<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 18, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TRX, INC.
(Exact name of Registrant as specified in its charter)
------------------------
<TABLE>
<S> <C> <C>
7374
GEORGIA 514210 58-2502748
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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6 WEST DRUID HILLS DRIVE
ATLANTA, GEORGIA 30329
(404) 929-6100
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------------
NORWOOD H. DAVIS, III
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TRX, INC.
6 WEST DRUID HILLS DRIVE
ATLANTA, GEORGIA 30329
(404) 929-6100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
The Commission is requested to mail copies of all orders, notices and
communications to:
<TABLE>
<S> <C>
JEFFREY K. HAIDET, ESQ. DAVID B. WALEK, ESQ.
LONG ALDRIDGE & NORMAN LLP ROPES & GRAY
SUNTRUST PLAZA, SUITE 5300 ONE INTERNATIONAL PLACE
303 PEACHTREE STREET BOSTON, MASSACHUSETTS 02110
ATLANTA, GEORGIA 30308-3201 (617) 951-7000
(404) 527-4000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, 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 the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
PROPOSED
AMOUNT MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED OFFERING PRICE FEE(1)
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<S> <C> <C> <C>
Common Stock $.01 par value per share....................... $-- $75,000,000 $19,800
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</TABLE>
(1) Calculated pursuant to Rule 457(o) under the Securities Act.
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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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES NOR DOES
IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
Subject to Completion. Dated February 18, 2000
[ ] Shares
TRX, INC.
[LOGO]
Common Stock
------------------------
This is an initial public offering of shares of common stock of TRX, Inc.
All of the shares of common stock are being sold by TRX.
Prior to the offering, there has been no public market for the common
stock. TRX estimates that the initial public offering price will be between
$ and $ per share. Application will be made to include the
common stock for quotation on the Nasdaq National Market under the symbol
"TRXI".
See "Risk Factors" beginning on page 5 to read about factors you should
consider before buying shares of the common stock.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Initial public offering price............................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to TRX........................... $ $
</TABLE>
To the extent that the underwriters sell more than shares of common
stock, the underwriters have the option to purchase up to an additional
shares from TRX at the initial public offering price less the underwriting
discount.
------------------------
The underwriters expect to deliver the shares against payment in New York,
New York on , 2000.
GOLDMAN, SACHS & CO.
ABN AMRO ROTHSCHILD
A DIVISION OF ABN AMRO INCORPORATED
THE ROBINSON-HUMPHREY COMPANY
------------------------
Prospectus dated , 2000.
<PAGE> 3
Description of Graphics - Inside Gate Fold
At the top of the gate fold is the following text:
The Internet is dramatically changing the way consumers and businesses
communicate, share information and conduct commerce. The Internet's
broad reach and easy access create an ideal environment for new online
marketplaces and are altering the organization and dynamics of many
existing industries. We believe that the worldwide travel industry is
especially well-suited to benefit from increased Internet and electronic
commerce adoption.
Below the text on the left hand side is a TRX logo.
To the right of the TRX logo is the following text:
TRX, Inc. is the leading independent provider of transaction
fulfillment, customer support, technology services and data management
services for the online travel industry. Our sophisticated technology
infrastructure and high quality customer support capabilities enable our
clients to provide online travel services more efficiently and
effectively. Our transaction fulfillment services include quality
control, ticketing, document distribution, transaction accounting and
management reporting. Our customer support services include providing
travel and technical support to travelers through e-mail and telephone.
Our technology services include providing our clients access to our
proprietary, leading edge online travel reservation, point-of-sale
support, travel management and automated quality control software
primarily through our application hosting model. Our data management
services include travel data consolidation, transformation, report and
analysis.
Below the TRX logo is the following text:
Our comprehensive suite of services eliminates the need for our clients
to use valuable management time and resources to coordinate these
services from different providers. The flexibility of our service
delivery provides clients with the option of purchasing services
separately or as a comprehensive, integrated end-to-end solution.
To the right of the TRX logo are logos from [ ],[ ],[ ],[ ] and
[ ], representative clients of TRX.
Below is a horizontal, rectangular flow chart diagram framed in a gray shaded
box.
In the upper left hand corner of the box is a TRX logo with the text "TRX,
Inc." to the right of the logo.
Below the logo, there is a box containing a graphic of an "i" in a circle with
the following text underneath: "The Internet-at-large is the source of all
transactions."
Below the box is the text: "Fulfillment Services, Technology Services and Data
Services."
To the right of the box is an arrow pointing both to and from another box
containing a graphic of an arrow on a computer screen in a circle entitled
"eCommerce Application." Below this box is the text: "Interface to GDS and
Computer Reservation System (CRS)."
To the right of the box are two arrows pointing both to and from two separate
boxes, one box containing a graphic of a globe with an arrow entitled "GDS" and
one box containing a graphic of shaking hands in a circle entitled "CRM." Above
the box entitled "GDS" is the following text: "Global Distribution System,
including SABRE, WORLDSPAN, Galileo and Amadeus." Below the box entitled "CRM"
is the text: "Customer Relationship Management, including personalization and
customization."
To the right of the box entitled "GDS" is an arrow pointing to a box containing
a graphic of a person in a circle entitled "PNR." Above this box is the text:
"Passenger Name Record, which is a traveler profile including itinerary and
seating preference."
To the right of the boxes entitled "GDS" and "CRM" are arrows leading to a box
containing a graphic of a computer diskette in a circle entitled "Data Mgmt."
Below the arrow is the text: "Data collection and consolidation, database
development and travel procurement reduction through data analysis."
To the right of the box entitled "PNR" is an arrow pointing to a box containing
a graphic of a "Q" in a circle entitled "Transaction Finishing & Quality
Control." To the left of this box is the text: "Automated process that attempts
to accommodate seating preference, confirms presence of required contact
information, documents fare selection and adjusts for applicable per diem
allowance."
To the right of the box entitled "Transaction Finishing & Quality Control" is
an arrow leading to a box containing a graphic of an airplane in a circle
entitled "Fulfillment Services." The box also contains the text "Transaction
Processing," "Distribution," "Customer Support" and "ARC Processing."
To the right of the box entitled "Fulfillment Services" is an arrow pointing to
the box entitled "Data Mgmt."
<PAGE> 4
PROSPECTUS SUMMARY
This summary is not complete and may not contain all the information that
you should consider before investing in the shares. Please read the entire
prospectus carefully, especially "Risk Factors" beginning on page 5. Unless
otherwise indicated, all information in this prospectus assumes no exercise of
the underwriters' overallotment option. In this prospectus, the terms "TRX" and
"we" refer to TRX, Inc. and our subsidiaries except where it is clear that such
terms mean only TRX, Inc.
TRX, INC.
We are the leading independent provider of transaction fulfillment,
customer support, technology services and data management services for the
online travel industry. Our sophisticated technology infrastructure and high
quality customer support capabilities enable our clients to provide online
travel services more efficiently and effectively. Our services enable our online
clients to focus on building their brand awareness and customer loyalty while
entrusting us with responsibility for their vital transaction fulfillment and
customer support functions. We offer a broad range of services such as:
- transaction fulfillment services, including quality control,
ticketing, document distribution, transaction accounting and
management reporting;
- customer support services, including travel and technical support
through e-mail and telephone;
- technology services, including online travel reservations,
point-of-sale support, travel management and automated quality
control; and
- data management services, including data consolidation,
transformation, reporting and analysis.
Our current clients include:
- travel-specific websites such as Expedia;
- travel suppliers selling their inventories directly through their own
websites such as Continental Airlines and US Airways;
- traditional travel agencies with an online presence such as Maritz
Travel Company;
- large corporate travel agencies such as WorldTravel Partners; and
- corporate travel departments in organizations such as Hewlett-Packard
and The Seagram Company Ltd.
We have experienced significant growth in the volume of online tickets
fulfilled and revenue recorded. For the fourth quarter of 1999, we processed 1.8
million transactions, an increase of 162.2% over the 675,000 transactions
processed in the fourth quarter of 1998. In 1999, our revenues were $26.6
million, representing a compound annual growth rate of 79.0% over revenues of
$8.3 million in 1997. In 1999, our net cash flow from operations was $2.0
million compared to a negative $1.4 million in 1997.
The Internet is dramatically changing the way consumers and businesses
communicate, share information and conduct commerce. The Internet's broad reach
and easy access create an ideal environment for new online marketplaces and are
altering the organization and dynamics of many existing industries. We believe
that the worldwide travel industry is especially well-suited to benefit from
increased Internet and electronic commerce adoption. The travel industry is
fragmented and consists of numerous participants serving diverse customer
segments within the business-to-consumer and business-to-business markets.
1
<PAGE> 5
The business-to-consumer market is large and growing rapidly. Forrester
Research estimates that travel is one of the largest online retail categories
with users expected to purchase approximately $14.0 billion in air, hotel and
car rental services through travel-related websites in 2000. Forrester Research
also predicts that these purchases will grow at a compound annual growth rate of
28% to $29.4 billion in 2003. The business-to-business online travel market is
expected to grow even faster than the business-to-consumer market as
corporations increasingly look to online travel service providers for their
travel needs. Forrester Research expects online business travel expenditures to
grow at a compound annual growth rate of 56% from $10 billion in 2000 to $38
billion in 2003. Forrester Research predicts that travel will be the second
largest spending category for online business-to-business services in 2000,
representing approximately 23% of this market.
OUR SOLUTION
HIGH QUALITY CUSTOMER SUPPORT. We provide high quality customer support
services that enable our clients to achieve significant cost savings while
enhancing customer satisfaction levels.
LOW COST PROVIDER. Our economies of scale and sophisticated technology
allow us to provide services at a significant savings compared to in-house
alternatives. Since 1997, we have decreased our fulfillment and customer support
cost per transaction by 36.5%.
COMPREHENSIVE, FLEXIBLE SERVICES. Our comprehensive suite of services
eliminates the need for our clients to use valuable management time and
resources to coordinate these services from different providers. The flexibility
of our service delivery provides clients with the option of purchasing services
separately or as a comprehensive, integrated end-to-end solution.
LEADING EDGE PROCESSES ENABLED BY PROPRIETARY TECHNOLOGY. We have
developed leading edge processes and proprietary technology that enhance the
reliability, productivity and scalability of our operations.
OUR STRATEGY
INCREASE OUR MARKET LEADERSHIP POSITION. We intend to enhance our market
leadership position by growing with our industry-leading clients as well as
targeting new clients that process large volumes of tickets in-house. While we
will continue to build our sales and marketing capabilities, we also intend to
utilize our strong client base to validate our outsourcing services as an
industry best practice.
PENETRATE MULTIPLE ONLINE TRAVEL MARKET SEGMENTS. We will focus on further
penetrating the business-to-consumer and business-to-business online travel
markets by demonstrating our cost and performance advantages and leveraging our
existing client relationships.
EXPAND EXISTING CLIENT RELATIONSHIPS. We believe that we can expand our
relationships with existing clients by promoting our comprehensive suite of
services. Many of our clients utilize only a limited portion of our
comprehensive suite of services. We plan to demonstrate to our existing clients
the strategic advantages of outsourcing a broad range of travel transaction
fulfillment, customer support, technology services and data management services.
ENHANCE OUR TECHNOLOGY INFRASTRUCTURE AND OPERATIONAL PROCESSES. We plan
to accelerate our investment in technology infrastructure and refine our
operational processes.
EXPAND INTERNATIONAL PRESENCE. In order to expand our international
presence, we intend to pursue strategic alliances with international travel
agencies, industry consortia, major travel suppliers and other complementary
travel service companies. In addition, we plan to expand with our existing
client base as they enter international markets.
2
<PAGE> 6
THE OFFERING
<TABLE>
<S> <C>
Shares offered by TRX....................................... shares
Shares to be outstanding after the offering................. shares(1)
Use of proceeds............................................. For general corporate purposes,
including working capital
Proposed Nasdaq National Market symbol...................... "TRXI"
</TABLE>
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(1) Based on shares of common stock outstanding as of , 2000. Does not
include shares of common stock reserved for issuance upon the
exercise of employee and director stock options outstanding as of
, 2000 and shares of common stock reserved for future grant
under our stock incentive plan as of , 2000.
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1997 1998 1999
--------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $ 8,298 $14,281 $26,573
Expenses.................................................... 9,299 14,866 27,947
------- ------- -------
Operating loss.............................................. (1,001) (585) (1,374)
Interest expense, net....................................... (247) (527) (269)
------- ------- -------
Net loss.......................................... $(1,248) $(1,112) $(1,643)
======= ======= =======
Pro forma loss per common share, basic and diluted.......... $ (0.18)
OTHER OPERATING DATA:
Adjusted EBITDA(1).......................................... $ (103) $ 556 $ 2,349
</TABLE>
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(1) Adjusted EBITDA represents earnings before net interest, income tax,
depreciation and amortization expenses and non-recurring charges of $0,
$190,000 and $2,245,000 in 1997, 1998 and 1999, respectively. EBITDA is not
determined in accordance with generally accepted accounting principles and
should not be considered an alternative to operating income, as an indicator
of operating performance or as an alternative to cash flow as a determinant
of liquidity.
3
<PAGE> 7
The following table is a summary of our consolidated balance sheet as of
December 31, 1999, (i) on an actual basis, (ii) on a pro forma basis after
giving effect to the conversion of the convertible promissory notes held by BCD
Technology S.A. and Hogg Robinson International Benefits Limited into common
stock and (iii) on a pro forma as adjusted basis to reflect the conversion of
the convertible promissory notes and the sale of shares of common
stock at an assumed initial offering price of $ per share, after
deducting the underwriting discount and estimated offering expenses.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
---------------------------
PRO
PRO FORMA AS
ACTUAL FORMA ADJUSTED
------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 0 $ 0
Working capital (deficit)................................... (2,496) (2,496)
Total assets................................................ 22,169 22,169
Convertible long-term debt.................................. 10,000 0
Other long-term debt........................................ 800 800
Total shareholders' equity.................................. 1,244 11,340
</TABLE>
Our executive offices are located at 6 West Druid Hills Drive, Atlanta,
Georgia 30329. Our telephone number is (404) 929-6100, and our Internet address
is www.trx.com. The information on our website is not a part of this prospectus.
4
<PAGE> 8
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should consider the following factors carefully before deciding to purchase
shares of common stock. Additional risks not presently known to us or that we
currently deem immaterial may also impair our business operations.
RISKS RELATED TO OUR BUSINESS
THE SUCCESS OF OUR BUSINESS DEPENDS ON OUR ABILITY TO MEET OUR CLIENTS'
PERFORMANCE EXPECTATIONS AND TO PROVIDE THEIR CUSTOMERS WITH HIGH QUALITY
CUSTOMER SERVICE.
Our clients expect us to maintain high levels of transaction service
quality for their businesses and customer support for their customers. In many
cases, specific performance criteria are included in our contracts with clients.
Any failure by us to meet specified or otherwise expected performance criteria
or to provide the level of customer support required by our clients could lead
to the deterioration of our relationships with our clients. Unsatisfied clients
may choose to terminate or not renew their contracts with us or seek transaction
fulfillment and customer support services from other sources. This could reduce
our revenues and harm our operating results, as well as make it more difficult
to attract new clients.
OUR SUCCESS DEPENDS ON OUR ABILITY TO GROW ALONG WITH OUR CLIENTS, AND ANY
FAILURE TO DO SO COULD HARM OUR BUSINESS.
Our clients expect us to grow along with their businesses and to meet their
increasing requirements for transaction fulfillment, customer support,
technology services and data management services. As our current clients' online
travel businesses grow and new clients purchase our services, our personnel,
technology and existing facilities may not be adequate to satisfy our clients'
needs. Hiring employees, purchasing new technology and establishing new
facilities can be expensive and time consuming. In addition, integrating new
personnel, technology and facilities into our business may be disruptive and not
adequately satisfy our clients' needs. Our inability to successfully grow along
with our clients could decrease our revenues and harm our operating results.
WE EXPERIENCE VOLATILITY IN THE VOLUME OF TRANSACTIONS WE SERVICE; SUCH
VOLATILITY MAY NEGATIVELY IMPACT OUR ABILITY TO PROVIDE OUR SERVICES AND MAY
HARM OUR OPERATING RESULTS.
We have experienced significant levels of volatility in the volume of
travel transactions we service. This volatility is attributable to a number of
factors, including travel industry conditions and promotional programs by our
online clients. Significant, unanticipated increases in transaction volume may
strain our transaction fulfillment and customer support capabilities, leading to
higher costs and lower quality service. Although we work with our clients and
draw upon our experience to forecast transaction volatility, there can be no
assurance that all volatility will be anticipated or that we can at all times
handle high transaction volume in a manner satisfactory to our clients. Our
failure to address unanticipated transaction volume may decrease our margins and
harm our relationships with our clients.
UNANTICIPATED INCREASES IN THE NUMBER OF CUSTOMER CONTACTS PER TRANSACTION MAY
INCREASE OUR COSTS AND HARM OUR OPERATING RESULTS AND COULD ADVERSELY AFFECT OUR
CLIENT RELATIONSHIPS.
We are able to lower the cost of servicing travel transactions by
automating many steps in the fulfillment and customer support functions. From
time to time, we experience unanticipated increases in demand for non-automated
customer contact, such as telephone calls and e-mails, that require more
personal attention from our fulfillment and customer support employees. Travel
industry conditions and the level of functionality of our clients' websites,
among other factors, can impact our
5
<PAGE> 9
level of non-automated customer contacts. The need for higher than expected
levels of non-automated customer contacts increase our costs. We work with our
clients to forecast call and e-mail volume, and many of our contracts are priced
based on an expected number of customer contacts per transaction, but there can
be no assurance that our forecasting will be accurate or that our contractual
provisions will protect us from these increased costs. Moreover, our failure to
respond adequately to unexpected increases in customer contacts may lead to a
deterioration in service levels. This could adversely affect our operating
results and client relationships.
A SUBSTANTIAL PORTION OF OUR REVENUES IS GENERATED BY THREE CLIENTS; THE LOSS OF
ANY OF THESE CLIENTS WOULD SIGNIFICANTLY REDUCE OUR REVENUES.
A substantial portion of our revenues is generated by three clients,
Expedia, WorldTravel Partners and Continental Airlines. These three clients
represented 80.8% of our revenues in 1999, of which Expedia comprised the
majority portion. Our agreement with Expedia expires on January 1, 2003, but may
be terminated by Expedia if we fail to meet certain performance criteria or
without cause, upon 180 days' prior written notice and in the event of the
termination of this agreement by Expedia without cause, Expedia must pay a
termination fee equal to between 3 and 12 months' average fees, depending on the
date of termination. In addition, we do not have a formal written agreement with
Continental Airlines, and Continental Airlines may terminate our relationship
with them upon 60 days notice. Our agreements with other clients generally can
be terminated by our clients upon a material breach, and in some cases if
certain performance criteria are not met. The loss or partial loss of any of
these clients or a substantial decline in the business of any of these clients
would significantly diminish our revenues and operating results and could force
us to curtail our growth plans.
TRAVEL INDUSTRY PARTICIPANTS MAY NOT ADOPT OUTSOURCING AS AN INDUSTRY BEST
PRACTICE.
Our business depends on travel industry participants adopting the
outsourcing of transaction fulfillment, customer support, technology services
and data management services as a means to achieve significant cost savings and
enhanced customer service. There is no guarantee that our services will lower
the costs of our clients' businesses or improve customer service. If these cost
savings or customer service improvements do not occur, we may not be able to
retain clients or attract new clients.
INCREASED COMPETITION IN THE FUTURE COULD ADVERSELY AFFECT OUR OPERATING
RESULTS.
We face significant competition primarily from in-house departments.
In-house departments or other travel industry participants that perform services
similar to those we offer could create new businesses that compete directly with
us. In addition, new market entrants may form businesses that compete with us.
These potential competitors may have greater financial and other resources to
compete with us. Increased competition may result in price reductions, reduced
margins and loss of market share.
FAILURE TO MANAGE OUR GROWTH COULD REDUCE OUR REVENUES OR NET INCOME.
Rapid expansion strains our infrastructure, management, internal controls
and financial systems. We may not be able to effectively manage our present
growth or any future expansion. We have recently experienced significant growth,
with our revenues for 1999 increasing 86.1% compared to our revenues for 1998.
This rapid growth has also strained our ability to train and integrate our new
employees. Inadequate training and integration of our employees may result in
inefficiencies in our workforce and may reduce our revenues or net income.
6
<PAGE> 10
WE MAY BUILD EXCESS CAPACITY TO ACCOMMODATE BUSINESS THAT DOES NOT DEVELOP.
In order to serve new clients or existing clients with increasing demand,
we sometimes hire and train new employees and establish extra capacity before we
begin to process new transactions. If contracts with new clients are not
consummated, or forecasted growth in demand does not result, we will have excess
capacity which may be costly for us to absorb or eliminate.
IF WE ARE UNABLE TO RECRUIT OR RETAIN QUALIFIED EMPLOYEES, OUR OPERATING
EFFICIENCY AND PRODUCTIVITY COULD DECLINE.
We are heavily dependent on our employees to provide the high level of
customer service our clients expect. If we cannot recruit and retain enough
qualified and skilled employees, the growth of our business may be limited. Our
ability to provide services to clients and grow our business depends, in part,
on our ability to attract and retain qualified employees for fulfillment,
customer support, technical, managerial and marketing functions. If our employee
turnover rate increases significantly, our recruiting and training costs could
rise, and our operating efficiency and productivity could decline. We may not be
able to recruit or retain the caliber of employees required to carry out
essential functions at the pace necessary to sustain or grow our business.
OUR SENIOR MANAGEMENT TEAM HAS BEEN WORKING TOGETHER FOR A RELATIVELY SHORT
PERIOD OF TIME.
Our success depends in part upon the capabilities of our senior management
team and their ability to work together efficiently and effectively. Our senior
management team has been working together for a relatively short period of time.
Delays in the integration of our senior management team, particularly during the
current period of rapid growth in our business, could cause our operations and
financial performance to suffer.
FAILURES OF OUR SOFTWARE, HARDWARE AND OTHER SYSTEMS COULD UNDERMINE OUR
CLIENTS' CONFIDENCE IN OUR RELIABILITY.
Delivering our services requires the successful integration and operation
of a network of software, computer hardware and telecommunications equipment. A
failure of any element in this network can partially or completely disrupt our
business. Third parties provide certain of these elements, and accordingly they
are not within our control. In addition, this network is vulnerable to
interruption from power failures, telecommunications outages and network service
outages and disruptions. Failures of our software, hardware and other systems
could undermine our clients' confidence in our reliability. There can be no
guarantee that our back-up systems will adequately protect against such
failures. Our business interruption insurance would not compensate us fully for
any losses that may result from these interruptions.
OUR SALES CYCLE IS LENGTHY AND VARIABLE AND 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 for our services is lengthy and unpredictable,
requires pre-purchase evaluation by a significant number of employees in our
clients' organizations and involves a significant operational decision by our
clients. Moreover, a purchase decision by a potential client typically requires
the approval of several senior decision makers. Our sales cycle for our larger
clients is generally between two and three months, with implementation and
testing of our services lasting an additional two to three months. This lengthy
and variable sales cycle may have a negative impact on the timing of our
revenues, causing our revenues and operating results to vary significantly from
period to period.
7
<PAGE> 11
DETERIORATION OF OUR ARRANGEMENTS WITH THIRD-PARTY COMPUTER SYSTEMS COULD IMPAIR
THE QUALITY OF OUR SERVICE.
We and our clients rely on third-party computer systems, including the
computerized central reservation systems serving the airline industry, to make
and complete travel reservations. We also rely on the compatibility of our
proprietary software with these computer systems. Interruptions in our ability
to access these systems or the failure of our software to interact with these
systems would significantly harm our business and operating results.
OUR INTERNATIONAL OPERATIONS INVOLVE RISKS RELATING TO TRAVEL PATTERNS, BUSINESS
PRACTICES, REGULATORY REQUIREMENTS AND ONLINE COMMERCE.
We seek to expand our operations to other countries. In order to achieve
wide-spread acceptance in the countries we enter, we must tailor our services to
the local travel patterns, business practices and regulatory requirements. Our
failure to do so could slow our growth in those countries. The international
risks which could significantly harm our business include:
- delays in the development of the Internet as a broadcast, advertising
and commerce medium in international markets;
- difficulties in managing operations due to distance, language and
cultural differences;
- unexpected changes in regulatory requirements; and
- potential adverse tax consequences.
OUR QUARTERLY OPERATING RESULTS ARE VOLATILE AND MAY BE DIFFICULT TO PREDICT; IF
WE FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS OR INVESTORS, THE
MARKET PRICE OF OUR COMMON STOCK MAY DECLINE.
Our quarterly operating results have varied significantly in the past and
will likely vary significantly in the future. You should not rely upon
period-to-period comparisons of our results of operations as indicators of
future performance. Our operating results may fall below the expectations of
securities analysts or investors in some future quarter or quarters. Our failure
to meet these expectations may result in a decrease in the market price of our
common stock.
RISKS RELATING TO OUR INDUSTRY
DECLINES OR DISRUPTIONS IN THE TRAVEL INDUSTRY GENERALLY COULD REDUCE OUR
REVENUES.
We rely on the health and growth of the travel industry. Travel is highly
sensitive to business and personal discretionary spending levels and tends to
decline during general economic downturns. In addition, other adverse trends or
events that tend to reduce travel are likely to reduce our revenues. These may
include:
- price escalation in the airline industry or other travel-related
industries;
- occurrence of travel-related accidents;
- airline or other travel-related strikes;
- political instability, regional hostilities and terrorism; and
- bad weather.
In addition, our clients may seek reduced prices for our services in
response to changing fare and commission structures and other travel industry
conditions.
8
<PAGE> 12
OUR BUSINESS IS SUBJECT TO SEASONAL FLUCTUATIONS THAT MAY IMPACT OUR OPERATING
RESULTS.
We have experienced and expect to continue to experience seasonal
fluctuations in our business. 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. This
seasonality may cause quarterly fluctuations in our operating results and 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.
Our services depend on the increased acceptance and use of the Internet as
a medium of commerce for both business-to-business and business-to-consumer
transactions. The use of the Internet as a means of transacting business is
relatively new and has not been accepted by all customers in the travel market.
As a result, the market may not accept products and services that rely on the
Internet, such as ours and those of our clients. Specific factors that could
prevent continued growth in the adoption of online commerce for
business-to-business and business-to-consumer transactions in the travel market
include:
- competition from traditional travel agencies and other sources for
both consumer travel services and travel procurement services for
businesses;
- failure to provide adequate customer support;
- inadequate network infrastructure;
- unreliable access to the Internet; and
- lack of security on the Internet.
If the growth rate of Internet usage in the travel market is less than
expected, our revenues will suffer.
RISKS RELATING TO LEGAL UNCERTAINTIES
REGULATORY CHANGES MAY IMPOSE BURDENS ON OUR BUSINESS THAT COULD ADVERSELY
IMPACT OUR OPERATING RESULTS.
The laws and regulations applicable to the travel industry affect us and
our clients. We must comply with laws and regulations relating to the sale and
fulfillment of travel services. In addition, many of our clients and computer
reservation systems providers are heavily regulated by the U.S. and other
governments. Our services are indirectly affected by regulatory and legal
uncertainties affecting the businesses of our clients and computer reservation
systems providers.
We are subject to federal regulations prohibiting unfair and deceptive
practices. In addition, federal regulations concerning the display and
presentation of information currently applicable to airline booking services, as
well as other laws and regulations aimed at protecting customers accessing
online or other travel services, could be extended to us in the future. In
certain states, we are required to register as a seller of travel, comply with
certain disclosure requirements and participate in the state's restitution fund.
We must also comply with laws and regulations applicable to online commerce
and businesses in general. Currently, few laws and regulations directly apply to
the Internet and commercial online services. Moreover, there is currently great
uncertainty about whether or how existing laws governing issues such as property
ownership, sales and other taxes, libel and personal privacy apply to the
Internet and commercial online services. It is possible that laws and
regulations may be adopted to address these and other issues. New laws or
different applications of existing laws would likely
9
<PAGE> 13
impose additional burdens on companies conducting business online and may
decrease the growth of the Internet or commercial online services. In turn, this
could decrease the demand for our products and services or increase our cost of
operations.
IF WE ARE NOT ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR
COMPETITORS MAY BE ABLE TO DUPLICATE OUR SERVICES.
We rely in part upon our proprietary technology to conduct our business.
Our failure to adequately protect our intellectual property rights could harm
our business by making it easier for our competitors to duplicate our services.
We have no patents. We primarily rely on a combination of copyrights, trade
secrets, confidential procedures and contractual provisions to protect our
technology. Despite these protections, it may be possible for unauthorized
parties to copy, obtain or use certain portions of our proprietary technology.
We have also obtained trademark registrations for some of our brand names, and
our marketing materials are copyright protected, but these protections may not
be adequate. Although we require each of our employees to enter into a
confidentiality agreement and some key employees are subject to non-competition
agreements, these agreements may not satisfactorily safeguard our intellectual
property.
We cannot be certain that third parties will not infringe or misappropriate
our proprietary rights or that third parties will not independently develop
similar proprietary information. Any infringement, misappropriation or
independent development could harm our future financial results. In addition,
effective protection of intellectual property rights may not be available in
every country where we provide services. We may, at times, have to incur
significant legal costs and spend time defending our intellectual property
rights. Any defensive efforts, whether successful or not, would divert both time
and resources from the operation and growth of our business.
There is also significant uncertainty regarding the applicability to the
Internet of existing laws regarding matters such as property ownership,
copyrights and other intellectual property rights. Legislatures adopted the vast
majority of these laws prior to the advent of the Internet, and, as a result,
these laws do not contemplate or address the unique issues of the Internet and
related technologies. We cannot be sure what laws and regulations may ultimately
affect our business or intellectual property rights.
OTHERS MAY ASSERT THAT OUR TECHNOLOGY INFRINGES THEIR INTELLECTUAL PROPERTY
RIGHTS.
We do not believe that we infringe the proprietary rights of others, and to
date, no third parties have notified us of infringement, but we may be subject
to infringement claims in the future. The defense of any claims of infringement
made against us by third parties could involve significant legal costs and
require our management to divert time from our business operations. Either of
these consequences of an infringement claim could have a material adverse effect
on our operating results. If we are unsuccessful in defending any claims of
infringement, we may be forced to obtain licenses or to pay royalties to
continue to use our technology. We may not be able to obtain any necessary
licenses on commercially reasonable terms or at all. If we fail to obtain
necessary licenses or other rights, or if these licenses are too costly, our
operating results may suffer either from reductions in revenues through our
inability to serve clients or from increases in costs to license third-party
technology.
10
<PAGE> 14
RISKS RELATING TO THE OFFERING AND THE SECURITIES MARKET
OUR COMMON STOCK PRICE MAY BE VOLATILE.
The market price for our common stock is likely to be highly volatile and
is likely to experience wide fluctuations in response to factors including the
following:
- actual or anticipated variations in our quarterly operating results;
- announcements of technological innovations or new services by us or
our competitors;
- changes in financial estimates by securities analysts;
- conditions or trends in the online commerce or travel industries;
- changes in the economic performance or market valuations of other
Internet, online commerce or travel companies;
- announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments;
- release 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.
The market prices of the securities of Internet-related and online commerce
companies have been especially volatile. Broad market and industry factors may
adversely affect the market price of our common stock, regardless of our actual
operating performance. In the past, following periods of volatility in the
market price of their stock, many companies have been the subject of securities
class action litigation. If we were sued in a securities class action, it could
result in substantial costs and a diversion of management's attention and
resources and would adversely affect our stock price.
THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK.
Before the offering, there has been no public market for our common stock.
Although we expect our common stock to be quoted on the Nasdaq National Market,
an active trading market for our shares may not develop or be sustained
following the offering. Purchasers in the offering may not be able to resell
their shares at prices equal to or greater than the initial public offering
price. The initial public offering price will be determined through negotiations
between us and the underwriters and may not be indicative of the market price
for these shares following the offering.
OUR MANAGEMENT HAS BROAD DISCRETION OVER HOW TO USE THE PROCEEDS OF THE
OFFERING; WE MAY NOT USE THE PROCEEDS IN WAYS THAT HELP OUR BUSINESS SUCCEED.
We estimate that our net proceeds from the offering will be
$ million, at an assumed initial public offering price of
$ per share and after deducting the estimated underwriting discount and
our estimated offering expenses. The principal purposes of the offering are to
increase working capital, create a public market for our common stock,
facilitate future access to the public capital markets and increase our
visibility in the marketplace. We have no specific plans for the net proceeds of
the offering other than general corporate purposes and working capital, and our
use of these proceeds will be in the discretion of our management. We may, for
example, use a portion of the net proceeds to repay amounts due to WorldTravel
Partners and to fund sales and marketing expenses, investments in our technology
infrastructure and expansion of our operations. If we fail to use these proceeds
effectively, our business may not grow and our revenues may decline.
11
<PAGE> 15
OTHER COMPANIES MAY HAVE DIFFICULTY ACQUIRING US, EVEN IF DOING SO WOULD BENEFIT
OUR SHAREHOLDERS, DUE TO PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS
AND GEORGIA LAW.
Provisions in our Articles of Incorporation, in our Bylaws and under
Georgia law could make it more difficult for third parties to acquire us, even
if doing so would benefit our shareholders. Our Articles of Incorporation and
Bylaws contain the following provisions, among others, which may inhibit an
acquisition of TRX by a third party:
- our directors serve on a classified board, which may make it more
difficult for a third party to acquire us without the approval of our
Board of Directors, inhibit a shareholder from nominating and
electing directors and make it more difficult for shareholders to
change the composition of our Board of Directors in any one year;
- our shareholders may not take action outside of a meeting by less
than unanimous written consent;
- our shareholders must comply with advance notice provisions contained
in our Bylaws to make proposals at shareholder meetings and nominate
candidates for election to our Board of Directors; and
- our shareholders may call a special meeting only upon request of the
holders of not less than 35% of the shares then outstanding and
entitled to vote.
Georgia law also contains business combination and fair price provisions,
which, if adopted, may delay, deter or prevent a change in control. We have
adopted certain of these provisions in our Bylaws. These anti-takeover
provisions could substantially impede the ability of our shareholders to change
our management and Board of Directors, which may reduce the market price of our
common stock. For a more complete discussion of these provisions of Georgia law,
see "Description of Capital Stock -- Anti-Takeover Provisions of Our Articles of
Incorporation, Bylaws and Georgia Law."
OUR EXISTING SHAREHOLDERS WILL CONTROL ALL MATTERS REQUIRING A SHAREHOLDER VOTE.
Upon the closing of the offering, our management and principal shareholders
will control approximately % of our outstanding stock. If all of these
shareholders were to vote together as a group, they would have the ability to
exert significant influence over our Board of Directors and its policies. For
instance, these shareholders will be able to control the outcome of all
shareholder votes, including votes concerning director elections, Bylaw
amendments and possible mergers, corporate control contests and other
significant corporate transactions. Accordingly, such concentration of ownership
may have the effect of delaying, deferring or preventing a change in control,
merger, consolidation, takeover or other business combination involving us or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, which in turn could have an adverse effect
on the market price of our common stock.
SUBSTANTIAL SALES OF OUR COMMON STOCK AFTER THE OFFERING COULD CAUSE OUR STOCK
PRICE TO FALL.
Most of our outstanding shares are currently restricted from resale, but
some may be sold into the market in the near future. Sales of these shares into
the market could cause the market price of our common stock to drop
significantly, even if our business is doing well.
Immediately following the offering, we will have outstanding shares
of common stock. This includes the shares we are selling in the offering.
Assuming that we sell all shares reserved under our directed share program to
the entities or persons for whom these shares have been reserved, we expect that
investors may resell shares in the public market immediately.
BCD Technology S.A., Hogg Robinson International Benefits Limited, our
directors, officers and other shareholders have entered into lock-up agreements
in connection with the offering generally providing that they will not offer,
sell, contract to sell or grant any option to purchase or otherwise dispose of
our common stock or any securities exercisable for or convertible into our
common stock
12
<PAGE> 16
owned by them for a period of 180 days after the date of this prospectus without
the prior written consent of Goldman, Sachs & Co.
WE DO NOT INTEND TO PAY ANY DIVIDENDS.
We have never declared or paid any cash dividends on our common 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.
YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE OF YOUR
INVESTMENT.
The initial public offering price per share will significantly exceed our
net tangible book value per share. If we were to liquidate immediately after the
offering, investors purchasing shares in the offering would receive a per share
amount of tangible assets net of liabilities that would be less than the initial
public offering price per share. Investors purchasing shares in the offering
will suffer dilution of $ per share from their investment.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus are forward-looking
statements that involve substantial risks and uncertainty. In some cases you can
identify these statements by forward-looking words such as "anticipate,"
"believe," "could," "estimate," "expect," "intend," "may," "should," "will" and
"would" or similar words. You should read statements that contain these words
carefully because they discuss our future expectations, contain projections of
our future results of operations or of our financial position or state other
"forward-looking" information. We believe that it is important to communicate
our future expectations to our investors. However, there may be events in the
future that we are not able to accurately predict or control. The factors listed
above in the section captioned "Risk Factors," as well as any cautionary
language in this prospectus, provide examples of risks, uncertainties and events
that may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements. Before you invest in our common
stock, you should be aware that the occurrence of the events described in these
risk factors and elsewhere in this prospectus could have an adverse effect on
our business, results of operations and financial position.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the shares of
common stock we are offering at an assumed initial public offering price of
$ per share will be $ million after deducting underwriting discounts
and commissions of approximately $ million and estimated offering expenses
of approximately $ payable by us. If the underwriters' over-allotment
option is exercised in full, we estimate that our net proceeds will be $
million.
The principal purposes of the offering are to increase working capital,
create a public market for our common stock, facilitate future access to the
public capital markets and increase our visibility in the marketplace. We have
no specific plans for the net proceeds of the offering other than general
corporate purposes and working capital, and our use of these proceeds will be at
the discretion of our management. We may, for example, use a portion of the net
proceeds to repay amounts due to WorldTravel Partners and to fund sales and
marketing expenses, investments in our technology infrastructure and expansion
of our operations. Pending the foregoing uses, we will invest the balance of the
net proceeds in short-term, investment grade, interest bearing obligations.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common 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.
13
<PAGE> 17
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 1999
(i) on an actual basis and (ii) on a pro forma basis after giving effect to the
conversion of the convertible promissory notes held by BCD Technology S.A. and
Hogg Robinson International Benefits Limited into common stock and (iii) on a
pro forma as adjusted basis to reflect the conversion of the convertible
promissory notes and the sale of shares of common stock at an
assumed initial offering price of $ per share, after deducting the
underwriting discount and estimated offering expenses. This table should be read
together with our financial statements and notes and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-------------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
-------- -------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Convertible long-term debt.................................. $10,000 $ 0
Other long-term debt........................................ 800 800
Shareholders' equity:
Common stock, $.01 par value per share, 100,000,000 shares
authorized; 9,269,373 shares issued and outstanding
actual; 10,120,077 shares issued and outstanding pro
forma; shares issued and outstanding, pro forma as
adjusted............................................... 93 101
Additional paid-in capital................................ 1,861 11,949
Accumulated deficit....................................... (710) (710)
------- -------
Total shareholders' equity........................ 1,244 11,340 $
------- ------- --------
Total capitalization.............................. $12,044 $12,140 $
======= ======= ========
</TABLE>
In addition to the shares of common stock to be outstanding after the
offering, we may issue additional shares of common stock under the following
plans and arrangements:
- shares issuable upon exercise of outstanding options at a
weighted average exercise price of $ per share as of
, 1999.
- shares available for future issuance upon exercise of
options available for future grant under our 2000 Stock Incentive
Plan.
14
<PAGE> 18
DILUTION
As of December 31, 1999, our historical net tangible book value was
approximately $ or $ per share of common stock. Net tangible
book value per share represents total tangible assets less total liabilities
divided by the number of shares of common stock outstanding. After giving effect
to our receipt of the net proceeds from our sale of the shares of
common stock offered hereby at the offering price of $ per share, the
pro forma net tangible book value at December 31, 1999 would have been
approximately $ million or $ per share. This represents an
immediate increase in net tangible book value of $ per share to our
existing shareholders and an immediate dilution of $ per share to new
investors purchasing shares of common stock in the offering. The following table
illustrates this per share dilution:
<TABLE>
<S> <C>
Initial public offering price per share..................... $
Pro forma net tangible book value per share after the
offering..................................................
-------
Dilution per share to new investors......................... $
=======
</TABLE>
The following table summarizes, as of December 31, 1999, the differences
between the number and percentage of shares of common stock issued to our
existing shareholders and new investors purchasing shares of common stock in the
offering, after giving effect to the conversion of the convertible promissory
notes, at the initial public offering price of $ per share, as well as
the aggregate consideration and the average price per share paid by them:
<TABLE>
<CAPTION>
SHARES TOTAL
PURCHASED CONSIDERATION AVERAGE
----------------- ----------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders........................ % $ % $
New investors................................
------- ----- ------- -----
Total.............................. 100.0% $ 100.0% $
======= ===== ======= =====
</TABLE>
The preceding tables assume no issuance of shares of common stock under our
stock incentive plans after December 31, 1999. In addition to the shares of
common stock to be outstanding after the offering, we may issue additional
shares of common stock under the following plans and arrangements:
- shares issuable upon exercise of outstanding options at a
weighted average exercise price of $ per share as of
.
- shares available for future issuance upon exercise of
options available for future grant under our 2000 Stock Incentive
Plan.
15
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data should be read together with our
financial statements and notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
prospectus. The statement of operations data for the years ended December 31,
1997, 1998 and 1999 and the balance sheet data as of December 31, 1998 and 1999
are derived from our audited financial statements included elsewhere in this
prospectus which have been audited by Arthur Andersen LLP, independent auditors,
whose report thereon is also included elsewhere in this prospectus.
The statement of operations data for the years ended December 31, 1995 and
1996 and the balance sheet data as of December 31, 1995, 1996 and 1997 are
derived from unaudited financial statements not included herein. 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 statement of results for
these periods.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1995 1996 1997 1998 1999
------ -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues..................................... $2,214 $ 2,742 $ 8,298 $14,281 $26,573
------ -------- -------- ------- -------
Expenses:
Operating.................................. 719 1,235 3,283 7,270 15,179
Selling, general and administrative........ 654 1,355 3,900 4,317 8,407
Technology development..................... 402 617 1,218 2,328 2,883
Depreciation and amortization.............. 419 938 898 951 1,478
------ -------- -------- ------- -------
Total expenses..................... 2,194 4,145 9,299 14,866 27,947
------ -------- -------- ------- -------
Operating income (loss)...................... 20 (1,403) (1,001) (585) (1,374)
Interest (income) expense, net............... 45 (16) 247 527 269
------ -------- -------- ------- -------
Net loss..................................... $ (25) $ (1,387) $ (1,248) $(1,112) $(1,643)
====== ======== ======== ======= =======
Pro forma loss per common share, basic and
diluted.................................... $ (0.18)
=======
Pro forma weighted average shares
outstanding, basic and diluted............. 9,025
=======
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------
1995 1996 1997 1998 1999
------ ------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit)..................... $ 422 $ 326 $ (1,705) $(4,699) $(2,496)
Total assets.................................. 2,191 3,832 4,186 5,336 22,169
Long-term debt, less current portion.......... 0 1,358 1,358 0 10,800
Total shareholders' equity (deficit).......... 1,942 547 (701) (1,613) 1,244
</TABLE>
16
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and the
related notes and other information included elsewhere in this prospectus. This
discussion contains forward-looking statements that involve risks and
uncertainties. Actual events or results could differ materially from those
anticipated events or results as a result of various factors, including, but not
limited to, the "Risk Factors" discussed elsewhere in this prospectus.
OVERVIEW
We are the leading independent provider of transaction fulfillment,
customer support, technology services and data management services for the
online travel industry. We provide these services to travel suppliers (air,
hotel and car rental), corporate travel departments and online and traditional
travel agencies. Our clients utilize our services either individually or as a
comprehensive, integrated end-to-end solution.
Prior to January 1997, we conducted our business as a division and
subsidiary of WorldTravel Partners, the third largest corporate travel agency in
the U.S. In January 1997, our business was separated from WorldTravel Partners
and transferred into a separate business organization, WorldTravel Technologies,
L.L.C. In connection with our reorganization on November 4, 1999, WorldTravel
Technologies, L.L.C. became our wholly-owned subsidiary. On November 4, 1999, we
acquired Arthur H. Ltd. d/b/a International Software Products. We accounted for
this acquisition using the purchase method, and the results of operations for
the period from the acquisition date through December 31, 1999 are included in
our financial statements.
We utilize proprietary and other leading edge technologies to provide our
services. Our technology is compatible with each of the four major computer
reservation systems (WORLDSPAN, SABRE, Galileo and Amadeus). We design our
services to scale along with our clients' businesses to enable us to remain a
reliable outsourcing partner.
Our revenues are primarily derived from transaction fees for fulfillment
services and customer support services. We provide our clients with transaction
fulfillment services that include quality control, ticketing, document
distribution, transaction accounting and management reporting. We provide
customer support services through e-mail and telephone. Over time, we anticipate
that the proportion of our revenues derived from fulfillment services and
customer support services will increase as we expand with our major clients,
such as Expedia, Continental Airlines and US Airways and may enter into
agreements with new clients. These revenues are recognized in the month in which
our services are provided.
Our agreements for providing fulfillment services and customer support
services generally contain transaction fees based on the number of tickets
processed. Also, some of our agreements provide for additional fees in the event
that certain customer support service criteria are exceeded. Under some of our
agreements, the transaction fees we charge our clients decrease over time or as
the transaction volume under those contracts increases. We expect our costs per
transaction to decrease as a result of increased transaction volume. We invoice
our clients monthly for these transaction fees and generally payment is due
within 30 days.
In addition, we generate revenues from our technology services. Our
technology services include proprietary travel automation software that helps
travel agents and travelers search for the best fares, specific seats and trip
templates, provides quality control processing for ticketing transactions and
provides reservation and coordination for meetings, including lodging, air and
ground services. We primarily offer these services through an application
hosting model. We offer our clients the ability to use our leading edge software
maintained on servers located at our facilities and derive revenues on a
transaction fee basis. These revenues are recognized in the month in
17
<PAGE> 21
which our services are provided. The terms of our agreements with clients vary,
depending on the services required by our clients. We invoice our clients
monthly for these transaction fees and expect payment within 30 days.
We also offer our technology services through license and post-contract
software support arrangements that include maintenance, telephone support and
unspecified software enhancements. Revenues from software licenses are
recognized as our products are accepted by our clients, with such acceptance
typically approximating the date of delivery. Revenues from support and
maintenance are generally recognized ratably over the term of the post-contract
support arrangement, which is typically 12 months. During 1999, revenues from
licensing software and post-contract software support arrangements represented
16.3% of our total revenues. We anticipate that the proportion of our revenues
derived from license and related post-contract arrangements will decrease as we
migrate further toward our application hosting model.
Our estimates of future results are primarily affected by assumptions of
transaction volumes, pricing levels, our ability to efficiently scale with our
clients, and client retention and acquisition. These anticipated results may be
impacted by the seasonality of the travel industry.
Our expenses include operating, selling, general and administrative,
technology development, and depreciation and amortization.
- Operating expenses include salaries, benefits and related overhead,
as well as direct ticketing costs.
- Selling, general and administrative expenses include salaries,
benefits and related overhead associated with the selling and
marketing of our products and services, as well as other overhead
functions.
- Technology development expenses primarily include salaries and
salary-related costs of individuals focusing on developing and
maintaining our proprietary and leading edge technologies.
- Depreciation and amortization expenses relate to fixed assets,
goodwill and other intangibles.
RESULTS OF OPERATIONS
The following table sets forth our results of operations as a percentage of
revenues.
<TABLE>
<CAPTION>
AS A PERCENTAGE OF
REVENUES
---------------------
YEARS ENDED DECEMBER
31,
---------------------
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Revenues.................................................... 100.0% 100.0% 100.0%
----- ----- -----
Expenses:
Operating................................................. 39.6 50.9 57.1
Selling, general and administrative....................... 47.0 30.2 31.6
Technology development.................................... 14.7 16.3 10.8
Depreciation and amortization............................. 10.8 6.7 5.6
----- ----- -----
Total expenses.................................... 112.1 104.1 105.1
Operating loss.............................................. (12.1) (4.1) (5.1)
Interest expense, net....................................... 3.0 3.7 1.0
----- ----- -----
Net loss.................................................... (15.0)% (7.8)% (6.1)%
===== ===== =====
</TABLE>
18
<PAGE> 22
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
REVENUES
Revenues for the year ended December 31, 1999 were $26.6 million, an
increase of 86.1% over revenues of $14.3 million for the year ended December 31,
1998. This increase was primarily attributable to an increase in our transaction
volume, which rose from 2.4 million transactions in 1998 to 6.8 million in 1999,
an increase of 183.3%. Our transaction volume increased because of our expanding
client base and the overall growth of the online travel market, which was offset
to some degree by a decrease in revenue by transaction.
OPERATING EXPENSES
Operating expenses for the year ended December 31, 1999 were $15.2 million
compared to $7.3 million for the year ended December 31, 1998. Of this increase,
$1.9 million was due to the renegotiation of a contract with a client in which
we assumed certain expenses previously borne by the client. Salary and related
expenses increased by $4.6 million due to an increase in the number of employees
that were necessary to meet the demands of rapid growth in transaction volume.
Office rent, telephone costs and other services increased by $1.0 million due to
the additional space and infrastructure necessary to support the increase in the
number of employees.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the year ended December
31, 1999 were $8.4 million compared to $4.3 million for the year ended December
31, 1998. Salaries and related expenses increased by $2.9 million. Included in
salary and related expenses in 1999 was a non-recurring, non-cash charge for
compensation expense of $1.5 million relating to profit participation units sold
to certain key employees during 1998 and 1999. In addition, we had non-recurring
costs of $760,000 in 1999 related to our reorganization and the hiring of a key
executive.
TECHNOLOGY DEVELOPMENT EXPENSES
Technology development expenses were $2.9 million for the year ended
December 31, 1999 compared to $2.3 million for the year ended December 31, 1998.
This increase was primarily related to additional costs incurred in the
development and maintenance of our technology infrastructure and services.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization for the year ended December 31, 1999 was $1.5
million compared to $1.0 million for the year ended December 31, 1998. The
increase was due to additional purchases of computers and technology related
equipment, leasehold improvements and the amortization of goodwill associated
with the purchase of International Software Products. Goodwill and other
intangibles relating to this purchase totaled $7.6 million and resulted in
amortization expense of $182,000 during 1999, or 34.5% of the total increase.
OPERATING LOSS
The operating loss for the year ended December 31, 1999 was $1.4 million,
an increase of 134.9% over the operating loss of $585,000 for the year ended
December 31, 1998. This increase in operating loss was primarily attributable to
non-recurring compensation and reorganization expenses. If these non-recurring
expenses of $2.2 million had not occurred we would have generated operating
income in 1999 of $871,000.
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<PAGE> 23
INTEREST EXPENSE, NET
Interest expense for the year ended December 31, 1999 was $269,000 compared
to $527,000 for the year ended December 31, 1998. We participated in a master
cash account sponsored by WorldTravel Partners. Interest was charged to us based
on our weighted average cash balance during the year. The decrease in interest
expense was due to a decrease in the amounts we utilized under the WorldTravel
Partners master cash account in 1999, partially offset by increases in interest
expense from the debt issued in the purchase of International Software Products
and the convertible promissory notes issued to BCD Technology S.A. and Hogg
Robinson International Benefits Limited in November 1999.
INCOME TAXES
Prior to our reorganization on November 4, 1999 we were not separately
subject to income taxes under the provisions of the Internal Revenue Code or
applicable state laws and, accordingly, did not provide for federal or state
taxes. In connection with the reorganization, we became taxable for federal and
state income tax purposes. During the period in 1999 in which we were a taxable
entity, we had a loss which resulted in no federal or state income taxes being
provided in the consolidated statement of loss.
NET LOSS
The net loss for the year ended December 31, 1999 was $1.6 million compared
to $1.1 million for the year ended December 31, 1998. The net loss in 1999 was
primarily attributable to non-recurring compensation and reorganization
expenses. If these non-recurring expenses of $2.2 million had not occurred, we
would have generated pre-tax profits of $603,000 in 1999.
YEARS ENDED DECEMBER 31, 1998 AND 1997
REVENUES
Revenues for the year ended December 31, 1998 were $14.3 million, an
increase of 72.1% over revenues of $8.3 million for the year ended December 31,
1997. This increase was primarily attributable to an increase in our transaction
volume, which rose from 1.5 million in 1997 to 2.4 million in 1998, an increase
of 56.6%.
OPERATING EXPENSES
Operating expenses for the year ended December 31, 1998 were $7.3 million
compared to $3.3 million for the year ended December 31, 1997. Salary and
related expenses increased by $2.8 million and office rent, telephone costs and
other services increased by $504,000. These increases were directly attributable
to the increase in employees and the accompanying increases in space and
infrastructure required to meet the demands of rapid growth in transaction
volume.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the year ended December
31, 1998 were $4.3 million compared to $3.9 million for the year ended December
31, 1997. This increase was primarily due to an increase in our costs associated
with the expansion of our sales force and administrative staff.
TECHNOLOGY DEVELOPMENT EXPENSES
Technology development expenses were $2.3 million for the year ended
December 31, 1998 compared to $1.2 million for the year ended December 31, 1997.
This increase was primarily related to additional costs incurred in the
development and maintenance of our technology infrastructure and services.
20
<PAGE> 24
OPERATING LOSS
The operating loss for the fiscal year ended December 31, 1998 was
$585,000, a decrease of 41.6% over the operating loss of $1.0 million for the
year ended December 31, 1997. This decrease in operating loss was primarily
attributable to non-recurring compensation. If these non-recurring expenses of
$190,000 had not occurred, we would have generated operating loss of $395,000 in
1998.
INTEREST EXPENSE, NET
Interest expense for the year ended December 31, 1998 was $527,000 compared
to $247,000 for the year ended December 31, 1997. We participated in a master
cash account that was sponsored by WorldTravel Partners. Interest was charged to
us based on our weighted average cash balance during the year. The increase in
interest expense was due to an increase in the amounts we utilized under the
WorldTravel Partners master cash account in 1998.
INCOME TAXES
During the years 1998 and 1997 we were not separately subject to income
taxes under the provisions of the Internal Revenue Code or applicable state laws
because we were organized as a limited liability company and, accordingly, did
not provide for federal or state taxes.
NET LOSS
The net loss for the year ended December 31, 1998 was $1.1 million compared
to $1.2 million for the year ended December 31, 1997.
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth our unaudited quarterly results of
operations for our eight quarters ended December 31, 1999. We have prepared this
information on the same basis as the audited consolidated financial statements
appearing elsewhere in this prospectus and all necessary adjustments (consisting
only of normal recurring adjustments) have been included in the amounts stated
below to present fairly the unaudited quarterly results. Our operating results
for any quarter are not necessarily indicative of the results for any future
period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------
MAR. 31, JUN. 30, SEP. 30, DEC. 31, MAR. 31, JUN. 30, SEP. 30, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............................. $2,610 $2,950 $3,698 $5,023 $5,295 $6,057 $6,134 $9,087
------ ------ ------ ------ ------ ------ ------ ------
Expenses:
Operating.......................... 1,374 1,583 1,797 2,516 2,942 3,514 3,566 5,157
Selling, general and
administrative................... 977 1,033 1,038 1,269 1,464 1,806 2,015 3,122
Technology development............. 460 538 548 782 649 763 765 706
Depreciation and amortization...... 229 231 245 246 199 290 379 610
------ ------ ------ ------ ------ ------ ------ ------
Total expenses.............. 3,040 3,385 3,628 4,813 5,254 6,373 6,725 9,595
------ ------ ------ ------ ------ ------ ------ ------
Operating (loss) income.............. (430) (435) 70 210 41 (316) (591) (508)
Interest expense, net................ 96 104 129 198 103 9 0 157
------ ------ ------ ------ ------ ------ ------ ------
Net (loss).................. $ (526) $ (539) $ (59) $ 12 $ (62) $ (325) $ (591) $ (665)
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
21
<PAGE> 25
<TABLE>
<CAPTION>
AS A PERCENTAGE OF REVENUES
-------------------------------------------------------------------------------------
MAR. 31, JUN. 30, SEP. 30 DEC. 31 MAR. 31, JUN. 30, SEP. 30, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------ ------ ------ ------ ------
Expenses:
Operating.......................... 52.7 53.7 48.6 50.1 55.6 58.0 58.1 56.7
Selling, general and
administrative................... 37.4 35.0 28.1 25.3 27.6 29.8 32.9 34.4
Technology development............. 17.6 18.2 14.8 15.6 12.3 12.6 12.5 7.8
Depreciation and amortization...... 8.8 7.8 6.6 4.9 3.8 4.8 6.2 6.7
------ ------ ------ ------ ------ ------ ------ ------
Total expenses.............. 116.5 114.7 98.1 95.9 99.3 105.2 109.7 105.6
------ ------ ------ ------ ------ ------ ------ ------
Operating (loss) income.............. (16.5) (14.7) 1.9 4.1 0.7 (5.2) (9.7) (5.6)
Interest expense, net................ 3.7 3.5 3.5 3.9 1.9 0.1 0 1.7
------ ------ ------ ------ ------ ------ ------ ------
Net loss.................... (20.2)% (18.2)% (1.6)% 0.2% (1.2)% (5.3)% (9.7)% (7.3)%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, we financed our operations through a master cash account
sponsored by WorldTravel Partners. WorldTravel Partners will not continue to be
a source of liquidity for us following this offering. We had negative working
capital of $2.5 million at December 31, 1999. We anticipate that our liquidity
needs over the next 12 months will be met with proceeds generated from this
offering. We are currently negotiating with several financial institutions to
obtain a credit facility.
Our operating activities provided net cash in 1999 and 1998 of $2.0 million
and $616,000, respectively, while during 1997 our operating activities used net
cash of $1.4 million. The net cash provided by operating activities for 1999 was
the result of an increase in accounts payable of $1.0 million, an increase in
deferred revenues of $1.0 million and an increase in customer deposits of $3.8
million. These were partially offset by a net loss of $1.6 million and an
increase in accounts receivable of $4.8 million. Net cash provided by operating
activities in 1998 was the result of an increase in accounts payable of $713,000
and an increase in customer deposits of $175,000, offset by an increase in
accounts receivable of $365,000. Net cash used in operating activities in 1997
was the result of a net loss of $1.2 million and an increase in accounts
receivable of $1.4 million, partially offset by depreciation expense of $900,000
and increases in accounts payable and accrued liabilities of $284,000.
Our investing activities used net cash in 1999, 1998 and 1997 of $6.6
million, $1.7 million and $1.7 million, respectively. Net cash used in investing
activities in 1999 was the result of fixed asset purchases, capitalized software
costs, leasehold improvements and the purchase of International Software
Products for net cash consideration of $1.5 million. Net cash used in investing
activities in 1998 and 1997 related to fixed asset purchases, capitalized
software costs and leasehold improvements. At December 31, 1999, we had no
material commitments for capital expenditures.
Our financing activities provided net cash in 1999, 1998 and 1997 of $4.6
million, $1.1 million and $1.2 million, respectively. Net cash provided by
financing activities in 1999 was the result of proceeds received from the
issuance of debt of $10.0 million, partially offset by payments to affiliates of
$1.9 million, a repayment of debt of $1.5 million and the distribution of
capital of $2.0 million to members of our predecessor, WorldTravel Technologies
LLC. Net cash provided by financing activities for 1998 and 1997 resulted from
net proceeds received from affiliates in both years.
Convertible long-term debt consisted of the following at December 31, 1999:
<TABLE>
<S> <C>
Convertible promissory note to BCD Technology S.A., a
shareholder, interest at 5.72%, principal and interest due
November 5, 2001.......................................... $ 8,000,000
Convertible promissory note to Hogg Robinson International
Benefits Limited, a shareholder, interest at 5.72%,
principal and interest due November 5, 2001............... 2,000,000
-----------
Total convertible long-term debt.................. $10,000,000
===========
</TABLE>
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<PAGE> 26
The outstanding balance, principal and interest of each convertible
promissory note is convertible into our common stock at the option of the holder
on the due date and automatically converts immediately prior to an underwritten
initial public offering or immediately upon the conversion of the other note.
The number of shares issuable upon conversion increases as the interest accrued
on the notes increases. If the offering had been consummated on December 31,
1999, we would have issued an aggregate of 842,670 shares of common stock upon
conversion of the notes.
We also have four separate promissory notes payable to the former owners of
International Software Products. Interest accrues at prime with all principal
and interest due on November 4, 2002.
We do not have any derivative financial instruments, and all of our
long-term debt, other than the notes issued to the former owners of
International Software Products, is at fixed rates. Therefore, we have not been
exposed to material near-term adverse changes in interest rates. However, we may
be exposed to such adverse changes if we incur variable rate debt or hold
derivative financial instruments in the future.
We believe that the net proceeds of this offering will be sufficient to
satisfy our cash requirements for at least the next 12 months. However, if we
expand more rapidly than currently anticipated, if our working capital needs
exceed our current expectations or if we make acquisitions, we may need to raise
additional capital from equity or debt sources. We cannot be sure that we will
be able to obtain the additional financing necessary to satisfy these expanded
cash requirements or to implement an expanded growth strategy on acceptable
terms or at all. If we cannot obtain this financing on terms acceptable to us,
we may be forced to curtail some planned business expansion and may be unable to
fund our ongoing operations.
YEAR 2000 ISSUES
Year 2000 issues are the result of many older computer systems using two
digits rather than four digits to define the applicable year. This could result
in systems failure or miscalculation when our systems are processing
date-related data. If this were to happen, we would experience disruption of our
business operations including a temporary inability for us to process
transactions.
Most of our current systems were developed in-house and were programmed for
Year 2000 compliance or were purchased from third party vendors who represented
to us that the systems were Year 2000 compliant. To date, the incremental cost
incurred relating to Year 2000 issues have been minimal.
As of February 18, 2000, we have not detected any problems with our systems
and/or software either internally or externally that will or could interrupt our
business. We have not had any problems with either our clients or third party
vendors experiencing Year 2000 issues that would have a material effect on our
business, results of operations or financial condition. However, there is no
guarantee that Year 2000 issues will not in the future have a material adverse
effect on our business, results of operations, or financial condition.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
The Statement, as amended in June 1999 by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the Effective Date
of FASB Statement No. 133," is effective for fiscal years beginning after June
15, 2000. We have evaluated the impact of adopting SFAS No. 133 and, based on
our current business activities, believe that it will not have a material effect
on our financial statements.
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<PAGE> 27
BUSINESS
BUSINESS OVERVIEW
We are the leading independent provider of transaction fulfillment,
customer support, technology services and data management services for the
online travel industry. Our sophisticated technology infrastructure and high
quality customer support capabilities enable our clients to provide online
travel services more efficiently and effectively. Our services enable our online
clients to focus on building their brand awareness and customer loyalty while
entrusting us with responsibility for their vital transaction fulfillment and
customer support functions. We offer a broad range of services such as:
- transaction fulfillment services, including quality control,
ticketing, document distribution, transaction accounting and
management reporting;
- customer support services, including travel and technical support
through e-mail and telephone;
- technology services, including online travel reservations,
point-of-sale support, travel management and automated quality
control; and
- data management services, including data consolidation,
transformation, reporting and analysis.
Our clients utilize our services either individually or as a comprehensive,
integrated end-to-end solution. The flexibility of our service delivery
eliminates the need for our clients to spend valuable resources to build and
manage high quality in-house capabilities as their businesses grow.
We provide services to corporate travel departments, travel agencies and
companies in the business-to-consumer and business-to-business online travel
markets. Our current clients include:
- travel-specific websites such as Expedia;
- travel suppliers selling their inventories directly through their own
websites such as Continental Airlines and US Airways;
- traditional travel agencies with an online presence such as Maritz
Travel Company;
- large corporate travel agencies such as WorldTravel Partners; and
- corporate travel departments in organizations such as Hewlett-Packard
and The Seagram Company Ltd.
Prior to January 1997, we conducted our business as a division and
subsidiary of WorldTravel Partners, the third largest corporate travel agency in
the U.S. In January 1997, our business was separated from WorldTravel Partners
and transferred into a separate business organization. Since that time, we have
experienced significant growth in the volume of online tickets fulfilled and
revenue recorded. For the fourth quarter of 1999, we processed 1.8 million
transactions, an increase of 162.2% over the 675,000 transactions processed in
the fourth quarter of 1998. In 1999, our revenues were $26.6 million,
representing a compound annual growth rate of 79.0% over revenues of $8.3
million in 1997. In 1999, our net cash flow from operations was $2.0 million
compared to a negative $1.4 million in 1997.
INDUSTRY BACKGROUND
GROWTH OF THE INTERNET
The Internet is dramatically changing the way consumers and businesses
communicate, share information and conduct commerce. The Internet's broad reach
and easy access create a favorable environment for new online marketplaces and
is altering the organization and dynamics of many
24
<PAGE> 28
existing industries. In particular, markets characterized by either the presence
of large numbers of geographically dispersed buyers and sellers or purchasing
decisions involving large amounts of information provide opportunities for
online commerce. Businesses leveraging the Internet create competitive
advantages by reengineering complex processes to lower costs and improve
efficiencies. We believe that the worldwide travel industry is especially
well-suited to benefit from increased Internet and electronic commerce adoption.
OVERVIEW OF THE TRAVEL INDUSTRY
The travel industry is very large in terms of both number of passengers and
dollars spent. The U.S. Department of Transportation estimates that there will
be 640 million air passengers carried by U.S. airlines in 2000, with this figure
increasing to 931 million air passengers by 2010. The World Travel and Tourism
Council estimates that spending on travel and tourism worldwide will reach $3.8
trillion in 2000 and $6.8 trillion in 2010.
The travel industry is fragmented and consists of numerous participants
serving diverse customer segments. These participants include travel suppliers
(air, hotel and car rental), travel agencies, corporate travel departments,
multiple computer reservation systems, service centers and credit card
companies. Each of these participants must meet strategic challenges in order to
remain competitive in its business. The complexities and inefficiencies present
throughout the transaction fulfillment, customer support and data management
functions make it difficult to address these challenges. The following table
outlines some of the strategic challenges of the key market participants in the
travel industry:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
KEY MARKET PARTICIPANTS STRATEGIC CHALLENGES
- ------------------------------------------------------------------------------------
<S> <C>
- Reduce distribution costs
Travel Suppliers (air, hotel and car - Maximize revenue and optimize capacity
rental)
- Enhance customer loyalty through
personalization
- Utilize improved data analysis
techniques to:
- reduce transaction fees with travel
agencies
Corporate Travel Departments - negotiate improved rates with travel
suppliers
- Ensure compliance with corporate travel
policies
- Improve service for business travelers
- Respond to reduced commissions from
travel suppliers by reducing
transaction costs
Travel Agencies - Provide cost-saving data management
services
- Develop personalized products and
services
</TABLE>
We believe travel industry participants are seeking new approaches to
address their strategic challenges. The Internet and related technologies are
enabling industry participants to develop and utilize solutions that:
- reduce costs;
- create new means of interaction;
25
<PAGE> 29
- provide real-time updating of pricing and availability;
- consolidate multiple sources of information;
- personalize customer support and enhance customer relationships;
- enable targeted marketing of excess inventory; and
- streamline the travel transaction process.
GROWTH OF THE ONLINE TRAVEL INDUSTRY
The online travel industry consists of two primary markets:
business-to-consumer and business-to-business. The business-to-consumer market
consists primarily of individuals and small businesses purchasing air, hotel and
car rental services. The limited need for customer interaction and the uniform
nature of these transactions makes automation desirable. This market also
includes purchases of pre-packaged tours and cruises which are more complex to
process and require more frequent and time-consuming customer interactions.
The business-to-consumer market is large and growing rapidly. Forrester
Research estimates that travel is one of the largest online retail categories
with users purchasing approximately $14.0 billion in air, hotel and car rental
services through travel-related websites in 2000. Forrester Research also
estimates that these purchases will grow at a compound annual growth rate of 28%
to $29.4 billion in 2003. Over the past several years, numerous online travel
service providers have emerged, including several well-capitalized companies
that are attracting millions of visitors annually. Online travel service
providers in the business-to-consumer market include:
- travel-specific websites such as Expedia and Travelocity;
- broader, multi-category websites offering travel services such as
Yahoo!;
- travel suppliers selling their inventories directly through their own
websites such as Continental Airlines and Delta Air Lines;
- traditional travel agencies such as Maritz Travel Company; and
- retail companies establishing an online presence such as Wal-Mart.
In the business-to-business market, corporations have typically purchased
air, hotel and car rental services directly from travel suppliers or through
managed travel service providers. Although usage rates are relatively low, the
business-to-business online travel market is expected to grow even faster than
the business-to-consumer market as corporations increasingly look to online
travel service providers for their travel needs. Forrester Research expects
online business travel expenditures to grow at a compounded annual growth rate
of 56% from $10 billion in 2000 to $38 billion in 2003. Forrester Research
estimates that travel will be the second largest spending category for online
business-to-business services in 2000, representing approximately 23% of this
market. The growth of this market is being driven by corporations seeking
solutions that reduce business travel expenditures.
Online travel service providers in this market include:
- corporations with intranets allowing for direct reservations by
internal travel departments;
- traditional corporate travel agencies servicing customers through
websites such as Maritz Travel Company and WorldTravel Partners; and
- third-party online travel reservation providers such as SABRE through
its BTS product and GetThere.com.
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<PAGE> 30
EMERGENCE OF OUTSOURCING
The primary focus of online travel service providers is to build market
share by creating brand awareness, delivering compelling content, building
customer loyalty and developing strategic relationships. In order to focus on
these critical objectives while providing the highest level of customer
satisfaction, many online travel service providers are considering outsourcing
their vital transaction fulfillment and customer support functions. The key
benefits of outsourcing for online travel service providers may include:
- higher customer satisfaction through quality customer support;
- lower costs through economies of scale; and
- greater flexibility to rapidly scale operations.
OUR OPPORTUNITY
Complexities and inefficiencies within the travel industry, growth in the
online travel market and the trend toward outsourcing create a significant
opportunity for an independent provider of transaction fulfillment, customer
support, technology services and data management services. We believe that we
are well positioned to capitalize on this opportunity by:
- providing services at a significant cost savings over in-house
solutions while maintaining high customer support levels;
- capturing market share and leveraging the related economies of scale
to enhance our low-cost leadership;
- maintaining and enhancing a scalable infrastructure through the use
of proprietary technology and experience; and
- offering a flexible, comprehensive suite of services necessary to
penetrate multiple segments of the online travel market.
OUR SOLUTION
We are the leading independent provider of transaction fulfillment,
customer support, technology services and data management services for the
online travel industry. Our services enable our clients to conduct online travel
commerce more efficiently and effectively. We enable our clients to focus on
their brand awareness and customer loyalty while entrusting us with
responsibility for their vital transaction fulfillment and customer support
functions.
27
<PAGE> 31
We offer a comprehensive suite of services including:
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------
SERVICES DESCRIPTION REPRESENTATIVE CLIENTS
- ---------------------------------------------------------------------------------------
Quality control Expedia
Ticketing Continental Airlines
Transaction Fulfillment Document distribution US Airways
Transaction accounting
Management reporting
- ---------------------------------------------------------------------------------------
Travel and technical Expedia
Customer Support support through telephone Continental Airlines
and e-mail US Airways
- ---------------------------------------------------------------------------------------
Online travel Maritz Travel Company
reservations WorldTravel Partners
Technology Services Point-of-sale support WORLDSPAN
Travel management U.S. Department of Transportation
Automated quality control
- ---------------------------------------------------------------------------------------
Data consolidation Hewlett-Packard
Data Management Data transformation The Seagram Company Ltd.
Services Data reporting
Data analysis
- ---------------------------------------------------------------------------------------
</TABLE>
We believe our clients derive the following benefits from our services:
HIGH QUALITY CUSTOMER SUPPORT
We provide high quality customer support services that enable our clients
to achieve significant cost savings while enhancing customer satisfaction
levels. Our ability to recruit, train and retain quality customer support
personnel eliminates the need for our clients to spend valuable resources to
build and manage high quality in-house customer support capabilities. Our
extensive experience allows us to anticipate our clients' needs to help them
develop more effective and efficient means of interacting with their customers.
For example, we are currently seeking new ways to improve our clients'
interactions with their customers by using travel transaction and customer data
to customize ticket processing and promotional efforts. We also continually
evaluate new means to enhance our service levels and regularly monitor our
performance against defined service metrics.
LOW COST PROVIDER
Our economies of scale and sophisticated technology allow us to provide
high quality services at significant savings compared to in-house alternatives.
In addition, we continually seek to lower costs for our clients by further
automating and refining key fulfillment and customer support functions. Since
1997, we have decreased our fulfillment and customer support cost per
transaction by 36.5%. This cost reduction has been a key driver in both
attracting new clients and increasing our operating income margins.
COMPREHENSIVE, FLEXIBLE SERVICES
We provide our clients with access to a broad range of transaction
fulfillment, customer support, technology services and data management services.
Our comprehensive suite of services eliminates the need for our clients to use
valuable management time and resources to coordinate these services from
different providers. The flexibility of our service delivery provides clients
with the option of purchasing services separately or as a comprehensive,
integrated end-to-end solution.
Furthermore, as our clients' system requirements expand or change, we can
respond to their needs because our technology is compatible with all major
computer reservation systems, and our fully-automated quality control system is
compatible with all major electronic booking applications.
28
<PAGE> 32
We design our services to scale along with our clients' businesses to enable us
to remain a reliable outsourcing partner.
LEADING EDGE PROCESSES ENABLED BY PROPRIETARY TECHNOLOGY
We have developed leading edge processes and proprietary technology that
are essential to providing high quality customer support at a low cost. These
processes include document tracking, e-mail management, call tracking and
quality control. To automate these processes, we developed proprietary software
including CoRRe, Ticket Partner and Message Partner. Our technology enhances the
reliability, productivity and scalability of our operations along with our
ability to rapidly process large transaction volumes. Using our technology and
expertise, we have developed best practices that we can rapidly replicate in
each of our facilities, thereby ensuring a consistent level of high quality
service for all of our clients.
OUR STRATEGY
We seek to enhance our position as the leading independent provider of
transaction fulfillment, customer support, technology services and data
management services for the online travel industry. The key elements of our
strategy are as follows:
INCREASE OUR MARKET LEADERSHIP POSITION
Our clients include leading online travel service providers such as
Expedia, Continental Airlines, and US Airways. In 1999, we fulfilled $748.8
million in online airline tickets representing approximately 21% of the $3.5
billion in airline tickets purchased online according to Gomez Advisors.
We intend to enhance our market leadership position by growing with our
industry-leading clients as well as targeting new clients that process large
volumes of tickets in-house. While we will continue to build our sales and
marketing capabilities, we also intend to utilize our strong client base to
validate our outsourcing services as an industry best practice. We expect that
the rapidly increasing volume of tickets from existing and new customers will
allow us to continue to build economies of scale, thereby maintaining our high
quality, low cost leadership.
PENETRATE MULTIPLE ONLINE TRAVEL MARKET SEGMENTS
We will focus on further penetrating the business-to-consumer and
business-to-business online travel markets. In the business-to-consumer segment,
we primarily target the online travel service providers and travel suppliers'
websites, as well as other traditional travel agencies and corporations that are
selling a significant amount of tickets online. To win new accounts in the
business-to-consumer segment, we plan to demonstrate our cost and performance
advantages, as well as leverage our existing relationships with online travel
service providers. We also expect to selectively target opportunities within the
pre-packaged tours and cruises segment.
In the business-to-business segment, we primarily target large, traditional
travel agencies and corporations. Potential business-to-business clients are
seeking a service provider that can implement applications for corporate
reservations, quality control and data consolidation, as well as an integrated
transaction fulfillment and customer support solution. We intend to win new
accounts in the business-to-business market by leveraging our existing
relationships with traditional travel agencies, corporations and industry
consultants to promote the adoption of our flexible, low cost services.
EXPAND EXISTING CLIENT RELATIONSHIPS
We believe that we can expand our relationships with existing clients by
promoting our comprehensive suite of services. Many of our clients utilize only
a limited portion of our services.
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Most of these clients are corporations and traditional travel agencies that are
not utilizing our transaction fulfillment or customer support services. We plan
to demonstrate to our existing clients the strategic advantages of outsourcing a
broad range of travel transaction fulfillment, customer support, technology
services and data management services.
ENHANCE OUR TECHNOLOGY INFRASTRUCTURE AND OPERATIONAL PROCESSES
We plan to accelerate our investment in technology infrastructure and
refine our operational processes. This strategy will enhance our ability to
scale our business, implement new service features and reduce costs by:
- installing automated distribution processing machines to further
automate ticket handling and mailing;
- implementing new technology such as real-time chat and next
generation telephony to enhance our communications systems;
- implementing new processes to assist our clients with demand
forecasting; and
- providing our clients with real-time access to their customer and
transaction data.
EXPAND INTERNATIONAL PRESENCE
In order to expand our international presence, we intend to pursue
strategic alliances with international travel agencies, industry consortia,
major travel suppliers and other complementary travel service companies. In
addition, we plan to expand with our existing clients as they enter
international markets. As we enter international markets, we will continue to
draw upon our experience with technology and operational processes while
tailoring our services to the specific needs of our clients in each local
market. We recently formed a joint venture with Hogg Robinson plc in the United
Kingdom to provide fulfillment, customer support and technology services in
certain European and Scandanavian countries.
OUR SERVICES
We provide a flexible and comprehensive suite of services including
transaction fulfillment, customer support, technology services and data
management for the online travel industry. We offer our services separately or
as a comprehensive, integrated end-to-end solution. Our services include the
following:
TRANSACTION FULFILLMENT SERVICES
Transaction fulfillment services include quality control, ticketing,
document distribution, transaction accounting and management reporting for
online travel transactions. Utilizing our proprietary and other leading edge
technologies, we streamline each step of the fulfillment process through
automation. Our clients obtain the following advantages from our transaction
fulfillment services:
- rapid and highly accurate ticket fulfillment;
- reduction of ticket fulfillment costs; and
- scalable fulfillment capabilities without significant capital
expenditures.
CUSTOMER SUPPORT SERVICES
Customer support services include processing reservation changes and
providing customer assistance and technical support through telephone and
e-mail. We provide these services 24 hours a day, seven days a week through our
highly-trained customer support employees. We have developed proprietary
technologies that enhance the quality and efficiency of our customer support
services, including Message Partner and Ticket Partner. Message Partner is a
unique e-mail
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management interface that allows us to efficiently manage, respond to and
maintain records of large volumes of customer e-mail. Message Partner tracks and
routes e-mail to appropriate personnel and provides easy access to a database of
prepared responses that are customized to comply with each client's guidelines
and travel policies. Ticket Partner provides instant access to relevant
transaction information needed to efficiently respond to customer inquiries.
These technologies enable us to provide our clients with a comprehensive record
of the nature and level of their customers' contact activity. Our clients obtain
the following advantages from our customer support services:
- high quality, reliable customer support;
- comprehensive customer data reporting;
- scalable customer support capabilities without significant capital
expenditures; and
- immediate access to our well-trained customer support and technical
personnel.
TECHNOLOGY SERVICES
Technology services include online travel reservations, point-of-sale
support, travel management and automated quality control. Our technology
services are supported by two key proprietary technologies: ResAssist and CoRRe.
ResAssist is an online travel booking application that enables our clients
to make corporate travel reservations easily and efficiently. ResAssist provides
our clients the following benefits:
- user-friendly interface with low-fare search capability and 24 hours
a day, seven days a week availability;
- compatibility with each of the four major computer reservation
systems (WORLDSPAN, SABRE, Galileo and Amadeus);
- ability to easily change, update and enforce corporate travel
policies; and
- cost savings through automation of the reservation process.
CoRRe is a fully-automated quality control system that checks each
ticketing transaction for accuracy and compliance with customers' travel
preferences. CoRRe has the capability to conduct over 300 quality control checks
per ticketing transaction. CoRRe provides our clients the following benefits:
- low cost quality control through process automation;
- flexibility to quickly modify travel policies;
- ability to rapidly and efficiently add capacity to accommodate
changing transaction volumes; and
- compatibility with each of the four major computer reservation
systems and all major booking applications.
DATA MANAGEMENT SERVICES
We offer our clients data consolidation, transformation, reporting and
analysis services. We consolidate our clients' worldwide travel data from
disparate sources into a single convenient format for reporting and analysis.
Our data management services provide our clients with the following benefits:
- rapid, cost-effective global travel data collection;
- flexible data consolidation and transformation;
- customized data reporting; and
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- travel procurement cost reduction through data analysis.
OUR CLIENTS
We provide transaction fulfillment, customer support, technology services
and data management services to a broad range of travel industry participants.
Some of our representative clients are:
<TABLE>
<CAPTION>
TRAVEL AGENCIES AIRLINES CORPORATE/GOVERNMENT
--------------- -------- --------------------
<S> <C> <C>
Expedia Continental Airlines EDS
Maritz Travel Company US Airways Hewlett-Packard
Travel and Transport The Seagram Company Ltd.
WorldTravel Partners U.S. Department of Transportation
</TABLE>
STRATEGIC RELATIONSHIPS
We establish and maintain strategic relationships with key participants in
the travel industry to promote our services and increase our market leadership
position. To date, we have established the following strategic relationships:
- WORLDTRAVEL PARTNERS. WorldTravel Partners is the third largest
corporate travel management firm in the U.S. and is controlled by our
largest shareholder. We provide our services to WorldTravel Partners
and certain of its joint venture partners, franchisees and corporate
customers. In connection with these relationships, WorldTravel
Partners assists us in marketing our services to air, hotel and car
rental providers.
- HOGG ROBINSON PLC. Hogg Robinson is one of our shareholders and a
joint venture partner. Through our joint venture with Hogg Robinson,
we intend to market and offer our transaction fulfillment, customer
support and technology services in certain European and Scandanavian
countries.
- BUSINESS TRAVEL INTERNATIONAL (BTI). BTI is a travel agency alliance
with over 70 members worldwide, including WorldTravel Partners and
Hogg Robinson. Because of our relationship with WorldTravel Partners
and Hogg Robinson, we believe we can market our services more
effectively to other BTI member firms.
TECHNOLOGY
We utilize proprietary and other leading edge technologies to automate
transaction fulfillment and customer support functions. Our technology enables
us to offer our clients services that allow them to conduct their online travel
commerce more efficiently. In addition, our proprietary technology is compatible
with each of the four major computer reservation systems (WORLDSPAN, SABRE,
Galileo and Amadeus), and CoRRe is compatible with all major electronic booking
applications. Our technology has the capacity to rapidly process large
transaction volumes and scale with our clients' businesses. We believe that our
technology helps us maintain and enhance the level of transaction fulfillment
and customer support services we provide for our clients.
We develop our technology using an object-oriented architecture. Our core
components are communications, computer reservation system support, database
management and Internet or desktop applications. Our object-oriented
architecture allows us to make improvements in one component without disrupting
the entire application. We can also utilize existing components to create new
and customized applications that offer our clients a flexible solution to meet
their online travel commerce needs.
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We offer our technology services to our clients by hosting our applications
on servers located at our facilities. Our clients access our applications
through the Internet and through existing computer reservation system
connections. By hosting our applications centrally in a highly reliable and
secure data center environment, we can efficiently initiate, upgrade, customize
and monitor the provision of our technology services such as ResAssist and CoRRe
to our clients to best meet their changing needs. Our application hosting model
enables our clients to utilize our applications quickly and easily without
investing in additional hardware or technical support personnel.
We employ technology from various leading technology companies. Our
hardware platform consists of Compaq Proliant, Dell Poweredge and DEC Alpha
servers. We use switches, hubs and routers from leading suppliers to operate our
networking infrastructure. Our customer support centers utilize advanced
switching technology and access the Internet via T-1 data communication lines.
We have combined software from leading vendors with our proprietary technology
to build a sophisticated online transaction fulfillment and customer support
system.
We maintain comprehensive security and backup systems to help us deliver
consistent and reliable service to our clients and their customers. We maintain
our databases on Compaq Proliant and DEC Alpha servers equipped with a RAID disk
storage system and also conduct backup procedures for offsite storage. We
maintain backup power supply equipment to provide constant availability to our
facilities.
SALES AND MARKETING
We market and sell our comprehensive suite of services to our clients
primarily through direct selling efforts as well as through our strategic
alliances. Our target clients include companies offering online travel services
in both the business-to-consumer and business-to-business markets. Target
clients in the business-to-consumer market include travel-specific websites,
broader multi-category websites offering travel services, travel suppliers
selling their inventories directly through their own websites, traditional
travel agencies with an online presence and retail companies that have created
an online presence. Target clients in the business-to-business market include
corporations, traditional corporate travel agencies, third-party online travel
reservation providers and online corporate travel agencies. Our sales efforts
generally focus on the chief technology officer and the officer responsible for
distribution in the business-to-consumer market and the chief financial officer,
chief technology officer, chief procurement officer and corporate travel manager
in the business-to-business market. We base our pricing on the specific services
selected by our clients and generally bill clients a flat fee per transaction.
Our marketing activities are designed to educate clients and potential
clients about the benefits of our services in the rapidly emerging online travel
industry. We are currently building a business development and client
relationship team. We plan to develop an integrated account management approach
to more effectively market our full suite of services to existing clients. We
also intend to use trade shows, seminars and conferences, direct mail, public
relations events, relationships with recognized industry analysts and our
website as part of our marketing program. We intend to manage and develop
relationships with current clients, consultants and technology partners to
assist us in marketing our services and to enhance our product development
efforts. We also expect to utilize our strategic relationships with WorldTravel
Partners and Hogg Robinson to access both their U.S. and international clients.
COMPETITION
The market for transaction fulfillment, customer support, technology
services and data management services for the online travel industry is new and
rapidly evolving, and we expect competition to intensify in the future. Although
we believe we are currently the only independent provider of a comprehensive
suite of such services for the online travel industry, we currently or may
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potentially compete with a variety of companies. Our primary competition comes
from or is anticipated to come from the following sources:
- in-house operations of prospective or existing clients;
- traditional travel service providers including travel agencies;
- operators of computer reservation systems;
- information technology service firms building customized solutions;
- teleservice companies introducing online customer support
capabilities; and
- enterprise software companies adding travel management functionality
to their products.
The principal competitive factors affecting the market for our services
include:
- customer support levels;
- price;
- flexibility to interface with multiple travel agencies and systems;
- accuracy and reliability;
- speed of fulfillment;
- time required for deployment of solutions;
- breadth of services; and
- scalability.
As the market for online travel services grows, we believe a number of
companies in the online travel service industry will increase their efforts to
develop products and services that compete with ours. It is also possible that
new competitors or alliances among our competitors and potential clients may
emerge and rapidly acquire significant market share. Our market is still
emerging, and we cannot assure you that we will be able to compete successfully
with current or future competitors.
EMPLOYEES
At January 31, 2000, we had 719 employees. We have no unionized employees.
We believe that our employee relations are satisfactory.
PROPERTIES
Our headquarters are located in Atlanta, Georgia, where we lease an
aggregate of approximately 63,000 square feet of space housing our corporate
offices and part of our transaction fulfillment and customer support services.
Our lease for 52,000 square feet of this space expires on December 31, 2001 and
our lease for the remaining approximately 11,000 square feet of this space
expires on August 14, 2002. We also lease an aggregate of approximately 9,000
square feet of property in Parkersburg, West Virginia, used for transaction
fulfillment and customer support. This lease expires in September 2004, and we
have an option to renew the lease for an additional two years. In September
1999, we entered into a lease for approximately 12,000 square feet of space in
Milton, Florida to accommodate a portion of our transaction fulfillment and
customer support services. This lease is scheduled to expire on August 31, 2002,
with an option to renew for up to an additional four years. We have also leased
approximately 20,000 square feet of office space in Dallas, Texas to accommodate
a portion of our transaction fulfillment, customer support and technology
services. The lease for the property in Dallas is scheduled to expire on
December 31, 2002. We lease approximately 6,000 square feet of space in McLean,
Virginia pursuant to two
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<PAGE> 38
agreements to accommodate our data management services. These leases expire on
January 31, 2002.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
We are constantly developing new technology and enhancing existing
proprietary technology. We have no patents. We primarily rely on a combination
of copyrights, trade secrets, confidential procedures and contractual provisions
to protect our technology. Despite these protections, it may be possible for
unauthorized parties to copy, obtain or use certain portions of our proprietary
technology. Any misappropriation of our intellectual property could have a
material adverse effect on our competitive position, although we believe that
protection of proprietary rights is less significant to our business than the
continued pursuit of our operating strategies and other factors.
We have registered TTG (services), Travel Technologies Group, CRS Screen
Highlighter and CoRRe as U.S. trademarks, and applications to register TRX, OFS
Online Fulfillment Services, MeetingAssist, TTG (software and related
technology), TTG Travel Technologies Group and ResAssist trademarks are pending
with the U.S. Patent and Trademark Office. There are no assurances that our
applications to register such trademarks will be successful. We have no
knowledge of any infringement or any prior claims of ownership of trademarks
that would materially adversely affect our current operations. We pursue and
intend to continue to pursue registration of our trademarks whenever possible
and to vigorously defend our proprietary rights against infringement or other
threats to the greatest extent practicable under the laws of the U.S. and other
countries.
GOVERNMENT REGULATION
The laws and regulations applicable to the travel industry affect us and
our clients. We must comply with laws and regulations relating to the sale and
fulfillment of travel services. In addition, many of our clients and computer
reservation systems providers are heavily regulated by the U.S. and other
governments. Our services are indirectly affected by regulatory and legal
uncertainties affecting the businesses of our clients and computer reservation
systems providers.
We are subject to federal regulations prohibiting unfair and deceptive
practices. In addition, federal regulations concerning the display and
presentation of information currently applicable to airline booking services, as
well as other laws and regulations aimed at protecting customers accessing
online or other travel services, could be extended to us in the future. In
certain states, we are required to register as a seller of travel, comply with
certain disclosure requirements and participate in the state's restitution fund.
We must also comply with laws and regulations applicable to online commerce
and businesses in general. Currently, few laws and regulations directly apply to
the Internet and commercial online services. Moreover, there is currently great
uncertainty about whether or how existing laws governing issues such as property
ownership, sales and other taxes, libel and personal privacy apply to the
Internet and commercial online services. It is possible that laws and
regulations may be adopted to address these and other issues. New laws or
different applications of existing laws would likely impose additional burdens
on companies conducting business online and may decrease the growth of the
Internet or commercial online services. In turn, this could decrease the demand
for our products and services or increase our cost of operations.
LEGAL PROCEEDINGS
We expect to be a party from time to time to certain routine legal
proceedings arising in the ordinary course of our business. Although we are not
currently involved in any litigation that will have a material adverse effect on
our financial condition and results of operations, we cannot accurately predict
the outcome of any such proceedings in the future.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The names, ages and positions of our executive officers and directors as of
February 18, 2000 are listed below along with their business experience during
the past five years. The business address of all of our executive officers is 6
West Druid Hills Drive, Atlanta, Georgia 30329.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Norwood H. ("Trip") Davis, III............. 32 President, Chief Executive Officer and
Director
Ralph Manaker.............................. 51 Executive Vice President and General
Counsel
William J. ("Jody") Billiard............... 33 Senior Vice President of Finance and
Treasurer
David F. Fromal............................ 46 Executive Vice President, Sales and
Marketing
Scott R. Hancock........................... 47 Executive Vice President, Operations
Timothy J. Severt.......................... 36 Executive Vice President, Administration
John C. ("Jack") Alexander................. 48 Chairman of the Board
John A. Fentener van Vlissingen............ 60 Director
Gerard L. Boel............................. 44 Director
David J. C. Radcliffe...................... 46 Director
William C. Nussey.......................... 34 Director
John F. Davis, III......................... 47 Director
</TABLE>
NORWOOD H. ("TRIP") DAVIS, III joined TRX in December 1999 as our President
and Chief Executive Officer. Previously, he was the Senior Vice President and
General Manager of the Travel Industry Practice Group at iXL, Inc., a leading
provider of strategic Internet services, from February 1998 until November 1999.
Prior to this, Mr. Davis was the Chief Executive Officer and a co-founder of
Green Room Productions, a San Francisco-based leader in strategic Internet
services for the travel industry, from July 1995 until it was acquired by iXL,
Inc. in January 1998. Mr. Davis worked in the New Ventures Department for
Landmark Communications, a private media company with holdings in cable
television and local media, where he planned and implemented The Travel Channel
Online Network, an Internet travel service, from July 1994 until June 1995.
Prior to this, he was an Associate Producer with ESPN and Jobson Sailing. Mr.
Davis earned a B.A. from Dartmouth College and an M.B.A. from the Darden School
at the University of Virginia.
RALPH MANAKER joined TRX as our Executive Vice President and General
Counsel in January 2000. He serves as Co-President of WorldTravel Partners, a
position that he has held since October 1998. Prior to this, he was the
president of BTI Americas from February 1995 until it merged with WorldTravel
Partners in October 1998. Mr. Manaker co-founded USTravel in December 1986 and
served as its chief counsel and treasurer and as its President from January 1990
until February 1995. Previously, he co-founded and served as Vice President of
Sontag, Annis & Associates, a travel management consulting firm which provided
services to travel agencies, airlines, hotels and corporate travel purchasers.
Mr. Manaker is a former partner in the law firm of Birnbaum & Manaker, P.C. and
formerly was an engineering consultant with Martin Barzelay Consultants and
March Race Car Company. Mr. Manaker earned a B.S.M.E. and a J.D. with honors
from Syracuse University.
WILLIAM J. ("JODY") BILLIARD joined TRX in January 1997 as our Controller.
He has served as our Senior Vice President of Finance and Treasurer since
October 1999, and he served as our Vice President and Controller from January
1998 until October 1999. Previously, Mr. Billiard was Controller of the 1996
Olympic Games Travel Network, WorldTravel Meetings and Incentives and OFS Online
Fulfillment Services at WorldTravel Partners from September 1995 until December
1996.
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Prior to this, he was Controller at Rapha, a mental healthcare provider, from
January 1994 until September 1995. Mr. Billiard was a Senior Auditor with
Deloitte & Touche, LLC from April 1990 until January 1994. Mr. Billiard earned a
B.B.A. in accounting from Pittsburg State University and has been a Certified
Public Accountant since 1988.
DAVID F. FROMAL joined TRX in November 1999 as our Executive Vice
President, Sales and Marketing. Previously, he served as Chief Executive Officer
of JARD Technology Group, Inc., an independent consulting firm focusing on the
needs of the education technology marketplace, from April 1997 until October
1999. Prior to this, Mr. Fromal held various sales, regional management and
general management positions at American Express Company, including Senior Vice
President and General Manager of the Personal Travel Group within the Consumer
Travel Division, from September 1984 until January 1997. Mr. Fromal earned a
B.A. from the College of William and Mary.
SCOTT R. HANCOCK joined TRX in January 2000 as our Executive Vice
President, Operations. Previously, from October 1988 until December 1999, he
held various offices at Cendant Travel, Inc., including Senior Vice President
and General Manager, Vice President and General Manager for Cendant's Denver
Travel Center and Vice President and General Manager for Cendant's Nashville
Travel Center. Mr. Hancock was Vice President and General Manager for Gelco
Travel Service from October 1986 until October 1988, and for Anthony Bennett
Travel from August 1982 until October 1986. Mr. Hancock earned a B.S. in
business administration from Miami University.
TIMOTHY J. SEVERT joined TRX in February 2000 as our Executive Vice
President, Administration. He served as Executive Vice President and Chief
Administration Officer of WorldTravel Partners from January 1999 until January
2000 and as its Senior Vice President from January 1998 until December 1998. Mr.
Severt served as Vice President and Controller for WorldTravel Partners'
technology divisions from August 1993 until he became the Vice President of
Administration in December 1993. He was a senior analyst at CGR Advisors, a real
estate management company, from July 1992 until August 1993. Mr. Severt was a
Certified Public Accountant and manager in the business consulting division of
Arthur Andersen LLP from September 1986 until July 1992. Mr. Severt earned a
B.S. in business administration from the University of North Carolina.
JOHN C. ("JACK") ALEXANDER co-founded TRX and has served as our Chairman of
the Board of Directors since October 1999. Mr. Alexander also co-founded
WorldTravel Partners in 1987 and has served as its Chief Executive Officer since
its founding. He was recently named Ernst & Young's National Entrepreneur of the
Year(R) for Principle Centered Leadership(R), an award presented by the Franklin
Covey Co. Mr. Alexander has been named as one of the 25 Most Influential
Executives in the travel and hospitality industries in six of the last seven
years by Business Travel News. He was also named "Person of the Year" for 1998
for Corporate Travel by Travel Agent Magazine. Mr. Alexander earned a B.A. in
accounting from Duke University and was formerly a Certified Public Accountant
at Arthur Andersen LLP.
JOHN A. FENTENER VAN VLISSINGEN has served as a director of TRX since
October 1999. He founded BCD Holdings N.V., which operates in the financial
services and travel industries, in 1975 and has served as its Chief Executive
Officer since its founding. He is Chairman of the Board of Directors of Business
Travel International (BTI), Nemag, Park 'N Fly, WorldTravel Holland and
WorldTravel Partners and is co-founder of Noro-Moseley Partners, a venture
capital company based in Atlanta, Georgia. Mr. van Vlissingen is a director of
SHV Holdings N.V., the Mr. August Fentener van Vlissingen Foundation and the
Custodia Foundation in Paris. He served as Manager at Vlaer and Kol bankers in
Utrecht, The Netherlands from February 1969 until January 1974. Mr. van
Vlissingen is also a former partner of Pierson Heldring and Pierson bankers, a
merchant bank in Amsterdam.
GERARD L. BOEL has served as a director of TRX since October 1999. He has
served as Controller of BCD Holdings N.V. since January 1988 and as its Chief
Financial Officer since January 1993. He also serves as an officer of various
subsidiaries of BCD Holdings N.V. Mr. Boel was
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Controller of Hagemeijer N.V., an international trading company, from August
1986 until January 1988. He served in the audit division of Arthur Andersen LLP
in The Netherlands from August 1977 until August 1986, focusing primarily on
international clients. Mr. Boel became a CPA through the Dutch Institute of
Chartered Accountants (NIVRA) in 1987 after earning a Bachelor of Economics
degree from the HEAO in The Hague, The Netherlands in 1977.
DAVID J. C. RADCLIFFE has served as a director of TRX since October 1999.
He has served as the Chief Executive Officer of Hogg Robinson plc since July
1997 and as one of its directors since 1993. Mr. Radcliffe also has served as
the Chief Executive Officer of Business Travel International since 1993.
Previously, Mr. Radcliffe was the Managing Director of Hogg Robinson Business
Travel and Executive Director of Hogg Robinson plc from September 1993 until
June 1997.
WILLIAM C. NUSSEY has served as a director of TRX since January 2000. He
has served as a director of iXL, Inc. since December 1997 and as its Chief
Executive Officer and President since July 1999 and May 1998, respectively.
Previously, Mr. Nussey served as Chief Operating Officer of iXL, Inc. from May
1998 until July 1999. He served as an associate with Greylock Ventures, a
private investment firm, from June 1996 until May 1998. Mr. Nussey served as a
consultant to ON Technology, Inc. from September 1994 until May 1996. Mr. Nussey
co-founded Da Vinci Systems, Inc., a software and application design company,
and served as its Chief Executive Officer from January 1985 until its sale to ON
Technology, Inc. in August 1994. Mr. Nussey earned a B.S. degree from North
Carolina State University and an M.B.A. from Harvard Business School.
JOHN F. DAVIS, III has served as a director of TRX since January 2000. He
has served as the President and Chief Executive Officer of Pegasus Systems, Inc.
since February 1989 and as one of its directors since March 1989. Previously,
Mr. Davis was the founder, President and a Director of Advanced Telemarketing
Company, a provider of inbound and outbound telemarketing services, from May
1985 until February 1989. He was also one of the founders of 1-800-Flowers,
Limited, a company offering quality floral arrangements by telephone. Mr. Davis
earned a B.A. from Texas Christian University.
BOARD COMPOSITION
Pursuant to our Articles of Incorporation and Bylaws, the Board of
Directors of TRX is divided into three classes, with each director serving a
three-year term (after an initial term). Directors are elected to serve until
they resign or are removed, or until their successors are elected and qualified.
The directors of Class I, John F. Davis, III and Mr. Boel, hold office until the
first scheduled Annual Meeting of Shareholders following the offering. The
directors of Class II, Norwood H. Davis, III and Mr. Nussey, hold office until
the second scheduled Annual Meeting of Shareholders following the offering. The
Directors of Class III, Messrs. Alexander, Radcliffe and van Vlissingen, hold
office until the third scheduled Annual Meeting of Shareholders following the
offering. Shareholders will elect the directors of each class for three-year
terms at the appropriate succeeding Annual Meeting of Shareholders. Executive
Officers are elected by and serve at the discretion of the Board of Directors.
No family relationships exist among any of the directors or executive officers
of TRX.
BOARD OF DIRECTORS COMMITTEES
TRX has an Executive Committee, an Audit Committee and a Compensation
Committee. The Executive Committee, which consists of Norwood H. Davis, III and
Messrs. Alexander, Boel and van Vlissingen, is authorized by our Board to
exercise the power and authority of the Board of Directors in the management of
our business and affairs, provided that at least three members of the Executive
Committee must be in attendance to constitute a quorum at a meeting, and any
action by the Executive Committee requires the vote of at least three members of
the committee. The authority of the Executive Committee is subject to certain
limitations, including statutory restraints under Georgia law.
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Our Audit Committee, which consists of Messrs. Alexander, Boel and Nussey,
is responsible for nominating our independent auditors for approval by the Board
of Directors and reviews the scope, results and costs of the audits and other
services provided by our independent accountants.
Our Compensation Committee, which consists of John F. Davis, III and Mr.
Nussey, reviews and approves the compensation and benefits for our executive
officers, administers our 2000 Stock Incentive Plan and makes recommendations to
the Board of Directors regarding such matters.
BOARD COMPENSATION
Except for reimbursement for reasonable travel expenses relating to
attendance at Board meetings, our directors are not currently compensated for
their services as directors. Our Board of Directors may in the future determine
to pay our directors additional compensation for their services. Non-employee
directors are eligible to participate in our 2000 Stock Incentive Plan at the
discretion of the full Board of Directors.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation awarded to, earned by or paid
to our current Chief Executive Officer, our former Chief Executive Officer and
our only other executive officer whose total cash compensation exceeded $100,000
for the fiscal year ended December 31, 1999 (collectively, the "Named Executive
Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ AWARDS
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING
PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS
- ------------------ -------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Norwood H. Davis, III(1)................... $ 17,308 $250,000(4) $ -- --
President, Chief Executive
Officer and Director
Ralph Manaker(2)........................... -- -- -- --
Executive Vice President
and General Counsel
John C. Alexander(3)....................... -- -- -- --
Chairman of the Board
and former Chief
Executive Officer
</TABLE>
- ---------------
(1) Mr. Davis began his employment with us on December 1, 1999. His current
annual base salary is $250,000.
(2) Mr. Manaker is an employee of WorldTravel Partners. In connection with our
services arrangement with WorldTravel Partners, Mr. Manaker provided
services to us in the fiscal year ended December 31, 1999. We reimbursed
WorldTravel Partners for compensation paid to Mr. Manaker in connection with
his services provided to us in that year as part of our aggregate $1.0
million payment to WorldTravel Partners in 1999 under our services
arrangement. The amount of this payment allocable to Mr. Manaker's services
is not separably identifiable.
(3) Mr. Alexander served as our Chief Executive Officer from January 1, 1999
until November 30, 1999. We reimbursed WorldTravel Partners for compensation
paid to Mr. Alexander in connection with his services as Chief Executive
Officer during 1999 as part of our aggregate $1.0 million payment to
WorldTravel Partners in 1999 under our services arrangement. The amount of
this payment allocable to Mr. Alexander's services is not separably
identifiable.
(4) Mr. Davis was awarded a signing bonus pursuant to his employment contract
with us. This bonus was paid to Mr. Davis in January 2000.
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<PAGE> 43
OPTION GRANTS DURING FISCAL 1999
Pursuant to our employment agreement with Norwood H. Davis, III, our
President and Chief Executive Officer, we agreed to grant Mr. Davis an option to
purchase 350,000 shares of our common stock at an exercise price of $5.00 per
share. We intend to grant this option under our 2000 Stock Incentive Plan prior
to the offering. When granted, the option will be exercisable in 20% increments
on each of the first four anniversaries of the grant, with the final increment
becoming exercisable six months after the fourth anniversary of the date of the
grant. We did not grant any stock options or stock appreciation rights to any of
our Named Executive Officers in fiscal 1999. No Named Executive Officers
exercised any options during the fiscal year ended December 31, 1999. We have
not granted any stock appreciation rights.
STOCK PLANS
2000 STOCK INCENTIVE PLAN
Our 2000 Stock Incentive Plan (the "Stock Incentive Plan") was adopted by
the Board of Directors in February 2000. We have reserved a total of 1,300,000
shares of common stock for issuance under the Stock Incentive Plan. The Stock
Incentive Plan provides for the grant to our employees who are in good standing,
our nonemployee directors, our key management employees of affiliated companies,
and our consultants and advisors. Our employees are eligible for both incentive
stock options qualifying as such under the Internal Revenue Code and
nonqualified stock options, and the nonemployees are only eligible for
nonqualified stock options.
The Stock Incentive Plan is administered by the Compensation Committee of
the Board of Directors. The Compensation Committee determines to whom the
options will be granted, the option price of the shares covered by the option,
the manner in which options are exercisable and the time or times at which
options will be granted. The option price of any incentive stock option will be
the fair market value of the common stock on the date the option is granted, as
determined by the Compensation Committee. The Compensation Committee may
determine the option price of nonqualified options below fair market value.
However, the exercise price of any stock option granted to an optionee who owns
stock representing more than 10% of the voting power of our outstanding capital
stock (a "ten percent owner") must equal at least 110% of the fair market value
of the common stock on the date of grant. Payment of the exercise price must be
paid in cash or in other consideration determined by the Compensation Committee.
The Compensation Committee determines the term of options. The term of any
stock option granted under the Stock Incentive Plan may not exceed 10 years;
provided, however, that the term of an incentive stock option may not exceed
five years for ten percent owners. Unless otherwise determined by the
Compensation Committee, the expiration date of the option is the earlier of (i)
the 10 year anniversary of the date of the grant, (ii) one year after the
optionee's death or disability, (iii) immediately upon termination of employment
for cause, or (iv) 30 days after any other termination of employment. Options
granted under the Stock Incentive Plan may not be transferred by the optionee
other than by will or the laws of descent or distribution unless the
Compensation Committee approves a transfer to an immediate family member, a
family trust, or a family limited partnership.
Options granted under the Stock Incentive Plan become exercisable in 20%
increments over five years, unless otherwise specified by the Compensation
Committee in the option agreement. Options are fully exercisable upon the
optionee's death or disability. The Compensation Committee may accelerate
exercisability at any time. The Stock Incentive Plan provides that an option
must be exercised for a minimum of 100 shares, unless the total number of shares
under the option is less than 100 shares, in which case the option must be
exercised for the remainder. Upon the exercise of an option, the optionee will
be required to sign a shareholders agreement.
40
<PAGE> 44
Any unexercisable stock options will become fully exercisable upon a change
in control of TRX. A change in control includes (i) the acquisition by any
person of 50% or more of the common stock, (ii) the sale, lease, transfer,
exchange or any disposition of all or substantially all of the company's assets
or (iii) a change in the majority of the members of the Board within a
twenty-four month period.
The Board of Directors has the authority to amend or terminate the Stock
Incentive Plan as long as such action does not affect any outstanding option.
Shareholder approval is required for an amendment to increase the number of
shares reserved for the Stock Incentive Plan.
EMPLOYMENT AGREEMENT
We have entered into an employment agreement with Norwood H. Davis, III,
our President and Chief Executive Officer. Our employment agreement with Mr.
Davis provides for a three-year term of employment with successive two-year
renewal options at an annual base salary of $250,000, with a five percent salary
increase on each anniversary date of the agreement. Mr. Davis received a signing
bonus of $250,000 and is eligible for a discretionary annual bonus.
Additionally, we agreed to grant Mr. Davis options under our 2000 Stock
Incentive Plan to purchase 350,000 shares of our common stock at an exercise
price of $5.00 per share. We intend to grant this option prior to the offering.
Our employment agreement with Mr. Davis provides that contemporaneously with or
immediately prior to the offering, we will also issue Mr. Davis stock options to
purchase 150,000 shares of our common stock at an exercise price equal to our
initial public offering price per share. The employment agreement provides that
Mr. Davis is entitled to five weeks of paid vacation per year, medical benefits
and an automobile allowance in the amount of $500 per month.
Mr. Davis' employment agreement provides that upon his death or if we
discharge Mr. Davis for good cause, we will continue to pay him his base salary
up to the date of his termination. If we terminate his employment without cause
during the initial three-year term of employment, Mr. Davis will be entitled to
receive the base salary and benefits due to him for the remainder of his
three-year term of employment. If we terminate his employment without cause
during any two-year renewal option term, we will either give Mr. Davis six
months' advance notice of the termination or pay him an amount equal to six
months' salary.
Our employment agreement with Mr. Davis includes non-compete,
nonsolicitation and confidentiality provisions that restricts him from competing
against us in a certain manner, soliciting our customers or employees, or
disclosing any of our confidential information for specified time periods
following the termination of his employment.
41
<PAGE> 45
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
ORGANIZATION OF TRX
Prior to November 1999, BCD Technology, Inc., The Alexander Family, L.P.,
Danny B. Hood (an executive officer of WorldTravel Partners, L.P.), Ralph
Manaker, Steve Reynolds and Velva ("Demme") Wiggins collectively owned all of
the membership interests in WorldTravel Technologies, LLC. In November 1999, BCD
Technology S.A. contributed all of its interest in BCD Technology, Inc. to us in
exchange for 7,559,733 shares of our common stock, or 81.6% of our outstanding
common stock at that date (after taking into account the acquisition of
International Software Products described below). As summarized in the following
table, the members of WorldTravel Technologies, LLC other than BCD Technology,
Inc. contributed all of their membership interests in WorldTravel Technologies,
LLC to us in exchange for 1,419,859 shares of our common stock, or 15.3% of our
outstanding common stock at that date (after taking into account the acquisition
of International Software Products described below).
<TABLE>
<CAPTION>
TRX
INTEREST IN SHARES % OF
WORLDTRAVEL TECHNOLOGIES, LLC RECEIVED IN OUTSTANDING
SHAREHOLDER EXCHANGED EXCHANGE TRX SHARES
----------- ----------------------------- ----------- -----------
<S> <C> <C> <C>
The Alexander Family L.P.......... 11.70% 1,061,015 11.45%
Danny B. Hood..................... 2.44 221,045 2.38
Ralph Manaker..................... .99 64,327 .69
Steve Reynolds.................... .75 36,736 .40
Velva ("Demme") Wiggins........... .75 36,736 .40
</TABLE>
In connection with this transaction, TRX, BCD Technology S.A. and the
members of WorldTravel Technologies, LLC other than BCD Technology, Inc. entered
into a shareholders agreement that provides certain limitations on the right of
certain of our shareholders to transfer their shares of our common stock. The
shareholders' agreement terminates upon the consummation of the offering.
In November 1999, the shareholders of International Software Products
exchanged all of their shares of International Software Products for shares of
our common stock and other consideration. In this transaction, Susan R. Hopley
exchanged 6,760 shares of International Software Products for 195,892 shares of
our common stock, approximately $1.1 million in cash and a promissory note
issued by us for $541,000 and Christopher M. Brittin exchanged 2,740 shares of
International Software Products for 79,400 shares of our common stock,
approximately $400,000 in cash and a promissory note issued by us for $219,000.
Other shareholders of International Software Products exchanged an aggregate of
500 shares of International Software Products for 14,669 shares of our common
stock and promissory notes issued by us for an aggregate of $40,000. In
addition, we satisfied certain debt obligations of International Software
Products to Ms. Hopley, Mr. Brittin and certain affiliates of Mr. Brittin.
We entered into a shareholders' agreement with BCD Technology S.A., Ms.
Hopley, Mr. Brittin and the other former International Software Products
shareholders that provides certain limitations on the transfer of our common
stock. This agreement terminates immediately upon consummation of the offering.
Simultaneously, we entered into a put agreement with Ms. Hopley, Mr. Brittin and
the other former International Software Products shareholders pursuant to which
these individuals may require us to buy their shares of our common stock at a
purchase price of $17.25 per share. The put agreement provides that the
shareholders must exercise their put rights within 15 days following a notice
from us that we intend to file a registration statement with the Securities and
Exchange Commission in order to perfect their put rights. We provided such
notice, and these shareholders did not exercise their rights within the 15-day
period.
42
<PAGE> 46
Immediately following the reorganization transaction described above, we
paid $1.8 million to Delta Services, N.V., an affiliate of BCD Technology S.A.,
in satisfaction of indebtedness of BCD Technology, Inc. owed to Delta Services,
N.V.
INDEBTEDNESS TO BCD TECHNOLOGY S.A.
On November 5, 1999, BCD Technology S.A. loaned us $8.0 million pursuant to
a convertible promissory note. The note provides for payment of the outstanding
principal balance thereof plus interest on the second anniversary of the date of
the note. Interest in computed daily at an annualized interest rate equal to the
yield of U.S. Treasury Notes (two-year) as published in the Wall Street Journal
on the date of issuance of the note. The note is convertible into shares of our
common stock. Upon the first to occur of (i) the offering, (ii) the conversion
by Hogg Robinson International Benefits Limited of all of the outstanding
balance due on our convertible promissory note to it, or (iii) November 5, 2001.
The number of shares issuable increases as the interest accrued on the note
increases. If the offering were to be consummated on February 18, 2000, we would
issue 685,753 shares of common stock to BCD Technology S.A. upon conversion.
INDEBTEDNESS TO HOGG ROBINSON INTERNATIONAL BENEFITS LIMITED
On November 5, 1999, Hogg Robinson International Benefits Limited, an
affiliate of Hogg Robinson plc, loaned us $2.0 million pursuant to a convertible
promissory note. The note provides for payment of the outstanding principal
balance thereof plus interest on the second anniversary of the date of the note.
Interest is computed daily at an annualized interest rate equal to the yield of
U.S. Treasury Notes (two-year) as published in the Wall Street Journal on the
date of issuance of the note. The note is convertible into shares of our common
stock upon the first to occur of (i) the offering, (ii) the conversion by BCD
Technology S.A. of all of the outstanding balance due on our convertible
promissory note to it, or (iii) November 5, 2001. The number of shares issuable
increases as the interest accrued on the note increases. If the offering were to
be consummated on February 18, 2000, we would issue 171,438 shares of common
stock to Hogg Robinson International Benefits Limited upon conversion.
OUR RELATIONSHIP WITH WORLDTRAVEL PARTNERS
In January 1997, we entered into a services agreement and a software
license agreement with WorldTravel Partners. John C. Alexander, our Chairman of
the Board and the beneficial owner of approximately nine percent of our common
stock, serves as Chief Executive Officer and a director of WorldTravel Partners.
John A. Fentener van Vlissingen, a director and the beneficial owner of a
majority of our common stock, serves as Chairman of the Board and is the
beneficial owner of a majority of the common stock of WorldTravel Partners.
Under the services agreement, WorldTravel Partners provided management services
to us, including operations improvement, customer service, marketing,
administration and employment matters. We paid WorldTravel Partners a monthly
service fee for its services in an amount that was determined annually by mutual
agreement. In addition, we reimbursed WorldTravel Partners for all overhead
costs allocated to us. Under the software license agreement, we granted to
WorldTravel Partners a non-exclusive license to use certain software and
provided standard support services for this software. WorldTravel Partners paid
us a royalty fee on a per-transaction basis for the use of this software. Both
the services agreement and the software license agreement were superseded by the
agreements described below.
In November 1999, we entered into certain service, development and license
agreements with WorldTravel Partners. These agreements were negotiated on an
arm's-length basis and were approved by Hogg Robinson International Benefits
Limited. We intend to negotiate any future agreements with WorldTravel Partners
on an arm's-length basis.
SHARED SERVICES AGREEMENT. We entered into a shared services agreement
with WorldTravel Partners under which WorldTravel Partners will provide support
services to us, including
43
<PAGE> 47
management, financial, payroll, human resources, legal, travel, insurance, risk
management, backoffice and training services, and office space. The management
services WorldTravel Partners provides under this agreement include executive
management services rendered by Mr. Alexander, Mr. Manaker, certain other
individuals and their staffs.
The shared services agreement provides that we pay WorldTravel Partners a
monthly charge based on actual cost plus ten percent of each component of the
services used by us during that period. The agreement also provides that we pay
all taxes associated with these services. We and WorldTravel Partners have
estimated in the agreement that the charge for services under this agreement
provided in the first 12 months after its execution will be approximately $1.1
million of which $770,000 will be in respect to executive management services.
These services will be provided until the later to occur of November 1,
2004 or, if the agreement is extended by written amendment on November 1, 2003,
the date the agreement expires following such extension. The agreement may be
terminated by either party in the event of breaches that are not cured in
accordance with the agreement, bankruptcy, or a change of control of TRX. In
addition, to our ability to terminate the entire agreement upon 180 days prior
written notice we may also choose to have certain services not provided by
WorldTravel Partners.
MASTER DEVELOPMENT AGREEMENT. We entered into a Master Development
Agreement that gives us a right to first refusal to perform custom software
development for WorldTravel Partners under individual delivery orders.
Pursuant to the Master Development Agreement we provided development
services to WorldTravel Partners from November 1, 1999 until December 31, 1999
at no cost. Fees for software development services relating to our software
service bureau or other businesses after December 31, 1999 are based on the
actual cost of development and WorldTravel Partners receives 20 percent of our
license revenues to offset development costs. Fees for software development
services for non-generic software applications or customized software for
WorldTravel Partners customers will be charged at our market rates. For
developments related to our MeetingAssist software, WorldTravel Partners will
pay one-third of the research and development costs until January 1, 2002, at
which time we will either (i) assign title to MeetingAssist to World Travel
Partners, in which event WorldTravel Partners must pay us a market rate for
further developments, or (ii) retain title to MeetingAssist and provide support
and hosting for MeetingAssist to WorldTravel Partners at our cost plus 20%. The
agreement provides that the development fees will be renegotiated by the parties
prior to the fifth anniversary of the agreement.
In general, we own all intellectual property associated with the developed
software, except for custom software developed for WorldTravel Partners
customers, which is assigned to WorldTravel Partners.
The agreement will terminate upon the later to occur of (i) November 1,
2009 (unless extended by the parties), or (ii) the termination of any one of the
End User Software License Agreement, the Service Bureau/Outsourcing Agreement,
or the Service Bureau Software Services Agreement we have entered into with
WorldTravel Partners. In addition, either party may terminate the agreement at
any time in the event of a material breach by the other party which is not cured
in accordance with the agreement.
END USER SOFTWARE LICENSE AGREEMENT. We entered into an End User Software
License Agreement under which we granted to WorldTravel Partners a non-exclusive
license to use certain software and agreed to provide standard support services
for this software. WorldTravel Partners may not use the software in a way that
replicates our software or transaction fulfillment service bureau or for use on
behalf of other travel agencies or other corporations that are not customers of
WorldTravel Partners.
The license fees for two of our software products are covered under the
Service Bureau Software Agreement described below. License fees for our
MeetingAssist software are based on a
44
<PAGE> 48
charge per ticketed reservation plus a portion of the research and development
costs associated with product development in accordance with the Master
Development Agreement. WorldTravel Partners must pay any taxes associated with
these services.
