reorganizations. Any other provision of the Plan notwithstanding,
immediately prior to the effective time of a Corporate Reorganization, the
Offering Period and Accumulation Period then in progress shall terminate and
shares shall be purchased pursuant to Section 7, unless the Plan is continued or
assumed by the surviving corporation or its parent corporation. The Plan shall
in no event be construed to restrict in any way the Company's right to undertake
a dissolution, liquidation, merger, consolidation or other reorganization.
SECTION 14. AMENDMENT OR DISCONTINUANCE.
The Board shall have the right to amend, suspend or terminate the Plan at
any time and without notice. Except as provided in Section 13, any increase in
the aggregate number of shares of Stock to be issued under the Plan shall be
subject to approval by a vote of the stockholders of the Company. In addition,
any other amendment of the Plan shall be subject to approval by a vote of the
stockholders of the Company to the extent required by an applicable law or
regulation. The Plan shall terminate automatically on August 15, 2009, unless
it is extended by the Board and the extension is approved by a vote of the
stockholders of the Company.
SECTION 15. DEFINITIONS.
(a) "Accumulation Period" means a six-month period during which
contributions may be made toward the purchase of Stock under the Plan, as
determined pursuant to Section 3(b).
(b) "Board" means the Board of Directors of the Company, as constituted
from time to time.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a committee of the Board, as described in Section 2.
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(e) "Company" means GetThere.com, a Delaware corporation.
(f) "Compensation" means (i) the total compensation paid in cash to a
Participant by a Participating Company, including salaries, wages, bonuses,
incentive compensation, commissions, overtime pay and shift premiums, plus (ii)
any pre-tax contributions made by the Participant under section 401(k) or 125 of
the Code. "Compensation" shall exclude all non-cash items, moving or relocation
allowances, cost-of-living equalization payments, car allowances, tuition
reimbursements, imputed income attributable to cars or life insurance, severance
pay, fringe benefits, contributions or benefits received under employee benefit
plans, income attributable to the exercise of stock options, and similar items.
The Committee shall determine whether a particular item is included in
Compensation.
(g) "Corporate Reorganization" means:
(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization; or
(ii) The sale, transfer or other disposition of all or substantially
all of the Company's assets or the complete liquidation or dissolution of the
Company.
(h) "Eligible Employee" means any employee of a Participating Company
whose customary employment is for more than five months per calendar year and
for more than 20 hours per week. The foregoing notwithstanding, an individual
shall not be considered an Eligible Employee if his or her participation in the
Plan is prohibited by the law of any country which has jurisdiction over him or
her or if he or she is subject to a collective bargaining agreement that does
not provide for participation in the Plan.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(j) "Fair Market Value" means the market price of Stock, determined by the
Committee as follows:
(i) If the Stock was traded on The Nasdaq National Market on the
date in question, then the Fair Market Value shall be equal to the last-
transaction price quoted for such date by The Nasdaq National Market;
(ii) If the Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date; or
(iii) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such basis as
it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in The Wall Street Journal or as reported
-----------------------
directly to the Company by Nasdaq or a stock exchange. Such determination shall
be conclusive and binding on all persons.
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(k) "IPO" means the initial offering of Stock to the public pursuant to a
registration statement filed by the Company with the Securities and Exchange
Commission.
(l) "Offering Period" means a 24-month period with respect to which the
right to purchase Stock may be granted under the Plan, as determined pursuant to
Section 3(a).
(m) "Participant" means an Eligible Employee who elects to participate in
the Plan, as provided in Section 3(c).
(n) "Participating Company" means (i) the Company and (ii) each present or
future Subsidiary designated by the Committee as a Participating Company.
(o) "Plan" means this GetThere.com 1999 Employee Stock Purchase Plan, as
it may be amended from time to time.
(p) "Plan Account" means the account established for each Participant
pursuant to Section 7(a).
(q) "Purchase Price" means the price at which Participants may purchase
Stock under the Plan, as determined pursuant to Section 7(b).
(r) "Stock" means the Common Stock of the Company.
(s) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
SECTION 16. EXECUTION.
To record the adoption of the Plan by the Board on August 16, 1999, the
Company has caused its duly authorized officer to execute this document in the
name of the Company.
GetThere.com
By:______________________
Title:___________________
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Exhibit 10.6
Employment Agreement
This Agreement is entered into as of January 11, 1999, by and between
Gadi Maier (the "Employee") and Internet Travel Network, a California
corporation (the "Company").
1. Duties and Scope of Employment.
(a) Positions. For the term of his employment under this
Agreement ("Employment"), the Company agrees to employ the Employee in the
position of President and Chief Executive Officer. The Employee shall report to
the Company's Board of Directors (the "Board"). The Board shall initially elect
the Employee as a member of the Board, effective as of the commencement of his
Employment. The Company shall use reasonable efforts to cause the Employee to be
nominated for reelection as a member of the Board whenever his term as a
director expires during his Employment. The Employee agrees to resign from the
Board in the event that his Employment terminates for any reason.
(b) Obligations to the Company. During the term of his
Employment, the Employee shall devote his full business efforts and time to the
Company. During the term of his Employment, without the prior written approval
of the Company's Board of Directors, the Employee shall not render services in
any capacity to any other person or entity and shall not act as a sole
proprietor or partner of any other person or entity or as a shareholder owning
more than five percent of the stock of any corporation other than the Company.
The foregoing notwithstanding:
(i) The Company acknowledges that, on the date of this
Agreement, the Employee owns the investments listed on Schedule A attached
hereto, and such investments shall be deemed to be in compliance with this
Agreement; and
(ii) The Company acknowledges (A) that the Employee, prior
to the commencement of his Employment, developed a business concept
involving the development of an internet site designed to facilitate the
centralized purchasing of both products and services, principally by small-
and medium-sized businesses, as reflected in a written business plan that
was presented to, and reviewed by, potential investors, (B) that such
concept is expected to result in the formation of a company (the
"Purchasing Site Company") by a colleague of the Employee, (C) that the
Employee will acquire a minority equity interest in the Purchasing Site
Company and may become a member of its board of directors, (D) that the
Company shall not have any interest in or claim to or against the
Purchasing Site Company or to the Employee's interest in the Purchasing
Site Company and (E) that the Employee's equity interest in the Purchasing
Site Company and service on its board of directors, as described in this
Paragraph (ii), shall be deemed to be in compliance with this Agreement.
The Employee
<PAGE>
acknowledges (A) that the Company, prior to the commencement of the
Employee's Employment, developed a business concept relating generally to
an internet-based purchasing site that has not been fully developed but
has been discussed with third parties and (B) that the Employee shall not
have any interest in or claim to the business concept developed by the
Company.
All business activities of the Employee, whether or not described in Paragraphs
(i) and (ii) above, that are not related to his duties under this Agreement
shall, in the aggregate, be limited to 10 hours per month. The Employee shall
comply with the Company's policies and rules, as they may be in effect from time
to time during the term of his Employment.
(c) No Conflicting Obligations. The Employee represents and
warrants to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. The Employee represents and warrants that he will not use or
disclose, in connection with his employment by the Company, any trade secrets or
other proprietary information or intellectual property in which the Employee or
any other person has any right, title or interest and that his employment by the
Company as contemplated by this Agreement will not infringe or violate the
rights of any other person. The Employee represents and warrants to the Company
that he has returned all property and confidential information belonging to any
prior employer.
(d) Commencement Date. The Employee shall commence full-time
Employment under this Agreement as soon as reasonably practicable and in no
event later than January 11, 1999.
2. Cash and Incentive Compensation.
(a) Salary. The Company shall pay the Employee as compensation
for his services a base salary at a gross annual rate of not less than $240,000.
Such salary shall be payable in accordance with the Company's standard payroll
procedures. (The annual compensation specified in this Subsection (a), together
with any increases in such compensation that the Company may grant from time to
time, is referred to in this Agreement as "Base Compensation.")
(b) Incentive Bonuses. The Employee shall be eligible to be
considered for an annual incentive bonus. The minimum amount of such bonus shall
be $60,000 per year (the "Minimum Bonus"). The maximum amount of such bonus for
the year 1999 shall be $110,000. Subject to the foregoing, the actual amount of
such bonus shall be determined on the basis of objective and/or subjective
criteria established by the Board at its discretion. The determinations of the
Board with respect to such bonus shall be final and binding.
(c) Reimbursement of Transition Expenses. The Company shall
reimburse the Employee for the reasonable fees of legal counsel incurred in
connection with the negotiation of this Agreement, not to exceed $6,500. The
Company shall also pay the Employee, on or about the first day of his
Employment, the amount of $2,000 to defray transition expenses relating to
health care insurance coverage.
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<PAGE>
(d) Stock Options. The Board shall grant the Employee options
(the "Options") to purchase, in the aggregate, 1,743,675 shares of the Company's
Common Stock. The Options, to the extent not granted prior to the date of this
Agreement, shall be granted as soon as reasonably practicable on or after the
date of this Agreement. The exercise price of the Options shall be equal to
$1.00 per share. To the extent permitted by section 422(d) the Internal Revenue
Code of 1986, as amended (the "Code"), the Options shall be incentive stock
options granted under the Internet Travel Network 1996 Stock Incentive Plan, as
amended (the "Plan"). The term of the Options shall be 10 years, and the Options
shall not be subject to earlier expiration with respect to vested shares in the
event of the termination of the Employee's Employment. The Options shall become
exercisable on January 1, 2000, with respect to 100,000 shares and on January 1,
2001, with respect to 100,000 shares. The Options shall be exercisable at any
time on or after the date of grant with respect to the remaining shares. To the
extent that the Options are not yet exercisable when the vesting of the
underlying shares accelerates, as described below, the Options shall become
exercisable in full at that time. The purchased shares shall be subject to
repurchase by the Company at the exercise price in the event that the Employee's
Employment terminates before he vests in the shares. The option shares shall
vest as follows:
(i) One-seventh of the option shares shall vest on the
earlier of (A) the date when the Employee completes the first 12 months of
continuous service with the Company or (B) the date when the Company is
subject to a Change in Control. For all purposes under this Agreement, the
term "Change in Control" shall have the meaning given to such term in the
Plan.
(ii) Six-sevenths of the option shares shall vest in equal
monthly installments over the Employee's first 48 months of continuous
service (the "Monthly Vesting Amount"). In the event that the Company is
subject to a Change in Control during the Employee's first 12 months of
continuous service with the Company, a total of 60% of the option shares
described in this Paragraph (ii) shall be vested. In the event that the
Company is subject to a Change in Control during the Employee's second 12
months of continuous service with the Company, the total percentage of the
option shares described in this Paragraph (ii) that is vested shall be
equal to 80% plus 1.6667% for each month of continuous service in excess of
12 completed by the Employee. In the event that the Company is subject to a
Change in Control after the Employee has completed 24 months of continuous
service with the Company, 100% of the option shares described in this
Paragraph (ii) shall be vested. In the event that vesting accelerates upon
a Change in Control pursuant to this Paragraph (ii), the remaining unvested
option shares shall continue to vest as to the Monthly Vesting Amount with
each month of continuous service following the Change in Control.
(iii) In the event that the Employee is subject to an
Involuntary Termination (as defined in Section 6(d)) after a Change in
Control, then all remaining option shares described in Paragraph (ii) above
shall vest.
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(iv) In the event of the Employee's death or Disability (as
defined in the Plan), the vested portion of the option shares described in
Paragraphs (i) and (ii) above shall be determined by adding 12 months to
the Employee's actual period of continuous service with the Company.
The Employee may pay the exercise price of shares of the Company's Common Stock
acquired under the Options with a full-recourse promissory note secured by such
shares. Such note shall have a term of five years, shall bear interest at the
applicable federal rate (as announced by the Internal Revenue Service from time
to time) and shall provide for principal and interest to be payable in a lump
sum on the due date. The forms of Notice of Grant and Stock Option Agreement
evidencing the Options, the form of such note and the form of Stock Pledge
Agreement related to such note are attached hereto as Exhibits A-1, A-2, A-3, A-
4, B and C, respectively.
(e) S-8 Registration Rights. The Company shall use reasonable
efforts to register all shares of its Common Stock subject to the Options by
means of a registration statement on Form S-8 (the "Form S-8") as soon as
reasonably practicable after an initial public offering of its securities (the
"IPO"). Except for those shares, if any, to be registered under a registration
statement on Form S-1 pursuant to Subsection (f) below, any shares acquired by
the Employee under the Options prior to the IPO shall be included in the Form S-
8 by means of a reoffer prospectus to the extent permitted by the General
Instructions to Form S-8.
(f) Other Registration Rights. All vested shares of the
Company's Common Stock that the Employee has purchased by exercising the Options
shall be deemed "Conversion Stock," and the Employee shall be deemed a "Holder,"
for purposes of sections 1, 2, 5.2, 5.4 through 5.9, 5.11, 11 and 13 through 19
of the Amended and Restated Investor Rights Agreement dated as of May 10, 1998
(the "Rights Agreement"), by and among the Company and the persons listed on the
Schedule of Investors attached as Schedule A thereto. In order to give effect to
the preceding sentence, the Employee shall become a party to the Rights
Agreement by means of an amendment to the Rights Agreement adopted pursuant to
section 14 thereof.
3. Vacation and Employee Benefits. During the term of his
Employment, the Employee shall be eligible for paid vacations in accordance with
the Company's standard policy for similarly situated employees, as it may be
amended from time to time, provided that the Employee shall be entitled to not
less than four weeks of paid vacation per year. During the term of his
Employment, the Employee shall be eligible to participate in any employee
benefit plans maintained by the Company for similarly situated employees,
subject in each case to the generally applicable terms and conditions of the
plan in question and to the determinations of any person or committee
administering such plan. In addition, the Company shall maintain term insurance
coverage on the Employee's life with a benefit of not less than $1 million;
provided that the Employee (a) is insurable at standard or better rates and (b)
agrees to submit to such medical examinations as the insurance carrier or
carriers selected by the Company may reasonably require. The Employee shall be
entitled to designate the beneficiary or beneficiaries of such coverage. After
the IPO, the Company shall maintain adequate liability insurance for the benefit
of its directors and officers; provided that such coverage is available at
reasonable cost.
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4. Business Expenses. During the term of his Employment, the
Employee shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with his duties
hereunder. The Company shall reimburse the Employee for such expenses upon
presentation of an itemized account and appropriate supporting documentation,
all in accordance with the Company's generally applicable policies.
5. Term of Employment.
(a) Basic Rule. The Company agrees to continue the Employee's
Employment, and the Employee agrees to remain in Employment with the Company,
from the commencement date set forth in Section 1(d) until the date when the
Employee's Employment terminates pursuant to Subsection (b) or (c) below. The
Employee's Employment with the Company shall be "at will." Any contrary
representations which may have been made to the Employee shall be superseded by
this Agreement. This Agreement shall constitute the full and complete agreement
between the Employee and the Company on the "at will" nature of the Employee's
Employment, which may only be changed in an express written agreement signed by
the Employee and a duly authorized officer of the Company.
(b) Termination. The Company may terminate the Employee's
Employment at any time and for any reason (or no reason), and with or without
Cause, by giving the Employee notice in writing. The Employee may terminate his
Employment by giving the Company notice in writing. The Employee's Employment
shall terminate automatically in the event of his death.
(c) Permanent Disability. The Company may terminate the
Employee's active Employment due to Permanent Disability by giving the Employee
30 days' advance notice in writing. For all purposes under this Agreement,
"Permanent Disability" shall mean that the Employee, at the time notice is
given, has failed to perform his duties under this Agreement for a period of not
less than 90 consecutive days as the result of his incapacity due to physical or
mental injury, disability or illness. In the event that the Employee
satisfactorily resumes the performance of substantially all of his duties
hereunder before the termination of his active Employment under this Subsection
(c) becomes effective, the notice of termination shall automatically be deemed
to have been revoked.
(d) Rights Upon Termination. Except as expressly provided in
Section 6, upon the termination of the Employee's Employment pursuant to this
Section 5, the Employee shall only be entitled to the compensation, benefits and
reimbursements described in Sections 2, 3 and 4 for the period preceding the
effective date of the termination. The payments under this Agreement shall fully
discharge all obligations and responsibilities of the Company to the Employee.
(e) Termination of Agreement. This Agreement shall terminate
when all obligations of the parties hereunder have been satisfied. The
termination of this Agreement shall not limit or otherwise affect any of the
Employee's obligations under Section 8.
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6. Termination Benefits.
(a) Mutual General Release. Any other provision of this
Agreement notwithstanding, Subsections (b) and (c) below shall not apply unless
the Employee and the Company (i) have executed a mutual general release (in a
form prescribed by the Company) of all known and unknown claims that each party
may then have against the other party or persons affiliated with the other
party, (ii) have agreed not to prosecute any legal action or other proceeding
based upon any of such claims and (iii) are in compliance with Section 8. The
Company may discontinue any payments and/or benefits under Subsections (b) and
(c) below if and when the Employee fails to comply with Section 8.
(b) Severance Benefit. If, during the term of this Agreement,
the Employee is subject to an Involuntary Termination, then the Employee shall
be entitled to receive an amount equal to his Base Compensation and Minimum
Bonus at the rate in effect at the termination of his Employment for a period
following the termination of his Employment (the "Severance Benefit"). Such
period (the "Continuation Period") shall be equal to the following:
(i) If the Involuntary Termination occurs during the first
three months of Employment, there shall be no Continuation Period.
(ii) If the Involuntary Termination occurs during the
fourth through 12/th/ months of Employment, the Continuation Period shall
be equal to nine months.
(iii) If the Involuntary Termination occurs after the 12/th/
month of Employment, the Continuation Period shall be equal to 12 months.
If the Involuntary Termination occurs prior to the IPO, one-half of the
Severance Benefit shall be paid as soon as reasonably practicable after the date
of the Involuntary Termination and the balance shall be paid in equal monthly
installments during the six-month period next following the date of the
Involuntary Termination. If the Involuntary Termination occurs after the IPO,
the entire Severance Benefit shall be paid as soon as reasonably practicable
after the date of the Involuntary Termination.
(c) Group Insurance Coverage. If Subsection (b) above applies,
the Employee and his dependents (where applicable) shall be entitled to continue
participating in the Company's group insurance programs during the Continuation
Period, subject to the terms of any insurance policies or other contracts
applicable to such programs. To the extent that such insurance policies or other
contracts do not permit the continued participation of the Employee and his
dependents during the Continuation Period, the Company shall make monthly cash
payments to the Employee equal to the amount that it would have paid to cover
the Employee and his dependents under such insurance policies or other
contracts.
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(d) Definition of "Involuntary Termination." For all purposes
under this Agreement, "Involuntary Termination" shall mean the termination of
the Employee's Employment by reason of:
(i) The involuntary discharge of the Employee by the
Company for reasons other than Cause or Permanent Disability; or
(ii) The voluntary resignation of the Employee following
(A) a material reduction of the Employee's duties, authority or
responsibilities, (B) any reduction in the Employee's title, (C) a change
in the Employee's reporting relationship requiring him to report to any
person other than the Board, (D) a reduction of the Employee's Base
Compensation or Minimum Bonus, as in effect immediately prior to such
reduction, or (E) the relocation of the Employee's principal place of
employment, if the distance between the Employee's new office and his
office immediately prior to such relocation is more than 35 miles.
The foregoing notwithstanding, no "Involuntary Termination" shall occur merely
because the Employee, after a Change in Control, is required to report to an
executive officer of the Company's parent corporation or, if the Company becomes
a division of its successor corporation, to an executive officer of such
successor corporation.
(e) Definition of "Cause." For all purposes under this
Agreement, "Cause" shall mean:
(i) Unauthorized use or disclosure of the confidential
information or trade secrets of the Company which is materially injurious
to the Company;
(ii) Any breach of this Agreement, the Proprietary
Information and Inventions Agreement between the Employee and the Company,
or any other agreement between the Employee and the Company which is
materially injurious to the Company;
(iii) Conviction of, or a plea of "guilty" or "no contest"
to, a felony under the laws of the United States or any state thereof;
(iv) Demonstrably willful misconduct which is materially
injurious to the Company and which is not cured within 60 days after the
Employee received written notice specifying such misconduct from the Board;
or
(v) Gross negligence in the performance of duties assigned
to the Employee.
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The foregoing notwithstanding, the Employee shall not be deemed to have been
discharged for Cause unless he has been given reasonable written notice
specifying the reasons for the proposed termination and has had an opportunity
to be heard by the Board (with his counsel, if he so elects).
7. Excise Taxes.
(a) Gross-Up Payment. If it is determined that any payment or
distribution of any type to or for the benefit of the Employee by the Company,
any of its affiliates, any person who acquires ownership or effective control of
the Company or ownership of a substantial portion of the Company's assets
(within the meaning of section 280G of the Code and the regulations thereunder)
or any affiliate of such person, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the "Total
Payments"), would be subject to the excise tax imposed by section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax and any such interest or penalties are collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment"). The amount of the Gross-Up Payment shall be as
follows:
(i) If the Gross-Up Payment becomes payable in a taxable
year of the Company in which the Company has no taxable income (after
taking into account net operating loss carry-forwards), the Gross-Up
Payment shall be equal to the product of (A) 50% multiplied by (B) an
amount calculated to ensure that after payment by the Employee of all taxes
(and any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Employee
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Total Payments.
(ii) If the Gross-Up Payment becomes payable in a taxable
year of the Company in which the Company has taxable income (after taking
into account net operating loss carry-forwards), the Gross-Up Payment shall
be equal to the excise tax imposed on the Employee by section 4999 of the
Code, without regard to any taxes payable by the Employee with respect to
the Gross-Up Payment.
(b) Determination by Accountant. All determinations and
calculations required to be made under this Section 7 shall be made by an
independent accounting firm selected by the Employee from among the largest five
accounting firms in the United States (the "Accounting Firm"), which shall
provide its determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any
other relevant matter, both to the Company and the Employee within five days of
the termination of the Employee's employment, if applicable, or such earlier
time as is requested by the Company or the Employee (if the Employee reasonably
believes that any of the Total Payments may be subject to the Excise Tax). If
the Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with a written statement
8
<PAGE>
that such Accounting Firm has concluded that no Excise Tax is payable (including
the reasons therefor) and that the Employee has substantial authority not to
report any Excise Tax on the Employee's federal income tax return. If a Gross-Up
Payment is determined to be payable, it shall be paid to the Employee within
five days after the Determination is delivered to the Company or the Employee.
Any determination by the Accounting Firm shall be binding upon the Company and
the Employee, absent manifest error. The Company shall pay the fees and costs of
the Accounting Firm.
(c) Over- and Underpayments. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments not made
by the Company should have been made ("Underpayment"), or that Gross-Up Payments
will have been made by the Company which should not have been made
("Overpayments"). In either such event, the Accounting Firm shall determine the
amount of the Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee. In the case of an Overpayment,
the Employee shall, at the direction and expense of the Company, take such steps
as are reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures established by, the
Company, and otherwise reasonably cooperate with the Company to correct such
Overpayment.
(d) Limitation on Parachute Payments. Any other provision of
this Section 7 notwithstanding, if the Excise Tax could be avoided by reducing
the Total Payments by $45,000 or less, then the Total Payments shall be reduced
to the extent necessary to avoid the Excise Tax and no Gross-Up Payment shall be
made. If the Accounting Firm determines that the Total Payments are to be
reduced under the preceding sentence, then the Company shall promptly give the
Employee notice to that effect and a copy of the detailed calculation thereof.
The Employee may then elect, in the Employee's sole discretion, which and how
much of the Total Payments are to be eliminated or reduced (as long as after
such election no Excise Tax will be payable) and shall advise the Company in
writing of the Employee's election within 10 days of receipt of notice. If no
such election is made by the Employee within such 10-day period, then the
Company may elect which and how much of the Total Payments are to be eliminated
or reduced (as long as after such election no Excise Tax will be payable) and
shall notify the Employee promptly of such election.
8. Restrictive Covenants.
(a) Non-Competition. During his Employment and during any
Continuation Period, the Employee agrees not to:
(i) Undertake any planning for any outside business
activity that is competitive with the Company; or
(ii) Directly or indirectly own any interest in, manage,
control, participate in (whether as an officer, director, employee,
partner, agent, representative or otherwise), consult with, render services
for, or in any manner
9
<PAGE>
engage in any business directly competing with the Company and engaged in
such business anywhere within any state, possession, territory or
jurisdiction of the United States of America.
The ownership of any securities that the Employee is permitted to own under
Section 1(b) shall be deemed to be in compliance with this Section 8(a).
(b) Non-Solicitation. During the period commencing on the date
of this Agreement and continuing until the second anniversary of the date when
the Employee's Employment terminated for any reason, the Employee shall not
directly or indirectly, personally or through others, solicit or attempt to
solicit (on the Employee's own behalf or on behalf of any other person or
entity) either (i) the employment of any employee of the Company or any of the
Company's affiliates or (ii) the business of any customer of the Company or any
of the Company's affiliates with whom the Employee had contact during his
Employment.
(c) Non-Disclosure. The Employee has entered into a Proprietary
Information and Inventions Agreement with the Company, which is incorporated
herein by reference.
(d) Injunctive Relief. The Employee acknowledges and agrees that
his failure to perform any of his covenants in this Section 8 would cause
irreparable injury to the Company and cause damages to the Company that would be
difficult or impossible to ascertain or quantify. Accordingly, without limiting
any other remedies that may be available with respect to any breach of this
Agreement, the Employee consents to the entry of an injunction to restrain any
breach of this Section 8.
(e) Survival. The covenants in this Section 8 shall survive any
termination or expiration of this Agreement and the termination of the
Employee's Employment with the Company for any reason.
9. Successors.
(a) Company's Successors. This Agreement shall be binding upon
any successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.
(b) Employee's Successors. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
10
<PAGE>
10. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. registered or certified
mail, return receipt requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
(b) Modifications and Waivers. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Employee and by an
authorized officer of the Company (other than the Employee). No waiver by either
party of any breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement and the
Proprietary Information and Inventions Agreement contain the entire
understanding of the parties with respect to the subject matter hereof. Without
limiting the foregoing, this Agreement supersedes the offer letter dated
December 30, 1998, pursuant to which the Employee was employed by the Company as
Special Advisor to the Chairman of the Board.
(d) Withholding Taxes. All payments made under this Agreement
shall be subject to reduction to reflect taxes or other charges required to be
withheld by law.
(e) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California (except their provisions governing the choice of law).
(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(g) No Assignment. This Agreement and all rights and
obligations of the Employee hereunder are personal to the Employee and may not
be transferred or assigned by the Employee at any time. The Company may assign
its rights under this Agreement to any entity that assumes the Company's
obligations hereunder in connection with any sale or transfer of all or a
substantial portion of the Company's assets to such entity.
11
<PAGE>
(h) 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.
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
__________________________________
Internet Travel Network
By _______________________________
Title: ___________________________
12
<PAGE>
Exhibit 10.8
Internet Travel Network
445 Sherman Avenue
Palo Alto, CA 94306
March 25, 1999
Mr. Kenneth R. Pelowski
3 Brady Place
Menlo Park, CA 94025
Dear Ken:
Internet Travel Network (the "Company") is pleased to offer you
employment on the following terms:
1. Position. You will serve in a full-time capacity as Chief
Operating Officer and Chief Financial Officer of the Company. You will report to
the Company's Chief Executive Officer. By signing this letter agreement, you
represent and warrant to the Company that you are under no contractual
commitments inconsistent with your obligations to the Company.
2. Salary and Bonus. You will be paid a salary at the annual rate of
$175,000, payable in semi-monthly installments in accordance with the Company's
standard payroll practices for salaried employees. This salary will be subject
to adjustment pursuant to the Company's employee compensation policies in effect
from time to time. You will also have the opportunity to earn a cash bonus of up
to $50,000 per year.
3. Stock Options. Subject to the approval of the Company's Board of
Directors or its Compensation Committee, you will be granted a nonstatutory
stock option to purchase 500,000 shares of the Company's Common Stock. The
exercise price per share will be equal to $1.00. The option will be subject to
the terms and conditions applicable to options granted under the Company's 1996
Stock Incentive Plan (the "Plan"), as described in the Plan and the applicable
stock option agreement. The option will be immediately exercisable, but the
purchased shares will be subject to repurchase by the Company at the exercise
price in the event that your service terminates before you vest in the shares.
Except as provided in Paragraph 4 below, you will vest in 12.5% of the option
shares when you complete the sixth month of continuous service and the balance
will vest in equal monthly installments over the next 42 months of continuous
service, as described in the applicable stock option agreement. You may pay the
exercise price of the option with a full-recourse promissory note secured by the
option shares. The note will have a five-year term (but will be due 180 days
after your employment terminates, if earlier), will bear interest at the
Applicable Federal Rate and will provide for principal and interest to be
payable in a lump sum on the due date.
4. Accelerated Vesting After Change in Control. If the Company is
subject to a Change in Control (as defined in the Plan) before your service with
the Company
<PAGE>
Mr. Kenneth R. Pelowski March 25, 1999
Page 2
terminates, and if you are subject to an involuntary discharge within 18 months
after that Change in Control, then all of your option shares will be vested. For
purposes of this Paragraph 4, you will be deemed to have been discharged by the
Company if you resign within 18 months after a Change in Control and after the
Company has notified you that your annual base salary will be materially
reduced, that there will be a material adverse change in your title or duties,
or that your principal place of employment will be relocated by more than 35
miles. For purposes of this Paragraph 4, you will also be deemed to have been
discharged by the Company if you resign within 18 months after a Change in
Control because James J. Hornthal is serving as a member of the board of
directors or an officer of the Company, of its parent corporation or of the
successor corporation in a merger with the Company.
5. Internet Purchasing Opportunity. As you know, you and I had
discussed prior to my joining the Company the possibility of our launching a
separate company focused on internet purchasing. I am aware that you had devoted
time to pursuing the opportunity after I joined the Company and that your
joining the Company will prevent you from independently pursuing the
opportunity. You have agreed that in connection with your joining the Company
you will not continue to pursue this opportunity. In addition, you have agreed
that you will assign to the Company any intellectual property that you
independently developed relating to the opportunity. You will transfer to the
Company any of such intellectual property relating to the internet purchasing
company that you have independently developed in consideration of 125,000
unvested shares of the Company's Common Stock. The details of this purchase are
described in Exhibit A attached hereto.
6. Parachute Excise Tax Gross-Up. If you become subject to the
excise tax applicable to excess parachute payments under section 4999 of the
Internal Revenue Code of 1986, as amended, then the Company will reimburse you
for that tax (subject to certain limitations). The details of the gross-up
payment are described in Exhibit B attached hereto.
7. Proprietary Information and Inventions Agreement. Like all
Company employees, you will be required, as a condition to your employment with
the Company, to sign the Company's standard Proprietary Information and
Inventions Agreement, a copy of which is attached hereto as Exhibit C.
8. Period of Employment. Your employment with the Company will be
"at will," meaning that either you or the Company will be entitled to terminate
your employment at any time and for any reason, with or without cause. Any
contrary representations which may have been made to you are superseded by this
offer. This is the full and complete agreement between you and the Company on
this term. Although your job duties, title, compensation and benefits, as well
as the Company's personnel policies and procedures, may change from time to
time, the "at will" nature of your employment may only be changed in an express
written agreement signed by you and a duly authorized officer of the Company.
9. Outside Activities. While you render services to the Company, you
will not engage in any other gainful employment, business or activity without
the written consent of
<PAGE>
Mr. Kenneth R. Pelowski March 25, 1999
Page 3
the Company. While you render services to the Company, you also will not assist
any person or organization in competing with the Company, in preparing to
compete with the Company or in hiring any employees of the Company.
10. Withholding Taxes. All forms of compensation referred to in this
letter are subject to reduction to reflect applicable withholding and payroll
taxes.
11. Indemnification. The Company hereby indemnifies you in the event
that Preview Travel, Inc. ("Preview") asserts any claim against you with respect
to your employment with the Company, provided that you comply with (a) this
letter agreement, (b) the Proprietary Information and Inventions Agreement
between you and the Company and (c) the Employee Proprietary Information
Agreement between you and Preview. The Company, at its discretion, may either at
its own expense engage counsel to defend you in any legal action brought by
Preview that is covered by this Paragraph 11 or reimburse you for the reasonable
fees and costs of counsel whom you retain to defend you in any legal action
brought by Preview that is covered by this Paragraph 11.
12. Entire Agreement. This letter and the Exhibits attached hereto
contain all of the terms of your employment with the Company and supersede any
prior understandings or agreements, whether oral or written, between you and the
Company.
13. Amendment and Governing Law. This letter agreement may not be
amended or modified except by an express written agreement signed by you and a
duly authorized officer of the Company. The terms of this letter agreement and
the resolution of any disputes will be governed by California law.
We hope that you find the foregoing terms acceptable. You may indicate
your agreement with these terms and accept this offer by signing and dating both
the enclosed duplicate original of this letter and the enclosed Proprietary
Information and Inventions Agreement and returning them to me. As required by
law, your employment with the Company is also contingent upon your providing
legal proof of your identity and authorization to work in the United States.
This offer, if not accepted, will expire at the close of business on March __,
1999.
We look forward to having you join us on _________ __, 1999.
<PAGE>
Mr. Kenneth R. Pelowski March 25, 1999
Page 4
If you have any questions, please call me at 650.614.6300.
Very truly yours,
Internet Travel Network
By:___________________________________
Chief Executive Officer
I have read and accept this employment offer:
____________________________________________
Signature of Kenneth R. Pelowski
Dated: March __, 1999
Attachments
Exhibit A: Summary of Stock Purchase and Stock Purchase Agreement
Exhibit B: Parachute Excise Tax Gross-Up Provisions
Exhibit C: Proprietary Information and Inventions Agreement
<PAGE>
Mr. Kenneth R. Pelowski March 25, 1999
Page 5
Exhibit A
Summary of Stock Purchase and Stock Purchase Agreement
<PAGE>
Mr. Kenneth R. Pelowski March 25, 1999
Page 6
Exhibit B
Parachute Excise Tax Gross-Up Provisions.
(a) Gross-Up Payment. If it is determined that any payment or
distribution of any type to or for the benefit of the employee by the Company,
any of its affiliates, any person who acquires ownership or effective control of
the Company or ownership of a substantial portion of the Company's assets
(within the meaning of section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder) or any affiliate of such
person, whether paid or payable or distributed or distributable pursuant to the
terms of this letter or otherwise (the "Total Payments"), would be subject to
the excise tax imposed by section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax and any such interest or
penalties are collectively referred to as the "Excise Tax"), then the employee
shall be entitled to receive an additional payment (a "Gross-Up Payment"). The
amount of the Gross-Up Payment shall be as follows:
(i) If the Gross-Up Payment becomes payable in a taxable year of the
Company in which the Company has no taxable income (after taking into
account net operating loss carry-forwards), the Gross-Up Payment shall be
equal to the product of (A) 50% multiplied by (B) an amount calculated to
ensure that after payment by the employee of all taxes (and any interest or
penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment, the employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.
(ii) If the Gross-Up Payment becomes payable in a taxable year of the
Company in which the Company has taxable income (after taking into account
net operating loss carry-forwards), the Gross-Up Payment shall be equal to
the excise tax imposed on the employee by section 4999 of the Code, without
regard to any taxes payable by the employee with respect to the Gross-Up
Payment.
(b) Determination by Accountant. All determinations and calculations
required to be made under this Exhibit B shall be made by an independent
accounting firm selected by the employee from among the largest five accounting
firms in the United States (the "Accounting Firm"), which shall provide its
determination (the "Determination"), together with detailed supporting
calculations regarding the amount of any Gross-Up Payment and any other relevant
matter, both to the Company and the employee within five days of the termination
of the employee's employment, if applicable, or such earlier time as is
requested by the Company or the employee (if the employee reasonably believes
that any of the Total Payments may be subject to the Excise Tax). If the
Accounting Firm determines that no Excise Tax is payable by the employee, it
shall furnish the employee with a written statement that such Accounting Firm
has concluded that no Excise Tax is payable (including the reasons therefor) and
that the employee has substantial authority not to report any Excise Tax on the
employee's federal income tax return. If a Gross-Up Payment is determined to be
payable, it shall be paid to the employee
<PAGE>
Mr. Kenneth R. Pelowski March 25, 1999
Page 7
within five days after the Determination is delivered to the Company or the
employee. Any determination by the Accounting Firm shall be binding upon the
Company and the employee, absent manifest error. The Company shall pay the fees
and costs of the Accounting Firm.
(c) Over- and Underpayments. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments not made
by the Company should have been made ("Underpayment"), or that Gross-Up Payments
will have been made by the Company which should not have been made
("Overpayments"). In either such event, the Accounting Firm shall determine the
amount of the Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment shall be promptly paid by the
Company to or for the benefit of the employee. In the case of an Overpayment,
the employee shall, at the direction and expense of the Company, take such steps
as are reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures established by, the
Company, and otherwise reasonably cooperate with the Company to correct such
Overpayment.
(d) Limitation on Parachute Payments. Any other provision of this
Exhibit B notwithstanding, if the Excise Tax could be avoided by reducing the
Total Payments by $45,000 or less, then the Total Payments shall be reduced to
the extent necessary to avoid the Excise Tax and no Gross-Up Payment shall be
made. If the Accounting Firm determines that the Total Payments are to be
reduced under the preceding sentence, then the Company shall promptly give the
employee notice to that effect and a copy of the detailed calculation thereof.
The employee may then elect, in the employee's sole discretion, which and how
much of the Total Payments are to be eliminated or reduced (as long as after
such election no Excise Tax will be payable) and shall advise the Company in
writing of the employee's election within 10 days of receipt of notice. If no
such election is made by the employee within such 10-day period, then the
Company may elect which and how much of the Total Payments are to be eliminated
or reduced (as long as after such election no Excise Tax will be payable) and
shall notify the employee promptly of such election.
<PAGE>
Exhibit 10.9
Internet Travel Network
453 Sherman Avenue
Palo Alto, CA 94306
March 1, 1999
Mr. Richard D.C. Whilden
106 South Poinsettia Avenue
Manhattan Beach, CA 90266
Dear Dick:
I am very pleased to confirm your agreement to remain with Internet
Travel Network (the "Company") in a different capacity following your
resignation as President and Chief Executive Officer. The terms of your
continuing relationship with the Company are as follows:
1. Employee Position Until March 15, 1999. You will serve as a full-
time employee until March 15, 1999. During this period, you will continue to
earn a salary at the rate currently in effect and will have the opportunity to
earn a prorated cash bonus for calendar year 1999. The 1999 bonus will be paid
on or about April 30, 1999. You will also receive a cash bonus for calendar year
1998 in the amount of $100,000. The 1998 bonus will be paid on or about March
31, 1999.
2. Positions After March 15, 1999. You will continue to serve as
Chairman of the Board of Directors of the Company at the discretion of the
Board. In addition, you will make yourself available to provide consulting
services to the Company from March 16, 1999, to March 15, 2000. During this
period, the Company will pay you a retainer of $5,000 per month for up to two
days of consulting per month. Any consulting services in excess of two days per
month will be compensated at the rate of $2,000 per day. The Company will also
pay or reimburse reasonable expenses incurred in connection with your consulting
services or your service as Chairman of the Company's Board of Directors. Either
you or the Company may terminate your position as a consultant at any time and
for any reason. If the Company terminates your position as a consultant before
December 31, 1999, then your retainer payments of $5,000 per month will continue
until December 31, 1999. In addition, if your service with the Company as a
consultant and/or member of the Board of Directors terminates before March 15,
2000, for any reason other than your voluntary resignation, then the vested
portion of your shares of the Company's common stock will be determined as if
your service had continued until March 15, 2000.
3. Restricted Stock Award. You and the Company will amend the
Restricted Stock Agreement dated March 19, 1998. Under the amendment, all of the
shares of the Company's common stock described in that agreement will be vested
on March 10, 2000, if
<PAGE>
Mr. Richard D.C. Whilden
March 1,1999
Page 2
your continuous service as a consultant to the Company or a member of the
Company's Board of Directors continues until that date. During the period from
March 10, 1999, to March 10, 2000, the remaining unvested shares will vest at
the rate of 27,083.33 shares upon the completion of each month of continuous
service as a consultant to the Company or a member of the Company's Board of
Directors. All other terms of the Restricted Stock Agreement dated March 19,
1998, will remain unchanged.
4. Entire Agreement. This letter and the Exhibits attached hereto
contain all of the terms of your relationship with the Company and supersede any
prior understandings or agreements, whether oral or written, between you and the
Company (including, without limitation, the letter agreement dated March 10,
1998). However, this letter does not affect the options and shares previously
granted to you by the Company, except as provided in Paragraph 3 above.
5. Amendment and Governing Law. This letter agreement may not be
amended or modified except by an express written agreement signed by you and a
duly authorized officer of the Company. The terms of this letter agreement and
the resolution of any disputes will be governed by California law.
We hope that you find the foregoing terms acceptable. You may indicate
your agreement with these terms and accept this offer by signing and dating the
enclosed duplicate original of this letter and returning it to me.
We look forward to your continuing valuable contributions to the
Company.
<PAGE>
Mr. Richard D.C. Whilden
March 1,1999
Page 3
If you have any questions, please call me at (650) 854-7691.
Sincerely,
On behalf of the Board of Directors of
Internet Travel Network
Jeffrey D. Brody
Member of the Board of Directors
I have read and accept this agreement:
___________________________________ Dated: March 1, 1999
Richard D.C. Whilden
<PAGE>
Exhibit 10.10
LEASE
1. HIRING: Lessor leases to Lessee and Lessee hires from Lessor, on the term
and conditions set forth herein, the premises described in Use Schedule.
2. TERM AND RENT: The term of this lease and the rent which Lessee agrees to
pay to Lessor are specified in the Schedule. Lessee agrees to pay the rent
to Lessor in lawful money of the United States of America, without
deductions or effect, in installments as provided in the Schedule. Rent for
partial months shall be prorated.
3. DEPOSIT: Upon execution of this lease, Lessee will pay to Lessor as a
security deposit the sum specified as "Deposit" in the Schedule. If Lessee
shall pay all rent and observe and perform all of the terms, covenants, and
conditions of this lease during the term and all extensions and renewal
thereof. Lessor shall repay the deposit to Lessee, without interest, within
three (3) days after Lessee vacates the premises. If Lessee defaults in any
of the terms, covenants or conditions of this (including but not limited to,
no payment of rent), Lessor may use or apply so much of the security deposit
as is required to cure or make good such default, or to indemnify Lessor for
loss or damage arising therefrom. Lessee agrees to restore the security
deposit to the full original amount immediately upon receipt of demand from
Lessor therefor. The security deposit will not be deemed a payment of the
monthly rent due for the last month of the term.
4. POSSESSION: If Lessor is unable to deliver possession of the premises to
Lessee at the commencement of the term for any reason whatsoever, this lease
shall not be voided or voidable for a period of thirty (30) days thereafter,
nor shall Lessor be liable to Lessee for any loss or damage resulting
therefrom, but the rent shall abate until Lessor delivers possession of the
premises to Lessee. The term of this lease shall be extended for a period
equal to any such delay and Lessee agrees to pay the rent provided for
herein and perform all of the terms and conditions of this lease during such
extension.
If Lessor is unable to deliver possession of the premises within thirty
(30) days after the commencement date, this lease may be terminated by
Lessee by written notice to Lessor at any time thereafter prior to the date
possession is delivered to Lessee.
5. USE: The premises shall be used for the purpose provided in the Schedule,
and for no other purpose without the prior written consent of Lessor, Lessee
agrees to conduct his business in
<PAGE>
accordance with the highest ethical standards of the business and profession
in which he is engaged, and in case of a breach of this covenant, Lessee
agrees that Lessor may cancel this lease.
6. ABANDONMENT: Lessee will not abandon or surrender the premises during the
term, and if Lessee does, or is dispossessed by process of law, or
otherwise, any personal property belonging to Lessee left on the premises
shall be deemed abandoned at the option of Lessor.
7. CONDITION OF PREMISES: Lessee's taking possession shall be conclusive
evidence as against Lessee that the premises were in good order and
satisfactory condition when Lessee took possession. No promise to alter,
remodel, or improve the premises or the building and no representation
respecting the condition of the premises or the building have been made by
Lessor to Lessee, unless the same is set forth in the Schedule. Lessee
waives all right to make repairs at the expense of Lessor, and to deduct the
cost thereof from the rent, and Lessee waives all rights under Section 1941
and 1942 of the Civil Code of the State of California. At the termination of
this lease by lapse of time or otherwise, Lessee shall surrender the
premises in as good a condition as when Lessee took possession, ordinary
wear and loss by fire excepted, failing which Lessor may restore the
premises to such condition and Lessee shall pay the cost thereof to Lessor
upon demand.
8. ALTERATIONS AND REPAIRS: Except for any initial leasehold improvements
provided for in the Schedule, Lessee shall not make or permit to be made any
alterations, additions, improvements, or changes in the premises without the
prior written consent of Lessor, which shall not be unreasonably withheld.
Subject to the service to be rendered by Lessor as set forth in the
Schedule, Lessee shall, at Lessee's own expense, keep the premises in good
order, condition, and repair during the term, including the replacement of
all broken glass with glass of the same size and quality under the
supervision and with the approval of Lessor. If Lessee does not make repairs
promptly and adequately, Lessor may but need not, make repairs, and Lessee
shall pay promptly the reasonable cost thereof. At any time or times, Lessor
either voluntarily or pursuant to governmental requirement, may make
repairs, alterations, or improvements in or to the building, or any part
thereof, including the premises, and during such operations Lessor may close
entrances, doors, corridors, elevators and or other facilities, all without
any liability to Lessee by reason of interference, inconvenience, or
annoyance, provided that Lessee shall have reasonable access to the
premises. Lessor shall
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not be liable to Lessee for any expense, injury or loss, or damage
resulting from work done in or upon, or the use of any adjacent or nearby
building, land, street or alley. In the event Lessee requests that repairs,
alterations, decorating, or other work in the premises be made during
periods other than ordinary business hours. Lessee shall pay Lessor for
overtime and other additional expenses incurred because of such request.
9. LIENS: Lessee agrees to keep the premises and the property on which the
premises are located free from any liens arising out of any work performed,
materials furnished, or obligations incurred by Lessee.
10. INDEMNIFICATION: Lessee waives all claims against Lessor for damages to
property, or to goods, wares, and merchandise stored in, upon, or about the
premises, and for injuries to persons in, upon, or about the premises from
any cause arising at any time, and Lessee agrees to indemnify and hold
Lessor exempt and harmless for and on account of any damage or injury to
any person or property arising from the use of the premises by Lessee or
from the failure of Lessee to keep the premises in good condition as herein
provided. Lessor shall not be liable to Lessee for any damage because of
any act or negligence of any co-tenant or other occupant of the same
building, or by any owner or occupant of adjoining or contiguous property,
not for overflow, breakage or leakage of water, steam, gas, electricity
from pipes, wires, or otherwise. Lessee will pay for all damage to the
building and to the tenants and occupants thereof caused by Lessee, his
agents', patients', clients', or invitees' misuse or neglect of said
premises, its apparatus, or appurtenances.
11. INSURANCE: Lessee at Lessee's expense will provide and keep in force
during the term of this lease and for the benefit of Lessor and Lessee
general liability insurance policies with companies and in form
satisfactory to Lessor, protecting Lessor and Lessee against any and all
liability occasioned by accident or disaster in amounts not less than that
specified as "insurance" in the Schedule. Lessee agrees to furnish copies
of such policies to Lessor upon request, Lessor agrees during the term to
carry fire and extended coverage insurance insuring Lessor's interest in
the premises in such amounts and covering such perils as Lessor shall
determine, but Lessor shall have no obligation to insure against loss by
Lessee to Lessee's leasehold improvements, fixtures, furniture, or other
personal property or about the premises occurring from any cause whatsoever
and Lessee shall have no interest in the proceeds of any insurance carried
by Lessor.
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If Lessor's insurance rates for the premises are increased at any time
during the term as a result of the nature of Lessee's use and occupancy of
the premises, Lessee agrees to reimburse Lessor for the full amount of such
increase immediately upon receipt of demand from Lessor therefor, such
increase shall be prorated as of the expiration of the term, if applicable.
12. SUBROGATION: Lessee and Lessor hereby waive any rights of subrogation
which their respective insurers might have under all policies of insurance
now existing or hereafter purchased during the term by either Lessor or
Lessee, insuring or covering the premises or any portion thereof, or
Lessee's leasehold improvements, furniture, fixtures, personal property,
business, or operations in or about the premises.
13. TAXES: Lessee will pay before delinquency any and all taxes, assessments,
license fees, and public charges levied, assessed, or imposed and which
become payable during the term hereof upon Lessee's fixtures, furniture and
personal property installed or located in the premises.
The term "basic taxes" as used in this subparagraph shall mean all
taxes and assessments levied, assessed, or charged against the real
property and improvements for the base tax year specified in the Schedule.
In the event the amount of taxes and assessments paid by Lessor for any
fiscal year during the term exceeds said basic taxes, Lessee agrees to pay
to Lessor within thirty (30) days after demand, as additional rent
hereunder, an amount equal to that portion of such increase as the total
square feet of Lessee's premises bears to the total leasable space. The
total square feet of Lessee's premises and the total square feet of the
building are specified in the Schedule for the purpose of this provision.
Lessee shall be considered the owner during the term of any leasehold
improvements installed at Lessee's expense, and any such leasehold
improvements may be assessed to lessee for property tax purposes. Except as
otherwise provided in the Schedule, Less shall not remove from the premises
any leasehold improvements installed by Lessor's prior written consent and
the ownership of any such leasehold improvements shall revert in Lessor
upon the expiration of the term.
14. SERVICES: So long as Lessee is not in default hereunder, Lessor will
furnish premises with such services as are specified in the Schedule, and
Lessee will pay for all other services supplied to the premises. Lessor
shall not be liable to Lessee or to any other party for any
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claim, injury, damage, rebate, or charge of any kind whatsoever which may
arise or accrue in case of the interruption of the supply of water, heat,
electricity, elevator service, air conditioning, gas, compressed air, or
refrigeration caused by conditions beyond Lessor's control, or by accident,
failure of power supply, repairs, strikes, fire, flood, act of God, or on
account of any defect of the building or the premises, nor shall any such
interruption be grounds for termination of this lease provided Lessor
exercises reasonable diligence to remedy such interruption.
15. PARKING: Lessee shall be entitled to use the parking spaces specified in
the Schedule. Lessee agrees that vehicles of Lessee or its employees shall
not park in driveways nor occupy parking spaces of other areas reserved for
any use such as visitors, delivery, loading, or other tenants.
16. DESTRUCTION: In the event of partial destruction of the building or
appurtenances during the term from a cause which is insured under Lessor's
fire and extended coverage insurance, Lessor shall forthwith repair the
same, provided such repairs can be made within ninety (90) days under the
laws and regulations of the state, county, federal, or municipal
authorities, but such partial destruction shall not annul or void this
lease, except that Lessee shall be entitled to a proportional reduction of
rent while such repairs are being made, such proportionate reduction to be
based upon the extent to which the making of such repairs interferes with
the business carried on by Lessee in the premises.
If the partial destruction is caused by a casualty which is not
insured by the Lessor's fire and extended covered insurance or if such
repairs cannot be made within thirty (30) days the Lessor or Lessee may
terminate this lease by giving written notice to the other party within
thirty (30) days after the damage occurs. If the lease is not terminated,
Lessor shall make such repairs within a reasonable time with this lease
continuing in full force and effect and the rent proportionately reduced
while the repairs are being made.
In the event the building in which the premises are located is
destroyed to the extent of not less than 50% of the then replacement cost
thereof, Lessor may elect to terminate this lease, regardless of whether
the premises are damaged, whether the partial destruction is caused by a
casualty which is covered by insurance, or whether the repairs can be made
within ninety (90) days. A total destruction of the building in which the
premises are located shall terminate this lease. In respect to any partial
destruction which Lessor is obligated to
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repair or may elect to repair under the terms of this paragraph and which
can be made within ninety (90) days the provisions of Section 1932,
subdivision 2 and Section 1933, Subdivision 4, of the Civil Code of the
State of California are waived by Lessee.
In the event of termination of this lease pursuant to any of the
provisions of this paragraph, rent and Lessee's portion of any tax increase
shall be apportioned on a per diem basis and shall be paid to the date of
casualty. In no event shall Lessor be liable to Lessee for any damages
resulting to Lessee from the happening of such casualty or from the
repairing or reconstruction of the premises or of the building, or from the
termination of this lease as herein provided, nor shall Lessee be relieved
thereby or in any such event from Lessee's obligations hereunder except to
the extent and upon the conditions expressly stated in the paragraph.
17. EMINENT DOMAIN: If the whole or any substantial part of the building or
appurtenant real property shall be taken or condemned by any competent
authority for any public use or purpose, the term of this lease shall end
upon, and not before, the date of such termination but the entire award
shall be the property of Lessor without apportionment.
18. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this lease, or any
interest herein, and shall not sublet the premises or any part thereof, or
any right or privilege appurtenant thereto, or suffer any other person (the
agents or employees of Lessee excepted) to occupy or use the premises, or
any portion thereof, without the prior written consent of Lessor, and a
consent to and assignment, subletting, occupation, or use by any other
person shall not be deemed a consent to any subsequent assignment:
subletting, occupation, or use by any other person. Any such assignment or
subletting without such consent shall be void, and shall, at the option of
Lessor, terminate this lease. Any transfer or assignment of this lease by
operation of law without the written consent of Lessor shall make this
lease voidable at the option of Lessor.
Lessor shall not unreasonably withhold its consent to a subletting by
Lessee provided that (a) the sublessee is financially responsible; (b) the
sublessee proposes to use the premises for the same purpose or a purpose
which is permitted by applicable zoning ordinances and regulations; (c) the
proposed use is not injurious to the premises; (d) the proposed use will
not disturb other tenants of Lessor in the building or immediate vicinity;
and (e) the proposed
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use will not violate any existing exclusive use provisions applicable to
the building or the premises.
Every assignment or sublease shall recite that it is and shall be
subject and subordinate to the provisions of this lease, and the
termination of this lease shall constitute a termination of every such
assignment or sublease.
LESSOR HEREBY CONSENTS TO AN ASSIGNMENT OF THIS LEASE OR SUBLEASE OF
ALL OR PART OF THE PREMISES TO A WHOLLY OWNED SUBSIDIARY OF LESSEE OR THE
PARENT ________ TO ANY CORPORATION INTO OR WITH WHICH LESSEE MAY BE MERGED
OR CONSOLIDATED; PROVIDED THAT LESSEE PROMPTLY PROVIDES LESSOR WITH A FULLY
EXECUTED COPY OF SUCH ASSIGNMENT OR SUBLEASE AND THAT LESSOR IS NOT
RELEASED FROM LIABILITY UNDER THE LEASE.
IF LESSOR CONSENTS TO A PROPOSED ASSIGNMENT OR SUBLEASE, THEN LESSOR
WILL HAVE THE RIGHT TO REQUIRE LESSEE WILL HAVE THE RIGHT TO REQUIRE LESSEE
TO PAY TO LESSOR A SUM EQUAL TO TWENTY-FIVE PERCENT (25%) OF (A) ANY RENT
OR OTHER CONSIDERATION PAID TO LESSEE BY ANY PROPOSED TRANSFEREE THAT
(AFTER DEDUCTING THE COSTS OF LESSEE, IF ANY, IN EFFECTING THE ASSIGNMENT
OR SUBLEASE, INCLUDING REASONABLE ALTERATIONS, COSTS, COMMISSIONS AND LEGAL
FEES IF IN ______ OF THE RENT ALLOCABLE TO THE TRANSFERRED SPACE THEN BEING
PAID BY LESSEE TO LESSOR PURSUANT TO THIS LEASE, AND (B) LESSOR'S
REASONABLE ATTORNEY'S FEES AND COSTS INCURRED IN CONNECTION WITH
NEGOTIATION, REVIEW AND PROCESSING OF THE TRANSFER (WHICH FEES AND COSTS
SHALL NOT IN ANY EVENT EXCEED $1,000). ALL SUCH SUMS PAYABLE WILL BE
PAYABLE TO LESSOR AT THE TIME THE NEXT PAYMENT OF MONTHLY RENT IS DUE.
19. SUBORDINATION: The rights of Lessee under this lease shall be and they are
subject and subordinate at all times to the lien of any mortgage or
mortgages, deed of trust or deeds of trust, now or hereafter in force
against the property, and to all advances made or hereafter to be made upon
the security thereof, and Lessee shall execute further instruments
subordinating this lease to the lien or liens of any such mortgage or
mortgages, deed of trust
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or deeds of trust, as shall be requested by Lessor, as long as Lessor is
provided a standard non-disturbance assignment. Lessee hereby irrevocably
appoints Lessor as attorney in fact for Lessee with full power and
authority or execute and deliver in the name of Lessee any such instrument
or instruments.
If any mortgagee or beneficiary elects to have this lease superior to
its mortgage or deed of trust and gives notice of such fact to Lessee, then
this lease shall be deemed superior to the lien of any such mortgage or
deed of trust, whether this lease or a memorandum thereof is dated or
recorded before or after said mortgage or deed of trust.
20. SIGNS: Lessee shall not place any signs, lettering, marks, photographs, or
any other material whatsoever, on the interior or exterior doors, windows,
hallways, or any other place in, on, or about the building, or its
appurtenances, without Lessee's prior written approval of the size, style,
design, color, material, manner of applying or fastening, and location
thereof, and the person or firm who shall install or apply the same.
21. LESSOR'S REMEDIES: If Lessee fails to make any payment of any such sum due
under this lease for ten (10) days after notice from Lessor or fails to
perform any other term, covenant, or condition hereof for twenty (20) days
after notice from Lessor, or if Lessee's interest herein, or any part
thereof, is assigned or transferred, either voluntarily or by operation of
law (except as expressly permitted by other provisions of this lease)
including, without limitation, the filing of a petition by or against
Lessee, or any member of Lessee if Lessee is a partnership or joint
venture, under any insolvency or bankruptcy laws, or if Lessee makes a
general or any assignment for the benefit of its creditors, then, in any
such events, Lessor shall have the right, at its option, in addition to and
not exclusive of any other remedy Lessor may have by operation of law,
without any further demand or notice, to re-enter the premises and eject
all persons therefrom, using all necessary forces to do so, and either:
(1) Declare this lease at an end, in which event Lessee shall immediately
pay to Lessor a sum of money equal to the amount, if any, by which the
then cash value of the rent reserved hereunder, for the balance of the
term of this lease exceeds the then cash reasonable rental value of
the premises for the balance of the term; or
(2) Without terminating this lease, relet the premises, of any part
thereof, as the agent and for the account of Lessee upon such terms
and conditions as Lessor may deem advisable, in
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which event to no rents received on such reletting shall be applied
___ to the expense of such reletting and collection, including
necessary renovation and alterations of the premises, reasonable
attorney's fees, any real estate commissions paid, and thereafter
toward payment of all sums due or to become due hereunder, and if a
sufficient sum is not thus realized to pay such sums and other
charges, Lessee shall pay Lessor any deficiency monthly,
notwithstanding Lessor may have received rent in excess of the rent
stipulated in this lease in previous or subsequent months, and Lessor
may bring an action therefor as such monthly deficiency shall arise.
Any such re-entry shall be allowed by Lessee without let or
hindrance, and Lessor shall not be liable in damages for any such re-
entry, or guilty of trespass or forcible entry.
No re-entry and taking of possession of the premises by Lessor
shall be construed as an election on Lessor's part to terminate this
lease, regardless of the extent of renovations and alteration by
Lessor, unless a written notice of such intention is given to Lessee
by Lessor. Notwithstanding any reletting without termination, Lessor
may at any time thereafter terminate this lease for such previous
breach.
22. SURRENDER: The voluntary or other surrender of this lease by Lessee, as a
mutual cancellation thereof, shall not work a merger, and shall, at the
option of Lessor, terminate all or any existing subleases or subtenancies,
or may, at the option of Lessor, terminate all or any existing subleases or
subtenancies, or may, at the option of Lessor, operate as an assignment to
Lessor of any or all such subleases or subtenancies.
23. REMOVAL OF PROPERTY: Lessee hereby irrevocably appoints Lessor as agent
and attorney in fact of Lessee, to enter upon the premises, in the event of
default by Lessee in the payment of any rent herein reserved, or in the
performance of any term, covenant, or condition herein contained to be kept
or performed by Lessee, and to remove any and all furniture and personal
property whatsoever situated upon the premises, and to place such property
in storage for the account of and at the expense of Lessee. In the event
that Lessee shall not pay the cost of storing any such property after the
property has been stored for a period of ninety (90) days or more, Lessor
may sell any or all of such property, and shall apply the proceeds of such
sale first to the cost and expenses of such sale, including reasonable
attorney's fees actually incurred; second to the payment of the costs or
charges for storing any such property; third, to the payment of any other
sums of money which may then
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or thereafter be due to Lessor from Lessee under any of the terms thereof;
and fourth, the balance, if any, to Lessee.
24. TRANSFER OF SECURITY: Lessor may transfer or deliver any security given by
Lessee to secure the faithful performance of any of the covenants of this
lease to the purchaser of successor of Lessor's interest in the premises,
and thereupon Lessor shall be discharged from any further liability in
reference thereto.
25. WAIVER: The waiver by Lessor or Lessee of any breach of any term,
covenant, or condition herein contained shall not be deemed to be a wavier
of such term, covenant, or condition or any subsequent breach of the same
or any other term, covenant, or condition herein contained. The subsequent
acceptance of rent hereunder by Lessor shall not be deemed to be a waiver
of any preceding breach by Lessee of any term, covenant, or condition of
this lease, other than failure of Lessee to pay the particular rent so
accepted, regardless of Lessor's knowledge of such preceding breach at the
time of acceptance of such rent.
26. HOLDING OVER: Any holding over after the expiration of the term, with the
consent of Lessor, shall be construed to be a tenancy from month to month
on the same terms and conditions of this lease, or for the recovery of the
possession of the premises, the prevailing party shall be entitled to
recover from the other party as a part of any judgment rendered.
27. ATTORNEY'S FEES: If an action at law or in equity shall be brought to
recover any rent under this lease, or for or to enforce or interpret any of
the terms, covenants, agreements, or conditions of this lease, or for the
recovery of the possession of the premises, the prevailing party shall be
entitled to recover from the other party as part of the prevailing party's
costs a reasonable attorney's fee, the amount of which shall be fixed by
the court and shall be made a part of any judgment rendered.
28. NOTICES: All notices to be given to Lessee may be given in writing,
personally or by depositing the same in the United States mail, postage
prepaid, and addressed to Lessee at the premises, whether or not Lessee has
departed from, abandoned, or vacated the premises. Notice to Lessor may be
given in writing personally or by depositing the same in the U.S. mail,
postage prepaid, and addressed to Lessor at the address to which the rent
is paid.
29. COMMISSION: Lessee warrants that Lessee has not had any dealings with any
realtor, broker, or agent, other than as specified in the Schedule hereto,
in connection with negotiating or recurring this lease.
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30. LESSOR ACCESS TO PREMISES: Lessor, its agents or employees shall have the
right to enter the premises at reasonable hours to make inspections; to
exhibit the premises to prospective purchasers, lender or tenant; to
determine if tenant is complying with all terms of and provisions of this
lease, to supply any service to be performed by Lessor to Lessee as
required in this lease; to past notices of responsibility and to make
repairs required of Lessor, it being understood that the Lessor shall not
be required to have such work performed outside of normal business hours.
Lessor shall retain a key for all doors to and within the premises and
shall have the right to use any means that Lessor deems proper to open any
door to or in the premises in order to gain entry to the premises.
31. GENERAL PROVISIONS: This lease contains all of the terms, covenants, and
conditions agreed to by Lessor and Lessee and it may not be modified orally
or in any manner other than by an agreement in writing signed by all of the
parties to this lease or the respective successors in interest.
Each term and each provision of this lease performable by Lessee shall
be construed to be both a covenant and a condition.
The covenants and conditions hereof, subject to the provisions as to
subletting and assignment, shall apply to and bind the heirs, successors,
executors, administrators, sublessees, and assigns of the parties.
All persons who have signed this lease shall be jointly and severally
liable hereunder.
When the context of this lease requires, the masculine gender includes
the feminine, a corporation, or a partnership, and the singular number
includes the plural.
The captions of this lease are for convenience only and are not a part
of this lease and do not in any way limit or amplify the terms and
provisions of this lease.
This lease shall be governed by and construed in accordance with the
laws of the State of California.
Time is of the essence as to all of the provisions of this lease.
32. OTHER TERMS AND CONDITIONS: None.
33. RULES: The rules and regulations contained in this lease, as well as
reasonable rules and regulations as may be hereafter adopted by Lessor for
the safety, care, and cleanliness of the premises and the preservation of
good order thereon, are hereby expressly made a part hereof, and Lessee
agrees to obey all such rules and regulations.
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Rules and Regulations attached to and made a part of this Lease
(a) Peaceful Enjoyment: Lessee, its employees, and visitors shall not
interfere with the peaceful enjoyment of the premises by other lessees, if any,
or those having business with them. Lessee shall not permit the placing of
litter in or upon the building and grounds and shall not permit any animal,
bicycle, motorcycle, or vehicle to be brought into or kept in the building.
(b) Moving Heavy Objects: Lessee shall be responsible to repair any
damage occasioned by the moving of freight, furniture, or other objects into,
within, or out of the building. No heavy objects of any nature shall be placed
upon any floor without Lessor's prior written approval as to the adequacy of the
allowable floor loading at the point where the objects are intended to be moved
or stored. Lessor may specify the time of moving to minimize inconvenience to
other lessees, if any.
(c) Obstructions: Waste, Markings: No drapes or sunscreens of any nature
shall be installed without Lessor's prior written approval. The sash doors,
sashes, windows, glass doors, lights and skylights that reflect or admit light
into the building shall not be covered or obstructed. The toilets and urinals
shall not be used for any purpose other than those for which they were
constructed, and no rubbish, newspapers or other substances of any kind shall be
_____ into them. Waste and excessive or unusual use of water shall not be
allowed. Lessee shall not mark, drive nails, screw or drill in, paint, not in
any way deface the walls, ceilings, partitions, floors, wood, stone or ironwork.
The expense of repairing any breakage, stoppage, or damage resulting from a
violation of this rule shall be borne by the Lessee who has caused such
breakage, stoppage or damage.
(d) Locks: No additional lock or locks shall be placed by Lessee on any
door unless written consent of the Lessor shall first have been obtained. Two
keys will be furnished by Lessor. All keys shall be surrendered to Lessor upon
termination or expiration of the lease term.
(e) Janitorial Services: If Lessor supplies janitorial services, Lessee
shall not, without Lessor's prior consent, employ any person or persons, other
than the janitor of Lessor, for the purpose of cleaning the leased premises.
Lessor shall not be responsible for the loss of property from the leased
premises, however occurring, or for any damage to any Lessee occasioned by any
of Lessor's employees or subcontractors or by any other person.
(f) Outside Storage: No materials, supplies, equipment, finished
products, or semi-finished products, raw materials, or articles of any nature
shall be stored upon or permitted to
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remain on any portion of the leased premises outside of the building constructed
thereon, except with the prior written consent of the Lessor.
(g) Other Rules: Lessor reserves the right to make such other rules and
regulations, including parking regulations, as in Lessor's judgment may from
time to time be necessary for the safety, cleanliness, and orderly operation of
the leased premises. Lessee agrees to require its employees to abide by any such
rules and regulations, including parking regulations.
34. SCHEDULE: The following Schedule is part of this lease:
1. DESCRIPTION OF PREMISES: Suites A through __, Suites __ through __, and
Suites U and V at 445 Sherman Avenue, Palo Alto, with floor plans
attached to this lease (Exhibit A).
2. TERMS: 24 (twenty-four) months commencing December 1, 1997, and ending
a 5:00 p.m. on November 30, 1999.
3. RENT: $18,269.00 (Eighteen thousand, Two Hundred Sixty-Nine Dollars)
per month, payable in equal installments in said amount in advance on
the first day of each month, commencing December 1, 1997, and
continuing on the same day of each month for the balance of the term.
The rent is $2.00 per square foot per month for all ground floor
suites, and $1.75 per square foot for suites U and V. Rent shall be
payable to Lessor at Dr. and Mrs. Jean Lust, 1274 Filbert Street, Apt.
#3, San Francisco, California 94109, Telephone: (415) 673-3131. Checks
made payable to Real Estate Properties, or at such other place as
Lessor may designate in writing. Lessor acknowledges receipt of the
following $18,269.00 rent upon execution of this lease.
4. DEPOSIT: $20,000 (Twenty Thousand Dollars), receipt of which is hereby
acknowledged.
5. USE OF PREMISES: Software Development, sales, marketing,
administration, travel ticketing, fulfillment, option, and related
uses.
6. REPRESENTATION AND CONDITION OF PREMISES: All suites, carpets and
windows will be clean. $2,400.00 will be available to install new
carpet in Suites U and V. All outside doors will be re-keyed. Door
signs and Directory signs will be named Internet Travel Network
according to the needs of the tenant.
Lessor represents that the premises will be in good order and
repair and that all services provided _____ shall be in good operating
condition. Lessor shall maintain and keep the exterior
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of the building in good order and repair and watertight at Lessor
expense, except for damages caused by Lessor or his agents or invitees.
Lessor will use best efforts to perform any regular maintenance or
repair within fifteen (15) days of written notice provided by Lessee.
7. SERVICES TO BE PROVIDED BY LESSOR: Heating, air conditioning,
electricity, garbage, water and ______. Tenant pays for own janitorial
and telephone usage. Lessor and Lessee will use the same janitorial
company, as directed by Lessor. Landlord pays taxes and insurance,
except under _______paragraph 10. Lessor shall pay their own personal
property taxes. The above services provided by Lessor will be
maintained by Lessor at ____ expense.
8. LEASEHOLD IMPROVEMENTS TO BE PROVIDED BY LESSOR: Lessor agrees to move
walls and create doorways in Suites __ and K as outlined in Exhibit A.
Lessor agrees to remove cabinet wall and door from Suite __. The wooden
bookcases on the property limit walls in Suites B and C will be removed
by Lessor and the walls painted. Lessor will invoice Lessee for the
cost of these improvements ____ ____ in this paragraph and in Exhibit A
and the removal of the bookcases. Lessor to complete in a timely
manner, but in any event, prior to December 31, ___ __ ____ _____.
9. REMOVAL OF PROPERTY: At any time Lessee may, and prior to the end of
the lease term Lessee shall, remove from the premises furniture,
equipment, and other personal property installed by Lessee or at
Lessee's expense. Lessee shall not remove any fixtures or leasehold
improvements without Lessor's prior written consent, except the
following; fixtures installed by Lessee which can be removed without
damage to building.
Upon Lessor's written request, Lessee shall remove the following
fixtures and leasehold improvements: None.
Lessee shall repair any damage to the promises caused by removal of any
property, and shall restore the premises to its conditions at the
commencement of the term, less reasonable wear and tear. All of such
removal and restoration shall be accomplished at Lessor's expense prior
to the end of the lease term.
10. LESSEE'S INSURANCE: Tenants to carry their own liability insurance.
$1,000,000 for injuries to any person
$1,000,000 for injuries to any one accident
$1,000,000 for damage to property
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11. TAXES: All taxes ___ in paragraph 13 of the lease, which is a ___
lease, will be paid by Lessor.
12. PARKING: No parking space available on the premises.
13. RENEWAL OPTION: Lessee shall have the option to renew this lease for an
additional period of 24 (Twenty Four) months following the expiration
of the original term upon giving written notice to Lessor, at least 120
(One Hundred and Twenty) days, but no more than 180 (One Hundred and
Eighty) days before the expiration of the original term of Lessee's
election to exercise its renewal option. The extended term shall be
upon all the terms and conditions contained in this lease, except that
the monthly rental for the extended term shall be negotiated at time of
renewal.
This lease is subject to termination of Landlord's lease with Marimba, Inc.
for the premises.
EXECUTED as of this 24/th/ day of November, 1997.
LESSOR LESSEE
________________________ __________________________
Dr. Jean Lust Internet Travel Network
By Matt Ackerman
15
<PAGE>
Exhibit 10.11
EXHIBIT "A"
COMMERCIAL LEASE FULL SERVICE
RECEIVED FROM Internet Travel Network, a corporation, hereinafter referred to as
LESSEE, the sum of $ Two Thousand Two Hundred Sixty-Five and 50/100 DOLLARS
($2,265.50), evidenced by check, as a deposit which shall belong to Lessor and
shall be applied as follows:
<TABLE>
<CAPTION>
TOTAL RECEIVED BALANCE DUE PRIOR TO OCCUPANCY
<S> <C> <C> <C>
Rent for the period from September 1 to October 1, 1996............... $2,285.50 $2,265.50 -0-
Security deposit (not applicable toward last month's rent)............ -0- -0- -0-
Other (Utilities payment for August and September, 1996).............. $ 700.00 $ 700.00 -0-
--------- --------- -------
TOTAL................................................................. $2,985.50 $2,965.50 -0-
</TABLE>
In the event that this Lease is not accepted by the Lessor within 5 days, the
total deposit received shall be refunded.
Lessee offers to lease from Lessor the premises situated in the city of Palo
Alto, County of Santa Clara, State of California, described as 451 Sherman
Avenue, upon the following TERMS and CONDITIONS:
1. TERM: The term hereof shall commence on September 1, 1996, and end on
August 31, 1999.
1.1 Options to Extend Lease. Lessor shall have one option to extend
-----------------------
the term of this Lease through a term ending March 31, 2001 and then a second
option (if the first option is exercised) for an additional term of 60 months.
The option(s) shall be exercised by giving notice of exercise of each option
("Option Notice") to Lessor at least six (6) months, but not more than one year,
before the expiration of the then current term, provided that if Lessee is in
default beyond any applicable cure period on the date of giving the option
notice, the option notice shall be totally ineffective, or if Lessee is in
default beyond any applicable cure period on the date the extended term is to
commence, the extended term shall not commence, and, in either case, this Lease
shall expire at the end of the initial term unless terminated sooner under the
provisions hereof.
2. RENT: The total rent shall be $2,285.50, payable as follows: monthly,
due on the first day of each month. All rents shall be paid to Lessor or his/her
authorized Agent, at the following address: Enterprise Development Co., P.O. Box
1785, Burlingame, CA 94011 or at such other places as may be designated by
Lessor from time to time. In the event rent is not paid within 5 days after due
date, Lessee agrees to pay a late charge of $100, plus interest at the greater
of 10% per annum or the maximum rate allowed at law for non-exempt lender
commercial loans on the delinquent amount. Lessee further agrees to pay $50.00
for each dishonored bank check. The late charge period is not a grace period,
and Lessor is entitled to make written demand for any rent if not paid when due.
2.1 Rent Adjustment. The monthly Rent shall be subject to adjustment
---------------
on the first day of the month after each one year anniversary of lease
commencement ("adjustment date"), as follows: the base for computing the
adjustment is the Consumer Price Index for all
<PAGE>
Urban Consumers (base year 1982-84--100) for San Francisco-Oakland-San Jose. All
items published by the United States Department of Labor, Bureau of Labor
Statistics ("Index"), which is most recently published prior to a given
"beginning Index" as defined in the Basic Lease Provisions. If the Index most
recently published prior to the adjustment date ("extension Index") has
increased over the beginning Index, the minimum monthly rent for the following
period shall be set by multiplying the minimum monthly rent for the immediately
prior period by a fraction, the numerator of which is the extension Index, and
the denominator of which is the beginning Index. For each adjustment, the
beginning Index becomes the prior extension Index date after the first
adjustment. Such adjustments shall be subject to the minimum percentage increase
of 4% per year and the maximum percentage of 6% per year. There is no
accumulation if the adjustment is smaller or larger than the minimum or maximum
percentage. If the Index is changed so that the base year differs from that used
for the beginning Index, the Index shall be converted in accordance with the
conversion factor published by the United States Department of Labor, Bureau of
Labor Statistics. If the Index is discontinued or revised during the term, such
other government Index or computation with which it is replaced shall be used in
order to obtain substantially the same result as would be obtained if the Index
had not been discontinued or revised.
2.2 Monthly Rent for Extended Terms. For the extended term, Rent
-------------------------------
shall continue with the same Rent charged during the last year of the initial
term plus the CPI adjustment as set forth above for the extended term.
2.3 Real Property Taxes. Lessor shall pay all real property taxes
-------------------
and assessments leveled or assessed against the Land and the Building by any
governmental entity or public authority during the Lease Term.
3. USE: The premises are to be used for the operation of general office,
sales, software R&D and internet services and for no other purposes, without
prior written consent of Lessor. Lessee shall not commit any waste upon the
premises, or any nuisance or act which may disturb the quiet enjoyment of any
tenant in the building.
4. USES PROHIBITED: Lessee shall not use any portion of the premises for
purposes other than those specified. No use shall be made or permitted to be
made upon the premises, nor acts done, which will increase the existing rate of
insurance upon the property, or cause cancellation of insurance policies
covering the property. Lessee shall not conduct or permit any sale by auction
on the premises.
4.1 Quiet Enjoyment and Condition of the Premises. As long as Lessee
---------------------------------------------
is not in default of this Lease beyond any applicable cure period, Lessee shall
quietly enjoy the premises without disturbance by Lessor, or by anyone claiming
a right to possession by or through Lessor, subject to the terms and provisions
of this Lease. This is a full service lease to Lessee so that Lessor shall
deliver the premises to Lessee clean and free of debris on the commencement date
and warrants to Lessee that the existing plumbing, fire sprinkler system,
lighting, air conditioning, heating and carpeting in the Premises shall be in
good operating condition on the commencement date. Furthermore, Lessor shall
keep the premises in good operating condition including adequate restroom
facilities, and adequate air conditioning and heating with thermostats, dampers,
and monitors necessary for adequate control and use within
<PAGE>
the premises. Lessor further warrants to Lessee that the premises comply with
all applicable building codes, regulations, ordinances, and laws in effect on
the commencement date. This warranty does not apply to any alterations or
utility installations made by Lessee. If the premises do not comply with this
warranty, Lessor shall promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such noncompliance,
rectify the same at Lessor's expense.
5. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this Lease or
sublet any portion of the premises without prior written consent of the Lessor,
which shall not be unreasonably withheld. Any such assignment or subletting
without consent shall be void and, at the option of the Lessor, shall terminate
this Lease.
6. ORDINANCES AND STATUTES: Lessee shall comply in its use with all
statutes, ordinances, and requirements of all municipal, state and federal
authorities now in force, or which may later be in force. The commencement or
pendency of any state or federal court abatement proceeding affecting the use of
the premises shall, at the option of the Lessor, be deemed a breach of this
Lease.
7. MAINTENANCE, REPAIRS, ALTERATIONS: Unless otherwise indicated, Lessee
acknowledges that the Premises are in good order and repair upon lease
commencement except for any latent defects. Lessor, at its sole cost, shall
keep and maintain in good, safe, water tight, and sanitary order, condition,
appearance, and repair the premises. Lessee will be responsible solely for any
repairs or maintenance where it has abused or improperly used the premises
causing the need for such maintenance or repair. Notwithstanding the above, to
the extent an additional damper is needed in the HVAC system for adequate
control within the premises is required in what has been referred to as the
"founders premises" then that shall be installed at Lessee's expense.
No improvements or alteration of the premises that exceeds for non-structural
alterations $5,000.00 in cost shall be made without the prior written consent of
the Lessor. Prior to the commencement of any substantial repair, improvement, or
alteration, Lessee shall give Lessor at least two (2) days' written notice in
order that Lessor may post appropriate notices to avoid any liability for liens.
8. ENTRY AND INSPECTION: Lessee shall permit Lessor or Lessor's agents
to enter the premises at reasonable times and upon reasonable notice for the
purpose of inspecting the premises, and shall permit Lessor, at any time within
sixty (60) days prior to the expiration of this Lease, to place upon the
premises any usual "To Let" or "For Lease" signs, and permit persons desiring to
lease the premises to inspect the premises at reasonable times.
9. INDEMNIFICATION OF LESSOR: Lessor shall not be liable for any damage
or injury to Lessee, or any other person, or to any property, occurring on the
premises unless caused through active negligence or greater culpability of
Lessor. Lessee agrees to hold Lessor harmless from any claims for damages
arising out of Lessee's use of the premises, and to indemnify Lessor for any
expense incurred by Lessor in defending any such claims.
<PAGE>
10. POSSESSION: If Lessor is unable to deliver possession of the premises
at the commencement date set forth above, Lessor shall not be liable for any
damage caused by the delay, nor shall this Lease be void or voidable, but Lessee
shall not be liable for any rent until possession is delivered. Lessee may
terminate this Lease if possession is not delivered within 15 days of the
commencement term in Item 1.
11. LESSEE'S INSURANCE: Lessee, at his/her expense, shall maintain plate
glass and public liability insurance, including bodily injury and property
damage, insuring Lessee and Lessor with minimum coverage as follows: $2,000,000.
Lessee shall provide Lessor with a Certificate of Insurance showing Lessor as
additional insured. The policy shall require ten (10) days' written notice to
Lessor prior to cancellation or material change of coverage.
12. LESSOR'S INSURANCE: Lessor shall maintain hazard insurance covering
one hundred percent (100%) replacement cost of the Improvements throughout the
Lease term. Lessor's insurance will not insure Lessee's personal property or
leasehold improvements.
13. SUBROGATION: To the maximum extent permitted by insurance policies
which may be owned by the parties, Lessor and Lessee waive any and all rights of
subrogation which might otherwise exist.
14. UTILITIES: Lessor agrees that he/she shall be responsible for the
payment of all utilities, including water, gas, electricity, heat and other
services delivered to the premises. Utilities, including HVAC shall be provided
to the premises twenty-four (24) hours a day seven (7) days a week so that the
HVAC properly cools or warms, as the case may be, the premises during any hours
that Lessee chooses to use the premises and to properly maintain and repair the
HVAC system and all utilities and plumbing and electrical systems. For this
additional twenty-four (24) use of the HVAC system, Lessee shall have
thermostats in the premises and the system will be properly maintained for such
full utilized use at Lessor's expense. Lessee shall pay as an additional cost or
rent under this Lease for this 24 hour use for this premises as well as all
other space Lessee is leasing from Lessor, the cost of $350.00 per month payable
the first day of each month commencing August 1, 1996 and through each remaining
month of the Lease or extended term thereof so long as any space is being leased
by Lessee that requires 24 hour HVAC.
15. SIGNS: Lessor reserves the exclusive right to the roof, side and rear
walls of the premises. Lessee shall not construct any projecting sign or awning
without the prior written consent of Lessor, which shall not be unreasonably
withheld.
16. ABANDONMENT OF PREMISES: Lessee shall not abandon the premises at any
time during the term of this Lease. If Lessee does abandon the premises, or is
dispossessed by process of law, or otherwise, any personal property belonging to
Lessee left on the premises shall be deemed to be abandoned, at the option of
Lessor.
17. CONDEMNATION: If any part of the premises is condemned for public
use, and a part remains which is susceptible of occupation by Lessee, this Lease
shall, as to the part taken, terminate as of the date the condemnor acquires
possession. Lessee shall be required to pay such proportion of the rent for the
remaining term as the value of the premises remaining bears to the
<PAGE>
total value of the premises at the date of condemnation; provided however, that
Lessor may at his/her option, terminate this Lease as of the date the condemnor
acquires possession. In the event that the premises are condemned in whole, or
the remainder is not susceptible for use by the Lessee, this Lease shall
terminate upon the date which the condemnor acquires possession. All sums which
may be payable on account of any condemnation shall belong solely to the Lessor;
except that Lessee shall be entitled to retain any amount awarded to him/her for
his/her trade fixtures or moving expenses.
18. TRADE FIXTURES: Any and all improvements made to the premises during
the term shall belong to the Lessor, except trade fixtures of the Lessee. Lessee
may, upon termination, remove all his/her trade fixtures, but shall pay for all
costs necessary to repair any damage to the premises occasioned by the removal.
19. DESTRUCTION OF PREMISES: In the event of the destruction of the
premises during the term, from any cause, Lessor shall promptly repair the
premises, provided that such repairs can be reasonably made within one hundred
eighty (180) days. Such destruction shall not terminate this Lease, except that
Lessee shall be entitled to a proportionate reduction of rent while such repairs
are being made, based upon the extent to which the making of such repairs
interferes with the business of Lessee on the premises. If the repairs cannot be
made within one hundred eight (180) days, this Lease may be terminated at the
option of either party by giving written notice to the other party within the
one hundred eighty (180) day period. If the destruction is over 80% of the
building or Property to which the premises is a part then Lessor may terminate
this Lease at its election.
20. HAZARDOUS MATERIALS: Lessee shall not use, store, or dispose of any
hazardous substances upon the premises, except the use and storage of such
substances that are customarily used in Lessee's business, and are in compliance
with all environmental laws. Hazardous substances means any hazardous waste,
substance or toxic materials regulated under any environmental laws or
regulations applicable to the property.
21. INSOLVENCY: The appointment of a receiver, an assignment for the
benefits of creditors, or the filing of a petition in bankruptcy by or against
Lessee, shall constitute a breach of this Lease by Lessee.
22. DEFAULT BY LESSEE: In the event of any material breach of this Lease
by Lessee that is not cured within thirty (30) days' written notice to Lessee,
Lessor may, at his/her option, terminate the Lease and recover from Lessee: (a)
the worth at the time of award of the unpaid rent, which had been earned at the
time of termination; (b) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time of
the award exceeds the amount of such rental loss that the Lessee proves could
have been reasonably avoided; (c) the worth at the time of award of the amount
by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (d) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform his/her
obligations under the Lease or which in the ordinary course of things would be
likely to result therefrom.
<PAGE>
Lessor may, in the alternative, continue this Lease in effect, as long as Lessor
does not terminate Lessee's right to possession, and Lessor may enforce all of
Lessor's rights and remedies under the Lease, including the right to recover the
rent as it becomes due under the Lease.
Nothing contained herein shall be deemed to limit any other rights or remedies
which Lessor may have.
22.1 DEFAULT BY LESSOR: Lessor shall not be deemed in breach of this
Lease unless Lessor fails to perform an obligation required of Lessor under this
Lease within thirty (30) days of written notice from Lessee specifying such
obligation not performed and demanding performance; provided, however, that if
the nature of Lessor's obligation is such that more than thirty (30) days after
such notice is reasonably required for its performance, the Lessor shall not be
in breach of this Lease if performance is commenced within thirty (30) days of
such notice and diligently pursued to completion.
23. SECURITY: The security deposit set forth above shall secure the
performance of the Lessee's obligations. Lessor may, but shall not be obligated
to apply all or portions of the deposit on account of Lessee's obligations. Any
balance remaining upon termination shall be returned to Lessee. Lessee shall not
have the right to apply the security deposit in payment of the last month's
rent.
24. DEPOSIT REFUNDS: The balance of all deposits shall be refunded within
three weeks (or otherwise required by law), form date possession is delivered to
Lessor or his/her authorized Agent, together with a statement showing any
charges made against such deposits by Lessor.
25. ATTORNEY'S FEE AND COSTS: In any action or proceeding involving a
dispute between Lessor and Lessee arising out of this Lease, the prevailing
party shall be entitled to reasonable attorney's fees.
26. WAIVER: No failure of either party to enforce any term of this Lease
shall be deemed to be a waiver.
27. NOTICES: Any notice which either party may or is required to give,
shall be given by mailing the same, postage prepaid, to Lessee at the premises,
or to Lessor at the address shown in Item 2, or at such other places as may be
designated by the parties from time to time. Notice shall be effective five days
after mailing, or on personal delivery.
28. HOLDING OVER: Any holding over after the expiration of this Lease,
with the consent of Owner, shall become a month-to-month tenancy at the monthly
rent payable in advance and otherwise subject to the terms of this Lease, as
applicable, until either party shall terminate the same by giving the other
party thirty (30) days' written notice.
29. TIME: Time is of the essence in this Lease.
30. HEIRS, ASSIGNS, SUCCESSORS: This Lease is binding upon and inures to
the benefit of the heirs, assigns and successors of the parties.
<PAGE>
31. OPTION FOR ADDITIONAL SPACE: Lessor gives Lessee the option to rent
any or all of five (5) additional suites in the building for which the premises
is a part for the suite numbers and rent as follows: Suite 107, Suite 109, Suite
111 for a combined rent of $1,250 per month; Suite 112 - $275.00 per month, and
Suite 113 - $370.00 per month. If Lessee exercises this option(s) more than six
(6) months after lease commencement date then the rent shall be the then
prevailing rental rate charged to the month-to-month tenant. Lessor will make
each of these suites available to Lessee upon receipt of thirty (30) days'
written notice term from Lessee that they are prepared to take down the suite
indicated. Rent will be as indicated above and subject the CPI adjustments set
forth in this Lease the term shall commence at the beginning of the month
following the end of the thirty (30) days' written notice from Lessee to Lessor
exercising this option as to the suite or suites to be taken and will end at the
end of the term of this Lease subject to the extensions granted in this Lease.
The leasing of this additional space shall cause the space to become part of the
premises under this Lease subject to all the terms and conditions of this Lease
except as modified in this paragraph. Lessee shall have five (5) business days
to exercise this right starting when Lessee is provided the offered rental rate.
Such rental shall be for the remaining term of this Lease with the same
extension rights. If Lessee rejects the rental rate offered then Lessor may
lease the space to anyone else for the same rate or higher.
32. EARLY TERMINATION: Lessee shall have the right to terminate this
Lease and the obligations thereunder before the end of the Lease term as set
forth in Paragraph 1 above, as to any or all of the suites leased by Lessee from
Lessor in the Building, on the following conditions: (1) Lessee gives Lessor at
least ninety (90) days prior written notice of this exercise of right to
terminate setting forth the space (suite(s)) being terminated and the date of
termination ("Early Termination Date") which shall be the last day of a month;
(b) the Early Termination Date is at least eighteen (18) months after the
commencement date of the Lease; (c) payment to Lessor on or before the Early
Termination Date an amount equal to five (5) months' rent at the then rental
rate being paid for the space for which the Lease is being terminated pursuant
to this paragraph; (d) payment to Lessor of all rents due up to the Early
Termination Date; and (e) as to the space (suite) in the Lease for 453 Sherman
Avenue commencing December 15, 1995 ("initial space"); the payment to Lessor on
or before the Early Termination Date of an amount equal to the number of months
rent or fraction thereof for rental of the initial space calculated by
multiplying the number of months left in the initial term for the initial space
by .1167.
33. LESSOR'S LIABILITY: In the event of a transfer of Lessor's title or
interest to the property during the term of this Lease, Lessee agrees that the
grantee of such title or interest shall be substituted as the Lessor under this
Lease, and the original Lessor shall be released of all further liability;
provided, that all deposits shall be transferred to the grantee.
34. ESTOPPEL CERTIFICATE:
(a) On ten (10) days' prior written notice from Lessor, Lessee shall
execute, acknowledge, and deliver to Lessor a statement in writing: (1)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect), the amount of any security
deposit, and the date to which the rent and other charged are paid in advance,
if any; and (2) acknowledging that there are not, to Lessee's knowledge, any
uncured defaults on the part of
<PAGE>
Lessor, or specifying such defaults if any are claimed. Any such statement may
be conclusively relied upon by any prospective buyer or encumbrancer of the
premises.
(b) At Lessor's option, Lessee's failure to deliver such statement
within such time shall be a material breach of this Lease or shall be conclusive
upon Lessee: (1) that this Lease is in full force and effect, without
modification except as may be represented by Lessor; (2) that there are no
uncured defaults in Lessor's performance; and (3) that not more than one month's
rent has been paid in advance.
(c) If Lessor desires to finance, refinance, or sell the premises, or
any part thereof, Lessee agrees to deliver to any lender or buyer designated by
Lessor such financial statements of Lessee as may be reasonably required by such
lender or buyer. All financial statements shall be received by the Lessor or the
lender or buyer in confidence and shall be used only for the purposes set forth.
35. ENTIRE AGREEMENT: The foregoing constitutes the entire Agreement
between the parties and may be modified only in writing signed by all parties.
The following exhibits are a part of this Lease:
The undersigned Lessee hereby acknowledges that he/she has thoroughly read and
approved each of the provisions contained in this Offer, and agrees to the terms
and conditions specified.
Lessee: ______________ Date: 9/9/96 Lessee: ________________ Date:________
------
Chief Financial Officer, Internet Travel Network, Inc.
Receipt for deposit acknowledged by: ___________________________________________
ACCEPTANCE
The undersigned Lessor accepts the foregoing Offer and agrees to lease the
premises on the terms and conditions set forth above.
Lessor: ______________ Date: 9/4/96 Lessor: ________________ Date:________
------
Lessee acknowledges receipt of a copy of the accepted Agreements.
Lessee: ______________ Date: 9/4/96 Lessee: ________________ Date:________
------
Chief Financial Officer, Internet Travel Network, Inc.
<PAGE>
The Master Lease monthly rent is increased by $1,875 per month, the total rent
being equal to $8,432.50 per month. The new lease, which includes the Master
Lease and this addendum will have the same duration, options, and yearly
increases and dates of increase as the Master Lease.
The Lessee will lease the space as is. The Lessor must approve in writing all
proposed changes, if any, but will not withhold consent unreasonably. The
Lessee will pay for all required and approved changes.
Suites may become available at different times but, in any case, not later than
two months following acceptance of this addendum. The Lessee will start to pay
additional rent incrementally as soon as each individual suite will become
available for occupancy or for construction, as required.
All other terms of the Master Lease will remain in effect.
Pio de Feo
Managing Partner
Enterprise Development Company
<PAGE>
ENTERPRISE DEVELOPMENT COMPANY
P.O. Box 1785
Burlingame, CA 94011-1785
Telephone & Fax: (650) 343-2492
July 9, 1996
Internet Travel Network
Mr. Michael Schradle, CFO
453 Sherman Avenue
Palo Alto, CA 94306
Dear Mr. M. Schradle;
The simplest way to add additional office space to that included in your
existing Lease Contract dated November 16, 1995 (Master Lease), is to add the
following addendum to that lease.
ADDENDUM A
The Master Lease is modified to add 5 individual suites to the currently leased
space. The suites are:
1) 451/107, 451/109, 451/111 which are collectively leased for $1,250.00
per month;
2) 451/112, which is leased for $275.00 per month; and
3) 451/113, which is leased for $350.00 per month.
<PAGE>
ASSIGNMENT OF LEASE
This Assignment of Lease ("Assignment") is entered into this _____ day
of September, 1996, by and between James M. Conte and Internet Travel Network.
ARTICLE 1 - DEFINITIONS
1.1 As used herein the term "ASSIGNOR" shall refer to James M.
LoConte.
1.2 As used herein the term "ASSIGNEE" shall refer to Internet Travel
Network.
1.3 As used herein the term "LESSOR" shall refer to Pio de Feo.
1.4 As used herein the term "PREMISES" shall refer to certain office
space located at 451 Sherman Avenue, Suite 100, Palo Alto, Santa Clara County,
California, as modified between ASSIGNOR and LESSOR effective January 1, 1995,
and consisting of approximately 861 square feet.
1.5 As used herein the term "MASTER LEASE" shall refer to the
Standard Office Lease and Addendum and any and all Exhibits and Attachments
thereto between Pio de Feo as lessor and Dr. Alan A. Silverberg, D.C., Inc., as
lessee, on or about January 6, 1992.
1.6 As used herein the term "LoCONTE ASSIGNMENT" shall refer to the
Assignment and Assumption of Lessor's Interest in Lease between Alan A.
Silverberg as assignor, Pio de Feo as lessor, and James LoConte as assignee and
Joseph LoConte as guarantor, dated October 28, 1994.
ARTICLE 2 - TERM
2.1 Commencement Date. The term of this ASSIGNMENT shall be for the
-----------------
remaining term of the MASTER LEASE, including any such option period extending
the term to February 28, 2002, which may be exercised by ASSIGNEE hereunder, and
shall commence on October 1, 1996, (the "Commencement Date").
This ASSIGNMENT goes into effect as of the Commencement Date and all
duties arising hereunder shall be transferred to ASSIGNEE as of the Commencement
Date and all duties arising hereunder shall be transferred to ASSIGNEE as of the
Commencement Date regardless of when actual occupation of the PREMISES by
ASSIGNEE begins.
2.2 Option to Extend Term. ASSIGNOR and ASSIGNEE hereby agree that
---------------------
paragraph 39 of the MASTER LEASE shall be non-operative and that the exercise of
the option to extend the lease term of the PREMISES by ASSIGNEE shall not void
ASSIGNEE's obligations arising hereunder.
<PAGE>
ARTICLE 3 - OBLIGATIONS OF PARTIES
3.1 LESSOR's Obligations. LESSOR's obligations shall not be changed,
--------------------
modified, extended, extinguished or harmed by this ASSIGNMENT. LESSOR shall
continue to exercise duties and rights over the PREMISES in accordance with the
terms of the MASTER LEASE.
3.2 ASSIGNEE's Obligations. ASSIGNEE assumes all obligations of
----------------------
ASSIGNOR arising under the MASTER LEASE and LoCONTE ASSIGNMENT and will be
solely liable for the payment of rent and improvements and the performance of
the terms and conditions of the MASTER LEASE, subject to any modifications by
the LoCONTE ASSIGNMENT.
ASSIGNEE shall not commit or permit to be committed any act or
omission which would violate any term or provision of the MASTER LEASE.
ASSIGNEE shall neither do nor permit anything to be done which would cause the
MASTER LEASE to be terminated or forfeited by reason of any right of termination
or forfeiture reserved or vested in LESSOR under the MASTER LEASE, and ASSIGNEE
shall indemnify and hold ASSIGNOR harmless from and against any and all
liability, judgments, costs, demands, claims, and damages of any kind whatsoever
(including, without limitation, attorneys' fees and court costs) to the extent
any act or omission by ASSIGNEE results in a violation of any term or provision
of the MASTER LEASE. Neither early termination of the term of this ASSIGNMENT
nor abandonment of the PREMISES by ASSIGNEE shall relieve or release ASSIGNEE of
any of the obligations transferred to it by this ASSIGNMENT.
ASSIGNEE hereby represents and warrants to ASSIGNOR that it has read
and is familiar with the MASTER LEASE and accepts all terms of the MASTER LEASE,
subject to any modifications of it by the LoCONTE ASSIGNMENT, and agrees to be
bound thereby.
3.3 ASSIGNOR's Obligations. This ASSIGNMENT transfers ASSIGNOR's
----------------------
entire interest in the PREMISES. ASSIGNOR maintains no interest of any kind
whatsoever, reversionary or present possessory, in the PREMISES.
Assignor shall have no liability to ASSIGNEE or any other person for
damage of any nature whatsoever as a result of the failure of LESSOR to perform
its obligations under the MASTER LEASE of LoCONTE ASSIGNMENT. ASSIGNOR
represents that it is not in breach of the MASTER LEASE or LoCONTE ASSIGNMENT
and is current in payment of all sums due under the MASTER LEASE and LoCONTE
ASSIGNMENT and shall indemnify and hold harmless ASSIGNEE from any obligations
accruing prior to the Commencement Date herein.
Upon expiration of the term of this ASSIGNMENT, all duties of the
ASSIGNOR now owing to the LESSOR shall expire.
ARTICLE 4 - RENT
4.1 Monthly Rent. ASSIGNEE shall timely pay monthly rent in the
------------
amount of the $1,762.76 on or before the 1st day of each and every month without
prior notice or demand
<PAGE>
and without any deduction, offset, or abatement, in lawful money of the United
States, to LESSOR at the address set forth in the ASSIGNMENT.
If the term of this ASSIGNMENT shall begin on a date other than the
first of the month, ASSIGNEE agrees to pay that portion the monthly rent accrued
on the PREMISES from the Commencement Date to the first of the next month.
All rent increases incurred on the PREMISES pursuant to the schedule
for increases stated in the MASTER LEASE or LoCONTE ASSIGNMENT shall be assumed
by ASSIGNEE.
ASSIGNEE's covenant to pay rent under this ASSIGNMENT shall continue
until the term of the MASTER LEASE, including any exercised extension periods,
has expired, whether or not ASSIGNEE vacates or abandons the premises or
terminates the ASSIGNMENT, unless ASSIGNEE and ASSIGNOR agree in writing that
ASSIGNOR will resume responsibility for payment of rents to LESSOR.
4.2 Additional Rent. To the extent of any additional rent owed under
---------------
the MASTER LEASE or LoCONTE ASSIGNMENT, ASSIGNEE shall pay all such amounts to
LESSOR.
4.3 Late Charge and Interest. Any and all late charges or interest
------------------------
incurred under that MASTER LEASE or LoCONTE ASSIGNMENT shall be paid by ASSIGNEE
to LESSOR.
4.4 Tenant Improvement Loan. ASSIGNEE agrees that it shall assume
-----------------------
repayment of the tenant improvement loan referred to in Addendum paragraph 51 of
the MASTER LEASE, pursuant to the repayment-amortization schedule dated April 7,
1992. ASSIGNEE agrees that it shall be solely responsible for repayment of the
tenant improvement loan to the extent of the repayment-amortization schedule
through the end of the MASTER LEASE term. ASSIGNEE further covenants that if the
option to extend the term of this ASSIGNMENT is exercised by ASSIGNEE or for
ASSIGNEE's benefit, it shall continue to repay the tenant improvement loan
pursuant to the repayment-amortization schedule referred to herein until said
loan is repaid in full. ASSIGNEE's exercise of the option to extend the term of
the lease of the PREMISES constitutes an assumption of the tenant improvement
loan and ASSIGNEE shall indemnify and hold harmless ASSIGNOR against any and all
requests, claims or demands for payment from LESSOR or anyone acting on LESSOR's
behalf, including LESSOR's creditors. Upon completion of repayment of the loan
either pursuant to the repayment-amortization schedule or earlier repayment of
the loan, ASSIGNEE shall obtain and secure from LESSOR a complete release of
ASSIGNOR from any and all claims arising or which may arise against ASSIGNOR or
in favor of LESSOR under the tenant improvement loan and repayment-amortization
schedule.
ASSIGNOR hereby agrees that if the option to extend the term of this
ASSIGNMENT is not exercised by ASSIGNEE or for ASSIGNEE's benefit, ASSIGNOR
shall, upon termination of this ASSIGNMENT and the lease, promptly repay to
LESSOR the balance remaining due on the tenant improvement loan after ASSIGNEE
fulfills its obligations under the
<PAGE>
loan repayment-amortization schedule, without abatement, reimbursement, or
contribution from ASSIGNEE.
ARTICLE 5 - SECURITY DEPOSIT
Upon execution hereof, ASSIGNOR hereby assigns to ASSIGNEE his rights
to the security deposit under the MASTER LEASE in the sum of $1,925.00.
ASSIGNEE shall pay to ASSIGNOR the sum of $1,925.00 within ten (10)
business days of the date of this ASSIGNMENT as consideration for ASSIGNOR's
transfer of rights to his security deposit under the MASTER LEASE.
ARTICLE 6 - USE OF PREMISES
ASSIGNEE shall only make lawful use of the PREMISES of a quality
reasonably comparable to that use by ASSIGNOR or consistent with the general
character of the premises generally, and such use of the PREMISES shall be in
accordance with the provisions of the MASTER LEASE regarding use of the premises
(paras. 1.4, 6.1).
ARTICLE 7 - CONDITION OF THE PREMISES
ASSIGNEE takes the PREMISES subject to all the rights of the LESSOR
reserved in the PREMISES, including liens and other priority rights, and subject
to all obligations imposed by the MASTER LEASE and in the condition as stated
below.
ASSIGNEE acknowledges that as of the Commencement Date the PREMISES
and every part thereof, are in good condition and without need of repair.
ASSIGNEE accepts the PREMISES "as is", ASSIGNEE having made all investigations
and tests it deems necessary to establish to its own satisfaction the condition
of the PREMISES.
ASSIGNEE accepts the PREMISES subject to all applicable zoning,
municipal, county and state laws, ordinances, and regulations governing and
regulating the use of the PREMISES and any covenants or restrictions of record.
ASSIGNEE acknowledges that neither ASSIGNOR nor LESSOR have made any
representations or warranties as to the condition of the PREMISES or its present
or future suitability for ASSIGNEE's purposes.
ARTICLE 8 - NOTICES
8.1 Manner of Service. Any notice, demand, request, consent,
-----------------
approval, submittal, or communication that any party desires or is required to
give to the other party or any other person shall be in writing and either
served personally or sent by prepaid, first-class, certified mail to the address
set forth in Section 8.3, or by facsimile transmission at the phone number set
forth in Section 8.3.
8.2 Change of Address. Any party may change its address or facsimile
-----------------
phone number by promptly notifying the other party of the change of address or
phone number in writing. Such written notice of a change of address shall be
made within five (5) business days of the effective date of said change of
address. In the event the notice of change of address is
<PAGE>
delivered to the facsimile telephone number of the other parties, such address
change is deemed effective and received upon receipt of the sender of a
transmission report verifying that the facsimile transmission was sent. In the
event notice of change of address is delivered through the U.S. mails, it shall
be sent by first class mail and shall be deemed effective and received three
days after mailing such notice.
In the event that any party fails to notify said other parties of a
change of address as stated above, said party shall be liable for costs incurred
by any other party who must employ outside services to locate said party. This
provision shall not allow any party to such locator collect fees against LESSOR.
8.3 Addresses.
---------
ASSIGNOR ASSIGNEE
Dr. James M. LoConte, D.C. Internet Travel Network
124 University Avenue Suite 201 453 Sherman Avenue
Palo Alto, California 94301 Palo Alto, California 94306
Attention: Michael Schradle
Fax to: (415) 326-1164 Fax to: (415) 614-6390
ASSIGNOR'S GUARANTOR LESSOR
Mr. Joseph LoConte Pio de Feo
28140 Story Hill Lane ____________________________
Los Altos Hills, CA 94022 ____________________________
____________________________
Fax to:_____________________
ARTICLE 9 - DISPUTES, ATTORNEYS' FEES
9.1 Agreement to Arbitrate Dispute. All disputes between ASSIGNOR
------------------------------
and ASSIGNEE arising under this ASSIGNMENT shall be submitted by the parties to
binding arbitration.
9.2 Attorneys' Fees. The prevailing party (by arbitration award or
---------------
settlement) shall be entitled to recover as part of such proceeding its
reasonable attorneys' fees and costs incurred in pursuing such arbitration and
judicially enforcing such arbitration award.
ARTICLE 10 - NOR RIGHT TO AMEND, ASSIGN OR SUBLEASE
ASSIGNEE shall not have a right to amend, assign or sublease the
PREMISES without ASSIGNOR's consent, which ASSIGNOR in its sole discretion may
deny unless ASSIGNOR is released by LESSOR from any liability or obligation
under the MASTER LEASE and LoCONTE ASSIGNMENT. Any such amendment, assignment
or sublease shall be deemed a termination of this ASSIGNMENT and ASSIGNOR's
liabilities and obligations under the MASTER LEASE and LoCONTE ASSIGNMENT.
Any such unapproved amendment, assignment or sublease shall not
relieve ASSIGNEE of liability for rents, improvement costs, loan repayment
obligation, expenses,
<PAGE>
additional costs or fees under the MASTER LEASE or LoCONTE ASSIGNMENT
transferred pursuant to this ASSIGNMENT.
ARTICLE 11 - MISCELLANEOUS
11.1 Entire Agreement. This ASSIGNMENT, Exhibits and Attachments
----------------
hereto constitute the entire agreement between the parties with respect to the
matters described or referred to herein. ASSIGNOR has made no representations or
warranties to ASSIGNEE except as expressly set forth herein. This ASSIGNMENT may
only be amended pursuant to the terms of the MASTER LEASE.
The following documents are incorporated by reference herein and
attached as exhibits:
EXHIBIT 1 MASTER LEASE
EXHIBIT 2 LOCONTE ASSIGNMENT
EXHIBIT 3 TENANT IMPROVEMENT LOAN
AMORTIZATION SCHEDULE DATED
APRIL 7, 1992
11.2 Counterparts. This ASSIGNMENT may be executed in two or more
------------
identical counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.3 Facsimile As Original. A facsimile copy of this ASSIGNMENT may
---------------------
be executed as an original.
11.4 LESSOR Consent. This ASSIGNMENT is conditioned on acceptance
--------------
and consent by LESSOR as to the ASSIGNMENT and all the terms and conditions
stated herein.
11.5 Due Authority. Each party represents and warrants that the
-------------
person(s) signing on its behalf have the authority to bind it to this ASSIGNMENT
<PAGE>
Executed as of the date first set forth above.
ASSIGNOR ASSIGNEE
________________________________________ INTERNET TRAVEL NETWORK
James M. LoConte, D.C.
________________________________________ By:_______________________________
Joseph LoConte, Cosigner
Its:______________________________
CONSENT TO ASSIGNMENT
The undersigned LESSOR hereby agrees to and accepts the above
Assignment of Lease and the terms thereof including the Option to Extend, with
the understanding and condition that the Assignment of Lease does not release
ASSIGNOR from the contracted obligations under the MASTER LEASE and LoCONTE
ASSIGNMENT during the initial term of the MASTER LEASE should the ASSIGNEE fail
to perform any obligations of the MASTER LEASE and LoCONTE ASSIGNMENT.
Date: 9/30/96 LESSOR:
---------------------------------
__________________________________
Pio de Feo
<PAGE>
February 4, 1996
Dr. J. LoConte
California Avenue Chiropractic
451 Sherman Avenue, Suite #100
Palo Alto, CA 94306
Re: Rent escalation
Dear Dr. LoConte:
Pursuant to the terms of the Addendum to you lease Assignment, the
referenced Master Lease dated January 6, 1992, and the letter dated Sep. 27,
1995, your monthly rent is scheduled to increase effective March 1, 1996. This
increase is computed in accordance with the Consumer Price Index (CPI) and is
limited to a minimum of 4% and a maximum of 8%. Because the CPI increase during
the last year has been less than 4%, your monthly rent increase will be based on
the minimum of 4%. As such, starting with the month of December 1994, and each
month thereafter until changed in accordance with the terms of your lease, your
basic rent shall be $1,694.96 * 1.04 = $1,762.76 reflecting that increase. Your
total monthly payment, including the loan payment schedule of $130.04, shall be:
$1,762.76 + $130.04 = $1,892.80.
If you have any questions regarding this information, please contact
our offices.
Sincerely,
Pio de Feo
Managing Partner
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LESSOR'S INTEREST IN LEASE
1. Dr. Alan A. Silverberg, D.C., Inc. ("Assignor") does hereby assign and
transfer to James M. LoConte ("Assignee") for valuable consideration, the
receipt and sufficiency of which is acknowledged, all of Assignor rights
under that certain Lease (the "Master Lease") dated Jan. 6, 1992 by and
between Pio de Feo as Lessor (and Landlord), and Dr. Alan Silverberg, D.C.,
Inc. as Lessee, concerning the real property commonly known as 451 Sherman
Avenue, Suite 100, Palo Alto, California (the "Premises").
2. Assignee hereby accepts the foregoing assignment and assumes and agrees to
fully observe and perform all obligations of the Assignor under the Master
Lease. Including among these obligations accepted by the Assignee are the
Assignor obligations relative to the personal loan granted by Pio de Feo to
the Assignor according to all terms of the loan as described in Tenant
Improvement Loan document dated April 7, 1992 and signed by the Assignor,
by Pio de Feo and by Herman Harrow. The balance of this loan, prior to the
Oct. 1, 1994 payment, is $9,599.23 and the fixed monthly payment is $130.04
which includes Principal and Interest payments.
3. Mr. Joseph LoConte, father of the Assignee, is a Cosigner for all
obligations of the Assignee under the terms of this Assignment contract.
The Cosigner promises to personally perform all obligations of the
Assignee, should the Assignee fail to do so, including paying the monthly
rent according to the lease schedule in the Master Lease and paying the
loan installments according to the terms of Tenant Improvement loan of Par.
3.
4. Assignor does assign to the Assignee the security deposit under said
Lease in the sum of $1,925.00.
5. Assignor and Assignee agree that this assignment is subject to the terms
and conditions of Landlord's consent to Assignment set forth in the next
page.
<PAGE>
LANDLORD'S CONSENT TO ASSIGNMENT
1. Landlord's consent to Assignment (Consent) is made and given this Oct. 28
day of 1994 by Pio de Feo (Lessor and Landlord's) under the Lease described
in the foregoing assignment, subject to the terms and conditions stated in
this Consent
2. Reservation of Landlord's rights. Landlord consent to the Assignment
--------------------------------
is given pursuant to the Master Lease. The landlord specifically reserves
all of Landlord's rights and privileges under the Master Lease. It is
expressly understood that nothing in this consent shall be construed to
modify the Master Lease or to waive any of Landlord's rights and privileges
thereunder.
THE EFFECTIVE DATE OF THIS ASSIGNMENT IS JAN. 1, 1995.
Dated Oct. 28, 1994
ASSIGNOR: (Print) A. Silverberg (Sign)
----------------------- -----------------------------
ASSIGNEE: (Print) James LoConte (Sign)
----------------------- -----------------------------
ASSIGNEE CO-SIGNER: (Print) Joseph LoConte (Sign)
----------------------- -----------------------------
LESSOR/LANDLORD: (Print) Pio de Feo (Sign)
----------------------- -----------------------------
<PAGE>
ASSIGNMENT OF LEASE
This Assignment of Lease ("Assignment") is entered into this _____ day
of September, 1996, by and between James M. LoConte and Internet Travel Network.
ARTICLE 1 - DEFINITIONS
1.1 As used herein the term "ASSIGNOR" shall refer to James M.
LoConte.
1.2 As used herein the term "ASSIGNEE" shall refer to Internet Travel
Network.
1.3 As used herein the term "LESSOR" shall refer to Pio de Feo.
1.4 As used herein the term "PREMISES" shall refer to certain office
space located at 451 Sherman Avenue, Suite 100, Palo Alto, Santa Clara County,
California, as modified between ASSIGNOR and LESSOR effective January 1, 1995,
and consisting of approximately 861 square feet.
1.5 As used herein the term "MASTER LEASE" shall refer to the
Standard Office Lease and Addendum and any and all Exhibits and Attachments
thereto between Pio de Feo as lessor and Dr. Alan A. Silverberg, D.C., Inc., as
lessee, on or about January 6, 1992.
1.6 As used herein the term "LoCONTE ASSIGNMENT" shall refer to the
Assignment and Assumption of Lessor's Interest in Lease between Alan A.
Silverberg as assignor, Pio de Feo as lessor, and James LoConte as assignee and
Joseph LoConte as guarantor, dated October 28, 1994.
ARTICLE 2 - TERM
2.1 Commencement Date. The term of this ASSIGNMENT shall be for the
-----------------
remaining term of the MASTER LEASE, including any such option period extending
the term to February 28, 2002, which may be exercised by ASSIGNEE hereunder, and
shall commence on October 1, 1996, (the "Commencement Date").
This ASSIGNMENT goes into effect as of the Commencement Date and all
duties arising hereunder shall be transferred to ASSIGNEE as of the Commencement
Date and all duties arising hereunder shall be transferred to ASSIGNEE as of the
Commencement Date regardless of when actual occupation of the PREMISES by
ASSIGNEE begins.
2.2 Option to Extend Term. ASSIGNOR and ASSIGNEE hereby agree that
---------------------
paragraph 39 of the MASTER LEASE shall be non-operative and that the exercise of
the option to extend the lease term of the PREMISES by ASSIGNEE shall not void
ASSIGNEE's obligations arising hereunder.
ARTICLE 3 - OBLIGATIONS OF PARTIES
3.1 LESSOR's Obligations. LESSOR's obligations shall not be changed,
--------------------
modified, extended, extinguished or harmed by this ASSIGNMENT. LESSOR shall
continue to exercise duties and rights over the PREMISES in accordance with the
terms of the MASTER LEASE.
3.2 ASSIGNEE's Obligations. ASSIGNEE assumes all obligations of
----------------------
ASSIGNOR arising under the MASTER LEASE and LoCONTE ASSIGNMENT and will be
solely liable for the payment of rent and improvements and the performance of
the terms and conditions of
1
<PAGE>
the MASTER LEASE, subject to any modifications by the LoCONTE ASSIGNMENT.
ASSIGNEE shall not commit or permit to be committed any act or
omission which would violate any term or provision of the MASTER LEASE.
ASSIGNEE shall neither do nor permit anything to be done which would cause the
MASTER LEASE to be terminated or forfeited by reason of any right of termination
or forfeiture reserved or vested in LESSOR under the MASTER LEASE, and ASSIGNEE
shall indemnify and hold ASSIGNOR harmless from and against any and all
liability, judgments, costs, demands, claims, and damages of any kind whatsoever
(including, without limitation, attorneys' fees and court costs) to the extent
any act or omission by ASSIGNEE results in a violation of any term or provision
of the MASTER LEASE. Neither early termination of the term of this ASSIGNMENT
nor abandonment of the PREMISES by ASSIGNEE shall relieve or release ASSIGNEE of
any of the obligations transferred to it by this ASSIGNMENT.
ASSIGNEE hereby represents and warrants to ASSIGNOR that it has read
and is familiar with the MASTER LEASE and accepts all terms of the MASTER LEASE,
subject to any modifications of it by the LoCONTE ASSIGNMENT, and agrees to be
bound thereby.
3.3 ASSIGNOR's Obligations. This ASSIGNMENT transfers ASSIGNOR's
----------------------
entire interest in the PREMISES. ASSIGNOR maintains no interest of any kind
whatsoever, reversionary or present possessory, in the PREMISES.
Assignor shall have no liability to ASSIGNEE or any other person for
damage of any nature whatsoever as a result of the failure of LESSOR to perform
its obligations under the MASTER LEASE of LoCONTE ASSIGNMENT. ASSIGNOR
represents that it is not in breach of the MASTER LEASE or LoCONTE ASSIGNMENT
and is current in payment of all sums due under the MASTER LEASE and LoCONTE
ASSIGNMENT and shall indemnify and hold harmless ASSIGNEE from any obligations
accruing prior to the Commencement Date herein.
Upon expiration of the term of this ASSIGNMENT, all duties of the
ASSIGNOR now owing to the LESSOR shall expire.
ARTICLE 4 - RENT
4.1 Monthly Rent. ASSIGNEE shall timely pay monthly rent in the
------------
amount of the $1,762.76 on or before the 1st day of each and every month without
prior notice or demand and without any deduction, offset, or abatement, in
lawful money of the United States, to LESSOR at the address set forth in the
ASSIGNMENT.
If the term of this ASSIGNMENT shall begin on a date other than the
first of the month, ASSIGNEE agrees to pay that portion the monthly rent accrued
on the PREMISES from the Commencement Date to the first of the next month.
All rent increases incurred on the PREMISES pursuant to the schedule
for increases stated in the MASTER LEASE or LoCONTE ASSIGNMENT shall be assumed
by ASSIGNEE.
ASSIGNEE's covenant to pay rent under this ASSIGNMENT shall continue
until the term of the MASTER LEASE, including any exercised extension periods,
has expired, whether or not ASSIGNEE vacates or abandons the premises or
terminates the ASSIGNMENT, unless ASSIGNEE and ASSIGNOR agree in writing that
ASSIGNOR will resume responsibility for payment of rents to LESSOR.
4.2 Additional Rent. To the extent of any additional rent owed under
the MASTER LEASE or LoCONTE ASSIGNMENT, ASSIGNEE shall pay all such amounts to
LESSOR.
2
<PAGE>
4.3 Late Charge and Interest. Any and all late charges or interest
------------------------
incurred under that MASTER LEASE or LoCONTE ASSIGNMENT shall be paid by ASSIGNEE
to LESSOR.
4.4 Tenant Improvement Loan. ASSIGNEE agrees that it shall assume
-----------------------
repayment of the tenant improvement loan referred to in Addendum paragraph 51 of
the MASTER LEASE, pursuant to the repayment-amortization schedule dated April 7,
1992. ASSIGNEE agrees that it shall be solely responsible for repayment of the
tenant improvement loan to the extent of the repayment-amortization schedule
through the end of the MASTER LEASE term. ASSIGNEE further covenants that if the
option to extend the term of this ASSIGNMENT is exercised by ASSIGNEE or for
ASSIGNEE's benefit, it shall continue to repay the tenant improvement loan
pursuant to the repayment-amortization schedule referred to herein until said
loan is repaid in full. ASSIGNEE's exercise of the option to extend the term of
the lease of the PREMISES constitutes an assumption of the tenant improvement
loan and ASSIGNEE shall indemnify and hold harmless ASSIGNOR against any and all
requests, claims or demands for payment from LESSOR or anyone acting on LESSOR's
behalf, including LESSOR's creditors. Upon completion of repayment of the loan
either pursuant to the repayment-amortization schedule or earlier repayment of
the loan, ASSIGNEE shall obtain and secure from LESSOR a complete release of
ASSIGNOR from any and all claims arising or which may arise against ASSIGNOR or
in favor of LESSOR under the tenant improvement loan and repayment-amortization
schedule.
ASSIGNOR hereby agrees that if the option to extend the term of this
ASSIGNMENT is not exercised by ASSIGNEE or for ASSIGNEE's benefit, ASSIGNOR
shall, upon termination of this ASSIGNMENT and the lease, promptly repay to
LESSOR the balance remaining due on the tenant improvement loan after ASSIGNEE
fulfills its obligations under the loan repayment-amortization schedule, without
abatement, reimbursement, or contribution from ASSIGNEE.
ARTICLE 5 - SECURITY DEPOSIT
Upon execution hereof, ASSIGNOR hereby assigns to ASSIGNEE his rights
to the security deposit under the MASTER LEASE in the sum of $1,925.00.
ASSIGNEE shall pay to ASSIGNOR the sum of $1,925.00 within ten (10)
business days of the date of this ASSIGNMENT as consideration for ASSIGNOR's
transfer of rights to his security deposit under the MASTER LEASE.
ARTICLE 6 - USE OF PREMISES
ASSIGNEE shall only make lawful use of the PREMISES of a quality
reasonably comparable to that use by ASSIGNOR or consistent with the general
character of the premises generally, and such use of the PREMISES shall be in
accordance with the provisions of the MASTER LEASE regarding use of the premises
(paras. 1.4, 6.1).
ARTICLE 7 - CONDITION OF THE PREMISES
ASSIGNEE takes the PREMISES subject to all the rights of the LESSOR
reserved in the PREMISES, including liens and other priority rights, and subject
to all obligations imposed by the MASTER LEASE and in the condition as stated
below.
ASSIGNEE acknowledges that as of the Commencement Date the PREMISES
and every part thereof, are in good condition and without need of repair.
ASSIGNEE accepts the
3
<PAGE>
PREMISES "as is", ASSIGNEE having made all investigations and tests it deems
necessary to establish to its own satisfaction the condition of the PREMISES.
ASSIGNEE accepts the PREMISES subject to all applicable zoning,
municipal, county and state laws, ordinances, and regulations governing and
regulating the use of the PREMISES and any covenants or restrictions of record.
ASSIGNEE acknowledges that neither ASSIGNOR nor LESSOR have made any
representations or warranties as to the condition of the PREMISES or its present
or future suitability for ASSIGNEE's purposes.
ARTICLE 8 - NOTICES
8.1 Manner of Service. Any notice, demand, request, consent,
-----------------
approval, submittal, or communication that any party desires or is required to
give to the other party or any other person shall be in writing and either
served personally or sent by prepaid, first-class, certified mail to the address
set forth in Section 8.3, or by facsimile transmission at the phone number set
forth in Section 8.3.
8.2 Change of Address. Any party may change its address or facsimile
-----------------
phone number by promptly notifying the other party of the change of address or
phone number in writing. Such written notice of a change of address shall be
made within five (5) business days of the effective date of said change of
address. In the event the notice of change of address is delivered to the
facsimile telephone number of the other parties, such address change is deemed
effective and received upon receipt of the sender of a transmission report
verifying that the facsimile transmission was sent. In the event notice of
change of address is delivered through the U.S. mails, it shall be sent by first
class mail and shall be deemed effective and received three days after mailing
such notice.
In the event that any party fails to notify said other parties of a
change of address as stated above, said party shall be liable for costs incurred
by any other party who must employ outside services to locate said party. This
provision shall not allow any party to such locator collect fees against LESSOR.
8.3 Addresses.
---------
ASSIGNOR ASSIGNEE
- -------- --------
Dr. James M. LoConte, D.C. Internet Travel Network
124 University Avenue Suite 201 453 Sherman Avenue
Palo Alto, California 94301 Palo Alto, California 94306
Attention: Michael Schradle
Fax to: (415) 326-1164 Fax to: (415) 614-6390
ASSIGNOR'S GUARANTOR LESSOR
- -------------------- ------
Mr. Joseph LoConte Pio de Feo
28140 Story Hill Lane /s/ Pio de Feo
----------------------------
Los Altos Hills, CA 94022 ____________________________
____________________________
Fax to:_____________________
<PAGE>
ARTICLE 9 - DISPUTES, ATTORNEYS' FEES
9.1 Agreement to Arbitrate Dispute. All disputes between ASSIGNOR and
------------------------------
ASSIGNEE arising under this ASSIGNMENT shall be submitted by the parties to
binding arbitration.
9.2 Attorneys' Fees. The prevailing party (by arbitration award or
---------------
settlement) shall be entitled to recover as part of such proceeding its
reasonable attorneys' fees and costs incurred in pursuing such arbitration and
judicially enforcing such arbitration award.
ARTICLE 10 - NO RIGHT TO AMEND, ASSIGN OR SUBLEASE
ASSIGNEE shall not have a right to amend, assign or sublease the
PREMISES without ASSIGNOR's consent, which ASSIGNOR in its sole discretion may
deny unless ASSIGNOR is released by LESSOR from any liability or obligation
under the MASTER LEASE and LoCONTE ASSIGNMENT. Any such amendment, assignment or
sublease shall be deemed a termination of this ASSIGNMENT and ASSIGNOR's
liabilities and obligations under the MASTER LEASE and LoCONTE ASSIGNMENT.
Any such unapproved amendment, assignment or sublease shall not
relieve ASSIGNEE of liability for rents, improvement costs, loan repayment
obligation, expenses, additional costs or fees under the MASTER LEASE or LoCONTE
ASSIGNMENT transferred pursuant to this ASSIGNMENT.
ARTICLE 11 - MISCELLANEOUS
11.1 Entire Agreement. This ASSIGNMENT, Exhibits and Attachments
----------------
hereto constitute the entire agreement between the parties with respect to the
matters described or referred to herein. ASSIGNOR has made no representations or
warranties to ASSIGNEE except as expressly set forth herein. This ASSIGNMENT may
only be amended pursuant to the terms of the MASTER LEASE.
The following documents are incorporated by reference herein and
attached as exhibits:
EXHIBIT 1 MASTER LEASE
EXHIBIT 2 LOCONTE ASSIGNMENT
EXHIBIT 3 TENANT IMPROVEMENT LOAN AMORTIZATION SCHEDULE DATED
APRIL 7, 1992
11.2 Counterparts. This ASSIGNMENT may be executed in two or more
------------
identical counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.3 Facsimile As Original. A facsimile copy of this ASSIGNMENT may
---------------------
be executed as an original.
11.4 LESSOR Consent. This ASSIGNMENT is conditioned on acceptance and
--------------
consent by LESSOR as to the ASSIGNMENT and all the terms and conditions stated
herein.
11.5 Due Authority. Each party represents and warrants that the
------------
person(s) signing on its behalf have the authority to bind it to this
ASSIGNMENT.
<PAGE>
Executed as of the date first set forth above.
ASSIGNOR: ASSIGNEE:
INTERNET TRAVEL NETWORK
____________________________
JAMES M. LoCONTE, D.C.
By /s/[SIGNITURE ILLEGIBLE]^^
____________________________ ---------------------------
JOSEPH LoCONTE, COSIGNER Its [ILLEGIBLE]
---------------------------
CONSENT TO ASSIGNMENT
The undersigned LESSOR hereby agrees to and accepts the above
Assignment of Lease and the terms thereof including the Option to Extend, with
the understanding and condition that the Assignment of Lease does not release
ASSIGNOR from the contracted obligations under the MASTER LEASE and LoCONTE
ASSIGNMENT during the initial term of the MASTER LEASE should the ASSIGNEE fail
to perform any obligations of the MASTER LEASE and LoCONTE ASSIGNMENT.
Date: 9/30/96 LESSOR:
------------------
/s/ Pio de Feo
-------------------------
Pio de Feo
<PAGE>
February 4, 1996
Dr. J. LoConte
California Avenue Chiropractic
451 Sherman Avenue, Suite #100
Palo Alto, CA 94306
Re: Rent escalation
Dear Dr. LoConte:
Pursuant to the terms of the Addendum to you lease Assignment, the referenced
Master Lease dated January 6, 1992, and the letter dated Sep. 27, 1995, your
monthly rent is scheduled to increase effective March 1, 1996. This increase is
computed in accordance with the Consumer Price Index (CPI) and is limited to a
minimum of 4% and a maximum of 8%. Because the CPI increase during the last year
has been less than 4%, your monthly rent increase will be based on the minimum
of 4%. As such, starting with the month of December 1994, and each month
thereafter until changed in accordance with the terms of your lease, your basic
rent shall be $1,694.96 * 1.04 = $1,762.76 reflecting that increase. Your total
monthly payment, including the loan payment schedule of $130.04, shall be:
$1,762.76 + $130.04 = $1,892.80.
If you have any questions regarding this information, please contact our
offices.
Sincerely,
Pio de Feo
Managing Partner
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LESSOR'S INTEREST IN LEASE
1. Dr. Alan A. Silverberg, D.C., Inc. ("Assignor") does hereby assign and
----------------------------------
transfer to James M. LoConte ("Assignee") for valuable consideration, the
-----------------------------
receipt and sufficiency of which is acknowledged, all of Assignor rights under
that certain Lease (the "Master Lease") dated Jan. 6, 1992 by and between Pio de
------------ ------
Feo as Lessor (and Landlord), and Dr. Alan Silverberg, D.C., Inc. as Lessee,
- --- -------------------------------
concerning the real property commonly known as 451 Sherman Avenue, Suite 100,
------------------------------
Palo Alto, California (the "Premises").
- ---------------------
2. Assignee hereby accepts the foregoing assignment and assumes and agrees to
fully observe and perform all obligations of the Assignor under the Master
Lease. Including among these obligations accepted by the Assignee are the
Assignor obligations relative to the personal loan granted by Pio de Feo to the
Assignor according to all terms of the loan as described in Tenant Improvement
Loan document dated April 7, 1992 and signed by the Assignor, by Pio de Feo and
by Herman Harrow. The balance of this loan, prior to the Oct. 1, 1994 payment,
is $9,599.23 and the fixed monthly payment is $130.04 which includes Principal
and Interest payments.
3. Mr. Joseph LoConte, father of the Assignee, is a Cosigner for all
------------------
obligations of the Assignee under the terms of this Assignment contract. The
Cosigner promises to personally perform all obligations of the Assignee, should
the Assignee fail to do so, including paying the monthly rent according to the
lease schedule in the Master Lease and paying the loan installments according to
the terms of Tenant Improvement loan of Par. 3.
4. Assignor does assign to the Assignee the security deposit under said Lease
in the sum of $1,925.00.
5. Assignor and Assignee agree that this assignment is subject to the terms
and conditions of Landlord's consent to Assignment set forth in the next page.
<PAGE>
LANDLORD'S CONSENT TO ASSIGNMENT
1. Landlord's consent to Assignment (Consent) is made and given this Oct. 28
-------
day of 1994 by Pio de Feo (Lessor and Landlord's) under the Lease described in
---- ----------
the foregoing assignment, subject to the terms and conditions stated in this
Consent
2. Reservation of Landlord's rights. Landlord consent to the Assignment is
--------------------------------
given pursuant to the Master Lease. The landlord specifically reserves all of
Landlord's rights and privileges under the Master Lease. It is expressly
understood that nothing in this consent shall be construed to modify the Master
Lease or to waive any of Landlord's rights and privileges thereunder.
THE EFFECTIVE DATE OF THIS ASSIGNMENT IS JAN. 1, 1995.
<TABLE>
<S> <C> <C>
Dated Oct. 28, 1994
-----------------
ASSIGNOR: (Print) A. Silverberg (Sign) /s/ A. Silverberg
----------------------- -------------------------
ASSIGNEE: (Print) James LoConte (Sign) /s/ James LoConte
----------------------- -------------------------
ASSIGNEE CO-SIGNER: (Print) Joseph LoConte (Sign) /s/ Joseph LoConte
----------------------- -------------------------
LESSOR/LANDLORD: (Print) Pio de Feo (Sign) /s/ Pio de Feo
----------------------- -------------------------
</TABLE>
<PAGE>
STANDARD OFFICE LEASE - GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. Basic Lease Provisions ("Basic Lease Provisions")
----------------------
1.1 Parties: This Lease, dated for reference purposes only. January
-------
6, 1992, is made by and between Pio DeFeo, an Individual (therein called
"Lessor") and Dr. Alan A. Silverberg, D.C., Inc., doing business under the name
of California Avenue Chiropractic (therein called "Lessee").
1.2 Premises: Suite Number(s) #N, 1st floor, consisting of
--------
approximately 1,100 sq. feet, more or less, as defined in paragraph 2 and as
shown on Exhibit "A" hereto (the "Premises").
1.3 Building: Commonly described as being located at 451 Sherman
--------
Avenue, in the City of Palo Alto, County of Santa Clara, State of California as
more particularly described in Exhibit A hereto, and as defined in paragraph 2.
1.4 Use: Chiropractic Office, subject to paragraph 6.
---
1.5 Term: five (5) years commencing March 1, 1992 ("Commencement
----
Date") and ending February 28, 1997, as defined in paragraph 3.
1.6 Base Rent: One Thousand Nine Hundred Twenty-five & No/100
---------
Dollars ($1,925.00) per month, payable on the 1st day of each month per
paragraph 4.1.
1.7 Base Rent Increase: On March 1, 1993, and each subsequent year,
------------------
the monthly Base Rent payable under paragraph 1.6 above shall be adjusted as
provided in paragraph 4.3 below.
1.8 Rent Paid Upon Execution: One Thousand Nine Hundred Twenty-five
------------------------
and No/100 Dollars ($1,925.00) as prepaid rent for April 1992. (The rent for
March 1992 is abated.)
1.9 Security Deposit: One Thousand Nine Hundred Twenty-five and
----------------
No/100 Dollars ($1,925.00).
1.10 Deleted
2. Premises, Parking and Common Areas.
----------------------------------
2.1 Premises: The Premises are a portion of a building, herein
--------
sometimes referred to as the "Building" identified in paragraph 1.3 of the Basic
Lease Provisions. "Building" shall include adjacent parking structures used in
connection therewith. The Premises, the Building, the Common Areas, the land
upon which the same are located, along with all other buildings and improvements
thereon or thereunder, are herein collectively referred to as the "Office
Building Project." Lessor hereby leases to Lessee and Lessee leases from
<PAGE>
Lessor for the term, at the rental, and upon all of the conditions set forth
herein, the real property referred to in the Basic Lease Provisions, paragraph
1.2, as the "Premises," including rights to the Common Areas as hereinafter
specified.
2.2 Deleted.
2.2.1 Deleted.
2.2.2 Deleted.
2.3 Common Areas--Definition. The term "Common Areas" is defined
------------------------
as all areas and facilities outside the Premises and within the exterior
boundary line of the Office Building Project that are provided and designated by
the Lessor from time to time for the general non-exclusive use of Lessor, Lessee
and of other lessees of the Office Building Project and their respective
employees, suppliers, shippers, customers and invitees, including but not
limited to common entrances, lobbies, corridors, stairways and stairwells,
public restrooms, elevators, escalators, parking areas to the extent not
otherwise prohibited by this Lease, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, ramps, driveways, landscaped areas and
decorative walls.
2.4 Common Areas--Rules and Regulations. Lessee agrees to abide by
-----------------------------------
and conform to the rules and regulations attached hereto as Exhibit B with
respect to the Office Building Project and Common Areas, and to cause its
employees, suppliers, customers, and invitees to so abide and conform. Lessor or
such other person(s) as Lessor may appoint shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
modify, amend and enforce and rules and regulations. Lessor shall not be
responsible to Lessee for the noncompliance with said rules and regulations by
other lessees, their agents, employees and invitees of the Office Building
Project.
2.5 Common Areas--Changes. Lessor shall have the right, in
---------------------
Lessor's sole discretion, from time to time:
(a) To make changes to the Building interior and exterior and
Common Areas, including, without limitation, changes in the location, size,
shape, number, and appearance thereof, including but not limited to the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, decorative walls, landscaped areas and walkways;
provided, however, Lessor shall at all times provide the parking facilities
required by applicable law;
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land and improvements outside the
boundaries of the Office Building Project to be a part of the Common Areas,
provided that such other land and improvements have a reasonable and functional
relationship to the Office Building Project;
2
<PAGE>
(d) To add additional buildings and improvements to the
Common Areas;
(e) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Office Building Project
or any portion thereof;
(f) To do and perform such other acts and make such other
changes in, to or with respect to the Common Areas and Office Building Project
is Lessor may, in the exercise of sound business judgment deem to be
appropriate.
3. Term.
----
3.1 Term. The term and Commencement Date of this Lease shall be
----
as specified in paragraph 1.5 of the Basic Lease Provisions.
3.2 Delay in Possession. Notwithstanding said Commencement Date,
-------------------
if for any reason Lessor cannot deliver possession of the Premises to Lessee on
said date and subject to paragraph 3.2.2, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease or
the obligations of Lessee hereunder or extend the term hereof; but, in such
case, Lessee shall not be obligated to pay rent or perform any other obligation
of Lessee under the terms of this Lease, except as may be otherwise provided in
this Lease, until possession of the Premises is tendered to Lessee, as
hereinafter defined; provided, however, that if Lessor shall not have delivered
possession of the Premises within sixty (60) days following said Commencement
Date, as the same may be extended under the terms of a Work Letter executed by
Lessor and Lessee. Lessee may, at Lessee's option, by notice in writing to
Lessor within ten (10) days thereafter, cancel this Lease, in which event the
parties shall be discharged from all obligations hereunder; provided, however,
that, as to Lessee's obligations, Lessee first reimburses Lessor for all costs
incurred for Non-Standard improvements and, as o Lessor's obligations, Lessor
shall return any money previously deposited by Lessee (less any offsets due
Lessor for Non-Standard Improvements); and provided further, that if such
written notice by Lessee is not received by Lessor within said ten (10) day
period, Lessee's right to cancel this Lease hereunder shall terminate and be of
no further force or effect.
3.2.1 Possession Tendered--Defined. Possession of the Premises
----------------------------
shall be deemed tendered to Lessee ("Tender of Possession") when (1) the
improvements to be provided by Lessor under this Lease are substantially
completed, (2) the Building utilities are ready for use in the Premises, (3)
Lessee has reasonable access to the Premises, and (4) ten (10) days shall have
expired following advance written notice to Lessee of the occurrence of the
matters described in (1), (2) and (3), above of this paragraph 3.2.1.
3.2.2 Delays Caused by Lessee. There shall be no abatement of
-----------------------
rent, and the sixty (60) day period following the Commencement Date before which
Lessee's right to cancel this Lease accrues under paragraph 3.2, shall be deemed
extended to the extent of any delays caused by acts or omissions of Lessee,
Lessee's agents, employees and contractors.
3
<PAGE>
3.3 Early Possession. If Lessee occupies the Premises prior to
----------------
said Commencement Date, such occupancy shall be subject to all provisions of
this Lease, such occupancy shall not change the termination date, and Lessee
shall pay rent for such occupancy.
3.4 Uncertain Commencement. In the event commencement of the Lease
----------------------
term is defined as the completion of the improvements, Lessee and Lessor shall
execute an amendment to this Lease establishing the date of Tender of Possession
(as defined in paragraph 3.2.1) or the actual taking of possession by Lessee,
whichever first occurs, as the Commencement Date.
4. Rent.
----
4.1 Base Rent. Subject to adjustment as hereinafter provided in
---------
paragraph 4.3, and except as may be otherwise expressly provided in this Lease,
Lessee shall pay to Lessor the Base Rent for the Premises set forth in paragraph
1.6 of the Basic Lease Provisions, without offset or deduction. Lessee shall pay
Lessor upon execution hereof the advance Base Rent described in paragraph 1.6 of
the Basic Lease Provisions. Rent for any period during the term hereof which is
for less than one month shall be prorated based upon the actual number of days
of the calendar month involved. Rent shall be payable in lawful money of the
United States to Lessor at the address stated herein or to such other persons or
at such other places as Lessor may designate in writing.
4.2 Releted
4.3 Rent Increase.
-------------
4.3.1 At the times set forth in paragraph 1.7 of the Basic Lease
Provisions, the monthly Base Rent payable under paragraph 4.1 of this Lease
shall be adjusted by the increase, if any, in the Consumer Price Index of the
Bureau of Labor Statistics of the Department of Labor for All Urban Consumers,
(1967 = 100). "All Items," for the city nearest the location of the Building,
herein referred to as "C.P.I.", since the date of this Lease. However, the
increase in Base Rent shall be subject to a minimum increase of four percent
(4%) per year and shall be no more than eight percent (8%) per year.
4.3.2 The monthly Base Rent payable pursuant to paragraph 4.3.1 shall
be calculated as follows: the Base Rent payable for the first month of the term
of this Lease, as set forth in paragraph 4.1 of this Lease, shall be multiplied
by a fraction, the numerator of which shall be the C.P.I. of the calendar month
during which the adjustments is to take effect, and the denominator of which
shall be the C.P.I. for the calendar month in which the original Lease form
commences. The sum so calculated shall constitute the new monthly Base Rent
hereunder, but, in no event, shall such new monthly Base Rent be less than the
Base Rent payable for the month immediately preceding the date for the rent
adjustment.