The agreement continues indefinitely unless terminated. Either party may
terminate the agreement upon a breach that is not cured in accordance with the
agreement. In addition, the agreement terminates automatically upon the
termination of the Service Bureau/Outsourcing Agreement, the Service Bureau
Software Services Agreement or the Master Development Agreement.
SERVICE BUREAU SOFTWARE SERVICES AGREEMENT. We entered into a Service
Bureau Software Services Agreement under which we process transactions from
locations owned or operated by WorldTravel Partners in the U.S. and Canada. We
will provide software and provide technical sales support and consulting
services. WorldTravel Partners agreed to process all its ticketed reservations
through our software service bureau.
WorldTravel Partners will pay us a fee per ticketed reservation. This fee
does not cover MeetingAssist software, which we bill at a fee equal to our costs
plus 20%. WorldTravel Partners must pay any taxes associated with these
services.
The agreement terminates upon the later to occur of (i) November 1, 2009
(unless extended), or (ii) the termination of any one of the End User Software
License Agreement, Master Development Agreement or the Service
Bureau/Outsourcing Agreement. Either party may terminate the agreement upon a
material breach that is not cured in accordance with the agreement.
The agreement creates a Joint Oversight Committee to review and analyze the
performance of the parties and to set priorities for the allocation of our
resources necessary to perform under the agreement.
SERVICE BUREAU/OUTSOURCING AGREEMENT. We entered into Service
Bureau/Outsourcing Agreement under which we provide transaction fulfillment and
customer support services to WorldTravel Partners related to online transaction
processing for their corporate travel service customers.
The agreement provides a general pricing structure based on transaction
volume, with profit per transaction split evenly between WorldTravel Partners
and us. With each new client, the parties will agree to a specific fee structure
for startup customers of WorldTravel Partners. We are obligated to treat
WorldTravel Partners as a most favored customer, which means the fees we charge
them for our services cannot exceed the fees we charge any of our other clients
with comparable types of service and transaction volume. WorldTravel Partners
must pay any taxes associated with these services.
The agreement will terminate upon the later to occur of (i) November 1,
2009 (unless extended), or (ii) the termination of any one of the End User
Software License Agreement, Master Development Agreement or Service Bureau
Software Services Agreement. In addition, either party may terminate the
agreement upon a material breach by the other party that is not cured in
accordance with the agreement.
The agreement creates a Joint Oversight Committee to review and analyze the
performance of the parties and to set priorities for the allocation of our
resources necessary to adequately perform under the agreement.
MASTER CASH ACCOUNT. We participate in a master cash account that is
sponsored by WorldTravel Partners. All of our deposits and disbursements flow
through this account, and any overdrafts are funded by affiliated participants
in the account with positive cash balances. Each participant is allocated
interest income or expense based on its weighted average cash balance during the
year. We do not anticipate that we will continue to participate in the master
cash account following the offering.
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<PAGE> 49
OUR RELATIONSHIP WITH HOGG ROBINSON PLC
JOINT VENTURE. In February 2000, we formed a joint venture with Hogg
Robinson plc in the United Kingdom to provide transaction fulfillment, customer
support and technology services in certain European and Scandinavian countries.
Each of Hogg Robinson and us owns 50% of the joint venture entity, Fortdove
Limited. Fortdove will be initially funded by two L1.25 million loans from both
Hogg Robinson and us. Both loans will accrue interest annually at a rate of
interest based on the bank base rate of Barclays Bank, plc plus one percent.
Fortdove must repay the loans by March 31, 2002 or may repay at any time prior
to March 31, 2002 upon 30 days' notice.
We granted Fortdove an exclusive license to use certain of our software
products in certain European and Scandinavian countries. We have also agreed to
provide Fortdove software development and support services for such licensed
software.
Fortdove has also entered into an agreement with Hogg Robinson under which
Hogg Robinson will provide administrative services to Fortdove for a fee.
Fortdove has agreed to provide transaction fulfillment, customer support and
technology services to Hogg Robinson and its customers. The fee for such
services is based on a per transaction fee schedule applicable to each type of
service provided by Fortdove to Hogg Robinson.
SHAREHOLDERS' AGREEMENT. We and BCD Technology S.A. entered into a
shareholders' agreement with Hogg Robinson. This agreement, as amended, contains
certain restrictions on the transferability of our shares held by BCD Technology
S.A. and Hogg Robinson, requirements that they sell their shares upon certain
events, registration rights and certain voting arrangements relating to
decisions regarding our operation. The foregoing provisions terminate upon the
consummation of the offering. In addition, the shareholders' agreement provides
that BCD Technology S.A. will vote for a representative of Hogg Robinson on our
board of directors under certain circumstances. The agreement also provides
that, if the offering implies a valuation of us of $250 million or more and
other conditions are satisfied in connection with the offering, we can require
Hogg Robinson to sell to us, or in the offering, that number of shares equal to
up to 2% of outstanding shares immediately prior to the offering.
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<PAGE> 50
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of February 18, 2000,
regarding the number of shares of common stock beneficially owned by each
director of TRX who beneficially owns shares, each Named Executive Officer who
beneficially owns shares, all persons known to us to beneficially own more than
five percent of the outstanding shares of common stock and all directors and
executive officers as a group. All shares of common stock shown in the table
reflect sole voting and investment power except as otherwise noted.
<TABLE>
<CAPTION>
PERCENTAGE OF
SECURITIES BENEFICIALLY
OWNED
NUMBER OF ------------------------
SHARES BENEFICIALLY PRIOR TO THE AFTER THE
NAME OF BENEFICIAL OWNER OWNED(1) OFFERING OFFERING
- ------------------------ ------------------- ------------ ---------
<S> <C> <C> <C>
The Alexander Family L.P.(2)........................... 848,812 9.2
John C. Alexander(3)................................... 848,812 9.2
Ralph Manaker.......................................... 51,462 *
BCD Technology S.A.(4)................................. 6,727,202 67.6
John A. Fentener van Vlissingen(5)..................... 6,727,202 67.6
Hogg Robinson International Benefits Limited(6)........ 2,025,313 21.5
Directors and Executive Officers as a Group (12
persons)............................................. 7,627,476 76.6
</TABLE>
- ---------------
* Less than one percent.
(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 or
other rights to purchase which are currently exercisable or are exercisable
within 60 days after , 2000 are deemed outstanding for purposes of
computing the percentage ownership of the persons holding such options or
other rights, but are not deemed outstanding for purposes of computing the
percentage ownership of any other person.
(2) The address for The Alexander Family L.P. is: 1055 Lenox Park Boulevard,
Suite 420, Atlanta, Georgia 30319.
(3) The address for Mr. Alexander is: 1055 Lenox Park Boulevard, Suite 420,
Atlanta, Georgia 30319. Includes 848,812 shares held by The Alexander Family
L.P., for which Mr. Alexander serves as general partner.
(4) The address for BCD Technology S.A. is: L-2163 Luxembourg, 27, avenue
Monterey. Includes 685,753 shares issuable to BCD Technology S.A. upon
conversion of a convertible promissory note from TRX to BCD Technology S.A.,
assuming the offering was consummated on February 18, 2000.
(5) The address for Mr. van Vlissingen is: Utrectseweg 67, 3704 HB Zeist, The
Netherlands. Includes 6,727,202 shares held by BCD Technology S.A. of which
Mr. van Vlissingen has beneficial ownership.
(6) The address for Hogg Robinson International Benefits Limited is: Abbey
House, 282 Farnborough Road, Farnborough-Hampshire, London, England GU147NJ.
Includes 171,438 shares issuable to Hogg Robinson International Benefits
Limited upon conversion of a convertible promissory note from TRX to Hogg
Robinson International Benefits Limited, assuming the offering was
consummated on February 18, 2000.
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<PAGE> 51
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $.01 per share. TRX has not authorized any preferred stock for
issuance.
Each holder of our common stock is entitled to one vote for each share on
all matters to be voted upon by the holders of our common stock. There are no
cumulative voting rights and [no preemptive] or conversion rights. There are no
redemption or sinking fund provisions available to the common stock. Holders of
our common stock are entitled to receive dividends share for share on a pro rata
basis when, as and if declared by the board of directors out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up of
TRX, holders of common stock will be entitled to share ratably in all assets
remaining after payment of liabilities of TRX.
Upon completion of the offering there will be shares of
common stock outstanding assuming no exercise of the underwriters' overallotment
option. As of February 18, 2000, there were 9,269,373 shares of common stock
outstanding.
ANTI-TAKEOVER PROVISIONS OF OUR ARTICLES OF INCORPORATION, BYLAWS AND GEORGIA
LAW
CLASSIFIED BOARD AND REMOVAL OF DIRECTORS
Our Articles of Incorporation provide for our Board of Directors to be
elected, initially, to staggered one, two and three year terms and, thereafter,
for three year terms. In addition, members of our Board of Directors may only be
removed for cause, which requires the affirmative vote of the holders of at
least 66 2/3% of the outstanding shares of our common stock. The classification
of directors, together with the limitation on the removal of directors, has the
effect of making it more difficult for shareholders to change the composition of
our Board of Directors.
SHAREHOLDER ACTION; SPECIAL MEETING OF SHAREHOLDERS
Our shareholders may not take action, outside of a duly called annual or
special meeting, by less than unanimous written consent. Our Bylaws further
provide that special meetings of our shareholders may be called only upon the
request of the holders of not less than 35% of the shares then outstanding and
entitled to vote.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Our Bylaws provide that any shareholder proposals or director nominations
must be provided to us in writing at least 60 days before the date of an annual
meeting of shareholders or, in the case of a special meeting of shareholders, at
least 60 days prior to such special meeting or the tenth day following the day
on which public announcement is made of the date of the special meeting. Our
Bylaws also specify requirements as to form and content of a shareholder's
notice. Such provisions may preclude shareholders from bringing matters before
the shareholders at an annual or special meeting.
ANTI-TAKEOVER PROVISIONS AND GEORGIA LAW
The Georgia Business Corporation Code generally restricts a corporation
from entering into certain business combinations with an interested shareholder,
which is defined as any person or entity that is the beneficial owner of at
least 10% of a company's voting stock, or its affiliates, for a period of five
years after the date on which the shareholder became an interested shareholder,
unless:
- the transaction is approved by the board of directors of the
corporation prior to the date the person became an interested
shareholder;
- the interested shareholder acquires 90% of the corporation's voting
stock in the same transaction in which it exceeds 10%; or
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<PAGE> 52
- subsequent to becoming an interested shareholder, the shareholder
acquires 90% of the corporation's voting stock and the business
combination is approved by the holders of a majority of the voting
stock entitled to vote on the transaction.
The fair price provisions of the Georgia Business Corporation Code further
restrict business combination transactions with 10% shareholders. These
provisions require that the consideration paid for stock acquired in the
business combination must meet specified tests that are designed to ensure that
shareholders receive at least fair market value for their shares in the business
combination.
The interested shareholder and fair price provisions of the Georgia
Business Corporation Code do not apply to a corporation unless the Bylaws of the
corporation specifically provide that these provisions are applicable to the
corporation. We have elected to be covered by these provisions in our Bylaws,
provided, however, that, notwithstanding anything to the contrary in the
provisions, the provisions shall not apply to any business combination with (i)
any shareholder who was an interested shareholder as of the date we adopted our
Bylaws or (ii) any person or entity that is at the time of such business
combination wholly owned by such interested shareholder.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is .
LISTING
We will make application to the Nasdaq National Market to list our common
stock thereon under the trading symbol "TRXI."
49
<PAGE> 53
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the offering, there has been no public market for our common stock
and we cannot predict the effect, if any, that the sale or availability for sale
of shares of additional common stock will have on the market price of the common
stock. Future sales of substantial amounts of common stock in the public market,
or the perception that such sales could occur could materially and adversely
affect the market price of our common stock and could impair our future ability
to raise capital through an offering of our equity securities.
Upon completion of the offering, we will have a total of
shares of common stock outstanding, assuming no exercise of the underwriters'
overallotment option. Of these shares, the shares of common stock
offered hereby will be freely tradable, without restriction or registration
under the Securities Act by persons other than "affiliates" of TRX, as that term
is defined in the Securities Act, who would be required to sell such shares
under Rule 144 under the Securities Act. In general, affiliates include
officers, directors or 10% shareholders.
The remaining shares of common stock outstanding will be
"restricted securities" as that term is defined by Rule 144 under the Securities
Act. The restricted securities were issued and sold by us in private
transactions in reliance upon exemptions from registration under the Securities
Act. These restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rules
144, 144(k) or 701 promulgated under the Securities Act, which are summarized
below. Sales of the restricted securities in the public market, or the
availability of these shares for sale, could adversely affect the market price
of our common stock.
Our directors, officers and all shareholders have entered into lock-up
agreements in connection with the offering generally providing that they will
not offer, sell, contract to sell or grant any option to purchase or otherwise
dispose of our common stock or any securities exercisable for or convertible
into our common stock owned by them for a period of 180 days after the date of
this prospectus without the prior written consent of Goldman, Sachs & Co. as
representative of the underwriters.
Taking into account these lock-up agreements, and assuming Goldman, Sachs &
Co. does not release shareholders from their agreements, the following shares
will be eligible for sale in the public market at the following times:
- beginning on the effective date of this prospectus, only the shares
of common stock sold in the offering will be immediately available
for sale in the public market.
- beginning 180 days after the date of this prospectus, approximately
additional shares of common stock underlying
exercisable options of TRX employees will be eligible for sale under
Rule 701 or as a result of the Form S-8 registration statement
described below.
- beginning one year after the date of this prospectus, essentially all
shares of our common stock will be available for sale, provided there
is compliance with the vesting requirements in the case of shares
underlying exercisable options of TRX employees. Holders of shares of
common stock that are restricted securities may sell shares under
Rule 144, and affiliates of TRX under Rule 144 will continue to be
subject to the volume limitations described below.
In general, under Rule 144 as currently in effect, after the expiration of
the lock-up agreements, a person (or persons whose shares are aggregated) who
has beneficially owned restricted securities for at least one year (including
the holding period of any prior owner except an affiliate), including persons
who may be deemed "affiliates" of TRX, would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:
- one percent of the number of shares of common stock then outstanding
(approximately shares upon completion of the
offering); or
50
<PAGE> 54
- the average weekly trading volume of the common stock during the four
calendar weeks preceding the filing of a Form 144 with respect to
such sale.
Sales under Rule 144 are also subject to certain manner-of-sale provisions
and notice requirements, and to the availability of current public information
about TRX. In addition, a person who is not deemed to have been an affiliate of
TRX at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner except an affiliate), would be
entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. Rule 144 also provides that affiliates who are
selling shares that are not restricted securities must nonetheless comply with
the same volume limitations applicable to the sale of restricted securities
described above in this paragraph.
Rule 701, as currently in effect, permits our employees, officers,
directors or consultants who purchased shares under a written compensatory plan
or contract to resell these shares in reliance upon Rule 144 but without
compliance with specific restrictions. Commencing 90 days after the date of the
offering, Rule 701 permits affiliates to sell their Rule 701 shares under Rule
144 without complying with the holding period requirement and permits
non-affiliates to sell these shares in reliance on Rule 144 without complying
with the holding period, public information, volume limitation or notice
provisions of Rule 144.
In addition, we intend to file, immediately after the effectiveness of the
offering, a registration statement on Form S-8 under the Securities Act covering
all shares of common stock reserved for issuance under our 2000 Stock Incentive
Plan. Shares registered under this registration statement would be available for
sale in the open market in the future, provided there is compliance with Rule
144 restrictions in the case of affiliates and the contractual restrictions
described above.
51
<PAGE> 55
UNDERWRITING
TRX and the underwriters named below (the "Underwriters") have entered into
an underwriting agreement with respect to the shares being offered. Subject to
certain conditions, each Underwriter has severally agreed to purchase the number
of shares indicated in the following table. Goldman, Sachs & Co., ABN AMRO
Incorporated and The Robinson-Humphrey Company, LLC are the representatives of
the Underwriters.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Goldman, Sachs & Co. .......................................
ABN AMRO Incorporated.......................................
The Robinson-Humphrey Company, LLC..........................
---------
Total.............................................
=========
</TABLE>
If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional
shares from TRX to cover such sales. They may exercise that
option for 30 days. If any shares are purchased pursuant to this option, the
Underwriters will severally purchase shares in approximately the same proportion
as set forth in the table above.
The following table shows the per share and total underwriting discounts
and commissions to be paid to the Underwriters by TRX. Such amounts are shown
assuming both no exercise and full exercise of the Underwriters' option to
purchase additional shares.
<TABLE>
<CAPTION>
PAID BY TRX NO EXERCISE FULL EXERCISE
----------- ----------- -------------
<S> <C> <C>
Per Share.................................................. $ $
Total...................................................... $ $
</TABLE>
Shares sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus. Any
shares sold by the Underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial public offering price. Any such
securities dealers may resell any shares purchased from the Underwriters to
certain other brokers or dealers at a discount of up to $ per share
from the initial public offering price. If all the shares are not sold at the
initial offering price, the representatives may change the offering price and
the other selling terms.
TRX, its directors, officers, employees and all other major shareholders
have agreed with the Underwriters not to dispose of or hedge any of their common
stock or securities convertible into or exchangeable for shares of common stock
during the period from the date of this Prospectus continuing through the date
180 days after the date of this prospectus, except with the prior written
consent of the representatives. See "Shares Eligible for Future Sale" for a
discussion of certain transfer restrictions.
Prior to the offering, there has been no public market for the shares. The
initial public offering price will be negotiated among TRX and the
representatives. Among the factors to be considered in determining the initial
public offering price of the shares, in addition to prevailing market
conditions, will be TRX's historical performance, estimates of the business
potential and earnings prospects of TRX, an assessment of TRX's management and
the consideration of the above factors in relation to market valuation of
companies in related businesses.
Application will be made to include the common stock for trading on the
Nasdaq National Market under the symbol "TRXI".
In connection with the offering, the Underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the Underwriters of a greater
number of shares than they are required to purchase in the offering. Stabilizing
52
<PAGE> 56
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the common stock while
the offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
Underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
The Underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.
At the request of TRX, the Underwriters are reserving up to
shares of common stock for sale at the initial public offering price to
directors, officers, employees and strategic partners through a directed share
program. The number of shares of common stock available for sale to the general
public will be reduced to the extent these persons purchase these reserved
shares. Any shares not so purchased will be offered by the underwriters to the
general public on the same basis as the other shares offered hereby.
TRX estimates that the total expenses of the Offering, excluding
underwriting discounts and commissions, will be approximately $ .
TRX has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for TRX by Long Aldridge & Norman LLP, Atlanta, Georgia. Certain legal
matters will be passed upon for the Underwriters by Ropes & Gray, Boston,
Massachusetts.
EXPERTS
The financial statements of TRX as of December 31, 1997, 1998 and 1999 and
for each of the three years in the period ended December 31, 1999 and the
financial statements of International Software Products as of and for the
periods ended December 31, 1998 and September 30, 1999 appearing in this
prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered in the offering. This prospectus does not contain all of the information
set forth in the registration statement. For further information with respect to
TRX and the common stock offered in the offering, we refer you to the
registration statement and to the attached exhibits and schedules. Statements
contained in this prospectus concerning the contents of any document referred to
in this prospectus are not necessarily complete. With respect to each document
filed as an exhibit to the registration statement, we refer you to the exhibit
for a more complete description of the matter involved. Copies of the
registration statement may be obtained from the Commission's principal office at
450 Fifth
53
<PAGE> 57
Street, N.W., Washington, D.C. 20549, and the following regional offices of the
Commission: Seven World Trade Center, 13th Floor, New York, New York 10048; and
the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. You may obtain copies of such materials from the public reference section
of the Securities and Exchange Commission at its Washington, D.C. office upon
payment of the prescribed fees. You may obtain information on the operation of
the public reference section by calling the Commission at 1-800-SEC-0330. You
may also inspect reports, proxy and information statements and other information
regarding registrants that file electronically with the Securities and Exchange
Commission without charge at the offices of the Commission or through the
Securities and Exchange Commission's website at http:\\www.sec.gov.
54
<PAGE> 58
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
TRX, INC. AND SUBSIDIARIES
Historical:
Report of Independent Public Accountants............... F-2
Consolidated Balance Sheets as of December 31, 1998 and
1999.................................................. F-3
Consolidated Statements of Loss for the Years Ended
December 31, 1997, 1998 and 1999...................... F-4
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1997, 1998 and 1999.......... F-5
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997, 1998 and 1999................ F-6
Notes to Consolidated Financial Statements............. F-7
Pro Forma (Unaudited):
Introduction to the Pro Forma Combined Financial
Statements............................................ F-18
Pro Forma Combined Balance Sheet as of December 31,
1999.................................................. F-19
Pro Forma Combined Statement of Loss for the Year Ended
December 31, 1999..................................... F-20
Notes to Pro Forma Combined Financial Statements....... F-21
ARTHUR H. LTD. D/B/A INTERNATIONAL SOFTWARE PRODUCTS
Report of Independent Public Accountants.................. F-22
Balance Sheets as of December 31, 1998 and September 30,
1999................................................... F-23
Statements of (Loss) Income for the Year Ended December
31, 1998 and the Nine Month Period Ended September 30,
1999................................................... F-24
Statements of Changes in Shareholders' Deficit for the
Year Ended December 31, 1998 and the Nine Month Period
Ended September 30, 1999............................... F-25
Statements of Cash Flows for the Year Ended December 31,
1998 and the Nine Month Period Ended September 30,
1999................................................... F-26
Notes to Financial Statements............................. F-27
</TABLE>
F-1
<PAGE> 59
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To TRX, Inc.:
We have audited the accompanying consolidated balance sheets of TRX, INC.
(a Georgia corporation and formerly WT Technologies, Inc.) (Note 1) AND
SUBSIDIARIES as of December 31, 1998 and 1999 and the related consolidated
statements of loss, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1999. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of TRX, Inc. and Subsidiaries
as of December 31, 1998 and 1999 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
January 28, 2000
F-2
<PAGE> 60
TRX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1999
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 0 $ 0
Accounts receivable, net of allowance for doubtful
accounts of $336,588 and $466,914 in 1998 and 1999,
respectively........................................... 2,132,443 7,133,696
Other current assets...................................... 117,716 388,060
----------- -----------
Total current assets.............................. 2,250,159 7,521,756
Property and Equipment, net................................. 2,886,032 6,701,085
Software Development Costs, net............................. 199,949 535,857
Goodwill, net............................................... 0 7,314,042
Noncompete Agreement, net................................... 0 96,667
----------- -----------
Total assets...................................... $ 5,336,140 $22,169,407
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities.................. $ 1,507,120 $ 3,036,670
Accrued interest.......................................... 301,862 0
Customer deposits......................................... 175,151 3,987,492
Deferred revenues......................................... 579,256 1,678,720
Due to affiliates, net.................................... 3,028,193 1,315,149
Current portion of other long-term debt................... 1,357,569 0
----------- -----------
Total current liabilities......................... 6,949,151 10,018,031
Convertible long-term debt................................ 0 10,000,000
Other long-term debt...................................... 0 800,000
Long-term accrued interest................................ 0 106,934
----------- -----------
Total liabilities................................. 6,949,151 20,924,965
----------- -----------
Commitments and Contingencies (Note 5)
Shareholders' Equity:
Members' interest (deficit)............................... (1,613,011) 0
Common stock, $0.01 par value; 100,000,000 shares
authorized; 9,269,373 shares issued and outstanding in
1999................................................... 0 92,694
Additional paid-in capital................................ 0 1,861,687
Accumulated deficit....................................... 0 (709,939)
----------- -----------
Total shareholders' equity........................ (1,613,011) 1,244,442
----------- -----------
Total liabilities and shareholders' equity........ $ 5,336,140 $22,169,407
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 61
TRX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Revenues............................................. $ 8,297,613 $14,280,506 $26,572,735
----------- ----------- -----------
Expenses:
Operating.......................................... 3,282,723 7,270,176 15,178,882
Selling, general and administrative................ 3,899,716 4,316,416 8,407,451
Technology development............................. 1,218,255 2,327,781 2,882,761
Depreciation and amortization...................... 898,224 951,138 1,477,671
----------- ----------- -----------
Total expenses............................. 9,298,918 14,865,511 27,946,765
----------- ----------- -----------
Operating loss....................................... (1,001,305) (585,005) (1,374,030)
Interest expense, net................................ 246,881 527,265 268,517
----------- ----------- -----------
Net loss............................................. $(1,248,186) $(1,112,270) $(1,642,547)
=========== =========== ===========
Pro forma loss per common share, basic and diluted... $ (0.18)
===========
Pro forma weighted average shares outstanding, basic
and diluted........................................ 9,025,000
===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 62
TRX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
MEMBERS' COMMON STOCK ADDITIONAL
INTEREST -------------------- PAID-IN ACCUMULATED
(DEFICIT) SHARES AMOUNT CAPITAL DEFICIT TOTAL
----------- ---------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996... $ 547,445 0 $ 0 $ 0 $ 0 $ 547,445
Net loss................... (1,248,186) 0 0 0 0 (1,248,186)
----------- ---------- ------- ----------- --------- -----------
Balance, December 31, 1997... (700,741) 0 0 0 0 (700,741)
Contribution by Member..... 10,000 0 0 0 0 10,000
Compensation expense
resulting from profit
participation units...... 190,000 0 0 0 0 190,000
Net loss................... (1,112,270) 0 0 0 0 (1,112,270)
----------- ---------- ------- ----------- --------- -----------
Balance, December 31, 1998... (1,613,011) 0 0 0 0 (1,613,011)
Contributions by Members... 15,000 0 0 0 0 15,000
Net loss prior to
reorganization........... (932,608) 0 0 0 0 (932,608)
Compensation expense
resulting from profit
participation units...... 1,485,000 0 0 0 0 1,485,000
Capital distributions prior
to reorganization........ (2,000,000) 0 0 0 0 (2,000,000)
Initial capitalization
resulting from the
reorganization (Note
1)....................... 3,045,619 8,979,592 89,796 (3,135,415) 0 0
Issuance of common stock
for acquisition of ISP... 0 289,781 2,898 4,997,102 0 5,000,000
Net loss subsequent to
reorganization........... 0 0 0 0 (709,939) (709,939)
----------- ---------- ------- ----------- --------- -----------
Balance, December 31, 1999... $ 0 9,269,373 $92,694 $ 1,861,687 $(709,939) $ 1,244,442
=========== ========== ======= =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 63
TRX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss............................................ $(1,248,186) $(1,112,270) $(1,642,547)
----------- ----------- -----------
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization.................... 898,224 951,138 1,477,671
Compensation expense resulting from profit
participation units............................ 0 190,000 1,485,000
Changes in assets and liabilities:
Accounts receivable, net....................... (1,385,220) (365,047) (4,761,237)
Other current assets........................... (26,457) (61,025) (264,059)
Accounts payable and accrued liabilities....... 125,754 713,277 1,045,202
Accrued interest............................... 157,893 143,969 (301,862)
Deferred revenue............................... 87,141 (18,848) 1,038,221
Customer deposits.............................. 0 175,151 3,812,341
Long-term accrued interest..................... 0 0 106,934
----------- ----------- -----------
Total adjustments........................... (142,665) 1,728,615 3,638,211
----------- ----------- -----------
Net cash (used in) provided by operating
activities................................ (1,390,851) 616,345 1,995,664
----------- ----------- -----------
Cash Flows from Investing Activities:
Purchase of ISP, net of cash acquired............... 0 0 (1,524,965)
Purchases of property and equipment................. (1,675,439) (1,554,585) (4,761,567)
Capitalized software development costs.............. 0 (121,000) (306,260)
----------- ----------- -----------
Net cash used in investing activities....... (1,675,439) (1,675,585) (6,592,792)
----------- ----------- -----------
Cash Flows from Financing Activities:
Net proceeds from (payments to) affiliates.......... 1,225,925 1,049,240 (1,882,404)
Proceeds from issuance of convertible long-term
debt............................................. 0 0 10,000,000
Capital distributions............................... 0 0 (2,000,000)
Repayments of debt.................................. 0 0 (1,535,468)
Contributions by Members............................ 0 10,000 15,000
----------- ----------- -----------
Net cash provided by financing activities... 1,225,925 1,059,240 4,597,128
----------- ----------- -----------
Net change in cash.................................... (1,840,365) 0 0
Cash at beginning of year............................. 1,840,365 0 0
----------- ----------- -----------
Cash at end of year................................... $ 0 $ 0 $ 0
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 64
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1998 AND 1999
1. ORGANIZATION, BACKGROUND AND NATURE OF OPERATIONS
The accompanying financial statements are of TRX, Inc. (formerly WT
Technologies, Inc.), a Georgia corporation (which was incorporated on October
18, 1999), and its related predecessor entities, which were under common
control. TRX, Inc. and its subsidiaries are collectively referred to herein as
the "Company" or "TRX." Prior to November 4, 1999, the Company operated as a
limited liability corporation named WorldTravel Technologies, L.L.C. As part of
a reorganization on November 4, 1999, the members of WorldTravel Technologies,
L.L.C. ("Members") exchanged their ownership interests in WorldTravel
Technologies, L.L.C. for shares of common stock of TRX, with WorldTravel
Technologies, L.L.C. becoming a wholly owned subsidiary of TRX. In connection
with the reorganization of the Company, the net assets of BCD Technology, Inc.,
an affiliated entity, were transferred into TRX at historical cost. All of these
entities are controlled by the same common shareholder. The accompanying
financial statements reflect the operations of all of these entities for all
periods presented.
The Company provides transaction processing services including transaction
fulfillment, customer support, technology services, and data management services
primarily to companies involved in the online travel industry. Transaction
fulfillment services and customer support services center on the management of
the physical ticketing, including quality control, packaging, invoicing and
accounting, delivery, tracking, reporting and follow up. Technology services
include booking online travel reservations, point-of-sale support, travel
management and automated quality control. Data management services include data
consolidation, transformation, reporting and analysis. The Company also provides
licensing and maintenance of software which centers on specialized travel
automation software.
2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
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 amounts reported in the consolidated financial
statements and the accompanying notes. Actual results could differ from those
estimates.
REVENUE RECOGNITION
The Company's revenues are derived primarily from transaction processing
fees. The Company also derives revenues from licensing software and related
post-contract software support arrangements. Transaction processing fees
generated from transaction fulfillment, customer support, technology services,
and data management services are recognized in the month in which the services
are provided. Software license revenues are recognized in accordance with
Statement of Position 97-2, "Software Revenue Recognition." Software license
fees are recognized when persuasive evidence of an arrangement exists, the later
of delivery or acceptance has occurred, the fee is fixed or determinable, and
collectibility is probable. Post-contract software support arrangements include
maintenance, telephone support, and unspecified software enhancements. Revenues
from support and maintenance are recognized ratably over the term of the
post-contract software support arrangement, which is typically 12 months.
F-7
<PAGE> 65
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DEFERRED REVENUES
Deferred revenue at December 31, 1998 and 1999 was as follows:
<TABLE>
<CAPTION>
1998 1999
-------- ----------
<S> <C> <C>
Deferred license fees....................................... $184,008 $1,088,193
Deferred maintenance fees................................... 395,248 590,527
-------- ----------
Total deferred revenue............................ $579,256 $1,678,720
======== ==========
</TABLE>
During 1999, the Company entered into a license agreement with a customer
for a software product. The client has accepted delivery and installed the
current version of the product. The client has an option to purchase specified
upgrades and enhancements in the future at a substantial discount from current
price if developed by the Company. During 1999, the Company recognized revenue
of $1,100,000. At December 31, 1999, deferred revenues included $900,000 related
to this contract which will be recognized as revenue when the upgraded
technology is delivered or when the client's option expires, whichever comes
first.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is recorded over
the estimated useful lives of the assets using the straight-line method. The
useful lives of computers and office equipment and furniture range from five to
seven years. Amortization of leasehold improvements is recorded over the shorter
of the lives of the leases or estimated useful lives using the straight-line
method.
The Company has incurred expenditures for software used to facilitate
internal data consolidation processes and transaction fulfillment services. The
Company has adopted Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." This statement
requires computer software costs, including internal payroll costs, incurred in
connection with the development or acquisition of software for internal use to
be charged to technology development expense as incurred until the project
enters the application development phase. Costs incurred in the application
development phase are capitalized by the Company and depreciated over the useful
life of five years.
The following summarizes the components of property and equipment at
December 31, 1998 and 1999:
<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Computers and office equipment............................ $3,493,680 $6,090,395
Leasehold improvements.................................... 310,771 1,747,517
Furniture................................................. 766,032 1,520,110
Internal-use software costs............................... 95,000 324,556
---------- ----------
4,665,483 9,682,578
Accumulated depreciation and amortization................. 1,779,451 2,981,493
---------- ----------
$2,886,032 $6,701,085
========== ==========
</TABLE>
Depreciation and amortization expense was $485,114, $575,110, and
$1,202,042 for the years ended December 31, 1997, 1998, and 1999, respectively.
SOFTWARE DEVELOPMENT COSTS
Computer software product development costs for the Company's software
products to be marketed are charged to technology development expense until
technological feasibility is
F-8
<PAGE> 66
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
established, after which remaining software production costs are capitalized in
accordance with Statement of Financial Accounting Standards No. 86, "Accounting
for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed."
The Company has defined technological feasibility as the point in time at which
the Company has a working model of the related product. After the product is
completed (i.e., at the point when the product is ready for general release to
customers), any further development costs are expensed as incurred. Capitalized
software development costs are amortized using the straight-line method over a
period of five years, the estimated useful life of the software products.
Accumulated amortization was $59,822 and $153,727 at December 31, 1998 and
1999, respectively. Amortization expense was $392,863, $368,542 and $93,905 for
the years ended December 31, 1997, 1998 and 1999, respectively.
INCOME TAXES
In conjunction with the November 4, 1999 reorganization (Note 1), the
Company adopted Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS No. 109"). SFAS No. 109 requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Prior to the reorganization, the Company elected to be treated as a limited
liability corporation and was not separately taxable under the provisions of the
Internal Revenue Code or applicable state laws and, accordingly, the Company did
not provide for federal or state income taxes. Members reported their respective
share of profits and losses of the Company, and federal and state income taxes
were computed on the Members' total income from all sources.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The book values of cash, trade receivables, trade accounts payable, and
other financial instruments approximate their fair values principally because of
the short-term maturities of these instruments. The fair value of the Company's
long-term debt is estimated based on the current rates offered to the Company
for debt of similar terms and maturities. Under this method, the Company's fair
value of long-term debt was not significantly different than the stated value at
December 31, 1999.
STATEMENTS OF CASH FLOWS
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash and cash equivalents.
IMPAIRMENT OF LONG-LIVED AND INTANGIBLE ASSETS
The Company regularly evaluates whether events and circumstances have
occurred that indicate the carrying amount of property and equipment or goodwill
and other intangibles may warrant revision or may not be recoverable. When
factors indicate that long-lived assets should be evaluated for possible
impairment, the Company uses an estimate of the future undiscounted net cash
flows associated with the asset over the remaining life of the asset in
measuring whether the long-lived asset is recoverable. In management's opinion,
the long-lived assets, including property and equipment and intangible assets,
are appropriately valued at December 31, 1998 and 1999.
F-9
<PAGE> 67
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONCENTRATION OF CREDIT RISK
A significant portion of the Company's revenues is derived from a limited
number of clients. The relationships with the following major clients may be
terminated by the client if the Company fails to meet certain performance
criteria or upon relatively short notice. During the years ended December 31,
1997, 1998, and 1999, the following clients individually accounted for more than
10% of the Company's revenue:
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Client A.............................................. 36.8% 43.9% 49.3%
Client B.............................................. * 12.7 16.0
Client C (WorldTravel Partners ("WTP"), an affiliated
entity)............................................. 13.0 13.3 15.5
Client D.............................................. 12.7 * *
</TABLE>
- ---------------
* Accounted for less than 10% of total revenues for the period indicated.
At December 31, 1999, 81.0% of the Company's accounts receivable related to
clients A, B, and C.
PRO FORMA LOSS PER COMMON SHARE
Basic and diluted pro forma loss per common share is computed by dividing
net loss by the weighted average number of common shares outstanding during the
period consistent with the guidelines of Statement of Accounting Standards No.
128, "Earnings Per Share." The effect of the convertible promissory notes (Note
6) has been excluded from the calculation of diluted pro forma loss per common
share as they are antidilutive.
RECLASSIFICATIONS
Certain reclassifications have been made to prior year financial statements
to conform to current year presentations.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. The statement, as amended in June 1999 by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB Statement No. 133," is effective for fiscal years
beginning after June 15, 2000. The Company has evaluated the impact of adopting
SFAS No. 133 and, based on its current business activities, believes that it
will not have a material effect on its financial statements.
3. ACQUISITION
Effective November 4, 1999, TRX acquired all of the outstanding shares of
Arthur H. Ltd. d/b/a International Software Products ("International Software
Products"). The purchase price of International Software Products included
289,781 shares of TRX common stock (of which 30% are held in escrow as a
guarantee of the sellers' representations and warranties), promissory notes
payable totaling $800,000, and approximately $1,571,000 in cash. The aggregate
purchase price of International Software Products was based on the guaranteed
TRX common stock value of $17.25 per share and totaled approximately $7,371,000.
The acquisition of International Software Products
F-10
<PAGE> 68
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
was accounted for as a purchase. The excess of the purchase price over the net
tangible assets acquired was allocated to the following intangible assets with
the following amortization lives:
<TABLE>
<CAPTION>
AMORTIZATION
AMOUNT PERIOD
---------- ------------
<S> <C> <C>
Noncompete agreement...................................... 100,000 5 years
Goodwill.................................................. 7,492,433 7 years
</TABLE>
Accumulated amortization at December 31, 1999 related to the noncompete
agreement and goodwill was $3,333 and $178,391, respectively.
The following unaudited pro forma information has been prepared as if the
purchase of International Software Products had been consummated on January 1,
1998 and is not necessarily indicative of the results of operations which would
have actually been attained had the purchase been consummated on January 1, 1998
or which may be attained in future periods:
<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Pro forma revenue....................................... $15,125,601 $27,742,046
=========== ===========
Pro forma net loss...................................... $(2,798,459) $(2,691,781)
=========== ===========
Pro forma loss per share................................ $ (0.30) $ (0.29)
=========== ===========
Pro forma weighted average shares outstanding........... 9,269,373 9,269,373
=========== ===========
</TABLE>
Pro forma adjustments were recorded to include the following through the
date of the acquisition: (i) increased interest expense to reflect interest
expense on the promissory notes payable and long-term debt issued to finance the
cash portion of the purchase, (ii) increased amortization expense as a result of
the intangible assets generated in the purchase and (iii) an increase in the
weighted average shares outstanding to reflect the issuance of shares of TRX
common stock.
The former owners of International Software Products have put rights with
respect to their shares of TRX common stock until January 1, 2002. Pursuant to
these rights, each former International Software Products shareholder has the
right to require TRX to purchase all of the TRX common stock owned by the
shareholder at a purchase price of $17.25 per share. The put rights must be
exercised by the former owners of International Software Products within 15 days
following receipt of the notice that the Company intends to file a registration
statement with the Securities and Exchange Commission. On January 5, 2000, the
former owners of International Software Products were given notice of the
Company's intent to file a registration statement with the Securities and
Exchange Commission. As of January 20, 2000, the expiration of the above-stated
15 day period, the former owners of International Software Products had not
exercised their put rights.
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following at
December 31, 1998 and 1999:
<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Accounts payable.......................................... $ 475,426 $1,213,285
Accrued compensation, benefits, and commissions........... 869,069 1,447,496
Other..................................................... 162,625 375,889
---------- ----------
Total........................................... $1,507,120 $3,036,670
========== ==========
</TABLE>
F-11
<PAGE> 69
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. COMMITMENTS AND CONTINGENCIES
LEASE OBLIGATIONS
The Company leases certain office space and equipment under noncancelable
operating lease agreements which expire at various times through fiscal 2004.
Future minimum annual lease payments under the related noncancelable operating
leases at December 31, 1999 are as follows:
<TABLE>
<S> <C>
2000........................................................ $1,270,024
2001........................................................ 1,269,442
2002........................................................ 1,023,436
2003........................................................ 131,912
2004........................................................ 134,510
----------
Total............................................. $3,829,324
==========
</TABLE>
Rental expense under noncancelable operating lease agreements for the years
ended December 31, 1997, 1998 and 1999 totaled $333,739, $560,265, and $957,820,
respectively.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain key
executives. Under each agreement, in the event employment is terminated (other
than voluntarily by the employee or by the Company for cause), the Company is
committed to pay certain benefits, including the payment of each employee's base
salary through the expiration of each agreement.
6. CONVERTIBLE LONG-TERM DEBT
Convertible long-term debt consists of the following at December 31, 1999:
<TABLE>
<CAPTION>
1998 1999
---------- -----------
<S> <C> <C>
Convertible promissory note to BCD Technology S.A., a
shareholder of the Company, interest at 5.72%, principal
and interest due November 5, 2001........................ $ 0 $ 8,000,000
Convertible promissory note to Hogg Robinson
International Benefits Limited ("Hogg"), a shareholder of
the Company, interest at 5.72%, principal and interest
due November 5, 2001..................................... 0 2,000,000
---------- -----------
Total convertible long-term debt............... $ 0 $10,000,000
========== ===========
</TABLE>
Both BCD Technology S.A. and Hogg have the right to convert the
outstanding principal and accrued interest of the convertible promissory
notes on the due date into shares of common stock of TRX. However, the
outstanding balance, principal and interest will automatically convert into
common stock immediately prior to an underwritten initial public offering
or immediately upon the conversion of the other note. The number of shares
issuable increases as the interest accrued on the notes increases. If the
offering had been consummated on December 31, 1999, we would have issued an
aggregate of 850,704 shares of common stock upon conversion of the notes.
F-12
<PAGE> 70
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. OTHER LONG-TERM DEBT
Other long-term debt consists of the following at December 31, 1998
and 1999:
<TABLE>
<CAPTION>
1998 1999
---------- --------
<S> <C> <C>
Promissory note to Delta Services, B.V., an affiliate of a
shareholder of the Company, interest at 9.5%.............. $1,357,569 $ 0
Four separate promissory notes to the former owners of
International Software Products, shareholders of the
Company, interest at prime, principal and interest due
November 4, 2002.......................................... 0 800,000
---------- --------
Total............................................. 1,357,569 800,000
Less current portion........................................ 1,357,569 0
---------- --------
Total other long-term debt, less current
portion......................................... $ 0 $800,000
========== ========
</TABLE>
8. INCOME TAXES
Effective November 4, 1999, the Company reorganized into a corporation
which was to be taxable under Subchapter C of the Internal Revenue Code. In
connection with this reorganization, the Company recorded net deferred tax
assets of $666,374. Simultaneously, with the recording of these net
deferred tax assets, the Company recorded a valuation allowance of
$666,374.
The components of deferred taxes at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 754,418
Allowance for doubtful accounts........................... 177,427
Intangibles............................................... 342,000
Other..................................................... 56,299
---------
Total deferred tax assets......................... 1,330,144
---------
Deferred tax liabilities:
Depreciation.............................................. 268,757
Capitalized software...................................... 203,626
---------
Total deferred tax liabilities.................... 472,383
---------
Net deferred tax assets..................................... 857,761
Valuation allowance....................................... (857,761)
---------
Net deferred taxes................................ $ 0
=========
</TABLE>
Pro forma or actual benefits for income taxes are not presented in the
accompanying consolidated statements of loss as the pro forma or actual net
deferred tax assets have been fully reserved at each year end. The
valuation allowance was recorded due to the uncertainty surrounding the
future utilization of the net deferred tax assets. A reconciliation of
income taxes
F-13
<PAGE> 71
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
at the federal statutory rate to the tax provision recorded by the Company
for the period from November 4, 1999 to December 31, 1999 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Income tax benefit computed at the federal statutory rate... $248,479
State income taxes, net of federal tax benefit.............. 12,360
Nondeductible goodwill amortization......................... (62,436)
Other....................................................... (7,016)
Change in deferred tax asset valuation allowance............ (191,387)
--------
$ 0
========
</TABLE>
9. SHAREHOLDERS' EQUITY
COMMON STOCK
The authorized capital of the Company consists of 100,000,000 shares of
common stock with a par value of $.01 per share. On November 4, 1999, as part of
a reorganization, the Company issued 8,979,592 shares of common stock to the
former members of WorldTravel Technologies, L.L.C. (Note 1). In addition,
289,781 shares of common stock were issued in connection with the purchase of
International Software Products (Note 3). All shares outstanding are subject to
shareholders agreements that contain restrictions on the transfer of the shares.
These agreements terminate immediately upon the consummation of an initial
public offering.
PROFIT PARTICIPATION UNITS
During 1998 and 1999, the Company sold profit participation units to
certain key executives. These units entitled the holders to a percentage of the
appreciation of the fair market value of the Company from the agreed upon fair
market value at the date on which the profit participation units were issued
(the "Participation Base"). Due to increases in the fair market value of the
Company during 1998 and 1999, compensation expense of $190,000 and $1,485,000,
respectively, was recorded in the accompanying consolidated statements of loss.
On November 4, 1999, these units were converted into common shares based on each
holder's percentage of ownership multiplied by the appreciation of the fair
market value of the Company over the Participation Base.
10. RELATED-PARTY TRANSACTIONS
TRX participates in a master cash account that is sponsored by WorldTravel
Partners ("WTP"), an affiliated entity. All deposits and disbursements of TRX
flow through this account, and any overdrafts are funded by affiliated
participants with positive cash balances. Each participant is allocated interest
income or expense based on its weighted average cash balance during the year.
During 1997, 1998 and 1999, TRX was allocated net interest expense of $88,988,
$383,296 and $30,212, respectively. At December 31, 1998 and 1999, TRX's
balances in the account are $(1,537,892) and $(336,715), respectively, and are
included in due to affiliates in the accompanying consolidated balance sheets.
During 1997, 1998 and 1999, the Company recognized revenues from WTP
totaling $1,079,986, $1,894,160, and $4,110,971, respectively. These amounts
primarily relate to transaction fees and are included in revenue in the
accompanying consolidated statements of loss.
Historically, TRX has paid a monthly overhead fee to WTP equal to estimated
costs incurred by WTP on behalf of TRX for various services plus a profit
margin. Overhead fees of $975,000, $975,000, and $1,000,000, respectively, were
paid in 1997, 1998 and 1999 to WTP and are included
F-14
<PAGE> 72
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
in selling, general, and administrative expenses in the accompanying
consolidated statements of loss.
Effective November 1, 1999, TRX entered into various contracts with
WTP replacing the existing fee and overhead arrangements. TRX has
contracted to provide WTP with professional services related to software
development, as requested by WTP and agreed to by TRX, under a Master
Development Agreement. Pursuant to an End User Software License Agreement
("EULA"), TRX has granted WTP a nonexclusive license to use identified TRX
software products and related manuals and documentation. Pursuant to a
Software Support Agreement executed as an Exhibit to the EULA, TRX has
agreed to provide ongoing support for identified TRX software products
under certain terms and conditions. TRX has also entered into two service
bureau service agreements with WTP under which TRX will process WTP's
traditional corporate travel transactions through TRX's software service
bureau and TRX will provide fulfillment services for WTP's
internet/intranet/extranet transactions to WTP's company-owned locations in
the U.S. and Canada.
TRX has also contracted with WTP under a Shared Services Agreement for
WTP to provide certain overhead services in exchange for an overhead fee
charged at actual cost plus 10%. TRX may, under this agreement, request a
change in the services rendered and a commensurate change in the fee in the
event the operations of TRX cause a substantial increase or decrease in the
need for services rendered by WTP on TRX's behalf. Amounts due under the
Shared Services Agreement for the period from November 1, 1999 through
December 31, 1999 are included in the $1,000,000 paid to WTP for the year
ended December 31, 1999.
At December 31, 1999, the Company has two convertible promissory notes
payable to two shareholders and an affiliate of a shareholder and four
separate promissory notes payable to shareholders (Note 6).
11. PROFIT-SHARING PLAN
TRX participates in a 401(k) profit-sharing plan (the "Plan")
sponsored by WTP. All employees of the Company are eligible to participate
on the first day of the quarter subsequent to their hire dates and upon
attaining age 21. The Plan includes a salary deferral arrangement pursuant
to which participants may contribute up to 15% of their salary on a pretax
basis. The employer matching contribution is equal to 50% of a
participant's contributions, up to 3% of pretax compensation. Participants
are also eligible to receive profit-sharing contributions, which are
determined annually on a discretionary basis by the board of directors and
are allocated to participants based on their compensation. The Company made
no such contributions during 1997, 1998, or 1999. Total expense recognized
under the Plan was $10,005, $30,440, and $101,289 for the years ended
December 31, 1997, 1998 and 1999, respectively.
F-15
<PAGE> 73
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information for the years ended December 31, 1997,
1998, and 1999 is as follows:
<TABLE>
<CAPTION>
1997 1998 1999
------- -------- ----------
<S> <C> <C> <C>
Interest paid...................................... $88,988 $383,296 $ 463,445
Noncash transactions:
Issuance of common stock in connection with the
purchase of International Software Products...... 0 0 5,000,000
Issuance of notes payable in connection with the
purchase of International Software Products...... 0 0 800,000
</TABLE>
13. INDUSTRY SEGMENTS
The Company has two reportable segments: the transaction processing
services segment which provides transaction fulfillment, customer support,
technology services, and data management services and the software licensing
segment which licenses and maintains software.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Intersegment sales and transfers
are not significant.
The following tables summarize, for the years indicated, operating results
and other financial information by industry segment:
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Transaction processing services.......... $ 5,157,560 $10,646,133 $22,245,969
Software licensing....................... 2,869,297 3,634,373 4,326,766
Corporate................................ 270,756 0 0
----------- ----------- -----------
Total............................ $ 8,297,613 $14,280,506 $26,572,735
=========== =========== ===========
Net Income (Loss):
Transaction processing services.......... $ (805,882) $ 977,740 $ 2,128,335
Software licensing....................... (456,277) (1,658,339) (1,164,709)
Corporate................................ 13,973 (431,671) (2,606,173)
----------- ----------- -----------
Total............................ $(1,248,186) $(1,112,270) $(1,642,547)
=========== =========== ===========
Identifiable Assets:
Transaction processing services.......... $ 2,712,897 $ 3,835,062 $19,736,201
Software licensing....................... 1,472,725 1,501,078 2,211,706
Corporate................................ 0 0 221,500
----------- ----------- -----------
Total............................ $ 4,185,622 $ 5,336,140 $22,169,407
=========== =========== ===========
Depreciation and Amortization:
Transaction processing services.......... $ 414,119 $ 535,694 $ 1,197,836
Software licensing....................... 484,105 415,444 279,835
Corporate................................ 0 0 0
----------- ----------- -----------
Total............................ $ 898,224 $ 951,138 $ 1,477,671
=========== =========== ===========
</TABLE>
F-16
<PAGE> 74
TRX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Capital Expenditures:
Transaction processing services.......... $ 1,388,411 $ 1,132,005 $ 4,171,340
Software licensing....................... 287,028 543,580 896,487
Corporate................................ 0 0 0
----------- ----------- -----------
Total............................ $ 1,675,439 $ 1,675,585 $ 5,067,827
=========== =========== ===========
</TABLE>
14. SUBSEQUENT EVENTS
INITIAL PUBLIC OFFERING
The Company is planning an initial public offering of its common stock
which is targeted for completion in the second quarter of 2000. There can be,
however, no assurance that the offering will be completed.
STOCK INCENTIVE PLAN
On January 13, 2000, the Company adopted the 2000 Stock Incentive Plan (the
"Stock Plan"). Under the terms of the Stock Plan, options to purchase 1,300,000
shares of the Company's common stock are authorized to be granted. No options
had been granted as of January 28, 2000; however, under two employment
agreements, the Company committed to grant 390,000 options at a per share
exercise price of $5 per share. The compensation committee of the board of
directors has not yet formally approved the granting of these shares. In
addition, in the event of an initial public offering, the Company has committed
to grant 230,000 options at a per share exercise price equal to the offering
price. Options become exercisable in 20% increments from the grant date with the
final increment becoming exercisable six months after four years from the grant
date.
F-17
<PAGE> 75
TRX, INC. AND SUBSIDIARIES
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
On November 4, 1999, the Company issued convertible promissory notes to BCD
Technology S.A. and Hogg Robinson International Benefits Limited for $8,000,000
and $2,000,000, respectively. Interest accrues at 5.72%. The number of shares
issuable increases as the interest accrued on the notes increases. If the
offering had been consummated on December 31, 1999, we would have issued an
aggregate of 850,704 shares of common stock upon conversion of the notes. The
following Unaudited Pro Forma Combined Balance Sheet as of December 31, 1999 has
been prepared to reflect the financial position of TRX, Inc. and Subsidiaries
(the "Company") as if the conversion of the outstanding principal and accrued
interest of the convertible promissory notes into the Company's common stock had
occurred on December 31, 1999 (the "Conversion").
On November 4, 1999, the Company purchased all of the outstanding shares of
International Software Products for an aggregate purchase price of approximately
$7,371,000. The purchase price included 289,781 shares of the Company's common
stock with a guaranteed value totaling $5,000,000, promissory notes payable
totaling $800,000, and approximately $1,571,000 in cash. The acquisition has
been accounted for using the purchase method. The excess of the purchase price
over the fair value of the net assets acquired (goodwill) was approximately
$7,492,000 and is being amortized over seven years using the straight-line
method. The following Unaudited Pro Forma Combined Statement of Loss for the
year ended December 31, 1999 has been prepared to reflect the operations of the
Company as if the purchase of all of the outstanding shares of International
Software Products had been consummated on January 1, 1999 (the "Acquisition").
The unaudited pro forma combined financial statements are not necessarily
indicative of the results that would have occurred if the assumed transactions
had occurred on the date indicated or the expected financial position or results
of operations in the future. The unaudited pro forma combined financial
statements should be read in conjunction with the separate historical
consolidated financial statements and notes thereto of the Company, as well as
the historical financial statements and notes thereto of International Software
Products contained elsewhere herein, and in conjunction with the related
assumptions and notes to these unaudited pro forma combined financial
statements.
F-18
<PAGE> 76
TRX, INC. AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
TRX, INC.
AND PRO FORMA
SUBSIDIARIES ADJUSTMENTS PRO FORMA
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... $ 0 $ 0 $ 0
Accounts receivable, net of allowance for
doubtful accounts of $336,588 and $466,914
in 1998 and 1999, respectively............. 7,133,696 0 7,133,696
Other current assets.......................... 388,060 0 388,060
----------- ----------- -----------
Total current assets.................. 7,521,756 0 7,521,756
Property and Equipment, net..................... 6,701,085 0 6,701,085
Software Development Costs, net................. 535,857 0 535,857
Goodwill, net................................... 7,314,042 0 7,314,042
Noncompete Agreement, net....................... 96,667 0 96,667
----------- ----------- -----------
Total assets.......................... $22,169,407 $ 0 $22,169,407
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities...... $ 3,036,670 $ 0 $ 3,036,670
Customer deposits............................. 3,987,492 0 3,987,492
Deferred revenues............................. 1,678,720 0 1,678,720
Due to affiliates, net........................ 1,315,149 0 1,315,149
----------- ----------- -----------
Total current liabilities............. 10,018,031 0 10,018,031
Convertible long-term debt.................... 10,000,000 (10,000,000)(a) 0
Other long-term debt.......................... 800,000 0 800,000
Long-term accrued interest.................... 106,934 (95,333)(b) 11,601
----------- ----------- -----------
Total liabilities..................... 20,924,965 (10,095,333) 10,829,632
----------- ----------- -----------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $0.01 par value; 100,000,000
shares authorized; 9,269,373 shares issued
and outstanding in 1999.................... 92,694 8,507(c) 101,201
Additional paid-in capital.................... 1,861,687 10,086,826(d) 11,948,513
Accumulated deficit........................... (709,939) 0 (709,939)
----------- ----------- -----------
Total shareholders' equity............ 1,244,442 10,095,333 11,339,775
----------- ----------- -----------
Total liabilities and shareholders'
equity.............................. $22,169,407 $ 0 $22,169,407
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this pro forma balance sheet.
F-19
<PAGE> 77
TRX, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF LOSS
FOR THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
TRX, INC. INTERNATIONAL
AND SOFTWARE PRO FORMA
SUBSIDIARIES PRODUCTS ADJUSTMENTS PRO FORMA
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues............................... $26,572,735 $1,169,311 $ 0 $27,742,046
----------- ---------- --------- -----------
Expenses:
Operating............................ 15,178,882 714,132 0 15,893,014
Selling, general and
administrative.................... 8,407,451 363,395 0 8,770,846
Technology development............... 2,882,761 0 0 2,882,761
Depreciation and amortization........ 1,477,671 38,801 891,956(e) 2,472,598
47,503(f)
16,667(g)
----------- ---------- --------- -----------
Total expenses............... 27,946,765 1,116,328 956,126 30,019,219
----------- ---------- --------- -----------
Operating (loss) income................ (1,374,030) 52,983 (956,126) (2,277,173)
Interest expense, net.................. 268,517 14,529 74,895(h) 262,608
56,667(i)
(95,333)(j)
(56,667)(k)
----------- ---------- --------- -----------
Net (loss) income...................... $(1,642,547) $ 38,454 $(935,688) $(2,539,781)
=========== ========== ========= ===========
Pro forma loss per common share, basic
and diluted.......................... $ (0.18) $ (0.25)
=========== ===========
Pro forma weighted average shares 850,704(l)
outstanding, basic and diluted....... 9,025,095 244,278(m) 10,120,077
=========== ========= ===========
</TABLE>
The accompanying notes are an integral part of this pro forma financial
statement.
F-20
<PAGE> 78
TRX, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(UNAUDITED)
1. PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
The following pro forma adjustments were made to the historical
consolidated balance sheet of the Company to show the Conversion as if it had
been consummated on December 31, 1999.
(a) To reflect the reduction in convertible promissory notes upon the
Conversion.
(b) To reflect the reduction in accrued interest on the convertible
promissory notes upon the Conversion.
(c) To reflect increase in par value for common stock issued in
conjunction with the Conversion.
(d) To reflect increase in additional paid-in capital for common stock
issued in conjunction with the Conversion.
2. PRO FORMA COMBINED STATEMENT OF LOSS ADJUSTMENTS
The following pro forma adjustments were made to the historical
consolidated statement of loss of the Company to reflect the Acquisition and the
Conversion as if they had been consummated on January 1, 1999.
(e) To reflect the increase of amortization expense related to the
goodwill recorded under the purchase method for the Acquisition over seven
years.
(f) To reflect the increase of amortization expense related to the
capitalized software recorded in conjunction with the Acquisition over five
years.
(g) To reflect the increase of amortization expense related to the
noncompete agreement in conjunction with the Acquisition over five years.
(h) To reflect the increase of interest expense on the convertible
promissory notes issued to finance the cash portion of the Acquisition.
(i) To reflect the increase of interest expense on the promissory notes
issued in conjunction with the Acquisition.
(j) To eliminate interest expense recorded by the Company from November
4, 1999 to December 31, 1999 on the convertible promissory notes in
conjunction with the assumed Conversion.
(k) To eliminate additional interest expense on the convertible
promissory notes issued to finance the cash portion of the Acquisition, in
conjunction with the assumed Conversion.
(l) To reflect additional common shares issued in conjunction with the
Conversion as if the shares are outstanding since January 1, 1999.
(m) To reflect shares issued in conjunction with the Acquisition as if
outstanding since January 1, 1999.
F-21
<PAGE> 79
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Arthur H. Ltd.
d/b/a International Software Products:
We have audited the accompanying balance sheets of ARTHUR H. LTD. D/B/A
INTERNATIONAL SOFTWARE PRODUCTS (a Virginia corporation) as of December 31, 1998
and September 30, 1999 and the related statements of (loss) income, changes in
shareholders' deficit, and cash flows for the year ended December 31, 1998 and
the nine month period ended September 30, 1999. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Arthur H. Ltd. d/b/a
International Software Products as of December 31, 1998 and September 30, 1999
and the results of its operations and its cash flows for the year ended December
31, 1998 and the nine month period ended September 30, 1999 in conformity with
generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
Atlanta, Georgia
December 22, 1999
F-22
<PAGE> 80
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
BALANCE SHEETS
DECEMBER 31, 1998 AND SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash...................................................... $ 14,972 $ 64,378
Accounts receivable....................................... 139,236 198,463
-------- --------
Total current assets.............................. 154,208 262,841
Property and Equipment, net................................. 94,861 147,909
Software Development costs, net............................. 81,157 123,553
Security Deposits........................................... 4,120 3,490
-------- --------
Total assets...................................... $334,346 $537,793
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued liabilities.................. $224,179 $298,644
Deferred revenues......................................... 57,419 75,159
Due to shareholders....................................... 168,742 113,594
Notes payable, current portion............................ 24,266 52,149
-------- --------
Total current liabilities......................... 474,606 539,546
Lines of Credit............................................. 9,080 48,033
Notes Payable, net of current portion....................... 21,400 82,500
-------- --------
Total liabilities................................. 505,086 670,079
-------- --------
Commitments and Contingencies (Note 3)
Shareholders' Deficit:
Common stock, $1 par value, 10,000 shares authorized,
issued, and outstanding................................ 10,000 10,000
Additional paid-in capital................................ 330,000 330,000
Accumulated deficit....................................... (510,740) (472,286)
-------- --------
Total shareholders' deficit....................... (170,740) (132,286)
-------- --------
Total liabilities and shareholders' deficit....... $334,346 $537,793
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-23
<PAGE> 81
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
STATEMENTS OF (LOSS) INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Revenues.................................................... $ 845,095 $1,169,311
---------- ----------
Expenses:
Operating................................................. 916,513 714,132
Selling, general and administrative....................... 263,276 363,395
Depreciation and amortization............................. 30,218 38,801
---------- ----------
Total expenses.................................... 1,210,007 1,116,328
---------- ----------
Operating (loss) income..................................... (364,912) 52,983
Interest expense, net....................................... 16,051 14,529
---------- ----------
Net (loss) income........................................... $ (380,963) $ 38,454
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-24
<PAGE> 82
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED SHAREHOLDERS'
STOCK CAPITAL DEFICIT DEFICIT
------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997..................... $10,000 $ 0 $(129,777) $(119,777)
Issuance of stock to employees............... 0 330,000 0 330,000
Net loss..................................... 0 0 (380,963) (380,963)
------- -------- --------- ---------
Balance, December 31, 1998..................... 10,000 330,000 (510,740) (170,740)
Net income................................... 0 0 38,454 38,454
------- -------- --------- ---------
Balance, September 30, 1999.................... $10,000 $330,000 $(472,286) $(132,286)
======= ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-25
<PAGE> 83
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) income......................................... $(380,963) $ 38,454
--------- ---------
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization.......................... 30,218 38,801
Stock compensation..................................... 330,000 0
(Increase) decrease in assets:
Accounts receivable.................................. (95,627) (59,227)
Security deposits.................................... (1,250) 630
Increase in liabilities:
Accounts payable and accrued liabilities............. 95,410 74,465
Deferred revenue..................................... 52,419 17,740
--------- ---------
Total adjustments................................. 411,170 72,409
--------- ---------
Net cash provided by operating activities......... 30,207 110,863
--------- ---------
Cash Flows from Investing Activities:
Purchases of property and equipment....................... (53,285) (71,239)
Capitalized software costs................................ (75,378) (63,006)
--------- ---------
Net cash used in investing activities............. (128,663) (134,245)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from notes payable............................... 29,000 110,000
Proceeds from lines of credit............................. 3,080 41,633
Advances from shareholders................................ 143,900 85,217
Payments on notes payable................................. (37,834) (21,017)
Payments on lines of credit............................... 0 (2,680)
Repayments of advances from shareholders.................. (51,449) (140,365)
--------- ---------
Net cash provided by financing activities......... 86,697 72,788
--------- ---------
Net (decrease) increase in cash............................. (11,759) 49,406
Cash at beginning of period................................. 26,731 14,972
--------- ---------
Cash at end of period....................................... $ 14,972 $ 64,378
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-26
<PAGE> 84
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND SEPTEMBER 30, 1999
1. NATURE OF OPERATIONS
Arthur H. Ltd. d/b/a International Software Products (the "Company") was
incorporated in October 1993. The Company is based in McLean, Virginia. The
Company provides data management services, including data consolidation,
transformation, reporting, and analysis. The services are offered primarily to
the corporate travel industry, both within the United States and Europe.
2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
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 amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company's revenues are primarily derived from data consolidation
services, licensing of software, and maintenance arrangements on licensed
software. Revenue from data consolidation services is recognized in the month in
which the services are provided. Software license revenue is recognized when the
product is delivered. Revenue from support and maintenance on licensed software
is recognized ratably over the term of the maintenance arrangement, which is
typically twelve months. Deferred revenue represents payments received for
services or support and maintenance which have not yet been performed or
software which has not yet been delivered as of December 31, 1998 and September
30, 1999.
CASH
Cash includes operating cash and cash on hand. The Company paid $5,265 and
$4,097 in interest for the year ended December 31, 1998 and the nine month
period ended September 30, 1999, respectively.
ACCOUNTS RECEIVABLE
The Company grants credit to its clients, generally without collateral.
Accounts receivable as of December 31, 1998 and September 30, 1999
consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Trade accounts receivable................................ $119,593 $140,092
Unbilled revenues earned................................. 19,336 55,268
Due from employees....................................... 307 3,103
-------- --------
Total.......................................... $139,236 $198,463
======== ========
</TABLE>
F-27
<PAGE> 85
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of five years for
computer equipment and ten years for office furniture and equipment.
The Company has incurred expenditures on software used to facilitate
internal data consolidation processes. The Company has adopted Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use." This statement requires computer software costs
including internal payroll costs, incurred in connection with the development or
acquisition of software for internal use to be charged to operations as incurred
until certain capitalization criteria are met. Costs incurred in the application
development phase are capitalized by the Company and depreciated over the
estimated useful life of five years.
The following summarizes the components of property and equipment as of
December 31, 1998 and September 30, 1999:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Computer equipment....................................... $ 57,953 $ 94,865
Capitalized internal-use software costs.................. 52,500 73,500
Office furniture and equipment........................... 5,535 18,862
-------- --------
115,988 187,227
Accumulated depreciation................................. (21,127) (39,318)
-------- --------
$ 94,861 $147,909
======== ========
</TABLE>
Depreciation expense was $15,167 and $18,191 for the year ended December
31, 1998 and the nine month period ended September 30, 1999, respectively.
SOFTWARE DEVELOPMENT COSTS
Computer software research and development costs for the Company's software
products to be marketed are charged to expense until technological feasibility
is established, after which remaining software production costs are capitalized
in accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise
Marketed." After the product to be marketed is completed (i.e., at the point
when the product is ready for general release to customers), any further
development costs are expensed as incurred. Capitalized software development
costs are amortized using the straight-line method over a period of five years,
the estimated useful life of the software products.
During the year ended December 31, 1998 and the nine month period ended
September 30, 1999, the Company capitalized $75,378 and $63,006 of software
development costs, respectively. Accumulated amortization was $71,437 and
$92,047 in 1998 and 1999, respectively. Amortization expense related to software
development costs was $15,051 and $20,610 for the year ended December 31, 1998
and the nine month period ended September 30, 1999, respectively.
INCOME TAXES
The Company, with the consent of its shareholders, has elected under the
Internal Revenue Code to be taxed as a Subchapter S corporation. In lieu of
corporation income taxes, the shareholders of a Subchapter S corporation are
taxed on their proportionate share of the Company's
F-28
<PAGE> 86
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
taxable income. Therefore, no provision or liability for federal income taxes
has been included in the financial statements.
3. COMMITMENTS AND CONTINGENCIES
The Company leases certain office space and equipment under noncancelable
operating lease agreements which expire through 2002.
At September 30, 1999, future minimum annual lease payments under the
related noncancelable operating leases are as follows:
<TABLE>
<S> <C>
Year ended September 30:
2000........................................................ $20,524
2001........................................................ 6,054
2002........................................................ 2,104
-------
Total............................................. $28,682
=======
</TABLE>
Rental expense under noncancelable operating lease agreements for the year
ended December 31, 1998 and the nine month period ended September 30, 1999
totaled $35,304 and $37,320, respectively.
4. RELATED-PARTY TRANSACTIONS
The Company owes money to its shareholders for expenses paid by the
shareholders on behalf of the Company and for advances from the shareholders to
the Company. These amounts are due on demand. Interest has been accrued at 8%.
Total interest expense accrued in the year ended December 31, 1998 and the nine
month period ending September 30, 1999 and included in accounts payable and
accrued liabilities at December 31, 1998 and September 30, 1999 is $8,407 and
$9,310, respectively.
Included in accounts payable and accrued liabilities as of December 31,
1998 and September 30, 1999 is $18,388 and $0, respectively, due to a director.
5. LINES OF CREDIT
The Company has two bank credit agreements. The Company's $10,000 credit
agreement expires in December 2000 and is unsecured; however, it is guaranteed
by one of the Company's shareholders. The outstanding balance on the $10,000
credit agreement was $9,080 and $6,400 as of December 31, 1998 and September 30,
1999, respectively. Interest on the outstanding balance is due monthly at prime
plus 3%.
The Company's $50,000 credit agreement is annually renewable and is
secured, together with the bank note payable described in Note 6, by
substantially all the assets of the Company and is guaranteed by two of the
Company's shareholders. One of these shareholders has further collateralized his
guarantee with the assignment to the bank of a deed of trust note payable to the
shareholder and his spouse. The outstanding balance on the $50,000 credit
agreement was $0 and $41,633 as of December 31, 1998 and September 30, 1999,
respectively. Interest on the outstanding balance is due monthly at prime plus
2.5%.
F-29
<PAGE> 87
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. NOTES PAYABLE
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Note payable to a partnership, which includes the president
and shareholder, and a director; dated December 1997, in
the original amount of $15,000; with interest at prime
plus 1%; unsecured........................................ $ 9,400 $ 9,400
Four separate notes payable to a relative of the president
and shareholder; dated March and July 1998, in the
original total amount of $21,500; due in full in January
to July 2000 with interest at prime plus 1%; unsecured.... 21,400 20,749
Note payable to consultant; represents balance due to an
individual who assisted the Company in its initial sales
and marketing efforts in the United Kingdom; due at the
rate of $2,500 per month, with interest at prime plus 3%;
unsecured................................................. 14,866 0
Note payable to bank in the original amount of $110,000,
dated February 1999, and amended June 1999; due in 60
monthly installments of $1,833, plus interest at prime
plus 2.5%; guaranteed by shareholders and secured
(together with the credit agreement described in Note 5)
by substantially all assets of the Company and by
assignment to the bank of a deed of trust note payable to
one of the shareholders and his spouse; final payment due
June 2004................................................. 0 104,500
-------- --------
Total............................................. 45,666 134,649
Less current portion........................................ 24,266 52,149
-------- --------
Notes payable, net of current portion....................... $ 21,400 $ 82,500
======== ========
</TABLE>
7. STOCK-BASED COMPENSATION
In February 1998, the Company issued unrestricted common stock, which was
immediately vested, to two employees of the Company in return for services
performed. Compensation expense of $330,000 was recorded for the year ended
December 31, 1998 pursuant to this transaction and is included in operating
expenses in the accompanying statements of operations.
8. SUBSEQUENT EVENTS
The shareholders of the Company sold all of the issued and outstanding
shares of common stock in the Company to TRX, Inc. on November 4, 1999. In
connection with this transaction, the Company repaid all outstanding balances on
its credit facilities, notes payable, and amounts due to shareholders.
F-30
<PAGE> 88
- ----------------------------------------------------------
- ----------------------------------------------------------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................... 1
Risk Factors............................. 5
Use of Proceeds.......................... 13
Dividend Policy.......................... 13
Capitalization........................... 14
Dilution................................. 15
Selected Consolidated Financial Data..... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 17
Business................................. 24
Management............................... 36
Certain Relationships and Related
Transactions........................... 42
Principal Shareholders................... 47
Description of Capital Stock............. 48
Shares Eligible for Future Sale.......... 50
Underwriting............................. 52
Legal Matters............................ 53
Experts.................................. 53
Where You Can Find More Information...... 53
Index to Financial Statements............ F-1
</TABLE>
Through and including , 2000 (the 25th day after the date of
this prospectus), all dealers effecting transactions in these securities,
whether or not participating in the offering, may be required to deliver a
prospectus. This is in addition to a dealer's obligation to deliver a prospectus
when acting as an underwriter and with respect to an unsold allotment or
subscription.
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
Shares
TRX, INC.
Common Stock
---------------------
[LOGO]
---------------------
GOLDMAN, SACHS & CO.
ABN AMRO ROTHSCHILD
A DIVISION OF ABN AMRO INCORPORATED
THE ROBINSON-HUMPHREY COMPANY
Representatives of the Underwriters
- ----------------------------------------------------------
- ----------------------------------------------------------
<PAGE> 89
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered hereby:
<TABLE>
<S> <C>
SEC Registration Fee........................................ *
NASD Filing Fee............................................. *
Nasdaq National Market Listing Fee.......................... *
Blue Sky Fees and Expenses.................................. *
Printing and Engraving Costs................................ *
Legal Fees and Expenses..................................... *
Accounting Fees and Expenses................................ *
Transfer Agent and Registrar Fees and Expenses.............. *
Miscellaneous............................................... *
---
Total............................................. $
===
</TABLE>
- ---------------
* To be supplied by amendment.
The foregoing, except for the Securities and Exchange Commission
registration fee, the National Association of Securities Dealers, Inc. fee and
the Nasdaq National Market fee, are estimates.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation eliminate, as permitted by Section
14-2-202(b)(4) of the Georgia Business Corporation Code (the "Georgia Code"),
the personal liability of directors and officers for monetary damages to the
corporation or its shareholders for breach of their duty of care and other
duties; provided, however, that our Articles of Incorporation and Section
14-2-202(b)(4) of the Georgia Code do not permit us to eliminate or limit
liability for (i) a breach of duty involving appropriation of a business
opportunity of TRX; (ii) an act or omission which involves intentional
misconduct or a knowing violation of law; (iii) any transaction from which an
improper personal benefit is derived; or (iv) any payments of a dividend or any
other type of distribution that is illegal under Section 14-2-832 of the Georgia
Code. In addition, if at any time the Georgia Code is amended to authorize
further elimination or limitation of personal liability, then the liability of
each director and officer of TRX shall be eliminated or limited to the fullest
extent permitted by such provisions, as so amended, without further action by
the shareholders, unless the provisions of the Georgia Code require such action.
Sections 14-2-850 to 14-2-859, inclusive, of the Georgia Code govern the
indemnification of directors, officers, employees and agents. Section 14-2-851
of the Georgia Code provides for indemnification of a director of TRX for
liability incurred by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative and whether formal or informal, in which he may
become involved by reason of being a director of TRX. Section 14-2-851 also
provides such indemnity for directors who, at the request of TRX, act as
directors, officers, partners, trustees, employees or agents of another foreign
or domestic corporation, partnership, joint venture, trust, employee benefit
plan or another enterprise. Section 14-2-851 permits indemnification if the
director acted in a manner he believed in good faith to be in or not opposed to
the best interest of TRX and, in addition, in criminal proceedings, if he had no
reasonable cause to believe his conduct was unlawful. If the required standard
of conduct is met, indemnification may include judgments, settlements,
penalties, fines or reasonable expenses (including attorneys' fees) incurred
with respect to a proceeding. However, if the director is adjudged
II-1
<PAGE> 90
liable to TRX in a derivative action or on the basis that personal benefit was
improperly received by him, the director will only be entitled to such
indemnification for reasonable expenses as a court finds to be proper in
accordance with the provisions of Section 14-2-854.
Section 14-2-852 of the Georgia Code provides that directors who are
successful with respect to any claim brought against them, which claim is
brought because they are or were directors, are entitled to indemnification
against reasonable expenses as of right. Conversely, if the charges made in any
action are sustained, the determination of whether the required standard of
conduct has been met will be made, in accordance with the provisions of Section
14-2-855 of the Georgia Code, as follows: (i) if there are two or more
disinterested members of the board of directors, by the majority vote of a
quorum of the disinterested members of the board of directors, (ii) by a
majority of the members of a committee of two or more disinterested directors,
(iii) by special legal counsel or (iv) by the shareholders, but, in such event,
the shares owned by or voted under the control of directors seeking
indemnification may not be voted.
Section 14-2-857 of the Georgia Code provides that an officer who is not a
director has the mandatory right of indemnification granted to directors under
Section 14-2-852, as described above. In addition, TRX may, as provided by its
Articles, Bylaws, general or specific actions by its Board of Directors, or by
contract, indemnify and advance expenses to an officer, employee or agent who is
not a director to the extent that such indemnification is consistent with public
policy.
Our Articles of Incorporation eliminate the personal liability of our
directors to TRX or our shareholders for monetary damage for any breach of duty
as a director, provided that we cannot eliminate or limit the liability of a
director for:
- a breach of duty involving appropriation of a business opportunity of
TRX;
- an act or omission which involves intentional misconduct or a knowing
violation of law;
- any transaction from which the director receives an improper personal
benefit; or
- unlawful corporate distributions.
In addition, if at any time the Georgia Code is amended to authorize
further elimination or limitation of the personal liability of a director, then
the liability of each of our directors shall be eliminated or limited to the
fullest extent permitted by such provisions, as so amended.
Our bylaws require us to indemnify any director or officer who was or is a
party or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative or
investigative (including any action or suit by or in our right) because such
person is or was one of our directors or officers, against liability incurred by
the director of officer in such proceeding except for any liability incurred in
a proceeding in which the director or officer is adjudged liable to us or is
subjected to injunctive relief in our favor for:
- any appropriation, in violation of such director's or officer's
duties, of any business opportunity of TRX;
- acts or omissions which involve intentional misconduct or a knowing
violation of law;
- any transaction from which such officer or director received an
improper personal benefit; or
- unlawful corporate distributions.
We have entered into separate indemnity agreements with each of our
directors and certain of our executive officers, whereby we agree to indemnify
them and to advance them expenses in a manner and subject to terms and
conditions similar to those set forth in our Articles of Incorporation and
bylaws.
II-2
<PAGE> 91
Reference is hereby made to Section [ ] of the Underwriting Agreement,
the form of which is filed as Exhibit 1 hereto, in which the Underwriters agree
to indemnify our directors and officers and certain other persons against
certain civil liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In November 1999, BCD Technology S.A. contributed all of its interest in
BCD Technology, Inc. to us in exchange for 7,559,733 shares of our common stock,
and the members of WorldTravel Technologies, L.L.C. other than BCD Technology,
Inc. contributed all of their membership interests in WorldTravel Technologies,
L.L.C. to us in exchange for 1,419,859 shares of our common stock. In this
transaction, the following individuals exchanged their membership interests in
WorldTravel Technologies, L.L.C. for the indicated number of our shares:
<TABLE>
<CAPTION>
TRX SHARES
SHAREHOLDER RECEIVED IN EXCHANGE
- ----------- -------------------------------
<S> <C>
The Alexander Family, L.P............................. 1,061,015
Danny B. Hood......................................... 221,045
Ralph Manaker......................................... 64,327
Steve Reynolds........................................ 36,736
Velva ("Demme") Wiggins............................... 36,736
</TABLE>
In November 1999, the shareholders of International Software Products
exchanged all of their shares of International Software Products for shares of
our common stock and other consideration. In this transaction, Susan R. Hopley
exchanged 6,760 shares of International Software Products for 195,892 shares of
our common stock, approximately $1.1 million in cash and a promissory note
issued by us for $541,000.Christopher M. Brittin exchanged 2,740 shares of
International Software Products for 79,400 shares of our common stock,
approximately $400,000 in cash and a promissory note issued by us for $219,000.
Other shareholders of International Software Products exchanged an aggregate of
500,000 shares of International Software Products for 14,669 shares of our
common stock and promissory notes issued by us for an aggregate of $40,000. In
addition, we satisfied certain debt obligations of International Software
Products to Ms. Hopley, Mr. Brittin and certain affiliates of Mr. Brittin.
The issuances described in this Item 15 were deemed to be exempt from
registration under the Securities Act of 1933, as amended, in reliance upon
Section 4(2) thereof as a transaction by an issuer not involving any public
offering.
II-3
<PAGE> 92
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.(+)
The following exhibits are filed with this registration statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <C> <S>
1 -- Form of Underwriting Agreement.*
2.1 -- Contribution Agreement, dated November 4, 1999, among WT
Technologies, Inc., Arthur H. Ltd., Susan R. Hopley,
Christopher M. Brittin, F. Gilmer Siler and the Smith
Trust.**
2.2 -- Contribution Agreement, dated November 4, 1999, among WT
Technologies, Inc., BCD Technology S.A., The Alexander
Family, L.P., Danny B. Hood, Ralph Manaker and Velva
Wiggins.
3.1 -- Articles of Incorporation of the Registrant.
3.2 -- Bylaws of the Registrant.
4.1 -- Shareholders Agreement, dated November 4, 1999, among WT
Technologies, Inc., BCD Technology S.A., Christopher M.
Brittin, Susan R. Hopley, the Smith Trust and F. Gilmer
Siler.
4.2 -- Shareholders Agreement, dated November 4, 1999, among WT
Technologies, Inc., BCD Technology S.A., The Alexander
Family, L.P., Danny B. Hood, Ralph Manaker, Steve Reynolds
and Velva Wiggins.
4.3 -- Shareholders Agreement, dated November 5, 1999, as amended
February 18, 2000, among WT Technologies, Inc., Hogg
Robinson International Benefits Limited and BCD Technology
S.A.**
4.4 -- Voting and Transfer Restriction Agreement, dated November 4,
1999, among WT Technologies, Inc., Susan R. Hopley and the
Smith Trust.
4.5 -- Convertible Promissory Note, dated November 5, 1999, between
WT Technologies, Inc. and Hogg Robinson International
Benefits Limited.
4.6 -- Convertible Promissory Note, dated November 5, 1999, between
WT Technologies, Inc. and BCD Technology S.A.
5 -- Opinion of Long Aldridge & Norman LLP (including consent).*
10.1 -- Service Agreement, dated October 9, 1996, as amended January
1, 1999, between WorldTravel Partners, L.P. and Microsoft
Corporation.*
10.2 -- Shared Services Agreement, dated November 1, 1999, between
WorldTravel Technologies, L.L.C. and WorldTravel Partners I,
L.L.C.**
10.3 -- Master Development Agreement between WorldTravel
Technologies, L.L.C. and WorldTravel Partners I, L.L.C.*
10.4 -- End User Software License Agreement, dated November 1, 1999,
between WorldTravel Technologies, L.L.C. and WorldTravel
Partners I, L.L.C.(*)(**)
10.5 -- Service Bureau Software Services Agreement, dated November
1, 1999, between WorldTravel Technologies, L.L.C. and
WorldTravel Partners I, L.L.C.(*)(**)
10.6 -- OFS Service Bureau/Outsourcing Agreement, dated November 1,
1999, between WorldTravel Technologies, L.L.C. and
WorldTravel Partners I, L.L.C.(*)(**)
10.7 -- TRX, Inc. 2000 Stock Incentive Plan
10.8 -- Employment Agreement, dated December 1, 1999, between WT
Technologies, Inc. and Norwood H. Davis, III.*
10.9 -- Employment Agreement, dated November 1, 1999, between
WorldTravel Technologies, L.L.C. and David Fromal.*
</TABLE>
II-4
<PAGE> 93
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <C> <S>
10.10 -- Employment Agreement, between TRX, Inc. and Timothy J.
Severt.*
10.11 -- Employment Agreement, between TRX, Inc. and Scott Hancock.*
10.12 -- Lease Agreement dated October 15, 1995, as amended August 7,
1996, April 8, 1997, December 3, 1997, October 5, 1998,
April 22, 1999 and August 17, 1999, between WorldTravel
Partners, L.P. and Weeks Realty, L.P.
10.13 -- Lease Agreement, effective October 1, 1999, among
WorldTravel Technologies, L.L.C., Michael Barker and Denver
Horn.
10.14 -- Lease Agreement, dated October 1, 1999, between WorldTravel
Technologies, L.L.C. and Hefty Publishing Company.
10.15 -- Lease Agreement, dated September 15, 1997, as amended June
15, 1998, October 1, 1998 and June 15, 1999, between Travel
Technologies Group, L.P. and 4849 Greenville Partners.
10.16 -- Lease Agreement, dated October 25, 1999, effective November
1, 1999, between Arthur H. Ltd. and Young & Skidmore Co.*
10.17 -- Lease Agreement, dated October 25, 1999, effective February
1, 2000, between Arthur H. Ltd. and Young & Skidmore Co.*
10.18 -- Shareholders Agreement, dated February 18, 2000, between
Hogg Robinson plc, Hogg Robinson Services Limited, WTT UK
Limited, WT Technologies, Inc. and Fortdove Limited.
10.19 -- Software License Agreement, dated February 18, 2000, between
WorldTravel Technologies, L.L.C. and Technology Licensing
Company, LLC.
10.20 -- Software License Agreement, dated February 18, 2000, between
Technology Licensing Company, LLC and Fortdove Limited.
10.21 -- Service Bureau/Outsourcing Agreement for Online Fullfillment
Services, dated February 18, 2000, between Fortdove Limited
& Hogg Robinson plc.*
10.22 -- Reciprocal Software Development Agreement, dated February
18, 2000, between WorldTravel Technologies, L.L.C. &
Fortdove Limited.
10.23 -- Service Bureau Software Services Agreement, dated February
18, 2000, between Fortdove Limited & Hogg Robinson plc.
21 -- Subsidiaries of the Registrant.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Long Aldridge & Norman LLP (to be contained in
Exhibit 5).*
24 -- Powers of Attorney (included in the signature page hereto).
27 -- Financial Data Schedule (for SEC use only).
</TABLE>
- ---------------
+ Pursuant to Item 601(b)(4)(iii) of Regulation S-K under the Securities Act,
TRX, Inc. agrees to furnish supplementally to the Commission a copy of
certain omitted promissory notes payable by TRX, Inc.
* To be filed by amendment.
** TRX, Inc. agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the Commission.
(b) Financial Statement Schedules.
All schedules have been omitted because they are not required or because
the required information is given in the financial statements or the notes to
those statements.
II-5
<PAGE> 94
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, 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 foregoing provisions, 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, 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 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 undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information which may be omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form or prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities 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-6
<PAGE> 95
SIGNATURES
Pursuant to the requirements of the Act, the registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Atlanta, State of Georgia, on February 18, 2000.
TRX, Inc.
By: /s/ NORWOOD H. DAVIS, III
------------------------------------
Norwood H. Davis, III
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints John C. Alexander and Norwood H. Davis, III, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution, for him and in his 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 file the same, with all exhibits thereto,
and other 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, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ NORWOOD H. DAVIS, III President, Chief Executive February 18, 2000
- ----------------------------------------------------- Officer and Director
Norwood H. Davis, III
/s/ WILLIAM J. BILLIARD Senior Vice President of February 18, 2000
- ----------------------------------------------------- Finance and Treasurer
William J. Billiard (principal financial and
accounting officer)
/s/ JOHN C. ALEXANDER Chairman of the Board February 18, 2000
- ----------------------------------------------------- and Director
John C. Alexander
/s/ JOHN A. FENTENER VAN VLISSINGEN Director February 18, 2000
- -----------------------------------------------------
John A. Fentener van Vlissingen
/s/ GERARD BOEL Director February 18, 2000
- -----------------------------------------------------
Gerard Boel
/s/ DAVID J. C. RADCLIFFE Director February 18, 2000
- -----------------------------------------------------
David J. C. Radcliffe
</TABLE>
II-7
<PAGE> 96
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM C. NUSSEY Director February 18, 2000
- -----------------------------------------------------
William C. Nussey
/s/ JOHN F. DAVIS, III Director February 18, 2000
- -----------------------------------------------------
John F. Davis, III
</TABLE>
II-8
<PAGE> 97
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <C> <S>
1 -- Form of Underwriting Agreement.*
2.1 -- Contribution Agreement, dated November 4, 1999, among WT
Technologies, Inc., Arthur H. Ltd., Susan R. Hopley,
Christopher M. Brittin, F. Gilmer Siler and the Smith
Trust.**
2.2 -- Contribution Agreement, dated November 4, 1999, among WT
Technologies, Inc., BCD Technology S.A., The Alexander
Family, L.P., Danny B. Hood, Ralph Manaker and Velva
Wiggins.
3.1 -- Articles of Incorporation of the Registrant.
3.2 -- Bylaws of the Registrant.
4.1 -- Shareholders Agreement, dated November 4, 1999, among WT
Technologies, Inc., BCD Technology S.A., Christopher M.
Brittin, Susan R. Hopley, the Smith Trust and F. Gilmer
Siler.
4.2 -- Shareholders Agreement, dated November 4, 1999, among WT
Technologies, Inc., BCD Technology S.A., The Alexander
Family, L.P., Danny B. Hood, Ralph Manaker, Steve Reynolds
and Velva Wiggins.
4.3 -- Shareholders Agreement, dated November 5, 1999, as amended
February 18, 2000, among WT Technologies, Inc., Hogg
Robinson International Benefits Limited and BCD Technology
S.A.**
4.4 -- Voting and Transfer Restriction Agreement, dated November 4,
1999, among WT Technologies, Inc., Susan R. Hopley and the
Smith Trust.
4.5 -- Convertible Promissory Note, dated November 5, 1999, between
WT Technologies, Inc. and Hogg Robinson International
Benefits Limited.
4.6 -- Convertible Promissory Note, dated November 5, 1999, between
WT Technologies, Inc. and BCD Technology S.A.
5 -- Opinion of Long Aldridge & Norman LLP (including consent).*
10.1 -- Service Agreement, dated October 9, 1996, as amended January
1, 1999, between WorldTravel Partners, L.P. and Microsoft
Corporation.*
10.2 -- Shared Services Agreement, dated November 1, 1999, between
WorldTravel Technologies, L.L.C. and WorldTravel Partners I,
L.L.C.**
10.3 -- Master Development Agreement between WorldTravel
Technologies, L.L.C. and WorldTravel Partners I, L.L.C.*
10.4 -- End User Software License Agreement, dated November 1, 1999,
between WorldTravel Technologies, L.L.C. and WorldTravel
Partners I, L.L.C.(*)(**)
10.5 -- Service Bureau Software Services Agreement, dated November
1, 1999, between WorldTravel Technologies, L.L.C. and
WorldTravel Partners I, L.L.C.(*)(**)
10.6 -- OFS Service Bureau/Outsourcing Agreement, dated November 1,
1999, between WorldTravel Technologies, L.L.C. and
WorldTravel Partners I, L.L.C.(*)(**)
10.7 -- TRX, Inc. 2000 Stock Incentive Plan.
10.8 -- Employment Agreement, dated December 1, 1999, between WT
Technologies, Inc. and Norwood H. Davis, III.*
10.9 -- Employment Agreement, dated November 1, 1999, between
WorldTravel Technologies, L.L.C. and David Fromal.*
10.10 -- Employment Agreement, between TRX, Inc. and Timothy J.
Severt.*
10.11 -- Employment Agreement, between TRX, Inc. and Scott Hancock.*
</TABLE>
<PAGE> 98
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <C> <S>
10.12 -- Lease Agreement, dated October 15, 1995, as amended August
7, 1996, April 8, 1997, December 3, 1997, October 5, 1998,
April 22, 1999 and August 17, 1999, between WorldTravel
Partners, L.P. and Weeks Realty, L.P.
10.13 -- Lease Agreement, effective October 1, 1999, among
WorldTravel Technologies, L.L.C., Michael Barker and Denver
Horn.
10.14 -- Lease Agreement, dated October 1, 1999, between WorldTravel
Technologies, L.L.C. and Hefty Publishing Company.
10.15 -- Lease Agreement, dated September 15, 1997, as amended June
15, 1998, October 1, 1998 and June 15, 1999, between Travel
Technologies Group, L.P. and 4849 Greenville Partners.
10.16 -- Lease Agreement, dated October 25, 1999, effective November
1, 1999, between Arthur H. Ltd. and Young & Skidmore Co.*
10.17 -- Lease Agreement, dated October 25, 1999, effective February
1, 2000, between Arthur H. Ltd. and Young & Skidmore Co.*
10.18 -- Shareholders Agreement, dated February 18, 2000, between
Hogg Robinson plc, Hogg Robinson Services Limited, WTT UK
Limited, WT Technologies, Inc. and Fortdove Limited.
10.19 -- Software License Agreement, dated February 18, 2000, between
WorldTravel Technologies, L.L.C. and Technology Licensing
Company, LLC.
10.20 -- Software License Agreement, dated February 18, 2000, between
Technology Licensing Company, LLC and Fortdove Limited.
10.21 -- Service Bureau/Outsourcing Agreement for Online Fullfillment
Services, dated February 18, 2000, between Fortdove Limited
& Hogg Robinson plc.*
10.22 -- Reciprocal Software Development Agreement, dated February
18, 2000, between WorldTravel Technologies, L.L.C. &
Fortdove Limited.
10.23 -- Service Bureau Software Services Agreement, dated February
18, 2000, between Fortdove Limited & Hogg Robinson plc.
21 -- Subsidiaries of the Registrant.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Long Aldridge & Norman LLP (to be contained in
Exhibit 5).*
24 -- Powers of Attorney (included in the signature page hereto).
27 -- Financial Data Schedule (for SEC use only).
</TABLE>
- ---------------
+ Pursuant to Item 601(b)(4)(iii) of Regulation S-K under the Securities Act,
TRX, Inc. agrees to furnish supplementally to the Commission a copy of
certain omitted promissory notes payable by TRX, Inc.
* To be filed by amendment.
** TRX, Inc. agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the Commission.
<PAGE> 1
EXHIBIT 2.1
CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement") is being entered into on
this the 4th day of November, 1999 between WT Technologies, Inc., a Georgia
corporation (the "Transferee"), Arthur H. Ltd., a Virginia corporation d/b/a
International Software Products (the "Target"), and Christopher M. Brittin,
Susan R. Hopley, F. Gilmer Siler and Gary D. Smith and Jean H. Smith, as
Trustees of the Gary D. Smith and Jean H. Smith Trust, each of whom is a
shareholder of the Target (the "Transferors"). The Transferee, the Transferors,
and the Target are sometimes referred to collectively herein as the "Parties".
W I T N E S S E T H
WHEREAS, the Transferors are the record holders and beneficial owners
of all of the issued and outstanding capital stock of the Target;
WHEREAS, the Transferors desire to transfer and the Transferee desires
to accept all of the issued and outstanding Target Shares (as defined below) on
the terms and subject to the conditions hereinafter set forth;
WHEREAS, this Agreement contemplates a transaction in which the
Transferors will transfer all of the outstanding capital stock of the Target to
the Transferee in return for (i) cash, (ii) the Transferee Notes (as defined
below), and (iii) an equity ownership interest in the Transferee, all as more
specifically described herein; and
WHEREAS, the Parties expressly intend that the transaction contemplated
by this Agreement constitute a transfer of property (i.e., Target Shares) by the
Transferors in exchange for common stock of the Transferee (plus additional
non-stock consideration) where the Transferors constitute some of a larger group
of transferors who are collectively intending to participate in a series of
transactions with the Transferee that taken together, qualify as a "Section 351
exchange" within the meaning of Section 351 of the Code.
NOW THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. DEFINITIONS. CAPITALIZED TERMS USED BUT NOT OTHERWISE DEFINED HEREIN
SHALL HAVE THE following meanings:
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D
promulgated under the Securities Act.
<PAGE> 2
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Section 1504(a) of the Code.
"APPLICABLE RATE" means the "prime rate" as published in the Wall
Street Journal from time to time.
"BCD" means BCD Technology, Inc., a Georgia corporation.
"CLOSING" means the consummation of the transactions contemplated by
this Agreement.
"CLOSING DATE" means the date upon which this Agreement is executed by
all of the Parties hereto.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"CODE" means the Internal Revenue Code of 1986, as amended.
"EMPLOYEE BENEFIT PLAN" means any agreement, arrangement, commitment,
policy or understanding of any kind (whether written or oral) which (i) makes
available retirement or welfare benefits; (ii) pertains to the present or former
employees, retirees, directors or independent contractors (or their
beneficiaries, dependents or spouses) of the Target, its predecessors in
interest or any ERISA Affiliate; and (iii) is currently or expected to be
adopted, maintained by, sponsored in whole or in part by, or contributed to by
the Target, any of its predecessors in interest or any ERISA Affiliate or as to
which the Target, any of its predecessors in interest or any ERISA Affiliate has
any ongoing liability or obligation whatsoever including, but not limited to,
all: (a) employee benefit plans as defined in Section 3(3) of ERISA; (b) other
deferred compensation, early retirement, incentive, profit-sharing, thrift,
stock ownership, stock appreciation rights, bonus, stock option, stock purchase,
severance, educational assistance, employee assistance, welfare or vacation, or
other nonqualified benefit plans or arrangements; and (c) trusts, insurance
policies or other funding media for the plans and arrangements described
hereinabove.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(l).
-2-
<PAGE> 3
"ENVIRONMENTAL, HEALTH AND SAFETY REQUIREMENTS" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means each entity which is treated as a single
employer with the Target for purposes of Section 414 of the Code.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, (h) all copies and
tangible embodiments thereof (in whatever form or medium), and (i) all
contracts, agreements or understandings relating to any of the above items that
are owned or used by the Target.
"KNOWLEDGE" means actual knowledge after reasonable investigation.
"MAJORITY TRANSFERORS" means Christopher M. Brittin, Susan R. Hopley
and F. Gilmer Siler.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
-3-
<PAGE> 4
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"REORGANIZATION" means the transactions pursuant to which the
Transferee will acquire all of the issued and outstanding shares or other
interests in the Target and the Transferee Affiliates.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043(b).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens for amounts not yet due and payable, and (b) liens for taxes
not yet due and payable or for taxes that the taxpayer is contesting in good
faith through appropriate proceedings.
"SUBSIDIARY" means any corporation or other entity with respect to
which a specified Person (or a Subsidiary thereof) owns a majority of the
capital stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors or has the power to direct the
management of such corporation or other entity.
"TARGET SHARES" means all issued and outstanding shares of the common
stock, par value $1.00 per share, of the Target.
"TAX" (and, with correlative meaning, "Taxes" and "Taxable") means any
federal, state, county, local or foreign taxes, charges, fees, duties (including
customs duties), levies or other assessments, including income, gross receipts,
net proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales, use, franchise, excise, value added, stamp, leasing, lease,
user, capital, registration, transfer, fuel, excess profits, occupational,
interest equalization, windfall profits, license, payroll, environmental,
capital stock, disability, severance, employee's income withholding, other
withholding, unemployment and Social Security taxes, which are imposed by any
taxing authority, and such term shall include any interest, penalties or
additions to tax attributable thereto.
"TAX RETURN" shall mean any report, return or other information
required to be supplied to a taxing authority in connection with any Taxes.
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"TRANSFEREE AFFILIATES" shall mean WTT, Travel Technologies Group,
L.L.C. and BCD.
"TRANSFERORS' REPRESENTATIVE" shall mean Susan R. Hopley.
"WTT" shall mean WorldTravel Technologies, L.L.C., a Georgia limited
liability company.
2. TRANSFER OF TARGET SHARES.
(a) Basic Transaction. On and subject to the terms and conditions
of this Agreement, each Transferor agrees to transfer to the Transferee, all of
his Target Shares for the consideration specified below in this Section 2.
(b) Consideration. Subject to the adjustments set forth in Section
2(c) hereof, the aggregate consideration to be provided to the Transferors for
the Target Shares shall be Seven Million Eight Hundred Thousand Dollars
($7,800,000) less the Transferors' calculation of Tangible Net Worth Shortfall
(the "Aggregate Consideration"). The Aggregate Consideration shall be payable to
the Transferors at Closing as follows:
(i) First, Five Million Dollars ($5,000,000) of the
Aggregate Consideration shall be in the form of 289,781 shares of common stock,
par value $.01 per share, of the Transferee (the "Transferee Shares"); provided,
however, that thirty percent (30%) of the number of Transferee Shares (the
"Escrow Shares") shall, at the Closing, be pledged to the Transferee as security
for any Consideration Adjustment (as defined below) and the Transferors'
indemnification obligations under Section 5 hereof, and such shares shall be
held in escrow and released pursuant to the Escrow Agreement attached hereto as
Exhibit A (the "Escrow Agreement"). The parties acknowledge and agree that they
have attempted to structure the Escrow Agreement so that the Escrow Shares will
satisfy the Internal Revenue Service advance ruling guidelines for Section 351
exchanges set forth in Section 3.06 of Rev. Proc. 77-37, as amplified by Rev.
Proc. 84-42. At the Closing, the Transferee shall deliver to each Transferor a
certificate or certificates representing the number of Transferee Shares to
which each such Transferor is entitled as of the Closing, and shall issue
separate share certificates to cover the Escrow Shares to be pledged and held
pursuant to the Escrow Agreement;
(ii) Next, Eight Hundred Thousand Dollars ($800,000) of any
remaining Aggregate Consideration shall be payable to each Transferor by a
promissory note in the form of Exhibit B attached hereto (the "Transferee
Notes"). The Transferee Notes shall have, in the aggregate, a principal amount
of Eight Hundred Thousand Dollars ($800,000) and interest thereon shall be
calculated at the Applicable Rate; and
(iii) Next, the balance of any remaining Aggregate
Consideration shall be paid to the Transferors at Closing by wire transfer or
delivery of other immediately available funds.
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<PAGE> 6
The Aggregate Consideration shall be allocated among and paid to the Transferors
in proportion to each such Transferor's respective holdings of Target Shares as
set forth in paragraph (v) of the Transferors' Disclosure Schedule ("Percentage
Interest").
(c) Consideration Adjustment.
(i) Simultaneous with the execution of this Agreement, the
Transferors have delivered to the Transferee (A) an unaudited balance sheet of
the Target, based on and prepared in a manner consistent with the Target Most
Recent Financial Statement (as defined below), as of the close of business on
the day immediately preceding the Closing Date (the "Closing Balance Sheet"),
and (B) the Transferors' calculation of any Tangible Net Worth Shortfall (as
defined below) based thereon. As used herein, "Tangible Net Worth Shortfall"
means the amount by which Tangible Net Worth (as defined below) is less than
Zero Dollars ($0) on an applicable balance sheet. As used herein, the term
"Tangible Net Worth" means the total assets of the Company as reflected on the
applicable balance sheet minus intangible assets and total liabilities of the
Company as reflected on the applicable balance sheet, determined as of the close
of business on the day immediately preceding the Closing Date; provided,
however, that "Tangible Net Worth" shall not include capitalized software costs
and costs related to Navigator Software (and no depreciation associated
therewith shall be included in the calculation of Tangible Net Worth).
(ii) The Transferee and its accountants shall have sixty (60)
days following receipt of the Closing Balance Sheet and the Transferors'
calculation of Tangible Net Worth Shortfall to review such items, and, at the
Transferee's option, perform an audit thereon. The Closing Balance Sheet and the
Transferors' calculation of Tangible Net Worth Shortfall shall become final and
binding on the Parties (A) unless the Transferee gives written notice to the
Transferors' Representative of its disagreement with the Closing Balance Sheet
and/or the Transferors' calculation of Tangible Net Worth Shortfall (a "Notice
of Disagreement") within such sixty (60) day period or (B) at such earlier time
as the Transferee notifies the Transferors' Representative of its acceptance of
the Closing Balance Sheet and the Transferor's calculation of Tangible Net Worth
Shortfall. Any Notice of Disagreement shall specify in reasonable detail the
nature of any disagreement so asserted. During the thirty (30) days immediately
following the delivery of any Notice of Disagreement, the Transferee and the
Transferors' Representative shall seek in good faith to resolve in writing any
differences which they may have with respect to any matter specified in such
Notice of Disagreement. At the end of such thirty (30) day period, the
Transferee and the Transferors' Representative shall submit to an accounting
firm mutually agreed upon by the Transferee and the Transferors' Representative
(the "Accounting Firm") for review and resolution any and all matters which
remain in dispute and which were included in any Notice of Disagreement, and the
Accounting Firm shall reach a final, binding resolution of all matters which
remain in dispute, which final resolution shall be (w) in writing, (x) furnished
to the Transferee and the Transferors' Representative as soon as practicable
after the items in dispute have been referred to the Accounting Firm, (y) made
in accordance with this Agreement, and (z) conclusive and binding upon the
Parties. If a timely Notice of Disagreement is delivered by the Transferee with
respect to the Closing Balance Sheet and/or the Transferors' calculation of
Tangible Net Worth Shortfall, the Closing Balance Sheet and calculation of
Tangible Net Worth Shortfall (as revised,
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<PAGE> 7
if at all, in accordance with clauses (A) or (B) below) shall become final and
binding upon the Parties on the earlier of (A) the date the Transferee and the
Transferors' Representative resolve in writing any differences they have with
respect to any matter specified in a Notice of Disagreement, or (B) the
date any matters in dispute are finally resolved in writing by the Accounting
Firm (as defined below) (the date on which the Closing Balance Sheet and
calculation of Tangible Net Worth Shortfall, as revised, if at all, in
accordance with clauses (A) or (B) above, become final and binding is referred
to as the "Final Determination Date"; such final and binding Closing Balance
Sheet is referred to as the "Final Closing Balance Sheet"; and such calculation
of any Tangible Net Worth Shortfall is referred to as the "Final Tangible Net
Worth Shortfall"). The Transferee and the Transferors shall disclose to each
other any past or present material relationship with the Accounting Firm
(including any past or present material relationship between the Target and the
Accounting Firm). The Transferee and the Transferors covenant that they will not
enter into, or arrange to enter into, any additional relationship with the
Accounting Firm until after the Final Determination Date. Each Party shall pay
its own costs and expenses incurred in connection with such dispute resolution;
provided, however, that the fees and expenses of the Accounting Firm shall be
borne fifty percent (50%) by the Transferee and fifty percent (50%) by the
Transferors, pro rata based on each such Transferors' Percentage Interest. The
Transferors hereby appoint the Transferors' Representative as their
attorney-in-fact to make all decisions on behalf of the Transferors with respect
to the matters set forth in this Section 2, and acknowledge that such
appointment is irrevocable and coupled with an interest.
(iii) Upon the determination of the Final Closing Balance
Sheet and calculation of the Final Tangible Net Worth Shortfall in accordance
with this Section 2(c), the following Consideration Adjustment (as hereinafter
defined) will be payable, as applicable, in accordance with Section 2(c)(iv):
(x) if the Final Tangible Net Worth Shortfall is greater than the Transferor's
calculation of Tangible Net Worth Shortfall (the "Estimated Tangible Net Worth
Shortfall"), then each Transferor shall pay to the Transferee its pro rata
portion, based on each such Transferor's Percentage Interest, of the amount by
which the Final Tangible Net Worth Shortfall is greater than the Estimated
Tangible Net Worth Shortfall; (y) if the Final Tangible Net Worth Shortfall
equals the Estimated Tangible Net Worth Shortfall, then there shall be no
adjustment hereunder; and (z) if the Final Tangible Net Worth Shortfall is less
than the Estimated Tangible Net Worth Shortfall, the Transferee shall pay to the
Transferors their pro rata portion, based on each such Transferor's Percentage
Interest, of the amount by which the Estimated Tangible Net Worth Shortfall
exceeds the Final Tangible Net Worth Shortfall; provided, however, that in no
event shall the Transferee be obligated to pay to the Transferors (including any
payment under this Section 2(c)(iii)) an aggregate amount for the Target Shares
in excess of $7,800,000. The required adjustments to the Aggregate Consideration
pursuant to this Section 2(c)(iii) shall be referred to as the "Consideration
Adjustment".
(iv) Any Consideration Adjustment pursuant to Section
2(c)(iii) hereof shall be satisfied as follows: each Transferor shall pay to the
Transferee, in immediately available funds, its pro rata portion of the
Consideration Adjustment and such payment shall be made within three (3)
business days following the Final Determination Date; provided, however, that if
the Final Determination Date is the Closing Date
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<PAGE> 8
and the Transferee is entitled to a Consideration Adjustment in its favor
pursuant to Section 2(c)(iii) hereof, the Transferee shall deduct, on a pro rata
basis, the entire amount of such Consideration Adjustment from the funds
otherwise payable to the Transferors pursuant to Section 2(b)(ii). If any
Transferor does not pay the Transferee the remaining Consideration Adjustment
attributable to such Transferor within the time period set forth in the
preceding sentence, the Transferee shall, at its option, be entitled to direct
the Escrow Agent (as defined in the Escrow Agreement) to pay to the Transferee
such number of Escrow Shares as shall equal the Consideration Adjustment
attributable to such Transferor.
(d) Accounts Receivable. At the Closing, the Target shall, and the
Transferors shall cause the Target to, deliver to the Transferee a complete list
of the Target's accounts receivable as of the Closing Date (the "Closing
Accounts Receivable"), which list shall itemize the Closing Accounts Receivable
by customer and account. Such list of Closing Accounts Receivable shall be
prepared on a basis consistent with the Closing Balance Sheet. Unless otherwise
expressly provided herein, the Transferee and the Target shall have the sole
right to collect the Closing Accounts Receivable following the Closing Date. No
later than one hundred eighty (180) days after the Closing, the Transferee shall
prepare and deliver to the Transferors' Representative a report setting forth
all relevant information concerning the collection of the Closing Accounts
Receivable during the one hundred eighty (180) day period following the Closing
Date (the date such report is delivered being referred to as the "A/R
Notification Date"), which report shall include, among other things, (i) a list
of all uncollected Closing Accounts Receivable as of the A/R Notification Date
("Uncollected A/R") and (ii) a list of Uncollected A/R for which the Transferors
will be required to compensate the Transferee on the terms set forth below (such
Uncollected A/R being referred to as "Reimbursable Uncollected A/R"). Within
three (3) business days after the A/R Notification Date, the Transferors shall
pay to the Transferee the full amount in cash of all Reimbursable Uncollected
A/R. After the Transferee has received from the Transferors the entire amount of
all Reimbursable Uncollected A/R, the Transferee shall assign all of its rights
in and to the Reimbursable Uncollected A/R to the Transferors and the
Transferors shall then, and only then, be entitled to collect such Reimbursable
Uncollected A/R and retain the proceeds therefrom. Such Reimbursable Uncollected
A/R shall be assigned to the Transferors free and clear of all Security
Interests, except for those Security Interests in existence on or prior to the
Closing Date. The Transferee shall remit to the Transferors any payments
received by it with respect to Reimbursable Uncollected A/R, provided that the
Transferee has received from the Transferors the full amount of such
Reimbursable Uncollected A/R. Notwithstanding the foregoing, the Transferors
shall be relieved of their obligations under this Section 2(d) to the extent
that the Transferee and the Target, as applicable, have failed to use
commercially reasonable efforts to collect the Closing Accounts Receivable
during such one hundred eighty (180) day period which, for purposes hereof,
shall not involve the institution of legal action to collect such Closing
Accounts Receivable.
(e) Deliveries at the Closing. Simultaneous with the execution
hereof, the following actions have been taken:
(i) each Transferor has delivered (A) the Non-Competition
Agreement in the form attached hereto as Exhibit D, (B) the stock certificate or
certificates representing all of his or its Target
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<PAGE> 9
Shares, endorsed in blank and accompanied by a duly executed stock power; (C)
the Shareholders Agreement in the form attached hereto as Exhibit E; the (D) the
Escrow Agreement; (E) the list of Closing Accounts Receivable as more fully
described in Section 2(d) hereof; and (F) the Put Agreement in the form attached
hereto as Exhibit F.
(ii) Susan R. Hopley has delivered an Employment Agreement in
the form attached hereto as Exhibit G and Christopher M. Brittin has delivered
an Employment Agreement in the form attached hereto as Exhibit H;
(iii) the Transferee has delivered (A) the Aggregate
Consideration to the Transferors pursuant and subject to Section 2(b) hereof;
(B) the Escrow Agreement; (C) the Shareholders Agreement in the form attached
hereto as Exhibit E; and (D) the Put Agreement in the form attached hereto as
Exhibit F.
(iv) WTT has delivered the Employment Agreement in the form
attached hereto as Exhibit G and, the Target has delivered the Employment
Agreement in the form attached hereto as Exhibit H.
(v) The Target has delivered to the Transferee a written
instrument or instruments, in form and substance reasonably satisfactory to the
Transferee, pursuant to which each person listed on Exhibit I hereto has waived
his or her rights under, and released the Target from all of its obligations in
connection with, the document set forth beside his or her name.
(f) Allocation. The Aggregate Consideration shall be allocated as
set forth on Exhibit J attached hereto, which exhibit shall be amended, if
necessary, on the Final Determination Date. The Transferors, the Target and the
Transferee agree (i) to file their federal and state income tax return (and Form
8594, if applicable) on the basis of the allocation set forth on Exhibit J and
(ii) that none of them shall thereafter take a tax return position inconsistent
with such allocation unless such inconsistent position shall arise out of or
through an audit or other inquiry or examination by the Internal Revenue
Service.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of the Transferors Regarding
the Transferors. Each Transferor represents and warrants to the Transferee that
the statements contained in this Section 3(a) are correct and complete as of the
date of this Agreement, except as set forth in the disclosure schedule delivered
by the Transferors to the Transferee on the date hereof and initialed by the
Transferors (the "Transferors' Disclosure Schedule"), which is arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3(a). All representations made in this Section 3(a) shall be deemed
to be made by each Transferor individually and severally and not jointly;
provided, however, that the representations and warranties in Sections 3(a)(iii)
and 3(a)(v) shall be deemed to be made by the Transferors jointly and severally.
Except with respect to those representations which are made jointly and
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<PAGE> 10
severally, with respect to the representations in this Section 3(a) only, no
Transferor shall have the obligation, or shall be deemed to have assumed or
undertaken the obligation, to ascertain, verify, or confirm the accuracy or
completeness of any representation made by any Transferor other than himself
(except to the extent that a Transferor has actual personal knowledge (without
any obligation of investigation) of matters or events regarding a representation
made by another Transferor). Except with respect to those representations which
are made jointly and severally, with respect to the representations in this
Section 3(a) only, no liability shall be imposed on any Transferor for the
inaccuracy or incompleteness of a representation made by any other Transferor
(unless a Transferor has actual personal knowledge (without any obligation of
investigation) of a material misrepresentation or omission made by another
Transferor).
(i) Authorization of Transaction. Each Transferor has full
power, authority and legal capacity and competence to execute and deliver this
Agreement and to perform his obligations hereunder. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of each Transferor. This Agreement has been duly and validly
executed and delivered by the Transferors and constitutes the valid and legally
binding obligation of each Transferor, enforceable in accordance with its terms
and conditions. No Transferor needs to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by this
Agreement.
(ii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any Transferor or his assets is subject
or (B) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Transferor is a party or
by which he is bound or to which any of his assets is subject.
(iii) Brokers' Fees. No Transferor has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(iv) Investment. Each Transferor (A) understands that the
Transferee Shares and the Transferee Notes have not been, and will not be,
registered under the Securities Act, or under any state securities laws, and are
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (B) is acquiring the Transferee
Shares and the Transferee Notes solely for his own account for investment
purposes, and not with a view to distribution, (C) is a sophisticated investor
with knowledge and experience in business and financial matters, (D) has
received certain information concerning the Transferee and has had the
opportunity to obtain all the information requested by him concerning the
Transferee and considered necessary or appropriate in order to evaluate
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<PAGE> 11
the merits and the risks inherent in holding the Transferee Shares and the
Transferee Notes, (E) is able to bear the economic risk and lack of liquidity
inherent in holding the Transferee Shares and the Transferee Notes, and (F) is
an Accredited Investor.
(v) Target Shares. The Transferors are the record holders and
beneficial owners of all of the issued and outstanding capital stock of the
Target. Each Transferor holds of record and owns beneficially, and has good and
valid title to, the number of Target Shares set forth next to his name in
paragraph (v) of the Transferors' Disclosure Schedule, and such shares are (i)
validly issued, fully paid and non-assessable, and (ii) free and clear of any
restrictions on transfer (other than any restrictions under the Securities Act
and state securities laws), taxes, Security Interests, options, warrants,
purchase rights, contracts, rights of first refusal, encumbrances of any kind
whatsoever, commitments, equities, claims, and demands. No Transferor is a party
to any option, warrant, purchase right, or other contract or commitment that
could require the Transferor to sell, transfer, or otherwise dispose of any
capital stock of the Target (other than this Agreement). No Transferor is a
party to any voting trust, proxy, or other agreement or understanding with
respect to the voting or transfer of any capital stock of the Target. Upon the
occurrence of the Closing, the Transferee shall have obtained good and valid
title to all of the capital stock of the Target, free and clear of any
restrictions on transfer (other than any restrictions under the Securities Act
and state securities laws), taxes, Security Interests, options, warrants,
purchase rights, contracts, rights of first refusal, encumbrances of any kind
whatsoever, commitments, equities, claims and demands. The Transferors have the
full and exclusive power, right and authority to vote and dispose of the Target
Shares.
(b) Representations and Warranties of the Majority Transferors
Concerning the Target. The Majority Transferors jointly and severally represent
and warrant to the Transferee that the statements contained in this Section 3(b)
are correct and complete as of the date of this Agreement, except as set forth
in the disclosure schedule delivered by the Majority Transferors to the
Transferee on the date hereof and initialed by the Majority Transferors (the
"Target Disclosure Schedule"), which is arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 3(b).
(i) Organization, Qualification, and Corporate Power. The
Target is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation. The Target is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required by virtue of the conduct of
business or ownership of properties and assets, except where the lack of such
qualification would not affect the enforceability of any material contract to
which the Target is a party and would not have a material adverse effect on the
business, financial condition, operations, results of operations, or future
prospects of the Target. The Target has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. Paragraph (i) of the Target Disclosure Schedule lists the
directors and officers of the Target. The copies of the charter documents and
bylaws of the Target that have been previously delivered to the Transferee are
the complete, true and correct charter documents and bylaws of the Target. The
minutes of directors' and shareholders' meetings and the stock books of the
Target that have previously been delivered to the Transferee are the complete,
true and correct records of directors'
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<PAGE> 12
and shareholders' meetings and stock issuances through and including the date
hereof and reflect all transactions and other matters required to be reflected
in such records.
(ii) Capitalization. The entire authorized capital stock of
the Target consists of 20,000 shares of common stock, par value $1.00 per share,
of which 10,000 shares of common stock, Class A, are issued and outstanding. All
of the issued and outstanding Target Shares have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record by the
respective Transferors as set forth in paragraph (ii) of the Target Disclosure
Schedule. There are no outstanding or authorized, nor is the Target bound by
any, options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights or rights of any character or other contacts or commitments that
could require the Target to issue, sell, or otherwise cause to become
outstanding any of its capital stock. All issuances, transfers or purchases of
the capital stock of the Target have been in compliance with all applicable
agreements and laws, and all taxes thereon have been paid. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Target. There are no
outstanding obligations of the Target to repurchase, redeem or otherwise acquire
any outstanding shares of capital stock of the Target. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting or transfer of the capital stock of the Target.
(iii) Absence of Other Claims. No prior offer, issue,
redemption, call, purchase, sale, merger, transfer, involvement in any transfer,
negotiation or other transaction of any nature or kind with respect to any
capital stock (including shares, offers, options, warrants, or debt convertible
into shares, options or warrants) of the Target has given, or may give rise to
(i) any valid claim or action by any person (including, without limitation, any
former or present holder of any of the Target Shares or any other capital stock
of the Target or the Transferors) which is enforceable against the Target or the
Transferee; or (ii) any valid interest in the Target, and to the Knowledge of
the Majority Transferors and the Target, no fact or circumstance exists which
could give rise to any such right, claim, action or interest on behalf of any
person.