4.3.3 In the event the compilation and/or publication of the C.P.I.
shall be transferred to any other governmental department or bureau or
[illegible copy] be discontinued, then the index most nearly the same as the
C.P.I. shall be used to make such calculations. In the event that Lessor
[illegible copy] cannot agree on such alternative index, then the matter shall
be submitted for decision to the American Arbitration Association in the
4
<PAGE>
[illegible copy] in which the Premises are located, in accordance with the then
rules of said association, and the decision of the arbitrators shall be binding
[illegible copy] the parties, notwithstanding one party failing to appear after
due notice of the proceeding. The cost of said Arbitrators shall be paid equally
by Lessor and Lessee.
4.3.4 Lessee shall continue to pay the rent at the rate previously in
effect until the increase, if any, is determined within five (5) days following
the date on which the increase is determined. Lessee shall make such payment to
Lessor as will bring the increased rental current, commencing with the effective
date of such increase through the date of any rental installments then due.
Thereafter the rental shall be paid at the increased rate.
4.3.5 At such time as the amount of any change in rental required by
this lease is known or determined, Lessor and Lessee shall execute an amendment
to this Lease setting forth such change.
5. Security Deposit. Lessee shall deposit with Lessor upon execution
----------------
hereof the security deposit set forth in paragraph 1.9 of the Basic Lease
Provisions as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease. Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default for the payment of any other sum to which Lessor may
become obligated by reason of Lessee's default, or to compensate Lessor for any
loss or damage which Lessor may suffer thereby. If Lessor so uses or applies all
or any portion of said deposit, Lessee shall within ten (10) days after written
demand therefor deposit cash with Lessor in an amount sufficient to restore said
deposit to the full amount then required of Lessee. If the monthly Base Rent
shall, from time to time, increase during the term of this Lease, Lessee shall,
at the time of such increase, deposit with Lessor additional money as a security
deposit so that the total amount of the security deposit held by Lessor shall at
all times bear the same proportion to the then current Base Rent as the initial
security deposit separate from its general accounts. If Lessee performs all of
Lessee's obligations hereunder, said deposit, or so much thereof as has not
heretofore been applied by Lessor, shall be returned, without payment of
interest or other increment for its use, to Lessee (or, at Lessor's option, to
the last assignee, if any, of Lessee's interest hereunder) at the expiration of
the term hereof, and after Lessee has vacated the Premises. No trust
relationship is created herein between Lessor and Lessee with respect to said
Security Deposit.
6. Use.
---
6.1 Use. The Premises shall be used and occupied only for the purpose
---
set forth in paragraph 1.4 of the Basic Lease Provisions or any other use which
is reasonably comparable to that use and for no other purpose.
6.2 Compliance with Law.
-------------------
(a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without regard to
alterations or improvements made by Lessee or the use for which Lessee will
occupy the Premises, does not violate any covenants or restrictions of record,
or any applicable building code, regulation or
5
<PAGE>
ordinance in effect on such Lease term Commencement Date. In the event it is
determined that this warranty has been violated, then it shall be the obligation
of the Lessor, after written notice from Lessee, to promptly, at Lessor's sole
cost and expense rectify any such violation.
(b) Except as provided in paragraph 6.2(a) Lessee shall, at
Lessee's expense, promptly comply with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record and
requirements of any fire insurance underwriters or rating bureaus now in effect
or which may hereafter come into effect, whether or not they reflect a change in
policy from that now existing, during that term of any part of the term hereof,
relating to any manner to the Premises and the occupation and use by Lessee of
the Premises. Lessee shall conduct its business in a lawful manner and shall not
use or permit the use of the Premises of the Common Areas in any manner that
will lend to create waste or a nuisance or shall tend to disturb other occupants
of the Office Building Project.
6.3 Condition of Premises. See Addendum, paragraph 51.
---------------------
(a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without regard to
alterations or improvements made by Lessee or the use for which Lessee will
occupy the Premises, does not violate any covenants or restrictions of records,
or any applicable building code, regulation or ordinance in effect on such Lease
term Commencement Date. In the event it is determined that this warranty has
been violated, then it shall be the obligation of the Lessor, after written
notice from Lessee, to promptly at Lessor's sole cost and expense, rectify any
such violation.
(b) Except as provided in this Lease, Lessee hereby accepts the
Premises and the Office Building Project in their condition existing as of the
Lease Commencement Date or the date that Lessee takes possession of the
Premises, whichever is earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, and any easements, covenants or restrictions of record, and
accepts this Lease subject thereto and to all matters disclosed thereby and by
any exhibits attached hereto. Lessee acknowledges that it has satisfied itself
by its own independent investigation that the Premises are suitable for its
intended use, and that neither Lessor nor Lessor's agent or agents has made any
representation or warranty as to the present or future suitability of the
Premises, Common Areas, or Office Building Project for the conduct of Lessee's
business.
7. Maintenance, Repairs, Alterations and Common Area Services.
----------------------------------------------------------
7.1 Lessor's Obligations. Lessor shall keep the Office Building
Project, including the Premises, interior and exterior walls, roof, and common
areas, and the equipment whether used exclusively for the Premises or in common
with other premises, in good condition and repair; provided, however, Lessor
shall not be obligated to paint, repair or replace wall coverings, or to repair
or replace any improvements that are not ordinarily a part of the Building or
are above then Building standards. Except as provided in paragraph 9.5, there
shall be no abatement of rent or liability of Lessee on account of any injury or
interference with Lessee's business with respect to any improvements,
alterations or repairs made by Lessor to the Office Building Project or any part
thereof. Lessee expressly waives the benefits of any statute
6
<PAGE>
now or hereafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good order, condition and repair.
7.2 Lessee's Obligations.
--------------------
(a) Notwithstanding Lessor's obligation to keep the Premises in
good condition and repair, Lessee shall be responsible for payment of the cost
thereof to Lessor as additional rent for that portion of the cost of any
maintenance and repair of the Premises, or any equipment (wherever located) that
serves only Lessee or the Premises, to the extent such cost is attributable to
causes beyond normal wear and tear, Lessee shall be responsible for the cost of
painting, repairing or replacing wall coverings, and to repair or replace any
Premises improvements that are not ordinarily a part of the Building or that are
above then Building standards. Lessor may, at its option, upon reasonable
notice, elect to have Lessee perform any particular such maintenance or repairs
the cost of which is otherwise Lessee's responsibility hereunder.
(b) On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as received, ordinary wear and tear excepted, clean and free of debris. Any
damage or deterioration of the Premises shall not be deemed ordinary wear and
tear if the same could have been prevented by good maintenance practices by
Lessee. Lessee shall repair any damage to the Premises occasioned by the
installation or removal of Lessee's trade fixtures, alterations, furnishings and
equipment. Except as otherwise stated in this Lease, Lessee shall leave the air
lines, power panels, electrical distribution systems, lighting fixtures, air
conditioning, window coverings, wall coverings, carpets, wall panelling,
ceilings and plumbing on the Premises and in good operating condition.
7.3 Alterations and Additions. Lessee shall provide Lessor a written
-------------------------
description of equipment which Lessee attaches to the Premise and which shall be
removed upon Lease expiration. Lessee shall be responsible for any repairs
necessary to walls or floor as a result of such installation and removal.
(a) Lessee shall not, without Lessor's prior written consent
make any alterations, improvements, additions, Utility Installations or repairs
in, on or about the Premises, or the Office Building Project. As used in this
paragraph 7.3 the term "Utility Installation" shall mean carpeting, window and
wall coverings, power panels, electrical distribution systems, lighting
fixtures, air conditioning, plumbing, and telephone and telecommunication wiring
and equipment. At the expiration of the term, Lessor may require the removal of
any or all of said alterations, improvements, additions or Utility Installations
and the restoration of the Premises and the Office Building Project to their
prior condition, at Lessee's expense. Should Lessor permit Lessee to make its
own alterations, improvements, additions or Utility Installations. Lessee shall
use only such contractor as has been expressly approved by Lessor, and Lessor
may require Lessee to provide Lessor, at Lessee's sole cost and expense, a lien
and completion bond in an amount equal to one and one-half times the estimated
cost of such improvements, to insure Lessor against any liability for mechanic's
and materialmen's liens and to insure completion of the work. Should Lessee make
any alterations, improvements,
7
<PAGE>
additions or Utility Installations without the prior approval of Lessor, or use
a contractor not expressly approved by Lessor, Lessor may, at any time during
the term of this Lease, require that Lessee remove any part or all of the same.
(b) Any alterations, improvements, additions or Utility
Installations in or about the Premises or the Office Building Project that
Lessee shall desire to make shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent to Lessee's making
such alteration, improvement, addition or Utility Installation, the consent
shall be deemed conditioned upon Lessee acquiring a permit to do so from the
applicable governmental agencies, furnishing a copy thereof to Lessor prior to
the commencement of the work, and compliance by Lessee with all conditions of
said permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use in the Premises which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, the Building or the Office Building
Project, or any interest therein.
(d) Lessee shall give Lessor not less than ten (10) days' notice
prior to the commencement of any work in the Premises by Lessee, and Lessor
shall have the right to post notices of non-responsibility in or on the Premises
or the Building as provided by law if Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises [illegible copy] Office Building
Project, upon the condition that if Lessor shall require, Lessee shall furnish
to Lessor a surety bond satisfactory to [illegible copy] equal to such contested
lien claim or demand indemnifying Lessor against liability for the same and
holding the Premises, the Building [illegible copy] Building Project free from
the effect of such lien or claim. In addition, Lessor may require Lessee to pay
Lessor's reasonable attorneys' fees [illegible copy] in participating in such
action if Lessor shall decide it is to Lessor's best interest so to do.
(e) All alterations, improvements, additions and Utility
Installations (whether or not such Utility Installations constitute trade
fixtures of Lessee), which may be made to the Premises by Lessee, including but
not limited to, floor coverings, panelings, doors, drapes, built-ins, moldings,
sound attenuation, and lighting and telephone or communication systems, conduit,
wiring and outlets, shall be made and done in a good and workmanlike manner and
of good and sufficient quality and materials and shall be the property of Lessor
and remain upon and be surrendered with the Premises at the expiration of the
Lease term, unless Lessor requires their removal pursuant to paragraph 7.3(a).
Provided Lessee is not in default, notwithstanding the provisions of this
paragraph 7.3(e), Lessee's personal property and equipment, other than that
which is affixed to the Premises so that it cannot be removed without material
damage to the Premises or the Building, and other than Utility Installations,
shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of paragraph 7.2.
8
<PAGE>
(f) Lessee shall provide Lessor with as-built plans and
specifications for any alterations, improvements, additions or Utility
Installations.
7.4 Utility Additions. Lessor reserves the right to install new or
-----------------
additional utility facilities throughout the Office Building Project for the
benefit of Lessor or Lessee, or any other lessee of the Office Building Project,
including, but not by way of limitation, such utilities as plumbing, electrical
systems, communication systems, and fire protection and detection systems, so
long as such installations do not unreasonably interfere with Lessee's use of
the Premises.
8. Insurance; Indemnity.
--------------------
8.1 Liability Insurance--Lessee. Lessee shall, at Lessee's expense,
---------------------------
obtain and keep in force during the term of this Lease a policy of Commercial
General Liability insurance utilizing an Insurance Services Office standard form
with Broad Form General Liability Endorsement (GLO404), or equivalent, in an
amount of not less than $1,000,000 per occurrence of bodily injury and property
damage combined or in a greater amount as reasonably determined by Lessor and
shall insure Lessee with Lessor as an additional insured against liability
arising out of the use, occupancy or maintenance of the Premises. Compliance
with the above requirement shall not, however, limit the liability of Lessee
hereunder.
8.2 Liability Insurance--Lessor. Lessor shall obtain and keep in
---------------------------
force during the term of this Lease a policy of Combined Single Limit Bodily
Injury and Broad Form Property Damage Insurance, plus coverage against such
other risks Lessor deems advisable from time to time, insuring Lessor, but not
Lessee, against liability arising out of the ownership, use, occupancy or
maintenance of the Office Building Project in an amount not less than
$5,000,000.00 per occurrence.
8.3 Property Insurance--Lessee. Lessee shall, at Lessee's expense,
--------------------------
obtain and keep in force during the term of this Lease for the benefit of
Lessee, replacement cost fire and extended coverage insurance, with vandalism
and malicious mischief, sprinkler leakage endorsements in an amount sufficient
to cover not less than 100% of the full replacement cost, as the same may exist
from time to time, of all of Lessee's personal property, fixtures, equipment and
tenant improvements.
8.4 Property Insurance--Lessor. Lessor shall obtain and keep in force
--------------------------
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Office Building Project improvements, but not Lessee's personal
property, fixtures, equipment or tenant improvements, in the amount of the full
replacement cost thereof, as the same may exist from time to time, utilizing
Insurance Services Office standard form, or equivalent, providing protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, plate glass, and such other perils as
Lessor deems advisable or may be required by a lender having a lien on the
Office Building Project. In addition, Lessor shall obtain and keep in force,
during the term of this Lease, a policy of rental value insurance covering a
period of one year, with loss payable to Lessor, which insurance shall also
cover all Operating Expenses for said period. Lessee will not be named in any
such policies carried by Lessor and shall have no right to any proceeds
therefrom. The policies required by these
9
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paragraphs 8.2 and 8.4 shall contain such deductibles as Lessor or the aforesaid
lender may determine. In the event that the Premises shall suffer an insured
loss as defined in paragraph 9.1(f) hereof, the deductible amounts under the
applicable insurance policies shall be deemed an Operating Expense. Lessee shall
not do or permit to be done anything which shall invalidate the insurance
policies carried by Lessor. Lessee shall pay the entirety of any increase in the
property insurance premium for the Office Building Project over what it was
immediately prior to the commencement of the term of this Lease if the increase
is specified by Lessor's insurance carrier as being caused by the nature of
Lessee's occupancy or any act or omission of Lessee.
8.5 Insurance Policies. Lessee shall deliver to Lessor copies of
------------------
liability insurance policies required under paragraph 8.1 or certificates
evidencing the existence and amounts of such insurance within seven (7) days
after the Commencement Date of this Lease. No such policy shall be cancellable
or subject to reduction of coverage or other modification except after thirty
(30) days prior written notice to Lessor. Lessee shall, at least thirty (30)
days prior to the expiration of such policies, furnish Lessor with renewals
thereof.
8.6 Waiver of Subrogation. Lessee and Lessor each hereby release and
---------------------
relieve the other, and waive their entire right of recovery against the other,
for direct or consequential loss or damage arising out of or incident to the
perils covered by property insurance carried by such party whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors and/or
invitees. If necessary all property insurance policies required under this Lease
shall be endorsed to so provide.
8.7 Indemnity. Lessee shall indemnify and hold harmless Lessor and
---------
its agents, Lessor's master or ground lessor, partners and lenders, from and
against any and all claims for damage to the person or property of anyone or any
entity arising from Lessee's use of the Office Building Project, or from the
conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims,
costs and expenses arising from any breach or default in the performance of any
obligation on Lessee's part to be performed under the terms of this Lease, or
arising from any act or omission of Lessee, or any Lessee's agents, contractors,
employees or invitees, and from and against all costs, attorney's fees, expenses
and liabilities incurred by Lessor as the result of any such use, conduct,
activity, work, things done, permitted or suffered, breach, default or
negligence, and in dealing reasonably therewith, including but not limited to
the defense or pursuit of any claim or any action or proceeding involved
therein; and in case any action or proceeding be brought against Lessor by
reason of any such matter, Lessee upon notice from Lessor shall defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid
any such claim in order to be so indemnified. Lessee, as a material part of the
consideration to Lessor, hereby assumes all risk of damage to property of Lessee
or injury to persons, in, upon or about the Office Building Project arising from
any cause and Lessee hereby waives all claims in respect thereof against Lessor.
8.8 Exemption of Lessor from Liability. Lessee hereby agrees that
----------------------------------
Lessor shall not be liable for injury to Lessee's business or any loss of income
herefrom or for loss of or damage to the goods, wares, merchandise or other
property of Lessee. Lessee's
10
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employees, invitees, customers, or any other person in or about the Premises or
the Office Building Project, nor shall Lessor be liable for injury to the person
of Lessee, Lessee's employees, agents or contractors, whether such damages or
injury is caused by or results from theft, fire, steam, electricity, gas, water
or rain, or from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether said damage or injury results from conditions
arising upon the Premises or upon other portions of the Office Building Project,
or from other sources or places, or from new construction or the repair,
alteration or improvement of any part of the Office Building Project, or of the
equipment, fixtures or appurtenances applicable thereto, and regardless of
whether the cause of such damage or injury or the means of repairing the same is
inaccessible, Lessor shall not be liable for any damages arising from any act or
neglect of any other lessee, occupant or user of the Office Building Project,
nor from the failure of Lessor to enforce the provisions of any other lease of
any other lessee of the Office Building Project.
8.9 No Representation of Adequate Coverage. Lessor makes no
--------------------------------------
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Lessee's property or obligations under
this Lease.
9. Damage or Destruction.
---------------------
9.1 Definitions.
-----------
(a) "Premises Damage" shall mean if the Premises are damaged or
destroyed to any extent.
(b) "Premises Building Partial Damage" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the extent
that the cost to repair is less than fifty percent (50%) of the then Replacement
Cost of the building.
(c) "Premises Building Total Destruction" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the extent
[illegible copy] the cost to repair is fifty percent (50%) or more of the then
Replacement Cost of the Building.
(d) "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.
(e) "Office Building Project Buildings Total Destruction" shall
mean if the Office Building Project Buildings are damaged or destroyed to the
extent that the cost of repair is fifty percent (50%) or more of the then
Replacement Cost of the Office Building Project Buildings.
(f) "Insured Loss" shall mean damage or destruction which was
caused by an event required to be covered by the insurance described in
paragraph 8. The fact that an Insured Loss has a deductible amount shall not
make the loss an uninsured loss.
(g) "Replacement Cost" shall mean the amount of money necessary
to be spent in order to repair or rebuild the damaged area to the condition that
existed
11
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immediately prior to the damage occurring, excluding all improvements made by
lessees, other than those installed by Lessor at Lessee's expense.
9.2 Premises Damage, Premises Building Partial Damage.
-------------------------------------------------
(a) Insured Loss. Subject to the provisions of paragraphs 9.4
------------
and 9.5, if at any time during the term of this Lease there is damage which is
an insured loss and which falls into the classification of either Premises
Damage or Premises Building Partial Damage, then Lessor shall, as soon as
reasonably possible and to the extent the required materials and labor are
readily available through usual commercial channels at Lessor's expense, repair
such damage (but not Lessee's fixtures, equipment or tenant improvements
originally paid for by Lessee) to its condition existing at the time of the
damage and this Lease shall continue in full force and effect.
(b) Uninsured Loss. Subject to the provisions of paragraphs 9.4
--------------
and 9.5, if at any time during the term of this Lease there is damage which is
not an Insured Loss and which falls within the classification of Premises Damage
or Premises Building Partial Damage, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
which damage prevents Lessee from making any substantial use of the Premises.
Lessor may at Lessor's option either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after the date of the occurrence of such damage of Lessor's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage, in which event this Lease shall terminate as of the date of the
occurrence of such damage.
9.3 Premises Building Total Destruction; Office Building Project
------------------------------------------------------------
Total Destruction. Subject to the provisions of paragraphs 9.4 and 9.5, if at
- -----------------
any time during the term of this Lease there is damage, whether or not it is an
Insured Loss, which falls into the classifications of either (i) Premises
Building Total Destruction, or (ii) Office Building Project Total Destruction,
then Lessor may at Lessor's option either (i) repair such damage or destruction
as soon as reasonably possible at Lessor's expense (to the extent the required
materials are readily available through usual commercial channels) to its
condition existing at the time of the damage, but not Lessee's fixtures,
equipment or tenant improvements, and this Lease shall continue in full force
and effect, or (ii) give written notice to Lessee within thirty (30) days after
the date of occurrence of such damage of Lessor's intention to cancel and
terminate this Lease, in which case this Lease shall terminate as of the date of
the occurrence of such damage.
9.4 Damage Near End of Term.
-----------------------
(a) Subject to paragraph 9.4(b), if at any time during the last
twelve (12) months of the term of this Lease there is substantial damage to the
Premises, Lessor may at Lessor's option cancel and terminate this Lease as of
the date of occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within 30 days after the date of occurrence of such
damage.
12
<PAGE>
(b) Notwithstanding paragraph 9.4(a), in the event that Lessee
has an option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such option,
if it is to be exercised at all, no later than twenty (20) days after the
occurrence of an Insured Loss falling within the classification of Premises
Damage during the last twelve (12) months of the term of this Lease. If Lessee
duly exercises such option during said twenty (20) day period, Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option
during said twenty (20) day period, then Lessor may at Lessor's option terminate
and cancel this Lease as of the expiration of said twenty (20) day period by
giving written notice to Lessee of Lessor's election to do so within ten (10)
days after the expiration of said twenty (20) day period, notwithstanding any
term or provision in the grant of option to the contrary.
9.5 Abatement of Rent; Lessee's Remedies.
------------------------------------
(a) In the event Lessor repairs or restores the Building or
Premises pursuant to the provisions of this paragraph 9, and any part of the
Premises are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including Lessee's Share of
Operating Expense increase) for the period during which such damage, repair or
restoration continues shall be abated, provided (1) the damage was not the
result of the negligence of Lessee, and (2) such abatement shall only be to the
extent the operating and profitability of Lessee's business as operated from the
Premises is adversely affected. Except for said abatement of rent, if any,
Lessee shall have no claim against Lessor for any damage suffered by reason of
any such damage, destruction, repair or restoration.
(b) If Lessor shall be obligated to repair or restore the
Premises or the Building under the provisions of this Paragraph 9 and shall not
commence such repair or restoration within ninety (90) days after such
occurrence, or if Lessor shall not complete the restoration and repair within
six (6) months after such occurrence. Lessee may at Lessee's option cancel and
terminate this Lease by giving Lessor written notice of Lessee's election to do
so at any time prior to the commencement or completion, respectively, of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
(c) Lessee agrees to cooperate with Lessor in connection with
any such restoration and repair, including but not limited to the approval
and/or execution of plans and specifications required.
9.6 Termination--Advance Payments. Upon termination of this Lease
-----------------------------
pursuant to this paragraph 9, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.7 Waiver. Lessor and Lessee waive the provisions of any statute
------
which relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
13
<PAGE>
10. Real Property Taxes.
-------------------
10.1 Payment of Taxes. Lessor shall pay the real property tax, as
----------------
defined in paragraph 10.3, applicable to the Office Building Project.
10.2 Additional Improvements. Lessee shall not be responsible for
-----------------------
paying any increase in real property tax specified in the tax assessor's records
and work sheets as being caused by additional improvements placed upon the
Office Building Project by other lessees or by Lessor for the exclusive
enjoyment of any other lessee. Lessee shall, however, pay to Lessor at the time
that Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.
10.3 Definition of "Real Property Tax." As used herein, the term
--------------------------------
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Office Building Project or any
portion thereof by any authority having the direct or indirect power to tax,
including any city, county, state or federal government, or any school,
agriculture, sanitary, fire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Llessor in the Office
Building Project or in any portion thereof, as against Lessor's right to rent or
other income therefrom, and as against Lessor's business of leasing the Office
Building Project. The term "real property tax" shall also include any tax, fee,
levy, assessment or charge (i) in substitution of partially or totally, any tax,
fee, levy, assessment or charge hereinabove included within the definition of
"real property tax," or (ii) the nature of which was hereinbefore included
within the definition of "real property tax," or (iii) which is imposed for a
service or right not charged prior to June 1, 1978, or if previously charged,
has been increased since June 1, 1978, or (iv) which is imposed as a result of a
change in ownership, as defined by applicable local statutes for property tax
purposes, of the Office Building Project or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such change of ownership, or (v) which is imposed by reason of this transaction,
any modifications or changes hereto, or any transfers hereof.
10.4 Joint Assessment. If the improvements or property, the taxes for
----------------
which are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not
separately assessed. Lessee's portion of that tax shall be equitably determined
by Lessor from the respective valuations assigned in the assessor's work sheets
or such other information (which may include the cost of construction) as may be
reasonably available. Lessor's reasonable determination thereof, in good faith,
shall be conclusive.
10.5 Personal Property Taxes.
-----------------------
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere.
14
<PAGE>
(b) If any of Lessee's said personal property shall be assessed
with Lessor's real property, Lessee shall pay to Lessor the taxes attributable
to Lessee within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property.
11. Utilities.
---------
11.1 Services Provided by Lessor. Lessor shall provide heating,
---------------------------
ventilation, air conditioning, and janitorial service as reasonably required,
reasonable amounts of electricity for normal lighting and office machines, water
for reasonable and normal drinking and lavatory use, and replacement light bulbs
and/or fluorescent tubes and ballasts for standard overhead fixtures.
11.2 Deleted.
11.3 Hours of Service. Said services and utilities shall be
----------------
provided during generally accepted business days and hours or such other days or
hours as may hereafter be set forth. Utilities and services required at other
times shall be subject to advance request and reimbursement by Lessee to Lessor
of the cost thereof. Lessor shall provide utility services to Lessee's Premises
on Saturday mornings.
11.4 Excess Usage by Lessee. Lessee shall not make connection
----------------------
to the utilities except by or through existing outlets and shall not install or
use machinery or equipment in or about the Premises that uses excess water,
lighting or power, or suffer or permit any act that causes extra burden upon the
utilities or services, including but not limited to security services, over
standard office usage for the Office Building Project. Lessor shall require
Lessee to reimburse Lessor for any excess expenses or costs that may arise out
of a breach of this subparagraph by Lessee. Lessor may, in its sole discretion,
install at Lessee's expense supplemental equipment and/or separate metering
applicable to Lessee's excess usage or loading.
11.5 Interruptions. There shall be no abatement of rent and
-------------
Lessor shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption or discontinuance of any utility or service due to riot,
strike, labor dispute, breakdown, accident, repair or other cause beyond
Lessor's reasonable control or in cooperation with governmental request or
directions.
12. Assignment and Subletting.
-------------------------
12.1 Lessor's Consent Required. Lessee shall not voluntarily
-------------------------
or by operation of law assign, transfer, mortgage, sublet, or otherwise
transfer, encumber all or any part of Lessee's interest in the Lease or in the
Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer, mortgage,
encumbrance or subletting without such consent shall be void, and shall
constitute a material default and breach of this Lease without the need
[illegible copy] notice to Lessee under paragraph 13.1. "Transfer" within the
meaning of this paragraph 12 shall include the transfer or transfers
aggregating; (a [illegible copy] Lessee is a corporation, more than twenty-five
percent (25%) of the profit and loss participation in such partnership.
15
<PAGE>
12.2 Lessee Affiliate. Notwithstanding the provisions of
----------------
paragraph 12.2 hereof, Lessee may assign or sublet the Premises, or any portion
[illegible copy] without Lessor's consent to any corporation which controls, is
controlled by or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee, or to any person or
entity which acquires all the assets of Lessee as a going concern of the
business that is being conducted on the Premises, all of which are referred to
as "Lessee Affiliate"; provided that before such assignment shall be effective
(a) said assignee shall assume, in full, the obligations of Lessee under this
Lease and (b) Lessor shall be given written notice of such assignment and
assumption. Any such assignment shall not, in any way, affect or limit the
liability of Lessee under the terms of this Lease even if after such assignment
or subletting the terms of this Lease are materially changed or altered without
the consent of Lessee, the consent of whom shall not be necessary.
12.3 Terms and Conditions Applicable to Assignment and
-------------------------------------------------
Subletting.
----------
(a) Regardless of Lessor's consent, no assignment or
subletting shall release Lessee of Lessee's obligations hereunder or alter the
primary liability of Lessee to pay the rent and other sums due Lessor hereunder
including Lessee's Share of Operating Expense increase, and to perform
[illegible copy] other obligations to be performed by Lessee hereunder.
(b) Lessor may accept rent from any person other than
Lessee pending approval or disapproval of such assignment.
(c) Neither a delay in the approval or disapproval of such
assignment or subletting, nor the acceptance of rent, shall constitute a waiver
of estoppel of Lessor's right to exercise its remedies for the breach of any of
the terms or conditions of this paragraph 12 or this Lease.
(d) If Lessee's obligations under this Lease have been
guaranteed by third parties, then an assignment or sublease, and Lessor's
consent thereto shall not be effective unless said guarantors give their written
consent to such sublease and the terms thereof.
(e) The consent by Lessor to any assignment or subletting
shall not constitute a consent to any subsequent assignment or subletting by
[illegible copy] or to any subsequent or successive assignment or subletting by
the sublessee. However, Lessor may consent to subsequent sublettings and
assignments of the sublease or any amendments or modifications thereto without
notifying Lessee or anyone else liable on the Lease or sublease and without
obtaining their consent and such action shall not relieve such persons from
liability under this Lease or said sublease; however, such persons shall not be
responsible to the extent any such amendment or modification enlarges or
increases the obligations of the Lessee or sublessee under this Lease [illegible
copy] such sublease.
(f) In the event of any default under this Lease, Lessor
may proceed directly against Lessee, any guarantors or any one else responsible
for the performance
16
<PAGE>
of this Lease, including the sublessee, without first exhausting Lessor's
remedies against any other person or entity responsible therefor to Lessor, or
any security held by Lessor or Lessee.
(g) Lessor's written consent to any assignment or subletting of
the Premises by Lessee shall not constitute an acknowledgement that no delay
then exists under this Lease of the obligations to be performed by Lessee nor
shall such consent by deemed a waiver of any then existing default except as may
be otherwise stated by Lessor at the time.
(h) The discovery of the fact that any financial statement
relied upon by Lessor in giving its consent to an assignment or subletting will
materially raise shall, at Lessor's election, render Lessor's said consent null
and void.
12.4 Additional Terms and Conditions Applicable to Subletting.
--------------------------------------------------------
Regardless of Lessor's consent, the following terms and conditions shall apply
to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly
incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all rentals and income arising from any sublease heretofore
[illegible copy] hereafter made by Lessee, and Lessor may collect such rent and
income and apply same toward Lessee's obligations under this Lease; provided
however, that until a default shall occur in the performance of Lessee's
obligations under this Lease, Lessee may receive, collect and enjoy the rent
accruing under sublease. Lessor shall not, by reason of this or any other
assignment of such sublease to Lessor nor by reason of the collection of the
rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a default
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents due and to become due under the sublease. Lessee agrees that
such sublessee shall have the right to rely upon any such statement and request
from Lessor, and that such sublessee shall pay such rents to Lessor without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against and sublessee or Lessor for any such rents
so paid by said sublessee to Lessor.
(b) No sublease entered into by Lessee shall be effective unless
and until it has been approved in writing by Lessor. In entering into any
sublease, Lessee shall use only such form of sublessee as is satisfactory to
Lessor, and once approved by Lessor, such sublease shall not be changed or
modified without Lessor's prior written consent. Any sublease shall, by reason
of entering into a sublease under this Lease, be deemed, for the benefit of
Lessor to have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Lessee other than such obligations as are
contrary to or inconsistent with provisions contained in a sublease to which
Lessor has expressly consented in writing.
(c) In the event Lessee shall default in the performance of its
obligations under this Lease, Lessor at its option and without any obligation to
do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of Lessee under such sublease from the time of
the exercise of said option to the termination of
17
<PAGE>
such sublease; provided, however, Lessor shall not be liable for any prepaid
rents or security deposit paid by such sublessee to Lessee or to any other prior
defaults of Lessee under such sublease.
(d) No sublessee shall further assign or sublet all or any part
of the Premises without Lessor's prior written consent.
(e) With respect to any subletting to which Lessor has
consented, Lessor agrees to deliver a copy of any notice of default by Lessee to
the sublease. Such sublessee shall have the right to cure a default of Lessee
within three (3) days after service of said notice of default upon such
sublessee, and the sublessee shall have a right of reimbursement and offset from
and against Lessee for any such defaults cured by the sublessee.
12.5 Lessor's Expense. In the event Lessee shall assign or sublet the
----------------
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable costs and expenses incurred in
connection therewith, including attorney's; architects', engineers' or other
consultants' fees. Limit to $500.00 per sublet or assignment request.
12.6 Conditions to Consent. Lessor reserves the right to condition
---------------------
any approval to assign or sublet upon Lessor's determination that (a) the
proposed assignee or sublessee shall conduct a business on the Premises of a
quality substantially equal to that of Lessee and consistent with the general
character of the other occupants of the Office Building Project and no in
violation of any exclusives or rights then held by other tenants, and (b) the
proposed assignee or sublessee be at least as financially responsible as Lessee
was expected to be all time of the execution of this Lease or of such
assignments of subletting, whichever is greater.
13. Default; Remedies.
-----------------
13.1 Default. The occurrence of any one or more of the following
-------
events shall constitute a material default of this Lease by Lessee:
(a) The vacation or abandonment of the Premises by Lessee.
Vacation of the Premises shall include the failure to occupy the Premises for a
continuous period of sixty (60) days or more, whether or not the rent is paid.
(b) The breach by Lessee of any of the covenants, conditions or
provisions of paragraph 7.3(a), (b) or (e) (alterations), 12.3 (assignment or
subletting), 13.1(a) (vacation or abandonment), 13.1(e) (insolvency), 13.1(f)
(false statement), 16(a) (estoppel certificate), 30(b) (subordination), 33
(auctions), or 41.1 (easements), all of which are hereby deemed to be material,
non-curable defaults without the necessity of any notice by Lessor to Lessee
hereof.
(c) The failure by Lessee to make any payment of rent or any
other payment required to be made by Lessee hereunder, as and when due where
such failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a
Notice to Pay Rent or Quit pursuant to applicable
18
<PAGE>
Unlawful Detainer statutes such Notice to Pay Rent or Quit shall also constitute
the notice required by this subparagraph.
(d) The failure by Lessee to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Lessee other than those referenced in subparagraphs (b) and (c), above, where
such failure shall continue for a period of thirty (30) days after written
notice thereof from Lessor to Lease; provided, however, that if the nature of
Lessee's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Lessee shall not be deemed to be in default if
Lessee commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and exclusive notice required
to be given to Lessee under applicable Unlawful Detainer statutes.
(e) (i) The making by Lessee of any general arrangement or
general assignment for the benefit of creditors, (ii) Lessee becoming a "debtor"
as defined in __ U.S.C. (S)101 or any successor statute thereof unless, in the
case of a petition filed against Lessee. The same is dismissed within sixty (60)
days; (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lease's assets located at the Premises or of Lessee's
interest in this Lease, where possession is not restored to Lessee's interest in
this Lease, where such seizure is not discharged within thirty (30) days. In the
event that any provision of this paragraph 13.1(e) is contrary to any applicable
law, such provision shall be of no force or effect.
(f) The discovery by Lessor that any financial statement given
to Lessor by Lessee, or its successor in interest or by any guarantor of
Lessee's obligation hereunder, was materially false.
13.2 Remedies. In the event of any material default of breach of this
--------
Lease by Lessee, Lessor may at any time thereafter, with or without notice or
demand and without limiting Lessor in the exercise of any right or remedy which
Lessor may have by reason of such default:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee all damages incurred
by Lessor by reason of Lessee's default including, but not limited to, the cost
of recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorney's fees,
and any real estate commission actually paid; the worth at the time of award by
the court having jurisdiction thereof of the amount by which the unpaid rent for
the balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Lessee proves could be reasonably avoided;
that portion of the leasing commission paid by Lessor pursuant to paragraph 15
applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this
Lease under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid
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installments of rent and other unpaid monetary obligations of Lessee under the
terms of this Lease shall bear interest from the date due at the maximum rate
then allowable by law.
13.3 Default by Lessor. Lessor shall not be in default unless Lessor
-----------------
fails to perform obligations required of Lessor within a reasonable time, but in
no event later than thirty (30) days after written notice by Lessee to Lessor
and to the holder of any first mortgage or deed or trust covering the Premises
whose name and address shall have theretofore been furnished to Lessee in
writing, specifying wherein Lessor has failed to perform such obligation;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and thereafter
diligently pursues the same to completion.
13.4 Late Charges. Lessee hereby acknowledges that late payment by
------------
Lessee to Lessor of Base Rent or other sums due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount at which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Lessor by the terms of any mortgage or trust deed covering the Office Building
Project. Accordingly, if any installment of Base Rent, or any other sum due from
Lessee shall not be received by Lessor or Lessor's designee within ten (10) days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall pay to Lessor a late charge equal to 6% of such overdue
amount. The parties hereby agree that such late charge by Lessor shall in no
event constitute a waiver of Lessee's default with respect to such overdue
amount, nor prevent Lessor from exercising any of the other rights and remedies
granted hereunder.
14. Condemnation. If the Premises or any portion thereof or the Office
------------
Building Project are taken under the power of eminent domain, or sold under the
threat of the exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first occurs;
provided that if so much of the Premises or the Office Building Project are
taken by such condemnation as would substantially and adversely affect the
operation and profitability of Lessee's business conducted from the Premises.
Lessee shall have the option, to be exercised only in writing within thirty (30)
days after Lessor shall have given Lessee written notice of such taking (or in
the absence of such notice, within thirty (30) days after the condemning
authority shall have taken possession), to terminate this Lease as of the date
the condemning authority takes such possession. If Lessee does not terminate
this Lease in accordance with the foregoing, this Lease shall remain in full
force and effect as to the portion of the Premises remaining, except that the
rent shall be reduced in the proportion that the floor area of the Premises
taken bears to the total floor area of the Premises. Common Areas taken shall be
excluded from the Common Areas usable by Lessee and no reduction of rent shall
occur with respect thereto or by reason thereof. Lessor shall have the option in
its sole discretion to terminate this Lease as of the taking of possession by
the condemning authority, by giving written notice to Lessee of such election
within thirty (30) days after receipt of notice of a taking by condemnation of
any part of the Premises or the Office Building Project. Any award for the
taking of all or any part of the Premises or the Office Building Project under
the power of eminent domain or any payment made under threat of the exercise of
such power shall be the
20
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property of Lessor, whether such award shall be made as compensation for
diminution in value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
separate award for loss of or damage to Lessee's trade fixtures, removable
personal property and unamortized tenant improvements that have been paid for by
Lessee. For that purpose the cost of such improvements shall be amortized over
the original term of this Lease excluding any options. In the event that this
Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of severance damages received by Lessor in connection with such
condemning authority, Lessee shall pay any amount in excess of such severance
damages required to complete such repair.
15. Broker's Fee.
------------
(a) The brokers involved in this transaction are
__________________________________________ as "listing broker" and Cornish &
Carey Commercial as "cooperating broker," licensed real estate broker(s). A
"cooperating broker" is defined as any broker other than the listing broker
entitled to a share of any commission arising under this Lease. Upon execution
of this Lease by both parties, Lessor shall pay to said brokers jointly, or in
such separate shares as they may mutually designate in writing, a fee as set
forth in a separate agreement between Lessor and said broker(s), or in the event
there is not separate agreement between Lessor and said broker(s), per
agreement, for brokerage services rendered by said broker(s) to Lessor in this
transaction. Cornish & Carey Commercial shall receive a full commission per
Cornish & Carey Commercial's Standard Commission Schedule.
(b) Lessor further agrees that (i) if Lessee exercises any Option, as
defined in paragraph 39.1 of this Lease, which is granted to Lessee under this
Lease, or any subsequently granted option which is substantially similar to an
Option granted to Lessee under this Lease, or (iii) if Lessee remains in
possession of the Premises after the expiration of the term of this Lease after
having failed to exercise an Option, or (iv) if said broker(s) are the procuring
cause of any other lease or sale entered into between the parties pertaining to
the Premises and/or any adjacent properly in which Lessor has an interest, or
(v) if the Base Rent is increased, whether by agreement or operation of an
escalation clause contained herein, then as to any of said transactions or rent
increase, Lessor shall pay said broker(s) a fee in accordance with the schedule
of said broker(s) in effect at the time of execution of this Lease. Said fee
shall be paid at the time such increased rental is determined.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but
also on behalf of any person, corporation, association, or other entity having
an ownership interest in said real property or any part thereof, which such fee
is due hereunder. Any transferee of Lessor's interest in this Lease whether such
transfer is by agreement or by operation of law, shall be deemed to have assumed
Lessor's obligation under this paragraph 15. Each listing and cooperating broker
shall be a third party beneficiary of the provisions of this paragraph 15 to the
extent of their interest in any commission arising under this Lease and may
enforce that right directly against Lessor; provided, however, that all brokers
having a right to any part of such total commission shall be a necessary party
to any suit with respect thereto.
(d) Lessee and Lessor each represent and warrant to the other that
neither has had any dealing with any person, firm, broker or finder (other than
the person(s),
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if any, whose names are set forth in paragraph 15(a), above) in connection with
the negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and no other broker or other person, firm or entity is
entitled to any commission or finder's fee in connection with said transaction
and Lessee and Lessor do each hereby indemnify and hold the other harmless from
and against any costs, expenses, attorney fees or liability for compensation or
charges which may be claimed by any such unnamed broker, finder or other similar
party by reason of any dealings or actions of the indemnifying party.
16. Estoppel Certificate.
--------------------
(a) Each party (as "responding party") shall at any time upon not
less than ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to the responding party's knowledge, any
uncured defaults on the part of the requesting party, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrances of the Office Building Project or
of the business of Lessee.
(b) At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party that (i) this Lease is in full force and effect, without modification
except as may be represented by the requesting party, (ii) there are no uncured
defaults in the requesting party's performance, and (iii) if Lessor is the
requesting party, not more than one month's rent has been paid in advance.
(c) If Lessor desires to finance, refinance, or sell the Office
Building Project, or any part thereof, Lessee hereby agrees to deliver to any
lender or purchase designated by Lessor such financial statements of Lessee as
may be reasonably required by such lender or purchaser. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean only
------------------
the owner or owners, at the time in question, of the ____ title or a lessee's
interest in a ground lease of the Office Building Project, and except as
expressly provided in paragraph 15, in the event of any transfer of such little
or interest, Lessor herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, provided
that any funds in the hands of Lessor or the then grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Lessor shall, subject
as aforesaid, be binding on Lessor's successors and assigns, only during their
respective periods of ownership.
22
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18. Severability. The invalidity of any provision of this Lease as
------------
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.
19. Interest on Past-due Obligations. Except as expressly herein provided,
--------------------------------
any amount due to Lessor not paid when due shall bear interest at the maximum
rate then allowable by law or judgments from the date due. Payment of such
interest shall not excuse or cure any default by Lessee under this Lease;
provided, however, that interest shall not be payable on late charges incurred
by Lessee nor on any amounts upon which late charges are paid by Lessee.
20. Time of Essence. Time is of the essence with respect to the
---------------
obligations to be performed under this Lease.
21. Additional Rent. All monetary obligations of Lessee to Lessor under
---------------
the terms of this Lease and any other expenses payable by Lessee hereunder shall
be deemed to be rent.
22. Incorporation of Prior Agreements; Amendments. This Lease contains all
---------------------------------------------
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Lessee hereby acknowledges that neither the real estate broker
listed in paragraph 15 hereof nor any cooperating broker on this transaction nor
the Lessor or any employee or agents of any of said persons has made any oral or
written warranties or representations to Lessee relative to the condition or use
by Lessee of the Premises or the Officer Building Project and Lessee
acknowledges that Lessee assume all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
term of this Lease.
23. Notice. Any notice required or permitted to be given hereunder shall
------
be in writing and may be given by personal delivery or by certified or
registered mail, and shall be deemed sufficiently given if delivered or
addressed to Lessee or to Lessor at the address noted below or adjacent to the
signature of the respective parties, as the case may be. Mailed notices shall be
deemed given upon actual receipt at the address required, or forty-eight hours
following deposit in the mail, postage prepaid, whichever first occurs. Either
party may be notice to the other specify a different address for notice purposes
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for notice purposes. A copy of all notices required
or permitted to be given to Lessor hereunder shall be concurrently transmitted
to such party or parties at such addresses as Lessor may from time to time
hereafter designate by notice to Lessee.
24. Waivers. No waiver by Lessor or any provision hereof shall be deemed
-------
a waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder by
Lessor shall not be a waiver of any preceding breach by
23
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Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted, regardless of Lessor's knowledge of such preceding
breach at the time of acceptance of such rent.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
---------
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. Holding Over. If Lessee, with Lessor's consent, remains in possession
------------
of the Premises or any part thereof after the expiration of the term hereof such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, except that the rent payable
shall be one hundred twenty five (125%) of the rent payable immediately
preceding the termination date of this lease, and all Options, if any, granted
under the terms of this Lease shall be deemed terminated and be of no further
effect during said-month to month tenancy.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
-------------------
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. Each provision of this Lease performance by
------------------------
Lessee shall be deemed both a covenant and a condition.
29. Binding Effect; Choice of Law. Subject to any provisions hereof
-----------------------------
restricting assignment or subletting by Lessee and subject to the provisions of
paragraph 17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Office Building Project is located and any litigation concerning this
Lease between the parties hereto shall be initiated in the country in which the
Office Building Project is located.
30. Subordination.
-------------
(a) This Lease, and any Option or right of first refusal granted
hereby, at Lessor's option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter placed
upon the Office Building Project and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such subordination,
Lessee's right to quiet possession of the Premises shall not be disturbed if
Lessee is not in default and so long as Lessee shall pay the rent and observe
and perform all of the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgages, trustee or ground lessor
shall elect to have this Lease and any Options granted hereby prior to the lien
of its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
mortgage, deed of trust, or ground lease, whether this Lease or such Options are
dated prior to subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination, or to make this Lease or any Option granted herein
prior to the lien of any mortgage, deed of trust or ground lease, as the case
may be. Lessee's
24
<PAGE>
failure to execute such documents within ten (10) days after written demand
shall constitute a material default by Lessee hereunder without further notice
to Lessee or, at Lessor's option, Lessor shall execute such documents on behalf
of Lessee's name, place and stead, to execute such documents in accordance with
this paragraph 30(b).
31. Attorneys' Fees.
---------------
31.1 If either party or the broker(s) named herein bring an action to
enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, trial or appeal thereon, shall be entitled to his reasonable
attorney's fees to be paid by the losing party as fixed by the court in the same
or a separate suit, and whether or not such action is pursued to decision or
judgment. The provisions of this paragraph shall inure to the benefit of the
broker named herein who seeks to enforce a right hereunder.
31.2 The attorney's fee award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorneys' fees reasonably incurred in good faith.
31.3 Lessor shall be entitled to reasonable attorneys' fees and all
other costs and expenses incurred in the preparation and service of notice of
default and consultations in connection therewith, whether or not a legal
transaction is subsequently commenced in connection with such default.
32. Lessor's Access.
---------------
32.1 Lessor and Lessor's agents shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same, performing
any services required of Lessor, showing the same to prospective purchasers,
lenders, or lessees, taking such safety measures, erecting such scaffolding or
other necessary structures, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project as Lessor may
reasonably deem necessary or desirable and the erecting, using and maintaining
of utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee's use of the
Premises Lessor may at any time place on or about the Premises or the Building
any ordinary "For Sale" signs and Lessor may at any time during the last 90 days
of the terms hereof place on or about the Premises any ordinary "For Lease"
signs.
32.2 All activities of Lessor pursuant to this paragraph shall be
without abatement of rent, nor shall Lessor have any liability to Lessee for the
same.
32.3 Lessor shall have the right to retain keys to the Premises and
to unlock all doors in or upon the Premises other than to files, vaults and safe
and in the case of emergency to enter the Premises by any reasonably appropriate
means, and any such entry shall not be deemed a forceable unlawful entry or
detainer of the Premises or an eviction. Lessee waives any charges or injuries
or interference with Lessee's property or business in connection therewith.
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33. Auctions. Lessee shall not conduct, nor permit to be conducted,
--------
either voluntarily or involuntarily, any auction upon the Premises or the Common
Areas without first having obtained Lessor's prior written consent.
Notwithstanding anything to the contrary in this Lease, Lessor shall not be
obligated to exercise any standard or reasonableness in determining whether to
grant such consent. The holding of any auction on the Premises or Common Areas
in violation of this paragraph shall constitute a material default of this
Lease.
34. Signs. Lessee shall not place any sign upon the Premises or the
-----
Office Building Project without Lessor's prior written consent. Under no
circumstances shall Lessee place a sign on any roof of the Office Building
Project. See Addendum #55.
35. Merger. The voluntary or other surrender of this Lease by Lessee, or
------
a mutual cancellation thereof, or a termination by Lessor, shall not work
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to Lessee
of any or all of such subtenancies.
36. Consents. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
--------
wherever in this Lease the consent of one party is required to an act of other
party such consent shall not be unreasonably withheld or delayed.
37. Guarantor. In the event that there is a guarantor of this Lease, said
---------
guarantor shall have the same obligations as Lessee under this Lease.
38. Quits Possession. Upon Lease paying the rent for the Premises and
----------------
observing and performing all of the covenants, conditions and provisions
Lessee's part to be observed and performed hereunder. Lessee shall have quiet
possession of the Premises for the entire term hereof subject to __ of the
provisions of this Lease. The individuals executing this Lease on behalf of
Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Office Building Project.
39. Options. See Addendum #52.
-------
39.1 Definition. As used in this paragraph the word "Option" has the
----------
following meaning: (1) the right or option to extend the term of this Lease to
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option of right of first refusal to lease the
premises or the right of first offer to lease other space within the Office
Building Project or other property of Lessor; (3) the right or option to
purchase the Premises or the Office Building Project, or the right of first
refusal to purchase the Premises or the Office Building Project or the right of
first offer to purchase the Premises or the Office Building Project, or the
right or option to purchase other property of Lessor, or the right of first
refusal to purchase other property of Lessor or the right of first offer to
purchase other property of Lessor.
39.2 Options Personal. Each Option granted to Lessee in this Lease
----------------
is personal to the original Lessee and may be exercised only by the original
Lessee while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portfolio thereof, and
may not be exercised or be assigned,
26
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voluntary or involuntarily, by or to any person or entity other than Lessee;
provided, however, that an Option may be exercised by or assigned to any Lessee
Affiliate as defined in paragraph 12.2 of this Lease. The Options, if any,
herein granted to Lessee are not assignable separate and apart from this Lease,
nor may any Option be separated from this Lease in any manner, either by
reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any multiple
----------------
options to extend or renew this Lease, a later option cannot be exercised unless
the prior option to extend or renew this Lease has been so exercised.
39.4 Effect of Default on Options.
----------------------------
(a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary, (i) during
the time commencing from the date Lessor gives to Lessee a notice of default
pursuant to paragraph 13.1(c) or 13.1(d) and continuing until the noncompliance
___? in said notice of default is cured, or (ii) during the period of time
commencing on the day after a monetary obligation to Lessor is due from Lessee
and unpaid (without any necessity for notice thereof to Lessee) and continuing
until the obligation is paid, or (iii) in the event that Lessor has given to
Lessee three or more notices of default under paragraph 13.1(c), or paragraph
13.1(d), whether or not the defaults are cured during the 12 month period of
time immediately prior to the time that Lessee attempts to exercise the subject
Option, (iv) if Lessee has committed any non-curable breach, including without
limitation those described in paragraph 13.1(b), or is otherwise in default of
any of the terms, covenants or conditions of this Lease.
(b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option
shall terminate and be of no further force or effect, notwithstanding Lessee's
due and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of
Lessee for a period of thirty (30) days after such obligation becomes due
(without any necessity of Lessor to give notice thereof to Lessee), or (ii)
Lessee fails to commence to cure a default specified in paragraph 13.1(d) within
thirty (30) days after the date that Lessor gives notice to Lessee of such
default and/or Lessee fails thereafter to diligently prosecute said cure to
completion, or (iii) Lessor gives to Lessee three or more notices of default
under paragraph 13.1(c), or paragraph 13.1(b), or is otherwise in default of any
of the terms, covenants and conditions of this Lease.
40. Security Measures-Lessor's Reservations.
---------------------------------------
40.1 Lessee hereby acknowledges that Lessor shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and or Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole option,
from
27
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providing security protection for the Office Building Project or any part
thereof, in which event the cost thereof shall be included within the definition
of Operating Expenses, as set forth in paragraph 4.2(b).
40.2 Lessor shall have the following rights
(a) To change the name, address or title of the Office Building
Project or building in which the Premises are located upon not less than 90 days
prior written notice.
(b) Deleted.
(c) To permit any lessee the exclusive right to conduct any
business as long as such exclusive does not conflict with any rights expressly
given herein.
(d) To place such signs, notices or displays as Lessor
reasonably deems necessary or advisable upon the roof exterior of the buildings
or the Office Building Project or on pole signs in the Common Areas.
40.3 Lessee shall not
(a) Use a representation (photographic or otherwise) of the
Building or the Office Building Project or their name(s) in connection with
Lessee's business, without written permission from Lessor.
(b) Suffer or permit anyone, except in emergency, to go upon
the roof of the Building.
41. Easements.
---------
41.1 Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material default of this Lease by Lessee without the need for
further notice to Lessee.
41.2 The obstruction of Lessee's view, air, or light by any structure
erected in the vicinity of the Building, whether by Lessor or third parties,
shall in no way affect this lease or impose any liability upon Lessor.
42. Performance Under Protest. If at any time a dispute shall arise as to
-------------------------
any amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment, and there shall survive the right
on the part of said party to institute suit for recovery of such sum if it shall
be adjusted that there was no legal obligation on the part of said party to pay
such sum or
28
<PAGE>
any part thereof, said party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.
43. Authority if Lessee is a corporation. ______??? general or limited
------------------------------------
partnership, Lessee, and _____??? individual executing this Lease on behalf of
such entity represent and warrant that such individual is duly authorized to
execute and deliver this Lease on behalf of said entity if Lessee is a
corporation, trust or partnership. Lessee shall, within thirty (30) days after
execution of this Lease, deliver to Lessor evidence of such authority
satisfactory to Lessor.
44. Conflict. Any conflict between the printed provisions, Exhibits or
--------
Addenda of this Lease and the typewritten or handwritten provisions, if any,
shall be controlled by the typewritten or handwritten provisions.
45. No Offer. Preparation of this Lease by Lessor or Lessor's agent and
--------
submission of same to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become binding upon Lessor and Lessee only when fully executed
by both parties.
46. Lender Modification. Lessee agrees to make such reasonable
-------------------
modifications to this Lease as may be reasonably required by an institutional
tender in connection with the obtaining of normal financing or refinancing of
the Office Building Project.
47. Multiple Parties. If more than one person or entity is named as
----------------
either Lessor or Lessee herein, except as otherwise expressly provided herein,
the obligations of the Lessor or Lessee herein shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee,
respectively.
48. Work Letter. This Lease is supplemented by that certain Work Letter
-----------
of even date executed by Lessor and Lessee, attached hereto as Exhibit C and
incorporated herein by this reference.
49. Attachments. Attached hereto are the following documents which
-----------
constitute a part of this Lease.
See Addendum, paragraphs 50 through 55 attached hereto and made a part
hereof .
CONTINGENCY: The validity of this Lease Agreement is contingent upon Lessee's
final review and acceptance of the new space plan being prepared by Lessor's
architect and subsequent cost analysis by Jack Dymond & Associates, contractor,
and Lessee's acceptance of Lessee's portion of those costs.
NONCOMPETE: Lessor shall not lease space in the building to a competing
chiropractic. Rent checks are to be made out to Sherman Avenue Account and sent
to 1930 Bryant Street, Palo Alto, CA 94301-3711.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO, THE
29
<PAGE>
PARTIES HEREBY AGREE THAT AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS
LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF
LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE
BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER OR ITS AGENT OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT,
OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO: THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO
THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
LESSOR LESSEE
Pio de Feo Dr. Alan A. Silverberg, D.C., Inc.
By: By:
------------------------- ----------------------------------------
Alan A. Silverberg
Its: Its
-------------------- --------------------------------
By: By:
------------------------- ----------------------------------------
Its: Its
-------------------- --------------------------------
Executed at Executed at
----------------- -----------------------------
on on
------------------------- --------------------------------------
Address Address
--------------------- ----------------------------------
30
<PAGE>
ADDENDUM TO THAT STANDARD OFFICE LEASE
DATED JANUARY 6, 1992,
BY AND BETWEEN
PIO deFEO, LESSOR, AND
DR. ALAN A. SILVERBERG, D.C., INC.
dba: CALIFORNIA AVENUE CHIROPRACTIC, LESSEE
FOR SPACE LOCATED AT
451 SHERMAN AVENUE, PALO ALTO, CA
50. EXAMPLE RENTAL SCHEDULE:
The following is an example of the minimum rental increase of
four percent (4%) over the Lease Term:
<TABLE>
<CAPTION>
Year Rental Rate
- ---- -----------
<S> <C>
1 $1,925.00 per month (one month free)
2 $2,002.00 per month ($1,925.00 X 4% = $2,002.00)
3 $2,082.00 per month ($2,002.00 X 4% = $2,082.00)
4 $2,165.00 per month ($2,082.00 X 4% = $2,165.00)
5 $2,251.00 per month ($2,165.00 X 4% = $2,251.00)
</TABLE>
51. CONDITION OF PREMISES
Lessor shall contribute up to 50% with a maximum of Thirteen
Thousand And No/100 Dollars ($13,000.00) towards Lessee's
interior improvements as detailed in the attached floor plan
marked Exhibit A.
If Lessee does not exercise its five (5) year option to extend the
lease term and vacated the Premises, Lessee shall pay to Lessor the
unamortized portion of cost of interior improvements.
52. OPTION TO EXTEND
Lessee shall have one (1) option to extend this Lease Agreement for a
period of five (5) years, on the same terms and conditions excepting
tenant improvement allowance and rent. Lessee shall give Lessor
written notice of intent to exercise option no later than ninety (90)
days prior to this Lease expiration (i.e., date of said notice to be
no later than November 30, 1996).
Rent for option period shall be at ninety percent (90%) of the then
fair market rate but in no event shall be increased more than eight
percent (8%) over previous year's rent (i.e., the fifth [5th] year's
rent).
31
<PAGE>
53. SHOWER ROOM
Lessee shall have the exclusive right to perform own modifications and
use the existing shower room as its x-ray developing room. Lessee
assumes full responsibility for improvements and any necessary permits
for said use. Work shall be performed by a licensed contractor.
54. PERSONAL GUARANTEE
Alan A. Silverberg hereby promises and agrees that Dr. Alan A.
Silverberg, D.C., Inc., a California Corporation, shall pay all
rentals due and perform and execute all of the covenants and
conditions herein contained and that should Dr. Alan A. Silverberg,
D.C., Inc. fail to pay said rentals or otherwise fail to perform or
comply with the terms and conditions of this Lease Agreement, said
performance, including payment of the rent, is hereby guaranteed by
the undersigned.
55. SIGNAGE
Lessee shall be permitted, at Lessee's sole cost and expense, to
install door signage and window signage on its Premises.
32
<PAGE>
Exhibit 10.12
AMENDMENT TO LEASE
This Amendment to Lease is effective as of September 1, 1996 between
Pio de Feo ("Lessor") and Internet Travel Network ("Lessee") and amends that
certain Lease between the parties dated November 1995, effective December 15,
1995 for space referred to as 453 Sherman Avenue, Palo Alto, California.
RECITALS
A. Lessor and Lessee entered into that certain lease for space at 453
Shareman Avenue, effective December 15, 1995 as evidenced by Commercial Lease
executed on November 14, 1995 by Lessee and November 16, 1995 by Lessor
(hereinafter "First Lease").
B. Lessor and Lessee entered into that certain Commercial Lease Full
Service effective as of September 1, 1996 for additional space at the same
building with options to include even further space within the building
(hereinafter "Second Lease"). As part of that Second Lease, the parties agreed
regarding utilities and other issues that effect all the space Lessee is leasing
from Lessor under both leases. For this reason, the parties desire to cause the
Second Lease to become a part of and an Amendment to the First Lease.
NOW, THEREFORE, in consideration of the mutual promises herein, the
parties agree as follows:
1. All of the terms and conditions of the Second Lease shall be
incorporated in and become a part of the First Lease and except that the term
and rent and option will remain unchanged in the First Lease as will the term
and rent of the Second Lease remain uniquely that of the space covered under the
Second Lease but in all other respects the terms and conditions of the Second
Lease as attached hereto as Exhibit A shall become the terms and conditions of
the First Lease so that all the space leased from Lessor to Lessee in the
building will be subject to the same terms and conditions except as to the term
and rent which will apply uniquely to each space as set forth in the two leases.
2. To the extent of any inconsistencies between this Amendment and
the First Lease, the terms and conditions of this Amendment shall prevail.
Executed as of the date first above written:
LESSOR: LESSEE:
___________________________________ Internet Travel Network
Pio de Feo
By:________________________________
Its:Chief Financial Officer
-------------------------------
<PAGE>
COMMERCIAL LEASE AND DEPOSIT RECEIPT
RECEIVED FROM INTERNET TRAVEL NETWORK, hereinafter referred to as
LESSEE, the sum of ($9,836.25 Dollars) evidenced by Check, as a deposit which
shall belong to Lessor and shall be applied as follows:
<TABLE>
<CAPTION>
Balance Due
Prior to
Total Received Acceptance
-------------- -------------- --------------
<S> <C> <C> <C>
Rent for the period from Dec. 15, 1995 to January 31, 1996.......... $ 3,278.75 $ 3,278.75 $
Security deposit (not applicable toward last month's rent)........... $ 6,557.50 $ 6,557.50 $
Other................................................................ $ $ $
TOTAL................................................................ $ 9,836.25 $ 9,835.25 $
</TABLE>
In the event that this Lease is not accepted by the Lessor within 2
days, the total deposit received shall be refunded.
Lessee offers to lease from Lessor the premises situated in the City
of Palo Alto, County of Santa Clara, State of California, described as 453
Sherman Avenue, see attached floor plan, upon the following TERMS and
CONDITIONS:
1. Term: The term hereof shall commence on December 15, 1995, and end
----
on March 31, 2001.
2. Rent: The total rent shall be $(see Exhibit B), payable as
----
follows: Monthly, due on the 1st day of each month. All rents shall be paid to
Lessor or his/her authorized Agent, at the following address: Enterprise
Development Co., P.O. Box 1785, Burlingame, CA 94011, or at such other places as
may be designated by Lessor from time to time. In the event rent is not paid
within 5 days after due date, Lessee agrees to pay a late charge of $100 plus
interest at 18% per annum on the delinquent amount. Lessee further agrees to pay
$100 for each dishonored bank check. The late charge period is not a grace
period, and Lessor is entitled to make written demand for any rent if not paid
when due.
3. Use: The premises are to be used for the operation of Professional
---
Internet Services and for no other purpose, without prior written consent of
Lessor. Lessee shall not commit any waste upon the premises, or any nuisance or
act which may disturb the quiet enjoyment of any tenant in the building.
4. Uses Prohibited: Lessee shall not use any portion of the premises
---------------
for purposes other than those specified. No use shall be made or permitted to be
made upon the premises, nor acts done, which will increase the existing rate of
insurance upon the property, or cause cancellation of insurance policies
covering the property. Lessee shall not conduct or permit any sale by auction on
the premises.
5. Assignment and Subletting: Lessee shall not assign this Lease or
-------------------------
sublet any portion of the premises without prior written consent of the Lessor,
which shall not be unreasonably withheld. Any such assignment or subletting
without consent shall be void and, at the option of the Lessor, shall terminate
this Lease.
<PAGE>
6. Ordinances and Statutes: Lessee shall comply with all statutes,
-----------------------
ordinances, and requirements of all municipal, state and federal authorities now
in force, or which may later be in force. The commencement or pendency of any
state or federal court abatement proceeding affecting the use of the premises
shall, at the option of the Lessor, be deemed a breach of this Lease.
7. Maintenance, Repairs, Alterations: Unless otherwise indicated,
---------------------------------
Lessee acknowledges that the premises are in good order and repair. Lessee
shall, at his/her own expense, maintain the premises in a good and safe
condition, including plate glass, electrical wiring, plumbing and heating
installations, and any other system or equipment. The premises shall be
surrendered, at termination of the Lease, in as good condition as received,
normal wear and tear excepted. Lessee shall be responsible for all repairs
required, except the roof, exterior walls, structural foundations, and: n/a,
which shall be maintained by Lessor. Lessee shall also maintain in good
condition property adjacent to the premises, such as sidewalks, driveways,
lawns, and shrubbery, which would be maintained by Lessor.
No improvement or alteration of the premises shall be made without the
prior written consent of the Lessor. Prior to the commencement of any
substantial repair, improvement, or alteration, Lessee shall give Lessor at
least two (2) days written notice in order that Lessor may post appropriate
notices to avoid any liability for liens.
8. Entry and Inspection: Lessee shall permit Lessor or Lessor's
--------------------
agents to enter the premises at reasonable times and upon reasonable notice for
the purpose of inspecting the premises, and shall permit Lessor, at any time
within one hundred eighty (180) days prior to the expiration of this Lease, to
place upon the premises any usual "To Let" or "For Lease" signs, and permit
persons desiring to lease the premises to inspect the premises at reasonable
times.
9. Indemnification of Lessor: Lessor shall not be liable for any
-------------------------
damage or injury to Lessee, or any other person, or to any property, occurring
on the premises. Lessee agrees to hold Lessor harmless from any claims for
damages arising out of Lessee's use of the premises, and to indemnify Lessor for
any expense incurred by Lessor in defending any such claims.
10. Possession: If Lessor is unable to deliver possession of the
----------
premises at the commencement date set forth above, Lessor shall not be liable
for any damage caused by the delay, nor shall this Lease be void or voidable,
but Lessee shall not be liable for any rent until possession is delivered.
Lessee may terminate this Lease if possession is not delivered within 30 days of
the commencement term in Item 1.
11. Lessee's Insurance: Lessee, at his/her expense, shall maintain
------------------
plate glass and public liability insurance, including bodily injury and property
damage, insuring Lessee and Lessor with minimum coverage as follows: $2,000,000.
Lessee shall provide Lessor with a Certificate of Insurance showing
Lessor as additional insured. The policy shall require ten (10) day's written
notice to Lessor prior to cancellation or material change of coverage.
<PAGE>
12. Lessor's Insurance: Lessor shall maintain hazard insurance
------------------
covering one hundred percent (100%) replacement cost of the improvements
throughout the Lease term. Lessor's insurance will not insure Lessee's personal
property or leasehold improvements.
13. Subrogation: To the maximum extent permitted by insurance
-----------
policies which may be owned by the parties, Lessor and Lessee waive any and all
rights of subrogation which might otherwise exist.
14. Utilities: Lessor agrees that he/she shall be responsible for the
---------
payment of all utilities, including water, gas, electricity, heat and other
services delivered to the premises.
15. Signs: Lessor reserves the exclusive right to the roof, side and
-----
rear walls of the premises. Lessee shall not construct any projecting sign or
awning without the prior written consent of Lessor, which shall not be
unreasonably withheld.
16. Abandonment of Premises: Lessee shall not vacate or abandon the
-----------------------
premises at any time during the term of this Lease. If Lessee does abandon or
vacate the premises, or is dispossessed by process of law, or otherwise, any
personal property belonging to Lessee left on the premises shall be deemed to be
abandoned, at the option of Lessor.
17. Condemnation: If any part of the premises is condemned for public
------------
use, and a part remains which is susceptible of occupation by Lessee, this Lease
shall, as to the part taken, terminate as of the date the condemnor acquires
possession. Lessee shall be required to pay such proportion of the rent for the
remaining term as the value of the premises remaining bears to the total value
of the premises at the date of condemnation; provided, however, that Lessor may
at his/her option, terminate this Lease as of the date the condemnor acquires
possession. In the event that the premises are condemned in whole, or the
remainder is not susceptible for use by the Lessee, this Lease shall terminate
upon the date which the condemnor acquires possession. All sums which may be
payable on account of any condemnation shall belong solely to the Lessor; except
that Lessee shall be entitled to retain any amount awarded to him/her for
his/her trade fixtures or moving expenses.
18. Trade Fixtures: Any and all improvements made to the premises
--------------
during the term shall belong to the Lessor, except trade fixtures of the Lessee.
Lessee may, upon termination, remove all his/her trade fixtures, but shall pay
for all costs necessary to repair any damage to the premises occasioned by the
removal.
19. Destruction of Premises: In the event of a partial destruction of
-----------------------
the premises during the term, from any cause, Lessor shall promptly repair the
premises, provided that such repairs can be reasonably made within sixty (60)
days. Such partial destruction shall not terminate this Lease, except that
Lessee shall be entitled to a proportionate reduction of rent while such repairs
are being made, based upon the extent to which the making of such repairs
interferes with the business of Lessee on the premises. If the repairs cannot be
made within sixty (60) days, this Lease may be terminated at the option of
either party by giving written notice to the other party within the sixty (60)
day period.
20. Hazardous Materials: Lessee shall not use, store, or dispose of
-------------------
any hazardous substances upon the premises, except the use and storage of such
substances that are
<PAGE>
customarily used in Lessee's business, and are in compliance with all
environmental laws. Hazardous substances means any hazardous waste, substance or
toxic materials regulated under any environmental laws or regulations applicable
to the property.
21. Insolvency: The appointment of a receiver, an assignment for the
----------
benefits of creditors, or the filing of a petition in bankruptcy by or against
Lessee, shall constitute a breach of this Lease by Lessee.
22. Default: In the event of any breach of this Lease by Lessee,
-------
Lessor may, at his/her option, terminate the Lease and recover from Lessee (a)
the worth at the time of award of the unpaid rent, which had been earned at the
time of termination, (b) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination until the time of
the award exceeds the amount of such rental loss that the Lessee proves could
have been reasonably avoided; (c) the worth at the time of award of the amount
by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (d) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform his/her
obligations under the Lease or which in the ordinary course of things would be
likely to result therefrom.
Lessor may, in the alternative, continue this Lease in effect, as long
as Lessor does not terminate Lessee's right to possession, and Lessor may
enforce all of Lessor's rights and remedies under the Lease, including the right
to recover the rent as it becomes due under the Lease. If said breach of Lease
continues, Lessor may, at any time thereafter, elect to terminate the Lease.
Nothing contained herein shall be deemed to limit any other rights or
remedies which Lessor may have.
23. Security: The security deposit set forth above shall secure the
--------
performance of the Lessee's obligations. Lessor may, but shall not be obligated
to apply all or portions of the deposit on account of Lessee's obligations. Any
balance remaining upon termination shall be returned to Lessee. Lessee shall not
have the right to apply the security deposit in payment of the last month's
rent.
24. Deposit Refunds: The balance of all deposits shall be refunded
---------------
within three weeks (or otherwise required by law), from date possession is
delivered to Lessor or his/her authorized Agent, together with a statement
showing any charges made against such deposits by Lessor.