(iv) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will, with or without notice or the lapse of time, or both, (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Target is subject or any provision of the charter or bylaws
of the Target or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Target is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). The Target does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
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<PAGE> 13
(v) Brokers' Fees. The Target has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated hereby.
(vi) Title to Assets. The Target has good and marketable
and/or valid title to, or a valid leasehold interest in, the real, personal and
mixed, tangible and intangible properties and assets used by it, located on its
premises, shown on the Target Most Recent Balance sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Target Most Recent Fiscal Month End. All properties and assets of the Target are
located on the premises and principal business operations of the Target.
(vii) Subsidiaries; Investments. The Target has no
Subsidiaries. The Target does not own any capital stock or other securities or
have any other investment in any Person.
(viii) Financial Statements. Paragraph (viii) of the Target
Disclosure Schedule contains the following financial statements (collectively
the "Target Financial Statements"): (i) unaudited consolidated balance sheets
and statements of income as of and for the fiscal years ended December 31, 1996
and December 31, 1997 for the Target; (ii) an unaudited consolidated balance
sheet and statement of income, changes in stockholders' equity and cash flow as
of and for the fiscal year ended December 31, 1998 (the "Target Most Recent
Fiscal Year End") for the Target; and (iii) an unaudited consolidated balance
sheet (the "Target Most Recent Balance Sheet") and statement of income, changes
in stockholders' equity, and cash flow (the "Target Most Recent Financial
Statements") as of and for the six months ended June 30, 1999 (the "Target Most
Recent Fiscal Month End") for the Target. The Target Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby and present fairly,
in all material respects, the financial condition of the Target as of such dates
and the results of operations of the Target for such periods; provided, however,
that the Target Most Recent Financial Statements are subject to normal,
recurring year-end adjustments (which will not be material individually or in
the aggregate) and lack footnotes; and provided, further, that the Target
Financial Statements identified in clause (i) above do not include statements of
changes in stockholders' equity and cash flow.
(ix) Events Subsequent to Target Most Recent Fiscal Year
End. Since the Target Most Recent Fiscal Year End, the Target has conducted its
business in the Ordinary Course of Business and there has not been any material
adverse change in the business, financial condition, operations, results of
operations, or future prospects of the Target taken as a whole. Without limiting
the generality of the foregoing, since that date:
(A) the Target has not sold, leased, transferred, or
assigned any assets, tangible or intangible, outside the Ordinary Course of
Business;
(B) the Target has not entered into any agreement,
contract, lease, or license outside the Ordinary Course of Business;
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<PAGE> 14
(C) no party (including the Target) has accelerated,
terminated, made material modifications to, or canceled any material agreement,
contract, lease, or license to which the Target is a party or by which any of
them is bound;
(D) the Target has not imposed any Security Interest
upon any of its assets, tangible or intangible;
(E) the Target has not made any single capital
expenditure or investment in excess of $10,000 or cumulative capital
expenditures or investments in excess of $25,000;
(F) the Target has not made any loan to any other
Person outside the Ordinary Course of Business;
(G) the Target has not created, incurred, assumed or
guaranteed more than $10,000 in aggregate indebtedness for borrowed money and
capitalized lease obligations;
(H) the Target has not granted any license or
sublicense of any rights under or with respect to any Intellectual Property;
(I) there has been no change made or authorized in
the charter or bylaws of the Target;
(J) the Target has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(K) the Target has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital stock (whether
in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(L) the Target has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property,
which damage, destruction or loss, individually or in the aggregate, exceeds
$25,000;
(M) the Target has not made any loan to, or entered
into any other transaction with, any of its current or former directors,
officers, and employees outside the Ordinary Course of Business;
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(N) the Target has not entered into any employment or
severance contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(O) the Target has not granted any bonus to or increase
in the base or other compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(P) the Target has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its current or former
directors, officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
(Q) the Target has not made any other change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(R) the Target has not managed working capital
components, including cash, receivables, other current assets, trade payables
and other current liabilities in a fashion inconsistent with past practice,
including failing to sell inventory and other property in an orderly and prudent
manner or failing to make all budgeted and other normal capital expenditures,
repairs, improvements and dispositions;
(S) the Target has not changed any accounting method for
GAAP or Tax purposes and has not made or changed any Tax election;
(T) the Target has not suffered any adverse change in
its working capital, assets, liabilities, financial condition, business
property, or relationships with any suppliers or customers; or
(U) the Target has not committed to, or otherwise
entered into any contract or agreement with respect to, any of the foregoing.
(x) Undisclosed Liabilities. The Target has no liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes), except for
(i) liabilities set forth on the face of the Target Most Recent Balance Sheet
(rather than in any notes thereto) and (ii) liabilities which have arisen after
the Target Most Recent Fiscal Month End in the Ordinary Course of Business.
(xi) Legal Compliance. The Target has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced or, to the
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<PAGE> 16
Knowledge of the Majority Transferors or the Target, threatened against the
Target alleging any failure so to comply.
(xii) Tax Matters.
(A) The Target has timely filed, including applicable
extensions, all Tax Returns that it was required to file. All such Tax Returns
are true, correct and complete in all material respects. All Taxes owed by the
Target (whether or not shown on any Tax Return) have been paid by the Target or
Target has made adequate provision on its books and records for the payment of
all Taxes required to be paid by it for all tax periods ending on or prior to
the Closing Date, whether or not in connection with such Tax Returns. All
deficiencies asserted against the Target as a result of any examinations by the
Internal Revenue Service or any other taxing authority have been paid, fully
settled or adequately provided for in the Target Most Recent Balance Sheet. The
Target currently is not the beneficiary of any extension of time within which to
file any Tax Return.
(B) There is no pending dispute or claim concerning any
Tax liability of the Target for any period either (A) claimed or raised by any
taxing authority in writing or (B) as to which the Target has knowledge based
upon personal contact with any agent of such authority. There are no outstanding
agreements or waivers extending the statutory period of limitations applicable
to any Tax Return of Target for any period.
(C) Paragraph (xii) of the Target Disclosure Schedule
lists all federal, state, local, and foreign Tax Returns filed with respect to
the Target for taxable periods ended on or after June 30, 1999, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Target delivered to the Transferee
correct and complete copies of all federal Tax Returns, examination reports, and
statements of deficiencies assessed against, or agreed to by any of the Target
since June 30, 1999 and made available such other Tax Returns requested by the
Transferee. The Target does not conduct business or derive income from any
state, local, or foreign taxing jurisdiction other than those for which Tax
Returns have been filed. The Target has disclosed on its federal income Tax
Returns all positions taken thereon that could give rise to any accuracy-related
penalty within the meaning of Section 6662 of the Code. The Target has complied
for all prior periods and will comply through the Closing Date with the Tax
withholding provisions of all applicable federal, state, local and other laws.
All accounting periods and methods used by the Target for Tax reporting purposes
are permissible periods and methods under applicable law.
(D) The Target has not filed a consent under Code
Section 341(f) concerning collapsible corporations. The Target has not made any
material payments, is not obligated to make any material payments, and is not a
party to any agreement that under certain circumstances could obligate it to
make any material payments that will not be deductible under Code Section 280G.
The Target has not been a United States real property holding corporation within
the meaning of Code Section 897(c)(2) during the applicable period specified in
Code Section 897(c)(1)(A)(ii). The Target is not a party to any
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<PAGE> 17
Tax allocation or sharing agreement. The Target (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return or (B) has no
liability for the taxes of any other Person under Treas. Reg. Section 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise.
(E) The unpaid Taxes of the Target (A) did not, as of
the Target Most Recent Fiscal Month End, exceed by any material amount the
reserve for Tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and tax income) set forth
on the face of the Target Most Recent Balance Sheet (rather than in any notes
thereto) and (B) will not exceed by any material amount that reserve as adjusted
for operations and transactions through the Closing Date in accordance with the
past custom and practice of the Target in filing its Tax Returns.
(xiii) Property.
(A) The Target owns no real property. Paragraph (xiii)
of the Target Disclosure Schedule lists and briefly describes all of the (i)
real property that the Target leases or subleases, has agreed (or has an option)
to lease, or may be obligated to lease and (ii) personal property that the
Target owns or leases (or subleases), has agreed (or has an option) to purchase,
sell or lease, or may be obligated to purchase, sell or lease. With respect to
each such parcel of leased real property:
(1) there are no pending or, to the Knowledge of
the Target or the Majority Transferors, threatened condemnation proceedings,
lawsuits, or administrative actions relating to the property or other matters
adversely affecting the current use, occupancy, or value thereof;
(2) to the Knowledge of the Target and the Majority
Transferors, there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of the parcel of real property; and
(3) there are no parties (other than the Target) in
possession of the parcel of real property, other than tenants under any leases
disclosed in paragraph (xiii) of the Target Disclosure Schedule who are in
possession of space to which they are entitled.
(B) The Target has delivered to the Transferee correct
and complete copies of the leases and subleases listed in paragraph (xiii) of
the Target Disclosure Schedule (as amended to date). With respect to each lease
and sublease listed in paragraph (xiii) of the Target Disclosure Schedule:
(1) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect in all respects;
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<PAGE> 18
(2) no party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(3) no party to the lease or sublease has repudiated
verbally or in writing to the Target or the Majority Transferors any provision
thereof;
(4) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(5) the Target has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; and
(6) all facilities leased or subleased thereunder
have received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof, and have been
operated and maintained in accordance with applicable laws, rules, and
regulations in all material respects.
(C) The rights, properties and other assets presently
owned, leased or licensed by the Target and described in paragraph (xiii) of the
Target Disclosure Schedule include all rights, properties and other assets
necessary to permit the Target to conduct its business in the same manner as its
business has been heretofore conducted, without any need for replacement,
refurbishment or extraordinary repair.
(D) All of the inventories of the Target included on the
Target Most Recent Balance Sheet or subsequently acquired are merchantable and
of a quality and quantity usable and saleable in the Ordinary Course of
Business, and the quantities of each type of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable,
adequate and appropriate in the present circumstances of the Target. All of the
inventories of the Target included on the Target Most Recent Balance Sheet are
valued for the purposes thereof at the lower of cost or market.
(xiv) Intellectual Property.
(A) The Target has not interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of third
parties in any respect, and neither the Target nor the Majority Transferors have
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that the Target must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of the Majority Transferors or the
Target, no third party has interfered with, infringed upon, misappropriated, or
violated any material Intellectual Property rights of the Target in any respect.
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<PAGE> 19
(B) Paragraph (xiv)(B) of the Target Disclosure Schedule
identifies each patent or registration which has been issued to the Target with
respect to any of its Intellectual Property, identifies each pending patent
application or application for registration which the Target has made with
respect to any of its Intellectual Property, and identifies each license,
agreement, or other permission which the Target has granted to any third party
with respect to any of its Intellectual Property (together with any exceptions).
The Target has delivered to the Transferee correct and complete copies of all
such patents, registrations, applications, licenses, agreements, and permissions
(as amended to date). Paragraph (xiv)(B) of the Target Disclosure Schedule also
identifies each trade name or unregistered trademark used by the Target in
connection with any of its businesses. With respect to each item of Intellectual
Property required to be identified in paragraph (xiv)(B) of the Target
Disclosure Schedule:
(1) the Target possesses all right, title, and
interest in and to the item, free and clear of any Security Interest, license,
or other restriction;
(2) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(3) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of the Target or the Majority Transferors, is threatened which
challenges the legality, validity, enforceability, use, or ownership of the
item; and
(4) the Target has not agreed to indemnify any
Person for or against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(C) Paragraph (xiv)(C) of the Target Disclosure Schedule
identifies each item of Intellectual Property that any third party owns and that
the Target uses pursuant to license, sublicense, agreement, or permission other
than non-proprietary software for desktop computers. The Target has delivered to
the Transferee correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in paragraph (xiv)(C) of the
Target Disclosure Schedule:
(1) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable, and in full
force and effect in all respects;
(2) no party to the license, sublicense, agreement,
or permission is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(3) no party to the license, sublicense, agreement,
or permission has repudiated any provision thereof; and
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<PAGE> 20
(4) the Target has not granted any sublicense or
similar right with respect to the license, sublicense, agreement, or permission.
(xv) Tangible Assets. The buildings, machinery, equipment,
and other tangible assets that the Target owns (or purports to own) and leases
are free from material defects (patent and latent), have been maintained in
accordance with normal industry practice, are in good operating condition and
repair (subject to normal wear and tear) and are adequate for the uses to which
they are being put.
(xvi) Contracts. Paragraph (xvi) of the Target Disclosure
Schedule lists the following contracts and other agreements to which the Target
is a party:
(A) any agreement (or group of related agreements)
for the lease of personal property to or from any Person providing for lease
payments in excess of $25,000 per annum;
(B) any agreement (or group of related agreements)
that may continue over a period of more than six months from the date hereof or
involve consideration in excess of $25,000;
(C) any agreement concerning a partnership or joint
venture;
(D) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or any capitalized lease obligation, in excess of $50,000 or
under which it has imposed a Security Interest an any of its assets, tangible or
intangible;
(E) any agreement concerning confidentiality or
limiting the freedom of the Target to compete in any line of business in any
geographic area or requiring the Target to share any profits;
(F) any agreement with any of the Transferors and
their Affiliates (other than the Target);
(G) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(H) any collective bargaining agreement;
(I) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis;
(J) any agreement under which it has advanced or
loaned any amount to any of its current or former directors, officers, and
employees outside the Ordinary Course of Business;
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<PAGE> 21
(K) any other agreement (or group of related
agreements) the performance of which involves consideration in excess of $5,000.
(L) any agreement or contract that is material to its
business, operations or prospects; or
(M) any agreement or arrangement entitling any person
or other entity to any profits, revenues or cash flows of the Target or
requiring any payments or other distributions based on such profits, revenues or
cash flows.
The Transferors have delivered to the Transferee a correct and complete copy of
each written agreement listed in paragraph (xvi) of the Target Disclosure
Schedule (as amended to date). With respect to each agreement, contract, lease
and license arrangement referred to in this Agreement and required to be
disclosed in any paragraph of the Target Disclosure Schedule: (A) the agreement
is legal, valid, binding, enforceable, and in full force and effect in all
respects; (B) no party is in breach or default, and no event has occurred which
with or without notice or lapse of time, or both, would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (C) no party has repudiated verbally or in writing to the Target
or the Transferors any provision of the agreement.
(xvii) Notes and Accounts Receivable. All notes and accounts
receivable of the Target are reflected properly on its books and records, are
valid receivables subject to no setoffs or counterclaims, represent monies due
for goods sold or services rendered in the Ordinary Course of Business, are
current and fully collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts set
forth on the face of the Target Most Recent Balance Sheet (rather than in any
notes thereto) as adjusted for operations and transactions through the Closing
Date in accordance with the methodologies used to make accruals for bad debt on
the Target Most Recent Balance Sheet.
(xviii) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of the Target.
(xix) Insurance. Paragraph (xix) of the Target Disclosure
Schedule sets forth the following information with respect to each insurance
policy (including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) with respect to which
the Target or any employee thereof is a party, a named insured, or otherwise the
beneficiary of coverage:
(A) the name of the insurer, the name of the
policyholder, and the name of each covered insured; and
(B) the policy number and the period of coverage.
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With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect in all respects; (B) the
Target is not in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (C) no party
to the policy has repudiated any provision thereof. Neither the Target nor the
Majority Transferors have received notice of any pending or threatened
termination or premium increase (retroactive or otherwise). Paragraph (xix) of
the Target Disclosure Schedule describes any self-insurance arrangements
affecting any of the Target.
(xx) Litigation. Paragraph (xx) of the Target Disclosure
Schedule sets forth each instance in which the Target (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Knowledge of any of the Majority Transferors or the Target, is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator.
(xxi) Product Warranty. All of the products manufactured,
sold, leased, and delivered by the Target have conformed in all material
respects with all applicable contractual commitments and all express and implied
warranties, and the Target has no liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due)
for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on the face of
the Target Most Recent Balance Sheet (rather than in any notes thereto).
Substantially all of the products manufactured, sold, leased, and delivered by
the Target are subject to standard terms and conditions of sale or lease.
Paragraph (xxi) of the Target Disclosure Schedule includes copies of the
standard terms and conditions of sale or lease for the Target (containing
applicable guaranty, warranty, and indemnity provisions).
(xxii) Product Liability. The Target has no liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by the Target.
(xxiii) Employees. Paragraph (xxiii) of the Target Disclosure
Schedule sets forth the names and current compensation (broken down by category,
e.g., salary, bonus, commission) of all employees of the Target, together with
the date and amount of the last increase in compensation for
such persons. To the Knowledge of the Target or the Majority Transferors, no
executive, key employee, or significant number of employees plans to terminate
employment with the Target during the next 12 months. The Target is not a party
to or bound by any collective bargaining agreement, nor has it experienced any
strike or grievance, claim of unfair labor practices, or other collective
bargaining dispute within the past two
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years. The Target has not committed any unfair labor practice. Neither the
Majority Transferors nor the Target have Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Target. The Target is in material compliance with
all laws related to employees and their compensation.
(xxiv) Employee Benefits.
(A) Paragraph (xxiv)(A) of the Target Disclosure
Schedule lists each corporation, trade, business or other entity which now or at
any time in the past would constitute an ERISA Affiliate. Paragraph (xxiv)(A) of
the Target Disclosure Schedule also contains a true and complete list of each
Employee Benefit Plan, designates those Employee Benefit Plans maintained by, or
contributed to by, the Target on behalf of its employees, and designates each
Employee Benefit Plan intended to be tax-qualified under Code Section 401(a).
(1) The Target, its predecessors in interest, and
each ERISA Affiliate have complied in all material respects with all of their
respective obligations with respect to all Employee Benefit Plans. To the
Knowledge of the Target or the Majority Transferors, each Employee Benefit Plan
complies in form and in operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(2) Other than may be required by law,
neither the Target, its predecessors in interest nor any ERISA Affiliate has any
agreement, arrangement, commitment or understanding, whether legally binding or
not, to create any additional Employee Benefit Plan or to continue, modify,
change in any material respect, or terminate any existing Employee Benefit Plan.
(3) To the Knowledge of the Target or the
Majority Transferors, none of the Employee Benefit Plans is currently under
investigation, audit or review by the Department of Labor, the Internal Revenue
Service or any other federal or state agency or is liable for any federal,
state, local or foreign taxes. There is no transaction in connection with which
the Target, any ERISA Affiliate or any Fiduciary of any of the Employee Benefit
Plans could be subject to either a civil penalty assessed pursuant to ERISA
Section 502, a tax imposed by Code Section 4975 or liability for a breach of
Fiduciary responsibility under ERISA.
(4) Other than routine claims for benefits
payable to participants or beneficiaries in accordance with the terms of the
Employee Benefit Plans, there are no claims, pending or threatened, by any
participant or beneficiary against any of the Employee Benefit Plans or any
Fiduciary of any of the Employee Benefit Plans, and to the Knowledge of the
Target or the Majority Transferees, no basis for any such claim or claims
exists.
(5) The levels of insurance reserves and
accrued liabilities with regard to all Employee Benefit Plans (to which such
reserves or liabilities do or should apply) are reasonable and
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sufficient to provide for all incurred but unreported claims and any retroactive
or prospective premium adjustments.
(6) It is intended that each Employee
Benefit Plan can be terminated on or prior to the Closing Date without liability
to the Target, its predecessors in interest or any ERISA Affiliate, including,
without limitation, any additional contributions, penalties, premiums, fees or
any other charges as a result of the termination.
(7) All required reports and descriptions
(Including Form 5500 Annual Reports, summary annual reports, PBGC-1's, and
summary plan descriptions) have been timely filed and distributed appropriately
with respect to each Employee Benefit Plan.
(8) All contributions (including all
employer contributions and employee salary reduction contributions) which are
due have been paid to each Employee Benefit Plan on or before the Closing Date
have been paid to each Employee Pension Benefit Plan or accrued in accordance
with the past custom and practice of the Target and applicable law.
(9) It is intended that each Employee
Benefit Plan which is designated as a tax-qualified plan meets the requirements
of a "qualified plan" under Code Section 401(a), has received a current
favorable determination letter from the Internal Revenue Service that it is a
"qualified plan," and the Majority Transferors are not aware of any facts or
circumstances that could result in the revocation of such determination letter.
(10) The Target has delivered to the
Transferee correct and complete copies of all written plan documents and
contracts, as amended, evidencing the Employee Benefit Plans, all summary plan
descriptions, the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report and certified financial
statements, the most recent actuarial reports, and all related trust agreements,
insurance or annuity contracts, and other funding agreements which implement
each Employee Benefit Plan, as well as all other documents related to the
Employee Benefit Plans reasonably requested by the Transferee.
(B) Paragraph (xxiv)(B) of the Target Disclosure
Schedule identifies by plan name all of the Employee Benefit Plans (other than
unfunded retirement plans which are not subject to the minimum coverage, minimum
funding or Fiduciary requirements of ERISA by virtue of being an unfunded plan
for a select group of management or highly compensated employees) that are
pension plans within the meaning of ERISA Section 3(2) (the "Pension Plans").
There are no other Pension Plans maintained by any ERISA Affiliate.
(1) No liability to the Pension Benefit
Guaranty Corporation ("PBGC") (other than the liability to pay premiums when
due) has been incurred with respect to the Pension Plans. All premiums due and
payable to the PBGC with respect to the Pension Plans have been paid in
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a timely manner. The PBGC has not instituted proceedings to terminate any of the
Pension Plans. No event has occurred, and there exists no condition or set of
circumstances, which reasonably could be expected to result in the involuntary
termination of any of the Pension Plans by the PBGC pursuant to ERISA Section
4042. Moreover, even if a Pension Plan were terminated voluntarily pursuant to
ERISA Section 4041, neither the Target, its predecessors in interest nor any
ERISA Affiliate would have any liability to the PBGC as a result of the
termination.
(2) No notice of a Reportable Event has been
filed with the PBGC by the plan administrator of any of the Pension Plans, nor
has any such Reportable Event occurred for which a notice to the PBGC is
required.
(3) The current present value of all accrued
benefit obligations under each of the Pension Plans which is subject to Title IV
of ERISA did not, as of its latest valuation date, exceed the then current value
of the Pension Plan assets allocable to such benefit liabilities, based on
reasonable actuarial assumptions currently used for such Pension Plan. In
addition, each of the Pension Plans which is subject to Title IV of ERISA is
fully funded on a termination basis, such that the net fair market value of the
assets equals or exceeds the present value of the accrued benefits under such
Pension Plan. The representation made in the preceding sentence is based upon
the reasonable actuarial assumptions currently used for such Pension Plan with
such modifications as is required by the PBGC for determining benefits on a
termination basis.
(4) No accumulated funding deficiency (as
defined in ERISA Section 302(a)(2)), whether or not waived and regardless of the
reason arising, exists with respect to any Pension Plan.
(5) None of the Pension Plans has been
terminated or partially terminated nor have the contributions to any such
Pension Plans been discontinued (within the meaning of Code Section 411), nor
have there been any events which might constitute grounds for such a
termination, partial termination or discontinuance of contributions.
(C) Neither the Target, its predecessors in interest
nor any ERISA Affiliate maintains, sponsors or contributes to, has ever
maintained, sponsored or contributed to, or has ever been required to maintain,
sponsor or contribute to any Employee Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with COBRA).
(D) Neither the Target, its predecessors in interest
nor any ERISA Affiliate maintains, sponsors or contributes to, or have ever
maintained, sponsored or contributed to any Multiemployer Plan as defined in
ERISA Section 3(37)(A), or have any material liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or
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unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any withdrawal liability (as defined in ERISA Section 4201),
under any such plan.
(xxv) Guaranties. The Target is not a guarantor or
otherwise responsible for any liability or obligation (including indebtedness)
of any other Person.
(xxvi) Certain Business Relationships With the Target.
None of the Transferors or their Affiliates have been involved in any business
arrangement or relationship with the Target within the past 12 months, and none
of the Transferors or their Affiliates own any asset, tangible or intangible,
which is used in the business of the Target.
(xxvii) Environmental, Health and Safety Matters. The Target
is not now, and has never been, in violation of any applicable Environmental,
Health and Safety Requirements. No claims have been made by any governmental
authority, and to the Knowledge of the Majority Transferors and the Target, no
such claim is anticipated, to the effect that the Target fails or may fail to
comply with any applicable Environmental, Health and Safety Requirements.
(xxviii) Indebtedness. Paragraph (xxviii) of the Target
Disclosure Schedule sets forth a complete and accurate list and description of
all instruments or other documents relating to any direct or indirect
indebtedness for borrowed money of the Target, as well as indebtedness by way of
lease-purchase arrangements, guarantees, undertakings on which others rely in
extending credit and all conditional sales contracts, chattel mortgages and
other security arrangements with respect to personal property used or owned by
the Target. The Target has made available to the Transferee a true, correct and
complete copy of each of the items listed on paragraph (xxviii) of the Target
Disclosure Schedule.
(xxix) Required Licenses and Permits. The Target has all
licenses, permits or other authorizations of governmental authorities necessary
for the conduct of its business. A correct and complete list of all such
licenses, permits and other authorizations is set forth on paragraph (xxix) of
the Target Disclosure Schedule.
(xxx) Major Suppliers and Customers. Paragraph (xxx) of the
Target Disclosure Schedule sets forth a list of each supplier of goods or
services to, and each customer of, the Target, to whom the Target paid or billed
in the aggregate more than $10,000 during the 12-month period ended as of the
date hereof, together, in each case, with the amount paid or billed during such
period. The Target is not engaged in any dispute with any of such suppliers or
customers. Neither the Transferors nor the Target knows or has reason to believe
that the consummation of the transactions contemplated hereunder will have any
adverse effect on the business relationship of the Target with any such supplier
or customer.
(xxxi) Required Consents and Approvals. No consent or
approval is required by virtue of the execution hereof by the Target or the
consummation of any of the transactions contemplated herein by the Target to
avoid the violation or breach of, or the default under, or the creation of a
lien on assets of
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the Target pursuant to the terms of, any regulation, order, decree or award of
any court or governmental agency or any lease, agreement, contract, mortgage,
note, license, or any other instrument to which the Target is a party or to
which it or any of its properties or assets or any of the Target Shares are
subject.
(xxxii) Disclosure. The representations and warranties
contained in this Section 3(b) do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained in this Section 3(b) not misleading.
(c) Representations and Warranties of the Transferee. The
Transferee represents and warrants to the Transferors that the statements
contained in this Section 3(c) are correct and complete as of the date of this
Agreement, except as set forth in the disclosure schedule delivered by the
Transferee to the Transferors and the Target on the date hereof and initialed by
the Transferee (the "Transferee Disclosure Schedule"), which is arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3(c). All matters set forth in any documents relating to the
Reorganization which have been provided to counsel for the Transferors or the
Target shall, for the purposes hereof, be deemed to have been disclosed in the
appropriate portion of the Transferee Disclosure Schedule.
(i) Organization, Qualification, and Corporate Power. The
Transferee is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Georgia. The Transferee is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required by virtue of the conduct of
business ownership of properties or assets, except where the lack of such
qualification would not affect the enforceability of any material contract to
which the Transferee is a party and would not have a material adverse effect on
the business, financial condition, operations, results of operations, or future
prospects of the Transferee. The Transferee has full power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. Paragraph (i) of the Transferee Disclosure Schedule lists
the directors and officers of the Transferee. The copies of the charter
documents and bylaws of the Transferee that have been previously delivered to
the Target are the complete, true and correct charter documents and bylaws of
the Transferee. The minutes of directors' and stockholders' meetings and the
stock books of the Transferee that have previously been delivered to the Target
are the complete, true and correct records of directors' and shareholders'
meetings and stock issuances through and including the date hereof and reflect
all transactions and other matters required to be reflected in such records.
(ii) Capitalization. The entire authorized capital stock of
the Transferee consists of 20,000,000 shares of common stock, par value $.01 per
share, and 100,000 shares of preferred stock, without par value, of which
9,269,373 shares of common stock will be issued and outstanding and zero (0)
shares will be held in treasury following the consummation of the
Reorganization. All shares of capital stock in the Transferee have been duly
authorized, and are fully paid, nonassessable, and held by the persons as set
forth in paragraph (ii) of the Transferee Disclosure Schedule. There
are no outstanding or authorized, nor is the Transferee bound by any, options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or rights of any character or other contacts or commitments that could
require the
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<PAGE> 28
Transferee to issue, sell, or otherwise cause to become outstanding any of its
capital stock. All issuances, transfers or purchases of the capital stock of the
Transferee have been in compliance with all applicable agreements and laws, and
all taxes thereon have been paid. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Transferee. There are no outstanding obligations of the
Transferee to repurchase, redeem or otherwise acquire any outstanding shares of
capital stock of the Transferee. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting or transfer of the
capital stock of the Transferee.
(iii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will, with or without notice or the lapse of time, or both, (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Transferee is subject or any provision of the articles of
incorporation or bylaws of the Transferee or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Transferee is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). The Transferee does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Transferee to
consummate the transactions contemplated by this Agreement.
(iv) Brokers' Fees. The Transferee has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(v) Subsidiaries. The Subsidiaries of the Transferee are as
set forth on paragraph (v) of the Transferee Disclosure Schedule.
(vi) Authorization of Transaction. The Transferee has full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of the Transferee, enforceable in accordance with its term and
conditions. The Transferee need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement.
(vii) Investment. The Transferee is not acquiring the Target
Shares with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
(viii) Financial Statements. Paragraph (viii) of the
Transferee Disclosure Schedule contains the following financial statements
(collectively the "Transferee Financial Statements"): (i) audited balance sheets
and statements of income, changes in members' equity, and cash flow as of and
for the fiscal
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years ended December 31, 1997 and December 31, 1998 for WTT; (ii) an unaudited
balance sheet as of and for the fiscal year ended December 31, 1998 for BCD; and
(iii) an unaudited balance sheet for BCD and an unaudited balance sheet and
statement of income, changes in members' equity, and cash flow for WTT
(collectively, the "Transferee Most Recent Financial Statements") as of and for
the seven months ended July 31, 1999 (the "Transferee Most Recent Fiscal Month
End"). The Transferee Financial Statements (including the notes thereto) have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby and present fairly, in all material respects, the
financial condition of WTT and BCD as of such dates and the results of
operations for such periods; provided, however, that the Transferee Most Recent
Financial Statements are subject to normal recurring year-end adjustments (which
will not be material individually or in the aggregate) and lack footnotes and
other presentation items.
(ix) Events Subsequent to Most Recent Fiscal Year End. Since
July 31, 1999, the Transferee Affiliates have conducted their respective
businesses in the Ordinary Course of Business and there has not been any
material adverse change in the business, financial condition, operations,
results of operations, or future prospects of the Transferee and the Transferee
Affiliates taken as a whole.
(x) Undisclosed Liabilities. The Transferee and the
Transferee Affiliates have no liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including any liability for taxes), except for (i) liabilities set forth on the
face of the Transferee Most Recent Balance Sheet and (ii) liabilities which have
arisen after the Transferee Most Recent Fiscal Month End in the Ordinary Course
of Business.
(xi) Legal Compliance. The Transferee and the Transferee
Affiliates have complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against them, or
to the Knowledge of the Transferee, threatened against them alleging any failure
to so comply.
(xii) Litigation. Paragraph (xii) of the Transferee Disclosure
Schedule sets forth each instance in which the Transferee or any Transferee
Affiliate (i) is subject to any outstanding injunction, judgment, order, decree,
ruling, or charge or (ii) is a party or, to the Knowledge of the Transferee, is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator.
(xiii) Guaranties. Neither the Transferee nor any Transferee
Affiliate is a guarantor or otherwise responsible for any liability or
obligation (including indebtedness) of any other Person.
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<PAGE> 30
(xiv) Required Consents and Approvals. No consent or approval
is required by virtue of the execution hereof by the Transferee or the
consummation of any of the transactions contemplated herein by the Transferee to
avoid the violation or breach of, or the default under, or the creation of a
lien on assets of the Transferee or the Transferee Affiliates pursuant to the
terms of, any regulation, order, decree or award of any court or governmental
agency or any lease, agreement, contract, mortgage, note, license, or any other
instrument to which the Transferee or a Transferee Affiliate is a party or to
which the Transferee or any of the Transferee Affiliates or any of their
properties or assets are subject.
(xv) Intellectual Property. Neither the Transferee nor the
Transferee Affiliates have interfered with, infringed upon, misappropriated or
violated any material Intellectual Property rights of third parties in any
respect, and neither the Transferee nor the Transferee Affiliates have received
any charge, complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or violation (including any claim that the
Transferee or the Transferee Affiliates must license or refrain from using any
Intellectual Property rights of any third party). To the Knowledge of the
Transferee, no third party has interfered with, infringed upon, misappropriated,
or violated any material Intellectual Property rights of the Transferee or the
Transferee Affiliates in any respect.
(xvi) Contracts. Neither the Transferee nor any Transferee
Affiliate nor any other party is in breach or default of any agreement,
contract, lease or license arrangement to which the Transferee or any Transferee
Affiliate is party, except where such breach or default would not reasonably be
expected to have a material adverse effect on the business, financial condition
or results of operations of the Transferee and the Transferee Affiliates taken
as a whole.
(xvii) Employee Benefits. To the Knowledge of the Transferee,
the Transferee Benefit Plans have been maintained in material compliance with
the applicable requirements of ERISA, the Code and other applicable laws. For
purposes hereof "Transferee Benefit Plans" shall mean any agreement,
arrangement, commitment, policy or understanding of any kind (whether written or
oral) which (i) makes available retirement or welfare benefits; (ii) pertaining
to the present or former employees, retirees, directors or independent
contractors (or their beneficiaries, dependents or spouses) of the Transferee,
its predecessors in interest or any entity which is treated as a single employer
with the Transferee for purposes of Section 414 of the Code (an "ERISA Affiliate
of the Transferee"); and (iii) is currently or expected to be adopted,
maintained by, sponsored in whole or in part by, or contributed to by the
Transferee, any of its predecessors in interest or any ERISA Affiliate of the
Transferee or as to which the Transferee, any of its predecessors in interest or
any ERISA Affiliate of the Transferee has any ongoing liability or obligation
whatsoever including, but not limited to, all: (a) employee benefit plans as
defined in Section 3(3) or ERISA; (b) other deferred compensation, early
retirement, incentive, profit sharing, thrift, stock ownership, stock
appreciation rights, bonus, stock option, stock purchase, severance, educational
assistance, employee assistance, welfare or vacation, or other nonqualified
benefit plans or arrangements; and (c) trusts, insurance policies or other
funding media for the plans and arrangements described herein above.
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(xviii) Insurance. All of the assets of the Transferee and the
Transferee Affiliates of an insurable nature and of a character usually insured
by companies of comparable size and carrying on businesses similar to that of
the Transferee and the Transferee Affiliates are insured in such amounts and
against such losses or casualties as is usual in such companies and for such
assets, except where the failure to be so insured would not reasonably be
expected to have a material adverse effect on the business, financial condition
or results of operations of the Transferee and the Transferee Affiliates taken
as a whole.
4. OTHER AGREEMENTS. THE PARTIES AGREE AS FOLLOWS:
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 5 below).
The Transferors acknowledge and agree that from and after the Closing, the
Transferee will be entitled to possession of all documents, books, records
(including tax records), agreements, and financial data of any sort relating to
the Target.
(b) Transition. None of the Transferors will take any action that
is designed or intended or likely to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the Target from
maintaining the same business relationships with the Target after the Closing as
it maintained with the Target prior to the Closing.
(c) Transferee Notes. The Transferee Notes will be imprinted with
a legend substantially in the following form:
THIS NOTE WAS ORIGINALLY ISSUED ON NOVEMBER 4,
1999, AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE IS
NON-TRANSFERABLE AND NON-NEGOTIABLE.
(d) Transferee Shares. All certificates for the Transferee Shares
and the Escrow Shares shall bear the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER STATE SECURITIES LAWS
(COLLECTIVELY, THE "STATE SECURITIES ACTS"), AND HAVE BEEN
ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACTS,
INCLUDING, BUT NOT NECESSARILY LIMITED TO, THE
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EXEMPTIONS CONTAINED IN SECTION 4(2) OF THE
SECURITIES ACT.
(e) Reporting of Transaction. The Transferee agrees to report and
document the transactions hereunder in accordance with such transactions being
part of a tax-free exchange under Section 351 of the Code.
(f) Shareholder Debt. At the Closing, the Transferee shall satisfy
and retire the entire amount of the liabilities set forth on Exhibit C attached
hereto including, without limitation, the outstanding balance due under the
notes and/or agreements set forth on Exhibit K hereto (collectively, the
"Notes") pursuant to written instructions delivered by Christopher M. Brittin to
the Transferee at least two (2) business days prior to the Closing. Immediately
upon receipt of such payment, the original Notes marked "Paid in Full" shall be
delivered to the Transferee and all obligations thereunder or with respect
thereto shall be satisfied.
(g) Certain Obligations. If, as of the date hereof, Susan R.
Hopley and Christopher M. Brittin have not been released from their obligations
as guarantors of the Target pursuant to (i) that certain Continuity Guaranty of
the Periodic Payment Business Loan and the Business Ready Credit Agreement
between CitiBank, F.S.B. and the Target (collectively, the "CitiBank Loan") and
(ii) that certain lease agreement, dated January 30, 1998, between the Target
and Thomas Brown, Inc. (collectively, the "Target Obligations"), the Transferee
shall indemnify and held harmless Susan R. Hopley and Christopher M. Brittin
from and against all Adverse Consequences related to such Target Obligations
arising after the Closing Date. The Transferee will use commercially reasonable
efforts to satisfy and retire the outstanding balance due under the Citibank
Loan within twelve (12) business days following the Closing Date.
5. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival; Time to Assert Claims.
(i) The representations and warranties of the Parties
contained herein shall not be extinguished by the Closing but shall survive the
Closing, subject to the limitations set forth in Section 5(a)(ii) hereof with
respect to the time periods within which claims for indemnity must be asserted,
and the covenants and agreements of the Parties made herein shall survive
without limitation as to time except as may be otherwise specified herein. No
investigation by one Party of the other shall affect the term of survival of any
representation or warranty contained herein, or the term of the respective
rights of the Transferee Protected Parties or the Transferor Protected Parties
(as defined below) to seek indemnification hereunder.
(ii) All claims for indemnification hereunder shall be
asserted no later than two (2) years after the Closing Date, except as follows:
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(A) claims with respect to Adverse Consequences arising
out of or related in any way to any breach of or inaccuracy in the
representations and warranties contained in Section 3(a), Sections 3(b)(i)-(v)
or Sections 3(c)(i)-(iv) hereof may be made without limitation, except as
limited by law; and
(B) claims with respect to Adverse Consequences
arising out of or related in any way to any breach of or inaccuracy in the
representations and warranties contained in Sections 3(b)(xi), (xii), (xxiv) and
(xxvii) or Sections 3(c)(xi) and (xvii) hereof may be made until, and shall be
made no later than, thirty (30) days after the expiration of the applicable
statute of limitations relative to the liability relating to such representation
or warranty.
(The matters cited in clauses (A) and (B) above being hereinafter collectively
referred to as the "Surviving Matters.")
Nothing herein shall be deemed to prevent a Transferee Protected Party or a
Transferor Protected Party from making a claim for indemnity hereunder for
potential or contingent claims or demands provided the notice of Adverse
Consequences sets forth the specific basis for any such potential or contingent
claim or demand to the extent then feasible and the party making the claim has
reasonable grounds to believe that such a claim or demand may become actual.
(b) Indemnification Provisions for Benefit of the Transferee. In
the event of any breach of the Transferors' or the Majority Transferors'
representations, warranties, or covenants contained herein, and, if there is an
applicable survival period pursuant to Section 5(a) above, provided that the
applicable Transferee Protected Party makes a written claim for indemnification
against any of the Transferors or the Majority Transferors, as applicable,
pursuant to Section 5(e) below within such survival period, then the Transferors
or the Majority Transferors, as applicable, jointly and severally (except where
as otherwise specifically set forth herein) agree to indemnify the Transferee,
the Target, or any successors or assigns thereto, and their respective officers,
employees, consultants and agents (the "Transferee Protected Parties") from and
against the entirety of any Adverse Consequences the Transferee Protected
Parties suffer resulting from, arising out of, relating to, in the nature of, or
caused by the breach. Notwithstanding the foregoing, the maximum liability of
the Transferors and the Majority Transferors pursuant to this Section 5 shall
not exceed the Aggregate Consideration and the Transferors and the Majority
Transferors shall not have any obligation to indemnify the Transferee Protected
Parties from and against any Adverse Consequences resulting from, arising out
of, relating to, in the nature of or caused by the breach of any representation
or warranty of the Transferors or the Majority Transferors contained herein
until the Transferee Protected Parties have suffered, in the aggregate, Adverse
Consequences by reason of all such breaches in excess of $75,000 (the "Basket
Amount"), after which point the Transferors or the Majority Transferors, as
applicable, will be obligated to indemnify the applicable Transferee Protected
Parties from and against the entire amount of such Adverse Consequences from the
first dollar thereof; provided, however, that claims with respect to the
Surviving Matters shall not be subject to the Basket Amount, nor
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<PAGE> 34
shall the amount of any such claim with respect to a Surviving Matter be applied
or included with other claims to determine whether the Basket Amount has been
reached.
(c) Indemnification Provisions for Benefit of the Transferors. In
the event of any breach of the Transferee's representations, warranties, or
covenants contained herein, and, if there is an applicable survival period
pursuant to Section 5(a) above, provided that the applicable Transferor
Protected Party makes a written claim for indemnification against the Transferee
pursuant to Section 5(e) below within such survival period, then the Transferee
agrees to indemnify each of the Transferors or any successors or assignees
thereto, and their respective officers, employees, consultants and agents (the
"Transferor Protected Parties") from and against the entirety of any Adverse
Consequences the Transferor Protected Parties suffer resulting from, arising out
of, relating to, in the nature of, or caused by the breach. Notwithstanding the
foregoing, the maximum liability of the Transferee pursuant to this Section 5
shall not exceed the Aggregate Consideration and the Transferee shall not have
any obligation to indemnify the Transferor Protected Parties from and against
any Adverse Consequences resulting from, arising out of, relating to, in the
nature of or caused by the breach of any representation or warranty of the
Transferee contained herein until the Transferor Protected Parties have
suffered, in the aggregate, Adverse Consequences by reason of all such breaches
in excess of the Basket Amount, after which point the Transferee will be
obligated to indemnify the applicable Transferor Protected Parties from and
against the entire amount of such Adverse Consequences from the first dollar
thereof; provided, however, that claims with respect to the Surviving Matters
shall not be subject to the Basket Amount, nor shall the amount of any such
claim with respect to a Surviving Matter be applied or included with other
claims to determine whether the Basket Amount has been reached.
(d) Matters Involving Third Parties.
(i) For purposes of this Section 5(d), the term "Party" shall
include all Transferee Protected Parties and Transferor Protected Parties. If
any third party shall notify, or be notified by, any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 5, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to assume, at
its cost and expense, the defense of the Third Party Claim with counsel of his
or its choice reasonably satisfactory to the Indemnified Party at any time
within 15 days after the Indemnified Party has given notice of the Third Party
Claim; provided, however, that the Indemnifying Party must conduct the defense
of the Third Party Claim actively and diligently thereafter in order to preserve
its rights in this regard; and provided further that the Indemnified Party may
retain separate co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim.
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<PAGE> 35
(iii) So long as the Indemnifying Party has assumed and is
conducting the defense of the Third Party Claim in accordance with Section
5(d)(ii) above, however, (A) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not to
be withheld unreasonably) unless the judgment or proposed settlement involves
only the payment of money damages by one or more of the Indemnifying Parties and
does not impose an injunction or other equitable relief upon the Indemnified
Party and (B) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not to be withheld
unreasonably).
(iv) In the event none of the Indemnifying Parties assumes
and conducts the defense of the Third Party Claim in accordance with Section
5(d)(ii) above, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner he or it reasonably may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith) and (B) the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this Section 5.
(e) Notice of Claim. The Indemnified Party shall notify the
Indemnifying Party, in writing, of any claim for indemnification hereunder,
specifying in reasonable detail, the nature of the Adverse Consequence and, if
known, the amount or an estimate of the amount of the liability therefrom. The
Indemnified Party shall provide to the Indemnifying party as promptly as
practicable such information and documentation as may be reasonably requested to
support and verify the claim asserted, so long as such disclosure would not
violate the attorney-client privilege of the Indemnified Party.
(f) Exclusive Remedy. The Transferee and the Transferors
acknowledge and agree that the foregoing indemnification provisions in this
Section 5 shall be the exclusive remedy of the Transferee and the Transferors
with respect to claims related to this Agreement and the matters covered
hereunder, except for fraud.
(g) Escrow of Funds. If payment under any Transferee Note is due
and payable at the time that a claim for indemnity by any Transferee Protected
Party pursuant to this Section 5 is outstanding, the Transferee shall deposit
with the Escrow Agent (as defined in the Escrow Agreement) such amount from the
Transferee Notes as shall be sufficient, together with the remaining balance of
cash and stock held by the Escrow Agent pursuant to the Escrow Agreement, to
satisfy the entire amount of the indemnity claim and such amount shall be held
pursuant to the Escrow Agreement pending final resolution of such indemnity
claim.
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6. MISCELLANEOUS.
(a) Nature of Certain Obligations. Certain representations and
warranties of the Transferors contained herein are made severally, and not
jointly. With respect to such representations and warranties, the particular
Transferors making the representation, warranty, or covenant will be solely
responsible to the extent provided in Section 5 above for any Adverse
Consequences the Transferee Protected Parties may suffer as a result of any
breach thereof.
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make a public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
Transferee and the Majority Transferors.
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties, the Transferee
Protected Parties, the Transferor Protected Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Transferee and the Majority Transferors; provided,
however, that the Transferee may (i) assign any or all of its rights and
interests hereunder to one or more of its Affiliates and (ii) designate one or
more of its Affiliates to perform its obligations hereunder (in any or all of
which cases the Transferee nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then on such
business day) it is sent by facsimile or if (and then two business days after)
it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
-36-
<PAGE> 37
If to the Transferors: Susan R. Hopely
International Software Products
1477 Chain Bridge Road, Suite 201
McLean, VA 22101
Attention: Susan R. Hopley
Facsimile: (703) 748-1281
Copy to: Greenberg Traurig
1750 Tysons Blvd., Suite 1200
McLean, VA 22102
Attention: C. Thomas Hicks III, Esq.
Facsimile: (703) 749-1301
If to the Transferee: WT Technologies, Inc.
1055 Lenox Park Boulevard, Fourth
Floor
Atlanta, Georgia
Attention: President
Facsimile: (404) 841-6770
Copy to: Long Aldridge & Norman LLP
303 Peachtree Street
Suite 5300
Atlanta, Georgia 30308
Attention: Jeffrey K. Haidet, Esq.
Facsimile: (404) 527-4198
Any Party may send any notice, request demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it actually is received
by the intended recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder to be delivered by
giving the other Parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Georgia without
giving effect to any choice or conflict of law provision or rules thereof.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Transferee and the Majority Transferors. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation,
-37-
<PAGE> 38
or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear his or its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby. The Transferors agree
that the Target has not borne and will not bear any of the Transferors' costs
and expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The word "his" shall
include "her."
(n) Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, the Transferors' Disclosure Schedule, the Target Disclosure Schedule
and the Transferee Disclosure Schedule identified in this Agreement are
incorporated herein by reference and made a part hereof.
(SIGNATURES BEGIN ON THE FOLLOWING PAGE)
-38-
<PAGE> 39
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
"TRANSFEREE":
WT TECHNOLOGIES, INC.
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
"TARGET":
ARTHUR H. LTD.
D/B/A INTERNATIONAL SOFTWARE PRODUCTS
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
"TRANSFERORS":
- ---------------------------------------
Christopher M. Brittin
- ---------------------------------------
Susan R. Hopley
THE GARY D. SMITH AND
JEAN H. SMITH TRUST
By:
-------------------------------------------
Name: Gary D. Smith
Title: Trustee
By:
-------------------------------------------
Name: Jean H. Smith
Title: Trustee
- ----------------------------------------------
F. Gilmer Siler
<PAGE> 40
[SIGNATURE PAGE TO CONTRIBUTION AGREEMENT]
<PAGE> 41
EXHIBIT A
ESCROW AGREEMENT
-41-
<PAGE> 42
EXHIBIT B
TRANSFEREE NOTES
<PAGE> 43
EXHIBIT C
SHAREHOLDER DEBT
<PAGE> 44
EXHIBIT D
NON-COMPETITION AGREEMENT
<PAGE> 45
EXHIBIT E
SHAREHOLDERS AGREEMENT
<PAGE> 46
EXHIBIT F
PUT AGREEMENT
<PAGE> 47
EXHIBIT G
HOPLEY EMPLOYMENT AGREEMENT
<PAGE> 48
EXHIBIT H
BRITTIN EMPLOYMENT AGREEMENT
<PAGE> 49
EXHIBIT I
EMPLOYEE RETIREMENT FUND CONTRIBUTIONS
Name Document
---- --------
1. Rashelle Johnson Offer letter of employment
2. John C. Leftwich Offer letter of employment
3. Margaret Petersen Offer letter of employment
4. Karim Sharif Offer letter of employment
5. Laurie Bailey Offer letter of employment
6. David Barnard Offer letter of employment
7. Christopher M. Brittin Offer letter of employment
8. Nicole Curtis Offer letter of employment
9. Ferri Decatur Offer letter of employment
10. Jason Gabor Offer letter of employment
11. Rich Granson Offer letter of employment
12. Debbie Hoggan Offer letter of employment
13. Susan R. Hopley Offer letter of employment
14. Danielle Jones Offer letter of employment
15. Bryanne Mayhew Offer letter of employment
16. Tracey Petrini Offer letter of employment
17. F. Gilmer Siler Offer letter of employment
18. Mike Sziede Offer letter of employment
19. Tom Sziede Offer letter of employment
29. Wanda Trimble Offer letter of employment
<PAGE> 50
EXHIBIT J
ALLOCATION
1. Target Shares $ 7,271,239.17
2. Non-Competition Agreements $ 100,000*
--------------
$ 7,371,239.17**
- --------------
* Represents $71,000 for the Non-Competition Agreement entered into by Susan
R. Hopley and $29,000 for the Non-Competition Agreement entered into by
Christopher M. Brittin.
** Aggregate Consideration is subject to adjustment pursuant to Section 2(c)
of the Agreement.
<PAGE> 51
EXHIBIT K: NOTES
<PAGE> 1
EXHIBIT 2.2
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (hereinafter referred to as the "Agreement")
is made and entered into as of the ____ day of November, 1999, by and among WT
Technologies, Inc., a Georgia corporation (the "Corporation"), BCD Technology,
S.A., a company organized under the laws of the country of Luxembourg ("BCD"),
The Alexander Family, L.P., a Georgia Limited Partnership ("Alexander L.P."),
Danny B. Hood, an individual resident of Georgia ("Hood"), Ralph Manaker, an
individual resident of Virginia ("Manaker"), Steve Reynolds, an individual
resident of Texas ("Reynolds"), and Velva Wiggins, an individual resident of
Georgia ("Wiggins") (Alexander L.P., Hood, Manaker, Reynolds and Wiggins are
hereinafter collectively referred to as the "Minority Members").
WHEREAS, the Corporation was formed on October 18, 1999 and is
authorized to issue 20,000,000 shares of common stock, $.01 par value, none of
which is currently issued and outstanding (the "Corporation Common Stock");
WHEREAS, BCD currently owns common stock of BCD Technology, Inc., a
Georgia corporation (the "BCD Common Stock");
WHEREAS, BCD desires to transfer the BCD Common Stock to the Corporation
in exchange for shares of Corporation Common Stock, and the Corporation desires
to receive the BCD Common Stock from BCD in exchange for Corporation common
stock (the "BCD Exchange");
WHEREAS, the Minority Members individually own membership interests in
WorldTravel Technologies, L.L.C., a Georgia limited liability company ("WTT,
LLC") ;
WHEREAS, each Minority Members desires to transfer that Minority
Member's interest in WTT, LLC to the Corporation in exchange for Corporation
Common Stock, and the Corporation desires to receive the WTT, LLC membership
interests from the Minority Members in exchange for Corporation Common Stock
(the "Minority Members Exchange");
WHEREAS, pursuant to a separate contribution and purchase agreement
between the Corporation and the shareholders of International Software
Productions, Inc., a Virginia corporation ("ISP"), the ISP shareholders will
transfer ISP common stock to the Corporation in exchange for Corporation Common
Stock and other consideration (the "ISP Exchange");
WHEREAS, the ISP Exchange is to occur simultaneously with both the BCD
Exchange and the Minority Members Exchange (collectively, the "Exchanges"); and
WHEREAS, BCD, the Minority Members and the ISP Shareholders will be in
control of the Corporation immediately following the Exchanges, and the
transactions described herein are
<PAGE> 2
intended to qualify as a tax-free transaction under Section 351 of the Internal
Revenue Code of 1986, as amended (a "Section 351 transaction").
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto agree as follows:
1. BCD's Transfer. BCD hereby transfers to Corporation all of its BCD
Common Stock in exchange for shares of Corporation Common Stock in the amount
set forth on Schedule 1 attached hereto.
2. Alexander L.P.'s Transfer. Alexander L.P. hereby transfers to
Corporation all of its interest in WTT, LLC, in exchange for shares of
Corporation Common Stock in the amount set forth on Schedule 2 attached hereto.
3. Hood's Transfer. Hood hereby transfers to Corporation all of his
interest in WTT, LLC, in exchange for shares of Corporation Common Stock in the
amount set forth on Schedule 3 attached hereto.
4. Manaker's Transfer. Manaker hereby transfers to Corporation all of
his interest in WTT, LLC, in exchange for shares of Corporation Common Stock in
the amount set forth on Schedule 4 attached hereto.
5. Reynolds' Transfer. Reynolds hereby transfers to Corporation all of
his interest in WTT, LLC, in exchange for shares of Corporation Common Stock in
the amount set forth on Schedule 5 attached hereto.
6. Wiggins' Transfer. Wiggins hereby transfers to Corporation all of her
interest in WTT, LLC, in exchange for shares of Corporation Common Stock in the
amount set forth on Schedule 6 attached hereto.
7. Authorization; Further Actions; Consents. Corporation, BCD, Alexander
L.P., Hood, Manaker, Reynolds and Wiggins each represent and warrant to the
other that its execution and performance of this Agreement has been properly
authorized and approved. The parties further agree that they each will: (a)
execute and deliver any and all member certificates, member powers, assignments,
certificates, instruments of transfer and other documents which may be necessary
or appropriate to effectuate the transfers of the common stock and LLC interests
as contemplated by the terms of this Agreement; and (b) seek and obtain any and
all consents necessary and appropriate to consummate the transactions
contemplated in this Agreement.
8. Entire Agreement. This Agreement represents the entire understanding
of the parties on the subject matter hereof and no modification or termination
shall be binding unless in writing signed by all of the parties hereto.
9. Binding. This Agreement shall be binding upon and inure to the
benefit of the parties and their executors, administrators, heirs, legatees,
successors and assigns.
- 2 -
<PAGE> 3
10. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of Georgia.
11. Counterparts. This Agreement can executed in any number of multiple
counterparts. Each counterpart is to be deemed an original, and all of such
counterparts together constitute one and the same instrument.
[Signatures on following pages]
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
WT TECHNOLOGIES, INC.
By: /s/ Ralph Manaker
---------------------------------------
Name: Ralph Manaker
Title: Vice President
BCD TECHNOLOGIES, S.A.
By: /s/ Gerard Birchen
---------------------------------------
Name: Gerard Birchen
Title: Director
By: /s/ Edward Bruin
---------------------------------------
Name: Edward Bruin
Title: Director
THE ALEXANDER FAMILY, L.P.
By: /s/ John C. Alexander
---------------------------------------
Name: John C. Alexander
Title: General Partner
/s/ Danny B. Hood
------------------------------------------
DANNY B. HOOD
/s/ Ralph Manaker
------------------------------------------
RALPH MANAKER
/s/ Steve Reynolds
------------------------------------------
STEVE REYNOLDS
/s/ Velva Wiggins
------------------------------------------
VELVA WIGGINS
- 4 -
<PAGE> 5
SCHEDULE 1
BCD TRANSFER
BCD hereby transfers to Corporation all of its interest in WTT, LLC, which
represents 83.3753% of the total outstanding member interests in WTT, LLC in
exchange for 7,559,733 shares of Corporation Common Stock which, when issued,
will represent 81.56% of the issued and outstanding Corporation Common Stock.
<PAGE> 6
SCHEDULE 2
ALEXANDER L.P.'S TRANSFER
Alexander L.P. hereby transfers to Corporation all of its interest in WTT, LLC,
which represents 11.7018% of the total outstanding member interests in WTT, LLC
in exchange for 1,061,015 shares of Corporation Common Stock which, when issued,
will represent 11.45% of the issued and outstanding Corporation Common Stock.
<PAGE> 7
SCHEDULE 3
HOOD'S TRANSFER
Hood hereby transfers to Corporation all of his interest in WTT, LLC, which
represents 2.4379% of the total outstanding member interests in WTT, LLC in
exchange for 221,045 shares of Corporation Common Stock which, when issued, will
represent 2.38% of the issued and outstanding Corporation Common Stock.
<PAGE> 8
SCHEDULE 4
MANAKER'S TRANSFER
Manaker hereby transfers to Corporation all of his interest in WTT, LLC, which
represents 0.985% of the total outstanding member interests in WTT, LLC in
exchange for 64,327 shares of Corporation Common Stock which, when issued, will
represent 0.69% of the issued and outstanding Corporation Common Stock.
<PAGE> 9
SCHEDULE 5
REYNOLDS' TRANSFER
Reynolds hereby transfers to Corporation all of his interest in WTT, LLC, which
represents 0.75% of the total outstanding member interests in WTT, LLC in
exchange for 36,736 shares of Corporation Common Stock which, when issued, will
represent 0.40% of the issued and outstanding Corporation Common Stock.
<PAGE> 10
SCHEDULE 6
WIGGINS' TRANSFER
Wiggins hereby transfers to Corporation all of her interest in WTT,
LLC, which represents 0.75% of the total outstanding member interests in WTT,
LLC in exchange for 36,736 shares of Corporation Common Stock which, when
issued, will represent 0.40% of the issued and outstanding Corporation Common
Stock.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
TRX, INC.
I.
CORPORATE NAME
The name of the Corporation is: TRX, Inc. (hereinafter, the "Corporation").
II.
PURPOSE OF CORPORATION
The Corporation is organized for the purpose of engaging in any and all
lawful businesses not specifically prohibited to corporations for profit under
the laws of the State of Georgia, and the Corporation shall have all powers
necessary to conduct any such businesses and all other powers enumerated in the
Georgia Business Corporation Code (the "Code") or under any act amendatory
thereof, supplemental thereto or substituted therefor.
III.
AUTHORIZED SHARES
SECTION 3.1. COMMON STOCK: The Corporation shall have authority to
issue not more than One Hundred Million (100,000,000) shares of Common Stock,
par value $.01 per share (the "Common Stock"), which shall have unlimited voting
rights and be entitled to receive the net assets of the Corporation upon
dissolution.
SECTION 3.2. SHARES ACQUIRED BY THE CORPORATION. Shares of Common Stock
that have been acquired by the Corporation shall become treasury shares and may
be resold or otherwise disposed of by the Corporation for such consideration,
not less than the par value thereof, as shall be determined by the Board of
Directors, unless or until the Board of Directors shall by resolution provide
that any or all treasury shares so acquired shall constitute authorized, but
unissued shares.
<PAGE> 2
IV.
REGISTERED OFFICE AND AGENT
The street address and county of the registered office of the
Corporation is 6 West Druid Hills Drive, Atlanta, Dekalb County, Georgia 30329.
The registered agent at such office shall be Norwood H. Davis, III.
V.
PRINCIPAL OFFICE
The mailing address of the principal office of the Corporation is 6
West Druid Hills Drive, Atlanta, Georgia 30329.
VI.
DIRECTORS
SECTION 6.1. CLASSIFICATION OF DIRECTORS: The Board of Directors shall
be divided into three classes as nearly equal in number as possible, with the
term of office of one class expiring each year. In the event that the number of
directors shall not be evenly divisible by three, the Board of Directors shall
determine in which group or groups the remaining director or directors, as the
case may be, should be included. The term of office of each director shall be
three years; provided, however, that, of the new Board of Directors named below
the term of office of directors in Group A shall expire at the 2001 annual
meeting of the shareholders, the term of office of directors in Group B shall
expire at the 2002 annual meeting of the shareholders, and the term of office of
directors of Group C shall expire at the 2003 annual meeting of the
shareholders. Election of Directors need not be by ballot unless the Bylaws of
the Corporation shall so provide.
SECTION 6.2. VACANCY. Any director may resign at any time, upon written
notice to the Corporation. The entire Board of Directors or any individual
director may be removed only for cause. During the intervals between annual
meetings of shareholders, any vacancy occurring in the Board of Directors caused
by resignation, removal, death or other incapacity, and any newly created
Directorships resulting from an increase in the number of Directors, shall be
filled by a majority vote of the Directors then in office, whether or not a
quorum. Each Director chosen to fill a vacancy shall hold office for the
unexpired term in respect of which such vacancy occurred. Each Director chosen
to fill a newly created directorship shall hold office until the next election
of the class for which such Director shall have been chosen. When the number of
Directors is changed, any newly created directorships or any decrease in
Directorships shall be so apportioned among the classes as to make all classes
as nearly equal in number as possible.
-2-
<PAGE> 3
SECTION 6.3. AUTHORITY. In furtherance and not in limitation
of the powers conferred by statute, the Board of Directors is expressly
authorized:
1. To make, alter or repeal the Bylaws of the Corporation.
2. To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
3. To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose
and to abolish any such reserve in the manner in which it was created.
4. By resolution adopted at a regular or special meeting of the
Board of Directors, to authorize the issuance of any series of
preferred stock or any debt security of the Corporation, with full,
limited or no voting power, and with such designations, preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be
determined by the Board of Directors.
5. By resolution passed by a majority of the whole Board of
Directors, to designate one or more committees, each committee to
consist of two or more of the Directors of the Corporation, which, to
the extent provided in the resolution or in the Bylaws of the
Corporation, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be stated in the Bylaws
of the Corporation or as may be determined from time to time by
resolution adopted by the Board of Directors.
6. When and as authorized by the affirmative vote of the holders
of a majority of the stock issued and outstanding having voting power
given at a shareholders' meeting duly called for that purpose to sell,
lease or exchange all of the property and assets of the Corporation,
including its goodwill and its corporate franchises, upon such terms
and conditions and for such consideration, which may be in whole or in
part shares of stock in, and/or other securities of, any other business
entity or entities, as its Board of Directors shall deem expedient and
for the best interests of the Corporation.
VII.
LIMITATIONS ON DIRECTOR AND OFFICER LIABILITY
-3-
<PAGE> 4
No Director or officer of the Corporation shall be personally liable to
the Corporation or its shareholders for monetary damages for breach of duty of
care or other duty as a Director or officer, except for liability (1) for any
appropriation, in violation of his duties, of any business opportunity of the
Corporation; (2) for acts or omissions which involve intentional misconduct or a
knowing violation of the law; (3) for the types of liability set forth in
Section 14-2-832 of the Code; or (4) for any transaction from which the Director
received an improper personal benefit. If the Code is amended after the
effective date of this Article to authorize corporate action further limiting
the personal liability of Directors or officers, then the liability of a
Director or officer of the Corporation shall be limited to the fullest extent
permitted by the Code, as so amended. Any repeal or modification of the
foregoing paragraph by the shareholders of the Corporation shall not adversely
affect any right or protection of a Director or officer of the Corporation
existing at the time of such repeal or modification.
IX.
ACTION WITHOUT MEETING
Any action required or permitted to be taken at a shareholders meeting
may be taken without a meeting of the shareholders only if the action is
evidenced by one or more written consents describing the action taken, which
consents are signed by all of the shareholders who would be entitled to vote at
a meeting.
IX.
CONSIDERATIONS AVAILABLE TO THE BOARD OF DIRECTORS
The Board of Directors of the Corporation, when evaluating any offer of
another person to make a tender or exchange offer for any equity security of the
Corporation, to merge or consolidate the Corporation with another person, or to
purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation, shall, in determining what is in the best interests
of the Corporation and its shareholders, give due consideration to all relevant
factors, including without limitation (i) the fairness and adequacy of the
consideration offered in relation to: the then current market price or fair
value of the Corporation (including the estimated fair value of the Corporation
in a freely negotiated transaction), historical financial results and the then
current financial condition of the Corporation, historical and comparative
market information (including price/earnings ratios, market trends, comparative
premiums for sale of control and general economic conditions), the then current
market or replacement price of the tangible and intangible assets of the
Corporation, the ability of management of the Corporation, the future earnings
prospects of the Corporation and the then estimated future value of the
Corporation as an independent entity; (ii) the nature of the consideration
offered (including the estimated present value and future earnings of any
noncash consideration); (iii) the amount of the Corporation's securities sought
to be acquired and, if less than all, the effect of the acquisition on
-4-
<PAGE> 5
the remaining shareholders (including consideration of the resulting market
liquidity, stock prices and likelihood of subsequent freezeout transactions);
(iv) the method of financing the proposed transaction, including the financial
condition of the offeror, its ability to finance and consummate the proposed
transaction, the extent to which the assets of the Corporation will be used
directly or indirectly therefor, and the likelihood of success; (v) the timing
of the proposed transaction; (vi) the availability of other alternatives; (vii)
the legality of the proposed transaction (including possible legal and
regulatory obstacles and delays); (viii) the reputation and integrity of the
offeror in the business community and the perceived purpose of the proposed
transaction in light of the operating history and reputation of the Corporation
and its subsidiaries in the communities they serve; (ix) the social, legal and
economic effects of the transaction on the employees, customers and other
constituents of the Corporation and its subsidiaries; (x) the effects and impact
of the proposed transaction on the communities in which the Corporation and its
subsidiaries operate or are located; and (xi) the desirability of maintaining
independence from any other person.
X.
AMENDMENT
SECTION 10.1. AMENDMENT TO ARTICLES OF INCORPORATION. The Corporation
reserves the right, subject to Section 10.2 to amend, alter, change or repeal
any provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon shareholders
herein are granted subject to this reservation.
SECTION 10.2. RESTRICTIONS. Notwithstanding the provisions of Section
10.1 and any provisions of the Bylaws of the Corporation, no amendment to these
Articles of Incorporation or amendment to the Bylaws adopted by the shareholders
shall amend, modify or repeal any or all of the provisions of Article VI,
Article IX, or this Article X of these Articles of Incorporation or Section 1,
Section 2, Section 3 and Section 8 of Article II, Section 1 of Article III,
Section 3 of Article VII or Article VIII of the Bylaws of the Corporation unless
adopted by the affirmative vote or consent of the holders of not less than
eighty percent (80%) of the outstanding shares of each class of stock of the
Corporation entitled to vote in elections of Directors, including the
affirmative vote or consent of the holders of not less than sixty-six and
two-thirds percent (66 _%) of the outstanding shares of each class of stock of
the Corporation entitled to vote in elections of Directors other than those
shares beneficially owned by any Interested Shareholder (as such term is defined
in ss. 14-2-1110 of the Georgia Business Corporation Code); provided, however,
that in the event the Board of Directors of the Corporation shall, by resolution
duly adopted by not less than sixty-six and two-thirds percent (66 _%) of the
members of the Board of Directors (including not less than sixty-six and
two-thirds percent (66 _%) of the members of the Board of Directors who vote in
favor of such resolution and who were duly elected and acting members of the
Board of Directors prior to the time any Interested Shareholder became an
Interested Shareholder), recommend to the shareholders the adoption of any such
amendment, the shareholders of record holding a majority of the outstanding
shares of each class of stock of the
-5-
<PAGE> 6
Corporation entitled to vote in elections of Directors may amend, modify or
repeal any or all of such provisions.
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation as of the ____ day of ________________, 2000.
TRX, Inc.
By:
----------------------------------------
Name: Ralph Manaker
--------------------------------------
Title:
-------------------------------------
-6-
<PAGE> 7
CERTIFICATE OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF TRX, INC.
Pursuant to Section 14-2-1007 of the Georgia Business Corporation Code,
TRX, Inc., a Georgia corporation, hereby certifies that:
I.
The name of the corporation is: TRX, Inc.
II.
Pursuant to Section 14-2-821 of the Georgia Business Corporation Code,
the Board of Directors of the Corporation duly adopted resolutions on January
13th and 20th, 2000 setting forth and declaring advisable that the Corporation
amend and restate its Articles of Incorporation by deleting the provisions
thereof in their entirety and substituting in lieu thereof new provisions so
that, as amended and restated, the provisions shall read in their entirety as
hereinafter set forth.
III.
The Amended and Restated Articles of Incorporation contain amendments
which require shareholder approval.
IV.
Pursuant to Section 14-2-704 of the Georgia Business Corporation Code,
a majority of the shareholders of the Corporation duly adopted on February 4th,
2000 resolutions approving and adopting the Amended and Restated Articles of
Incorporation.
V.
The Amended and Restated Articles of Incorporation supersede the
original Articles of Incorporation and all amendments thereto.
VI.
The Amended and Restated Articles of Incorporation are attached hereto.
<PAGE> 8
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amended and Restated Articles of Incorporation to be executed by its duly
authorized officer this 17th day of February, 2000.
TRX, INC.
By: /s/ Ralph Manaker
-------------------------------------
Name: Ralph Manaker
----------------------------------
Title: Executive Vice President
----------------------------------
<PAGE> 1
EXHIBIT 3.2
BYLAWS OF
TRX, INC.
ARTICLE I
CAPITAL STOCK
SECTION 1. STOCK CERTIFICATES. The capital stock of the Company shall
be evidenced by certificates bearing the signatures or facsimiles thereof of the
Chief Executive Officer and the Secretary and countersigned by the Registrar and
Transfer Agent, if any. The stock shall be transferable only on the books of the
Company by assignment properly signed by the shareholder of record or such
shareholder's duly authorized attorney-in-fact and with all taxes on the
transfer having been paid. The Company or its transfer agent or agents shall be
authorized to refuse any transfer unless and until it is furnished such evidence
as it may reasonably require showing that the requested transfer is proper. The
Company may deem and treat the registered holder of any stock as the absolute
owner thereof for all purposes and shall not be required to take any notice of
any right or claim of right of any other person.
SECTION 2. LOST, DESTROYED OR STOLEN CERTIFICATES. When the holder of
record of a share or shares of stock of the Company claims that the certificate
representing said share has been lost, destroyed or wrongfully taken, the Board
of Directors may by resolution provide for, or may authorize such officer or
agent as it may designate to provide for, the issuance of a certificate to
replace the original if the holder of record so requests before the Company has
notice that the certificate has been acquired by a bona fide purchaser, files
with the Company a sufficient indemnity bond, if required by the Company, and
furnishes evidence of such loss, destruction or wrongful taking satisfactory to
the Company, in the reasonable exercise of its discretion. The Board of
Directors may also authorize such officer or agent as it may designate to
determine the sufficiency of such an indemnity bond and to determine reasonably
the sufficiency of the evidence of loss, destruction or wrongful taking.
SECTION 3. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
(but shall not be required to) appoint a transfer agent or agents and a
registrar or registrars to effect transfers of shares of stock, and may require
that all stock certificates bear the signature of such transfer agent or of such
transfer agent and registrar.
SECTION 4. RECORD DATE. The Board of Directors may fix a date (the
"record date") not exceeding seventy (70) days prior to the date appointed for
any meeting of the shareholders, or prior to the date fixed for the payment of
any dividend, or for the delivery of any evidences of rights, or other
distribution allowed by law or in order to make a determination of shareholders
for any other proper purpose, as the record date for the determination of the
shareholders entitled to participate in the aforesaid. A record date for the
determination of shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof shall not be set less than 10 days prior
to such meeting. Only shareholders of record on the record date shall be
entitled to notice of or to participate in the aforesaid.
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SECTION 5. INSPECTION OF RECORDS. The record of shareholders,
accounting records and written proceedings of the shareholders, the Board of
Directors and committees of the Board of Directors shall be open for inspection
and copying during regular business hours at the Company's principal office by a
shareholder owning not less than two percent (2%) of the outstanding shares of
the Company upon at least five (5) days written notice of his demand to inspect
and copy. The right of inspection by a shareholder may be granted only if his
demand is made in good faith and for a proper purpose that is reasonably
relevant to his legitimate interest as a shareholder, he describes with
reasonable particularity his purpose and the records he desires to inspect, the
records are directly connected with his purpose and are to be used only for the
stated purpose.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING OF SHAREHOLDERS. The annual meeting of the
shareholders shall be held for the purpose of electing Directors and for the
transaction of only such other business as is properly brought before the
meeting in accordance with these Bylaws, at a time and place to be designated by
the Board of Directors, either within or without the State of Georgia, or if the
Board of Directors fails to designate, then such meeting shall be held at the
principal executive offices of the Company at 9:00 a.m. on the 30th day of the
fifth month after the end of the Company's fiscal year if not a legal holiday
under the laws of the State of Georgia, and if a legal holiday, on the next
succeeding business day. Notice of such meeting stating the time and place
thereof shall be given by the Secretary not less than ten days nor more than 60
days before the time for such meeting by depositing such notice in the post
office with postage prepaid and directed to each shareholder at his last known
residence or at such other address as any shareholder may have designated in
writing.
To be properly brought before the meeting, business must be either (a)
specified in the notice of the meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (b) otherwise properly brought
before the meeting by or at the direction of the Board of Directors or (c)
otherwise properly brought before the meeting by a shareholder in accordance
with Section 8 of this Article II.
SECTION 2. LIST OF STOCKHOLDERS. The officer who has charge of the
stock ledger of the Company shall prepare and make, at least 10 days before
every meeting of shareholders, a complete list of shareholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be so specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any shareholder who is
present.
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SECTION 3 SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of the
shareholders may be called at any time by a majority of the Board of Directors,
the Chairman of the Board or the Chief Executive Officer, or the holders of not
less than 35% of the shares then outstanding and entitled to vote. Meetings may
be held either within or without the State of Georgia as designated by the Board
of Directors. Notice of special meetings of the shareholders, setting out the
time, place and purpose of the meeting, shall be mailed to each shareholder at
his address shown on the books of the Company, not less than ten days nor more
than 60 days before such meeting, unless such shareholder waives notice of the
meeting. No business may be transacted at any special meeting of shareholders
except such business as is set forth in a notice of the special meeting in
accordance with Section 8 of this Article II.
SECTION 4 QUORUM. The presence, in person or by proxy, of a majority of
the shares entitled to vote at a meeting shall constitute a quorum for the
transaction of business. Except as otherwise required by law or the Articles of
Incorporation of the Company or these Bylaws, the acts of a majority of the
shareholders present at a meeting at which a quorum is present shall be the acts
of the shareholders. If a quorum is not present, a meeting of shareholders may
be adjourned from time to time by either the vote of shares having a majority of
the votes of the shares represented at such meeting, the Chairman of the Board
or the Chief Executive Officer, until a quorum is present. If a quorum is
present, a meeting of shareholders may be adjourned from time to time by either
the Chairman of the Board or the Chief Executive Officer. When a quorum is
present at the reconvening of any adjourned meeting, and if the requirements of
Section 1 of this Article II have been observed, then any business may be
transacted at such reconvened meeting in the same manner and to the same extent
as it might have been transacted at the meeting as originally noticed.
SECTION 5 WAIVER OF NOTICE. Any shareholder present at a meeting in
person, or by proxy, shall be deemed to have waived notice thereof.
SECTION 6 PROXIES. Any shareholder may vote his shares in person or by
proxy by executing a writing which authorizes another person or persons to vote
or otherwise act on the shareholder's behalf. Execution may be accomplished by
means of facsimile telecommunication, either personally or by an
attorney-in-fact of an individual shareholder or by an authorized officer,
Director, employee or agent in the case of any other shareholder. A shareholder
may authorize another person or persons to act for him as proxy by transmitting
or authorizing the transmission of a telegram, cablegram or other means of
electronic or telecommunication transmission acceptable to the Company to the
person who will be the holder of the proxy.
SECTION 7 ACTION WITHOUT MEETING. Any action required or permitted to
be taken at a shareholders' meeting may be taken without a meeting if the action
is taken by all the shareholders entitled to vote on the action, or, if so
provided in the Articles of Incorporation, by persons who would be entitled to
vote at a meeting shares having voting power to cast not less than the minimum
number (or numbers, in the case of voting by groups) of votes that would be
necessary to authorize or take the action at a meeting at which all shareholders
entitled to vote were present and voted. The action must be evidenced by one or
more written consents describing the action taken, signed by shareholders
entitled to take action without a meeting and delivered to the corporation for
inclusion in the minutes or for filing with the corporate records. No written
consent shall be valid unless the
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consenting shareholder has been furnished the same material that would have been
required to be sent to the shareholders in a notice of a meeting at which the
proposed action would have been submitted to the shareholders for action,
including notice of any applicable dissenters' right, or the written consent
contains an express waiver of the right to receive the material otherwise
required to be furnished. Action with respect to any election of Directors as to
which shareholders would be entitled to cumulative voting may be taken without a
meeting only by written consent of all the shareholders entitled to vote on the
action. Written notice, together with the materials that would have been
required to be sent in a notice of meeting, shall be given within ten days of
the taking of the corporate action without a meeting by less than unanimous
written consent to all persons who are voting shareholders on the date the
consent is first executed and who have not consented in writing.
SECTION 8 NOMINATIONS AND SHAREHOLDERS BUSINESS.
(a) Annual Meetings of Shareholders.
(1) Nominations of persons for election to the Board of Directors and
the proposal of business to be considered by the shareholders may be made at an
annual meeting of shareholders (i) pursuant to the Company's notice of meeting,
(ii) by or at the direction of the Board of Directors or (iii) by any
shareholder of the Company who (x) was a shareholder of record at the time of
giving of notice provided for in Section 8(a)(2), (y) is entitled to vote at the
meeting and (z) complied with the notice procedures set forth in Section 8.
(2) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (iii) of paragraph (a)(1) of
this Section 8, the shareholder must have given timely notice thereof in writing
to the secretary of the Company. To be timely, a shareholder's notice shall be
delivered to the secretary at the principal executive offices of the Company not
less than 60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, notice by the shareholder to be timely
must be so delivered not earlier than the 90th day prior to such annual meeting
and not later than the close of business on the later of the 60th day prior to
such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such shareholder's
notice shall set forth (i) as to each person whom the shareholder proposes to
nominate for election or reelection as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); (ii) as
to any other business that the shareholder proposes to bring before the meeting,
a brief description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any material
interest in such business of such shareholder and of the beneficial owners, if
any, on whose behalf the proposal is made; and (iii) as to the shareholder
giving the notice and the beneficial owners, if any, on whose behalf the
nomination or proposal is made, (x) the name and address of such shareholder, as
they appear on the Company's books, and of such beneficial owners, if any, and
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(y) the class and number of shares of stock of the Company which are owned
beneficially and of record by such shareholder and such beneficial owners, if
any.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2)
of this Section 8 to the contrary, in the event that the number of directors to
be elected to the Board of Directors is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board of Directors made by the Company at least 70 days prior to
the first anniversary of the preceding year's annual meeting, a shareholder's
notice required by paragraph (a)(2) of this Section 8 shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the secretary at the principal executive
offices of the Company not later than the close of business on the tenth day
following the day on which such public announcement is first made by the
Company.
(b) Special Meetings of Shareholders.
(1) Only such business shall be conducted at a special meeting of
shareholders as shall have been brought before the meeting pursuant to the
Company's notice of meeting.
(2) Nominations of persons for election to the Board of Directors may
be made at a special meeting of shareholders at which directors are to be
elected (i) pursuant to the Company's notice of meeting, (ii) by or at the
direction of the Board of Directors or (iii) provided that the Board of
Directors has determined that directors shall be elected at such special
meeting, by any shareholder of the Company who (x) has given timely notice
thereof meeting the requirements of Section 8(b)(3), (y) is a shareholder of
record at the time of giving of such notice and (z) is entitled to vote at the
meeting.
(3) To be timely, a shareholder's notice referred to in Section 8(b)(2)
must have been delivered to the secretary of the Company at the principal
executive offices of the Company not earlier than the 90th day prior to such
special meeting and not later than the close of business on the later of the
60th day prior to such special meeting or the tenth day following the day on
which public announcement is made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. Such
shareholder's notice shall set forth (i) as to each person whom the shareholder
proposes to nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); and (ii) as to the shareholder giving the
notice and the beneficial owners, if any, on whose behalf the nomination is
made, (x) the name and address of such shareholder, as they appear on the
Company's books, and of such beneficial owners, if any, and (y) the class and
number of shares of stock of the Company which are owned beneficially and of
record by such shareholder and such beneficial owners, if any.
(c) General.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 8 shall be eligible to serve as directors
and only such business shall be conducted at a
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meeting of shareholders as shall have been brought before the meeting in
accordance with the procedures set forth in this Section 8. The presiding
officer of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made in
accordance with the procedures set forth in this Section 8 and, if any proposed
nomination or business is not in compliance with this Section 8, to declare that
such defective nomination or proposal be disregarded.
(2) For purposes of this Section 8, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service or in a document publicly filed by the Company
with the Securities and Exchange Commission pursuant to Sections 13, 14, or
15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 8, a
shareholder shall also comply with all applicable requirements of state law and
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 8. Nothing in this Section 8 shall be deemed
to affect any rights of shareholders to request inclusion of proposals in the
Company's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1 GENERAL POWERS. The business of the Company shall be managed
by a Board of Directors consisting of not more than eleven persons. Hereafter,
within the limits above specified, the number of Directors shall be determined
only by the Board of Directors.
SECTION 2 QUALIFICATION OF DIRECTORS. Directors shall be natural
persons who have attained the age of 18 years but need not be residents of the
State of Georgia or shareholders of the Company.
SECTION 3 REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such places within or without the State of Georgia and at such
times as the Board of Directors by vote may from time to time determine and if
so determined, no notice thereof need be given.
SECTION 4 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by a Director or officer of the Company. Said meetings shall be
held at the place designated in the notice of such meeting. Notice of such
special meeting shall be given to each Director at least forty-eight (48) hours
before such meeting. Such notice may be given personally or by telephone, mail,
telegram, telex, facsimile transmission or any other means. Notice given by mail
shall be addressed to a Director at his last known principal place of business
or residence, with postage thereon prepaid, and such notice shall be deemed to
be given at the time when the same shall be deposited in the United States mail.
Notice to Directors given by telegram, telex or facsimile transmission shall be
deemed to be delivered when the telegram is delivered to the telegraph company,
or when the telex or facsimile transmission is transmitted to the Director.
Written notice delivered by any other means shall be deemed delivered when
received at or delivered to the Director's last known principal place of
business or residence. Notice of such special meeting shall state the matter(s)
to be discussed at such meeting.
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SECTION 5 QUORUM AND VOTING. At all meetings of the Board of Directors
or a committee thereof, one-half of the number of Directors shall be necessary
to constitute a quorum to transact business. The affirmative vote of a majority
of the Directors present at any meeting at which there is a quorum at the time
of such act shall be the act of the Board or of the committee, except as might
be otherwise specifically provided by statute or by the Articles of
Incorporation or Bylaws.
SECTION 6 WAIVER OF NOTICE. Whenever any notice is required to be given
under provisions of the Articles of Incorporation or these Bylaws or by law, a
waiver thereof, signed by the Director entitled to notice and delivered to the
Company for inclusion in the minutes or filing with the corporate records,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting and of all objections to the place or time of the meeting
or the manner in which it has been called or convened, except when the Director
attends a meeting for the express purpose of stating, at the beginning of the
meeting, any such objection and does not thereafter vote for or assent to action
taken at the meeting. Neither the business to be transacted at nor the purpose
of any regular or special meeting of the Directors need be specified in any
written waiver of notice.
SECTION 7 COMMITTEES. The Board of Directors may, by resolution,
designate from among its members one or more committees, each committee to
consist of one or more Directors, except that committees appointed to take
action with respect to indemnification of Directors, Directors' conflicting
interest transactions or derivative proceedings shall consist of two or more
Directors qualified to serve pursuant to the Georgia Business Corporation Code
(the "Code"). Any such committee, to the extent specified by the Board of
Directors, Articles of Incorporation or Bylaws, shall have and may exercise all
of the authority of the Board of Directors in the management of the business and
affairs of the Company, except that it may not (1) approve or propose to
shareholders action that the Code requires to be approved by shareholders, (2)
fill vacancies on the Board of Directors or any of its committees, (3) amend the
Articles of Incorporation, (4) adopt, amend, or repeal Bylaws or (5) approve a
plan of merger not requiring shareholder approval.
SECTION 8 ACTION WITHOUT MEETING. Unless the Articles of Incorporation
or Bylaws provide otherwise, any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if the action is taken by all members of the Board or committee, as
the case may be. The action must be evidenced by one or more written consents
describing the action taken, signed by each Director, and filed with the minutes
of the proceedings of the Board or committee or filed with the corporate
records.
SECTION 9 REMOTE PARTICIPATION IN A Meeting. Unless otherwise
restricted by the Articles of Incorporation or the Bylaws, any meeting of the
Board of Directors or any committee may be conducted by the use of any means of
communication by which all the members of the Board or committee participating
may simultaneously hear each other during the meeting. A member of the Board or
committee participating in a meeting by this means is deemed to be present in
person at the meeting.
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SECTION 10 COMPENSATION OF DIRECTORS. The Board of Directors may fix
the compensation of the Directors for their services as Directors. No provision
of these Bylaws shall be construed to preclude any Director from serving the
Company in any other capacity and receiving compensation therefor.
ARTICLE IV
OFFICERS
SECTION 1 APPOINTMENT OF OFFICERS. The officers of the Company may
include a Chairman of the Board, Chief Executive Officer, Chief Operating
Officer, President, a Secretary, a Chief Financial Officer (whose title shall be
designated by the Board) and such other officers and assistant officers as may
be elected or appointed by the Board of Directors or the Chief Executive
Officer. The same individual simultaneously may hold more than one office.
SECTION 2 POWERS AND DUTIES. Each officer has the authority and shall
perform the duties set forth below or, to the extent consistent with these
Bylaws, the duties prescribed by the Board of Directors or by direction of the
Chief Executive Officer authorized to prescribe the duties of other officers.
(a) Chairman of the Board. The Chairman of the Board shall be chosen from among
the Directors of the Company and shall preside at all meetings of the
shareholders and the Board of Directors. The Chairman of the Board shall have
the usual powers and duties incident to the position of Chairman of the Board of
Directors of a Company and such other powers and duties as from time to time may
be assigned by the Board of Directors.
(b) Chief Executive Officer. The Chief Executive Officer of the Company shall be
responsible for the administration of the Company, including general supervision
of the policies of the Company and general and active management of the
financial affairs of the Company. The Chief Executive Officer shall have the
power to make and execute contracts on behalf of the Company and to delegate
such power to others. The Chief Executive Officer also shall have such powers
and perform such duties as are specifically imposed on him by law and as may be
assigned to him by the Board of Directors.
(c) President. The President shall perform such duties as a President
customarily performs and shall perform such other duties and shall exercise such
other powers as the Chief Executive Officer or the Board of Directors may from
time to time designate. The President, in the absence or disability or at the
direction of the Chief Executive Officer, shall perform the duties and exercise
the powers of the Chief Executive Officer.
(d) Chief Operating Officer. The Chief Operating Officer shall perform such
duties as a Chief Operating Officer customarily performs and shall perform such
other duties and shall exercise such other powers as the Chief Executive Officer
or the Board of Directors may from time to time designate. The Chief Operating
Officer, in the absence or disability or at the direction of the President,
shall perform the duties and exercise the powers of the President.
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(e) Vice Presidents. The Vice Presidents, if any, shall perform such duties as
Vice Presidents customarily perform and shall perform such other duties and
shall exercise such other powers as the Chief Executive Officer or the Board of
Directors may from time to time designate. The Vice President, in the absence or
disability or at the direction of the President, shall perform the duties and
exercise the powers of the President. If the Company has more than one Vice
President, the one designated by the Board of Directors shall act in lieu of the
President, or, in the absence of any such designation, then the Vice President
first elected shall act in lieu of the President. In the absence of a Secretary
or an Assistant Secretary, the Vice President shall perform the Secretary's
duties.
(f) Secretary. The Secretary shall attend all meetings of the shareholders and
all meetings of the Board of Directors, as requested, and shall record all votes
and minutes of all proceedings in books to be kept for that purpose, and shall
perform like duties for the standing committees when required. The Secretary
shall have custody of the corporate seal of the Company, shall have the
authority to affix the same to any instrument the execution of which on behalf
of the Company under its seal is duly authorized and shall attest to the same by
his signature whenever required. The Board of Directors may give general
authority to any other officer to affix the seal of the Company and to attest to
the same by his signature. The Secretary shall give, or cause to be given, any
notice required to be given of any meetings of the shareholders, the Board of
Directors and of the standing committees when required. The Secretary shall
cause to be kept such books and records as the Board of Directors, the Chairman
of the Board, the Chief Executive Officer or the President may require and shall
cause to be prepared, recorded, transferred, issued, sealed and canceled
certificates of stock as required by the transactions of the Company and its
shareholders. The Secretary shall attend to such correspondence and shall
perform such other duties as may be incident to the office of a Secretary of a
Company or as may be assigned to him by the Board of Directors, the Chairman of
the Board, the Chief Executive Officer or the President.
(g) Treasurer. The Treasurer shall be charged with the management of financial
affairs of the Company. The Treasurer shall perform such duties as Treasurers
usually perform and shall perform such other duties and shall exercise such
other powers as the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President may from time to time designate and shall
render to the Chairman of the Board, the Chief Executive Officer, the President
and to the Board of Directors, whenever requested, an account of the financial
condition of the Company.
(h) Assistant Vice President, Assistant Secretary and Assistant Treasurer. The
Assistant Vice President, Assistant Secretary and Assistant Treasurer, if any,
in the absence or disability of any Vice President, the Secretary or the
Treasurer, respectively, shall perform the duties and exercise the powers of
those offices, and, in general, they shall perform such other duties as shall be
assigned to them by the Board of Directors or by the person appointing them.
Specifically the Assistant Secretary may affix the corporate seal to all
necessary documents and attest the signature of any officer of the Company.
SECTION 3 OTHER DUTIES. Each officer, employee and agent shall have
such other duties and authorities as may be conferred upon him by the Board of
Directors.
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SECTION 4 RESIGNATION AND REMOVAL OF Officers. Any officer may resign
at any time by delivering notice to the Company and such resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. The Board of Directors may remove any officer at any time with
or without cause. A contract of employment for a definite term shall not prevent
the removal of any officer, but this provision shall not prevent the making of a
contract of employment with any officer, and any officer removed in breach of
his contract of employment shall have cause of action therefor.
SECTION 5 EXECUTION OF DOCUMENTS. All deeds, contracts and other
instruments shall be executed by such person or persons as the Board of
Directors may from time to time designate.
ARTICLE V
DEPOSITORIES
SECTION 1 BANK ACCOUNTS. All funds of the Company shall be deposited in
the name of the Company in such bank, banks, trust companies, or other
depositories as the Board of Directors may from time to time designate and shall
be drawn out on checks, drafts or other orders signed on behalf of the Company
by such person or persons as the Board of Directors may from time to time
designate.
ARTICLE VI
INDEMNIFICATION AND INSURANCE
SECTION 1 AUTHORITY TO INDEMNIFY; THIRD PARTY ACTIONS. Every person now
or hereafter serving as a Director or officer of the Company and any and all
former Directors and officers shall be indemnified and held harmless by the
Company from and against any and all loss, cost, liability, and expense that may
be imposed upon or incurred by him in connection with or resulting from any
threatened, pending, or completed claim, action, suit, or proceeding (other than
an action by or in the right of the Company), whether civil, criminal,
administrative, or investigative, in which he may become involved, as a party or
otherwise, by reason of his being or having been a Director or officer of the
Company, or arising from his status as such, or that he is or was serving at the
request of the Company as a Director, officer, employee, or agent of another
company, limited liability company, partnership, limited partnership, limited
liability partnership, limited liability limited partnership, joint venture,
trust, or other enterprise, regardless of whether such person is acting in such
capacity at the time such loss, cost, liability or expense shall have been
imposed or incurred. As used herein, the term "loss, cost, liability and
expense" shall include, but shall not be limited to, any and all costs, expenses
(including attorneys' fees and disbursements), judgments, penalties, fines, and
amounts paid in settlement incurred in connection with any such claim, action,
suit, or proceeding if such person acted in good faith and, while acting in an
official capacity as a Director or officer, acted in a manner he reasonably
believed to be in the best interest of the Company, and, in all other cases,
acted in a manner he reasonably believed was not opposed to the best interests
of the Company and, with respect to any criminal action or proceeding, if such
person had no reasonable cause to believe his conduct was unlawful. The
termination of any claim, action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contender or its equivalent,
shall not, of itself, create a presumption that the person did not act in a
manner which meets the standard described in
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the immediately preceding sentence. If any such claim, action, suit, or
proceeding is settled (whether by agreement, plea of nolo contender, entry of
judgment or consent, or otherwise), the determination in good faith by the Board
of Directors of the Company that such person acted in a manner that met the
standard set forth in this paragraph shall be necessary and sufficient to
justify indemnification.
SECTION 2 AUTHORITY TO INDEMNIFY; DERIVATIVE ACTIONS. The Company shall
indemnify and hold harmless any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the Company to procure a judgment in its favor by reason of the
fact he is or was a Director or officer of the Company, or is or was serving at
the request of the Company as a Director, officer, employee, or agent of another
company, limited liability company, partnership, limited partnership, limited
liability partnership, limited liability limited partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees and
disbursements), judgments and any other amounts, now or hereafter permitted by
applicable law, actually and reasonably incurred by him or in connection with
the defense or settlement of such action or suit; except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Company, unless the Director or
officer has not been adjudged liable or subject to injunctive relief in favor of
the Company (i) for any appropriation, in violation of his duties, of any
business opportunity of the Company; (ii) for acts or omissions which involve
intentional misconduct or a knowing violation of law; (iii) for the types of
liability set forth in Code Section 14-2-832; or (iv) for any transaction from
which he received an improper personal benefit, and in the event the foregoing
conditions are not met, then only to the extent that the court in which such
action or suit was brought or another court of competent jurisdiction shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
SECTION 3 ADVANCEMENT OF EXPENSES. Expenses incurred in any claim,
action, suit, or proceeding shall be paid by the Company in advance of the final
disposition of such claim, action, suit or proceeding as authorized by the Board
of Directors in the specific case upon receipt from the Director or officer of a
written affirmation of his good faith belief that he has met the relevant
standard of conduct set forth under Section 14-2-851 of the Code and furnishes
to the Company an undertaking to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Company.
SECTION 4 DETERMINATION OF INDEMNIFICATION RIGHTS. Except as ordered by
a court, the Company may not indemnify a Director, officer, employee or agent
under this Article unless authorized hereunder and a determination has been made
in the specific case that indemnification of the Director, officer or employee
is permissible under the circumstances because he or she has met the relevant
standard of conduct set forth in either Section 1 or Section 2. The
determination shall be made (i) if there are two or more disinterested
Directors, by the Board of Directors by a majority vote of all the disinterested
Directors (a majority of whom shall for such purpose constitute a quorum), or by
a majority of the members of a committee of two or more disinterested Directors
appointed by such a vote; (ii) by special legal counsel (a) selected in the
manner prescribed in clause (i) of this sentence or (b) if there are fewer than
two disinterested Directors, selected by the Board of Directors (in which
selection Directors who do not qualify as disinterested Directors may
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participate); or (iii) by the shareholders, but shares owned by or voted under
the control of a Director who at the time does not qualify as a disinterested
Director may not be voted on the determination.
SECTION 5 CONSIDERATION. The Company shall be obligated to provide
indemnification in accordance with the provisions of this Article VI. Any person
who at any time after the adoption of this Article serves or has served in the
capacity of Director or officer for or on behalf of the Company shall be deemed
to be doing or to have done so in reliance upon, and as consideration for, the
right of indemnification provided herein. Such right shall inure to the benefit
of the legal representatives of any such person and shall not be exclusive of
any other rights to which such person may be entitled apart from the provision
of this Article. Any repeal or modification of these indemnification provisions
shall not affect any rights or obligations existing at the time of such repeal
or modification.
SECTION 6 NON-EXCLUSIVE RIGHT OF INDEMNIFICATION. The foregoing rights
of indemnification and advancement of expenses shall not be deemed exclusive of
any other right to which those indemnified may be entitled, and the Company may
provide additional indemnity and rights to its Directors, officers, employees or
agents.
SECTION 7 INSURANCE. The Company may purchase and maintain insurance,
at its expense, on behalf of an individual who is or was a Director, officer,
employee or agent of the Company or who, while a Director, officer, employee or
agent of the Company, is or was serving at the request of the Company as a
Director, officer, partner, trustee, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise, against liability asserted against or incurred by him in
any such capacity or arising from his status as a Director, officer, employee or
agent, whether or not the Company would have power to indemnify him against the
same liability under this Article.
SECTION 8 MISCELLANEOUS. The provisions of this Article VI shall cover
claims, actions, suits and proceedings, civil or criminal, whether now pending
or hereafter commenced and shall be retroactive to cover acts or omissions or
alleged acts or omissions which heretofore have taken place. In the event of
death of any person having a right of indemnification or advancement of expenses
under the provisions of this Article VI, such right shall inure to the benefit
of his heirs, executors, administrators and personal representatives. If any
part of this Article VI should be found to be invalid or ineffective in any
proceeding, the validity and effect of the remaining provisions shall not be
affected.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1 SEAL. The Company may have a seal, which shall be in such
form as the Board of Directors may from time to time determine. In the event
that the use of the seal is at any time inconvenient, the signature of an
officer of the Company, followed by the word "Seal" enclosed in parenthesis,
shall be deemed the seal of the Company.
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<PAGE> 13
SECTION 2 VOTING SHARES IN SUBSIDIARIES. In the absence of other
arrangements by the Board of Directors, shares of stock issued by another
corporation and owned or controlled by the Company, whether in a fiduciary
capacity or otherwise, may be voted by the Chairman of the Board, Chief
Executive Officer, President or any Vice President, in the same order as they
preside, or, in the absence of action by the foregoing officers, by any other
officer of the Company, and such person may execute the aforementioned powers by
executing proxies and written waivers and consents on behalf of the Company.
SECTION 3 AMENDMENT OF BYLAWS. These Bylaws may be amended or repealed
and new Bylaws may be adopted by the Board of Directors at any regular or
special meeting of the Board of Directors unless the Articles of Incorporation
or the Code reserve this power exclusively to the shareholders in whole or in
part or the shareholders, in amending or repealing the particular bylaw, provide
expressly that the Board of Directors may not amend or repeal that bylaw.
ARTICLE VIII
INTERESTED STOCKHOLDER TRANSACTIONS
The Company hereby elects to be governed by all of the requirements of
the Fair Price Requirements and Business Combinations with Interested
Stockholders rules set forth in Part 2 and Part 3 of Article 11 of the Code,
ss.ss. 14-2-1110 through 14-2-1133; provided, however, that, notwithstanding
anything to the contrary in the foregoing rules, the restrictions set forth in
the foregoing rules shall not apply to any "business combination" (as such term
is defined in ss.14-2-1110 or ss.14-2-1131 of the Code) with (i) any shareholder
of the Company who was an "interested shareholder" (as such term is defined in
ss.14-2-1110 of the Code) as of the date the Company adopts these Bylaws or (ii)
any person or entity now existing or hereafter created that is at the time of
such business combination wholly owned by such interested shareholder.
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EXHIBIT 4.1
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") is made and entered into
as of the 4th day of November, 1999, by and among WT Technologies, Inc., a
Georgia corporation (the "Corporation"), BCD Technology S.A., a corporation
organized under the laws of Luxembourg ("BCD") (who is a party solely for
purposes of Sections 2(c) and 5 hereof) and the following parties, each of which
shall be a "Shareholder," and collectively, the "Shareholders": (i) Christopher
M. Brittin, an individual resident of Virginia ("Brittin"); (ii) Susan R.
Hopley, an individual resident of Virginia ("Hopley"); (iii) Gary D. Smith and
Jean H. Smith, as Trustees of the Gary D. Smith and Jean H. Smith Trust
("Smith"); and (iv) F. Gilmer Siler, an individual resident of Virginia
("Siler").
R E C I T A L S
WHEREAS, pursuant to the terms of that certain Contribution Agreement,
dated as of the date hereof (the "Contribution Agreement"), between the
Corporation, the Shareholders and Arthur H. Ltd d/b/a International Software
Products ("ISP"), the Shareholders are transferring all of the issued and
outstanding shares of capital stock of ISP to the Corporation in consideration
for, among other things, shares of common stock of the Corporation;
WHEREAS, the Corporation and the Shareholders desire to place certain
restrictions on the transferability of the Shares (as defined below) now or
hereafter owned by them, and address certain other matters with respect to the
Shares and the Corporation, all as set forth herein; and
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to such terms in the Contribution Agreement;
NOW, THEREFORE, in consideration of the mutual promises of the parties
made in this Agreement and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties, intending to be legally
bound, agree as follows:
A G R E E M E N T
1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
(a) "Affiliate" means a Person or Persons (each as
defined below) who: (i) directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
Person(s) in question, or (ii) is an officer, director, or shareholder of the
Person(s) in question. The term "control," as used in the immediately preceding
sentence, means,
<PAGE> 2
with respect to a Person that is a corporation, the right to the exercise,
directly or indirectly, of more than 50% of the voting rights attributable to
the shares of such controlled corporation and, with respect to a Person that is
not a corporation, the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such controlled
Person.
(b) "Person" means an individual, partnership, limited
liability company, joint venture, association, corporation, trust or any other
legal entity.
(c) "Share" or "Shares" shall mean and include shares of
the Corporation's common stock, par value $.01 per share, and all other
securities of the Corporation which may be issued in exchange for or in respect
of such shares (whether by way of stock split, stock dividend, combination,
reclassification or any other means);
(d) "Transfer" shall mean to transfer, sell, assign,
pledge, hypothecate, give, create a security interest in or lien on, place in
trust (voting or otherwise), assign or in any way encumber or dispose of
directly or indirectly and whether or not by operation of law or for value.
2. Transfers by Shareholders.
(a) Transfers Generally. Except as provided in this
Section 2, no Shareholder shall have the right to Transfer all or any portion of
his or her Shares other than to an existing shareholder of the Corporation
without the prior written consent of the Board of Directors of the Corporation.
(b) Redemption.
(1) (i) Upon the death or permanent physical or
mental disability of Brittin, Hopley, Siler or Smith (each a
"Redeemable Shareholder"), or (ii) in the event that a Redeemable
Shareholder employed by WorldTravel Technologies, L.L.C. ("WTT") or
ISP, as applicable (or any successor or Affiliate entities thereof),
shall no longer be employed by WTT or ISP (or any successor or
Affiliate entities thereof) for any reason (which, for the purpose of
this Section 2(b), shall be interpreted to include a party invoking any
notice of termination provision in an employment agreement, regardless
of the fact that actual employment with WTT or ISP (or any successor or
Affiliate entities thereof) has not yet ceased), the Corporation shall
have the right to redeem, or shall have the right to cause a third
party to purchase, and (if the Corporation exercises such right) the
Redeemable Shareholder shall sell, all of the Shares of such Redeemable
Shareholder. Each of the events described in subsections (i) and (ii)
above shall, for the purposes of this Agreement, be deemed a
"Separation Event." For the purpose of clause (ii) above, performing
consulting services as an independent contractor and/or serving on the
Board of Directors
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<PAGE> 3
of the Corporation or WTT or ISP (or any successor or Affiliate
entities thereof) shall not, singly or together, constitute employment.
For the purposes of this Agreement, a permanent physical or mental
disability of a Redeemable Shareholder shall be deemed to have occurred
at the end of a period of one hundred and eighty (180) consecutive days
during which the Redeemable Shareholder has been unable to perform the
customary and usual duties for which he or she was employed. Any such
redemption or purchase shall be consummated within sixty (60) days
after the date of the Separation Event; provided, however, in the event
of a purchase or redemption occasioned by a party invoking any notice
of termination provision in an employment agreement, the date specified
above shall be sixty (60) days after the date through which the
employee is contractually bound to be employed by the Corporation.
(2) The redemption price (the "Redemption Price") for
the Shares of a Redeemable Shareholder redeemed or purchased pursuant
to this Section 2(b) shall be equal to $17.25 per Share, as adjusted to
reflect securities of the Corporation issued in respect of such Shares
(whether by way of stock split, stock dividend, combination,
reclassification or the like); provided, however, that if (i) the
Separation Event giving rise to a right of redemption or purchase
pursuant to this Section 2(b) is the termination of a Redeemable
Shareholder's employment with WTT or ISP (or any successor of Affiliate
entities thereof) by WTT or ISP (or any successor or Affiliate entities
thereof) without "good cause" or by the Redeemable Shareholder with
"good reason" and (ii) the Corporation files a registration statement
with the Securities and Exchange Commission with respect to an initial
public offering (an "IPO") of its securities (a "Registration
Statement") within the second (2nd) anniversary following such
Separation Event (provided, however, that with respect to a redemption
or purchase following a termination by WTT or ISP (or any successor or
Affiliate entities thereof) without "good cause" or by the Redeemable
Shareholder with "good reason and occasioned by a party invoking any
notice of termination provision in an employment agreement, for the
purposes of this Section 2(b)(2), the term "Separation Event" shall be
deemed to be the last date on which the employee is employed by the
Company and not the date of notice of termination), such Redeemable
Shareholder shall be entitled to purchase from the Corporation up to
the number of Shares held by the Redeemable Shareholder at the time of
the redemption or purchase by the Corporation in this Section 2(b) (the
"Buyback Right," and the number of Shares purchased pursuant to the
Buyback Right being referred to as the "Buyback Shares") for a purchase
price equal to the number of Buyback Shares multiplied by the
Redemption Price. The Corporation shall notify such Redeemable
Shareholder of its intention to commence an IPO at least thirty (30)
days prior to the anticipated filing date of a Registration Statement.
The Corporation will disclose to such Redeemable Shareholder any
estimates of the range of the public offering price known by it at the
time of such notification. The Redeemable Shareholder may exercise the
Buyback Right by delivering
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<PAGE> 4
to the Corporation a written notice of exercise no later than fifteen
(15) days following receipt by such Redeemable Shareholder of the
Corporation's notice of its intention to commence an IPO. The closing
of the purchase of the Buyback Shares shall occur within five (5) days
following receipt by the Corporation of such Redeemable Shareholder's
notice of its intention to exercise the Buyback Right. The
consideration payable at the closing of the purchase of the Buyback
Shares shall be in the form of cash and/or cancellation of a Redemption
Note (if unpaid and outstanding at the time of such closing).
Notwithstanding the foregoing, if a Redeemable Shareholder provides an
Exercise Notice (as defined in the Put Agreement, dated as of even date
herewith, between the Corporation and the Shareholders) to the
Corporation, such Redeemable Shareholder shall not be entitled to
receive the Redemption Price.
For purposes hereof, "good cause" means (i) conviction of any act of
fraud or material act of dishonesty (whether or not in connection with
the Corporation's Business as hereinafter defined) punishable by
incarceration for six (6) months or longer or by payment of a monetary
penalty in excess of $499.00, (ii) competing with the Business of the
Corporation either directly or indirectly, (iii) the material breach of
any provisions of an employment agreement (if one exists) between a
Redeemable Shareholder and the Corporation or ISP, as applicable, (iv)
the failure to comply with the written directives of the Corporation,
or (v) the material failure to discharge one's duty of loyalty to the
Corporation; "Business" means the business of designing and supplying
computer and information technology, software, processing and
information management in the travel service industry; and "good
reason" means (i) the Redeemable Shareholder's normal place of business
is moved beyond a twenty (20) mile radius of McLean, Virginia, (ii) an
officer of the Corporation or ISP, as applicable, lower than the Chief
Operating Officer is assigned to be the Redeemable Shareholder's
supervisor or (iii) the Redeemable Shareholder is assigned, as part of
his regular responsibilities and other than on a temporary basis, to
duties which are of a menial nature or are intended to demean the
Redeemable Shareholder.
(3) At the closing of a redemption or purchase of a
Redeemable Shareholder's Shares pursuant to this Section 2(b), the
Corporation or its assignee shall pay to the Redeemable Shareholder the
Redemption Price in the following manner: one-third (1/3) by cashier's
check and two-thirds (2/3) pursuant to a promissory note (the
"Redemption Note"). Fifty percent (50%) of the outstanding principal
and interest due under the Redemption Note shall be payable on the
first (1st) anniversary of the closing and the balance thereof shall be
payable on the second (2nd) anniversary of the closing. The Redemption
Note shall be reasonably satisfactory to the Corporation and the
Redeemable Shareholder and shall bear simple interest at an annualized
interest rate equal to the Prime
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<PAGE> 5
Rate as published in the Wall Street Journal on the date of issuance of
the Redemption Note.
(4) In the event that the exchange of Target Shares
for Transferee Shares contemplated by the Contribution Agreement shall
fail to qualify as a "Section 351 exchange" within the meaning of
Section 351 of the Internal Revenue Code of 1986, as amended (the
"Code"), and pursuant to a "final determination" such exchange is
determined to be a taxable exchange, then the Corporation shall redeem,
on a pro rata basis, such number of Shares of the Shareholders as shall
be necessary to permit the Shareholders to satisfy their related
federal income tax liabilities solely attributable to such taxable
exchange, calculating such liability using the maximum federal income
tax rate on long-term capital gains under the Code. Each Share redeemed
pursuant to this Section 2(b)(4) shall be valued at the Redemption
Price. Notwithstanding the foregoing, the Corporation shall have no
obligation to redeem any Shares of the Shareholders pursuant to this
Section 2(b)(4) following the effective date of an IPO.
(c) BCD Sale; Obtaining Offer. If BCD proposes to sell
all or substantially all of its Shares in any single transaction or related
series of transactions and other than to an Affiliate, then BCD shall cause the
proposed purchaser to deliver to the Shareholders an offer to purchase all of
their Shares on the same relative terms and conditions as offered to BCD for its
Shares. The Shareholders may accept such additional offer by delivering their
written acceptances to the proposed purchaser within thirty (30) days from the
receipt of such offer from the proposed purchaser. The closing of any sale
pursuant to this Section 2(c) shall occur simultaneously with the sale of BCD's
Shares to said purchaser.
(d) Mandatory Sale. If shareholders of the Corporation
holding an aggregate of sixty percent (60%) or more of the Shares (the "Selling
Shareholders") agree to sell their interests in the Corporation in any single
transaction or related series of transactions other than to an Affiliate, and
the proposed purchaser desires to acquire all the Shares in the Corporation,
then all of the Shareholders shall sell their Shares to said proposed purchaser
on the same relative terms and conditions contained in the offer delivered to
the Selling Shareholders.
(e) Permitted Transfers by Brittin, Hopley, Smith and
Siler. Each of the Shareholders may transfer their Shares to any one or more of
their spouse, siblings, children or other lineal descendants, parents or lineal
ancestors, or any trust created solely for the benefit of any one or more of
such individuals; provided, however, that all such transferees shall, prior to
such transfer, execute an attorney-in-fact (in form and substance reasonably
satisfactory to the Corporation) in favor of the transferor for the purpose of
exercising all rights, receiving notices and taking any action with respect to
the Shares.
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<PAGE> 6
3. Conditions of Transfer. No Transfer of Shares, other than
permitted transfers under Section 2(e), will be effectuated by the Corporation
until the following conditions have been satisfied:
(a) The written consent of the Board of Directors must
have been obtained;
(b) the transferee must have executed a written
agreement, in form and substance satisfactory to the Board of Directors, to
assume all of the duties and obligations of the transferor Shareholder under
this Agreement and to be bound by and subject to all of the terms and conditions
of this Agreement;
(c) the transferee or transferor must have paid the
expenses incurred by the Corporation in connection with the Transfer;
(d) upon request of the Corporation, the transferor must
have delivered to the Corporation a written opinion of counsel reasonably
satisfactory to the Board of Directors (which opinion shall be obtained at the
expense of the transferor) that such Transfer will not result in a violation of
applicable law including the Securities Act of 1933, as amended (the "Securities
Act"), or any applicable state securities laws, or of this Agreement;
(e) the transferor must have executed a written
instrument of transfer of Shares in form and substance satisfactory to the Board
of Directors; and
(f) the transferor and the transferee must have executed
a written agreement, in form and substance satisfactory to the Board of
Directors, to indemnify and hold the Corporation and all shareholders of the
Corporation harmless from and against any loss or liability arising out of the
Transfer.
4. Term. This Agreement shall terminate immediately upon the
occurrence of any of the following events:
(a) The bankruptcy, receivership, insolvency or
dissolution of the Corporation;
(b) The unanimous written agreement of the Shareholders
and consent of the Corporation;
(c) The cessation of the Corporation's business; or
(d) The effective date of an IPO.
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<PAGE> 7
5. Board Seat. For so long as Hopley remains employed by WTT, the
Corporation agrees that Hopley shall be entitled to serve as a member of the
Board of Directors of the Corporation and BCD agrees to vote its Shares during
such time in favor of such election. Notwithstanding the foregoing, in the event
that the facilitating broker/dealer or lead managing underwriter retained by the
Corporation in connection with an IPO advises the Corporation that Hopley's
right to serve as a member of the Board of Directors of the Corporation would
adversely affect such offering, then Hopley shall no longer have such right and
BCD shall no longer be obligated to vote in favor of such election.
6. Piggy-Back Registration Rights. If the Corporation allows the
inclusion of any Shares held by a shareholder in a public offering registered
under the Securities Act, the Shareholders shall be entitled to include their
Shares in such offering on a pro rata basis, provided that the aggregate amount
to be included shall be at the discretion of the Corporation and the managing
underwriter. In order to participate in the offering, each Shareholder must
provide such information and execute such agreements and other documents as may
be required of selling shareholders in the offering by the Corporation and the
managing underwriter.
7. Specific Enforcement. Each Shareholder expressly agrees that
the Shares cannot be purchased or sold in the public market and that for these
reasons, among others, the Corporation and the other Shareholders would be
irreparably damaged if this Agreement is not specifically enforced. Upon a
breach or threatened breach of the terms, covenants and/or conditions of this
Agreement by any Shareholder, the Corporation shall, in addition to all other
remedies, be entitled to a temporary or permanent injunction, and/or a decree
for specific performance, in accordance with the provisions hereof, without the
necessity of proof of actual damages or the posting of a bond or other security.
Upon a breach or threatened breach of Section 5 by BCD, Hopley shall, in
addition to all other remedies, be entitled to a temporary or permanent
injunction, and/or a decree for specific performance, in accordance with the
provisions hereof, without the necessity of proof of actual damages or the
posting of a bond or other security.
8. Legend.
(a) During the term of this Agreement, each certificate
evidencing any of the Shares now owned or hereafter acquired by the Shareholders
shall bear a legend substantially as follows:
"Any sale, assignment, transfer or other disposition of the shares
represented by this certificate is restricted by, and subject to, the
terms and provisions of a certain Shareholders Agreement dated as of
November 3, 1999. A copy of said Agreement is on file with the
Secretary of the Corporation."
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<PAGE> 8
(b) The undersigned understands and acknowledges that the
Shares have not been registered for sale under the Securities Act or any
applicable state securities laws and that the Shares will be issued and sold by
the Corporation in reliance upon exemptions from the registration requirements
of such acts. Accordingly, the undersigned understands and agrees that for a
period of at least one year from the date of issuance of the Shares, (i)
stop-transfer instructions will be noted on the appropriate records of the
Corporation and (ii) there will be maintained on the certificate(s) evidencing
the Shares, or any substitutions therefor, a legend reading as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED FOR
SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER STATE SECURITIES LAWS (COLLECTIVELY, THE "STATE
SECURITIES ACTS"), AND HAVE BEEN ISSUED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH ACTS, INCLUDING,
BUT NOT NECESSARILY LIMITED TO, THE EXEMPTIONS CONTAINED IN SECTION
4(2) OF THE SECURITIES ACT. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT, AND ALL APPLICABLE STATE SECURITIES ACTS.
Any assignment or endorsement of the certificate(s) representing the
Shares which is in violation of the restrictions on transfer provided above will
not be recognized by the Corporation nor will any assignee or endorsee of such
shares be recognized as the owner thereof by the Corporation.
9. Notices. All notices, designations, consents, offers or any
other communications provided for in this Agreement must be given in writing,
personally delivered, by a recognized overnight mail and courier service or by
mail. If by mail, it must be mailed by registered or certified mail, postage
prepaid, return receipt requested, and it will be deemed to have been given on
the date which is three (3) days following the date it is posted. Notice to the
Corporation is to be addressed to its then principal office. Notices to the
Shareholders are to be addressed to their respective addresses as they appear on
the transfer books of the Corporation, or to such other address as may be
designated by a Shareholder in writing to the Secretary of the Corporation.
10. Entire Agreement. This Agreement constitutes the entire
agreement among the Shareholders and the Corporation with respect to the subject
matter hereof and supersedes all prior agreements and understandings between
them or any of them with respect to such subject matter.
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<PAGE> 9
11. Governing Law; Successors and Assigns. This Agreement shall be
governed by, and construed and enforced in accordance with the laws of the State
of Georgia (without giving effect to the conflict of law principles thereof).
12. Severability. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
13. Captions and Headings. Captions and Article and Section
headings are for convenience only and are not deemed to be part of this
Agreement, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
14. Singular and Plural, Etc. Whenever the singular number is used
herein and where required by the context, the same shall include the plural, and
the neuter gender shall include the masculine and feminine genders.
15. Amendments and Waivers. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Corporation
and the holders of at least 80% of the Shares held by the Shareholders;
provided, however, that no such waiver shall extend to or affect any other
obligation not expressly waived. No failure to exercise and no delay in
exercising, on the part of any party, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. The failure of any party to insist upon a strict performance of
any of the terms or provisions of this Agreement, or to exercise any option,
right or remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect.
16. Successors and Assigns. All rights, covenants and agreements
of the parties contained in this Agreement shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective successors
and assigns.
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17. 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.
(SIGNATURES APPEAR ON FOLLOWING PAGE)
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IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
WT TECHNOLOGIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
- ------------------------------------
Christopher M. Brittin
- ------------------------------------
Susan R. Hopley
THE GARY D. SMITH AND
JEAN H. SMITH TRUST
By:
---------------------------------------
Name: Gary D. Smith
Title: Trustee
By:
----------------------------------------
Name: Jean H. Smith
Title: Trustee
- --------------------------------------
F. Gilmer Siler
[SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT]
(SIGNATURES CONTINUE ON FOLLOWING PAGE)
<PAGE> 12
BCD TECHNOLOGY S.A.
(solely for purposes of Sections 2(c)
and 5 hereof)
By:
-----------------------------------------
Name: Gerard Birchen
Title: Director
By:
------------------------------------------
Name: Edward Bruin
Title: Director
[SIGNATURE PAGE TO SHAREHOLDERS AGREEMENT]
<PAGE> 1
EXHIBIT 4.2
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (the "Agreement"), is made and entered into
as of the ___day of November, 1999, by and among WT Technologies, Inc., a
Georgia corporation (the "Corporation"), BCD Technology, S.A., a company
organized under the laws of the country of Luxembourg ("BCD"), and the following
parties, each of which shall be a "Shareholder," and collectively, the
"Shareholders": (i) The Alexander Family, L.P., a Georgia limited partnership
("Alexander"); (ii) Danny B. Hood, an individual resident of Georgia ("Hood");
(iii) Ralph Manaker, an individual resident of Virginia ("Manaker"); (iv) Steve
Reynolds, an individual resident of Texas ("Reynolds"); and (v) Velva Wiggins,
an individual resident of Georgia ("Wiggins").
R E C I T A L S
WHEREAS, Alexander, Hood, Manaker, Reynolds and Wiggins are acquiring
shares of the Corporation's common stock pursuant to the terms of that certain
Contribution Agreement dated as of the date hereof between the Corporation and
those Shareholders, pursuant to which such Shareholders are contributing all of
their membership interests in WorldTravel Technologies, L.L.C. ("WTT"), to the
Corporation.
WHEREAS, the Corporation and the Shareholders desire to place certain
restrictions on the transferability of the Shares (as defined below) now or
hereafter owned by them, and address certain other matters with respect to the
Shares and the Corporation, all as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises of the parties
made in this Agreement, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties, intending to be legally
bound, agree as follows:
A G R E E M E N T
1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
(a) "Affiliate" means a Person or Persons (each as
defined below) who: (i) directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
Person(s) in question, or (ii) is an officer, director, or shareholder of the
Person(s) in question. The term "control," as used in the immediately preceding
sentence, means, with respect to a Person that is a corporation, the right to
the exercise, directly or indirectly, of more than 50% of the voting rights
attributable to the shares of such controlled corporation and, with respect to a
Person that is not a corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
controlled Person.
<PAGE> 2
(b) "Person" means an individual, partnership, limited
liability company, joint venture, association, corporation, trust or any other
legal entity.
(c) "Share" or "Shares" shall mean and include shares of
the Corporation's common stock, par value $.01 per share, and all other
securities of the Corporation which may be issued in exchange for or in respect
of such shares (whether by way of stock split, stock dividend, combination,
reclassification or any other means);
(d) "Transfer" shall mean to transfer, sell, assign,
pledge, hypothecate, give, create a security interest in or lien on, place in
trust (voting or otherwise), assign or in any way encumber or dispose of
directly or indirectly and whether or not by operation of law or for value.
2. Transfers by Shareholders.
(a) Transfers Generally. Except as provided in this
Section 2, no Shareholder shall have the right to Transfer all or any portion of
his or her Shares other than to an existing shareholder of the Corporation
without the prior written consent of the Board of Directors of the Corporation.
(b) Redemption.
(1) (i) Upon the death or permanent physical or
mental disability of Alexander's managing general partner, John C.
Alexander ("JCA"), Hood, Manaker, Reynolds, or Wiggins (each a
"Redeemable Shareholder"), or (ii) in the event that a Redeemable
Shareholder (or, in the case of Alexander, JCA) shall no longer be
employed by the Corporation, WTT, WorldTravel or WTPG (or any successor
or Affiliate entities thereof) for any reason (which, for the purpose
of this Section 2(b), shall be interpreted to include a party invoking
any notice of termination provision in an employment agreement,
regardless of the fact that actual employment with the Corporation,
WTT, WorldTravel or WTPG (or any successor or Affiliate entities
thereof) has not yet ceased), the Corporation shall have the right to
redeem, or shall have the right to cause a third party to purchase, and
(if the Corporation exercises such right) the Redeemable Shareholder
shall sell, all of the Shares of such Redeemable Shareholder. Each of
the events described in subsections (i) and (ii) above shall, for the
purposes of this Agreement, be deemed a "Separation Event." For the
purpose of clause (ii) above, performing consulting services as an
independent contractor and/or serving on the Board of Directors of the
Corporation, WTT, WTPG or WorldTravel (or any successor or Affiliate
entities thereof) shall not, singly or together, constitute employment.
For the purposes of this Agreement, a permanent physical or mental
disability of a Redeemable Shareholder shall be deemed to have occurred
at the end of a period of one hundred and eighty (180) consecutive days
during which the Redeemable Shareholder (or, in the case of Alexander,
JCA) has been unable to perform the customary and usual duties for
which he or she was employed. Any such redemption or purchase shall be
consummated
2
<PAGE> 3
(x) within sixty (60) days after the date of the Separation Event or
(y) if the redemption price is tied to "fair market value," within
thirty (30) days of a final determination of "fair market value;"
provided, however, in the event of a purchase or redemption occasioned
by a party invoking any notice of termination provision in an
employment agreement, the date specified in (x) above shall be sixty
(60) days after the date through which the employee is contractually
bound to be employed by the Corporation.
(2) The redemption price (the "Redemption
Price") for the Shares of a Redeemable Shareholder redeemed or
purchased pursuant to this Section 2(b) shall be equal to the amount
which would be distributed to such Redeemable Shareholder or its
representative upon the dissolution of the Corporation if the entire
business of the Corporation was sold to a third party for cash at its
"fair market value," as defined and determined below:
(A) For purposes of this Section 2(b),
"fair market value" shall mean the price which a sophisticated
purchaser, knowledgeable in the business of the Corporation,
would pay for such business as a going concern, taking into
account goodwill and any other intangible assets of the
Corporation's business, all as determined in accordance with
this Section 2(b). The "fair market value" measure to be used
in connection with a purchase or redemption occasioned by a
Separation Event which occurs during a given year shall be the
fair market value of the Corporation as of December 31st of
the year immediately preceding the year in which the
Separation Event occurs. If the Separation Event at issue is
the invocation of a "notice of termination" provision in an
employment agreement, then the "fair market value" for such
purchase or redemption shall be the fair market value
applicable for the year in which the notice of termination is
given and not the fair market value of the actual date of the
person's termination of employment, if different. Each year,
the Board of Directors shall propose in good faith a fair
market value for the Corporation and provide each shareholder
of the Corporation with written notice thereof within one
hundred and twenty (120) days of the end of the preceding
year. The fair market value proposed by the Board of Directors
shall be adopted on behalf of the Corporation and all
Shareholders by operation of this Agreement unless one or more
shareholders of the Corporation (the "Objecting
Shareholders"), by a majority of the votes entitled to be cast
in accordance with this Section 2(b)(2)(A), has objected to
the proposed fair market value through written notice to the
Corporation no later than fifteen (15) days after the date of
the Board of Directors' written proposal. For this purpose,
each shareholder of the Corporation shall be entitled to vote
that number of votes equal to the percentage derived by
dividing the number of Shares owned by such shareholder by the
sum of the Shares owned by all other shareholders of the
Corporation. In the event the Objecting Shareholders timely
and properly object to the fair market value figure proposed
by the Board of Directors, the Board of Directors will
continue to work with the
3
<PAGE> 4
Objecting Shareholders to attempt to reach agreement on fair
market value until (x) one or more shareholders of the
Corporation, by a majority of the votes entitled to be cast in
accordance with this Section 2(b)(2)(A), agree with the Board
of Directors in writing to a fair market value, or (y) such
time as either the Board of Directors or one or more
shareholders of the Corporation, by a majority of the votes
entitled to be cast in accordance with this Section
2(b)(2)(A), makes written demand on the other for an appraisal
(an "Appraisal Demand"). In the event of an Appraisal Demand,
fair market value shall be determined as set forth in Section
2(a)(1)(B)-(E).
(B) In the event of an Appraisal
Demand, the Board of Directors and the Objecting Shareholders,
by a majority of the votes entitled to be cast in accordance
with Section 2(b)(2)(A), shall each appoint an appraiser to
determine the fair market value of the business of the
Corporation. Such appointments shall be made within sixty (60)
days from the date of the Appraisal Demand, and shall be
accomplished by each of the Board of Directors and the
Objecting Shareholders by providing written notice to the
other. In the event that either the Board of Directors or the
Objecting Shareholders do not appoint an appraiser within such
time, then such appraiser shall be appointed by the appraiser
who has been appointed by either the Board of Directors or the
Objecting Shareholders. Each appraiser selected hereunder
shall be qualified and experienced in valuing businesses which
are in the same or similar business of the Corporation and
shall be neutral and impartial. Each appraiser shall disclose
to all parties any circumstances likely to affect his
impartiality, including any bias, any financial or personal
interest in the outcome of the appraisal, and any past or
present relationship with any of the parties or their counsel.
The Board of Directors, on the one hand, and the Objecting
Shareholders, on the other hand, shall each be responsible for
paying the fees of their respective appointed appraiser.
(C) Within seventy (70) days of
appointment, each appraiser shall determine the fair market
value of the business of the Corporation as of December 31st
of the preceding year. Each appraiser shall deliver written
notice of such fair market value to the Board of Directors and
the Objecting Shareholders within such time period.
(D) In the event that the difference
between the appraised values determined by each of the
appraisers is ten percent (10%) or less, the fair market value
of the business of the Corporation shall be determined by
averaging the appraised value of each of the appraisers. In
the event that only one appraiser has timely delivered notice
of his/her appraised value, then such appraisal shall
determine the fair market value of the business of the
Corporation.
4
<PAGE> 5
(E) In the event that the difference
between the appraised values determined by each of the
appraisers is greater than ten percent (10%), then a third
appraiser shall be appointed by the original two appraisers
within ten (10) days and the fair market value shall be
determined by the majority vote of the three appraisers within
ten (10) days of the most recent appraisal issued under
subsection (iii) above; provided, however, that such appraised
value shall be within the range of appraised values originally
determined by the two appraisers under subsection (iii) above.
(3) At the closing of a redemption or purchase
of a Redeemable Shareholder's Shares pursuant to this Section 2(b), the
Corporation or its assignee shall pay to the Redeemable Shareholder the
Redemption Price in the following manner: twenty-five percent (25%) by
cashier's check at the closing and seventy-five percent (75%) pursuant
to a promissory note (the "Redemption Note"). The Redemption Note shall
be for a term of no longer than one (1) year and shall bear simple
interest at an annualized interest rate equal to the yield of U.S.
Treasury Notes (3 year) as published in the Wall Street Journal on the
date of issuance of the Redemption Note. Any Redemption Note of the
Corporation or its assignee shall be adequately secured.
(c) BCD Sale; Obtaining Offer. If BCD proposes to sell
all or substantially all of its Shares in any single transaction or related
series of transactions and other than to an Affiliate, then BCD shall cause the
proposed purchaser to deliver to the Shareholders an offer to purchase all of
their Shares on the same relative terms and conditions as offered to BCD for its
Shares. The Shareholders may accept such additional offer by delivering their
written acceptances to the proposed purchaser within thirty (30) days from the
receipt of such offer from the proposed purchaser. The closing of any sale
pursuant to this Section 2(c) shall occur simultaneously with the sale of BCD's
Shares to said purchaser.
(d) Mandatory Sale. If shareholders of the Corporation
holding an aggregate of sixty percent (60%) or more of the Shares (the "Selling
Shareholders") agree to sell their interests in the Corporation in any single
transaction or related series of transactions other than to an Affiliate, and
the proposed purchaser desires to acquire all the Shares in the Corporation,
then all of the Shareholders shall sell their Shares to said proposed purchaser
on the same relative terms and conditions contained in the offer delivered to
the Selling Shareholders.
(e) Permitted Transfers by Alexander. Notwithstanding the
foregoing provisions of this Section 2, Alexander may transfer all of its Shares
to an Affiliate without complying with the foregoing provisions of Section 2.
(f) Permitted Transfers by Hood. Notwithstanding the
foregoing provisions of this Section 2, Hood may transfer all of his Shares to
an Affiliate without complying with the foregoing provisions of Section 2.
5
<PAGE> 6
3. Conditions of Transfer. No Transfer of Shares will be
effectuated by the Corporation until the following conditions have been
satisfied:
(a) the written consent of the Board of Directors must
have been obtained;
(b) the transferee must have executed a written
agreement, in form and substance satisfactory to the Board of Directors, to
assume all of the duties and obligations of the transferor Shareholder under
this Agreement and to be bound by and subject to all of the terms and conditions
of this Agreement;
(c) the transferee or transferor must have paid the
expenses incurred by the Corporation in connection with the Transfer;
(d) upon request of the Corporation, the transferor must
have delivered to the Corporation a written opinion of counsel reasonably
satisfactory to the Board of Directors (which opinion shall be obtained at the
expense of the transferor) that such Transfer will not result in a violation of
applicable law including the Securities Act of 1933, as amended (the "Securities
Act"), or any applicable state securities laws, or of this Agreement;
(e) the transferor must have executed a written
instrument of transfer of Shares in form and substance satisfactory to the Board
of Directors; and
(f) the transferor and the transferee must have executed
a written agreement, in form and substance satisfactory to the Board of
Directors, to indemnify and hold the Corporation and all shareholders of the
Corporation harmless from and against any loss or liability arising out of the
Transfer.
4. Term. This Agreement shall terminate immediately upon the
occurrence of any of the following events:
(a) The bankruptcy, receivership, insolvency or
dissolution of the Corporation;
(b) The unanimous written agreement of the Shareholders
and consent of the Corporation;
(c) The cessation of the Corporation's business; or
(d) The consummation of the initial public offering of
the Corporation's securities;
6
<PAGE> 7
5. Specific Enforcement. Each Shareholder expressly agrees that
the Shares of the Corporation cannot be purchased or sold in the public market
and that for these reasons, among others, the Corporation and the other
shareholders of the Corporation would be irreparably damaged if this Agreement
is not specifically enforced. Upon a breach or threatened breach of the terms,
covenants and/or conditions of this Agreement by any Shareholder, the
Corporation and each other shareholder of the Corporation shall, in addition to
all other remedies, each be entitled to a temporary or permanent injunction,
and/or a decree for specific performance, in accordance with the provisions
hereof, without the necessity of proof of actual damages or the posting of a
bond or other security.
6. Legend.
(a) During the term of this Agreement, each certificate
evidencing any of the Shares now owned or hereafter acquired by the Shareholders
shall bear a legend substantially as follows:
"Any sale, assignment, transfer or other disposition of the shares
represented by this certificate is restricted by, and subject to, the
terms and provisions of a certain Shareholders Agreement dated as of
November __, 1999. A copy of said Agreement is on file with the
Secretary of the Corporation."
(b) The undersigned understands and acknowledges that the
Shares have not been registered for sale under the Securities Act or any
applicable state securities laws and that the Shares will be issued and sold by
the Corporation in reliance upon exemptions from the registration requirements
of such acts. Accordingly, the undersigned understands and agrees that for a
period of at least one year from the date of issuance of the Shares, (i)
stop-transfer instructions will be noted on the appropriate records of the
Corporation and (ii) there will be maintained on the certificate(s) evidencing
the Shares, or any substitutions therefor, a legend reading as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED FOR
SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER STATE SECURITIES LAWS (COLLECTIVELY, THE "STATE
SECURITIES ACTS"), AND HAVE BEEN ISSUED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH ACTS, INCLUDING,
BUT NOT NECESSARILY LIMITED TO, THE EXEMPTIONS CONTAINED IN SECTION
4(2) OF THE SECURITIES ACT. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT, AND ALL APPLICABLE STATE SECURITIES ACTS.
7
<PAGE> 8
Any assignment or endorsement of the certificate(s) representing the
Shares which is in violation of the restrictions on transfer provided above will
not be recognized by the Corporation nor will any assignee or endorsee of such
shares be recognized as the owner thereof by the Corporation.
7. Notices. All notices, designations, consents, offers or any
other communications provided for in this Agreement must be given in writing,
personally delivered, by a recognized overnight mail and courier service or by
mail. If by mail, it must be mailed by registered or certified mail, postage
prepaid, return receipt requested, and it will be deemed to have been given on
the date which is three (3) days following the date it is posted. Notice to the
Corporation is to be addressed to its then principal office. Notices to the
Shareholders and BCD are to be addressed to their respective addresses as they
appear on the transfer books of the Corporation, or to such other address as may
be designated by a Shareholder or BCD in writing to the Secretary of the
Corporation.
8. Entire Agreement. This Agreement constitutes the entire
agreement among the Shareholders, BCD and the Corporation with respect to the
subject matter hereof and supersedes all prior agreements and understandings
between them or any of them with respect to such subject matter.
9. Governing Law; Successors and Assigns. This Agreement shall be
governed by, and construed and enforced in accordance with the laws of the State
of Georgia (without giving effect to the conflict of law principles thereof).
10. Exculpation; Rights of the Shareholders. Each Shareholder and
BCD shall have the absolute right to exercise or refrain from exercising any
rights that such Shareholder or BCD may have by reason of this Agreement or the
Corporation's corporate charter (including, without limitation, the right to
consent to the waiver of any obligation of the Corporation under this Agreement
or the Corporation's corporate charter and to enter into an agreement with the
Corporation for the purpose of amending or supplementing, in accordance with
their respective terms, this Agreement or the Corporation's corporate charter),
and neither any such holder nor any of its controlling persons, officers,
directors, partners, agents, or employees, as the case may be, shall incur any
liability to any other holder of Shares as a result of such holder's exercising
or refraining from exercising any such right.
11. Severability. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
8
<PAGE> 9
12. Captions and Headings. Captions and Article and Section
headings are for convenience only and are not deemed to be part of this
Agreement, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
13. Singular and Plural, Etc. Whenever the singular number is used
herein and where required by the context, the same shall include the plural, and
the neuter gender shall include the masculine and feminine genders.
14. Amendments and Waivers. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Corporation
and the holders of at least 80% of the common stock of the Corporation then
issued and outstanding; provided, however, that no such waiver shall extend to
or affect any other obligation not expressly waived. No failure to exercise and
no delay in exercising, on the part of any party, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. The failure of any party to insist upon a strict performance of
any of the terms or provisions of this Agreement, or to exercise any option,
right or remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect.
15. Successors and Assigns. All rights, covenants and agreements
of the parties contained in this Agreement shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective successors
and assigns.
16. 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.
[Signatures on next page]
9
<PAGE> 10
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
WT TECHNOLOGIES, INC.
By: /s/ Ralph Manaker
----------------------------
Name: Ralph Manaker
Its: Vice President
BCD TECHNOLOGY, S.A. THE ALEXANDER FAMILY, L.P.
By: /s/ Gerard Birchen By: /s/ John C. Alexander
---------------------------- ----------------------------
Name: Gerard Birchen Name: John C. Alexander,
Its: Director its managing general partner
By: /s/ Edward Bruin
----------------------------
Name: Edward Bruin
Its: Director
DANNY B. HOOD RALPH MANAKER
/s/ Danny Hood /s/ Ralph Manaker
- ------------------------------- ----------------------------------
STEVE REYNOLDS VELVA WIGGINS
/s/ Steve Reynolds /s/ Velva Wiggins
- ------------------------------- ----------------------------------
10
<PAGE> 1
EXHIBIT 4.3
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (the "Agreement") is executed as of this
____ day of November, 1999, by and among Hogg Robinson International Benefits
Limited, a company organized under the laws of England and Wales ("Hogg"), BCD
Technology S.A., a corporation formed under the laws of Luxembourg ("BCD"), and
WT Technologies, Inc., a corporation formed under the laws of Georgia (the
"Corporation"), (Hogg and BCD are collectively referred to as the "Shareholders"
and sometimes individually as a "Shareholder").
W I T N E S S E T H:
WHEREAS, the Shareholders together own a majority of the issued and
outstanding common stock of the Corporation; and
WHEREAS, the Shareholders and the Corporation believe it to be in the
best interest of each Shareholder and of the Corporation to make provision for
any future disposition of the Stock of the Corporation; and
WHEREAS, the Shareholders and the Corporation desire to control the
management of the Corporation and its subsidiaries, for their mutual best
interests;
NOW, THEREFORE, in consideration of the promises and mutual obligations
contained herein, the parties hereto agree as follows:
ARTICLE 1
PURPOSE OF THE CORPORATION
1.1 The Shareholders hereby declare that the purpose of the Corporation
is to generate a profit by directly and indirectly engaging in supplying
technology and information management to the travel industry (the "Business").
1.2 The Corporation has been organized to serve as a holding company
for World Travel Technologies, LLC ("WTT"), currently a wholly-owned subsidiary
of the Corporation, and the holdings of WTT and any other businesses or
companies created or acquired in the future to engage in the Business. It is the
intent of the Shareholders that the Corporation, as the manager of WTT, actively
participate in the management of WTT according to the terms of this Agreement.
<PAGE> 2
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants to the Shareholders that at the time this
Agreement is executed:
(a) The 9,269,373 shares of capital stock of the Corporation (the
"Stock") owned by the Shareholders and the other shareholders of the
Corporation, as shown on Schedule 2.1 hereof, are the only shares of
Stock of the Corporation outstanding;
(b) No outstanding proxies, voting trusts, loan agreements or other
agreements to which the Corporation is a party affect, in any way, the
right of the Shareholders to vote the shares of the Stock or the right
of the Corporation to perform its obligations under this Agreement;
(c) No preferred stock, stock options, warrants or other equity
interests in the Corporation are outstanding;
(d) The stock transfer records of the Corporation are accurate and
reflect all requests to date for registration of shares of the Stock;
(e) The Corporation has duly authorized the execution of this
Agreement; and
(f) The Corporation has outstanding no bonds, debentures or other
instruments of any type that are convertible into Stock.
2.2 Representations and Warranties of the Shareholders. Each
Shareholder hereby represents and warrants to the Corporation and the other
Shareholder as follows: that such Shareholder owns those shares of Stock shown
on Schedule 2.2 hereof, free and clear of all liens, restrictions, pledges and
encumbrances, that such Shareholder has made no "Disposition" (as hereinafter
defined) and that such Shareholder has granted no proxy rights or other voting
rights with respect to any of such shares.
ARTICLE 3
RESTRICTIONS UPON THE TRANSFER OF THE STOCK
3.1 No Dispositions Generally. During the term of this Agreement,
neither Shareholder shall have the right to make any "Disposition" (as
hereinafter defined), other than a "Permitted Disposition" (as hereinafter
defined). The Corporation will not cause or permit the transfer of shares of
Stock on the transfer records of the Corporation for any Disposition, other than
a Permitted Disposition. Any other attempted Disposition shall be void ab initio
and shall have no effect whatsoever. "Disposition" means: any transfer, whether
outright or as security, with or without
-2-
<PAGE> 3
consideration, voluntary or involuntary, of all or any part of any right, title
or interest (including but not limited to voting rights) in or to any shares of
Stock.
3.2 Permitted Dispositions. A Shareholder shall have the right to make
a "Permitted Disposition." "Permitted Disposition" means:
(a) Any Disposition approved by the other Shareholder;
(b) A Disposition made pursuant to Section 3.3;
(c) A Disposition made pursuant to Section 3.4;
(d) A Disposition made pursuant to Section 13.2; and
(e) A Disposition to an Affiliate (as defined below).
Provided, however, that no Disposition shall be a Permitted Disposition unless
the person or entity to whom such shares are transferred (other than an
Affiliate, who shall be bound by this Agreement, or an existing shareholder of
the Corporation) shall have agreed to be bound by and become a party to this
Agreement, as it may be amended from time to time and kept on file with the
Corporation.
3.3 Option of the Corporation.
(a) In the event Hogg receives a bona fide offer (the "Offer") from
one or more third-parties to purchase any or all of its interest in the
Corporation (the "Offered Stock"), unless a Disposition is permitted pursuant to
Section 3.2 (a), (d), or (e) Hogg must first offer to sell the Offered Stock to
the Corporation on the same terms as set forth in the Offer. The notice to the
Corporation of the Offer shall be in writing (the "Notice of the Offer"),
delivered to the President of the Corporation. Within sixty (60) days of the
date the Notice of the Offer is delivered, Hogg shall be notified as to whether
or not the Corporation shall purchase the Offered Stock on the same terms as the
Offer. If the Corporation provides notice that it will purchase the Offered
Stock on such terms (the "Notice of Acceptance"), Hogg shall transfer the
Offered Stock and the Corporation shall purchase the Offered Stock, at a closing
at such time designated by the Corporation but within sixty (60) days of the
delivery of the Notice of Acceptance to Hogg. The transfer of the Offered Stock
to the Corporation shall be pursuant to such documentation as the Corporation
shall reasonably require.
(b) If the consideration offered by the third party or parties in
the Offer involves property other than cash, the purchase of the Offered Stock
by the Corporation may be made for cash in an amount equal to the Equivalent
Value of the property offered by the third party or parties. Hogg and the
Corporation shall initially negotiate with each other to agree upon the
Equivalent Value within thirty (30) days of the Notice of Acceptance. In the
event that Hogg and the Corporation cannot reach an agreement on the Equivalent
Value within such 30 day period, the Equivalent Value will be determined by two
appraisers, one chosen by Hogg and one chosen by the
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<PAGE> 4
Corporation. If the two appraisal values (the "Appraisal") differ by 10% or less
(such percentage difference to be computed by subtracting the lesser of the
Appraisals from the greater of the Appraisals and dividing that difference by
the greater of the Appraisals), then the Equivalent Value of the property shall
equal the average of the two Appraisals. In the event that the Appraisals vary
by more than 10%, a third appraiser shall be chosen by the initial two
appraisers to conduct an independent appraisal of the property, and on the basis
of that independent appraisal, the third appraiser shall, in the exercise of his
own professional judgment, determine which of the two Appraisals is the most
commercially reasonably, and that Appraisal shall be the Equivalent Value.
Notwithstanding the provisions of Section 3.3(a), in the event that this Section
3.3(b) is applicable the closing of the purchase of the Offered Stock by the
Corporation shall occur within thirty (30) days of the final determination of
the Equivalent Value.
(c) If the Corporation either rejects the Offer or fails to accept
the Offer within thirty (30) days of the delivery of the Notice of Offer, Hogg
may, within the subsequent thirty (30) days, transfer the Offered Stock to the
offering party or parties so long as (i) the Disposition does not have an
adverse regulatory or legal effect on the Corporation or any subsidiary or
related entity, and (ii) each transferee agrees in writing to be bound by the
terms of this Agreement subject to the transferee's acknowledgment that Articles
4, 5, 6 and 10 are of no further effect.
3.4 First Offer to Hogg.
(a) In the event that BCD desires to sell any or all of its portion
of the Stock (the "BCD Offered Stock"), BCD agrees to first give written notice
to Hogg (the "First Offer Notice") of its intent to sell the BCD Offered Stock
and to negotiate with Hogg in good faith the price and corresponding terms of
purchase for the BCD Offered Stock. In the event that by the forty-fifth (45)
day after the First Offer Notice (the "Third Party Date") BCD does not accept
Hogg's final proposed price and corresponding terms (the "Final Offer"), BCD
shall notify Hogg in writing that Hogg's final price and terms have been
rejected.
(b) In the event BCD does not accept the Final Offer, BCD may sell
the BCD Offered Stock to a third party or parties; provided, however, that any
sale to a third party or parties of the BCD Offered Stock must be evidenced by a
letter of intent which must be signed within six (6) months of the Third Party
Date and the contemplated transaction must be completed within one (1) year of
the Third Party Date. The sale of the BCD Offered Stock to a third party or
parties shall be for a price not less than 95% of the Final Offer.
ARTICLE 4
MANAGEMENT AND BUSINESS PLAN
4.1 Board of Directors. The Shareholders agree that at all times during
the term of this Agreement, the affairs of the Corporation shall be managed by a
Board of Directors consisting of no more than seven (7) members, at least four
(4) members of which shall be appointed by BCD and one (1) member of which shall
be appointed by Hogg. Any vacancy in office of a director, resulting
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<PAGE> 5
from any cause, shall be filled by a candidate selected by the Shareholder who
appointed the director who previously held the vacated position. BCD shall not
propose or vote for any change in the structure of the Board of Directors, as
set forth above without the approval of Hogg. Unless all of the members of the
Board of Directors agree otherwise, the meetings of the Board of Directors shall
be held within the business hours of the United Kingdom. Hogg's representative
shall be provided with 10 days actual notice of any meeting of the Board of
Directors along with notice of the matters to be considered at such meeting;
provided however that in the event the Company in its reasonable judgement
believes a meeting must be called sooner, Hogg's representative shall be given
at least forty eight (48) hours actual notice of the meeting.
4.2 Day-to-Day Management. Subject to the restrictions contained in
this Agreement and the direction of the Board of Directors, the day-to-day
management and operation of the Corporation shall be the responsibility of the
President and other officers of the Corporation.
4.3 Business Plan. The Shareholders agree that the Corporation,
including for purposes of this Section 4.3, all subsidiaries, and its finances
shall be managed in accordance with a business plan ("Business Plan"). The
Corporation's preliminary Business Plan is attached as Schedule 4.3. Each year,
at least sixty (60) days before the start of the Corporation's fiscal year, the
Shareholders shall unanimously approve a new Business Plan. In the event that
the Shareholders are unable to agree upon a new Business Plan, the Business Plan
from the previous year shall remain in effect until a new Business Plan is
agreed upon.
4.4 Dividend Policy. The Corporation shall distribute all net income
(as determined in accordance with generally accepted accounting principles) that
is not reasonably needed by the Corporation or its subsidiaries for
contingencies and capital expenditures. It is understood among the parties
hereto that it is the intention that after the first anniversary of this
Agreement, the Corporation shall endeavor to distribute to its shareholders 50%
of its net income.
4.5 Major Actions. Without the written consent of Hogg, the Corporation
will not:
(a) Amend, supplement, repeal, or otherwise change the articles of
incorporation or bylaws of the Corporation in any manner or permit any
subsidiary to amend, supplement, repeal, or otherwise change its
articles of certificate of incorporation, bylaws, articles of
organization, operating agreement, or other governing documents, as
applicable, in any manner which would negatively impact the rights of
Hogg granted pursuant to this Agreement;
(b) Allow any subsidiary to authorize, designate, issue or sell any
additional limited liability company interests, shares, or other
securities of such subsidiary (including any options, warrants, and
purchase rights) except to another subsidiary or the Corporation or
pursuant to Section 4.5(c), below;
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(c) Establish, or allow any subsidiary to establish, any option or
other equity based incentive plan for management, directors, or
employees, grant, or allow any subsidiary to grant, any stock options,
or other rights to purchase securities, or authorize or enter into, or
allow any subsidiary to authorize or enter into, any plan, contract, or
arrangement that provides any person with economic benefits directly or
indirectly, in whole or in part, equivalent to equity security
ownership, including but not limited to, phantom stock option, stock
appreciation rights, and similar plans except for an incentive or bonus
plan which allows for the issuance of options or grants, directly or
indirectly, of up to 2.5% of the outstanding equity securities of the
Corporation;
(d) Redeem or repurchase any security of the Corporation (except
for repurchase in connection with departing employees) or allow any
subsidiary to purchase any security of the Corporation unless done on a
pro rata basis with respect to all shareholders of the Corporation or
pursuant to the terms of Article 3;
(e) Make distributions or pay dividends in cash or property with
respect to any security of the Corporation, except for dividends or
distributions made pro rata among the holders of Stock;
(f) Sell, exchange, transfer, or otherwise dispose of any shares of
capital stock or other security of any subsidiary or allow any
subsidiary to sell, exchange, transfer, or otherwise dispose of any
membership interests, shares of capital stock, or other security of any
other subsidiary, except to the Corporation or another subsidiary, or
pursuant to Section 4.5(c), above;
(g) Enter into, or allow any subsidiary to enter into, any merger,
consolidation, or statutory share exchange with any other entity,
except with the Corporation or another subsidiary;
(h) Sell, exchange, lease, license, or otherwise dispose of, or
allow any subsidiary to sell, exchange, lease, license, or otherwise
dispose of, any material amount of assets (including intangible
property) except in the ordinary course of business;
(i) Take any action to voluntarily dissolve, liquidate, or wind up
or carry out any partial liquidation or distribution or transaction in
the name of a partial liquidation or dissolution;
(j) Acquire, or allow any subsidiary to acquire, assets or
securities of any other person or entity, except for acquisitions with
an aggregate purchase consideration of less than $2,000,000 in any one
transaction or series of related transactions in a financial year;
(k) Enter into any material agreement, license, lease, transaction,
or other arrangement with any Related Party (other than a subsidiary),
provided that Hogg will not
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unreasonably withhold its consent to such agreement, license, lease,
transaction, or other arrangement if the terms are equivalent to those
in an arms length transaction;
(l) Enter into, or allow any subsidiary to enter into, any new line
of business that is unrelated to an existing business operation unless
the entry into the new line of business is provided for in the Business
Plan;
(m) Incur, or allow any subsidiary to incur, any single expense or
capital expenditure of an amount in excess of $100,000.00 unless such
expenditure is provided for in the Business Plan;
(n) Except as provided in item (k) above, borrow, or allow any
subsidiary to borrow, money in excess of $500,000.00 unless such
arrangement is set forth in the Business Plan;
(o) Amend the Business Plan; or
(p) Authorize, ratify, or enter into any agreement to undertake any
of the matters specified in items (a) through (o), above.
The Corporation shall address all requests for approval of any of the above
listed actions to the Chief Executive Officer of Hogg Robinson, PLC at Abbey
House, 282 Farnborough Road, Farnborough Hampshire GU14 7NJ, facsimile
#44-12-52-542-444, or his successor indicated in writing by Hogg (the "Hogg
Representative"). The decision regarding such request shall be delivered by the
Hogg Representative to the Corporation within ten (10) business days of such
request.
As under in this Section 4.5, "subsidiary" shall mean an entity controlled by
the Corporation, directly or through one or more intermediaries. "Related Party"
shall mean any Affiliate of BCD and any associate of any such Affiliate.
Affiliate and associate shall have the meanings set forth in Rule 405 under the
Securities Act of 1933.
ARTICLE 5
INITIAL PUBLIC OFFERING
5.1 Intent of Corporation. The Corporation desires to engage in an
initial public offering whereby the Stock of the Corporation will be available
for purchase by the public at a valuation of the Corporation at no less than
$150,000,000 (the "IPO"). In the event that the Corporation does engage in an
IPO, the IPO process will be conducted in accordance with this Article 5.
5.2 Investment Banking Firm. The Corporation shall retain a nationally
recognized investment banking firm to advise the Corporation in connection with
the IPO and the Corporation shall confer with Hogg regarding the Corporation's
proposed choices for the underwriting group for the IPO.
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5.3 Registration Statements. The Corporation agrees that it will
provide to Hogg and its counsel copies of drafts of Form S-1 (the "Registration
Statement") from time to time as they are prepared. Within a reasonable time
after Hogg's receipt of any draft of the Registration Statement, any comments or
objections posed by Hogg or its counsel shall be submitted to the Corporation in
writing and state with specificity the material in question, the reason for
objection or comment, and Hogg's proposed alternative ("Comments").
Notwithstanding the foregoing, during the five (5) business days immediately
proceeding the date scheduled for the filing of the Registration Statement, the
Corporation shall provide Hogg with as much notice as possible regarding any
proposed revisions to the Registration Statement and Hogg shall provide the
Corporation with Comments to such proposed revisions within twelve (12) hours of
the time any such documentation regarding any proposed revision is received by
Hogg and its counsel.
5.4 Dilution. In the event that the Corporation elects to engage in an
IPO, Hogg shall have the option to purchase stock in the Corporation in
conjunction with the IPO and at the price offered in the IPO, such that Hogg
will retain 20% of the equity ownership of the Corporation.
5.5 Piggy-Back Registration Rights. If the Corporation allows the
inclusion of any Stock held by a shareholder in a public offering registered
under the Securities Act of 1993, the Shareholders shall be entitled to include
their shares of Stock in such offering on a pro rata basis, provided that the
aggregate amount to be included shall be at the discretion of the Corporation
and the managing underwriter. In order to participate in the offering, each
Shareholder must provide such information and execute such agreements and other
documents as may be required of selling shareholders in the offering by the
Corporation and the managing underwriter.
ARTICLE 6
ADDITIONAL CAPITAL
6.1 Generally. Capital needs of the Corporation shall be funded by
available funds from operations of the Corporation. In the event the funds from
operations are insufficient to fund the capital needs of the Corporation, the
Corporation shall seek to obtain additional capital from third-party lending
sources, including banks, on reasonably acceptable terms. If the Corporation is
unable to satisfy its capital requirements after making a good faith effort to
secure such funding from third-party lending sources, then the Corporation may
issue debt or equity securities of the Corporation (the "Issued Securities").
6.2 Shareholders Purchase Right. In the event the Corporation plans to
issue the Issued Securities pursuant to Section 6.1, the Shareholders have the
right to buy the Issued Securities, pro rata. The Corporation shall notify the
Shareholders of the type, amount, and price of the Issued Securities. Each
Shareholder shall have thirty (30) days within which to elect to purchase all or
part of its pro rata portion of the Issued Securities. In the event a
Shareholder does not purchase its entire pro rata portion of the Issued
Securities, the other Shareholder shall be notified thereof and shall have three
(3) days to agree to purchase all or part of those remaining shares but only on
the price and terms offered to the Shareholders. Any Issued Securities not
purchased by the Shareholders may
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<PAGE> 9
be sold to third-party purchasers within one hundred twenty (120) days. Any
Issued Securities not so purchased by a third party within such period shall
again become subject to the procedures of this Article.
ARTICLE 7
INFORMATION
The Corporation shall deliver the following information and, provide
the following rights to Hogg:
7.1 Audited Annual Financial Statements. As soon as practicable and, in
any case, within ninety (90) days after the end of each fiscal year, audited
financial statements of the Corporation, consisting of a consolidated balance
sheet of the Corporation as of the end of such fiscal year and consolidated
statements of operations, statements of Shareholders' equity and statements of
cash flows of the Corporation for such fiscal year, setting forth in each case,
in comparative form, the figures for the preceding fiscal year, all in
reasonable detail and fairly presented in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods reflected therein, and accompanied by an opinion thereon of independent
certified public accountants.
7.2 First Quarter Financial Statements. Within forty-five (45) days
after the end of the first calendar quarter, copies of the unaudited
consolidated balance sheet of the Corporation as at the end of such calendar
quarter and the related unaudited consolidated statements of operations and cash
flows for such calendar quarter and the portion of the calendar year through
such calendar quarter all reviewed by the Corporation's public accounting firm,
setting forth in comparative form the figures for the corresponding periods of
(a) the previous calendar year and (b) the budget for the current year, prepared
in reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and certified by the chief financial officer of
the Corporation as presenting fairly the financial condition and results of
operations of the Corporation (subject to customary exceptions for interim
unaudited financial statements). The cost for such review by the Corporation's
public accounting firm shall be reimbursed by Hogg.
7.3 Monthly Unaudited Financial Statements. As soon as available, but
in any event within twenty (20) days after the end of each calendar month,
copies of the unaudited consolidated balance sheet of the Corporation as at the
end of such calendar month and the related unaudited consolidated statements of
operations and cash flows for such calendar month and the portion of the
calendar year through such calendar month, in each case setting forth in
comparative form the figures for the corresponding periods of (a) the previous
calendar year and (b) the budget for the current year, prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the periods
reflected therein and certified by the chief financial officer of the
Corporation as presenting fairly the financial condition and results of
operations of the Corporation (subject to customary exceptions for interim
unaudited financial statements).
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<PAGE> 10
7.4 Management's Analysis. All the financial statements delivered
pursuant to Sections 7.1 and 7.2 shall be accompanied by an informal narrative
description of material business and financial trends and developments and
significant transactions that have occurred in the appropriate period or periods
covered thereby.
7.5 Inspection. The Corporation shall, and shall cause each subsidiary
to, permit Hogg, by its representatives, agents, or attorneys (provided that
such entity or person executes an appropriate confidentiality agreement):
(a) to examine all books of account, records, and other papers of
the Corporation or such subsidiary reasonably requested by Hogg;
(b) to make copies and take extracts from any thereof, except for
information which is confidential or proprietary;
(c) to discuss the affairs, finances, and accounts of the
Corporation or such subsidiary with the Corporation's or such subsidiary's
officers and independent certified public accountants (and by this provision the
Corporation hereby authorizes said accountants to discuss with any Hogg and its
representatives, agents or attorneys the finances and accounts of the
Corporation or such subsidiary); and
(d) to visit and inspect, at reasonable times and on reasonable
notice during normal business hours, the properties of the Corporation and such
subsidiary.
Notwithstanding any provision herein to the contrary, the provisions of this
Section 7.5 are in addition to any rights of the Hogg under the Georgia Business
Corporation Code and shall in no way limit such rights.
7.6 Other Information. The Corporation shall deliver the following to
Hogg:
(a) Promptly after the submission thereof to the Corporation,
copies of any detailed reports (including the auditors' comment letter to
management, if any such letter is prepared) submitted to the Corporation by its
independent auditors in connection with each annual or interim audit of the
accounts of the Corporation made by such accountants;
(b) With reasonable promptness, a notice of any default by the
Corporation or a subsidiary under any material agreement to which it is a party;
(c) Promptly (but in any event within ten (10) days) after the
filing of any document or material with the SEC, a copy of such document or
materials; and
(d) Promptly upon request therefor, such other data, filings and
information Hogg may from time to time reasonably request.
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ARTICLE 8
TAG-ALONG RIGHT
8.1 Tag-Along Rights. If after complying with Section 3.4 BCD intends
to sell all or part of its shares of Stock to any person or entity, BCD shall
not sell all or part of its shares of Stock to any person or entity without
first complying with the provisions of this Section. In the event a proposed
transferee offers (the "BCD Offer") to buy a number of shares from BCD (the
"Total Purchase Shares'), BCD shall not transfer all or part of its shares of
Stock unless the proposed transferee offers (the "Hogg Offer") to acquire from
Hogg, on the same terms and conditions as were offered to BCD, that number of
shares of Stock determined by multiplying (A) the percentage of the total number
of shares of Stock outstanding owned by Hogg by (B) the Total Purchase Shares.
In no event shall the total number of shares sold to the proposed transferee
pursuant to the BCD Offer and Hogg Offer exceed the Total Purchase Shares. In
the event of any proposed sale, BCD shall give a written notice ("Transfer
Notice") to Hogg. BCD shall attach to the Transfer Notice the offer of the
proposed transferee to Hogg to purchase shares of Hogg in accordance with the
terms of this Agreement. Hogg shall have twenty (20) days after delivery of the
Transfer Notice to accept the offer of the proposed transferee. If Hogg accepts
the offer of the proposed transferee, it shall give BCD and the proposed
transferee written notice thereof within such twenty-day period, and the
closing, if any, of the purchase of BCD's shares and Hogg's shares shall be made
contemporaneously by the proposed transferee.
8.2 Come-Along Rights. If after complying with Section 3.4, BCD intends
to sell all or part of its shares of Stock to any person or entity, BCD has the
right to require Hogg to transfer to the proposed transferee, on the same terms
and conditions as were offered to BCD, that number of shares of Stock determined
by multiplying (A) the percentage of the total number of shares of Stock
outstanding owned by Hogg by (B) the number of shares of Stock the proposed
transferee has agreed to purchase from BCD. In the event BCD desires to exercise
its rights under this Section 8.2, BCD shall notify Hogg of such intent in a
written notice ("Come-Along Notice"). BCD shall attach to the Come-Along Notice
the offer of the proposed transferee to Hogg to purchase shares of Hogg in
accordance with the terms of this Agreement. Hogg shall give BCD and the
proposed transferee written notice of its acceptance of the offer of the
proposed transferee within twenty (20) days after delivery of the Come-Along
Notice. The closing of the purchase of BCD's shares and Hogg's shares shall be
made contemporaneously by the proposed transferee.
ARTICLE 9
VOTING AGREEMENT
9.1 Voting of Shares. The Shareholders shall vote their shares of the
Corporation and take such other actions as may be necessary to cause the
Corporation to comply with all provisions of this Agreement.
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ARTICLE 10
LEGEND ON STOCK
10.1 Form of Legend. All certificates representing shares of Stock of
the Corporation held by the Shareholders shall bear the following restrictive
legend:
THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE ARE HELD SUBJECT TO, AND TRANSFER OR
PLEDGE OF SUCH SHARES IS RESTRICTED BY, THE
TERMS OF A SHAREHOLDERS AGREEMENT BY AND BETWEEN
HOGG ROBINSON INTERNATIONAL BENEFITS LIMITED,
BCD TECHNOLOGY S.A., AND WT TECHNOLOGIES, INC.
DATED ________, 1999, A COPY OF WHICH IS ON FILE
AT THE OFFICE OF THE CORPORATION. NO TRANSFER OR
PLEDGE OF ANY SHARE REPRESENTED BY THIS
CERTIFICATE SHALL BE VALID UNLESS MADE IN
ACCORDANCE WITH THE TERMS OF THE AGREEMENT.
10.2 Additional Legend. The Secretary shall endorse each certificate
with any additional legend (or legends) as he or she shall deem necessary, upon
the opinion of counsel to the Corporation, to comply with any applicable laws
and regulations. In the event that any additional legend (or legends) are
required, each Shareholder shall surrender to the Corporation all of its
certificates representing shares of Stock. After such endorsement, each of the
certificates so surrendered shall be returned to the Shareholder owning such
certificate. Thereafter, all certificates representing shares of Stock of the
Corporation shall bear an identical endorsement. A copy of this Agreement shall
be filed with the Secretary of the Corporation.
ARTICLE 11
TERMINATION AND AMENDMENT
11.1 Termination. This Agreement shall terminate:
(a) If all outstanding shares of Stock of the Corporation are
owned by any one (1) Shareholder; or
(b) If the Corporation is adjudicated a bankrupt, the Corporation
executes an assignment for benefit of creditors, a receiver is appointed for the
Corporation, or the Corporation voluntarily or involuntarily dissolves;
(c) If all Shareholders agree to terminate this Agreement;
(d) Upon the completion of the IPO.
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Notwithstanding anything to the contrary contained in this Agreement,
this Agreement shall terminate twenty (20) years from the date hereof unless
this Agreement is renewed within such twenty-year period. Amendments to this
Agreement shall be deemed renewals of this Agreement unless the contrary is
stated in the amendment.
11.2 Amendment. This Agreement may not be amended, waived or terminated
orally, and no amendment, termination or attempted waiver shall be valid unless
in writing and signed by all of the Shareholders. Additional parties may be
added to this Agreement in accordance with the terms hereof by execution of a
counterpart of this Agreement which shall be attached hereto and incorporated
herein by this reference.
ARTICLE 12
REMEDIES
12.1 Remedies. During the term of this Agreement, the shares of Stock
shall not be readily marketable, and, for that reason and other reasons, the
parties will be irreparably damaged if this Agreement is not specifically
enforced. In this regard, the parties declare that it is impossible to measure
in money the damages that will accrue to a person having rights under this
Agreement by reason of a failure of another to perform any obligation under this
Agreement. Therefore, this Agreement, including without limitation the
provisions of Article 3, shall be enforceable by specific performance or other
equitable remedy cumulative with and not exclusive of any other remedy. If any
person shall institute any action or proceeding to enforce the provisions of
this Agreement, any person subject to this Agreement against whom such action or
proceeding is brought hereby waives the claim or defense that the person
instituting the action or proceeding has an adequate remedy at law, and no
person shall in any action or proceeding put forward the claims or defense that
an adequate remedy at law exists. Should any dispute concerning the transfer of
shares of Stock arise under this Agreement, an injunction may be issued
restraining the transfer of such shares pending the determination of such
dispute.
ARTICLE 13
DISPUTE RESOLUTION
13.1 Negotiations and Mediation. Should there be any ambiguity,
contradiction or inconsistency in this Agreement, or should any disagreement or
dispute arise in the course of or subsequent to implementation of this
Agreement, the Shareholders shall, as a condition precedent to the use of any
dispute resolution method listed below, meet within ten (10) days of written
request by either party and negotiate in good faith to settle the matter. Each
Shareholder shall make available such persons and documents as maybe reasonably
requested by the other Shareholder in order to facilitate such negotiations. If
such negotiations are unsuccessful in settling the disagreement or dispute, the
parties agree to attempt to settle their differences by non-binding mediation to
be held in Atlanta, Georgia and administered by the American Arbitration
Association under its Commercial Mediation Rules.
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13.2 Stock Buy-Back. In the event that Hogg exercises its right of
approval pursuant to Sections 4.3 or 4.5 and in doing so takes a position
contrary to the decision of the Board of Directors of the Corporation (a
"Section 13.2 Event") then the Corporation, or its designee, may purchase all of
the shares of Stock held by Hogg for an amount equal to the greater of (i) the
Fair Market Value (as defined below), or (ii) 125% times the amount paid by Hogg
for the shares of Stock being sold.
13.3 Fair Market Value. Hogg and the Corporation shall initially
negotiate with each other to agree upon the Fair Market Value within thirty (30)
days of the Section 13.2 Event. In the event that Hogg and the Corporation
cannot reach an agreement on the Fair Market Value within such thirty-day
period, the Fair Market Value will be determined by two appraisers, one chosen
by Hogg and one chosen by the Corporation. If the two appraisal values (the
"Fair Market Value Appraisal") differ by 10% or less (such percentage difference
to be computed by subtracting the lesser of the Fair Market Value Appraisals
from the greater of the Fair Market Value Appraisals and dividing that
difference by the greater of the Fair Market Value Appraisals), then the Fair
Market Value of the property shall equal the average of the two Fair Market
Value Appraisals. In the event that the Fair Market Value Appraisals vary by
more than 10%, a third appraiser shall be chosen by the initial two appraisers
to conduct an independent appraisal of the property, and on the basis of that
independent appraisal, the third appraiser shall, in the exercise of his own
professional judgment, determine which of the two Fair Market Value Appraisals
is the most commercially reasonably, and that Fair Market Value Appraisal shall
be the Fair Market Value.
ARTICLE 14
MISCELLANEOUS
14.1 Applicable Law. This Agreement is executed and will be performed
in the State of Georgia, and this Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia.
14.2 Captions. Titles or captions of sections contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or prescribe the scope of this Agreement or the
intent of any provision.
14.3 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.
14.4 Further Acts. Each party agrees to perform any further acts and to
execute and deliver any instruments or documents that may be necessary or
reasonably deemed advisable to carry out the purposes of this Agreement.
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14.5 Gender. Where the context so requires, the masculine gender shall
be construed to include the female, a corporation, a trust, or other entity, and
the singular shall be construed to include the plural and the plural the
singular.
14.6 Severability. If any part of this Agreement shall be held void,
voidable, or otherwise unenforceable by any court of law or equity, nothing
contained in this Agreement shall limit the enforceability of any other part.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Shareholders, their respective heirs,
successors, successors-in-title, legal representatives and lawful assigns. No
party shall have the right to assign this Agreement, or any interest under this
Agreement, without the prior written consent of the other parties.
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[SIGNATURES APPEAR ON FOLLOWING PAGE]
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<PAGE> 17
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
WT TECHNOLOGIES, INC.
By:
--------------------------------
Name: Ralph Manaker
Title: Vice President
BCD TECHNOLOGY S.A.
By:
-------------------------------
Name: Gerard Birchen
Title: Director
By:
--------------------------------
Name: Edward Bruin
Title: Director
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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<PAGE> 18
HOGG ROBINSON INTERNATIONAL
BENEFITS LIMITED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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<PAGE> 19
SCHEDULE 2.1
COMPANY'S SHAREHOLDERS
<TABLE>
<CAPTION>
Name Ownership
- ---- ---------
<S> <C>
Hogg Robinson International Benefits Limited 1,853,874.60
BCD Technology S.A 5,705,858.40
The Alexander Family, L.P. 1,061,015
Danny B. Hood 221,045
Ralph Manaker 64,327
Steve Reynolds 36,736
Velva D. Wiggins 36,736
Susan Hopley 195,892
*note that 58,767 shares are held in escrow
Gary D. Smith and Jean H. Smith, as Trustees of 5,796
the Gary D. Smith and Jean H. Smith Trust
*note that 1739 shares are held in escrow
Christopher M. Brittin 79,400
*note that 23,820 shares are held in escrow
F. Gilmer Siler 8,693
*note that 2,608 shares are held in escrow
</TABLE>
-19-
<PAGE> 20
SCHEDULE 2.2
SHAREHOLDER SHARES
<TABLE>
<CAPTION>
Name # Shares
- ---- --------
<S> <C>
Hogg Robinson International Benefits Limited 1,853,874.60
BCD Technology S.A. 5,705,858.40
</TABLE>
-20-
<PAGE> 21
SCHEDULE 4.3
BUSINESS PLAN
-21-
<PAGE> 22
EXHIBIT 4.3
FIRST AMENDMENT TO SHAREHOLDERS AGREEMENT
THIS FIRST AMENDMENT (the "Amendment") to the Shareholders Agreement by and
between Hogg Robinson International Benefits Limited ("Hogg"), BCD Technology
S.A. ("BCD") and WT Technologies, Inc. (the "Corporation") dated November 5,
1999 (the "Agreement"), is made as of the _______ day of _______________, 2000.
WHEREAS, Hogg and BCD have agreed that in the event the Corporation engages
in and completes an initial public offering of its stock (the "IPO"), Hogg and
BCD shall enter into a voting arrangement whereby BCD will vote its shares in
favor of Hogg's candidate to the Board of Directors in certain circumstances;
and
WHEREAS, Hogg has agreed to sell up to 2% of the outstanding shares of
Common Stock of the Corporation to the Corporation or into the IPO in certain
circumstances; and
WHEREAS, Hogg has agreed to waive its right to retain 20% of the equity
ownership of the Corporation in the event the Corporation engages in an IPO; and
WHEREAS, Hogg and BCD desire to document their agreement to enter into such
arrangements.
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, representations and covenants contained herein, Hogg, BCD and the
Corporation hereby agree as follows:
1. The Agreement is hereby amended by deleting Section 5.4 of the Agreement in
its entirety and substituting in lieu thereof the following:
5.4(a) Required Stock Sale. In the event of an IPO whereby the stock of
the Corporation will be available for purchase by the public at a valuation
of the Corporation at no less than $250,000,000.00, and upon written
request of the Corporation, Hogg shall, subject to Section 5.4(b), sell to
the Corporation or into the IPO the number of its shares of Common Stock as
specified by the Corporation at a price per share equal to the IPO price
per share, provided, however, that in no event shall Hogg be required to
sell a number of its shares greater than 2% of the shares of Common Stock
of the Corporation immediately outstanding prior to the IPO.
5.4(b) Hogg Board Approval. BCD acknowledges that Hogg must obtain
approval from its Board of Directors to sell the shares pursuant to Section
5.4(a) and Hogg covenants and agrees to obtain such approval.
2. The Agreement is hereby amended by adding a Section 9.2 to the Agreement as
follows:
<PAGE> 23
9.2 Additional Voting Agreement. Hogg and BCD covenant and agree that in
the event that:
(a) the Corporation engages in and completes an initial public
offering of its stock; and
(b) at the date of completion of such initial public offering of the
Corporation's stock (the "Post-IPO Date"), Hogg owns 5% or more of the
outstanding shares of Common Stock of the Corporation provided that
Hogg has not sold any of its shares other than contemplated in this
Amendment;
then, within a reasonable time after the Post-IPO Date, Hogg and BCD shall
enter into a voting agreement whereby:
(c) BCD will agree to vote its shares in favor of Hogg's candidate to
the Board of Directors to fill the vacancy created when David
Radcliffe's or his successor's term expires in 2003 and thereafter
unless:
(1) Hogg's ownership percentage of the Corporation reduces to
less than 10% of the outstanding shares of Common Stock of the
Corporation because of the sale of its shares by Hogg, or
(2) Hogg's ownership percentage of the Corporation reduces to
less than 5% of the outstanding shares of Common Stock of the
Corporation because of equity issuances by the Corporation.
Notwithstanding the provisions of Section 4.l, at the request of the Board of
Directors upon the occurrence of Section 9.2(c)(1) or 9.2(c)(2) event, then Hogg
will require its candidate to resign from the Board of Directors after the
expiration of the term in 2003.
3. All terms and provisions of the Agreement which are not inconsistent with
the terms and provisions of this Amendment shall remain in full force and
effect.
4. This Amendment may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
5. Capitalized terms used and not otherwise defined herein shall have those
meanings ascribed to them in the Agreement.
<PAGE> 24
EXHIBIT 4.3
IN WITNESS WHEREOF, the undersigned have executed this First Amendment to
the Shareholders Agreement on the date first above written.
WT TECHNOLOGIES, INC.
By:____________________________________
Name: Ralph Manaker
Title: Executive Vice President
BCD TECHNOLOGY S.A.
By:____________________________________
Name: Gerard Birchen
Title: Director
By:____________________________________
Name: Edward Bruin
Title: Director
HOGG ROBINSON INTERNATIONAL
BENEFITS LIMITED
By:____________________________________
Name:__________________________________
Title:_________________________________
[Signatures Appear on Following Page]
<PAGE> 1
Exhibit 4.4
AGREEMENT
This AGREEMENT (this "Agreement") dated as of November 4, 1999, among
WT Technologies, Inc., a Georgia corporation (the "Company"), Susan R. Hopley
("Hopley") and Gary D. Smith and Jean H. Smith, as Trustees of the Gary D. Smith
and Jean H. Smith Trust (the "Smith Trust").
WHEREAS, the Smith Trust is a shareholder of Arthur H. Ltd. d/b/a
International Software Products, a Virginia corporation ("ISP");
WHEREAS, the Company, Hopley, the Smith Trust, Christopher M. Brittin,
F. Gilmer Siler and ISP propose to enter into a Contribution Agreement, of even
date herewith (the "Contribution Agreement"), pursuant to which the Company
would acquire all of the issued and outstanding shares of capital stock of ISP
in exchange for, among other things, shares of common stock, par value $.01 per
share, of the Company (such common stock to be received by the Smith Trust as
well as other securities issued with respect to the Company's capital stock by
means of share splits, combinations, dividends or other similar recapitalization
events being referred to as the "Subject Shares");
WHEREAS, as a condition to its willingness to enter in the Contribution
Agreement, the Company has requested that the Smith Trust enter into this
Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to such terms in the Shareholders Agreement;
NOW, THEREFORE, to induce the Company to enter into, and in
consideration of entering into, the Contribution Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Smith Trust. The Smith Trust
hereby represents and warrants to the Company that (a) the Smith Trust has all
requisite power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby and
(b) this Agreement has been duly authorized, executed and delivered by the Smith
Trust and constitutes a valid and binding obligation of the Smith Trust
enforceable in accordance with its terms.
2. Covenants of the Smith Trust. Until the termination of this
Agreement in accordance with Section 4 hereof, the Smith Trust agrees as
follows:
(a) Voting of Subject Shares. At any meeting of shareholders of the
Company or at any adjournment thereof or in any other circumstances
upon which any Company shareholder's vote, consent or other approval
(including by written consent) is sought, the Smith Trust shall vote
all of the Subject Shares then beneficially owned by it as directed by
<PAGE> 2
Hopley. The Smith Trust shall not hereafter, unless and until this
Agreement terminates pursuant to Section 4 hereof, purport to grant
(other than through the irrevocable proxy granted in Section 2(b)) any
proxy or power of attorney with respect to any of the Subject Shares,
deposit any of the Subject Shares into a voting trust or enter into any
agreement (other than this Agreement), arrangement or understanding
with any person, directly or indirectly, to vote, grant any proxy or
give instructions with respect to the voting of any of the Subject
Shares. The Smith Trust further agrees not to commit or agree to take
any action inconsistent with the foregoing.
(b) Proxy. The Smith Trust hereby grants to Hopley, as the Smith
Trust's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of the Smith Trust, a proxy to
vote, or to grant a consent or approval in respect of, all of the
Subject Shares then beneficially owned by the Smith Trust as indicated
in Section 2(a) above, and Hopley hereby accepts such proxy. The Smith
Trust agrees that this proxy shall be irrevocable and coupled with an
interest and may under no circumstances be revoked, agrees to take such
further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy and hereby revokes any proxy
previously granted by the Smith Trust with respect to any of the
Subject Shares. Such irrevocable proxy is executed and intended to be
irrevocable in accordance with the provisions of Section 14-2-722 of
the Georgia Business Corporation Code.
(c) Transfer Restrictions. The Smith Trust agrees not to sell,
transfer, pledge, encumber, assign or otherwise dispose of (including
by gift) (collectively, "Transfer"), or enter into any contract, option
or other arrangement or understanding (including any profit sharing
arrangement) with respect to the Transfer of, any of the Subject Shares
to any person unless (i) permitted by the Shareholders Agreement and
(ii) the transferee agrees in writing (to the reasonable satisfaction
of the Company) to be bound by all of the terms and conditions of this
Agreement.
(d) Mandatory Sale of Subject Shares. In the event that Hopley sells
or transfers her Transferee Shares for any reason including, without
limitation, pursuant to the Shareholders Agreement or the Put
Agreement, then the Smith Trust shall sell or transfer its pro rata
portion of the Subject Shares on the same terms and conditions;
provided, however, that the provisions of this Section 3(d) shall not
apply to permitted transfers by Hopley pursuant to Section 2(e) of the
Shareholders Agreement; and provided further, that the Smith Trust
shall be entitled to exercise or decline the Buyback Right (as defined
in the Shareholders Agreement) regardless of Hopley's election with
respect thereto.
3. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any of the parties hereto without
the prior written consent of the other parties hereto, except by Hopley in
connection with a permitted transfer pursuant to Section 2(e) of the
Shareholders Agreement. Subject to the preceding sentence, this Agreement will
be binding
2
<PAGE> 3
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
4. Termination. This Agreement shall terminate, and no party hereto
shall have any rights or obligations hereunder, upon the first to occur of (a)
the effective time of an initial public offering of the Company's securities or
(b) such time as Hopley and the Smith Trust have exercised or declined to
exercise the Buyback Right as set forth in the Shareholders Agreement.
5. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by telecopy or by registered or certified mail (postage
prepared, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
if to Smith Trust, to:
4805 162nd Avenue, N.E.
Redmond, WA 89052
Facsimile: (425) 885-1250
if to Hopley, to:
1477 Chain Bridge Road, Suite 201
McLean, VA 22101
Facsimile: (703) 748-1281
with a copy to:
Greenberg Traurig
1750 Tysons Boulevard, Suite 1200
McLean, VA 22102
Attention: C. Thomas Hicks III, Esq.
Facsimile: (703) 749-1301
3
<PAGE> 4
if to the Company, to:
1055 Lenox Park Boulevard, Fourth Floor
Atlanta, GA 30319
Attention: Ralph Manaker
Facsimile: (404) 841-6770
with a copy to:
Long Aldridge & Norman LLP
303 Peachtree Street, Suite 5300
Atlanta, GA 30308
Attention: Jeffrey K. Haidet, Esq.
Facsimile: (404) 527-4198
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the
counterparts have been signed by each of the parties and delivered to
the other party, it being understood that each party need not sign the
same counterpart.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Georgia
regardless of the laws that might otherwise govern under applicable
principles of conflicts or law.
(f) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is
not affected in any manner materially adverse to any party. Upon any
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent
possible.
4
<PAGE> 5
6. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, in addition to any other remedy to which it may be
entitled, at law or in equity, the parties shall be entitled to the remedy of
specific performance of the covenants and agreements contained herein and
injunctive and other equitable relief.
7. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto. Except as provided in the preceding
sentence, nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies or any nature
whatsoever under or by reason of this Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by its signatory thereunto duly authorized, as of the date first written
above.
WT TECHNOLOGIES, INC.
By:
--------------------------------
Name:
Title:
THE GARY D. SMITH AND
JEAN H. SMITH TRUST
By:
--------------------------------
Name: Gary D. Smith
Title: Trustee
By:
---------------------------------
Name: Jean H. Smith
Title: Trustee
-----------------------------------
Susan R. Hopley
6
<PAGE> 1
EXHIBIT 4.5
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii)
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER AND THAT SUCH TRANSFER IS NOT IN
VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED
UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE.
November 5, 1999 $2,000,000.00
Atlanta, Georgia
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, WT Technologies, Inc. ("Borrower") unconditionally
promises to pay to the order of Hogg Robinson International Benefits Limited
("Hogg") two years from the date of this Convertible Promissory Note (the "Due
Date") (unless and only to the extent that this Note shall have been sooner paid
off or converted as herein provided), without setoff, at Abbey House 282
Farnborough Road, Farnborough Hampshire GU14 7NJ, c/o the Chief Executive
Officer of Hogg Robinson PLC, or at such other place as may be designated by
Hogg in writing, the principal amount of Two Million and No/100 Dollars
($2,000,000.00), together with interest computed daily on the outstanding
principal balance hereunder, at an annualized interest rate equal to the yield
of U.S. Treasury Notes (2 year) as published in the Wall Street Journal on the
date of issuance of this Convertible Promissory Note (the "Note").
1. FEES AND CHARGES. Notwithstanding any other provision
contained in this Note, Hogg does not intend to charge and Borrower shall not be
required to pay any amount of interest or other fees or charges that are in
excess of the maximum permitted by applicable law. Any payment in excess of such
maximum shall be refunded to Borrower or credited against principal, at the
option of Hogg.
2. CONVERSION.
(a) Hogg shall have the right on the Due Date to convert all
of the outstanding balance, principal or interest, of this Note (the
"Conversion") into such number of fully paid and nonassessable shares of common
voting stock of Borrower (the "Common Stock") as shall be provided for herein.
Notwithstanding the foregoing, all of the outstanding balance, principal and
interest, of this Note shall convert automatically into Common Stock (an
"Automatic Conversion") (i) immediately prior to an underwritten initial public
offering of Common Stock which is required to be registered under the Act; or
(ii) immediately upon the conversion by BCD Technology, SA ("BCD") of all of the
outstanding balance, principal and interest, of the Convertible Promissory Note
from Borrower to BCD of even date herewith (the "BCD Note"), into Common Stock.
<PAGE> 2
(b) Hogg may exercise the Conversion right provided in this
Section 2 by giving written notice (the "Conversion Notice") to Borrower at
least thirty (30) days prior to the Due Date of the exercise of such right
stating the dollar amount of the outstanding balance of the Note, the name or
names in which the stock certificate or stock certificates for the shares of
Common Stock are to be issued, and the address or addressees to which such stock
certificates shall be delivered. In the event of an Automatic Conversion,
Borrower shall give written notice to Hogg of the Automatic Conversion stating
the basis of the Automatic Conversion and the outstanding balance of the Note.
Upon receipt of such notice from Borrower, Hogg shall send a Conversion Notice
to Borrower stating the name or names in which the stock certificate or stock
certificates for the shares of Common Stock are to be issued, and the address or
addressees to which such stock certificates shall be delivered.
(c) The number of shares of Common Stock that shall be
issuable upon any Conversion or Automatic Conversion shall equal the amount of
the outstanding balance of the Note as of the date of the Conversion Notice
divided by the per share value of Common Stock based upon a One Hundred Ten
Million Dollars ($110,000,000.00) valuation (the "Conversion Ratio").
(d) Borrower shall issue and deliver by hand against a signed
receipt therefor, to the address designated by Hogg in the Conversion Notice, a
stock certificate, or stock certificates of the Borrower representing the number
of shares of Common Stock to which Hogg is entitled pursuant hereto, (i) in the
event of a Conversion, within the latter of ten (10) business days after the
Conversion Ratio is determined or the Due Date; or (ii) in the event of an
Automatic Conversion, within ten (10) business days after the Conversion Ratio
is determined. Conversion shall be deemed to have been effected on the date of
delivery.
(e) In case issued and outstanding shares of Common Stock
shall be subdivided or split up into a greater number of shares of the Common
Stock, the Conversion Ratio shall be proportionately increased, and in case
issued and outstanding shares of Common Stock shall be combined into a smaller
number of shares of the Common Stock, the Conversion Ratio shall be
proportionately decreased.
(f) In case of any capital reorganization, any
reclassification of the stock of Borrower (other than as a result of a stock
dividend or subdivision, split up or combination of shares), or any share
exchange by or the consolidation or merger of Borrower with or into another
person or entity (other than a share exchange or merger in which Borrower is the
acquiring or surviving corporation and which does not result in any change in
control of Borrower or change in the Common Stock) or of the sale, exchange,
lease, transfer or other disposition of all or substantially all of the
properties and assets of Borrower as an entirety or the participation by
Borrower in share exchange as the corporation the stock of which is to be
acquired, this Note shall (effective on the opening of business on the date
after the effective date of such reorganization, reclassification,
consolidation, merger, sale or exchange, lease, transfer or other disposition or
share exchange) be convertible into the kind and number of shares of stock or
other securities or property of Borrower or of the corporation resulting from
such consolidation or surviving such merger or to which such
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<PAGE> 3
properties and assets shall have been sold, exchanged, leased, transferred or
otherwise disposed or which was the corporation whose securities were exchanged
for those of Borrower, to which the holder of the number of shares on Common
Stock deliverable upon conversion of this Note would have been entitled upon
such reorganization, reclassification, consolidation, merger, sale, exchange,
lease, transfer or other disposition or share exchange.
(g) In the event Borrower shall take any action of the types
described in Sections 2(f) or (g) hereof, Borrower shall promptly give notice to
Hogg, which notice shall specify the record date, if any, with respect to any
such action. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Ratio and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of this Note. Failure to give notice in accordance
with this Section 2(h) shall not render such action ultra vires, illegal or
invalid.
3. PAYMENT SCHEDULE. All payments received hereunder shall be
applied first to the payment of any expense or charges payable hereunder, then
to interest due and payable, with the balance being applied to principal, or in
such other order as Hogg shall determine at its option. All outstanding
principal and interest then due and not previously paid shall be paid in full in
a single payment on the Due Date.
4. WAIVERS, CONSENTS, AND COVENANTS. Except as otherwise
specifically provided in this Note, Borrower: (a) waives presentment, demand,
notice of demand, notice of intent to accelerate, and notice of acceleration or
maturity, protest, notice of protest, notice of nonpayment, notice of dishonor,
and any other notice required to be given under the laws to Borrower, in
connection with the delivery, acceptance, performance, default, or enforcement
of this Note; (b) consents to any and all delays, extensions, renewals, or other
modifications of this Note or waivers of any terms hereof or thereof, or release
or discharge by Hogg of Borrower, or the failure to act on the part of Hogg, or
any indulgence shown by Hogg, from time to time, and in one or more instances
(without notice to or further assent of Borrower), and agree that no such
action, failure to act, or failure to exercise any right or remedy on the part
of Hogg shall in any way effect or impair the obligations of Borrower or be
construed as a waiver by Hogg of, or otherwise effect, any of Hogg's rights
under this Note; and (c) agrees to pay, on demand, all costs and expenses of
collection of this Note, including, without limitation, reasonable attorney's
fees, including fees related to any trial, mediation, arbitration, Bankruptcy,
appeal, or other proceeding in an amount not to exceed fifteen percent (15%) of
the principal amount of this Note.
5. PREPAYMENTS.
(a) Prepayments may be made in whole or in part at any time.
All prepayments of principal shall be applied in the inverse order of maturity,
or in such order as Hogg shall determine in its sole discretion.
-3-
<PAGE> 4
(b) In the event prepayment is made in whole or in part of the
BCD Note ("BCD Prepayment"), the amount of prepayment of this Note must be made
such that the ratio of the outstanding balance of this Note divided by the
prepayment amount is equal to the ratio of the outstanding balance of the BCD
Note divided by the BCD Prepayment.
6. EVENTS OF DEFAULT. The following are events of default
hereunder: (a) the failure to pay or perform any obligation, liability, or
indebtedness of Borrower to Hogg, or to any affiliate of Hogg, under this Note
within ten (10) days of demand therefor (whether upon demand, at maturity, or by
acceleration, but following the expiration of any application notice or cure
period); provided, however, that no such demand shall be required in connection
with the principal payment to be made by Borrower on the Due Date; (b) except as
otherwise provided in item (a) above, the failure to pay or perform any other
obligation, liability, or indebtedness of Borrower, whether to Hogg or some
other party, the security for which constitutes an encumbrance on this Note,
within ten (10) days of demand therefor; (c) a proceeding being filed or
commenced against Borrower for dissolution or liquidation (and if such
proceeding is involuntarily filed, such proceeding remains undismissed for sixty
(60) days), or Borrower voluntarily or involuntarily terminating or dissolving
or being terminated or dissolved; (d) insolvency of, business failure of, the
appointment of a custodian, trustee, liquidator, or receiver for any of the
property of, or an assignment for the benefit of creditors by, or the filing of
a petition under Bankruptcy (and if such petition for an involuntary Bankruptcy,
such petition remains undismissed for sixty (60) days), insolvency, or debtor's
relief law or for any adjustment of indebtedness, composition, or extension by
or against Borrower.
7. REMEDIES UPON DEFAULT. Whenever there is a default under this
Note: (a) the entire balance outstanding and all other obligations of Borrower
to Hogg, however acquired, shall, at the option of Hogg, become immediately due
and payable; and/or (b) to the extent permitted by law, the rate of interest on
the unpaid principal shall, at the option of Hogg, be increased at Hogg's
discretion up to the maximum rate allowed by law, or if none, fifteen percent
(15%) per annum (the "Default Rate"); and/or (c) to the extent permitted by law,
a delinquency charge may be imposed in an amount not to exceed five percent (5%)
of any payment in default for more than fifteen (15) days. The provision herein
for a Default Rate or a delinquency charge shall not be deemed to extend the
time for any payment hereunder or to constitute a "grace period" giving Borrower
a right to cure any default. At Hogg's option, to the extent permitted by law,
any accrued and unpaid interest, fees, or charges may, for purposes of computing
and accruing interest on a daily basis after the due date of the Note or any
installment thereof, be deemed to be a part of the principal balance, and
interest shall accrue on a daily compounded basis after, such date at the rate
provided in this Note until the entire outstanding balance of principal and
interest is paid in full.
8. NON-WAIVER. The failure at any time of Hogg to execute any of
its options or any other rights hereunder shall not constitute a waiver thereof,
nor shall it be a bar to the exercise of any of its options or rights at a later
date. All rights and remedies of Hogg shall be cumulative and may be pursued
singly, successively, or together, at the option of Hogg. The acceptance by Hogg
of any partial payment shall not constitute a waiver of any default or any of
Hogg's rights under this Note. No waiver of its rights hereunder, and no
modification or amendment of this Note, shall be deemed
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<PAGE> 5
to be made by Hogg unless the same shall be in writing, duly signed on behalf of
Hogg; and each such waiver, if any, shall apply only with respect to the
specific instance involved, and shall in no way impair the rights of Hogg or the
obligations of Borrower to Hogg in any other respect at any other time.
9. APPLICABLE LAW. This Note is delivered in and shall be
construed under the internal laws and judicial decisions of the State of Georgia
and the laws of the United States as the same may be applicable.
10. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Note shall not affect the enforceability or validity of any
other provision herein.
11. RESERVATION OF RIGHTS. Nothing in this Note shall be deemed to
(i) limit the applicability of any otherwise applicable statutes of limitation
or repose and any waivers contained in this Note; or (ii) limit the right of
Hogg to (a) exercise self-help remedies such as (but not limited to) setoff, or
(b) obtain from a court provisional or ancillary remedies such as (but not
limited to) injunctive relief, writ of possession or the appointment of a
receiver.
12. BINDING EFFECT. This Note shall be binding upon and inure to
the benefit of Borrower and Hogg and their respective successors, assigns, heirs
and personal representatives, provided, however, that no obligations of Borrower
hereunder can be assigned without prior written consent of Hogg.
13. ENTIRE AGREEMENT. This Note represents the final agreement
between the parties with regard to the transactions described herein and may not
be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten or oral agreements between the
parties.
-5-
<PAGE> 6
This 5th day of November, 1999.
BORROWER:
WT TECHNOLOGIES, INC.
/s/ Ralph Manaker
-----------------------------------
By: Ralph Manaker
Its: Vice President
[SEAL]
AGREED TO AND ACCEPTED BY:
HOGG ROBINSON INTERNATIONAL BENEFITS LIMITED
/s/ David Radcliffe
- ----------------------------
By: David Radcliffe
-------------------------
Its: Director
------------------------
-6-
<PAGE> 1
EXHIBIT 4.6
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii)
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER AND THAT SUCH TRANSFER IS NOT IN
VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED
UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE.
November 5, 1999 $8,000,000.00
Atlanta, Georgia
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, WT Technologies, Inc. ("Borrower") unconditionally
promises to pay to the order of BCD Technology, SA ("BCD") two years from the
date of this Convertible Promissory Note (the "Due Date") (unless and only to
the extent that this Note shall have been sooner paid off or converted as herein
provided), without setoff, at its offices at 1055 Lenox Park Boulevard, Suite
420, Atlanta, Georgia 30319, or at such other place as may be designated by BCD
in writing, the principal amount of Eight Million and No/100 Dollars
($8,000,000.00), together with interest computed daily on the outstanding
principal balance hereunder, at an annualized interest rate equal to the yield
of U.S. Treasury Notes (2 year) as published in the Wall Street Journal on the
date of issuance of this Convertible Promissory Note (the "Note").
1. FEES AND CHARGES. Notwithstanding any other provision
contained in this Note, BCD does not intend to charge and Borrower shall not be
required to pay any amount of interest or other fees or charges that are in
excess of the maximum permitted by applicable law. Any payment in excess of such
maximum shall be refunded to Borrower or credited against principal, at the
option of BCD.
2. CONVERSION.
(a) BCD shall have the right on the Due Date to convert all of
the outstanding balance, principal or interest, of this Note (the "Conversion")
into such number of fully paid and nonassessable shares of common voting stock
of Borrower (the "Common Stock") as shall be provided for herein.
Notwithstanding the foregoing, all of the outstanding balance, principal and
interest, of this Note shall convert automatically into Common Stock (an
"Automatic Conversion") (i) immediately prior to an underwritten initial public
offering of Common Stock which is required to be registered under the Act; or
(ii) immediately upon the conversion by Hogg Robinson International Benefits
Limited ("Hogg") of all of the outstanding balance, principal and interest, of
the Convertible Promissory Note from Borrower to Hogg of even date herewith (the
"Hogg Note"), into Common Stock.
<PAGE> 2
(b) BCD may exercise the Conversion right provided in this
Section 2 by giving written notice (the "Conversion Notice") to Borrower at
least thirty (30) days prior to the Due Date of the exercise of such right
stating the dollar amount of the outstanding balance of the Note, the name or
names in which the stock certificate or stock certificates for the shares of
Common Stock are to be issued, and the address or addressees to which such stock
certificates shall be delivered. In the event of an Automatic Conversion,
Borrower shall give written notice to BCD of the Automatic Conversion stating
the basis of the Automatic Conversion and the outstanding balance of the Note.
Upon receipt of such notice from Borrower, BCD shall send a Conversion Notice to
Borrower stating the name or names in which the stock certificate or stock
certificates for the shares of Common Stock are to be issued, and the address or
addressees to which such stock certificates shall be delivered.
(c) The number of shares of Common Stock that shall be
issuable upon any Conversion or Automatic Conversion shall equal the amount of
the outstanding balance of the Note as of the date of the Conversion Notice
divided by the per share value of Common Stock based upon a One Hundred Ten
Million Dollars ($110,000,000.00) valuation (the "Conversion Ratio").
(d) Borrower shall issue and deliver by hand against a signed
receipt therefor, to the address designated by BCD in the Conversion Notice, a
stock certificate, or stock certificates of the Borrower representing the number
of shares of Common Stock to which BCD is entitled pursuant hereto, (i) in the
event of a Conversion, within the latter of ten (10) business days after the
Conversion Ratio is determined or the Due Date; or (ii) in the event of an
Automatic Conversion, within ten (10) business days after the Conversion Ratio
is determined. Conversion shall be deemed to have been effected on the date of
delivery.
(e) In case issued and outstanding shares of Common Stock
shall be subdivided or split up into a greater number of shares of the Common
Stock, the Conversion Ratio shall be proportionately increased, and in case
issued and outstanding shares of Common Stock shall be combined into a smaller
number of shares of the Common Stock, the Conversion Ratio shall be
proportionately decreased.
(f) In case of any capital reorganization, any
reclassification of the stock of Borrower (other than as a result of a stock
dividend or subdivision, split up or combination of shares), or any share
exchange by or the consolidation or merger of Borrower with or into another
person or entity (other than a share exchange or merger in which Borrower is the
acquiring or surviving corporation and which does not result in any change in
control of Borrower or change in the Common Stock) or of the sale, exchange,
lease, transfer or other disposition of all or substantially all of the
properties and assets of Borrower as an entirety or the participation by
Borrower in share exchange as the corporation the stock of which is to be
acquired, this Note shall (effective on the opening of business on the date
after the effective date of such reorganization, reclassification,
consolidation, merger, sale or exchange, lease, transfer or other disposition or
share exchange) be convertible into the kind and number of shares of stock or
other securities or property of Borrower or of the corporation resulting from
such consolidation or surviving such merger or to which such
-2-
<PAGE> 3
properties and assets shall have been sold, exchanged, leased, transferred or
otherwise disposed or which was the corporation whose securities were exchanged
for those of Borrower, to which the holder of the number of shares on Common
Stock deliverable upon conversion of this Note would have been entitled upon
such reorganization, reclassification, consolidation, merger, sale, exchange,
lease, transfer or other disposition or share exchange.
(g) In the event Borrower shall take any action of the types
described in Sections 2(f) or (g) hereof, Borrower shall promptly give notice to
BCD, which notice shall specify the record date, if any, with respect to any
such action. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Ratio and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of this Note. Failure to give notice in accordance
with this Section 2(h) shall not render such action ultra vires, illegal or
invalid.
3. PAYMENT SCHEDULE. All payments received hereunder shall be
applied first to the payment of any expense or charges payable hereunder, then
to interest due and payable, with the balance being applied to principal, or in
such other order as BCD shall determine at its option. All outstanding principal
and interest then due and not previously paid shall be paid in full in a single
payment on the Due Date.
4. WAIVERS, CONSENTS, AND COVENANTS. Except as otherwise
specifically provided in this Note, Borrower: (a) waives presentment, demand,
notice of demand, notice of intent to accelerate, and notice of acceleration or
maturity, protest, notice of protest, notice of nonpayment, notice of dishonor,
and any other notice required to be given under the laws to Borrower, in
connection with the delivery, acceptance, performance, default, or enforcement
of this Note; (b) consents to any and all delays, extensions, renewals, or other
modifications of this Note or waivers of any terms hereof or thereof, or release
or discharge by BCD of Borrower, or the failure to act on the part of BCD, or
any indulgence shown by BCD, from time to time, and in one or more instances
(without notice to or further assent of Borrower), and agree that no such
action, failure to act, or failure to exercise any right or remedy on the part
of BCD shall in any way effect or impair the obligations of Borrower or be
construed as a waiver by BCD of, or otherwise effect, any of BCD's rights under
this Note; and (c) agrees to pay, on demand, all costs and expenses of
collection of this Note, including, without limitation, reasonable attorney's
fees, including fees related to any trial, mediation, arbitration, Bankruptcy,
appeal, or other proceeding in an amount not to exceed fifteen percent (15%) of
the principal amount of this Note.
5. PREPAYMENTS.
(a) Prepayments may be made in whole or in part at any time.
All prepayments of principal shall be applied in the inverse order of maturity,
or in such order as BCD shall determine in its sole discretion.
-3-
<PAGE> 4
(b) In the event prepayment is made in whole or in part of the
Hogg Note ("Hogg Prepayment"), the amount of prepayment of this Note must be
made such that the ratio of the outstanding balance of this Note divided by the
prepayment amount is equal to the ratio of the outstanding balance of the Hogg
Note divided by the Hogg Prepayment.
(c) In the event that Hogg brings a claim for indemnity
against BCD pursuant to the Stock Purchase Agreement by and between Borrower,
BCD, and Hogg of even date herewith, BCD has the right to require prepayment in
full or in part of the outstanding balance, principal and interest, of the Note.
6. EVENTS OF DEFAULT. The following are events of default
hereunder: (a) the failure to pay or perform any obligation, liability, or
indebtedness of Borrower to BCD, or to any affiliate of BCD, under this Note
within ten (10) days of demand therefor (whether upon demand, at maturity, or by
acceleration, but following the expiration of any application notice or cure
period); provided, however, that no such demand shall be required in connection
with the principal payment to be made by Borrower on the Due Date; (b) except as
otherwise provided in item (a) above, the failure to pay or perform any other
obligation, liability, or indebtedness of Borrower, whether to BCD or some other
party, the security for which constitutes an encumbrance on this Note, within
ten (10) days of demand therefor; (c) a proceeding being filed or commenced
against Borrower for dissolution or liquidation (and if such proceeding is
involuntarily filed, such proceeding remains undismissed for sixty (60) days),
or Borrower voluntarily or involuntarily terminating or dissolving or being
terminated or dissolved; (d) insolvency of, business failure of, the appointment
of a custodian, trustee, liquidator, or receiver for any of the property of, or
an assignment for the benefit of creditors by, or the filing of a petition under
Bankruptcy (and if such petition for an involuntary Bankruptcy, such petition
remains undismissed for sixty (60) days), insolvency, or debtor's relief law or
for any adjustment of indebtedness, composition, or extension by or against
Borrower.
7. REMEDIES UPON DEFAULT. Whenever there is a default under this
Note: (a) the entire balance outstanding and all other obligations of Borrower
to BCD, however acquired, shall, at the option of BCD, become immediately due
and payable; and/or (b) to the extent permitted by law, the rate of interest on
the unpaid principal shall, at the option of BCD, be increased at BCD's
discretion up to the maximum rate allowed by law, or if none, fifteen percent
(15%) per annum (the "Default Rate"); and/or (c) to the extent permitted by law,
a delinquency charge may be imposed in an amount not to exceed five percent (5%)
of any payment in default for more than fifteen (15) days. The provision herein
for a Default Rate or a delinquency charge shall not be deemed to extend the
time for any payment hereunder or to constitute a "grace period" giving Borrower
a right to cure any default. At BCD's option, to the extent permitted by law,
any accrued and unpaid interest, fees, or charges may, for purposes of computing
and accruing interest on a daily basis after the due date of the Note or any
installment thereof, be deemed to be a part of the principal balance, and
interest shall accrue on a daily compounded basis after, such date at the rate
provided in this Note until the entire outstanding balance of principal and
interest is paid in full.
-4-
<PAGE> 5
8. NON-WAIVER. The failure at any time of BCD to execute any of
its options or any other rights hereunder shall not constitute a waiver thereof,
nor shall it be a bar to the exercise of any of its options or rights at a later
date. All rights and remedies of BCD shall be cumulative and may be pursued
singly, successively, or together, at the option of BCD. The acceptance by BCD
of any partial payment shall not constitute a waiver of any default or any of
BCD's rights under this Note. No waiver of its rights hereunder, and no
modification or amendment of this Note, shall be deemed to be made by BCD unless
the same shall be in writing, duly signed on behalf of BCD; and each such
waiver, if any, shall apply only with respect to the specific instance involved,
and shall in no way impair the rights of BCD or the obligations of Borrower to
BCD in any other respect at any other time.
9. APPLICABLE LAW. This Note is delivered in and shall be
construed under the internal laws and judicial decisions of the State of Georgia
and the laws of the United States as the same may be applicable.
10. PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Note shall not affect the enforceability or validity of any
other provision herein.
11. RESERVATION OF RIGHTS. Nothing in this Note shall be deemed to
(i) limit the applicability of any otherwise applicable statutes of limitation
or repose and any waivers contained in this Note; or (ii) limit the right of BCD
to (a) exercise self-help remedies such as (but not limited to) setoff, or (b)
obtain from a court provisional or ancillary remedies such as (but not limited
to) injunctive relief, writ of possession or the appointment of a receiver.
12. BINDING EFFECT. This Note shall be binding upon and inure to
the benefit of Borrower and BCD and their respective successors, assigns, heirs
and personal representatives, provided, however, that no obligations of Borrower
hereunder can be assigned without prior written consent of BCD.
13. ENTIRE AGREEMENT. This Note represents the final agreement
between the parties with regard to the transactions described herein and may not
be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten or oral agreements between the
parties.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
this 5th day of November, 1999.
BORROWER:
WT TECHNOLOGIES, INC.
/s/ Ralph Manaker
-----------------------------------
By: Ralph Manaker
Its: Vice President
[SEAL]
Agreed and accepted to by:
BCD TECHNOLOGY S.A.
By: /s/ Gerard Birchen
--------------------------------
Name: Gerard Birchen
Title: Director
By: /s/ Edward Bruin
--------------------------------
Name: Edward Bruin
Title: Director
-6-
<PAGE> 1
EXHIBIT 10.2
SHARED SERVICES AGREEMENT
This Agreement, including all Addenda hereto (collectively, the "Agreement"),
dated as of November 1, 1999, is by and between WorldTravel Technologies, L.L.C.
(the "WTT") and WorldTravel Partners I, L.L.C. ("WTP").
1. The Services. WTP's employees will provide various services to WTT as
described in greater detail in the SCOPE ADDENDUM, attached hereto as
Exhibit A (collectively, the "Services"). The individuals who provide
the services will be referred to as "WTP Personnel". WTP is acting as
an independent contractor in providing any and all services hereunder.
Additional Services. WTT may desire that WTP perform additional
services that are different from or in addition to, the Services ("Additional
Services"). WTP will provide such Additional Services as WTT may reasonably
request, upon such terms and conditions (including compensation terms) as are
mutually agreed between the parties. Such terms shall be documented in the form
attached hereto as the CHANGE ORDER REQUEST ADDENDUM, attached hereto as Exhibit
B. No charges or other compensation in respect of any Additional Services is
provided for in the Monthly Charge. In no event shall WTP be obligated to
perform any Additional Services that would cause it to be in conflict with any
law, rule or regulation, or any internal WTP policy.
Changes. The occurrence of (i) any event or transaction which
significantly increases or decreases the size or nature of the operations of WTT
that affects the scope, manner, nature or quantity of the Services or Additional
Services or (ii) any change in any laws, rules or regulations that affects the
scope, manner, nature or quantity of the Services or Additional Services shall
be considered a change in the scope of services, and WTP and WTT shall promptly
meet to negotiate an equitable adjustment in the fees payable to WTP. WTP shall
have no obligation to commence work in connection with any change of the type
described in either clause (i) or (ii) above until the fee impact of such change
is agreed upon by the parties in writing. Each such change shall be documented
in the form attached hereto as the CHANGE ORDER REQUEST ADDENDUM. If the parties
are unable to agree upon a mutually acceptable adjustment, the matter shall be
handled in accordance with the Section 8 (Dispute Resolution).
Prior Approval by WTT of WTT-Related Commitments. If in the performance
of its obligations hereunder, it is necessary for WTP to incur costs over and
above those related to WTP's standard practices and procedures and such costs
will exceed $50,000, which amount shall include any and all amounts contained in
any contract commitments or obligations in excess of twelve (12) months, then
WTP shall notify WTT in writing of the necessity of such expense and shall
secure WTT's written approval prior to incurring such costs.
2. Personnel.
WTP Personnel. WTT and WTP are not joint employers for any purpose
under this Agreement. WTP will determine how to staff its Services and
Additional Services under this Agreement. WTP reserves the right to assign the
personnel to perform the Services and Additional Services and to replace or
reassign such employees. WTP Personnel may rotate between this engagement and
other engagements of WTP.
Employment of WTP Personnel. During the term of this Agreement and for
any individual employee for six months following termination or resignation of
such employee during the term of this Agreement, neither party shall employ,
solicit or make any offers to employ any employees of the other in the
performance of the Services or Additional Services, without the prior written
consent of the original employing party. The original employing party shall be
entitled, in addition to any other remedies it may have at law or in equity, to
a payment from the hiring party in an amount equal to one year's salary of any
employee that the hiring party employs, solicits or offers to employ in
violation of this Section.
3. WTT Responsibilities. WTP's performance is dependent upon WTT's timely
and effective performance of WTT"s responsibilities under this Agreement and
WTT' s timely decisions and approvals. The responsibilities and obligations of
WTT under and pursuant to this Agreement include, but are not limited to, the
following:
(a) Providing WTP with complete and accurate informatio
required by WTP to perform its
<PAGE> 2
Services and Additional Services in a timely manner and ensuring that
all such information provided by WTT to WTP contains no material
omissions, and is updated on a prompt and continuous basis;
(b) Making available, promptly after requested by WTP,
management decisions, approvals, acceptances and such other information
and assistance desired or required by WTP to perform its obligations
under this Agreement;
(c) Establishing and maintaining WTTs policies (including
finance, accounting and management information system policies) and an
effective overall system of internal controls;
(d) Making WTTs employees available to and causing them
to communicate with WTP and WTP Personnel during business hours as WTP
may reasonably request; and
(e) Providing WTP with access to WTT's personnel who are
ultimately responsible for supervising the Services (the
"Supervisor(s)") at such times as WTP may reasonably request. WTP shall
report to WTT's Supervisor(s) with respect to the performance of its
obligations under this Agreement.
4. Payments.
Monthly Charge. On the first business day of each month during the term
of this Agreement WTT shall pay WTP a monthly charge applicable to such month
(the "Monthly Charge") for the Services. Fees related to any partial month shall
be prorated. The Monthly Charge will be based on actual cost plus ten percent
(10%). The actual costs for each component of the services provided hereunder
are shown on Exhibit C. The Monthly Charge, which includes the ten percent (10%)
fee, will be a fixed fee per month in the amount shown on Exhibit C. The fee for
the first month shall be due and payable in advance on the date of execution of
this Agreement.
Out-of-Pocket Expenses. WTT shall reimburse WTP for pre-approved,
reasonable actual out-of-pocket expenses, not already included in the monthly
charge, (e.g., travel, lodging, supplies, etc.) incurred by WTP in connection
with rendering the Services and Additional Services. WTP shall send WTT a
monthly invoice for the aggregate amount of the WTP expenses during the
preceding month, which invoice will describe and document such expenses in
reasonable detail. Payment shall be due within ten (10) days following the date
of WTP's invoice to WTT.
Periodic Adjustment. For the first year following the Effective Date,
within forty-five (45) days of the end of each quarter, WTP shall notify WTT of
any difference between the then current Monthly Charge and the actual costs for
the preceding quarter. If actual costs plus ten percent (10%) are greater than
those that were used to calculate the Monthly Charge for the preceding quarter,
WTP shall bill WTT for the difference. If the actual costs are less, WTP shall
provide WTT with a credit for the difference. On each annual anniversary of the
Effective Date WTP shall adjust the Monthly Charge to reflect any increase or
decrease in the anticipated costs for the upcoming year. WTP shall notify WTT of
the amount of any such adjustment no later than forty-five (45) days prior to
such annual anniversary date. During the next twelve (12) months after such an
adjustment, within forty-five (45) days of the end of each quarter, WTP shall
notify WTT of any difference between the then current Monthly Charge and the
actual costs for the preceding quarter. If actual costs are greater than those
that were used to calculate the Monthly Charge for the preceding quarter, WTP
shall bill WTT for the difference. If the actual costs are less, WTP shall
provide WTT with a credit for the difference.
Late Payment Charges. WTT shall pay a late payment charge, computed on
a daily basis at the monthly rate of 1.5%, for any amounts not paid when due.
Should a dispute arise over an invoice, WTT shall immediately pay the undisputed
portion of the invoice and promptly pay the disputed portion (or applicable part
thereof) if and when the dispute is resolved in WTP's favor.
Taxes. In addition to the other charges payable under this Agreement,
WTT shall be solely responsible for the payment of any taxes and duties based
upon the facilities, assets and Services, any Additional Services and/or
2
<PAGE> 3
products provided by WTP, exclusive of any taxes based upon WTP's income. Both
parties shall take all reasonable steps to minimize taxes, which might be
assessed on either party based on the parties' performance hereunder.
5. Term and Termination.
Engagement Term. The term of this Agreement will begin on November 1,
1999 (the "Effective Date"), and will continue until the latter of (a) the fifth
anniversary of the Effective Date, or (b) the date that this Agreement expires
following the extension of its term (unless terminated sooner in accordance with
this Agreement).
Extension and Renewal. Unless terminated earlier, if upon the fourth
anniversary of the Effective Date, the parties have not agreed to a written
Amendment extending this Agreement, this Agreement shall terminate at the end of
the fifth year of its initial five (5) year term.
Termination for Cause.
(a) If WTT breaches any payment obligation under this
Agreement, and such breach is not cured within 15 days of its receipt
of written notice of such breach, WTP may immediately (i) suspend
performance of the Services, (ii) change the payment conditions under
this Agreement so that WTT must pay WTP weekly and in advance, or (iii)
terminate this Agreement. If either party breaches any other material
obligation under this Agreement, and such breach is not cured within 30
days after receiving written notice of the breach, the party not in
default may immediately terminate this Agreement, provided however,
that to the extent the matter has been submitted to the JOC (as defined
in Section 6.1 below), the 30 day period shall be modified to fifteen
days after the JOC has issued its determination. In addition, if WTT or
WTP becomes or is declared insolvent or bankrupt, this Agreement shall
immediately terminate without the requirement of notice to the
insolvent or bankrupt party. Either party may also terminate this
Agreement for the other party's non-compliance with applicable law
relating to this Agreement, if such non-compliance is not cured within
ten (10) days of the non-complying party's receipt of written notice of
such non-compliance. WTP may immediately terminate this Agreement if it
determines that a governmental or regulatory entity or entity having
the force of law has introduced a new, or modified an existing, law,
rule, regulation, interpretation or decision the result of which would
render WTP's performance of any part of the Services illegal or
otherwise unlawful.
(b) In the event of any breach by WTT, WTP shall have the
right to suspend performance hereunder until such breach is cured or in
reference to a monetary breach its insecurity is satisfied. This
provision shall be in addition to and not in limitation of any other
provision of this Section 5.
(c) If (i) WTT transfers ownership of substantially all
of its assets, (ii) all or a controlling interest in WTT's voting stock
is transferred, (iii) WTT merges with any other entity, or (iv)
management or control of WTT is otherwise transferred to any third
party, and such change(s) in control is to a competitor of WTP and was
not the result of an initial public offering, then WTP may terminate
this Agreement without liability to WTT by giving WTT one hundred and
eighty (180) days written notice. Such termination may be given at any
time within two months following notification to WTP that any such
event has occurred.
3
<PAGE> 4
Termination for Convenience. At any time during the term of this
Agreement WTT may terminate this Agreement for its own convenience, provided
written notice of such termination has been delivered at least one hundred and
eighty (180) days prior to the effective date of such termination. Except as
expressly set forth above, neither party shall have any right to terminate this
Agreement for convenience.
Partial Termination. WTT may terminate this Agreement as to one or more
of the covered Services without terminating as to the remainder of the Services.
In the event of such partial termination, the monthly payment shall be adjusted
to reflect the deletion of the terminated Services.
Accrued Fees and Payment for Outstanding Obligations.
(a) In the case of any termination, WTP shall be entitled
to payment for all services provided to WTT prior to such termination.
The foregoing provisions of this Section 5 shall in no way limit WTP's
other remedies, whether at law or in equity.
(b) If this Agreement is terminated for convenience by
WTT, partially terminated by WTT, or terminated for cause by WTP, then
WTT shall pay WTP such amounts as necessary to make WTP whole by
covering all outstanding obligations incurred by WTP, which WTP would
not otherwise have incurred but for this Agreement with WTT.
WTP Obligations Upon Termination. In the event of termination of this
Agreement by WTT, WTP will work together with WTT and, as requested by WTT any
third party identified by WTT, to identify the information, materials and
resources WTT and/or such third party is entitled to receive and to develop an
overall plan for transitioning such items to WTT and/or the third party
designated by WTT in accordance with the following provisions (collectively,
"Termination Assistance"). The terms of this Agreement as they relate to
Termination Assistance shall remain in effect until WTP has completed its
Termination Assistance. WTP will provide the Termination Assistance described
below for a period of up to six months per WTT's written request, except as
provided in this Section. WTP's obligation to provide Termination Assistance
will be conditioned upon WTT paying to WTP all outstanding invoices prior to the
commencement of any Termination Assistance and will be conditioned upon WTT
continuing to pay when due any and all fees due hereunder during the Termination
Assistance period. WTT shall pay WTP standard hourly rates and reasonable
expenses for any Termination Assistance provided by WTP. This fee is in addition
to any other payments required under this Agreement. Notwithstanding the
termination or expiration of this Agreement, the terms and conditions of this
Agreement will apply to all services provided by WTP during such period. If WTT
requests Termination Assistance beyond the available capacity of the WTP staff,
such request will be treated as a request for Additional Services pursuant to
Section 1.1 and WTT will pay the agreed upon charge for such Additional
Services. The provisions of this Section will survive the expiration or
termination of this Agreement for any reason.
WTP and WTT will jointly develop a plan (the "Transition Plan") to effect the
orderly transition and migration to WTT or a third party designated by WTT from
WTP of all services then being performed or managed by WTP under this Agreement
(the "Termination Transition"). The Transition Plan will indicate the schedule
on which WTP will turn over responsibility for each service to WTT or such third
party. The Transition Plan will set forth the tasks to be performed by WTP and
WTT, the time for completing such tasks and the criteria for declaring the
transition "completed". The parties and their employees and agents will
cooperate in good faith to execute the plan and each party agrees to perform
those tasks assigned to it in the Transition Plan. WTP will direct the execution
of the Transition Plan. The Transition Plan will include the following tasks and
such other tasks as may be agreed upon by WTP and WTT:
(i) Providing WTT or its designated third party access to
necessary data files and programs, certain
non-proprietary operational procedures and data and
documentation in WTP's possession related to the
Services.
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(ii) Returning all WTT confidential and proprietary
information in WTP's possession, except for one copy
which WTP may retain, subject to its confidentiality
obligations, for internal recordkeeping purposes and
for compliance with applicable professional
standards.
(iii) Returning all WTT software to WTT or its designated
third party with data and documentation. WTP will
deliver to WTT all WTT data in a format applicable
for use by WTT or its designated third party and will
seek to minimize the amount of manual data entry or
re-keying necessary in connection with the transfer
of such data to WTT.
(iv) WTP will provide to WTT or the designated third party
the opportunity to offer employment to any WTP
employees who at the time of the expiration or
termination was spending 75% or more of his/her time
performing services exclusively for WTT. Such
employment offer would provide for employment with
WTT or the designated third party to be effective at
the earlier of (A) the end of the agreed upon
transition period, or (B) the date on which WTP is no
longer responsible under the Transition Plan for any
of the tasks performed by the WTP employee to whom
WTT or the designated third party is making the offer
of employment. With respect to personnel who were
performing services for WTT and other WTP customers
at the time of the expiration or termination, WTT or
its designated third party will have the opportunity
to offer employment to such WTP employees only if WTT
obtains the prior written consent of WTP. For any WTP
employee for whom WTP has given such written consent,
employment with WTT or the designated third party
will be effective at the end of the agreed upon
transition period. WTP will provide appropriate
training for those WTT or third party employees who
will be assuming responsibility following expiration
or termination for training and operation of the
technology used by WTP to provide services to WTT.
(v) WTP will provide WTT or its designated third party
with reasonably detailed specifications for any
hardware which WTT or such third party will require
to perform the services previously performed by WTP
under this Agreement. In addition, WTP will offer to
assign leases (if permitted by the lessor) or to sell
hardware which at the time of the expiration or
termination was dedicated solely to use for WTT. For
any hardware acquired by WTT from WTP, WTP will
provide reasonable assistance to WTT in connection
with the de-installation, shipping (at WTT's
expense), delivery and re-installation of such
hardware. WTP shall sell such hardware to WTT at fair
market value, but in no event shall such price exceed
net book value.
(vi) WTP will assist WTT or its designated third party at
WTT's expense, in acquiring licenses to any third
party software which WTT or such third party will
require to perform the services previously performed
by WTP under this Agreement.
(vii) Subject to entering into a license agreement in form
and substance reasonably satisfactory to WTP and WTT
(and such third party if applicable), WTP will grant
to WTT or its designated third party (as applicable)
a perpetual, nontransferable, nonexclusive license to
use any WTP-owned software which is application
software (but not operating software or utilities)
being used by WTP to provide services to WTT
immediately prior to the termination or expiration of
this Agreement (the "Licensed Programs"), subject to
the following restrictions:
(A) Except to the limited extent required by
natural disaster or similar emergency, the
Licensed Programs will not be operated,
directly or indirectly, by persons other
than bona fide employees of WTT or its
designated third party, or on equipment that
is not leased or owned by WTT or such third
party and is under
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WTT's or such third party's control. Without
limiting the foregoing, the Licensed
Programs will not be utilized or operated by
third-party processors.
(B) Only data of WTT will be processed utilizing
the Licensed Programs.
(C) WTT will not allow the Licensed Programs, or
any of the various components or
modifications thereof, to be disclosed to
third parties, sold, assigned, leased or
commercially exploited or marketed in any
way, with or without charge. Except to the
extent required for normal operation of the
Licensed Programs, WTT will not permit the
Licensed Programs to be copied or
reproduced, in whole or in part.
(D) The Licensed Programs are the valuable
property of WTP and any violation in any
material respect of any provision of the
agreement for the Licensed Programs would
cause WTP irreparable injury for which it
would have no adequate remedy at law, and
WTP will be entitled to preliminary and
other injunctive relief against any such
violation. Such injunctive relief will be in
addition to, and in no way in limitation of,
any and all other remedies or rights that
WTP will have at law or in equity.
Obligation To Minimize Damages. Both parties shall have an obligation
to take such steps as may be reasonably necessary to minimize damages
to the parties on termination, including, but not limited to,
minimizing all contractual obligations that but for the existence of
this Agreement, neither party would have entered into.
6.0. Designees.
6.1 JOC Procedures. The following representatives will comprise a
joint oversight committee (the "JOC") which will meet at least quarterly. The
functions of such committee, among other things, will be to provide product
direction, review and analyze changes in the market, prioritize resources to
effectuate performance of the parties obligations hereunder, review and analyze
the performance of the parties, and to review recommendations and suggestions to
enhance service.
WTT Designee: William J. Billiard
WTP Designee: Timothy J. Severt
If a JOC Member resigns or leaves its employer, the party with a vacancy will
promptly appoint a replacement.
6.2 Management Representatives. Each party hereby appoints the
following individual as its Management Representative for purposes of
this Agreement:
WTT: President or CEO
WTP: W. Thomas Barahm
If a Management Representative resigns or leaves its employer,
the party with a vacancy will promptly appoint a replacement.
7.0 Service Performance.
7.1 Report Contents. WTP will prepare (i) a listing of key service
activities, and (ii) definitions of measurements of qualitative and quantitative
service performance levels for each such key service activity, and will
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submit such listings and definitions to the JOC for approval. Such service
performance levels will be used to measure WTP's and WTT's performance of their
responsibilities under this Agreement.
7.2 Performance Levels. WTP will deliver to the JOC for each
calendar quarter (within thirty (30) days of the end of such quarter),
commencing with the calendar quarter beginning October 1, 1999, service
performance reports ("Service Performance Reports") that identify, for each JOC
approved key service activity, the performance level for that activity. The JOC
will review the parties' performance during the relevant time period (including
but not limited to the information, contained in the Service Performance
Reports), and will provide feedback to both WTT and WTP regarding the
performance of their respective responsibilities under this Agreement. The JOC
will also periodically review the definitions and measurements used in the
Service Performance Reports and revise them as necessary to reflect the most
appropriate measures of WTT and WTP performance. The failure by WTP to meet any
service performance level shall not be considered a breach of this Agreement.
8.0 Dispute Resolution
8.1 Initial Procedures. The parties shall make all reasonable
efforts to resolve all disputes without resorting to litigation. If a dispute
arises between the parties, the JOC Representatives will attempt to reach an
amicable resolution. If either JOC Representative determines that an amicable
resolution cannot be reached, such JOC Representative shall submit such dispute
in writing to the Management Representatives, who shall use their best efforts
to resolve it or to negotiate an appropriate modification or amendment.
8.2 Escalation. Except as otherwise provided in the termination
provisions hereof, neither party shall be permitted to exercise any other
remedies until the later of (i) the date that either Management Representative
concludes in good faith that an amicable resolution of the dispute through
continued negotiation is unlikely, or (ii) sixty (60) days following the date
that both parties have notified a Management Representative pursuant to
Paragraph 8.1. If either party fails to designate a Management Representative at
its own initiative, it shall do so within three business days of a request from
the other party to do so.
8.3 Arbitration. If the parties are unable to reach a resolution
of any matter within the negotiation procedures outlined herein, the parties may
submit such matter to arbitration under the rules of the American Arbitration
Association. If the parties resort to arbitration, no arbitrator shall be
entitled to award punitive damages.
9. Confidentiality.
9.1 Definition. Each party may disclose to the other, orally or in
writing, information that it considers proprietary and confidential, which (i)
relates to its business operations, services and/or technical knowledge, and
(ii) has been designated as such (the "Confidential Information"). Each party
represents that it has the right to disclose all information it makes available
to the other. All Confidential Information communicated to either party
("Recipient ") by the other party ("Discloser ") under this Agreement shall be
(i) received in confidence, (ii) used only for purposes of this Agreement, and
(iii) protected in the same manner as such party protects its own confidential
information of like kind (which shall be at least a reasonable manner). WTP will
at all times comply with applicable professional standards with respect to WTT's
Confidential Information.
9.2 Subpoena. Recipient shall not disclose Disclosee's
Confidential Information to any third party without the prior written consent of
Discloser, except as may be necessary by reason of legal, accounting or
regulatory requirements applicable to such party. If Recipient receives a
subpoena or other valid administrative or judicial demand requiring it to
disclose Disclosee's Confidential Information, Recipient shall provide Discloser
prompt notice of such demand. Unless the demand shall have been timely limited,
quashed or extended, Recipient shall thereafter be entitled to comply with such
demand to the extent permitted by law.
9.3 Exclusions. Confidential Information does not include, and the
parties' confidentiality obligations do not apply to, information that: (i) is
or becomes generally available to the public without breach by Recipient of its
confidentiality obligations, (ii) is received by Recipient from a third party
without restriction against disclosure,
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(iii) was known to Recipient without restriction prior to disclosure, or (iv) is
independently developed by Recipient without use of Disclosee's Confidential
Information.
9.4 Retention. WTP may retain, subject to its confidentiality
obligations, copies of WTTs Confidential Information required for internal
recordkeeping purposes and for compliance with applicable professional
standards.
9.5 Contractors. Notwithstanding the foregoing, WTP shall have the
right to disclose WTT's confidential information to, and/or allow access to such
by, any of WTP's contractors, subcontractors, agents and/or other third parties
supplying products, services or systems in support of WTP's obligations under
this Agreement, provided that WTP shall require such contractors,
subcontractors, agents and/or other third parties to execute an appropriate
nondisclosure agreement.
10. Proprietary Materials.
10.1 Ownership. WTT shall be the exclusive owner of all data (the
"Data") created in connection with this Agreement; provided that WTP may retain
one copy of any Data for its files.
10.2 Retention. Notwithstanding the foregoing, during the term of
this Agreement and for a period of at least six (6) years thereafter or such
longer period as may be required to meet applicable governmental or professional
standards, WTT (i) will maintain and retain copies of all Data, and (ii) will
afford WTP and its representatives access to the Data whenever it may reasonably
request.
10.3 Auditor Access. Upon WTT' s written request, WTP shall provide
WTT's external auditors with access to WTT Data in WTP's possession as is
necessary for WTT' s external auditor to conduct its audit; provided that the
external auditor may not use or disclose any of WTP's proprietary methodologies
which may be disclosed in the course of providing such access. WTP shall adhere
to WTT' s written internal procedures and guidelines relating to the disclosure
of WTT's data to such external auditors. If requested by WTT as Additional
Services, WTP shall provide to such external auditors any assistance that they
might reasonably require in connection with such audits. Subject to WTT approval
and as part of the Additional Services to be separately agreed to, WTP shall
make all reasonable changes requested by, and take any other reasonable action
necessitated by, any such audit or examination. Access by any third party to
WTP's tools, procedures or methodologies will be subject to the requirements of
WTP's standard policies regarding granting access to its confidential
information.
10.4 Publications. Notwithstanding anything contained herein to the
contrary, if WTT intends to publish or otherwise reproduce any of WTP's work
product or to make reference to WTP in any document that contains other
information, WTT agrees to (i) provide WTP with a draft of the document to
review, and (ii) obtain WTP's written approval for inclusion of WTP's name or
work product in such document before the document is printed and distributed.
11. Representations, Warranties and Disclaimers.
11.1 Capacity, Authorization and Effect of Agreement. Each party
hereby represents and warrants to the other that:
a) Such party has all requisite power and authority to
execute this Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement and the transactions contemplated
hereby have been duly authorized and approved by such party, and this Agreement
is a valid and binding agreement of such party enforceable in accordance with
its terms;
b) The execution and delivery of this Agreement by such
party, and the consummation by such party of the transactions contemplated
herein, will not breach or violate the organizational documents or any material
contract, agreement, instrument, judgment, law or license which is applicable to
such party, or to which such party is bound; and
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c) No consent, approval or authorization of, or notice
to, any governmental or regulatory authority or agency is required to be
obtained by such party in connection with its execution, delivery and
performance of this Agreement.
11.2 Accuracy of Information. WTT warrants that all information
(whether written or oral) and materials given or made available by WTT to WTP
will be current, complete and accurate and shall not omit to state any material
fact. WTT warrants that it will update such information on a prompt and
continuous basis. WTP's ability to perform acceptably under this Agreement is
expressly conditioned and contingent upon the foregoing warranty. WTP warrants
that it shall use best efforts to meet or exceed the service performance levels
set under this Agreement, including, but not limited to, accuracy and timeliness
of information.
11.3 Third-Party Consents. WTT warrants that it has obtained all
third-party consents and security clearances that are needed to enable WTP to
have access (on-site and remote) to all third-party products and assets to be
utilized by WTP in providing the Services, including, without limitation, all
consents needed for WTP to access and use any applicable WTT systems, hardware
and software.
11.4 Year 2000. WTT acknowledges that the programming assumptions
made in the development of either (i) the computer hardware, software or other
products owned, leased or otherwise used by WTT (the "WTT System") and/or (ii)
the computer hardware, software or other products owned, licensed or otherwise
used by any third party whose systems in any way interact with, exchange data
with or are interdependent with any WTT System (the "Third Party Systems"), may
prevent certain existing and future system functions in either the WTT System or
Third Party Systems from performing as originally intended with respect to data,
calculations and other processing relating to dates of January 1, 2000 and
beyond (collectively, the "Year 2000 Problems "). WTT acknowledges that WTP
shall have no obligation under this Agreement to correct any Year 2000 Problems,
nor does WTP have any obligation to provide any type of Year 2000 advice or
services (whether review, analysis, planning, implementation, remediation,
project management or any other type of Year 2000 advice or services). To the
extent WTT wishes to engage WTP to perform any such services, they must be
mutually agreed to in a separately signed Year 2000 consulting services
agreement or amendment between WTT and WTP. WTT AGREES THAT WTP HAS NO
RESPONSIBILITY FOR ANY OF THE FOLLOWING WHICH RESULT FROM ANY YEAR 2000 PROBLEM:
(I) ANY INACCURACY IN THE PERFORMANCE OF THE SERVICES OR ADDITIONAL SERVICES;
(II) ANY DELAY IN THE PERFORMANCE OF THE SERVICES OR ADDITIONAL SERVICES; OR
(III) ANY INABILITY TO PERFORM THE SERVICES OR ADDITIONAL SERVICES.
11.5 WTP represents that it has a backup plan in place consistent
with industry standards to recover all data and information necessary for the
performance of the Services hereunder in the event of a failure of WTP's
computer systems and/or functionality in such a manner as to adversely impact
WTP's standard operating procedures.
11.6 WTT shall not resale the Services or Additional Services
provided hereunder to any third party without the prior written consent of WTP.
11.7 DISCLAIMERS. THE WARRANTIES SET FORTH IN THIS SECTION ARE THE
PARTIES' ONLY WARRANTIES CONCERNING THE SERVICES, ARE MADE EXPRESSLY IN LIEU OF
ALL OTHER WARRANTIES AND REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR
OTHERWISE, AND ARE SUBJECT TO THE LIMITATIONS ON LIABILITY SET FORTH HEREIN.
12. Indemnification.
12.1 Indemnification by WTP. WTP shall indemnify and hold WTT, its
directors, officers, employees and affiliates harmless against, and will
reimburse WTT for, any payment, loss, cost or expense (including reasonable
attorneys' fees) incurred by WTT from any third-party claim or suit asserted
against WTT at any time after the Effective Date in respect of:
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a) the death or bodily injury of any person or damage to
real and/or tangible personal property arising pursuant to the performance of
WTP's obligations under this Agreement to the extent such death, injury or
damage is proximately caused by the negligence or willful misconduct of WTP or
its employees; and
b) the infringement of the intellectual property or
contractual rights of any third party resulting from WTT's use of work products
created by WTP under this Agreement. Notwithstanding the foregoing, WTP will not
indemnify WTT if the claim of infringement is caused by (1) WTT's misuse or
modification of WTP's work products; (2) WTT's failure to use corrections or
enhancements made available by WTP; (3) WTT's use of WTP's work products in
combination with any product or information not owned or developed by WTP; (4)
WTT's distribution, marketing or use for the benefit of third parties of WTP's
work products; or (5) information or materials provided by WTT or any third
party.
12.2 Indemnification by WTT. WTT shall indemnify and hold WTP its
partners, employees and affiliates harmless against, and will reimburse WTP for,
any payment, loss, cost or expense (including reasonable attorneys, fees)
incurred by WTP frorn any third-party claim or suit asserted against WTP at any
time after the Effective Date in respect of:
a) the death or bodily injury of any person or damage to
real and/or tangible personal property at WTT's facilities or arising pursuant
to the performance of WTT's obligations under this Agreernent, to the extent
such death, injury or damage is proximately caused by the negligence or willful
misconduct of WTT, its employees, or agents;
b) the infringement by WTP of the intellectual property
and contractual rights of any person or entity resulting from the use of any of
WTTs information, data or software or third-party software in the performance of
the Services or any Additional Services. Notwithstanding the foregoing, WTT will
not indemnify WTP if the claim of infringement is caused by (1) WTT's failure to
use corrections or enhancements made available by WTT; (2) WTT's use of WTT's
materials and information in combination with any product or information not
owned, developed or provided by WTT; (3) WTT's distribution, marketing or use
for the benefit of third parties of such materials and information, or (4)
information or materials provided by WTP;
c) any claim by any third party relating to the conduct
of WTTs functions and operations occurring prior to the Effective Date;
d) any claim by any of WTT's employees or former
employees;
e) the failure of WTT to obtain any consent relating to
WTP's use of any third-party products in connection with this Agreement;
f) any claim arising out of or relating to any Year 2000
Problem;
g) any claim or suit attributable to knowing
misrepresentations by WTT management; and
h) any claim by any third party (including, without
limitation, any claim by any governmental authority) arising out of or relating
to WTT's Services or any Additional Services or the use by WTT of any
deliverable item unless such claims are finally determined to have resulted
solely from the gross negligence or willful misconduct of WTP or its employees.
12.3 Conditions of Indemnification. To receive the foregoing
indemnities, the Party seeking indemnification must promptly notify the other in
writing of a claim or suit and provide reasonable cooperation (at the
indemnifying party's expense) and full authority to defend or settle the claim
or suit Neither party shall have any obligation to indemnify the other under any
settlement made without its written consent.
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13. Remedies.
13.1 Limitation Period. Neither party may assert against the other
any claim in connection with this Agreement unless the asserting party has given
the other party written notice of the claim within one (1) year after the
asserting party first know or should have known of the facts giving rise to such
claim.
13.2 Release. Because of the importance of management's
representations to WTP with respect to WTT's ability to perform its Services and
Additional Services, WTT agrees to release WTP and its personnel from any
liability and costs relating to the Services and/or Additional Services
hereunder which liability and costs are attributable to any misrepresentation
made by WTT management.
14. Miscellaneous.
14.1 Binding Nature and Assignment; Subcontract. This Agreement
shall be binding on and inure to the benefit of the parties and their respective
successors and assigns. Neither party may assign any of its rights or
obligations under this Agreement without the prior written consent of the other,
which shall not be unreasonably withheld.
14.2 Notices. Notices under this Agreement shall be deemed given
when delivered by hand, on the fifth business day after such notice is deposited
in the United States mail, registered or certified, return receipt requested,
postage prepaid, or sent via facsimile and sent to the following address:
WTT: WorldTravel Technologies, L.L.C. WTP: WorldTravel Partners I, L.L.C.