25. Attorney's Fee and Costs: In any action or proceeding involving a
------------------------
dispute between Lessor and Lessee arising out of this Lease, the prevailing
party shall be entitled to reasonable attorney's fees.
26. Waiver: No failure of Lessor to enforce any term of this Lease
------
shall be deemed to be a waiver.
<PAGE>
27. Notices: Any notice which either party may or is required to
-------
give, shall be given by mailing the same, postage prepaid, to Lessee at the
premises, or to Lessor at the address shown in Item 2, or at such other places
as may be designated by the parties from time to time. Notice shall be effective
five days after mailing, or on personal delivery.
28. Holding Over: Any holding over after the expiration of this
------------
Lease, with the consent of Owner, shall become a month-to-month tenancy at a
monthly rent of $ n/a , payable in advance and otherwise subject to the terms of
this Lease, as applicable, until either party shall terminate the same by giving
the other party thirty (30) days written notice.
29. Time: Time is of the essence of this Lease.
----
30. Heirs, Assigns, Successors: This Lease is binding upon and inures
--------------------------
to the benefit of the heirs, assigns and successors of the parties.
31. Tax Increase: In the event there is any increase during any year
------------
of the term of this Lease in the City, County or State real estate taxes over
and above the amount of such taxes assessed for the tax year during which the
term of this Lease commences, Lessee shall pay to Lessor upon presentation of
paid tax bills an amount equal to 30% of the increase in taxes upon the land and
building in which the leased premises are situated. In the event that such taxes
are assessed for a tax year extending beyond the term of the Lease, the
obligation of Lessee shall be prorated. Lessee shall be not be responsible for
any tax increase occasioned solely by a sale or transfer of the premises by
Lessor.
32. Cost of Living Increase: The rent provided for in Item 2 shall be
-----------------------
adjusted effective upon the first day of the month immediately following the
expiration of 12 months from date of commencement of the term, and upon the
expiration of each 12 months _________ in accordance with changes in the U.S.
Consumer Price Index for All Urban Consumers (1982-84 = 100) hereinafter called
the "CPI." The monthly rent shall be increased to an amount equal to the monthly
rent set forth in Item 2, multiplied by a fraction the numerator of which is the
CPI for the second calendar month immediately preceding the commencement of the
Lease term; provided, however, that the monthly rent shall not be less than the
annual _________. See Exhibit.
33. Option to Renew: Provided that Lessee is not in default in the
---------------
performance or this Lease, Lessee shall have the option to renew the Lease for
an additional term of 60 months commencing at the expiration of the initial
Lease. All of the terms and conditions of the Lease shall apply during the
renewal term, except that the monthly rent shall be the sum of $ See Exhibit B,
which shall be adjusted in accordance with the cost of living increase provision
set forth in Item 32.
The option shall be exercised by written notice given to Lessor not
less than 180 days prior to the expiration of the initial Lease term. If notice
is not given within the time specified, this Option shall expire.
34. Americans with Disabilities Act: The parties are alerted to the
-------------------------------
existence of the Americans With Disabilities Act, which may require costly
structural modifications. The parties are advised to consult with a professional
familiar with the requirements of the Act.
<PAGE>
35. Lessor's Liability: In the event of a transfer of Lessor's title
------------------
or interest to the property during the term of this Lease, Lessee agrees that
the grantee of such title or interest shall be substituted as the Lessor under
this Lease, and the original Lessor shall be released of all further liability;
provided, that all deposits shall be transferred to the grantee.
36. Estoppel Certificate:
--------------------
(a) On ten (10) days' prior written notice from Lessor, Lessee
shall execute, acknowledge, and deliver to Lessor a statement in writing: (1)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect), the amount of any security
deposit, and the date to which the rent and other charges are paid in advance,
if any; and (2) acknowledging that there are not, to Lessee's knowledge, any
incurred defaults on the part of Lessor, or specifying such defaults if any are
claimed. Any such statement may be conclusively relied upon by any prospective
buyer or encumbrancer of the premises.
(b) At Lessor's option, Lessee's failure to deliver such
statement within such time shall be a material breach of this Lease or shall be
conclusive upon Lessee: (1) that this Lease is in full force and effect, without
modification except as may be represented by Lessor; (2) that there are no
uncured defaults in Lessor's performance; and (3) that not more than one month's
rent has been paid in advance.
(c) If Lessor desires to finance, refinance, or sell the
premises, or any part thereof, Lessee agrees to deliver to any lender or buyer
designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or buyer. All financial statements shall be received by
the Lessor or the lender or buyer in confidence and shall be used only for the
purposes set forth.
37. Entire Agreement: The foregoing constitutes the entire Agreement
----------------
between the parties and may be modified only in writing signed by all parties.
The following exhibits are a part of this Lease:
Exhibit A: Floor plans and improvements
Exhibit B: Cost of living adjustment and option to renew
Exhibit C: Right of First Refusal
Exhibit D: MRI
Exhibit F: Offer Expiration
The undersigned Lessee hereby acknowledges that he/she has thoroughly
read and approved each of the provisions contained in this Offer, and agrees to
the terms and conditions specified:
<PAGE>
Lessee:_____________________________ Lessee:___________________________
Alfred Whaley C.T.O. Daniel Whaley C.E.O.
Date:_______________________________ Date:_____________________________
Receipt for deposit acknowledged by:__________________________________________
Lessee:_____________________________
Date:_______________________________
ACCEPTANCE
The undersigned Lessor accepts the foregoing Offer and agrees to lease
the premises on the terms and conditions set forth above.
NOTICE: The amount or rate of real estate commissions is not fixed by
law. They are set by each broker individually and may be negotiable between the
owner and broker.
The Lessor agrees to pay to Wilbur Properties, the Broker in this
transaction, the sum of 5% for services rendered.
In any action for commission, the prevailing party shall be entitled
to reasonable attorney fees:
Lessee:_______________________________ Lessee:___________________________
Date: 11/16/95 Date:_____________________________
Lessee acknowledges receipt of a copy of the accepted Agreements.
Lessee:_______________________________ Lessee:___________________________
Date:_________________________________ Date:_____________________________
<PAGE>
EXHIBIT "A"
(FLOOR PLAN AND IMPROVEMENTS)
The Lessor shall provide, at his own cost, the following Tenant Improvements:
1) Water and sewage service in one location (see floor plan), but not exterior
plumbing and cabinetry
2) All exterior walls with freshly painted drywall and electrical and phone
outlets as required by code
3) A fully carpeted floor; The existing carpet is acceptable
4) A conference room (see floor plan)
5) Drop ceiling with lights and HVAC to code
<PAGE>
EXHIBIT "B"
(COST OF LIVING ADJUSTMENTS AND OPTION TO RENEW)
The initial monthly rent for the first year from March 1, 1996 to
February 28, 1997 will be $6,557.50 per month. Thereafter the rent will increase
in accordance with the CPI but limited to a minimum increase of 4% and a maximum
increase of 6% (see item 32 of Master Lease). The CPI increase is applied each
March 1 during the duration of the lease. The same schedule of increases applies
to the option period, if it is exercised by the Lessee.
<PAGE>
EXHIBIT "C"
(RIGHT OF FIRST REFUSAL)
Tenant shall have the right of first refusal to negotiate on any space
which becomes available in the building. Tenant shall have two (2) days to make
their decision.
<PAGE>
A TERMINATION CLAUSE....
Landlord has another tenant in the medical imaging business. Landlord
has permitted this other tenant to mount the imaging device immediately on the
other side of a wall on one side of the space to be leased by ITN. Conversations
with Hitachi, the manufacturer, indicate that the active power output of the
device is in a narrow range centered around 12.7 megahertz, at a maximum power
of 5 kilowatts, and that the shielding enclosure should reduce the signal by 80
decibels, i.e. 8 bels, or 10 to the 8th power, for a total power issuing from
the shielded room of .05 milliwatts, and with six surfaces of the room, a power
entering ITN's leased space of less than .05/6 or .0083 milliwatts. The safety
factor should be maintained. Tenant (ITN) shall have the ability to terminate
this lease if after 60 days notice landlord has been unable to correct any of
the following problems to tenant's satisfaction:
1 - Radiation in the direction of ITN's leased space is found at any
time to exceed by a factor of two the intended maximum radiation, i.e. is above
.0166 milliwatts. (Hitachi indicates that normal operation is at 1/4th power;
this level of emissions should therefore be unlikely according to Hitachi's
statements.)
Printed for [email protected] (NancyWright)
-------------
Dan Whaley, 07:55 AM 11/13/9, suggested lease language (fwd)
2 - The imaging device is emitting other radiation or strong magnetic
fields, that are felt to be impairing normal conduct of business in any way, or
the imaging devices presence is in any other way obstructing the desired
utilization of the leased (ITN's) space.
<PAGE>
EXHIBIT "E"
(PERSONAL GUARANTEE AND REMOVAL)
This lease will be personally guaranteed by the Lessees namely, Alfred
Whaley, Daniel Whaley, and Bruce Yoxsimer. If after the first 24 months of the
lease term the Lessee is in compliance with all the terms and conditions of this
lease and has been performing all of the duties and obligations of Lessee in a
timely manner the personal guarantees will be eliminated. The Lessor will so
remove the personal guarantees in writing.
<PAGE>
EXHIBIT "F"
OFFER EXPIRATION
This offer to lease will expire at 5:00 P.M. November 20.
<PAGE>
Exhibit 10.13
ALHOUSE . DEATON 390 Cambridge Avenue, Palo Alto
MANAGEMENT & LEASING, INC.
2600 El Camino Real, Palo Alto, CA 94306 "Visionael Corporation"
(650) 857-0116
Fax: (650) 852-0361
July 16, 1998
GROSS LEASE
1. HIRING: Lessor leases to Lessee and Lessee hires from Lessor, on
the terms and conditions set forth herein, the premises described in the
Schedule.
2. TERM AND RENT: The term of this lease and the rent which Lessee
agrees to pay to Lessor are specified in the Schedule. Lessee agrees to pay rent
to Lessor in lawful money on the United States of America, without deduction or
offset, in installments as provided in the Schedule. Rent for partial months
shall be prorated.
3. DEPOSIT: Upon the execution of this lease, Lessee will pay to
Lessor as a security deposit the sum specified as "Deposit" in the Schedule. If
Lessee shall pay all rent and observe and perform all of the terms, covenants,
and conditions of this lease during the term and all extensions and renewals
thereof, Lessor will ___ the deposit to Lessee, without interest, within three
(3) days after Lessee vacates the premises. If Lessee defaults in any of the
terms, covenants, or conditions of this lease (including, but not limited to,
nonpayment of rent), Lessor may use or apply so much of the security deposit as
is required to cure or make good such default, or to indemnify Lessor for loss
or damage arising therefrom. Lessee agrees to restore the security deposit to
the full original amount immediately upon receipt of demand from Lessor
therefor.
4. POSSESSION: If Lessor is unable to deliver possession of the
premises to Lessee at the commencement of the term for any reason whatsoever,
this lease shall not be void or voidable for a period of thirty (30) days
thereafter, nor shall Lessor be liable to Lessee for any loss or damage
resulting therefrom, but the rent shall abate until Lessor delivers possession
of the premises to Lessee. The term of this lease shall be extended for a period
equal to any such delay and Lessee agrees to pay the rent provided for herein
and to perform all of the terms and conditions of this lease during such
extension.
If Lessor is unable to deliver possession of the premises to Lessee
within thirty (30) days after the commencement date, this lease may be
terminated by either Lessor or Lessee by written notice to the other at any time
thereafter prior to the date of possession is delivered to Lessee.
5. USE: The premises shall be used for the purpose provided in the
Schedule, and for no other purpose without the prior written consent of Lessor.
Lessee agrees to conduct his business in accordance with the highest ethical
standards of the business or
<PAGE>
profession in which he is engaged, and in case of a breach of this covenant
Lessee agrees that Lessor may cancel this lease.
6. ABANDONMENT: Lessee will not vacate (for more than thirty (30)
------------------------
days), abandon, or surrender the premises during the term, and if Lessee does,
- ----
or is dispossessed by process of law, or otherwise, any personal property
belonging to Lessee left on the premises shall be deemed to be abandoned at the
option of Lessor.
7. CONDITION OF PREMISES: Lessee's taking possession shall be
conclusive evidence as against Lessee that the premises were in good order and
satisfactory condition when Lessee took possession. No promise to alter,
remodel, or improve the premises or the building and no representation
respecting the condition of the premises or the building have been made by
Lessor to Lessee, unless the same is set forth in the Schedule. Lessee waives
all rights to make repairs at the expense of Lessor, or to deduct the cost
thereof from the rent, and Lessee waives all rights under Section 1941 and 1942
of the Civil Code of the State of California. At the termination of this lease
by lapse of time or otherwise, Lessee shall surrender the premises in as good a
condition as when the Lessee took possession, ordinary wear and loss by fire
excepted, failing which Lessor may restore the premises to such condition and
Lessee shall pay the cost thereof to Lessor upon demand.
8. ALTERATIONS AND REPAIRS: Except for any initial leasehold
improvements provided for in the Schedule, Lessee shall not make or permit to be
made any alterations, additions, improvements, or changes in the premises which
-----
total contract amount exceeds $2,500.00 without prior written consent of Lessor
- ---------------------------------------
which shall not be delayed for more than fifteen (15) calendar days following
- -----------------------------------------------------------------------------
request for approval. Subject to the services to be rendered by Lessor as set
- --------------------
forth in the Schedule, Lessee shall, at Lessee's own expense, keep the premises
in good order, condition, and repair during the term, including the replacement
of all broken glass with glass of the same size and quality under the
supervision and with the approval of Lessor. If Lessee does not make repairs
promptly and adequately, Lessor may, but need not, make repairs, and Lessee
shall pay promptly the reasonable cost thereof. At any time or times, Lessor,
either voluntarily or pursuant to governmental requirement, may at Lessor's own
expense, make repairs, alterations, or improvements in or to the building or
facilities, all without any liability to Lessee by reason of interference,
inconvenience, or annoyance; provided that Lessee shall have reasonable access
to the premises. Lessor shall not be liable to Lessee for any expense, injury,
loss, or damage resulting from work done in or upon, or the use of, any adjacent
or nearby building, land, street, or alley. In the event Lessee requests that
repairs, alterations, decorating, or other work in the premises be made during
periods other than ordinary business hours, Lessee shall pay Lessor for overtime
and other additional expenses incurred because of such request.
9. LIENS: Lessee agrees to keep the premises and the property on
which the premises are located free from any liens arising out of any work
performed, materials furnished, or obligations by Lessee.
10. INDEMNIFICATION: Lessee waives all claims against Lessor for
damages to property, or to goods, wares, and merchandise stored in, upon, or
about the premises, and for injuries to persons in, upon, or about the premises
from any cause arising at any time
<PAGE>
unless caused by Lessor's active negligence and willful misconduct and malicious
- --------------------------------------------------------------------------------
intent, and Lessee agrees to indemnify and hold Lessor exempt and harmless for
- ------
and on account of any damage or injury to any person or property arising from
the use of the premises by Lessee or from the failure of Lessee to keep the
premises in good condition as herein provided. Lessor shall not be liable to
Lessee for any damage because of any act or negligence of any co-tenant or other
occupant of the same building, or by any owner or occupant of adjoining or
contiguous property, nor for the overflow, breakage, or leakage of water, steam,
gas, or electricity from pipes __________ Lessee invitees' misuse or neglect of
said premises, its apparatus, or appurtenances.
11. INSURANCE: Lessee at Lessee's expense will provide and keep in
force during the term of this lease and for the benefit of the Lessor and Lessee
general liability insurance policies with companies and in form satisfactory to
Lessor, protecting Lessor and Lessee against any and all liability occasioned by
accident or disaster in amounts and covering such perils as Lessor shall
determine, but Lessor shall have no obligation to insure against loss by Lessee
to Lessee's leasehold improvements, fixtures, furniture, or other personal
property in or about the premises occurring from any cause whatsoever and Lessee
shall have no interest in the proceeds of any insurance carried by Lessor.
If Lessor's insurance rates for the premises are increased at any time
during the term as a result of the nature of Lessee's use and occupancy of the
premises, Lessee agrees to reimburse Lessor for the full amount of such increase
immediately upon receipt of demand from Lessor therefor. Such increase shall be
prorated as of the expiration of the term, if applicable.
12. SUBROGATION: Lessor and Lessee hereby waive all rights of
subrogation which their respective insurers might have under all policies of
insurance now existing or hereafter purchased during the term by either Lessor
or Lessee, insuring or covering the premises or any portion thereof, or Lessee's
leasehold improvements, furniture, fixtures, personal property, business, or
operations in, or about the premises.
13. TAXES: Lessee will pay before delinquency any and all taxes,
assessments, license fees, and public charges levied, assessed, or imposed and
which become payable during the term hereof upon Lessee's fixtures, furniture,
and personal property installed or located in the premises.
The term "basic taxes" as used in this subparagraph shall mean all
taxes and assessments levied, assessed, or charged against the real property and
improvements for the based tax year specified in the Schedule. In the event the
amount of taxes and assessments paid by Lessor for any fiscal year during the
term exceeds said basic taxes, Lessee agrees to pay Lessor within thirty (30)
days after demand, as additional rent hereunder, an amount equal to that portion
of such increase as the total square feet of Lessee's premises bears to the
total leasable space. The total square feet of Lessee's premises and the total
leasable square feet of the building are specified in the Schedule for the
purpose of this provision.
Lessee shall be considered the _____ the term of any leasehold
improvements installed at Lessee's expense, and any such leasehold improvements
may be assessed to Lessee for property tax purposes. Except as otherwise
provided on the Schedule, Lessee shall not
<PAGE>
remove from the premises any leasehold improvements installed by Lessee without
Lessor's prior written consent, and the ownership of any such leasehold
improvements shall revert to Lessor upon the expiration of the term.
In the event Lessor voluntarily sells the subject building, the
---------------------------------------------------------------
resultant Property Tax increase will not be passed through to the Lessee as
- ---------------------------------------------------------------------------
provided in this Lease agreement. Lessee shall still be liable for the original
- --------------------------------------------------------------------------------
Property Tax pass through amount as if the voluntary sale had not occurred.
- ---------------------------------------------------------------------------
14. SERVICES: So long as Lessee is not in default hereunder, Lessor
will furnish the premises with such services as are specified in the Schedule,
and Lessee will pay for all other services supplied to the premises. Lessor
shall not be liable to Lessee or to any other party for any claim, injury,
damage, rebate, or charge of any kind whatsoever which may arise or accrue in
case of the interruption of the supply of water, heat, electricity, elevator
service, air conditioning, gas, compressed air, or refrigeration caused by
conditions beyond Lessor's control, or by accident, failure of power supply,
repairs, strikes, fire, flood, act of God, or on account of any defect of the
building or the premises, nor shall any such interruption be grounds for
termination of this lease provided Lessor exercises reasonable diligence to
remedy such interruption unless caused by Lessor's active negligence and willful
------------------------------------------------------
misconduct and malicious intent.
- -------------------------------
15. PARKING: Lessor shall be entitled to use the parking spaces
specified in the Schedule. Lessee agrees that vehicles of Lessee or its
employees shall not park in driveways nor occupy parking spaces or other area
reserved for any use such as visitors, delivery, loading, or other tenants.
16. DESTRUCTION: In the event of a partial destruction of the
building or appurtenances during the term from a cause which is insured under
Lessor's fire and extended coverage insurance, Lessor shall forthwith repair the
same, provided such repairs can be made within ninety (90) days under the laws
and regulations of the state, county, federal, or municipal authorities, but
such partial destruction shall not annul or void this lease, except that Lessee
shall be entitled to a proportionate reduction of rent while such repairs are
being made, such proportionate reduction to be based upon the extent to which
the making of such repairs interferes with the business carried on by Lessee in
the premises.
If the partial destruction is caused by a casualty which is not
insured under Lessor's fire and extended coverage insurance or if such repairs
cannot be made in ninety (90) days, either Lessor or Lessee may terminate this
lease by giving written notice to the other party within thirty (30) days after
the damage occurs. If the lease is not terminated, Lessor shall make such
repairs within a reasonable time with this lease continuing in full force and
effect and the rent proportionately reduced while the repairs are being made.
In the event the building in which the premises are located is destroyed to the
extent of not less than 33-1/3% of the then current replacement cost thereof,
Lessor may elect to terminate this lease, regardless of whether the premises are
damaged, whether the partial destruction is caused by casualty which is covered
by insurance, or whether the repairs can be made within ninety (90) days. A
total destruction of the building in which the premises are located shall
terminate this
<PAGE>
lease. In respect to any partial destruction which Lessor is obligated to repair
or may elect to repair under the terms of this paragraph and which can be made
within ninety (90) days the provisions of Section 1932, Subdivision 2, and of
Section 1933, Subdivision 4, of Civil Code of the State of California are waived
by Lessee.
In the event of termination of this lease pursuant to any of the
provisions of this paragraph, rent and Lessee's portion of any tax increase
shall be apportioned on a per diem basis and shall be paid to the date of the
casualty. In no event shall Lessor be liable to Lessee for any damages
resulting to Lessee from the happening of such casualty or from the repairing or
reconstruction of the premises or of the building, or from the termination of
this lease as herein provided, nor shall Lessee be relieved thereby or in any
such event from Lessee's obligations hereunder except to the extent and upon the
conditions expressly stated in this paragraph.
17. EMINENT DOMAIN: If the whole or any substantial part of the
building or appurtenant real property shall be taken or condemned by any
competent authority for any public use or purpose, the term of this lease shall
end upon, and not before, the date when the possession of the part so taken
shall be required for such use or purpose. Current rent shall be apportioned as
of the date of such termination, but the entire award shall be the property of
Lessor without apportionment.
18. ASSIGNMENT AND SUBLETTING: Lessee shall not assign this lease, or
any interest herein, and shall not sublet the premises or any part thereof, or
any right or privilege appurtenant thereto, or suffer any other person (the
agent and employees of Lessee excepted) to occupy of use the premises, or any
portion thereof, without prior written consent of Lessor which shall not be
------------------
unreasonably withheld and shall not be delayed for more than fifteen (15)
- -------------------------------------------------------------------------
calendar days following written request for approval from Lessee, and a consent
- ----------------------------------------------------------------
to one assignment, subletting, occupation, or use by any other person shall not
be deemed to be consent to any subsequent assignment, subletting, occupation, or
use by any other person. Any such assignment or subletting without such consent
shall be void, and shall, at the option of Lessor, terminate this lease. Any
transfer or assignment of this lease by operation of law without the written
consent of Lessor shall make this lease voidable at the option of Lessor.
Lessor will not unreasonably withhold its consent to a subletting by
Lessee, provided that (a) the sublessee is financially responsible; (b) the
sublessee proposes to use the premises for the same purposes or a purpose which
is permitted by applicable zoning ordinances and regulations; (c) the proposed
use is not injurious to the premises; (d) the proposed use will not disturb
other tenants of Lessor in the building or immediate vicinity; and (e) the
proposed use will not violate any existing exclusive use provisions applicable
to the building or the premises. Every assignment or sublease shall recite that
is and shall be subject and subordinate to the provisions of this lease, and
termination of this lease shall constitute a termination of every assignment or
sublease.
19. SUBORDINATION: The rights of Lessee under this lease shall be and
they are subject and subordinate at all times to the lien of any mortgage or
mortgages, deed of trust or deeds of trust, now or hereafter in force against
the property, and to all advances made or hereafter to be made upon the security
thereof, and Lessee shall execute such further instruments subordinating this
lease to the lien or liens of any such mortgage or mortgages, deed of trust or
<PAGE>
deeds of trust, as shall be requested by Lessor. Lessee hereby irrevocable
appoints Lessor as attorney in fact for Lessee with full power and authority to
execute and deliver in the name of Lessee any such instrument or instruments.
If any mortgage or beneficiary elects to have this lease superior to
its mortgage or deed of trust and gives notice of such fact to Lessee, then this
lease shall be deemed superior to the lien of any such mortgage or deed of
trust, whether this lease or a memorandum thereof is dated or recorded before or
after said mortgage or deed of trust.
20. SIGNS: Lessee shall not place any signs, lettering, marks,
photographs, or any other material whatsoever, on the interior or exterior of
the doors, windows, hallways, or any other place, in, on, or about the premises,
the building, or its appurtenances, without Lessor's prior written approval of
the size, style, design, color, material, manner of applying or fastening, and
location thereof, and the person or firm who shall install or apply the same.
21. LESSOR'S REMEDIES: If Lessee fails to make any payment of any sum
due under this lease for ten (10) days after notice from Lessor, or if Lessee's
interest herein, or any part thereof, is assigned or transferred, either
voluntarily or by operation of law (except as expressly permitted by other
provisions of this lease) including, without limitation, the filing of a
petition by or against the Lessee, or any member of Lessee if Lessee is a
partnership or joint venture, under any insolvency or bankruptcy laws, or if
Lessee makes a general or any assignment for the benefit of his creditors, then,
in any of such events, Lessor shall have the right, at its option, in addition
to and not exclusive of any other remedy Lessor may have by operation of law,
without any further demand or notice, to re-enter the premises and eject all
persons therefrom, using all necessary force to do so, and either:
(1) Declare this lease at an end in which event Lessee shall
immediately pay to Lessor a sum of money equal to the amount, if any, by which
the then cash value of the rent reserved hereunder, for the balance of the term
of this lease exceeds the then cash reasonable rental value of the premises for
the balance of the term; or
(2) Without terminating this lease, relet the premises, or any
part thereof, as the agent and for the account of Lessee upon such terms and
conditions as Lessor may deem advisable, in which event the rents received on
such reletting shall be applied first to the expense of such reletting and
collection, including necessary renovation and alterations of the premises,
reasonable attorney's fees, any real estate commissions paid, and thereafter
toward payment if all sums due hereunder, and if a sufficient sum is not thus
realized to pay such sums and other charges, Lessee shall pay Lessor any
deficiency monthly, notwithstanding Lessor may have received rent in excess of
the rent stipulated in this lease in previous or subsequent months, and Lessor
may bring an action therefor as such monthly deficiency shall arise.
Any such re-entry shall be allowable by Lessee without let or
hindrance, and Lessor shall not be liable in damages for any such re-entry, or
guilty of trespass or forcible entry.
No re-entry and taking possession of the premises by Lessor shall be
construed as an election on Lessor's part to terminate this lease, regardless of
the extent of renovations and alteration by Lessor, unless a written notice of
such intention is given to Lessee by Lessor.
<PAGE>
Notwithstanding any reletting without termination, Lessor may at any time
thereafter terminate this lease for such previous breach.
22. SURRENDER: The voluntary or other surrender of this lease by
Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Lessor, terminate all or any existing subleases or subtenancies,
or may, at the option of Lessor, operate as an assignment to Lessor of any or
all such subleases or subtenancies.
23. REMOVAL OF PROPERTY: Lessee hereby irrevocably appoints Lessor as
agent and attorney in fact of Lessee, to enter upon the premises, in the event
of default by Lessee in the payment of any rent herein reserved, or in the
performance of any term, covenant, or condition herein contained to be kept or
performed by Lessee, and to remove any and all furniture and personal property
whatsoever situated upon the premises, and to place such property in storage for
the account of and at the expense of Lessee. In the event that Lessee shall not
pay the cost of storing any such property after the property has been stored for
a period of ninety (90) days or more, Lessor may sell any or all of such
property, at public or private sale, in such manner and at such times and places
as Lessor in its sole discretion may deem proper, without notice to Lessee or
any demand upon Lessee for the payment of any part of such charges or the
removal of any such property, and shall apply the proceeds of such sale first to
the cost and expenses of such sale, including reasonable attorney's fees
actually incurred; second, to the payment of costs of or charges for storing any
such property; third, to the payment of any other sums of money which may then
or thereafter be due to Lessor form Lessee under any of the terms; and, fourth,
the balance, if any, to Lessee.
24. TRANSFER OF SECURITY: Lessor may transfer or deliver any security
given by Lessee to secure the faithful performance of any of the covenants of
this lease to the purchaser or successor of Lessor's interest in the premises,
and thereupon Lessor shall be discharged from any further liability in reference
thereto.
25. WAIVER: The waiver by Lessor or Lessee of any breach of any term,
covenant, or condition herein contained shall not be deemed to be a waiver of
such term, covenant, or condition or any subsequent breach of the same or any
other term, covenant, or condition herein contained. The subsequent acceptance
of rent hereunder by Lessor shall not be deemed to be a waiver of any preceding
breach by Lessee of any term, covenant, or condition of this lease, other than
the failure of Lessee to pay the particular rent so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of such
rent.
26. HOLDING OVER: Any holding over after the expiration of the term,
with the consent of Lessor, shall be construed to be a tenancy from month to
month on the same terms and conditions specified herein so far as applicable.
27. ATTORNEY'S FEES: If any action at law or in equity shall be
brought to recover any rent under this lease, or for or on account of any breach
of or to enforce or interpret any of the terms, covenants, agreements, or
conditions of this lease, or for the recovery of the possession of the premises,
the prevailing party shall be entitled to recover from the other party as a part
of the prevailing party's costs a reasonable attorney's fee, the amount of which
shall be fixed by the court and shall be made a part of any judgement rendered.
<PAGE>
28. NOTICES: All notices to be given to Lessee may be given in
writing personally or by depositing the same in the United States mail, postage
prepaid, and addressed to Lessee at the premises, whether or not the Lessee has
departed from, abandoned, or vacated the premises. Notice to Lessor may be given
in writing personally or by depositing the same in U.S. mail, postage prepaid,
and addressed to Lessor at the address to which the rent is paid.
29. COMMISSIONS: Lessee warrants that Lessee has not had any dealings
with any realtor, broker, or agent, other than is specified in the Schedule
hereto, in connection with negotiating or securing this lease.
30. GENERAL PROVISIONS: This lease contains all of the terms,
covenants, and conditions agreed to by Lessor and Lessee and it may not be
modified orally or in any manner other than by an agreement in writing signed by
all of the parties to this lease or their respective successors in interest.
Each term and provision of this lease performable by Lessee shall be
construed to be both a covenant and a condition.
The covenants and conditions hereof, subject to the provisions as to
subletting and assignment, shall apply to and bind the heirs, successors,
executors, administrators, sublessees, and assigns of the parties.
All persons who have signed this lease shall be jointly and severally
liable hereunder. The person signing this agreement is not personally
---------------------------------------------------
guaranteeing Lessee's performance of this lease.
- ------------------------------------------------
When the context of this lease requires, the masculine gender includes
the feminine, a corporation, or partnership, and the singular number includes
the plural.
The captions of this lease are for convenience only and are not a part
of this lease and do not in any way limit or amplify the terms and provision of
this lease.
This lease shall be governed by and construed in accordance with the
laws of the State of California.
Time is the essence as to all of the provisions of this lease.
31. OTHER TERMS AND CONDITIONS:
. Late charges. Rent payments which are received later than five (5) days
------------
after the due date of the first, will incur a 10% late charge due and
payable immediately to Lessor.
. Holdover. The rental amount due for any holdover period will be the monthly
--------
rent amount last paid by Lessee to Lessor plus 25%. This amount will be due
and payable on the first day of each month of the holdover tenancy.
. Insurance. Lessee will show Lessor as Additional Insured on Lessee's
---------
certificate of insurance.
<PAGE>
. Rent: The rent schedule for the subject office space during the lease term
shall be as follows:
. January 1, 1999 through December 31, 1999
. January 1, 2000 through December 31, 2000
. January 1, 2001 through December 31, 2001
. January 1, 2002 through December 31, 2002
. Lessee Improvements. Lessor shall provide __________ (Lessee to coordinate
all work.) No other improvements are provided by Lessor. (Lessor shall
maintain and service the existing HVAC, electrical and plumbing systems,
and warrants that they are in working order as of the date of this lease.
Lessor is responsible for replacement of those existing base building
---------------------------------------------------------------------
systems (limited to HVAC units and roof) that occasionally wear out over
------------------------------------------------------------------------
time. No other representations or warranties are made whatsoever by Lessor
----
or Broker regarding the existing building conditions, Americans With
Disabilities Act compliance, or adequacy of said building systems for
Lessee's needs or employee and/or equipment loads. Any improvements,
modifications or increases to the base building systems required by Lessee
during the Lease Term will be the responsibility of Lessee.)
. Signage. Lessee shall be responsible for any and all costs associated with
-------
removal of signage, and/or damage at the end of the lease. Lessor will
provide building standard directory signage at written request from Lessee.
Lessee shall be responsible for additional building signage it may desire,
and, will conform to the City of Palo Alto Planning Department guidelines
and approval process's for same.
. Right of First Refusal. Lessee shall have the first right to refuse other
----------------------
building areas for lease that may from time to time become available during
the term of this lease. Lessee shall have five (5) business days to respond
to offers from the Lessor to lease said space, or, the first right will be
cancelled.
. Other Improvements. Lessor hereby permits Lessee to construct passages
-----------------------------------------------------------------------
through the exterior walls of the premises for the purposes of accessing
------------------------------------------------------------------------
the neighboring ground floor office space located in the building commonly
--------------------------------------------------------------------------
known as 410 Cambridge Avenue, Palo Alto, CA. Lessor makes no warranties
------------------------------------------------------------------------
regarding: 1) approval of the owner of 410 Cambridge Avenue, Palo Alto for
--------------------------------------------------------------------------
this work, 2) whether this work is permitted by the City of Palo Alto.
---------------------------------------------------------------------
Lessee shall be responsible for any and all costs associated with said work
---------------------------------------------------------------------------
and must as a minimum provide the following: 1) permitted plans for said
------------------------------------------------------------------------
work subject to both owners' approvals, 2) mechanically and electronically
--------------------------------------------------------------------------
activated fire rated doors. At the termination of this lease, and at the
------------------------------------------------------------------------
discretion of the Lessor, it may be required that the access areas be
---------------------------------------------------------------------
removed and filled in and put back in their original condition. Should any
---------------------------------------------------------------------------
other agency or body having jurisdiction over said work or improvements
-----------------------------------------------------------------------
require any action related to this work or these improvements, the Lessee
-------------------------------------------------------------------------
shall bear all costs, and respond timely to said required action.
----------------------------------------------------------------
32. RULES: The rules and regulations contained in this lease, as well
as such reasonable rules and regulations as may be hereafter adopted by Lessor
for the safety, care, and cleanliness of the premises and the preservation of
good order thereon, are hereby expressly made a part hereof, and Lessee agrees
to obey all such rules and regulations.
<PAGE>
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE
A. PEACEFUL ENJOYMENT: Lessee, its employees, and visitors
shall not interfere with the peaceful enjoyment of the premises by other
lessees, if any, or those having business with them. Lessee shall not permit the
placing of litter in or upon the building and grounds and shall not permit any
animals, bicycle, motorcycle, or vehicle to be brought into or kept in the
building.
B. MOVING HEAVY OBJECTS: Lessee shall be responsible to repair
any damage occasioned by the moving of freight, furniture, or other objects
within, or out of the building. No heavy objects of any nature shall be placed
upon any floor without Lessor's prior written approval, as to the adequacy of
the allowable floor loading at the point where the objects are intended to be
moved or stored. Lessor may specify the time of moving to minimize inconvenience
to other lessees, if any.
C. OBSTRUCTIONS, WASTE, MARKINGS: No drapes or sunscreens of
any nature shall be installed without Lessor's prior written approval. The sash
doors, sashes, windows, glass doors, lights, and skylights that reflect or admit
light into the building shall not be covered or obstructed. The toilets and
urinals shall not be used for any other purpose other than for which they were
constructed, and no rubbish, newspapers or other substances of any kind shall be
thrown into them. Waste and excessive or unusual use of water shall not be
allowed. Lessee shall not mark, drive nails, screw or drill into, paint, nor in
any way deface the walls, ceilings, partitions, floors, wood, stone or iron
work. The expense of repairing any breakage, stoppage, or damage resulting from
a violation of this rule shall be born by the Lessee who has caused such
breakage, stoppage, or damage.
D. LOCKS: No additional lock or locks shall be placed by Lessee
on any door unless written consent of Lessor shall first have been obtained. Two
keys will be furnished by Lessor. All keys shall be surrendered to Lessor upon
termination or expiration of the lease term.
E. JANITORIAL SERVICE: If Lessor supplies janitorial services
(which it does not), __________ without Lessor's prior consent, employ any
-----------------
person or persons, other than the janitor of Lessor, for the purpose of
cleaning the leased premises. Lessor shall not be responsible for the loss of
property from the leased premises, however occurring, or for any damage to any
Lessee occasioned by any of Lessor's employees or subcontractors or by any other
person.
F. OUTSIDE STORAGE: No materials, supplies, equipment, finished
products, or semi-finished products, raw materials, or articles of any nature
shall be stored upon or permitted to remain on any portion of the leased
premises outside of the building constructed thereon, except with the prior
written consent of the Lessor.
G. OTHER RULES: Lessor reserves the right to make such other
rules and regulations, including parking regulations, as in Lessor's judgment
may from time to time be necessary for the safety, cleanliness, and orderly
operation of the leased premises.
<PAGE>
Lessee agrees to require its employees to abide by any such rules and
regulations, including parking regulations.
33. SCHEDULE: The following Schedule is a part of this lease:
Visionael Corporation.
1. DESCRIPTION OF PREMISES: 390 Cambridge Avenue, (Ground
Floor), Palo Alto, CA.
2. TERM: 48 months commencing January 1, 1999, and ending at
5:00 P.M. on December 31, 2002.
3. RENT: $ See paragraph 31 per month, payable in equal monthly
----------------
installments in said amount in advance on the first day of each month,
commencing January 1, 1999, and continuing on the same day of each month for the
balance of the term. Rent shall be payable to Lessor at: 852 Los Robles Road,
Palo Alto, CA 94306 or at such other place as Lessor may designate in writing.
Lessor acknowledges receipt of the following rent upon execution of this lease:
(first month's rent) and (Security Deposit).
4. DEPOSIT: $_____, receipt of which is hereby acknowledged.
5. USE OF PREMISES: Professional office uses, or, other
-----------------------------------
legally allowable uses in the event Lessee subleases the subject premises. In
- -----------------------------------------------------------------------------
the event of said subleasing, Lessor and Lessee shall reconcile periodically the
- --------------------------------------------------------------------------------
expenses of operation of the building with said sublessee in place to ensure
- ----------------------------------------------------------------------------
that Lessor does not experience ANY increase in operation of the property
- -------------------------------------------------------------------------
relative to the sublease and sublessee. In the event expenses are determined to
- -------------------------------------------------------------------------------
have risen, Lessee shall pay Lessor the difference between the historical
- -------------------------------------------------------------------------
expenses and those related to the sublease.
- ------------------------------------------
6. REPRESENTATIONS RE CONDITION OF PREMISES: See paragraph 31.
7. SERVICES TO BE PROVIDED BY LESSOR: Utilities, heating and
air conditioning five (5) days per week Monday through Friday, 8:00 A.M. to 5:00
P.M. (Not included are, but are not limited to the following: Phone system
charges or related connection fees, and janitorial service within the leased
premises.)
8. LEASEHOLD IMPROVEMENTS TO BE PROVIDED BY LESSOR: See
---
paragraph 31.
- ------------
9. REMOVAL OF PROPERTY: At any time Lessee may, and prior to
the end of the lease term Lessee shall, remove from the premises furniture,
equipment, and other personal property installed by Lessee or at Lessee's
expense. Lessee shall not remove any fixtures or leasehold improvements without
Lessor's prior written consent, except the following: fixtures installed by
Lessee which can be removed without damage to the building.
Upon Lessor's written request, Lessee shall remove the following fixtures and
leasehold improvements: None.
----
<PAGE>
Lessee shall repair any damage to the premises cause by removal of any property,
and shall restore the premises to its condition at the commencement of the term,
less reasonable wear and tear. All of such removal and restoration shall be
accomplished at Lessee's expense prior to the end of the lease term.
10. LESSEE'S INSURANCE:
$1,000,000.00 for injuries to any person
$1,000,000.00 for injuries in any one accident
$1,000,000.00 for damage to property
11. TAXES: Base Tax Year 1998-1999
Total square feet of lessee's premises 3,849
Total leasable square feet of the building 9,915
12. PARKING: Public only
13. BROKER: Alhouse . Deaton Management & Leasing, Inc., and,
Cornish & Carey Commercial
14. RENEWAL OPTION: Lessee shall have the option to renew this
lease, if at no previous time during the term of the Lease the Lessee was in
default, for one additional period of sixty (60) months following the expiration
of the original term, upon giving written notice to Lessor at least ninety (90)
days before the expiration of the original term, of Lessee's election to
exercise this renewal option. The extended term shall be upon all of the terms
and conditions contained in this lease, including, but not limited to, the same
property tax increase clause applicable to the original term, except that the
rent shall be: January 1, 2003 through December 31, 2003 _________ per month,
January 1, 2004 through December 31, 2004 _________ per month, January 1, 2005
through December 31, 2005 _________ per month, January 1, 2006 through December
31, 2006 _________ per month, January 1, 2007 through December 31, 2007
_________ per month.
15. RENEWAL COMMISSION: In the event Lessee elects to exercise
said option to renew, Lessor shall thereupon pay to broker the sum of $ n/a as
-----
additional real estate commission, or in the alternative, 3% percent of the
annual rental for the first year of the option period.
EXECUTED as of this __________ day of __________, 19__
LESSOR: LESSEE: Visionael Corporation
__________________________________ _______________________________________
James H. Jepsen By: Mr. Marc Jones, CEO (An Authorized
Officer)
__________________________________ _______________________________________
Date Date
<PAGE>
AMENDMENT TO SUBLEASE
This Amendment to Sublease is entered into as of the 29th day of June,
1999, and amends that certain Sublease Agreement (the "Sublease") by and between
VISIONAEL CORPORATION, a Delaware corporation ("Sublandlord") and INTERNET
TRAVEL NETWORK, a California Corporation, ("Subtenant") dated as of October 30,
1998, regarding the Sublease of space located at 390 Cambridge Avenue, Palo
Alto, California.
RECITALS
--------
A. The parties entered into Sublease as set forth above and now
desire to amend the Sublease to extend the term of the Sublease to terminate on
October 31, 1999 or sooner upon sixty (60) days notice from Subtenant to
Sublandlord. All other items and conditions of the Sublease are to remain in
effect.
NOW, THEREFORE, for due consideration, the parties agree to amend the
Sublease as follows:
1. Paragraph 5.1 of the Sublease is amended to change the termination
date from July 31, 1999 to October 31, 1999 or sooner upon sixty (60) days prior
written notice from subtenant to Sublandlord (but not to terminate before August
1, 1999).
2. Except as specifically amended hereto, the sublease remains in
full force and effect and unchanged in all other respects.
3. This Amendment to Sublease may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute one in
the same instrument, and verification of the execution of this Amendment can be
by facsimile copies of the signatures exchanged between the parties.
Executed as of the date set forth above.
SUBLANDLORD SUBTENANT
- ----------- ---------
Visionael Corporation Internet Travel Network
a Delaware Corporation a California Corporation
By: ______________________________ By: _______________________________
Its: CFO Its: Dir. of Real Estate
----------------------------- ------------------------------
(Title) (Title)
By: ______________________________ By: _______________________________
Its: _____________________________ Its: ______________________________
(Title) (Title)
<PAGE>
Sublandlord: VISIONAEL CORPORATION, A DELAWARE CORPORATION
By: ________________________________ Date: 11/4/98
-----------------------------
Subtenant: INTENT TRAVEL NETWORK, A CALIFORNIA CORPORATION
By: ________________________________ Date: 11/3/98
-----------------------------
NOTICE TO SUBLANDLORD AND SUBTENANT: CORNISH & CAREY COMMERCIAL, IS NOT
AUTHORIZED TO GIVE LEGAL OR TAX ADVICE; NOTHING CONTAINED IN THIS SUBLEASE OR
ANY DISCUSSIONS BETWEEN CORNISH & CAREY AND SUBLANDLORD AND SUBTENANT SHALL BE
DEEMED TO BE A REPRESENTATION OR RECOMMENDATION BY CORNISH & CAREY COMMERCIAL,
OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
DOCUMENT OR ANY TRANSACTION RELATING THERETO. ALL PARTIES ARE ENCOURAGED TO
CONSULT WITH THEIR INDEPENDENT FINANCIAL CONSULTANTS AND/OR ATTORNEYS REGARDING
THE TRANSACTION CONTEMPLATED BY THIS PROPOSAL.
Attachment I Master Lease
MASTER LANDLORD CONSENT
The undersigned, Lessor under the Master Lease attached as Attachment I, hereby
consents to the subletting of the Subleased Premises described herein on the
terms and conditions contained in this Sublease. This Consent shall apply only
to this Sublease and shall not be deemed to be a consent to any other Sublease.
Landlord: JAMES H. JESPEN
By: _______________________________ Date: 11/7/98
--------------------------------
<PAGE>
1. Parties:
This Sublease is made and entered into as of October 30, 1998, by and
between Visionael Corporation, a Delaware Corporation ("Sublandlord"), and
Internet Travel Network, a California corporation ("Subtenant"), under the
Master Lease dated July 16, 1998, between James H. Jepsen, as "Lessor" and
Sublandlord under this Sublease as "Lessee." A copy of the Master Lease is
attached hereto as Attachment I and incorporated herein by this reference.
2. Provisions Constituting Sublease:
2.1 This Sublease is subject to all of the terms and conditions of
the Master Lease. Subtenant hereby assumes and agrees to perform all of the
obligations of "Lessee" under the Master Lease to the extent said obligations
apply to the Subleased Premises and Subtenant's use of the Common Areas, except
as specifically set forth herein. Sublandlord hereby agrees to comply with all
the terms and conditions of the Master Lease and to cause Lessor under the
Master Lease to perform all of the obligations of Lessor thereunder to the
extent said obligations apply to the Subleased Premises and Subtenant's use of
the Common Areas. Subtenant shall not commit or permit to be committed on the
Subleased Premises or on any other portion of the Project any act or omission
which violates any term or condition of the Master Lease. Except to the extent
waived or consented to in writing by the other party or parties hereto who are
affected thereby, neither of the parties hereto will, by renegotiation of the
Master Lease, assignment, subletting, default or any other voluntary action,
avoid or seek to avoid the observance or performance of the terms to be observed
or performed hereunder by such party, but will at all times in good faith assist
in carrying out all the terms of this Sublease and in taking all such action as
may be necessary or appropriate to protect the rights of the other party or
parties hereto who are affected thereby against impairment. Nothing contained in
this Section 2.1 or elsewhere in this Sublease shall prevent or prohibit
Sublandlord upon at least 30 calendar days prior written notice to Subtenant (a)
from exercising its right to terminate the Master Lease pursuant to the terms
thereof or (b) from assigning its interest in this Sublease or subletting the
Premises to any other third party.
2.2 All of the terms and conditions contained in the Master Lease are
incorporated herein, except as specifically provided below, and the terms and
conditions specifically set forth in this Sublease, shall constitute the
complete terms and conditions of this Sublease, except the following paragraphs
of the Master Lease which shall solely be the obligation of Sublandlord:
Paragraphs: 2. Term and Rent, 3. Deposit 31. Rent, Lessee
Improvements, Right of First Refusal, 33.2 Term, 33.3 Rent, 33.4 Deposit, 33.8
Leasehold Improvements to be Provided by Lessor, 33.13 Broker, 33.14 Renewal
option, 33.15 Renewal commission
3. Subleased Premises and Rent:
3.1 Subleased Premises:
Sublandlord leases to Subtenant and Subtenant leases from Sublandlord
the Subleased Premises upon all of the terms, covenants and conditions contained
in this Sublease. The Subleased Premises consist of approximately 3,849 +
-
rentable square feet, located at
<PAGE>
390 Cambridge Avenue, Palo Alto, CA. The Premises shall be delivered by
Sublandlord at its sole expense, in broom clean condition with the carpets
cleaned, walls painted, and building systems operational by the commencement
date set forth in the Lease between Subtenant and Lessor.
3.2 Rent:
Subtenant shall pay to Sublandlord as Rent for the Subleased Premises
the sum of Eleven Thousand One Hundred Sixty Two and 10/100 Dollars ($11,162.10)
per month, without deductions, offset, prior notice or demand. Rent shall be
payable by Subtenant to Sublandlord in consecutive monthly installments on or
before the first day of each calendar month during the Sublease Term. If the
Sublease commencement date or the termination date of the Sublease occurs on a
date other than the first day or the last day, respectively, of a calendar
month, then the Rent for such partial month shall be prorated and the prorated
Rent shall be payable on the Sublease commencement date or on the first day of
the calendar month in which the Sublease termination date occurs, respectively.
The above stated rent shall be fully serviced, inclusive of all operating
expenses, excepting janitorial costs which shall be paid by Subtenant.
3.3 Security Deposit:
In addition to the Rent specified above, Subtenant shall pay to
Sublandlord Eleven Thousand One Hundred Sixty Two and 10/100 Dollars
($11,162.10) rent as a noninterest bearing Security Deposit. In the event
Subtenant has performed all of the terms and conditions of this Sublease during
the term hereof, Sublandlord shall return to Subtenant, within ten days after
Subtenant has vacated the Subleased Premises, the Security Deposit less any sums
due and owing to Sublandlord.
4. Rights of Access and Use:
4.1 Use:
Subtenant shall use the Subleased Premises only for those purposes
permitted in the Master Lease, unless Sublandlord and Master Landlord consent in
writing to other uses prior to the commencement thereof.
5. Sublease Term:
5.1 Sublease Term:
The Sublease Term shall be for the period commencing January 1, 1999,
and continuing through July 31, 1999. In no event shall the Sublease Term
extend beyond the Term of the Master Lease.
6. Notices:
All notices, demands, consents and approvals which may or are required
to be given by either party to the other hereunder shall be given in the manner
provided in the Master Lease, at the addresses shown on the signature page
hereof. Sublandlord shall notify Subtenant
<PAGE>
of any Event of Default under the Master Lease, or of any other event of which
Sublandlord has actual knowledge which will impair Subtenant's ability to
conduct its normal business at the Subleased Premises, as soon as reasonably
practicable following Sublandlord's receipt of notice from the Landlord of an
Event of Default or actual knowledge of such impairment. If Sublandlord elects
to terminate the Master Lease, Sublandlord shall so notify Subtenant by giving
at least 30 days notice prior to the effective date of such termination.
7. Broker Fee:
Upon execution of the Sublease, Sublandlord shall pay Cornish & Carey
Commercial and the Staubach Company, licensed real estate brokers, fees set
forth in a separate agreement between Sublandlord and Broker.
8. Compliance With Americans With Disabilities Act:
Subtenant shall be responsible for the installation and cost of any
and all improvements, alterations or other work required on or to the Subleased
Premises or to any other portion of the property and/or building of which the
Subleased Premises are a part, required or reasonably necessary because of: (1)
Subtenant's particular use of the Subleased Premises or any portion thereof; (2)
the particular use by a subtenant by reason of assignment or sublease; or (3)
both, including any improvements, alterations or other work required under the
Americans With Disabilities Act of 1990. Compliance with the provisions of this
Section 8 shall be a condition of Sublandlord granting its consent to any
assignment or Sublease of all or a portion of this Sublease and the Subleased
Premises described in this Sublease.
9. Compliance With Nondiscrimination Regulations:
It is understood that it is illegal for Sublandlord to refuse to
display or sublease the Subleased Premises, or to assign, surrender or sell the
Master Lease, to any person because of race, color, religion, national origin,
sex, sexual orientation, marital status or disability.
10. Toxic Contamination Disclosure:
Sublandlord and Subtenant each acknowledge that they have been advised
that numerous federal, state, and/or local laws, ordinances and regulations
("Laws") affect the existence and removal, storage, disposal, leakage of and
contamination by materials designated as hazardous or toxic ("Toxics"). Many
materials, some utilized in everyday business activities and property
maintenance, are designated as hazardous or toxic.
Some of the Laws require that Toxics be removed or cleaned up by
landowners, future landowners or former landowners without regard to whether the
party required to pay for "clean up" caused the contamination, owned the
property at the time the contamination occurred or even knew about the
contamination. Some items, such as asbestos or PCBs, which were legal when
installed, now are classified as Toxics, and are subject to removal
requirements. Civil lawsuits for damages resulting from Toxics may be filed by
third parties in certain circumstances.
<PAGE>
Sublandlord and Subtenant each acknowledge that Broker has no specific
expertise with respect to environmental assessment or physical condition of the
Subleased Premises, including, but not limited to, matters relating to: (i)
problems which may be posed by the presence or disposal of hazardous or toxic
substances on or from the Subleased Premises, (ii) problems which may be posed
by the Subleased Premises being within the Special Studies Zone as designated
under the Alquist-Priolo Special Studies Zone Act (Earthquake Zones), Section
2621-2630, inclusive of California Public Resources Code, and (iii) problems
which may be posed by the Subleased Premises being within a HUD Flood Zone as
set forth in the U.S. Department of Housing and Urban Development "Special Flood
Zone Area Maps," as applicable.
Sublandlord and Subtenant each acknowledge that Broker has not made an
independent investigation or determination of the physical or environmental
condition of the Subleased Premises, including, but not limited to, the
existence or nonexistence of any underground tanks, sumps, piping, toxic or
hazardous substances on the Subleased Premises. Subtenant agrees that it will
rely solely upon its own investigation and/or the investigation of professionals
retained by it or Sublandlord, and neither Sublandlord nor Subtenant shall rely
upon Broker to determine the physical and environmental condition of the
Subleased Premises or to determine whether, to what extent or in what manner,
such condition must be disclosed to potential sublessees, assignees, purchasers
or other interested parties.
<PAGE>
Exhibit 10.14
BUSINESS PARK LEASE
THIS LEASE is made this 10th day of June, 1999, between CAMPBELL AVENUE
ASSOCIATES, a California partnership, herein referred to as "Landlord," and
INTERNET TRAVEL NETWORK, a California corporation, herein referred to as
"Tenant."
WITNESSETH:
ARTICLE 1 - Premises and Term
Section 1.1. Landlord hereby leases to Tenant and Tenant hereby leases
------------
from Landlord the demised premises, including the building and other
improvements thereon, consisting of approximately 65,839 square feet of gross
floor area and located at 4045 Campbell Avenue, Menlo Park, California (as
described in Exhibit "A" and located substantially as shown on Exhibits "A-1"
----------- --------------
and "B" attached hereto), upon and subject to the terms and provisions of this
- -------
Lease for a demised term of five (5) years, commencing on June 1, 1999, and
ending on May 31, 2004.
Within thirty (30) days after execution of this Lease by both parties,
Tenant shall have the right to re-measure the building on the demised premises
leased herein, and if the square footage thereof is more or less than 65,839
gross square feet of Floor Area (as that term is defined in Section 19.19.
hereof), the base rent and all items of additional rent which are calculated on
the basis of square footage shall each be adjusted on a pro-rata basis
accordingly. Should Tenant exercise its right to re-measure the building leased
herein, then the same shall be done by a licensed architect and is subject to
Landlord's review and approval.
Should Landlord and Tenant agree on a square footage for the building other
than 65,839 gross square feet of Floor Area, then Landlord and Tenant shall
execute a statement or Amendment to this Lease confirming the square footage of
the building and the base rent for each year of the demised term, based on the
re-measured square footage of the building on the demised premises.
Section 1.2. Provided Tenant is not, at the time of giving the notice
-----------
described below or at any time thereafter until commencement of the option term,
in default under any of the terms, conditions and covenants of this Lease beyond
applicable cure periods (which default has not been timely cured), and subject
to the terms and conditions set forth hereinbelow, Tenant shall be granted the
option to extend the demised term of this Lease for one (1) period of five (5)
years.
(a) Tenant shall notify Landlord in writing of Tenant's exercise of
the option to extend the Lease at least two hundred seventy (270) days prior to
the expiration of the initial term; and
(b) The option term will commence on the day after the expiration of
the initial term and shall terminate five (5) years later; and
<PAGE>
(c) The base rent for each year of the option term shall equal the
greater of (i) the previous year's base rent, or (ii) the Fair Market Rental
Value (hereinafter defined (of the demised premises. "Fair Market Rental Value"
shall mean the annual base rent (including interim adjustments) that the
Landlord would receive as of the commencement date of the extension term if it
were to lease the demised premises pursuant to the terms of this Lease (except
to the extent that this Lease is inconsistent with the assumptions and
requirements set forth below), for a term equal to the period in question and in
an "as is" condition. In determining the Fair Market Rental Value, comparable
transactions in the area located South of Highway 101 and East of Marsh Road and
------------------------------------------------------------
contained within the City of Menlo Park shall be considered, including, without
- --------------------
limitation, landlord and tenant inducements, such as rental concessions, tenant
improvement allowance and rental increases, if and to the extent then a part of
market conditions. The rent on comparable leases shall be adjusted to reflect
the value or cost of such inducements since neither Landlord nor Tenant shall
have any obligation to pay or perform any such inducements (except for rental
increases if applicable). Landlord and Tenant shall agree on the Fair Market
Rental Value in accordance with Section 19.20 below; and
-------------
(d) The option to extend can be exercised only by Internet Travel
Network for its sole use of the demised premises and may not be transferred or
assigned to any subleassee, assignee or other party, nor may this option be
exercised by Internet Travel Network for the use of the premises by any
sublessee, assignee or party other than Internet Travel Network, except that the
---------------
option may be transferred to a Permitted Transferee as set forth in Article 6
- -----------------------------------------------------------------------------
and;
(e) There shall be no further option to extend the demised term.
ARTICLE 2 - Rent
Section 2.1. Tenant covenants and agrees to pay to Landlord without set-
------------
off, recoupment, deduction or demand of any nature whatsoever, base rent for
each year during the demised term as follows: for the first (1st) year during
the demised term the amount of One Million Eighty Thousand Dollars
($1,080,000.00) per annum, payable in twelve (12) equal monthly installments of
Ninety Thousand Dollars ($90,000,00); for the second (2nd) year during the
demised term the amount of One Million Three Hundred Thirty-Nine Thousand Three
Hundred Fifty-Six Dollars ($1,339,356.00), payable in twelve (12) equal monthly
installments of One Hundred Eleven Thousand Six Hundred Thirteen Dollars
($111,613.00); for the third (3rd) year during the demised term the amount of
One Million Three Hundred Eighty-Six Thousand Two Hundred Forty Dollars
($1,386,240.00), payable in twelve (12) equal monthly installments of One
Hundred Fifteen Thousand Five Hundred Twenty Dollars ($115,520.00); for the
fourth (4th) year during the demised term the amount of One Million Four Hundred
Thirty-Four Thousand Seven Hundred Fifty-Six Dollars ($1,434,756.00), payable in
twelve (12) equal monthly installments of One Hundred Nineteen Thousand Five
Hundred Sixty-Three Dollars ($119,563.00); and for the fifth (5th) year during
the demised term the amount of One Million Four Hundred Eighty-Four Thousand
Nine Hundred Seventy-Six Dollars ($1,484,976.00), payable in twelve (12) equal
monthly installments of One Hundred Twenty-Three Thousand Seven Hundred Forty-
Eight Dollars ($123,748.00). Base rent shall be paid monthly in advance on the
first (1st) day of each calendar month.
2
<PAGE>
Section 2.2. For the purpose of this Lease, a year shall be twelve (12)
------------
calendar months, commencing with the first day of the first full calendar month
of the demised term and the succeeding anniversaries thereof. For any period
prior to the commencement of the first year or subsequent to the end of the last
year of the demised term, rent shall be prorated on the basis of the rental rate
then payable.
Section 2.3. All sums payable and all statements deliverable to Landlord
------------
by Tenant under this Lease shall be paid and delivered at 60 Hillsdale Mall, San
Mateo, California, 94403-3497, or at such other place as Landlord may from time
to time direct by notice to Tenant and all such sums shall be paid in lawful
money of the United States.
Section 2.4. Upon execution of this Lease,
------------
(a) Tenant shall pay to the Landlord Ninety Thousand Dollars
($90,000.00), which shall be applied by Landlord to the first base rent to
become due and payable under this Lease, and
(b) Tenant shall provide Landlord with an unconditional, clean,
irrevocable, standby letter of credit (the "Letter of Credit"), payable on sight
with the bearer's draft in the amount of Eight Hundred Five Thousand Dollars
($805,000.00) (the "Initial Amount") issued by and drawn on an institution as
may be reasonably acceptable to Landlord (the "Issuing Bank"). The Letter of
Credit shall permit partial drawings and state that it shall be payable against
site drafts presented by Landlord, accompanied by Landlord's certificate that a
default in the payment of base rent or additional rent exists under the Lease
that has not been remedied within any applicable cure period and that said
drawing is in accordance with the terms and conditions of this Lease; no other
document or certification from Landlord shall be required to negotiate the
Letter of Credit. Landlord shall only have the right to draw upon the Letter of
Credit to the extent of the amount of base rent or additional rent that is
delinquent. Landlord may designate any bank as Landlord's advising bank for
collection purposes and any site drafts for the collection of the Letter of
Credit may be presented by the advising bank on Landlord's behalf.
This Letter of Credit shall be for an initial term of one (1) year, and
shall be acceptable to Landlord in both form and substance and shall be deemed
to have renewed without amendment, except to the extent as set forth herein, for
consecutive periods of one year each thereafter during the demised term hereof,
including any option period, unless the Issuing Bank sends notice (the "Non-
Renewal Notice") to Landlord by certified mail, return receipt requested, not
less than sixty (60) days next preceding the then expiration date of the Letter
of Credit that it elects not to renew such Letter of Credit. The Letter of
Credit shall provide that Landlord shall have the right exercisable within
forty-five (45) days of its receipt of the Non-Renewal Notice by site draft on
the Issuing Bank, to receive all or part of the monies of one or more draws in
the amount of the then existing Letter of Credit and Landlord shall hold such
proceeds pursuant to the terms of this Section 2.4. (B) and Section 19.9. unless
and until a replacement Letter of Credit is provided. The amount of the Letter
of Credit shall, provided Tenant is not in material default under the Lease
beyond any applicable notice and cure period, be reduced at the commencement of
each of the following years of the demised term such that the Security Deposit
remaining during the following years shall be the following amounts:
3
<PAGE>
Year Remaining Security Deposit
---- --------------------------
2 $696,000.00
3 $522,000.00
4 $348,000.00
5 and following $174,000.00
Upon failure of Tenant to pay base rent or additional rent within ten (10)
days after Tenant's receipt of written notice from Landlord that such sum is
due, Landlord shall be entitled to draw against the Letter of Credit in the
amount of the delinquent base rent or additional rent.
Landlord shall not be required to exhaust its remedies against Tenant
before having recourse to the Letter of Credit or to any other form of security
held by Landlord or to any other remedy available to Landlord at law or in
equity.
Section 2.5. In addition to base rent under Section 2.1., all other
------------ ------------
payments to be made under this Lease by Tenant to Landlord shall be deemed to be
and shall become additional rent hereunder, whether or not the same to be
designated as such, and shall be included in the term "rent" wherever used in
this Lease; and, unless another time shall be expressly provided for the payment
thereof, all rent and additional rent shall be due and payable together with the
next succeeding installment of base rent; and Landlord shall have the same
remedies for failure to pay the same as for a nonpayment of base rent.
Section 2.6. Any amount due from Tenant to Landlord that is not paid
------------
within five (5) days after written notice that such amount is due shall bear
interest at the lesser of (i) twelve percent (12%) per annum, or (ii) the
highest rate then permitted to be charged on late payments under leases under
California law; provided, however, the payment of any such interest shall not
excuse or cure the default upon which such interest accrued. Tenant acknowledges
and agrees that payment of such interest on late payments is reasonable
compensation to Landlord for the additional costs incurred by Landlord caused by
such late payment, including, but not limited to, collection and administration
expenses and the loss of the use of the money that was late in payment.
ARTICLE 3 - Landlord's Work - Tenant's Work
Section 3.1. Landlord shall not be required to perform any work in the
------------
demised premises; and, subject to the provisions of Section 11.5., Tenant
-------------
accepts the demised premises in an "as is" condition.
Section 3.2. Tenant shall provide, at Tenant's sole cost, certain interior
------------
improvements ("Tenant Improvements") in accordance with detailed plans and
specifications therefor which must be approved, in writing, by Landlord or
Landlord's architect before work is commenced (which approval shall not be
unreasonably withheld) and which plans, once approved, shall become Exhibit "C"
-----------
hereto. Tenant shall furnish Landlord with a set of "as built" plans in IBM-
compatible AutoCAD format or such other format which is compatible to Landlord's
computer aided design software after any such work is completed.
4
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ARTICLE 4 - Streets
Section 4.1. Tenant agrees to require employees, and to direct customers
------------
and other persons visiting Tenant, to park in the parking area provided in the
Parking and Accommodation Areas and to allow Landlord to post the streets for no
parking. Landlord represents that as of the commencement date of this Lease
there are a total of 170 parking spaces in the Parking and Accommodation Area
available for Tenant's non-exclusive use.
ARTICLE 5 - Utility Services
Section 5.1. Landlord represents that it has at its own cost and expense
------------
secured the installation of water, gas, sanitary sewers and electrical services
to the demised premises and made all necessary connections thereof to the
building and that the same will be fully operational and in good condition and
repair as of the date Landlord delivers the demised premises to Tenant. Tenant
shall pay all meter or service charges made by public utilities companies and
shall pay for the water, gas and/or electricity used on the demised premises and
sewer use fees and charges whether ad valorum or not and any so called "sewer
connection charges" based on increased wastewater discharge from the demised
premises exclusively. Tenant shall maintain such connections of utilities to the
building.
Section 5.2. Except for Landlord's or its agents' negligence or willful
------------
misconduct, Landlord shall not be liable to Tenant for the failure of any
utility services.
ARTICLE 6 - Assignment - Change of Ownership
Section 6.1.
------------
A. Except as otherwise provided herein, Tenant shall not, by operation of
law or otherwise, transfer, assign, sublet, change ownership, mortgage or
hypothecate this Lease or the Tenant's interest in and to the demised premises
without first procuring the written consent of Landlord. Any attempted transfer,
assignment, subletting, license or concession agreement, change of ownership,
mortgage or hypothecation without Landlord's written consent shall be void and
confer no rights upon any third person. Landlord's consent to a proposed
assignment or sublease shall not be unreasonably withheld provided that the
proposed assignee or sublessee shall have: (i) the financial capacity, at the
time of the assignment or sublease, determined in accordance with good
accounting principles, to fulfill all of the obligations of Tenant hereunder;
and (ii) a good reputation in the business community; provided further that
Tenant shall give Landlord not less than fifteen (15) days notice prior to the
effective date of any such assignment or sublease, and Landlord shall have the
option to terminate this Lease with respect to the space to be assigned or
subleased (if the space to be subleased is, or when combined with other
subleases then in effect would cause the total square footage of the demised
premises subleased to be, more than fifty percent (50%) in the aggregate of the
demised premises, except to a Permitted Transferee as hereafter defined) by
notice to Tenant given within fifteen (15) days of Landlord's receipt of
Tenant's notice. Nothing herein contained shall relieve Tenant and any Guarantor
from its covenants and obligations for the demised term. Tenant agrees to
reimburse Landlord for Landlord's reasonable outside attorneys' fees incurred in
conjunction with the processing and documentation of any such requested
transfer, assignment, subletting, change of
5
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ownership, mortgage or hypothecation of this Lease or Tenant's interest in and
to the demised premises (not to exceed One Thousand Dollars [$1,000.00]). If
Landlord consents to any assignment or sublease pursuant to this Article, Tenant
shall pay Landlord, as additional rent, eighty five percent (85%) of the
Sublease Premium derived from that sublease or assignment. "Sublease Premium"
shall mean all rent, additional rent, and/or other monies, property, and other
consideration of every kind whatsoever received by Tenant from the subtenant or
assignee for, or by reason of, the sublease or assignment (including all amounts
received by Tenant for, attributable to, any Included Property), LESS:
(a) commissions actually paid by Tenant to procure the sublease or
assignment to an independent third party licensed real estate broker and outside
attorneys' fees actually paid by Tenant, commencing with the date on which the
sublease or assignment term commences;
(b) the actual cost of leasehold improvements undertaken by Tenant
(subject to Landlord's prior written consent) solely to prepare the subleased or
assigned space for the subtenant or assignee;
(c) the unamortized cost of Included Property, if any, determined on
a straight-line basis over the period of the term of the sublease or assignment,
as certified to Landlord by Tenant's independent certified public accountant (at
Tenant's expense); and
(d) fixed rent and additional rent (including utilities) allocable to
the space covered by a sublease (as reasonably determined by Landlord, taking
into account the useable area of the premises demised under the sublease).
The term "Included Property" means all property by Tenant transferred in
ownership to the subtenant or assignee as part of the transaction (including,
but not limited to, fixtures and other leasehold improvements installed by
Tenant at its cost and expense and, to the extent Tenant receives consideration
in excess of fair market value, furniture, equipment, and furnishings).
Tenant shall pay the Sublease Premium to Landlord as and when Tenant
receives payment from such subtenant or assignee.
Notwithstanding anything to the contrary herein, Tenant may, without
Landlord's prior written consent, sublet the demised premises or assign the
Lease to ("Permitted Transferee"): (a) a subsidiary, affiliate, division or
corporation controlling, controlled by or under common control with Tenant; (b)
a successor corporation related to Tenant by merger, consolidation,
nonbankruptcy reorganization or governmental action (provided such surviving
corporation succeeds to all or substantially all of Tenant's assets); or (c) a
purchaser of all or substantially all of Tenant's assets provided that, in any
event, any such Permitted Transferee shall agree in writing, in form reasonably
satisfactory to Landlord, to assume, to be bound by, and to perform the terms,
covenants and conditions of this Lease to be done, kept and performed by Tenant,
including (in the case of an assignment) the payment of all amounts due or to
become due under this Lease directly to Landlord, without any modification of
this Lease. Tenant shall provide Landlord with the following no later than ten
(10) days prior to the effective date of the proposed
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transfer: (i) the name and address of the Permitted Transferee, and (ii) a copy
of the proposed sublet or assignment agreement, and (iii) such reasonable
information as may be requested by Landlord to substantiate that the proposed
assignee or sublessee qualifies as a Permitted Transferee under the definition
set forth in this Section 6.1(A). Nothing herein contained shall be construed as
--------------
releasing Tenant from any of its liabilities or other obligations hereunder,
including the payment of rent.
For the purposes of this Lease, the sale of Tenant's capital stock through
any bona fide public exchange or issuances for purposes of raising financing
shall not be deemed on an assignment, subletting or any other transfer of this
Lease or the demised premises.
B. Each transfer, assignment, subletting, mortgage and hypothecation to
which there has been consent shall be by an instrument in writing in form
satisfactory to Landlord, and shall be executed by the transferor, assignor,
sublessor, hypothecator or mortgagor and the transferee, assignee, sublessee,
licensee, concessionaire or mortgagee in each instance, as the case may be; and
each transferee, assignee, sublessee, or mortgagee shall agree in writing for
the benefit of Landlord herein to assume, to be bound by, and to perform the
terms, covenants and conditions of this Lease to be done, kept and performed by
Tenant, including the payment of all amounts due to become due under this Lease
directly or to Landlord. One (1) executed copy of such written instrument shall
be delivered to Landlord. Failure to first obtain in writing Landlord's consent
or failure to comply with the provisions of this Article shall operate to
prevent any such transfer, assignment, subletting, license, concession
agreement, mortgage, or hypothecation from becoming effective.