6 W. Druid Hills Road 1055 Lenox Park Boulevard
Atlanta, GA 30329 Atlanta, GA 30319
Attention: Ralph Manaker Attention: Timothy J. Severt
General Counsel
Either party may change its address by giving the other written notice of the
new address.
14.3 Relationship of Parties. WTP is acting as an independent
contractor in providing its services. WTP Personnel shall remain WTP's employees
for all purposes including but not limited to determining responsibility for all
payroll-related obligations. WTP shall at all times be responsible for
supervising, directing and coordinating the professional responsibilities and
duties of all WTP Personnel in respect of their performance of all services
under this Agreement. WTP Personnel are not intended to be "leased employees" as
that term is defined under the Internal Revenue Code. Except as otherwise
expressly provided in this Agreement, WTP does not undertake to perform any
obligations of WTT whether regulatory or contractual or to assume any
responsibility for the management of WTT's business.
14.4 Headings. The section headings used herein are for convenience
only and shall not affect the interpretation hereof.
14.5 Force Majeure. Neither party shall be liable for any delays or
failures in performance due to circumstances beyond its control, including
failures of computers, computer related equipment, hardware or software.
14.6 Severability. If any provision of this Agreement is found to
be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
14.7 Waiver. No delay or omission by either party to exercise any
right or power under this Agreement or pursuant to applicable law shall impair
such right or power or be construed as a waiver thereof. A waiver by any party
of any covenant or breach shall not be construed to be a waiver of any other
covenant or succeeding breach.
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14.8 Publicity. All media releases, public announcements and public
disclosures by either party relating to this Agreement, including, without
limitation, promotional or marketing material, but not including any disclosure
required by legal, accounting or regulatory requirements, shall be approved by
the parties prior to such release.
14.9 Entire Agreement. This Agreement constitutes the entire
agreement between the parties regarding the Services and supersedes all prior
agreements and understandings. No amendment, modification, waiver or discharge
of this Agreement shall be valid unless in writing and signed by authorized
representatives of both parties.
14.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia.
14.11 WTP-Developed Software. Any software developed by WTP in
providing Services or Additional Services is outside the scope of this Agreement
and therefore, absent written agreement to the contrary, will be the property of
WTP.
14.12 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one Agreement.
14.13 Third-Party Claims. This Agreement has been entered into for
the sole benefit of WTT and WTP, and in no event shall any third-party
beneficiaries be created thereby.
14.14 Survival. The terms of Sections 4 (Payments), 5 (Term and
Termination) 8 (Dispute Resolution), 9 (Confidentiality), 10 (Proprietary
Materials), 11 (Representations, Warranties, and Disclaimers) 12
(Indemnification) 13 (Remedies) and 14 (Miscellaneous) of this Agreement shall
survive the termination of this Agreement.
(SIGNATURES ON FOLLOWING PAGE)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
WorldTravel Partners I, L.L.C. WorldTravel Technologies, LLC
By: /s/ Danny Hood By: /s/ Ralph Manaker
--------------------------- ---------------------------
Title: President Title: President
------------------------ -------------------------
Danny Hood Ralph Manaker
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EXHIBIT A: SCOPE ADDENDUM
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EXHIBIT B: CHANGE ORDER REQUEST ADDENDUM
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EXHIBIT C: FEES
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EXHIBIT 10.7
TRX, INC.
2000 STOCK INCENTIVE PLAN
<PAGE> 2
TRX, INC.
2000 STOCK INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1 General Purpose. The purpose of this Plan is to further the growth
and development of the Company by encouraging employees and nonemployee
Directors to obtain a proprietary interest in the Company by owning its stock.
The Company intends that the Plan will provide such persons with an added
incentive to continue in the employ of the Company and will stimulate their
efforts in promoting the growth, efficiency and profitability of the Company.
The Company also intends that the Plan will afford the Company a means of
attracting to its service persons of outstanding quality.
1.2 Intended Tax Effects of Stock Rights. It is intended that part of
the Plan qualify as an ISO (as hereinafter defined) plan and that any option
granted in accordance with such portion of the Plan qualify as an ISO (as
hereinafter defined), all within the meaning of Code ss.422. The tax effects of
any NQSO granted hereunder should be determined under Code ss.83.
ARTICLE 2
DEFINITIONS
The following words and phrases as used in this Plan shall have the
meanings set forth in this Article unless a different meaning is clearly
required by the context:
2.1 1933 Act shall mean the Securities Act of 1933, as amended.
2.2 1934 Act shall mean the Securities Exchange Act of 1934, as
amended.
2.3 Board shall mean the Board of Directors of the Company.
2.4 Cause shall mean any act by an individual of fraud or dishonesty
(whether or not in connection with the Company's business), competing with the
business of the Company either directly or indirectly, the breach of any
provision of any employment contract with the Company, failure to comply with
the decisions of the Company, failure to discharge a duty of loyalty to the
Company, or any other matter constituting "good cause" under the laws of the
State of Georgia.
2.5 Change of Control shall mean the occurrence of any one of the
following events:
<PAGE> 3
(a) Acquisition By Person of Substantial Percentage. The
acquisition by a Person (including "affiliates" and "associates" of
such Person, but excluding the Company, any "parent" or "subsidiary" of
the Company, or any employee benefit plan of the Company or of any
"parent" or "subsidiary" of the Company) of a sufficient number of
shares of the Common Stock, or securities convertible into the Common
Stock, and whether through direct acquisition of shares or by merger,
consolidation, share exchange, reclassification of securities or
recapitalization of or involving the Company or any "parent" or
"subsidiary" of the Company, to constitute the Person the actual or
beneficial owner of 50 percent or more of the Common Stock;
(b) Disposition of Assets. Any sale, lease, transfer,
exchange, mortgage, pledge or other disposition, in one transaction or
a series of transactions, of all or substantially all of the assets of
the Company to a Person described in subsection (a) above; or
(c) Substantial Change of Board Members. During any
consecutive twenty-four (24) month period, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election of each
director who was not a director at the beginning of such period has
been approved in advance by a majority of the directors in office at
the beginning of the 24-month period.
For purposes of this Section, the terms "affiliate," "associate," "parent" and
"subsidiary" shall have the respective meanings ascribed to such terms in Rule
12b-2 under Section 12 of the 1934 Act.
2.6 Code shall mean the Internal Revenue Code of 1986, as amended.
2.7 Committee shall mean the committee appointed by the Board to
administer and interpret the Plan in accordance with Article 3 below.
2.8 Common Stock shall mean the common stock of the Company.
2.9 Company shall mean TRX, Inc. and its successors.
2.10 Director shall mean any individual who is serving as a member of
the Board of Directors of the Company.
2.11 Disability shall mean, with respect to an individual, the total
and permanent disability of such individual, as determined by the Company's
long-term disability insurance carrier, so that such individual is eligible to
receive benefits under the Company's long-term disability insurance plan, or if
no such plan is applicable, an individual's inability (with or without
accommodation) to engage in the essential functions of his or her duties due to
a medically-determinable physical or mental impairment, illness or injury, which
can be expected to result in death or to be of long-continued and indefinite
duration.
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2.12 Effective Date shall mean January 1, 2000, subject to shareholder
approval.
2.13 Fair Market Value of the Common Stock as of a date of
determination shall mean the following:
(a) Stock Listed and Shares Traded. If the Common Stock is
listed and traded on a national securities exchange (as such term is
defined by the 1934 Act) or on the NASDAQ National Market System on the
date of determination, the Fair Market Value per share shall be the
closing price of a share of the Common Stock on the national securities
exchange or National Market System on the business day immediately
preceding the date of determination. If the Common Stock is traded in
the over-the-counter market, the Fair Market Value per share shall be
the average of the closing bid and asked prices on the business day
immediately preceding the date of determination.
(b) Stock Listed But No Shares Traded. If the Common Stock is
listed on a national securities exchange or on the National Market
System but no shares of the Common Stock are traded on the date of
determination but there were shares traded on dates within a reasonable
period before the date of determination, the Fair Market Value shall be
the closing price of the Common Stock on the most recent date before
the date of determination. If the Common Stock is regularly traded in
the over-the-counter market but no shares of the Common Stock are
traded on the date of determination (or if records of such trades are
unavailable or burdensome to obtain) but there were shares traded on
dates within a reasonable period before the date of determination, the
Fair Market Value shall be the average of the closing bid and asked
prices of the Common Stock on the most recent date before the date of
determination.
(c) Stock Not Listed. If the Common Stock is not listed on a
national securities exchange or on the National Market System and is
not regularly traded in the over-the-counter market, then the Committee
shall determine the Fair Market Value of the Common Stock from all
relevant available facts, which may include any recent sales and
purchases of such Common Stock to the extent they are representative.
The Committee's determination of Fair Market Value, which shall be made
pursuant to the foregoing provisions, shall be final and binding for all
purposes of this Plan.
2.14 ISO shall mean an incentive stock option within the meaning of
Code ss.422(b).
2.15 NQSO shall mean a nonqualified option to which Code ss.421
(relating generally to certain ISO and other options) does not apply.
2.16 Option shall mean ISO's and NQSO's, as applicable, granted to
individuals pursuant to the terms and provisions of this Plan.
2.17 Option Agreement shall mean a written agreement, executed and
dated by the Company and an Optionee, evidencing an Option granted under the
terms and provisions of this
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Plan, setting forth the terms and conditions of such Option, and specifying the
name of the Optionee and the number of shares of stock subject to such Option.
2.18 Option Price shall mean the purchase price of the shares of Common
Stock underlying an Option.
2.19 Optionee shall mean an individual who is granted an Option
pursuant to the terms and provisions of this Plan.
2.20 Person shall mean any individual, organization, corporation,
partnership or other entity.
2.21 Plan shall mean this TRX, Inc. 2000 Stock Incentive Plan.
ARTICLE 3
ADMINISTRATION
3.1 General Administration. The Plan shall be administered and
interpreted by the Committee. Subject to the express provisions of the Plan, the
Committee shall have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the terms and
provisions of the Option Agreements by which Options shall be evidenced (which
shall not be inconsistent with the terms of the Plan), and to make all other
determinations necessary or advisable for the administration of the Plan, all of
which determinations shall be final, binding and conclusive.
3.2 Appointment. The Board shall appoint the Committee from among its
nonemployee members to serve at the pleasure of the Board. The Board from time
to time may remove members from, or add members to, the Committee and shall fill
all vacancies thereon. The Committee at all times shall be composed of two or
more directors who shall meet the following requirements:
(a) Disinterested Administration Rule. During the period any
director is serving on the Committee and during the 1-year period
immediately preceding the commencement of such service, he shall not be
or have been granted or awarded any Option or other equity securities
of the Company under the Plan (or any other discretionary stock plan of
the Company or any Company affiliate as defined by Rule 144(a)(1) of
the 1933 Act). Notwithstanding the preceding sentence, a member of the
Committee may participate during such period in (A) a formula plan, (B)
an ongoing securities acquisition program with broad-based employee
participation, and/or (C) a program to elect to receive all or part of
his annual retainer in equity securities of the Company, all as defined
and limited by Rule 16b-3 promulgated under Section 16 of the 1934 Act.
The requirements of this subsection are intended to comply with the
"disinterested administration rule" of Rule 16b-3 under Section 16 of
the 1934 Act or any successor rule or regulation, and shall be
interpreted and construed in a manner which assures compliance with
said Rule. To the extent said Rule 16b-3 is modified to reduce
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or increase the restrictions on who may serve on the Committee, the
Plan shall be deemed modified in a similar manner.
(b) Outside Director Rule. No director serving on the
Committee may be a current employee of the Company or a former employee
of the Company (or any corporation affiliated with the Company under
Codess.1504) receiving compensation for prior services (other than
benefits under a tax-qualified retirement plan) during each taxable
year during which the director serves on the Committee. Furthermore, no
director serving on the Committee shall be or have ever been an officer
of the Company (or any Codess.1504 affiliated corporation), or shall be
receiving remuneration (directly or indirectly) from such a corporation
in any capacity other than as a director. The requirements of this
subsection are intended to comply with the "outside director"
requirements of Treas. Reg.ss.1.162-27(e)(3) or any successor
regulation, and shall be interpreted and construed in a manner which
assures compliance with the "outside" director requirement of
Codess.162(m)(4)(C)(i).
3.3 Organization. The Committee may select one of its members as its
chairman and shall hold its meetings at such times and at such places as it
shall deem advisable. A majority of the Committee shall constitute a quorum, and
such majority shall determine its actions. The Committee shall keep minutes of
its proceedings and shall report the same to the Board at the meeting next
succeeding.
3.4 Delegation by Committee. Unless prohibited by applicable law or the
rules of an applicable stock exchange, the Committee may allocate all or some of
its responsibilities and powers to any one or more of its members. The Committee
may revoke any such allocation or delegation at any time. The Committee
delegates the authority to grant Options of up to 10,000 shares each to
nonofficer employees to the Company's Corporate Chief Executive Officer, which
grants shall be subject to approval by the Committee at its next following
meeting. The Committee delegates to the Company's Corporate Secretary the
authority to document any and all grants and awards made by the Committee under
the Plan.
3.5 Indemnification. In addition to such other rights of
indemnification as they have as directors or as members of the Committee, the
members of the Committee, to the extent permitted by applicable law, shall be
indemnified by the Company against reasonable expenses (including, without
limitation, attorneys' fees) actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any
appeal, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Options
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved to the extent required by and in the
manner provided by the articles or certificate of incorporation or the bylaws of
the Company relating to indemnification of directors) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member or members did not act in good faith and
in a manner he or they reasonably believed to be in or not opposed to the best
interest of the Company.
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ARTICLE 4
STOCK
The stock subject to the Options and other provisions of the Plan shall
be authorized but unissued or reacquired shares of Common Stock. Subject to
readjustment in accordance with the provisions of Article 7, the total number of
shares of Common Stock which may be granted to, or for which Options may be
granted to, persons participating in the Plan shall not exceed in the aggregate
1,300,000 shares of Common Stock. Notwithstanding the foregoing, shares of
Common Stock allocable to the unexercised portion of any expired or terminated
Option again may become subject to Options under the Plan.
ARTICLE 5
ELIGIBILITY TO RECEIVE AND GRANT OF OPTIONS
5.1 Individuals Eligible for Grants of Options. The individuals
eligible to receive Options hereunder shall be (i) employees of the Company who
are in "good standing" (as defined below), including such employees who are also
members of the Board of the Company, (ii) any nonemployee Directors of the
Company, (iii) any key management employees of companies related to the Company
(even if those companies are not within the same controlled group of
corporations as the Company), and (iv) any consultants and/or advisors who are
designated by the Committee to receive Options under the Plan; provided,
however, that only employees of the Company and its "parent" or "subsidiary"
corporations within the meaning of subsections (e) and (f) of Code ss.424 shall
be eligible to receive ISO's. For purposes of this provision, an employee is in
"good standing" if he has an executed employment contract with the Company in
force and/or he has a Restrictive Covenant Agreement with the Company in force.
5.2 Grants of Options. Subject to the provisions of the Plan, the
Committee shall have the authority and sole discretion to determine and
designate, from time to time, those individuals (from among the individuals
eligible for a grant of Options under the Plan pursuant to Section 5.1 above) to
whom Options will actually be granted, the Option Price of the shares covered by
any Options granted, the manner in and conditions under which Options are
exercisable (including, without limitation, any limitations or restrictions
thereon), and the time or times at which Options shall be granted. In making
such determinations, the Committee may take into account the nature of the
services rendered by the respective employees to whom Options may be granted,
their present and potential contributions to the Company's success and such
other factors as the Committee, in its sole discretion, shall deem relevant. In
its authorization of the granting of an Option hereunder, the Committee shall
specify the name of the Optionee, the number of shares of stock subject to such
Option and whether such Option is an ISO or a NQSO. The Committee may grant, at
any time, new Options to an Optionee who previously has received Options,
whether such Options include prior Options that still are outstanding,
previously have been exercised in whole or in part, have expired or are canceled
in connection with the issuance of new Options. No individual shall have any
claim or right to be granted Options under the Plan unless such claim or right
has been expressly provided in a contract executed by the Company.
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5.3 Limitation on Exercisability of ISO's. Notwithstanding anything
herein to the contrary, the aggregate Fair Market Value of ISO's which are
granted to any employee under the Plan or any other stock option plan adopted by
the Company that are first exercisable in any one calendar year shall not exceed
$100,000. The Committee shall interpret and administer the limitations set forth
in this Section in accordance with Code ss.422(d).
5.4 Restriction on Grant of Stock Options. No more than 500,000 shares
of Common Stock may be made subject to Options granted during a calendar year to
any one individual.
ARTICLE 6
TERMS AND CONDITIONS OF OPTIONS
Options granted hereunder and Option Agreements shall comply with and
be subject to the following terms and conditions:
6.1 Requirement of Option Agreement. Upon the grant of an Option
hereunder, the Committee shall prepare (or cause to be prepared) an Option
Agreement. The Committee shall present such Option Agreement to the Optionee.
Upon execution of such Option Agreement by the Optionee, such Option shall be
deemed to have been granted effective as of the date of grant. The failure of
the Optionee to execute the Option Agreement within 30 days after the date of
the receipt of same shall render the Option Agreement and the underlying Option
null and void ab initio.
6.2 Optionee and Number of Shares. Each Option Agreement shall state
the name of the Optionee and the total number of shares of the Common Stock to
which it pertains, the Option Price, and the date as of which the Option was
granted under this Plan.
6.3 Exercisability. Unless otherwise specified by the Committee in the
Option Agreement, an Option shall first become exercisable with respect to such
portions of the shares subject to such Option as are specified in the schedule
set forth hereinbelow:
(a) Commencing as of the first anniversary of the date the
Option is granted, the Optionee shall have the right to exercise the
Option with respect to, and to thereby purchase, 20% of the shares
subject to such Option. Prior to said date, the Option shall be
unexercisable in its entirety.
(b) Commencing as of the second anniversary of the date the
Option is granted, the Optionee shall have the right to exercise the
Option with respect to, and to thereby purchase, an additional 20% of
the shares subject to the Option.
(c) Commencing as of the third anniversary of the date the
Option is granted, the Optionee shall have the right to exercise the
Option with respect to, and to thereby purchase, an additional 20% of
the shares subject to the Option.
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(d) Commencing as of the fourth anniversary of the date the
Option is granted, the Optionee shall have the right to exercise the
Option with respect to, and to thereby purchase, an additional 20% of
the shares subject to the Option.
(e) Commencing as of the fifth anniversary of the date the
Option is granted, the Optionee shall have the right to exercise the
Option with respect to, and to thereby purchase, the remainder of the
shares subject to such Option.
(f) Notwithstanding subsections (a) through (e) above, any
Options previously granted to an Optionee shall become immediately
exercisable for 100% of the number of shares subject to the Options
upon the Optionee's becoming Disabled or upon his death or upon a
Change in Control of the Company.
Other than as provided above, if an Optionee ceases to be an employee of the
Company or a company with ownership related to the Company, his rights with
regard to all then unexercisable Options shall cease immediately.
6.4 Option Price. The Option Price of the shares of Common Stock
underlying each Option shall be the Fair Market Value of the Common Stock on the
date the Option is granted, unless otherwise determined by the Committee;
provided, in no event shall the Option Price of any ISO be less than 100% (110%
in the case of ISO's of Optionees who own more than ten percent of the voting
power of all classes of stock of either the Company or any "parent" or
"subsidiary" corporation of the Company (within the meaning of subsections (e)
and (f) of Code ss.424)) of the Fair Market Value of the Common Stock on the
date the Option is granted. Upon execution of an Option Agreement by both the
Company and Optionee, the date as of which the Committee granted the Option as
specified in the Option Agreement shall be considered the date on which such
Option is granted.
6.5 Terms of Options. Subject to the provisions of Section 6.9, terms
of Options granted under the Plan shall commence on the date of grant and shall
expire on such date as the Committee may determine for each Option; provided, in
no event shall any Option be exercisable after ten years (five years in the case
of ISO's granted to Optionees who own more than ten percent of the voting power
of all classes of stock of either the Company or any parent or subsidiary) from
the date the Option is granted. No Option shall be granted hereunder after ten
years from the earlier of the date the Plan is approved by the shareholders or
the date the Plan is adopted by the Board.
6.6 Minimum Exercise. The exercise of an Option may be for less than
the full number of shares of Common Stock subject to such Option, but such
exercise shall not be made for less than (i) 100 shares or (ii) the total
remaining shares subject to such Option, if such total is less than 100 shares.
Subject to the other restrictions on exercise set forth herein, the unexercised
portion of an Option may be exercised at a later date by the Optionee.
6.7 Method of Exercise. All Options granted hereunder shall be
exercised by written notice directed to the Secretary of the Company at its
principal place of business or to such other person as the Committee may direct.
Each notice of exercise shall identify the Option which the
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Optionee is exercising (in whole or in part) and shall be accompanied by
payment of the Option Price for the number of shares specified in such notice
and by any documents required by Section 8.1. The Company shall make delivery of
such shares within a reasonable period of time; provided, if any law or
regulation requires the Company to take any action (including, but not limited
to, the filing of a registration statement under the 1933 Act and causing such
registration statement to become effective) with respect to the shares specified
in such notice before the issuance thereof, then the date of delivery of such
shares shall be extended for the period necessary to take such action. For
Options which are ISO's, written statements shall be furnished to the Optionee
in accordance with Code ss.6039 on or before January 31 of the year following
the year in which the Option was exercised. See Treas. Reg. ss.1.6039-1 and -2,
and 301.6039-1.
6.8 Medium and Time of Payment.
(a) The Option Price shall be payable upon the exercise of the
Option in an amount equal to the number of shares then being purchased
times the per share Option Price. Payment shall be made in cash or by
any other method of payment determined acceptable by the Committee
(including stock tenders and broker-assisted cashless exercises).
(b) In addition to the payment of the purchase price of the
shares then being purchased, an Optionee also shall pay in cash an
amount equal to the amount, if any, which the Company at the time of
exercise is required to withhold under the income tax or Federal
Insurance Contribution Act tax withholding provisions of the Code, of
the income tax laws of the state of the Optionee's residence, and of
any other applicable law.
6.9 Effect of Termination of Employment, Disability or Death. Except as
provided in subsections (a), (b) and (c) below, no Option shall be exercisable
unless the Optionee thereof shall have been an employee of the Company from the
date of the granting of the Option until the date of exercise; provided, the
Committee, in its sole discretion, may waive the application of this Section
with respect to any NQSO's granted hereunder and, instead, may provide a
different expiration date or dates in a NQSO Option Agreement.
(a) Termination of Employment. In the event an Optionee ceases
to be an employee of the Company for any reason other than death or
Disability, any Option or unexercised portion thereof granted to him
shall terminate on and shall not be exercisable after the earliest to
occur of (i) the expiration date of the Option, (ii) thirty days after
termination of employment, or (iii) the date on which the Company gives
notice to such Optionee of termination of employment if employment is
terminated by the Company for Cause. Notwithstanding the foregoing, in
the event that an Optionee's employment terminates for a reason other
than death or Disability at any time after a Change of Control, the
term of all Options of that Optionee shall be extended through the end
of the three-month period immediately following the date of such
termination; provided, this extension shall apply to ISO's only to the
extent it does not cause the term of such ISO's to exceed the maximum
term permitted under Codess.422 or does not cause such ISO's to lose
their status as ISO's. Prior to the earlier of the dates specified in
the preceding
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sentences of this subsection (a), the Option shall be exercisable only
in accordance with its terms and only for the number of shares
exercisable on the date of termination of employment. The question of
whether an authorized leave of absence or absence for military or
government service or for any other reason shall constitute a
termination of employment for purposes of the Plan shall be determined
by the Committee, which determination shall be final and conclusive.
(b) Disability. Upon the termination of an Optionee's
employment due to Disability, any Option or unexercised portion thereof
granted to him which is otherwise exercisable shall terminate on and
shall not be exercisable after the earlier to occur of (i) the
expiration date of such Option, or (ii) the date one (1) year after the
date on which such Optionee ceases to be an employee of the Company due
to Disability. Prior to the earlier of such date, such Option shall be
exercisable only in accordance with its terms and only for the number
of shares exercisable on the date such Optionee's employment ceases due
to Disability.
(c) Death. In the event of the death of the Optionee (i) while
he is an employee of the Company, (ii) within thirty days after the
date on which such Optionee's employment terminated (for a reason other
than Cause) as provided in subsection (a) above, or (iii) within one
(1) year after the date on which such Optionee's employment terminated
due to his Disability as provided in subsection (b), any Option or
unexercised portion thereof granted to him which is otherwise
exercisable may be exercised by the executor or administrator of his
estate at any time prior to the expiration of one year from the date of
death of such Optionee, but in no event later than the date of
expiration of the option period. Such exercise shall be effected
pursuant to the terms of this Section as if such executor or
administrator is the named Optionee.
6.10 Restrictions on Transfer and Exercise of Options. No Option shall
be assignable or transferable by the Optionee except by will or by the laws of
descent and distribution, except that the Committee may approve transfers to one
of the Optionee's immediate family members, a trust (with beneficiaries of only
immediate family members), or a family limited partnership (with general and
limited partners of only immediate family members). An Option shall be
exercisable only by the Optionee; provided, however, that in the event the
Optionee is incapacitated and unable to exercise Options, such Options may be
exercised by such Optionee's legal guardian or other representative whom the
Committee deems appropriate based on applicable facts and circumstances; and
provided further, if the Optionee has assigned or transferred an Option (with
the Committee's consent), that Option may be exercised by the transferee.
6.11 Rights and Obligations as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to shares covered by his Option until date
of the issuance of the shares to him and only after the Option Price of such
shares is fully paid. Unless specified in Article 8, no adjustment will be made
for dividends or other rights for which the record date is prior to the date of
such issuance. Upon exercise of an Option, the Optionee shall be required to
execute a shareholder's agreement with the Company and shall be subject to the
provisions of such agreement pertinent to the Company's rights of first refusal
and buy-back provisions.
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6.12 No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
6.13 Acceleration. The Committee shall at all times have the power to
accelerate the exercisability of Options previously granted under this Plan.
6.14 Designation of Option as ISO or NQSO. Subject to the provisions of
this Article, each Option granted under the Plan shall be designated either as
an ISO or a NQSO. An Option Agreement evidencing both an ISO and a NQSO shall
identify clearly the status and terms of each Option.
6.15 ISO's Converted to NQSO's. In the event any part or all of an
Option granted under the Plan which is intended to be an ISO at any time fails
to satisfy all of the requirements of an ISO, then such ISO shall be split into
an ISO and NQSO so that the portion of the Option, if any, that still qualifies
as an ISO shall remain an ISO and the portion that does not qualify as an ISO
shall become a NQSO. Such split of an Option into an ISO portion and a NQSO
portion shall be evidenced by one or more Option Agreements, as long as each
Option is identified clearly as to its status as an ISO or NQSO.
ARTICLE 7
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
7.1 Recapitalization. In the event that the outstanding shares of the
Common Stock of the Company are hereafter increased or decreased or changed into
or exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, reclassification, stock split,
combination of shares or dividend payable in shares of the Common Stock, the
following rules shall apply:
(a) The Committee shall make an appropriate adjustment in the
number and kind of shares available for the granting of Options under
the Plan.
(b) The Committee also shall make an appropriate adjustment in
the number and kind of shares as to which outstanding Options, or
portions thereof then unexercised, shall be exercisable; any such
adjustment in any outstanding Options shall be made without change in
the total price applicable to the unexercised portion of such Option
and with a corresponding adjustment in the Option Price per share. No
fractional shares shall be issued or optioned in making the foregoing
adjustments, and the number of shares available under the Plan or the
number of shares subject to any outstanding Options shall be the next
lower number of shares, rounding all fractions downward.
(c) Any adjustment to or assumption of ISO's under this
Section shall be made in accordance with Code ss.424(a) and the
regulations promulgated thereunder so as to preserve the status of such
Options as ISO's under Code ss.422.
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(d) If any rights or warrants to subscribe for additional
shares are given pro rata to holders of outstanding shares of the class
or classes of stock then set aside for the Plan, each Optionee shall be
entitled to the same rights or warrants on the same basis as holders of
the outstanding shares with respect to such portion of his Option as is
exercised on or prior to the record date for determining shareholders
entitled to receive or exercise such rights or warrants.
7.2 Reorganization. Subject to any required action by the shareholders,
if the Company shall be a party to any reorganization involving merger,
consolidation, acquisition of the Common Stock or acquisition of the assets of
the Company (other than an initial public offering of the Common Stock) that
does not constitute a Change in Control of the Company, the Committee, in its
discretion, may declare that:
(a) any Option granted but not yet exercised shall pertain to
and apply, with appropriate adjustment as determined by the Committee,
to the securities of the resulting corporation to which a holder of the
number of shares of the Common Stock subject to such Option would have
been entitled;
(b) any or all outstanding Options granted hereunder shall
become immediately nonforfeitable and fully exercisable (to the extent
permitted under federal or state securities laws); and/or
(c) any or all Options granted hereunder shall become
immediately nonforfeitable and fully exercisable (to the extent
permitted under federal or state securities laws) and are to be
terminated after giving at least 30 days' notice to the Optionees to
whom such Options have been granted.
7.3 Dissolution and Liquidation. If the Board adopts a plan of
dissolution and liquidation that is approved by the shareholders of the Company,
the Committee shall give each Optionee written notice of such event at least ten
days prior to its effective date, and the rights of all Optionees shall become
immediately exercisable (to the extent permitted under federal or state
securities laws).
7.4 Limits on Adjustments. Any issuance by the Company 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 price of shares of the Common Stock subject to any Option, except as
specifically provided otherwise in this Article. The grant of Options 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 or to merge, consolidate or dissolve, or to liquidate,
sell or transfer all or any part of its business or assets. All adjustments the
Committee makes under this Article shall be conclusive.
ARTICLE 8
AGREEMENT BY OPTIONEE AND SECURITIES REGISTRATION
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8.1 Agreement. If, in the opinion of counsel to the Company, such
action is necessary or desirable, no Options shall be granted to any Optionee,
and no Option shall be exercisable, unless, at the time of grant or exercise, as
applicable, such Optionee (i) represents and warrants that he will acquire the
Common Stock for investment only and not for purposes of resale or distribution,
and (ii) makes such further representations and warranties as are deemed
necessary or desirable by counsel to the Company with regard to holding and
resale of the Common Stock. The Optionee shall, upon the request of the
Committee, execute and deliver to the Company an agreement or affidavit to such
effect. Should the Committee have reasonable cause to believe that such Optionee
did not execute such agreement or affidavit in good faith, the Company shall not
be bound by the grant of the Option or by the exercise of the Option. All
certificates representing shares of Common Stock issued pursuant to the Plan
shall be marked with the following restrictive legend or similar legend, if such
marking, in the opinion of counsel to the Company, is necessary or desirable:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE. ACCORDINGLY, THESE SHARES MAY NOT BE SOLD, HYPOTHECATED,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND ANY APPLICABLE SECURITIES LAWS OR REGULATIONS OF ANY STATE WITH
RESPECT TO SUCH SHARES, (II) IN ACCORDANCE WITH SECURITIES AND EXCHANGE
COMMISSION RULE 144, OR (III) UPON THE ISSUANCE TO THE CORPORATION OF A
FAVORABLE OPINION OF COUNSEL OR THE SUBMISSION TO THE CORPORATION OF
SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE CORPORATION THAT SUCH
PROPOSED SALE, ASSIGNMENT, ENCUMBRANCE OR OTHER TRANSFER WILL NOT BE IN
VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OR ANY RULES OR REGULATIONS THEREUNDER.
ANY ATTEMPTED TRANSFER OF THIS CERTIFICATE OR THE SHARES REPRESENTED
HEREBY WHICH IS IN VIOLATION OF THE PRECEDING RESTRICTIONS WILL NOT BE
RECOGNIZED BY THE CORPORATION, NOR WILL ANY TRANSFEREE BE RECOGNIZED AS
THE OWNER THEREOF BY THE CORPORATION.
If the Common Stock is (A) held by an Optionee who is not an "affiliate," as
that term is defined in Rule 144 of the 1933 Act, or who ceases to be an
"affiliate," or (B) registered under the 1933 Act and all applicable state
securities laws and regulations as provided in Section 8.2, the Committee, in
its discretion and with the advice of counsel, may dispense with or authorize
the removal of the restrictive legend set forth above or the portion thereof
which is inapplicable.
8.2 Registration. In the event that the Company in its sole discretion
shall deem it necessary or advisable to register, under the 1933 Act or any
state securities laws or regulations, any shares with respect to which Options
have been granted hereunder, then the Company shall take such action at its own
expense before delivery of the shares to an Optionee. In such event, and if the
shares of Common Stock of the Company shall be listed on any national securities
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<PAGE> 15
exchange or on NASDAQ at the time of the exercise of any Option, the Company
shall make prompt application at its own expense for the listing on such stock
exchange or NASDAQ of the shares of Common Stock to be issued.
ARTICLE 9
EFFECTIVE DATE
The Plan shall be effective as of the Effective Date, and no Options
shall be granted hereunder prior to said date. Adoption of the Plan shall be
approved by the shareholders of the Company within twelve (12) months after the
adoption of the Plan by the Board. Shareholder approval shall be made by a
majority of the votes cast at a duly held meeting at which a quorum representing
a majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the Plan, or by the written consent in lieu of a meeting
of the holders of a majority of the outstanding voting stock or such greater
number of shares of voting stock as may be required by the Company's articles or
certificate of incorporation and bylaws and by applicable law. Failure to obtain
such approval shall render the Plan and any Options granted hereunder null and
void ab initio.
ARTICLE 10
AMENDMENT AND TERMINATION
10.1 Amendment and Termination By the Board. Subject to Section 10.2
below, the Board shall have the power at any time to add to, amend, modify or
repeal any of the provisions of the Plan, to suspend the operation of the entire
Plan or any of its provisions for any period or periods or to terminate the Plan
in whole or in part. In the event of any such action, the Committee shall
prepare written procedures which, when approved by the Board, shall govern the
administration of the Plan resulting from such addition, amendment,
modification, repeal, suspension or termination.
10.2 Restrictions on Amendment and Termination. Notwithstanding the
provisions of Section 10.1 above, the following restrictions shall apply to the
Board's authority under Section 10.1 above:
(a) Prohibition Against Adverse Affects on Outstanding
Options. No addition, amendment, modification, repeal, suspension or
termination shall adversely affect, in any way, the rights of the
Optionees who have outstanding Options without the consent of such
Optionees;
(b) Shareholder Approval Required for Certain Modifications.
No modification or amendment of the Plan may be made without the prior
approval of the shareholders of the Company if such modification or
amendment would cause the applicable portions of the Plan to fail to
qualify as an ISO plan pursuant to Code ss.422, such modification or
amendment would materially increase the number of securities which may
be issued under the Plan, or such modification or amendment would
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<PAGE> 16
materially modify the requirements as to eligibility for participation
in the Plan. The preceding sentence shall be interpreted in accordance
with the provisions of paragraph (b)(2) of Rule 16b-3 of the 1934 Act.
Shareholder approval shall be made by a majority of the votes cast at a
duly held meeting at which a quorum representing a majority of all
outstanding voting stock is, either in person or by proxy, present and
voting, or by the written consent in lieu of a meeting of the holders
of a majority of the outstanding voting stock or such greater number of
shares of voting stock as may be required by the Company's articles or
certificate of incorporation and bylaws and by applicable law;
provided, however, that for modifications described in clauses (ii),
(iii) and (iv) above, such shareholder approval, whether by vote or by
written consent in lieu of a meeting, must be solicited substantially
in accordance with the rules and regulations in effect under Section
14(a) of the 1934 Act as required by paragraph (b)(2) of Rule 16b-3 of
the 1934 Act.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Application of Funds. The proceeds received by the Company from
the sale of the Common Stock subject to the Options granted hereunder will be
used for general corporate purposes.
11.2 Notices. All notices or other communications by an Optionee to the
Committee pursuant to or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Committee at the
location, or by the person, designated by the Committee for the receipt thereof.
11.3 Term of Plan. Subject to the terms of Article 10, the Plan shall
terminate upon the later of (i) the complete exercise or lapse of the last
outstanding Stock Right, or (ii) the last date upon which Options may be granted
hereunder.
11.4 Compliance with Rule 16b-3 and Code Section 162(m). This Plan is
intended to be in compliance with the requirements of Rule 16b-3 as promulgated
under Section 16 of the 1934 Act. In addition, this Plan is intended to be in
compliance with the requirements for exemption of grants under Code Section
162(m).
11.5 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Georgia.
11.6 Additional Provisions By Committee. The Option Agreements
authorized under the Plan may contain such other provisions, including, without
limitation, restrictions upon the exercise of an Option, as the Committee shall
deem advisable.
11.7 Plan Document Controls. In the event of any conflict between the
provisions of an Option Agreement and the Plan, the Plan shall control.
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<PAGE> 17
11.8 Gender and Number. Wherever applicable, the masculine pronoun
shall include the feminine pronoun, and the singular shall include the plural.
11.9 Headings. The titles in this Plan are inserted for convenience of
reference; they constitute no part of the Plan and are not to be considered in
the construction hereof.
11.10 Legal References. Any references in this Plan to a provision of
law which is, subsequent to the Effective Date of this Plan, revised, modified,
finalized or redesignated, shall automatically be deemed a reference to such
revised, modified, finalized or redesignated provision of law.
11.11 No Rights to Employment. Nothing contained in the Plan, or any
modification thereof, shall be construed to give any individual any rights to
employment with the Company or any parent or subsidiary corporation of the
Company.
11.12 Unfunded Arrangement. The Plan shall not be funded, and except
for reserving a sufficient number of authorized shares to the extent required by
law to meet the requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any grant under the Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by
its duly authorized officer, as of the 1st day of January, 2000.
TRX, INC.
By:
----------------------------------
Title:
-------------------------------
ADOPTED BY BOARD OF DIRECTORS ON JANUARY 13, 2000
APPROVED BY SHAREHOLDERS AS OF FEBRUARY 4, 2000
16
<PAGE> 1
EXHIBIT 10.12
WORLD TRAVEL PARTNERS, L.P.
OFFICE LEASE
TABLE OF CONTENTS
SECTION PAGE
------- ----
1 LEASED PREMISES ........................................................1
2 TERM ...................................................................1
3 RENTAL .................................................................1
4 OPERATING EXPENSES .....................................................2
5 SECURITY DEPOSIT .......................................................4
6 COMPLETION OF IMPROVEMENTS .............................................5
7 DELAY IN DELIVERY OF POSSESSION ........................................5
8 USE OF LEASED PREMISES .................................................5
9 ACCEPTANCE OF PREMISES .................................................6
10 ALTERATIONS, MECHANICS' LIENS ..........................................6
11 WASTE AND QUIET CONDUCT ................................................6
12 FIRE INSURANCE, HAZARDS ................................................7
13 LIABILITY INSURANCE ....................................................7
14 INDEMNIFICATION BY TENANT ..............................................8
15 WAIVER OF CLAIMS .......................................................9
16 LANDLORD'S REPAIRS .....................................................9
17 TENANT'S REPAIRS ......................................................10
18 SIGNS, LANDSCAPING ....................................................10
19 ENTRY BY LANDLORD .....................................................10
20 SERVICES ..............................................................11
21 ABANDONMENT ...........................................................12
22 DESTRUCTION ...........................................................12
23 ASSIGNMENT AND SUBLETTING .............................................13
24 INSOLVENCY OF TENANT ..................................................13
25 BREACH BY TENANT ......................................................13
<PAGE> 2
26 ATTORNEYS' FEES/COLLECTION CHARGES ...................................14
27 CONDEMNATION .........................................................14
28 NOTICES ..............................................................15
29 WAIVER ...............................................................15
30 EFFECT OF HOLDING OVER ...............................................16
31 SUBORDINATION ........................................................16
32 ESTOPPEL CERTIFICATE .................................................16
33 PARKING ..............................................................16
34 MORTGAGE PROTECTION ..................................................17
35 RULES AND REGULATIONS ................................................17
36 RELOCATION ...........................................................17
MISCELLANEOUS PROVISIONS ................................................17
EXHIBITS
EXHIBIT A FLOOR PLAN
EXHIBIT B SITE PLAN
EXHIBIT C TENANT'S ACCEPTANCE OF PREMISES
EXHIBIT D SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
AGREEMENT
EXHIBIT E RULES AND REGULATIONS
EXHIBIT F JANITORIAL SCHEDULE
EXHIBIT G SECURITY SCHEDULE
EXHIBIT H TERMINATION SCHEDULE
<PAGE> 3
STATE OF GEORGIA
DEKALB COUNTY
This Lease Agreement, made this _____ day of __________, 1995, by and
between, WEEKS REALTY, L.P. hereinafter referred to as "Landlord", and WORLD
TRAVEL PARTNERS, L.P. hereinafter referred to as "Tenant";
WITNESSETH:
LEASED PREMISES
1.01 Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the space hereinafter referred to as the LEASED PREMISES, described
as approximately 12,681 sq. ft. of office space designated as Suite 700 and
shown on Exhibit "A", in the office building located at 6 West Druid Hills,
Atlanta, Georgia (hereinafter referred to as the "Building"). The Property upon
which the Building is located is more particularly described on Exhibit "B"
attached hereto and by this reference made a part hereof (hereinafter referred
to as the "Property").
TERM
2.01 TO HAVE AND TO HOLD said Leased Premises for a term of three (3)
years commencing upon the date of execution hereof and continuing for a period
of three (3) years from the Rent Commencement Date (defined below), upon the
terms, conditions, and covenants contained herein. "Substantial Completion"
shall mean completion of construction of the tenant improvements substantially
in accordance with the approved plans and specifications, and the Landlord's
provision to Tenant of a certificate of occupancy, subject only to normal
punchlist items. See below.
RENTAL
3.01 As rental for the Leased Premises, Tenant agrees to pay to Landlord
the sum of ONE HUNDRED SEVENTY-SEVEN THOUSAND, FIVE HUNDRED THIRTY-FOUR NO/100
Dollars ($177,534.00) per year (hereinafter referred to as "Base Rental"),
payable in monthly installments each in the amount of FOURTEEN THOUSAND SEVEN
HUNDRED NINETY-FOUR 50/100 Dollars ($14,794.50) on or before the first day of
each calendar month beginning on the earlier of Substantial Completion or
October 15, 1995 (the "Rent Commencement Date") and thereafter for the
remainder of the term, together with any other additional rental as hereinafter
set forth. Tenant shall pay interest at a rate of twelve percent (12%) per
annum on all late payments of rent received by Landlord more than ten (10) days
after the date due. If the Lease shall commence on any date other than the
first day of a calendar month, or end on any date, other than the last day of a
calendar month, rent for such month shall be prorated. Tenant has deposited
with Landlord, upon delivery of this Lease Agreement an amount equal to
FOURTEEN THOUSAND SEVEN HUNDRED NINETY-FOUR 50/100 Dollars ($14,794.50) which
is to be applied as first month's rental. In the event landlord delays in
tendering possession of Premises to Tenant, or in the event Landlord* inhibits
or otherwise* delays Tenant in its pursuit of completing such construction,
then in either of said events, the Commencement Date shall move forward one (1)
day for each day of delay attributed to Landlord.
<PAGE> 4
OPERATING EXPENSES
.01 In addition to the Base Rental payable by Tenant in accordance with
Paragraph 3.01 of this Lease, Tenant shall pay monthly to Landlord on the same
due date as the Base Rental the sum (hereinafter referred to as the "Additional
Rent") calculated in accordance with the following:
(a) As used in this Lease, the following definitions shall apply:
(i) "Calendar Year" shall mean any period during the Term of this
Lease commencing on January 1 and ending on the next following
December 31.
(ii) "Base Year" shall mean the Calendar Year 1996.
(iii) "Building" shall mean the Property and the Building and other
structures, improvements, fixtures and appurtenances now or hereafter
placed, constructed or erected thereon.
(iv) "Pro Rata Share" shall equal fourteen and twenty eight one
hundredths percent (14.28%); provided, however, that in the event
that the amount of space leased by Tenant shall increase or decrease
subsequent to the commencement date of the Term, whether pursuant to
an option to expand or otherwise, the Pro Rata Share shall be
appropriately adjusted by Landlord.
(v) "Operating Expenses" shall mean any and all costs, expenses and
disbursements of every kind and character (subject to the limitations
set forth below) which Landlord shall incur, pay or become obligated
to pay in connection with the ownership of any estate or interest in
the Building or the operation, maintenance, repair, replacement and
security of the Building determined in accordance with generally
accepted accounting principles consistently applied, including, but
not limited to, the following:
(A) Wages and salaries of all employees specifically engaged
in the operation, repair, replacement, maintenance, and security
of the Building, including taxes, insurance and benefits
relating thereto.
(B) All supplies and materials used in the operation,
maintenance, repair, replacement, and security of the Building.
(C) Cost of all utilities including gas, water, telephone,
telegraph, power, heating, lighting, air-conditioning and
ventilating the Building.
(D) Cost of all maintenance and service agreements on
equipment, including alarm service, window cleaning and elevator
maintenance.
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<PAGE> 5
(E) Cost of casualty, liability and other insurance applicable
to the Building or Landlord's personal property used in
connection with the operation and management of the Building.
(F) All taxes and assessments and governmental charges,
whether federal, state, county or municipal, and whether they be
by taxing districts or authorities presently taxing or by
others, subsequently created or otherwise, and any other taxes
and assessments imposed upon or attributable to the Building,
its operation or the Base Rental or Additional Rent without
reference to other income of the Landlord.
(G) Cost of repairs, replacements, and general maintenance of
the Building.
(H) Cost of service or maintenance contracts with independent
contractors for the operation, maintenance, repair, replacement,
or security of the Building.
(I) Cost of maintaining accounting books and records for the
Building.
(J) Costs of contractual management fees and other costs
directly related to the on-site management of the Building. The
contractual management fees shall not exceed five and one half
percent (5 1/2%) of gross rental income of the Building.
(K) Cost of janitorial services, trash, garbage, snow and ice
removal; servicing, replacing, equipping and maintenance of all
electrical, security and fire alarms, fire pumps, sprinkler
systems and fire extinguishers and hose cabinets; painting;
window cleaning and landscaping and gardening.
(L) Capital expenditures required by any governmental or
regulatory authority, and capital expenditures for energy
related equipment or fire and safety equipment provided,
however, that the costs will be amortized over the useful life
of the improvements.
Specifically excluded from the definition of the term "Operating Expenses" are
expenses for repairs, replacements and general maintenance to the extent paid
by proceeds of insurance or by Tenant or other third parties and alterations
attributable solely to tenants of the Building other than Tenant; interest,
amortization or other payments on loans to Landlord whether secured or
unsecured; depreciation of the Building; lease payments on capital equipment
(elevators or HVAC); leasing commissions; legal expenses; salaries of officers,
executives, employees and agents not directly involved in the on-site operation
of the Building; and state, federal or local income taxes, excess profits or
franchise taxes or other such taxes
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<PAGE> 6
imposed on or measured by or determined from the gross income of Landlord.
(b) The actual amount of Additional Rent payable shall be an amount
equal to the product obtained by multiplying the Pro Rata Share times the
remainder obtained by subtracting the Operating Expenses for the Base Year from
he Operating Expenses for the Calendar Year in question (provided, however,
in no event shall the amount so determined be less than zero) In the event that
the Building is not fully occupied during the Base Year, the Landlord shall
compute the Operating Expenses for the Base Year as though the Building were
fully occupied.
(c) on or before December 31st of each Calendar Year during the Term,
or as soon thereafter as practicable, Landlord shall give Tenant written notice
of its estimate of the Additional Rent for the next ensuing Calendar Year.
Commencing in the first (1st) month of the ensuing Calendar Year, or as soon
thereafter as Landlord shall invoice Tenant, Tenant shall pay to Landlord
one-twelfth (1/12) of such estimated Additional Rent. If notice of Landlord's
estimate of Additional Rent is not given prior to December 31, during the next
Calendar Year Tenant shall continue to pay the monthly payment based on the
Additional Rent computed for the previous Calendar Year until the month after
such notice is given.
(d) As soon as practicable after the close of each Calendar Year, but
no later than April 1, Landlord shall deliver to Tenant a final statement of
the Additional Rent for the immediately preceding Calendar Year and such
statement shall be final and binding upon Landlord and Tenant. If such
statement shows an amount owing by Tenant that is less than the payments
actually made by the Tenant for the immediately preceding Calendar Year, Tenant
shall be credited for such excess against the next monthly payments of
Additional Rent. If such statement shows an amount owing by the Tenant that is
more than the payments actually made by the Tenant for the immediately
preceding Calendar Year, Tenant shall pay the deficiency to Landlord within ten
(10) days after delivery of the statement.
SECURITY DEPOSIT
5.01 Intentionally omitted.
COMPLETION OF IMPROVEMENTS
6.01 The rental provided in paragraph 3.01 "Rental" above, includes an
allowance ("Allowance") in the amount of $76,086.00 for the construction of
tenant improvements in the Leased Premises on the basis set forth in the plans
and specifications attached, or to be attached, hereto in Exhibit "B". [SEE
MISCELLANEOUS PROVISIONS "W"].
4
<PAGE> 7
DELIVERY OF POSSESSION
7.01 Upon commencement of this Lease, Landlord shall deliver possession
of the Leased Premises to Tenant.
USE OF LEASED PREMISES
8.01 The Leased Premises may be used and occupied only for general
office purposes, including, but not limited to the operation of a commercial
travel agency, ticketing office and related businesses and for no other purpose
or purposes, without Landlord's prior written consent. Tenant shall promptly
comply at its sole expense with all laws, ordinances, orders, and regulations
affecting the Leased Premises and their cleanliness, safety, occupation and
use. Tenant shall not do or permit anything to be done in or about the Leased
Premises that will in any way increase the fire insurance upon the Building.
Tenant will not perform any act or carry on any practices that may injure the
Building or be a nuisance or menace to tenants of adjoining premises. Tenant
shall, at Tenant's sole cost and expense, comply fully with all environmental
laws and regulations, and all other legal requirements, applicable to Tenant's
specific operations at, on or within, or to Tenant's use and occupancy of, the
Leased Premises.
ACCEPTANCE OF LEASED PREMISES
9.01 By entry hereunder, Tenant acknowledges that it has examined the
Leased Premises and accepts the same as being in the condition called for by
this Lease, and as suited for the uses intended by Tenant subject to items set
forth in the Punch List and latent defects. Upon delivery of possession of the
Leased Premises to Tenant, Tenant agrees to execute and deliver to Landlord a
Tenant's Acceptance of Premises, in the form attached hereto as Exhibit "C".
ALTERATIONS, MECHANICS' LIENS
10.01 Alterations may not be made to the Leased Premises without prior
written consent of Landlord, and any alterations of the Leased Premises
excepting movable furniture and trade fixtures shall at Landlord's option
become part of the realty and belong to Landlord.
10.02 Should Tenant desire to alter the Leased Premises and Landlord gives
written consent to such alterations, at Landlord's option, Tenant shall
contract with a contractor approved by Landlord for the construction of such
alterations.
10.03 Notwithstanding anything in paragraph 10.02 above, Tenant may, upon
written consent of Landlord, install trade fixtures, machinery or other trade
equipment in conformance with all applicable laws, statutes, ordinances, rules,
regulations, and the same may be removed upon the termination of this Lease
provided Tenant shall not be in default under any of the terms and conditions
of this Lease, and the Leased Premises are not damaged by such removal. Tenant
shall return the Leased Premises on the termination of this Lease in the same
condition as when rented to Tenant, reasonable wear and tear only excepted.
Tenant
5
<PAGE> 8
shall keep the Leased Premises, the Building and Property in which the Leased
Premises are situated free from any liens arising out of any work performed
for, materials furnished to, or obligations incurred by Tenant. All such work
provided for above, shall be done at such times and in such manner as Landlord
may from time to time designate. Tenant shall give Landlord written notice five
(5) days prior to employing any laborer or contractor to perform work
(excluding, however computer, telecommunications and cable contractors)
resulting in an alteration of the Leased Premises so that Landlord may post a
notice of non-responsibility.
WASTE AND QUIET CONDUCT
11.01 Tenant shall not commit, or suffer any waste upon the Leased
Premises, or any nuisance, or other act or thing which may disturb the quiet
enjoyment of any other tenant in the Building containing the Leased Premises or
any building in the project in which the Leased Premises are located.
11.02 So long as Tenant is not in default in the payment of rent, or
other charges or in the performance of any of the other terms, covenants, or
conditions of the Lease beyond any period given Tenant in the Lease to cure
such default, Tenant shall not be disturbed by Landlord or anyone claiming by,
through or under Landlord in Tenant's possession, enjoyment, use and occupancy
of the Leased Premises during the original or any renewal term of the Lease or
any extension or modification thereof.
FIRE INSURANCE, HAZARDS
12.01 No use shall be made or permitted to be made of the Leased Premises,
nor acts done which might increase the existing rate of insurance upon the
Building or cause the cancellation of any insurance policy covering the
Building, or any part thereof, nor shall Tenant sell, or permit to be kept,
used or sold, in or about the Leased Premises, any article which may be
prohibited by the Standard form of fire insurance policies. Tenant shall, at
its sole cost and expense, comply with any and all requirements pertaining to
the Leased Premises, of any insurance organization or company, necessary for
the maintenance of reasonable fire and public liability insurance, covering
the Leased Premises, Building and appurtenances. Tenant agrees to pay to
Landlord as additional rent, any increase in premiums on policies which may be
carried and for loss of rent caused by fire and the perils normally included in
extended coverage above the rates presently being paid by the Landlord as of
the date hereof that may be caused by Tenant's use or occupancy of the Leased
Premises. In the event that Tenant takes any actions in the future, or conducts
its business in such a way that causes an increase in the fire insurance rate
on the Building, Landlord shall give Tenant notice of such proposed increase,
and Tenant shall have a period of ten (10) days within which to discontinue
such actions or use before Tenant shall be responsible for the payment of such
increase in cost.
12.02 Tenant shall maintain in full force and effect on all of its
fixtures and equipment in the Leased Premises a policy or policies of fire and
extended coverage insurance with standard
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<PAGE> 9
coverage endorsement to the extent of at least eighty percent (80%) of their
insurable value. During the term of this Lease the proceeds from any such policy
or policies of insurance shall be used for the repair or replacement of the
fixtures, and Landlord will sign all documents necessary or proper in connection
with the settlement of any claim or loss by Tenant. Landlord will not carry
insurance on Tenant's possessions. Tenant shall furnish Landlord with a
certificate of such policy within thirty (30) days of the commencement of this
Lease, and whenever required, shall satisfy Landlord that such policy is in full
force and effect.
LIABILITY INSURANCE
13.01 Tenant, at its own expense, shall provide and keep in force with
companies acceptable to Landlord public liability insurance for the benefit of
Landlord and Tenant jointly against liability for bodily injury and property
damage in the amount of not less than One Million Dollars ($1,000,000.00) in
respect to injuries to or death of more than one person in any one occurrence,
in the amount of not less than One Million Dollars ($1,000,000.00) in respect
to injuries to or death of any one person, and in the amount of not less than
Fifty Thousand Dollars ($50,000.00) per occurrence in respect to damage to
property, such limits to be for any greater amounts as may be reasonably
indicated by circumstances from time to time existing. Tenant shall furnish
Landlord with a certificate of such policy (which certificate shall contain the
insurer's waiver of subrogation rights exercisable against the Landlord) within
thirty (30) days of the commencement date of this Lease and whenever required
shall satisfy Landlord that such policy is in full force and effect. Such
policy shall name Landlord as an additional insured and shall be primary and
non-contributing with any insurance carried by Landlord. The policy shall
further provide that it shall not be cancelled or altered without twenty (20)
days prior written notice to Landlord.
INDEMNIFICATION BY TENANT
14.01 Tenant shall indemnify and hold harmless Landlord against and from
any and all claims arising from Tenant's use of the Leased Premises (other than
those arising from negligence of Landlord or its agents or employees), or the
conduct of its business or from any activity, work, or thing done, permitted or
suffered by the Tenant in or about the Leased Premises, and shall further
indemnify and hold harmless Landlord against and from any and all claims
arising from any breach or default in the performance of any obligation on
Tenant's part to be performed under the terms of this Lease, or arising from
any act, neglect, fault or omission of the Tenant, or of its agents or
employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in or about such claim or any action or proceeding brought
relative thereto and in case any action or proceeding be brought against
Landlord by reason of any such claim, Tenant upon notice from Landlord shall
defend the same at Tenant's expense by counsel, chosen by Tenant and who is
reasonably acceptable to Landlord. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons in or about the Leased Premises
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<PAGE> 10
from any cause whatsoever except that which is caused by the failure of
Landlord to observe any of the terms and conditions of this Lease where such
failure has persisted for an unreasonable period of time after written notice
of such failure, and Tenant hereby waives all claims in respect thereof against
Landlord. The obligations of Tenant under this section arising by reason of any
occurrence taking place during the term of this Lease shall survive any
termination of this Lease.
14.02 Landlord shall indemnify and hold harmless Tenant against and from
all claims arising from any breach or default in the performance of any
obligation on Landlord's part to be performed under this Lease, or arising
from any act, neglect, fault or omission of Landlord or of its agents,
employees or contractors and from and against all reasonable costs, reasonable
attorneys' fees, expenses and liabilities actually incurred in or about such
claim or any action or proceeding brought relative thereto and in case any
action or proceeding be brought against Tenant by reason of any such claim,
Landlord upon notice from Tenant shall defend the same at Landlord's expense by
counsel, chosen by Landlord and who is reasonably acceptable to Tenant. The
obligations of Landlord or Tenant under this section arising by reason of any
occurrence taking place during the term of this Lease shall survive any
termination of this Lease.
WAIVER OF CLAIMS
15.01 Tenant, as a material part of the consideration to be rendered to
Landlord, hereby waives all claims against Landlord for damages to goods, wares
and merchandise in, upon or about the Leased Premises and for injury to Tenant,
its agents, employees, invitees, or third persons in or about the Leased
Premises from any cause arising at any time, other than the intentional
misconduct or negligence of Landlord, its agents and employees.
LANDLORD'S REPAIRS
16.01 Tenant agrees that no representations respecting the Leased Premises
or the condition thereof and that no promises to decorate, alter, repair or
improve the Leased Premises, either before or after the execution hereof, have
been made by Landlord or its agents to Tenant, unless the same are contained in
the Work Agreement or Exhibit "B" or elsewhere in this Lease.
16.02 Landlord shall maintain and repair only the common hallways and
corridors, common rest rooms, main lobby area, heating, ventilating and
air-conditioning systems, elevators, building and floor access control systems,
electrical and plumbing systems, driveways and parking areas located on the
Property, if any, the roof, foundation, floors and exterior walls and glass of
the Building. Notwithstanding Landlord's obligation to maintain and repair
under this Paragraph 16, Tenant shall repair and pay for any damage caused by
Tenant, or Tenant's employees, agents, contractors, invitees or licensees, or
caused by Tenant's default hereunder. Tenant shall immediately give Landlord
written notice of any defect or need for repairs known to Tenant, after which
Landlord shall have a reasonable time within which to repair same or cure such
defect. Landlord's
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[MISSING TEXT WILL BE PROVIDED LATER]
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such obligation of Tenant shall survive the expiration or sooner termination of
the Term.
ENTRY BY LANDLORD
19.01 Tenant shall permit Landlord and Landlord's agents to enter the
Leased Premises at all reasonable times for the purpose of inspecting the same
to perform janitorial and cleaning services, or for the purpose of maintaining
the Building, or for the purpose of decorating, making repairs, alterations, or
additions to any portion of the Building, including the erection and
maintenance of such scaffolding, canopies, fences and props as may be required,
or for the purpose of posting notices of non-responsibility for alterations,
additions, or repairs, or for the purpose of showing the Leased Premises to
prospective tenants within six (6) months prior to the expiration of the Lease,
or placing upon the Building any usual or ordinary "for sale" signs, without
any rebate of rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Leased Premises thereby occasioned; and
shall permit Landlord at any time within thirty (30) days prior to the
expiration of this Lease, to place upon the Leased Premises any usual or
ordinary "to let" or "to lease" signs. For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the exterior doors about the Leased Premises. Any entry by Landlord shall be
made upon notice to Tenant and during regular business hours or as otherwise
acceptable to Tenant (other than in an emergency). In an emergency, Landlord
shall have the right to enter the Leased Premises for any proper purpose.
SERVICES
20.01 Subject to the provisions set forth below in this Paragraph 20.01,
Landlord shall furnish the following services to the Leased Premises:
(a) Seasonable heating and air-conditioning between the hours of 8:00 a.m.
and 6:00 p.m. on Mondays through Fridays, inclusive, and on Saturdays
between the hours of 8:00 a.m. and 1:00 p.m., except for those days which
are Holidays as defined on Exhibit "E" hereto. Heating, ventilating and
air conditioning shall be sufficient to provide reasonable comfort for
normal office use in the Leased Premises. Fresh air levels shall be
maintained in accordance with prevailing Class A standards and ASHRAE
62-1989 standards (ventilation for acceptable indoor air quality).
Landlord shall provide adequate thermal environmental comfort and air
velocity limits in accordance with ASHRAE-55. Upon prior notice from
tenant, Landlord shall provide Tenant with heating and air conditioning
services during hours other than those listed above, it being understood
that Tenant shall pay Landlord $18.00 per hour for such service.
(b) General cleaning and janitorial services as shown on the attached
schedule commencing after 5:00 p.m. on Mondays through Fridays, inclusive,
except for Holidays.
(c) Passenger elevator service at all times; provided, however, the
Landlord reserves the right to reduce the
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number of elevators in operation after 6:00 p.m. on Mondays through
Fridays and at all times on Saturdays, Sundays, and Holidays and to impose
such other reasonable elevator security measures as the Landlord deems
appropriate.
(d) Common use restroom facilities and drinking water.
(e) Electricity for lighting and small business machines designed to
operate on 110-120 volt electric power (e.g., ticket printers, facsimile
machines, typewriters, dictating machines, adding machines, calculators,
copiers, postage machines, teletypes, personal computers and any other
small office equipment that is not computer related except personal
computers, and any other equipment typical for Tenant's use provided that
such use is not more than standard office use).
20.02 Tenant will not use any electrical equipment which in Landlord's
opinion will overload the wiring installations or interfere with the reasonable
use thereof by other users in the Building. Tenant will not, without Landlord's
prior written consent in each instance, connect any additional items (e.g.,
electric heaters, vending equipment and auxiliary air-conditioners) to the
Building's electrical system, or make any alteration or addition to the system.
Should Landlord grant such consent, all additional circuits or equipment
required therefor shall be installed by Landlord and the cost of such
installation, equipment and metering device shall be paid by Tenant. The
consumption of electricity for such additional equipment shall be paid monthly
by Tenant to Landlord at the prevailing utility company rates. In the event the
Tenant desires heating, ventilating or air-conditioning services in addition to
those set forth, above, the Landlord shall use its best efforts to make same
available to Tenant at such rates as may be established from time to time by
Landlord.
20.03 Landlord shall not be liable for any damages directly or indirectly
resulting from the installation, use or interruption of use of any equipment in
connection with the furnishing of services referred to in this Lease, and
particularly any interruption in services by any cause beyond the control of
Landlord.
20.04 Landlord reserves the right to stop services of the heating,
elevators, plumbing, air-conditioning, electrical power or other utilities or
services when necessary by reason of war, insurrection, civil commotion, riots,
acts of God or the enemy, governmental action, repairs, improvements,
alterations, strikes, lockouts, picketing, whether legal or illegal, accidents,
actions or inactions of Tenant, its agents, contractors, servants, employees,
sublessees, concessionaires, licensees, invitees, or guests, inability of
Landlord to obtain fuel or supplies or any other cause or causes beyond the
reasonable control of Landlord.
ABANDONMENT
21.01 Intentionally omitted.
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DESTRUCTION
22.01 In the event of (a) a partial destruction of the Leased Premises
or the Building during the lease term which requires repairs to either the
Leased Premises or the Building, or (b) the Leased Premises or the Building
being declared unsafe or unfit for occupancy by any authorized public authority
for any reason other than Tenant's act, use or occupation which declaration
requires repairs to either the Leased Premises or the Building, Landlord shall
forthwith make repairs, provided repairs can be made within sixty (60) days
under the laws and regulations of authorized public authorities, but partial
destruction (including any destruction necessary in order to make repairs
required by any declaration) shall in no way annul or void this Lease, except
that Tenant shall be entitled to a proportionate reduction of rent while such
repairs are being made. The proportionate reduction is to be based upon the
extent to which the making of repairs shall interfere with the business carried
on by Tenant in the Leased Premises. In the event that repairs cannot be made
within sixty (60) days, or repairs cannot be made under current laws and
regulations, this Lease may be terminated at the option of either party. A
total destruction (including any destruction required by any authorized public
authority) of either the Leased Premises or the Building shall terminate this
Lease. In the event of any dispute between Landlord and Tenant relative to the
provisions of this paragraph, they may each select an arbitrator, the two
arbitrators so selected shall select a third arbitrator and the three
arbitrators so selected shall hear and determine the controversy and their
decision thereon shall be final and binding on both Landlord and Tenant who
shall bear the cost of such arbitration equally between them. Landlord shall
not be required to repair any property installed in the Leased Premises by
Tenant. Tenant waives any right under applicable laws inconsistent with the
terms of this paragraph and in the event of a destruction agrees to accept
any offer by Landlord to provide Tenant with comparable space within the
project in which the leased Premises are located on the same terms as this
Lease.
ASSIGNMENT AND SUBLETTING
23.01 Landlord shall have the right to transfer and assign, in whole or
in part its rights and obligations in the Building and Property that are the
subject of this Lease. Tenant shall not assign this Lease or sublet all or any
part of the Leased Premises without the prior written consent of the Landlord.
In the event of any assignment or subletting, Tenant shall nevertheless at all
times, remain fully responsible and liable for the payment of the rent and for
compliance with all of its other obligations under the terms, provisions and
covenants of this Lease. If all or any part of the Leased Premises are then
assigned or sublet, Landlord, in addition to any other remedies provided by
this Lease or provided by law, may at its option, collect directly from the
assignee or subtenant all rents becoming due to Tenant by reason of the
assignment or sublease. Any collection directly by Landlord from the assignee
or subtenant shall not be construed to constitute a novation or a
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release of Tenant from the further performance of its obligations under this
Lease.
INSOLVENCY OF TENANT
24.01 Either (a) the appointment of a trustee to take possession of all
or substantially all of the assets of Tenant, or (b) a general assignment by
Tenant for the benefit of creditors, or (c) any action taken or suffered by
Tenant under any insolvency or bankruptcy act shall, if any such appointments,
assignments or action continues for a period of thirty (30) days, constitute a
breach of this Lease by Tenant, and Landlord may at its election without
notice, terminate this Lease and in that event be entitled to immediate
possession of the Leased Premises and damages as provided below.
BREACH BY TENANT
25.01 In the event of a monetary default by Tenant, which is not cured
within ten (10) days of receipt of written notice by Tenant of such default or
in the event of a nonmonetary default by Tenant which is not cured within
thirty (30) days of receipt of written notice by Tenant of such default,
Landlord in addition to any and all other rights or remedies that it may have
hereunder, at law or in equity shall have the right to either terminate this
Lease or from time to time, without terminating this Lease relet the Leased
Premises or any part thereof for the account and in the name of Tenant or
otherwise, for any such term or terms and conditions as Landlord in its sole
discretion may deem advisable with the right to make reasonable alterations and
repairs to the Leased Premises. Tenant shall pay to Landlord, as soon as
ascertained, the costs and expenses incurred by Landlord in such reletting or
in making such reasonable alterations and repairs. Should such rentals received
from time to time from such reletting during any month be less than that agreed
to be paid during that month by Tenant hereunder, the Tenant shall pay such
deficiency to Landlord. Such deficiency shall be calculated and paid monthly.
25.02 No such reletting of the Leased Premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a notice
of such intention be given to Tenant or unless the termination thereof be
decreed by a court of competent jurisdiction. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect to
terminate this Lease for such previous breach provided it has not been cured.
Should Landlord at any time terminate this Lease for any breach, including the
cost of recovering the Leased Premises, and including (1) all amounts that
would have fallen due as rent between the time of termination of this Lease and
the time of judgment, or other award, less the avails of all relettings and
attornments, plus interest on the balance at the rate of twelve percent (12%)
per year; and (2) the worth at the time of the judgment or other award, of the
amount by which the unpaid rent for the balance of the term exceeds the amount
of such rental less that Tenant proves could be reasonably avoided. "Worth" as
used in this provision, is computed by discounting the total at the discount
rate of the Federal Reserve Bank of Atlanta at the time of the judgment, or
award, plus one percent (1%).
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ATTORNEYS' FEES/COLLECTION CHARGES
26.01 Should Landlord be named as a defendant in any suit brought
against Tenant in connection with or arising out of Tenant's occupancy
hereunder, Tenant shall pay to Landlord its cost and expenses incurred in such
suit, including reasonable attorneys' fees. If any rent or other sums of money
owed or owing under this Lease is collected by or through an attorney at law,
Tenant agrees to pay fifteen percent (15%) thereof as attorneys' fees. In the
event of any dispute under this Lease, the prevailing party shall be entitled
to an award of its costs and reasonable attorney's fees against the
nonprevailing party.
CONDEMNATION
27.01 If, at any time during the term of this Lease, title to the Leased
Premises should become vested in a public or quasi-public authority by virtue
of the exercise of expropriation, appropriation, condemnation or other power in
the nature of eminent domain, or by voluntary transfer from the owner of the
Leased Premises under threat of such a taking then this Lease shall terminate
as of the time of such vesting of title, after which neither party shall be
further obligated to the other except for occurrence antedating such taking.
The same results shall follow if less than the entire Leased Premises be thus
taken, or transferred in lieu of such a taking, but to such extent that it
would be legally and commercially impossible for Tenant to occupy the portion
of the Leased Premises remaining, and impossible for Tenant to reasonably
conduct his trade or business therein.
27.02 Should there be such a partial taking or transfer in lieu
thereof, but not to such an extent as to make such continued occupancy and
operation by Tenant an impracticability, then this Lease shall continue on all
of its same terms and conditions subject only to an equitable reduction in rent
proportionate to such taking.
27.03 In the event of any such taking or transfer, whether of the entire
Leased Premises, or a portion thereof, it is expressly agreed and understood
that all sums awarded, allowed or received in connection therewith shall belong
to Landlord, and any rights otherwise vested in Tenant are hereby assigned to
Landlord, and Tenant shall have no interest in or claim to any such sums or any
portion thereof, whether the same be for the taking of the property or for
damages, or otherwise. Landlord agrees that Tenant shall be entitled to pursue
a separate award against the condemning authority so long as such award does
not diminish or interfere with Landlord's award.
NOTICES
28.01 All notices, statements, demands, requests, consents, approvals,
authorization, offers, agreements, appointments, or designations under this
Lease by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party, if sent by certified mail,
return receipt requested, postage prepaid, and addressed as follows:
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(a) To Tenant at the Leased Premises with a copy to Timothy J.
Severt, Vice-President Administration, World Travel Partners,
1055 Lenox Park Boulevard, Suite 420, Atlanta, Georgia
30319;
(b) To Landlord, addressed to Landlord at 4497 Park Drive,
Norcross, Georgia 30093, with a copy to such other place as
Landlord may from time to time designate by notice to Tenant.
WAIVER
29.01 The waiver by Landlord or Tenant 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 Landlord shall not be deemed to be a waiver of any
preceding breach by Tenant of any term, covenant, or condition of this Lease,
other than the failure of Tenant to pay the particular rental so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent.
EFFECT OF HOLDING OVER
30.01 If Tenant should remain in possession of the Leased Premises after
the expiration of the lease term and without executing a new lease, then such
holding over shall be construed as a tenancy from month to month, subject to
all the conditions, provisions, and obligations of this Lease insofar as the
same are applicable to a month to month tenancy, except that the rent payable
hereunder shall be increased to 150% of the amount set out in subparagraph
3.01.
SUBORDINATION
31.01 This Lease, at Landlord's option, shall be subordinate to any
ground lease, first priority mortgage, first priority deed of trust, or first
priority security deed now or hereafter placed upon the real property of which
the Leased Premises are a part and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof.
31.02 Tenant and Landlord agree to execute any documents required to
effectuate such subordination or to make this Lease prior to the lien of any
such ground lease, mortgage, deed of trust or security deed, as the case may
be, including specifically a subordination, non-disturbance and attornment
agreement in the form hereto attached as Exhibit "D", and failing to do so
within ten (10) days after written demand, does hereby make, constitute and
irrevocably appoint Landlord as Tenant's attorney in fact and in Tenant's name,
place and stead, to do so. If requested to do so, Tenant agrees to attorn to
any person or other entity that acquires title to the real property
encompassing the Leased Premises, whether through judicial foreclosure, sale
under power, or otherwise, and to any assignee of such person or other entity.
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ESTOPPEL CERTIFICATE
32.01 Upon ten (10) days notice from Landlord to Tenant, Tenant shall
deliver a certificate dated as of the first day of the calendar month in which
such notice is received, executed by an appropriate officer, partner or
individual, in the form as Landlord may require and stating but not limited to
the following: (i) the commencement date of this Lease; (ii) the space occupied
by Tenant hereunder; (iii) the expiration date hereof; (iv) a description of any
renewal or expansion options; (v) the amount of rental currently and actually
paid by Tenant under this Lease; (vi) the nature of any default or claimed
default hereunder by Landlord and (vii) that Tenant in not in default hereunder
nor has any event occurred which with the passage of time or the giving of
notice would become a default by Tenant hereunder.
PARKING
33.01 Tenant shall be entitled to park in common with other tenants of
Landlord. Landlord shall provide 4.0 parking spaces per 1,000 square feet of
space in the Leased Premises at no extra charge to Tenant. Tenant agrees not to
overburden the parking facilities and agrees to cooperate with Landlord and
other tenants in the use of parking facilities. Landlord reserves the right in
its absolute discretion to determine whether parking facilities are becoming
crowded and, in such event, to allocate parking spaces among Tenant and other
tenants. There will be no assigned parking. Tenant agrees to park all Tenant's
trucks in the parking spaces provided at the rear of the building. "Parking" as
used herein means the use by Tenant's employees, its visitors, invitees, and
customers for the parking of motor vehicles for such periods of time as are
reasonably necessary in connection with use of and/or visits to the demised
premises. No vehicle may be repaired or serviced in the parking area and any
vehicle deemed abandoned by Landlord will be towed from the project and all
costs therein shall be borne by the Tenant. All driveways, ingress and egress,
and all parking spaces are for the joint use of all tenants. No area outside of
the Leased Premises shall be used by Tenant for storage without Landlord's
prior written permission.
MORTGAGE PROTECTION
34.01 In the event of any default on the part of Landlord, Tenant will
give notice by registered or certified mail to any beneficiary of a deed or
trust or holder of a security deed or mortgage covering the Leased Premises
whose address shall have been furnished it, and shall offer such beneficiary or
holder a reasonable opportunity to cure the default, including time to obtain
possession of the Leased Premises by power of sale or a judicial foreclosure,
if such should prove necessary to effect a cure.
RULES AND REGULATIONS
35.01 This Lease is subject to the rules and regulations pertaining to
the Building, which are attached as Exhibit "E". Tenant, its employees, agents,
visitors, invitees, contractors
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and customers will perform and abide by said Rules and Regulations, and any
amendments or additions to said Rules and Regulations as may be made from time
to time by Landlord. Such amendments shall not adversely impact the business
terms of this Lease.
RELOCATION
36.01 Intentionally omitted.
MISCELLANEOUS PROVISIONS
A. Whenever the singular number is used in this Lease and when required
by the context, the same shall include the plural, and the masculine gender
shall include the feminine and neuter genders, and the word "person" shall
include corporation, firm or association. If there be more than one tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
B. The headings or titles to paragraphs of this Lease are for
convenience only and shall have no effect upon the construction or
interpretation of any part of this Lease.
C. This instrument contains all of the agreements and conditions made
between the parties to this Lease and may not be modified orally or in any
other manner than by agreement in writing signed by all parties to this Lease.
D. Where the consent of a party is required, such consent or approval
will not be unreasonably withheld or delayed.
E. This Lease shall create the relationship of Landlord and Tenant
between Landlord and Tenant; no estate shall pass out of Landlord; Tenant has
only a usufruct, not subject to levy and/or sale and not assignable by Tenant
except as provided in paragraph 20.01 hereof.
F. Except as otherwise expressly stated, each payment required to be
made by Tenant shall be in addition to and not in substitution for other
payments to be made by Tenant.
G. All covenants and agreements to be performed by Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent.
H. No payment by Tenant or receipt by Landlord of a lesser amount than
any installment or payment of rent due shall be deemed to be other than on
account of the amount due, and no endorsement or statement on any check or
payment of rent shall be deemed an accord and satisfaction. Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such installment or payment of rent, or pursue any other remedies
available to Landlord.
I. Subject to paragraph 20, the terms and provisions of this Lease shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, successors, and assigns of Landlord and Tenant.
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J. Tenant acknowledges and agrees that Landlord shall not be responsible
for providing any further security protection for the Leased Premises than that
set out on the attached schedule.
K. This Lease shall be governed by Georgia law.
L. Time is of the essence of each term and provision of this Lease.
M. Tenant shall not record this Lease or a memorandum thereof without
the written consent of Landlord. Upon the request of Landlord, Tenant shall
join in the execution of a memorandum or so-called "short form" of this Lease
for the purpose of recordation. Said memorandum or short form of this Lease
shall describe the parties, the Leased Premises and the lease term, and shall
incorporate this Lease by reference.
N. Landlord's liability for performance of its obligations under the
terms of this Lease shall be limited to its interest in the Building.
O. Landlord hereby grants to Tenant the right of first refusal to lease
any of the space in the Building as such space becomes vacant (the Adjacent
Space) under the same terms and conditions as the Lease, except such terms as
may be contained in the notice set out below. This right of first refusal to
lease the Adjacent Space shall be specifically made subordinate to the rights
of Wang Laboratories, Inc. to lease the space as contained in that certain
lease Agreement by and between Honeywell Bull, Inc. and CDA-Weeks dated May 27,
1988, as assigned and amended.
So long as Tenant is not then in default under the Lease, Landlord will
notify Tenant when it has made a proposal to lease any portion of the Adjacent
Space to a third party and the terms and conditions upon which it is willing to
lease such space.
Tenant shall provide written notice to Landlord, as to Tenant's decision
to lease or not to lease that portion of the Adjacent Space within two (2)
business days after Landlord has notified Tenant of the availability of such
space (which notice can be verbal or by fax, addressed to Timothy J. Severt,
Vice President Administration and Brian Learst, Chief Financial Officer, or
their successors or supervisors, at World Travel Partners, 1055 Lenox Park
Boulevard, Suite 420, Atlanta, Georgia 30319). If Tenant does provide such
notice to lease the Adjacent Space, Landlord and Tenant will execute a lease
for the Adjacent Space, within ten (10) days after Landlord's receipt of
Tenant's notice of intent to lease on all the same terms as this Lease except
for the rental terms, and other matters which shall be the same as those
contained in the proposal to the third party. If Tenant does not provide
written notice or indicates that it will not exercise its right of first
refusal, this right will expire and Landlord shall have no future obligations
to Tenant with regard to that portion of the Adjacent Space which was subject
to such notice.
P. Tenant shall have the option to terminate this Lease at any time
effective on December 31, 1996 or the last day of any
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calendar month thereafter provided that Tenant gives written notice to Landlord
of its intention to terminate at least one hundred twenty (120) days prior to
the termination date and provided that Tenant pays to Landlord a sum equal to
the unamortized tenant improvements and broker's commissions relating to the
Lease. The total amount of tenant improvements and brokers commissions equal
$111,592.00 which shall be amortized over thirty six (36) months at an interest
rate of nine and one half (9.5%) percent. The schedule for such amount is
attached as Exhibit "H". It is hereby acknowledged that any such amount required
to be paid by Tenant in connection with such early termination is not a penalty
but a reasonable estimate of the loss that would be incurred by Landlord as a
result of such early termination of this Lease and, in that regard, constitutes
liquidated damages with respect to such loss.
On or prior to the termination date, Tenant will surrender possession
of the Leased Premises in accordance with the provisions of this Lease as if
the termination 'date were the expiration date of this Lease.
Q. The building is equipped with an Essex Elevator Security System that
restricts access to single tenant floors at times determined by Tenant.
Landlord reserves the right to change the type of lock off system, however the
Landlord agrees that it will not remove the lock off system.
R. Tenant shall have the option to renew this Lease Agreement for one
(1) three (3) year term, provided that Tenant gives written notice to Landlord
of its intention to renew at least one hundred eighty (180) days prior to the
end of the then current term thereof. The renewal shall be upon the same terms
and conditions and the same base year as the Agreement, except that the base
rent for the renewal term shall be subject to adjustment on the first (1st) day
of the renewal term (the "First Adjustment Date") as follows: The base for
computing such adjustment is the Index, as defined herein below. If the index
published for the month immediately preceding the First Adjustment Date (the
"First Adjustment Index") has increased over the index published for the first
month after the Commencement Date (the "Initial Index"), the Renewal Base Rate
shall be adjusted by multiplying the Renewal Base Rate by a fraction, the
numerator of which is the First Adjustment Index and the denominator of which
is the Initial Index. However, notwithstanding the foregoing, in no event shall
such Annual Rental increase less than four (4%) percent or more than twelve
(12%) percent.
"Index" shall mean the Consumer Price Index for All Urban Consumers,
U.S. City Average for All Items (1982-1984 = 100) published by the Bureau of
Labor Statistics, United States Department of Labor. If the Index shall be
revised or cease to be compiled and published at any time during the term of
this Lease, but a comparable successor index is compiled and published by the
Bureau of Labor Statistics, United States Department of Labor, the adjustments
shall be computed according to such successor index with appropriate
adjustments in the index to reflect any differences in the method of
computation from the Index. If the Index is changed so that the base year
differs from that in effect on the Commencement Date, the Index shall be
converted in
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accordance with the conversion factor published with the Bureau of Labor
Statistic, United States Department of Labor. If, at anytime during the term of
this Lease, neither the Index nor a comparable successor index is compiled or
published by the Bureau of Labor Statistics, the index for "all items" compiled
and published by any other branch or department of the Federal Government shall
be used for the adjustments, and if no such index is compiled and published by
any branch or department of the Federal government, the statistics reflecting
cost of living increases as compiled any institution or organization or
individual generally recognized as an authority by financial and insurance
institutions shall be used as a basis for such adjustments in order to obtain
substantially the same result as would have been obtained if the Index had not
been discontinued or revised.
It is expressly understood that Tenant shall have no option to renew
this Lease for the renewal term if at the time of the attempted exercise of
such option or at the commencement of such renewal term this Lease is not then
in full force and effect and if Tenant is then in default of any terms and
conditions of this Lease.
S. Tenant will purchase and install a new supplemental HVAC unit in the
Leased Premises. This HVAC unit will be separately metered and Tenant will be
fully responsible for the cost and maintenance associated with such HVAC unit.
T. Exhibits A, B, C, D, E, F and G are attached hereto and made a part
hereof by reference.
U. In addition to the Allowance as set forth in Paragraph 6.01 herein,
Landlord shall provide Tenant a special space planning allowance equal to
$1,521.72, payable upon execution of this Lease.
V. It is understood and agreed that Tenant may utilize Suite numbers
710, 720, 730, 740, 750 and 775 in addition to Suite number 700, however, such
additional suite numbers shall not apply as to the provisions of paragraph
28.01 of the Lease.
W. Landlord will disburse the Allowance to Tenant upon compliance by
Tenant with the following conditions:
(a) Tenant shall submit to Landlord an application and certificate for
payment, showing the amount of the Improvements installed or constructed
through the date of the draw request. The form shall be signed by Tenant and
its contractor and shall be accompanied by such documentation as is reasonably
required by Landlord to verify and ensure that the work shown on the draw
request has been completed.
(b) Tenant shall submit to Landlord such lien waivers and affidavits as
are necessary, in Landlord's opinion, to ensure that the Leased Premises, the
Building and the Land remain free and clear of all liens and other encumbrances
arising as a result of the installation and construction of the Improvements.
All such lien waivers and affidavits shall be satisfactory in form and
substance to Landlord.
20
<PAGE> 23
(c) Tenant shall obtain a certificate of occupancy from Dekalb County
for the Leased Premises. Tenant agrees that it shall have no right to, and will
not, occupy the Leased Premises until a certificate of occupancy for the Leased
Premises has been issued by the appropriate governmental authority(ies).
(f) All construction work done by Tenant in the Leased Premises shall
be pursued diligently to completion and shall be performed in a good and
workmanlike manner, and in compliance with all governmental regulations. Tenant
covenants and agrees that all contractors, subcontractors and other persons or
entities performing work for Tenant at the Leased Premises will carry (i)
liability insurance in amounts acceptable to Landlord, in Landlord's reasonable
opinion, and (ii) worker's compensation insurance in the amounts required by
law.
(e) Tenant hereby indemnifies Landlord against, and shall keep all
portions of the Leased Premises, the Building and the Land free from liens for
any work performed, material furnished or obligations incurred by Tenant.
Should any liens or claims be filed against all or any portion of the Leased
Premises, the Building or the Land by reason of Tenant's acts, omissions or
work performed by any person or entity, Tenant shall cause same to be
discharged by bond or otherwise within fifteen (15) days following notice
thereof. If Tenant fails to cause any such lien or claim to be discharged
within the required time, Landlord may cause same to be discharged and may make
any payment that Landlord, in its reasonable judgment, considers necessary,
desirable or proper in order to do so. All amounts paid by Landlord shall bear
interest at the lower of (i) eighteen percent (18%) per annum, or (ii) the
highest rate permitted under applicable law, from the date of payment by
Landlord and shall be payable by Tenant to Landlord upon written demand.
(SIGNATURES CONTAINED ON FOLLOWING PAGE)
21
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto who are individuals have set
their hands and seals, and the parties who are corporations have caused this
instrument to be duly executed by its proper officers and its corporate seal to
be affixed, as of the day and year first above written.
LANDLORD:
Signed, sealed and delivered WEEKS REALTY, L.P.,
as to Landlord, in the a Georgia Limited Partnership
presence of:
/s/ Patricia By: Weeks Corporation,
- ----------------------------------------- a Georgia Corporation,
Notary Public, Gwinnett County, Georgia its sole general partner
My Commission expires June 9, 1997
- ---------------------------------------- By: A.R. Weeks, Jr.
Notary Public --------------------------
Name: A.R. Weeks, Jr.
--------------------------
Its: Chairman/CEO
--------------------------
(Corporate Seal)
TENANT:
Signed, sealed and delivered
as to Landlord, in the WORLD TRAVEL PARTNERS, LTD.
presence of:
/s/ By: Timothy J. Severt
- ----------------------------------------- --------------------------
Name: Timothy J. Severt
--------------------------
- ----------------------------------------- Its: VP of Administration
Notary Public --------------------------
ATTEST:
By:
---------------------------
Name:
--------------------------
Its:
--------------------------
<PAGE> 25
EXHIBIT 10.11
Weeks Corporation EXHIBIT "A"
4497 Park Drive
Norcross, Georgia 30093
404 923-4076/Phone
404 717-3310/Fax
[WEEKS LOGO]
- - Druid Chase Office Park
6 West Druid Hills Road, Suite 700
Space Available: 12,681 RSF (7th Floor)
[DRUID CHASE OFFICE PARK MAP]
EXHIBIT A
<PAGE> 26
EXHIBIT "B"
[ MAP ]
[LOCATION MAP]
EXHIBIT "B"
<PAGE> 27
ACCEPTANCE OF PREMISES
Lessee:
--------------------------------------------------------------------
Lessor:
--------------------------------------------------------------------
Date Lease Signed:
-------------------------------------------------------------
Term of Lease:
-----------------------------------------------------------------
Address of Leased Premises: Suite ____ containing approximately__________square
feet, located at
---------------------------------------------------------------
Commencement Date:
------------------------------------------------------------
Expiration Date:
--------------------------------------------------------------
The above described premises are accepted by Lessee as suitable for the purpose
for which they were let. The above described lease term commences and expires
on the dates set forth above. Lessee acknowledges that it has been received
from Lessor ______ number of keys to the leased premises. It is understood that
there is a punch list which will be completed after move-in and will be an
exhibit to the Tenant Estoppel.
LESSEE
- --------------------------------
(Type Name of Lessee)
WITNESS
By:
---------------------------- ----------------------------
(Signature) (Signature)
- ------------------------------- ----------------------------
(Type Name and Title) (Company)
EXHIBIT "C"
<PAGE> 28
EXHIBIT "D"
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made as of the ___ day of ______________, 1995, between
_________________________________________________________with offices at_______
("Tenant") and _____________________________________ (herein, together with its
successors, transferees and assigns, the "Mortgagee");
W I T N E S S E T H:
WHEREAS, Mortgagee is about to or has heretofore granted to
__________________________________, a Georgia limited partnership (the "owner")
a first mortgage loan, which loan is secured by a security deed (herein
"Mortgage") dated as of ___________, 198_ and duly recorded on ___________, 198_
in the land records of Gwinnett County, Georgia; and
WHEREAS, the Mortgage is to be a first and prior lien upon the Owner's
fee estate in the real property described in Exhibit "A" annexed hereto
("Mortgaged Premises"); and
WHEREAS, Tenant is occupying a portion of the Mortgaged Premises under a
lease dated as of ______________, 198_ in which Owner is Landlord (the "Lease")
covering that portion of the Mortgaged Premises therein more particularly
described (the "Leased Premises"); and
WHEREAS, Tenant desires to be assured of its continued and undisturbed
occupancy of the Leased Premises should the Mortgage be foreclosed or the
Mortgaged Premises sold pursuant to any power of sale contained therein and
Mortgagee is agreeable thereto.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and in further consideration of the sum of ONE DOLLAR ($1.00)
each to the other in hand paid, the receipt whereof is hereby acknowledged,
Tenant and Mortgagee mutually covenant and agree as follows:
FIRST: The Lease and all of Tenant's rights, interest and estate therein
and thereunder are hereby made subject and subordinate to the lien of the
Mortgage and to any extensions, renewals, replacements, modifications,
additions or consolidations thereof and to all rights, title and interest of
Mortgagee and its successors and assigns therein and thereunder.
SECOND: in the event, however, proceedings shall ever be instituted by
Mortgagee to foreclose or liquidate the Mortgage, the Tenant's possession of
its leased portion of the Mortgaged Premises shall not be disturbed by the
foreclosure proceedings and the Mortgaged Premises shall be sold at any
foreclosure sale subject to Tenant's possession on condition that:
(a) there shall be, at the time of commencement of foreclosure proceedings,
as well as all subsequent times, no default
<PAGE> 29
by Tenant in the due and timely observance and performance of any
covenant and agreement in the Lease to be observed and performed by
Tenant; and
(b) the Tenant shall not have entered into any agreement modifying any
term, condition or agreement of the Mortgagee-approved Lease without
the prior written consent of Mortgagee.
THIRD: Tenant shall attorn to Mortgagee while Mortgagee is in possession
of the Mortgaged Premises, or to a Receiver appointed in any action or
proceeding to foreclose the Mortgage. In the event of the completion of
foreclosure proceedings and sale of the Mortgaged Premises or in the event the
Mortgagee should otherwise acquire possession of the Mortgaged Premises, the
Tenant will promptly upon demand attorn to the purchaser at the foreclosure
sale or to the Mortgagee, as the case may be, and will recognize such purchaser
or the Mortgagee as the Tenant's landlord. The Tenant agrees to execute and
deliver, at any time and from time to time, upon the request of the Mortgagee
or the purchaser at the foreclosure sale, as the case may be, any instrument
which may be necessary or appropriate to such successor landlord to evidence
such attornment. The Tenant shall, upon demand of the Mortgagee or any Receiver
or purchaser at the foreclosure sale, pay to the Mortgagee or to such Receiver
or purchaser, as the case may be, all rental monies then due or as they
thereafter become due.
FOURTH: Upon the attornment provided for in preceding Paragraph THIRD
the Tenant's occupancy shall thereafter be in full force and effect as under a
direct Lease between Mortgagee, the Receiver or the purchaser at the
foreclosure sale, as the case may be, and Tenant. It is specifically understood
and agreed that Mortgagee or any such Receiver or purchaser shall not be:
(a) liable for any act, omission, negligence or default of any prior
landlord, or
(b) subject to any offsets, claims or defenses which Tenant might have
against any prior landlord; or
(c) bound by any rent or additional rent which Tenant might have paid for
more than one month in advance to any prior landlord; or
(d) bound by any amendment or modification of the Lease made without the
prior written consent of the Mortgagee.
FIFTH: On and after the date Tenant in good standing attorns to
Mortgagee or any Receiver or subsequent owner in pursuance of its agreement
herein set forth, Mortgagee, the Receiver or such subsequent owner will
undertake and perform all subsequent obligations of the Landlord as set forth
in the Lease for the benefit of and undisturbed occupancy of Tenant under the
Lease.
SIXTH: Tenant agrees it will not amend, modify nor abridge the Lease in
any way, nor cancel or surrender the same without
<PAGE> 30
prior written approval of the Mortgagee other than by reason of a continued
uncured material default of the landlord under the Lease, nor will the Lease
ever merge into the fee in the event that Mortgagee acquires fee title to the
Mortgaged Premises.
SEVENTH: Any notices or other communication to be given hereunder by
either party shall be in writing and shall be deemed to have been sufficiently
given or served for all purposes if sent by registered or certified mail with
return receipt requested to the other party hereto at its address above stated
or such other address of which written notification has been timely given to
the other party.
EIGHTH: Mortgagee has and shall have the continuing right to execute
and record in the Land Records of Gwinnett County, Georgia at any time, in its
unilateral discretion, a Declaration of Subordination for the purpose of
thereby subordinating its rights, title and interest in and under the Mortgage
to the rights, title and interest of Tenant under the Lease. Such Declaration
of Subordination shall, at Mortgagee's election, operate, function and be in
full force and effect for whatever period of time Mortgagee declares therein
that it shall be in force not exceeding the term of the Lease and any
extensions thereof and the said Declaration may be voided unilaterally by
Mortgagee when it so elects.
NINTH: Tenant waives any and all rights it may have to execute and
record after the date hereof any document purporting to again or further
subordinate its right, title or interest under the Lease to the lien of either
the Mortgage or any other mortgage or deed of trust or any ground lease or any
agreement modifying or amending the Mortgage except with the written consent of
Mortgagee.
TENTH: This Agreement cannot be changed orally but only in writing
signed by both parties hereto.
ELEVENTH: This Agreement may be recorded by either party at its own
expense in the Land Records of Gwinnett County, Georgia whenever, in its sole
discretion, either party elects so to do.
TWELFTH: All of the terms, covenants and conditions hereof shall run
with the Mortgaged Premises and shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, acknowledged and delivered the day and year first above written.
SIGNED, SEALED AND DELIVERED TENANT:
in the presence of:
- ---------------------------
BY:
- --------------------------- -------------------------
MORTGAGEE:
BY:
- --------------------------- -------------------------
- ---------------------------
The undersigned Owner of the leased and mortgaged premises hereby
consents to the foregoing Agreement and agrees to be bound by and subject to
the terms thereof.
BY:
------------------------
<PAGE> 32
EXHIBIT "E"
RULES AND REGULATIONS
1. The Tenant shall give the Landlord not less than forty-eight (48) hours
prior written notice of the Tenant's intention to move into or to move out of
the Building, and all such moves shall be conducted on Saturdays, Sunday, or
Holidays, or between the hours of 6 p.m. and 7 a.m. The Tenant shall use, or
cause to be used, the freight elevator serving the Building (and not any of the
passenger elevators) in connection with all such moves into or out of the
Building. The Tenant shall be responsible to the Landlord for all damage done
to the Building, the Leased Premises or any portion of either, by the Tenant's
movers. The Tenant shall insure that its movers take all necessary precautions
required by the Landlord to protect the Building and all portions thereof,
including, without limitation, protection of all flooring, carpeting,
wallcovering, doors and door frames.
2. All safes or other heavy articles shall be carried up or into the
Building only at such times and in such manner as shall be prescribed by the
Landlord and the Landlord shall in all cases have the right to specify the
proper weight and position of any such safe or other heavy article. Any damage
done to the Building by taking in or removing any equipment or from overloading
any floor in any way shall be paid the Tenant. Defacing or injuring in any way
any part of the Building by the Tenant, his invitees, agents or employees,
shall be paid for by the Tenant.
3. The sidewalks, entries, passages, corridors, stairways and elevators
shall not be obstructed by Tenants, their employees or agents, or used by them
for purposes other than ingress and egress to and from their respective suites.
4. Tenant will refer all contractors, contractors' representatives and
installation technicians rendering any service for Tenant to Landlord for
Landlord's approval and supervision before performance of any contractual
service. This provision shall apply to all work performed in the Building,
electrical devices and attachments and installations of any nature affecting
floors, walls, woodwork, trim, windows, ceilings, equipment or any other
physical portion of the Building. Such approval, if given, shall in no way make
Landlord a party to any contract between Tenant and any such contractor, and
Landlord shall have no liability therefor.
5. If any Tenant desires, at his cost, telegraphic, telephonic or other
electric connections, Landlord or its agents will direct the electricians
(which must be approved in advance by Landlord) as to where and how the wires
may be introduced, and without such directions, no boring or cutting for wires
will be permitted.
6. The Tenant shall not (without Landlord's written consent) install or
operate any fans, electric heaters, machinery or stove upon the Leased
Premises, or carry on any mechanical business thereon, or do any cooking
thereon, or use or allow to be used
<PAGE> 33
upon the Leased Premises, oil, burning fluids, camphene, gasoline or kerosene
for heating, warming or light. No article deemed extra hazardous on account of
fire and no explosives shall be brought into the Building. No offensive gases
or liquids will be permitted within the Building.
7. Tenant shall not install or authorize the installation of any vending
machines, food or beverage preparation machines or dispensing devices, nor
shall Tenant authorize the delivery of food or beverage to the Building,
without Landlord's prior written approval. Landlord shall have the right to
rescind this approval, if given, without liability to Tenant for reimbursement
of any Tenant costs or expenses.
8. No sign, advertisement or notice shall be inscribed, painted or affixed
on any part of the inside or outside of the Building unless of such color, size
and style and in such place as shall first be designated by Landlord; there
shall be no obligation or duty on Landlord to allow any sign, advertisement or
notice to be inscribed, painted or affixed on any part of the inside or outside
of the Building. Tenant suite identification on or adjacent to entry doors will
conform to standards established by Landlord and must be installed by Landlord
at Tenant's expense. A directory in a conspicuous place, with the names of the
Tenants, will be provided by Landlord; any necessary revision in Tenant's name
will be made by Landlord within a reasonable time after notice from the Tenant,
and upon payment of a standard fee. No furniture shall be placed in front of
the Building or in any lobby or corridor without written consent of Landlord.
Landlord shall have the right to remove all other signs and furniture, without
notice to Tenant at the expense of Tenant.
9. Tenant shall have the non-exclusive use in common with the Landlord,
other tenants, their guests and invitees, of the automobile parking areas,
driveways and footways, subject to reasonable rules and regulations for the use
thereof as may be prescribed from time to time by Landlord. Landlord shall have
the right to designate parking areas for the use of the other tenants in the
Building and their employees, and the tenants and their employees shall not
park in parking areas not so designated, specifically including driveways, fire
lanes, loading/unloading areas, walkways and building entrances. Landlord will
not be liable for damage to vehicles in the parking areas or for theft of
vehicles, personal property from vehicles, or equipment of vehicles. Tenant
agrees that Tenant and employees of Tenant shall not park on off-site
surrounding property, whether publicly or privately owned, without the written
consent of the owner of such surrounding property.
10. No Tenant shall do or permit anything to be done in said Leased
Premises, or bring or keep anything therein, which will in any way increase the
rate of fire insurance on said Building, or on property kept therein, or
obstruct or interfere with the rights of other Tenants, or in any way injure or
annoy them, or conflict with the laws relating to fire, or with any regulations
of the fire department, or with any insurance policy upon said buildings
<PAGE> 34
or any part thereof, or conflict with any rules and ordinances of the local
Board of Health or any governing bodies.
11. Tenant shall not injure, overload or deface the Building, the woodwork
or the walls of the Building, nor carry on upon the Leased Premises any
noisome, noxious, noisy, or offensive business.
12. No person shall disturb the occupants of the Building by the use of any
musical instruments, radios, televisions, phonographs, tape players, etc., the
making of unreasonable noises, odors, vibrations or any other unreasonable use
of the Building. No dogs or other animals or pets of any kind will be allowed
in the Building.
13. No portion of the Building shall be occupied or used as sleeping or
lodging quarters at any time.
14. Tenant shall not employ any person other than the janitors of Landlord
(who will be provided with pass-keys into the Building) for the purpose of
cleaning or taking charge of the Building.
15. The janitor or janitors of the Building may keep a pass key, and he
shall at all times be allowed admittance to said Leased Premises.
16. Landlord or its agents shall have the right to enter the Leased
Premises to examine the same or to make such repairs, alterations or additions
as Landlord shall deem necessary for the safety, preservation or improvement of
the Building.
17. Landlord or its agents may show said Leased Premises and may place on
the windows or doors thereof, or upon the bulletin board, a notice "For Rent"
for six (6) months prior to the expiration of the Lease.
18. No additional locks shall be placed upon any doors without the written
consent of the Landlord. All keys to the Leased Premises and Building Security
Card Keys (if any) shall be furnished by the Landlord in a reasonable number
commensurate with the square footage leased. Additional keys and Building
Security Card Keys (if any) shall be furnished to Tenant at Landlord's cost
plus a reasonable administrative fee. Upon termination of this Lease, all keys
and Building Security Card Keys (if any) shall be surrendered, and the Tenant
shall then give the Landlord or his agents explanation of the combination of
all locks upon the doors or vaults.
19. No windows or other openings that reflect or admit light into the
corridors or passageways, or to any other place in said Building, shall be
covered or obstructed by any of the Tenants. No sunscreen or other film shall
be applied to the interior surface of any window glass. All glass, locks and
trimmings in or upon the doors or windows of the Building shall be kept whole
and, when any part thereof shall be broken, the same shall be immediately
replaced or repaired and put in order under the
<PAGE> 35
direction and to the satisfaction of Landlord, and shall be left whole and in
good repair.
20. If Tenant desires shades, draperies or other window treatment, they
must be of such shape, color, materials and make as shall conform with other
window treatment within the Building, shall be purchased and installed at the
sole cost and expense of Tenant, and shall be approved in advance by Landlord.
21. The water closets and other water fixtures shall not be used for any
purpose other than those for which they were designed or constructed, and any
damage resulting to them from misuse, or the defacing or injury of any part of
the Building, shall be borne by the person who shall occasion it.
22. No bicycles or similar vehicles will be allowed in the Building.
23. Nothing shall be thrown out the windows of the Building or down the
stairways or other passages.
24. Landlord reserves the right at any time to take one elevator out of
service to Tenants for exclusive use by the Building management in servicing
the Building.
25. Tenant shall not disturb any occupant of the Building, or canvas or
conduct surveys within the Building (without the prior written consent of
Landlord), and shall cooperate to prevent same.
26. Landlord reserves the right to exclude or expel from the Building any
person who, in the judgment of Landlord, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of any
of the rules and regulations of the Building.
27. Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant except as Tenant's address.
<PAGE> 36
28. The following shall constitute Holidays for purposes of this Lease:
January 1st New Year's Day
Last Monday in May Memorial Day
July 4th Independence Day
First Monday in September Labor Day
Fourth Thursday in November Thanksgiving Day
December 25th Christmas Day
29. The Landlord reserves the right to make such other reasonable rules and
regulations as in its judgment may from time to time be needed for the safety,
care and cleanliness of the Building, and for the preservation of good order
therein. The Landlord shall not be responsible to the Tenant for the
nonobservance or violation of any of the rules and regulations by any other
occupant or tenant of the Building.
<PAGE> 37
EXHIBIT "F"
SPECIFICATIONS FOR
DRUID CHASE
<TABLE>
<CAPTION>
SERVICE
DAYS/YR
<S> <C>
RESTROOMS
CLEAN RESTROOM FIXTURES & MIRRORS, WIPE ALL COUNTERS 260
SPT CLN WALLS & PART., REFILL DISP., EMPTY TRASH & MOP FLOORS.
WASH ALL RESTROOM PARTITIONS ON BOTH SIDES. 52
DUST AND CLEAN ALL RETURN AIR VENTS. 52
MACHINE SCRUB ALL RESTROOM FLOORS USING GERMICIDAL DETERGENT. 4
WASH ALL CERAMIC TILE WALLS BY HAND. 2
ELEVATORS
COMPLETELY CLEAN AND DAMP MOP HARD FLOOR ELEVATOR. 260
COMPLETELY CLEAN AND VACUUM CARPETED ELEVATOR. 260
STAIRS
POLICE STAIRS FOR LITTER. 248
SWEEP / DUST -MOP STAIRS REMOVING ALL LITTER, DEBRIS AND SPOTS. 12
EXECUTIVE OFFICES
EMPTY ALL TRASH RECEPTACLES AND REPLACE LINERS AS NECESSARY. 260
DUST ALL HORIZONTAL SURFACES. 260
SPOT CLEAN ALL WALLS, DOORS, LIGHT SWITCHES DESKS AND TABLES. 260
FULLY VACUUM CARPETS FROM WALL TO WALL. 260
USING APPROVED SPOTTER, SPOT CLEAN CARPETED AREA. 52
BRUSH AND REMOVE SPOTS FROM FURNITURE AS NEEDED. 52
SPOT CLEAN INTERIOR GLASS WITHIN NORMAL REACH. 260
USING EDGING TOOL, VACUUM CORNERS AND EDGES. 52
REMOVING VISIBLE DUST AND DEBRIS.
CLEAN AND DISINFECT TELEPHONES. 12
DUST ALL LOW REACH AREAS. 52
DUST ALL VENETIAN BLINDS. 12
DUST ALL HIGH REACH AREAS. 12
VACUUM OR DUST ALL VENTS AND GRILL WORK AS NEEDED. 4
THOROUGHLY CLEAN INTERIOR GLASS WITH THE EXCEPTION OF 12
THE INTERIOR OF EXTERIOR WINDOWS.
CORRIDORS - CARPET
FULLY VACUUM CARPETS FROM WALL TO WALL. 260
USING APPROVED SPOTTER, SPOT CLEAN CARPETED AREA. 260
SPOT CLEAN ALL WALLS, DOORS, LIGHT SWITCHES, DESKS AND TABLES. 260
DUST ALL LOW REACH AREAS. 260
EMPTY AND DAMP WIPE ASHTRAYS; CLEAN CIGARETTE URNS, SMOOTH SAND. 260
AND REPLACE AS NECESSARY.
CLEAN AND POLISH DRINKING FOUNTAINS. 260
DUST ALL HIGH REACH AREAS. 52
VACUUM OR DUST ALL VENTS AND GRILL WORK AS NEEDED. 12
</TABLE>
Page 1
<PAGE> 38
EXHIBIT "G"
DRUID CHASE OFFICE PARK
SECURITY SCHEDULE AS OF 8/15/95
Weekday Schedules:
The 6 W. Druid Hills Building remains unlocked from 7 a.m. - 6 p.m.,
Monday through Friday. Single tenant floors will activate/deactivate the
elevator control for their floor at their discretion.
9 a.m. - 10 p.m., M-F Roving patrol service throughout parking lots
11 p.m. - 7 a.m. 3-4 random checks of the property are made and
include exterior door checks to ensure building
is secure. Additionally, one interior door check
is made to secure any unlocked suites. Security
does not maintain elevator codes, therefore, no
suite door checks are made if elevator is locked
down.
Note: Security is available to escort personnel on weekdays until
10 p.m. at specific times to be provided in advance. After 10
p.m., escort service can be provided at scheduled times at
tenant's expense.
Weekend & Holiday Schedules:
7 a.m. - 7 p.m. 3-4 random patrols to include exterior door
checks only.
7 p.m. - 7 a.m. 3-4 random patrols to include exterior door
checks and one interior door check. Again,
security does not maintain elevator codes,
therefore, no suite door checks are made if
elevator is locked.
Escort service can be provided on weekends and holidays and after above
hours at scheduled times at Tenant's expense which shall be charged to
Tenant at Landlord's actual cost.
In case of emergency requiring security's attention, Tenant should call
982-9191 and the answering service will page the Manager on call to dispatch
security, if necessary.
** Weeks Corporation reserves the right to modify the schedule
from time to time as deemed necessary to provide adequate
security to the Property. However, Landlord agrees that the
schedule outlined above shall be the minimum service and that
any modifications will not be less than currently provided.
<PAGE> 39
EXHIBIT "H"
<TABLE>
<CAPTION>
MONTH IN WHICH
TERMINATION IS
EXERCISED UNAMORTIZED AMOUNT
- -------------------------------------------------------------------------------
<S> <C>
1 $108,900.82
2 106,188.33
3 103,454.36
4 100,698.76
5 97,921.33
6 95,121.92
7 92,300.35
8 89,456.44
9 86,590.02
10 83,700.90
11 80,788.91
12 77,853.87
13 74,895.59
14 71,913.89
15 68,908.59
16 65,879.50
17 62,826.42
18 59,749.18
19 56,647.57
20 53,521.41
21 50,370.50
22 47,194.64
23 43,993.65
24 40,767.31
25 37,515.43
26 34,237.81
27 30,934.24
28 27,604.51
29 24,248.43
30 20,865.77
31 17,456.34
32 14,019.91
33 10,556.28
34 7,065.23
35 3,546.54
</TABLE>
<PAGE> 40
SPECIFICATIONS FOR
DRUID CHASE
<TABLE>
<CAPTION>
SERVICE
DAYS/YR
<S> <C>
DUST INTERIOR OF FIRE EXTINGUISHER CABINETS, FIRE EXTINGUISHERS, 12
AND CLEAN BOTH SIDES OF CABINET GLASS.
TILED AREAS
EMPTY ALL TRASH RECEPTACLES AND REPLACE LINERS AS NECESSARY. 260
DUST MOP ALL HARD SURFACE FLOORS WITH TREATED DUST MOP. 260
DUST ALL HORIZONTAL SURFACES. 260
BRUSH AND REMOVE SPOTS FROM FURNITURE AS NEEDED. 52
SPOT CLEAN ALL WALLS, DOORS, LIGHT SWITCHES, DESKS AND TABLES. 260
MOP ALL STAINS AND SPILLS ESPECIALLY COFFEE AND DRINK SPILLS. 208
DAMP MOP ENTIRE AREA. 52
DUST ALL LOW REACH AREAS. 52
USING A HIGH SPEED FLOOR MACHINE SPRAY BUFF ALL HARD SURFACE 12
AREA.
DUST ALL HIGH REACH AREAS. 12
VACUUM OR DUST ALL VENTS AND GRILL WORK AS NEEDED. 4
STRIP HARD SURFACE FLOOR AND RECOAT WITH TWO COATS OF FLOOR 2
POLISH.
LAY ONE COAT OF FLOOR POLISH. 2
ELEVATOR LOBBY - VCT
CLEAN AND POLISH ELEVATOR BRIGHT WORK. 260
SPOT CLEAN ALL WALLS, DOORS, LIGHT SWITCHES, DESKS AND TABLES. 260
DUST MOP ALL HARD SURFACE FLOORS WITH TREATED DUST MOP. 260
DAMP MOP ENTIRE AREA. 260
USING A HIGH SPEED FLOOR MACHINE SPRAY BUFF ALL HARD SURFACE 12
AREA.
STRIP HARD SURFACE FLOOR AND RECOAT WITH TWO COATS OF FLOOR 4
POLISH.
LAY ONE COAT OF FLOOR POLISH. 4
LOBBIES-GRANITE/MARBLE
EMPTY AND DAMP WIPE ASHTRAYS; CLEAN CIGARETTE URNS, SMOOTH SAND 260
AND REPLACE AS NECESSARY.
CLEAN LOBBY SIGN DIRECTORIES REMOVING ALL SOIL. 260
BRUSH AND REMOVE SPOTS FROM FURNITURE AS NEEDED. 260
POLISH ALL WOOD SURFACES WITH APPROVED POLISH. 260
CLEAN BOTH SIDES OF ALL GLASS DOORS. 260
DUST ALL HORIZONTAL SURFACES. 260
DUST ALL LOW REACH AREAS. 260
SPOT CLEAN ALL WALLS, DOORS, LIGHT SWITCHES, DESKS AND TABLES. 260
VACUUM WALK-OFF MATS. 260
DUST MOP ALL HARD-SURFACE FLOORS WITH TREATED DUST MOP. 260
DAMP MOP ENTIRE AREA. 260
DRY BUFF HARD SURFACE FLOOR WITH HIGH SPEED FLOOR MACHINE. 260
</TABLE>
Page 2
<PAGE> 41
SPECIFICATIONS FOR
DRUID CHASE
<TABLE>
<CAPTION>
SERVICE
DAYS/YR
<S> <C>
SPOT CLEAN INTERIOR GLASS WITHIN NORMAL REACH. 260
EMPTY ALL TRASH RECEPTACLES AND REPLACE LINERS AS NECESSARY. 260
DUST ALL HIGH REACH AREAS. 52
THOROUGHLY CLEAN INTERIOR GLASS WITH THE EXCEPTION OF
THE INTERIOR OF EXTERIOR WINDOWS. 52
DUST ALL WALL SURFACES. 2
COMPUTER ROOMS - RAISED, TILE
EMPTY ALL TRASH RECEPTACLES AND REPLACE LINERS AS NECESSARY. 260
DUST MOP ALL HARD SURFACE FLOORS WITH TREATED DUST MOP. 260
MOP ALL STAINS AND SPILLS ESPECIALLY COFFEE AND DRINK SPILLS. 260
DUST ALL HORIZONTAL SURFACES. 52
DUST ALL LOW REACH AREAS. 52
SPOT CLEAN ALL WALLS, DOORS, LIGHT SWITCHES, DESKS AND TABLES. 260
BRUSH AND REMOVE SPOTS FROM FURNITURE AS NEEDED. 52
VACUUM WALK-OFF MATS. 260
SPOT CLEAN INTERIOR GLASS WITHIN NORMAL REACH. 260
THOROUGHLY CLEAN INTERIOR GLASS WITH THE EXCEPTION OF
THE INTERIOR OF EXTERIOR WINDOWS. 12
DUST ALL HIGH REACH AREAS. 52
MACHINE SCRUB FLOOR WITH DAMP MOP AND DRY PADS. 4
REMOVE TRASH
REMOVE ALL COLLECTED TRASH TO DESIGNATED AREA. 260
LOADING DOCK
DUST MOP ALL HARD SURFACE FLOORS WITH TREATED DUST MOP. 260
DAMP MOP ENTIRE AREA. 260
REGULAR OFFICES
EMPTY ALL TRASH RECEPTACLES AND REPLACE LINERS AS NECESSARY. 260
DUST ALL HORIZONTAL SURFACES. 260
SPOT CLEAN ALL WALLS, DOORS, LIGHT SWITCHES, DESKS AND TABLES. 26O
USING APPROVED SPOTTER, SPOT CLEAN CARPETED AREA. 52
SPOT CLEAN INTERIOR GLASS WITHIN NORMAL REACH. 260
VACUUM ALL CARPETED TRAFFIC LANE AREAS. 208
FULLY VACUUM CARPETS FROM WALL TO WALL. 52
USING EDGING TOOL, VACUUM CORNERS AND EDGES. 52
REMOVING VISIBLE DUST AND DEBRIS.
CLEAN AND DISINFECT TELEPHONES. 12
DUST ALL LOW REACH AREAS. 52
THOROUGHLY CLEAN INTERIOR GLASS WITH THE EXCEPTION OF
THE INTERIOR OF EXTERIOR WINDOWS. 12
DUST ALL VENETIAN BLINDS. 12
VACUUM OR DUST ALL VENTS AND GRILL WORK AS NEEDED. 4
</TABLE>
Page 3
<PAGE> 42
SPECIFICATIONS FOR
DRUID CHASE
<TABLE>
<CAPTION>
SERVICE
DAYS/YR
<S> <C>
* DINING/COFFEE AREA
EMPTY ALL TRASH RECEPTACLES AND REPLACE LINERS AS NECESSARY. 260
EMPTY AND DAMP WIPE ASHTRAYS. 260
DUST ALL HORIZONTAL SURFACES. 260
SPOT CLEAN ALL WALLS, DOORS, LIGHT SWITCHES, DESKS AND TABLES. 260
FULLY VACUUM CARPETS FROM WALL TO WALL. 260
USING APPROVED SPOTTER, SPOT CLEAN CARPETED AREA. 260
SPOT CLEAN INTERIOR GLASS WITHIN NORMAL REACH 260
CLEAN ALL KITCHEN SINKS. 260
DAMP WIPE ALL CAFETERIA AND LUNCH ROOM TABLES. 260
USING EDGING TOOL, VACUUM CORNERS AND EDGES 52
REMOVING VISIBLE DUST AND DEBRIS.
DUST ALL LOW REACH AREAS. 52
DUST ALL HIGH REACH AREAS. 52
DUST ALL VENETIAN BLINDS. 52
THOROUGHLY CLEAN INTERIOR GLASS WITH THE EXCEPTION OF 12
THE INTERIOR OF EXTERIOR WINDOWS.
VACUUM OR DUST ALL VENTS AND GRILL WORK AS NEEDED. 12
</TABLE>
Page 4
<PAGE> 43
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as
the "First Amendment") is made as of the 7th day of August 1996, by and between
WEEKS REALTY, L.P. (hereinafter referred to as "Landlord") and WORLD TRAVEL
PARTNERS, L.P. (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated September 26, 1995, (hereinafter referred to as the "Agreement") for the
lease of 12,681 sq. ft. of office space at 6 West Druid Hills, Suite 700,
Atlanta, Georgia which is more particularly described in Exhibit "A" to the
Agreement and certain easements, rights and privileges appurtenant thereto
(hereinafter referred to as the "Leased Premises"); and
WHEREAS, Tenant desires to lease an additional 3,180 square feet of space
in the Building (hereinafter the "Additional Space"); and
WHEREAS, Landlord and Tenant desire to enter into this First Amendment
in order to amend the Agreement upon terms and conditions mutually acceptable
to Landlord and Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid
by Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Effective July 15, 1996, paragraph 1.01 of the Agreement is hereby
amended to provide for the lease by Tenant of an additional 3,180 square feet
of space which is a portion of Suite 500 at 6 West Druid Hills, Atlanta,
Georgia, as shown on the attached Exhibit A, which together with the 12,681
square feet being leased by Tenant under the Agreement (hereinafter the
"Existing Space"), equals a total of 15,861 square feet (the Additional Space
and Existing Space shall be collectively hereinafter referred to as the "Leased
Premises" for all purposes of the Agreement, as amended hereby).
2. Paragraph 3.01 of the Agreement is hereby amended to provide that
effective July 15, 1996 through the remainder of the term, Tenant shall pay as
base rental the sum of Two Hundred Twenty Two Thousand Fifty Four and 00/100
Dollars ($222,054.00) per year payable in monthly installments each in the
amount of Eighteen Thousand Five Hundred Four and 50/100 Dollars ($18,504.50)
on or before the first day of each calendar month during the applicable term,
together with any other additional rental as set forth hereunder or as set
forth in the Agreement.