C. If Tenant hereunder is a corporation which, under the then current
laws of the State of California, is not deemed a public corporation, or is an
unincorporated association or partnership, the transfer, assignment or
hypothecation of any stock or interest in such corporation, association or
partnership in the aggregate in excess of fifty percent (50%) shall be deemed an
assignment within the meaning and provisions of this Section 6.1.
D. Landlord's rights to assign this Lease are and shall remain
unqualified. Upon any sale of the demised premises and provided the purchaser
assumes all obligations under this Lease (including the return of Tenant's
--------------------------------
security deposit). Landlord shall thereupon be entirely released of all
- -----------------
obligations of Landlord hereunder and shall not be subject to any liability
resulting from any act or omission or event occurring after such date.
E. The consent of Landlord to any transfer, assignment, sublease,
license, or concession agreement, change in ownership, mortgage or hypothecation
of this Lease is not and shall not operate as a consent to any future or further
transfer, assignment, sublease, license or concession agreement, change in
ownership, mortgage or hypothecation, and Landlord specifically reserves the
right to refuse to grant any such consents except as otherwise provided in this
Section 6.1.
- ------------
ARTICLE 7 - Tenant's Additional Agreements
Section 7.1. Tenant agrees at all times during the demised term to: (A)
------------
Keep the demised premises in a neat and clean condition. (B) Promptly remove all
waste, garbage or
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refuse from the demised premises. (C) Promptly comply with all laws and
ordinances and all rules and regulations of duly constituted governmental
authorities affecting the demised premises, and the cleanliness, safety, use and
occupation thereof, but this clause (C) shall not be construed to require Tenant
to comply with any such laws, ordinances, rules or regulations which require
structural changes in the demised premises unless the same are made necessary by
act or work performed by Tenant or the particular nature of Tenant's business.
(D) Prevent the escape from the demised premises of all fumes, odors, and other
substances which are offensive or may constitute a nuisance or interfere with
other tenants.
Section 7.2. Tenant agrees that it will not at any time during the demised
------------
term without first obtaining the Landlord's written consent: (A) Conduct or
permit any fire, bankruptcy or auction sale in the demised premises. (B) Place
on the exterior walls (including both interior and exterior surfaces of windows
and doors), the roof of any buildings or any other part of the demised premises,
any sign, symbol, advertisement, neon light, other light or other object or
thing visible to public view outside of the demised premises. (C) Change the
exterior color of the building on the demised premises, or any part thereof, or
the color, size, location or composition of any sign, symbol or advertisement
that may have been approved by Landlord. (D) Park, operate, load or unload, any
truck or other delivery vehicle on any place other than the loading area
designated for Tenant's use. (E) Use the plumbing facilities for any purpose
other than that for which they were constructed or dispose of any foreign
substance therein. (F) Install any exterior lighting or plumbing facilities,
shades or awnings, amplifiers or similar devices, or use any advertising medium
which may be heard or experienced outside the demised premises, such as
loudspeakers, phonographs, or radio broadcasts. (G) Deface any portion of the
building or improvements on the demised premises, normal usage excepted. In the
event any portion of the building is defaced or damaged, Tenant agrees to repair
such damage. (H) Permit any rubbish or garbage to accumulate on the demised
premises, or any part thereof, unless confined in metal containers so located as
not to be visible to members of the public. (I) Install, maintain or operate any
sign except as approved in writing by Landlord. (J) Store materials, supplies,
equipment, finished products, raw materials or articles of any nature outside of
the demised premises. (K) Use the demised premises for retail or residential
purposes. Tenant shall have the right to install (at its cost) a monument sign
for the building leased by Tenant hereunder in a location approved by Landlord,
Such monument signage shall be subject to the prior written approval of Landlord
and the City of Menlo Park.
Section 7.3. Tenant agrees that it will not at any time during the demised
------------
term: (A) Perform any act or carry on any practice which may injure the demised
premises. (B) Burn anything in or about the demised premises. (C) Keep or
display any merchandise or other object on or otherwise obstruct any sidewalks,
walkways or areaways. (D) Use or permit the use of any portion of the demised
premises as living quarters, sleeping apartments, lodging rooms, or for any
unlawful purpose. (E) Use or permit the demised premises to be used for any
purpose which is or shall not then be allowed under the Zoning Ordinance of the
City of Menlo Park, California, in that area.
Section 7.4. Subject to Section 7.1. above, Tenant shall, at its expense,
------------ ------------
comply with all applicable laws, regulations, rules and orders regarding
Tenant's use of the demised premises, regardless of when they become or became
effective, including, without limitation, those relating
8
<PAGE>
to health, safety, noise, environmental protection, waste disposal, and water
and air quality, and furnish satisfactory evidence of such compliance upon
request of Landlord.
Section 7.5. Should any discharge, leakage, spillage, emission or
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pollution of any type occur upon or from the demised premises due to Tenant's
use and occupancy thereof, Tenant, at its expense, shall be obligated to remedy
the same to the satisfaction of Landlord and any governmental body having
jurisdiction thereover. Tenant agrees to indemnify, hold harmless, and defend
Landlord against all liability, cost, and expense (including without limitation
any fines, penalties, judgments, litigation costs, and attorneys' fees) incurred
by Landlord as a result of Tenant's breach of this section, or as a result of
any such discharge, leakage, spillage, emission, or pollution due to Tenant's
use and occupancy, regardless of whether such liability, cost, or expense arises
during or after the demised term, unless such liability, cost or expense is
proximately caused solely by the active negligence of Landlord.
Tenant shall pay all amounts due Landlord under this section, as additional
rent, within ten (10) days after any such amounts become due
Tenant shall, at least thirty (30) days prior to the termination of the
demised term, or any earlier termination of this Lease, submit a plan to the
Menlo Park Fire Protection District in accordance with applicable provisions of
the Uniform Fire Code, with a copy to Landlord, demonstrating how any hazardous
materials which were stored, dispensed, handled or used in, at or upon the
demised premises will be transported, disposed of or reused at the expiration or
sooner termination of the demised term of this Lease; and Tenant shall, at the
expiration or sooner termination of the demised term comply with all applicable
laws, regulations, rules and orders of any governmental body having jurisdiction
thereover (including without limitation the Menlo Park Fire Protection District)
regarding the disposal of any such hazardous materials.
Tenant's obligations under this Section 7.4. shall survive the expiration
------------
or earlier termination of this Lease, including without limitation any
termination resulting from any default by Tenant under the Lease.
Landlord represents that to the best of its knowledge there are no known
hazardous materials under, on or in the demised premises as of the execution
date of this Lease.
ARTICLE 8 - Use of Premises
Section 8.1. Tenant shall use the demised premises solely for general
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office, administration, data networking and customer service center purposes and
other related legal uses and for no other purposes without Landlord's written
consent, which consent shall not be unreasonably withheld.
ARTICLE 9 - Indemnity and Public Liability Insurance
Section 9.1. Tenant agrees to indemnify and save harmless Landlord from
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and against all claims arising from any act, omission or negligence of Tenant,
or its contractors, licensees, agents, servants, invitees or employees, or
arising from any accident, injury or damage whatsoever caused to any person, or
to the property of any person occurring during the demised
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[Missing page to come]
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(B) the proceeds of any such insurance policy if Landlord keeps the building and
the demised premises insured against loss or damage by such fire and extended
coverage insurance to the extent of at least eighty percent (80%) of the
insurable value of the building with a replacement cost endorsement (or
otherwise for the full replacement value) to the extent reasonably obtainable
from responsible insurance companies licensed to do business in California.
unless Landlord nevertheless elects to repair and/or rebuild the building and
the demised premises Tenant shall in the event of any such damage or destruction
unless this Lease shall be terminated as hereinafter provided, be responsible
for replacing or repairing all exterior signs, trade fixtures, equipment,
display cases, and other installations originally installed by the Tenant.
Tenant shall have no interest in the proceeds of any insurance carried by
Landlord.
Section 10.2. Tenant's base rent shall be abated proportionately during
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any period in which, by reason of any such damage or destruction, the building
is rendered partially or totally untenantable. Such abatement shall continue for
the period commencing with such destruction or damage and ending with the
substantial completion by the Landlord of such work or repair and/or
reconstruction as Landlord is obligated to do.
Section 10.3. If the building on the demised premises should be damaged or
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destroyed to the extent of 33-1/3% or more of the then monetary value thereof by
an event described in Section 10.1., then Landlord may terminate this Lease by
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written notice to Tenant.
Notwithstanding anything to the contrary in this Lease, if: (i) Landlord
estimates that the demised premises cannot be fully repaired or restored within
a two hundred and seventy (270) day period from the date of such damage and
destruction; or (ii) Landlord commences such repair but fails (subject to
Unavoidable Delay but in no event more than an additional ninety (90) days) to
complete such restoration within such two hundred seventy (270) day period;
then, in either such case, Tenant may, at its option, terminate this Lease
immediately upon notice to Landlord given within ten (10) days of such damage,
or the expiration of such two hundred seventy (270) day period (subject to an
additional 90 days due to an Unavoidable Delay), unless Landlord completes such
restoration before the expiration of any such ten day period, as the case may
be, and the obligation of Tenant, if any, to pay rent to Landlord shall
terminate as of ten (10) days after the date of Tenant's notice.
If neither party elects to terminate this Lease then Landlord shall repair
and/or rebuild the same as provided in Section 10.1. If such damage or
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destruction occurs and this Lease is not so terminated, this Lease shall remain
in full force and effect and the parties waive the provisions of any law to the
contrary. The Landlord's obligation under this Section shall in no event exceed
the scope of the work to reconstruct the building to the condition existing at
the time Landlord delivered possession of the demised premises to Tenant.
Section 10.4. Tenant agrees to comply with all of the regulations and
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rules of the Insurance Service Office or any similar body and will not do,
suffer, or permit an act to be done in or about the demised premises which will
increase any insurance rate with respect thereto.
Section 10.5. Tenant agrees, in addition to any rent provided for herein,
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to pay to the Landlord the cost of the fire and extended coverage insurance
policy carried by Landlord on the demised premises during the entire demised
term or any renewal or extension thereof. This
11
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Section expressly requires the Landlord to carry the standard fire and extended
coverage policies described in Section 10.1. above (if available).
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Section 10.6. During the demised term, Tenant shall carry, at its expense,
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insurance against loss and damage by fire with an "All Risk" endorsement for the
full insurable value of Tenant's merchandise, trade fixtures, furnishings,
operating equipment and personal property, including wall coverings, carpeting
and drapes, if installed by Tenant. Landlord and Landlord's mortgagee shall be
named as additional insureds under said policy, which shall be noncancellable
with respect to Landlord and Landlord's mortgagee without twenty (20) days'
prior written notice. A certificate evidencing such coverage shall be delivered
to Landlord prior to commencement of the demised term and thereafter thirty (30)
days prior to the expiration of the term of such policy. Such insurance shall be
written as a primary policy, not contributing with and not in excess of coverage
Landlord may carry. If Tenant shall not comply with its covenants to maintain
said insurance, or if Tenant fails to provide a certificate thereof to Landlord,
Landlord may, but shall not be required to, obtain any such insurance, and if
Landlord does obtain any such insurance, Tenant shall, on demand, reimburse
Landlord for the premium for any such insurance.
Section 10.7. In the event the building on the demised premises shall be
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damaged as a result of any flood, earthquake act of war, nuclear reaction,
nuclear radiation or radioactive contamination, or from any other casualty not
covered by Landlord's fire and extended coverage insurance (or any other
additional insurance actually carried by Landlord) to the extent of One Hundred
Thousand Dollars ($100,000.00) or more, Landlord may within ninety (90) days
following the date of such damage, commence repair, reconstruction or
restoration of the building and prosecute the same diligently to completion in
which event this Lease shall continue in full force and effect so long as said
completion can be completed within two hundred seventy (270) days (subject to
Unavoidable Delay but in no event more than an additional ninety (90) days) or
within thirty (30) days from the date of destruction. Landlord can elect not to
repair, in which event this Lease shall terminate. In either event, Landlord
shall give Tenant written notice of its intention within thirty (30) days of the
damage or destruction.
Section 10.8. Upon any termination of this Lease under the provisions of
-------------
this Article 10, the rent shall be adjusted as of the date of such termination
----------
and the parties shall be released without further obligation to the other party
upon the surrender of possession of the demised premises to Landlord, except for
items that have been theretofore accrued and are then unpaid, and except for
obligations that are designated as surviving such termination.
Section 10.9. Notwithstanding anything in this Article 10 or elsewhere in
------------- ----------
this Lease to the contrary, Landlord may maintain any insurance on the demised
premises that Landlord deems necessary or reasonably advisable, including, but
not limited to, any rental insurance (not to exceed one (1) year's rent),
owner's protective liability insurance or any insurance required by any
mortgagee of Landlord; and Landlord may include the amount of the premiums for
such insurance in the total of the insurance premiums which Tenant is required
to pay under the terms hereof. Landlord agrees that it will only secure
earthquake or flood insurance if available at commercially reasonable rates.
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Section 10.10. Notwithstanding any other provision of this Lease to the
--------------
contrary, Landlord and Tenant each hereby waive all rights of action against the
other for loss or damage to the demised premises or any property of Landlord and
Tenant in the demised premises, which loss or damage is insured, or is required
pursuant to this Lease to be insured, by valid and collectible insurance
policies to the extent of the proceeds collected or collectible under such
insurance policies, subject to the condition that this waiver shall be effective
only when the waiver is permitted by such insurance policies or when, by the use
of good faith effort or the payment of an additional premium, such waiver could
have been permitted in the applicable insurance policies. The policies of
casualty insurance required to be maintained by Landlord at Tenant under the
terms of this Lease shall contain waiver of subrogation clauses.
ARTICLE 11 - Repair
Section 11.1. Landlord agrees, at Landlord's sole expense, to repair
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structural defects of the building on the demised premises throughout the life
of the Lease. Structural defects and maintenance shall not be deemed to include
cracks or fissures in walls or floors, nor the requirement of painting or
caulking.
Section 11.2. Tenant agrees during the demised term or any extension
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thereof to maintain the interior non-structural portions of the building on the
demised premises, and every part thereof, except as to work to be performed by
Landlord under Sections 11.1. and 11.3. Tenant further agrees to clean, inside
------------------------
and out, all of the glass on the exterior of the building. If Tenant should fail
to faithfully perform its maintenance obligations hereunder then Landlord shall,
upon having given written notice to Tenant of the need for said maintenance, and
upon Tenant's failure to so perform, have the right to perform, or cause to be
performed, said maintenance and Tenant shall on demand reimburse Landlord for
Landlord's costs of providing such maintenance. Landlord's reservation of the
right to enter upon the demised premises to perform any repairs or maintenance
or other work in, to, or about the demised premises which in the first instance
is the Tenant's obligation pursuant to this Lease shall not be deemed to impose
any obligation on Landlord to do so, nor shall Landlord be rendered liable to
Tenant or any third party for the failure to do so, and Tenant shall not be
relieved from any obligation to indemnify Landlord as otherwise provided
elsewhere in this Lease.
Section 11.3. Landlord shall provide the following services and Tenant
-------------
shall, in addition to all other payments required to be made under other
provisions of this Lease, on demand reimburse Landlord for Landlord's gross
costs of: (i) maintaining, repairing and replacing the roof; (ii) painting,
maintaining and repairing the exterior of the building; (iii) maintaining,
repairing and replacing the elevator and elevator equipment room (if any); (iv)
maintenance and repair associated with the mechanical and electrical rooms; (v)
maintenance and repair of the trash enclosure utilized in connection with the
building; (vi) maintenance, repair and replacement of the glass on the exterior
of the building and (vii) any other maintenance and repair other than that which
Landlord is required to perform at Landlord's expense per Section 11.1. Tenant
-------------
shall also, on demand, reimburse Landlord for Landlord's gross costs of
maintaining, repairing and replacing the heating and air conditioning equipment
serving the demised premises, whether furnished by Landlord or Tenant.
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If at any time during the demised term Landlord reasonably anticipates that
Landlord will expend in excess of Twenty Thousand Dollars ($20,000.00) for any
one (1) single, non-emergency maintenance, repair or replacement of an item
mentioned in this Section 11.3, or in Article 18, then, provided Tenant is not
------------
in default under the terms of this Lease beyond applicable cure periods,
Landlord will use its reasonable efforts to advise Tenant in advance of making
such expenditure. At Tenant's request, which request must be delivered to
Landlord within five (5) calendar days after Tenant's receipt of Landlord's
notification, Landlord shall obtain at least two (2) bids from responsible
contractors selected by Landlord for the maintenance, repair or replacement of
said item, and Landlord shall choose the contractor to do such necessary
maintenance, repair or replacement work from such bids, or obtain additional
bids, in Landlord's sole reasonable, business judgement. The provisions
contained herein shall not apply to any work (regardless of the cost) to be
performed by Landlord in an emergency or necessitated by Tenant's negligent act
or omission.
Landlord's said gross costs as used in this Section 11.3. shall include all
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costs and expenses of every kind or nature incurred by Landlord in the
performance of such maintenance, repair or replacements and Landlord's
determination of the amount of said costs and expenses will be final.
Section 11.4. If during the term of this Lease Landlord or Landlord's
-------------
insurance carrier reasonably requires the installation of an Ansul Fire Control
System or its equivalent, or any fire detection device, because of the nature of
the particular activities being carried on by Tenant in the demised premises,
then said system or device shall be installed at the sole cost of the Tenant
within the time specified.
Section 11.5. Landlord agrees that it will deliver the demised premises to
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Tenant with the existing roof, mechanical, HVAC, electrical, plumbing, and
lighting systems of the building on the demised premises in good operating
condition and repair.
Section 11.6. Landlord shall be responsible for all costs relating to
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making the exterior of the building of which the demised premises is a part and
the Parking and Accommodation Areas comply with the provisions of the Americans
with Disabilities Act ("ADA") in effect prior to commencement of this Lease,
provided such costs are not necessitated by any work performed by or for Tenant
hereunder. Tenant shall be responsible, at Tenant's sole cost and expense, for
all work necessary to make the demised premises comply with the ADA which is
required as a condition of issuance of any building permit for the Tenant
Improvements in the demised premises and, in any event, all ADA compliance
required of the demised premises during the demised term hereof after Landlord
delivers possession of the demised premises to Tenant, and/or the costs of ADA
compliance arising with respect to the Parking and Accommodation Areas after the
commencement of the demised term.
ARTICLE 12 - Fixtures & Alterations
Section 12.1. All trade fixtures owned by Tenant and installed in the
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demised premises shall remain the property of Tenant and may be removed from
time to time and shall be removed at the expiration of the demised term. Tenant
shall repair any damage to the demised premises caused by the removal of said
fixtures. If Tenant fails to remove such fixtures on or before the
14
<PAGE>
last day of the demised term, all such fixtures shall become the property of
Landlord, unless Landlord elects to require their removal, in which case Tenant
shall promptly remove them and restore the demised premises to its condition
prior to such removal. Landlord may also, at Landlord's sole discretion, store
such fixtures at Tenant's expense.
Section 12.2. Tenant shall not make any alterations, additions or
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improvements in or to the demised premises or the building without submitting
plans and specifications therefor for the prior written consent of Landlord,
which consent shall not be unreasonably withheld and, if granted, may be subject
to such conditions as Landlord may reasonably deem appropriate: except that the
consent of Landlord shall not be needed for non-structural interior repairs,
alterations, additions or improvements which cost less than Twenty-Five Thousand
Dollars ($25,000.00) per occurrence and which do not affect the sprinkler system
and/or the mechanical/electrical system or require removal or modification of
improvements installed by Landlord and provided that Tenant shall notify
Landlord of any such changes and shall provide Landlord with as-built plans
thereof in IBM-compatible AutoCAD format or such other format which compatible
to Landlord's computer aided design software. Any such alterations, additions or
improvements consented to by Landlord (or for which Landlord's consent is not
required) shall be made at Tenant's sole cost and expense in accordance with
plans and specifications therefor and Tenant agrees to provide Landlord with an
"as-built" set of plans and specifications in IBM-compatible AutoCAD format or
such other format which is compatible to Landlord's computer aided design
software after any such work is completed. Tenant shall secure any and all
governmental permits, approvals or authorizations required in connection with
any such work, and shall hold Landlord harmless from any and all liability,
costs, damages, expenses (including attorneys' fees) and any and all liens
resulting therefrom. All alterations, decorations, additions and improvements
(and expressly including all light fixtures and floor coverings installed by
Tenant), except furniture, removable paneling, wall fixtures, trade fixtures,
appliances and equipment which do not become a part of the demised premises,
shall be deemed to belong to Tenant, but shall be deemed to have been attached
to the demised premises or the building and to have become the property of
Landlord upon the termination of the demised term. Upon the expiration or sooner
termination of the demised term hereof, Tenant shall, if Landlord has made
written demand at the time of providing its consent, or for such improvements
made by Tenant for which Landlord's consent is not required as Provided
hereinabove, then upon written demand by Landlord, at Tenant's sole cost and
expense, forthwith remove any alterations, decorations, additions or
improvements made by Tenant, designated by Landlord to be removed, and Tenant
shall forthwith at its sole cost and expense repair any damage to the demised
premises or the building caused by such removal.
ARTICLE 13 - Remedies
Section 13.1. Should Tenant default in the performance of any of its
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obligations under this Lease with reference to the payment of rent and such
default continue for five (5) days after the date of written notice that such
payment is due, or should Tenant default in the performance of any other
obligations under this Lease and such default continue for thirty (30) days
after receipt of written notice from Landlord specifying such default or beyond
the time reasonably necessary to cure if such default is of a nature to require
more than thirty (30) days to remedy,
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then, in addition to all other rights and remedies Landlord may have under this
Lease or under applicable law, Landlord shall have the following rights and
remedies:
(1) The Landlord has the remedy described in California Civil Code Section
1951.4 (Landlord may continue the lease in effect after Tenant's breach and
abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations). If Tenant breaches
any covenants of this Lease or if any event of default occurs, whether or not
Tenant abandons the demised premises, this Lease shall continue in effect until
Landlord terminates Tenant's right to possession, and Tenant shall remain liable
to perform all of its obligations under this Lease and Landlord may enforce all
of Landlord's rights and remedies, including the right to recover rent as it
falls due. If Tenant abandons the demised premises or fails to maintain and
protect the same as herein provided, Landlord shall have the right to do all
things necessary or appropriate to maintain, preserve and protect the demised
premises, including the installation of guards, and may do all things
appropriate to a re-letting of the demised premises, and none of said acts shall
be deemed to terminate Tenant's right of possession, unless Landlord elects to
terminate the same by written notice to Tenant. Tenant agrees to reimburse
Landlord on demand for all amounts reasonably expended by Landlord in
maintaining, preserving and protecting the demised premises, together with
interest on the amounts expended from time to time at the maximum legal rate.
Landlord shall also have the right to repair, remodel and renovate the demised
premises at the expense of Tenant and as deemed reasonably necessary by
Landlord.
(2) Landlord shall have the right to terminate Tenant's possession of the
demised premises, and if Tenant's right to possession of the demised premises is
terminated by Landlord by reason of a breach of this Lease by Tenant, or by
reason of the happening of an event of default, or by reason of abandonment of
the demised premises by Tenant, Tenant agrees to pay to Landlord on demand (i)
all unpaid rent earned at the time of termination, together with interest on all
unpaid installments from the times they were due to the date of termination at
the maximum legal rate; (ii) the amounts by which the unpaid rent which would
have been due and payable by Tenant since the date of termination exceeds the
amount of any rental loss that Tenant proves could have been avoided, together
with interest on said amounts from the dates they were due at the maximum legal
rate; (iii) the worth at the time of the award of the amount by which the unpaid
rent for the balance of the term of this Lease exceeds the amount of rental loss
that Tenant proves may reasonably be avoided, together with interest on such
amount at the maximum legal rate from the date of the award until paid; (iv) all
other amounts due Landlord from Tenant under the terms of this Lease, or
necessary to compensate Landlord for all detriment caused by Tenant's failure to
perform its obligations under this Lease. The right to possession of the demised
premises by Tenant should not be deemed terminated until Landlord gives Tenant
written notice of such termination or until Landlord re-lets all or a portion of
the demised premises. In the event that Landlord seeks to recover the amount
due, Landlord shall be entitled to recover the amounts specified in paragraphs
(a) (1), (a) (2) and (a) (4) of Section 1951.2 of the Civil Code of California
as such section reads at the date of this Lease, together with interest on said
amounts at the maximum legal rate from the dates they were due, computed as of
the date of the award, together with the worth at the time of the award of the
amount by which the unpaid rent for the balance of the term exceeds the amount
of such rental loss that Tenant proves could reasonably have been avoided.
Landlord shall be required to mitigate damages by making a good faith effort to
re-let the demised premises.
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(3) No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy herein or by law, provided
that each shall be cumulative and in addition to every other right or remedy
given herein or now hereafter existing at law or in equity or by statute.
Section 13.2. Landlord shall in no event be in default in the performance
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of any of its obligations hereunder unless and until Landlord shall have failed
to perform such obligations within thirty (30) days or such additional times as
is reasonably required to correct any such default after notice by Tenant to the
Landlord properly specifying wherein the Landlord has failed to perform any such
obligation.
ARTICLE 14 - Bankruptcy
Section 14.1. Tenant shall give written notice to Landlord of its
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intention to commence proceedings under any state or federal insolvency or
bankruptcy law, or any comparable law that is now or hereafter may be in effect,
whereby Tenant seeks to be, or would be, discharged of its debts or the payment
of its debts is sought to be delayed, at least thirty (30) days prior to the
commencement of such proceedings.
Section 14.2. If any of the following events occur:
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(1) The entry of an order for relief under Title 11 of the United States
Code as to Tenant or its executors, administrators or assigns, if any, or the
adjudication of Tenant or its executors, administrators or assigns, if any, as
insolvent or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act;
(2) The appointment of a receiver, trustee or other custodian of the
property of Tenant by reason of the insolvency or inability of Tenant to pay its
debts;
(3) The assignment of the property of Tenant for the benefit of creditors;
(4) The commencement of any proceedings under any state or federal
insolvency or bankruptcy law, or any comparable law that is now or hereafter may
be in effect, whereby Tenant seeks to be, or would be, discharged of its debts
or the payment of its debts is sought to be delayed;
(5) The failure of Tenant to give written notice to Landlord provided for
in Section 14.1. above;
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then Landlord may, at any time thereafter, in addition to any and all other
rights or remedies of Landlord under this Lease or under applicable law, upon
written notice to Tenant, terminate this Lease in accordance with state and/or
federal laws, and upon such notice this Lease shall cease and terminate with the
same force and effect as though the date set forth in said notice were the date
originally set forth herein and fixed for the expiration of the demised term.
Tenant shall thereupon vacate and surrender the demised premises, but shall
remain liable as herein provided.
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ARTICLE 15 - Surrender of Premises
Section 15.1. Tenant shall, upon termination of the demised term, or any
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earlier termination of this Lease, surrender to Landlord the demised premises,
including, without limitation, all building equipment and apparatus, and
fixtures (except as provided in Sections 12.1. and 12.2.) then upon the demised
-------------- -----
premises without any damage, injury, or disturbance thereto, or payment
therefor, except damages due to ordinary wear and tear, acts of God, fire and
other perils to the extent the demised premises are not required to be repaired
or restored as herein before provided, and Tenant shall dispose of any hazardous
materials stored, dispensed, handled or used in, at or upon the demised premises
in accordance with the provisions of Section 7.4.
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ARTICLE 16 - Eminent Domain
Section 16.1. If more than thirty-three percent (33%) of the floor area of
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the building on the demised premises shall be taken under the power of eminent
domain and the portion not so taken will not be reasonably adequate for the
operation of Tenant's business after the Landlord completes such repairs or
alterations as the Landlord is obligated or elects to make, Tenant shall have
the right to elect either to terminate this Lease, or, subject to Landlord's
right to terminate the Lease pursuant to Section 16.4., to continue in
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possession of the remainder of the demised premises and shall notify Landlord in
writing within ten (10) days after such taking of Tenant's election. In the
event less than thirty-three percent (33%) of the floor area of the building on
the demised premises shall be taken or Tenant elects to remain in possession, as
provided in the first sentence hereof, all of the terms herein provided shall
continue in effect, except that the base rent shall be reduced in the same
proportion that the floor area of the building on the demised premises taken
bears to the original floor area of the building on the demised premises, and
Landlord shall at its own cost and expense make all necessary repairs or
alterations to the building so as to constitute the portion of the building not
taken a complete architectural unit and the demised premises a complete unit for
the purposes allowed by this Lease, but such work shall not exceed the scope of
the work to be done by Landlord in originally constructing said building.
Section 16.2. Each party waives the provisions of Code of Civil Procedure
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Section 1265.130 allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial taking.
Section 16.3. All damages or awards for any taking under the power of
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eminent domain whether for the whole or a part of the demised premises shall
belong to and be the property of Landlord whether such damages or awards shall
be awarded as compensation for diminution in value to the leasehold or to the
fee of the demised premises; provided however, that Landlord shall not be
entitled to the award made to Tenant or Landlord for loss of business,
depreciation to, and cost or removal of stock and fixtures and for leasehold
improvements which have been installed by Tenant at its sole cost and expense
less depreciation which is to be computed on the basis of completely
depreciating such leasehold improvements during the initial term of this Lease,
and any award made to Tenant in excess of the then depreciated value of
leasehold improvements shall be payable to the Landlord.
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Section 16.4. If more than thirty-three percent (33%) of the floor areas
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of the building on the demised premises shall be taken under power of eminent
domain, or if more than fifteen percent (15%) of the Parking and Accommodation
Areas shall be so taken, Landlord may, by written notice to Tenant delivered on
or before the date of surrendering possession to the public authority pursuant
to such taking, terminate this Lease as of such date.
Section 16.5. If this Lease is terminated as provided in this Article, the
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rent shall be paid up to the day that possession is so taken by public authority
and Landlord shall make a prorate refund of any rent and all deposits paid by
Tenant in advance and not yet earned.
ARTICLE 17 - Real Property Taxes
Section 17.1. Tenant shall reimburse Landlord for all real property taxes,
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assessments and ongoing sewer fees applicable to the demised premises. Taxes
shall be prorated to lease years for purpose of making this computation. Such
payment shall be made by Tenant within thirty (30) days after receipt of
Landlord's written statement setting forth the amount of such computation
thereof. If the demised term of this Lease shall not expire concurrently with
the expiration date of the fiscal tax year, Tenant's liability for taxes for the
last partial lease year shall be prorated on an annual basis.
Section 17.2. If the demised premises are not separately assessed,
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Tenant's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Landlord from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Landlord's reasonable determination thereof, in good
faith, shall be conclusive.
Section 17.3. Tenant shall pay prior to delinquency all taxes assessed
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against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the demised premises or elsewhere.
Tenant shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Landlord.
If any of Tenant's said personal property shall be assessed with Landlord's
real property, Tenant shall pay Landlord the taxes attributable to Tenant within
ten (10) days after receipt of a written statement setting forth the taxes
applicable to Tenant's property.
Section 17.4. In addition to all other payments provided for herein, the
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Tenant shall on demand reimburse Landlord for any surcharges, fees, and any
similar charges required to be paid by any instrumentality of local, state or
federal government in connection with parking in the parking area, including
policing; supervising with attendants; other costs in connection with providing
charged parking; repairs, replacements and maintenance not properly chargeable
to capital account under good accounting principles; interest and depreciation
of the actual cost of modification or improvements to the areas, facilities and
improvements maintained in this Article either (i) required by any
instrumentality of local, state or federal government, or (ii) installed by
Landlord to facilitate payment of a parking charge by the general public for
parking in the parking area, or both, and other similar costs; and there shall
be excluded (a) cost
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of construction of such improvements which is properly chargeable to capital
account and (b) depreciation of the original cost of construction of all items
not previously mentioned in this sentence. If Landlord shall require the payment
of a parking charge by the general public for parking in the parking area, then
during any period in which such a charge is made the total revenue (after
deducting excise and similar taxes thereon and taxes, fees or surcharges imposed
by any agency or instrumentality of local, state or federal government) actually
received in cash or its equivalent by Landlord for such parking charge shall be
credited against said gross costs.
Section 17.5. Notwithstanding the provisions of Article 17 hereinabove,
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Tenant shall pay any increase in "real property taxes" resulting from any and
ail improvements of any kind whatsoever placed on or in the demised premises for
the benefit of or at the request of Tenant regardless of whether said
improvements were installed or constructed either by Landlord or Tenant.
Section 17.6. In addition to ail other payments provided for herein, the
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Tenant shall on demand reimburse Landlord for any tax (excluding income tax)
and/or business license fee or other levy that may be levied, assessed or
imposed upon the rent or other payments provided for herein or on the square
footage of the demised premises, on the act of entering into this Lease, or on
the occupancy of the Tenant however described, as a direct substitution in whole
or in part for, or in addition to, any real property taxes, whether pursuant to
laws presently existing or enacted in the future.
Section 17.7. Notwithstanding anything to the contrary contained in this
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Lease, real property taxes shall not include, and Tenant shall not be obligated
to pay, any of the following: (a) interest on taxes or penalties resulting from
Landlord's failure to taxes, or (b) transfer, gift or franchise taxes.
ARTICLE 18 - Parking and Accommodation Areas
Section 18.1. Landlord grants to Tenant during the demised term the
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nonexclusive right to use the parking facilities and other areas provided and
designated as "Parking and Accommodation Areas" on Exhibit "B" hereto for the
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accommodation and parking of such automobiles of the Tenant, its officers,
agents, employees and its customers while working or visiting Tenant. Tenant
agrees that its officers, agents and employees will park their automobiles only
in the parking areas provided in the Parking and Accommodation Areas, and Tenant
specifically agrees that such officers, agents and employees will not park on
any public streets in the vicinity of the demised premises. Except as provided
in Section 17.4., Landlord shall not charge parking fees for such right to use
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parking facilities.
Section 18.2. All parking areas and facilities furnished by Landlord
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including, but not limited to, pedestrian sidewalks, landscaped areas and
parking areas shall at all times be subject to the control and management of
Landlord so that Landlord will be in a position to make available efficient and
convenient use thereof, and Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with respect to
all facilities and areas mentioned in this Article, and Tenant agrees to abide
by and conform therewith. Landlord shall have the right to construct, maintain
and operate lighting facilities on all of said areas and improvements, to police
the same, from time to time to change the area,
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location and arrangement of parking areas and facilities, to restrict employee
parking to employee parking areas, to construct surface, subterranean and/or
elevated parking areas and facilities, to establish and from time to time change
the level of parking surfaces, to close (if necessary) all or any portion of
said areas or facilities to such extent as may in the opinion of Landlord's
counsel be legally sufficient to prevent a dedication thereof or the accrual of
any rights of any person or of the public therein, and to do and perform such
other acts in and to said areas and improvements respectively as in the use of
good business judgment the Landlord shall determine to be advisable with a view
to the improvement of the convenience and use thereof by Tenant, other lessees,
and their respective employees and visitors.
Section 18.3. Tenant agrees during the demised term to pay to Landlord an
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annual charge which shall be Landlord's actual gross costs of operating,
maintaining and/or replacing all of the areas and facilities mentioned in this
Article. The annual charge shall be an estimate computed on the basis of periods
of twelve (12) consecutive calendar months, commencing and ending on such dates
as may be designated by Landlord, and shall be paid in monthly installments on
the first day of each calendar month in the amount estimated by Landlord. Within
ninety (90) days after the end of each such annual period, Landlord will
determine (and furnish to Tenant a statement showing in reasonable detail) the
actual annual charge for such period and the amounts so estimated and paid
during such period shall be adjusted within such ninety (90) days (including
adjustments on a prorate basis of any partial such period at either end of the
demised term) and one party shall pay to the other on demand whatever amount is
necessary to effectuate such adjustment.
Landlord's said gross costs shall consist of and include all costs and
expenses of emery kind or nature incurred by Landlord in the operation,
maintenance and/or replacement of all of the areas, facilities and improvements
mentioned in this Article determined in accordance with good accounting practice
by an accountant employed by Landlord. The determination of such accountant
shall be conclusive. Without otherwise limiting the generality of the foregoing,
there shall be included in such gross costs public liability and property damage
insurance, landscape maintenance, maintenance of utilities, water, cleaning of
areas, facilities and improvements, operation of lighting, common area taxes and
assessments determined in the same manner as taxes and assessments on the
demised premises, policing and sweeping of parking areas, supervising with
attendants, repairs, replacements and maintenance, and an amount equal to ten
percent (10%) of the total of all of the above for administration of the Parking
and Accommodation Areas.
Section 18.4. The Parking and Accommodation Areas included for the purpose
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of this Article are those shown on Exhibit "B" outside of the building area.
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Section 18.5. Notwithstanding anything to the contrary contained in this
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Lease, gross costs shall not include, and Tenant shall not be required to pay,
any of the following: (a) legal fees, brokerage commissions, advertising costs,
or other related expenses incurred in connection with the leasing of the
Building or defense of Landlord's title to or interest in the building or any
part thereof; (b) repairs, alterations, additions, improvements or replacements
made to rectify or correct any latent defect in the design, materials or
workmanship of the Building; (c) damage and repairs attributable to fire or
other casualty except as otherwise provided herein and except for applicable
deductibles; (d) damage and repairs necessitated by the negligence or willful
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misconduct of Landlord or Landlord's agents, employees or contractors and not
covered by insurance carried or required to be carried by Tenant hereunder; (e)
executive salaries or salaries of service personnel to the extent that such
service personnel perform services other than in connection with the management,
operation, repair or maintenance of the Building or Parking and Accommodation
Areas (to the extent not covered by the administrative fee described in Section
18.3; above); (f) the cost of any service provided to Tenant for which Landlord
is reimbursed by others; and (g) payment of principal or interest on any
mortgage or other encumbrance or any costs or expenses related thereto.
Tenant's obligation to reimburse Landlord for the cost of a Capital
Expenditure (as used in this Section 18.5., "Capital Expenditure" shall be any
one (1) single improvement, alteration, repair or replacement which costs in
excess of Twenty Five Thousand Dollars ($25,000.00) individually in any one
calendar year) made by Landlord pursuant to Article 11 and/or Article 18 of this
Lease during the demised term and required under good accounting practice to be
amortized, shall be calculated by multiplying the cost of any such Capital
Expenditure by a fraction, the numerator of which is the number of years (both
elapsed and not elapsed) in the demised term, including any option period which
has been (or is subsequently) exercised by Tenant, and the denominator of which
is the number of years in the estimated useful life of the Capital Expenditure
based on good accounting practice (the foregoing limitation shall not apply to
any costs for Capital Expenditures made necessary on account of: (i) negligent
acts or omissions of Tenant or its agents, employees, invitees or contractors;
(ii) the particular nature of Tenant's business or operations; or (iii)
equipment furnished by Tenant and maintained by Landlord). Tenant shall pay any
such amounts, as additional rent, monthly on a straight-line basis amortized
over the remaining demised term of the Lease, including any option period which
has been (or is subsequently) exercised by Tenant, using an interest rate equal
to ten percent (10%) per annum.
Section 18.6. Tenant's internal accountant shall have the right at
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Tenant's own cost and expense to inspect Landlord's records (not more than once
in any calendar year) with respect to all gross costs payable by Tenant under
this Lease for any Fiscal Year of Landlord during the demised term. Tenant shall
give Landlord not less than thirty (30) days' prior written notice of its
intention to conduct any such inspection which such inspection shall be
conducted in Landlord's offices during normal business hours, Landlord will
allow Tenant to use Landlord's copying facilities subject to reimbursement by
Tenant to Landlord of the reasonable cost of copying. Tenant's right to inspect
Landlord's records shall apply only to those records for the Fiscal Year
immediately preceding the Fiscal Year during which the inspection is made.
Landlord will reimburse Tenant for any such gross costs which are found to have
been overstated. Tenant's right to inspect is conditioned upon Tenant, and
Tenant's internal accountant, executing appropriate confidentiality agreements
acceptable to Landlord agreeing to keep the results of any such inspection
confidential.
ARTICLE 19 - Miscellaneous
Section 19.1. Landlord and its designee shall have the right during
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reasonable business hours to enter the demised premises except restricted areas
as established by or on behalf of the Federal Government for security purposes
(and in emergencies at all times), (i) to inspect the
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same, (ii) for any purpose connected with Landlord's rights or obligations under
this Lease and, (iii) for all other lawful purposes.
Section 19.2. Landlord and its designee shall have the right during
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reasonable business hours to enter the demised premises except restricted areas
as established by or on behalf of the Federal Government for security purposes
(and in emergencies at all times), (i) to inspect the same, (ii) for any purpose
connected with Landlord's rights or obligations under this Lease and, (iii) for
all other lawful purposes.
Section 19.3. This Lease shall be governed exclusively by the provisions
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hereof and by the laws of the State of California as the same from time to time
exist. This Lease expresses the entire understanding and all agreements of the
parties hereto with each other and neither party hereto has made or shall be
bound by any agreement or any representation to the other party which is not
expressly set forth in this Lease.
Section 19.4. If Tenant should hold over after the demised term and any
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extension thereof as herein provided for, then such holding over shall be
construed as a tenancy from month to month at a rent equal to one hundred fifty
percent (150%) that provided for under the monthly rental of the principal term
of this Lease.
Section 19.5. Tenant agrees to maintain all toilet and washroom facilities
------------
within the demised premises in a neat, clean and sanitary condition.
Section 19.6. Landlord covenants and agrees that Tenant, subject to the
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terms and provisions of this Lease, on paying the rent and observing, keeping
and performing all of the terms and provisions of this Lease on its part to be
observed, kept and performed, shall lawfully, peaceably and quietly have, hold,
occupy and enjoy the demised premises during the demised term without hindrance
or ejection by any person lawfully claiming under or against the Landlord.
Section 19.7. Subject to Article 6, the terms and provisions hereof shall
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be construed as running with the land and shall be binding upon and inure to the
benefit of heirs, executors, administrators, successors and assigns of Landlord
and Tenant.
Section 19.8.
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A. Tenant shall promptly pay all sums of money with respect to any labor,
services, materials, supplies or equipment furnished or alleged to have been
furnished to Tenant in, at or about the demised premises, or furnished to
Tenant's agents, employees, contractors or subcontractors, that may be secured
by any mechanic's, materialmen's, supplier's or other liens against the demised
premises or Landlord's interest therein. In the event any such or similar liens
shall be filed, Tenant shall, within three (3) days of receipt thereof, give
notice to Landlord of such lien, and Tenant shall, within ten (10) days after
receiving notice of the filing of the lien, discharge such lien by payment of
the amount due to the lien claimant. However, Tenant may in good faith contest
such lien provided that within such ten (10) day period Tenant provides Landlord
with a surety bond from a company acceptable to Landlord, protecting against
said lien in an amount at least one and one-half (1-1/2) times the amount
claimed or secured as a lien or such greater amount as may be required by
applicable law; and provided further that Tenant, if it
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should decide to contest such lien, shall agree to indemnify, defend and save
harmless Landlord from and against all costs arising from or in connection with
any proceeding with respect to such lien. Failure of Tenant to discharge the
lien, or, if contested, to provide such bond and indemnification, shall
constitute a default under this Lease and in, addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated, to discharge or
secure the release of any lien by paying the amount claimed to be due, and the
amount so paid by Landlord, and all costs and expenses incurred by Landlord
therewith, including, but not limited to, court costs and reasonable attorneys'
fees, shall be due and payable by Tenant to Landlord forthwith on demand.
B. At least fifteen (15) days before the commencement by Tenant of any
material construction or remodeling work on the demised premises, Tenant shall
give written notice thereof to Landlord. Landlord shall have the right to post
and maintain on the demised premises such Notices of Non-Responsibility, or
similar notices, provided for under applicable laws.
Section 19.9.
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A. Tenant shall deposit with Landlord the sum specified in Section
2.4.(B) hereof as a "Security Deposit", which Security Deposit shall be reduced
during the demised term pursuant to the provisions of Section 2.4.(B). The
Security Deposit shall be held by Landlord as security for the faithful
performance of all the terms of this Lease to be observed and performed by
Tenant. The Security Deposit shall not be mortgaged, assigned, transferred or
encumbered by Tenant without the written consent of Landlord and any such act on
the part of Tenant shall be without force and effect and shall not be binding
upon Landlord.
B. If any of the rents herein reserved or any other sum payable by Tenant
to Landlord shall be overdue and unpaid, or should Landlord make payments on
behalf of Tenant, or should Tenant shall fail to perform any of the terms of
this Lease, then Landlord may, at its option and without prejudice to any other
remedy which Landlord may have on account thereof, apply the entire Security
Deposit, or so much thereof as may be necessary, to compensate Landlord toward
the payment of rent or additional rent, loss, or damage sustained by Landlord
due to such breach on the part of Tenant, and Tenant shall forthwith upon demand
restore said Security Deposit to the original sum deposited. Should Tenant
comply with all of said terms and pay all of the rent and ail other sums payable
by Tenant to Landlord, the remaining portion of said Security Deposit shall be
returned in full to Tenant at the end of the demised term.
C. In the event of bankruptcy or other similar proceedings listed in
Article 14 hereof, the Security Deposit shall be deemed to be applied first to
the payment of rent and other charges due Landlord for all periods prior to the
filing of such proceedings.
D. In the event Landlord delivers the Security Deposit to the purchaser
of Landlord's interest in the demised premises, Landlord, after written notice
to Tenant of said delivery, shall be discharged from any further liability with
respect to the Security Deposit. This provision shall also apply to any
subsequent transferees.
Section 19.10. All notices, statements, demands, requests, consents,
---------------
approvals, authorizations, offers, agreements, appointments or designations
hereunder by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party or, if sent
24
<PAGE>
by overnight carrier or United States certified mail, return receipt requested,
postage prepaid, and addressed as follows:
If sent to Tenant, the same shall be addressed to the Tenant at 4045
Campbell Avenue, Menlo Park, California 94025, or at such other place as Tenant
may from time to time designate by notice to Landlord.
If sent to Landlord, the same shall be addressed to Landlord at 60
Hillsdale Mall, San Mateo, California 94403-3497, or at such other place as
Landlord may from time to time designate by notice to Tenant.
Any such notice when sent by overnight carrier or certified mail as above
provided shall be deemed duly served on the third business day following the
date of such mailing.
Section 19.11. As used in this Lease and when required by the context,
---------------
each number (singular or plural) shall include all numbers, and each gender
shall include all genders; and unless the context otherwise requires, the word
"person" shall include corporation, firm or association.
Section 19.12. In case of litigation with respect to the mutual rights,
---------------
obligations, or duties of the parties hereunder, the prevailing party shall be
entitled to reimbursement from the other party of all costs and reasonable
attorneys' fees actually incurred.
Section 19.13. Each term and each provision of this instrument
--------------
performable by Tenant shall be construed to be both a covenant and a condition.
Section 19.14. Except as otherwise expressly stated, each payment
--------------
provided herein to be made by Tenant to Landlord shall be in addition to and not
in substitution for the other payments to be made by Tenant to Landlord.
Section 19.15. Time is and shall be of the essence of this Lease
---------------
and all of the terms, provisions, covenants and conditions hereof.
Section 19.16. The Tenant warrants that it has not had any dealings with
--------------
any realtor, broker, or agent in connection with the negotiation of this Lease
excepting only Soroush Kaboli and Cornish & Carey Commercial, whom Landlord
agrees to pay whatever commission may be due. Each party agrees to hold the
other harmless from any cost, expense or liability for any compensation,
commissions or charges claimed by any realtor, broker, or agent with respect to
this Lease and/or the negotiation thereof with whom the other party has or
purportedly has dealt.
Section 19.17. Tenant agrees that its interest in this Lease shall be
---------------
subordinate to any mortgage, deed of trust and/or other security indenture
hereafter placed upon the demised premises and to any and all advances made or
to be made thereunder and to the interest thereon made and all renewals,
replacements, and extensions thereof, but nothing herein contained shall be
deemed to alter or limit Tenant's rights as set forth in Section 19.6. Tenant
shall, at the request of Landlord or any mortgagee, trustee or holder of any
such security instrument, execute in writing an agreement subordinating its
rights under this Lease to the lien of such mortgage, deed of trust and/or other
security indenture subject to a standard non-disturbance clause. If any
25
<PAGE>
mortgagee, trustee or holder of such security instrument elects to have the
Tenant's interest in this Lease superior to any such instrument by notice to
Tenant, then this Lease should be deemed superior to the lien of any such
mortgage, deed of trust or security indenture whether this Lease was executed
before or after said mortgage, deed of trust and/or security indenture.
Section 19.18. Landlord reserves the right during the last six months of
--------------
the demised term of this Lease or the last six months of any extension hereof to
enter the property during normal working hours for the purpose of showing the
demised premises (except restricted areas established by, or on behalf of, the
Federal Government for security purposes) to prospective tenants or purchasers
and to place signs (for the last year) on the demised premises advertising the
property for lease or sale.
Section 19.19. The following terms as used in this Lease shall have the
--------------
following meaning:
(a) "Unavoidable Delay" means any prevention, delay or stoppage due
to strike(s), lockout(s), labor dispute(s), act(s) of God, inability to obtain
labor or materials or reasonable substitutes therefor, governmental
restrictions, governmental regulations, governmental controls, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other
conditions or causes beyond the reasonable control of the party obligated to
perform.
(b) "Floor Area" shall mean the total constructed area of the
building on the demised premises. This area is computed by measuring to the
outside finished surface of permanent outer building wails, without any
deductions. All enclosed floors of the building are calculated.
Section 19.20. For the purposes of determining the base rent during the
--------------
option period (if any) contained in Section 1.2. of this Lease, the Fair Market
Rental Value shall be determined as follows: in Tenant's notice to Landlord
exercising the option to extend, Tenant shall advise Landlord of its estimate of
the Fair Market Rental Value for the demised premises (including interim
adjustments). Landlord, within thirty (30) days thereafter, shall advise Tenant
in writing of its estimate of the Fair Market Rental Value (including interim
adjustments). During the next twenty (20) calendar days the parties shall meet
and confer for the purpose of agreeing upon the Fair Market Rental Value. If the
parties are then unable to agree, then the Fair Market Rental Value shall be
determined by an appraisal as herein set forth and the Fair Market Rental Value
as so determined shall be binding upon Landlord and Tenant. Within one hundred
twenty (120) days after the Tenant's notice of exercise of the option Landlord
and Tenant shall each appoint an appraiser and notify the other party in writing
of its choice. Thereupon, the two appraisers shall elect a third appraiser
within thirty (30) days of their appointment, unless during such period the two
appraisers shall have agreed upon a Fair Market Rental Value, in which case
their determination shall be final and binding. If the two appraisers shall be
unable to agree upon a third appraiser, then the Landlord and Tenant shall
immediately request the Presiding Judge of the San Mateo County Superior Court
to make such selection. The decision of the third appraiser shall be final and
binding provided that the determination of Fair Market Rental Value of the third
appraiser shall be equal to, or in-between, the determinations of the other two
appraisers. Each party shall bear the cost of the appraiser selected by it and
the cost of the third appraiser
26
<PAGE>
shall be shared equally. To be appointed as an appraiser the person so appointed
shall hold the professional designation as may then be the preeminent
professional designation, hold any licenses which may then be required by law,
and have at least three (3) years current experience in appraisal of commercial
properties in the San Francisco Bay Area including San Mateo County. In nonevent
shall the base rent for each year of the option term be less than the amount of
base rent payable by Tenant on an annualized basis during the final year of the
initial term.
27
<PAGE>
IN WITNESS WHEREOF, the parties have executed this instrument.
TENANT: LANDLORD:
INTERNET TRAVEL NETWORK, CAMPBELL AVENUE ASSOCIATES,
a California corporation a California partnership
By: _____________________________ By: ___________________________
President Managing Partner
By: _____________________________
Secretary
(Single Tenant -
Land Building)
28
<PAGE>
EXHIBIT "A"
BOHANNON PARK
4045 CAMPBELL AVE.
MENLO PARK, CALIFORNIA
DESCRIPTION OF DEMISED PREMISES
FOR
"INTERNET TRAVEL NETWORK"
All that certain real property situated in the City of Menlo Park, County
of San Mateo, California.
Parcel 2 as shown on that certain map entitled "Parcel Map of a Subdivision
of Lots 5 and 6 and portion of Lot 7, Bohannon Industrial Park, Menlo Park, San
Mateo County, California", recorded in Volume 12 of Parcel Maps at Page 20, San
Mateo Records, and a portion of Parcel C as shown on that certain map entitled
"Record of Survey Resubdivision of Portions of Lot 7 and 8, Tract No. 750,
Bohannon Industrial Park, Menlo Park, San Mateo County, California", recorded in
Volume 6 of L.L.S. Maps at Page 62, San Mateo Records, more particularly
described as follows:
BEGINNING at a point on the Northwesterly line of Campbell Avenue, said
point being the most Southerly corner of said Parcel 2; thence from said point
of beginning North 68(degree) 03' West 370.00 feet; thence North 21(degree) 57'
East 319.86 feet; thence South 68(degree) 03' East 370.00 feet and South
21(degree) 57' West 319.86 feet to the point of beginning.
Reserving therefrom unto the Landlord, its successors and assigns a non-
exclusive 23.00 foot easement for vehicular, ingress and egress over that
certain real property described as follows:
Beginning at a point on the Northwesterly line of Campbell Avenue, from
which point the most Southerly corner of said Parcel 2 bears South 21(degree)
57' West 319.86 feet; thence from said point of beginning along said
Northwesterly line of Campbell Avenue South 21(degree) 57' West 23.00 feet;
thence North 68(degree) 03' West 370.00 feet; thence North 21(degree) 57' East
23.00 feet and South 68(degree) 03' East 370.00 feet to the point of beginning.
Furthermore demising a non-exclusive 2.00 foot easement for vehicular,
ingress and egress over that certain real property described as follows:
Beginning at a point on the Northwesterly line of Campbell Avenue, from
which point the most Southerly corner of said Parcel 2 bears South 21(degree)
57' West 319.86 feet; thence from said point of beginning along said
Northwesterly line of Campbell Avenue North 21(degree) 57' East 2.00 feet;
thence North 68(degree) 03' West 370.00 feet; thence South 21(degree) 57' West
2.00 feet and South 68(degree) 03' East 370.00 feet to the point of beginning.
E-1
<PAGE>
EXHIBIT 10.15
STANDARD OFFICE BUILDING LEASE
THIS LEASE AGREEMENT (sometimes hereinafter referred to as the "Lease") made and
entered into this 1st day of March, 1996, by and between Airport Commerce Park,
Inc. (hereinafter called "Landlord"), whose address for purposes hereof is C/O
The Allen Morris Company, 1000 Brickell Avenue, 3rd Floor, Miami, Florida 33131
and Carnival Air Lines, Inc. (hereinafter called "Tenant"), whose address for
purposes hereof is 1815 Griffin Road, Dania, Florida 33004.
W I T N E S S E T H:
LANDLORD AND TENANT agree to the following definitions for the defined terms
contained herein:
DEFINITIONS
a) "Premises" or "Leased Premises" is hereby defined as suite numbers 308
through 318, located in Building #3, and such Lease Premises being more
particularly described as approximately 8,688 square feet of Net Rentable
Area (hereinafter defined):
b) Building is hereby defined as Airport Commerce Park, located at 4101
Ravenswood Road, Dania, Florida 33312.
c) Base Rental is hereby defined as a sum of money as set forth below. The
phrase "Months of Term" refers to that period of time commencing on and
subsequent to the Commencement Date. Applicable sales tax will be added to
the Base Rental.
Months of Term Monthly Rent Annual S/PSF
----------------- ------------ ------------
1-12 $8,326.00 $ 11.50
13-24 8,659.04 11.96
25-36 9,006.56 12.44
37-48 9,368.56 12.94
49-60 9,737.80 13.45
Landlord upon execution of this Lease by Landlord and Tenant, hereby
acknowledges payment by Tenant of the sum of Eight Thousand Eight Hundred
Twenty-Five and 56/100 Dollars ($8,825.56) representing payment of rental for
the first full calendar month of this Lease, including sales tax. The balance of
the total Base Rental is payable in equal monthly installments as specified
above on the first day of each month; hereafter ensuing the first of which shall
be due and payable on the first day of July, 1996.
d) Lease Term is hereby defined as being for a period of Five (5) years
commencing on approximately June 1, 1996, and terminating on May 31, 2001.
e) Base Year as herein defined, as being calendar year 1996.
f) Tenant's Proportionate Share to be paid by Tenant for Impositions (as
hereinafter defined) is hereby to be the percentage which the Net Rentable
Area then leased by the Tenant in the Building bears to the Total Net
Rentable contained in the Building which is approximately 80,000 rentable
square feet. This percentage at the commencement of this Lease is 10.86%.
g) Annual Rent Increase pursuant to Paragraph 4 of this Lease, the annual Base
Rental is hereby defined as Ninety-Nine Thousand Nine Hundred Twelve
Dollars ($99,912.00), plus applicable sales tax.
h) Security Deposit is hereby defined to be: None.
<PAGE>
i) Use or Purpose for which the Tenant will use and occupy the lease premises
shall be for the sole purpose of General Office, and reservations twenty-
four (24) hours a day, seven (7) days a week.
j) Electric and Janitorial monthly expenses are not included in the Base
Rental Rate, and shall be the sole cost and responsibility of the Tenant.
Electric is separately metered.
k) Parking Spaces: Landlord shall provide Tenant with one hundred (100)
unassigned parking spaces. During the term of the Lease, Landlord shall
have the right to assign Tenant's spaces to Tenant.
l) Real Estate Broker in this transaction is hereby defined as Allen Morris
Commercial Real Estate Services, Inc.
m) Upon execution and delivery of this Lease to Landlord, Landlord hereby
acknowledges payment by Tenant as follows:
First Month's Rent: $ 8,326.00
Sales Tax: 499.56
----------
Total: $ 8,825.56
With the submission of this Lease for Landlord's consideration, Tenant also
includes a certificate of insurance as described in Paragraph 20.
2
<PAGE>
TERMS
The terms and conditions of the Standard Office Building Lease attached hereto
are incorporated by reference and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have signed, sealed and delivered this
Lease in triplicate at Broward County, Florida on the date and year first
written above.
WITNESSES: LANDLORD:
AIRPORT COMMERCE PARK, INC.
_______________________________ By:_______________________________
Cy J. Case, President
_______________________________
TENANT:
CARNIVAL AIR LINES, INC.
_______________________________ By:_______________________________
Robert C. Coile
Vice President Internal Affairs
_______________________________
Attachments:
Exhibit A - Floor Plan
Standard Office Building Lease
Rules and Regulations
3
<PAGE>
STANDARD OFFICE BUILDING LEASE
LEASED 1. Subject to and upon the terms, provisions, covenants and
PREMISES conditions hereinafter stated, and each in considerations of the
duties, covenant, and obligations of the other hereunder,
Landlord does hereby lease, demise and let to Tenant; and Tenant
does hereby lease, demise, and let from Landlord those Leased
Premises as reflected on the floor plan attached hereto as
Exhibit "A" and made a part hereof.
The Term "Net Rentable Area," as used herein, shall refer to
(i) a single tenancy floor, all space measured from the inside
surface of the outer glass of the Building to the inside surface
of the opposite outer glass of the Building, excluding only the
areas ("Service Areas") within the outside walls used for
building stairs, fire towers elevator shafts, flues, vents, pipe
shafts and vertical ducts, but including any such areas which are
for the specific use of the particular Tenant such as special
stairs or elevators, and (ii) a multi-tenancy floor, all space
with the inside surface of the outer glass enclosing Tenant
occupied portion of the floor and measure to the midpoint of the
walls separating areas leased by or held for lease to other
Tenants or from areas devoted to corridors, elevator foyers,
restrooms and other similar facilities for the use of all Tenants
on the particular floor (hereinafter sometimes called "Common
Areas"), but including a proportionate part of the Common Areas.
No deductions from Net Rentable Areas are made for columns
necessary to the Building. The Net Rentable Areas in the Leased
Premises and in the Building have been calculated on the basis of
the foregoing definition and are hereby stipulated above as to
the Leased Premises whether the same should be more or less as a
result of minor variations resulting from actual construction and
completion of the Leased Premises for occupancy so long as such
work is done substantially in accordance with the approved plans.
TERM 2. This Lease shall be for the Term herein defined unless
sooner terminated or extended as provided herein. If Landlord is
unable to give possession of the Leased Premises on the date of
the commencement of the aforesaid Lease Term by reason of the
holding over of any prior tenant or tenants or for any other
reason, an abatement or diminution of the rent to be paid
hereunder shall be allowed Tenant under such circumstances until
possession is given to Tenant; but nothing herein shall operate
to extend the initial Term of the Lease beyond the agreed
expiration date, and said abatement in rent shall be the full
extent of Landlord's liability to tenant for any loss or damage
to Tenant because of said delay in obtaining possession of the
Premises. There shall be no delay in the commencement of the Term
of this Lease and/or payment of rent where Tenant fails to occupy
premises when same are ready for occupancy, or when Landlord
shall be delayed in substantially completing such Leased Premises
as a result of:
a. Tenant's failure to promptly approve working drawings
and plans as required; or
b. Tenant's failure to promptly select materials,
finishes, or installations; or
c. Tenant's changes in plans (notwithstanding Landlord's
approval of any such changes); or
d. Any other act of omissions by Tenant or its agents, or
failure to promptly make other decisions necessary to
the preparation of the Lease Premises for occupancy.
The commencement of the Term and the payment of rent shall
not be affected, delayed or deferred on account of the foregoing.
For the purposes of this paragraph, the Leased Premises shall be
deemed substantially completed and ready for occupancy by Tenant
when Landlord's supervising architect certifies that the work
required of Landlord, if any, has
4
<PAGE>
been substantially completed in accordance with the approved
plans and specifications.
Taking possession of the Lease Premises by Tenant shall be
conclusive evidence as against Tenant that the Leased Premises
were in good and satisfactory condition, completed in accordance
with the approved plans, when possession was so taken. If Tenant,
with Landlord's consent, shall occupy the Leased Premises prior
to the beginning of the Lease Term as specified hereinabove, all
provisions of this Lease shall be in full force and effect
commencing upon such occupancy; and rent for such period shall be
paid by Tenant at the same rate herein specified.
BASE RENT: 3. Tenant agrees to pay Landlord the Base Rental without demand
in advance, in monthly installments on the first day of each and
every month during the Terms. If the Term of the Lease commences
on any day of a month, except for the first day, Tenant shall pay
Landlord Base Rental as provided for herein for such commencement
month on a prorated basis (such pro-ration to be based on the
actual number of days in the commencement month); and the first
month's rent paid by Tenant, if any, upon execution of this Lease
shall apply and be credited to the next full month's rent due
hereunder. Base Rental for any partial month of occupancy at the
end of the Term of this Lease shall be prorated, such pro-ration
to be based on the actual number of days in the partial month.
In addition to Base Rental, Tenant shall and hereby agrees
to pay to Landlord each month a sum equal to any sales tax, tax
on rentals, and any other charges, taxes and/or impositions now
in existence or hereafter imposed based upon the privilege of
renting the space leased hereunder or upon the amount of rentals
collected therefor. However, nothing herein shall be taken to
require Tenant to pay any part of any federal and state taxes on
income imposed upon Landlord.
Tenant shall be required to pay Landlord interest on any
installment of Base Rental and additional rent, as hereinafter
provided, that remains unpaid for ten (10) days after its due
date. Said interest shall be computed at the maximum legal rate
from the due date.
ANNUAL 4. Commencing with the first month of the second lease year and
RENT each year thereafter during the Term of this Lease, the annual
INCREASE Base Rental shall be adjusted Four Percent (4%) annually as
stated on page 1C of the Lease.
TIME OF 5. Tenant agrees that Tenant shall promptly pay said rents
PAYMENT/ (Base Rental as the same may be adjusted from time to time
ACCELER-ATION pursuant to Paragraph 4 and additional rent), at the time and
UPON DEFAULT place stated above; Tenant shall also pay charges for work
performed on order of Tenant, and any other charges that accrue
under this Lease; that, if any part of the rent or above-
mentioned charges shall remain due and unpaid for the seven (7)
days after written notice from Landlord to Tenant, Landlord shall
have the option, without further notice to Tenant, (in addition
to all other rights and remedies available to it by law and in
equity) of evicting Tenant and simultaneously accelerating and
declaring the balance of the entire rent for the entire Term of
the Lease to be immediately due and payable. In the event of such
acceleration upon default in payment, Tenant shall remain liable
for all expenses incurred by Landlord and the full balance due on
the Lease - subject only to credit for rent received on reletting
of premises and Landlord may lease by distress or otherwise.
USE 6. Tenant shall use and occupy the Leased Premises for the use
or purpose as hereinbefore stated and for no other use or
purpose.
QUIET
ENJOYMENT 7. Upon payment by Tenant of the rents herein provided, and
upon the observance and performance of all items, provisions,
covenants and conditions on Tenant's part to be observed and
performed, Tenant shall, subject to all of the terms, provisions,
covenants and conditions on Tenant's part to be observed and
performed, Tenant shall, subject to all of the terms, provisions,
covenants and conditions of this Lease, peaceably and quietly
hold and enjoy the
5
<PAGE>
Leased Premises for the Term hereby demised.
INSURANCE 8. If the Landlord's insurance premiums exceed the
PREMIUMS standard premium rates because the nature of Tenant's
operations results in extra hazardous exposure, then Tenant
shall, upon receipt of appropriate invoices from Landlord,
reimburse Landlord for such increase in premiums. It is
understood and agreed between the parties hereto that any
such increases in premiums shall be considered as rent due
and shall be included in any lien for rent.
RULES AND 9. Tenant agrees to comply with all rules and regulations
REGULATIONS Landlord may adopt from time to time for operation of the
Building and parking facilities and for the protection and
welfare of Building and parking facilities, and the
tenants, visitors and occupants of the Building. The
present rules and regulations, which Tenant hereby agrees
to comply with, entitled "Rules and Regulations" are
attached hereto and are by this reference incorporated
herein. Any future rules and regulations adopted from time
to time by Landlord shall become a part of the Lease, and
Tenant hereby agrees to comply with the same upon delivery
of a copy thereof to Tenant providing the same do not
materially deprive Tenant of its rights established under
this Lease.
SERVICES 10. Janitorial and electric shall be the sole cost and
responsibility of the Tenant and is not included in the
Rental Rate.
TENTANT 11. It is understood and agreed between the parties hereto
CHARGES that any charges against Tenant by Landlord for services or
for work done on the Leased Premises by order of Tenant, or
otherwise accruing under this Lease, shall be considered as
rent due and shall be included in any lien for rent.
REPAIR OF 12. Landlord shall maintain in good order and repair the
BUILDING AND Building (excluding repairs to be made by Tenant),
PREMISES including without limitation public areas, the parking
areas, landscape areas, elevators, stairs, corridors,
restrooms, the base building heat, ventilating, air
conditioning, mechanical, plumbing, and electrical systems,
and the structure itself, including the roof, foundations,
exterior walls, and glass exterior surfaces of the Premises
and the Building, all structural members of the Building
and all underground utility lines serving the Building.
Provided, however, the cost of any repairs or maintenance
to the foregoing necessitated by the negligence of Tenant
or its agents, contractors or employees shall be reimbursed
by Tenant to Landlord upon demand as additional rent.
At its sole cost, Tenant shall maintain in good repair
and tenable condition, subject to normal wear, tear,
casualty and condemnation, that portion of the Premises
within the demising walls thereof, including any wall
coverings and paint on the interior side of the demising
walls, below the ceiling slab and above the floor slab, any
tile, carpet or other floor covering installed for Tenant.
Tenant's maintenance obligation shall extend to all tenant
improvements and contents within the Premises. Tenant shall
not be obligated to repair damage resulting from the gross
negligence of Landlord or its agents, contractors, or
employees.
Tenant shall make no structural alterations or
structural additions of any kind to the interior of the
Premises without first obtaining Landlord's written
consent. Tenant, at its sole cost, may make non-structural
alterations or non-structural additions within the Premises
subject to the following conditions:
a. Tenant shall give Landlord prior written notice of
its intention to make alterations, additions, or repairs.
b. Landlord reserves the right to approve the plans
and specifications for such alterations and additions; such
approval shall not be unreasonably withheld or delayed.
c. Tenant shall only use contractors who are approved
by Landlord, and such contractors shall be required to
furnish evidence of insurance coverages, including Public
6
<PAGE>
Liability, Workers Compensation, and Automobile Liability
coverages, as well as any other coverages required by
Landlord. The limits of such coverage shall be no less than
those required of Tenant. Tenant shall cause such work to
be performed in accordance with all applicable building
codes and other governmental regulations to be completed
and paid and shall discharge any and all liens or claims of
lien arising therefrom, or if Tenant disputes any such lien
or claim of lien, Tenant may post a bond to remove the lien
from the Premises in accordance with local statute. All
such work, including additions, fixtures, and improvements
(but excluding movable office furniture and equipment and
other personal property. of Tenant) made or placed in or
upon the Premises by either Tenant or Landlord shall be and
become Landlord's property upon installation all without
compensation to Tenant.
MECHANIC 13. Tenant further agrees that Tenant shall pay all liens
LIENS of contractors, subcontractors, mechanics, laborers,
materialmen, and other items of like character, and shall
indemnify Landlord against all expenses, costs, and
charges, including bond premiums for release of liens and
attorney's fees and costs reasonably incurred in and adopt
the defense of any suit in discharging the said Premises or
any part thereof from any liens, judgments, or encumbrances
caused or suffered by Tenant. In the event any such lien
shall be made or filed, Tenant shall bond against or
discharge the same within ten (10) days after the same has
been made or filed. It is understood and agreed between the
parties hereto that the expenses, costs and charges above
referred to shall be considered as rent due and shall be
included in any lien for rent.
Tenant shall not have any authority to create any
liens for labor or materials on Landlord's interest in the
Leased Premises, and Tenant shall place all persons
contracting with Tenant for the destruction or removal of
any facilities or other improvements or for the erection,
installation, alternation, or repair of any facilities or
other improvements on or about the Leased Premises, and all
materialmen, contractors, subcontractors, mechanics, and
laborers on notice that they must look only to Tenant and
to Tenant's interest in the Leased Premises to secure the
payment of all bill for work done or material furnished at
the request or instruction of Tenant.
PARKING 14. Pursuant to all the terms, provisions, covenants, and
conditions contained herein, for the Term of this Lease,
Tenant hereby shall be provided one hundred (100)
unassigned parking spaces. Four (4) of the parking spaces
may be assigned for Carnival Air Lines visitors. During the
lease term, Landlord shall have the right to assign any and
all parking spaces. Tenant agrees to hold Landlord harmless
for damage to the vehicles or personal property in vehicles
that may occur while the vehicles are parked in the parking
areas of the Building.
ESTOPPEL 15. Tenant agrees that from time to time, upon not less
AGREEMENT than ten (10) days prior request by Landlord, Tenant shall
deliver to Landlord a statement in writing certifying (a)
that this Lease is unmodified and in full force and effect,
(or, if there have been modifications, that the Lease as
modified is in full force and effect and stating the
modifications); (b) the dates to which the rent and other
charges have been paid; and (c) that Landlord is not in
default under any provisions of this Lease, or, if in
default, the nature thereof in detail.
SUBORDIN- 16. If the Building and/or Leased Premises are at any time
NATION subject to a mortgage and/or deed of trust, and Tenant has
received written notice from mortgagee of same, then in any
instance in which Tenant gives notice to Landlord alleging
default by Landlord hereunder, Tenant shall also
simultaneously give a copy of such notice to each
Landlord's mortgagee; and each Landlord's mortgagee shall
have the right (but not the obligation) to cure or remedy
such default during the period that is permitted to
Landlord hereunder, plus an additional period of thirty
(30) days, and Tenant shall accept such curative or
remedial action (if any) taken by Landlord's mortgagee with
the same effect as if such action had been taken by
Landlord.
This Lease shall, at Landlord's option, which option
may be exercised at any time
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during the Lease Term, be subject and subordinate to any
mortgage now or hereafter encumbering the Building. This
provision shall be self-operative without the execution of
any further instruments. Notwithstanding the foregoing,
however, Tenant hereby agrees to execute any instruments
which Landlord may deem desirable to evidence the
subordination of this Lease to any and all such mortgages.
Failure to execute a subordination agreement within ten
(10) days after request from Landlord shall be deemed a
default hereunder.
ATTORNMENT 17. If the interest of Landlord under this Lease shall be
transferred voluntarily or by reason of foreclosure or
other proceedings for enforcement of any mortgage on the
Leased Premises, Tenant shall be bound to such transferee
(herein sometimes called the "Purchaser") for the balance
of the Term hereof remaining, and any extensions or
renewals thereof which may be effective in accordance with
the terms and provisions hereof with the same force and
effect as if the Purchaser were Landlord under this Lease,
and Tenant does hereby agree to attorn to the Purchaser,
including the mortgagee under any such mortgage if it be
the Purchaser, as its said attornment to be effective and
self-operative without the execution of any further
instruments upon the Purchaser succeeding to the interest
of this Lease. The respective rights and obligations of
Tenant and the Purchaser upon such attornment, to the
extent of the then remaining balance of the Term of this
Lease and any such extensions and renewals, shall be and
are the same as those set forth herein. In the event of
such transfer of Landlord's interests, Landlord shall be
released and relieved from all liability and responsibility
thereafter accruing in Tenant under Lease or otherwise and
Landlord's successor by acceptance of rent from Tenant
hereunder shall become liable and responsible to Tenant in
respect to all obligations of Landlord under this lease
thereafter accruing.
ASSIGNMENT 18. Without the written consent of Landlord first obtained
in each case, which consent may be granted or withheld at
Landlord's sole discretion, Tenant shall not voluntarily or
involuntarily, whether by operation of law or otherwise,
assign, transfer, mortgage, pledge or otherwise encumber or
dispose of this Lease or underlet the Leased Premises or
any part thereof or permit the Leased Premises or any part
thereof to be occupied by other persons. In lieu of
consenting or not consenting, Landlord may, at its option,
(1) in the case of a proposed assignment of this lease or a
proposed subletting of all of the Leased Premises,
terminate this Lease as to that portion of the Premises
which Tenant has proposed to sublet. In the event Landlord
elects to terminate this Lease pursuant to clause (ii) of
this paragraph, Tenant's obligation as to Base Rental and
additional rent shall be reduced in the same proportion
that the Net Rentable Area of the portion of the Premises
which Tenant proposed to sublet bears to the total Net
Rentable Area of the Premises. If this Lease is assigned or
if the Leased Premises or any part thereof is underlet or
occupied by anybody other than Tenant, voluntarily or
involuntarily, whether by operation of law or otherwise,
Landlord may, after default by Tenant under this Lease in
case of a sublease and at any time (whether or not Tenant
is in default under this Lease) in the case of an
assignment, collect or accept rent form the assignee,
undertenant or occupant and apply the net amount collected
or accepted to the rent herein reserved; but such
collection or acceptance shall not be deemed a waiver of
the foregoing covenant or the acceptance of the assignee,
undertenant or occupant as Tenant hereunder, nor shall it
be construed as or implied to be a release of Tenant from
the further observance and performance by Tenant of the
terms, provisions, covenants and conditions herein
contained.
In the event Tenant is a partnership, corporation or
other firm or entity, any transfer of more than fifty
percent (50%) of the right, title or interest herein,
existing as of the date hereof shall, for the purposes
hereof be deemed to be an assignment. Fifty percent (50%)
of any sums or other economic considerations received by
Tenant as a result of a subletting, whether denominated
rentals under the sublease or otherwise, which exceed, in
the aggregate, the total sums which Tenant is obligated to
pay Landlord under this Lease (prorated to reflect
obligations applicable to that portion of the Leased
Premises subject to such sublease) shall be payable to
Landlord, immediately following Tenant's receipt of the
same under this Lease
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without affecting or reducing any other obligations of
Tenant hereunder and shall constitute additional rent.
Fifty percent (50%) of any sums or other economic
considerations received by Tenant as result of an
assignment of this Lease, whether denominated rentals under
the assignment or otherwise, shall be payable to Landlord,
immediately following Tenant's receipt of the same under
this Lease without affecting or reducing any other
obligations of Tenant hereunder and shall constitute
additional rent.
SUCCESSORS 19. All terms, provisions, covenants and conditions to
AND ASSIGNS be observed and performed by Tenant shall be applicable to
and binding upon Tenant's respective heirs, administrators,
executor, successors and assigns - subject, however, to the
restrictions as to assignment or subletting by Tenant as
provided therein. All expressed covenants of this Lease
shall be deemed to be covenants running with the land.
HOLD 20. Tenant agrees to indemnify and hold harmless
HARMLESS OF Landlord against all claims and damages to persons or
LANDLORD property by reason of the use or occupancy of the Leased
Premises by Tenant, its agents, contractors or employees or
invitees and to pay all expenses incurred by Landlord in
connection therewith including attorney's fees and court
costs.
Landlord shall not be liable to Tenant or to any
person, firm, corporation, or other business association
claiming by, through or under Tenant, for failure to
furnish or for delay in furnishing any services provided
for in this Lease and not such failure or delay by Landlord
shall be actual or constructive eviction of Tenant nor
shall any such failure or delay operate or relieve Tenant
from the prompt and punctual performance of each and all of
the covenants to be performed herein by Tenant; nor form
any defects in the Premises or Building; or from defects in
the cooling, heating, electric, water, elevator or other
applicable apparatus or systems or water discharge from
sprinkler systems in the Building; nor for theft,
mysterious disappearance or loss of any property of Tenant,
water from the premises or any part of the Building.
Tenant shall at all times maintain the following
insurance coverages and amounts:
(i) Commercial General Liability Insurance,
including Contractual Liability coverage, relating to the
Leased Premises and its appurtenances on an occurrence
basis with a minimum limit of at least $1,000,000 per
occurrence, $1,000,000 aggregate, including Personal Injury
and Products/Completed Operations. In addition, before
undertaking any alterations, additions, improvements,
construction or occupancy, Tenant shall obtain public
liability insurance and name Landlord and Landlord's
property manager as additional insured insuring Tenant and
Landlord (and its designees) against any liability which
may arise on account of such proposed alterations,
additions, improvements or construction on an occurrence
basis with a minimum single limit of at least $1,000,000.
(ii) Property insurance on an "all risk" basis,
including but not limited to, fire and lightning, extended
coverage (all risk of physical loss), vandalism and
malicious mischief and flood (if required by Landlord, any
mortgagee or governmental authority and if obtainable) in
an amount adequate to cover the full replacement cost of
Tenant's personal property, the property of others in the
care, custody or control of Tenant, and any improvements
and betterments installed by Tenant. Tenant waives any and
all right of recovery against Landlord for damage to the
aforementioned property and agrees to obtain waiver of
subrogation in the property insurance policy.
(iii) Workers compensation insurance for statutory
limits including a minimum of $1,000,000 employer's
liability covering all employed, directly or indirectly, in
connection with any finish work performed by Tenant or any
repair or alteration authorized by this Lease or consented
to by Landlord, and all employees or agents of Tenant.
(iv) Such other insurance as may be carried on the
Leased Premises and Tenant's
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operation thereof as may be required by Landlord from time.
The coverages afforded by such insurance shall not limit
Tenant's liability hereunder. If Tenant fails to obtain and
provide any or all of the aforesaid insurance, then
Landlord may, (but shall not be required to) purchase such
insurance on behalf of Tenant and Tenant shall, on demand,
reimburse Landlord for the cost of such insurance together
with interest thereof (from the date on which Landlord paid
such cost to the date on which Tenant reimburses Landlord
therefor) the maximum rate permitted by law and same shall
constitute additional rent. In case Landlord shall be made
a party to any litigation commenced against Tenant, then
Tenant shall protect and hold harmless and shall pay all
costs and reasonable attorney's fees incurred or paid by
Landlord in connection with such litigation and any
thereof, regardless of the initiation of court proceedings.
Tenant shall furnish Landlord certificates of
insurance certifying the above coverage. The certificates
shall include acknowledgment that the policies have been
amended to provide thirty (30) days notice of termination
to Landlord.
Notwithstanding any contrary provision of this Lease,
Tenant shall look solely (to the extent insurance coverage
is not applicable or available) to the interest of Landlord
in the Building for the satisfaction of any judgment or the
judicial process requiring the payment of money as a result
of any gross negligence or breach of this Lease by Landlord
or Landlord's management agent and Landlord shall have no
personal liability hereunder of any kind.
ATTORNEYS' FEES 21. If either party defaults in the performance of any of
the terms, provisions, and conditions and by reasons
thereof, the other party employs the services of an
attorney to enforce performance of the covenants, or to
perform a service based upon defaults, regardless of the
initiation of court proceedings, then in any of said
events, the prevailing party shall be entitled to
reasonable attorney's fees and all expenses and costs
incurred by the prevailing party pertaining thereto
(including costs and fees relating to any appeal) and in
enforcement of any remedy.
DESTRUCTION 22. In the event the Leased Premises shall be destroyed
OR DAMAGE or so damaged or injured by fire or other casualty, during
the Term of the Lease, whereby the same shall be rendered
untenantable, then Landlord shall have the right, but not
the obligation, to render such Leased Premises tenantable
by repairs within one hundred twenty (120) days therefrom.
Landlord agrees that, within thirty (30) days
following damage or destruction, it shall notify Tenant
with respect to whether or not Landlord intents to restore
the Premises. If said Premises are not rendered tenantable
within the aforesaid one hundred twenty (120) days, it
shall be optional with either party hereto to cancel this
Lease, and in the event of such cancellation, the rent
shall be paid only to the date of such fire or casualty.
The cancellation herein mentioned shall be evidenced in
writing. During any time that the Leased Premises are
untenantable due to causes set forth in this paragraph, the
rent r a just and fair proportion thereof shall be abated.
Notwithstanding the foregoing, should damage or
destruction occur during the last twelve (12) months of the
Lease Term, either Landlord or Tenant shall have the option
to terminate this Lease, effective on the date of damage or
destruction, provided notice to terminate is given within
thirty (30) days of the date of such damage or destruction.
EMINENT 23. If there shall be taken during the Term of this
DOMAIN Lease, any portion of the Leased Premises, parking
facilities or Building, other than a part not interfering
with maintenance, operation or use of the Leased Premises,
Landlord may elect to terminate this Lease or to continue
same in effect. If Landlord elects to continue the Lease,
the rental shall be reduced in proportion to the area of
the Leased Premises so taken and Landlord shall repair any
damage to
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the Leased Premises, parking facilities, or Building resulting
from such taking. If any part of the Leased Premises is taken by
condemnation or Eminent Domain which renders Leased Premises
unsuitable for its intended use, Tenant may elect to terminate
this Lease; or if any part of the Leased Premises is so taken
which does not render the Premises unsuitable for its intended
use, this Lease shall continue in effect, and the rental shall be
reduced in proportion to the area of the Leased Premises so taken
and Landlord shall repair any damage to the Leased Premises
resulting from such taking. If all of the Leased Premises is
taken by condemnation or Eminent Domain, this Lease shall
terminate on the date possession is taken by the authority. All
sums awarded or agreed upon between Landlord and the condemning
authority for the taking of the interest of Landlord whether as
damages or as compensation, and whether for partial or total
condemnation, shall be the sole property of Landlord. If this
Lease should be terminated under any provisions of this
paragraph, rental shall be payable up to the date that possession
is taken by the authority, and Landlord shall refund to Tenant
any prepaid unaccrued rent less any sums or amount then owing by
Tenant to Landlord.
ABANDON 24. If during the Term of this Lease, Tenant shall abandon,
- -MENT vacate or remove from the Lease Premises the major portion of the
goods, wares, equipment or furnishings usually kept on said
Leased Premises, or shall cease doing business in said Leased
Premises, or shall suffer the rent to be in arrears, Landlord
may, at its option, cancel this Lease in the manner stated in
Paragraph 27 hereof, or Landlord may enter said Leased Premises
as the agent of Tenant by force or otherwise, without being
liable in any way therefore, and relet the Leased Premises with
or without any furniture that may be therein, as the agent of
Tenant, at such price and upon such terms and for such duration
of time as Landlord may determine, and receive the rent
therefore, applying the same to the payment of the rent due by
these presents, and if the full rental herein provided shall not
be realized by Landlord over and above the expenses to Landlord
of such reletting, Tenant shall pay any deficiency. Landlord
shall have all rights of acceleration of, without further notice
to Tenant, in any manner Landlord deems fit in its sole
discretion, without any liability or rent credit to Tenant.
DEFAULT 25. It is agreed between the parties hereto that if Tenant shall
be adjudicated a bankrupt or an insolvent or take the benefit of
any federal or state reorganization or composition proceeding or
make a general assignment or take the benefit of any insolvency
law, or if Tenant's leasehold interest under this Lease shall be
sold under any execution or process of law; or if a trustee in
bankruptcy or a receiver be appointed or elected or had for
Tenant (whether under federal or state laws); or if said Premises
shall be abandoned or deserted; or if Tenant shall fail to
perform any of the terms, provisions, covenants or conditions of
this Lease on Tenant's part to be performed; or if this Lease or
the Term thereof be transferred or pass to or devolve upon any
persons, firms, officers, or corporations other than Tenant by
death of Tenant, operation of the law or otherwise; then and in
any such events, at the option of Landlord, the total remaining
unpaid Base Rental for the Term of this Lease shall become due
and payable and the Term of this Lease shall expire and end five
(5) days after Landlord has given Tenant written notice (in the
manner hereinafter provided) of such act, condition or default
and Tenant hereby agrees immediately then to pay said Base Rental
or quit and surrender said Leased Premises to Landlord; but this
shall not impair or affect Landlord's right to maintain summary
proceedings for the recovery of the possession of the Leased
Premises in all cases provided for by law. If the Term of this
Lease shall be so terminated, Landlord may immediately, or at any
time thereafter, re-enter or repossess the Leased Premises and
remove all persons and property therefrom without being liable
for trespass or damages. In addition, Landlord shall be entitled
to all rights and remedies available at law or in equity in the
event Tenant shall fail to perform any of the terms, provisions,
covenants or conditions of this Lease on Tenant's part to be
performed. All rights and remedies specifically granted to
Landlord herein by law or in equity shall be cumulative and not
mutually exclusive.
WAIVER OF 26. Failure of Landlord to declare any default upon occurrence
DEFAULT thereof, or delay in taking any action in connection therewith,
shall not waive such default, but Landlord shall have the right
to declare any such default at any time and take such action as
might be lawful or
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authorized hereunder, in law and/or in equity. No waiver by
Landlord of a default by Tenant shall be implied, and no express
waiver by Landlord shall affect any default other than the
default specified in such waiver and then only for the time and
extension therein stated.
No waiver of any term, provision, condition or covenant of
this Lease by Landlord shall be deemed to imply or constitute a
further waiver by Landlord of any other term, provision condition
or covenant of this Lease.
RIGHT OF 27. Landlord, or any of his agents, shall have the right to
ENTRY enter the Leased Premises by appointment during all reasonable
hours to examine the same or to make such repairs, additions or
alterations as may be deemed necessary for the safety, comfort,
or preservation thereof, or to said Building or to exhibit said
Leased Premises at any time within one hundred eighty (180) days
before the expiration of this Lease. Said right of entry shall
likewise exist for the purpose of removing placards, signs,
fixtures, alterations, or additions which do not conform to this
Lease. Appointment shall not be unreasonably withheld.
NOTICE 28. Any notice given Landlord as provided for in this Lease
shall be sent to Landlord by registered mail addressed to
Landlord at Landlord's Management Office. Any notice to be given
Tenant under the terms of this Lease, unless otherwise stated
herein, shall be in writing and shall be sent by registered mail
to the office of Tenant in the Building or hand delivered to
Tenant. Either party, from time to time, by such notice, may
specify another address to which subsequent notice shall be sent.
LANDLORD 29. All automobile parking areas, driveways, entrances and
CONTROLLED exits thereto, Common Areas, and other facilities furnished by
AREAS Landlord, including all parking areas, truck ways, loading areas,
pedestrian walkways and ramps, landscaped areas, stairways,
corridors, and other areas and improvements provided by Landlord
for the general use, in common, of tenants, their officers,
agents, employees, servants, invitees, licenses, visitors,
patrons and customers shall be at times subject to the exclusive
control and management of Landlord, and Landlord shall have the
right from time to time to establish, modify and enforce rules
and regulations with respect to all facilities and areas and
improvements, to police same, from time to time to change the
area, level and location and arrangement of parking areas and
other facilities hereinabove referred to, to restrict parking by
and enforce parking charges (by operation of meters or otherwise)
to tenants, their officers, agents, invitees, employees,
servants, licensees, visitors, patrons and customers, to close
all or any portion of said areas or facilities to such extensions
as may, in the opinion of Landlord's counsel, be legally
sufficient to prevent a dedication thereof or the accrual of any
rights to any person or the public therein, to close temporarily
all or any portion of the public areas, Common Areas or
facilities, to discourage non-tenant parking, to charge a fee for
visitor and/or customer parking and to do and perform such other
acts in and to said areas and improvements as, in the sole
judgement of Landlord. Landlord shall operate and maintain to
Common Areas and other facilities referred to in such reasonable
manner as Landlord shall determine from time to time. Without
limiting the scope of such discretion, Landlord shall have full
authority to make and enforce rules and regulations regarding the
use of the same or to employ all personnel and to make and
enforce all rules and regulations pertaining to and necessary for
the proper operation and maintenance of the parking area and/or
Common Areas and other facilities. Reference in this paragraph to
parking area and/or facilities shall in no way be construed as
giving Tenant hereunder any rights and/or privileges in
connection with such parking areas and/or facilities unless such
rights and/or privileges are expressly set forth in Paragraph 17
hereof.
CONDITIONS 30. Tenant agrees to surrender to Landlord, at the end of the
OF PREMISES Term of this Lease and/or upon any cancellation of this Lease,
ON said Leased Premises in as good condition as said Leased Premises
TERMINATION were at the beginning of the Term of this Lease, ordinary wear
OF LEASE AND and tear, and damage by fire or other casualty not caused by
HOLDING Tenant's negligence excepted. Tenant agrees that if tenant does
OVER not surrender said Leased Premises to Landlord at the end of the
Term of this Lease, then Tenant shall pay to Landlord double the
amount of the current rental for each
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month or portion thereof that Tenant holds over plus all damages
that Landlord may suffer on account of Tenant's failure to so
surrender to Landlord possession of said Leased Premises and
shall indemnify and save Landlord harmless from and against all
claims made by any succeeding tenant of said Leased Premises
against Landlord on account of delay of Landlord in delivering
possession of said Leased Premises to said succeeding tenant so
far as such delay is occasioned by failure to so surrender said
Leased Premises in accordance herewith or otherwise.
No receipt of money by Landlord from Tenant after
termination of this Lease or the service of any notice of
commencement of any suit or final judgement for possession shall
reinstate, continue or extend the Term of this Lease or affect in
writing and subscribed by a duly authorized officer or agent of
Landlord.
No act or thing done by Landlord or its agents during the
Term hereby granted shall be deemed an acceptance of a surrender
of the Leased Premises, and no agreement to accept a surrender of
the Leased Premises shall be valid unless it be made in writing
and subscribed by a duly authorized officer or agent of Landlord.
OCCUPANCY 31. Tenant shall be responsible for and shall pay before
TAX delinquency all municipal, county or state taxes assessed during
the Term of this Lease against any occupancy interest or personal
interest or personal property of any kind, owned by or placed in,
upon or about the Leased Premises by Tenant.
SIGNS 32. Landlord shall have the sole right to install on the
interior or exterior of the Building (not to obscure Tenant's
sign) and Leased Premises and Landlord shall have the sole right
to change the Building's name or street address.
TRIAL BY 33. It is mutually agreed by and between Landlord and Tenant
JURY that the respective parties hereto shall, and they hereby do
waive trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other on any
matters arising out of or in any way connected with this Lease,
the relationship of Landlord and Tenant, and Tenant's use or
occupancy of the Premises. Tenant further agrees that it shall
not interpose any counterclaim in a summary proceeding or in any
action based upon non-payment of rent or any other payment
required of Tenant hereunder.
RELOCATION 34. With the mutual agreement of Landlord and Tenant, Landlord
OF TENANT expressly reserves the right at Landlord's sole cost to remove
Tenant from the Leased Premises and to relocate Tenant in some
other space of Landlord's choosing of approximately the same
dimensions and size within the Building, which other space shall
be decorated by Landlord at Landlord's expense. Landlord shall
have the right, in Landlord's sole discretion, to use such
decorations and materials from the existing Premises, or other
materials so that the space in which Tenant is removed. Nothing
herein contained shall be construed the relieve Tenant or imply
that Tenant is relieved of the liability for or obligation to pay
any additional rent due by reason of the provisions of Paragraph
4 of this Lease, the provisions of which paragraph shall be
applied to the space in which Tenant is relocated on the same
basis as said provisions were applied to the Premises from which
Tenant is removed. Tenant agrees that Landlord's exercise of its
election to remove and relocate Tenant shall not terminate this
Lease or release Tenant, in whole or in part, from Tenant's
obligation to pay the rents and perform the covenants and
agreements hereunder for the full Term of this Lease.
CROSS 35. If the term of any lease, other than this Lease, made by
DEFAULT Tenant for any other space in the Building shall be terminated or
terminable after the making of this Lease as herein extent
permitted by law. This Lease shall be construed in accordance
with the laws of the State of Florida.
INVALIDITY OF 36. If any terms, provision, covenant or condition of this
PROVISION Lease or the application thereof
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to any person or circumstances shall, to any extent, be invalid
or unenforceable, the remainder of this Lease or the application
of such term, provisions, covenant or condition to persons or
circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby and each term,
provision, covenant or condition of this Lease shall be valid and
be enforceable to the fullest extent permitted by law. This lease
shall be construed in accordance with the laws of the State of
Florida.
TIME OF 37. It is understood and agreed between the parties hereto
ESSENCE that time is of the essence of all the terms, provisions,
covenants and conditions of this Lease.
MISCEL- 38. The terms "Landlord" and "Tenant" as herein contained shall
LANEOUS include singular and/or plural, masculine, feminine and/or
neuter, heirs, successors, executors, administrators, personal
representatives and/or assigns wherever the context so requires
or admits. The terms, provisions, covenant and conditions of this
Lease are expressed in the total language of this Lease Agreement
and the paragraph headings are solely for the convenience of the
reader and are not intended to be all inclusive. Any formally
executed addendum to or modification of this Lease shall be
expressly deemed incorporated by reference herein unless a
contrary intention is clearly stated therein.
EFFECTIVE 39. Submission of this instrument for examination does not
DATE constitute an offer, right of first refusal, reservation of or
option for the Leased Premises or any other space or premises in,
on or about the Building. This instrumental becomes effective as
a Lease only upon execution and delivery by both Landlord and
Tenant.
ENTIRE 40. This Lease contains the entire agreement between the
AGREEMENT parties hereto and all previous negotiations leading thereto and
it may be modified only by an agreement in writing signed by
Landlord and Tenant. No surrender of the Leased Premises, or of
the remainder of the terms of this Lease, shall be valid unless
accepted by Landlord in writing. Tenant acknowledges and agrees
that Tenant has not relied upon any statement, representation,
prior written or contemporaneous oral promises, agreements or
warranties, except such as are expressly herein.
DUAL 41. Tenant represents and warrants that it has dealt with no
AGENCY broker, agent or other person in connection with this
DISCLOSURE transaction and that no broker, agent or other person brought
about this transaction, other than Allen Morris Commercial Real
Estate as agent for Landlord, shall be compensated by the
Landlord. Tenant agrees to indemnify and hold Landlord harmless
from and against any claims by any other broker, agent or other
person claiming a commission or other form of compensation by
virtue of having dealt with Tenant with regard to this leasing
transaction. The provisions of this paragraph shall survive the
termination of this Lease.
FORCE 42. Neither Landlord nor Tenant shall be required to perform
MAJEURE any term, condition or covenant in this Lease so long as such
performance is delayed or prevented by force majeure, which shall
mean acts of God, labor disputes (whether lawful or not),
material or labor shortages, restrictions by any governmental
authority, civil riots, floods, and any other cause not
reasonably within the control of Landlord or Tenant and which by
the exercise of due diligence Landlord or Tenant is unable,
wholly or in part, to prevent or overcome. Lack of money shall
not be deemed force majeure.
RADON GAS 43. Radon is a naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have
been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your
county public health unit.
USE OF 44. Tenant shall not cause or permit any Hazardous Material to
HAZARDOUS be brought upon, kept or used in or about the Premises or the
MATERIALS Building by Tenant, its agents, employees, contractors or
invitees. If Tenant breaches this obligation, Tenant shall
indemnify, defend and hold Landlord harmless from any and all
claims, judgements, damages, penalties, fines, costs, liabilities
or
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losses (including without limitation, diminution in value of the
Premises or the Building, damages for loss or restriction on use
of rentable space or of any amenity of the Premises or the
Building, damages arising form any adverse impact on marketing of
space, and sums paid in settlement of claims, attorney's fees,
consultant fees and expert fees) which arise during or after the
lease Term as a result of such contamination. This
indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation
of site conditions or any cleanup, remedial, removal or
restoration work required by and federal, state or local
governmental agency or political subdivision because of Hazardous
Material present in the soil or ground water, in the Premises or
in the Building.
Without limiting the foregoing, if the presence of any
Hazardous Material on the Premises or in the Building caused by
Tenant, its agents, employees, contractors or invitees results in
any contamination of the Premises and/or the Building, Tenant
shall promptly take all actions at its sole expense as are
necessary to return the Premises and/or the Building to the
conditions existing prior to the introduction of any such
Hazardous Material to the Premises; provided that Landlord's
approval of such actions shall first be obtained, which approval
shall not be unreasonably withheld so long as such actions would
not potentially have any material adverse long-term effect on the
Premises and/or the Building. The foregoing indemnity shall
survive the expiration or earlier termination of the Lease. As
used herein, the term "Hazardous Material" means such hazardous
or toxic substance, material or waste, including, but not limited
to, those substances, materials, and wastes listed in the United
States Department of Transportation Hazardous Materials Table (49
CFR 172.101) or by the Environmental Protection Agency as
hazardous substances (40 CFR Part 302) and amendments thereto, or
such substances, materials and wastes that are or become
regulated under applicable local, state or federal law. Landlord
and its agents shall have the right, but not the duty, to inspect
the Premises at any time to determine whether Tenant is complying
with the terms of this Lease. Landlord shall use its best efforts
to minimize interference with Tenant's business but shall not be
liable for any interference caused thereby. Any default under
this paragraph shall be a material default-enabling Landlord to
exercise any of the remedies set forth in this Lease.
15
<PAGE>
ADDENDUM
This ADDENDUM is attached to and is to be considered part of that Lease
Agreement between Airport Commerce Center, Inc., as Landlord and Carnival
Airlines, Inc., as Tenant dated February ____, 1996, for lease of office space
at the Airport Commerce Park, 4101 Ravenswood Road, Dania, FL 33312
LANDLORD'S WORK 45. Prior to occupancy and at no additional cost to Tenant,
Landlord shall build out the demised space using building
standard materials in accordance with a space plan to be
prepared by Landlord and approved by Tenant and Landlord
prior to construction.
16
<PAGE>
RULES AND REGULATIONS
The following Rules and Regulations, hereby accepted by Tenant, are
prescribed by Landlord to enable Landlord to provide, maintain, and operate, to
the best of Landlord's ability, orderly, clean and desirable premises, Building
and parking facilities for tenants therein at as economical a cost as reasonably
possible and in as efficient a manner as reasonably possible, to assure security
for the protection of tenants so far as reasonably possible, and to regulate
conduct in and use of said Premises, Building and parking facilities in such
manner as to minimize interference by others in the proper use of same by
Tenant.
1. Tenant, its officers, agents, servants and employees shall not block or
obstruct any of the entries, passages, doors, elevator doors, hallways or
stairways of Building or parking facilities, or place, empty or throw any
rubbish, litter, trash or material of any nature into such areas, or permit such
areas to be used at any time except for ingress or egress of Tenant, its
officers, agents, servants, employees, patron, licensees, customers, visitors or
invitees.
2. The movement of furniture, equipment, merchandise or materials within, into
or out of the Leased Premises, Building or parking facilities shall be
restricted to time, method and routing of movement as determined by Landlord
upon request from Tenant and Tenant shall assume all liability and risk to
property, Premises and Building in such movement. Tenant shall not move
furniture, machines, equipment merchandise or materials within, into or out of
the Building, Leased Premises or parking facilities without having first
obtained a written permit from Landlord twenty-four (24) hours in advance.
Safes, large files, electronic data processing equipment and other heavy
equipment or machines shall be moved into Leased Premises, Building or parking
facilities only with Landlord's written consent and placed where directed by
Landlord.
3. No sign, door plaque, advertisement or notice shall be displayed, painted
or affixed by Tenant, its officers, agents, servants, employees, patrons,
licensees, customers, visitors or invitees in or on any part of the outside or
inside the Building, parking facilities or Leased Premises without prior written
consent of Landlord and then only of such color, size, character, style and
materials and in such places as shall be approved and designated by Landlord.
Signs on doors and entrances to Leased Premises shall be placed thereon by a
contractor designated by Landlord and paid for by Tenant. Tenant will be allowed
to advertise presence of a sales office that is clearly visible to the public.
All signage must comply with all municipal codes and shall be approved by
Landlord prior to installation. Approval shall not be unreasonably withheld.
4. Landlord shall not be responsible for lost or stolen property, equipment,
money or any article taken from Leased Premises, Building or parking facilities,
regardless of how or when loss occurs.
5. No additional locks shall be placed on any door or changes made to existing
locks in Building without the prior written consent of Landlord. Landlord shall
furnish two keys to each lock on doors in the Leased Premises and Landlord, upon
request of Tenant, shall provide additional duplicate keys at Tenant's expense.
Landlord may, at all times, keep a pass key to the Leased Premises. All keys
shall be returned to Landlord promptly upon termination of this Lease. Tenant
shall, at Tenant's expense be allowed to re-key interior and exterior doors to
master and furnish master to Landlord.
6. Tenant, its officers, agents, servants or employees shall do no painting or
decorating in Leased Premises, or mark, paint or cut into, drive nails or screw
into or in any way deface any part of Leased Premises or Building without the
prior written consent of Landlord. If Tenant desires signal, communication,
alarm or other utility or service connection installed or changed, such work
shall be done at expense of Tenant, with the approval and under the direction of
Landlord.
7. Landlord reserves the right to:
(i) Close the Parking Area at 6:00 p.m., subject, however, to Tenant's
right to admittance under regulations prescribed by Landlord, and to
require the persons entering the Building to identify themselves and
establish their right to enter or to leave the Building; Tenant shall have
access to parking after hours by Landlord providing Tenant with access;
17
<PAGE>
(ii) close all parking areas between the hours of 6:00 p.m. and 7:00 a.m.
during the week days; and
(iii) close all parking areas on weekends and holidays.
(iv) Tenant shall have full access to Leased Premises twenty-four (24)
hours a day, seven (7) days a week. Tenant shall be provided access
cards for after-hours-secured gates.
8. Tenant, its officers, agents, servants and employees shall not permit the
operation of any musical or sound producing instruments or device which may be
heard outside Leased Premises, Building or parking facilities, or which may
emanate electrical waves which shall impair radio or television broadcasting or
reception from or in Building.
9. Tenant, its officers, agents, servants and employees shall, before leaving
Leased Premises unattended, close and lock all doors and shut off all utilities;
damage resulting from failure to do so shall be paid by Tenant. Before closing
of the day and leaving the said Premises, each Tenant shall see that all blinds
and/or draperies are pulled and drawn.
10. All plate and other glass now in Leased Premises or Building which is
broken through cause attributable to Tenant, its officers, agents, servants and
employees, patrons, licensees, customers, visitors or invitees shall be replaced
by and at expense of Tenant under the direction of Landlord.
11. Tenant shall give Landlord prompt notice of all accidents to or defects in
air conditioning equipment, plumbing, electric facilities or any part or
appurtenance of Leased Premises.
12. The plumbing facilities shall not be used for any other purpose than that
for which they are constructed, and no foreign substances of any kind shall be
thrown therein, and the expense of any breakage, stoppage, or damage resulting
from a violation of this provision shall be borne by Tenant, who shall, or whose
officers, employees, agents, servants, patrons, customers, licensees, visitors
or invitees shall have caused it.
13. All contractors and/or technicians performing work for Tenant within the
Leased Premises, Building or parking facilities shall be referred to Landlord
for approval before performing such work. This shall apply to all work
including, but not limited to, installation of telephones, telegraph equipment,
electrical devices and attachments, and all installations affecting floors,
walls, windows, doors, ceiling, equipment or any other physical feature of the
Building, Leased Premises or parking facilities. None of this work shall be
done by Tenant without Landlord's prior written approval. Approval of Tenant's
contractors and communications and computer support vendors and employees
performing normal routine installations will not be governed by this condition
nor will approvals be unreasonably withheld or delayed.
14. No showcases or other articles shall be put in front of or affixed to any
part of the exterior of the Building, nor placed in the halls, corridors or
vestibules without the prior written consent of Landlord.
15. Glass panel doors, that reflect or admit light into the passageways or into
any place in the Building shall not be covered or obstructed by Tenant, and
Tenant shall not permit, erect, and/or place drapes, furniture, fixtures,
shelving, display cases or tables, lights or signs and advertising devices in
front of or in proximity of interior and exterior windows, glass panels, or
glass doors providing a view into the interior of the Leased Premises, unless
same shall have first been approved in writing by Landlord.
16. Canvassing, soliciting and peddling in the Building or parking facilities
is prohibited and each Tenant shall cooperate to prevent the same. In this
respect, Tenant shall promptly report such activities to the Property Management
office.
18
<PAGE>
17. There shall not be used in any space, or in the public halls of the
Building, either by any Tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and side guards.
18. In the event Tenant must dispose of crates, boxes, etc., which shall not
fit into office wastepaper baskets, it shall be the responsibility of Tenant
with Landlord's assistance to dispose of same. In no event, shall Tenant set
such items in the public hallways or other areas of Building or parking
facilities, excepting Tenant's own Premises, for disposal.
19. Tenants are cautioned in purchasing furniture and equipment that can easily
fit on the elevator and can pass through the doors of the Leased Premises.
Large pieces should be made in parts and set up in the Leased Premises.
Landlord reserves the right to refuse to allow any furniture or equipment of any
description to be placed in the Building which does not comply with the above
conditions.
20. Tenants shall be responsible for any damage to the Leased Premises,
including carpeting and flooring, as a result of rust or corrosion of file
cabinets, roller chairs, metal objects or spills of any type of liquid.
21. If the Premises demised to Tenant become infested with vermin, Tenant, at
its sole cost and expense, shall cause its premises to be exterminated from time
to time, to the satisfaction of Landlord, and shall employ such extermination
therefore as shall be approved by Landlord.
22. Tenant shall not install any antenna or aerial wires, or radio or
television equipment, or any other type of equipment, inside or outside the
Building, without Landlord's prior approval in writing, and upon such terms and
conditions as may be specified by Landlord in each and every instance. Approval
shall not be unreasonably withheld.
23. Tenant shall not advertise the business, profession or activities of Tenant
in any manner which violated the letter or spirit of any code of ethics adopted
by any recognized association or organization pertaining thereto, or use the
name of the Building for any purpose other than that of the business address of
Tenant or use any letterhead, envelopes, circulars, notices, advertisements,
containers or wrapping material without Landlord's express consent in writing.
24. Tenant, its officers, agents, employees, servants, patrons, customers,
licensees, invitees and visitors shall not solicit business in the Building's
parking facilities or Common Areas, nor shall Tenant distribute any handbills or
other advertising matter in automobiles parked in the Building's parking
facilities.
25. Tenant shall not conduct its business in such manner as to create any
nuisance, or interfere with, annoy or disturb any other Tenant in the Building,
or Landlord in its operation of the Building or commit waste or suffer or permit
waste to be committed in the Leased Premises, Building or parking facilities.
In addition, Tenant shall not allow its officers, employees, agents, servants,
patrons, customers, licensees, and visitors to conduct themselves in such a
manner as to create any nuisance or interfere with, annoy or disturb any other
Tenant in the Building or Landlord in its operations of the Building or commit
waste or suffer or permit waste to be committed in the Leased Premises, Building
or parking facilities.
26. Tenant, its officers, agents, servants and employees shall not install or
operate any refrigerating, heating or air conditioning apparatus or carry on any
mechanical operation or bring into Leased Premises, Building or parking
facilities any flammable fluids or explosives without permission of Landlord.
27. Tenant, its officers, employees, agents and servants shall not use Leased
Premises, Building or parking facilities for housing, lodging or sleeping
purposes or for the cooking or preparation of food without prior written consent
of Landlord.
19
<PAGE>
28. Tenant, its officers, employees, agents, servants, patrons, customers,
licensees, visitors or invitees shall not bring into parking facilities,
Building or Leased Premises or keep on Leased Premises any fish, fowl, reptile,
insect, or animal or any bicycle or other vehicle without the written consent of
Landlord.
29. Neither Tenant nor any officers, employees, agents, servants, patrons,
customers, licensees, visitors or invitees or any Tenant shall go upon the roof
of the Building without the written consent of Landlord.
30. Tenants employing laborers or others outside of the Building shall not have
their employees paid in the Building, but shall arrange to pay their payrolls
elsewhere.
20
<PAGE>
ASSIGNMENT OF LEASE
-------------------
THIS ASSIGNMENT OF LEASE, made and entered into this ________ Day of July, 1999
by and between OASIS RESERVATION SERVICES, INC., hereinafter called the
"Assignor", and INTERNET TRAVEL NETWORK, hereinafter called the "Assignee".
WITNESSETH:
-----------
For good and valuable consideration paid by Assignee to Assignor, receipt of
which is hereby acknowledged, Assignor does hereby assign unto Assignee all of
the right, title and interest of Assignor as Tenant under that certain lease
dated August 23, 1995 by and between Airport Commerce Park, Inc., as Landlord,
and Pan American Airways Corp. F/K/A Carnival Air Lines, Inc., as Tenant, with
an Assignment of Lease to Oasis Reservation Services, Inc., dated June 18, 1998
relating to that certain area containing approximately 8,688 square feet of
space, Suite numbers 308 through 318, located at 4101 Ravenswood Road, Dania,
Florida, together, with all of the rights of Assignor arising under said lease.
The said assignment by said Assignor or Assignee shall become affective on the
14th day of July. Copy of above recited lease dated March 1, 1996, and First
Assignment of Lease dated June 18th, 1998 is attached hereto and make a part
hereof.
The Assignor understands and agrees that this assignment shall not in any manner
relieve the Assignor from liability upon the covenants of said lease and agrees
that the Assignor shall remain liable for all payments provided for and to
perform and abide by all the covenants and conditions of said lease as are
provided by Tenant therein to be made and performed.
The Assignee, by execution hereof, hereby accepts the foregoing assignment and
assumes and agrees to make all the payments provided for and to perform and
abide by all the covenants and conditions of said lease as are provided by
Tenant therein to be made and performed.
The Assignee, by execution hereof, hereby accepts the foregoing assignment and
assumes and agrees to make all the payments provided for and to perform and
abide by all the covenants and conditions of said lease as are provided by
Tenant therein to be made and performed.
IN WITNESS WHEREOF, the parties hereto have assigned and sealed this Assignment
of Lease in triplicate the day and year first above written.
WITNESSES: ASSIGNOR:
OASIS RESERVATION SERVICES, INC.
_______________________________ _____________________________________________
_______________________________
<PAGE>
ASSIGNEE:
INTERNET TRAVEL NETWORK
_______________________________ _____________________________________________
_______________________________
Case Holding Company, Inc., Landlord in the above mentioned lease, hereby
consents to the foregoing Assignment of Lease under the conditions as stated
above and with an additional condition that no further assignment of said lease
of the premises thereby demised or any part thereof shall be made without the
written consent of the Landlord. Signed and sealed this ________ Day of
_____________ 1999.
WITNESSES: CASE HOLDING COMPANY, INC.
_______________________________ ---------------------------------------------
Cy J. Case, President
_______________________________
<PAGE>
ASSIGNMENT OF LEASE
-------------------
THIS ASSIGNMENT OF LEASE, made and entered into this ________ Day of July, 1999
by and between OASIS RESERVATION SERVICES, INC., hereinafter called the
"Assignor", and INTERNET TRAVEL NETWORK, hereinafter called the "Assignee".
WITNESSETH:
-----------
For good and valuable consideration paid by Assignee to Assignor, receipt of
which is hereby acknowledged, Assignor does hereby assign unto Assignee all of
the right, title and interest of Assignor as Tenant under that certain lease
dated August 23, 1995 by and between Airport Commerce Park, Inc., as Landlord,
and Pan American Airways Corp. F/K/A Carnival Air Lines, Inc., as Tenant, with
an Assignment of Lease to Oasis Reservation Services, Inc., dated June 18, 1998
relating to that certain area containing approximately 1,600 square feet of
space, Suite numbers 322 through 323, located at 4101 Ravenswood Road, Dania,
Florida, together, with all of the rights of Assignor arising under said lease
and including transfer of Assignor to Assignee of security deposit of None
posted under said lease. The said assignment by said Assignor or Assignee shall
become effective on the 14th day of July. Copy of above recited lease dated
March 1, 1996, and First Assignment of Lease dated June 18th, 1998 is attached
hereto and made a part hereof.
The Assignor understands and agrees that this assignment shall not in any manner
relieve the Assignor from liability upon the covenants of said lease and agrees
that the Assignor shall remain liable for all payments provided for and to
perform and abide by all the covenants and conditions of said lease as are
provided by Tenant therein to be made and performed.
The Assignee, by execution hereof, hereby accepts the foregoing assignment and
assumes and agrees to make all the payments provided for and to perform and
abide by all the covenants and conditions of said lease as are provided by
Tenant therein to be made and performed.
The Assignee, by execution hereof, hereby accepts the foregoing assignment and
assumes and agrees to make all the payments provided for and to perform and
abide by all the covenants and conditions of said lease as are provided by
Tenant therein to be made and performed.
IN WITNESS WHEREOF, the parties hereto have assigned and sealed this Assignment
of Lease in triplicate the day and year first above written.
WITNESSES: ASSIGNOR:
OASIS RESERVATION SERVICES, INC.
______________________________ _____________________________________________
______________________________
<PAGE>
ASSIGNEE:
INTERNET TRAVEL NETWORK
_______________________________ _____________________________________________
_______________________________
Case Holding Company, Inc., Landlord in the above mentioned lease, hereby
consents to the foregoing Assignment of Lease under the conditions as stated
above and with an additional condition that no further assignment of said lease
of the premises thereby demised or any part thereof shall be made without the
written consent of the Landlord. Signed and sealed this ________ Day of
_____________ 1999.
WITNESSES: CASE HOLDING COMPANY, INC.
_______________________________ ---------------------------------------------
Cy J. Case, President
_______________________________
<PAGE>
ASSIGNMENT OF LEASE
-------------------
THIS ASSIGNMENT OF LEASE is made and entered into this 18th day of June, 1998 by
and between Pan American Airways Corp. f/k/a Carnival Air Lines, Inc.,
hereinafter called the "Assignor", and OASIS Reservation Services, Inc.,
hereinafter called the "Assignee".
WITNESSETH:
-----------
For good and valuable consideration paid by Assignee to Assignor, receipt of
which is hereby acknowledged, Assignor does hereby assign unto Assignee all of
the right, title and interest of Assignor as Tenant under that certain leased
dated August 23, 1995 by and between Airport Commerce Park, Inc., as Landlord,
and Carnival Air Lines, Inc., as Tenant, relating to that certain area
containing approximately 1,600 square feet of space located in Building 3 of the
property known as Airport Commerce Park, Suite numbers 322 & 323, located at
4101 Ravenswood Road, Dania, FL 33312, together, with all of the rights of
Assignor arising under said lease. The said assignment by said Assignor to the
Assignee shall become affective on the 18th day of June, 1998. A copy of above
lease dated August 23, 1995 is attached hereto and made a part hereof.
The Assignee understands and agrees that this assignment relieves the Assignor
from liability upon the covenants of said lease and agrees that the Assignee
shall now be solely and directly liable for all payments provided for in said
lease, and to perform and abide by all the covenants and conditions of said
lease.
The Assignee, by execution hereof, hereby accepts the foregoing assignment and
assumes and agrees to make all the payments provided for in said lease, and to
perform and abide by all the covenants and conditions of said lease as are
provided by Tenant therein to be made and performed.
IN WITNESS WHEREOF, the parties hereto have assigned and sealed this Assignment
of Lease in triplicate the day and year first above written.
WITNESSES: ASSIGNOR:
PAN AMERICAN AIRWAYS CORP.
F/K/A CARNIVAL AIR LINES, INC.
______________________________ By: _________________________________________
______________________________
ASSIGNEE:
OASIS RESERVATIONS SERVICES, INC.
_______________________________ By: _________________________________________
_______________________________
Airport Commerce Park, Inc., Landlord in the above mentioned lease, hereby
consents to the foregoing Assignment of Lease under the conditions as stated
above and with an additional condition that no further assignment of said lease
of the premises thereby demised or any part thereof shall be made without the
written consent of the Landlord. Signed and sealed this 25th day of June, 1998.
WITNESSES: AIRPORT COMMERCE PARK, INC.
_______________________________ _____________________________________________
President
_______________________________
<PAGE>
STANDARD OFFICE BUILDING LEASE
THIS LEASE AGREEMENT (sometimes hereinafter referred to as the
"Lease") made and entered into this 23rd day of August, 1995, by and between
Airport Commerce Park, Inc. (hereinafter called "Landlord"), whose address for
purposes hereof is C/O The Allen Morris Company, 1000 Brickell Avenue, 12th
Floor, Miami, FL 33131 and Carnival Air Lines, Inc. (hereinafter called
"Tenant"), whose address for purposes hereof is 1815 Griffin Road, Dania, FL
33004.
WITNESSETH:
LANDLORD AND TENANT agree to the following definitions for the defined
terms contained herein:
Definitions
a) "Premises" or "Leased Premises" is hereby defined as: suite
-------- ---------------
numbers 322 and 323 located in the Building #3 and such Lease Premises being
more particularly described as approximately 1,600 square feet of Net Rentable
Area (hereinafter defined):
b) Building is hereby defined as Airport Commerce Park, Suites #322
--------
and #323 located at 4101 Ravenswood Road, Dania, FL 33312.
c) Base Rental is hereby defined as a sum of money as set forth
-----------
below. The phrase "Months of Term" refers to that period of time commencing on
and subsequent to the Commencement Date. Applicable sales tax will be added to
the Base Rental.
Months of Term Monthly Rent Annual $/PSF
- -------------- ------------ ------------
1-12 $1,333.33 $10.00
13-24 1,386.67 10.40
25-36 1,442.13 10.82
37-48 1,499.82 11.25
49-60 1,559.81 11.70
Landlord upon execution of this Lease by Landlord and Tenant, hereby
acknowledges payment by Tenant of the sum of One thousand four hundred thirteen
and 33/100 Dollars ($1,413.33) representing payment of rental for the first full
calendar month of this Lease including sales tax. The balance of the total Base
Rental is payable in equal monthly installments as specified above on the first
day of each month; hereafter ensuing the first of which shall be due and payable
on the first day of November, 1995.
d) Lease Term is hereby defined s being for a period of Five (5)
----------
years commencing on approximately October 1, 1995 and terminating on September
30, 2000.
e) Base Year is herein defined, as being calendar year 1995)
---------
<PAGE>
f) Tenant's Proportionate Share to be paid by the Tenant for
----------------------------
Impositions (as hereinafter defined) is hereby defined to be the percentage
which the Net Rentable Area then leased by the Tenant in the Building bears to
the Total Net Rentable contained in the building which is approximately 1,600
rentable square feet. This percentage at the commencement of this Lease is 2%.
g) Cost of Living pursuant to Paragraph 5 of this Lease, the annual
--------------
Base Rental is hereby defined as Sixteen thousand and No/100 Dollars plus
applicable sales tax. ($16,000.00).
i) Security Deposit is hereby defined to be: Waived.
----------------
j) Use or Purpose for which the Tenant will use and occupy the lease
--------------
premises shall be for the sole purpose of Office and Baggage Storage.
k) Electric, Heat and Air Conditioning and Janitorial monthly
----------------------------------------------------------
expenses are not included in the Base Rental Rate and shall be the sole cost and
- --------
responsibility of the Tenant. Electric is separately metered.
l) Parking Spaces: Landlord shall provide Tenant with (six)
--------------
unassigned parking spaces, and two (2) "Customer Only" parking spaces. The
"Customer Only" parking spaces shall be located in front of the demised space.
m) Real Estate Broker in this transaction is hereby defined as Allen
------------------
Morris Commercial Real Estate Services, Inc.
n) Upon execution and delivery of this Lease to Landlord, Landlord
hereby acknowledges payment by Tenant as follows:
First Month's Rent: $1,333.33
Sales Tax: 80.00
---------
Total: $1,413.33
With the submission of this Lease for Landlord's consideration, Tenant
also includes a certificate of insurance as described in Paragraph 23.
Terms
The terms and conditions of the Standard Office Building Lease
attached hereto are incorporated by reference and made a part hereof.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed, sealed and
delivered this Lease in quadruplicate at Broward County, Florida on the date and
year first written above.
WITNESSES: LANDLORD:
AIRPORT COMMERCE PARK, INC.
________________________ By:________________________
Cy J. Case, President
________________________
TENANT:
CARNIVAL AIR LINES, INC.
________________________ By:__________________________
________________________
Attachments:
Exhibit A - Floor Plan
Standard Office Building Lease
Rules and Regulations
3
<PAGE>
Exhibit 10.21
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT (the "Master Lease") dated April 2, 1996 by and
between COMDISCO, INC. ("Lessor") and Internet Travel Network ("Lessee").
IN CONSIDERATION of the mutual agreements described below, the parties
agree as follows (all capitalized terms are defined in Section 14.18):
1. Property Leased.
---------------
Lessor leases to Lessee all of the Equipment described on each Summary
Equipment Schedule. In the event of a conflict, the terms of the applicable
Schedule prevail over this Master Lease.
2. Term.
----
On the Commencement Date, Lessee will be deemed to accept the
Equipment, will be bound to its rental obligations for each item of Equipment
and the term of a Summary Equipment Schedule will begin and continue through the
Initial Term and thereafter until terminated by either party upon prior written
notice received during the Notice Period. No termination may be effective prior
to the expiration of the Initial Term.
3. Rent and Payment.
-----------------
Rent is due and payable in advance on the first day of each Rent
Interval at the address specified in Lessor's invoice. Interim Rent is due and
payable when invoiced. If any payment is not made when due, Lessee will pay a
Late Charge on the overdue amount. Upon Lessee's execution of each Schedule,
Lessee will pay Lessor the Advance specified on the Schedule. The Advance will
be credited towards the final Rent payment if Lessee is not then in default. No
interest will be paid on the Advance.
4. Selection; Warranty and Disclaimer of Warranties.
------------------------------------------------
4.1 Selection. Lessee acknowledges that it has selected the
---------
Equipment and disclaims any reliance upon statements made by the Lessor, other
than as set forth in the Schedule.
4.2 Warranty and Disclaimer of Warranties. Lessor warrants to
-------------------------------------
Lessee that, so long as Lessee is not in default, Lessor will not disturb
Lessee's quiet and peaceful possession, and unrestricted use of the Equipment.
To the extent permitted by the manufacturer, Lessor assigns to Lessee during the
term of the Summary Equipment Schedule any manufacturer's warranties for the
Equipment. LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT
OR ITS FITNESS FOR A PARTICULAR PURPOSE. Lessor is not responsible for any
liability, claim, loss, damage or expense of any kind (including strict
liability in tort) caused by the Equipment except for any
<PAGE>
loss or damage caused by the willful misconduct or negligent acts of Lessor. In
no event is Lessor responsible for special, incidental or consequential damages.
5. Title; Relocation or Sublease; and Assignment.
---------------------------------------------
5.1 Title. Lessee holds the Equipment subject and subordinate
-----
to the rights of the Owner, Lessor, any Assignee and any Secured Party. Lessee
authorizes Lessor, as Lessee's agent, and at Lessor's expense, to prepare,
execute and file in Lessee's name precautionary Uniform Commercial Code
financing statements showing the interest of the Owner, Lessor, and any Assignee
or Secured Party in the Equipment and to insert serial numbers in Summary
Equipment Schedules as appropriate. Lessee will, at its expense, keep the
Equipment free and clear from any liens or encumbrances of any kind (except any
caused by Lessor) and will indemnify and hold the Owner, Lessor, any Assignee
and Secured Party harmless from and against any loss caused by Lessee's failure
to do so, except where such is caused by Lessor.
5.2 Relocation or Sublease. Upon prior written notice Lessee
----------------------
may relocate Equipment to any location within the continental United States
provided (i) the Equipment will not be used by an entity exempt from federal
income tax, and (ii) all additional costs including any administrative fees,
additional taxes and insurance coverage) are reconciled and promptly paid by
Lessee.
Lessee may sublease the Equipment upon the reasonable consent of the
Lessor and the Secured Party. Such consent to sublease will be granted if: (i)
Lessee meets the relocation requirements set out above, (ii) the sublease is
expressly subject and subordinate to the terms of the Schedule, (iii) Lessee
assigns its rights in the sublease to Lessor and the Secured Party as additional
collateral and security, (iv) Lessee's obligation to maintain and insure the
Equipment is not altered, (v) all financing statements required to continue the
Secured Party's prior perfected security interest are filed, and (vi) Lessee
executes sublease documents acceptable to Lessor.
No relocation or sublease will relieve Lessee from any of its
obligations under this Master Lease and the relevant Schedule.
5.3 Assignment by Lessor. The terms and conditions of each
--------------------
Schedule have been fixed by Lessor in order to permit Lessor to sell and/or
assign or transfer its interest or grant a security interest in each Schedule
and/or the Equipment to a Secured Party or Assignee. In that event, the term
Lessor will mean the Assignee and any Secured Party. However, any assignment,
sale, or other transfer by Lessor will not relieve Lessor of its obligations to
Lessee and will not materially change Lessee's duties or materially increase the
burdens or risks imposed on Lessee. The Lessee consents to and will acknowledge
such assignments in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of
Lessor's rights, but will not be obligated to perform any of the obligations of
Lessor. The Secured Party will not disturb Lessee's quiet and peaceful
possession and unrestricted use of the
2
<PAGE>
Equipment so long as Lessee is not in default and the Secured Party continues to
receive all Rent payable under the Schedule; and
(b) Lessee will pay all Rent and all other amounts payable
to the Secured Party, despite any defense or claim which it has against Lessor.
Lessee reserves its right to have recourse directly against Lessor for any
defense or claim;
(c) Subject to and without impairment of Lessees leasehold
rights in the Equipment, Lessee holds the Equipment for the Secured Party to the
extent of the Secured Party's rights in the Equipment.
6. Net Lease; Taxes and Fees.
-------------------------
6.1 Net Lease. Each Summary Equipment Schedule constitutes a
---------
net lease. Lessee's obligation to pay Rent and all other amounts due hereunder
is absolute and unconditional and is not subject to any abatement, reduction,
set-off, defense, counterclaim, interruption, deferment or recoupment for any
reason whatsoever.
6.2 Taxes and Fees. Lessee will pay when due or reimburse
--------------
Lessor for all taxes, fees or any other charges (together with any related
interest or penalties not arising from the negligence of Lessor) accrued for or
arising during the term of each Summary Equipment Schedule against Lessor,
Lessee or the Equipment by any governmental authority (except only Federal,
state, local and franchise taxes on the capital or the net income of Lessor).
Lessor will file all personal properly tax returns for the Equipment and pay all
such property taxes due. Lessee will reimburse Lessor for property taxes within
thirty (30) days of receipt of an invoice.
7. Care, Use and Maintenance; Inspection by Lessor.
-----------------------------------------------
7.1 Care, Use and Maintenance. Lessee will maintain the
-------------------------
Equipment in good operating order and appearance, protect the Equipment from
deterioration, other than normal wear and tear, and will not use the Equipment
for any purpose other than that for which it was designed. If commercially
available and considered common business practice for each item of Equipment,
Lessee will maintain in force a standard maintenance contract with the
manufacturer of the Equipment, or another party acceptable to Lessor, and will
provide Lessor with a complete copy of that contract. If Lessee has the
Equipment maintained by a party other than the manufacturer or self maintains,
Lessee agrees to pay any costs necessary for the manufacturer to bring the
Equipment to then current release, revision and engineering change levels, and
to re-certify the Equipment as eligible for manufacturer's maintenance at the
expiration of the lease term, provided re-certification is available and is
required by Lessor. The lease term will continue upon the same terms and
conditions until recertification has been obtained.
7.2 Inspection by Lessor. Upon reasonable advance notice,
--------------------
Lessee, during reasonable business hours and subject to Lessee's security
requirements, will make the Equipment and its related log and maintenance
records available to Lessor for inspection.
3
<PAGE>
8. Representations and Warranties of Lessee. Lessee hereby
----------------------------------------
represents, warrants and covenants that with respect to the Master Lease and
each Schedule executed hereunder:
(a) The Lessee is a corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to do business in each jurisdiction (including
the jurisdiction where the Equipment is, or is to be, located) where its
ownership or lease of property or the conduct of its business requires such
qualification, except for where such lack of qualification would not have a
material adverse effect on the Company's business, and has full corporate power
and authority to hold properly under the Master Lease and each Schedule and to
enter into and perform its obligations under the Master Lease and each Schedule.
(b) The execution and delivery by the Lessee of the Master
Lease and each Schedule and its performance thereunder have been duly authorized
by all necessary corporate action on the part of the Lessee, and the Master
Lease and each Schedule are not inconsistent with the Lessee's Articles of
Incorporation or Bylaws, do not contravene any law or governmental rule,
regulation or order applicable to it, do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which it is a party or by which it is bound, and the
Master Lease and each Schedule constitute legal, valid and binding agreements of
the Lessee, enforceable in accordance with their terms, subject to the effect of
applicable bankruptcy and other similar laws connecting the rights of creditors
generally and rules of law concerning equitable remedies.
(c) There are no actions, suits, proceedings or patent
claims pending or, to the knowledge against or affecting the Lessee in any court
or before any governmental commission, board or authority which, if adversely
determined will have a material adverse effect on the ability of the Lessee to
perform its obligations under the Master Lease and each Schedule.
(d) The Equipment is personal property and when subjected
to use by the Lessee will not be or become fixtures under applicable law.
(e) The Leasee has no material liabilities or obligations,
absolute or contingent (individually or in the aggregate), except the
liabilities and obligations of the Lessee as set forth in the Financial
Statements and liabilities and obligations which have occurred in the ordinary
course of business, and which have not been, in any case or in the aggregate,
materially adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns,
possesses, has access to, or can become licensed on reasonable terms under all
patents, patent applications, trademarks, trade names, inventions, franchises,
licenses, permits, computer software and copying necessary for the operations of
its business as now conducted, with no known infringement of, or conflict with,
the rights of others.
(g) All material contracts, agreements and instruments to
which the Lessee is a party are in full force and elect in all material
respects, and are valid,
4
<PAGE>
binding and enforceable by the Lessee in accordance with their respective terms,
subject to the effect of applicable bankruptcy and other similar laws affecting
the rights of creditors generally, and rules of law concerning equitable
remedies.
9. Delivery and Return of Equipment.
--------------------------------
Lessee hereby assumes the full expense of transportation and in-
transit insurance to Lessee's premises and indications thereat of the Equipment.
Upon termination (by expiration or otherwise) of each Summary Equipment
Schedule, Lessee shall, pursuant to Lessor's instructions and at Lessee's full
expense (including, without limitation, expenses of transportation and in-
transit insurance), return the Equipment to Lessor in the same operating order,
repair, condition and appearance as when received, less normal depreciation and
wear and tear. Lessee shall return the Equipment to Lessor at 6111 North River
Road, Rosemont, Illinois 60018 or at such other address within the continental
United States as directed by Lessor, provided, however, that Lessee's expense
shall be limited to the cost of returning the equipment to Lessor's address as
set forth herein. During the period subsequent to receipt of a notice under
Section 2, Lessor may demonstrate the Equipment's operation in place and Lessee
will supply any of its personnel as may reasonably be required to assist in the
demonstrations.
10. Labeling.
--------
Upon request, Lessee mill mark the Equipment indicating Lessor's
interest with labels provided by Lessor. Lessee will keep all Equipment free
from any other marking or labeling which might be interpreted as a claim of
ownership.
11. Indemnity.
---------
With regard to bodily injury and property damage liability only,
Lessee will indemnify and hold Lessor, any Assignee and any Secured Party
harmless from and against any and all claims, costs, expenses, damages and
liabilities, including reasonable attorneys' fees, arising out of the ownership
(for strict liability in tort only), selection, possession, leasing, operation,
control, use, maintenance, delivery, return or other disposition of the
Equipment during the term of this Master Lease or until Lessee's obligations
under the Master Lease terminate. However, Lessee is not responsible to a party
indemnified hereunder for any claims, costs, expenses, damages and liabilities
occasioned by the negligent acts of such indemnified party. Lessee agrees to
carry bodily injury and property damage liability insurance during the term of
the Master Lease in amounts and against risks customarily insured against by the
Lessee on equipment owned by it. Any amounts received by Lessor under the
insurance will be credited against Lessee's obligations under this Section.
12. Risk of Loss.
------------
Effective upon delivery and until the Equipment is resumed, Lessee
relieves Lessor of responsibility for all risks of physical damage to or loss or
destruction of the Equipment. Lessee will carry casualty insurance for each item
of Equipment in an amount not less than the Casualty Value. All policies for
such insurance will name the Lessor and any Secured Party as additional insured
and as loss payee, and will provide for at least thirty (30) days prior written
notice to the Lessor of cancellation or expiration, and will insure Lessor's
5
<PAGE>
interests regardless of any breach or violation by Lessee of any representation
warranty or condition contained in such policies and will be primary without
right to; contribution from any insurance effected by Lessor. Upon the execution
of any Schedule, the Lessee will furnish appropriate evidence of such insurance
acceptable to Lessor.
Lessee will promptly repair any damaged item of Equipment unless such
Equipment has suffered a Casualty Loss. Within fifteen (15) days of a Casualty
Loss, Lessee will provide written notice of that loss to Lessor and Lessee will,
at Lessee's option, either (a) replace the item of Equipment with Like Equipment
and marketable title to the Like Equipment will automatically vest in Lessor or
(b) pay the Casualty Value and after that payment and the payment of all other
amounts due and owing with respect to that item of Equipment, Lessee's
obligation to pay further Rent for the item of Equipment will cease.
13. Default, Remedies and Mitigation.
--------------------------------
13.1 Default. The occurrence of any one or more of the following
-------
Events of Default constitutes a default under a Summary Equipment Schedule:
(a) Lessee's failure to pay Rent or other amounts payable
by Lessee when due if that failure continues for five (5) business days after
written notice; or
(b) Lessee's failure to perform any other term or condition
of the Schedule or the material inaccuracy of any representation or warranty
made by the Lessee in the Schedule or in any document or certificate furnished
to the Lessor hereunder if that failure or inaccuracy continues for ten (10)
business days after written notice; or
(c) An assignment by Lessee for the benefit of its
creditors, the failure by Lessee to pay its debts when due, the insolvency of
Lessee, the filing by Lessee or the filing against Lessee of any petition under
any bankruptcy or insolvency law or for the appointment of a trustee or other
officer with similar powers, the adjudication of Lessee as insolvent, the
liquidation of Lessee, or the taking of any action for the purpose of the
foregoing; or
(d) The occurrence of an Event of Default under any
Schedule, Summary Equipment Schedule or other agreement between Lessee and
Lessor or its Assignee or Secured Party.
13.2 Remedies. Upon the occurrence of any of the above Events of
--------
Default, Lessor, at its option, may:
(a) enforce Lessee's performance of the provisions of the
applicable Schedule by appropriate court action in law or in equity;
(b) recover from Lessee any damages and or expenses,
including Default Costs;
(c) with notice and demand, cover all sums due and
accelerate and recover the present value of the remaining payment stream of all
rent due under the defaulted
6
<PAGE>
Schedule (discounted at the same rate of interest at which such defaulted
Schedule was discounted with a Secured Party plus any prepayment fees charged to
Lessor by the Secured Party or, if there is no Secured Party, then discounted at
6%) together with all Rent and other amounts currently, due as liquidated
damages and not as a penalty;
(d) with notice and process of law and in compliance with
Lessee's security requirements, Lessor may enter on Lessee's premises to remove
and repossess the Equipment without being liable to Lessee for damages due to
the repossession except those resulting from Lessor's, its assignees', agents'
or representatives' negligence; and
(e) pursue any other remedy, permitted by law or equity.
The above remedies, in Lessor's discretion and to the extent permitted
by law, are cumulative and may be exercised successively or concurrently.
13.3 Mitigation. Upon return of the Equipment pursuant to the
----------
terms of Section 13.2, Lessor will use its best efforts in accordance with its
normal business procedures (and without obligation to give any priority to such
Equipment) to mitigate Lessor's damages as described below. EXCEPT AS SET FORTH
IN THIS SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY
STATUTE OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS DAMAGES OR MODIFY
ANY OF LESSORS RIGHTS OR REMEDIES STATED HEREIN. Lessor may sell, lease or
otherwise dispose of all or any part of the Equipment at a public or private
sale for cash or credit with the privilege of purchasing the Equipment. The
proceeds from any sale, lease or other disposition of the Equipment are defined
as either:
(a) if sold or otherwise disposed of, the cash proceeds
less the Fair Market Value of the Equipment at the expiration of the Initial
Term less the Default Costs; or
(b) if leased, the present value (discounted at 3 percent
3%) over the U.S. Treasury Notes of comparable maturity to the term of the re-
lease) of the rentals for a term not to exceed the Initial Term, less the
Default Costs.
Any proceeds will be applied against liquidated damages and any other
sums due to Lessor from Lessee. However, Lessee is liable to Lessor for, and
Lessor may recover, the amount by which the proceeds are less than the
liquidated damages and other sums due to Lessor from Lessee.
14. Additional Provisions.
---------------------
14.1 Board Attendance. One representative of Lessor will have
----------------
the right to attend Lessee's corporate Board of Directors meetings and Lessee
will give Lessor reasonable notice in advance of any special Board of Directors
meeting, which notice will provide an agenda of the subject matter to be
discussed at such board meeting. Lessee will provide Lessor with a codified copy
of the minutes of each Board of Directors meeting within thirty (30) days
following the date of such meeting held during the term of this Master Lease.
7
<PAGE>
14.2 Financial Statements. As soon as practicable at the end of
--------------------
each month (and in any event within thirty (30) days), Lessee will provide to
Lessor the same information which Lessee provides to its Board of Directors, but
which will include not less than a monthly income statement, balance sheet and
statement of cash flows prepared in accordance with generally accepted
accounting principles, consistently applied (the "Financial Statements"). As
soon as practicable at the end of each fiscal year, Lessee will provide to
Lessor audited Financial Statements setting forth in comparative form the
corresponding figures for the fiscal year (and in any event within ninety (90)
days), and accompanied by an audit report and opinion of the independent
certified public accountants selected by Lessee. Lessee will promptly furnish to
Lessor any additional information (including, but not limited to, tax returns,
income statements, balance sheets and names of principal creditors) as Lessor
reasonably believes necessary to evaluate Lessee's continuing ability to meet
financial obligations. After the effective date of the initial registration
statement covering a public offering of Lessee's securities, the term "Financial
Statements" will be deemed to refer to one those statements required by the
Securities and Exchange Commission.
14.3 Obligation to Lease Additional Equipment. Upon notice to
----------------------------------------
Lessee, Lessor will not be obligated to lease any Equipment which would have a
Commencement Date after said notice if: (i) Lessee is in default under this
Master Lease or any Schedule; (ii) Lessee is in default under any loan
agreement, the result of which would allow the lender or any secured party to
demand immediate payment of any material indebtedness, (iii) there is a material
adverse change in Lessee's credit dancing; or (iv) Lessor determines on
reasonable good faith) that Lessee will be unable to perform as obligations
under this Master Lease or any Schedule.
14.4 Merger and Sale Provisions. Lessee will notify Lessor of
--------------------------
any proposed Merger at least sixty (60) days prior to the closing date. Lessor
may, in its discretion, either (i) consent to the assignment of the Master Lease
and all relevant Schedules to the successor entity, or (ii) terminate the Lease
and all relevant Schedules. If Lessor elects to consent to the assignment,
Lessee and its successor will sign the assignment documentation provided by
Lessor. If Lessor elects to terminate the Master Lease and all relevant
Schedules, then Lessee will pay Lessor all amount then due and owing and a
termination fee equal to the present value (discounted at 6%) of the remaining
Rent for the balance of the Initial Term(s) of all Schedules, and will return
the Equipment in accordance with Section 9. Lessor hereby consents to any Merger
in which the acquiring entity has a Moody's Bond Rating of BA3 or better or a
commercially acceptable equivalent measure of creditworthiness as reasonably
determined by Lessor.