3. In consideration of Tenant's performance of all its obligations under
the Agreement, as amended, Landlord shall, at Landlord's sole cost and expense,
provide the following tenant improvements to the Leased Premises:
(a) Landlord shall purchase and install, in the Additional Space,
a supplemental HVAC system engineered in accordance with the specifications
labeled Exhibit "B" attached hereto. In the event that the cost to install said
supplemental HVAC system exceeds $25,000, then Tenant shall pay to Landlord any
amount above said $25,000 within thirty (30) days of Tenant's receipt of
Landlord's invoice. Landlord's contribution of said $25,000 amount is
hereinafter referred to as "Allowance". It is understood and agreed that the
actual "cost to install" said supplemental HVAC system shall be Landlord's
direct cost of installing same. Landlord shall exercise good faith efforts to
ensure that the "cost to install" said supplemental HVAC system reflects
<PAGE> 44
competitive pricing. Further, until such installation is complete and said
supplemental HVAC system is operational, Landlord shall provide Tenant with
complementary after hours HVAC service, as requested by Tenant for Additional
Space. The supplemental HVAC system will be placed on a timer, and Landlord
will bill Tenant $.65 / ton / hour such supplemental HVAC system is actually
running. After installation, Tenant shall keep and maintain the supplemental
HVAC system in good condition and repair and shall obtain and keep current
during the Lease term a service maintenance contract on said equipment.
(b) Landlord shall provide Tenant with up to $15,000.00 worth of
Bell South credits for services and equipment provided by Bell South.
4. Tenant shall continue to have the option to terminate, as more
particularly described in Paragraph P of the Miscellaneous Provisions of the
Agreement, and in addition thereto, Tenant shall have an option to terminate
its lease of Additional Space at any time effective on December 31, 1996 or the
last day of any calendar month thereafter provided that Tenant gives written
notice to Landlord of its intention to terminate at least 120 days prior to the
termination date, and provided that Tenant pays to Landlord a sum equal to the
unamortized Allowance and broker's commissions relating to the lease of
Additional Space.
5. Landlord hereby grants to Tenant the right of first refusal to the
lease the remainder of Suite 500 (approximately 3,618 rentable square feet), as
shown on the attached Exhibit "A", (the Adjacent Space) upon the terms and
conditions contained herein.
So long as Tenant is not then in default under the Lease, Landlord will
notify Tenant when it has made a proposal to lease the Adjacent Space to a
third party and the terms and conditions upon which it is willing to lease such
space.
Tenant shall provide written notice to Landlord, as to Tenant's decision
to lease or not to lease that portion of the Adjacent Space within five (5)
calendar days after Landlord's notice to Tenant is received. If Tenant does not
provide written notice or indicates that it will not exercise its right of
first refusal, this right will expire and Landlord shall have no future
obligations to Tenant with regard to that portion of the Adjacent Space which
was subject to such notice.
If Tenant does provide such notice to lease the Adjacent Space for a
term not to exceed the remaining initial term of this Lease, Landlord and
Tenant will execute a lease for the Adjacent Space within ten (10) days after
Landlord's receipt of Tenant's notice of intent to lease on all the same terms
as this Lease except for the rental terms, and other matters which shall be the
same as those contained in the proposal to the third party. If Tenant does not
provide written notice or indicates that it will not exercise its right of
first refusal, this right will expire and Landlord shall have no future
obligations to Tenant with regards to that portion of the Adjacent Space which
was subject to such notice.
This right of first refusal to lease the Adjacent Space is personal to
World Travel Partners, L.P. and may not be assigned in connection with an
assignment of this Lease or otherwise.
6. Except as expressly modified by this First Amendment, all provisions,
terms and conditions of the Agreement shall remain in full force and effect.
7. In the event a provision of this First Amendment conflicts with a
provision of the Agreement, the First Amendment shall supersede and control.
8 All terms and phrases used herein shall have the same meaning as
assigned to them in the Agreement.
<PAGE> 45
9. This First Amendment shall not be of any legal effect or consequence
unless signed by Landlord and Tenant, and once signed by Landlord and Tenant it
shall be binding upon and inure to the benefit of Landlord, Tenant, and their
respective legal representatives, successors and assigns.
10. This First Amendment has been executed and shall be construed under
the laws of the State of Georgia.
SIGNATURES CONTAINED ON FOLLOWING PAGE
<PAGE> 46
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
be executed under seal and delivered as of the day and year first above
written.
LANDLORD:
Signed, sealed and delivered
in presence of: WEEKS REALTY, L.P.,
a Georgia limited partnership
- -----------------------------------
Witness By: Weeks Corporation,
a Georgia corporation,
- ---------------------------------- its general partner
Notary Public, Gwinnett County, Georgia
My Commission Expires June 9, 1997
By: /s/ A. R. Weeks, Jr.
---------------------------
Name: A. R. WEEKS, JR.
--------------------------
Its: CHAIRMAN/CEO
--------------------------
(Corporate Seal)
TENANT:
Signed, sealed and delivered
in the presence of: WORLD TRAVEL PARTNERS, L.P.
By: /s/ Timothy J. Severt
- ----------------------------------------- --------------------------
Witness Name: Timothy J. Severt
--------------------------
- ----------------------------------------- Its: VP of Administration
Notary Public --------------------------
ATTEST:
By:
---------------------------
Name:
--------------------------
Its:
--------------------------
(Corporate Seal)
<PAGE> 47
EXHIBIT "A"
DRUID CHASE OFFICE PARK
6 West Druid Hills Road, Suite 700
Space Available: 12,681 RSF (7th Floor)
(Graphics)
<PAGE> 48
EXHIBIT "B"
[LOGO] July 16, 1996
David Barker
Weeks Corporation
4491 Park Drive
Norcross, Georgia 30003
Re: WorldTravel
5th Floor - Druid Chase
Dear Mr. Barker,
Enclosed are copies of the WorldTravel expansion drawings for
the 5th Floor at Druid Chase for you to distribute to your
associates for review. The tenant has requested that I convey two
outstanding issues that need to be resolved with input from your
company.
The first issue relates to the question that Ron Budde from
our office asked Jennifer DeWeese, last week regarding the upgrading
of the existing building corridor and demising walls to be one hour
rated and extended to structure. I have shown on our construction
drawings for some of the building corridor wall and the demising
wall to be extended to structure for the tenant's security purposes,
but this does not address the issue of fire rating. Jennifer was
going to consult with you on this issue, therefore I am awaiting
your feedback on this item.
The second issue concerns the modifications to the HVAC
system to accommodate WorldTravel's needs. Tim Severt of WorldTravel
told me that they are receiving an allowance for the landlord to
furnish and install four one-ton, 24 hour, above calling HVAC units
to accommodate their 24 hour operating conditions. I have met with
the tenant's Technical and Equipment managers and propose the
following criteria that should alter the design intent of the
proposed 24 hour HVAC configuration.
The Server/Ticket Printer Rooms 518/514 will initially
produce approx. 25.000 Btu/hr. of heat continuously. Therefore, the
tenant would like a three ton, 24 hour cooling (only) unit above the
ceiling to serve this room with a T-stat. This will give them a
small amount of growth capacity.
The balance of the Suite shall be conditioned with after hour
heating and cooling as required per the distribution of people and
equipment as illustrated below:
<TABLE>
<S> <C> <C>
Development Room 517 Equivalent of 4 PC servers plus two people.
Office 510 Equivalent of 2 PC's plus one person.
Break 511 Refrigerator, microwave and coffee.
Distribution 508 Mscl. Postal Equipment, 11 People and 11 PC's
Open Plan 15 People plus 15 PC's
</TABLE>
For the occupied areas (all areas except room 514/518), three
one-ton units may be adequate instead of the four proposed. However,
I will leave that for you to decide. Nonetheless, the tenant did
stress that the 24 hour supplemental conditioning in the occupied
areas should
<PAGE> 49
WorldTravel
PAGE 2
include accommodations for heating as well as cooling, that the
T-stats shall engage the equipment only after normal building hours
and that all of the supplemental units shall be wired through a
separate electrical meter to account for their increase in
electricity consumption.
Please coordinate your work with the tenant's General
Contractor. You should contact Tim Severt with WorldTravel for a
schedule and the G.C.'s contact information. Please call me at
770 396 3207 if you have any other questions.
Sincerely,
/s/ Clint M. Morrison
Senior Project Manager
CC: Tim Severt - WorldTravel Partners
Les White - White Construction
Ron Budde - Lola Budde * Associates
<PAGE> 50
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the
"Second Amendment") is made as of the 8th day of April 1997, by and between
WEEKS REALTY, L.P. (hereinafter referred to as "Landlord") and WORLD TRAVEL
PARTNERS, L.P. (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated September 26, 1995, as amended by that certain First Amendment to Lease
Agreement dated August 7, 1996 (hereinafter collectively referred to as the
"Agreement") for the lease of 15,861 sq. ft. of office space at 6 West Druid
Hills, Suite 700, Atlanta, Georgia which is more particularly described in
Exhibit "A" to the Agreement and certain easements, rights and privileges
appurtenant thereto (hereinafter referred to as the "Leased Premises"); and
WHEREAS, pursuant to the First Amendment to Lease Agreement, Tenant
leased an additional 3,180 square feet in the Building (hereinafter the "First
Additional Space"); and
WHEREAS, Tenant desires to lease an additional 12,464 square feet of
space on the second floor in the Building; and
WHEREAS, Landlord has permitted Tenant to occupy an additional 3,618
square feet in the Building at no charge to Tenant (hereinafter the "Temporary
Space"); and
WHEREAS, Landlord and Tenant desire Tenant to lease the Temporary Space
along with the 12,644 square feet described above upon terms and conditions
acceptable to Landlord (the 12,644 square feet on the second floor and the
Temporary Space shall hereinafter be referred to as the Second Additional
Space); and
WHEREAS, Landlord and Tenant desire to enter into this Second Amendment
in order to amend the Agreement upon terms and conditions mutually acceptable
to Landlord and Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by
Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Effective upon the earlier of (i) June 1, 1997, or (ii) Substantial
Completion of the improvements to the Second Additional Space, as hereinafter
defined, Paragraph 1.01 of the Agreement is hereby amended to provide for the
lease by Tenant of an additional 16,082 square feet of space in the Building at
6 West Druid Hills, Atlanta, Georgia, as shown on the attached Exhibit A (the
"Second Additional Space"). "Substantial Completion" shall mean receipt of a
certificate of occupancy and completion of construction of the Second
Additional Spade substantially in accordance with the approved plans attached,
or to be attached, hereto in Exhibit "A" (the "Approved Plans"). It is
understood and agreed by Landlord and Tenant that in order to achieve
Substantial Completion the only permitted incomplete or defective punchlist
items must be those which shall, if taken either individually or in the
aggregate, do not materially or substantially interfere with Tenant's taking
possession of, moving its personal property and effects into, or using and
enjoying the Second Additional Space for the purposes for which it was
intended.
2. Effective upon Substantial Completion of the improvements to the
Second Additional Space, Paragraph 1.01 of the Agreement is hereby amended to
provide that the Leased Premises shall increase by 16,082 square feet which
together with the space then being leased by Tenant under the Agreement
including the First Additional Space (the "Existing Space"), equals a total
of 31,943 square feet (the Second Additional Space and the Existing Space
shall be collectively
<PAGE> 51
hereinafter referred to as the "Leased Premises" for all purposes of the
Agreement, as amended hereby).
3. The Agreement is hereby extended for a period of three (3) years
effective upon Substantial Completion of the improvements to the Second
Additional Space (provided that if the date of Substantial Completion is not
the first day of a calendar month, the term of this lease shall continue until
the last day of the calendar month which is the thirty-sixth month after the
Commencement Date) on all of the same terms, covenants and conditions of the
Agreement, with the same base year, except that the base rental for the Leased
Premises shall be the sum of Four Hundred Forty Seven Thousand Two Hundred Two
and 00/100 Dollars ($447,202.00) per year payable in monthly installments each
in the amount of Thirty Seven Thousand Two Hundred Sixty Six and 83/100 Dollars
($37,266.83) which payments shall be due on or before the first day of each
calendar month during the term together with any other additional rent as set
forth in the Agreement.
4. As consideration for Tenant's performance of all obligations to be
performed by Tenant under the Agreement, Landlord shall contribute the sum of
Ninety Nine Thousand Six Hundred Seventy Two and 00/100 Dollars ($99,672.00)
(the "Allowance") towards the cost of tenant improvements to the Second
Additional Space. The Allowance shall be used for alterations, improvements,
fixtures and equipment which become part of or are attached or affixed to the
Leased Premises, including walls, wall coverings and floor coverings, but
excluding trade fixtures, furniture and furnishings or other personal property.
In the event the cost of tenant improvements exceeds the cost of the tenant
improvement Allowance, the excess shall be paid by Tenant within thirty (30)
days of Tenant's receipt of Landlord's notice.
5. Tenant shall utilize the existing HVAC units, electrical, and
other special use systems located in the Second Additional Space, and Tenant
shall have the right to relocate the supplemental HVAC system, counters and
built-in-work surfaces, and other special improvements, installed on Tenant's
behalf in the in the First Additional Space to the Second Additional Space.
6. The following sentence shall be deleted from Paragraph 33.01 of the
Agreement:
"Landlord shall provide 4.0 parking spaces per 1,000 square feet of
space in the Leased Premises at no extra charge to Tenant."
and the following shall be inserted in lieu thereof:
"Landlord shall provide 2.6 parking spaces per 1,000 square feet of
space in the Leased Premises at no extra charge to Tenant. In the event
Landlord obtains additional parking or is otherwise able to offer a parking
ratio in excess of the stated Building ratio of 2.6 parking spaces per 1,000
square feet of space in the Building, then such enhanced ratio shall first be
provided to Tenant (as opposed to other tenants in the Building), and the Lease
shall be duly amended in accordance therewith."
7. Tenant may park 24 cars in the parking lots of Landlord's buildings
located at 1190 West Druid Hills Drive and 2801 Buford Highway. Such parking is
not reserved nor assigned.
8. Paragraph P of the Agreement is hereby deleted in its entirety and
Landlord and Tenant hereby mutually agree and understand that Tenant shall have
no option to terminate the Agreement.
9. The following sentence shall be deleted from Paragraph 3(a) of the
First Amendment to Lease Agreement:
"The supplemental HVAC system will be placed on a timer, and Landlord
will bill Tenant $.65/ton/hour such supplemental HVAC system is actually
running."
and the following sentence shall be inserted in lieu thereof:
<PAGE> 52
"The supplemental HVAC system will be placed on a meter, and Landlord
will bill Tenant the "actual cost of electricity" plus a ten percent (10%)
administrative charge for the time the supplemental HVAC system is actually
running."
10. Except as expressly modified by this Second Amendment, all
provisions, terms and conditions of the Agreement shall remain in full force
and effect.
11. In the event a provision of this Second Amendment conflicts with a
provision of the Agreement, the Second Amendment shall supersede and control.
12. All terms and phrases used herein shall have the same meaning as
assigned to them in the Agreement.
13. This Second Amendment shall not be of any legal effect or
consequence unless signed by Landlord and Tenant, and once signed by Landlord
and Tenant it shall be binding upon and inure to the benefit of Landlord,
Tenant, and their respective legal representatives, successors and assigns.
14. This Second Amendment has been executed and shall be construed
under the laws of the State of Georgia.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
<PAGE> 53
IN WITNESS WHEREOF, the undersigned have caused this Second Amendment
to be executed under seal and delivered as of the day and year first above
written.
LANDLORD:
Signed, sealed and delivered
in presence of: WEEKS REALTY, L.P.,
a Georgia limited partnership
- -----------------------------------
Witness By: Weeks GP Holdings, Inc.
/s/ Stephanie Pongetti a Georgia corporation,
- ----------------------------------- its sole general partner
Notary Public
By: /s/ A. R. Weeks, Jr.
------------------------------
Name: A. R. WEEKS, JR.
------------------------------
(GRAPHIC) Its: CHAIRMAN/CE0
------------------------------
TENANT:
Signed, sealed and delivered
in the presence of: WORLD TRAVEL PARTNERS, L.P.
By: /s/ Timothy J. Severt
- ----------------------------------------- -----------------------------
Witness Name: Timothy J. Severt
-----------------------------
- ----------------------------------------- Its: Vice President Administration
Notary Public -----------------------------
ATTEST:
By:
------------------------------
Name:
------------------------------
Its:
------------------------------
(Corporate Seal)
<PAGE> 54
THIRD AMENDMENT TO LEASE AGREEMENT
THIS THIRD AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the
("Third Amendment") is made as of the 3rd day of December 1997, by and between
WEEKS REALTY, L.P. (hereinafter referred to as "Landlord") and WORLD TRAVEL
PARTNERS, L.P. (hereinafter referred to as 'Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated September 26, 1995, as amended by that certain First Amendment to Lease
Agreement dated August 7, 1996, and as further amended by that certain Second
Amendment to Lease Agreement dated April 8, 1997 (hereinafter collectively
referred to as the "Agreement") for the lease of 31,943 square feet of office
space at 6 West Druid Hills, Suite 700, Atlanta, Georgia, which is more
particularly described in Exhibit "A" to the Agreement and certain easements,
rights and privileges appurtenant thereto (hereinafter referred to as the
"Leased Premises"); and
WHEREAS, Tenant desires to lease an additional 2,620 square feet of
office space known as Suite 600 and an additional 1,042 square feet of office
space known as Suite 635 at 6 West Druid Hills (hereinafter collectively
referred to as the "Additional Space"); and
WHEREAS, Landlord and Tenant desire to enter into this Third Amendment in
order to provide for said expansion of the Leased Premises upon terms and
conditions mutually acceptable to Landlord and Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by
Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Effective upon the earlier of (i) January 1, 1998, or (ii) Substantial
Completion of the tenant improvements to the Additional Space, as hereinafter
defined (hereinafter the "Commencement Date"), Tenant shall lease an additional
2,620 square feet of office space known as Suite 600 and an additional 1,042
square feet of office space at 6 West Druid Hills, as shown on the plan attached
hereto as Exhibit "A", which together with the 31,943 square feet being leased
by Tenant under the original Agreement (hereinafter the "Existing Space"),
equals a total of 35,605 square feet (the Additional Space and the Existing
Space shall be collectively hereinafter referred to as the "Leased Premises" for
all purposes of the Agreement, as amended hereby). "Substantial Completion"
shall mean receipt of a certificate of occupancy and completion of tenant
improvements to the Additional Space. It is understood and agreed by Landlord
and Tenant that in order to achieve Substantial Completion the only permitted
incomplete or defective punchlist items must be those which shall, if taken
either individually or in the aggregate, do not materially or substantially
interfere with Tenant's taking possession of, moving its personal property and
effects into, or using and enjoying the Additional Space for the purposes for
which it was intended.
2. The Agreement is hereby extended for a period of three (3) years
effective upon Substantial Completion of the tenant improvements to the
Additional Space (provided that if the date of Substantial Completion is not
the first day of the calendar month, the term of the Agreement shall continue
until the last day of the calendar month which is the thirty-sixth month after
the Commencement Date) on all of the same terms, covenants and conditions of the
Agreement, except that the base year for the Additional
<PAGE> 55
Space shall be 1997, and except that the base rental for the Leased Premises
shall be as set forth below:
<TABLE>
<S> <C> <C>
Existing Premises (31,943 square feet):
Years 1 - 3 $37,266.83/month $447,202.00/year
Additional Space (3,662 square feet):
Years 1 - 3 $ 4,272.33/month $ 51,268.00/year
Total Leased Premises (35,605 square feet):
Years 1 - 3 $41,539.17/month $498,470.00/year
</TABLE>
which payments shall be due and payable on or before the first day of
each calendar month during the applicable term, together with any other
additional rental as set forth hereunder or as set forth in the Agreement.
3. As consideration for Tenant's performance of all obligations to be
performed by Tenant under the Agreement, Landlord shall contribute $4.00 per
square foot contained in the Additional Space, or the sum of Fourteen Thousand
Six Hundred Forty-eight and no /100 Dollars ($14,648.00) (the "Allowance")
towards the cost of tenant improvements to the Additional Space. The Allowance
shall be used for alterations, improvements, fixtures and equipment which become
part of or are attached or affixed to the Additional Space, including walls,
wall coverings and floor coverings, but excluding trade fixtures, furniture and
furnishings or other personal property. In the event the cost of tenant
improvements exceeds the cost of tenant improvement Allowance, the excess shall
be paid by Tenant within thirty (30) days of Tenant's receipt of Landlord's
notice.
4. Effective upon the Commencement Date and continuing for a period of
twelve (12) months after the Commencement Date, Tenant shall have the option to
install a sign on the roof of the Building, at Tenant's cost and expense,
subject to the reasonable approval of Landlord regarding the size, quality,
location and method of installation of the sign. It is understood and agreed by
Tenant, however, that should Tenant exercise its option to install said sign,
Tenant shall be required to extend the term of the Agreement for one (1)
additional year, on the same terms and conditions prevailing under the
Agreement, so that the Agreement shall expire one (1) year beyond the original
expiration date of the Agreement.
5. Landlord hereby grants to Tenant the option to lease 5,249 square feet
of the adjacent space known as Suite 510, as shown on the attached Exhibit "B",
(hereinafter the "Adjacent Space"), upon the same terms and conditions as the
Additional Space, at the same time of the surrender of the Adjacent Space by its
current tenant (hereinafter the "Current Tenant").
So long as Tenant is not then in default under the Agreement, Landlord
will notify Tenant when the Current Tenant has surrendered and vacated the
Adjacent Space. Tenant shall provide written notice to Landlord, as to Tenant's
decision to lease or not to lease the Adjacent Space within five (5) business
days after Landlord's notice to Tenant is received. If Tenant does provide such
notice to lease the Adjacent Space, Landlord and Tenant will execute an
amendment to the Agreement for the lease of the Adjacent Space within ten (10)
days after Landlord's receipt of Tenant's notice of intent to lease on all the
same terms as the Additional Space. If Tenant does not provide written notice
or indicates that it will not exercise its option to lease the Adjacent Space,
this right will expire and Landlord shall have no future obligations to Tenant
with regard to the Adjacent Space which was subject to such notice.
Notwithstanding the foregoing, should Tenant exercise its option to lease the
Adjacent Space, the Base Rental for the first thirty (30) days of Tenant's
possession of the Adjacent Space shall be $12.50 per rentable square foot.
Thereafter, the Base Rental for Said Adjacent Space shall be per the Base Rental
prevailing for the Leased Premises.
<PAGE> 56
6. Tenant shall have the option to renew the Agreement for an additional
one (1) year term provided that Tenant gives written notice to Landlord of its
intention to renew at least ninety (90) days prior to the end of the then
current term thereof. The renewal shall be upon the same terms and conditions
and the same Base Rental prevailing under the Agreement,
It is expressly understood that Tenant shall have no option to renew the
Agreement for the renewal term if at the time of the attempted exercise of such
option or at the commencement of such renewal term the Agreement is not then in
full force and effect and if Tenant is then in default of any terms and
conditions of the Agreement.
2. Paragraph 7 of the 2nd Amendment to the Lease Agreement will be
deleted in its entirety and replaced with the following:
"Tenant may park 30 cars in the parking lots of Landlord's
buildings located at 1190 West Druid Hills Drive and 2801 Buford Highway. Such
parking is not reserved nor assigned."
7. Except as expressly modified by this Third Amendment, all provisions,
terms and conditions of the Agreement shall remain in full force and effect.
8. In the event a provision of this Third Amendment conflicts with a
provision of the Agreement, the Third Amendment shall supersede and control.
9. All terms and phrases used herein shall have the same meaning as
assigned to them in the Agreement
10. This Third Amendment shall not be of any legal effect or consequence
unless signed by Landlord and Tenant, and once signed by Landlord and Tenant it
shall be binding upon and inure to the benefit of Landlord, Tenant, and their
respective legal representatives, successors and assigns.
11. This Third Amendment has been executed and shall be construed under
the laws of the State of Georgia.
<PAGE> 57
IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to
be executed under seal and delivered as of the day and year first above written.
<TABLE>
<S> <C>
LANDLORD:
Signed, sealed and delivered WEEKS REALTY, L.P.
in the presence of:
By: Weeks GP Holdings, Inc., a Georgia Corporation
its sole general partner
/s/ Kelly A. Kinnery By: /s/ Forrest Robinson
- --------------------------------------- ------------------------------------------------
Witness Name: Forrest Robinson
----------------------------------------------
/s/ Patricia L. Adams Its: President/COO
- --------------------------------------- -----------------------------------------------
Notary Public
Notary Public, Gwinnett County, Georgia
My Commission Expires June 9, 2001
TENANT:
Signed, sealed and delivered WORLD TRAVEL PARTNERS, L.P.
in the presence of:
By: /s/ Timothy J. Severt
- ---------------------------------------- ------------------------------------------------
Witness Name: Timothy J. Severt
----------------------------------------------
- ---------------------------------------- Its: VP of Administration
Notary Public -----------------------------------------------
Notary Public, Gwinnett County, Georgia
My Commission Expires January 11, 2001
ATTEST
By: /s/ Alison Ehrlich
------------------------------------------------
Name: Alison Ehrlich
---------------------------------------------
Its: Paralegal
-----------------------------------------------
(Corporate Seal)
</TABLE>
<PAGE> 58
EXHIBIT A
Suite I-600
<PAGE> 59
EXHIBIT "B"
Suite 510
<PAGE> 60
FOURTH AMENDMENT TO LEASE AGREEMENT
THIS FOURTH AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as
the "Fourth Amendment") is made as of the 5th day of October 1998 by and between
WEEKS REALTY, L.P. (hereinafter referred to as "Landlord") and WORLD TRAVEL
PARTNERS, L.P. (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated September 26, 1995, and as amended by that certain First Amendment to
Lease Agreement dated August 7,1996, and as amended by that certain Second
Amendment to Lease Agreement dated April 8, 1997 and as further amended by that
certain Third Amendment to Lease Agreement dated December 3, 1997 (hereinafter
collectively referred to as the "Agreement") for the lease of 35,605 square feet
of office/warehouse space at 6 West Druid Hills, Suite 700, Atlanta, Georgia
which is more particularly described in Exhibit "A" to the Agreement and certain
easements, rights and privileges appurtenant thereto (hereinafter referred to as
the "Leased Premises"); and
WHEREAS, Tenant desires to lease an additional 11,442 square feet of
office space at 6 West Druid Hills, Suite 400 (hereinafter the Additional
Space"); and
WHEREAS, Landlord and Tenant desire to enter into this Fourth Amendment
in order to provide for said expansion of the Leased Premises upon terms and
conditions mutually acceptable to Landlord and Tenant,
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid
by Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Effective upon the earlier of (i) January 1, 1999, or (ii)
Substantial Completion of the tenant improvements to the Additional Space, as
hereinafter defined (hereinafter the "Commencement Date"), Tenant shall lease an
additional 11,442 square feet of space known as 6 West Druid Hills, Suite 400,
Atlanta, Georgia as shown on the plan attached hereto as Exhibit "A",
(hereinafter the "Additional Space"), which together with the 35,605 square feet
being leased by Tenant under the original Agreement (hereinafter the "Existing
Space"), equals a total of 47,047 square feet (the Additional Space and the
Existing Space shall be collectively hereinafter referred to as the "Leased
Premises" for all purposes of the Agreement, as amended hereby). "Substantial
Completion" shall mean receipt of a certificate of occupancy and completion of
tenant improvements to the Additional Space. It is understood and agreed by
Landlord and Tenant that in order to achieve Substantial Completion the only
permitted incomplete or defective punchlist items must be those which shall, if
taken either individually or in the aggregate, do not materially or
substantially interfere with Tenant's taking possession of, moving its personal
property and effects into, or using and enjoying the Additional Space for the
purposes for which it was intended.
2. The Agreement is hereby extended for a period of three (3) years
effective upon Substantial Completion of the tenant improvements to
the Additional Space (provided that if the date of Substantial Completion is not
the first day of the calendar month, the term of the Agreement shall continue
until the last day of the calendar month which is the thirty-sixth month after
the Commencement Date) on all of the same terms, covenants and conditions of the
Agreement, except that the base year for the Additional
<PAGE> 61
Space shall be 1999, and except that the base rental for the Leased Premises
shall be as set forth below:
<TABLE>
<S> <C> <C>
Existing Premises (35,605 square feet):
Years 1-3 $41,539.16/month $498,470.00/year
Additional Space (11,442 square feet):
Years 1-3 $14,302.50/month $171,630.00/year
Total Leased Premises (47,027 square feet),
Years1-3 $55,841.66/month $670,100.00/year
</TABLE>
which payments shall be due and payable on or before the first day of each
calendar month during the applicable term, together with any other additional
rental as set forth hereunder or as set forth in the Agreement.
3. As consideration for Tenant's performance of all obligations to be
performed by Tenant under the Agreement, Landlord shall contribute $3.00 per
square foot contained in the Additional Space, or the sum of Thirty-Four
Thousand Three Hundred Twenty-Six and no /100 Dollars ($34,326.00) (the
"Allowance") towards the cost of tenant improvements to the Additional Space.
The Allowance shall be used for alterations, improvements, fixtures and
equipment which become part of or are attached or affixed to the Additional
Space, including walls, wall coverings and floor coverings, but excluding trade
fixtures, furniture and furnishings or other personal property. In the event the
cost of tenant improvements exceeds the cost of tenant improvement Allowance,
the excess shall be paid by Tenant within thirty (30) days of Tenant's receipt
of Landlord's notice.
4. Weeks Corporation will commence the refurbishment of the building's
main lobby during 1998.
5. Except as expressly modified by this Fourth Amendment, all provisions,
terms and conditions of the Agreement shall remain in full force and effect.
6. In the event a provision of this Fourth Amendment conflicts with a
provision of the Agreement, the Fourth Amendment shall supersede and control.
7. All terms and phrases used herein shall have the same meaning as
assigned to them in the Agreement.
8. This Fourth Amendment shall not be of any legal effect or consequence
unless signed by Landlord and Tenant, and once signed by Landlord and Tenant it
shall be binding upon and inure to the benefit of Landlord, Tenant, and their
respective legal representatives, successors and assigns.
9. This Fourth Amendment has been executed and shall be construed under
the laws of the State of Georgia.
10. Landlord shall also contribute the sum of $19,021.50 (the "Other
Allowance") towards the costs of replacing the carpet* in the portion of Leased
Premises comprising floor 7.
* including touch-up painting
<PAGE> 62
IN WITNESS WHEREOF, the undersigned have caused this Fourth Amendment to
be executed under seal and delivered as of the day and year first above written.
<TABLE>
<S> <C>
LANDLORD:
Signed, sealed and delivered WEEKS REALTY, L.P.
in the presence of: a Georgia limited partnership
By: Weeks GP Holdings, Inc., a Georgia
corporation,
Kelly A. Kinnery its sole general partner
- -----------------------------
Witness By: /s/ Forrest Robinson
-------------------------------------
/s/ Name: Forrest W. Robinson
- ----------------------------- -----------------------------------
Notary Public Its: President/C.O.O.
------------------------------------
TENANT:
Signed, sealed and delivered WORLD TRAVEL PARTNERS, L.P.
in the presence of
By: /s/ Timothy J. Severt
- ----------------------------- -------------------------------------
Witness Name: Timothy J. Severt
-----------------------------------
Its: SVP - Administration
------------------------------------
B. Sharon Wilhelm
- -----------------------------
Notary Public
Notary Public, Gwinnett County, Georgia
My Commission Expires January 11, 2001
ATTEST:
By: /s/ W. Thomas Barhan
-------------------------------------
Name: W. Thomas Barhan
-------------------------------------
Its: SVP - Finance
-------------------------------------
(Corporate Seal)
</TABLE>
<PAGE> 63
FIFTH AMENDMENT TO LEASE AGREEMENT
THIS FIFTH AMENDMENT TO LEASE AGREEMENT hereinafter referred to as the
"Fifth Amendment") is made as of the 22nd day of April 1999, by and between
WEEKS REALTY, L.P. (hereinafter referred to as "Landlord") and WORLD TRAVEL
PARTNERS, L.P. (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated September 26, 1995, and as amended by that certain First Amendment to
Lease Agreement dated August 7, 1996, and as amended by that certain Second
Amendment to Lease Agreement dated April 8, 1997, as amended by that certain
Third Amendment to Lease Agreement dated December 3, 1997, and as further
amended by that certain Fourth Amendment to Lease Agreement dated October 5,
1998 (hereinafter collectively referred to as the "Agreement") for the lease of
47,047 rentable square feet of office space at 6 West Druid Hills, Suite 700,
Atlanta, Georgia which is more particularly described in Exhibit "A" to the
Agreement and certain easements, rights and privileges appurtenant thereto
(hereinafter referred to as the "Leased Premises"); and
WHEREAS, Tenant desires to lease an additional 5,249 rentable square
feet of office space at 6 West Druid Hills, known as Suite 510, as shown on the
attached Exhibit "A" (hereinafter the "Expansion Space"); and
WHEREAS, Landlord and Tenant desire to enter into this Fifth Amendment
in order to provide for said expansion of the Leased Premises upon terms and
conditions mutually acceptable to Landlord and Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid
by Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Effective May 1, 1999 (hereinafter the "Expansion Commencement
Date"), and continuing until midnight on December 31, 2001, Tenant shall lease
the Expansion Space, which together with the 47,047 rentable square feet being
leased by Tenant under the original Agreement (hereinafter the "Existing
Space"), equals a total of 52,296 rentable square feet. As of the Expansion
Commencement Date, the Existing Premises and the Expansion Space shall be
collectively hereinafter referred to as the "Leased Premises" for all purposes
of the Agreement, as amended hereby.
2. Paragraph 3.01 of the Agreement is hereby amended to provide that
Tenant shall pay base rental as set forth below:
As of Expansion Commencement Date:
Existing Premises (47,047 rentable square feet:
$55,841.66/month $670,099.92/year
Expansion Space (Suite 510 - 5,249 rentable square feet):
$6,123.83/month $73,486.00/year
<PAGE> 64
Total Leased Premises as of Expansion Commencement Date:
(52,296 rentable square feet)
$61,965.49/month $743,585.92/year
3. Effective as of the Expansion Commencement Date, Paragraph 4.01(iv)
of the Agreement is hereby amended to provide that Tenants "Pro Rata Share"
shall equal 64.16%.
4. Effective as of the Expansion Commencement Date, Paragraph 4.01(b)
of the Agreement is hereby amended to provide that the Base Year for purposes
of calculating Tenant's Pro Rata Share of Additional Rent for the Expansion
Space only shall be 1997.
5. Effective as of the Expansion Commencement Date, as consideration
for Tenant's performance of all obligations to be performed by Tenant under the
Agreement, Landlord shall contribute $4.00 per rentable square foot contained
in the Expansion Space (which is the sum of $20,996.00) towards the cost of
tenant improvements to the Expansion Space only. The Allowance shall be used
for alterations, improvements, fixtures and equipment which become part of or
are attached or affixed to the Expansion Space, including walls, wall coverings
and floor coverings, but excluding trade fixtures, furniture and furnishings or
other personal property. In the event the cost of tenant improvements exceeds
the cost of tenant improvement Allowance, the excess shall be paid by Tenant
within thirty (30) days of Tenant's receipt of Landlord's notice.
6. Except as expressly modified by this Fifth Amendment, all
provisions, terms and conditions of the Agreement shall remain in full force and
effect.
7. In the event a provision of this Fifth Amendment conflicts with a
provision of the Agreement, the Fifth Amendment shall supersede and control.
8. All terms and phrases used herein shall have the same meaning as
assigned to them in the Agreement.
9. This Fifth Amendment shall not be of any legal effect or consequence
unless signed by Landlord and Tenant, and once signed by Landlord and Tenant it
shall be binding upon and inure to the benefit of Landlord, Tenant, and their
respective legal representatives, successors and assigns.
10. This Fifth Amendment has been executed and shall be construed under
the laws of the State of Georgia.
(SIGNATURES CONTAINED ON FOLLOWING PAGE)
<PAGE> 65
IN WITNESS WHEREOF, the undersigned have caused this Fifth Amendment to
be executed under seal and delivered as of the day and year first above written.
<TABLE>
<S> <C>
LANDLORD:
Signed, sealed and delivered WEEKS REALTY, L.P.
in the presence of: a Georgia limited partnership
By: Weeks GP Holdings, Inc.,
a Georgia corporation,
/s/ its sole general partner
- -----------------------------------
Witness
By: /s/ Forrest Robinson
/s/ Renita R. Mills --------------------------------
- ----------------------------------- Name: Forrest W. Robinson
Notary ------------------------------
Its: President / C.O.O.
TENANT:
Signed, sealed and delivered WORLD TRAVEL PARTNERS, L.P.
in the presence of:
/s/ Alison Ehrlich
- ------------------------------------ By: /s/ Timothy J. Severt
Witness -------------------------------
Name: Timothy J. Severt
-----------------------------
Its: SVP - Administrator
/s/ B. Sharon Wilhelm
- ------------------------------------
Notary Public
Notary Public, Gwinnett County, Georgia
My Commission Expires January 11, 2001
ATTEST:
By: /s/ W.T. Barham
-------------------------------
Name: W.T. Barham
-----------------------------
Its: Sr. VP Finance
------------------------------
(Corporate Seal)
</TABLE>
<PAGE> 66
SIXTH AMENDMENT TO LEASE AGREEMENT
THIS SIXTH AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the
"Sixth Amendment") is made as of the 17 day of August 1999, by and between
DUKE-WEEKS REALTY LIMITED PARTNERSHIP (hereinafter referred to as "Landlord")
and WORLD TRAVEL PARTNERS, L.P. (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, Weeks Realty, L.P. and Tenant entered into that certain Lease
Agreement dated September 26, 1995, and as amended by that certain First
Amendment to Lease Agreement dated August 7, 1996, and as amended by that
certain Second Amendment to Lease Agreement dated April 8, 1997, as amended by
that certain Third Amendment to Lease Agreement dated December 3, 1997, as
amended by that certain Fourth Amendment to Lease Agreement dated October 5,
1998, and as further amended by that certain Fifth Amendment to Lease Agreement
dated April 22, 1999 (hereinafter collectively referred to as the "Agreement")
for the lease of 52,296 rentable square feet of office space at 6 West Druid
Hills, Suites 700, 400 and 510, Atlanta, Georgia, as well as other suites
throughout the Building, which is more particularly described in Exhibit "A" to
the Agreement and certain easements, rights and privileges appurtenant thereto
(hereinafter referred to as the "Leased Premises"); and
WHEREAS, Duke-Weeks Realty Limited Partnership succeeded to the interest of
the Landlord under the Agreement and is the Landlord with respect to the Leased
Premises, as defined herein; and
WHEREAS, Tenant desires to lease an additional 3,810 rentable square feet
of office space at 6 West Druid Hills, known as Suite 100, 3,963 rentable square
feet of office space at 6 West Druid Hills, known as Suite 110, and 3,474
rentable square feet of office space at 6 West Druid Hills, known as Suite 640
as shown on the attached Exhibit "A" (hereinafter collectively the "Expansion
Space"); and
WHEREAS, Landlord and Tenant desire to enter into this Sixth Amendment in
order to provide for said expansion of the Leased Premises upon terms and
conditions mutually acceptable to Landlord and Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by
Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Effective August 15, 1999 and continuing until midnight on August 14,
2002, Tenant shall lease the Expansion Space, which together with the 52,296
rentable square feet being leased by Tenant under the original Agreement
(hereinafter the "Existing Space"), equals a total of 63,543 rentable square
feet. As of August 15, 1999, the Existing Premises and the Expansion Space shall
be collectively hereinafter referred to as the "Leased Premises" for all
purposes of the Agreement, as amended hereby.
2. Paragraph 3.01 of the Agreement is hereby amended to provide that Tenant
shall pay base rental as set forth below:
Expansion Space
Suite 100 - 3,810 sq. ft.
August 15, 1999 - August 14, 2002 $4,762.50/month $57,150.00/year
<PAGE> 67
<TABLE>
<S> <C> <C>
Suite 110 - 3,963 sq. ft.
August 15, 1999 - August 14, 2002 $4,128.13/month $49,537.50/year
Suite 640 - 3,474 sq.ft.
August 15, 1999 - August 14, 2002 $4,632.00/month $55,584.00/year
Existing Premises - 52,296 rentable square feet:
May 1, 1999 - December 31, 2001 $61,965.49/month $743,585.92/year
Total Leased Premises - 63,543 rentable square feet
May 1, 1999 - August 14, 1999 $61,965.49/month $743,585.92/year
August 15,1999 - December 31, 2001 $75,488.12/ month $905,857.42/year
Total Leased Premises - 11,247 rentable square feet
January 1, 2002 - August 14, 2002 $ 13,522.63/month $162,271.50/year
</TABLE>
3. Effective as of August 15, 1999, Paragraph 4.01(iv) of the Agreement
is hereby amended to provide that Tenant's "Pro Rata Share" shall equal 77.96%.
4. Effective as of August 15, 1999, Paragraph 4.01(b) of the Agreement
is hereby amended to provide that the Base Year for purposes of calculating
Tenant's Pro Rata Share of Additional Rent for the Expansion Space only shall be
1999.
5. Effective as of August 15, 1999, as consideration for Tenant's
performance of all obligations to be performed by Tenant under the Agreement,
Landlord shall contribute $3.00 per rentable square foot contained in the
Expansion Space (which is the sum of $33,741.00) towards the cost of tenant
improvements to the Expansion Space only. The Allowance shall be used for
alterations, improvements, fixtures and equipment which become part of or are
attached or affixed to the Expansion Space, including walls, wall coverings and
floor coverings, but excluding trade fixtures, furniture and furnishings or
other personal property. In the event the cost of tenant improvements exceeds
the cost of tenant improvement Allowance, the excess shall be paid by Tenant
within thirty (30) days of Tenant's receipt of Landlord's notice.
Notwithstanding the foregoing, Tenant shall not be permitted to alter or remove
any existing finishes in Suite 640 of the Expansion Space without Landlord's
prior written approval, which approval shall not be unreasonably withheld or
delayed.
6. Effective July 1, 1999 and thereafter during the course of
construction of the Leased Premises, Tenant may enter upon the Expansion Space
for purposes of inspecting and reviewing the work, taking measurements, making
plans, installing trade fixtures and telephones, erecting temporary or permanent
signs and doing such other work as may be appropriate or desirable without being
deemed thereby to have taken possession or obligated itself to pay rent but
Tenant agrees that: (a) Landlord shall have no liability for injury to any
person or damage to any property of Tenant stored on the Expansion Space except
for damages caused by the willful act or gross negligence of Landlord or its
employees or agents, (b) Tenant shall not interfere with Landlord's construction
work on the Leased Premises, (c) Tenant shall indemnify, protect and hold
harmless Landlord from and against any and all claims, demands, damages, losses,
costs, expenses, liabilities and actions at law or in equity based upon any
occurrence or condition arising out of or attributable to Tenant's exercise of
such right, and (d) Tenant shall be solely responsible for the permitting of any
such work it performs.
7. Except as expressly modified by this Sixth Amendment, all
provisions, terms and conditions of the Agreement shall remain in full force and
effect.
8. In the event a provision of this Sixth Amendment conflicts with a
provision of the Agreement, the Sixth Amendment shall supersede and control.
<PAGE> 68
10. This Sixth Amendment shall not be of any legal effect or
consequence unless signed by Landlord and Tenant, and once signed by Landlord
and Tenant it shall be binding upon and inure to the benefit of Landlord,
Tenant, and their respective legal representatives, successors and assigns.
11. This Sixth Amendment has been executed and shall be construed under
the laws of the State of Georgia.
IN WITNESS WHEREOF, the undersigned have caused this Sixth Amendment to
be executed under seal and delivered as of the day and year first above written.
LANDLORD:
Signed, sealed and delivered WEEKS REALTY, L.P.
in the presence of: a Georgia limited partnership
By: Weeks GP Holdings, Inc.,
a Georgia corporation,
its sole general partner
/s/ Mary K. Ronnich
- ---------------------------------
Witness
/s/ Patricia L. Lidam By: /s/ Robert M. Chapman
- --------------------------------- --------------------------------
Notary Public Name: Robert M. Chapman
Notary Public, Gwinnett County Georgia ------------------------------
My Commission Expires June 9, 2001 Its: Executive V.P.
-------------------------------
TENANT:
Signed, sealed and delivered WORLD TRAVEL PARTNERS, L.P.
in the presence of:
/s/ Alisin Ethele By: /s/ Timothy J. Severt
- --------------------------------- --------------------------------
Witness Name: Timothy J. Severt
------------------------------
Its: SVP Administration
-------------------------------
/s/ Sharon Williams
- ---------------------------------
Notary Public
Notary Public, Gwinnett County Georgia
My Commission Expires January 11, 2001
ATTEST:
By: /s/ W. Thomas Burham
--------------------------------
Name: W. Thomas Burham
------------------------------
Its: SVP - Finance
-------------------------------
(Corporate Seal)
<PAGE> 69
EXHIBIT "A"
First Floor Plan
[Floor Plan]
<PAGE> 70
EXHIBIT "A"
Sixth Floor Plan to Be Attached
<PAGE> 71
ASSIGNMENT OF LEASE AND CONSENT
THIS ASSIGNMENT OF LEASE AND CONSENT (hereinafter "Assignment and
Consent") is made and entered into as of the 1st day of December, 1999 by and
among DUKE-WEEKS REALTY LIMITED PARTNERSHIP, an Indiana limited partnership
(hereinafter referred to as "Landlord"), ARCHITECTURAL DEVELOPMENT GROUP, LTD.
(hereinafter referred to as "Assignor") and WORLDTRAVEL TECHNOLOGIES, L.L.C.
(hereinafter referred to as "Assignee").
WHEREAS, Weeks Realty L.P. as landlord, and SLH & Associates, Ltd., as
tenant entered into that certain Lease Agreement dated June 26, 1997 ("Lease")
concerning certain premises (the "Premises") consisting of 2,429 square feet of
retail space at 6 West Druid Hills Drive, Suite 620, Atlanta, in Dekalb County,
Georgia as more particularly described in Exhibit "B" of the Lease;
WHEREAS, Duke-Weeks Realty Limited Partnership succeeded to the
interest of the landlord under the Lease and is the Landlord with respect to the
Leased Premises; and
WHEREAS, Architectural Development Group, Ltd. succeeded to the
interest of the tenant under the Lease and is the Tenant with respect to the
Leased Premises; and
WHEREAS, Assignor has agreed to assign all of its right, title and
interest in, to and under the Lease to Assignee; and
WHEREAS, pursuant to Section 23.01 of the Lease, Landlord's consent is
required for any assignment of the Lease by Assignor;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Assignment. Assignor hereby sells, transfers and assigns to Assignee
the Lease and all of the right, title and interest of Assignor in, to and under
the Lease and Assignee hereby assumes the liabilities, payments and obligations
of "Tenant" under the Lease that accrue, or have accrued from the date of this
Assignment.
2. Consent to Assignment. Pursuant to Section 23.01 of the Lease,
Landlord hereby (i) consents to the assignment and transfer by Assignor to
Assignee of all of Assignor's right, title and interest in, to and under the
Lease and (ii) agrees to recognize Assignee, from and after the date of this
Agreement, as the Tenant under the Lease with all of the rights, privileges and
benefits and obligations of the Tenant under the terms of the Lease.
3. Conditions Precedent. The effective date ("Effective Date") of this
Assignment shall be as of the date of execution of this Assignment of Lease and
Consent.
4. Release. Landlord shall, and hereby does, release Tenant from any
further obligations under the Lease except that any of Tenant's obligations
under the Lease which survive the termination of the Lease shall continue to
survive as provided therein. Assignee hereby agrees to indemnify and hold
Assignor harmless from such Lease obligations.
5. Further Actions. From time to time as and when reasonably requested
by Landlord, Assignee shall execute and deliver, or cause to be executed and
delivered, such documents and instruments and shall take, or shall cause to be
taken, such further or other actions as Landlord may deem necessary or desirable
to carry out the intent and purposes of this Assignment, to effect the transfers
and assignments hereunder to Assignee and its successors and assigns, and to
evidence the foregoing, including without limitation to execute memoranda of
lease or short-form leases for recording purposes and to obtain customary
non-disturbance agreements.
<PAGE> 72
6. Notices. All notices or other communications that are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by registered or certified mail, postage prepaid, addressed as follows:
If to Landlord: Duke-Weeks Realty Limited Partnership
Attn: Elizabeth Belden, Esq.
4497 Park Drive
Norcross, Georgia 30093
If to Assignee: 6 West Druid Hills Drive
Suite 620
Atlanta, Georgia
Any party may by notice change the address to which notices or other
communications to it are to be delivered or mailed.
7.* Security Deposit. Landlord shall return $3,036.25 to Assignor in
repayment of the Security Deposit paid to Landlord by Assignor (or its
predecessors), within thirty (30) days after Assignee occupies the Leased
Premises and begins paying rent to Landlord.
8. Governing Law. This Assignment shall be governed by and construed
in accordance with the laws of the State of Georgia (other than the choice of
law principles thereof).
9. Counterparts. This Assignment and Consent may be executed in
several counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument.
10. No further subletting or assignment of all or any portion of the
Leased Premises will be made without the prior written consent of the Landlord.
11. This Assignment constitutes the entire agreement between Assignor
and Assignee and there are no other oral or written agreements between them with
respect to the Leased Premises.
*With receipt of Amount of Security Deposit from Assignee, Assignor
releases Landlord from said repayment.
Assignor directs Landlord to Pay Assignee above mentioned security
deposit in time frame set above.
(SIGNATURES CONTAINED ON FOLLOWING PAGE)
<PAGE> 73
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Consent, effective as of the date first above written.
LANDLORD DUKE-WEEKS REALTY LIMITED
PARTNERSHIP,
An Indiana limited partnership
By: Duke-Weeks Realty Corporation,
an Indiana corporation,
its sole general partner
By: /s/ Robert M. Chapman
------------------------------------------
Name: Robert M. Chapman
----------------------------------------
Title: Regional Exec VP, Atlanta/Texas
---------------------------------------
ASSIGNOR: ARCHITECTURAL DEVELOPMENT
GROUP, LTD.
By: /s/ Hal Arndt
------------------------------------------
Name: Hal Arndt
----------------------------------------
Title: Chief Operating Officer
---------------------------------------
ASSIGNEE: WORLD TRAVEL TECHNOLOGIES, L.L.C.
By: /s/ Timothy J. Severt
------------------------------------------
Name: Timothy J. Severt
----------------------------------------
Title: SVP - Administration
---------------------------------------
<PAGE> 74
ASSIGNMENT OF LEASE AND CONSENT
THIS ASSIGNMENT OF LEASE AND CONSENT (hereinafter "Assignment and
Consent") is made and entered into as of the 5th day of January, 1998 by and
among Weeks Realty, L.P., a Georgia limited partnership (hereinafter referred to
as "Landlord"), SLH & ASSOCIATES, LTD. (hereinafter referred to as "Assignor")
and ARCHITECTURAL DEVELOPMENT GROUP, LTD. (hereinafter referred to as
"Assignee").
WHEREAS, Landlord and Assignor are parties to a Lease Agreement dated
June 26, 1997, and pursuant to which Assignor has ]eased from Landlord the
premises (the "Premises") consisting of 2,429 square feet of retail space at 6
West Druid Hills Drive, Suite 620, Atlanta, in Dekalb County, Georgia as more
particularly described in Exhibit "B" of the Lease; and
WHEREAS, Assignor has agreed to assign all of its right, title and
interest in, to and under the Lease to Assignee; and
WHEREAS, pursuant to Section 23.01 of the Lease, Landlord's consent is
required for any assignment of the Lease by Assignor;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Assignment. Assignor hereby sells, transfers and assigns to Assignee
the Lease and all of the right, title and interest of Assignor in, to and under
the Lease and Assignee hereby assumes the liabilities, payments and obligations
of Tenant under the Lease that accrue, or have accrued from the date of this
Assignment.
2. Consent to Assignment. Pursuant to Section 23.01 of the Lease,
Landlord hereby (i) consents to the assignment and transfer by Assignor to
Assignee of all of Assignor's right, title and interest in, to and under the
Lease and (ii) agrees to recognize Assignee, from and after the date of this
Agreement, as the Tenant under the Lease with all of the rights, privileges and
benefits and obligations of the Tenant under the terms of the Lease; provided,
however, that Tenant shall remain liable for the payment of rent, and for
compliance with all other obligations of the tenant under the Lease.
3. Conditions Precedent. The effective date ("Effective Date") of this
Assignment shall be as of the date of execution of this Assignment of Lease and
Consent.
4. Further Actions. From time to time as and when reasonably requested
by Landlord, Assignee shall execute and deliver, or cause to be executed and
delivered, such documents and instruments and shall take, or shall cause to be
taken, such further or other actions as Landlord may deem necessary or desirable
to carry out the intent and purposes of this Assignment, to effect the transfers
and assignments hereunder to Assignee and its successors and assigns, and to
evidence the foregoing, including without limitation to execute memoranda of
lease or short-form leases for recording purposes and to obtain customary
non-disturbance agreements.
5. Notices. All notices or other communications that are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by registered or certified mail, postage prepaid, addressed as follows:
<PAGE> 75
If to Landlord: Weeks Realty, L.P.
Attn: Elizabeth Belden, Esq.
4497 Park Drive
Norcross, Georgia 30093
If to Assignee: Architectural Development Group, Ltd.
6 West Druid Hills Drive
Suite 620
Atlanta, Georgia
Any party may by notice change the address to which notices or other
communications to it are to be delivered or mailed.
6. Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of the State of Georgia (other than the choice of law
principles thereof).
7. Counterparts. This Assignment and Consent may be executed in several
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
8. No further subletting or assignment of all or any portion of the
Leased Premises will be made without the prior written consent of the Landlord.
9. This Assignment constitutes the entire agreement between Assignor
and Assignee and there are no other oral or written agreements between them with
respect to the Leased Premises.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Consent, effective as of the date first above written.
LANDLORD: WEEKS REALTY, L.P.,
a Georgia limited partnership
By: Weeks GP Holdings, Inc.,
a Georgia corporation,
its sole general partner
By: /s/ Forrest W. Robinson
-----------------------------------------
Name: Forrest W. Robinson
---------------------------------------
Title: President/C.O.O.
--------------------------------------
ASSIGNOR: SLH & ASSOCIATES, LTD.
By:/s/ Richard D. Lang
-----------------------------------------
Name: Richard D. Lang
---------------------------------------
Title: VP
--------------------------------------
ASSIGNEE: ARCHITECTURAL DEVELOPMENT
GROUP, LTD.
By: /s/ Terry R. Hardt
-----------------------------------------
Name: Terry R. Hardt
---------------------------------------
Title: President
--------------------------------------
<PAGE> 76
OFFICE LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SECTION PAGE
- ------- ----
1 LEASED PREMISES ....................................................... 1
2 TERM .................................................................. 1
3 RENTAL ................................................................ 1
4 OPERATING EXPENSES .................................................... 1
5 SECURITY DEPOSIT ...................................................... 3
6 COMPLETION OF IMPROVEMENTS ............................................ 4
7 DELAY IN DELIVERY OF POSSESSION ....................................... 4
8 USE OF LEASED PREMISES ................................................ 4
9 ACCEPTANCE OF PREMISES ................................................ 4
10 ALTERATIONS, MECHANICS' LIENS ......................................... 4
11 WASTE AND QUIET CONDUCT ............................................... 5
12 FIRE INSURANCE, HAZARDS ............................................... 5
13 LIABILITY INSURANCE ................................................... 6
14 INDEMNIFICATION BY TENANT ............................................. 6
15 WAIVER OF CLAIMS ...................................................... 6
16 LANDLORDS REPAIRS ..................................................... 6
17 TENANTS REPAIRS ....................................................... 7
18 SIGNS, LANDSCAPING .................................................... 7
19 ENTRY BY LANDLORD ..................................................... 8
20 SERVICES .............................................................. 8
21 ABANDONMENT ........................................................... 9
22 DESTRUCTION ........................................................... 9
23 ASSIGNMENT AND SUBLETTING ............................................. 10
24 INSOLVENCY OF TENANT .................................................. 10
25 BREACH BY TENANT ...................................................... 10
26 ATTORNEYS' FEES/COLLECTION CHARGES .................................... 11
</TABLE>
<PAGE> 77
<TABLE>
<S> <C>
27 CONDEMNATION .......................................................... 11
28 NOTICES ............................................................... 11
29 WAIVER ................................................................ 12
30 EFFECT OF HOLDING OVER ................................................ 12
31 SUBORDINATION ......................................................... 12
32 ESTOPPEL CERTIFICATE .................................................. 12
33 PARKING ............................................................... 12
34 MORTGAGE PROTECTION ................................................... 13
35 RULES AND REGULATIONS ................................................. 13
36 RELOCATION ............................................................ 13
MISCELLANEOUS PROVISIONS ................................................. 13
</TABLE>
EXHIBITS
EXHIBIT A FLOOR PLAN
EXHIBIT B SITE PLAN
EXHIBIT C RULES AND REGULATIONS
EXHIBIT D TENANT'S ACCEPTANCE OF PREMISES
EXHIBIT E SPECIAL STIPULATIONS
2
<PAGE> 78
STATE OF GEORGIA
DEKALB COUNTY
This Lease Agreement, made this 26th day of June, 1996, by and between
WEEKS REALTY, L.P., hereinafter referred to as "Landlord", and SLH &
ASSOCIATES, LTD hereinafter referred to as 'Tenant";
WITNESSETH:
LEASED PREMISES
1.01 Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the space hereinafter referred to as the LEASED PREMISES, described
as approximately 2,429 sq. ft. of office space designated as Suite 620 and
shown on Exhibit "A", in the office building located at 6 West Druid Hills
Drive, Atlanta, Georgia (hereinafter referred to as the "Building"). The
Property upon which the Building is located is more particularly described on
Exhibit "B" attached hereto and by this reference made a part hereof
(hereinafter referred to as the "Property").
TERM
2.01 TO HAVE AND TO HOLD said Leased Premises for a term of five (5)
years, commencing on August 1, 1997, and continuing until midnight on July 31,
2002, upon the following terms, conditions, and covenants:
RENTAL
3.01 As rental for the Leased Premises, Tenant agrees to pay Landlord,
the sum of Thirty Six Thousand Four Hundred Thirty Five and NO/ 100 Dollars
($36,435.00) per year (hereinafter referred to as "Base Rental"), payable in
monthly installments each in the amount of Three Thousand Thirty Six and 25/100
Dollars ($3,036.25) on or before the first day of each calendar month beginning
on July 1, 1997 and thereafter for the remainder of the term, together with any
other additional rental as hereinafter set forth. Tenant shall pay interest at
a rate of twelve percent (12%) per annum on all late payments of rent. If the
Lease shall commence on any date other than the first day of a calendar month,
or end on any date, other than the last day of a calendar month, rent for such
month shall be prorated. Tenant has deposited with Landlord, upon delivery of
this Lease Agreement, an amount equal to Three Thousand Thirty Six and 25/100
dollars ($3,036.25) which is to be applied as first month's rental, plus a
refundable security deposit equal to Three Thousand Thirty Six and 25/100
Dollars ($3,036.25) as set forth in Paragraph 5.01.
OPERATING EXPENSES
4.01 In addition to the Base Rental payable by Tenant in accordance
with Paragraph 3.01 of this Lease, Tenant shall pay monthly to Landlord on the
same due date as the Base Rental the sum (hereinafter referred to as the
"Additional Rent") calculated in accordance with the following:
(a) As used in this Lease, the following definitions shall apply:
(i) "Calendar Year" shall mean any period during the Term of
this Lease commencing on January 1 and ending on the next
following December 31.
(ii) "Base Year" shall mean the Calendar Year during which the
Term commences.
<PAGE> 79
(iii) "Building" shall mean the Property and the Building and other
structures, improvements, fixtures and appurtenances now or
hereafter placed, constructed or erected thereon.
(iv) "Pro Rata Share" shall equal 2.98%; provided, however, that in
the event that the amount of space leased by Tenant shall increase
or decrease subsequent to the commencement date of the Term,
whether pursuant to an option to expand or otherwise, the Pro Rata
Share shall be appropriately adjusted by Landlord.
(v) "Operating Expenses" shall mean any and all costs, expenses and
disbursements of every kind and character (subject to the
limitations set forth below) which Landlord shall incur, pay or
become obligated to pay in connection with the ownership of any
estate or interest in the Building or the operation, maintenance,
repair, replacement and security of the Building determined in
accordance with generally accepted accounting principles
consistently applied, including, but not limited to, the following:
(A) Wages and salaries of all employees engaged in the
operation, repair, replacement, maintenance, and security of
the Building, including taxes, insurance and benefits
relating thereto.
(B) All supplies and materials used in the operation,
maintenance, repair, replacement, and security of the
Building.
(C) Cost of all utilities including gas, water, telephone,
telegraph, power, heating, lighting, air-conditioning and
ventilating the Building.
(D) Cost of all maintenance and service agreements on
equipment, including alarm service, window cleaning and
elevator maintenance.
(E) Cost of casualty, liability and other insurance
applicable to the Building or Landlord's personal property
used in connection therewith.
(F) All taxes and assessments and governmental charges,
whether federal, state, county or municipal, and whether they
be by taxing districts or authorities presently taxing or by
others, subsequently created or otherwise, and any other
taxes and assessments imposed upon or attributable to the
Building, its operation or the Base Rental or Additional Rent
without reference to other income of the Landlord.
(G) Cost of repairs, replacements, and general maintenance of
the Building.
(H) Cost of service or maintenance contracts with independent
contractors for the operation, maintenance, repair,
replacement, or security of the Building.
(I) Cost of maintaining accounting books and records.
(J) Costs of contractual management fees and other costs
directly related to the on-site management of the Building.
(K) Cost of janitorial services, trash, garbage, snow and ice
removal; servicing, replacing, equipping and maintenance of
all electrical,
2
<PAGE> 80
security and fire alarms, fire pumps, sprinkler systems and
fire extinguishers and hose cabinets; painting; window
cleaning and landscaping and gardening.
(L) Capital expenditures required by any governmental or
regulatory authority, and capital expenditures for energy
related equipment or fire and safety equipment.
Specifically excluded from the definition of the term "Operating Expenses" are
expenses for repairs, replacements and general maintenance to the extent paid
by proceeds of insurance or by Tenant or other third parties and alterations
attributable solely to tenants of the Building other than Tenant; interest,
amortization or other payments on loans to Landlord whether secured or
unsecured; depreciation of the Building; leasing commissions; legal expenses;
salaries of officers, executives, employees and agents not directly involved in
the on-site operation of the Building; and state, federal or local income
taxes, excess profits or franchise taxes or other such taxes imposed on or
measured by or determined from the gross income of Landlord.
(b) The actual amount of Additional Rent payable shall be an amount equal
to the product obtained by multiplying the Pro Rata Share times the remainder
obtained by subtracting the Operating Expenses for the Base Year from the
Operating Expenses for the Calendar Year in question (provided, however, in no
event shall the amount so determined be less than zero). In the event that the
Building is not fully occupied during the Base Year, the Landlord shall compute
the Operating Expenses for the Base Year as though the Building were fully
occupied.
(c) On or before December 31st of each Calendar Year during the Term, or
as soon thereafter as practicable, Landlord shall give Tenant written notice of
its estimate of the Additional Rent for the next ensuing Calendar Year.
Commencing in the first (1st) month of the ensuing Calendar Year, or as soon
thereafter as Landlord shall invoice Tenant, Tenant shall pay to Landlord
one-twelfth (1/12) of such estimated Additional Rent. If notice of Landlord's
estimate of Additional Rent is not given prior to December 31, during the next
Calendar Year Tenant shall continue to pay the monthly payment based on the
Additional Rent computed for the previous Calendar Year until the month after
such notice is given.
(d) As soon as practicable after the close of each Calendar Year,
Landlord shall deliver to Tenant a final statement of the Additional Rent for
the immediately preceding Calendar Year and such statement shall be final and
binding upon Landlord and Tenant. If such statement shows an amount owing by
Tenant that is less than the payments actually made by the Tenant for the
immediately preceding Calendar Year, Tenant shall be credited for such excess
against the next monthly payments of Additional Rent. If such statement shows
an amount owing by the Tenant that is more than the payments actually made by
the Tenant for the immediately preceding Calendar Year, Tenant shall pay the
deficiency to Landlord within ten (10) days after delivery of the statement.
SECURITY DEPOSIT
5.01 As additional security for the full and prompt performance by the
Tenant of the terms and covenants of this Lease Agreement, Tenant has deposited
with the Landlord the sum of Three Thousand Thirty Six and 25/100 ($3,036.25)
Dollars. This security deposit may not be deemed by Tenant to constitute rent
for any month. If Tenant defaults with respect to any provision of this Lease
Agreement, including, but not limited to the provisions relating to the payment
of rent, Landlord may (but shall not be required to) use, apply or retain all
or any part of this security deposit for the payment of any rent or any other
sum in default, or for the payment of any amount which Landlord may spend or
become obligated to spend by reason of Tenant's default, or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant's
3
<PAGE> 81
default. If any portion of said deposit is so used or applied, Tenant shall
within five (5) days after written demand therefor, deposit cash with Landlord
in an amount sufficient to restore the security deposit to its original amount
and Tenant's failure to do so shall be a material breach of this Lease
Agreement. Landlord shall not be required to keep this security deposit
separate from its general funds, and Tenant shall not be entitled to interest
on such deposit. If Tenant shall fully and faithfully perform every provision
of this Lease to be performed by it, the security deposit or any balance
thereof shall be returned to Tenant (or, at Landlord's option, to the last
assignee of Tenant's interest hereunder) at the expiration of the Lease term.
In the event of termination of Landlord's interest in this Lease Agreement,
Landlord shall transfer said deposit to Landlord's successor in interest.
COMPLETION OF IMPROVEMENTS
6.01 The rental provided in paragraph 3.01 "Rental" above, includes an
allowance ("Allowance") in the amount of $5.00 per rentable square foot in the
Leased Premises for the construction of tenant improvements on the basis set
forth in the plans and specifications attached, or to be attached, hereto in
Exhibit "B". In the event the cost of tenant improvements exceeds the cost of
tenant improvement Allowance, the excess shall be paid by Tenant.
DELAY IN DELIVERY OF POSSESSION
7.01 If Landlord, for any reason whatsoever, cannot deliver possession of
the Leased Premises to Tenant at the commencement of the term of this Lease,
this Lease shall not be void or voidable, nor shall Landlord be liable to
Tenant for any loss or damage resulting therefrom, but in that event there
shall be a proportionate reduction of rent covering the period between the
commencement of the term and the time when Landlord can deliver possession. If
delay is longer than three (3) months, Landlord will provide Tenant such space
(not exceeding in area the Leased Premises) as Landlord may have available,
until the Leased Premise can be completed, at no charge to Tenant. The term of
this Lease shall be extended by such delay.
USE OF LEASED PREMISES
8.01 The Leased Premises may be used and occupied only for general office
purposes and for no other purpose or purposes, without Landlord's prior written
consent. Tenant shall promptly comply at its sole expense with all laws,
ordinances, orders, and regulations affecting the Leased Premises and their
cleanliness, safety, occupation and use. Tenant shall not do or permit anything
to be done in or about the Leased Premises that will in any way increase the
fire insurance upon the Building. Tenant will not perform any act or carry on
any practices that may injure the Building or be a nuisance or menace to
tenants of adjoining premises. Tenant shall, at Tenant's sole cost and expense,
comply fully with all environmental laws and regulations, and all other legal
requirements, applicable to Tenant's operations at, on or within, or to
Tenant's use and occupancy of, the Leased Premises.
ACCEPTANCE OF LEASED PREMISES
9.01 By entry hereunder, Tenant acknowledges that it has examined the
Leased Premises and accepts the same as being in the condition called for by
this Lease, and as suited for the uses intended by Tenant. Upon delivery of
possession of the Leased Premises to Tenant, Tenant agrees to execute and
deliver to Landlord a Tenant's Acceptance of Premises, in the form attached
hereto as Exhibit "D".
4
<PAGE> 82
ALTERATIONS, MECHANICS' LIENS
10.01 Alterations may not be made to the Leased Premises without prior
written consent of Landlord, and any alterations of the Leased Premises
excepting movable furniture and trade fixtures shall at Landlord's option
become part of the realty and belong to Landlord.
10.02 Should Tenant desire to alter the Leased Premises and Landlord
gives written consent to such alterations, at Landlord's option, Tenant shall
contract with a contractor approved by Landlord for the construction of such
alterations.
10.03 Notwithstanding anything in paragraph 10.02 above, Tenant may, upon
written consent of Landlord, install trade fixtures., machinery or other trade
equipment in conformance with all applicable laws, statutes, ordinances, rules,
regulations, and the same may be removed upon the termination of this Lease
provided Tenant shall not be in default under any of the terms and conditions
of this Lease, and the Leased Premises are not damaged by such removal. Tenant
shall return the Leased Premises on the termination of this Lease in the same
condition as when rented to Tenant, reasonable wear and tear only excepted.
Tenant shall keep the Leased Premises, the Building and Property in which the
Leased Premises are situated free from any liens arising out of any work
performed for, materials furnished to, or obligations incurred by Tenant. All
such work provided for above, shall be done at such times and in such manner as
Landlord may from time to time designate. Tenant shall give Landlord written
notice five (5) days prior to employing any laborer or contractor to perform
work resulting in an alteration of the Leased Premises so that Landlord may
post a notice of non-responsibility.
WASTE AND QUIET CONDUCT
11.01 Tenant shall not commit, or suffer any waste upon the Leased
Premises, or any nuisance, or other act or thing which may disturb the quiet
enjoyment of any other tenant in the Building containing the Leased Premises or
any building in the project in which the Leased Premises are located.
FIRE INSURANCE, HAZARDS
12.01 No use shall be made or permitted to be made of the Leased
Premises, nor acts done which might increase the existing rate of insurance
upon the Building or cause the cancellation of any insurance policy covering
the Building, or any part thereof, nor shall Tenant sell, or permit to be kept,
used or sold, in or about the Leased Premises, any article which may be
prohibited by the Standard form of fire insurance policies. Tenant shall, at
its sole cost and expense, comply with any and all requirements pertaining to
the Leased Premises, of any insurance organization or company, necessary for
the maintenance of reasonable fire and public liability insurance, covering the
Leased Premises, Building and appurtenances. Tenant agrees to pay to Landlord
as additional rent, any increase in premiums on policies which may be carried
and for loss of rent caused by fire and the perils normally included in
extended coverage above the rates presently being paid by the Landlord as of
the date hereof that may be caused by Tenant's use or occupancy of the Leased
Premises.
12.02 Tenant shall maintain in full force and effect on all of its
fixtures and equipment in the Leased Premises a policy or policies of fire and
extended coverage insurance with standard coverage endorsement to the extent of
at least eighty percent (80%) of their insurable value. During the term of this
Lease the proceeds from any such policy or policies of insurance shall be used
for the repair or replacement of the fixtures, and Landlord will sign all
documents necessary or proper in connection with the settlement of any claim or
loss by Tenant. Landlord will not carry insurance on Tenant's possessions.
Tenant shall furnish Landlord with a certificate of such policy within thirty
<PAGE> 83
(30) days of the commencement of this Lease, and whenever required, shall
satisfy Landlord that such policy is in full force and effect.
LIABILITY INSURANCE
13.01 Tenant, at its own expense, shall provide and keep in force with
companies acceptable to Landlord public liability insurance for the benefit of
Landlord and Tenant jointly against liability for bodily injury and property
damage in the amount of not less than One Million Dollars ($1,000,000.00) in
respect to injuries to or death of more than one person in any one occurrence,
in the amount of not less than One Million Dollars ($1,000,000.00) in respect
to injuries to or death of any one person, and in the amount of not less than
Fifty Thousand Dollars ($50,000.00) per occurrence in respect to damage to
property, such limits to be for any greater amounts as may be reasonably
indicated by circumstances from time to time existing. Tenant shall furnish
Landlord with a certificate of such policy (which certificate shall contain the
insurer's waiver of subrogation rights exercisable against the Landlord) within
thirty (30) days of the commencement date of this Lease and whenever required
shall satisfy Landlord that such policy is in full force and effect. Such
policy shall name Landlord as an additional insured and shall be primary and
non-contributing with any insurance carried by Landlord. The policy shall
further provide that it shall not be canceled or altered without twenty (20)
days prior written notice to Landlord.
INDEMNIFICATION BY TENANT
14.01 Tenant shall indemnify and hold harmless Landlord against and from
any and all claims arising from Tenant's use of the Leased Premises (other than
those arising from negligence of Landlord or its agents or employees), or the
conduct of its business or from any activity, work, or thing done, permitted or
suffered by the Tenant in or about the Leased Premises, and shall further
indemnify and hold harmless Landlord against and from any and all claims
arising from any breach or default in the performance of any obligation of
Tenant's part to be performed under the terms of this Lease, or arising from
any act, neglect, fault or omission of the Tenant, or of its agents or
employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in or about such claim or any action or proceeding brought
relative thereto and in case any action or proceeding be brought against
Landlord by reason of any such claim, Tenant upon notice from Landlord shall
defend the same at Tenant's expense by counsel, chosen by Tenant and who is
reasonably acceptable to Landlord. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons in or about the Leased Premises from any cause whatsoever
except that which is caused by the failure of Landlord to observe any of the
terms and conditions of this Lease where such failure has persisted for an
unreasonable period of time after written notice of such failure, and Tenant
hereby waives all claims in respect thereof against Landlord. The obligations
of Tenant under this section arising by reason of any occurrence taking place
during the term of this Lease shall survive any termination of this Lease.
WAIVER OF CLAIMS
15.01 Tenant, as a material part of the consideration to be rendered to
Landlord, hereby waives all claims against Landlord for damages to goods, wares
and merchandise in, upon or about the Leased Premises and for injury to
Tenant, its agents, employees, invitees, or, third persons in or about the
Leased Premises from any cause arising at any time, other than the negligence
of Landlord, its agents and employees.
LANDLORD'S REPAIRS
16.01 Tenant agrees that no representations respecting the Leased
Premises or the condition thereof and that no promises to decorate, alter,
repair or improve the Leased
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<PAGE> 84
Premises, either before or after the execution hereof, have been made by
Landlord or its agents to Tenant, unless the same are contained in the Work
Agreement.
16.02 Landlord shall maintain and repair only the common hallways and
corridors, common rest rooms, main lobby area, heating, ventilating and
air-conditioning systems, driveway's and parking areas located on the Property,
if any, the roof, foundation, floors and exterior walls and glass of the
Building. Notwithstanding Landlord's obligation to maintain and repair under
this Paragraph 16, Tenant shall repair and pay for any damage caused by Tenant,
or Tenant's employees, agents, contractors, invitees or licensees, or caused by
Tenant's default hereunder. Tenant shall immediately give Landlord written
notice of any defect or need for repairs, after which Landlord shall have a
reasonable time within which to repair same or cure such defect. Landlord's
liability hereunder shall be limited only to the cost of correcting such
defects or making such needed repairs.
16.03 Notwithstanding any other provisions herein, Landlord shall not be
liable to Tenant for any damage occasioned by plumbing, electrical, gas, water,
steam or other utility pipes, systems or facilities or by the bursting,
stopping, leaking or running of any tank, sprinkler, washstand, water closet or
pipes in or about the Leased Premises or the Building; nor for any damage
occasioned by water being upon or coming through or around the roof or any
flashing, window, skylight, vent, door, or the like unless directly resulting
from Landlord's act or neglect after notice; nor for any damage arising out of
any acts or neglect of co-tenants, other occupants of the Building, occupants of
adjacent property or the public.
TENANT'S REPAIRS
17.01 Tenant shall, at its sole cost and expense, keep the Leased
Premises in good order, condition and repair during the Term. In the event any
repairs are required to be made in or to the Leased Premises as a result of the
actions or inactions of Tenant, its agents, contractors, servants, employees,
sublessees, concessionaires, licensees, invitees or guests, Tenant shall be
responsible for payment of all such repairs which shall be made by Landlord or
its contractors. If Tenant does not make repairs promptly and adequately,
Landlord may, but need not, make repairs, and Tenant shall promptly pay the
cost thereof. Tenant shall pay Landlord for overtime costs and for any other
expenses incurred in the event repairs, alterations, decorating or other work
in the Leased Premises are not made, at Tenant's request, during ordinary
business hours. Upon expiration or other termination of the Term, Tenant shall
quit and surrender to Landlord the Leased Premises, broom clean, in good order
and condition as provided in this Lease, ordinary wear and tear excepted, and
Tenant shall remove all of its property therefrom, except as provided in
Paragraph 10 above.
SIGNS, LANDSCAPING
18.01 Tenant will not place or maintain, or suffer to be placed or
maintained on the exterior of the Leased Premises, any sign, advertising matter
or other things of any kind, and will not place or maintain any sign,
decoration, lettering or advertising matter in or on the glass of any window or
door of the Leased Premises without first obtaining Landlord's prior written
approval thereof. Thereafter Tenant shall maintain such sign, decoration,
lettering, advertising matter and other things as may be approved by Landlord
in good condition and repair at all times. Tenant shall be responsible to
Landlord for all damages caused by the installation, use or maintenance of said
signs and Tenant agrees to repair all damages incident to the removal of said
signs and such obligation of Tenant shall survive the expiration or sooner
termination of the Tenn.
ENTRY BY LANDLORD
19.01 Tenant shall permit Landlord and Landlord's agents to enter the
Leased Premises at all reasonable times for the purpose of inspecting the same
to perform
7
<PAGE> 85
janitorial and cleaning services, or for the purpose of maintaining the
Building, or for the purpose of decorating, making repairs, alterations,
or additions to any portion of the Building, including the erection and
maintenance of such scaffolding, canopies, fences and props as may be required,
or for the purpose of posting notices of non-responsibility for alterations,
additions, or repairs, or for the purpose of showing the Leased Premises to
prospective tenants, or placing upon the Building any usual or ordinary "for
sale" signs, without any rebate of rent and without any liability to Tenant for
any loss of occupation or quiet enjoyment of the Leased Premises thereby
occasioned; and shall permit Landlord at any time within six (6) months prior
to the expiration of this Lease, to place upon the eased Premises any usual or
ordinary "to let" or "to lease" signs. For each of the aforesaid purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the exterior doors about the Leased Premises.
SERVICES
20.01 Subject to the provisions set forth below in this Paragraph 20.01,
Landlord shall furnish the following services to the Leased Premises:
(a) Seasonable heating and air-conditioning between the hours of 8:00
a.m. and 6:00 p.m. on Mondays through Fridays, inclusive, and on
Saturdays between the hours of 8:00 a.m. and 1:00 p.m., except for
those days which are Holidays as defined on Exhibit "C" hereto.
(b) General cleaning and janitorial services commencing after 5:00 p.m.
on Mondays through Fridays, inclusive, except for Holidays.
(c) Passenger elevator service at all times; provided, however, the
Landlord reserves the right to reduce the number of elevators in
operation after 6:00 p.m. on Mondays through Fridays and at all
times on Saturdays, Sundays, and Holidays and to impose such
other reasonable elevator security measures as the Landlord deems
appropriate.
(d) Common use restroom facilities and drinking water.
(e) Electricity for lighting and small business machines designed to
operate on 110-120 volt electric power (e.g., typewriters,
dictating machines, adding machines, calculators, small copiers,
postage machines, teletypes, personal computers and any other small
office equipment that is not computer related except personal
computers).
20.02 Tenant will not use any electrical equipment which in Landlord's
opinion will overload the wiring installations or interfere with the reasonable
use thereof by other users in the Building. Tenant will not, without Landlord's
prior written consent in each instance, connect any additional items (e.g.,
electric heaters, vending equipment and auxiliary air-conditioners) to the
Building's electrical system, or make any alteration or addition to the system.
Should Landlord grant such consent, all additional circuits or equipment
required therefor shall be installed by Landlord and the cost of such
installation, equipment and metering device shall be paid by Tenant. The
consumption of electricity for such additional equipment shall be paid monthly
by Tenant to Landlord at the prevailing utility company rates. In the event the
Tenant desires heating, ventilating or air-conditioning services in addition to
those set forth above, the Landlord shall use its best efforts to make same
available to Tenant at such rates as may be established from time to time by
Landlord.
20.03 Landlord shall not be liable for any damages directly or indirectly
resulting from the installation, use or interruption of use of any equipment in
connection with the furnishing of services referred to in this Lease, and
particularly any interruption in services by any cause beyond the immediate
control of the landlord.
8
<PAGE> 86
20.04 Landlord reserves the right to stop services of the heating,
elevators, plumbing, air-conditioning, electrical power or other utilities or
services when necessary by reason of war, insurrection, civil commotion, riots,
acts of God or the enemy, governmental action, repairs, improvements,
alterations, strikes, lockouts, picketing, whether legal or illegal, accidents,
actions or inactions of Tenant, its agents, contractors, servants, employees,
sublessees, concessionaires, licensees, invitees, or guests, inability of
Landlord to obtain fuel or supplies or any other cause or causes beyond the
reasonable control of Landlord.
ABANDONMENT
21.01 Tenant shall not vacate nor abandon the Leased Premises at any time
during the term of this Lease; and if Tenant shall abandon, vacate or surrender
the Leased Premises, or be dispossessed by process of law, or otherwise, any
personal property belonging to Tenant and left on the Leased Premises shall, at
the option of the Landlord, be deemed abandoned and be and become the property
of Landlord.
DESTRUCTION
22.01 In the event of (a) a partial destruction of the Leased Premises or
the Building during the lease term which requires repairs to either the Leased
Premises or the Building, or (b) the Leased Premises or the Building being
declared unsafe or unfit for occupancy by any authorized public authority for
any reason other than Tenant's act, use or occupation which declaration
requires repairs to either the Leased Premises or the Building, Landlord shall
forthwith make repairs, provided repairs can be made within sixty (60) days
under the laws and regulations of authorized public authorities, but partial
destruction (including any destruction necessary in order to make repairs
required by any declaration) shall in no way annul or void this Lease, except
that Tenant shall be entitled to a proportionate reduction of rent while such
repairs are being made. The proportionate reduction is to be based upon the
extent to which the making of repairs shall interfere with the business carried
on by Tenant in the Leased Premises. If repairs cannot be made within sixty
(60) days, Landlord may, at its option, make same within a reasonable time,
this Lease continuing in full force and effect and the rent to be
proportionately abated, as in this paragraph provided. In the event that
Landlord does not so elect to make repairs which cannot be made within sixty
(60) days, or repairs cannot be made under current laws and regulations, this
Lease may be terminated at the option of either party. A total destruction
(including any destruction required by any authorized public authority) of
either the Leased Premises or the Building shall terminate this Lease. In the
event of any dispute between Landlord and Tenant relative to the provisions of
this paragraph, they may each select an arbitrator, the two arbitrators so
selected shall select a third arbitrator and the three arbitrators so selected
shall hear and determine the controversy and their decision thereon shall be
final and binding on both Landlord and Tenant who shall bear the cost of such
arbitration equally between them. Landlord shall not be required to repair any
property installed in the Leased Premises by Tenant. Tenant waives any right
under applicable laws inconsistent with the terms of this paragraph and in the
event of a destruction agrees to accept any offer by Landlord to provide Tenant
with comparable space within the project in which the Leased Premises are
located on the same terms as this Lease.
ASSIGNMENT AND SUBLETTING
23.01 Landlord shall have the right to transfer and assign, in whole or
in part its rights and obligations in the Building and Property that are the
subject of this Lease. Tenant shall not assign this Lease or sublet all or any
part of the Leased Premises without the prior written consent of the Landlord.
In the event of any assignment or subletting, Tenant shall nevertheless at all
times, remain fully responsible and liable for the payment of the rent and for
compliance with all of its other obligations under the terms, provisions
9
<PAGE> 87
and covenants of this Lease. If all or any part of the Leased Premises are then
assigned or sublet, Landlord, in addition to any other remedies provided by
this Lease or provided by law, may at its option, collect directly from the
assignee or subtenant all rents becoming due to Tenant by reason of the
assignment or sublease, and Landlord shall have a security interest in all
properties on the Leased Premises to secure payment of such sums. Any
collection directly by Landlord from the assignee or subtenant shall not be
construed to constitute a novation or a release of Tenant from the further
performance of its obligations under this Lease.
INSOLVENCY OF TENANT
24.01 Either (a) the appointment of a trustee to take possession of all
or substantially all of the assets of Tenant, or (b) a general assignment by
Tenant for the benefit of creditors, or (c) any action taken or suffered by
Tenant under any insolvency or bankruptcy act shall, if any such appointments,
assignments or action continues for a period of thirty (30) days, constitute a
breach of this Lease by Tenant, and Landlord may at its election without
notice, terminate this Lease and in that event be entitled to immediate
possession of the Leased Premises and damages as provided below.
BREACH BY TENANT
25.01 In the event of a default, Landlord in addition to any and all
other rights or remedies that it may have hereunder, at law or in equity shall
have the right to either terminate this Lease or from time to time, without
terminating this Lease relet the Leased Premises or any part thereof for the
account and in the name of Tenant or otherwise, for any such term or terms and
conditions as Landlord in its sole discretion may deem advisable with the right
to make reasonable alterations and repairs to the Leased Premises. Tenant shall
pay to Landlord, as soon as ascertained, the costs and expenses incurred by
Landlord in such reletting or in making such reasonable alterations and
repairs. Should such rentals received from time to time from such reletting
during any month be less than that agreed to be paid during that month by
Tenant hereunder, the Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly.
25.02 No such reletting of the Leased Premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a notice of
such intention be given to Tenant or unless the termination thereof be decreed
by a court of competent jurisdiction. Notwithstanding any such reletting
without termination, Landlord may immediately or at any time thereafter
terminate this Lease, and this Lease shall be deemed to have been terminated
upon receipt by Tenant of notice of such termination; upon such termination
Landlord shall recover from Tenant all damages that Landlord may suffer by
reason of such termination including without limitation, all arrearages; in
rentals, costs, charges, additional rentals, and reimbursements, the cost
(including court costs and attorneys' fees actually incurred) of recovering
possession of the Leased Premises, the actual or estimated (as reasonably
estimated by Landlord) cost of any alteration of or repair to the Leased
Premises which is necessary or proper to prepare the same for reletting and, in
addition thereto, Landlord shall have and recover from Tenant the difference
between the present value (discounted at a rate per annum equal to the discount
rate of the Federal Reserve Bank of Atlanta at the time the Event of Default
occurs) of the rental to be paid by Tenant for the remainder of the lease term,
and the present value (discounted at the same rate) of the Leased Premises for
the remainder of the lease term, taking into account the cost, time and other
factors necessary to relet the Leased Premises; provided, however that such
payment shall not constitute a penalty or forfeiture, but shall constitute full
liquidated damages due to Landlord as a result of Tenant' s default. Landlord
and Tenant acknowledge that Landlord's actual damages in the event of a default
by Tenant under this Lease will be difficult to ascertain, and that the
liquidated damages provided above represent the parties' best estimate of such
damages. The parties expressly acknowledge
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<PAGE> 88
that the foregoing liquidated damages are intended as a penalty, but as full
liquidated damages, as permitted by Section 13-6-7 of the Official Code of Ga.
Annotated.
ATTORNEYS' FEES/COLLECTION CHARGES
26.01 Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder,
Tenant shall pay to Landlord its cost and expenses incurred in such suit,
including reasonable attorneys' fees. If any rent or other sums of money owed
or owing under this Lease is collected by or through an attorney at law, Tenant
agrees to pay fifteen percent (15%) thereof as attorneys' fees.
CONDEMNATION
27.01 If, at any time during the term of this Lease, title to the Leased
Premises should become vested in a public or quasi-public authority by virtue
of the exercise of expropriation, appropriation, condemnation or other power in
the nature of eminent domain, or by voluntary transfer from the owner of the
Leased Premises under threat of such a taking then this Lease shall terminate
as of the time of such vesting of title, after which neither party shall be
further obligated to the other except for occurrence antedating such taking.
The same results shall follow if less than the entire Leased Premises be thus
taken, or transferred in lieu of such a taking, but to such extent that it
would be legally and commercially impossible for Tenant to occupy the portion
of the Leased Premises remaining, and impossible for Tenant to reasonably
conduct his trade or business therein.
27.02 Should there be such a partial taking or transfer in lieu thereof,
but not to such an extent as to make such continued occupancy and operation by
Tenant an impossibility, then this Lease shall continue on all of its same
terms and conditions subject only to an equitable reduction in rent
proportionate to such taking.
27.03 In the event of any such taking or transfer, whether of the entire
Leased Premises, or a portion thereof, it is expressly agreed and understood
that all sums awarded, allowed or received in connection therewith shall belong
to Landlord, and any rights otherwise vested in Tenant are hereby assigned to
Landlord, and Tenant shall have no interest in or claim to any such sums or any
portion thereof, whether the same be for the taking of the property or for
damages, or otherwise.
NOTICES
28.01 All notices, statements, demands, requests, consents, approvals,
authorization, offers, agreements, appointments, or designations under this
Lease by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party, if sent by certified mail,
return receipt requested, postage prepaid, and addressed as follows:
(a) To Tenant at the Leased Premises;
(b) To Landlord, addressed to Landlord at 4497 Park Drive, Norcross,
Georgia 30093, with a copy to such other place as Landlord may from
time to time designate by notice to Tenant.
WAIVER
29.01 The waiver by Landlord 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 Landlord shall not be
11
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deemed to be a waiver of any preceding breach by Tenant of any term, covenant,
or condition of this Lease, other than the failure of Tenant to pay the
particular rental so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such rent.
EFFECT OF HOLDING OVER
30.01 If Tenant should remain in possession of the Leased Premises after
the expiration of the lease term and without executing a new lease, then such
holding over shall be construed as a tenancy from month to month, subject to
all the conditions, provisions, and obligations of this Lease insofar as the
same are applicable to a month to month tenancy, except that the rent payable
pursuant to subparagraph 3.01 hereof shall be doubled.
SUBORDINATION
31.01 This Lease, at Landlord's option, shall be subordinate to any
ground lease, first priority mortgage, first priority deed of trust, or first
priority security deed now or hereafter placed upon the real property of which
the Leased Premises are a part and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof.
31.02 Tenant agrees to execute any documents required to effectuate such
subordination or to make this Lease prior to the lien of any such ground lease,
mortgage, deed of trust, or security deed, as the case may be and failing to do
so within ten (10) days after written demand, does hereby make, constitute and
irrevocably appoint Landlord as Tenant's attorney in fact and in Tenant's name,
place and stead, to do so. If requested to do so, Tenant agrees to attorn to
any person or other entity that acquires title to the real property
encompassing the Leased Premises, whether through judicial foreclosure, sale
under power, or otherwise, and to any assignee of such person or other entity.
ESTOPPEL CERTIFICATE
32.01 Upon ten (10) days notice from Landlord to Tenant, Tenant shall
deliver a certificate dated as of the first day of the calendar month in which
such notice is received, executed by an appropriate officer, partner or
individual, in the form as Landlord may require and stating but not limited to
the following: (i) the commencement date of this Lease; (ii) the space occupied
by Tenant hereunder; (iii) the expiration date hereof; (iv) a description of
any renewal or expansion options; (v) the amount of rental currently and
actually paid by Tenant under this Lease; (vi) the nature of any default or
claimed default hereunder by, Landlord and (vii) that Tenant is not in default
hereunder nor has any event occurred which with the passage of time or the
giving of notice would become a default by Tenant hereunder.
PARKING
33.01 Tenant shall be entitled to park in common with other tenants of
Landlord. Tenant agrees not to overburden the parking facilities and agrees to
cooperate with Landlord and other tenants in the use of parking facilities.
Landlord reserves the right in its absolute discretion to determine whether
parking facilities are becoming crowded and, in such event, to allocate parking
spaces among Tenant and other tenants. There will be no assigned parking.
Tenant agrees to park all Tenant's trucks in the parking spaces provided at the
rear of the building, "Parking" as used herein means the use by Tenant's
employees, its, visitors, invitees, and customers for the parking of motor
vehicles for such periods of time as are reasonably necessary in connection
with use of and/or visits to the demised premises. No vehicle may be repaired
or serviced in the parking area and any vehicle deemed abandoned by Landlord
will be towed from the project and all costs
12
<PAGE> 90
therein shall be borne by the tenant. All driveways, ingress and egress, and
all parking spaces are for the joint use of all tenants. No area outside of the
Leased Premises shall be used by Tenant for storage without Landlord's prior
written permission.
MORTGAGE PROTECTION
34.01 In the event of any default on the part of Landlord, Tenant will
give notice by registered or certified mail to any beneficiary of a deed or
trust or holder of a security deed or mortgage covering the Leased Premises
whose address shall have been furnished it, and shall offer such beneficiary or
holder a reasonable opportunity to cure the default, including time to obtain
possession of the Leased Premises by power of sale or a judicial foreclosure,
if such should prove necessary to effect a cure.
RULES AND REGULATIONS
35.01 This Lease is subject to the rules and regulations pertaining to
the Building, which are attached as Exhibit "C". Tenant, its employees, agents,
visitors, invitees, contractors and customers will perform and abide by said
Rules and Regulations, and any amendments or additions to said Rules and
Regulations as may be made from time to time by Landlord.
RELOCATION
36.01 At Landlord's option, to be exercised by notice to Tenant
specifying the date 6f relocation, Landlord may designate any other space in
the Project to be occupied by Tenant in lieu of the Leased Premises, provided
that said other space is of substantially equal size and area and equivalent
base rental per square foot. Landlord shall bear the expense of Tenant's move
as well as the expense of any renovation or alterations necessary to make the
new space substantially conform in layout and appointment with the original
Leased Premises.
MISCELLANEOUS PROVISIONS
A. Whenever the singular number is used in this Lease and when required
by the context, the same shall include the plural, and the masculine gender
shall include the feminine and neuter genders, and the word "person" shall
include corporation, firm or association. If there be more than one tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
B. The headings or titles to paragraphs, of this Lease are for
convenience only and shall have no effect upon the construction or
interpretation of any part of this Lease.
C. This instrument contains all of the agreements and conditions made
between the parties to this Lease and may not be modified orally or in any
other manner than by agreement in writing signed by all parties to this Lease.
D. Where the consent of a party is required, such consent will not be
unreasonably withheld.
E. This Lease shall create the relationship of Landlord and Tenant
between Landlord and Tenant; no estate shall pass out of Landlord; Tenant has
only a usufruct, not subject to levy and/or sale and not assignable by Tenant
except as provided in paragraph 20.01 hereof.
F. Except as otherwise expressly stated, each payment required to be made
by Tenant shall be in addition to and not in substitution for other payments to
be made by Tenant.
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<PAGE> 91
G. All covenants and agreements to be performed by Tenant under any of
the terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent.
H. No payment by Tenant or receipt by Landlord of a lesser amount than
any installment or payment of rent due shall be deemed to be other than on
account of the amount due, and no endorsement or statement on any check or
payment of rent shall be deemed an accord and satisfaction. Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such installment or payment of rent, or pursue any other remedies
available to Landlord.
I. Subject to paragraph 20, the terms and provisions of this Lease shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, successors, and assigns of Landlord and Tenant.
J. Tenant acknowledges and agrees that Landlord shall not provide guards
or other security protection for the Leased Premises and that any and all
security protection shall be the sole responsibility of Tenant.
K. This Lease shall be governed by Georgia law.
L. Time is of the essence of each term and provision of this Lease
M. Tenant shall not record this Lease or a memorandum thereof without the
written consent of Landlord. Upon the request of Landlord, Tenant shall join in
the execution of a memorandum or so-called "short form" of this lease for the
purpose of recordation. Said memorandum or short form of this Lease shall
describe the parties, the Leased Premises and the lease term, "and shall
incorporate this Lease by reference.
N. Landlord's liability for performance of its obligations under the
terms of this Lease shall be limited to its interest in the Leased Premises.
(SIGNATURES CONTAINED ON FOLLOWING PAGE)
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IN WITNESS WHEREOF, the parties hereto who are individuals have set their
hands and seals, and the parties who are corporations have caused this
instrument to be duly executed by its proper officers and its corporate seal to
be affixed, as of the day and year first above written.
Signed, sealed and delivered LANDLORD:
as to Landlord, in the
presence of: WEEKS REALTY, L.P.,
a Georgia limited partnership
/s/ Kelly A. Kinnery
- -----------------------------------
By: Weeks GP Holdings, Inc.
Stephanie Pongetti a Georgia corporation,
- ----------------------------------- its sole general partner
Notary Public
By: /s/ Forrest Robinson
---------------------------
Name: FORREST ROBINSON
--------------------------
(NOTARY SEAL) Its: PRESIDENT/C.O.O
--------------------------
Signed, sealed and delivered TENANT:
as to Tenant, in the presence
of: SLH & ASSOCIATES, LTD.
/s/ Kelly A. Kinnery By: /s/ Richard W. Lang
- ----------------------------------------- --------------------------
Name: Richard W. Lang
Stephanie Pongetti --------------------------
- ----------------------------------------- Its: V.P.
Notary Public --------------------------
ATTEST:
By:
---------------------------
Name:
--------------------------
(NOTARY SEAL) Its:
--------------------------
(Corporate Seal)
15
<PAGE> 93
EXHIBIT "A"
[FLOOR PLAN]
<PAGE> 94
EXHIBIT "B"
<TABLE>
<S> <C>
ESTIMATE WHITE CONSTRUCTION ASSOCIATES, INC.
141 Corvette Drive
Weeks Marietta, Ga. 30066
6 W. Druid Hills Dr., 6th Floor suite 620 Ph. 770/426/6388 Fax 770/426/6387
Atlanta, GA 30329
Date prepared: 06/26/97
Robert Green
Estimator: ROBERT SLATEI
</TABLE>
<TABLE>
<CAPTION>
Description Quantity Unit Cost/Unit Item Cost Category Cost
<S> <C> <C> <C> <C> <C>
ARCHITECTURAL DEMOLITION 100.00
Remove wallcovering 1 lot 100.00 100.00
DRYWALL CONSTRUCTION 3060.00
Drywall to ceiling 94 lf 25.00 2350.00
Drywall delivery 1 lot 250.00 250.00
Window Mullions 2 ea 45.00 90.00
Skim coat existing surface 1 lot 200.00 200.00
Close door/window openings 1 ea 95.00 95.00
Cut door/window opening 1 ea 75.00 75.00
CEILING 147.00
F & I 2x2 ceiling tile 1 ea 75.00 76.00
Reframe for light fixtures 9 ea 8.00 72.00
DOORS/FRAMES/HARDWARE 2787.00
F & I- 3x8'6" frame "custom" 3 ea 260.00 750.00
Frames for wood french doors 4 ea 375.00 1500.00
Metal cased opening 1 ea 125.00 125.00
F & I door stops 4 ea 8.00 32.00
F & I standard passage sets 4 ea 95.00 380.00
MILLWORK 1264.00
Wood shelves, 16" mel. labor only 240 lf 4.00 950.00
1/2 wall wood top pt grade 1 lot 100.00 100.00
Chart rail 12 ea 17.00 204.00
PAINT & WALLCOVERING (wallcovering is allowance only) 1543.88
Paint walls 2268 sf 0.28 635.04
Paint walls on exterior wall 918 sf 0.38 348.84
Paint door frames 10 ea 30.00 300.00
Paint doors 4 ea 65.00 260.00
FLOORING.( N.I.C.) 285.00
</TABLE>
<PAGE> 95
EXHIBIT "B" (cont.)
[FLOOR PLAN]
<PAGE> 96
EXHIBIT "D"
ACCEPTANCE OF PREMISES
Lessee:
--------------------------------------------------------
Lessor:
--------------------------------------------------------
Date Lease Signed:
----------------------------------------------
Term of Lease:
--------------------------------------------------
Address of Leased Premises: Suite__________ containing approximately ________
square feet, located at
----------------------------------------------
----------------------------------------------
Commencement Date:
----------------------------------------------
Expiration Date:
----------------------------------------------
The above described premises are accepted by Lessee as suitable for the purpose
for which they were let. The above described lease term commences and expires
on the dates set forth above. Lessee acknowledges that it has been received
from Lessor ____ number of keys to the leased premises. It is understood that
there is a punch list which will be completed after move-in and will be an
exhibit to the Tenant Estoppel.
LESSEE
- ---------------------------------
(Type Name of Lessee)
WITNESS
By:
------------------------------ ------------------------
(Signature) (Signature)
------------------------------ ------------------------
(Type Name and Title) (Company)
<PAGE> 97
EXHIBIT "E"
SPECIAL STIPULATIONS
Finish Allowance:
(1) Landlord shall provide Tenant an allowance of $5.00 per square
foot, or the sum of Twelve Thousand One Hundred Forty-five and no/100 Dollars
($12,145.00) (herein referred to as the "Finish Allowance") for the
installation and construction of the Improvements. The Finish Allowance shall
be disbursed pursuant to the procedure set forth below.
(2) Landlord will disburse the Finish Allowance to Tenant (in two
equal draws), upon compliance by Tenant with the following conditions:
(a) The first draw shall be made when Tenant has approval by Dekalb
County of all rough in inspections (framing, electrical, plumbing and HVAC) and
all walls have been double-sided.
(i) Tenant shall submit to Landlord an application and certificate for
payment, showing the amount of the Improvements installed or constructed
through the date of the draw request. The form shall be signed by Tenant and
its contractor and shall be accompanied by such documentation as is reasonably
required by Landlord to verify and ensure that the work shown on the draw
request has been completed.
(ii) Tenant shall submit to Landlord such lien waivers and affidavits
as are necessary, in Landlord's opinion, to ensure that the Leased Premises,
the Building and the Land remain free and clear of all liens and other
encumbrances arising as a result of the installation and construction of the
Improvements. All such lien waivers and affidavits shall be satisfactory in
form and substance to Landlord (a copy of such waiver attached hereto and made
a part hereof).
(b) The final draw will be paid to Tenant upon issuance by Dekalb
County of a certificate of occupancy for the Leased Premises. Tenant agrees
that it shall have no right to, and will not, occupy the Leased Premises until
a certificate of occupancy for the Leased Premises has been issued by the
appropriate governmental authority(ies).
(i) Tenant shall submit to Landlord an application and certificate for
payment, showing the amount of the Improvements installed or constructed
through the date of the draw request. The form shall be signed by Tenant and
its contractor and shall be accompanied by such documentation as is reasonably
required by Landlord to verify and ensure that the work shown on the draw
request has been completed.
(ii) Tenant shall submit to Landlord such lien waivers and affidavits
as are necessary, in Landlord's opinion, to ensure that the Leased Premises,
the Building and the Land remain free and clear of all liens and other
encumbrances arising as a result of the installation and construction of the
Improvements. All such lien waivers and affidavits shall be satisfactory in
form and substance to Landlord.
(3) All construction work done by Tenant in the Leased Premises shall
be pursued diligently to completion and shall be performed in a good and
workmanlike manner, and in compliance with all governmental regulations. Tenant
covenants and agrees that all contractors, subcontractors and other persons or
entities performing work for Tenant at the Leased Premises will carry (i)
liability insurance in amounts acceptable to Landlord, in
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Landlord's reasonable opinion, and (ii) worker's compensation insurance in the
amounts required by law.
(4) Tenant hereby indemnifies Landlord against, and shall keep all
portions of the Leased Premises, the Building and the Land free from liens for
any work performed, material furnished or obligations incurred by Tenant.
Should any liens or claims be filed against all or any portion of the Leased
Premises, the Building or the Land by reason of Tenant's acts, omissions or
work performed by any person or entity, Tenant shall cause same to be
discharged by bond or otherwise within fifteen (15) days following notice
thereof. If Tenant fails to cause any such lien or claim to be discharged
within the required time, Landlord may cause same to be discharged and may make
any payment that Landlord, in its reasonable judgment, considers necessary,
desirable or proper in order to do so. All amounts paid by Landlord shall bear
interest at the lower of (i) eighteen percent (18%) per annum, or (ii) the
highest rate permitted under applicable law, from the date of payment by
Landlord and shall be payable by Tenant to Landlord upon written demand.
<PAGE> 1
EXHIBIT 10.13
LEASE AGREEMENT
This Lease Agreement made and entered into in duplicate on the ______ day
of _____________, 1999, by and between MICHAEL W. BARKER, and DENVER D. HORN,
hereinafter collectively called "Lessor" and WORLDTRAVEL TECHNOLOGIES, LLC
d.b.a. OFS ONLINE FULFILLMENT SERVICES hereinafter called "Lessee".
NOW, THEREFORE, WITNESSETH: That for and in consideration of the mutual
covenants herein contained in this Lease Agreement, the parties agree as
follows:
1. SUBJECT AND PURPOSE: Lessor leases 3210 Dudley Avenue, Suite F in the City
of Parkersburg, Wood County, West Virginia, unto Lessee. The property leased
consists of 9000 square feet and 60 parking spaces. Improvements to be made to
the premises by Lessor for Lessee will be shown upon an attached diagram with a
description of all work upon the premises to be performed by Lessor but said
improvements shall include at a minimum paving for the parking areas, a dryvit
exterior finish, a balloon type or styled awning at the rear entry of the
building, the erection of a protection fence to block the view of the building
to the South, and to finish the interior as designated on the attached diagram.
HVAC specifications are to be shown upon the attached diagram. (If no diagram is
attached to this lease and initialed then it shall be presumed that Lessee
accepts the premises as is upon taking possession.) The parties had entered into
a prior lease dated March 13, 1998 and this lease is to replace the prior lease
where now the Lessee is taking more rental space. The rent which Lessee is to
pay shall be based upon the prior lease through September 1999 and thereafter
said prior lease shall be considered null and void on
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condition that this lease is fully executed and signature acknowledge.
Notwithstanding anything to the contrary contained herein, as of the
Commencement Date, Lessor hereby represents and warrants that the HVAC,
electrical and plumbing systems of the Premises are or will be in good working
order and repair and that all work within the Premises comply or will comply
with state and federal laws including ADA.
2. TERMS AND RENT: The Lessor does demise the above described premises for an
initial term of five years (5) years, commencing on the first day of October,
1999, and terminating on the last day of September, 2004, or sooner as provided
in this Lease Agreement. Lessee shall have the option to exercise two additional
one year lease extensions with written notice to Lessor within sixty days of the
end of the initial five year term and for each successive one year option. The
beginning initial annual rent shall be $63,063.00, payable in equal installments
of $5,255.25 per month no later than the 5th day of each month hereafter in
advance of the month wherein this Lease remains in effect. The initial rent
shall be increased thereafter and continue to be paid monthly as aforesaid at
the increased amount as follows: The annual rent for October 1, 2000 through
September 30, 2001 shall be $64,324.26, the next year $65,610.74, the next year
$66,922.96, the next year $68,261.40 and the next year $69,626.63 if the option
to renew is exercised and the final year $71,019.16 if the option to renew is
exercised. Each time the lease is renewed, it shall be upon the same terms and
continue with the same provisions as herein set forth. Any carry over where
Lessee remains in possession shall be upon the terms of this lease. During the
term of this lease, Lessee shall have the right of first refusal to lease any of
the remaining
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floor space in the remainder of the building for an amount to be determined when
and if the space becomes available subject to terms to be agreed upon by Lessor
and Lessee. To exercise the right, Lessee, once notified in writing of the right
of refusal must in writing advise Lessor within fifteen (15) days of its intent
to exercise the right.
3. ADDITIONAL RENT: In addition to the rent set forth in Paragraph 2 hereof,
the Lessee shall pay Eight Dollars ($8.00) in additional rent per day for each
day that the rent payment is late or overdue after the 5th of each month as
required to be paid under Paragraph 2 and all other reasonable costs or expenses
which the Lessee assumes or agrees to pay under this Lease, and all other direct
damages, reasonable costs, expenses and sums that Lessor may suffer or incur, or
that may become due, by reason of any default of Lessee or failure by Lessee to
comply with the terms and conditions of this Lease Agreement. All these items
shall be deemed to be additional rent, and, in the event of nonpayment, Lessor
shall have all the rights and remedies as provided in this Lease Agreement for
failure to pay rent.
4. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS:
A. Subject to the limitations that no substantial portion of the building
on the demised premises shall be demolished or removed by Lessee without the
prior, express, and written consent of the Lessor, (which consent shall not be
unreasonably withheld or delayed) and, if necessary, of any mortgagee, Lessee
may at any time during the lease term, subject to the conditions set forth below
and at its own expense, make any alterations, additions, or improvements in and
to the demised premises and the building. Alterations shall be performed
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<PAGE> 4
in a satisfactory manner and shall not weaken or impair the structural strength,
or lessen the value of the building on the demised premises, or change the
purposes for which the building, or any part of the building, may be used.
B. Conditions with respect to alterations, additions, or improvements are
as follows: Before commencement of any work, all plans and specifications shall
be filed with and approved by all governmental departments or authorities having
jurisdiction and any public utility company having an interest in such matters,
and all work shall be done in accordance with the requirements of local
regulations.
C. All alterations, additions, and improvements on or in the demised
premises at the commencement of the term, and which may be erected or installed
during the term, shall become part of the demised premises and become the sole
property of Lessor, except that all movable trade fixtures or signs installed by
the Lessee shall be and remain the property of Lessee.
D. At the onset of this lease and during the course of this lease, Lessee
shall have the right to erect signs for its business upon the condition that
such signs meet the standards and are approved by and are consistent with
applicable City of Parkersburg Zoning ordinances.
5. REPAIRS: Lessee shall, at all times during the term of this Lease Agreement
and at its or its cost and expense, repair, replace, and maintain in a good,
safe, and substantial condition, all buildings and any improvements (to include
additions and alterations made by Lessee under Paragraph 4 hereof) to such
buildings, on the demised premises
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with the exception of the roof and structure which shall be maintained by the
Lessor. Lessee shall use all reasonable precaution to prevent waste, damage, or
injury to the demised premises.
6. REAL ESTATE TAXES: Lessor shall pay the real estate taxes upon the premises.
7. UTILITIES: Lessee shall pay all charges for sewer, water, gas, electricity,
and garbage pick-up used upon the premises. Lessee shall pay for any telephone
or other utility service.
8. INSURANCE: Lessor shall be responsible to maintain a casualty policy of
insurance upon the premises to insure itself and any lender as a loss payee.
Lessor shall have no obligation to insure the Lessee for any loss. This clause
shall not be a waiver of Lessee should it make a claim upon Lessor for loss to
Lessee which Lessee may claim was caused by Lessor's negligence or intentional
act. Lessee shall be required to maintain an adequate policy for contents
coverage which equals the value of the contents located by the Lessee upon the
premises from time to time. The Lessee shall also have insurance against
liability for bodily injury and property damage, etc., in an amount of not less
than One Million Dollars ($1,000,000). Upon receipt of a written request,
Lessee shall provide Lessor with a copy of the policy for contents and
liability insurance.
9. UNLAWFUL OR DANGEROUS ACTIVITY: Lessee shall neither use nor occupy the
demised premises or any part of the demised premises for any unlawful,
disreputable, or ultrahazardous business purposes nor operate or conduct its
business in a manner constituting a nuisance of any kind. Lessee shall
immediately, on discovery of any unlawful,
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disreputable, or ultrahazardous use, take action to halt such activity.
10. INDEMNITY: Lessee shall indemnify Lessor against any and all expenses,
liabilities, and claims of every kind, including reasonable counsel fees, by or
on behalf of any person or entity arising out of either (1) failure by Lessee to
perform any of the terms or conditions of this Lease Agreement, (2) any injury
or damage happening on or about the demised premises, (3) failure to comply with
any law of any governmental authority, or (4) any mechanic's lien or security
interest filed against the demised premises or equipment materials, or
alterations of buildings or improvements on the demised premises.
11. DEFAULT OR BREACH: Each of the following events shall constitute a default
or breach of this Lease Agreement by Lessee:
A. If Lessee, or any successor or assignee of Lessee while in possession,
shall file a petition in bankruptcy or insolvency or for reorganization under
the bankruptcy act, or shall voluntarily take advantage of any such act by
answer or otherwise, or shall make an assignment for the benefit of creditors.
B. If involuntary proceedings under any bankruptcy law or insolvency act
shall be instituted against Lessee, or if a receiver or trustee shall be
appointed of all or substantially all of the property of Lessee, and such
proceedings shall not be dismissed or the receivership or trusteeship vacated
within thirty (30) days after the institution or appointment.
C. If Lessee shall fail to pay Lessor any rent or additional rent when the
rent shall become due and shall not make the payment within thirty (30) days
after notice thereof by Lessor to Lessee.
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D. If Lessee shall fail to perform or comply with any of the conditions of
this Lease Agreement and if the nonperformance shall continue for a period of
thirty (30) days after notice of nonperformance given by Lessors to Lessee or,
if the performance cannot be reasonably had within the thirty-day period, Lessee
shall not in good faith have commenced performance within the thirty-day period
and shall not diligently proceed to completion of performance.
E. If Lessee shall vacate or abandon the demised premises for more than
five (5) business days without the prior written consent of Lessors.
F. If this Lease Agreement or the estate of Lessee under this Lease
Agreement shall be transferred to or shall pass to or devolve on any other
person or party, except in the manner permitted in this Lease Agreement.
G. If Lessee fails to take possession of the demised premises on the term
commencement date, or within thirty (30) days after notice that the demised
premises are available for occupancy, if the term commencement date is not
fixed in this Lease Agreement or shall be deferred as provided in this Lease
Agreement.
12. EFFECT OF DEFAULT: In the event of any material default under this Lease
Agreement, as set forth in Section Eleven, the rights of Lessor shall be as
follows:
A. Lessor shall have the right to cancel and terminate this Lease
Agreement as well as all of the right, title, and interest of Lessee under this
Lease Agreement, by giving to Lessee not less than thirty (30) days notice of
the cancellation right to cure and termination. On expiration of the time fixed
in the notice, this Lease
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<PAGE> 8
Agreement and the right, title, and interest of Lessee under this Lease
Agreement, shall terminate in the same manner and with the same force and
effect, except as to Lessee's liability, as if the date fixed in the notice of
cancellation and termination were the end of the term originally set forth in
this Lease Agreement.
B. Lessor may elect, but shall not be obligated, to make any payment
required of Lessee in this Lease Agreement or comply with any agreement, term,
or condition required by this Lease Agreement to be performed by Lessee. Lessor
shall have the right to enter the demised premises for the purpose of
correcting or remedying any such default and to remain until the default has
been corrected or remedied, but any expenditure for the correction by Lessor
shall not be deemed to waive or release the default of Lessee or the right of
Lessor to take any action as may be otherwise permissible under this Lease
Agreement in the case of any material default.
C. Lessor may re-enter the demised premises immediately and remove the
property and personnel of Lessee, and store the property in a public warehouse
or at a place selected by Lessor, at the reasonable expense of Lessee. After
re-entry, Lessor may terminate the lease on giving thirty (30) days written
notice of termination to Lessee. Without the notice, re-entry will not terminate
this Lease Agreement. On termination, Lessor may recover from Lessee all direct
damages proximately resulting from the breach, including the reasonable cost of
recovering the demised premises.
D. After re-entry, Lessor may relet the demised premises or any part of
the demised premises for any term without terminating this Lease Agreement, at
the rent and on the terms as Lessor may choose.
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<PAGE> 9
Lessor may make alterations and repairs to the demised premises. The duties and
liabilities of the parties if the premises are relet as provided in this section
shall be as follows:
(1) In addition to Lessee's liability to Lessor for breach of the lease,
Lessee shall be liable for all reasonable and customary expenses of the
reletting, for the alterations and repairs made, and for the difference between
the rent received by Lessor under the new Lease Agreement.
(2) Lessor shall have the right to apply the rent received from reletting
the premises to (1) reduce the indebtedness of Lessee to Lessor under this Lease
Agreement, not including indebtedness for rent, (2) reasonable expenses of the
reletting and alterations and repairs made, or (3) rent due under this Lease
Agreement.
(3) If the new Lessee does not pay a rent installment promptly to Lessor,
and the rent installment has been credited in advance of payment to the
indebtedness of Lessee other than rent, or if rentals from the new Lessee have
been otherwise applied by Lessor as provided for in this section and during any
rent installment period are less than the rent payable for the corresponding
installment period under this Lease Agreement, Lessee shall pay Lessor the
deficiency, separately for each rent installment deficiency period, and before
the end of that period. Lessor may at any time after a reletting terminate this
Lease Agreement for the breach on which Lessor had based the reentry and
subsequently relet the demised premises.
13. DESTRUCTION OF PREMISES:
A. In the event of a partial destruction of the premises during the term
of this Lease Agreement from any cause, Lessor shall promptly
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<PAGE> 10
repair such damage, provided the repairs can be made within ninety (90) days
under the laws and regulations of applicable governmental authorities. Any
partial destruction shall neither annul nor void this Lease Agreement, except
that Lessee shall be entitled to a proportionate reduction of rent while the
repairs are being made, any proportionate reduction being based on the extent to
which the making of repairs shall interfere with the business carried on by
Lessee on the premises. If the repairs cannot be made in the specified time,
Lessor may, at Lessor's option, make repairs within a reasonable time, this
Lease Agreement continuing in full force and effect and the rent to be
proportionately rebated as previously set forth in this section. In the event
that Lessor does not elect to make repairs that cannot be made in the specified
time, or those repairs cannot be made under the laws and regulations of the
applicable governmental authorities, this Lease Agreement may be terminated at
the option of either party.
B. Should the building in which the demised premises are situated be
destroyed to the extent of more than sixty percent (60%) of the replacement
cost, this Lease Agreement shall be terminated.
C. Any dispute between Lessor and Lessee relative to the provisions of
this section shall be subject to arbitration operating under the rules of the
American Arbitration Association.
14. CONDEMNATION: Rights and duties in the event of condemnation are as
follows:
A. If the whole or up to fifty percent (50%) of the demised premises
shall be taken or condemned by any competent authority for any public or
quasi-public use or purpose, this Lease Agreement shall cease and terminate as
of the date on which title shall vest in that
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<PAGE> 11
authority, and the rent reserved under this Lease Agreement shall be
apportioned and paid up to that date.
B. If only a portion of the demised premises shall be taken or
condemned, of less than fifty percent (50%), this Lease Agreement shall not
cease or terminate, but the rent payable after the date on which Lessee shall be
required to surrender possession of such portion shall be reduced in proportion
to the decreased use suffered by Lessee as the parties may agree or as shall be
determined by arbitration as aforesaid.
C. In the event of any taking or condemnation in whole or in part, the
entire resulting award of consequential damages shall belong to Lessor without
any deduction from such award for the value of the unexpired term of this Lease
Agreement or for any other estate or interest in the demised premises now or
later vested in Lessee. Lessee assigns to Lessor all its right, title, and
interest in any and all such awards.
D. In the event of a partial taking, Lessor shall promptly proceed to
restore the remainder of the building on the demised premises to a self
contained architectural unit.
E. In case of any governmental action not resulting in the taking or
condemnation of any portion of the demised premises but creating a right to
compensation for such action, or if less than a fee title to all or any portion
of the demised premises shall be taken or condemned by any governmental
authority for temporary use or occupancy, this Lease Agreement shall continue
in full force and effect without reduction or abatement of rent, and the rights
of the
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parties shall be unaffected by the other provisions of this section, but shall
be governed by applicable law.
15. SUBORDINATION: This Lease Agreement and all rights of Lessee under this
Lease Agreement shall be subject and subordinate to the lien of any and all
mortgages that may now or hereafter affect the damaged premises, or any part of
the demised premises, and to any and all renewals, modifications, or extensions
of any such mortgages. Lessee shall on demand by written notice, execute,
acknowledge, and deliver to Lessor without expense to Lessor, any and all
instruments that may be reasonably necessary or proper to subordinate this Lease
Agreement and all rights in this Lease Agreement to the lien of any such
mortgage or mortgages.
16. ACCESS TO PREMISES; SIGNS POSTED BY LESSOR: Lessee shall permit Lessor or
their agents to enter the demised premises at all reasonable hours upon
reasonable notice to inspect the premises or make repairs that Lessee may
neglect or refuse to make in accordance with the provisions of this Lease
Agreement, and also to show the premises to prospective buyers or Lessees. At
any time within three (3) months prior to the expiration of the term of this
Lease Agreement, Lessor may show the demised premises to persons wishing to rent
the premises.
17. EASEMENTS, AGREEMENTS, OR ENCUMBRANCES: The parties shall be bound by all
existing easements, agreements, and encumbrances of record relating to the
demised premises, and Lessor shall not be liable to Lessee for any damages
resulting from any action taken by a holder of an interest pursuant to the
rights of a prior Easement Agreement.