14.5 Entire Agreement. This Master Lease and associated Schedules
----------------
and Summary Equipment Schedules supersede all other oral or written agreements
or understandings between the parties concerning the Equipment including, for
example, purchase orders. ANY AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY
ONLY BE ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT
IS SOUGHT TO BE ENFORCED.
14.6 No Waiver. No action taken by Lessor or Lessor will be
---------
deemed to constitute a waiver of compliance with any representation, warranty or
covenant contained in this Master Lease or a Schedule. The waiver by Lessor or
Lessee of a breach of any provision of
8
<PAGE>
this Master Lease or a Schedule will not operate or be conducted as a waiver of
any subsequent breach.
14.7 Binding Nature. Each Schedule is binding upon, and
--------------
inures to the benefit of Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS
RIGHTS OR OBLIGATIONS.
14.8 Survival of Obligations. All agreements, obligations
-----------------------
including, bud not limited to those arising under Section 6.2, representations
and warranties contained in this Master Lease, any Schedule, Summary Equipment
Schedule or in any document delivered in connotation with those agreements are
for the benefit of Lessor and any Assignee or Secured Party and survive the
execution, delivery, expiration or termination of this Master Lease.
14.9 Notices. Any notice, request or other communication to
-------
either party by the other will be given in writing and deemed received upon the
earlier of (1) actual receipt or (2) three days after mailing if mailed postage
prepaid by regular or airmail to Lessor (to the attention of "the Comdisco
Venture Group") or Lessee, at the address set out in the Schedule, (3) one day
after it is sent by courier or (4) on the same day as sent via facsimile
transmission, provided the original is sent by personal delivery or mail by the
sending party.
14.10 Applicable Law. THIS MASTER LEASE HAS BEEN, AND EACH
--------------
SCHEDULE WILL HAVE BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS
AND WILL BE GOVERNED AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS
OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO
RIGHTS OR REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL
BE CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A
SCHEDULE.
14.11 Severability. If any one or more of the provisions of
------------
this Master Lease or any Schedule is for any reason held invalid, illegal or
unenforceable, the remaining provisions of this Master Lease and any such
Schedule will be unimpaired, and the invalid, illegal or unenforceable provision
replaced by a mutually acceptable valid legal and enforceable provision that is
closest to the original intention of the parties.
14.12 Counterparts. This Master Lease and any Schedule may be
------------
executed in any number of counterparts, each of which will be deemed an
original, but all such counterparts together constitute one and the same
instrument. If Lessor grants a security interest in all or any part of a
Schedule, the Equipment or sums payable thereunder, only that counterpart
Schedule marked "Secured Party's Original" can transfer Lessor's rights and all
other counterparts will be marked "Duplicate."
14.13 Licensed Products. Lessee will obtain no title to
-----------------
Licensed Products which will at all times remain the property of the owner of
the Licensed Products. A license from the owner may be required and it is
Lessee's responsibility to obtain any required license before the use of the
Licensed Products. Lessee agrees to treat the Licensed Products as
9
<PAGE>
confidential information of the owner, to observe all copyright restrictions,
and not to reproduce or sell the Licensed Products.
14.14 Secretary's Certificate. Lessee will, upon execution of
-----------------------
this Master Lease, provide Lessor with a secretary's certificate of incumbency
and authority. Upon the execution of each Schedule with a purchase price in
excess of $1,000,000, Lessee will provide Lessor with an opinion from Lessee's
counsel in a form acceptable to Lessor regarding the representations and
warranties in Section 8.
14.15 Electronic Communications. Each of the parties may
-------------------------
communicate with the other by electronic means under mutually agreeable terms.
14.16 Landlord/Mortgagee Waiver. Lessee agrees to provide
-------------------------
Lessor with a Landlord/Mortgagee Waiver with respect to the Equipment. Such
waiver shall be in a form satisfactory to Lessor.
14.17 Equipment Procurement Charges/Progress Payments. Lessee
-----------------------------------------------
hereby agrees that Lessor shall not, by virtue of its entering into this Master
Lease, be required to remit any payments to any manufacturer or other third
party until Lessee accepts the Equipment subject to this Master Lease.
14.18 Definitions.
-----------
Advance - means the amount due to Lessor by Lessee upon Lessee's
-------
execution of each Schedule.
Assignee - means an entity to whom Lessor has sold or assigned its
--------
rights as owner and Lessor of Equipment.
Casualty Loss - means the irreparable loss or destruction of
-------------
Equipment.
Casualty Value - means the greater of the aggregate Rent remaining to
--------------
be paid for the balance of the lease term or the Fair Market Value of the
Equipment immediately prior to the Casualty Loss. However, if a Casualty Value
Table is attached to the relevant Schedule its terms will control.
Commencement Date - is defined in each Schedule.
-----------------
Default Costs - means reasonable attorney's fees and remarketing costs
-------------
resulting from a Lessee default or Lessor's enforcement of its remedies.
Delivery Date - means date of delivery of Inventory Equipment to
-------------
Lessee's address.
Equipment - means the property described on a Summary Equipment
---------
Schedule and any replacement for that property required or permitted by this
Master Lease or a Schedule.
Event of Default - means the events described in Subsection 13.1.
----------------
10
<PAGE>
Fair Market Value - means the aggregate amount which would be
-----------------
obtainable in an arm's-length transaction between an informed and willing
buyer/user and an informed and willing seller under no compulsion to sell.
Initial Term - means the period of time beginning on the first day of
------------
the first full Rent Interval following the Commencement Date for all items of
Equipment and continuing for the number of Rent Intervals indicated on a
Schedule.
Interim Rent - means the prorate portion of Rent due for the period
------------
from the Commencement Date through but not including the first day of the first
full Rent Interval included in the Initial Term.
Late Charge - means the lesser of five percent (5%) of the payment due
-----------
or the maximum amount permitted by the law of the date where the Equipment is
located.
Licensed Products - means any software or other licensed products
-----------------
attached to the Equipment.
Like Equipment - means replacement Equipment which is lien free and of
--------------
the same model, type, configuration and manufacture as Equipment.
Merger - means any consolidation or merger of the Lessee with or into
------
any other corporation or entity, any sale or conveyance of all or substantially
all of the assets or stock of the Lessee by or to any other person or entity in
which Lessee is not the surviving entity.
Notice Period - means not less than ninety (90) days nor more than
-------------
twelve (12) months prior to the expiration of the lease term.
Owner - means the owner of Equipment.
-----
Rent - the rent Lessee will pay for each item of Equipment expressed
----
in a Summary Equipment Schedule either as a specific amount or an amount equal
to the amount which Lessor pays for an item of Equipment multiplied by a lease
rate factor plus all other amounts due to Lessor under this Master Lease or a
Schedule.
Rent Interval - means a foil calendar month or quarter as indicated on
-------------
a Schedule.
Schedule - means either an Equipment Schedule or a Licensed Products
--------
Schedule which incorporates all of the terms and conditions of this Master
Lease.
Secured Party - means an entity to whom Lessor has granted a security
-------------
interest (for the purpose of securing a loan.
Summary Equipment Schedule - means a certificate provided by Lessor
--------------------------
summarizing all of the Equipment for which Lessor has received Lessee approved
vendor invoices purchase documents and/or evidence of delivery during a calendar
quarter which will incorporate all of the terms and conditions of the related
Schedule and this Master Lease and will constitute a separate lease for the
equipment based thereunder.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease
on or as of the day and year first above written.
INTERNET TRAVEL NETWORK COMDISCO, INC.,
as Lessee as Lessor
By:___________________________ By:____________________________
Title: Chief Financial Officer Title: James P. Labe, President
----------------------- ------------------------
Venture Lease Division
12
<PAGE>
ADDENDUM TO THE
MASTER LEASE AGREEMENT DATED AS OF APRIL 2, 1996
BETWEEN INTERNET TRAVEL NETWORK AS LESSEE
AND COMDISCO, INC. AS LESSOR
The undersigned hereby agree that the terms and conditions of the
above-referenced Master Lease are hereby modified and amended as follows:
1) Section 3., "Rent and Payment"
----------------
In line 3, after the words, "payment is not made" insert "within five (5)
business days of".
2) Section 8., "Representations and Warranties of Lessee"
----------------------------------------
In line 9, after the word "enforceable" insert the words "against Lessee".
3) Section 11., "Indemnity"
---------
In line 9., after the words "negligent acts" insert the words "or willful
misconduct".
4) Section 13., "Default, Remedies and Mitigation"
--------------------------------
In the last line of paragraph (c), after the word "foregoing" add the words
"which, in the case of an involuntary petition or action, remains unstayed
and undismissed for at least sixty (60) days."
5) Section 13.2., "Remedies"
--------
In the last line of paragraph (d) after the word "negligence" add the words
"or misconduct".
6) 14.1., "Board Attendance"
----------------
Delete this section in its entirety.
7) Section 14.2., "Financial Statements"
--------------------
In the third to the last line, after the words "to meet financial
obligations" add the word "hereunder".
To the end of this section add the following:
"Any financial or other confidential information provided to Lessor by
Lessee hereunder shall be held in confidence by Lessor, shall not be used
for any purpose other than the lease transactions contemplated by this
Master Lease and shall not be disclosed by Lessor to any other person or
entity."
A-1
<PAGE>
8) Section 14.4 "Merger and Sale Provisions"
--------------------------
In the second line delete the words "sixty (60)" and replace it with
"twenty (20)".
9) Section 14.7., "Binding Nature"
--------------
To the end of the second sentence add ", except as provided in Section
14.4."
10) Section 14.13., "Licensed Products"
-----------------
To the end of last sentence add the words "except as may be permitted by
the applicable license agreement".
INTERNET TRAVEL NETWORK COMDISCO, INC.
as LESSEE as LESSOR
By:____________________________ By:_____________________________
Title: Chief Financial Officer Title: James P. Labe, President
------------------------ -------------------------
Venture Lease Division
Date: 4/2/96 Date:___________________________
-------------------------
A-2
<PAGE>
Exhibit 10.22
MASTER EQUIPMENT LEASE NO. 0047
Under this Master Equipment Lease No. 0047 (the "Lease"), dated as of December
1, 1996, PHOENIX LEASING INCORPORATED, a California corporation ("Lessor"),
hereby leases to INTERNET TRAVEL NETWORK, a California corporation ("Lessee"),
and Lessee hereby leases from Lessor, the equipment including custom use
equipment, installation and delivery costs, purchase tax, tooling, software, and
certain items which are generally considered by Lessor to be fungible and
expendable (referred to separately as "Soft Costs") (the Soft Costs and
equipment herein together called "Equipment") which is described on the schedule
attached hereto or any subsequently-executed schedule entered into by Lessor and
Lessee and which incorporates this Lease by reference. Any such schedules shall
hereinafter individually be referred to as a "Schedule" and collectively be
referred to as the "Schedules." Lessor hereby leases the Equipment to Lessee
upon the following terms and conditions:
1. TERM OF AGREEMENT. The term of this Lease begins on the date set
forth above and shall continue thereafter and be in effect so long as and at any
time any Schedule entered into pursuant to this Lease is in effect. The Initial
Term and rent payable with respect to each leased item of Equipment shall be as
set forth in and as stated in the respective Schedule(s). The terms of each
Schedule hereto are subject to all conditions and provisions of this Lease as it
may at any time be amended. Each Schedule shall constitute a separate and
independent lease and contractual obligation of Lessee and shall incorporate the
terms and conditions of this Master Equipment Lease and any additional
provisions contained in such Schedule. In the event of a conflict between the
terms and conditions of this Lease and any additional provisions of such
Schedule, the additional provisions of such Schedule shall prevail with respect
to such Schedule only.
2. NON-CANCELLABLE LEASE. This Lease and any Schedule cannot be
cancelled or terminated except as expressly provided herein. This Lease
(including all Schedules to this Lease) constitutes a net lease and Lessee
agrees that its obligations to pay all rent and other sums payable hereunder
(and under any Schedule) and the rights of Lessor and assignee in and to such
rent and other sums, are absolute and unconditional and are not subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment due or alleged
to be due to, or by reason of, any past, present or future claims which Lessee
may have against Lessor, any assignee, the manufacturer or seller of the
Equipment, or against any person for any reason whatsoever.
3. LESSOR COMMITMENT. So long as no Event of Default or event which
with the giving of notice or passage of time, or both, could become an Event of
Default has occurred or is continuing, Lessor agrees to lease to Lessee the
groups of Equipment described on each Schedule, subject to the following
conditions: (i) that in no event shall Lessor be obligated to lease Equipment to
Lessee hereunder where the aggregate purchase price of all Equipment leased to
Lessee hereunder would exceed $500,000 ("Commitment") of which amount Lessor may
finance Soft Costs for lease to Lessee having an aggregate purchase price not
exceeding an amount equal to 20% of the utilized Commitment; (ii) the amount of
Equipment purchased by Lessor at any one time shall be at least equal to $25,000
except for a final advance which may be less than $25,000; (iii) Lessor shall
not be obligated to purchase
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Equipment hereunder after June 30, 1997, provided that the funding period may be
extended to August 31, 1997 if Lessor has received and accepted Lessee's
calendar 1997 monthly financial plan ("1997 Business Plan"); (iv) all Lease
documentation required by Lessor has been executed by Lessee or provided by
Lessee no later than December 31, 1996 ; (v) the equipment described on the
Schedule is acceptable to Lessor; (vi) with respect to each funding Lessee has
provided to Lessor, and Lessor agrees to hold in confidence and trust and to act
in a fiduciary duty (even upon termination of the Lease) with respect to each of
the closing documents and other items described in Exhibit A hereto (which
documents shall be in form and substance acceptable to Lessor) and which list
may be modified for each subsequent funding; (vii) there is no material adverse
change in Lessee's condition, financial or otherwise, as reasonably determined
by Lessor and Lessee so certifies, from (yy) the date of the most recent
financial statements delivered by Lessee to Lessor prior to execution of this
Lease, to (zz) the date of the proposed lease of the Equipment; (viii) at all
fundings Lessee is performing according to the Income Statement and Cash Flow
portions of its business plan referred to as "Financial Projection, (five pages)
including Income Statement, Cash Flow, Transaction Fee Revenue Detail, Private
Label Revenue and Revenue Detail by Type" dated September 18, 1996, as may be
amended by Lessee's 1997 Business Plan and otherwise from time to time in form
and substance acceptable to Lessor (collectively, "Business Plan"); (ix) Lessor
or its agent has inspected and placed identification labels on the Equipment;
and (x) Lessor has received in form and substance acceptable to Lessor: (a)
Lessee's interim financial statements signed by a financial officer of Lessee;
(b) hard copy evidence of Lessee's $3,480,000 cash position as of May 31, 1996;
(c) Lessee's Capitalization Table; and (d) Lessee's corporate resolution
authorizing the transaction herein.
4. NO WARRANTIES BY LESSOR. (a) Lessee has selected both (i) the
Equipment and (ii) the suppliers (herein called "Vendor") from whom Lessor is to
purchase the Equipment. LESSOR MAKES NO WARRANTY EXPRESS OR IMPLIED AS TO ANY
MATTER WHATSOEVER, INCLUDING THE CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY
OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND AS TO LESSOR, LESSEE LEASES THE
EQUIPMENT "AS IS" AND WITH ALL FAULTS. (b) If the Equipment is not properly
installed, does not operate as represented or warranted by Vendor or is
unsatisfactory for any reason, Lessee shall make any claim on account thereof
solely against Vendor and shall, nevertheless, pay Lessor all rent payable under
this Lease, Lessee hereby waiving any such claims as against Lessor. Lessor
hereby agrees to assign to Lessee solely for the purpose of making and
prosecuting any said claim, to the extent assignable, all of the rights which
Lessor has against Vendor for breach of warranty or other representation
respecting the Equipment. Lessor shall have no responsibility for delay or
failure to fill the order. (c) Lessee understands and agrees that neither the
Vendor nor any salesman or other agent of the Vendor is an agent of Lessor. No
salesman or agent of Vendor is authorized to waive or alter any term or
condition of this Lease, and no representations as to the Equipment or any other
matter by the Vendor shall in any way affect Lessee's duty to pay the rent and
perform its other obligations as set forth in this Lease. (d) Lessee hereby
requests Lessor to purchase Equipment from Vendor and to lease Equipment to
Lessee on the terms and conditions of the Lease set forth herein. (e) Lessee
hereby authorizes Lessor to insert in this Lease and each Schedule hereto the
serial numbers and other identification data of the Equipment when determined by
Lessor.
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5. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and
warrants that, (a) it is a corporation in good standing under the laws of the
state of its incorporation, and duly qualified to do business, and will use its
best efforts to remain duly qualified during the term of this Lease, in each
state where the Equipment will be located, as specified on each Schedule hereto;
(b) it has full authority to execute and deliver this Lease and perform the
terms hereof, and this Lease has been duly authorized and constitutes valid and
binding obligations of Lessee enforceable in accordance with its terms; (c) to
the best knowledge of Lessee, this Lease will not contravene any law, regulation
or judgment affecting Lessee or result in any breach of any agreement or other
instrument binding on Lessee; (d) no consent of Lessee's shareholders or holder
of any indebtedness, or to the best knowledge of Lessee, filing with, or
approval of, any governmental agency or commission, is a condition to the
performance of the terms hereof; (e) to its best knowledge, as of the date
hereof, there is no action or proceeding pending or threatened against Lessee
before any court or administrative agency which might have a materially adverse
effect on the business, financial condition or operations of Lessee; (f) no deed
of trust, mortgage or third party interest arising through Lessee will attach to
the Equipment or the Lease; (g) the Equipment will remain at all times under
applicable law, removable personal property, free and clear of any lien or
encumbrance in favor of Lessee or any other person except the Lessor,
notwithstanding the manner in which the Equipment may be attached to any real
property; (h) all credit, financial and any other information submitted to
Lessor herewith or any other time is true and correct; and (i) Lessee has
provided, or will provide if requested, Lessee's tax identification number.
6. EQUIPMENT-ORDERING. Lessee shall be responsible for all packing,
rigging, transportation and installation charges for the Equipment and Lessor
may separately invoice Lessee for such charges. Lessee has selected the
Equipment itself and shall arrange for delivery of Equipment so that it can be
accepted in accordance with Section 7 hereof. Lessee hereby agrees to indemnify
and hold Lessor harmless from any claims, liabilities, costs and expenses,
including reasonable attorneys' fees, incurred by Lessor arising out of any
purchase orders or assignments executed by Lessor with respect to any Equipment
or services relating thereto.
7. LESSEE ACCEPTANCE. Upon receipt, preparation and installation of
any item of Equipment, Lessee shall return to Lessor the signed and dated
Acceptance Notice attached to each Schedule hereto (a) acknowledging the
Equipment has been received, installed and is ready for use and (b) accepting it
as satisfactory in all respects for the purposes of this Lease. Lessor is
authorized to fill in the Rent Start Date on each Schedule in accordance with
the foregoing.
8. LOCATION; INSPECTION; LABELS. Equipment shall be delivered to and
shall not be removed from the Equipment "Location" shown on each Schedule
without Lessor's prior written consent which shall not be unreasonably withheld,
which "Location" shall in all events be within the United States. Lessor shall
have the right to inspect Equipment at any reasonable time mutually agreeable to
Lessor and Lessee upon one (1) day's prior notice. Lessee shall be responsible
for all labor, material and freight charges incurred in connection with any
removal or relocation of such Equipment which is requested by the Lessee and
consented to by Lessor, as well as for any charges due to the installation or
moving of the Equipment. The rental payments shall continue during any period in
which the Equipment is in transit during a
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relocation. Lessor or its agent shall mark and label Equipment, which labels
shall state Equipment is owned by Lessor, and Lessee shall keep such labels on
the Equipment as labeled by Lessor or its agent.
9. EQUIPMENT MAINTENANCE. (a) General. Lessee will locate or base
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each item of Equipment where designated in an Acceptance Notice and will
reasonably permit Lessor to inspect such item of Equipment and its maintenance
records at a time mutually agreeable to Lessor and Lessee upon one (1) day's
prior notice. Lessee will at its sole expense comply with all applicable laws,
rules, regulations, requirements and orders with respect to the use,
maintenance, repair, condition, storage and operation of each item of Equipment.
Except as required herein, Lessee will not make any addition or improvement to
any item of Equipment that is not readily removable without causing material
damage to any item or impairing its original value or utility. Any addition or
improvement that is so required or cannot be so removed will immediately become
the property of Lessor. (b) Service and Repair. With respect to computer
------------------
equipment, other than personal computers, Lessee has entered into, and will
maintain in effect, Vendor's standard maintenance contract or another contract
satisfactory to Lessor for a period equal to the term of each Schedule and
extensions thereto which provides for the maintenance of the Equipment and
repairs and replacement parts thereof in good condition and working order, all
in accordance with the terms of such maintenance contract. Lessee shall have the
Equipment certified for the Vendor's standard maintenance agreement prior to
delivery to Lessor upon expiration of this Lease. With respect to any other
Equipment, Lessee will, at its sole expense, maintain and service, and repair
any damage to, each item of Equipment in a manner consistent with prudent
industry practice and Lessee's own practice so that such item of Equipment is at
all times (i) in the same condition as when delivered to Lessee, except for
ordinary wear and tear, (ii) in good operating order for the function intended
by its manufacturer's warranties and recommendations.
10. LOSS OR DAMAGE. Upon Lessee's acceptance of any particular item
of Equipment in accordance with Section 7 above, Lessee assumes the entire risk
of loss to such item of Equipment through use, operation or otherwise. Lessee
hereby indemnifies and holds harmless Lessor from and against all claims, loss
of rental payments, costs, damages, and expenses relating to or resulting from
any loss, damage or destruction of the Equipment and for which the Lessor bears
no fault, any such occurrence being hereinafter called a "Casualty Occurrence."
On the first rental payment date following such Casualty Occurrence, or, if
there is no such rental payment date, thirty (30) days after such Casualty
Occurrence, Lessee shall (i) repair the Equipment, returning it to good
operating condition or (ii) replace the Equipment with substantially similar
equipment in good condition and repair, the title to which shall vest in Lessor
and which thereafter shall be subject to the terms of this Lease; or (iii) pay
to Lessor (a) any unpaid accrued amounts relating to such Equipment due Lessor
under this Lease up to the date of the Casualty Occurrence, and (b) a sum equal
to the Casualty Value as set forth in the Casualty Value table attached to each
Schedule hereto for such Equipment. Upon the making of such payment, the term of
this Lease as to each unit of Equipment with respect to which the Casualty Value
was paid shall terminate.
11. GENERAL INDEMNITY. Except where Lessor is in breach of the Lease
or is grossly negligent, Lessee will protect, indemnify and save harmless Lessor
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and
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expenses, imposed upon or incurred by or asserted against Lessor or any assignee
of Lessor by Lessee or any third party by reason of the occurrence or existence
(or alleged occurrence or existence) of any act or event relating to or caused
by the Equipment, including but not limited to, consequential or special damages
of any kind, or any failure on the part of Lessee to perform or comply with any
of the terms of this Lease. In the event that any action, suit or proceeding is
brought against Lessor by reason of any such occurrence, Lessee, upon request of
Lessor, will at Lessee's expense resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel designated
by Lessee and approved by Lessor, such approval not to be unreasonably withheld.
Lessee's obligations under this Section 11 shall survive the termination or
expiration of this Lease only with respect to acts or events occurring or
alleged to have occurred prior to the return of the Equipment to Lessor at the
end of the Lease term.
12. INSURANCE. Lessee at its expense shall keep the Equipment insured
for the entire term and any extensions of this Lease against all risks for at
least the replacement value of such Equipment and shall provide for a loss
payable endorsement to Lessor or any assignee of Lessor. Lessee shall maintain
comprehensive general public liability insurance with respect to loss or damage
for personal injury, death or property damage in an amount not less than
$2,000,000 per occurrence, naming Lessor and Lessor's assignee as additional
insured. Such insurance shall contain insurer's agreement to give thirty (30)
days written notice to Lessor before cancellation or material change of any
policy of insurance. Lessee will provide Lessor and any assignee of Lessor with
a certificate of insurance from the insurer evidencing Lessor's or such
assignee's interest in the policy of insurance. Such insurance shall cover any
Casualty Occurrence to any unit of Equipment. Notwithstanding anything in
Section 10 or this Section 12 to the contrary, this Lease and Lessee's
obligations hereunder and under each Schedule shall remain in full force and
effect with respect to any unit of Equipment which is not subject to a Casualty
Occurrence. If Lessee fails to provide or maintain insurance as required herein,
Lessor shall have the right, but shall not be obligated to obtain such
insurance. In that event, Lessee shall pay to Lessor the cost thereof.
13. TAXES. Lessee agrees to reimburse Lessor for, (or pay directly if
instructed by Lessor), and agrees to indemnify and hold Lessor harmless from,
all fees (including, but not limited to, license, documentation, recording and
registration fees), and all sales, use, gross receipts, personal property,
occupational, value added or other taxes, levies, imposts, duties, assessments,
charges, or withholdings of any nature whatsoever, together with any penalties,
fines, additions to tax, or interest thereon (all of the foregoing being
hereafter referred to as "Impositions") except same as may be attributable to
Lessor's income, arising at any time prior to or during the term of this Lease,
or upon termination or early termination of this Lease and levied or imposed
upon Lessor directly or otherwise by any Federal, state or local government in
the United States or by any foreign country or foreign or international taxing
authority upon or with respect to (i) the Equipment, (ii) the exportation,
importation, registration, purchase, ownership, delivery, leasing, possession,
use, operation, storage, maintenance, repair, return, sale, transfer of title,
or other disposition thereof, (iii) the rentals, receipts, or earnings arising
from the Equipment, or, alternatively, any disposition of the rights to such
rentals, receipts, or earnings, (iv) any payment pursuant to this Lease, and (v)
this Lease or the transaction or any part thereof. Lessee's obligations under
this Section 13 shall survive the expiration of this Lease with respect to acts
or events occurring prior to the return of the Equipment to Lessor at the end of
the Lease term.
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14. PAYMENT BY LESSOR. If Lessee shall fail to make any payment or
perform any act required hereunder, then Lessor may, but shall not be required
to, after such notice to Lessee as is reasonable under the circumstances, make
such payment or perform such act with the same effect as if made or performed by
Lessee. Lessee will upon demand reimburse Lessor for all sums paid and all costs
and expenses incurred in connection with the performance of any such act.
15. SURRENDER OF EQUIPMENT. Upon termination or expiration of this
Lease, with respect to each group of Equipment, Lessee will forthwith surrender
the Equipment to Lessor delivered in as good order and condition as originally
delivered, reasonable wear and tear excepted. Lessor may, at its sole option,
arrange for removal and transportation of the Equipment provided that Lessee's
obligations under Sections 10 and 12 shall terminate upon Lessor's receipt of
the Equipment and be released. Lessee shall bear all expenses of delivering
(which include, but are not limited to, the de-installation, insurance,
packaging and transportation of) the Equipment to Lessor's location. In the
event Lessee fails to deliver the Equipment as directed above, all obligations
of Lessee under this Lease, including rental payments, shall remain in full
force and effect until Lessee delivers the Equipment to Lessor.
16. ASSIGNMENT. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, SUCH CONSENT
NOT TO BE UNREASONABLY WITHHELD, LESSEE SHALL NOT (a) ASSIGN OR TRANSFER,
PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS LEASE, EQUIPMENT, OR ANY
INTEREST THEREIN, OR (b) SUBLET OR LEND EQUIPMENT OR PERMIT IT TO BE USED BY
ANYONE OTHER THAN LESSEE OR LESSEE'S EMPLOYEES. LESSOR MAY ASSIGN THIS LEASE OR
GRANT A SECURITY INTEREST IN ANY OR ALL EQUIPMENT, OR BOTH, IN WHOLE OR IN PART
TO ONE OR MORE ASSIGNEES OR SECURED PARTIES WITHOUT NOTICE TO LESSEE.
Notwithstanding the above, Lessee may, without Lessor's prior written consent,
assign or transfer this Lease to a subsidiary of Lessee in connection with a
reincorporation of Lessee, the sole purpose of which is to change the state in
which Lessee is incorporated, provided, however, Lessee agrees to provide
reasonable advance notice to Lessor of such change and such change does not
result in a material adverse change in Lessee's condition, financial or
otherwise. If Lessee is given notice of such assignment it agrees to acknowledge
receipt thereof in writing and Lessee shall execute such additional
documentation as Lessor's assignee shall require. Each such assignee and/or
secured party shall have all of the rights, but none of the obligations, of
Lessor under this Lease, unless such assignee or secured party expressly agrees
to assume such obligations in writing. Lessee shall not assert against any
assignee and/or secured party any defense, counterclaim or offset that Lessee
may have against Lessor. Notwithstanding any such assignment, and providing no
Event of Default has occurred and is continuing, Lessor, or its assignees,
secured parties, or their agents or assigns, shall not interfere with Lessee's
right to quietly enjoy use of Equipment subject to the terms and conditions of
this Lease. Subject to the foregoing, this Lease inures to the benefit of and is
binding upon the successors and assignees of the parties hereto. Lessor agrees
and Lessee acknowledges that any such assignment by Lessor will not materially
change Lessee's duties or obligations under the Lease or increase any burden of
risk on Lessee.
17. DEFAULT. (a) Event of Default. Any of the following events or
----------------
conditions shall constitute an "Event of Default" hereunder: (i) Lessee's
failure to pay any
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monies due to Lessor hereunder or under any Schedule beyond the thirtieth (30th)
day after the same is due, provided, however, Lessee shall pay late charges
pursuant to Section 18 hereof upon its failure to pay such monies beyond ten
(10) days after the same is due; (ii) Lessee's failure to comply with its
obligations under Section 12 or Section 16; (iii) Lessee's failure to comply
with or perform any term, covenant, condition, warranty or representation of
this Lease or any Schedule hereto or under any other agreement between Lessee
and Lessor or under any lease of real property covering the location of
Equipment if such failure to comply or perform is not cured by Lessee within
thirty (30) days of receipt of notice thereof; (iv) seizure of the Equipment
under legal process; (v) the filing by or against Lessee of a petition for
reorganization or liquidation under the Bankruptcy Code or any amendment thereto
or under any other insolvency law providing for the relief of debtors; (vi) the
voluntary or involuntary making of an assignment of all or substantially all of
its assets by Lessee, or any guarantor ("Guarantor") under any guaranty executed
in connection with this Lease ("Guaranty"), for the benefit of its creditors,
the appointment of a receiver or trustee for Lessee or any Guarantor for any of
Lessee's or Guarantor's assets, the institution by or against Lessee or any
Guarantor of any formal or informal proceeding for dissolution, liquidation,
settlement of claims against or winding up of the affairs of Lessee or any
Guarantor, provided that in the case of all such involuntary proceedings, same
--------
are not dismissed within sixty (60) days after commencement; or (vii) the making
by Lessee or any Guarantor of a transfer of all or substantially all of Lessee's
or Guarantor's assets or inventory not in the ordinary course of business.
(b) Remedies. If any Event of Default shall have occurred:
--------
(i) Lessor may proceed by appropriate court action or actions
either at law or in equity to enforce performance by Lessee, of the applicable
covenants of this Lease, or to recover damages therefor; or
(ii) Lessee will, without demand, on the next rent payment date
following the Event of Default, pay to Lessor as liquidated damages which the
parties agree are fair and reasonable under the circumstances existing at the
time this Lease is entered into, and not as a penalty, an amount equal to the
Casualty Value of the Equipment set forth in Exhibit C together with any rent or
other amounts past due and owing by Lessee hereunder; and
(iii) Lessor may, without notice to or demand upon Lessee;
(a) Take possession of the Equipment and lease or sell the
same or any portion thereof, for such period, amount, and to such entity as
Lessor shall elect. The proceeds of such lease or sale will be applied by Lessor
(A) first, to pay all costs and expenses, including reasonable legal fees and
disbursements, incurred by Lessor as a result of the default and the exercise of
its remedies with respect thereto, (B) second, to pay Lessor an amount equal to
any unpaid rent or other amounts past due and payable plus the Casualty Value,
to the extent not previously paid by Lessee, and (C) third, to reimburse Lessee
for the Casualty Value to the extent previously paid. Any surplus remaining
thereafter will be retained by Lessor.
(b) Take possession of the Equipment and hold and keep
idle the same or any portion thereof provided that Lessor shall reimburse Lessee
for the Casualty Value to the extent previously paid pursuant to this Section
17.
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Notwithstanding the remedies set forth herein, in the event the Lessee
has paid to Lessor all amounts set forth in Section 17(b)(ii) above, title to
all such Equipment shall immediately, and without need for further
documentation, vest in the Lessee following the payment of such Casualty Values
and past due rents and amounts, and Lessor agrees to execute any instruments or
documents as reasonably requested by Lessee for Lessee's purposes to evidence
such transfer of title.
Lessee agrees to pay all internal and out-of-pocket costs of Lessor
related to the exercise of its remedies, including direct costs of its in-house
counsel and out-of-pocket legal fees and expenses. At Lessor's request, Lessee
shall assemble the Equipment and make it available to Lessor at such location as
Lessor may reasonably designate. Lessee waives any right it may have to redeem
the Equipment.
Repossession of any or all Equipment shall terminate this Lease and
any Schedule and Lessor shall notify Lessee in writing. Any amount required to
be paid under this Section shall be increased by a service charge at the rate of
1.5% per month, or the highest rate of interest permitted by applicable law,
whichever is less, accruing from the date the Casualty Value or other amounts
are payable hereunder until such amounts are paid.
None of the above remedies is intended to be exclusive, but each is
cumulative and in addition to any other remedy available to Lessor, and all may
be enforced separately or concurrently.
18. LATE PAYMENTS. Lessee shall pay to Lessor an amount equal to the
greater of 10% per month of all amounts owed Lessor by Lessee which are not paid
when due or $100, but in no event an amount greater than the highest rate
permitted by applicable law. If such funds have not been received by Lessor at
Lessor's place of business or by Lessor's designated agent by the date such
funds are due under this Lease, Lessor shall bill Lessee for such charges.
Lessee acknowledges that invoices for rentals due hereunder are sent by Lessor
for Lessee's convenience only. Lessee's non-receipt of an invoice will not
relieve Lessee of its obligation to make rent payments hereunder.
19. LESSOR'S EXPENSE. Lessee shall pay Lessor all costs and expenses
including reasonable attorney's fees and the fees of the collection agencies,
incurred by Lessor in enforcing any of the terms, conditions or provisions
hereof.
20. OWNERSHIP; PERSONAL PROPERTY. The Equipment shall be and remain
personal property of Lessor, and Lessee shall have no right, title or interest
therein or thereto except as expressly set forth in this Lease, notwithstanding
the manner in which it may be attached or affixed to real property, and upon
termination or expiration of the Lease term, Lessee shall have the duty and
Lessor shall have the right to remove the Equipment from the premises where the
same be located whether or not affixed or attached to the real property or any
building, at the cost and expense of Lessee.
21. ALTERATIONS; ATTACHMENTS. No alterations or attachments shall be
made to the Equipment without Lessor's prior written consent, which shall not be
given for changes that will affect the reliability and utility of the Equipment
or which cannot be
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removed without damage to the Equipment, or which in any way affect the value of
the Equipment for purposes of resale or re-lease.
22. FINANCING STATEMENT. Lessee will execute financing statements
with respect to any item of Equipment under this Lease pursuant to the Uniform
Commercial Code. Lessee authorizes Lessor to file financing statements with
respect to any item of Equipment under this Lease signed only by Lessor (where
such authorization is permitted by law) at all places where Lessor deems
necessary.
23. MISCELLANEOUS. (a) Lessee shall make available to Lessor such
corporate resolutions and financial statements that Lessor may reasonably
request from time to time. (b) Lessee represents that the Equipment is being
leased hereunder for business purposes. (c) Time is of the essence with respect
to this Lease. (d) Lessee shall keep its books and records in accordance with
generally accepted accounting principles and practices consistently applied and
shall deliver to Lessor its annual audited financial statements, unaudited
monthly financial statements and signed by an officer of Lessee and such other
unaudited financial statements as may be reasonably requested by Lessor.
24. NOTICES. All notices hereunder shall be in writing, by registered
mail, or reliable messenger or delivery service and shall be directed, as the
case may be, to Lessor at 2401 Kerner Boulevard, San Rafael, California 94901,
Attention: Asset Management, and to Lessee at 453 Sherman Avenue, Palo Alto, CA
94306, Attention: Michael Schradle.
25. ENTIRE AGREEMENT. Lessee acknowledges that Lessee has read this
Lease, understands it and agrees to be bound by its terms, and further agrees
that it and each Schedule constitute the entire agreement between Lessor and
Lessee with respect to the subject matter hereof and supersedes all previous
agreements, promises, or representations. The terms and conditions hereof shall
prevail notwithstanding any variance with the terms of any purchase order
submitted by the Lessee with respect to any Equipment covered hereby.
26. AMENDMENT. This Lease may not be changed, altered or modified
except by an instrument in writing signed by an officer of the Lessor and the
Lessee.
27. WAIVER. Any failure of Lessor to require strict performance by
Lessee or any waiver by Lessor of any provision herein shall constitute a
consent or waiver of such provision, but shall not be construed as a consent or
waiver of any other breach of any other provision.
28. SEVERABILITY. If any provision of this Lease is held invalid,
such invalidity shall not affect any other provisions hereof.
29. JURISDICTION. This Lease shall be governed by and construed under
the laws of the State of California. It is agreed that exclusive jurisdiction
and venue for any legal action between the parties arising out of this Lease
shall be in the Superior Court for Marin County, California, or, in cases where
Federal diversity jurisdiction is available' in the United States District Court
for the Northern District of California.
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30. NATURE OF TRANSACTION. Lessor makes no representation whatsoever,
express or implied, concerning the legal character of the transaction evidenced
hereby, for tax or any other purpose.
31. SECURITY INTEREST. (a) One executed copy of the Lease will be
marked "Original" and all other counterparts will be duplicates. To the extent,
if any, that this Lease constitutes chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction) no
security interest in the lease may be created in any documents other than the
"Original." (b) There shall be only one original of each Schedule and it shall
be marked "Original, n and all other counterparts will be duplicates. To the
extent, if any, that any Schedule(s) to this Lease constitutes chattel paper (or
as such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction) no security interest in any Schedule(s) may be created
in any documents other than the "Original."
32. SUSPENSION OF OBLIGATIONS. The obligations of Lessor hereunder
will be suspended to the extent that it is hindered or prevented from complying
therewith because of labor disturbances, including but not limited to strikes
and lockouts, acts of God, fires, storms, accidents, failure of the manufacturer
to deliver any item of Equipment, governmental regulations or interference, or
any cause whatsoever not within the sole and exclusive control of Lessor.
33. SOFTWARE. For the term of this Lease, and so long as no Event of
Default has occurred and is continuing, Lessor hereby assigns to Lessee all of
Lessor's rights under any License Agreement executed by Lessor in connection
with the Equipment (except for any right of Lessor to be reimbursed for the
License Fee). Lessee agrees to be bound by the provisions of any such License
Agreement and to perform all obligations of Lessor (except Lessor's payment
obligations) thereunder. Lessee acknowledges that all of Lessee's obligations
under the Lease with respect to the Equipment will apply equally to the
software, including but not limited to Lessee's obligation to pay rent to
Lessor.
34. COMMITMENT FEE. Lessee has paid to Lessor a commitment fee
("Fee") of $10,000. The Fee shall be applied by Lessor first to reimburse Lessor
for all out-of-pocket UCC search costs, inspections and appraisal fees incurred
by Lessor, and then proportionally to the first month's rent for each Schedule
hereunder in the proportion that the purchase price of the Equipment leased
pursuant to the Schedule bears to Lessor's entire commitment. However, the
portion of the Fee which is not applied to rental shall be non-refundable except
if Lessor defaults in its obligations pursuant to Section 3.
35. FINANCE LEASE. The parties agree that this lease is a "Finance
Lease" as defined by section 10-103(a)(7) of the California Commercial Code
(Cal.Com.C.). Lessee has reviewed and approved any written Supply Contract (as
defined by Cal.Com.C. Section 10-103(a)(25)) covering Equipment purchased from
the "Supplier" (as defined by Cal.Com.C. Section 10-103(a)(24)) thereof for
lease to Lessee or (b) that Lessor has informed or advised Lessee, in writing,
either previously or by this Lease of the following: (i) the identity of the
Supplier; (ii) that the Lessee may have rights under the Supply Contract; and
(iii) that the Lessee may contact the Supplier for a description of any such
rights Lessee may have under the Supply Contract.
<PAGE>
36. PURCHASE OR RENEWAL REQUIREMENT FOR ALL SCHEDULES TO MASTER
EQUIPMENT LEASE. At the expiration of the Initial Term for Schedule No. 1, and
notwithstanding anything to the contrary in the Lease, upon at least 90 days
prior written notice to Lessor, Lessee shall either:
No. 1
-----
Purchase AS-IS, WHERE-IS all, but not less than all, of the Equipment
covered under all Schedules to this Lease at the expiration of the
Initial Term for each such Schedule for an amount equal to twenty
percent (20%) of the Equipment's original purchase price, whereupon
Lessor shall issue to Lessee a Bill of Sale for the Equipment
transferring it to Lessee without any representation or warranty
whatsoever, or
No. 2
-----
Extend the Initial Term of all Schedules to this Lease for an
additional twelve (12) months ("Renewal Term") commencing with the end
of the Initial Term of each Schedule at a rate of 1.9% per month of
the Equipment's original purchase price followed by an option to
purchase all, but not less than all, the Equipment, AS-IS, WHERE-IS,
for $1.00. Upon expiration of each Renewal Term, Lessor shall issue to
Lessee a Bill of Sale for the Equipment under the applicable Schedule
transferring it to Lessee without any representation or warranty
whatsoever.
In the event Lessee does not provide 90 days prior written notice as specified
above, Lessee shall be deemed to have selected No. 1 above for all Schedules to
the Lease.
Lessee shall be responsible for all applicable taxes in connection with any
purchase of Equipment by Lessee.
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
PHOENIX LEASING INCORPORATED INTERNET TRAVEL NETWORK
By:_________________________ By:____________________________
Title:______________________ Title:_________________________
Headquarters Location:
453 Sherman Avenue
Palo Alto, CA 94306
County of Santa Clara
Exhibit A - Closing Memorandum
11
<PAGE>
ADDITIONAL COMMITMENT SCHEDULE
Schedule (Additional Commitment) No. 05
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
A. Description and Purchase Price of Equipment
-------------------------------------------
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Street Address
and serial number) Purchase Price Rent Mft./Vendor City, State and County
- ------------------ -------------- ---- ----------- ----------------------
<S> <C> <C> <C> <C>
See Exhibit A attached hereto.
Total: $505,750.26 $ 5,507.50 Months 1-12
$18,459.88 Months 13-42
</TABLE>
B. Terms
-----
Initial Term: The Initial Term shall commence on the date the
Equipment is received, installed and accepted for
use, as shown on the Acceptance Notice, and
continue for 42 full months after the "Rent Start
Date."
Rent Start Date: This shall be the first day of the month following
the month during which the Initial Term commences;
provided, however, that if the Equipment is
accepted on the first day of the month, the Rent
Start Date shall commence on the same day that the
Initial Term commences.
Initial Rental Amount Per Month: $5,507.50, for Months 1 through 12, plus
applicable taxes, and $18,459.88, for Months 13 through 42, plus applicable
taxes, which amount shall be adjusted in accordance with the Rate Factors and
Terms shown hereinbelow:
Lease Rate Factor (as a percentage of Equipment's original Purchase Price):
Months 1-12: 1.00%
Months 13-42 3.65%
Monthly Rental Payments in advance.
Initial Rent Due: Payable on the Rent Start Date shall be (1) the
first Monthly Rental Amount including any sales or
use tax and (2) an amount equal to 1/30th of the
Monthly Rental Amount using a rate of 1.00%
multiplied by the number of days, if any, between
(and including) the date the Initial Term
commences and (but not including) the Rent Start
Date.
<PAGE>
Schedule (Additional Commitment) No. 05
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
C. Invoice Information: Lessee's and Lessor's addresses for invoice purposes
-------------------
for the Equipment on the Schedule shall be as follows:
Lessor's Invoice Address: Remit Monthly Rental Amount To:
- ------------------------- ------------------------------
INTERNET TRAVEL NETWORK PHOENIX LEASING INCORPORATED
445 Sherman Avenue P.O. Box 200432
Palo Alto, CA 94306 Dallas, TX 75320-0432
Attention: Michael Schradle
D. Casualty Values: See attachment hereto.
---------------
E. Special Provisions: 1. Lessor's payment for Equipment hereunder is
------------------
conditioned on Lessor's satisfaction that there has been no adverse change in
Lessee's financial condition subsequent to initial credit approval, 2. Sale
Leaseback Addendum, and 3. Purchase or Renewal Requirement set forth in Section
36A of the Lease, as amended, and repeated for convenience below.
36A. PURCHASE OR RENEWAL REQUIREMENT FOR ALL ADDITIONAL COMMITMENT
SCHEDULES TO MASTER EQUIPMENT LEASE. At the expiration of the Initial Term for
Schedule No. 1, and notwithstanding anything to the contrary in the Lease, upon
at least 90 days prior written notice to Lessor, Lessee shall either:
No. 1: Purchase AS-IS, WHERE-IS all, but not less than all, of the
-----
Equipment covered under all Schedules to this Lease at the expiration of the
Initial Term for each such Schedule for an amount equal to fifteen (15%) of the
Equipment's original purchase price, whereupon Lessor shall issue to Lessee a
Bill of Sale for the Equipment transferring it to Lessee without any
representation or warranty whatsoever, or
No. 2: Extend the Initial Term of all Schedules to this Lease for an
-----
additional twelve (12) months ("Renewal Term") commencing with the end of the
Initial Term of each Schedule at a rate of 1.60% per month of the Equipment's
original purchase price followed by an option to purchase all, but not less than
all, the Equipment, AS-IS, WHERE-IS, for $1.00. Upon expiration of each Renewal
Term, Lessor shall issue to Lessee a Bill of Sale for the Equipment under the
applicable Schedule transferring it to Lessee without any representation or
warranty whatsoever.
In the event Lessee does not provide 90 days prior written notice as specified
above, Lessee shall be deemed to have selected No. 1 above for all Schedules to
the Lease.
Lessee shall be responsible for all applicable taxes in connection with any
purchase of Equipment by Lessee.
LESSOR AND LESSEE AGREE THAT THIS SCHEDULE SHALL CONSTITUTE A LEASE OF THE
EQUIPMENT DESCRIBED ABOVE, SUBJECT TO THE TERMS AND
2
<PAGE>
Schedule (Additional Commitment) No. 03
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
CONDITIONS OF THIS SCHEDULE AND OF THE MASTER EQUIPMENT LEASE DATED DECEMBER 1,
1996, AS AMENDED, BETWEEN LESSEE AND LESSOR. THE TERMS AND CONDITIONS OF SUCH
MASTER EQUIPMENT LEASE ARE HEREBY INCORPORATED BY REFERENCE AND MADE A PART
HEREOF TO THE SAME EXTENT AS IF SUCH TERMS AND CONDITIONS WERE SET FORTH IN FULL
HEREIN.
PHOENIX LEASING INCORPORATED INTERNET TRAVEL NETWORK
By: _________________________ By: ______________________________
Name: Andrew Fergusen Name: Al Whaley
------------------------- ------------------------------
Title: Contract Admin. Title: Secretary
------------------------- ------------------------------
Date: 2/20/98 Date: 2/19/98
------------------------- ------------------------------
3
<PAGE>
ADDITIONAL COMMITMENT SCHEDULE
Schedule (Additional Commitment) No. 04
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
A. Description and Purchase Price of Equipment
-------------------------------------------
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Street Address
and serial number) Purchase Price Rent Mft./Vendor City, State and County
- --------------------- -------------- ---- ----------- ----------------------
See Exhibit A attached hereto.
<S> <C> <C> <C> <C>
Total: $ 473,907.37 $ 4,739.07 Months 1-12
$17,297.62 Months 13-42
</TABLE>
B. Terms
-----
Initial Term: The Initial Term shall commence on the date the
Equipment is received, installed and accepted for use,
as shown on the Acceptance Notice, and continue for 42
full months after the "Rent Start Date."
Rent Start Date: This shall be the first day of the month following the
month during which the Initial Term commences; provided,
however, that if the Equipment is accepted on the first
day of the month, the Rent Start Date shall commence on
the same day that the Initial Term commences.
Initial Rental Amount Per Month: $4,739.07, for Months 1 through 12, plus
applicable taxes, and $17,297.62, for Months 13 through 42, plus applicable
taxes, which amount shall be adjusted in accordance with the Rate Factors and
Terms shown hereinbelow:
Lease Rate Factor (as a percentage of Equipment's original Purchase Price):
Months 1-12: 1.00%
Months 13-42: 3.65%
Monthly Rental Payments in advance.
Initial Rent Due: Payable on the Rent Start Date shall be (1) the first
Monthly Rental Amount including any sales or use tax and
(2) an amount equal to 1/30th of the Monthly Rental
Amount using a rate of 1.00% multiplied by the number of
days, if any, between (and including) the date the
Initial Term commences and (but not including) the Rent
Start Date.
<PAGE>
Schedule (Additional Commitment) No. 04
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
C. Invoice Information: Lessee's and Lessor's addresses for invoice purposes
-------------------
for the Equipment on the Schedule shall be as follows:
Lessor's Invoice Address: Remit Monthly Rental Amount To:
- ------------------------ ------------------------------
INTERNET TRAVEL NETWORK PHOENIX LEASING
445 Sherman Avenue INCORPORATED
Palo Alto, CA 94306 P.O. Box 200432
Attention: Michael Schradle Dallas, TX 75320-0432
D. Casualty Values: See attachment hereto.
----------------
E. Special Provisions: 1. Lessor's payment for Equipment hereunder is
-------------------
conditioned on Lessor's satisfaction that there has been no adverse change in
Lessee's financial condition subsequent to initial credit approval, 2. Sale
Leaseback Addendum, and 3. Purchase or Renewal Requirement set forth in Section
36A of the Lease, as amended, and repeated for convenience below.
36A. PURCHASE OR RENEWAL REQUIREMENT FOR ALL ADDITIONAL COMMITMENT
SCHEDULES TO MASTER EQUIPMENT LEASE. At the expiration of the Initial Term for
Schedule No. 1, and notwithstanding anything to the contrary in the Lease, upon
at least 90 days prior written notice to Lessor, Lessee shall either:
No. 1: Purchase AS-IS, WHERE-IS all, but not less than all, of the
-----
Equipment covered under all Schedules to this Lease at the expiration of the
Initial Term for each such Schedule for an amount equal to fifteen (15%) of the
Equipment's original purchase price, whereupon Lessor shall issue to Lessee a
Bill of Sale for the Equipment transferring it to Lessee without any
representation or warranty whatsoever, or
No. 2: Extend the Initial Term of all Schedules to this Lease for an
-----
additional twelve (12) months ("Renewal Term") commencing with the end of the
Initial Term of each Schedule at a rate of 1.60% per month of the Equipment's
original purchase price followed by an option to purchase all, but not less than
all, the Equipment, AS-IS, WHERE-IS, for $1.00. Upon expiration of each Renewal
Term, Lessor shall issue to Lessee a Bill of Sale for the Equipment under the
applicable Schedule transferring it to Lessee without any representation or
warranty whatsoever.
In the event Lessee does not provide 90 days prior written notice as specified
above, Lessee shall be deemed to have selected No. 1 above for all Schedules to
the Lease.
Lessee shall be responsible for all applicable taxes in connection with any
purchase of Equipment by Lessee.
LESSOR AND LESSEE AGREE THAT THIS SCHEDULE SHALL CONSTITUTE A LEASE OF THE
EQUIPMENT DESCRIBED ABOVE, SUBJECT TO THE TERMS AND
5
<PAGE>
Schedule (Additional Commitment) No. 04
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
CONDITIONS OF THIS SCHEDULE AND OF THE MASTER EQUIPMENT LEASE DATED DECEMBER 1,
1996, AS AMENDED, BETWEEN LESSEE AND LESSOR. THE TERMS AND CONDITIONS OF SUCH
MASTER EQUIPMENT LEASE ARE HEREBY INCORPORATED BY REFERENCE AND MADE A PART
HEREOF TO THE SAME EXTENT AS IF SUCH TERMS AND CONDITIONS WERE SET FORTH IN FULL
HEREIN.
PHOENIX LEASING INCORPORATED INTERNET TRAVEL NETWORK
By: ________________________ By: __________________________
Name: Andrew Fergusen Name: Al Whaley
------------------------ --------------------------
Title: Contract Admin. Title: Secretary
------------------------ --------------------------
Date: 2/20/98 Date: 2/19/98
------------------------ --------------------------
6
<PAGE>
ADDITIONAL COMMITMENT SCHEDULE
Schedule (Additional Commitment) No. 05
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
A. Description and Purchase Price of Equipment
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Street Address
and serial number) Purchase Price Rent Mft./Vendor City, State and County
- ------------------ -------------- ---- ----------- ----------------------
<S> <C> <C> <C> <C>
See Exhibit A attached hereto.
Total: $505,750.26 $ 5,507.50 Months 1-12
$18,459.88 Months 13-42
</TABLE>
B. Terms
-----
Initial Term: The Initial Term shall commence on the date the
Equipment is received, installed and accepted for
use, as shown on the Acceptance Notice, and
continue for 42 full months after the "Rent Start
Date."
Rent Start Date: This shall be the first day of the month following
the month during which the Initial Term commences;
provided, however, that if the Equipment is
accepted on the first day of the month, the Rent
Start Date shall commence on the same day that the
Initial Term commences.
Initial Rental Amount Per Month: $5,507.50, for Months 1 through 12, plus
applicable taxes, and $18,459.88, for Months 13 through 42, plus applicable
taxes, which amount shall be adjusted in accordance with the Rate Factors and
Terms shown hereinbelow:
Lease Rate Factor (as a percentage of Equipment's original Purchase Price):
Months 1-12: 1.00%
Months 13-42 3.65%
Monthly Rental Payments in advance.
Initial Rent Due: Payable on the Rent Start Date shall be (1) the
first Monthly Rental Amount including any sales or
use tax and (2) an amount equal to 1/30th of the
Monthly Rental Amount using a rate of 1.00%
multiplied by the number of days, if any, between
(and including) the date the Initial Term
commence3s and (but not including) the Rent Start
Date.
<PAGE>
Schedule (Additional Commitment) No. 05
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
C. Invoice Information: Lessee's and Lessor's addresses for invoice purposes
-------------------
for the Equipment on the Schedule shall be as follows:
Lessor's Invoice Address: Remit Monthly Rental Amount To:
- ------------------------- ------------------------------
INTERNET TRAVEL NETWORK PHOENIX LEASING INCORPORATED
445 Sherman Avenue P.O. Box 200432
Palo Alto, CA 94306 Dallas, TX 75320-0432
Attention: Michael Schradle
D. Casualty Values: See attachment hereto.
---------------
E. Special Provisions: 1. Lessor's payment for Equipment hereunder is
------------------
conditioned on Lessor's satisfaction that there has been no adverse change in
Lessee's financial condition subsequent to initial credit approval, 2. Sale
Leaseback Addendum, and 3. Purchase or Renewal Requirement set forth in Section
36A of the Lease, as amended, and repeated for convenience below.
36A. PURCHASE OR RENEWAL REQUIREMENT FOR ALL ADDITIONAL COMMITMENT
SCHEDULES TO MASTER EQUIPMENT LEASE. At the expiration of the Initial Term for
Schedule No. 1, and notwithstanding anything to the contrary in the Lease, upon
at least 90 days prior written notice to Lessor, Lessee shall either:
No. 1: Purchase AS-IS, WHERE-IS all, but not less than all, of the
-----
Equipment covered under all Schedules to this Lease at the expiration of the
Initial Term for each such Schedule for an amount equal to fifteen (15%) of the
Equipment's original purchase price, whereupon Lessor shall issue to Lessee a
Bill of Sale for the Equipment transferring it to Lessee without any
representation or warranty whatsoever, or
No. 2: Extend the Initial Term of all Schedules to this Lease for an
-----
additional twelve (12) months ("Renewal Term") commencing with the end of the
Initial Term of each Schedule at a rate of 1.60% per month of the Equipment's
original purchase price followed by an option to purchase all, but not less than
all, the Equipment, AS-IS, WHERE-IS, for $1.00. Upon expiration of each Renewal
Term, Lessor shall issue to Lessee a Bill of Sale for the Equipment under the
applicable Schedule transferring it to Lessee without any representation or
warranty whatsoever.
In the event Lessee does not provide 90 days prior written notice as specified
above, Lessee shall be deemed to have selected No. 1 above for all Schedules to
the Lease.
Lessee shall be responsible for all applicable taxes in connection with any
purchase of Equipment by Lessee.
LESSOR AND LESSEE AGREE THAT THIS SCHEDULE SHALL CONSTITUTE A LEASE OF THE
EQUIPMENT DESCRIBED ABOVE, SUBJECT TO THE TERMS AND
8
<PAGE>
Schedule (Additional Commitment) No. 05
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
CONDITIONS OF THIS SCHEDULE AND OF THE MASTER EQUIPMENT LEASE DATED DECEMBER 1,
1996, AS AMENDED, BETWEEN LESSEE AND LESSOR. THE TERMS AND CONDITIONS OF SUCH
MASTER EQUIPMENT LEASE ARE HEREBY INCORPORATED BY REFERENCE AND MADE A PART
HEREOF TO THE SAME EXTENT AS IF SUCH TERMS AND CONDITIONS WERE SET FORTH IN FULL
HEREIN.
PHOENIX LEASING INCORPORATED INTERNET TRAVEL NETWORK
By: _________________________ By: ______________________________
Name: Andrew Fergusen Name: Al Whaley
------------------------- ------------------------------
Title: Contract Admin. Title: Secretary
------------------------- ------------------------------
Date: 2/20/98 Date: 2/19/98
------------------------- ------------------------------
9
<PAGE>
ADDITIONAL COMMITMENT SCHEDULE
Schedule (Additional Commitment) No. 06
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
A. Description and Purchase Price of Equipment
-------------------------------------------
<TABLE>
<CAPTION>
Description of
Equipment
(quantity, model Street Address
and serial number) Purchase Price Rent Mft./Vendor City, State and County
----------------- -------------- ---- ----------- ----------------------
<S> <C> <C> <C> <C>
See Exhibit A attached hereto.
Total: $128,378.00 $1,283.78 Months 1-12
$4,685.80 Months 13-42
</TABLE>
B. Terms
-----
Initial Term: The Initial Term shall commence on the date the Equipment is
received, installed and accepted for use, as shown on the
Acceptance Notice, and continue for 42 full months after the
"Rent Start Date."
Rent Start Date: This shall be the first day of the month following the month
during which the Initial Term commences; provided, however,
that if the Equipment is accepted on the first day of the
month, the Rent Start Date shall commence on the same day
that the Initial Term commences.
Initial Rental Amount Per Month: $1,283.78, for Months 1 through 12, plus
applicable taxes, and $4,685.80, for Months 13 through 42, plus applicable
taxes, which amount shall be adjusted in accordance with the Rate Factors and
Terms shown hereinbelow:
Lease Rate Factor (as a percentage of Equipment's original Purchase Price):
Months 1-12: 1.00%
Months 13-42 3.65%
Monthly Rental Payments in advance.
Initial Rent Due: Payable on the Rent Start Date shall be (1) the first
Monthly Rental Amount including any sales or use tax and (2)
an amount equal to 1/30th of the Monthly Rental Amount using
a rate of 1.00% multiplied by the number of days, if any,
between (and including) the date the Initial Term commence3s
and (but not including) the Rent Start Date.
<PAGE>
Schedule (Additional Commitment) No. 06
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
C. Invoice Information: Lessee's and Lessor's addresses for invoice purposes
------------------
for the Equipment on the Schedule shall be as follows:
Lessor's Invoice Address: Remit Monthly Rental Amount To:
- ------------------------ -----------------------------
INTERNET TRAVEL NETWORK PHOENIX LEASING INCORPORATED
445 Sherman Avenue P.O. Box 200432
Palo Alto, CA 94306 Dallas, TX 75320-0432
Attention: Michael Schradle
D. Casualty Values: See attachment hereto.
---------------
E. Special Provisions: 1. Lessor's payment for Equipment hereunder is
-------------------
conditioned on Lessor's satisfaction that there has been no adverse change in
Lessee's financial condition subsequent to initial credit approval, 2. Sale
Leaseback Addendum, and 3. Purchase or Renewal Requirement set forth in Section
36A of the Lease, as amended, and repeated for convenience below.
36A. PURCHASE OR RENEWAL REQUIREMENT FOR ALL ADDITIONAL COMMITMENT
SCHEDULES TO MASTER EQUIPMENT LEASE. At the expiration of the Initial Term for
Schedule N. 1, and notwithstanding anything to the contrary in the Lease, upon
at least 90 days prior written notice to Lessor, Lessee shall either:
No. 1: Purchase AS-IS, WHERE-IS all, but not less than all, of the
-----
Equipment covered under all Schedules to this Lease at the expiration of the
Initial Term for each such Schedule for an amount equal to fifteen (15%) of the
Equipment's original purchase price, whereupon Lessor shall issue to Lessee a
Bill of Sale for the Equipment transferring it to Lessee without any
representation or warranty whatsoever, or
No. 2: Extend the Initial Term of all Schedules to this Lease for an
-----
additional twelve (12) months ("Renewal Term") commencing with the end of the
Initial Term of each Schedule at a rate of 1.60% per month of the Equipment's
original purchase price followed by an option to purchase all, but not less than
all, the Equipment, AS-IS, WHERE-IS, for $1.00. Upon expiration of each Renewal
Term, Lessor shall issue to Lessee a Bill of Sale for the Equipment under the
applicable Schedule transferring it to Lessee without any representation or
warranty whatsoever.
In the event Lessee does not provide 90 days prior written notice as specified
above, Lessee shall be deemed to have selected No. 1 above for all Schedules to
the Lease.
Lessee shall be responsible for all applicable taxes in connection with any
purchase of Equipment by Lessee.
LESSOR AND LESSEE AGREE THAT THIS SCHEDULE SHALL CONSTITUTE A LEASE OF THE
EQUIPMENT DESCRIBED ABOVE, SUBJECT TO THE TERMS AND
11
<PAGE>
Schedule (Additional Commitment) No. 06
to Lease No. 0047 dated as of December 1, 1996
Between INTERNET TRAVEL NETWORK
and PHOENIX LEASING INCORPORATED
CONDITIONS OF THIS SCHEDULE AND OF THE MASTER EQUIPMENT LEASE DATED DECEMBER 1,
1996, AS AMENDED, BETWEEN LESSEE AND LESSOR. THE TERMS AND CONDITIONS OF SUCH
MASTER EQUIPMENT LEASE ARE HEREBY INCORPORATED BY REFERENCE AND MADE A PART
HEREOF TO THE SAME EXTENT AS IF SUCH TERMS AND CONDITIONS WERE SET FORTH IN FULL
HEREIN.
PHOENIX LEASING INCORPORATED INTERNET TRAVEL NETWORK
By: ____________________________ By: _______________________________
Name: Andrew Fergusen Name: Al Whaley
---------------------------- -------------------------------
Title: Contract Admin. Title: Secretary
---------------------------- ------------------------------
Date: 2/20/98 Date: 2/19/98
---------------------------- ------------------------------
12
<PAGE>
Exhibit 10.23
IMPERIAL BANK
Member FDIC
GENERAL SECURITY AGREEMENT
(Tangible and Intangible Personal Property)
This Agreement is executed on April 15, 1997, by INTERNET TRAVEL NETWORK
(hereinafter called "Obligor"). In consideration of financial accommodations
given, to be given or continued, the Obligor grants to IMPERIAL BANK
(hereinafter called "Bank") a security interest in (a) all property (i)
delivered to Bank by Obligor, (ii) which shall be in Bank's possession or
control in any matter or for any purpose, (iii) described below, (iv) now owned
or hereafter acquired by Obligor of the type or class described below and/or in
any supplementary schedule hereto, or in any accessions thereto, and all
property which Obligor may receive on account of such collateral which Obligor
will immediately deliver to Bank (collectively referred to as "Collateral") to
secure payment and performance of all Obligor's present or future debts or
obligations to Bank, whether absolute or contingent (hereafter referred to as
"Debt"). Unless otherwise defined, words used herein have the meanings given
them in the California Uniform Commercial Code.
Collateral:
A. VEHICLE, VESSEL, AIRCRAFT:
Year Make/Manufacturer Model Indemnification License or New or
And Serial No. Registration No. Used
Engine or other equipment:______________________________________________________
(For aircraft - original ink signature on copy to FAA)
B. DEPOSIT ACOUNTS:
Type _________________ Account Number________________ Amount_________________
In name of ______________________________ Depository ________________________
AND ALL EXTENSIONS OR RENEWALS THEREOF.
C. ACCOUNTS, INTANGIBLES AND OTHER: (Describe)
All personal property, whether presently existing or hereafter created or
acquired, including but not limited to: All accounts, chattel paper, documents,
instruments, money, deposit accounts and general intangibles including returns,
repossessions, books and records relating thereto, and equipment containing said
books and records. All Investment property including securities and securities
entitlements. All goods including equipment and inventory. All proceeds
including without limitation, insurance proceeds. And all guarantees and other
security thereof.
The collateral not in Bank's possession will be located at: 453 Sherman Ave.,
Palo Alto, CA 94306
[_] If checked, the Obligor is executing this Agreement as an Accommodation
Debtor only and the Obligor's liability is limited to the security interest
granted in the Collateral described herein. The party being accommodated is
("Borrower")
All the terms and provisions on the reverse side hereof are incorporated herein
as though set forth in full, and constitute a part of this Agreement.
<TABLE>
<CAPTION>
Name Signature Address
(indicate title, if applicable)
<S> <C> <C>
INTERNET TRAVEL NETWORK BY:_______________________________ 453 Sherman Ave.
-------------------
_______________________ __________________________________ Palo Alto, CA 94306
-------------------
</TABLE>
<PAGE>
SECURITY AGREEMENT (CONTINUED)
Obligor represents, warrants and agrees:
1. Obligor will immediately pay (a) any Debt when due, (b) Bank's costs of
collecting the Debt, of protecting, insuring or realizing on Collateral,
and any expenditure of Bank pursuant hereto, including reasonable
attorneys' fees and expenses, with interest at the rate of 24% per year, or
the rate applicable to the Debt, whichever is less, from the date of
expenditure, and (c) any deficiency after realization of Collateral.
2. Obligor will use the proceeds of any car loan that becomes Debt hereunder
for the purpose indicated on the application therefore, and will promptly
contract to purchase and pay the purchase price of any property which
becomes Collateral hereunder from the proceeds of any loan made for that
purpose.
3. As to all Collateral in Obligor's possession (unless specifically otherwise
agreed to by Bank in writing), Obligor will:
(a) Have, or has, possession of the Collateral at the location disclosed to
Bank and will not remove the Collateral from the location.
(b) Keep the collateral separate and identifiable.
(c) Maintain the Collateral in good and saleable condition, repair it if
necessary, clean, feed, shelter, water, medicate, fertilize, cultivate,
irrigate, prune and otherwise deal with the Collateral in all such ways as
are generally considered good practice by owners of like property, use it
lawfully and only as permitted by insurance policies, and permit Bank to
inspect the Collateral at any reasonable time.
(d) Not sell, contract to sell, lease, encumber or transfer the Collateral
(other than inventory Collateral) until the Debt has been paid, even though
Bank has a security interest in proceeds of such Collateral.
4. As to collateral which is inventory and accounts, Obligor:
(a) May, until notice from Bank, sell, lease or otherwise dispose of inventory
Collateral in the ordinary course of business only, and collect the cash
proceeds thereof.
(b) Will, upon notice from Bank, deposit all cash proceeds as received in a
demand deposit account with Bank, containing only such proceeds and deliver
statements identifying units of inventory disposed of, accounts which gave
rise to proceeds, and all acquisitions and returns of inventory as required
by Bank.
(c) Will receive in trust, schedule on forms satisfactory to the Bank and
deliver to Bank all non-cash proceeds other than inventory received in
trade.
(d) If not in default, may obtain release of Bank interest in individual units
of inventory upon request, therefore, payment to Bank of the release price
of such units shown on any Collateral schedule supplementary hereto, and
compliance herewith as to proceeds thereof.
5. As to Collateral which are accounts, chattel paper, general intangibles and
proceeds described in 4(c) above. Obligor warrants, represents and agrees:
(a) All such Collateral is genuine, enforceable in accordance with its terms,
free from default, prepayment, defense and conditions precedent (except as
disclosed to and accepted by Bank in writing), and is supported by
consecutively numbered invoices to, or rights against, the debtors thereon.
Obligor will supply Bank with duplicate invoices or other evidence of
Obligor's rights on Bank request;
(b) All persons appearing to be obligated on such Collateral have authority and
capacity to contract;
(c) All chattel paper is in compliance with law as to form, content and manner
of preparation and execution and has been properly registered, recorded,
and/or filed to protect Obligor's interest thereunder;
(d) If an account debtor shall also be indebted to Obligor on another
obligation, any payment made by him not specifically designated to be
applied on any particular obligation shall be considered to be a payment on
the account in which Bank has a security interest. Should any remittance
include a payment not on an account, it shall be delivered to Bank and, if
no event of default has occurred, Bank shall pay Obligor the amount of such
payment;
(e) Obligor agrees not to compromise, settle or adjust any account or renew or
extend the time of payment thereof without Bank's prior written consent.
6. Obligor owns all Collateral absolutely, and no other person has or claims
any interest in any Collateral, except as disclosed to and accepted by Bank
in writing, Obligor will defend any proceeding which may affect title to or
Bank's security interest in any Collateral, and will indemnify and hold
Bank free and harmless from all costs and expenses of Bank's defense.
7. Obligor will pay when due all existing or future charges, liens or
encumbrances on and all taxes and assessments new or hereafter imposed on
or affecting the Collateral and, if the Collateral is in Obligor's
possession, the realty on which the Collateral is located.
8. Obligor will insure the Collateral with Bank as loss payee in form and
amounts with companies, and against risks and liability satisfactory to
Bank, and hereby assigns such policies to Bank, agrees to deliver them to
Bank at Bank's request, and authorizes Bank to make any claim thereunder,
to cancel the insurance on Obligor's default, and to receive payment of and
endorse any instrument in payment of any loss or return premium. If Obligor
should fail to deliver the required policy or policies to the Bank, Bank
may, at Obligor's cost and expense, without any duty to do so, get and pay
for insurance naming as the insured, at Bank's option, either both Obligor
and Bank, or only Bank, and the cost thereof shall be secured by this
Security Agreement, and shall be repayable as provided in Paragraph 1
above.
9. Obligor will give Bank any information it reasonably requires. All
information at any time supplied to Bank by Obligor (including, but not
limited to, the value and condition of Collateral, financial statements,
financing statements, and statements made in documentary Collateral is
correct and complete, and Obligor will notify Bank of any adverse change in
such information. Obligor will promptly notify Bank of any change of
Obligor's residence, chief executive office or mailing address.