18. QUIET ENJOYMENT: Lessor warrants that Lessee shall be granted peaceable
and quiet enjoyment of the demised premises free from any
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eviction or interference by Lessor if Lessee pays the rent and other charges
provided in this Lease Agreement, and otherwise fully and punctually performs
the terms and conditions imposed on Lessee. Lessor warrants that the premises
may be occupied by Lessee for its business under applicable zoning and use codes
of the City of Parkersburg and may occupy the premises and conducts business
thereon twenty-four (24) hours a day.
19. LIABILITIES OF LESSOR: With the exception of Lessors' active and direct
negligence, Lessee shall be in exclusive control and possession of the demised
premises, and the Lessor shall not be liable for any injury or damages to any
property or to any person on or about the demised premises or for any injury or
damage to any property of Lessee. The provisions of this Lease Agreement
permitting Lessor to enter and inspect the demised premises are made to insure
that Lessee is in compliance with the terms and conditions of this Lease
Agreement and to insure that Lessee makes repairs which Lessee may have failed
to make. Lessor shall not be liable to Lessee for any entry on the premises for
inspection purposes.
20. RENT ABATEMENT: No abatement, diminution, or reduction of rent shall be
claimed or allowed to Lessee or any person claiming under them under any
circumstances, whether for inconvenience, discomfort, interruption of business,
or otherwise, arising from the making of alterations, improvements, or repairs
to the demised premises, because of any governmental laws, or arising from and
during the restoration of the demised premises after their destruction or damage
by fire or other cause, or the taking or condemnation of a portion only of the
damaged premises, except as provided in Section Fifteen.
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21. REPRESENTATIONS BY LESSOR: At the commencement of the term, Lessee shall
accept the buildings and improvements and any equipment in their existing
condition and state of repair, and Lessee agrees that no representations,
statements, or warranties, express or implied, have been made by or on behalf of
Lessor in respect thereto except as contained in the provisions of this Lease
Agreement. Lessor shall in no event be liable for any latent defects. Lessor
shall make reasonable efforts to install tenants in the other part of premises
of a reputable nature but in no event shall another tenant be installed which is
in the travel business.
22. WAIVERS: The failure of Lessor to insist on strict performance of any of
the terms and conditions of this Lease Agreement on a specific instance shall be
deemed a waiver of the rights or remedies that Lessor may have regarding that
specific instance only, and shall not be deemed a waiver of any subsequent
breach or default in any terms and conditions.
23. NOTICES:
A. All notices, demands or other writings in this Lease Agreement provided
to be given or made or sent, or which may be given or made or sent, by either
party to the other, shall be deemed to have been fully given or made or sent
when made in writing and deposited in the United States mail, registered and
postage prepaid, and addressed as follows:
TO LESSOR: Michael W. Barker and Denver D. Horn
3210 Dudley Avenue, Parkersburg, WV 26104
TO LESSEE: World Travel Technologies, LLC dba
OFS Online Fulfillment Services
6 W. Druid Hills Dr., Suite 635, Atlanta, GA 30529
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B. The address to which any notice, demand, or other writing may be given
or made or sent to any party as above provided may be changed by written notice
given by such party as above provided.
24. ASSIGNMENT, MORTGAGE, OR SUBLEASE: Neither Lessee nor its successors or
assigns shall assign, mortgage, pledge, or encumber this Lease Agreement or
sublet the demised premises in whole or in part, or permit the demised premises
to be used or occupied by others, nor shall this Lease Agreement be assigned or
transferred by operation of law, without the prior, express, and written
consent in writing of Lessor in each instance which consent shall not be
unreasonably withheld. If this Lease is assigned or transferred, or all or any
part of the demised premises is sublet or occupied by anybody other than
Lessee, Lessor may, after default by Lessee, collect rent from the assignee,
transferee, subtenant, or occupant, and apply the net amount collected to the
rent reserved in this Lease Agreement. However, any such assignment,
subletting, occupancy, or collection shall not be deemed a waiver or any
agreement or condition of this Lease Agreement in accordance with its terms and
conditions and shall not be released from the performance of the terms and
conditions of this Lease Agreement. The consent by Lessor to an assignment,
mortgage, pledge, or transfer shall not be construed to relieve Lessee from
obtaining the express written consent of Lessor to any future transfer of
interest. Notwithstanding anything to the contrary contained herein, Lessee
shall have the right to assign this Lease to an entity which is owned by or
under the common ownership of Lessee or, to a parent, subsidiary or affiliate
of the Lessee.
25. SURRENDER OF POSSESSION:
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A. Lessee shall, on the last day of the term, or on earlier termination
and forfeiture of this Lease Agreement, peaceably and quietly surrender and
deliver the demised premises to Lessor free of subtenancies, including all
buildings, additions, and improvements constructed or place on the demised
premises by Lessee, except movable trade fixtures, all in good condition and
repair, normal wear and tear excepted.
B. If Lessor so elects, any trade fixtures or personal property used in
connection with the operation of the demised premises and belonging to Lessee,
if not removed at the termination or forfeiture of this Lease Agreement, shall
be deemed abandoned and become the property of Lessor without any payment or
offset for such fixtures or property. At Lessor's election, Lessor may remove
such fixtures or property from the demised premises and store them at the risk
and expense of Lessee.
C. Lessee shall repair and restore all damage to the demised premises
caused by the removal of equipment, trade fixtures, and personal property,
normal wear and tear excepted.
26. REMEDIES OF LESSOR:
A. In the event of a breach by Lessee of any of the terms or conditions of
this Lease Agreement, Lessor shall have the right of injunction to restrain
Lessee and the right to invoke any remedy allowed by law or in equity, as if
the specific remedies of indemnity or reimbursement were not provided in this
Lease Agreement.
B. The rights and remedies given to Lessor in this Lease Agreement are
distinct, separate, and cumulative, and no one of them, whether or not exercised
by Lessor, shall be deemed to be in exclusion
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of any of the others in this Lease Agreement, by law, or by equity provided.
C. No receipt of money by Lessor from Lessee after default or cancellation
of this Lease Agreement in any lawful manner shall (1) reinstate, continue, or
extend the term or affect any notice given to Lessee, (2) operate as a waiver
of the right of Lessor to enforce the payment of rent and additional rent then
due or falling due, or (3) operate as a waiver of the right of Lessor to
recover possession of the demised premises by proper suit, action, proceeding,
or other remedy. After (1) service of notice of termination and forfeiture as
provided in this Lessee Agreement and the expiration of the time specified in
such notice, (2) the commencement of any suit, action, proceeding, or other
remedy, or (3) final order or judgment for possession of the demised premises,
Lessors may demand, receive, and collect any monies due, without in any manner
affecting such notice, order, or judgment. Any and all such monies so collected
shall be deemed to be payment on account of the use and occupation of the
demised premises or at the election of Lessor, on account of the liability of
Lessee under this Lease Agreement.
27. LESSEE'S RIGHTS UPON LESSOR'S DEFAULT: If Lessor defaults in the
performance of any substantial term, covenant, or condition required to be
performed by Lessor under this Lease, Lessor may terminate this Lease by giving
at least thirty (30) days written notice to Lessor of such intention and right
to cure, thereby terminating this Lease on the date designated in such notice,
but not for less than thirty (30) days, unless Lessor shall have cured such
default prior to the expiration of the thirty (30) days after receiving notice
from Lessee, and commences to eliminate the cause of such default and proceeds
diligently and with reasonable dispatch to take all steps and to do all work
required to cure such default, and through such effort the default is cured,
then Lessee shall not have the right to declare the said term ended by such
default.
28. ENTIRE AGREEMENT: This Lease Agreement shall constitute the entire
agreement between the parties. Any prior understanding or
17
<PAGE> 18
representation of any kind including former leases upon these premises preceding
the date of this Lease Agreement shall not be binding upon either party except
to the extent incorporated in this Lease Agreement.
29. MODIFICATION OF AGREEMENT: Any modification of this Lease Agreement or
additional obligation assumed by either party in connection with this Lease
Agreement shall be binding only if evidenced in a writing signed by each party
or an authorized representative of each party.
30. BINDING EFFECT: This Lease Agreement shall bind and inure to the benefit of
the respective heirs, personal representative, successors, assigns of the
parties.
31. APPLICABLE LAW: This Lease Agreement shall be governed by and construed in
accordance with the laws of the State of West Virginia.
32. TIME OF THE ESSENCE: It is specifically declared that time is of the
essence in all provisions of this Lease Agreement.
33. PARAGRAPH HEADINGS: The titles to the paragraphs of this Lease Agreement
are solely for the convenience of the parties and shall not be used to explain,
modify, simplify, or aid in the interpretation of the provisions of this Lease
Agreement.
WITNESS the following signatures.
-----------------------------------------
MICHAEL W. BARKER, LESSOR
-----------------------------------------
DENVER D. HORN, LESSOR
/s/ Timothy J. Severt
-----------------------------------------
WORLD TRAVEL TECHNOLOGIES, LLC
dba OFS ONLINE FULFILLMENT SERVICES, LLP,
LESSEE
By: /s/ Timothy J. Severt
--------------------------------------
18
<PAGE> 19
STATE OF WEST VIRGINIA,
COUNTY OF WOOD, TO-WIT:
This document was acknowledged before me this __/____ day of
_______________, 1999, by MICHAEL W. BARKER, LESSOR.
My commission expires: -----------------------
------------------------------------
NOTARY PUBLIC
STATE OF WEST VIRGINIA.
COUNTY OF WOOD, TO-WIT:
This document was acknowledged before me this _______ day of
__________________, 1999, DENVER D. HORN, LESSOR.
STATE OF GEORGIA,
COUNTY OF GWINNETT, TO-WIT:
This document was acknowledged before me this 15th day of
November, 1999, by TIMOTHY J. SEVERT, its
EVP Administration, on behalf of WORLD TRAVEL TECHNOLOGIES,
LLC, dba OFS ONLINE FULFILLMENT SERVICES, LESSEE.
Notary Public, Gwinnett County, Georgia
My commission expires: My Commission Expires January 11, 2001
---------------------------------------
/s/ B. Sharon Wilhelru
------------------------------------
NOTARY PUBLIC
This instrument was prepared under the direction of
R. Vance Golden, III
P.O. Box 81, Parkersburg, WV 26102
19
<PAGE> 1
EXHIBIT 10.14
LEASE
STATE OF FLORIDA
COUNTY OF SANTA ROSA
THIS AGREEMENT made and entered into this 1st day of October, 1999 by and
between HEFTY PUBLISHING COMPANY, a Florida Corporation, of Gulf Breeze, Santa
Rosa County, Florida, hereinafter called the "Lessor", and WORLD TRAVEL
TECHNOLOGIES, L.L.C., a Georgia Limited Liability Company, hereinafter called
the "Lessee".
WITNESSETH
The Lessor, for and in consideration of the rental herein mentioned and the
covenants to be performed by the Lessee, does lease and let unto the Lessee
those certain premises, and the improvements located thereon, commonly known as
6671 Caroline Street, Milton, Florida (the downstairs/bottom floor only,
consisting of approximately twelve thousand (12,000) square feet), located in
Milton, Santa Rosa County, Florida.
TO HAVE AND TO HOLD the same for a period of thirty-six (36) months, to
commence on September 1, 1999 and terminating on August 31, 2002. Lessor
acknowledges that the commencement date is for purposes of rent only.
The parties mutually covenant and agree as follows:
1. COVENANT OF SEIZEN: The Lessor covenants and agrees with Lessee that
at the time of the sealing and
<PAGE> 2
delivery of this lease, the Lessor is seized of the said premises in fee simple
absolute and has the right to lease said premises under the terms hereof.
2. COVENANT OF QUIET ENJOYMENT: Subject to the terms, conditions, and
covenants of this lease, the Lessor agrees that the Lessee shall and may
peaceably have, hold, and enjoy the premises above described, without hindrance
or molestation by the Lessor, during the period set forth above.
3. RENT RESERVED: The Lessee will yield and pay to the Lessor as rental
for said property the sum of Eight Thousand and No/100's Dollars ($8,000.00)
per month (together with applicable Florida sales tax), in advance, during the
initial thirty-six (36) month term of this Lease. The rental to be paid
hereunder shall be due on the first (1st) day of each month and shall be deemed
delinquent after the tenth (10th) day of each month during the entire term of
this lease. Payments received by the Lessor (regardless of when mailed) after
the tenth (10th) day of each month shall be subject to a late charge of Fifty
and No/100's Dollars ($50.00), which shall be due upon written notice. All
payments shall by made payable to HEFTY PUBLISHING COMPANY, and shall be
tendered at its premises, located at 1232 Paula Circle, Gulf Breeze, Florida
32561, or at such other place as the Lessor, through its duly authorized
officers, shall designate in writing to the Lessee.
<PAGE> 3
4. EARLY TERMINATION: During the initial thirty-six (36) month term of
this Lease, the Lessee may terminate the same at the end of any calendar month
period, by giving advance written notice of such termination. As a consideration
for this right of termination, the Lessee will pay a penalty equal to one (1)
month's rent upon exercise of the right of early termination. The provisions of
this paragraph with respect to early termination do not apply to any renewals
or extensions of the subject Lease, and the Lessee will not be allowed to
terminate such an renewal or extension prematurely.
5. RENEWAL FOR ADDITIONAL TERMS: If, at the end of the initial
thirty-six (36) month term of this Lease (or any permitted extension or renewal
thereof as provided hereunder), the Lessee is not in default hereunder, then
the Lessee may, at its option, extend the lease for the demised premises herein
described for an additional twenty-four (24) months. The Lessee will be
permitted two (2) such extensions (for a total of forty-eight (48) months)
hereunder. The Lessee must give the landlord ninety (90) days advance written
notice of its intention to exercise any option provided under this paragraph.
With respect to the rent reserved during any extension or renewal hereof, the
same will increase to the sum of Eight Thousand Five Hundred and No/100's
Dollars ($8,500.00) per month. All of the terms and provisions of this Lease,
except as otherwise expressly
<PAGE> 4
provided herein, will be applicable during any extension or renewal hereof.
6. TENANT IMPROVEMENT ALLOWANCE: If, during the term of this Lease (or any
permitted extensions or renewals thereof, as provided hereunder), the Lessee
makes improvements to the demised premises, then subject to the limitations
and conditions herein, the Lessee will be eligible to receive an improvement
allowance therefore. This improvement allowance shall be limited to a maximum
of Twenty Four Thousand and No/100's Dollars ($24,000.00) during the initial
thirty-six (36) month term of this Lease (or any permitted extensions or
renewals thereof). In order to receive this allowance, the Lessee will submit
to the Lessor copies of any and all invoices for which reimbursement is claimed
(including invoices for architectural drawings and space plans); the Lessor
will be given a period of thirty (30) days to review the invoices and verify
that such improvements have been made. At the conclusion of that time, if no
dispute has arisen about the same, then the Lessor shall pay to the Lessee the
amount of the invoice, which, when coupled with any other invoices previously
paid, shall not exceed the maximum amount of the improvement allowance
previously specified hereunder.
Until May 1, 2000, no monies for an improvement allowance will be paid
hereunder. In the event that the Lessee, for any reason whatsoever, vacates the
<PAGE> 5
demised premises before May 1, 2000, then it shall forfeit its right to any
improvement allowance, and no such sums shall be paid hereunder whatsoever,
regardless of whether the Lessee has actually expended sums for the improvement
of the demised premises. Moreover, no improvement allowance shall be paid
whatsoever for any additional air conditioning which the Lessee might
determine, in its sole and absolute discretion, is required for its needs. Any
and all improvements, paid for or reimbursed by the Lessor under this
paragraph, shall remain with the demised premises and be the sole and exclusive
property of the Lessor at the conclusion of the lease term contemplated hereby
(including any permitted extensions or renewals thereof).
7. FIRST RIGHT OF REFUSAL: The demised premises which are the subject of
this Lease are the downstairs/bottom floor only of those premises located at
6671 Caroline Street, Milton, Florida. With respect to the upstairs portion of
the demised premises, the Lessor grants the Lessee the right of first refusal,
with respect to the lease/use of that space, on the following terms and
conditions: In the event that the Lessor desires to use that space for its own
benefit, it will give the Lessee ten (10) business days written notice of its
intention to do so. Within that time period, if the Lessee desires to lease
the upstairs portion of the subject premises, it will do so, by paying a rent
for the upstairs portion which is equal to that rent which it is paying for
<PAGE> 6
the downstairs portion at that particular time under the terms of this Lease.
In the event that the Lessor is approached by a third party, who desires to
lease the upstairs portion of the demised premises, then the Lessor will give
the Lessee ten (10) business days written notice of its intention to lease that
space to the third party and the terms of the proposed lease. Within that time,
the Lessee will then have the option to exercise its right of first refusal for
the upstairs portion by paying a rent reserved of no less than that previously
set forth within this paragraph, or the amount which is contained in the third
party's offer to lease the premises, whichever is greater. Such lease will be
coterminous with this Lease.
8. ADDITIONAL AIR CONDITIONING: The Lessee shall have the right to add
additional air conditioning to the demised premises for its own use and
benefit. Such additional air conditioning shall be the sole and exclusive
responsibility of the Lessee. At the end of the term of this Lease (including
any permitted extensions or renewals thereof) the air conditioning equipment
will remain the property of the Lessor. Any additional air conditioning
installed in the demised premises pursuant to this section shall not be subject
to the improvement allowance, as previously set forth herein.
9. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: The Lessee and Lessor will
comply with all the laws, rules, and
<PAGE> 7
regulations of proper governmental authorities and will not knowingly cause or
permit said premises or building to be used for any unlawful purposes.
10. UTILITIES AND MAINTENANCE: The Lessee shall and will pay all costs for
gas, electricity, water, lights, heating, telephone, and all other utilities and
things of a similar nature used on the demised said premises during the term of
this lease. The Lessee shall apply for and pay required deposits for these
items and will have the utilities put in its own name. The Lessor shall and
will maintain, at its own expense, the roof, plumbing, primary HVAC, foundation,
and exterior walls of the building (except for Lessee's signs, if any). The
roof shall be free of leaks. The Lessee shall and will maintain, at its own
expense, all portions of the leased premises and any additional air
conditioning which it may install. Additionally, the Lessee will likewise
maintain the fixtures and equipment therein for which the Lessor is not
responsible hereunder, if any, in a workable condition and will replace at its
own expense any fixtures and equipment owned by the Lessor which become
defective, broken, or unusable due to the willfulness or gross negligence of
the Lessee, its agents, employees, or customers. The Lessor will be responsible
for the landscaping and grounds maintenance. The Lessor hereby represents and
warrants that as the commencement date of this Lease, the plumbing, electric,
water, and HVAC systems are in
<PAGE> 8
good working order and repair and that the premises are ADA compliant; in the
event that it is discovered that the building possesses one or more problems
relating only to ADA compliance, and the amounts to be spent by the Lessor to
correct such an item or items relating to ADA compliance and bring the same
into compliance exceed Ten Thousand and No/100's Dollars ($10,000.00) in the
aggregate over the thirty-six (36) month term of this Lease (and any extensions
or renewals hereof), then the Lessee shall be responsible for the additional
amount. The Lessor further represents and warrants that as of the commencement
date, that there are no hazardous materials within the premises and that the
premises are in compliance with all applicable laws, ordinances, and
regulations. The Lessor will provide adequate and functional lighting for the
parking lot. Subject to the dollar limitations expressed herein, the Lessor
shall make all repairs within twenty-four (24) hours notice of the same, or
Lessee can contract with outside services to repair and deduct that amount from
next month's rent. In the event that individual repairs will cost more than
$1,000.00 (One Thousand Dollars), Lessee will notify Lessor and Lessor will
provide approval for repair within 24 hours of notice.
11. INSURANCE: The Lessor shall and will, at its own cost and
expense, keep the demised premises fully
<PAGE> 9
insured against loss or damage by fire or other casualty in the principal sum of
One Million Three Hundred Thousand and No/100's Dollars ($1,300,000.00). The
Lessee shall and will, during the full term of this lease, and at its own
expense, carry public liability insurance in the limits commonly known as One
Million and No/100's Dollars ($1,000,000.00) per occurrence, and One Million
Three Hundred Thousand and No/100's Dollars ($1,300,000.00) in the aggregate,
and shall cause the policy of insurance to be issued to show the Lessor as an
additional insured. If the Lessee desires any type of insurance on its
merchandise, inventory, equipment, or other property in the building or on the
premises, it shall be its sole obligation to arrange for it, it being understood
that the Lessor's sole responsibility shall be for fire and extended coverage
protection generally offered on commercial buildings. The Lessee agrees to hold
the Lessor harmless from any liability for any damages sustained by any person
on said premises due to the actions of the Lessee, its agents, servants,
employees, or customers during the term of this Lease, except in the case of
negligence or misconduct on the part of the Lessor, its agents, contractors, or
employees.
12. REAL ESTATE TAXES: The Lessor will pay all county, state, and other
real property taxes which may be assessed on the premises leased hereby.
13. PERSONAL PROPERTY TAXES: The Lessee shall and will pay all taxes of
any kind levied only upon the personal property, including trade fixtures and
inventory,
<PAGE> 10
kept on the leased premises and leased or owned by the Lessee.
14. PROHIBITION AGAINST ALTERATION OR CHANGES TO THE DEMISED PREMISES: The
Lessee shall not make any alterations or changes to the demised premises without
the prior written consent of the Lessor, which consent shall not be unreasonably
withheld or delayed, and all additions, fixtures, equipment, and floor covering,
together with any and all improvements (except furniture, inventory, airline
ticketing machines and telephones, which will be readily removable without
injury to the premises), shall be and remain a part of the premises at the
expiration of this lease.
15. PROHIBITION AGAINST ASSIGNMENT AND SUBLETTING: The Lessee shall not
have the right to assign, sublet, or part with the possession of the whole or
any part of said premises without the prior written approval of the Lessor;
provided, however, that such consent by the Lessor will not be unreasonably
withheld. Notwithstanding anything to the contrary contained herein. Lessee
shall have the right to assign the Lease to an entity which is owned by or under
the common ownership of Lessee or, to a parent, subsidiary, or affiliate of the
Lessee.
16. USE OF PREMISES: The Lessee shall not use or permit said premises or
any part thereof to be used for any purpose or purposes other than as general
office purposes and
<PAGE> 11
on-line fulfillment services without the prior written consent of the Lessor,
and no use shall knowingly be made or permitted to be made of the premises
which will increase the existing rate of insurance upon the type of building
being leased hereunder, or cause a cancellation of any insurance policy
covering said building, or any part thereof, nor shall the Lessee knowingly
sell or permit to be kept, used or sold in or about the premises, any article
which may be prohibited by the standard form of the Lessor's fire insurance
policy.
17. SIGNS: The Lessee shall have the right to place a sign on the building
to notify the public of its presence therein. Such sign shall not damage,
deface, or otherwise mar the exterior of the building, and the content and
placement of the sign shall be subject to approval, which shall not be
unreasonably withheld or delayed, by the Lessor, in advance. The Lessee shall
be responsible for all expenses incident to the preparation and mounting of the
sign.
18. DESTRUCTION OF LEASED PREMISES: It is understood and agreed that if
said premises during the term of this contract be destroyed by fire or other
casualty, then the Lessor must give written notification of intent within
thirty (30) days, then and in that event the Lessor shall be under no obligation
to rebuild the same, and if it shall elect not to rebuild said premises, then
this lease shall at once become null and void; provided, however, that if the
Lessor shall elect to rebuild said premises, it may do so by
<PAGE> 12
restoring same to like condition as of the date of this contract (together with
all improvements subsequently made by the Lessee). Such restoration shall be
made within sixty (60) days of the casualty. During the time of such rebuilding,
the rent reserved hereunder shall cease, but on the conclusion of such
rebuilding the rent reserved hereunder shall at once begin again.
19. CONDEMNATION: In the event any portion of said leased premises is
taken by any condemnation or eminent domain proceedings, the monthly rental
herein shall be ratably reduced according to the area of the leased premises
which is taken and the Lessee shall be entitled to no other consideration by
reason of such taking. Any damages suffered by the Lessee on account of the
taking of any portion of said leased premises and any damage to any structure
erected on said leased premises, respectively, that shall be awarded to the
Lessee in said proceeding shall be paid to and received by the Lessor, and the
said Lessee shall have no right therein or thereto or to any part thereof. The
Lessee does hereby relinquish and assign to the Lessor all of the Lessee's
rights and equities in and to any such damage. In the event the property is
either totally or partially condemned, the Lessee may terminate the Lease
without penalty.
20. LESSOR'S LIABILITY FOR THEFT: The Lessor shall not be liable for any
loss of property by theft or
<PAGE> 13
burglary from the building, except in the event of the Lessor's negligence.
21. LESSOR'S RIGHT OF INSPECTION: The Lessor or its agents shall have the
right to enter and inspect said premises, at any reasonable hour, upon advance
notice to Lessee, except in emergencies of Lessor's employees, agents, or
contractors, and to make any alterations, additions, or improvements which they
may reasonably deem necessary for its preservation. Such alterations, additions,
or improvements shall not materially interfere with Lessee's business.
22. LESSOR'S RIGHT OF ACCESS TO THE SECOND FLOOR: The demised premises
which are the subject of this Lease consist of the bottom floor/downstairs
portion of the property located at 6671 Caroline Street, Milton, Florida. The
parties recognize that the Lessor has an interest in the upstairs portion of
that property. Accordingly, the Lessor shall be permitted access to the
downstairs/bottom floor at all times, in order to gain access to the upstairs
floor. Such access shall, at a minimum, consist of unfettered use of the
stairwell. In the event that it becomes necessary for the Lessor to renovate the
demised premises, in order to add an elevator from the first to the second
floor, the Lessee agrees to provide such access and space in order for that
renovation to be accomplished. This renovation, if necessary, will occur with no
disruption to Lessee's operation; if disruption occurs, Lessee is notified of
the same, and fails
<PAGE> 14
to correct the situation, then Lessor will be liable for damages, disruption,
and loss to Lessee. If the Lessee leases the upstairs and the Lessor provides an
elevator, the Lessee will relinquish its early termination rights within this
Lease; however, if the Lessor does not provide an elevator, the Lessee will not
relinquish its early termination rights.
23. RIGHT TO RE-TAKE UPON ABANDONMENT: If the said leased premises shall
be deserted or vacated for more than thirty (30) days or more any time during
the lease term, then it shall be lawful for the Lessor, its attorney, agents,
successors, or assigns, to re-enter into and repossess the said premises. In
such case, the Lessee shall continue to remain liable for any and all rents
which are then due or which may become due until the termination of this lease.
24. EVENTS OF DEFAULT CONSISTING OF NON-PAYMENT OR FAILURE TO ABIDE BY THE
COVENANTS: In case any sum to be paid hereunder shall be in default for a period
of ten (10) business days, or if the Lessee shall violate any of the other
covenants of this lease as provided herein, which default remains uncorrected
after the giving of ten (10) business days written notice, then in either event,
the Lessee shall become Lessee at sufferance and the Lessor, its attorney,
agents, successors, representatives, and assigns shall be entitled to
immediately re-enter and take possession of said premises with notice of legal
process.
<PAGE> 15
25. EVENTS OF DEFAULT OTHER THAN NON-PAYMENT OR FAILURE TO ABIDE BY THE
COVENANTS: If the Lessee shall be adjudicated a bankrupt, become insolvent, take
the benefit of any federal or state reorganization or composition proceeding,
make a general assignment for the benefit of creditors, otherwise take the
benefit of any benefit of any insolvency law, or have a trustee in bankruptcy or
a receiver appointed or elected (whether under federal or state law), and such
in not discharged within thirty (30) days, then and in such event this lease
shall terminate at the will of the Lessor, and the said Lessor shall re-enter
and retake possession without the necessity of legal process, and upon written
notice to said Lessee.
26. ATTORNEY'S FEES AND COSTS: In the event it becomes necessary for the
Lessor or Lessee to obtain legal assistance in enforcing any covenant in this
lease, then the non-prevailing party and will pay all reasonable attorney's fees
and all expenses incurred (both at the trail and appellate levels, if
necessary).
27. LANDLORD'S LIEN: The Lessee hereby pledges and assigns to the Lessor
all the furniture, fixtures, goods, chattels which shall be brought upon said
premises, together any rents from the demised premises (if the premises have
been sub-let or assigned), as security for the payment of said rent and all
other payments due by the Lessee hereunder, and the Lessee agrees that said lien
may be enforced by
<PAGE> 16
distress, foreclosure, or otherwise, at the election of the Lessor.
28. CUMULATIVE PROVISIONS: The rights and remedies created by this lease
are cumulative and the use of one remedy shall not be taken to exclude or waive
the right to the use of another.
29. EFFECT OF WAIVER: No waiver of any condition or covenant of this lease
by the Lessor shall be deemed to imply or constitute a further waiver by the
Lessor of any other condition or covenant of this lease.
30. TIME IS OF THE ESSENCE: It is understood and agreed between the
parties hereto that time is of the essence as to all of the terms and
provisions of this lease except as where otherwise indicated herein.
31. NOTICES: Any and all notices under this Lease shall be in writing, and
hand delivered to the Lessor or Lessee, or delivered by some form of mail or
delivery requiring a signed receipt, at the demised premises or headquarters
for the Lessee, or at address where the Lessor is receiving the rent reserved
hereunder, as applicable.
32. OCCUPATIONAL LICENSES RESPONSIBILITY OF LESSEES: It shall be the
responsibility of the Lessee to obtain any and all licenses necessary from any
and all governmental authorities to operate the business upon the leased
premises, including but not limited to any and all licenses required to conduct
the type of business for which
<PAGE> 17
these premises are being leased. The Lessee shall not hold for sale any items of
merchandise for which he does not hold the requisite license from the proper
governmental authority.
33. SURRENDER OF PREMISES: At the expiration of the term of this lease,
the Lessee shall quit and surrender the premises to the Lessor, in as good state
and condition as reasonable use and wear thereof will permit, damage by the
elements excepted, unless such damage by the elements shall result from the acts
of negligence of the Lessee, its employees, agents, representatives or
customers.
34. HOLD HARMLESS: Should an action be commenced in which the Lessor is
made a party defendant due to the acts of the Lessee, its employees, agents,
representatives, or customers, the Lessee agrees to pay, on demand, the Lessor's
counsel fees (at both the trial and appellate levels) and any judgments
resulting from such action. It is the intention of the parties that the Lessee,
at all times, will hold the Lessor, or its agents, successors, and assigns, free
and harmless from any damage or judgment resulting as aforesaid. This paragraph
shall also apply to protect the Lessor against loss, liability, or expense by
reason of any accident or injury to person or property occurring on the premises
leased hereunder, except in the case of negligence or misconduct on the part of
the Lessor, its agents, contractors or employees.
35. BINDING EFFECT OF COVENANTS: All covenants herein contained shall
extend to and bind the heirs, executors, administrators, successors, and
assigns,
<PAGE> 18
respectively, of each of the parties hereto.
36. PARKING: The Lessee shall have the exclusive right to 75 parking
spaces on the premises. The remaining spaces will be open. If Lessee leases
entire building, it shall have exclusive rights to all parking spaces in the
property.
37. RULE OF CONSTRUCTION AGAINST DRAFTER OF CONTRACT INAPPLICABLE HERETO:
This Lease is the product of negotiations between the parties hereto. Hence,
while it may have been typed in the office of counsel for one of the parties it
is, in essence, a joint work product. Hence, the rule that a contract that will
be most strongly construed against the drafter hereof will have no force and
effect with respect to this Lease.
IN WITNESS WHEREOF, the said parties have hereunder set their hands and
seals the day and year first above written.
HEFTY PUBLISHING COMPANY
By: /s/ JOHN HEFTY
--------------------------------------
JOHN HEFTY
As its President
ATTEST:
/s/ JOHN HEFTY
- ---------------------------------
As its Secretary
Executed in the presence of:
/s/
- ---------------------------------
Witness as to the Lessor
/s/
- ---------------------------------
Witness as to the Lessor
<PAGE> 19
WORLDTRAVEL TECHNOLOGIES, L.L.C.
By: /s/ TIM SEVERT
------------------------------
TIM SEVERT
As its Senior Vice-President
Administration
ATTEST:
/s/
- ----------------------------
As its Treasurer
Executed in the presence of:
/s/
- ----------------------------
Witness as to the Lessee
/s/ WENDY A. KLEIN
- ----------------------------
Witness as to the Lessee
STATE OF FLORIDA
COUNTY OF SANTA ROSA
----------
BEFORE ME, the subscriber, personally appeared JOHN HEFTY, as the
President of HEFTY PUBLISHING COMPANY, a Florida Corporation, who is personally
known to me or who produced ____________________ as identification, who did not
take an oath, and who acknowledged that he signed the foregoing document, on
behalf of the aforesaid Corporation, as its deed and act, for the uses and
purposes therein set forth.
<PAGE> 1
EXHIBIT 10.15
[COTTONWOOD Partners Letterhead]
October 14, 1997 Via Federal Express
Mr. Tim Severt
World Travel Partners
1055 Lenox Park Blvd.
Suite 420
Atlanta, Georgia 30319
RE: LEASE AGREEMENT / 7557 RAMBLER ROAD
Dear Tim:
For your file, I have enclosed a fully executed lease agreement by and between
4849 Greenville Partners as Landlord and Travel Technologies Group, L.P. as
Tenant, dated September 15, 1997.
Please note, the total number of parking spaces has been reduced from 60 to 55.
I evidently overlooked this point when I reduced the square footage from 14,088
sf to 13,325 sf. In your absence, Terry visited with Steve Reynolds regarding
this reduction and I received verbal from Sherri Wilhelm on behalf of John C.
Alexander.
Please initial the change on your copy, as well as the two attached copies, and
return the two copies to my attention in the enclosed envelope.
If you have any questions, please do not hesitate to contact me at
214/987-4981.
Sincerely,
COTTONWOOD PARTNERS
/s/ Kathy Denny /ab
Kathy Denny
Senior Vice President
KMD/ab
Enclosure - Original Lease Agreement
2 Copies of Page 2
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LEASE AGREEMENT BETWEEN
4849 GREENVILLE PARTNERS, AS LANDLORD, AND
TRAVEL TECHNOLOGIES GROUP, L.P., AS TENANT
SUITE 1300
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7557 RAMBLER RD., DALLAS, TEXAS
DATED: SEPTEMBER 15, 1997
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TABLE OF CONTENTS
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PAGE
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1. DEFINITIONS.................................................................. 1
2. PREMISES..................................................................... 1
3. TERM......................................................................... 1
4. USE.......................................................................... 1
5. RENT......................................................................... 1
5.1 Base Rent......................................................... 1
5.2 Base Rent Adjustment.............................................. 1
5.3 Additional Rent................................................... 1
5.4 Parking Charge.................................................... 2
5.5 Payment of Rent................................................... 2
5.6 Delinquent Payments and Handling Charge........................... 2
5.7 Prepaid Rent and Security Deposit................................. 2
6. CONSTRUCTION OF IMPROVEMENTS................................................. 2
6.1 General........................................................... 2
6.2 Access by Tenant Prior to Commencement of Term.................... 2
6.3 Commencement Date; Adjustments to Commencement Date............... 2
7. SERVICES TO BE FURNISHED BY LANDLORD......................................... 3
7.1 General........................................................... 3
7.2 Keys.............................................................. 3
7.3 Tenant Identity................................................... 3
7.4 Charges........................................................... 3
7.5 Operating Hours................................................... 3
8. REPAIR AND MAINTENANCE....................................................... 3
8.1 By Landlord....................................................... 4
8.2 By Tenant......................................................... 4
9. TAXES ON TENANT'S PROPERTY................................................... 4
10. TRANSFER BY TENANT........................................................... 4
10.1 General........................................................... 4
10.2 Conditions........................................................ 4
10.3 Liens............................................................. 4
11. ALTERATIONS.................................................................. 5
12. SPECIFICALLY PROHIBITED USES................................................. 5
13. ACCESS BY LANDLORD........................................................... 5
14. CONDEMNATION................................................................. 5
15. CASUALTY..................................................................... 5
15.1 General........................................................... 5
15.2 Acts of Tenant.................................................... 5
16. SUBORDINATION AND ATTORNMENT................................................. 6
16.1 General........................................................... 6
16.2 Attornment........................................................ 6
17. INSURANCE.................................................................... 6
17.1 General........................................................... 6
17.2 Waiver of Subrogation............................................. 6
18. TENANT'S INDEMNITY........................................................... 7
19. THIRD PARTIES; ACTS OF FORCE MAJEURE......................................... 7
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20. SECURITY INTEREST............................................................ 7
21. CONTROL OF COMMON AREAS...................................................... 7
22. RIGHT TO RELOCATE............................................................ 7
23. QUIET ENJOYMENT.............................................................. 7
24. DEFAULT BY TENANT............................................................ 7
24.1 Events of Default................................................. 7
24.2 Remedies of Landlord.............................................. 8
24.3 Payment by Tenant................................................. 8
24.4 Reletting......................................................... 8
24.5 Landlord's Right to Pay or Perform................................ 8
24.6 No Waiver; No Implied Surrender................................... 8
25. DEFAULTS BY LANDLORD......................................................... 9
26. RIGHT OF REENTRY............................................................. 9
27. MISCELLANEOUS................................................................ 9
27.1 Independent Obligations; No Offset................................ 9
27.2 Time of Essence................................................... 9
27.3 Applicable Law.................................................... 9
27.4 Assignment by Landlord............................................ 9
27.5 Commencement Date and Estoppel Certificates....................... 9
27.6 Signs, Building Name and Building Address......................... 9
27.7 Notices........................................................... 9
27.8 Entire Agreement, Amendment and Binding Effect.................... 10
27.9 Severability...................................................... 10
27.10 Number and Gender, Captions and References........................ 10
27.11 Attorney's Fees................................................... 10
27.12 Brokers........................................................... 10
27.13 Interest on Tenant's Obligations.................................. 10
27.14 Authority......................................................... 10
27.15 Recording......................................................... 10
27.16 Exhibits.......................................................... 10
27.17 Multiple Counterparts............................................. 10
Signature Page.................................................... 11
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LEASE AGREEMENT
THIS LEASE AGREEMENT (this "LEASE") is entered as of September 30, 1997,
between 4849 GREENVILLE PARTNERS ("LANDLORD") and TRAVEL TECHNOLOGIES GROUP
L.P. ("TENANT").
1. DEFINITIONS. The definitions of certain of the capitalized terms used in
this Lease are set forth in the Glossary of Defined Terms attached as Exhibit A.
2. PREMISES. Subject to the provisions of this Lease, Landlord hereby leases
to Tenant, and Tenant hereby leases from Landlord, approximately 13,325
rentable square feet of space in the Building, which space is outlined on the
floor plan attached hereto as Exhibit B (the "PREMISES"). In connection with
such demise, Landlord hereby grants to Tenant the non-exclusive right to use
during the Term all Common Areas designed for the use of all tenants in the
Building, in common with all tenants in the Building and their invitees, for
the purposes for which designed and in accordance with all Legal Requirements.
By occupying the Premises, Tenant accepts the Premises as being suitable for
Tenant's intended use of the Premises.
3. TERM. The Term of this Lease shall commence on the Commencement Date
(which is scheduled to be January 1, 1998) and shall expire at 5:00 p.m.
December 31, 2002 unless earlier terminated as provided herein (the "TERM").
4. USE. Tenant shall occupy and use the Premises solely for lawful, general
business office purposes in strict compliance with the Building Rules and
Regulations from time to time in effect and all other Legal Requirements.
5. RENT.
5.1 BASE RENT. In consideration of Landlord's leasing the Premises to
Tenant, Tenant shall pay to Landlord as follows:
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Monthly
Term Amount
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January 1, 1998 - December 31, 1998 $19,154.69
January 1, 1999 - December 31, 1999 $20,265.10
January 1, 2000 - December 31, 2000 $21,375.52
January 1, 2001 - December 31, 2001 $22,485.94
January 1, 2002 - December 31, 2002 $23,596.35
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The Base Rent set forth in this Section 5.1 is a negotiated figure and
shall govern whether or not the actual gross rentable square footage of the
Premises is the same as set forth in Section 2 hereof or changes pursuant to
the standards set in the definition of Net Rentable Area. Tenant shall have no
right to withhold, deduct or offset any amount of the monthly Base Rent or any
other sum due hereunder even if the actual gross rentable square footage of the
premises is less than that set forth in Section 2 hereof or changes pursuant to
the standards set forth in the definition of Net Rentable Area.
5.3 ADDITIONAL RENT. For purposes of this Lease, Tenant's "ADDITIONAL
RENT" for any Fiscal Year (or portion thereof) shall mean the product of (a)
Net Rentable Area of the Premises multiplied by (b) the difference between (1)
the Operating Expenses divided by the Net Rentable Area of the Building minus
(ii) the Expense Stop, all as applicable for the period in question. By the
Commencement Date, Landlord shall estimate the Additional Rent to be due by
Tenant for the balance of the Fiscal Year in which the Commencement Date
occurs. Thereafter, unless Landlord delivers to Tenant a revision of the
estimated Additional Rent, Tenant shall pay to Landlord, coincident with
Tenant's payment of Base Rent, an amount equal to the estimated Additional Rent
for the remainder of such year divided by the number of months remaining in
such year. From time to time during any Fiscal Year, Landlord may estimate and
re-estimate the Additional Rent to be due by Tenant for that Fiscal Year and
deliver a copy of the estimate or re-estimate to Tenant. Thereafter, the
monthly installments of Additional Rent payable by Tenant shall be
approximately adjusted in accordance with the estimation so that, by the end of
the Fiscal Year, Tenant shall have paid all of the Additional Rent as estimated
by Landlord. After the conclusion of each Fiscal Year during the Term, and
after the termination or expiration of the Term, Landlord shall deliver to
Tenant a statement of actual Additional Rent due by Tenant for the Fiscal Year
(or, with respect to termination or expiration, the portion of the Fiscal Year)
just ended. Within 30 days thereafter, Tenant shall pay to Landlord or Landlord
shall credit against the next installment of Additional Rent due by Tenant (or
Landlord shall refund to Tenant, if the Term has expired and all payments due
by Tenant to Landlord have been paid in full) the difference between the actual
Additional Rent due for such year and the estimated Additional Rent paid by
Tenant during such year. Tenant may review, at Tenant's expense and after giving
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20-day's prior written notice to Landlord, Landlord's records relating to
Operating Expenses for any periods within two Fiscal Years prior to the review;
provided, however, no review shall extend to periods of time preceding the
Commencement Date. In lieu of allowing Tenant to review Landlord's records
under this Section 5.3, Landlord may deliver to Tenant a report of the
Operating Expenses prepared by a certified public accountant, which report
shall be conclusive for purposes of this Lease.
5.4 PARKING CHARGE. Tenant shall at all times during the Term lease from
Landlord 55 unassigned automobile parking spaces AT NO COST in the Parking
Facility. TWELVE (12) OF THE UNASSIGNED PARKING SPACES WILL BE LIMITED TO THE
TOP LEVEL OF THE GARAGE. THESE TWELVE (12) AUTOMOBILES WILL BE IDENTIFIED WITH
A STICKER PROVIDED BY THE LANDLORD. Of the total number of allocated parking
spaces, Tenant may lease up to FOUR (4) reserved parking spaces at a cost of
$75.00 per month per space.
5.5 PAYMENT OF RENT. Except as otherwise expressly provided in this
Lease, all Rent shall be due in advance monthly installments on the first day
of each calendar month during the Term. Rent shall be paid to Landlord at its
address recited in Section 27.7 or to such other person or at such other
address as Landlord may from time to time designate in writing. Rent shall be
paid without notice, demand, abatement, deduction or offset in legal tender of
the United States of America. If the Term commences or ends on other than the
first or the last day of a calendar month, the Rent for the partial month shall
be prorated on the basis of the number of days during the month for which the
Term was in effect. If the Term commences or ends on other than the first day
or the last day of a Fiscal Year, the Additional Rent for the partial Fiscal
Year shall be prorated on the basis of the number of days during the Fiscal
Year for which the Term was in effect.
5.6 DELINQUENT PAYMENTS AND HANDLING CHARGE. All Rent and other payments
required of Tenant hereunder shall bear interest from the FIFTH DAY FOLLOWING
THE date due until the date paid at the rate of interest specified in Section
27.13. Alternatively, Landlord may charge Tenant, as additional Rent hereunder,
a fee equal to five percent of the delinquent payment to reimburse Landlord for
its cost and inconvenience incurred as a consequence of Tenant's delinquency.
In no event, however, shall the charges permitted under this Section 5.6 or
elsewhere in this Lease, to the extent the same are considered to be interest
under applicable law, exceed the maximum rate of interest allowable under
applicable law.
5.7 PREPAID RENT AND SECURITY DEPOSIT. Landlord hereby acknowledges
receipt of $19,154.69 representing the first monthly installment of Base Rent
paid in advance, to be applied to the Rent for the first month of the Term when
due.
6. CONSTRUCTION OF IMPROVEMENTS.
6.1 GENERAL. Subject to events of Force Majeure, Landlord shall install,
furnish, perform and apply, at its expense, the Landlord's Work as specified in
the Work Letter. Performance of the Landlord's Work shall constitute Landlord's
sole construction obligation to Tenant under this Lease.
6.2 ACCESS BY TENANT PRIOR TO COMMENCEMENT OF TERM. Provided that Tenant
obtains and delivers to Landlord the certificates or policies of insurance
called for in Section 17.1, Landlord, in its sole discretion, may permit Tenant
and its employees, agents, contractors and suppliers to enter the Premises
before the Commencement Date (and such entry, alone, shall not constitute
Tenant's taking possession of the Premises for the purpose of Section 6.3(c))
to prepare the Premises for Tenant's occupancy. Tenant and each other person or
firm who or which enters the Premises before the Commencement Date shall
conduct itself so as to not interfere with Landlord or other occupants of the
Building. Landlord may withdraw any permission granted under this Section 6.2
upon 24-hours' notice to Tenant if Landlord, in its sole discretion, determines
that any such interference has been or may be caused. Any prior entry shall be
under all of the terms of this Lease (other than the obligation to pay Base
Rent and Additional Rent) and at Tenant's sole risk. Landlord shall not be
liable in any way for personal injury, death or property damage (including
damage to any personal property which Tenant may bring into, or any work which
Tenant may perform in, the Premises) which may occur in or about the Complex by
Tenant or such other person or firm as a result of any prior entry.
6.3 COMMENCEMENT DATE; ADJUSTMENTS TO COMMENCEMENT DATE. For purposes of
this Lease, the "COMMENCEMENT DATE" shall mean the earliest of: (a) THREE (3)
BUSINESS DAYS FOLLOWING THE DATE AFTER LANDLORD NOTIFIES TENANT THAT LANDLORD
HAS SUBSTANTIALLY COMPLETED LANDLORD'S WORK AND THE TENANT IMPROVEMENTS HAVE
PASSED FINAL INSPECTION BY THE CITY OF DALLAS, TEXAS; (b) the date on which
Landlord would have substantially completed the Landlord's Work and tendered
possession of the Premises to Tenant but for (i) the delay or failure of Tenant
to furnish information or other matters required in the Work Letter, (ii)
Tenant's request for changes in the Plans or non-Building Standard Items or
(iii) any other action or inaction of Tenant, or any person or firm employed or
retained by Tenant or (1) the date on which Tenant takes possession of the
Premises. If by the scheduled Commencement Date specified in Section 3 the
Landlord's Work has not been substantially completed, and such failure to
substantially complete renders the Premises untenable for their intended
purpose, all as reasonably determined by Landlord, or Landlord is unable to
tender possession of the Premises to Tenant, then the Commencement Date (and the
commencement of payment of Base Rent and Additional Rent) shall be postponed
until the Landlord's Work is substantially completed as reasonably determined by
Landlord or until possession of the Premises is tendered to Tenant, as the case
may be. Such postponement shall extend the scheduled expiration of the Term for
a number of days equal to the postponement. The postponement of the payment of
Base Rent and Additional Rent under this Section 6.3 shall be Tenant's exclusive
remedy for Landlord's delay in completing the Landlord's Work or tendering
possession of the
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Premises to Tenant. NOTWITHSTANDING THE FORGOING IN NO EVENT SHALL THE
COMMENCEMENT DATE OCCUR PRIOR TO JANUARY 1, 1997.
7. SERVICES TO BE FURNISHED BY LANDLORD.
7.1 GENERAL. Subject to applicable Legal Requirements and Tenant's
performance of its obligations hereunder, Landlord shall use all reasonable
efforts to furnish the following services IN A MANNER AND AMOUNT CONSIDERED TO
BE STANDARD FOR SIMILAR GRADE BUILDINGS IN THE NORTH CENTRAL EXPRESSWAY
SUBMARKET:
(a) Air-conditioning and heating to the Premises during Building
Operating Hours AS DEFINED IN SECTION 4 OF EXHIBIT A, at such temperatures and
in such amounts as are considered by Landlord to be suitable and standard (thus
excluding air-conditioning or heating for electronic data processing or other
specialized equipment).
(b) Hot and cold water at those points of supply common to all floors
for lavatory and drinking purposes only;
(c) Janitor service and periodic window washing in and about the
Building and the Premises;
(d) Elevator service, if necessary, to provide access to and egress
from the Premises;
(e) Electric current during Building Operating Hours for normal
office machines and other machines of low electrical consumption (which shall
exclude electric current for electronic data processing equipment, lighting in
excess of Building Standard or any other item of electrical equipment which
singly consumes more than 0.8 kilowatts per hour at rated capacity or requires
a voltage other than 120 volts single phase); and
(f) Replacement of INCANDESCENT AND fluorescent lamps in Building
Standard light fixtures installed by Landlord and of incandescent bulbs or
fluorescent lamps in all public restrooms, stairwells and other common areas in
the Building.
If any of the services described above or elsewhere in this Lease are
interrupted, Landlord shall use reasonable diligence to promptly restore same.
However, neither the interruption or cessation of such services nor the
failure of Landlord to restore same shall render Landlord liable for damages to
person or property, or be construed as an eviction of Tenant, or work an
abatement of Rent or relieve Tenant from fulfilling any of its other
obligations hereunder.
NOTWITHSTANDING THE FOREGOING, IN THE EVENT OF A MATERIAL INTERRUPTION OF
SERVICES AND SUCH INTERRUPTION OR FAILURE OF SERVICES CONTINUES FOR A PERIOD OF
SIX (6) CONSECUTIVE DAYS, RENDERING THE PREMISES UNTENANTABLE, LANDLORD SHALL
ABATE THE BASE RENTAL ON A PER DIEM BASIS BEGINNING ON THE SEVENTH (7TH) DAY AND
CONTINUING UNTIL SUCH SERVICES ARE REINSTATED.
7.2 KEYS. Landlord shall furnish Tenant, at Landlord's expense with
twenty (20) keys, and at Tenant's expense with such additional keys as Tenant
may request, to unlock each corridor door entering the Premises.
Contemporaneously with the payment of the first installment of Rent, Tenant
shall pay to Landlord as additional rent the product of the number of parking
spaces which shall not exceed one (1) space per 333 rentable square feet leased
multiplied by $20.00 for the access cards needed to gain access to the
Building. Tenant shall not install, or permit to be installed, any additional
lock on any door into or in the Premises or make, or permit to be made, any
duplicates of keys to the Premises. Landlord shall be entitled at all times to
possession of a duplicate of all keys to all doors to or inside the Premises.
All keys referred to in this Section 7.2 shall remain the property of Landlord.
Upon the expiration or termination of the Term, Tenant shall surrender all such
keys to Landlord and shall deliver to Landlord the combination to all locks on
all safes, cabinets and vaults which will remain in the Premises. Landlord
shall be entitled to install, operate and maintain security systems in or about
the Premises and the Complex which monitor, by closed circuit television or
otherwise, all persons leaving or entering the Complex, the Building and the
Premises.
7.3 TENANT IDENTITY. Landlord shall provide and install, in Building
Standard graphics, letters or numerals identifying Tenant's name and suite
number on entrance doors to the Premises. Without Landlord's prior written
consent, no other signs, numerals, letters, graphics, symbols or marks
identifying Tenant shall be placed on the exterior, or on the interior if they
are visible from the exterior, of the Premises. Landlord shall install up to
three (3) directory strips for each 13,325 net rentable square feet in the
Premises, listing the names and suite numbers of Tenant on the Building
directory board to be placed in the main lobby of the Building. Tenant
acknowledges that the monument sign located on the complex at the south
entrance of the Building on the Commencement Date displays the Building name.
LANDLORD AGREES THAT THE MONUMENT SIGN SHALL BE CONVERTED TO A MULTITENANT
MONUMENT SIGN WITHIN NINETY (90) DAYS FOLLOWING THE COMMENCEMENT DATE. LANDLORD
SHALL GIVE TENANT THIRTY (30) DAYS WRITTEN NOTICE TO MAKE AN ELECTION TO
INSTALL TENANT'S NAME ON SUCH MONUMENT SIGN. TENANT SHALL HAVE THE RIGHT, AT
ITS SOLE EXPENSES, TO INSTALL TENANT'S NAME ON SUCH MONUMENT SIGN IN A MANNER
CONSISTENT WITH THE SIGN GUIDELINES ESTABLISHED BY LANDLORD. IF TENANT
EXERCISES ITS OPTION TO INCLUDE ITS NAME ON THE MONUMENT SIGN AS AFORESAID,
THEN TENANT SHALL THEREAFTER PAY TO LANDLORD, WITHIN THIRTY (30) DAYS AFTER
RECEIPT OF AN INVOICE FOR THE SAME, AS ADDITIONAL RENT, ALL COSTS AND EXPENSES
INCURRED BY LANDLORD IN CONNECTION WITH INSTALLING TENANT'S NAME ON SUCH
MONUMENT SIGN, AND TENANT'S PRO RATA SHARE (BASED UPON THE TOTAL NUMBER OF
TENANT NAMES INCLUDED ON SUCH MONUMENT SIGN) OF ALL COSTS AND EXPENSES INCURRED
BY LANDLORD DURING THE TERM OF THIS LEASE FOR MAINTENANCE AND REPAIR OF SUCH
MONUMENT SIGN.
7.4 CHARGES. Tenant shall pay to Landlord, monthly as billed, as
additional Rent, such charges as may be separately metered or as Landlord may
compute for (a) any utility services utilized by Tenant for computers, data
processing
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equipment or other electrical equipment in excess of that agreed to be furnished
by Landlord pursuant to Section 7.1(e), (b) lighting installed in the Premises
in excess of Building Standard lighting, (c) air-conditioning, heating and other
services in excess of that stated in Section 7.1(a) or provided at times other
than Building Operating Hours and (d) janitorial services required with respect
to Non-Building Standard Items within the Premises. Landlord may elect to
estimate the charges to be paid by Tenant under this Section 7.4 and bill such
charges to Tenant monthly in advance, in which event Tenant shall promptly pay
the estimated charges. When the actual charges are determined by Landlord an
appropriate cash adjustment shall be made between Landlord and Tenant to account
for any underpayment or overpayment by Tenant. Tenant shall pay all costs
associated with providing separate utility meters to the Leased Premises. AFTER
HOURS HVAC SHALL BE PROVIDED AT A COST OF $40/HOUR WITH A TWO HOUR MINIMUM.
NOTWITHSTANDING THE FOREGOING, LANDLORD AGREES TO PROVIDE TENANT WITH 25 HOURS
OF AFTER HOURS HVAC SERVICE TO BE UTILIZED ANY TIME BETWEEN THE MONTHS OF MAY
THROUGH SEPTEMBER AND THE HOURS OF 1:00 P.M. TO 6:00 P.M. ON SATURDAYS AND 9:00
A.M. TO 5:00 P.M. ON SUNDAYS. IN THE EVENT TENANT REQUESTS AFTER HOURS HVAC,
TENANT MUST NOTIFY LANDLORD IN WRITING BY 2:00 P.M. FOR SAME DAY SERVICE MONDAY
THROUGH FRIDAY AND BY 2:00 P.M. ON FRIDAY FOR WEEKEND SERVICE;
7.5 OPERATING HOURS. Subject to Building Rules and Regulations and such
security standards as Landlord may from time to time adopt, the Building shall
be open to the public during the Building Operating Hours and the Premises
shall be open to Tenant during hours other than Building Operating Hours.
8. REPAIR AND MAINTENANCE.
8.1 BY LANDLORD. Landlord shall maintain the Building (excluding
leasehold improvements which become fixtures thereto) in a good and operable
condition, and shall make such repairs and replacements as may be required to
maintain the Building in such condition. The Section 8.1 shall not apply to
damage resulting from a Taking (as to which Section 14 shall apply), or damage
resulting from a casualty (as to which Section 15.1 shall apply) or to damage
for which Tenant is otherwise responsible under this Lease.
8.2 BY TENANT. Tenant shall maintain the Premises in a clean, safe,
operable, attractive condition, and will not commit or allow to remain any
waste or damage to any portion of the Premises. Tenant shall repair or replace,
subject to Landlord's direction and supervision, any damage to the Complex
caused by Tenant or Tenant's agents, contractors or invitees. If Tenant fails
to make such repairs or replacements, Landlord may make same at Tenant's cost.
Such cost shall be payable to Landlord by Tenant on demand as additional Rent.
All contractors, workmen, artisans and other persons which or who Tenant
proposes to retain to perform work in the Premises (or the Complex, pursuant to
the second sentence of this Section 8.2) pursuant to this Section 8.2 or
Section 11 shall be approved by Landlord prior to the commencement of any such
work.
9. TAXES ON TENANT'S PROPERTY. Tenant shall be liable for and shall pay,
before their becoming delinquent, all taxes and assessments levied against any
personal property placed by Tenant in the Premises (even if same becomes a
fixture of operation of law or the property of Landlord by operation of this
Lease), including any additional Impositions which may be assessed, levied,
charged or imposed against Landlord or the Building by reason of Non-Building
Standard Items in the Premises. Tenant may withhold payments of any taxes and
assessments described in this Section 9 so long as Tenant contests its
obligation to pay in accordance with applicable law and the non-payment thereof
does not pose a threat of loss or seizure of the Building or any interest of
Landlord therein.
10. TRANSFER BY TENANT.
10.1 GENERAL. Without the prior written consent of Landlord, Tenant shall
not effect or suffer any Transfer. Any attempted Transfer without such consent
shall be void. If Tenant desires to effect a Transfer, it shall deliver to
Landlord written notice thereof in advance of the date on which Tenant proposes
to make the Transfer, together with all of the terms of the proposed Transfer
and the identity of the proposed Transferee. Landlord shall have 30 days
following receipt of the notice and information within which to notify Tenant
in writing whether Landlord elects (a) to refuse to consent to the Transfer and
to terminate this Lease as to the space proposed to be Transferred as of the
date so specified by Tenant, in which event Tenant will be relieved of all
further obligations hereunder as to such space, (b) to refuse to consent to the
Transfer and to continue this Lease in full force as to the entire Premises or
(c) to permit Tenant to effect the proposed Transfer. If Landlord fails to
notify Tenant of its election within said 30 day period, Landlord shall be
deemed to have elected option (b). The consent by Landlord to a particular
Transfer shall not be deemed a consent to any other Transfer. If a Transfer
occurs without the prior written consent of Landlord as provided herein,
Landlord may nevertheless collect rent from the Transferee and apply the net
amount collected to the Rent payable hereunder, but such collection and
application shall not constitute a waiver of the provisions hereof or a release
of Tenant from the further performance of its obligations hereunder. SEE
PARAGRAPH 29 OF EXHIBIT A ATTACHED HERETO.
10.2 CONDITIONS. The following conditions shall automatically apply to
each Transfer, without the necessity of same being stated in or referred to in
Landlord's written consent:
(a) Tenant shall execute, have acknowledged and deliver to Landlord,
and cause the Transferee to execute, have acknowledged and deliver to Landlord,
an instrument in form and substance acceptable to Landlord in which (I) the
Transferee adopts this Lease and agrees to perform, jointly and severally with
Tenant, all of the obligations of Tenant hereunder, as to the space transferred
to it, (ii) the Transferee grants Landlord an express first and prior security
interest in its personal property brought into the transferred space to secure
its obligations to Landlord hereunder, (iii) Tenant subordinates to Landlord's
statutory lien and security interest any liens, security interests or other
rights which Tenant may claim with respect to any property of the Transferee,
(iv) Tenant agrees with Landlord
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that, if the rent or other consideration due by the Transferee exceeds
the Rent for the transferred space, then Tenant shall pay Landlord as
additional Rent hereunder all such excess rent and other consideration
immediately upon Tenant's receipt thereof, (v) Tenant and the Transferee
agree to provide to Landlord, at their expense, direct access from a
public corridor in the Building to the transferred space, (vi) the
Transferee agrees to use and occupy the transferred space solely for the
purpose specified in Section 4 and otherwise in strict accordance with
this Lease and (vii) Tenant acknowledges that, notwithstanding the
Transfer, Tenant remains directly and primarily liable for the performance
of all the obligations of Tenant hereunder (including, without limitation,
the obligation to pay all Rent), and Landlord shall be permitted to
enforce this Lease against Tenant or the Transferee, or both, without
prior demand upon or proceeding in any way against any other persons, and
(b) Tenant shall deliver to Landlord a counterpart of all
instruments relative to the Transfer executed by all parties to such
transaction (except Landlord).
10.3 LIENS. Without in any way limiting the generality of the foregoing,
Tenant shall not grant, place or suffer, or permit to be granted, placed or
suffered, against the Complex or any portion thereof, any lien, security
interest, pledge, conditional sales contract, claim, charge or encumbrance
(whether constitutional, contractual or otherwise) and if any of the aforesaid
does arise or is asserted, Tenant will, promptly upon demand by Landlord and at
Tenant's expense, cause same to be released.
11. ALTERATIONS. Tenant shall not make, or permit to be made, any alteration,
improvement or addition to, or install, or permit to be installed, any fixture
or equipment (other than desk top electrical equipment) in, the Premises
without the prior written consent of Landlord; PROVIDED, HOWEVER, TENANT SHALL
HAVE THE RIGHT WITHOUT THE PRIOR WRITTEN CONSENT OF LANDLORD, TO MAKE
NON-STRUCTURAL, COSMETIC ALTERATIONS WITH AN AGGREGATE COST OF LESS THAN TEN
THOUSAND DOLLARS )$10,000.00), PROVIDED THAT TENANT NOTIFIES LANDLORD IN
WRITING AT LEAST FIVE (5) BUSINESS DAYS IN ADVANCE OF THE NATURE AND EXTENT OF
SUCH PROPOSED ALTERATIONS. All such alterations, improvements and additions
(including all articles attached to the floor, wall or ceiling of the Premises)
shall become the property of Landlord and shall, at Landlord's election, be
(a) surrendered with the Premises as part thereof at the termination or
expiration of the Term, without any payment, reimbursement or compensation
therefor, or (b) removed by Tenant, at Tenant's expense, with all damage caused
by such removal repaired by Tenant. Tenant may remove Tenant's trade fixtures,
office supplies, movable office furniture and equipment not attached to the
Building provided such removal is made within five days after the expiration of
the Term, no uncured Event of Default has occurred and Tenant promptly repairs
all damage caused by such removal.
12. SPECIFICALLY PROHIBITED USES. Tenant will not (a) use, occupy or permit
the use or occupancy of the Premises for any purpose or in any manner which is
or may be, directly or indirectly, violative of any Legal Requirement, or
dangerous to life or property, or a public or private nuisance or disruptive or
obstructive of any other tenant of the Building, (b) keep, or permit to be
kept, any substance in or conduct, or permit to be conducted, any operation
from the Premises which might emit offensive odors or conditions into other
portions of the Building, or make undue noise or create undue vibrations, (c)
commit or permit to remain any waste to the Premises, (d) install or permit to
remain any improvements to the Premises (other than window coverings which have
first been approved by Landlord) which are visible from the outside of the
Premises, or exceed the structural loads of floors or walls of the Building, or
adversely affect the mechanical, plumbing or electrical systems of the Building
or affect the structural integrity of the Building in any way, (e) install any
food, soft drink or other vending machine (other than those for the exclusive,
non-commercial use of Tenant and its business invitees) in the Premises or
(f) commit, or permit to be committed, any action or circumstance in or about
the Building which, directly or indirectly, would or might justify any
insurance carrier in cancelling or increasing the premium on the fire and
extended coverage insurance policy maintained by Landlord on the Building or
contents, and if any increase results from any act of Tenant, then Tenant shall
pay such increase promptly upon demand therefor by Landlord.
13. ACCESS BY LANDLORD. Landlord, its employees, contractors, agents and
representatives, shall have the right (and Landlord, for itself and such
persons and firms, hereby reserves the right) to enter the Premises at all
hours (a) to inspect, clean, maintain, repair, replace or alter the Premises or
the Building AND AT REASONABLE HOURS WITH PRIOR NOTICE TO TENANT, (b) to show
the Premises to prospective purchasers (or, during the last six (6) months of
the Term to prospective tenants), (c) to determine whether Tenant is performing
its obligations hereunder and, if it is not, to perform same at Landlord's
option and Tenant's expense (d) for any other purpose deemed reasonable by
Landlord. In an emergency, Landlord (and such persons and firms) may ENTER THE
PREMISES AT ANY HOUR AND use any means to open any door into or in the Premises
without any liability therefor. Entry into the Premises by Landlord or any
other person or firm named in the first sentence of this Section 13 for any
purpose permitted herein shall not constitute a trespass or an eviction
(constructive or otherwise), or entitle Tenant to any abatement or reduction of
Rent, or constitute grounds for any claim (and Tenant hereby waives any claim)
for damages for any injury to or interference with Tenant's business, for loss
of occupancy or quiet enjoyment or for consequential damages.
14. CONDEMNATION. If all of the Complex is Taken, or if so much of the Complex
is Taken that, in Landlord's opinion, the remainder cannot be restored to an
economically viable, quality office building, or if the awards payable to
Landlord as a result of any Taking, are in Landlord's opinion, inadequate to
restore the remainder to an economically viable, quality office building,
Landlord may, at its election, exercisable by the giving of written notice to
Tenant within 60 days after the date of the Taking, terminate this Lease as of
the date of the Taking or the date Tenant is deprived of possession of the
Premises (whichever is later). If this Lease is not terminated as result of a
Taking, Landlord shall restore the Premises remaining after the Taking to a
Building Standard condition. During the period of restoration, Base Rent shall
be abated to the extent the Premises are rendered untenantable and, after the
period of restoration, Base Rent and Tenant's Share shall be reduced in the
proportion that the area of the Premises Taken or otherwise rendered
untenantable bears to the area of the Premises just prior to the Taking. If
any portion of Base Rent is abated under this Section 14, Landlord may elect
to extend
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the expiration date of the Term for the period of the abatement. All awards,
proceeds, compensation or other payments from or with respect to any Taking of
the Complex or any portion thereof shall belong to Landlord, Tenant hereby
assigning to Landlord all of its right, title, interest and claim to same.
Tenant may assert a claim for and recover from the condemning authority, but not
from Landlord, such compensation as may be awarded on account of Tenant's moving
and relocation expenses, and depreciation to and loss of Tenant's moveable
personal property.
15. CASUALTY.
15.1 GENERAL. Tenant shall give prompt written notice to Landlord of any
casualty to the Complex of which Tenant is aware and any casualty to the
Premises. If the Complex or the Premises are totally destroyed, or if the
Complex or the Premises are partially destroyed but in Landlord's opinion, they
cannot be restored to an economically viable, quality office building, or if the
insurance proceeds payable to Landlord as a result of any casualty are, in
Landlord's opinion, inadequate to restore the portion remaining to an
economically viable and quality office building, Landlord may, at its election
exercisable by the giving of written notice to Tenant within 60 days after the
casualty, terminate this Lease as of the date of the casualty or the date Tenant
is deprived of possession of the Premises (whichever is later). If this Lease is
not terminated as a result of a casualty, Landlord shall (subject to Section
15.2) restore the Premises to a Building Standard condition; PROVIDED, HOWEVER
IN THE EVENT THE PREMISES HAS NOT BEEN RESTORED TO A BUILDING STANDARD CONDITION
WITHIN ONE HUNDRED EIGHTY (180) DAYS AFTER THE CASUALTY, TENANT MAY AT ITS
ELECTION, EXERCISABLE BY GIVING WRITTEN NOTICE TO LANDLORD WITHIN TEN (10) DAYS
AFTER THE EXPIRATION OF SUCH ONE HUNDRED EIGHTY (180) DAY PERIOD, TERMINATE THIS
LEASE. During the period of restoration, Base Rent shall be abated to the
extent the Premises are rendered untenantable and, after the period of
restoration, Base Rent and Tenant's Share shall be reduced in the proportion
that the area of the Premises remaining tenantable after the casualty bears to
the area of the Premises just prior to the casualty. If any portion of the Base
Rent is abated under this Section 15.1, Landlord may elect to extend the
expiration date of the Term for the period of the abatement.
15.2 ACTS OF TENANT. Notwithstanding any provisions of this Lease to the
contrary, if the Premises or the Complex are damaged or destroyed as a result
of a casualty arising from the acts or omissions of Tenant, or any of Tenant's
officers, directors, shareholders, partners, employees, contractors, agents,
invitees or representatives, (a) Tenant's obligation to pay Rent and to perform
its other obligations under this Lease shall not be abated, reduced or altered
in any manner, (b) Landlord shall not be obligated to repair or restore the
Premises or the Complex and (c) subject to Section 17.2, Tenant shall be
obligated, at Tenant's cost, to repair and restore the Premises or the Complex
to the condition they were in just prior to the damage or destruction under the
direction and supervision of, and to the satisfaction of, Landlord and any
Landlord Mortgagee.
16. SUBORDINATION AND ATTORNMENT.
16.1 GENERAL. This Lease, Tenant's leasehold estate created hereby and all
of Tenants rights, titles and interests hereunder and in and to the Premises
are subject and subordinate to any Mortgage presently existing or hereafter
placed upon all or any portion of the Complex. However, Landlord and Landlord's
Mortgagee may, at any time upon the giving of written notice to Tenant and
without any compensation or consideration being payable to Tenant, make this
Lease, and the aforesaid leasehold estate and rights, titles and interests,
superior to any Mortgage. Upon the written request by Landlord or by
Landlord's Mortgagee to Tenant, and within five (5) days of the date of such
request, and without any compensation or consideration being payable to Tenant,
Tenant shall execute, have acknowledged and deliver a recordable instrument
confirming that this Lease, Tenant's leasehold estate in the Premises and all
of Tenant's rights, titles and interests hereunder are subject and subordinate
(or, at the election of Landlord or Landlord's Mortgagee, superior) to the
Mortgage benefiting Landlord's Mortgagee.
16.2 ATTORNMENT. Upon the written request of any person or party succeeding
to the interest of Landlord under this Lease, Tenant shall automatically become
the tenant of and attorn to such successor in interest without any change in any
of the terms of this Lease. No successor in interest shall be (a) bound by any
payment of Rent for more than one month in advance, except payments of security
for the performance by Tenant of Tenant's obligations under this Lease, (b)
subject to any offset, defense or damages arising out of a default or any
obligations of any preceding Landlord or (c) bound by any amendment of this
Lease entered into after Tenant has been given written notice of the name and
address of Landlord's Mortgagee and without the written consent of Landlord's
Mortgagee or such successor in interest. The subordination, attornment and
mortgage protection clauses of this Section 16 shall be self-operative and no
further instruments of subordination, attornment or mortgagee protection need be
required by any Mortgagee or successor in interest thereto. Nevertheless, upon
the written request therefor and without any compensation or consideration being
payable to Tenant, Tenant agrees to execute, have acknowledged and deliver such
instruments as may be requested to confirm the same. NOTWITHSTANDING THE
FOREGOING, SO LONG AS TENANT IS NOT IN DEFAULT OF ANY OF THE TERMS OR CONDITIONS
OF THIS LEASE, ANY FUTURE PURCHASOR OR MORTGAGEE SHALL RECOGNIZE THE RIGHTS OF
TENANT HEREUNDER.
17. INSURANCE.
17.1 GENERAL. Tenant shall obtain and maintain throughout the Term the
following policies of insurance:
(a) fire and all risk insurance, with vandalism, malicious
mischief and sprinkler leakage endorsements, on all of Tenant's personal
property located in, and on all Non-Building Standard Items to, the
Premises in an amount not less than eight percent of the replacement cost
thereof;
(b) comprehensive general and contractual liability insurance
against claims for personal injury, bodily injury, death and property
damage occurring in or about the Premises, such insurance to afford
protection to the limits of (I) not less than $1,000,000 per occurrence;
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(c) insurance required hereunder shall be written by companies
licensed to do business in the State of Texas and shall have a minimum
rating of A:X by Best's Key Rating Guide.
(d) such other policy or policies of insurance as Landlord may
reasonably require or as Landlord is then requiring from one or more other
tenants in the Building.
Tenant shall deliver to Landlord, prior to the Commencement Date, certificates
of such insurance and shall, at all times during the Term, deliver to Landlord
upon request true copies of such insurance policies. The policy described in
clause (b) shall (i) name Landlord as an addition insured, (ii) provide that it
will not be cancelled, reduced or non-renewed without 30-days' prior written
notice to Landlord, (iii) insure performance of the indemnities of Tenant
contained in Section 18 and elsewhere in this Lease and (iv) be primary
coverage, so that any insurance coverage obtained by Landlord shall be in
excess thereto. Tenant shall deliver to Landlord certificates of renewal at
least 30 days before the expiration date of each such policy and copies of new
policies at least 30 days before terminating any such policies. All policies of
insurance required to be obtained and maintained by Tenant shall be subject to
the approval of Landlord as to terms, coverage, deductibles and issuer.
17.2 WAIVER OF SUBROGATION. Landlord and Tenant hereby waive all claims,
rights of recovery and causes of action that either party or any party
claiming by, through or under such party may now or hereafter have by
subrogation or otherwise against the other party or against any of the other
party's officers, directors, shareholders, partners or employees for any loss
or damage that may occur to the Complex, the Premises, Tenant's improvements or
any of the contents of any of the foregoing by reason of fire or other
casualty, or by reason of any other cause except gross negligence or willful
misconduct (thus including simple negligence of the parties hereto or their
officers, directors, shareholders, partners or employees), that could have been
insured against under the terms of (a) in the case of Landlord, the standard
fire and extended coverage insurance policies available in the state where the
Complex is located at the time of the casualty and (b) in the case of Tenant,
the fire and extended coverage insurance policy required to be obtained and
maintained under Section 17.1; provided, however, that the waiver set forth in
this Section 17.2 shall not apply to any deductibles on insurance policies
carried by Landlord or to any coinsurance penalty which Landlord might sustain.
Landlord and Tenant shall cause an endorsement to be issued to their respective
insurance policies recognizing this waiver of subrogation.
18. TENANT'S INDEMNITY. Subject to Section 17.2, Tenant shall defend,
indemnify and hold harmless Landlord and Landlord's officers, directors,
shareholders, partners and employees from and against, all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements (including court costs and reasonable attorneys'
fees) resulting from any injuries to or death of any person or damage to any
property occurring during the Term in or about the Premises, UNLESS ARISING
FROM OR OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD OR
LANDLORD'S EMPLOYEES AGENTS OR CONTRACTORS.
19. THIRD PARTIES; ACTS OF FORCE MAJEURE. Landlord shall have no liability to
Tenant, or to Tenant's officers, directors, shareholders, partners, employees,
agents, contractors or invitees, for bodily injury, death, property damage,
business interruption, loss of profits, loss of trade secrets or other direct or
consequential damages occasioned by (a) the acts or omissions of any other
tenant or such other tenant's officers, directors, shareholders, partners,
employees, agents, contractors or other invitees within the Complex, (b) Force
Majeure, (c) vandalism, theft, burglary and other criminal acts (other than
those committed by Landlord and its employees), (d) water leakage or (e) the
repair, replacement, maintenance, damage, destruction or relocation of the
Premises, UNLESS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
LANDLORD OR LANDLORD'S EMPLOYEES AGENTS OR CONTRACTORS.
20. SECURITY INTEREST. As security for Tenant's payment of Rent and
performance of all of its other obligations under this Lease, Tenant hereby
grants to Landlord a security interest in all property of Tenant now or
hereafter placed in the Premises. Landlord, as secured party, shall be entitled
to all of the rights, remedies and recourses afforded to a secured party under
the Texas Uniform Commercial Code, which rights, remedies and recourses shall be
cumulative of all other rights, remedies, recourses, liens and security
interests afforded Landlord by law, equity or this Lease. Contemporaneously with
the execution of this Lease, Tenant shall execute and deliver, as debtor,
promptly upon request and without any compensation or consideration being
payable to Tenant, such additional financing statement or statements as Landlord
may request. However, Landlord may at any time file a copy of this Lease as a
financing statement. THE SECURITY INTEREST CREATED PURSUANT TO THIS PARAGRAPH
SHALL BE SUBORDINATE TO ANY PURCHASE MONEY FINANCING CREATED BY TENANT WITH
RESPECT TO ANY FURNITURE, FIXTURES AND EQUIPMENT OF TENANT AND, UPON REQUEST
FROM TENANT, LANDLORD AGREES TO EXECUTE A SUBORDINATION IN FORM REASONABLY
ACCEPTABLE TO LANDLORD OF SUCH SECURITY INTEREST TO ANY SUCH PURCHASE MONEY
FINANCING.
21. CONTROL OF COMMON AREAS. Landlord shall have the exclusive control over
the Common Areas. Landlord may, from time to time, create different Common
Areas, close or otherwise modify the Common Areas, and modify and the Building
Rules and Regulations with respect thereto.
22. RIGHT TO RELOCATE. Landlord retains the right and power, to be exercised
reasonably and at Landlord's SOLE expense to relocate Tenant within the
Building in space which is comparable in size, LOCATION, VIEWS (I.E. NOT BELOW
THE FIFTH FLOOR) to the Premises and is suited to Tenant's use, SUCH EXPENSES
SHALL INCLUDE BUT NOT BE LIMITED TO: THE COST OF SPACE PLANNING AND CONSTRUCTION
DRAWINGS, MOVING AND REINSTALLING FURNITURE, ANY AND ALL COMPUTER SYSTEMS,
TELECOMMUNICATION SYSTEMS, HVAC SYSTEMS, THE COST OF REPLACING A REASONABLE
AMOUNT OF STATIONARY, BUSINESS CARDS, AND ALL OTHER PRINTED MATTER BEARING THE
CORPORATE ADDRESS, AS WELL AS THE COST OF THE TRANSFER AND/OR REINSTATEMENT OF
ANY LICENSES, OPERATING AGREEMENTS, CONTRACTS, OR OTHER BUSINESS AGREEMENTS
WHICH SUCH A MOVE WOULD EFFECT. Instances when the exercise of Landlord's right
and power to relocate Tenant shall be deemed reasonable include, but shall not
be limited to, instances where Landlord desires to consolidate the rentable
area in the Building to provide Landlord's services more efficiently, or to
provide contiguous vacant space for a prospective tenant. Landlord shall not be
liable to Tenant for any claims arising in connection with a relocation
permitted
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under this Section 22. LANDLORD AGREES TO PROVIDE TENANT WITH WRITTEN NOTICE OF
SUCH RELOCATION THREE (3) MONTHS PRIOR TO THE RELOCATION DATE.
23. QUIET ENJOYMENT. Provided Tenant has performed all of its obligations
under this Lease, Tenant shall and may peaceably and quickly have, hold,
occupy, use and enjoy the Premises during the Term subject to the provisions of
this Lease. Landlord shall warrant and forever defend Tenant's right to
occupancy of the Premises against the claims of any and all persons whomsoever
lawfully claiming the same or any part thereof, by, through or under Landlord,
but not otherwise, subject to the provisions of this Lease.
24. DEFAULT BY TENANT.
24.1 EVENTS OF DEFAULT. Each of the following occurrences shall constitute
an Event of Default (herein so called):
(a) The failure of Tenant to pay Rent as and when due hereunder and
the continuance of such failure for a period of FIVE (5) days after written
notice from Landlord to Tenant specifying the failure; provided, however, after
Landlord has given Tenant written notice pursuant to this clause (a) on two
separate occasions Landlord shall not be required to give Tenant any further
notice under this clause (a);
(b) The failure of Tenant to perform, comply with or observe any
other agreement, obligation or undertaking of Tenant, or any other term,
condition or provision, in this Lease, and the continuance of such failure for a
period of THIRTY (30) days after written notice from Landlord to Tenant
specifying the failure AND SUCH ADDITIONAL TIME [BUT NOT TO EXCEED SEVENTY-FIVE
(75) DAYS AFTER SUCH WRITTEN NOTICE FROM LANDLORD TO TENANT], IF ANY, AS IS
REASONABLY NECESSARY TO CURE SUCH FAILURE IF SUCH FAILURE IS OF SUCH A NATURE
THAT IT CANNOT REASONABLY BE CURED WITHIN SUCH THIRTY (30) DAY PERIOD, PROVIDED
TENANT COMMENCES THE CURING OF THE SAME WITHIN SUCH THIRTY (30) DAY PERIOD AND
DILIGENTLY AND CONTINUOUSLY PROSECUTES THE CURING OF THE SAME IN GOOD FAITH AND
WITH DUE DILIGENCE;
(c) The abandonment of the Premises by Tenant or the failure of
Tenant to occupy the Premises or any significant portion thereof;
(d) The filing of a petition by or against Tenant (the term
"Tenant" also meaning, for the purpose of this clause (d), any guarantor of the
named Tenant's obligations hereunder)(I) in any bankruptcy or other insolvency
proceeding, (ii) seeking any relief under the Bankruptcy Code or any similar
debtor relief law, (iii) for the appointment of a liquidator or receiver for
all or substantially all of Tenant's property or for Tenant's interest in this
Lease or (iv) to reorganize or modify Tenant's capital structure; and
(e) The admission by Tenant in writing that it cannot meet its
obligations as they become due or the making by Tenant of an assignment for the
benefit of its creditors.
24.2 REMEDIES OF LANDLORD. Upon any Event of Default, Landlord may, at
Landlord's option and in addition to all other rights, remedies and recourses
afforded Landlord hereunder or by law or equity, do any one or more of the
following:
(a) Terminate this Lease by the giving of written notice to Tenant,
in which event Tenant shall pay to Landlord the sum of (I) all Rent and other
amounts accrued hereunder to the date of termination, (ii) all amounts due
under Section 24.3 and (iii) liquidated damages in an amount equal to (A) the
total Rent that Tenant would have been required to pay for the remainder of the
Term discounted to present value at the prime lending rate (or equivalent rate,
however denominated) in effect on the date of termination at the largest
national bank in the state where the Complex is located minus (B) the then
present fair rental value of the Premises for such period, similarly discounted.
(b) Terminate Tenant's right to possession of the Premises without
terminating this Lease by the giving of written notice to Tenant, in which
event Tenant shall pay to Landlord (I) all Rent and other amounts accrued
hereunder to the date of termination of possession, (ii) all amounts due from
time to time under Section 24.3 and (iii) all Rent and other sums required
hereunder to be paid by Tenant during the remainder of the Term, diminished by
any net sums thereafter received by Landlord through reletting the Premises
during said period. Reentry by Landlord in the Premises will not affect the
obligations of Tenant hereunder for the unexpired Term. Landlord may bring
action against Tenant to collect amounts due by Tenant on one or more
occasions, without the necessity of Landlord's waiting until expiration of the
Term. If Landlord elects to proceed under this Section 24.2(b), it may at any
time elect to terminate this Lease pursuant to Section 24.2(a).
(c) Without notice, alter any and all locks and other security
devices at the Premises without being obligated to deliver new keys to the
Premises, unless Tenant has cured all Events of Default before Landlord has
terminated this Lease under Section 24.2(a) or has entered into a lease to
relet all or a portion of the Premises.
(d) If an Event of Default specified in Section 24.1(c) occurs,
Landlord may remove and store any property that remains on the Premises, and,
if Tenant does not claim such property within ten days after Landlord has
delivered to Tenant notice of such storage, Landlord may appropriate, sell,
destroy, or otherwise dispose of the
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property in question without notice to Tenant or any other person and
without any obligation to account for such property.
24.3 PAYMENT BY TENANT. Upon any Event of Default, Tenant shall also pay
to Landlord all costs and expenses incurred by Landlord, including court costs
and reasonable attorneys' fees, in (a) retaking or otherwise obtaining
possession of the Premises, (b) removing and storing Tenant's or any other
occupant's property, (c) repairing, restoring, altering, remodeling or
otherwise putting the Premises into condition acceptable to a new tenant or
tenants, (d) reletting all or any part of the Premises, (e) paying or
performing the underlying obligation which Tenant failed to pay or perform and
(f) enforcing any of Landlord's rights, remedies or recourses arising as a
consequence of the Event of Default.
24.4 RELETTING. Upon termination of this Lease or upon termination of
Tenant's right to possession of the Premises, Landlord shall use reasonable
efforts to relet the Premises on such terms and conditions as Landlord in its
sole discretion may determine (including a term different than the Term, rental
concessions, and alterations to, and improvements of, the Premises); however,
Landlord shall not be obligated to relet the Premises before leasing other
portions of the Building. Landlord shall not be liable, nor shall Tenant's
obligations hereunder be diminished because of, Landlord's failure to relet the
Premises or collect rent due in respect of such reletting. Tenant shall not be
entitled to the excess of any rent obtained by reletting over the Rent herein
reserved.
24.5 LANDLORD'S RIGHT TO PAY OR PERFORM. Upon an Event of Default,
Landlord may, but without obligation to do so and without thereby waiving or
curing such Event of Default, pay or perform the underlying obligation for the
account of Tenant, and enter the Premises and expend the Security Deposit for
such purpose.
24.6 NO WAIVER; NO IMPLIED SURRENDER. Provisions of this Lease may only be
waived by the party entitled to the benefit of the provision evidencing the
waiver in writing. Thus, neither the acceptance of Rent by Landlord following
an Event of Default (whether known to Landlord or not), nor any other custom or
practice followed in connection with this Lease, shall constitute a waiver by
Landlord of such Event of Default or any other Event of Default. Further, the
failure by Landlord to complain of any action or inaction by Tenant, or to
assert that any action or inaction by Tenant constitutes (or would constitute,
with the giving of notice and the passage of time) an Event of Default,
regardless of how long such failure continues, shall not extinguish, waive or
in any way diminish the rights, remedies and recourses of Landlord with respect
to such action or inaction. No waiver by Landlord of any provision of this
Lease or of any breach by Tenant of any obligation of Tenant hereunder shall be
deemed to be a waiver of any other provision hereof, or of any subsequent
breach by Tenant of the same or any other provision hereof. Landlord's consent
to any act by Tenant requiring Landlord's consent shall not be deemed to render
unnecessary the obtaining of Landlord's consent to any subsequent act of
Tenant. No act or omission by Landlord (other than Landlord's execution of a
document acknowledging such surrender) or Landlord's agents, including the
delivery of the keys to the Premises, shall constitute an acceptance of a
surrender of the Premises.
25. DEFAULTS BY LANDLORD. Landlord shall not be in default under this Lease,
and Tenant shall not be entitled to exercise any right, remedy or recourse
against Landlord or otherwise as a consequence of any alleged default by
Landlord under this Lease, unless Landlord fails to perform any of its
obligations hereunder and said failure continues for a period of 30 days after
Tenant gives Landlord and (provided that Tenant shall have been given the name
and address of Landlord's Mortgagee) Landlord's Mortgagee written notice
thereof specifying, with reasonable particularity, the nature of Landlord's
failure. If, however, the failure cannot reasonably be cured within the 30-day
period, Landlord shall not be in default hereunder if Landlord or Landlord's
Mortgagee commences to cure the failure within the 30 days and thereafter
pursues the curing of same diligently to completion. If Tenant recovers a money
judgment against Landlord for Landlord's default of its obligations hereunder
or otherwise, the judgment shall be limited to Tenant's actual direct, but not
consequential, damages therefor and shall be satisfied only out of the interest
of Landlord in the Complex as the same may then be encumbered, and Landlord
shall not otherwise be liable for any deficiency. In no event shall Tenant have
the right to levy execution against any property of Landlord other than its
interest in the Complex. The foregoing shall not limit any right that Tenant
might have to obtain specific performance of Landlord's obligations hereunder.
26. RIGHT OF REENTRY. Upon the expiration or termination of the Term for
whatever cause, or upon the exercise by Landlord of its right to re-enter the
Premises without terminating this Lease, Tenant shall immediately, quietly and
peaceably surrender to Landlord possession of the Premises in "broom clean" and
good order, condition and repair, except only for ordinary wear and tear,
damage by casualty not covered by Section 15.2 and repairs to be made by
Landlord pursuant to Section 15.1. If Tenant fails to surrender possession as
herein required, Landlord may, without giving Tenant prior notice to vacate the
Premises or any other notice, initiate any and all legal action as Landlord may
elect to dispossess Tenant and all of its property, and all persons or firms
claiming by, through or under Tenant and all of their property, from the
Premises, and may remove from the Premises and store (without any liability for
loss, theft, damage or destruction thereto) any such property at Tenant's cost.
While Tenant remains in possession of the Premises after such expiration,
termination or exercise by Landlord of its re-entry right, Tenant shall be
deemed to be occupying the Premises as a tenant-at-sufferance, subject to all
of the obligations of Tenant under this Lease, except that the daily Rent shall
be twice the per day Rent in effect immediately before such expiration,
termination or exercise by Landlord. No such holding over shall extend the
Term. If Tenant fails to surrender possession of the Premises in the condition
herein required, Landlord may, at Tenant's expense, restore the Premises to
such condition.
27. MISCELLANEOUS.
27.1 INDEPENDENT OBLIGATIONS; NO OFFSET. The obligations of Tenant to pay
Rent and to perform the other undertakings of Tenant hereunder constitute
independent unconditional obligations to be performed at the times specified
hereunder, regardless of any breach or default by Landlord hereunder. Tenant
shall have no right, and Tenant hereby waives
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and relinquishes all rights which Tenant might otherwise have, to claim any
nature of lien against the Complex or to withhold, deduct from or offset
against any Rent or other sums to be paid to Landlord by Tenant.
27.2 TIME OF ESSENCE. Time is of the essence with respect to each date or
time specified in this Lease by which an event is to occur.
27.3 APPLICABLE LAW. This Lease shall be governed by, and construed in
accordance with, the laws of the State of Texas. All monetary and other
obligations of Landlord and Tenant are performable in the county where the
Complex is located.
27.4 ASSIGNMENT BY LANDLORD. Landlord shall have the right to
assign, in whole or in part, any or all of its rights, titles or interests in
and to the Complex or this Lease and, upon any such assignment, Landlord shall
be relieved of all unaccrued liabilities and obligations hereunder to the
extent of the interest so assigned.
27.5 COMMENCEMENT DATE AND ESTOPPEL CERTIFICATES. From time to time at
the request of Landlord or Landlord's Mortgagee Tenant will promptly and
without compensation or consideration execute, have acknowledged and deliver a
certificate stating (a) the Commencement Date and the date of expiration of the
Term, (b) the rights (if any) of Tenant to extend the Term or to expand the
Premises, (c) the Rent (or any components of the Rent) currently payable
hereunder, (d) whether this Lease has been amended in any respect and, if so,
submitting copies of or otherwise identifying the amendments, (e) whether,
within the knowledge of Tenant, there are any existing breaches or defaults by
Landlord hereunder and, if so, stating the defaults with reasonable
particularity and (f) such other information pertaining to this Lease as
Landlord or Landlord's Mortgagee may reasonably request.
27.6 SIGNS, BUILDING NAME AND BUILDING ADDRESS. Landlord may, from time
to time at its discretion, maintain any and all signs anywhere in the Complex,
and to change the name and street address of the Complex. Tenant shall not use
the name of the Building for any purpose other than the address of the business
to be conducted by Tenant from the Premises.
27.7 NOTICES. All notices and other communications given pursuant to this
Lease shall be in writing and shall either be mailed by first class United
States mail, postage prepaid, registered or certified with return receipt
requested, and addressed as set forth in this Section 27.7, or delivered in
person to the intended addressee, or sent by prepaid telegram, cable or telex
followed by a confirmatory letter. Notice mailed in the aforementioned manner
shall become effective three business days after deposit; notice given in any
other manner, and any notice given to Landlord, shall be effective only upon
receipt by the intended addressee. Each party shall have the continuing right to
change its address for notice hereunder by the giving of 15 days' prior written
notice to the other party in accordance with this Section 27.7. ALL PAYMENTS
SHOULD BE MADE PAYABLE TO COTTONSTAR--RAMBLER ROAD L/B A/C AND MAILED TO:
COTTONSTAR--RAMBLER ROAD L/B A/C NEWARK POST OFFICE PO BOX 35262 NEWARK, NJ
07193-5262
Landlord Tenant
-------- ------
4849 Greenville Partners Travel Technologies Group, L.P.
c/o Cottonwood Partners 7557 Rambler Rd., Suite 1300
7557 Rambler Rd., Suite 932 Dallas, TX 75231
Dallas, Texas 75231
cc: Property Manager
Cottonwood Management Services
7557 Rambler Rd., Suite 250
Dallas, TX 75231
27.8 ENTIRE AGREEMENT, AMENDMENT AND BINDING EFFECT. This Lease
constitutes the entire agreement between Landlord and Tenant relating to the
subject matter hereof and all prior agreements relative hereto which are not
contained herein are terminated. This Lease may be amended only by a written
document duly executed by Landlord and Tenant (and, if a Mortgage is then in
effect, by the Landlord's Mortgagee entitled to the benefits thereof), and any
alleged amendment which is not so documented shall not be effective as to
either party. The provisions of this Lease shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors and assigns; provided however, that this Section 27.8 shall not
negate, diminish or alter the restrictions on Transfers applicable to Tenant
set forth elsewhere in this Lease.
27.9 SEVERABILITY. This Lease is intended to be performed in accordance
with and only to the extent permitted by all Legal Requirements. If any
provision of this Lease or the application thereof to any person or
circumstance shall, for any reason and to any extent, be invalid or
unenforceable, but the extent of the invalidity or unenforceability does not
destroy the basis of the bargain between the parties as contained herein, the
remainder of this Lease and the application of such provision to other persons
or circumstances shall not be affected thereby, but rather shall be enforced to
the greatest extent permitted by law.
27.10 NUMBER AND GENDER, CAPTIONS AND REFERENCES. As the context of this
Lease may require, pronouns shall include natural persons and legal entities of
every kind and character, the singular number shall include the plural and the
neuter shall include the masculine and the feminine gender. Section headings in
this Lease are for convenience of reference only and are not intended, to any
extent and for any purpose, to limit or define any section hereof. Whenever the
terms "hereof," "hereby," "herein," "hereunder" or words of similar import are
used in this Lease, they shall be construed as referring
10
<PAGE> 15
to this Lease in its entirety rather than to a particular section or provision,
unless the context specifically indicates to the contrary. Any reference to a
particular "Section" shall be construed as referring to the indicated section
of this Lease.
27.11 ATTORNEYS' FEES. If either party hereto initiates any litigation
against the other party relating to this Lease, the prevailing party shall be
entitled to recover, in addition to all damages allowed by law and other
relief, all court costs and reasonable attorneys' fees incurred in connection
with such litigation.
27.12 BROKERS. Tenant and Landlord hereby warrant and represent unto the
other that it has not incurred or authorized any brokerage commission, finder's
fees or similar payments in connection with this Lease, other than that which
is due to The Darrow Group and Cottonwood Partners, which payment shall be paid
by Landlord. Each party shall defend, indemnify and hold the other harmless
from and against any claim for brokerage commission, finder's fees or similar
payment arising by virtue of authorization of such party, or any Affiliate of
such party, in connection with this Lease.
27.13 INTEREST ON TENANT'S OBLIGATIONS. Any amount due from Tenant to
Landlord which is not paid when due shall bear interest at the maximum rate
allowed by law from the date such payment is due until paid, but the payment of
such interest shall not excuse or cure the default in payment.
27.14 AUTHORITY. The person executing this Lease on behalf of Tenant
personally warrants and represents to Landlord that (a) Tenant is a duly
organized and existing legal entity, in good standing in the State of Texas;
(b) Tenant has full right and authority to execute, deliver and perform this
Lease; (c) the person executing this Lease on behalf of Tenant was authorized
to do so; and (d) upon request of Landlord, such person will deliver to
Landlord satisfactory evidence of his or her authority to execute this Lease on
behalf of Tenant.
27.15 RECORDING. Neither this Lease (including any Exhibit hereto) nor
any memorandum hereof shall be recorded without the prior written consent of
Landlord.
27.16 EXHIBITS. All Exhibits and written addenda hereto are incorporated
herein for any and all purposes.
27.17 MULTIPLE COUNTERPARTS. This Lease may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute but one instrument.
27.18 CONSENTS AND APPROVALS. ANY PROVISION CONTAINED IN THIS LEASE
REQUIRING LANDLORD'S CONSENT OR APPROVAL SHALL BE CONSTRUED SUCH THAT LANDLORD
WILL NOT UNREASONABLY WITHHOLD SUCH CONSENT OR APPROVAL.
EXECUTED as of the date and year above first written.
TENANT ACKNOWLEDGES THAT LANDLORD HAS MADE NO WARRANTIES TO TENANT AS TO THE
CONDITION OF THE PREMISES, EITHER EXPRESS OR IMPLIED, AND LANDLORD AND TENANT
EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR
TENANT'S INTENDED COMMERCIAL PURPOSE, AND TENANT'S OBLIGATION TO PAY RENT
HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE
PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND TENANT SHALL CONTINUE
TO PAY THE RENT, WITHOUT ABATEMENT (EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREIN), SET OFF, DEDUCTION, NOTWITHSTANDING ANY BREACH BY LANDLORD OF ITS
DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED.
TENANT: TRAVEL TECHNOLOGIES GROUP, L.P.
BY: /s/ TIMOTHY J. SEVERT
------------------------------------
NAME: TIMOTHY J. SEVERT
TITLE: VP OF ADMIN.
LANDLORD: 4849 GREENVILLE PARTNERS
BY: WallGlen Partners I, Ltd.
BY: WallGlen Properties I, Inc.
By: /s/ Robert J. Axley
-------------------------
Name: Robert J. Axley
Title: Chairman
11
<PAGE> 16
EXHIBIT INDEX
Exhibit A: Glossary
Exhibit B: Description of Premises
Exhibit C: Rules and Regulations
Exhibit D: Work Letter
Exhibit E: Property Legal Description
Exhibit F: Right of First Refusal
Exhibit G: Renewal Option
Exhibit H: Corporate Guaranty
<PAGE> 17
EXHIBIT A
GLOSSARY OF DEFINED TERMS
1. "ADDENDUM" shall mean the Addendum, if any, attached to this Lease.
2. "AFFILIATE" shall mean a person or party who or which controls, is
controlled by or is under common control with another person or party.
3. "BUILDING" shall mean that certain 14 floor office building and
garage structure constructed on the Land, the street address of which is 7557
Rambler, Dallas, Texas, and is more particularly described in the deed recorded
in Volume 90252, Page 5110 of the Deed Records of Dallas County, Texas. The
term "Building" shall include all fixtures and appurtenances in and to the
aforesaid structure, including specifically but without limitation all above
grade walkways and all electrical, mechanical, plumbing, security, elevator,
boiler, HVAC, telephone, water, gas, storm sewer, sanitary sewer and all other
utility systems and connections, all life support systems, sprinklers, smoke
detection and other fire protections systems, and all equipment, machinery,
shafts, flues, piping, wiring, ducts, duct work, panels, instrumentation and
other appurtenances relating thereto.
4. "BUILDING OPERATING HOURS" shall mean 8:00 a.m. to 6:00 p.m. Monday
through Friday and Saturday 8:00 a.m. to 1:00 p.m., exclusive of Sundays and
Holidays.
5. "BUILDING RULES AND REGULATIONS" shall mean the rules and regulations
governing the Complex promulgated by Landlord from time to time. The current
Building Rules and Regulations maintained by Landlord are attached as Exhibit C
hereto.
6. "BUILDING STANDARD", when applied to an item, shall mean such item as
has been designated by Landlord (orally or in writing) as generally applicable
throughout the leased portions of the Building.
7. "COMMENCEMENT DATE" shall mean the date of commencement of the Term
as determined pursuant to Section 6.3.
8. "COMMON AREAS" shall mean all areas and facilities within the Complex
which have been constructed and are being maintained by Landlord for the
common, general, non-exclusive use of all tenants in the Building, and shall
include restrooms, lobbies, corridors, service areas, elevators, stairs and
stairwells, the Parking Facility, driveways, loading areas, ramps, walkways and
landscaped areas.
9. "COMPLEX" shall mean the Land and all improvements thereon, including
the Building and the Parking Facility.
10. "EXPENSE STOP" shall mean that portion of the Operating Expenses,
expressed in terms of dollars per square foot of Net Rentable Area per Fiscal
Year, which will be excluded from the computation of Additional Rent. Unless
changed by mutual agreement of the parties, the "Expense Stop" shall equal the
actual operating expenses for calendar year 1998.
11. "FISCAL YEAR" shall mean the fiscal year (or portion thereof) of
Landlord as elapses during the Term. The Fiscal Year currently commences on
January 1; however, Landlord may change the Fiscal Year at any time or times.
12. "FORCE MAJEURE" shall mean the occurrence of any event which hinders,
prevents or delays the performance by Landlord of any of its obligations
hereunder and which is beyond the reasonable control of Landlord.
13. "HOLIDAYS" shall mean (a) New Year's Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day, (b) other days on which
national or state banks located in the state where the Complex is located must
or may close for ordinary operations and (c) other days which are commonly
observed as holidays by the majority of tenants of the Building. If the Holiday
occurs on a Saturday or Sunday, the Friday preceding or the Monday following
may, at Landlord's discretion, be observed as a Holiday.
14. "HVAC" shall mean the heating, ventilation and air conditioning
systems in the Building.
15. "IMPOSITIONS" shall mean (a) all real estate, personal property,
rental, water, sewer, transit, use, occupancy and other taxes, assessments,
charges, excises and levies (including any interest, costs or penalties with
respect thereto), general and special, ordinary and extraordinary, foreseen and
unforeseen of any kind and nature whatsoever which are assessed, levied, charged
or imposed upon or with respect to the Complex, or any portion thereof, or the
sidewalks, streets, or alley ways adjacent thereto, or the ownership, use,
occupancy or enjoyment thereof (including but not limited to mortgage taxes and
other taxes and assessments passed on to Landlord by Landlord's Mortgagee) and
(b) all charges for any easement, license, permit or agreement maintained for
the benefit of the Complex. "Impositions" shall not include income taxes, estate
and inheritance taxes, excess profit taxes, franchise taxes, taxes imposed on or
measured by the income of Landlord from the operation of the Complex, and taxes
imposed on account of the transfer of ownership of the Complex or the Land. If
any or all of the Impositions be discontinued and, in substitution therefor,
taxes, assessments, charges, exercises or impositions be assessed, levied,
charged or imposed wholly or partially on the Rents received or payable under (a
"SUBSTITUTE IMPOSITION"), then the Substitute Imposition shall be deemed to be
included within the term "Impositions".
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<PAGE> 18
17. "LAND" shall mean the real property on which the Building is
constructed and which is further described in Exhibit E hereto.
18. "LANDLORD'S MORTGAGEE" shall mean the mortgagee of any mortgage, the
beneficiary of any deed of trust, the pledgee of any pledge, the secured party
of any security interest, the assignee of any assignment and the transferee of
any other instrument of transfer (including the ground lessor of any ground
lease on the Land) now or hereafter in existence on all or any portion of the
Complex, and their successors, assigns and purchasers. "MORTGAGE" shall mean
any such mortgage, deed of trust, pledge, security agreement, assignment or
transfer instrument, including all renewals, extensions and rearrangements
thereof and of all debts secured thereby.
19. "LANDLORD'S WORK" shall mean all improvements, components,
assemblies, installations, finish, labor, materials and services that Landlord
is required to furnish, install, perform, provide or apply to the Premises as
specified in the Work Letter.
20. "PREMISES" shall mean the area leased by Tenant pursuant to this
Lease as outlined on the floor plan drawing attached as Exhibit B hereto and all
other space added to the Premises pursuant to the terms of this Lease. The
Premises includes the space between the top surface of the floor slab of the
outlined area and the finished surface of the ceiling immediately above.
21. "LEGAL REQUIREMENTS" shall mean any and all (a) judicial decisions,
orders, injunctions, writs, statutes, rulings, rules, regulations,
promulgations, directives, permits, certificates or ordinances of any
governmental authority in any way applicable to Tenant or the Complex,
including but not limited to the Building Rules and Regulations, zoning,
environmental and utility conservation matters, (b) requirements imposed on
Landlord by any Landlord's Mortgagee, (c) insurance requirements and (d) other
documents, instruments or agreements (written or oral) relating to the Complex
or to which the Complex may be bound or encumbered.
22. "NET RENTABLE AREA" whether of the Premises or the Complex shall mean
the area determined pursuant to the American National Standard Method for
measuring floor space in office buildings, as set forth in American National
Standard's Institute publication Z65.1-1980 and as, from time to time, revised.
Landlord and Tenant hereby stipulate that, unless and until revised by virtue
of the application of the standards set forth in said publication or in a
revised publication, the Net Rentable Area of the Premises shall be 13,325
square feet and the Net Rentable Area of the Building shall be 307,130 square
feet.
23. "OPERATING EXPENSES" shall mean all costs and expenses which Landlord
pays or accrues by virtue of the ownership, use, management, leasing,
maintenance, service, operation, insurance or condition of the Complex during a
particular Fiscal Year or portion thereof as determined by Landlord or its
certified public accountants in accordance with generally accepted accounting
principles plus (in instances where the Building was not fully occupied for the
entire period in question) all additional costs and expenses which Landlord or
such accountant reasonably determines Landlord would have paid or accrued
during such period if the Building has been fully occupied (defined as 95%
occupied). "Operating Expenses" shall include, but shall not be limited to, the
following to the extent they relate to the Complex:
(a) all Impositions and other governmental charges;
(b) all insurance premiums charged for policies obtained by Landlord,
which may include without limitation, at Landlord's election, (i) fire and
extended coverage insurance including earthquake, windstorm, hail,
explosion, riot, strike, civil commotion, aircraft, vehicle and smoke
insurance, (ii) public liability and property damage insurance, (iii)
elevator insurance, (iv) workmen's compensation insurance for the
employees covered by clause (h), (v) boiler, machinery, sprinkler, water
damage, legal liability, burglary, hold-up, fidelity and pilferage
insurance, (vi) rental loss insurance and (vii) such other insurance as
Landlord may elect to obtain;
(c) all deductible amounts incurred in any Fiscal Year relating to an
insurable loss;
(d) all maintenance, repair, replacement and painting costs;
(e) all janitorial, custodial, cleaning, washing, landscaping,
landscape maintenance, trash removal and pest control costs;
(f) all security costs;
A-2
<PAGE> 19
(g) all electrical, energy monitoring, water, water treatment, gas,
sewer, telephone and other utility and utility related charges;
(h) all wages, salaries, salary burdens, employee benefits, payroll
taxes, social security and insurance for all persons engaged by Landlord or
an Affiliate of Landlord in connection with the operation and maintenance of
the Building;
(i) all costs of leasing or purchasing supplies, tools, equipment and
materials;
(j) all management fees and other charges for management services
(including, without limitation, travel and related expenses), whether
provided by an independent management company, by Landlord or by an
Affiliate of Landlord;
(k) all fees and other charges paid under all maintenance and service
agreements, including but not limited to window cleaning, elevator and HVAC
maintenance;
(l) all legal, accounting and auditing fees and expenses; and
(m) amortization of the cost of acquiring, financing and installing
capital items which are intended to reduce (or avoid increases in) operating
expenses or which are required by a governmental authority. Such costs shall
be amortized over the reasonable life of the items in accordance with
generally accepted accounting principles, but not beyond the reasonable life
of the Building.
"Operating Expenses" shall not include (i) expenditures classified as capital
expenditures for federal income tax purposes except as set forth in clause (m),
(ii) costs for which Landlord is entitled to specific reimbursement by Tenant,
by any other tenant of the Building or by any other third party, (iii)
allowances specified in the Work Letter for expenses incurred by Landlord for
improvements to the Premises, (iv) leasing commissions, and all non-cash
expenses (including depreciation), except for the amortized costs specified in
clause (m), (v) land or ground rent, if applicable, and (vi) debt service on any
indebtedness secured by the Complex (except debt service on indebtedness to
purchase or pay for items specified as permissible "Operating Expenses" under
clause (a) through (m)), (VIII) LEASEHOLD IMPROVEMENTS MADE FOR OTHER TENANTS,
(IX) ADVERTISING AND PROMOTIONAL EXPENDITURES, (X) ANY EXPENSE FOR WHICH
LANDLORD IS COMPENSATED BY INSURANCE OR OTHER PROCEEDS.
24. "PARKING FACILITY" shall mean (a) any parking garage and any other
parking lot or facility adjacent to or in the Complex servicing the Building
and (b) any parking area, open or covered, leased by Landlord to service the
Building.
25. "RENT" shall mean Base Rent, Additional Rent, the parking charge
called for in Section 5.4 and all other amounts provided for under this Lease
to be paid by Tenant, whether as additional rent or otherwise. "BASE RENT"
shall mean the base rent specified in Section 5.1 as adjusted in accordance
with Section 5.2. " BASE RENT ADJUSTMENT" shall mean the increase in the annual
Base Rent as set forth in Section 5.2 "ADDITIONAL RENT" shall mean the
additional rent specified in Section 5.3.
26. "SECURITY DEPOSIT" shall mean -0- paid by Tenant as security for the
full and faithful performance of the obligations of Tenant under this Lease.
27. "TAKING" or "TAKEN" shall mean the actual or constructive
condemnation, or the actual or constructive acquisition by or under threat of
condemnation, eminent domain or similar proceeding, by or at the direction of
any governmental authority or agency.
28. "TENANT'S SHARE" shall mean the proportion by which the Net Rentable
Area of the Premises bears to the Net Rentable Area of the Building. "Tenant's
Share" shall be adjusted by Landlord from time to time to reflect adjustments
to the then current Net Rentable Area of the Building or the Premises.
"Tenant's Share" shall initially mean 13,325 rentable square feet divided by
307,130 rentable square feet X 100 = 4.339%.
29. "TRANSFER" shall mean (a) an assignment (direct or indirect, absolute
or conditional, by operation of law or otherwise) by Tenant of all or any
portion of Tenant's interest in this Lease or the leasehold estate created
hereby, (b) a sublease of all or any portion of the Premises or (c) the grant
or conveyance by Tenant of any concession or license within the Premises. If
Tenant is a corporation then any transfer of this Lease by merger,
consolidation or dissolution, or by any change in ownership or power to vote a
majority of the voting stock (being the shares of stock regularly entitled to
vote for the election of directors) in Tenant outstanding at the time of
execution of this Lease shall constitute a Transfer. If Tenant is a partnership
having one or more corporations as general partners, the preceding sentence
shall apply to each corporation as if the corporation alone had been the Tenant
hereunder. If Tenant is a general or limited partnership, joint venture or
other form of association, the transfer of a majority of the ownership
interests therein shall constitute a Transfer. "TRANSFEREE" shall mean the
assignee, sublessee, pledgee, concessionee, licensee or other transferee of all
or any portion of Tenant's interest in this Lease, the leasehold estate created
hereby or the Premises. NOTWITHSTANDING THE FOREGOING, AN ASSIGNMENT OF THE
LEASE BY TENANT TO AN ENTITY CONTROLLED BY OR UNDER COMMON CONTROL WITH TENANT
SHALL NOT CONSTITUTE A TRANSFER HEREUNDER BUT TENANT SHALL PROVIDE PRIOR
WRITTEN NOTICE TO LANDLORD OF SUCH ASSIGNMENT.
30. "WORK LETTER" shall mean the agreement, if any, attached as Exhibit D
hereto between Landlord and Tenant for the construction of improvements in the
Premises.
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<PAGE> 20
EXHIBIT B
PREMISES
Suite 1300
(Approximately 13,325 Rentable Square Feet)
[FLOOR PLAN]
<PAGE> 21
EXHIBIT C
RULES AND REGULATIONS
1. Landlord may from time to time adopt appropriate systems and
procedures for the security or safety of the Building, any persons occupying,
using, or entering the Building, or any equipment, finishings, or contents of
the Building, and each tenant shall comply with such systems and procedures.
2. Tenant's employees, visitors, and licensees shall not loiter in or
interfere with the use of the Parking Facility or the Complex's driveway or
parking areas nor consume alcohol in the common areas of the Complex or the
Parking Facility. The sidewalks, halls, passages, exits, entrances, elevators,
escalators, and stairways of the Building will not be obstructed by any tenants
or used by any of them for any purpose other than for ingress to and egress
from their respective premises. The halls, passages, exits, entrances,
elevators, escalators, and stairways are not for the general public, and
Landlord may control and prevent access to them by all persons whose presence,
in the reasonable judgment of Landlord, would be prejudicial to the safety,
character, reputation and interests of the Building and its tenants; in
determining whether access will be denied, Landlord may consider attire worn by
a person and its appropriateness for an office building, whether shoes are
being worn, use of profanity, either verbally or on clothing, actions of a
person (including, without limitation, spitting, verbal abusiveness, and the
like), and such other matters as Landlord may reasonably consider appropriate.
3. No sign, placard, picture, name, advertisement, or notice visible
from the exterior of any tenant's premises shall be inscribed, painted,
affixed, or otherwise displayed by any tenant on any part of the Building
without the prior written consent of Landlord. All approved signs or lettering
on doors will be printed, painted, affixed, or inscribed at the expense of the
tenant desiring such by a person approved by Landlord. Material visible from
outside the Building will not be permitted. Landlord may remove such material
without any liability, and may charge the expense incurred by such removal to
the tenant in question.
4. No curtains, draperies, blinds, shutters, shades, screens, or other
coverings, hangings, or decorations will be attached to, hung, or placed in, or
used in connection with any window of the Building or the Premises.
5. The sashes, sash doors, skylights, windows, heating, ventilating, and
air conditioning vents and doors that reflect or admit light and air into the
halls, passageways, or other public places in the Building shall not be covered
or obstructed by any tenant, nor will any bottles, parcels, or other articles
be placed on any window sills.
6. No showcases or other articles will be put in front of or affixed to
any part of the exterior of the Building, nor placed in the public halls,
corridors, or vestibules without the prior written consent of Landlord.
7. No tenant will permit its Premises to be used for lodging or
sleeping. No cooking will be done or permitted by any tenant on its premises,
except in areas of the premises which are specially constructed for cooking, so
long as such use is in accordance with all applicable federal, state, and city
laws, codes, ordinances, rules, and regulations.
8. No tenant will employ any person or persons other than the cleaning
service of Landlord for the purpose of cleaning the premises, unless otherwise
agreed by Landlord in writing. If any tenant's actions result in any increased
expense for any required cleaning, Landlord may assess such tenant for such
expenses. Janitorial service will not be furnished on nights to offices which
are occupied after business hours on those nights unless, by prior written
agreement of Landlord, service is extended to a later hour for specifically
designated offices.
9. The toilets, urinals, wash bowls, and other plumbing fixtures will
not be used for any purposes other than those for which they were constructed,
and no sweepings, rubbish, rags, or other foreign substances will be thrown in
them. All damages resulting from any misuse of the fixtures will be borne by
the tenant who, or whose servants, employees, agents, visitors, or licensees,
have caused the damage.
10. No tenant will deface any part of the premises or the Building.
Without the prior written consent of Landlord, no tenant will lay linoleum, or
other similar floor covering, so that it comes in direct contact with the floor
of such tenant's premises. If linoleum or other similar floor covering is to be
used, an interlining of builder's deadening felt will be first affixed to the
floor, by a paste or other material, soluble in water. The use of cement or
other similar adhesive material is expressly prohibited.
11. No tenant will alter, change, replace, or rekey any lock or install a
new lock or a knocker on any door of the premises. Landlord, its agent or
employee, will retain a master key to all door locks on the premises. Any new
door locks required by a tenant or any change in keying of existing locks will
be installed or changed by Landlord following such tenant's written request to
Landlord and will be at such tenant's expense. All new locks and rekeyed locks
will remain operable by Landlord's master key. Landlord will furnish to each
tenant, free of charge, two (2) keys to each door lock on its premises.
Landlord will have the right to collect a reasonable charge for additional keys
and cards requested by any tenant. Each tenant, upon termination of its
tenancy, will deliver to Landlord all keys and access cards for the premises
and Building which have been furnished to such tenant.
12. The elevator designated for freight by Landlord will be available for
use by all tenants in the Building during the hours and pursuant to such
procedures as Landlord may determine from time to time. The persons employed
to move tenant's equipment, material, furniture, or other property in or out of
the Building must be acceptable to Landlord; such
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<PAGE> 22
persons must be a locally recognized professional mover, whose primary business
is the performing of relocation services, and must be bonded and fully insured.
A certificate or other verification of such insurance must be received and
approved by Landlord prior to the start of any moving operations. Insurance
must be sufficient, in Landlord's sole opinion, to cover all personal
liability, theft, or damage to the Building, including without limitation floor
coverings, doors, walls, elevators, stairs, foliage, and landscaping. All moving
operations will be conducted at such times and in such a manner as Landlord may
direct, and all moving will take place during nonbusiness hours unless Landlord
otherwise agrees in writing. The moving tenant shall be responsible for the
provision of Building security during all moving operations, and shall be
liable for all losses and damages sustained by any party as a result of the
failure to supply adequate security. Landlord may prescribe the weight, size,
and position of all equipment, materials, furniture, or other property brought
into the Buildings. Heavy objects will, if considered necessary by Landlord,
stand on wood strips of such thickness as is necessary to distribute the weight
properly. Landlord will not be responsible for loss of or damage to any such
property from any cause, and all damage done to the Building by moving or
maintaining such property will be repaired at the expense of the moving tenant.
Landlord may inspect all such property to be brought into the Building and to
exclude from the Building all such property which violates any of these rules
and regulations or the lease of which these rules and regulations are a part.
Supplies, goods, materials, packages, furniture, and all other items of every
kind delivered to or taken from the premises will be delivered or removed
through the entrance and route designated by Landlord.
13. No tenant will use or keep in the premises or the Building any kerosene,
gasoline, or inflammable or combustible or explosive fluid or material or
chemical substance other than limited quantities of them reasonably necessary
for the operation or maintenance of office equipment or limited quantities of
cleaning fluids and solvents required in normal operation of the premises.
Without Landlord's prior written approval, no tenant will use any method of
heating or air conditioning other than that supplied by Landlord. No tenant will
keep any firearms within the Premises. No tenant will use or keep or permit to
be used or kept any foul or noxious gas or substance in the premises, or permit
of suffer the premises to be occupied or used in an manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors, or vibrations, or interfere in any way with other tenants or those having
business in the Building.
14. Landlord may without notice and without liability to any tenant, change
the name and street address of the Building.
15. Landlord will have the right to prohibit any advertising by tenant,
mentioning the Building, which, in Landlord's reasonable opinion, tends to
impair the reputation of the Building or its desirability as a Building for
offices, and upon written notice from Landlord, tenant will discontinue such
advertising.
16. Tenant will not bring any animals or birds into the Building, and will
not permit bicycles or other vehicles inside or on the sidewalks outside the
Building except in areas designated from time to time by Landlord for such
purposes.
17. All persons entering or leaving the Building at any time other than the
Building's business hours shall comply with such off-hour regulations as
Landlord may establish and modify from time to time. Landlord may limit or
restrict access to the Building during such periods.
18. Each tenant will store all its trash and garbage within its premise. No
material will be placed in the trash boxes or receptacles if such material is of
such nature that it may not be disposed of in the ordinary and customary manner
of removing and disposing of trash and garbage without being in violation of any
law or ordinance governing such disposal. All garbage and refuse disposal will
be made only through entryways and elevators provided for such purposes and at
such times as Landlord may designate. No furniture, appliances, equipment, or
flammable products of any type may be disposed of in the Building trash
receptacles.