<PAGE>
10. As long as there are monies outstanding under the Security and Loan
Agreement or the Note, Bank is irrevocably appointed Obligor's attorney-in-
fact to do any act which Obligor is obligated hereby to do, to exercise
such rights as Obligor may exercise, to use such equipment as Obligor might
use, to enter Obligor's premises to give notice of Bank's security
interest, and to collect Collateral and proceeds and to execute and file in
Obligor's name any financing statements and amendments thereto required to
perfect Bank's security interest hereunder, all to protect and preserve the
Collateral and Bank's rights hereunder. Bank may:
(a) Endorse, collect and receive delivery or payment of instruments and
documents constituting Collateral;
(b) Make extension agreements with respect to or affecting Collateral,
exchange it for other Collateral, release persons liable thereon or
take security for the payment thereof, and compromise disputes in
connection therewith
(c) Use or operate Collateral for the purpose of preserving Collateral or
its value and for preserving or liquidating Collateral.
11. If more than one Obligor signs this Agreement, their liability is joint and
several. Any Obligor who is married agrees that recourse may be had against
separate property for the Debt. Discharge of any Obligor except for full
payment, or any extension, forbearance, change of rate of interest, or
acceptance, release or substitution of Collateral or any impairment or
suspension of Bank's rights against an Obligor, or any transfer of an
Obligor's interest to another shall not affect the liability of any other
Obligor. Until the Debt shall have been paid or performed in full, Bank's
rights shall continue even if the Debt is outlawed. All Obligors waive: (a)
any right to require Bank to proceed against any Obligor before any other,
or to pursue any other remedy; (b) presentment, protest and notice of
protest, demand and notice of nonpayment, demand or performance; (c) any
right to the benefit of or to direct the application of any Collateral
until the Debt shall have been paid; (d) and any right of subrogation to
Bank until Debt shall have been paid or performed in full.
12. Upon default, at Bank's option, without demand, all or any part of the Debt
shall immediately become due. Bank shall have all rights given by law, and
may sell, in one or more sales, Collateral in any county where Bank has an
office. Bank may purchase at such sale. Sales for cash or on credit to a
wholesaler, retailer or user of the Collateral, or at public or private
auction, are all to be considered commercially reasonable. Bank may require
Obligor to assemble the Collateral and make it available to Bank at the
entrance to the location of the Collateral, or a place designated by Bank.
Defaults shall include:
(a) Obligor's failure to pay or perform this or any agreement with Bank or
breach of any warranty hereon, or Borrower failure to pay or perform
any agreement with Bank.
(b) Any change in Obligor's or Borrower's financial condition which in
Bank's judgment impairs the prospect of Borrower's payment or
performance.
(c) Any actual or reasonably anticipated deterioration of the Collateral
or in the market price thereof which causes it, in Bank's judgment, to
become unsatisfactory as security.
(d) Any levy or seizure against Borrower or any of the Collateral.
(e) Death, termination of business, assignment for creditors, insolvency,
appointment of receiver, or the filing of any petition under
bankruptcy or debtors relief laws of, by or against Obligor or
Borrower or any guarantor of the Debt.
(f) Any warranty or representation which is false or is believed in good
faith by Bank to be false.
13. Bank's acceptance of partial or delinquent payments or the failure of Bank
to exercise any right or remedy shall not waive any obligation of Obligor
or Borrower or right of Bank to modify this Agreement, or waive any other
similar default.
14. On transfer of all or any part of Debt, Bank may transfer all or any part
of the Collateral. Bank may deliver all or any part of the Collateral to
any Obligor at any time. Any such transfer or delivery shall discharge Bank
from all liability and responsibility with respect to such Collateral
transferred or delivered. This Agreement benefits Bank's successors and
assigns and binds Obligor's heirs, legatees, personal representatives,
successors and assigns. Obligor agrees not to assert against any assignee
of Bank any claim or defense that may exist against Bank. Time is of the
essence. This Agreement and supplementary schedules hereto contain the
entire security agreement between Bank and Obligor. Obligor will execute
any additional agreements, assignments or documents reasonably required by
Bank to carry this Agreement into effect.
15. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, to the jurisdiction of whose courts the
Obligor hereby agrees to submit. Obligor agrees that service of process may
be accomplished by any means authorized by California law. All words used
herein in the singular shall be considered to have been used in the plural
where the context and construction so require.
<PAGE>
IMPERIAL BANK
Member FDIC
NOTE
$500,000.00 San Jose, California April 15, 1997
On October 5, 2001, and as hereinafter provided, for value received, the
undersigned promises to pay to IMPERIAL BANK ("Bank"), a California banking
corporation, or order, at its Santa Clara Valley Regional office, the principal
sum of $500,000.00, or such sums up to the maximum if so stated, as the Bank may
now or hereafter advance to or for the benefit of the undersigned in accordance
with the terms hereof, together with interest from date of disbursement or N/A,
whichever is later, on the unpaid principal balance at the rate of ________ %
per year at the rate of 1.750% per year in excess of the rate of interest which
Bank has announced as its prime lending rate (the "Prime Rate"), which shall
vary concurrently with any change in such Prime Rate, or $250.00, whichever is
greater. Interest shall be computed at the above rate on the basis of the
actual number of days during which the principal balance is outstanding, divided
by 360, which shall, for interest computation purposes, be considered one year.
Interest shall be payable [X] monthly [_] quarterly [_] included with principal
in addition to principal beginning May 5, 1997, and if not so paid shall become
a part of the principal. All payments shall be applied first to interest, and
the remainder, if any, on principal, [X] (If checked), Principal shall be
payable in installments of $______ , or more, each installment on the *_______
day of each *________, beginning *___________. Advances not to exceed any unpaid
balance owing at any one time equal to the maximum amount specified above, may
be made at the option of Bank.
Any partial prepayment shall be applied to the installments, if any ,
in inverse order of maturity. Should default be made in the payment of
principal or interest when due, or in the performance or observance, when due,
of any item, covenant or condition of any deed of trust, security agreement or
other agreement (including amendments or extensions thereof) securing or
pertaining to this note, at the option of the holder hereof and without notice
or demand, the entire balance of principal and accrued interest then remaining
unpaid shall (a) become immediately due and payable, and (b) thereafter bear
interest, until paid in full, at the increased rate of 5% per year in excess of
the rate provided for above, as it may vary from time to time.
Defaults shall include, but not be limited to, the failure of the
maker(s) to pay principal or interest when due; the filing as to each person
obligated hereon, whether as maker, co-maker, endorser or guarantor
(individually or collectively referred to as the "Obligor") of a voluntary or
involuntary petition under the provisions of the Federal Bankruptcy Act; the
issuance of any attachment or execution against any asset of any Obligor; the
death of any Obligor; or any deterioration of the financial condition of any
Obligor which results in the holder hereof considering itself in good faith,
insecure.
[X] If any installment payment or principal balance payment due hereunder is
delinquent ten or more days, Obligor agrees to pay a late charge in the
amount of 5% of the payment so due and unpaid, in addition to the payment;
but nothing in this paragraph is to be constituted as any obligation on the
part of the holder of this note to accept payment of any installment past
due or less than the total unpaid principal balance after maturity.
If this note is not paid when due, each Obligor promises to pay all costs
and expenses of collection and reasonable attorney's fees incurred by the holder
hereof on account of such collection, plus interest at the rate applicable to
principal, whether or not suit is filed hereon. Each Obligor shall be jointly
and severally liable hereon and consents to renewals, replacements and
extensions of time for payment hereof, before, at, or after maturity; consents
to the acceptance, release or substitution of security for this note, and waives
demand and protest and the right to assert any statute of limitations. Any
married person who signs this note agrees that recourse may be had against
separate property for any obligations hereunder. The indebtedness evidenced
hereby shall be payable in lawful money of the United States. In any action
brought under or arising out of this note, each Obligor, including successor(s)
or assign(s) hereby consents to the application of California law, to the
jurisdiction of any competent court within the State of California, and to
service of process by any means authorized by California law.
No single or partial exercise of any power hereunder, or under any deed of
trust, security agreement or other agreement in connection herewith shall
preclude other or further exercises thereof or the exercise of any other such
power. The holder hereof shall at all times have the right to proceed against
any portion of the security for this note in such order and in such manner as
such holder may consider appropriate, without waiving any rights with respect to
any of the security. Any delay or omission on the part of the holder hereof in
exercising any right hereunder, or under any deed of trust, security agreement
or other agreement, shall not operate as a waiver of such right, or of any other
right, under this note or any deed of trust, security agreement or other
agreement in connection herewith.
*See attached addendum
________________________________ INTERNET TRAVEL NETWORK
-----------------------
________________________________ By________________________________
Ken Swanton, Chief Exec. Officer
________________________________ By________________________________________
Matthew Ackerman, Vice President Finance
<PAGE>
ADDENDUM TO NOTE
Disbursements under the Note shall be available through April 5, 1998. On said
date, the outstanding balance of the disbursements under the Note shall be
converted to an amortizing loan payable in 30 equal monthly payments of
principal plus accrued interest commencing May 5, 1998.
All principal and accrued but unpaid interest shall in any event be due and
payable on October 5, 2001.
INTERNET TRAVEL NETWORK
By:____________________________
Ken Swanton, Chief Exec. Officer
By:____________________________
<PAGE>
EXHIBIT A
Any partial prepayment shall be applied to the installments, if any, in inverse
order of maturity. Should default be made in the payment of principal or
interest when due, or in the performance or observance, when due, of any item,
covenant or conditions of any deed of trust, security agreement or other
agreement (including amendments or extensions thereof) securing or pertaining to
this note, at the option of the holder hereof and without notice or demand, the
entire balance or principal and accrued interest then remaining unpaid shall (a)
become immediately due and payable, and (b) thereafter bear interest, until paid
in full, at the increased rate of 5% per year in excess of the rate provided in
the Security and Loan Agreement, as it may vary from time to time.
If any installment payment, interest payment, principal payment or principal
balance payment due hereunder is delinquent ten or more days, Obligor agrees to
pay Bank a late charge in the amount of 5% of the payment so due and unpaid, in
addition to the payment; but nothing in this paragraph is to be construed as any
obligation on the part of the holder of this note to accept payment of any
payment past due or less than the total unpaid principal balance after maturity.
All payments shall be applied first to any late charges owing, then to interest
and the remainder, if any, to principal.
INTERNET TRAVEL NETWORK
By:__________________________
Ken Swanton, Chief Exec. Officer
By:__________________________
<PAGE>
IMPERIAL BANK
Member FDIC
226 Airport Parkway
San Jose, California
Subject: Credit Terms and Conditions ("Agreement")
Gentlemen:
To induce you to make loans to the undersigned (herein called "Borrower"), and
in consideration of any loan or loans you, in your sole discretion, may make to
Borrower, Borrower warrants and agrees as follows:
A. Borrower represents and warrants that:
1. Existence and Rights.
Company is a corporation.
Borrower is duly organized and existing and in good standing under the laws of
the State of California and is authorized and in good standing to do business in
the State of California. Borrower has powers and adequate authority, rights and
franchises to own its property and to carry on its business as now conducted,
and is duly qualified and in good standing in each State in which the character
of the properties owned by it therein or the conduct of its business makes such
qualification necessary except for such jurisdictions in which failure to
qualify would not have a material adverse affect on Borrower, and Borrower has
the power and adequate authority to make and carry out this Agreement. Borrower
has no investment in any other business entity, except as previously disclosed
to Bank.
2. Agreement Authorized. The execution, delivery and performance of
this Agreement are duly authorized and to the knowledge of Borrower do not
require the consent or approval of any governmental body or other regulatory
authority, to the knowledge of Borrower are not in contravention of or in
conflict with any law or regulation or any term or provision of Borrower's
articles of incorporation, by-laws, or Articles of Association, as the case may
be, and this Agreement is the valid, binding and legally enforceable obligation
of Borrower in accordance with its terms.
3. No Conflict. The execution, delivery and performance of this Agreement
are not in contravention of or in conflict with any agreement, indenture or
undertaking to which Borrower is a party or by which it or any of its property
may be bound or affected, and do not cause any lien, charge or other encumbrance
to be created or imposed upon any such property by reason thereof.
4. Litigation. To the knowledge of Borrower as of the date hereof, there
is no litigation or other proceeding pending or threatened against or affecting
Borrower, and to the knowledge of Borrower as of the date hereof, Borrower is
not in default with respect to any order, writ, injunction, decree or demand of
any court or other governmental or regulatory authority.
5. Financial Condition. The balance sheet of Borrower as of 2/28/97, and
the related profit and loss statement for the 2 months ended on that date, a
copy of which has heretofore been delivered to you by Borrower, and all other
statements and data submitted in writing by Borrower to you in connection with
this request for credit are true and correct, and said balance sheet and profit
and loss statement truly present the financial condition of Borrower as of the
date thereof and the results of the operations of Borrower for the period
covered thereby, and have been prepared in accordance with generally accepted
accounting principles on a basis consistently maintained. Since such date, there
have been no materially adverse changes in the financial condition or business
of Borrower. Borrower has no knowledge of any liabilities, contingent or
otherwise, at such date not reflected in said balance sheet, and Borrower has
not entered into any special commitments or substantial contracts which are not
reflected in said balance sheet, other than in the ordinary and normal course of
its business, which may have a materially adverse effect upon its financial
condition, operations or business as now conducted.
April 15, 1997
Borrower: Internet Travel Network
6. Title to Assets. Borrower has good title to its assets, and the
same are not subject to any liens or encumbrances other than those permitted by
Section C.3 hereof.
7. Tax Status. Borrower has not been informed that it has liability
for any delinquent state, local or federal taxes, and if Borrower has contracted
with any government agency, Borrower has not been informed that it has liability
for renegotiation of profits.
8. Trademarks, Patents. To the knowledge of Borrower, Borrower, as
of the date hereof, possesses all necessary trademarks, trade names, copyrights,
patents, patent rights, and licenses to conduct its business as now operated,
without any known conflict with the valid trademarks, trade names, copyrights,
patents and license rights of others.
9. Regulation U: The proceeds of this loan shall not be used to
purchase or carry margin stock (as defined with Regulation U of the Board of
Governors of the Federal Reserve System).
B. Borrower agrees that so long as it is indebted to you, it will, unless
you shall otherwise consent in writing:
1. Rights and Facilities. Maintain and preserve all rights,
franchises and other authority adequate for the conduct of its business;
maintain its properties, equipment and facilities in good order and repair,
conduct its business in an orderly manner without voluntary interruption to the
extent controlled by Borrower and, if a corporation or partnership, maintain and
preserve its existence.
2. Insurance. Maintain public liability, property damage and
workers' compensation insurance and insurance on all its insurable property
against fire and other hazards with responsible insurance carriers to the extent
usually maintained by similar businesses.
3. Taxes and Other Liabilities. Pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against it or any of its properties, and all
its other liabilities at any time existing, except to the extent and so long as:
(a) The same are being contested in good faith and by appropriate
proceedings in such manners as not to cause any materially adverse effect upon
its financial condition or the loss of any right of redemption from any sale
thereunder, and
(b) It shall have set aside on its books reserves (segregated to the
extent required by generally accepted accounting practice) deemed by it adequate
with respect thereto.
4. Records and Reports. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles on a
basis consistently maintained; permit your representatives to have access to,
and to examine its properties, books and records at all reasonable times; and
furnish you;
(a) As soon as available, and in any event within 25 days after the
close of each month of each fiscal year of Borrower, commencing with the month
next ending, a balance sheet, profit and loss statement and reconciliation of
Borrower's capital accounts as of the close of such period and covering
operations for the portion of Borrower's fiscal year ending on the last day of
such period, all in reasonable detail and stating in comparative from the
figures for the corresponding date and period in the previous fiscal year,
prepared in accordance with generally accepted accounting principles on a basis
consistently maintained by Borrower and certified by an appropriate officer of
Borrower, subject, however, to year-end audit adjustments .
<PAGE>
(b) As soon as available, and in the event within 120 days after the
close of each fiscal year of Borrower, a report of audit of Company as of the
close of and for such fiscal year, all in reasonable detail and stating in
comparative form the figures as of the close of and for the previous fiscal
year, with the unqualified opinion of accountants satisfactory to you.
(c) A certificate by chief financial officer within 25 days after the
close of each month of each fiscal year of Borrower, or partner of Borrower,
stating that Borrower has performed and observed each and every covenant
contained in this Letter of Inducement to be performed by it and that no event
has occurred and no condition then exists which constitutes an event of default
hereunder or would constitute such an event of default upon the lapse of time or
upon the giving of notice and the lapse of time specified herein, or, if any
such event has occurred or any such condition exists, specifying the nature
thereof:
(d) Promptly after the receipt thereof by Borrower, copies of any
detailed audit reports submitted to Borrower by independent accountants in
connection with each annual or interim audit of the accounts of Borrower made by
such accountants;
(e) Promptly after the same are available, copies of all such proxy
statements, financial statements and reports as Borrower shall send to its
stockholders, if any, and copies of all reports which Borrower may file with the
Securities and Exchange Commission or any governmental authority at any time
substituted therefor; and
(f) Such other information relating to the affairs of Borrower as you
reasonably may request from time to time.
(g) Notice of Default, Promptly notify the Bank in writing of the
occurrence of any event of default hereunder or any event which upon notice and
lapse of time would be an event of default.
C. Borrower agrees that so long as it is indebted to you, it will not,
without your written consent:
1. Type of Business; Management. Make any substantial change in the
character of its business; or make any change in its executive management which
would reasonably be expected to have a material adverse effect on Borrower's
business.
2. Outside Indebtedness. Create, incur, assume or permit to exist
any indebtedness for borrowed moneys other than (i) loans from you except
obligations now existing as shown in financial statement dated 2/28/97,
excluding those being refinanced by your bank, or (ii) equipment leases; or sell
or transfer, either with or without recourse, any accounts or notes receivable
or any moneys due to become due unless such indebtedness is fully subordinated
to Bank.
3. Liens and Encumbrances. Create, incur, or assume any mortgage,
pledge encumbrance, lien or charge of any kind (including the charge upon
property at any time purchased or acquired under conditional sale or other title
retention agreement) upon any asset now owned or hereafter acquired by it, other
than liens for taxes not delinquent and liens in your favor.
4. Loans, Investments, Secondary Liabilities. Make any loans or
advances to any person or other entity other than in the ordinary and normal
course of its business as now conducted or make any investment in the securities
of any person or other entity other than the United States Government; or
guarantee or otherwise become liable upon the obligation of any person or other
entity, except by endorsement of negotiable instruments for deposit or
collection in the ordinary and normal course of its business.
5. Acquisition or Sale of Business; Merger or Consolidation. Purchase
or otherwise acquire the assets or business of any person or other entity; or
liquidate, dissolve, merge or consolidate, or commence any proceedings therefor;
or sell any assets except in the ordinary and normal course of its business as
now conducted; or sell, lease, assign, or transfer any substantial part of its
business or fixed assets, or any property or other assets necessary for the
continuance of its business as now conducted including without limitation the
selling of any property or other _____ accompanied by the ______ back of the
same. In the case of this Section C (5), written consent not to be unreasonably
withheld.
6. Dividends, ___, Payments. If a corporation, declare or pay any
dividend (other than dividends payable in common stock of Borrower) or make any
other distribution on any of its capital stock now outstanding or hereafter
issued or purchase, redeem or retire any of such stock. Notwithstanding the
foregoing, nothing in this agreement shall prohibit Borrower from (i) licensing
or selling its products in the ordinary course of its business, (ii) entering
into strategic partnerships, or (iii) selling or issuing any of its securities.
D. The occurrence of any one of the following events of default shall, at
your option, terminate your commitment to lend and make all sums of principal
and interest then remaining unpaid on all Borrower's indebtedness to you
immediately due and payable, all without demand, presentment or notice, all of
which are hereby expressly waived:
1. Failure to Pay Note. Failure to pay any installment of principal or
of interest on any indebtedness of Borrower to you and such failure continues
after a period of 10 day.
2. Breach of Covenant. Failure of Borrower to perform any other term
or condition of this Agreement binding upon Borrower.
3. Breach of Warranty. Any of Borrower's representations or warranties
made herein or any statement or certificate at any time given in writing
pursuant hereto or in connection herewith shall be false or misleading in any
material respect when made or at the time to which such representation or
warranty relates.
4. Insolvency; Receiver or Trustee. Borrower shall become insolvent or
make an assignment for the benefit of creditors; or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business.
5. Judgments, Attachments. Any money judgment, writ or warrant of
attachment or similar process shall be entered or filed against Borrower or any
of its assets and shall remain unvacated, unbonded or unstayed for a period of
10 days or in any event later than five days prior to the date of any proposed
sale thereunder.
6. Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against Borrower and, if
instituted against it shall be consented to.
E. Miscellaneous Provisions.
1. Failure or Indulgence Not Waiver. No failure or delay on the part of
your Bank or any holder of Notes issued hereunder, in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this agreement or any note issued in
connection with a loan that your Bank may make hereunder, are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
See Addendum April 15, 1997 attached hereto and incorporated herein by this
reference for addition terms. In the event of a conflict between this Agreement
and the Addendum, the terms in the Addendum prevail.
Internet Travel Network
By:___________________________________________________
(Authorized Signature and Title)
<PAGE>
Internet Travel Network
Addendum to Credit Terms and Conditions
Dated April 15, 1997
FACILITIES
- ----------
1. $1,250,000 Revolving Line of Credit. Line limited to $1,000,000 until Bank
receives evidence of a signed term sheet for a minimum of $2,000,000 from
investors acceptable to Bank.
2. $5000,000 Equipment Loan.
Throughout this document, all items identified as (1) shall refer to the
Revolving Line of Credit and all items identified as (2) shall refer to the
Equipment Loan. All items not identified as either (1) or (2) shall apply to
both the Revolving Line of Credit and the Equipment Loan. All items under the
sections entitled "FINANCIAL COVENANTS", "REPORTING REQUIREMENTS", and "OTHER
COVENANTS" shall apply to both the Revolving Line of Credit and the Equipment
Loan.
PURPOSE
- -------
1. To support working capital requirements.
2. To finance capital equipment purchases.
AVAILABILITY
- ------------
1. Upon execution of documents and payment of related fees.
2. Upon evidence of receipt of no less than $4,000,000 in new equity, execution
of documents and payment of related fees.
MATURITY
- --------
1. July 31, 1997. Upon receipt of Bank of evidence of receipt of a minimum of
$4,000,000 in new equity from an investor satisfactory to Bank, the maturity
date will automatically be extended to 364 days from the original date of
documents.
2. October 5, 2001.
PAYMENT
- -------
1. Interest due monthly; principal due at maturity.
2. Interest only drawdown period through April 5, 1998, with the outstanding
principal balance thereafter amortized, with equal monthly payments of
principal, plus accrued interest through maturity.
SECURITY
- --------
1 & 2. Perfected first priority security interest in all corporate assets,
excluding leased equipment.
<PAGE>
Internet Travel Network
Addendum to Credit Terms and Conditions
April 15, 1997
Page 2 of 3
- -----------
BORROWING FORMULA
- -----------------
1. None through 7/31/97. Thereafter, 75% of Eligible Accounts (as hereafter
defined), due and payable by debtors whose principal offices are located
within the United States or foreign accounts approved by Bank in writing. In
addition to the definitions contained in the Security and Loan Agreement
dated the date hereof, as used herein "Eligible Accounts" will include those
accounts receivable of Borrower which are outstanding less than 90 days from
invoice date subject to certain exclusions for non-approved foreign,
government, contra, progress billings, and inter-company accounts. Any
account receivable which alone exceeds 20% of the total accounts receivable
of Borrower will be ineligible to the extent said accounts exceed 20% of the
total accounts. Exceptions to the concentration limit to be allowed for
accounts approved by Bank in writing, which will each be allowed to
constitute up to 40% of Eligible Accounts. If 25% or more of an account
receivable is past due (aged greater than 90 days), then the entire account
is ineligible.
2.85% of submitted paid equipment invoices less soft costs such as tax,
freight, installation, etc.
PRICING
- -------
Interest Rate:
- -------------
1. Bank's Prime Rate / 1.25%, reducing to Bank's Prime Rate / 0.75% upon
evidence of the achievement of operating and net after tax profitability in two
consecutive fiscal quarters.
2. Bank's Prime Rate / 1.75%
Fee:
- ---
1. $3,500 payable upon acceptance of commitment. Borrower, at its option, may
draw on the Revolving Line of Credit to pay the Loan Fee.
2. $2,500.
Warrant:
- -------
1. Bank to receive a Warrant to purchase $75,000 in shares of Borrower's Series
A Preferred Stock at the Series A price. Bank agrees to modify the Warrant
according to the following:
A. If Borrower receives a minimum of $2,000,000 in new equity by 7/31/97, then
the Warrant shall be adjusted to purchase shares of Borrower's Series B
Preferred Stock at the Series B price.
B. If through 7/31/97 the outstanding amount under the Line of Credit does not
exceed $500,000, then Bank will refund $50,000 of the Warrant amount.
2. Bank to receive a Warrant to purchase $25,000 in shares of Borrower's Series
B Preferred Stock at the Series B price.
The Warrants are to be on the Bank's form and mutually agreeable to Bank and
Borrower, with 5 year maturities inclusive of certain provisions to include, but
not be limited to, net exercise provisions and anti-dilution protections
identical to that of the Series A Preferred Stock, as applicable.
<PAGE>
Internet Travel Network
Addendum to Credit Terms and Conditions
April 15, 1997
Page 3 of 3
- -----------
DEPOSITS
- --------
Borrower to maintain primary operating and depository accounts with Bank.
Borrower to maintain a minimum of 50% of investible funds in interest-bearing
accounts at Bank.
FINANCIAL COVENANTS
- -------------------
Beginning with the quarter ending 9/30/97, Borrower to maintain the following
financial covenants on a quarterly basis:
1) Minimum Quick Ratio of 1.0:1.0.
2) Minimum TNW of $1,500,000.
3) Maximum Debt/TNW of 1.5:1.0.
4) Maximum quarterly net after tax loss:
12/31/97: $1,000,000
03/31/98 $1,000,000
Profitability on an operating and net after tax basis
beginning with the fiscal quarter ending 6/30/98
REPORTING REQUIREMENTS
- ----------------------
In addition to the reporting requirements contained in the Credit Terms and
Conditions, the Borrower will provide:
1. Monthly A/R and A/P agings and Borrowing Base Certificate within 25 days of
month end.
2. Financial projections or other financial exhibits which Bank may
reasonably request.
OTHER COVENANTS
- ---------------
In addition to the covenants contained in the Credit Terms and Conditions, the
Borrower agrees:
1) Borrower to notify Bank in writing of any legal action known to company
commenced against it which may result in damages over $100,000.
2) Borrower to provide Bank proof of insurance covering all tangible corporate
assets and a Lender's Loss Payable Clause with Bank as Loss Payee.
3) Beginning 7/31/97, annual accounts receivable audit performed by the Bank's
Asset Based Department with results satisfactory to Bank, at Borrower's
expense, but not to exceed $2,000.
4) All reasonable out-of-pocket expenses incurred by Bank in connection with
its due diligence and closing of this transaction, such expenses not to
exceed $200,000, shall be reimbursed by Borrower.
INTERNET TRAVEL NETWORK
By: _____________________________________
(Authorized Signature and Title)
<PAGE>
EXHIBIT 10.24
THIS WARRANT AGREEMENT AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS WARRANT AGREEMENT (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED, OR ANY STATE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT AGREEMENT
To Purchase Shares of the Series B Preferred Stock of
INTERNET TRAVEL NETWORK
Dated as of June 29, 1999 (the "Effective Date")
WHEREAS, Internet Travel Network, a California corporation (the
"Company") has entered into a Master Lease Agreement dated as of April 2, 1996,
Equipment Schedule No. VL-4 dated as of June 29, 1999, and related Summary
Equipment Schedules (collectively, the Leases) with Comdisco, Inc., a Delaware
corporation (the "Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Leases, the right to purchase shares of its Series B
Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing,
performing and delivering such Leases and in consideration of mutual covenants
and agreements contained herein, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.
----------------------------------------------
The Company hereby grants to the Warrantholder, and the Warrantholder
is entitled, upon the terms and subject to the conditions hereinafter set forth,
to subscribe to and purchase, from the Company, 19,500 fully paid and non-
assessable shares of the Company's Series B Preferred Stock ("Preferred Stock")
at a purchase price to be calculated as follows (the "Exercise Price"). In the
event the next round of equity financing, which shall be defined as the earlier
to occur of (i) the closing of an initial public offering, (ii) the closing of
an acquisition or merger of the Company, or (iii) the closing of a round of
(raising $10,000,000 or more) Series E Preferred Stock financing ("Next Round")
occurs prior to August 11, 1999 the Exercise Price shall be the price per share
of the Next Round (in the event such price per share is being determined in
connection with an initial public offering, such price per share shall be deemed
to be the per share "price to public" set forth on the front cover of the
Company's final prospectus and in connection with an acquisition or merger the
imputed price per share of Series B Preferred Stock) ("100% Price"). In the
event the Next Round occurs on or after August 11, 1999 and
<PAGE>
prior to November 12, 1999, then the Exercise Price shall be 85% of the price
per share of the Next Round ("85% Price"). In the event the Next Round occurs on
or after November 13, 1999 then the Exercise Price shall be $5.125 per share
(Series C Preferred Stock Price).
Notwithstanding the foregoing, in the event that (i) the Next Round is
the closing of the sale by the Company of a Series E Preferred Stock raising
$10,000,000 or more; and (ii) the Company issues to the purchasers of the Series
E Preferred Stock in connection with the Next Round warrants having an exercise
price per share that is less than the Series E Preferred Stock price per share
(the "In-the Money Warrants"), then the Exercise Price of this warrant shall be
the quotient obtained by dividing (x) the sum of the aggregate gross proceeds to
the Company from the issuance of Series E Preferred Stock in the Next Round and
the aggregate gross proceeds the Company would receive upon the full exercise of
all In-the-Money Warrants as of the date of the close of the Next Round; by (y)
the sum of the total number of shares of Series E Preferred Stock issued in the
Next Round and the total number of shares that would be issuable upon the full
exercise of all the In-the Money Warrants as of the date of the close of the
Next Round. The Exercise Price determined in accordance with this paragraph
shall remain subject to adjustment as described in the preceding paragraph based
upon the closing date of the Next Round.
The number and purchase price of such shares are subject to adjustment
as provided in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
-----------------------------
Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Preferred Stock as granted herein shall
commence on the Effective Date and shall be exercisable for a period ending upon
the earlier of (i) seven (7) years from the Effective Date of this Warrant
Agreement or (ii) two (2) years from the effective date of the Company's initial
public offering.
Notwithstanding the term of this Warrant Agreement fixed pursuant to
the above paragraph, the right to purchase Preferred Stock as granted herein
shall expire, if not previously exercised immediately upon the closing of a
merger or consolidation of the Company with or into another corporation when the
Company is not the surviving corporation, or the sale of all or substantially
all of the Company's properties and assets to any other person (the "Merger")
provided in which Warrantholder realizes a value for its shares equal to or
greater than $4.98 per share.
The Company shall notify Warrantholder if the Merger is proposed in
accordance with the terms of 8(f) hereof, and if the Company fails to deliver
such written notice, then notwithstanding anything to the contrary in this
Warrant Agreement, the rights to purchase the Company's Preferred Stock shall
not expire until the Company complies with such notice provisions. Such notice
shall also contain such details of the proposed Merger as are reasonable in the
circumstances. If such closing does not take place, the Company shall promptly
notify the Warrantholder that such proposed transaction has been terminated, and
the Warrantholder may rescind any exercise of its purchase rights promptly after
such notice of termination of the proposed transaction if the exercise of
Warrants has occurred after the Company notified the
2
<PAGE>
Warrantholder that the Merger was proposed. In the event of such recission, the
Warrants will continue to be exercisable on the same terms and conditions
contained herein.
3. EXERCISE OF THE PURCHASE RIGHTS.
-------------------------------
The purchase rights set forth in this Warrant Agreement are
exercisable by the Warrantholder, in whole or in part, at any time, or from time
to time, prior to the expiration of the term set forth in Section 2 above, by
tendering to the Company at its principal office a notice of exercise in the
form attached hereto as Exhibit I ("Notice of Exercise"), duly completed and
executed. Promptly upon receipt of the Notice of Exercise and the payment of
the purchase price in accordance with the terms set forth below, and in no event
later than twenty one (21) days thereafter, the Company shall issue to the
Warrantholder a certificate for the number of shares of Preferred Stock
purchased and shall execute the acknowledgment of exercise in the form attached
hereto as Exhibit II (the "Acknowledgment of Exercise") indicating the number of
shares which remain subject to future purchases, if any.
The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuances") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Preferred Stock to be issued to the
Warrantholder.
Y = the number of shares of Preferred Stock requested to be exercised
under this Warrant Agreement.
A = the current fair market value of one (1 ) share of Preferred
Stock as of the date of exercise.
B = the Exercise Price.
For purposes of the above calculation, current fair market value of
Preferred Stock shall mean with respect to each share of Preferred Stock:
(i) if the exercise is in connection with an initial public
offering of the Company's Common Stock, and if the Company's Registration
Statement relating to such public offering has been declared effective by the
SEC, then the fair market value per share shall be the product of (x) the
initial Price to Public" specified in the final prospectus with respect to the
offering and (y) the number of shares of Common Stock into which each share of
Preferred Stock is convertible at the time of such exercise;
(ii) if this Warrant is exercised after, and not in connection
with the Company's initial public offering, and:
(a) if traded on a securities exchange, the fair market
value shall be deemed to be the product of (x) the average of the closing prices
over a ten (10) day period ending the day the current fair market value of the
securities is being determined and (y) the number of shares of Common Stock into
which each share of Preferred Stock is convertible at the time of such exercise;
or
3
<PAGE>
(b) if actively traded over-the-counter, the fair market
value shall be deemed to be the product of (x) the average of the closing bid
and asked prices quoted on the NASDAQ system (or similar system) over the ten
(10) day period ending the day the current fair market value of the securities
is being determined and (y) the number of shares of Common Stock into which each
share of Preferred Stock is convertible at the time of such exercise;
(iii) if at any time the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the current fair market value of Preferred Stock shall be the product of
(x) the highest price per share which the Company could obtain from a willing
buyer (not a current employee or director) for shares of Common Stock sold by
the Company, from authorized but unissued shares, as determined in good faith by
its Board of Directors and (y) the number of shares of Common Stock into which
each share of Preferred Stock is convertible at the time of such exercise,
unless the Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party, in which
case the fair market value of Preferred Stock shall be deemed to be the value
received by the holders of the Companies Preferred Stock on a common equivalent
basis pursuant to such merger or acquisition.
Upon partial exercise by either cash or Net Issuance, the Company
shall promptly issue an amended Warrant Agreement representing the remaining
number of shares purchasable hereunder. All other terms and conditions of such
amended Warrant Agreement shall be identical to those contained herein,
including, but not limited to the Effective Date hereof.
4. RESERVATION OF SHARES.
---------------------
During the term of this Warrant Agreement, the Company will at all
times have authorized and reserved a sufficient number of shares of its
Preferred Stock to provide for the exercise of the rights to purchase Preferred
Stock as provided for herein.
5. NO FRACTIONAL SHARES OR SCRIP.
-----------------------------
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
------------------------
This Warrant Agreement does not entitle the Warrantholder to any
voting rights or other rights as a shareholder of the Company prior to the
exercise of the Warrant.
7. WARRANTHOLDER REGISTRY.
----------------------
The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.
4
<PAGE>
8. ADJUSTMENT RIGHTS.
-----------------
The purchase price per share and the number of shares of Preferred
Stock purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall
-------------------------
be a capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation whether or not the Company is the surviving corporation, or
the sale of all or substantially all of the Company's properties and assess To
any other person (hereinafter referred to as a "Merger Event"), then, as a part
of such Merger Event, unless lawful provision shall be made so that the
Warrantholder shall thereafter be entitled to receive, upon exercise of the
Warrant, the number of shares of preferred stock or other securities of the
successor corporation resulting from such Merger Event, equivalent to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event (the "Assumption"), then upon the effective time of
such Merger Event, if not exercised at such time or prior by the Warrantholder,
by cash or otherwise, this Warrant shall automatically be exercised pursuant to
the Net Issuance provision set forth in Section 3 hereof for the full amount of
shares of the Preferred Stock remaining available for purchase according to the
terms and provisions hereof without any action by the Warrantholder, the Company
or any third party. In the event of an Assumption, appropriate adjustment (as
determined in good faith by the Board of Directors of the Company making the
Assumption) shall be made in the application of the provisions of this Warrant
Agreement with respect to the rights and interest of the Warrantholder after the
Merger Event to the end that the provisions of this Warrant Agreement (including
adjustments of the Exercise Price and number of shares of Preferred Stock
purchasable) shall be applicable to the greatest extent possible and the
Exercise Price of any replacement warrant or other security shall be adjusted
such that the aggregate Exercise Price payable thereunder remains equivalent to
the aggregate exercise price hereunder.
(b) Reclassification of Shares. If the Company at any time
--------------------------
shall, by combination, reclassification, exchange or subdivision of securities
or otherwise, change any of the securities as to which purchase rights under
this Warrant Agreement exist into the same or a different number of securities
of any other class or classes, this Warrant Agreement shall thereafter represent
the right to acquire, for the same aggregate Exercise Price, such number and
kind of securities as would have been issuable as the result of such change with
respect to the securities which were subject to the purchase rights under this
Warrant Agreement immediately prior to such combination, reclassification,
exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company
------------------------------------
at any time shall combine or subdivide its Preferred Stock, (i) the Exercise
Price shall be proportionately decreased in the case of a subdivision, or
proportionately increased in the case of a combination, and (ii) the number of
shares of Preferred Stock purchasable hereunder shall be proportionately
increased in the case of a subdivision or proportionately decreased in the case
of a combination, in each case such that the aggregate Exercise Price payable
hereunder remains the same.
5
<PAGE>
(d) Stock Dividends. If the Company at any time shall pay
---------------
a dividend payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (h)) of the
Company's Preferred Stock, then the Exercise Price shall be adjusted, from and
after the record date of such dividend or distribution, to that price determined
by multiplying the Exercise Price in effect immediately prior to such record
date by a fraction (i) the numerator of which shall be the total number of all
shares of the Company's Preferred Stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of all shares of the Company's Preferred Stock outstanding immediately
after such dividend or distribution. The Warrantholder shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment, the
number of shares of Preferred Stock (calculated to the nearest whole share)
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Preferred Stock issuable upon the exercise
hereof immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment.
(e) Conversion of Preferred Stock. If the Company's
-----------------------------
outstanding Preferred Stock shall be converted into shares of the Company's
Common Stock pursuant to the Company's Articles of Incorporation, then this
Warrant shall thereafter be exercisable for the number of shares of Common Stock
that would have been issuable upon conversion of the Preferred Stock issuable
upon exercise of this Warrant, if immediately prior to such conversion of the
outstanding Preferred Stock: (i) this Warrant had been exercised in full, and
(ii) the Preferred Stock issued upon such exercise had been converted to Common
Stock. In such event, (x) the Exercise Price shall be adjusted such that the
aggregate Exercise Price payable hereunder remains the same, and (y) all
references to Preferred stock in this Warrant shall be deemed to be references
to the Company's Common Stock.
(f) Antidilution Rights. Additional antidilution rights
-------------------
applicable to the Preferred Stock purchasable hereunder are as set forth in the
Company's Articles of Incorporation, as amended through the Effective Date, a
true and complete copy of which is attached hereto as Exhibit IV (the "Charter")
and the Company shall provide Warrantholder with copies of all notices provided
to holders of Preferred Stock. The Company shall promptly provide the
Warrantholder with any restatement, amendment, modification or waiver of the
Charter.
(g) Notice of Adjustments. If: (i) the Company shall
---------------------
declare any dividend or distribution upon its stock, whether in cash, property,
stock or other securities; (ii) the Company shall offer for subscription prorate
to the holders of any class of its Preferred Stock or other convertible stock
any additional shares of stock of any class or other rights; (iii) there shall
be any Merger Event; (iv) there shall be an initial public offering; or (v)
there shall be any voluntary dissolution, liquidation or winding up of the
Company; then, in connection with each such event, the Company shall send to the
Warrantholder: (A) within twenty (20) days following such event, written notice
of the date on which the books of the Company closed or a record was taken for
such dividend, distribution, subscription rights (specifying the date on which
the holders of Preferred Stock shall be entitled thereto) or for determining
rights to vote in respect of such Merger Event, dissolution, liquidation or
winding up; (B) in the case of any such Merger Event, dissolution, liquidation
or winding up, at least twenty (20) days' prior written notice of the date when
the same shall occur (and except in the
6
<PAGE>
case of an Assumption under Section 8(a), specifying the date on which the
holders of Preferred Stock shall be entitled to exchange their Preferred Stock
for securities or other property deliverable upon such Merger Event,
dissolution, liquidation or winding up); and (C) in the case of a public
offering, the Company shall give the Warrantholder at least ten (10) days
written notice prior to the expected effective date thereof.
Each such written notice shall set forth, in reasonable detail, (i)
the event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.
(h) Timely Notice. Failure to timely provide such notice
-------------
required by subsection (h) above shall entitle Warrantholder to retain the
benefit of the applicable notice period notwithstanding anything to the contrary
contained in any insufficient notice received by Warrantholder. The notice
period shall begin on the date Warrantholder actually receives a written notice
containing all the information specified above.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
--------------------------------------------------------
(a) Reservation of Preferred Stock. The Preferred Stock
------------------------------
issuable upon exercise of the Warrantholder's rights has been duly and validly
reserved and, when issued in accordance with the provisions of this Warrant
Agreement, will be validly issued, fully paid and non-assessable, and will be
free of any taxes, liens, charges or encumbrances of any nature whatsoever;
provided, however, that the Preferred Stock issuable pursuant to this Warrant
Agreement may be subject to restrictions on transfer under state and/or Federal
securities laws. The Company has made available to the Warrantholder true,
correct and complete copies of its Charter and Bylaws, as amended. The issuance
of certificates for shares of Preferred Stock upon exercise of the Warrant
Agreement shall be made without charge to the Warrantholder for any issuance tax
in respect thereof, or other cost incurred by the Company in connection with
such exercise and the related issuance of shares of Preferred Stock. The Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved and the issuance and delivery of any certificate in a name
other than that of the Warrantholder.
(b) Due Authority. The execution and delivery by the
-------------
Company of this Warrant Agreement and the performance of all obligations of the
Company hereunder, including the issuance to Warrantholder of the right to
acquire the shares of Preferred Stock, have been duly authorized by all
necessary corporate action on the part of the Company, and the Leases and this
Warrant Agreement are not inconsistent with the Company's Charter or Bylaws, do
not contravene any law or governmental rule, regulation or order applicable to
it, and, to the Company's knowledge, do not and will not contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract or other material instrument to which it is a party or by which it is
bound, and the Leases and this Warrant Agreement constitute legal,
7
<PAGE>
valid and binding agreements of the Company, enforceable against the Company in
accordance with their respective terms.
(c) Consents and Approvals. No consent or approval of,
----------------------
giving of notice to, registration with, or taking of any other action in respect
of any state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act and any filing required by
applicable state securities law, which filings will be effective by the time
required thereby.
(d) Issued Securities. All issued and outstanding shares
-----------------
of Common Stock, Preferred Stock or any other securities of the Company have
been duly authorized and validly issued and are, to the Company's knowledge,
fully paid and nonassessable. All outstanding shares of Common Stock, Preferred
Stock and any other securities were issued in full compliance with all Federal
and state securities laws.
(e) Insurance. The Company has in full force and effect
---------
insurance policies, with extended coverage, insuring the Company and its
property and business against such losses and risks, and in such amounts, as are
customary for corporations engaged in a similar business and similarly situated
and as otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Other Commitments to Register Securities. Except as
----------------------------------------
set forth in the Company's Investor Rights Agreement, the Company is not,
pursuant to the terms of any other agreement currently in existence, under any
obligation to register under the 1933 Act any of its presently outstanding
securities or any of its securities which may hereafter be issued.
(g) Exempt Transaction. Subject to the accuracy of the
------------------
Warrantholder's representations in Section 10 hereof, the issuance of the
Preferred Stock upon exercise of this Warrant will constitute a transaction
exempt from (i) the registration requirements of Section 5 of the 1933 Act, in
reliance upon Section 4(2) thereof or upon Regulation D promulgated thereunder,
and (ii) the qualification requirements of the applicable state securities laws.
(h) Compliance with Rule 144. At the written request of
------------------------
the Warrantholder, who proposes to sell Preferred Stock issuable upon the
exercise of the Warrant in compliance with Rule 144 promulgated by the
Securities and Exchange Commission, the Company shall furnish to the
Warrantholder, within ten days after receipt of such request, a written
statement confirming the Company's compliance with the filing requirements of
the Securities and Exchange Commission as set forth in such Rule, as such Rule
may be amended from time to time.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
--------------------------------------------------
This Warrant Agreement has been entered into by the Company in
reliance upon the following representations and covenants of the Warrantholder:
8
<PAGE>
(a) Investment Purpose. The right to acquire Preferred
------------------
Stock or the Preferred Stock issuable upon exercise of the Warrantholder's
rights contained herein will be acquired for investment and not with a view to
the sale or distribution of any part thereof, and the Warrantholder has no
present intention of selling or engaging in any public distribution of the same
except pursuant to a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that
-------------
the Preferred Stock issuable upon exercise of this Warrant is not registered
under the 1933 Act or qualified under applicable state securities laws on the
ground that the issuance contemplated by this Warrant Agreement will be exempt
from the registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event
-------------------------------------
will the Warrantholder make a disposition of any of its rights to acquire
Preferred Stock or Preferred Stock issuable upon exercise of such rights unless
and until (i) it shall have notified the Company of the proposed disposition,
and (ii) if requested by the Company, it shall have furnished the Company with
an opinion of counsel (which counsel may either be inside or outside counsel to
the Warrantholder) satisfactory to the Company and its counsel to the effect
that (A) appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the 1933 Act is
available. Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Preferred Stock or Preferred
Stock issuable on the exercise of such rights do not apply to transfers from the
beneficial owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any particular
share of Preferred Stock when (1) such security shall have been effectively
registered under the 1933 Act and sold by the holder thereof in accordance with
such registration or (2) such security shall have been sold without registration
in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been
issued to the Warrantholder at its request by the staff of the Securities and
Exchange Commission or a ruling shall have been issued to the Warrantholder at
its request by such Commission stating that no action shall be recommended by
such staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter or ruling
specifies that no subsequent restrictions on transfer are required. Whenever the
restrictions imposed hereunder shall terminate, as hereinabove provided, the
Warrantholder or holder of a share of Preferred Stock then outstanding as to
which such restrictions have terminated shall be entitled to receive from the
Company, without expense to such holder, one or more new certificates for the
Warrant or for such shares of Preferred Stock not bearing any restrictive
legend.
(d) Financial Risk. The Warrantholder has such knowledge
--------------
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment, and has the ability to bear the economic
risks of its investment.
(e) Risk of No Registration. The Warrantholder
-----------------------
understands that if the Company does not register with the Securities and
Exchange Commission pursuant to Section 12 of the 1933 Act, or file reports
pursuant to Section 15(d), of the Securities Exchange
9
<PAGE>
Act of 1934 (the "1934 Act"), or if a registration statement covering the
securities under the 1933 Act is not in effect when it desires to sell (i) the
rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii)
the Preferred Stock issuable upon exercise of the right to purchase, it may be
required to hold such securities for an indefinite period. The Warrantholder
also understands that any sale of its rights of the Warrantholder to purchase
Preferred Stock or Preferred Stock which might be made by it in reliance upon
Rule 144 under the 1933 Act may be made only in accordance with the terms and
conditions of that Rule.
(f) Accredited Investor. Warrantholder is an "accredited
-------------------
investor" within the meaning of the Securities and Exchange Rule 501 of
Regulation D, as presently in effect.
11. TRANSFERS.
---------
Subject to the terms and conditions contained in Section 10 hereof to
which any transferee shall be bound and shall represent and warrant to the
Company prior to any transfer of this Warrant Agreement, this Warrant Agreement
and all rights hereunder are transferable only to affiliates of Comdisco, Inc.
and any such transfer shall be recorded on the books of the Company upon receipt
by the Company of a notice of transfer in the form attached hereto as Exhibit
III (the "Transfer Notice"), at its principal offices and the payment to the
Company of all transfer taxes and other governmental charges imposed on such
transfer.
12. MISCELLANEOUS.
-------------
(a) Effective Date. The provisions of this Warrant
--------------
Agreement shall be construed and shall be given effect in all respects as if it
had been executed and delivered by the Company on the date hereof. This Warrant
Agreement shall be binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or
---------------
court proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all costs
of proceedings incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be
-------------
governed by and construed for all purposes under and in accordance with the laws
of the State of California.
(d) Counterparts. This Warrant 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) Notices. Any notice required or permitted hereunder
-------
writing and shall be deemed effectively given upon personal delivery, facsimile
transmission (provided that the original is sent by personal delivery or mail as
hereinafter set forth) or five (5) days after deposit in the United States mail,
by registered or certified mail, addressed (i) to the Warrantholder at 6111
North River Road, Rosemont, Illinois 60018, attention: James Labe, Venture
Group, cc: Legal Department, attn: General Counsel, (and/or, if
10
<PAGE>
by facsimile, (847) 518-5465 and (847) 518-5088) and (ii) to the Company at 453
Sherman, Palo Alto, CA 94306, attention: (and/or if by facsimile, (650) 614-
6390) or at such other address as any such party may subsequently designate by
written notice to the other party.
(f) Remedies. In the event of any default hereunder, the
--------
non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an action
for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate remedy
at law and where damages will not be readily ascertainable. The Company
expressly agrees that it shall not oppose an application by the Warrantholder or
any other person entitled to the benefit of this Agreement requiring specific
performance of any or all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.
(g) No Impairment of Rights. The Company will not, by
-----------------------
amendment of its Charter or through any other means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate in order to
protect the rights of the Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants
--------
and conditions of the respective parties contained herein or made pursuant to
this Warrant Agreement shall survive the execution and delivery of this Warrant
Agreement.
(i) Severability. In the event any one or more of the
------------
provisions of this Warrant Agreement shall for any reason be held invalid,
illegal or unenforceable, the remaining provisions of this Warrant Agreement
shall be unimpaired, and the invalid, illegal or unenforceable provision shall
be replaced by a mutually acceptable valid, legal and enforceable provision,
which comes closest to the intention of the parties underlying the invalid,
illegal or unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement
----------
may be amended by a written instrument signed by the Company and by the
Warrantholder.
(k) Additional Documents. The Company, upon execution of
--------------------
this Warrant Agreement, shall provide the Warrantholder with certified
resolutions with respect to the representations, warranties and covenants set
forth in subparagraphs (a) through (d), (f) and (g) of Section 9 above.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.
Company: INTERNET TRAVEL NETWORK
By:____________________________________________
Title: VP Finance
---------------------------------------
Warrantholder: COMDISCO, INC.
By:____________________________________________
Title: James Labe, President
Comdisco Ventures Division
12
<PAGE>
Exhibit 10.25
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.
Dated February 20, 1998
INTERNET TRAVEL NETWORK
WARRANT TO PURCHASE SHARES OF SERIES B PREFERRED STOCK
This Warrant is issued to Phoenix Leasing Incorporated (the
"Investor") by Internet Travel Network, a California corporation (the
"Company"), in consideration of the loan of certain monies in connection with
the Amendment Number One to Master Equipment Lease, dated the date hereof (the
"Loan Agreement").
1. Purchase of Shares. Subject to (i) its execution of an Investor
------------------
Representation Statement of even date herewith for the benefit of the Company in
substantially the form attached hereto as Exhibit A, 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 Twenty-Eight Thousand
Nine Hundred Sixteen (28,916) fully paid and nonassessable shares of Series B
Preferred Stock of the Company, as more fully described below. The shares of
Series B 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 $1.66
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 until the later to occur of: (i) February 20, 2008, or
(ii) the fifth (5th) anniversary of the closing of the Company's initial sale
and issuance of shares of Common Stock in an underwritten public offering
pursuant to a registration statement filed in compliance with the Securities Act
of 1933, as amended (the "1993 Act").
<PAGE>
4. Method of Exercise. While this Warrant remains outstanding and
------------------
exercisable in accordance with Section 3 above, the holder may exercise the
purchase rights for the full number of Shares evidenced hereby. Such exercise
shall be effected by:
(i) 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
(ii) the payment to the Company of the cash amount equal to the
aggregate Exercise Price for the full number of Shares being purchased.
5. Net Exercise. In lieu of exercising this Warrant with a cash
payment, 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 B Preferred Stock computed using the following formula:
Y(A - B)
--------
X = A
Where
X = The number of shares of Series B Preferred Stock to be issued to
the holder of this Warrant upon a net exercise.
Y = The number of shares of Series B 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 B
Preferred Stock.
B = The Exercise Price (as adjusted to the date of such
calculations).
For purposes of this Section 5, if the Company's Common Stock is then
actively traded over-the-counter or on a securities exchange or through the
Nasdaq National Market (each referred to herein as an "Exchange"), the fair
market value of Series B Preferred Stock shall mean the average of the closing
bid and asked prices of the Common Stock into which the Series B 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 B Preferred Stock sold by the Company
from authorized but unissued shares, as such prices shall be determined in good
faith by the
<PAGE>
Company's Board of Directors. Notwithstanding the previous terms of this
section, 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 B 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.
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
B 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 B
Preferred Stock, by split-up or otherwise, or combine its Series B Preferred
Stock, or issue additional shares of its Series B Preferred Stock or Common
Stock as a dividend with respect to any shares of its Series B 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 prices 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 B
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. 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
<PAGE>
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 Series B Preferred stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
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 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. Representations and Covenants of Investor. This warrant has been
-----------------------------------------
issued by the Company in reliance upon the following representations and
covenants by Investor:
(a) Investment Purpose. This Warrant and the Shares issuable upon
------------------
exercise of the Investor's rights contained herein or the Common Stock issuable
upon conversion of the Shares will be acquired for investment only and not with
a view to the sale or distribution of any part thereof, and the Investor has no
present intention of selling or engaging in any public distribution of the same
except pursuant to a registration or exemption.
(b) Private Issuance. The Investor understands that (i) the Shares
----------------
issuable upon exercise of this Warrant or the Common Stock issuable upon
conversion of the Preferred Stock is not registered under the 1933 Act or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Warrant will be exempt from the registration and
qualifications requirements thereof, and (ii) that the Company's reliance on
such exemption is predicated on the representations set forth in this Section
11.
(c) Disposition of this Warrant or the Shares. In no event will the
-----------------------------------------
Investor make any disposition of this Warrant or the Shares issuable upon
exercise of this Warrant or the Common Stock issuable upon conversion of the
Shares unless and until (i) it shall have notified the Company of the proposed
disposition and (ii) if requested by the Company, it shall have furnished the
Company with an opinion of counsel (which counsel may either be inside or
outside counsel to the Investor) satisfactory to the Company and its counsel to
the effect that (A) appropriate action necessary for the compliance with the
1933 Act has been taken, or (B) an exemption from the registration requirements
of the 1933 Act is available.
<PAGE>
(d) Financial Risk. The Investor has such knowledge and experience in
------------------------
financial and business matters as to be capable of evaluating the merits and
risks of its investment and has the ability to bear the economic risks thereof.
(e) Risks of No Registration. The Investor understands that if the
------------------------
Company does not register with the Securities and Exchange Commission pursuant
to the 1933 Act, or file reports pursuant to the Securities Exchange Act of 1934
(the "1934 Act"), or if a registration statement covering the securities under
--------
the 1933 Act is not in effect at the time when Investor desires to sell any
securities issuable upon exercise of this Warrant, the Investor may be required
to hold such securities for an indefinite period.
(f) Accredited Investor. Investor is an "accredited investor" within
-------------------
the meaning of Regulation D of the 1933 Act, as presently in effect.
(g) Standoff Agreement. In connection with the initial public
------------------
offering of the Company's securities, Investor 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 of the Shares or the Common Stock
issuable upon conversion of the Shares 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 and eighty (180) days from the effective date of such
registration as may be requested by the underwriters. The Investor 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. Successors and Assigns. The terms and provisions of this Warrant
----------------------
shall be binding upon the Company and any entity succeeding the Company by
merger, consolidation or acquisition of all or substantially all of the
Company's assets. The terms and provisions of this Warrant shall inure to the
benefit of, and be binding upon, 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 holders of the shares of Series B
Preferred Stock issued or issuable upon exercise of the Warrant.
14. 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, 445 Sherman Avenue, Palo Alto, California 94306, Attention:
President (as the same may be changed from time to time by notice from the
Company.)
15. 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
<PAGE>
letter and legal opinions satisfactory to the Company, if such are requested by
the Company) and the prior written consent of the Company.
16. Financial Information. The Company shall deliver to the Investor
---------------------
concurrent with deliver to any of its shareholders all the quarterly and annual
financial information delivered to any of its shareholders pursuant to Section 6
of the Amended and Restated Investor Rights Agreement dated April 18, 1997 (the
"Rights Agreement"). If the Rights Agreement is terminated for any reason, and
----------------
for so long as the Company is not subject to the periodic reporting requirements
of Section 12(g) or 15(d) of the Exchange Act, the Company shall deliver to the
Investor all the quarterly and annual financial information that was required to
be delivered pursuant to the Section 6 of the Rights Agreement, as in effect on
the date hereof .
17. Remedies. The Company stipulates that the remedies at law of the
--------
Investor in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate to the fullest extent permitted by law, and that such terms
may be specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof or otherwise.
18. Enforcement Costs. If either party to this Warrant seeks to
-----------------
enforce its rights hereunder by legal proceedings or otherwise, then the non-
prevailing party shall pay all reasonable costs and expenses incurred by the
prevailing party, including, without limitation, all reasonable attorneys' fees
(including the allocate costs of in-hours counsel).
19. 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:
---------------------------------------
Kenneth G. Swanton,
President and Chief Executive Officer
Address: 445 Sherman Avenue
Palo Alto, California 94306
<PAGE>
EXHIBIT 10.26
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER 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 PURSUANT TO RULE 144 ODefault UserFinancial Printing GroupGDSVF&H\181545.1
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER 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 PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: Internet Travel Network, a California Corporation
Number of Shares: 15,060
Class of Stock: Series B Preferred
Initial Exercise Price: $1.66 per share
Issue Date: April 15, 1997
Expiration Date: April 15, 2002 (subject to Article 5.1)
THIS WARRANT CERTIFIES THAT, in consideration of the payment of $1.00
and for other good and valuable consideration, IMPERIAL BANK or its registered
assignee ("Holder") is entitled to purchase the number of fully paid and
nonassessable shares of the class of securities (the "Shares") of INTERNET
TRAVEL NETWORK (the "Company") at the initial exercise price per Share (the
"Warrant Price") all as set forth above and as adjusted pursuant to Article 2 of
this Warrant, subject to the provisions and upon the terms and conditions set
forth in this Warrant.
ARTICLE 1.
EXERCISE
1.1 Method of Exercise. Holder may exercise this Warrant by
------------------
delivering this Warrant and a duly completed and executed Notice of Exercise in
substantially the form attached as Appendix 1 to the principal office of the
Company. Unless Holder is exercising the conversion right set forth in Section
1.2, Holder shall also deliver to the Company a check for the aggregate Warrant
Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified
----------------
in Section 1.1, Holder may from time to time convert this Warrant, in whole or
in part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant to Section 1.3.
1.3 Fair Market Value. If the Shares are traded regularly in a public
-----------------
market, the fair market value of the Shares shall be the closing price of the
Shares (or the closing price of
<PAGE>
the Company's stock into which the Shares are convertible) reported for the
business day immediately before Holder delivers its Notice of Exercise to the
Company. If the Shares are not regularly traded in a public market, the Board of
Directors of the Company shall determine fair market value in its reasonable
good faith judgment. The foregoing notwithstanding, if Holder advises the Board
of Directors in writing that Holder disagrees with such determination, then the
Company and Holder shall promptly agree upon a reputable investment banking firm
or appraiser to undertake such valuation. If the valuation of such investment
banking firm or appraiser is greater than that determined by the Board of
Directors, then all reasonable fees and expenses of such investment banking firm
shall be paid by the Company and if such valuation is less, such fees and
expenses shall be paid by Holder. In all other circumstances, such fees and
expenses shall be paid by Holder.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder
---------------------------------------
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired
1.5 Replacement of Warrants. On receipt of evidence reasonably
-----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
1.6 No Fractional Shares of Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of the Warrant,
but in lieu of such fractional shares the Company shall make a cash payment
therefor upon the basis of the Exercise Price then in effect.
1.7 Repurchase on Sale, Merger, or Consolidation of the Company.
-----------------------------------------------------------
1.7.1 "Acquisition". For the purpose of this Warrant,
-----------
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets (including intellectual property) of the
Company, or any reorganization, consolidation, or merger of the Company where
the holders of the Company's securities before the transaction beneficially own
less than 50% of the outstanding voting securities of the surviving entity after
the transaction.
1.7.2 Assumption of Warrant. If upon the closing of any
---------------------
Acquisition the successor entity assumes the obligations of this Warrant, then
this Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date
for the Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly. The Company shall use reasonable efforts to cause the surviving
corporation to assume the obligations of this Warrant.
1.7.3 Nonassumption. If upon the closing of any Acquisition the
-------------
successor entity does not assume the obligations of this Warrant and Holder has
not otherwise
2
<PAGE>
exercised this Warrant in full, and at such time the fair market value per Share
exceeds the Warrant price per Share then in effect, then the unexercised portion
of this Warrant shall be deemed to have been automatically converted pursuant to
Section 1.2 and thereafter Holder shall participate in the acquisition on the
same terms as other holders of the same class of securities of the Company.
ARTICLE 2.
ADJUSTMENTS TO THE SHARES
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
----------------------------
dividend on its common stock payable in common stock, or other securities,
subdivides the outstanding common stock into a greater amount of common stock,
then upon exercise of this Warrant, for each Share acquired, Holder shall
receive, without cost to Holder, the total number and kind of securities to
which Holder would have been entitled had Holder owned the Shares of record as
of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any
------------------------------------------
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Articles of
Incorporation upon the closing of a registered public offering of the Company's
common stock. The Company or its successor shall promptly issue to Holder a new
Warrant for such new securities or other property. The new Warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property
issuable upon exercise of the new Warrant. The provisions of this Section 2.2
shall similarly apply to successive reclassifications, exchanges, substitutions,
or other events.
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are
---------------------------------
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 Adjustments for Diluting Issuances. The Warrant Price and the
----------------------------------
number of Shares issuable upon exercise of this Warrant shall be subject to
adjustment, from time to time, in the manner set forth on Exhibit A, if
attached, in the event of Diluting Issuances (as defined on Exhibit A).
2.5 No Impairment. The Company shall not, by amendment of its
-------------
Articles of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the
3
<PAGE>
Company, but shall at all times in good faith assist in carrying out all the
provisions of this Article 2 and in taking all such action as may be necessary
or appropriate to protect Holder's rights under this Article against impairment.
If the Company takes any action affecting the Shares or its common stock other
than as described above that adversely affects Holder's rights under this
Warrant, the Warrant Price shall be adjusted downward and the number of Shares
issuable upon exercise of this Warrant shall be adjusted upward in such a manner
that the aggregate Warrant Price of this Warrant is unchanged.
2.6 Certificate as to Adjustments. Upon each adjustment of the
-----------------------------
Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall, upon written request, furnish Holder a certificate setting
forth the Warrant Price in effect upon the date thereof and the series of
adjustments leading to such Warrant Price.
ARTICLE 3.
REPRESENTATIONS AND COVENANTS OF THE COMPANY
3.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant, and all securities, if any, issuable
upon conversion of the Shares, shall, upon issuance in accordance herewith, duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances created by the Company except for restrictions on transfer
provided for herein or under applicable federal and state securities laws.
3.2 Notice of Certain Events. If the Company proposes at any time (a)
------------------------
to declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give
Holder (1) at least 20 days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
4
<PAGE>
3.3 Information Rights. So long as the Holder holds this Warrant
------------------
and/or any of the Shares, the Company shall deliver to the Holder (a) promptly
after mailing, copies of all communiques to the shareholders of the Company, (b)
within ninety (90) days after the end of each fiscal year of the Company, the
annual financial statements of the Company, and if such annual statements are
audited the audit reports with respect thereto, (c) within forty-five (45) days
after the end of each of the first three quarters of each fiscal year, the
Company's quarterly, unaudited financial statements.
3.4 Registration Under Securities Act of 1933, as amended. The
-----------------------------------------------------
Company agrees that the Shares shall be subject to the registration rights set
forth on Exhibit B.
ARTICLE 4.
REPRESENTATIONS AND COVENANTS OF HOLDER
This Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder:
(a) Investment Purpose. The right to acquire Preferred Stock or
------------------
the Preferred Stock issuable upon exercise of the Holder's rights contained
herein or the Common Stock issuable upon conversion of the Preferred Stock will
be acquired for investment and not with a view to the sale or distribution of
any part thereof, and the Holder has no present intention of selling or engaging
in any public distribution of the same except pursuant to a registration or
exemption.
(b) Private Issue. The Holder understands (i) that the Preferred
-------------
Stock issuable upon exercise of this Warrant or the Common Stock issuable upon
conversion of the Preferred Stock is not registered under the Securities
Exchange Act of 1933 (the "1933 Act") or qualified under applicable state
securities laws on the ground that the issuance contemplated by this Warrant
will be exempt from the registration and qualifications requirements thereof,
and (ii) that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 4.
(c) Disposition of Holder's Rights. In no event will the Holder
------------------------------
make a disposition of any of its rights to acquire Preferred Stock or Preferred
Stock issuable upon exercise of such rights or the Common Stock issuable upon
conversion of the Preferred Stock unless and until (i) it shall have notified
the Company of the proposed disposition, and (ii) if requested by the Company,
it shall have furnished the Company with an opinion of counsel (which counsel
may either be inside or outside counsel to the Holder) satisfactory to the
Company and its counsel to the effect that (A) appropriate action necessary for
compliance with the 1933 Act is available. Notwithstanding the foregoing, the
restrictions imposed upon the transferability of any of its rights to acquire
Preferred Stock or Preferred Stock issuable on the exercise of such rights or
the Common Stock issuable upon conversion of the Preferred Stock do not apply to
transfers from the beneficial owner of any of the aforementioned securities to
its nominee or from such nominee to its beneficial owner, and shall terminate as
to any particular share of Preferred Stock or the Common Stock issuable upon
conversion of the Preferred Stock when (1) such security shall have been
effectively registered under the 1933 Act and sold by the
5
<PAGE>
Holder thereof in accordance with such registration or (2) such security shall
have been sold without registration in compliance with Rule 144 under the 1933
Act, or (3) a letter shall have been issued to the Holder at its request by the
staff of the Securities and Exchange Commission or a ruling shall have been
issued to the Holder at its request by such Commission stating that no action
shall be recommended by such staff or taken by such Commission, as the case may
be, if such security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specified that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Holder or holder of a share of Preferred Stock or the
Common Stock issuable upon conversion of the Preferred Stock then outstanding as
to which such restrictions have terminated shall be entitled to received from
the Company, without expense to such holder, one or more new certificates for
the Warrant or for such shares of Preferred Stock or the Common Stock issuable
upon conversion of the Preferred Stock no bearing any restrictive legend.
(d) Financial Risk. The Holder has such acknowledge and
--------------
experience in financial and business matters as to be capable on evaluating the
merits and risks of its investment, and has the ability to bear the economic
risks of its investment.
(e) Risk of No Registration. The Holder understands that if the
-----------------------
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Preferred Stock pursuant to this Warrant, or
(ii) the Preferred Stock issuable upon exercise of the right to purchase, it may
be required to hold such securities or the Common Stock issuable upon conversion
of the Preferred Stock for an indefinite period. The Holder also understands
that any sale of its rights of the Holder to purchase Preferred Stock or the
Common Stock issuable upon conversion of the Preferred Stock which might be made
by it in reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and conditions of that Rule.
(f) Accredited Investor. Holder is an "accredited investor"
-------------------
within the meaning of the Securities and Exchange Rule 501 of Regulation D, as
presently in effect.
ARTICLE 5.
MISCELLANEOUS
5.1 Term: Notice of Expiration. This Warrant is exercisable, in
---------------------------
whole or in part, at any time and from time to time on or before the Expiration
Date set forth above.
5.2 Legends. This Warrant and the Shares (and the securities
-------
issuable, directly or indirectly, upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
6
<PAGE>
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION
IS NOT REQUIRED.
5.3 Transfer Procedure. Subject to the provisions of Section 5.2,
------------------
Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the securities issuables, directly or indirectly,
upon conversion of the Shares, if any) only with the prior written consent of
the Company, such consent not to be unreasonably withheld, by giving the Company
notice of the portion of the Warrant being transferred setting forth the name,
address and taxpayer identification number of the transferee and surrendering
this Warrant to the Company for reissuance to the transferee(s) (and Holder, if
applicable). Notwithstanding the foregoing, the Company shall have the right to
refuse to transfer any portion of this Warrant to any person who directly
competes with the Company.
5.4 Notices. All notices and other communications from the Company
-------
to the Holder, or vice versa, shall be given in writing and shall be deemed
delivered and effective when given personally or five days after deposit in the
United Stated mail by registered or certified mail, postage prepaid, at such
address as may have been furnished to the Company or the Holder, as the case may
be, in writing by the Company or such Holder from time to time.
5.5 Waiver. This Warrant and any term hereof may be changed, waived,
------
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
5.6 Attorneys' Fees. In the event of any dispute between the parties
---------------
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
5.7 Governing Law. This Warrant shall be governed by and construed in
-------------
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
INTERNET TRAVEL NETWORK
By:_________________________
Name:_______________________
Title:______________________
7
<PAGE>
Exhibit 10.27
EXHIBIT E
---------
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 purchase of the Company's Series C Preferred Stock under that certain
Series C Preferred Stock, Warrant and Option Purchase Agreement dated as of May
10, 1998 (the "Purchase 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 under Section 4 of the Purchase 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 Eight
Hundred Seven Thousand Six Hundred Ninety-Eight (807,698) 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 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
<PAGE>
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:
(i) 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
(ii) 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 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
2
<PAGE>
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 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
3
<PAGE>
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 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.
4
<PAGE>
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 10, 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 Purchase 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.
5
<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
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:
6
<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
September 13, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JAN-31-1998 JAN-31-1999
<PERIOD-START> FEB-01-1997 FEB-01-1998
<PERIOD-END> JAN-31-1998 JAN-31-1999
<CASH> 1,332 8,268
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10,784 36,060
0 0
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0
0
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