19. Canvassing, peddling, soliciting, and distribution of handbills or any
other written materials in the Building are prohibited, and each tenant will
cooperate to prevent same.
20. Each tenant shall keep the doors of the premises closed and locked and
shall shut off all water faucets, water apparatus, and utilities before tenant
or tenant's employees leave the premises, so as to prevent waste or damage, and
for any default or carelessness in this regard tenant shall be liable for all
injuries sustained by other tenants or occupants of the Building or Landlord. On
multiple-tenancy floors, all tenants will keep the doors to the Building
corridors closed at all times except for ingress and egress.
C-2
<PAGE> 23
EXHIBIT D
WORK LETTER AGREEMENT
This Work Letter Agreement supplements and is hereby incorporated in that
certain lease (hereinafter referred to as the "Lease") dated and executed
concurrently herewith by and between 4849 Greenville Partners, (hereinafter
referred to as "Landlord") and Travel Technologies Group L.P., (hereinafter
referred to as "Tenant") with the terms defined in the Lease to have the same
definition where used herein.
(i) The Premises are leased to Tenant in their "AS IS" condition and this
Work Letter Agreement is included to set forth the obligations of Landlord and
Tenant with respect to the preparation of the Premises for Tenant's occupancy.
All improvements described in this Work letter Agreement to be constructed in
and upon the Premises are hereinafter referred to as the "Tenant Improvements."
It is agreed that construction of the Tenant Improvements will be completed in
accordance with the procedures set forth in this Work Letter Agreement.
(ii) Tenant shall devote such time in consultation with Landlord or
Landlord's agent as may be required to provide all necessary information to
Landlord or Landlord's agent as Landlord deems necessary in order to enable
Landlord to complete, and obtain Tenant's written approval of, the final
layout, drawings, and plans for the Premises. If Tenant fails to furnish any
such information, or fails to approve layout, drawings, or plans within five
(5) Business Days after written request, Landlord may, at its election, be
discharged of its obligations under this Work Letter Agreement, but the same
shall not affect or diminish Tenant's duties and obligations set forth in the
Lease, and Tenant agrees to pay on demand all costs and expenses and increased
unit prices incurred by Landlord on account of Tenant's failure to furnish such
information and approved drawings within such prescribed times. All of Tenant's
plans and specifications shall be subject to Landlord's consent, the granting
or denial of which shall be in Landlord's sole discretion.
(iii) Space planning and construction drawings, and when deemed necessary
by Landlord, engineering drawings, shall be prepared by Landlord's architect.
Landlord shall bear the cost of the initial space planning drawings, to include
one revision, which shall be prepared by Landlord's architect. Unless otherwise
provided in Exhibit "D-2", Tenant shall pay for additional space planning
services beyond those specified above, for Landlord's standard construction and
engineering drawings covering Landlord's Building Standard materials as defined
in Exhibit "D-1", and for any nonstandard construction and engineering
drawings, or any additional costs for drawings occasioned by special
installation other than Building Standard. Tenant may pay for such services out
of the Allowance, if any, provided in Exhibit "D-2". Tenant shall furthermore
be responsible for the design, function and maintenance of all special
improvements, whether installed by Landlord at Tenant's request or installed by
Tenant with Landlord's prior written approval. Tenant shall use the Building
Standard materials unless other materials are expressly approved in writing by
Landlord.
(iv) Prior to commencing any construction of Tenant Improvements,
Landlord shall submit to Tenant a written estimate setting forth the
anticipated cost of the Tenant Improvements (excluding any costs which may be
specified herein or in Exhibit "D-2" as being borne by Landlord), including but
not limited to labor and materials, contractor's fees (whether paid to
independent contractors or charged by Landlord for acting as a general
contractor), permit fees, and space planning, construction, and engineering
drawing costs which are the responsibility of Tenant. Within five (5) Business
Days Tenant shall either notify Landlord in writing of its approval of the cost
estimate, or specify its objections thereto and desired changes to the proposed
Tenant Improvements. In the event Tenant notifies Landlord of such objections
and desired changes, Tenant shall work with Landlord to reach acceptable plans
and cost estimate; provided, however, if Tenant fails to give written approval
of a cost estimate within ten (10) Business Days following delivery to Tenant
of the original cost estimate, Tenant shall be chargeable with one day of Delay
for each day thereafter until Tenant provides to Landlord in writing its
approval of a cost estimate.
(v) In the Event Landlord's estimate and/or the actual cost of
construction shall exceed the Allowance, (as defined in Exhibit "D-2" attached
hereto), if any (such amounts exceeding the Allowance being herein referred to
as the "Excess Costs"), Tenant shall pay to Landlord such Excess Costs as
follows:
Tenant shall deliver to Landlord, with its approval of the Landlord's
estimate, and in any event prior to commencement of construction, an amount
equal to fifty percent (50%) of the Excess Costs as then estimated by Landlord.
After substantial completion of the Tenant Improvements, but prior to
occupancy of the Premises by Tenant, Tenant shall pay to Landlord on demand an
amount which when added to the initial payment described in subparagraph (a)
above equals ninety percent (90%) of the Excess Costs as then estimated by
Landlord.
As soon as the final accounting can be prepared and submitted to
Tenant, Tenant shall pay on demand to Landlord the entire balance of the Excess
Costs based upon the actual cost of construction.
The statements of costs submitted to Landlord by Landlord's contractors shall
be conclusive for purposes of determining the actual cost of the items
described therein. The amounts payable hereunder constitute additional rent
payable pursuant to the Lease, and the failure to timely pay same constitutes
an event of default under the Lease.
Exhibit "D" - Work Letter Agreement Initialed:
<PAGE> 24
(vi) If Tenant shall request any change, addition or alteration in
the working drawings, after approval by Landlord and Tenant, Landlord shall
have such working drawings prepared, and Tenant shall promptly reimburse
Landlord for the cost thereof. Promptly upon completion of the revisions,
Landlord shall notify Tenant in writing of the cost which will be chargeable to
Tenant by reason of such change, addition or deletion. Tenant shall, within
three (3) business Days, notify Landlord in writing whether it desires to
proceed with such change, addition or deletion. In the absence of such written
authorization, Landlord shall have the option to continue work on the
Premises, disregarding the requested change, addition or alteration, or
Landlord may elect to discontinue work on the Premises, in which event Tenant
shall be chargeable with a Delay in completion of the Premises resulting
therefrom in accordance with Paragraph 3(a) of the Lease. In the event such
revisions result in a higher estimate of the cost of construction, Tenant shall
pay to Landlord an amount sufficient to provide Landlord with the above
described fifty percent (50%) (or if applicable ninety percent (90%)) payment
toward Excess Costs.
(vii) Following approval of the plans and the payment by Tenant of the
required portion of the Excess Costs, if any, Landlord shall cause the Tenant
Improvements to be constructed in accordance with the approved plans. Unless
otherwise specifically provided in the approved plans, all material used in the
construction of the Tenant's Improvements shall be of such quality as
determined by the Landlord's architect. Landlord shall notify Tenant of
substantial completion of the Tenant Improvements.
It is hereby acknowledged by both Tenant and Landlord that this
Exhibit "D" has been executed as of, and shall become part of the Lease
Agreement dated, September 30, 1997.
LANDLORD: 4849 GREENVILLE PARTNERS
BY: WallGlen Partners I, Ltd.
BY: WallGlen Properties I, Inc.
By: /s/ Robert J. Axley
-----------------------
Name: Robert J. Axley
---------------------
Title: Chairman
---------------------
Date: 10-12-97
---------------------
TENANT: TRAVEL TECHNOLOGIES GROUP, L.P.
By: /s/ Timothy J. Severt
-----------------------
Name: Timothy J. Severt
---------------------
Title: VP - Admin.
---------------------
Date: 9/30/97
---------------------
<PAGE> 25
EXHIBIT "D-1"
1. The Building Standard (herein so called) materials are the following:
A. FLOORING: Grade and quality of carpeting to be selected by Landlord,
with color to be selected by Tenant from those offered by
Landlord.
B. WINDOW
COVERING: At Landlord's option, miniblinds or drapes in Landlord's
uniform color.
C. CEILING: Acoustical tiles - Grid system.
D. PARTITIONS: Sheetrock partitions with tape, bed, texture and paint
finish, and/or vinyl pre-clad sheetrock.
E. DOORS: Solid core door with metal frame and hardware.
F. ELECTRICAL
POWER
OUTLETS: Standard 110 volt duplex wall-mounted convenience outlets.
G. LIGHT
SWITCHES: Single pole lights switches.
H. TELEPHONE
FACILITIES: Standard unwired telephone outlets (ring and string)
mounted on partitions. Tenant must make timely arrangements
for telephone installation and is responsible for all
charges related to such installation.
I. LIGHT
FIXTURES: Recessed fluorescent lighting fixtures.
TENANT SHALL HAVE THE ABILITY TO SELECT AND UTILIZE NONBUILDING STANDARD
MATERIALS WITH LANDLORD'S WRITTEN APPROVAL. IN NO EVENT SHALL THE ALLOWANCE SET
FORTH IN EXHIBIT D-2 CHANGE.
<PAGE> 26
EXHIBIT "D-2"
(viii) Landlord agrees to construct the Tenant Improvements in accordance with
the approved plans as its cost and expense; provided, however, in the event
the actual cost of construction of the Tenant Improvements exceeds $7.00 per
square foot of Rentable Area in the Premises (which for purposes hereof is
agreed to be 13,325 square feet), being the total sum of $93,275.00 such
amount being referred to as the "Allowance"), Tenant shall pay the Excess Costs
as prescribed in Exhibit "D". In the event the actual cost of the Tenant
Improvements is less than the Allowance, Tenant shall not be entitled to any
credit for any amounts not applied to the cost of the Tenant Improvements.
<PAGE> 27
EXHIBIT E
PROPERTY LEGAL DESCRIPTION
BEING a tract of land situated in Dallas County, Texas, in the Neal McCreary
Survey, Abstract No. 996, and being all of Lot 5 of Shelby's Suburban Heights
as recorded in Volume 624, Page 6, Map Records, Dallas County, Texas, and being
more particularly described as follows:
BEGINNING at an iron rod set for corner situated in the West line of Rambler
Road (a 50 foot right-of-way), said iron rod being North, a distance of 370.85
feet from the North line of Glen Lakes Drive;
THENCE South 89 degrees 28 minutes 52 seconds West, departing said Rambler
Road, a distance of 679.20 feet to an iron rod set for corner situated in the
East line of Houston and Texas Central Railway (a 100 foot right-of-way);
THENCE North 00 degrees 05 minutes 12 seconds West, along said Railway, a
distance of 383.64 feet to an iron rod set for corner;
THENCE North 89 degrees 28 minutes 50 seconds East, departing said Railway, a
distance of 679.78 feet to an iron rod set for corner situated in the West line
of Rambler Road;
THENCE South along said Rambler Road, a distance of 383.65 feet to the POINT OF
BEGINNING and CONTAINING 260,674 square feet or 5.9843 acres of land, more or
less.
E-1
<PAGE> 28
EXHIBIT "G"
RENEWAL OPTION
Provided that no event has ever occurred under any term or provision
contained in this Lease and no condition exists which with the passage of time
or the giving of notice or both would constitute an event of default pursuant to
this Lease and provided that Tenant has continuously occupied the Premises for
the Permitted Use during the Lease Term, Tenant (but not any assignee or
subtenant) shall have the right and option (the "Renewal Option") to renew this
Lease, by written notice delivered to Landlord no later than six (6) months
prior to the expiration of the initial Lease Term, for a period of sixty (60)
months (Renewal Term), at the then prevailing market rates FOR SPACE WITHIN
COMPARABLE CLASS A BUILDINGS WITHIN THE CENTRAL EXPRESSWAY SUBMARKET IN DALLAS,
TEXAS, WITH COMPARABLE VIEWS, SQUARE FOOTAGE, LEASEHOLD IMPROVEMENTS AND
CONCESSIONS, IF ANY, and under the same terms, conditions, and covenants
contained in the Lease, except that (a) no abatements or other concessions, if
any, applicable to the initial Lease Term shall apply to the Renewal Term; AND
(b) Tenant shall have no option to renew this Lease beyond the expiration of the
Renewal Term. Failure by Tenant to notify Landlord in writing of Tenant's
election to exercise the Renewal Option herein granted within the time limits
set forth for such exercise shall constitute a waiver of such Renewal Option. In
the event Tenant elects to exercise the Renewal Option as set forth above,
Landlord shall, within twenty (20) days thereafter, notify Tenant in writing of
the proposed rental for the Renewal Term (the "Proposed Renewal Rental"). Tenant
shall within twenty (20) days following delivery of the Proposed Renewal Rental
by Landlord notify Landlord in writing of the acceptance or rejection of the
Proposed Renewal Rental. If Tenant accepts Landlord's proposal, then the
Proposed Renewal Rental shall be the rental rate in effect during the Renewal
Term. Failure of Tenant to respond in writing during the aforementioned twenty
(20) day period shall be deemed an acceptance by Tenant of the Proposed Renewal
Rental. Should Tenant reject Landlord's Proposed Renewal Rental during such
twenty (20) day period, then Landlord and Tenant shall negotiate during the
thirty (30) day period commencing upon Tenant's rejection of Landlord's Proposed
Renewal Rental to determine the rental for the Renewal Term. In the event
Landlord and Tenant are unable to agree to a rental for the Renewal Term during
said thirty (30) day period, then the Renewal Option shall terminate and be null
and void and the Lease shall, pursuant to its terms and provisions, terminate at
the end of the original Lease Term.
Upon exercise of the Renewal Option by Tenant and subject to the
conditions set forth hereinabove, the Lease shall be extended for the period of
such Renewal Term without the necessity of the execution of any further
instrument or document, although if requested by either party, Landlord and
Tenant shall enter into a written agreement modifying and supplementing the
Lease in accordance with the provisions hereof. Any termination of the Lease
during the initial lease Term shall terminate all renewal rights hereunder. The
renewal rights of Tenant hereunder shall not be severable from the Lease, nor
may such rights be assigned or otherwise conveyed in connection with any
permitted assignment of the Lease. Landlord's consent to any assignment of the
Lease shall not be construed as allowing an assignment of such rights to any
assignee.
G-1
<PAGE> 29
EXHIBIT "F"
ONGOING FIRST RIGHT OF REFUSAL
Provided Tenant is not in default under the Lease and provided Travel
Technologies Group, L.P. is in occupancy of the Premises then Tenant, (but not
any Transferee) shall have the right, subject to the terms below, to Lease any
space on the 13th floor that is currently available or comes available for
lease, subordinate to any existing renewal options or Rights of First Refusals
that other tenants may have. See "First Right of Refusal Space" (herein so
called) outlined on Exhibit F-1. In the event any third party expresses
interest in leasing all or any portion of the First Right of Refusal Space
during the Term of the Lease which Landlord is prepared to accept, ("Third
Party Interest"), Landlord shall offer the First Right of Refusal Space to
Tenant upon the same terms and conditions as provided in the Lease for the
original Premises, except that (i) the rent for the First Right of Refusal
Space shall be the prevailing market rate, for comparable office space located
in the Building, (ii) Tenant shall accept the First Right of Refusal Space
"As-Is", unless otherwise agreed to by Landlord and Tenant. Tenant shall
notify Landlord in writing of the acceptance of such offer within five (5)
business days after Landlord has delivered such offer to Tenant, specifying
that such First Right of Refusal Space has been accepted by Tenant and is a
part of the Premises demised pursuant to the Lease for the remainder of the
Lease Term and any renewal thereof, if applicable, and containing other
appropriate terms and conditions relating to the addition of the First Right of
Refusal Space to this Lease (including specifically any increase or adjustment
of the rent as a result of such addition). In the event that Tenant does not
notify Landlord in writing of its acceptance of such offer within five (5)
business day period, then Tenant's rights under this paragraph with respect to
the First Right of Refusal Space shall terminate and Landlord shall thereafter
be able to lease the First Right of Refusal Space or any portion thereof to any
third party. Any termination of the Lease shall terminate all rights of Tenant
with respect to the First Right of Refusal Space. The rights of Tenant with
respect to the First Right of Refusal Space shall not be severable from the
Lease, nor may such rights be assigned or conveyed in connection with any
permitted assignment of the Lease. Landlord's consent to any assignment of the
Lease shall not be construed as allowing an assignment or a conveyance of such
rights to any assignee. Nothing herein contained should be construed so as to
limit or abridge Landlord's ability to deal with the First Right of Refusal
Space or to lease the First Right of Refusal Space to other tenants, Landlord's
sole obligation being to offer, and if such offer is accepted, to deliver the
First Right of Refusal Space to Tenant in accordance with this provision.
The Lease shall not be void or voidable, nor shall Landlord be liable to
Tenant for any loss or damage resulting from any delay in delivering possession
of the First Right of Refusal Space to Tenant, but abatement of the Base Rental
attributable to the First Right of Refusal Space from the date of Tenant's
acceptance of Landlord's offer with respect to the First Right of Refusal offer
to the date of actual delivery of the First Right of Refusal Space shall
constitute full settlement of all claims that Tenant might have against
Landlord by reason of the First Right of Refusal Space not being delivered upon
the date of Tenant's acceptance of Landlord's offer.
F-1
<PAGE> 30
EXHIBIT "F-1"
RIGHT OF FIRST REFUSAL SPACE
[FLOORPLAN]
<PAGE> 31
EXHIBIT "H"
GUARANTY OF LEASE
Page 1 of 2
The following provisions form a part of and constitute the basis for
this Guaranty of Lease (herein referred to as the "Guaranty"):
WHEREAS, a certain Lease Amendment dated September 15, 1997 (herein
referred to as the "Lease") has been executed by and between 4849 Greenville
Partners, as Landlord (herein referred to as "Landlord", and Travel
Technologies Group L.P., as Tenant (herein referred to as "Tenant"), covering
certain Premises located in 7557 Rambler Road, Suite 1300, Dallas 75231,
County of Dallas, State of Texas, as more particularly described in the
Lease;
WHEREAS, as a condition to Landlord's entering into the Lease,
Landlord requires the undersigned to guarantee the full performance of all of
the obligations of Tenant accruing under the Lease;
WHEREAS, the undersigned desires to induce Landlord to enter into the
Lease with Tenant;
NOW, THEREFORE, in consideration of the execution of the Lease by
Landlord, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the undersigned hereby agrees that:
(i) The undersigned unconditionally, absolutely and to the same extent
as if the undersigned had signed the Lease as tenant, assumes all liabilities,
obligations and duties of Tenant accruing under the Lease, and guarantees to
Landlord and Landlord's successors and assigns the full, prompt and complete
performance of each and all of the terms, covenants, conditions and provisions
of the Lease to be kept and performed by Tenant or Tenant's successors or
assigns, including the payment of all rental and other charges to accrue
thereunder and all damages that may arise as a consequence of the
nonperformance thereof.
(ii) The liability of the undersigned under this Guaranty shall be
unconditional and primary, and in relation to any right of action which shall
accrue to Landlord under the Lease, Landlord may, at its option, proceed from
time to time solely against the undersigned or jointly against the undersigned
and any other person or entity without regard to Tenant's ability to perform
and without first commencing any action, exhausting any remedy, obtaining any
judgment or proceeding in any way against Tenant or any other person or entity;
and suit may be brought and maintained against the undersigned by Landlord to
enforce any liability, duty or obligation guaranteed hereby without joinder of
Tenant or any other person or entity.
(iii) This Guaranty shall continue during the entire term of the Lease
and any renewals or extensions thereof and thereafter until Tenant and Tenant's
successors or assigns have fully discharged all of their obligations under the
Lease.
(iv) Until all the covenants and conditions in the Lease to be
performed and observed by Tenant or Tenant's successors or assigns are fully
performed and observed, the undersigned: (a) shall have no right of subrogation
or any other right to enforce any remedy against Tenant or Tenant's successors
or assigns by reason of any payment or performance thereunder by the
undersigned, and (b) subordinates any liability or indebtedness of Tenant or
Tenant's successors or assigns now or hereafter held by the undersigned to all
obligations of Tenant or Tenant's successors or assigns to Landlord under the
Lease.
(v) The undersigned agrees that the undersigned's obligations under
the terms of this Guaranty shall not be released, diminished, impaired, reduced
or affected by any limitation of liability or recourse under the Lease or by
the occurrence of any one or more of the following events: (a) the taking or
accepting of any other security or guaranty in connection with the Lease; (b)
any release, surrender, exchange, subordination, or loss of any security at any
time existing or purported or believed to exist in connection with the Lease;
(c) the death, insolvency, bankruptcy, disability, dissolution, termination,
receivership, reorganization or lack of corporate, partnership or other power
of Tenant, the undersigned, or any party at any time liable for payment or
performance pursuant to the Lease, whether now existing or hereafter occurring;
(d) any assignment or subletting by Tenant or Tenant's successors or assigns
whether or not permitted pursuant to the terms of the Lease or otherwise
approved by Landlord; (e) amendment of the Lease or any renewal, extension,
modification or rearrangement of the terms of payment or performance pursuant
to the Lease either with or without notice to or consent of the undersigned, or
any adjustment, indulgence, forbearance, or compromise that may be granted or
given by Landlord to Tenant, the undersigned or any other party at any time
liable for payment or performance pursuant to the Lease; (f) any
<PAGE> 32
neglect, delay, omission, failure, or refusal of Landlord to take or prosecute
any action for the collection or enforcement of the Lease or to foreclose or
take or prosecute any action in connection with the Lease; (g) any failure of
Landlord to notify the undersigned of any renewal, extension, rearrangement,
modification, assignment of the Lease or subletting of the Premises or any part
thereof, or of the release of or change in any security or of any other action
taken or refrained from being taken by Landlord against Tenant or of any new
agreement between Landlord and Tenant, it being understood that Landlord shall
not be required to give the undersigned any notice of any kind under any
circumstances with respect to or in connection with the Lease; (h) the
unenforceability of all or any part of the Lease against Tenant, it being
agreed that the undersigned shall remain liable hereon regardless of whether
Tenant or any other person be found not liable on the Lease, or any part
thereof, for any reason; or (i) any payment by Tenant to Landlord being held to
constitute a preference under the bankruptcy laws or for any other reason
Landlord being required to refund such payment or pay the amount thereof to
someone else.
(vi) In the event suit or action is brought upon or in connection with
the enforcement of this Guaranty, the undersigned shall pay reasonable
attorneys' fees and all other expenses and court costs incurred by Landlord in
connection therewith.
(vii) This Guaranty shall be binding upon the heirs, legal
representatives, successors and assigns of the undersigned and shall inure to
the benefit of the heirs, legal representatives, successors and assigns of
Landlord.
(viii) The undersigned represents that the undersigned is the owner of
a direct or indirect interest in Tenant and that the undersigned will receive a
direct or indirect benefit from the Lease.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of
the 30th day of, September, 1997.
GUARANTOR:
WORLDTRAVEL PARTNERS, L.P.
By: /s/ Timothy J. Severt
----------------------------------------
Name (Print) Timothy J. Severt
-------------------------------
Title: VP Admin.
-------------------------------------
Date: 9/30/97
--------------------------------------
Tax ID Number: 58-1758379
-----------------------------
<PAGE> 33
[LOGO]
July 28, 1998 Original by Mail
Return Receipt Requested
Mr. Tim Severt
Travel Technologies
1055 Lennox Park Blvd.
Suite 420
Atlanta, GA 30319
RE: FIRST AMENDMENT TO LEASE AGREEMENT
7557 RAMBLER
Dear Tim:
I am pleased to enclose your fully executed First Amendment to Lease Agreement
regarding the additional 2,869 RSF at 7557 Rambler in Dallas, Texas.
If you have any questions, or require further assistance, please do not
hesitate to call me at 214/987-4981.
Best regards,
COTTONWOOD PARTNERS
/s/ Kathy Denny
- ----------------------------------
Kathy Denny
Senior Vice President
KMD/ab
Enclosure - Fully executed original
cc: Terry Darrow
REAL ESTATE INVESTMENT, DEVELOPMENT & MANAGEMENT
5956 Sherry Lane, Suite 850, Dallas, TX 75225
Tel: 214 987 4981 Fax: 214 373 6440
<PAGE> 34
FIRST AMENDMENT TO LEASE AGREEMENT
The First Amendment (the "Amendment") is entered into as of June 15,
1998 (the "Effective Date"), between 4849 GREENVILLE PARTNERS (as "Landlord")
and TRAVEL TECHNOLOGIES GROUP, L.P. (as "Tenant"), for the purpose of amending
the Lease Agreement between Landlord and Tenant, dated September 15, 1997 (the
"Original Lease") covering space in the building known as 7557 Rambler Road and
located at 7557 Rambler Road, Dallas, Texas 75231. The Original Lease, as
amended, is herein called the "Lease". Unless otherwise specified, all
capitalized terms used herein shall have the meanings assigned to them in the
Original Lease.
RECITALS
Tenant is currently leasing 13,325 rentable square feet (RSF) of space
in Suite 1300 in the Building under the Lease. Tenant desires to increase the
rentable square footage of the Premises, and Landlord has agreed to such
expansion on the terms and conditions contained herein.
AGREEMENTS
For valuable consideration, whose receipt and sufficiency are
acknowledged, Landlord and Tenant agree as follows:
1. Premises. Landlord and Tenant agree that effective August 1, 1998,
the Premises shall be expanded from 13,325 rentable square feet by
2,869 RSF for a new total of 16,194 rentable square feet as outlined
on Exhibit A attached hereto.
2. Lease Term. Landlord and Tenant agree that the term of the
expansion space shall be coterminous with the Original Lease expiring
December 31, 2002.
3. Base Rental. Landlord and Tenant agree that effective August 1,
1998, the Base Rent shall be as follows:
<TABLE>
<CAPTION>
Period Monthly Amount
------ --------------
<S> <C>
August 1, 1998 - December 31, 1998 $22,980.02 / month
January 1, 1999 - December 31, 1999 $24,329.52 / month
January 1, 2000 - December 31, 2000 $25,858.33 / month
January 1, 2001 - December 31, 2001 $27,207.84 / month
January 1, 2002 - December 31, 2002 $28,557.33 / month
</TABLE>
4. Pro Rata Share. Effective August 1, 1998, Tenant's Pro Rata Share
shall be increased from 4.339% to 5.273%.
5. Landlord's Work. Landlord agrees to construct the requested
leasehold improvements not to exceed $12,795.74 ($4.46 / RSF on the
2,869 RSF). The improvements will be constructed in accordance with
the terms and procedures set forth in Exhibit D of the Lease Agreement
dated September 15, 1997.
6. Parking. Effective August 1, 1998, the Tenant shall be entitled
to utilize an additional eight (8) nonreserved parking spaces at no
charge, an additional four (4) nonreserved spaces on the top level of
the garage at no charge and shall have the option of leasing one (1)
additional reserved parking space for a monthly fee of $75.00.
Notwithstanding the foregoing, the Landlord agrees to waive the
requirement for the above code parking to be limited to the top level
of the garage until such time as Landlord, in its sole discretion,
deems it necessary for Tenant to comply with this provision of the
Lease.
7. Ratification. Tenant hereby ratifies and confirms its obligations
under the Lease, and represents and warrants to Landlord it has no
defenses thereto.
1
<PAGE> 35
8. Binding Effect; Governing Law. Except as modified hereby, the
Lease shall remain in full force and effect and this Amendment shall
be binding upon Landlord and Tenant and their respective successors
and assigns. This Amendment shall be governed by Texas law.
Executed as of the date first written above.
LANDLORD: 4849 GREENVILLE PARTNERS
By: WallGlen Partners I, Ltd.
By: WallGlen Properties I, Inc.
By: /s/ Robert J. Axley
--------------------------------
Name: Robert J. Axley
--------------------------------
Title: Chairman
--------------------------------
TENANT: TRAVEL TECHNOLOGIES GROUP, L.P.
By: /s/ Timothy Severt
--------------------------------
Name: Timothy Severt
--------------------------------
Title: Sr. VP Administration
--------------------------------
2
<PAGE> 36
EXHIBIT A
LEASED PREMISES
Approximately 16,194 RSF
[FLOOR PLAN]
3
<PAGE> 37
[LOGO
COTTONWOOD
Partners]
November 11, 1998 Original by Mail
Return Receipt Requested
Mr. Tim Severt
Travel Technologies
1055 Lennox Park Blvd.
Suite 420
Atlanta, GA 30319
RE: SECOND AMENDMENT TO LEASE AGREEMENT
7557 RAMBLER
Dear Tim:
I am pleased to enclose your fully executed Second Amendment to Lease Agreement
regarding the additional 763 RSF at 7557 Rambler in Dallas, Texas.
If you have any questions, or require further assistance, please do not
hesitate to call me at 214/987-4981.
Best regards,
COTTONWOOD PARTNERS
/s/ Kathy Denny
- ----------------------------------
Kathy Denny
Senior Vice President
KMD/ab
Enclosure - Fully executed original
cc: Terry Darrow
REAL ESTATE INVESTMENT, DEVELOPMENT & MANAGEMENT
5950 Sherry Lane Suite 850 Dallas, TX 75225
Tel.: 214 987 4981 FAX: 214 3373 6340
<PAGE> 38
SECOND AMENDMENT TO LEASE AGREEMENT
The Second Amendment (the "Amendment") is entered into as of October
1, 1998 (the "Effective Date"), between 4849 GREENVILLE PARTNERS (as
"Landlord") and TRAVEL TECHNOLOGIES GROUP, L.P. (as "Tenant"), for the purpose
of amending the Lease Agreement between Landlord and Tenant, dated September
15, 1997 and amended June 15, 1998 (the "Original Lease") covering space in the
building known as 7557 Rambler Road and located at 7557 Rambler Road, Dallas,
Texas 75231. The Original Lease, as amended, is herein called the "Lease".
Unless otherwise specified, all capitalized terms used herein shall have the
meanings assigned to them in the Original Lease.
RECITALS
Tenant is currently leasing 16,194 rentable square feet (RSF) of space
in Suite 1300 in the Building under the Lease. Tenant desires to increase the
rentable square footage of the Premises, and Landlord has agreed to such
expansion on the terms and conditions contained herein.
AGREEMENTS
For valuable consideration, whose receipt and sufficiency are
acknowledged, Landlord and Tenant agree as follows:
1. PREMISES. Landlord and Tenant agree that effective February 1,
1999, the Premises shall be expanded from 16,194 rentable square feet
by 763 RSF for a new total of 16,957 rentable square feet as outlined
on Exhibit A attached hereto.
2. LEASE TERM. Landlord and Tenant agree that the term of the
expansion space shall be coterminous with the Original Lease expiring
December 31, 2002.
3. BASE RENTAL. Landlord and Tenant agree that effective February 1,
1999, the Base Rent shall be as follows:
<TABLE>
<CAPTION>
Period Monthly Amount
------ --------------
<S> <C>
February 1, 1999 - December 31, 1999 $25,569.40 / month
January 1, 2000 - December 31, 2000 $27,098.21 / month
January 1, 2001 - December 31, 2001 $28,447.72 / month
January 1, 2002 - December 31, 2002 $29,797.21 / month
</TABLE>
4. PRO RATA SHARE. Effective February 1, 1999, Tenant's Pro Rata
Share shall be increased from 5.273% to 5.5211%.
5. LANDLORD'S WORK. Landlord agrees to construct the requested
leasehold improvements not to exceed $3,815.00 ($5.00 / RSF on the 763
RSF). The improvements will be constructed in accordance with the
terms and procedures set forth in Exhibit D of the Lease Agreement
dated September 15, 1997.
6. PARKING. Effective February 1, 1999, the Tenant shall be entitled
to utilize an additional three (3) nonreserved parking spaces at no
charge.
7. RATIFICATION. Tenant hereby ratifies and confirms its obligations
under the Lease, and represents and warrants to Landlord it has no
defenses thereto.
8. BINDING Effect; Governing Law. Except as modified hereby, the
Lease shall remain in full force and effect and this Amendment shall
be binding upon Landlord and Tenant and their respective successors
and assigns. This Amendment shall be governed by Texas law.
1
<PAGE> 39
Executed as of the date first written above.
LANDLORD: 4849 GREENVILLE PARTNERS
By: WallGlen Partners I, Ltd.
By: WallGlen Properties I, Inc.
By: /s/ Robert J. Axley
--------------------------------
Name: Robert J. Axley
--------------------------------
Title: Chairman
--------------------------------
TENANT: TRAVEL TECHNOLOGIES GROUP, L.P.
By: /s/ Timothy J. Severt
--------------------------------
Name: Timothy J. Severt
--------------------------------
Title: Secretary
--------------------------------
2
<PAGE> 40
EXHIBIT A
LEASED PREMISES
Approximately 16,957 RSF
[Floor plan diagram]
<PAGE> 41
[LOGO COTTONWOOD
Partners]
July 15, 1999 Via Overnight Delivery
Mr. Tim Severt
Travel Technologies
1055 Lennox Park Blvd.
Suite 420
Atlanta, GA 30319
RE: THIRD AMENDMENT TO LEASE AGREEMENT
7557 RAMBLER
Dear Tim:
Please find enclosed three (3) partially executed Third Amendments for your
space at 7557 Rambler. Please initial and sign where indicated and return two
(2) copies to my attention in the enclosed Airborne package at your earliest
possible convenience.
If you have any questions, or require additional information, please call me at
214/987-4981
Best regards,
COTTONWOOD PARTNERS
/s/ Kathy Denny
Kathy Denny
Senior Vice President
KMD/ab
Enclosure -Third Amendments
cc: Terry Darrow The Darrow Group
REAL ESTATE INVESTMENT, DEVELOPMENT & MANAGEMENT
5956 SHERRY LANE SUITE 850 DALLAS, TX 75225
TEL: 214 987 -4981 FAX: 214 373 6340
<PAGE> 42
THIRD AMENDMENT TO LEASE AGREEMENT
The Third Amendment (the "Amendment") is entered into as of June 15,
1999 (the "Effective Date"), between 4849 GREENVILLE PARTNERS (as "Landlord")
and TRAVEL TECHNOLOGIES GROUP, L.P. (as "Tenant"), for the purpose of amending
the Lease Agreement between Landlord and Tenant, dated September 15, 1997 and
amended June 15, 1998 and October 1, 1998 (the "Original Lease") covering space
in the building known as 7557 Rambler Road and located at 7557 Rambler Road,
Dallas, Texas 75231. The Original Lease, as amended, is herein called the
"Lease". Unless otherwise specified, all capitalized terms used herein shall
have the meanings assigned to them in the Original Lease.
RECITALS
Tenant is currently leasing 16,957 rentable square feet (RSF) of space
in Suite 1300 in the Building under the Lease. Tenant desires to increase the
rentable square footage of the Premises, and Landlord has agreed to such
expansion on the terms and conditions contained herein.
AGREEMENTS
For valuable consideration, whose receipt and sufficiency are
acknowledged, Landlord and Tenant agree as follows:
1. PREMISES. Landlord and Tenant agree that effective upon the
Commencement Date as defined in Paragraph 2 below, the Premises shall
be expanded from 16,957 rentable square feet by 3,161 RSF ("Expansion
Space") for a new total of 20,118 rentable square feet as outlined on
Exhibit A attached hereto.
2. LEASE TERM. Landlord and Tenant agree that the term of the
expansion space shall be coterminous with the Original Lease expiring
December 31, 2002. The Commencement Date for the Expansion Space shall
be fifteen (15) days following the date that the existing tenant
vacates the Expansion Space.
3. BASE RENTAL. Landlord and Tenant agree that effective upon the
Commencement Date, the Base Rent shall be as follows:
<TABLE>
<CAPTION>
Primary Space Expansion Space New Monthly
Period (16,957 RSF) (3,161 RSF) Amount
- ------ ------------ ----------- ------
<S> <C> <C> <C> <C> <C>
Comm. Date - December 31, 1999 $25,569.40 + $4,881.11 = $30,450.51 / mo
January 1, 2000 - July 31, 2000 $27,098.21 + $4,881.11 = $31,979.32 / mo
August 1, 2000 - December 31, 2000 $27,098.21 + $5,012.82 = $32,111.03 / mo
January 1, 2001 - July 31, 2001 $28,447.72 + $5,012.82 = $33,460.54 / mo
August 1, 2001 - December 31, 2001 $28,447.72 + $5,400.04 = $33,847.76 / mo
January 1, 2002 - December 31, 2002 $29,797.21 + $5,663.46 = $35,460.67 / mo
</TABLE>
4. PRO RATA SHARE. Effective upon the Commencement Date, Tenant's Pro
Rata Share shall be increased from 5.5211% to 6.5503%.
5. LANDLORD'S WORK. See Exhibit B attached hereto.
6. PARKING. Landlord and Tenant agree that effective upon the
Commencement Date, the Tenant shall be entitled to utilize an
additional twelve (12) nonreserved parking spaces at no charge.
7. EXPENSE STOP. Landlord and Tenant agree that effective upon the
Commencement Date, Tenant's expense stop for the Expansion Space only
shall change to reflect the actual Operating Expenses for calendar
year 1999.
1
<PAGE> 43
8. RATIFICATION. Tenant hereby ratifies and confirms its obligations
under the Lease, and represents and warrants to Landlord it has no
defenses thereto.
9. BINDING EFFECT; GOVERNING LAW. Except as modified hereby, the
Lease shall remain in full force and effect and this Amendment shall
be binding upon Landlord and Tenant and their respective successors
and assigns. This Amendment shall be governed by Texas law.
Executed as of the date first written above.
LANDLORD: 4849 GREENVILLE PARTNERS
By: WallGlen Partners I, Ltd.
By: WallGlen Properties I, Inc.
By: /s/ Robert J. Axley
--------------------------------
Name: Robert J. Axley
--------------------------------
Title: Chairman
--------------------------------
TENANT: TRAVEL TECHNOLOGIES GROUP, L.P.
By: /s/ Timothy J. Severt
--------------------------------
Name: Timothy J. Severt
--------------------------------
Title: Sr. VP Administration
--------------------------------
2
<PAGE> 44
EXHIBIT A
LEASED PREMISES
Approximately 20,118 RSF
[Floor Plan]
3
<PAGE> 45
the cost which will be chargeable to Tenant by reason of such change, addition
or deletion. Tenant shall, within three (3) Business Days, notify Landlord in
writing whether it desires to proceed with such change, addition or deletion.
In the absence of such written authorization, Landlord shall have the option to
continue work on the Premises disregarding the requested change, addition or
alteration, or Landlord may elect to discontinue work on the Premises, in which
event Tenant shall be chargeable with a Delay in completion of the Premises
resulting therefrom in accordance with Section 6.3 of the Lease. In the event
such revisions result in a higher estimate of the cost of construction, Tenant
shall pay to Landlord an amount sufficient to provide Landlord with the above
described fifty percent (50%) (or if applicable ninety percent (90%)) payment
toward Excess Costs.
(vii) Following approval of the plans and the payment by Tenant of the
required portion of the Excess Costs, if any, Landlord shall cause the Tenant
Improvements to be constructed in accordance with the approved plans. Unless
otherwise specifically provided in the approved plans, all material used in the
construction of the Tenant's Improvements shall be of such quality as
determined by the Landlord's architect. Landlord shall notify Tenant of
substantial completion of the Tenant Improvements.
It is hereby acknowledged by both Tenant and Landlord that this
Exhibit "B" has been executed as of, and shall become part of the Third
Amendment dated, June 15, 1999.
LANDLORD: 4849 GREENVILLE PARTNERS
By: WallGlen Partners I, Ltd.
By: WallGlen Properties I, Inc.
By: /s/ Robert J. Axley
--------------------------------
Name: Robert J. Axley
--------------------------------
Title: Chairman
--------------------------------
TENANT: TRAVEL TECHNOLOGIES GROUP, L.P.
By: /s/ Timothy Severt
--------------------------------
Name: Timothy Severt
--------------------------------
Title: SVP Administration
--------------------------------
5
<PAGE> 46
EXHIBIT B-1
1. The Building Standard (herein so called) materials are the following:
A. FLOORING: Grade and quality of carpeting to be selected by
Landlord, with color to be selected by Tenant from
those offered by Landlord.
B. WINDOW
COVERING: At Landlord's option, miniblinds or drapes in
Landlord's uniform color.
C. CEILING: Acoustical tiles - Grid system.
D. PARTITIONS: Sheetrock partitions with tape, bed, texture and paint
finish, and/or vinyl pre-clad sheetrock.
E. DOORS: Solid core door with metal frame and hardware.
F. ELECTRICAL
POWER
OUTLETS: Standard 110 volt duplex wall-mounted convenience
outlets.
G. LIGHT
SWITCHES: Single pole light switches.
H. TELEPHONE
FACILITIES: Standard unwired telephone outlets (ring and string)
mounted on partitions. Tenant must make timely
arrangements for telephone installation and is
responsible for all charges related to such
installation.
I. LIGHT
FIXTURES: Recessed fluorescent lighting fixtures.
6
<PAGE> 47
EXHIBIT B-2
(viii) Landlord agrees to construct the Tenant Improvements in
accordance with the approved plans at its cost and expense; provided, however,
in the event the actual cost of construction of the Tenant Improvements exceeds
$2.20 per square foot of Rentable Area in the Premises (which for purposes
hereof is agreed to be 3,161 square feet), being the total sum of $6,954.20
such amount being referred to as the "Allowance"), Tenant shall pay the Excess
Costs as prescribed in Exhibit "B". In the event the actual cost of the Tenant
Improvements is less than the Allowance, Tenant shall not be entitled to any
credit for any amounts not applied to the cost of the Tenant Improvements.
Notwithstanding anything herein to the contrary at Tenant's request, Landlord
shall provide up to an additional six dollars ($6.00) per rentable square foot
to Tenant for the payment of Excess Costs, which amount shall be amortized at
11% per annum over the term of the Lease and repaid to Landlord as Base Rent.
In the event Tenant elects to utilize all or any portion of such additional six
dollars ($6.00), Tenant shall notify Landlord in writing prior to the
commencement of construction setting forth the amount of Excess Costs which
Tenant would like to amortize, not to exceed six dollars ($6.00).
7
<PAGE> 1
EXHIBIT 10.18
HOGG ROBINSON PLC
HOGG ROBINSON SERVICES LIMITED
WTT UK LIMITED
WT TECHNOLOGIES, INC.
FORTDOVE LIMITED
SHAREHOLDERS AGREEMENT
RELATING TO
The establishment and operation of Fortdove Limited as a joint venture company
MCDERMOTT, WILL & EMERY
7 BISHOPSGATE
LONDON
EC2N 3AQ
TEL: 020 7577 6900
FAX: 020 7577 6950
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Interpretation..............................................................................................1
2. Conditions..................................................................................................6
3. Representations, Warranties and Indemnities.................................................................6
4. Constitution of the Company.................................................................................7
5. Business of Joint Venture...................................................................................7
6. Enforcement of Company's Rights.............................................................................8
7. Management of the Company...................................................................................8
8. Provision of Finance and Accounting Records................................................................12
9. The Business...............................................................................................15
10. Competition.................................................................................................16
11. Employees...................................................................................................20
12. Confidentiality.............................................................................................20
13. Tax Matters.................................................................................................21
14. Share Transfers.............................................................................................24
15. Resolution..................................................................................................26
16. Termination.................................................................................................27
17. Consequences of Notice under Clauses 15.2 and 16.2..........................................................31
18. Guarantees..................................................................................................34
19. Supremacy and General Covenant..............................................................................35
20. Announcements...............................................................................................36
21. Remedies....................................................................................................37
22. Warranty and Indemnity......................................................................................37
23. Provisions relating to this Agreement.......................................................................37
24. Law and Settlement of Disputes..............................................................................41
SCHEDULE 1: BUSINESS PLAN........................................................................................42
SCHEDULE 2: COMPLETION AGREEMENTS................................................................................54
SCHEDULE 3: DEED OF ADHERENCE....................................................................................55
SCHEDULE 4: TARGETS..............................................................................................56
ANNEX A: ARTICLES................................................................................................58
ANNEX B: COMPLETION BOARD RESOLUTION.............................................................................81
ANNEX C: COMPLETION SPECIAL RESOLUTION...........................................................................86
ANNEX D: OBJECTS CLAUSE (NOT USED)...............................................................................87
ANNEX E: LOAN NOTE...............................................................................................88
ANNEX F: WTT LICENCE (NOT USED)..................................................................................99
ANNEX G: WTT LOAN NOTE (NOT USED)...............................................................................100
ANNEX H: PRODUCTS CREATED BY HRPLC..............................................................................101
ANNEX I: BUSINESS CONTEMPLATED BY THE SHAREHOLDERS..............................................................102
</TABLE>
(i)
<PAGE> 3
THIS AGREEMENT is dated 2000 and made
BETWEEN:
(1) HOGG ROBINSON PLC a company incorporated in England and Wales under
number 2107443 whose registered office is at Abbey House, 282
Farnborough Road, Farnborough, Hampshire GU14 7NJ ("HRPLC");
(2) HOGG ROBINSON SERVICES LIMITED a company incorporated in England and
Wales under number 756582 whose registered office is at Abbey House,
282 Farnborough Road, Farnborough, Hampshire GU14 7NJ ("HOGG");
(3) WTT UK LIMITED a company incorporated in England and Wales under
number 3854369 whose registered office is at c/o Jordans Limited,
20-22 Bedford Row, London WC1R 4JS ("WTT");
(4) WT TECHNOLOGIES INC., a Georgia company whose principal place of
business is at Suite 635, 6 W. Druid Hills Drive, Atlanta, GA 30329,
USA (and whose name shall be changed to TRX Inc.) ("WT
TECHNOLOGIES"); and
(5) FORTDOVE LIMITED a company incorporated in England and Wales under
number 3841799 whose registered office is at 200 Aldersgate Street,
London EC1A 4JJ (the "COMPANY")
WHEREAS:
(A) Hogg and WTT have agreed to operate the Company as an equal joint
venture between them for the purpose of developing and supplying
technology and information management services and transaction
processing services to the travel industry;
(B) The Company has an authorised share capital of(pound)100 divided
into 100 ordinary shares of(pound)1 each (of which one share has
been issued and is fully paid up); and
(C) WTT has agreed to subscribe for one "B" Ordinary Share in the
Company and the parties have each agreed to finance the Company and
to regulate their rights and interests in relation to the Company in
the manner and on the terms hereinafter appearing.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement, where the context admits:
""A" ORDINARY SHARES" means the "A" Ordinary Shares in the capital of
the Company and ""A" Ordinary Share" means any one of them;
""A" ORDINARY SHAREHOLDER" means the registered holder of any "A"
Ordinary Share;
"ACT" means the Companies Act 1985 (as amended);
"ADDITIONAL DIRECTORS" means the Directors appointed to the Board in
accordance with clause 7.3;
1
<PAGE> 4
"AGREED FORM" means, in relation to any document, a document in the
terms signed, annexed to this Agreement or initialled by or on behalf
of a party, for identification;
"AMERICAS" means all countries and territories in continental North
America and continental South America (including Central America) and
includes any territories of the United States of America not forming
part of continental North America;
"ARTICLES" means the articles of association of the Company in the
Agreed Form attached to this Agreement as Annex A, as amended from time
to time and any reference to an "Article" in this Agreement shall mean
an article contained in the Articles;
"ASSOCIATE" means any subsidiary undertaking or parent undertaking, or
any other subsidiary undertaking of such parent undertaking, and for
these purposes "parent undertaking" means, in relation to another
undertaking (a subsidiary undertaking) an undertaking which holds
(directly or indirectly) at least 75 per cent. of the Voting Rights in
the undertaking and "subsidiary undertaking" shall be construed
accordingly;
"AUDITORS" means the auditors of the Company from time to time
appointed pursuant to section 384 of the Act and the first Auditors
shall be PriceWaterhouseCoopers;
"AVAILABLE PROFITS" means those profits of the Company available for
distribution within the meaning of Part VIII of the Act;
""B" ORDINARY SHARES" means "B" Ordinary Shares in the capital of the
Company and ""B" Ordinary Share" means any one of them;
""B" ORDINARY SHAREHOLDER" means a Shareholder who holds "B" Ordinary
Shares;
"BOARD" means the board of Directors, or the Directors present at a
duly convened meeting ("Board Meeting") of the Directors for the time
being (or a committee of the Directors) at which a quorum is present;
"BTI" shall have the meaning given to it in the WTT Licence;
"BTI GROUP" means those companies and their Associates who, from time
to time, enter into a partnership agreement with BTI or its Associates
but does not include Rider Travel;
"BUSINESS" means the business of the Company described in Clause 5.1;
"BUSINESS DAY" means any day (other than a Saturday or a Sunday) on
which banks are open for business in England and the United States;
"BUSINESS PLAN" in respect of each financial year has the meaning set
out in Clause 9.2;
"CHAIRMAN" means the chairman of the Board from time to time appointed
in accordance with Clause 7.1.5;
"CHANGE OF CONTROL NOTICE" shall have the meaning given in Clause
16.3.3;
"COMPLETION" means completion of the matters referred to in Clause 4.1;
"COMPLETION AGREEMENTS" means the agreements in the agreed form listed
in Schedule 2 and "COMPLETION AGREEMENT" shall mean any one of them;
2
<PAGE> 5
"COMPLETION BOARD RESOLUTIONS" means the resolutions of the Board in
the Agreed Form attached to this Agreement as Annex B;
"COMPLETION SPECIAL RESOLUTIONS" means the special resolutions of the
Company in the Agreed Form attached to this Agreement as Annex C;
"CONTROL" means, in relation to a body corporate, the power of a person
to secure that its affairs are conducted in accordance with the wishes
of that person:
(a) by means of the holding of shares or the possession of Voting
Rights in or in relation to that or any other body corporate;
or
(b) by virtue of any powers conferred by the articles of
association or any other document regulating that or any other
body corporate;
and a "Change of Control" shall occur if a person who controls any
company or undertaking ceases to do so, or if another person acquires
Control of it;
"CONFIDENTIAL INFORMATION" has the meaning set out in Clause 12.1;
"DIRECTORS" means the directors of the Company from time to time and
"DIRECTOR" shall mean any one of them;
"DISPOSITION" means any transfer, pledge, mortgage, charge or other
encumbrance or grant of an option (including an agreement relating to
voting rights) or other legal or beneficial interest in respect of any
Ordinary Share;
"FAIR VALUE" has the meaning set out in Clause 17.2.2;
"FINANCIAL YEAR" means the accounting reference period of the Company
determined in accordance with the Act from time to time;
"GROUP" means the Company and its Subsidiaries from time to time and a
"GROUP COMPANY" shall mean any one of them;
"HOGG DIRECTOR" means a Director appointed by Hogg pursuant to Clause
7.1.2(a);
"HRPLC GROUP" means HRPLC and its Subsidiaries from time to time;
"ICC DISTRIBUTION AGREEMENT" means the Software Distribution Agreement
entered into on 29 November 1996 by and between Travel Technologies
Group, L.P. ("TTG") and Independent Computer Company Limited ("ICC")
for the distribution, marketing and servicing of certain of TTG's
software products within specified territory;
"LOAN NOTE" means the loan note in the Agreed Form attached to this
Agreement as Annex E constituted by the Company on the date of this
Agreement;
"LICENSED PRODUCTS" means the Software and any other software or
Product that may be licensed, assigned or otherwise transferred by WTT
or its Affiliates or any member of the HRPLC Group to any member of the
Group;
"MEMORANDUM" means the memorandum of association of the Company from
time to time;
"NON-BREACHING PARTY" shall have the meaning given in Clause 16.2.1;
3
<PAGE> 6
"OBJECTS CLAUSE" means the objects clause of the Memorandum in the
agreed form attached to this Agreement as Annex D;
"OFS CORPORATE PRODUCTS" means the software products specified in
Schedule 1 of the Service Bureau Agreement between the Company and
HRPLC;
"OFS CORPORATE SERVICES" means corporate travel services (as defined in
the WTT Licence) processed using OFS Corporate Products;
"OFS PRODUCTS" means those software products (other than OFS Corporate
Products) identified as such in Schedule A (as amended from time to
time) of the WTT Licence;
"OFS SERVICES" means travel services (other than OFS Corporate
Services) processed using OFS Products;
"OFS TERRITORY" shall have the meaning given to in clause 2.5 of the
WTT Licence;
"ORDINARY SHARES" means the A and B ordinary shares of (pound)1 in the
capital of the Company AND "ORDINARY SHARE" shall mean any one of them;
"PARTY" and "PARTIES" shall be construed as references to a party or
the parties to this Agreement;
"PRODUCT" means software products relating to travel transaction
processing;
"SHARE" means any share of any class in the capital of the Company;
"SHAREHOLDERS" means, from time to time, the registered holders of the
Ordinary Shares and "Shareholder" shall mean any one of them;
"SOFTWARE" means the software described in Schedule A of the WTT
Licence;
"SUBSIDIARY" means in relation to an undertaking (the holding
undertaking), any other undertaking in which the holding undertaking
directly or indirectly holds or controls either:
(a) a majority of the Voting Rights; or
(b) the right to appoint or remove directors having a majority of
the voting rights exercisable at meetings of the board of
directors of that undertaking,
and any undertaking which is a Subsidiary of another undertaking shall
also be a Subsidiary of that undertaking's holding undertaking. For the
avoidance of doubt, "undertaking" shall include a body corporate,
unincorporated association, joint venture or partnership;
"TERMINATION NOTICE" shall have the meaning given in Clause 15.2;
"TERRITORY" shall have the meaning given to it in the WTT Licence;
"TLC" means Technology Licensing Company, LLC, a Georgia limited
liability company whose registered address is at c/o Jeffrey K. Haidet,
303 Peachtree Road, Suite 5300, Atlanta GA 30308, USA ("TLC");
4
<PAGE> 7
"TTG PRODUCTS" means the software products set out in Schedule 1 (as
amended from time to time) to the Service Software Bureau Agreement
between the Company and HRPLC to be entered into on the date of this
Agreement;
"TTG SERVICES" means travel services processed using TTG Products;
"US AGREEMENTS" means the US Operating Agreement and the US Licence and
all ancillary documents contemplated by those agreements;
"US LICENCES" means the software licence between (1) WTT and (2) TLC in
the Agreed Form and entered into on the date of this Agreement;
"US OPERATING AGREEMENT" means the operating agreement between
WorldTravel Technologies LLC and Hogg Robinson International Benefits
Limited in respect of TLC in the Agreed Form to be entered into on the
date of this Agreement;
"VOTING RIGHTS" means voting rights exercisable at general meetings of
the members of the relevant company;
"WTT DIRECTOR" means a Director appointed by WTT pursuant to Clause
7.1.2(b); and
"WTT LICENCE" means the software licence between the Company and TLC in
the Agreed Form to be entered into on the date of this Agreement.
1.2 CONSTRUCTION OF CERTAIN REFERENCES
In this Agreement, except as otherwise provided and where the context
admits:
1.2.1 words and phrases the definitions of which are contained or
referred to in Part XXVI Companies Act 1985 shall be
construed as having the meanings thereby attributed to them;
1.2.2 references to, or to any provision of, any treaty, directive,
statute, regulation, decision, order, instrument, by-law, or
any other law of, or having effect in, any jurisdiction
("Laws") shall be construed also as references to all other
Laws made under the Law referred to, and to all such Laws as
amended, re-enacted, consolidated or replaced or as their
application is modified by other Laws from time to time and
whether before or after the date of this Agreement;
1.2.3 references to Clauses, Annexes and Schedules are references
to clauses of, and annexes and schedules to, this Agreement,
references to Paragraphs are, unless otherwise stated,
references to paragraphs of the Clause, Annex or Schedule in
which the reference appears and references to this Agreement
include the Annexes and Schedules;
1.2.4 references to the singular shall include the plural and vice
versa;
1.2.5 "person" includes any individual, partnership, company, body
corporate, corporation sole or aggregate, state or agency of
a state, and any unincorporated association or organisation,
in each case whether or not having separate legal
personality;
1.2.6 "company" includes any body corporate; and
1.2.7 a document in the "agreed form" is a reference to a document
in a form approved, and for the purposes of identification
signed, by or on behalf of the parties.
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1.3 HEADINGS
The headings and sub-headings are inserted for convenience only and
shall not affect the construction of this Agreement.
2. CONDITIONS
NOT USED
3. REPRESENTATIONS, WARRANTIES AND INDEMNITIES
3.1 As at the date of this Agreement, Hogg represents and warrants to WTT
that:
3.1.1 Hogg is the sole beneficial owner of all the issued and
allotted Shares free of all liens, charges, encumbrances or
other third party rights;
3.1.2 the Company has not traded nor has it received any income or
made any gains since its date of incorporation;
3.1.3 the Company has no assets (other than cash with accrued
interest in respect of its one fully paid up Ordinary Share)
or liabilities (whether actual, contingent or otherwise); and
3.1.4 the Ordinary Share referred to in Clause 3.1.3 constitutes the
whole of the issued and allotted share capital of the Company.
3.2 As at the date of this Agreement, each of HRPLC and Hogg represents and
warrants to WTT and WT Technologies that it has the right, power and
authority, and has taken all action and sought all approvals and
consents necessary to execute, deliver and exercise its rights, and
perform its obligations under this Agreement and the Completion
Agreements to which it is a party.
3.3 As at the date of this Agreement, each of WTT and WT Technologies
represents and warrants to Hogg and HRPLC that it has the right, power
and authority, and has taken all action and sought all approvals and
consents necessary to execute, deliver and exercise its rights, and
perform its obligations under this Agreement and the Completion
Agreements to which it is a party.
3.4 WT Technologies represents and warrants to Hogg and the Company that
WorldTravel Technologies LLC has adequate title to the Software for the
purposes of granting the software licence to TLC and that to the best
of its knowledge there are no third party rights or claims in respect
of the Software.
3.5 Hogg and HRPLC agree with WT Technologies and WTT (contracting for
itself and as trustee for the Company) to indemnify WT Technologies,
WTT and the Company against all losses (excluding indirect or
consequential loss), liabilities and costs which WT Technologies, WTT
or the Company may incur arising out of, or in connection with, any
breach of the representations or warranties set out in Clauses 3.1
and/or 3.2.
3.6 WTT and WT Technologies agree with HRPLC and Hogg (contracting for
itself and as trustee for the Company) to indemnify HRPLC, Hogg and the
Company against all losses (excluding indirect or consequential loss),
liabilities and costs which HRPLC, Hogg or the Company may incur
arising out of, or in connection with, any breach of the
representations or warranties set out in Clause 3.3.
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3.7 Without prejudice to the indemnity given in Clause 6 of the WTT
Licence, WT Technologies agrees to indemnify the Company in respect of
any loss arising from any claim made by ICC in respect of the use of
any intellectual property rights granted under the WTT Licence
following the termination of the ICC Distribution Agreement.
4. CONSTITUTION OF THE COMPANY
4.1 COMPLETION ARRANGEMENTS
At Completion:
4.1.1 Hogg shall procure that the Completion Special Resolutions are
passed, inter alia, to replace the Company's articles of
association with the Articles;
4.1.2 WTT shall subscribe for, and Hogg shall procure the passing of
the Completion Board Resolutions to authorise the allotment
and issue of, one 'B' Ordinary Share to WTT or such other
number of 'B' Ordinary Shares as shall ensure both Hogg and
WTT hold equal numbers of Shares;
4.1.3 each of the parties (other than the Company) shall enter into
the Completion Agreements to which it is a party; and
4.1.4 the Shareholders shall procure that the Company enters into
the Completion Agreements to which it is a party.
5. BUSINESS OF JOINT VENTURE
5.1 PRINCIPAL BUSINESS OF JOINT VENTURE
The business of the Company is the development of technology and
information management services and transaction processing services to
the travel industry, the supply of transaction processing services to
the travel industry and the sale of the Licensed Products in the
Territory.
5.2 DIVIDEND POLICY
5.2.1 Subject to Clause 5.2.2, each Shareholder shall approve, and
the Company shall distribute, by way of an interim or final
dividend, an amount equivalent to the full amount of Available
Profits that is not reasonably needed by the Group for
contingencies and capital expenditures in each financial year
within six months of the end of that financial year.
5.2.2 It is understood among the parties that it is the intention
that after the first financial year in which there are
Available Profits available for distribution, the Company will
distribute 50% of its Available Profits to the Shareholders.
5.2.3 The Company shall distribute any dividends declared in
accordance with Clauses 5.2.1 or 5.2.2 to the Shareholders in
accordance with the Articles.
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6. ENFORCEMENT OF COMPANY'S RIGHTS
Any rights of action which the Company may have in respect of breach of
this Agreement or any of the Completion Agreements or any obligation
owed to the Company under this Agreement or any of the Completion
Agreements shall be prosecuted by the directors of the Company
appointed by the Shareholder which is not, or whose Associate is not,
responsible for the breach (the "Non-Breaching Shareholder"). Those
Directors shall have full authority on behalf of the Company to take
any steps to enforce any rights, negotiate, litigate and settle any
claim arising out of the breach or exercise of any right of termination
arising out of the breach and the Shareholders shall take all steps
within their power to give effect to the provisions of this Clause. For
the avoidance of doubt, the quorum required to transact any of the
business or pass any Board resolutions referred to in this Clause shall
be two Directors appointed by the Non-Breaching Shareholder.
7. MANAGEMENT OF THE COMPANY
7.1 DIRECTORS
7.1.1 Number of Directors
The Shareholders shall procure that the number of Directors
shall be not less than five and not more than seven.
7.1.2 Shareholders' nominees
(a) Subject to Clauses 7.1.6 and 16.3.1, Hogg shall be
entitled to appoint three Directors to the Board (each
being a "Hogg Director") at any time and to remove (and
replace) any Director so appointed by it.
(b) Subject to Clauses 7.1.6 and 16.3.1, WTT shall be
entitled to appoint two Directors to the Board (each
being a "WTT Director") at any time and to remove (and
replace) any Director so appointed by it.
(c) The first Directors appointed by Hogg and WTT are as
specified in the Completion Board Resolutions.
7.1.3 Additional Directors
(a) Subject to Clause 7.1.6 and the provisions of the Act,
the Shareholders shall be entitled to remove from the
Board the Additional Directors appointed pursuant to
Clause 7.3.
(b) In the event of any appointment made pursuant to Clause
7.1.2(a), the voting rights of the Directors shall be
governed in accordance with Article 27.3.
7.1.4 Alternate Directors
Subject to Clause 7.1.6 and the provisions of the Act, each
Shareholder shall be entitled to appoint to or remove from the
Board an alternate director for each of its Directors
appointed in accordance with Clause 7.1.2.
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7.1.5 Chairman
The Chairman shall be appointed by Hogg. The Chairman shall
chair meetings of the Board and any committee of the Board of
which he is a member. The Chairman shall not have a second or
casting vote. A deputy Chairman shall be appointed by WTT who
shall chair meetings at which the Chairman is not present.
7.1.6 Consultation
Notwithstanding the provisions of the Articles, no Shareholder
shall appoint or remove any Director or any alternate director
without reasonable prior consultation, where practically
possible, with the other Shareholder.
7.2 BOARD MEETINGS
7.2.1 Board Meetings shall be convened and held at least four times
a year. Where reasonably practicable, at least seven days
prior to each Board Meeting, each Director shall be sent a
written agenda specifying the matters to be raised at the
relevant Board Meeting (together with a notice convening the
Board Meeting). Unless all the Directors present at the Board
Meeting otherwise unanimously agree, no resolution relating to
any business may be proposed or passed at any Board Meeting
unless the nature of the business is specified in the relevant
agenda.
7.2.2 Board Meetings shall be held in London or another location in
the United Kingdom agreed by the Shareholders.
7.2.3 At each Board Meeting, and in respect of each resolution
proposed to the Board at a Board Meeting, each WTT Director
(or his alternate) shall have three votes, each Hogg Director
(or his alternate) shall have three votes and any Additional
Directors appointed to the Board shall be entitled to one vote
each, provided that if one or more WTT Directors or Hogg
Directors (as the case may be) are absent from such meeting,
any WTT Director or Hogg Director (or his alternate)(as the
case may be) present at the meeting in person, or represented
by an alternate, shall be entitled to cast the votes of the
WTT Director or Hogg Director (as the case may be) not
present. All resolutions of the Board shall be passed by
simple majority of the number of votes cast.
7.2.4 No Board Meeting (or meeting of any committee thereof) may
proceed to business nor transact any business unless a quorum
is present at the start of and throughout such meeting. Except
as otherwise provided in Clause 6, a quorum shall be one WTT
Director and one Hogg Director.
7.3 OPERATING COMMITTEE
The Board shall establish an operating committee to conduct the
day-to-day business of the Company. Hogg will nominate and appoint the
members of the operating committee including the managing director and
the finance director (the "Finance Director") (together, "Additional
Directors"), subject to WTT's prior approval of such candidates (which
in the case of the managing director shall not be unreasonably withheld
or a decision thereon unreasonably delayed).
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7.4 FUNCTIONS OF THE OPERATING COMMITTEE
The Operating Committee shall be accountable to and shall report to the
Board and the Shareholders but otherwise shall carry out its functions
in such manner as it thinks fit and may appoint sub-committees to carry
out any of its functions on its behalf as it considers appropriate.
7.5 MAJOR ACTIONS
The Shareholders shall procure that no member of the Group shall,
without the prior written consent of the Shareholders:
7.5.1 amend, supplement, repeal, or otherwise change the Memorandum
or Articles of the Company in any manner or permit any Group
Company to amend, supplement, repeal, or otherwise change its
memorandum or articles or other governing documents, as
applicable, in any manner;
7.5.2 incorporate or form any new Group Company;
7.5.3 vary the authorised or issued share capital of the Company or
any Group Company (including by reduction or repurchase of
share capital) or vary the rights attaching to shares in the
capital of the Company or any Group Company;
7.5.4 allow any Group Company to authorise, designate, issue or sell
any additional shares or other securities of such Group
Company (including any options, warrants, and purchase rights)
except to another Group Company or pursuant to Clause 7.5.6
below;
7.5.5 establish, or allow any Group Company to establish, any option
or other equity based incentive plan or any bonus, profit
sharing or other incentive scheme for its management,
directors, or employees or grant, or allow any Group Company
to grant, any share options or other rights to purchase
securities;
7.5.6 redeem or repurchase any security of the Company (except for
repurchase from departing employees) or allow any Group
Company to purchase any security of the Company unless done on
a pro rata basis with respect to all shareholders of the
Company or pursuant to the terms of Clause 14.3;
7.5.7 declare, make distributions or pay, or allow any Group Company
to declare, make distributions, or pay any dividends (whether
interim or final) in cash or in kind with respect to any
security of such Group Company other than in accordance with
Clause 5.2;
7.5.8 change the name of the Company or the name of any of the
Company's Products other than in accordance with Clause 17.4;
7.5.9 sell, exchange, transfer, or otherwise dispose of any shares
or other security of any Group Company or other security of
any other, except to another Group Company or pursuant to
Clauses 7.5.4, 7.5.5 and 7.5.6, or pursuant to Clause 5.6.5
above;
7.5.10 enter into, or allow any Group Company to enter into, any
merger, consolidation, or statutory share exchange with any
other entity, except with another Group Company;
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7.5.11 sell, exchange, lease, licence, or otherwise dispose of, or
allow any Group Company to sell, exchange, lease, licence, or
otherwise dispose of, any material asset or assets with an
aggregate value in excess of (pound)50,000 in any one
transaction or series of related transactions in a financial
year;
7.5.12 take any action to voluntarily dissolve, liquidate, wind up or
carry out any partial liquidation or distribution of any Group
Company;
7.5.13 acquire, or allow any Group Company to acquire, assets of any
other person or entity, except for acquisitions with an
aggregate purchase consideration of less than (pound)250,000
in any one transaction or series of related transactions in a
financial year;
7.5.14 acquire, or allow any Group Company to acquire, securities of
any other person or entity;
7.5.15 amend the Business Plan other than in accordance with Clause
9.2;
7.5.16 save insofar as any Group Company is contractually bound to do
so or as provided in the Business Plan establish any pension
or other similar scheme for any director or employee (or his
dependents) or provide or pay contributions in respect of any
pensions or annuities;
7.5.17 enter into any material agreement, licence, lease,
transaction, or other arrangement with any Associate or Group
Company, provided that the Shareholders will not unreasonably
withhold their consent to such agreement, licence, lease,
transaction, or other arrangement if the terms are equivalent
to those in an arms length transaction;
7.5.18 enter into, or allow any Group Company to enter into, any new
line of business that is unrelated to an existing business
operation unless the entry into the new line of business is
provided for in the Business Plan;
7.5.19 incur, or allow any Group Company to incur, any single expense
or capital expenditure of an amount in excess of (pound)50,000
unless such expenditure is provided for in the Business Plan;
7.5.20 borrow, or allow any Group Company to borrow, money in excess
of (pound)100,000 unless such arrangement is set forth in the
Business Plan;
7.5.21 issue any debenture or loan stock (whether secured or
unsecured) or create any mortgage, charge, lien, encumbrance
or other third party right over any Group Company assets or
give any guarantee or indemnity to, or become surety for, any
third party;
7.5.22 make any arrangement in respect of any joint venture or
partnership or for the acquisition of the whole or
substantially the whole of the assets and undertaking of that
company or acquire any part of the issued share capital or the
assets and undertakings of another company;
7.5.23 make any change in the accounting policies or the Company's
Auditors, bankers or financial year;
7.5.24 make, grant or allow any claim, disclaimer, surrender,
election or consent by any Group Company for taxation
purposes;
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7.5.25 approve the appointment, remuneration, transfer and discharge
of the managing director or Finance Director;
7.5.26 make, approve, grant or allow any claim, disclaimer,
surrender, election or consent for taxation purposes; or
7.5.27 authorize, ratify, or enter into any agreement to undertake
any of the matters specified in items 7.5.1 through 7.5.26
above.
The Company shall address all requests for approval of any of the above
listed actions to a shareholder representative or his successor
indicated in writing by his appointing Shareholder. The decision
regarding such request shall, unless otherwise agreed between the
Shareholders, be sent by the Shareholders to the Company within ten
Business Days of its receipt of such request. If the decision is not
sent within such ten Business Day period, the request for approval
shall be deemed to have been denied.
8. PROVISION OF FINANCE AND ACCOUNTING RECORDS
8.1 CAPITAL FUNDING
8.1.1 Capital needs of the Group shall be funded by available funds
from operations of the Group. In the event the funds from
operations are insufficient to fund the capital needs of the
Group, the Company shall seek to obtain additional capital
from third-party lending sources, including banks in
accordance with the provisions of Clause 8.1.3. If the Company
is unable to satisfy the Group's capital requirements after
making a good faith effort to secure such funding from
third-party lending sources, then the Company may subscribe
for such number of Loan Notes as it may require PROVIDED THAT
such borrowing shall be simultaneously and in equal amounts
from both loan notes. Subject to Clause 7.5.3 and 7.5.21, the
Company may issue debt or equity securities of the Company
(the "Issued Securities").
8.1.2 In the event the Company plans to issue the Issued Securities
pursuant to Clause 8.1.1, the Shareholders have the right to
buy the Issued Securities, PRO RATA. The Company shall notify
the Shareholders of the type, amount and price of the Issued
Securities. Each Shareholder shall have 30 days within which
to elect to purchase all or part of its PRO RATA portion of
the Issued Securities. In the event a Shareholder does not
elect to purchase its entire PRO RATA portion of the Issued
Securities, the other Shareholder shall be notified thereof
and shall have three Business Days to agree to purchase all or
part of those remaining Issued Securities but only on the
price and terms offered to the Shareholders. Any Issued
Securities not purchased by the Shareholders may be sold to
third-party purchasers within 120 days. Any Issued Securities
not so purchased by a third party within such period shall
again become subject to the procedures of this Clause.
8.1.3 Any member of the Group may borrow additional sums from third
parties on the most favourable terms available as to interest,
repayment and security compatible with its needs, but shall
not, without the prior written consent of the Shareholders,
allow any prospective lender the right to participate in the
share capital of any Group Company or otherwise in the
Business as a condition or term of any loan or advance.
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8.1.4 Except with the written consent of each Shareholder, no party
shall be obliged to guarantee or provide security for any
indebtedness of any Group Company, but where the Shareholders
agree that any or all of the parties shall do so they shall do
so severally in the proportions of their participation in the
equity share capital of the Company.
8.1.5 Each of the Shareholders will take all reasonable steps
necessary to procure that relevant bonding arrangements are
made available to support the business of the Company. Where a
Shareholder (or its Associate) makes a bond available to the
Company with the other Shareholder's prior written consent:
(a) the liability of that Shareholder (or its Associate)
under such bond (other than liability solely
attributable to its act or default) shall be borne by
each of the Shareholders in the same proportion as its
holding of Shares at the time of the provision of the
bond; and
(b) the other Shareholder shall indemnify the Shareholder
(or its Associate) for all amounts payable by it
pursuant to sub-clause (a) above.
8.1.6 Notwithstanding Clause 8.1.4, where the Shareholders give a
joint and several guarantee or indemnity to a third party in
respect of any obligations of the Company, the following
provisions shall apply:
(a) the aggregate liability of a Shareholder under the
guarantee or indemnity shall be in the same proportion
as its holding of Shares at the time the guarantee or
indemnity is given;
(b) a Shareholder shall be responsible for the whole of any
liability pursuant to the guarantee or indemnity which
is solely attributable to its act or default; and
(c) each Shareholder shall indemnify the other Shareholders
for all amounts payable by the first-named Shareholder
pursuant to sub-clauses (a) and (b).
8.2 ACCOUNTING RECORDS
8.2.1 The Shareholders shall each procure that each member of the
Group shall at all times maintain accurate and complete
accounting and other financial records in accordance with the
requirements of all applicable laws and generally accepted
accounting principles applicable in the United Kingdom ("UK
GAAP").
8.2.2 The Company shall deliver the following information to each of
the Shareholders:
(a) Audited Annual Financial Statements.
As soon as practicable and, in any case, within 90 days
after the end of each financial year, audited financial
statements of the Company, consisting of a consolidated
balance sheet of the Company as of the end of such
financial year and consolidated statements of
operations, statements of Shareholders' equity and
statements of cash flows of the Company for such
financial year, setting forth in each case, in
comparative form, the figures for the preceding
financial year, all in reasonable detail and fairly
presented in accordance with UK generally accepted
accounting principles ("GAAP") applied on a consistent
basis throughout the periods reflected therein, and
accompanied by an opinion thereon of the Auditors.
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(b) Quarterly Financial Statements.
Within 45 days after the end of each of the first three
calendar quarters and no later than 20 days after the
end of the final calendar quarter, copies of the
unaudited consolidated balance sheet of the Company as
at the end of such calendar quarter and the related
unaudited consolidated statements of operations and cash
flows for such calendar quarter and the portion of the
calendar year through such calendar quarter, setting
forth in comparative form the figures for the
corresponding periods of (a) the previous calendar year
and (b) the budget for the current year, prepared in
reasonable detail and in accordance with UK GAAP applied
consistently throughout the periods reflected therein
and certified by the Finance Director of the Company as
presenting fairly the financial condition and results of
operations of the Company (subject to customary
exceptions for interim unaudited financial statements).
The above information representing the first calendar
quarter shall be reviewed by the Auditors at WTT's
expense.
(c) Monthly Unaudited Financial Statements.
As soon as available, but in any event within 20 days
after the end of each calendar month, copies of the
unaudited consolidated balance sheet of the Company as
at the end of such calendar month and the related
unaudited consolidated statements of operations and cash
flows for such calendar month and the portion of the
calendar year through such calendar month, in each case
setting forth in comparative form the figures for the
corresponding periods of (a) the previous calendar year
and (b) the budget for the current year, prepared in
reasonable detail and in accordance with UK GAAP applied
consistently throughout the periods reflected therein
and certified by the Finance Director of the Company as
presenting fairly the financial condition and results of
operations of the Company (subject to customary
exceptions for interim unaudited financial statements).
(d) Management's Analysis.
All the financial statements delivered pursuant to
paragraphs (a), (b) and (c) shall be accompanied by an
informal narrative description of material business and
financial trends and developments and significant
transactions that have occurred in the appropriate
period or periods covered thereby.
8.3 INSPECTION
The Company shall (for itself and as agent for any member of the Group)
permit any Shareholder, by its representatives, agents or attorneys
(provided that such entity or person executes an appropriate
confidentiality agreement as may be necessary):
8.3.1 on reasonable notice and during business hours, to examine all
books of account, records and other papers of any member of
the Group and to make copies and take extracts from any
thereof;
8.3.2 to discuss the affairs, finances and accounts of the any
member of the Group with the Group's officers and Auditors
(and by this provision the Company, as agent as aforesaid,
hereby authorises the Auditors to discuss with any Shareholder
and its representatives, agents or attorneys the finances and
accounts of any member of the Group); and
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8.3.3 to visit and inspect, at reasonable times and on reasonable
notice during normal business hours, the properties of any
member of the Group.
8.4 OTHER INFORMATION
The Company shall deliver the following to the Shareholders:
8.4.1 promptly after the submission thereof to the Company, copies
of any detailed reports (including the Auditors' comment
letter to management, if any such letter is prepared)
submitted to the Company by its independent Auditors in
connection with each annual or interim audit of the accounts
of the Group;
8.4.2 with reasonable promptness, notice of any default by any
member of the Group under any material agreement to which it
is a party; and
8.4.3 promptly upon request therefor, such other data, filings and
information any Shareholder may from time to time reasonably
request.
9. THE BUSINESS
9.1 CONTENT OF BUSINESS PLAN
The Shareholders and the Company agree that the Group's business and
finances shall be managed in accordance with the Business Plan. The
Shareholders shall procure that the Board procures that two months
before the beginning of each financial year the Operating Committee
prepares a "rolling" business plan which shall (except as otherwise
provided in Clause 9.3) include a budget for that financial year and
the two succeeding financial years which shall be in a form from time
to time agreed. The draft business plan shall include at least each of
the following:
9.1.1 a summary of business objectives;
9.1.2 a review of the projected business;
9.1.3 projected funding and method of funding;
9.1.4 a projected profit and loss account, balance sheet, capital
expenditure (including technology related items) and cash
flow; and
9.1.5 details of the technology platform to be used by the Group.
9.2 APPROVAL OF BUSINESS PLAN
Subject to Clause 9.3, a draft business plan shall be presented to the
Shareholders before the beginning of each financial year, for approval
by the Shareholders. The draft business plan shall be approved by the
Shareholders, subject to such amendments as they think fit, and the
approved business plan shall be the "Business Plan" for the next
financial year.
9.3 FIRST BUSINESS PLAN
The provisions of Clause 9.2 shall not apply to the first Business Plan
(as set out in Schedule 1 to this Agreement) which shall be deemed to
be approved by the Shareholders pursuant to Clause 9.2 on the date of
this Agreement.
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10. COMPETITION
10.1 Save as otherwise provided in this Agreement and the Completion
Agreements:
(a) each Shareholder covenants for itself and on behalf of
its Associates that it shall not, either alone or
jointly, directly or indirectly, carry on or be engaged
or concerned or interested in or solicit any business
which is in competition with the Business of the Company
(or any Group Company) as carried on at any time during
the term of this Agreement in the Territory; and
(b) the Company covenants for itself and on behalf of the
Group that it shall not, either alone or jointly,
directly or indirectly, carry on or be engaged or
concerned or interested in or solicit any business which
is in competition with the business of a Shareholder or
its Associates carried on at the date of this Agreement.
10.2 For the avoidance of doubt, a Shareholder or its Associates which
provide travel services shall not be deemed to be in breach of Clause
10.1 by virtue of:
10.2.1 using a Product in the Territory which competes with a
Licensed Product upon receipt of a written request by an
existing or prospective client of that Shareholder so long as
such requested Product is used only for such client;
10.2.2 using and selling Products in the Territory which compete with
ResAssist and Highlighter, so long as such competing Products
are compatible with the technology and systems used by Hogg
and HRPLC and are either of a higher quality, lower price or
better performance;
10.2.3 carrying on, alone or jointly, directly or indirectly, in the
Territory any business which it carried on in the Territory at
the date of this Agreement or at any time in the twelve months
preceding this Agreement or which are contemplated in Annex I
to this Agreement;
10.2.4 holding less than ten per cent of any class of shares or
debentures of any company listed on any recognised stock
exchange which competes directly or indirectly with the
Business; or
10.2.5 any of the matters contemplated in terms of Clauses 10.3 or
10.4.
10.3 WT Technologies and its Subsidiaries may only provide processing
services (then offered by any Group Company) (other than OFS Services)
if requested in writing to do so by an existing client of WT
Technologies or its Subsidiaries located within in the Territory
provided that such services may only be processed outside the
Territory. WT Technologies shall immediately notify the Group when such
written notice is received from such a client. WT Technologies pay to
the Group within 30 days of the end of each financial year of WT
Technologies a sum equivalent to 50 per cent. of net profits generated
by WT Technologies as a result of such request from such a client in
that financial year.
10.4 WT Technologies and its Subsidiaries may only provide and process OFS
Services in the OFS Territory if requested in writing to do so by an
existing OFS client of WT Technologies or its Subsidiaries. For the
avoidance of doubt, WT Technologies and its Subsidiaries may provide
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OFS Services outside the OFS Territory without restriction. WT
Technologies shall immediately notify the Company when such written
request is received from such a client. WT Technologies shall have no
obligation to account to the Group for any profits generated by it as a
result of such a request from a client unless the aggregate of all
transaction volumes generated by the provision of such services in a
financial year of WT Technologies exceed 10 per cent. of the Group's
OFS Service transaction volumes in that financial year (the "OFS
Services Thresholds"), in which case WT Technologies shall pay to the
Group within 30 days of the end of that financial year a sum equivalent
to 50 per cent. of net profits generated from the transaction volume
that exceeds 10 per cent. of the Group's OFS Service transaction
volumes in that financial year.
10.5 Subject to Clause 10.7, any Group Company may use OFS Corporate
Products only in the Territory.
10.6 Subject to Clause 10.8, any Group Company may use OFS Products only in
the OFS Territory.
10.7 Any Group Company may only process services (then offered by WT
Technologies and its Subsidiaries) (other than OFS Services) if
requested in writing to do so by an existing client of the Group
Company located outside the Territory provided that such services may
only be processed within the Territory. The Company shall immediately
notify WT Technologies when such written request is received from such
a client. The Group Company shall pay to WT Technologies within 30 days
of the end of each financial year a sum equivalent to 50 per cent. of
any net profits generated by the Group as a result of such request from
such a client in that financial year. For the avoidance of doubt,
processing services provided to Rider Travel in the Americas cannot be
processed through any Group Company.
10.8 Any Group Company may only process OFS Services at a location outside
the OFS Territory for an existing OFS client if requested in writing to
so do by such a client. The Group Company shall immediately notify WT
Technologies when such written request is received from such a client.
The Group Company shall have no obligation to account to WT
Technologies for any profits generated by it as a result of such a
request from a client unless the aggregate of all transaction volumes
generated by the provision of such services in a financial year exceed
10 per cent. of WT Technologies' OFS Services transaction volumes, in
which case, the Group Company shall pay to WT Technologies within 30
days of the end of that financial year a sum equivalent to 50 per cent.
of net profits generated from the transaction volume that exceed 10 per
cent. of WT Technologies' OFS Services transaction volumes in that
financial year.
10.9 If WT Technologies and its Subsidiaries receives a request in writing
from an existing OFS client to provide and process OFS Services within
the OFS Territory and WT Technologies and its Subsidiaries transfers
the request to any Group Company, the Group Company shall pay to WT
Technologies within 30 days of the end of each financial year a
commission equivalent to 20% of net profits generated by the Group
Company's OFS Services transactions in that financial year in respect
of such client for a period of 42 months starting at the beginning of
the first month in which OFS Services for such client commences.
10.10 If a Group Company receives a request in writing from an existing
client to provide OFS Services outside the OFS Territory and the Group
Company transfers the request to WT Technologies and its Subsidiaries,
WT Technologies shall pay the Group within 30 days of the end of each
financial year of WT Technologies a commission equivalent to 20% of net
profits generated by WT Technologies transacting in that financial year
in respect of such client for a period of 42 months starting at the
beginning of the first month in which services for such client
commences.
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10.11 For the purposes of this Clause 10, 'existing client' shall have its
ordinary meaning and 'existing OFS client' shall mean clients of the
relevant party to whom OFS Services are currently being or have, within
the previous twelve months been, provided as at the date of the
provision of the relevant services .
10.12 At the Company's written request, a non-exclusive licence (which
licence shall be capable of being sub-licensed on conditions reasonably
acceptable to HRPLC) in respect of the use of a Product created by any
existing member of the HRPLC Group (other than Rider Travel) and
described in Annex H hereto shall be granted at the Company's cost to
the Company (or such member of the Group as the Company may in writing
direct) for a consideration equivalent to the reasonable development
cost of the relevant Product incurred during the period commencing from
the date of this Agreement until the date of grant of such licence.
10.13 At the Company's written request, a non-exclusive licence (which
licence shall be capable of being sub-licensed on conditions reasonably
acceptable to HRPLC) in respect of the use of any Product (other than
those referred to in Clause 10.12 above) created by any member of the
HRPLC Group (other than Rider Travel) after the date of this Agreement
shall be granted at the Company's cost to the Company (or such other
member of the Group as the Company may in writing direct) for a
consideration equivalent to the fair market value of such Product at
the date of grant of such licence PROVIDED that:
(a) the foregoing obligation shall not apply in relation to
any Product developed for the use in the business of any
member of the HRPLC Group which is not subject to the
restrictions set out in Clauses 10.1;
(b) a Product to which this Clause 10.13 applies may only be
used by WT Technologies in the Americas or under Clause
10.3 or 10.4;
(c) upon request by WT Technologies, the Company shall grant
a sub-licence to WT Technologies (or such Subsidiary of
WT Technologies as WT Technologies may request) of a
product to which this Clause 10.13 applies on such terms
as are in the spirit of this Agreement and at fair
market value provided that such sub-licence may only be
used by WT Technologies or its Subsidiary in the
Americas or under Clause 10.3 or 10.4.
10.14 An exclusive licence in respect of the use of any Product created by a
member of the Group shall be offered at WT Technologies' cost to WT
Technologies (or such Subsidiary of WT Technologies as WT Technologies
may request) in respect only of those territories in which WT
Technologies is not restrained from competing in terms of Clause 10.1
((or Clause 10.3) as the case may be) at a price equivalent to the fair
market value of such Product at the date of grant of such licence. In
the event WT Technologies refuses such offer (or does not accept such
offer within 60 days of the date of receipt of such offer, in which
case the offer shall be deemed to have been refused by WT
Technologies), the Company shall be entitled to exploit such Product in
those territories in which the Company would otherwise be restrained
from competing in terms of Clauses 10.1 or 10.3 (as the case may be)
(save that this shall not entitle the Company to compete with Rider
Travel).
10.15 An exclusive licence in respect of the use of any Product created by WT
Technologies (or any of its Subsidiaries) shall be offered at the
Company's cost to the Company (or such Group Company as the Company may
request) in respect only of the Territory at a price equivalent to the
fair market value of such Product at the date of grant of such licence.
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In the event the Company refuses such offer (or does not accept such
offer within 60 days of the date of receipt of such offer, in which
case the offer shall be deemed to have been refused by the Company), WT
Technologies shall be entitled to exploit such Product in the
Territory.
10.16 Each party undertakes (for itself and on behalf of its Subsidiaries) to
keep the other parties promptly and fully informed in relation to the
creation of any Products that may be capable of being licensed pursuant
to Clauses 10.13, 10.14, 10.15 or 10.16.
10.17 For the avoidance of doubt, the obligations specified in Clauses 10.13,
10.14, 10.15 and 10.16 shall cease to apply to:
10.17.1 any member of the HRPLC Group in the event that Hogg ( or a
Permitted Transferee of all of Hogg's Shares) ceases to hold
Shares in the Company; or
10.17.2 to WT Technologies and its Associates in the event that WTT
(or a Permitted Transferee) of all of WTT's Shares) ceases to
hold Shares in the Company.
10.18 The obligations contained in clause 10.1 shall continue to apply to a
Shareholder for a period of one year after the transfer of its Shares
in accordance with this Agreement provided that this restriction shall
not apply where, at the time of transfer, a Shareholder holds less than
ten per cent. of the entire issued share capital of the Company and has
no Director appointed by it to the Board where that party ceases to be
a Shareholder other than by reason of the termination of this
Agreement.
10.19 For the avoidance of doubt, Products licensed to the Group under
Clauses 10.13 and 10.14 may also be used by members of the HRPLC Group
for their own use and may be licensed non-exclusively to other parties
provided that the use of such Products by such other party does not
contravene Clause 10.1. Upon the granting of the licenses to a Group
Company in accordance with clause 10.13 and/or 10.14, the Group Company
and HRPLC shall negotiate in good faith with a view to outsourcing the
operations of HRPLC in relation to the licence at a price to be less
than the then current HRPLC Group cost of such operations.
10.20 Where a member of the HRPLC Group licenses a Product to the Company
pursuant to Clauses 10.13 or 10.14 and the Company sub-licenses that
Product to WTT or WT Technologies, the relevant sub-licensee shall not
use such Product in competition with a member of the HRPLC Group in
Canada and outside the Americas.
10.21 WT Technologies undertakes on behalf of itself and its Subsidiaries to
procure that accurate records are maintained in respect of any profit
generated by the processing services permitted in terms of Clauses 10.3
and 10.4 and in respect of the OFS Service transaction volumes and to
allow any authorised representative, agent or employee of any member of
the Group to access for the purposes of verifying the net profits
referred to in Clauses 10.3 and 10.4, such records at reasonable times
and upon reasonable notice, subject to the entering into of any
reasonable confidentiality undertakings, as WT Technologies considers
necessary.
10.22 The Company undertakes on behalf of itself and each member of the Group
to procure that accurate records are maintained in respect of any
profit generated in terms of Clauses 10.7 and 10.8 and in respect of
the OFS Services transaction volumes under clause 10.8 and to allow any
authorised representative, agent or employee of WTT or WT Technologies
to access for the purposes of verifying the net profit referred to
Clauses 10.7 and 10.8, such records at reasonable times and upon
reasonable notice, subject to entering into any reasonable
confidentiality undertakings as the Group Company considers necessary.
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10.23 No Group Company shall or be entitled to waive any breach or attempted
breach of Clause 10.1(a) by a Shareholder or its Associate, whether or
not on the application of such Shareholder, without the consent of the
other Shareholder.
11. EMPLOYEES
11.1 Each Shareholder covenants to the Company that, for so long as it is a
Shareholder in the Company, it shall not and shall procure that none of
its Subsidiaries or Associates and no person on its behalf shall
engage, employ, canvass, solicit or endeavour to entice away from any
Group Company any person who is an officer, employee or manager of such
Group Company or who has been an officer, employee or manager of such
Group Company at any time during the term of this Agreement and in
either case has confidential information or know-how or would be in a
position to exploit trade connections of the Group.
11.2 The Company covenants to each party hereto that, for so long as each
party remains a party to this Agreement, it shall not and shall procure
that no Group Company and no person on its behalf shall engage, employ,
canvass, solicit or endeavour to entice away from such party (or any
Associate or Subsidiary of such party) any person who is an officer,
employee or manager of such party or who has been an officer, employee
or manager of such party at any time during the term of the Agreement
and in either case has confidential information or know-how or would be
in a position to exploit trade connections of the such party. This
Clause will not prevent the appointment of employees, officers or
managers of each party as the party's nominees on the Board in
accordance with Clause 7.1.2 or the secondment to a Group Company from
time to time by any party of its employees, officers or managers.
12. CONFIDENTIALITY
12.1 CONFIDENTIALITY
12.1.1 Each party shall:
(a) treat as strictly confidential:
(1) all information of a confidential nature obtained
or received by it as a result of negotiating,
entering into or performing its obligations under
this Agreement which relates to the negotiation
of, or the provisions or subject matter of, this
Agreement or to any other party; and
(2) all other business, financial, operational and
marketing information (or any other information of
a secret or proprietary nature) relating to any
other party, (together "Confidential
Information"); and
(b) not, except with the prior written consent of the
relevant other party (which shall not be unreasonably
withheld or delayed), publish or otherwise disclose to
any person any Confidential Information.
12.1.2 Each agrees with the other only to make Confidential
Information available to its directors, consultants,
employees, advisers or other representatives who need to know
that information for the purposes and implementation of this
Agreement or the Business and shall not use, directly or
indirectly, Confidential Information for any other purpose
whatsoever.
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12.2 PERMITTED DISCLOSURES
Clause 12.1 shall not apply if and to the extent that the party
disclosing Confidential Information can demonstrate that:
12.2.1 such disclosure is required by law or by any securities
exchange or regulatory or governmental body having
jurisdiction over it and whether or not the requirement has
the force of law; or
12.2.2 the Confidential Information concerned was lawfully in its
possession (as evidenced by written records) prior to its
being obtained or received as described in Clause 12.1; or
12.2.3 the Confidential Information concerned has come into the
public domain other than through its fault or the fault of any
person to whom such Confidential Information has been
disclosed as permitted by Clause 12.1; or
12.2.4 such disclosure is necessary for the purposes of applying for
or obtaining any clearances or approvals referred to in Clause
22.5.
12.3 CONTINUANCE OF RESTRICTIONS
The restrictions contained in this Clause 12 shall survive Completion
and shall continue in relation to each party throughout the term of
this Agreement and indefinitely thereafter.
13. TAX MATTERS
13.1 INTERPRETATION
In this Clause 13:
"CHAPTER IV" means Chapter IV Part X of ICTA 1988 as supplemented by
Schedule 18 of ICTA 1988;
"GROUP RELIEF" means any consortium relief in respect of losses of a
company or other amounts eligible for relief which may be available to
any of the Shareholders, the Company, or any member of the same group
of companies as a Shareholder hereto pursuant to sections 402 to 413
ICTA 1988;
"ICTA 1988" means the Income and Corporation Taxes Act 1988;
"MEMBER OF THE SAME GROUP OF COMPANIES" shall mean a company which is a
member of a group of companies (defined in section 413 ICTA 1988) of
which the respective Shareholder is a member;
"RATE OF CORPORATION TAX APPLICABLE TO ANY RELEVANT ACCOUNTING PERIOD"
means the full rate of corporation tax (ignoring any application of
section 13 of ICTA 1988) applicable to such Relevant Accounting Period
or where more than one rate is applicable, the average rate over that
Relevant Accounting Period calculated on a time basis;
"RELEVANT ACCOUNTING PERIOD" means an accounting period within the
meaning of section 12 ICTA 1988; and
"VALUE ADDED TAX" means value added tax as provided for in the Value
Added Tax Act 1994 and legislation supplemental thereto or replacing
modifying or consolidating such legislation and any reference to "VAT"
shall be construed accordingly.
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13.2 GROUP INCOME ELECTIONS
13.2.1 The Shareholders shall each join with the Company in making
elections under section 247 ICTA 1988 ("group income
elections") with a view to enabling interest to be paid by the
Company to the Shareholders without deducting income tax.
13.2.2 Once group income elections have been accepted by the
Inspector of Taxes, all payments from the Company to the
Shareholders shall be paid in accordance with such elections.
13.2.3 If any Shareholder transfers all or any part of its
shareholding in the Company, the transferor and the other
Shareholders will procure that the Company enters into new
group income elections if available under section 247 ICTA
1988.
13.3 GROUP RELIEF
13.3.1 The Shareholders and any other company which is a member of
the same group of companies as any Shareholder ("Claimant
Company") may claim Group Relief from the Company
("Surrendering Company") to which they may be entitled for any
Relevant Accounting Period of the Company. The Shareholders
shall consent to any such claim and shall take such action as
is requisite to procure that the Company surrenders such Group
Relief in accordance with the provisions of Chapter IV.
13.3.2 The Shareholders and any other company which is a member of
the same group of companies as any Shareholder ("Surrendering
Company") may offer to surrender Group Relief to the Company
("Claimant Company") by written notification to the Company
(with a copy to the other Shareholder) in respect of any
Relevant Accounting Period of the Surrendering Company of such
amount as is permitted under Chapter IV. If the other
Shareholder (not being the Surrendering Company) shall agree
in writing such surrender within thirty days of such
notification, the Shareholders shall consent to any such
surrender and take such action as is requisite to procure that
the Company accepts such Group Relief.
13.3.3 The Company shall not be obliged to accept surrenders of Group
Relief to the extent that its corporation tax liability can be
relieved in the Relevant Accounting Period by credit for tax
paid or suffered by it, in any jurisdiction outside the United
Kingdom.
13.4 PAYMENT FOR GROUP RELIEF
In consideration of any surrender of Group Relief within Clause 13.3,
the Claimant Company shall pay to the Surrendering Company an amount
equal to the amount of corporation tax for which, but for the
surrender, the Claimant Company would have been liable or (as the case
may be, where the Company is the Surrendering Company) an amount equal
to the product of the Group Relief surrendered to the Claimant Company
and the Rate of Corporation Tax applicable to the Relevant Accounting
Period of the Claimant Company. Any such payment shall be made on the
later of:
13.4.1 the normal due date or dates for payment of corporation tax by
the Claimant Company; and
13.4.2 seven days after a notice of claim has been submitted to the
Inland Revenue in respect of the Group Relief.
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13.5 GROUP RELIEF SURRENDERS
13.5.1 When the reduction in the liability of any Claimant Company to
corporation tax as a result of a surrender of Group Relief has
been determined (whether by agreement with the Inland Revenue
or otherwise on appeal), the Shareholders shall procure that
the Claimant Company shall promptly produce and deliver within
30 days to each of the Shareholders a certificate setting out
the extent to which such liability has been reduced, together
with copies of any correspondence with the Inland Revenue
agreeing such reduction of liability.
13.5.2 In the event that any of the Shareholders shall object to such
certificate, such Shareholder(s) may, within 14 days of the
certificate being delivered to it, require the Claimant
Company to refer the reduction in liability to be determined
by an independent firm of chartered accountants to be agreed
upon between them or, in default of such agreement, to be
selected (at the instance of any Shareholder) by the President
for the time being of the Institute of Chartered Accountants
in England and Wales. Any such firm of chartered accountants
(whose fees and expenses shall be paid by the Shareholder
objecting to the certificate if such firm of chartered
accountants does not alter the extent to which the relevant
liability is to be reduced and by the Claimant Company in any
other case) shall act as experts and not arbitrators in
connection with the giving of such decision.
13.5.3 The Shareholders shall provide, and shall procure that the
Company shall provide, within a reasonable period and in any
event within 21 days of any written request, the independent
firm of chartered accountants with such information as it may
reasonably require for the purpose of giving its
determination.
13.5.4 The certificate referred to in Clause 13.5.1 (unless any of
the Shareholders have exercised its or their rights to refer
the matter to an independent firm of chartered accountants in
accordance with Clause 13.5.2 or (if the matter is referred to
an independent firm of chartered accountants) the
determination of such firm shall, save for manifest error, be
binding on the Shareholders, the Company and the relevant
Claimant Company and Surrendering Company.
13.5.5 Within seven days of the reduction in the liability of a
Claimant Company to corporation tax as a result of a surrender
of Group Relief becoming final under Clause 13.5.4,
appropriate adjustments to the payment made under Clause 13.4
for such Group Relief shall be made.
13.5.6 The provisions of this Clause 13.5 shall prevail over the
provisions of Clause 24.2 (save as to questions of compliance
with the provisions of this Clause 13.5).
13.6 INTEREST
Payments for Group Relief and any adjustments thereto shall carry
interest at the rate of 2 per cent. per annum above the base lending
rate of Barclays Bank plc from time to time from the due date for
payment to the date on which such payment for Group Relief is actually
made or such adjustment is paid.
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13.7 COMMUNICATION WITH INLAND REVENUE
If the Inland Revenue does not accept any particular surrender of Group
Relief whether in whole or in part, then the Claimant Company may take,
and direct the Surrendering Company to take, such action as may be
reasonable with a view to establishing to the satisfaction of the
Inland Revenue that such Group Relief has been validly surrendered and
claimed. The Claimant Company will keep the parties informed as to the
content of all correspondence and discussions with the Inland Revenue
relevant to the surrender. The cost of taking any such action shall be
borne by the Claimant Company.
13.8 GROUPS OF COMPANIES
Where any Claimant Company or Surrendering Company is not a party to
this Agreement, the party which is a member of the same group of
companies as the Claimant Company or Surrendering Company shall procure
that the Claimant Company or Surrendering Company shall take all steps
contemplated by this Clause 13 as if the Claimant Company or
Surrendering Company were a party to this Agreement.
13.9 MAINTENANCE OF CONSORTIUM
Each Shareholder shall, until this Agreement is terminated, take such
steps as are reasonably available to it to ensure that the Shareholders
are and remain a consortium in relation to the Company for Group Relief
purposes, and in particular to ensure that:
13.9.1 the Shareholders and the Company are treated as resident only
in the United Kingdom for United Kingdom tax purposes and for
the purposes of any double taxation treaty;
13.9.2 no shares are transferred and no further shares issued or
allotted if as a result more than 25% of the issued ordinary
share capital (as defined in section 832 ICTA 1988) of the
Company would be held by persons not being companies resident
only in the United Kingdom;
13.9.3 all shares of the Company held by each Shareholder from time
to time will be held as beneficial owner;
13.9.4 all shares of the Company held by each Shareholder from time
to time will not be held such that a profit on a sale of such
shares would be treated as a trading receipt; and
13.9.5 no one Shareholder owns, beneficially, more than 75% or less
than 5% of the issued ordinary share capital (as defined in
Section 832 ICTA 1988) of the Company.
13.10 VALUE ADDED TAX
13.10.1 The Company shall not apply to HM Customs & Excise to be
members of a group registration for VAT purposes other than a
registration comprising only two or more of the Company and
any Subsidiary company of the Company.
13.10.2 Where any taxable supply for VAT purposes is made under or in
connection with this Agreement by one party (or by the
Company) to the other (or to the Company), the payer shall in
addition to any consideration required for that supply pay,
upon presentation of a VAT invoice, such VAT as is chargeable
in respect of it.
14. SHARE TRANSFERS
14.1 MORATORIUM
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Save as otherwise provided in Clause 14.3, no Shareholder may for a
period of three years from the date of this Agreement transfer, sell or
dispose of any Shares for the time being held by it (the "MORATORIUM
PERIOD").
14.2 RESTRICTION
14.2.1 Save as otherwise expressly provided herein or in the Articles
no Shareholder shall during the term of this Agreement make
any Disposition other than a Permitted Transfer (as
hereinafter defined). Each Shareholder shall, to the extent it
is able by virtue of its power of appointment of Directors,
procure that the Board only approves the registration of a
transfer of Shares transferred in accordance with the
Articles.
14.2.2 No transfer of Shares shall be made by a Shareholder without
that Shareholder procuring the delivery to the Company of an
executed Deed of Adherence in or substantially in the same
form as Schedule 3.
14.3 PERMITTED TRANSFERS
14.3.1 Any Shareholder may at any time transfer all (but not some
only) of its Shares (a "Permitted Transfer") to an Associate
in accordance with, and subject to the provisions of, the
Articles PROVIDED THAT the transferee (the "Permitted
Transferee") shall execute and deliver to the Company a Deed
of Adherence in or substantially in the form of Schedule 3.
14.3.2 Any Shareholder transferring Shares in accordance with this
Clause 14.3 (which expression shall not include a second or
subsequent transferor in a series of Permitted Transfers)
shall be jointly and severally liable with the transferee for
the obligations of this Agreement as a Shareholder in respect
of each Share transferred.
14.4 SALE TO THIRD PARTIES
14.4.1 After the expiry of the Moratorium Period a Shareholder may,
subject to this clause, sell all (but not some only) of its
Shares to a third party or parties. In the event that a
Shareholder (the "Vendor") desires to sell all of its Shares
in accordance with this clause (the "Offered Shares"), the
Vendor agrees to first give written notice (the "Offer
Notice") to the other Shareholder (the "Purchaser") of its
intention to sell the Offered Shares and to negotiate with the
Purchaser in good faith the price and corresponding terms of
purchase for the Offered Shares. In the event that by the
forty-fifth day after the date of the Offer Notice (the "Third
Party Date") the Vendor does not accept the Purchaser's final
proposed price and corresponding terms (the "Final Offer"),
the Vendor shall notify the Purchaser in writing that the
Purchaser's final price and terms have been rejected.
14.4.2 In the event the Purchaser's Final Offer is not accepted, the
Vendor may sell the Offered Shares to a third party or
parties; provided, however, that any sale to a third party of
the Offered Shares must be evidenced by a letter of intent
which must be signed within six months of the Third Party Date
and the contemplated transaction must be completed within one
year of the Third Party Date. The sale of the Offered Shares
to a third party or parties shall be for a price not less than
95% of the Final Offer.
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14.4.3 In the event of a sale of Shares to a third party in
accordance with Clause 14.4.2;
(a) the Board shall be reconstituted at the date of transfer
of the Shares to such party so that each Shareholder
shall be entitled to and shall appoint three Directors
(who shall, in the case of the Directors appointed by
the "A" Shareholder, be designated "A" Directors and, in
the case of the Directors appointed by the "B"
Shareholder, be designated "B" Directors) and each such
Director shall be entitled to one vote;
(b) the Shareholders shall procure that the necessary Board
and Shareholders resolutions are passed to affect the
reconstitution of the Board and/or amendments required
to reflect such constitution in the Articles including
an amendment to the Articles to provide that all
resolutions of the Board be passed by a two-thirds
majority;
(c) the Vendor shall procure that the Purchaser executes a
Deed of Adherence on or prior to the date of transfer of
the Shares; and
(d) the provisions of Clause 14.5 shall become effective.
14.5 DEADLOCK RESOLUTION
14.5.1 In the event of a Deadlock, either Shareholder shall be
entitled to serve upon the other notice of such Deadlock (a
"DEADLOCK NOTICE") and the provisions of Clause 15.2 shall
apply save that "Fundamental Disagreement" shall be read as
"Deadlock".
14.5.2 A "Deadlock" shall be deemed to have occurred if, after the
expiry of the Moratorium Period:
(a) any Shareholder has failed to give his consent or is
deemed to have refused his consent within ten Business
Days to any major action in accordance with Clause 7.5;
or
(b) (1) a matter relating to or affecting the Company has
been raised at and/or considered by a Board
Meeting; and
(2) no resolution has been passed by such meeting by
reason of an equality of votes for and against any
resolution proposed relating to such matter; and
(3) a Shareholder has subsequently failed to notify
the other Shareholders within 28 days after such
Board Meeting that the matter has not been
resolved to its satisfaction.
15. RESOLUTION
15.1 FUNDAMENTAL DISAGREEMENT
A "Fundamental Disagreement" shall be deemed to have occurred if Hogg
and WTT are unable to agree on any of the matters described in Clauses
7.5 and 9.2 (which in the case of Clause 7.5 shall include any deemed
refusal of consent in terms of that Clause) and one of them serves
notice on the other stating that it believes there exists a Fundamental
Disagreement (a "Fundamental Disagreement Notice") PROVIDED THAT for
the purpose of this Clause 15, no Fundamental Disagreement shall arise
or be deemed to arise before the expiry of the Moratorium Period.
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15.2 PROCEDURE FOLLOWING FUNDAMENTAL DISAGREEMENT
15.2.1 In the event of Fundamental Disagreement, the Shareholders
shall refer the matter for consideration to such persons as
they consider appropriate (such individuals together the
"Representatives") for discussion between them. Each party to
the Agreement shall procure that the Representatives use all
reasonable endeavours to resolve any differences between the
Shareholders which led to the Fundamental Disagreement. Unless
otherwise agreed, the matter shall be so referred within seven
days of the service of a Fundamental Disagreement Notice.
15.2.2 Unless otherwise agreed between the Shareholders, if within
ten days (or such longer period as the parties may agree) of
reference to the Representatives as above they are not able,
or agree not to be so able, to resolve the relevant
differences either Representatives may on behalf of the party
it represents serve a notice (the "Termination Notice") on the
other (the "Recipient").
15.2.3 In the event that a Termination Notice is served by one
Shareholder on the other in accordance with Clause 15.2.2, the
terms of Clause 17.1.1 (b) shall apply.
16. TERMINATION
16.1 TERMINATION GENERALLY
This Agreement shall continue in full force and effect until terminated
in accordance with the provisions of this Clause, whereupon Clause 17,
without limitation, shall apply.
16.2 BREACH BY OR WINDING UP OF HRPLC OR WTT
16.2.1 A Shareholder (the "Non-Breaching Party") may, without
prejudice to any other rights it may have in respect thereof,
elect to terminate this Agreement forthwith by notice in
writing to the other (the "Terminal Breach Notice") (but not
after 90 days of the event in question first coming to the
attention of the Non-Breaching Party) if any of the following
shall occur:
(a) if the other Shareholder (the "Breaching Party") shall
act or omit to act as described in Clause 16.2.3 and
shall fail to remedy such breach (if capable of remedy)
within 30 days after being given notice by the
Non-Breaching Party (by the first party) so to do; or
(b) if the other (being a company) shall go into liquidation
whether compulsory or voluntary (except for the purposes
of a bona fide reconstruction or amalgamation with the
consent of the first Non-Breaching Party, such consent
not to be unreasonably withheld) or if the other party
shall have an administrator appointed or if a receiver,
administrative receiver or manager shall be appointed
over any part of the assets or undertaking of the other
party.
16.2.2 If the Non-Breaching Party serves a Terminal Breach Notice on
the Breaching Party, it may further elect that the terms of
either Clause 17.1.1(a) or 17.1.1(b) shall apply and shall be
entitled to the rights to the Company's Brand Name in
accordance with Clause 17.4. In addition, where WTT is the
Non-Breaching Party it may also make the election in clause
17.1.1(c).
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16.2.3 Subject to the terms (where appropriate) of Clause 16.2.1(a),
any of the following acts or omissions will entitle the
Non-Breaching Party to serve a Terminal Breach Notice in
accordance with Clause 16.2.1:
(a) failure to seek Shareholder consent prior to undertaking
a major action in accordance with Clause 7.5;
(b) failure to provide funding in accordance with the
capital funding requirements in Clause 8.1;
(c) competing with the Company in contravention of Clause
10.1;
(d) attempting to transfer Shares in contravention of Clause
14;
(e) failure to exercise voting rights so as to procure the
obligations under this Agreement and the Articles are
duly observed in accordance with Clause 19.3;
(f) an intentional act or intentional omission to act to
prevent the operation of the Company in accordance with
the Business Plan;
(g) failure by a Shareholder to procure that at least one of
its Directors or alternates is in attendance at two
consecutive Board Meetings (including any adjournment of
such meeting);
(h) failure by a Shareholder to attend two consecutive
Shareholders Meetings (including any adjournment of such
meeting);
(i) commission of a material breach, and failure to remedy
such breach (if capable of remedy) within 30 days after
being given notice by the Non-Breaching Party, of any of
the Completion Agreements (excluding the Shared Services
Agreement between the Company and HRPLC); or
(j) default by HRPLC or WT Technologies under the terms of
the HRPLC Loan Note or the WTT Loan Note respectively.
16.3 CHANGE OF CONTROL OF HOGG, HRPLC OR WTT
16.3.1 In the event of:
(a) a Change of Control of HRPLC which results in the
resignation or removal (other than by reason of
retirement, illness, disqualification or mental
incapacity) of a majority of the Directors appointed by
Hogg to the Board of the Company within six months of
such Change of Control; or
(b) failure by the acquirer of Control of Hogg to agree in
writing to endorse and adhere to the then current
Business Plan within 30 days of such Change of Control,
WTT may elect (within a period of six months of the events
specified in Clause 16.3.1(a)) to take over the management and
operational control of the Company in which event the
Shareholders shall procure that Hogg's "A" Ordinary Shares are
reclassified as "B" Ordinary Shares, that WTT's "B" Ordinary
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Shares be reclassified as "A" Ordinary Shares and that one of
the Directors appointed by Hogg be removed from the Board.
HRPLC undertakes to notify WTT promptly (and in any event
within seven days) of a Change of Control affecting it.
16.3.2 In the event that WTT exercises its option in accordance with
Clause 16.3.1 in the Moratorium Period, Hogg shall have the
option (to be exercised within six months of the exercise of
WTT's option) to sell its Shares to any third party, subject
however to the provisions of Clause 14.4. The restrictions
contained in Clauses 14.1 and 14.3 with regard to the
Moratorium Period shall not apply to the exercise by Hogg of
its option under this Clause.
16.3.3 In the event of a Change of Control of a Shareholder (other
than for the purposes of amalgamation, merger, consolidation,
reorganisation or other similar arrangement between members of
the HRPLC Group or WTT and its Associate, as the case may be),
the other Shareholder may elect by giving written notice
("Change of Control Notice") whereupon Clauses 17.2.2 to
17.2.6 and 17.6 shall apply, within six months from such
Change of Control, to buy all of the Shares of the other
Shareholder at a purchase price equal to 50% of the Fair Value
of the Company (taking into account, only in the case of a
change of control of Hogg, the fact that the Company will have
a non-exclusive licence of the Licensed Products).
16.3.4 Upon WTT giving the Change of Control Notice but prior to the
completion of the sale and purchase, in accordance with Clause
16.3.3, the Shareholders shall procure that Hogg's "A"
Ordinary Shares are reclassified as "B" Ordinary Shares, that
WTT's "B" Ordinary Shares be reclassified as "A" Ordinary
Shares and that one of the Directors appointed by Hogg be
removed from the Board. Hogg undertakes to notify WTT promptly
(and in any event within seven days) of a Change of Control
affecting it. In the event that WTT does not purchase Hogg's
Shares in accordance with Clause 17.6.1 having given a Change
of Control Notice, the Shareholders shall procure that
respective positions of WTT and Hogg's shall be re-instated as
if a Change of Control Notice had not been given.
16.3.5 In the event that WTT gives a Change of Control Notice to
Hogg, the WTT Licence shall terminate and WTT shall offer Hogg
a non-exclusive licence of the Licensed Products for the fair
market value of such licence on terms and conditions contained
in the Licence Software Licence Agreement between the Company
and HRPLC.
16.4 FAILURE TO MEET SALES TARGETS
16.4.1 The Shareholders acknowledge and agree that the Company's
primary objectives include providing services to third party
travel agencies, as well as to the Hogg Group and BTI Group,
in Europe.
16.4.2 Subject to Clause 16.4.9, on 31 October 2002, the Company
shall deliver to WT Technologies a 12 month rolling forward
projection of each of its OFS Corporate Products and Services,
OFS Products and Services and TTG Product and Services, based
upon the preceding six months historical data together with
details of any new signed or lost accounts (eg accounts which
have not been trading for the full six month period). The
targeted values in respect of the foregoing projections shall
be as described in Schedule 4 (the "OFS Corporate Services
Target", "OFS Services Target" and the "TTG Target"
respectively and each a "Target").
16.4.3 Subject to Clause 16.4.9, in the event that any of the
information set out in Clause 16.4.2 in respect of a Target
has not been delivered to WT Technologies by 30 November 2002,
WT Technologies shall have the right to conclude that the
Company has failed to meet the relevant Targets.
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16.4.4 Subject to Clause 16.4.9, in the event the Company has failed
or is deemed to have failed to meet the OFS Services Target by
30 November 2002 WT Technologies may elect, by written notice
to the Company to be delivered within six months of such
failure or deemed failure by the Company under Clause 16.4.3,
to:
(a) terminate any exclusive technology licenses in respect
of the OFS Products which have been granted to the
Company and grant a non-exclusive licence in respect of
the OFS Products to the Company on substantially the
same terms as the WTT Licence and compete with the
Company and the HRPLC Group; or
(b) waive the Company's failure to meet the Target.
16.4.5 Subject to Clause 16.4.9, in the event the Company has failed
or is deemed to have failed to reach the OFS Services Target
by 30 November 2002, Clause 10.1 shall be waived to the extent
that it applies to WT Technologies and its Associates and WT
Technologies and its Associates shall be entitled to compete
with the Company in the OFS Territory in respect of the OFS
Services. If WT Technologies elects to compete with the
Company and begins to market the OFS Products and Services in
competition with the Company in the Territory (in such a
manner as would otherwise be a breach of Clause 10):
(a) this Agreement shall be amended so that the consent of
WTT to any major action in terms of Clause 7.5 shall not
be required by any Group Company; and
(b) HRPLC (or such member of the HRPLC Group as HRPLC in
writing directs) may, within six months of delivery of a
notice pursuant to Clause 16.4.6, elect by written
notice (which notice shall be deemed to be a Change of
Control Notice) to buy all of WTT's Shares at a purchase
price equal 50% of the Fair Value of the Company (taking
into account the fact that the Company will have a
non-exclusive licence to the relevant products).
16.4.6 WT Technologies shall give the Company 30 days' notice of its
intention to compete with the Company prior to competing with
the Company in terms of Clause 16.4.5.
16.4.7 Subject to Clause 16.4.9, in the event the Company fails or is
deemed to have failed to meet the TTG Target by 30 November
2002, WT Technologies may, by written notice to be delivered
within six months of such failure or deemed failure, terminate
any exclusive licenses in respect of the TTG Products which
have been granted to the Company and grant a non-exclusive
licence in respect of the TTG Products to the Company and it
may grant non-exclusive licenses in respect of the TTG
Products to third parties provided that WT Technologies shall
not enter into any corporate equity joint venture arrangements
with third parties in competition with the Business which
would otherwise be a contravention of Clause 10.
16.4.8 If, subject to clause 16.4.9, the Company fails or is deemed
to have failed to meet the TTG Target by 30 November 2002 and
the Company has failed or is deemed to have failed to meet the
OFS Corporate Services Target by 30 November 2002, WT
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Technologies may, by written notice to be delivered within six
months of such failure or deemed failure, terminate any
exclusive licenses in respect of OFS Corporate Products which
have been granted to the Company and grant a non-exclusive
licence in respect of the OFS Corporate Products to the
Company and it may grant non-exclusive licenses in respect of
OFS Corporate Products to third parties provided that WT
Technologies shall not enter into any corporate equity joint
venture arrangement with third parties in competition with the
Business which would otherwise be a contravention to clause
10.
16.4.9 The Company shall notify WTT in writing if it reasonably
believes that it is unlikely to meet a Target as a result of a
failure by WT Technologies or TLC to meet its obligations to
the Company to deliver a technology product specified in
Schedule A of the WTT Licence the use of which has a direct
impact on the ability of the Company to meet such Target and
the parties shall negotiate in good faith a modification of
the date for satisfaction of the relevant Target to take
account of such delay.
16.4.10 WTT will act reasonably in determining whether a relevant
Target has been met, or that the date for satisfaction of such
Target be extended, take into account the economic conditions
affecting the Company, the Company's competitive environment,
staffing requirements and timely delivery of technology
products by WT Technologies.
16.5 CEASING TO BE A PARTY
The benefit of this Agreement shall cease to accrue to a party if, at
any time as a result of a transfer of shares made in accordance with
this Agreement and/or the Articles, that party holds no Shares (but
without prejudice to any rights which any party may have against any
other party arising prior to such termination).
16.6 WINDING UP
Save to the extent provided to the contrary, this Agreement shall
terminate forthwith if an effective resolution is passed to wind up the
Company or if (except for the purposes of a bona fide reconstruction or
amalgamation) a liquidator, receiver, administrative receiver or
manager is otherwise appointed (but without prejudice to any rights any
party may have against any other arising prior to such termination).
17. CONSEQUENCES OF NOTICE UNDER CLAUSES 15.2 AND 16.2
17.1 SALE AND PURCHASE
17.1.1 Subject to Clauses 15.2 and 16.2, if the Non-Breaching Party
shall serve a notice under Clause 15.2.2 or 16.2 that party
(the "terminator") shall require:
(a) the Breaching Party to sell to it all (but not some
only) of the Breaching Party's Shares in the Company at
the price determined in accordance with sub-clause 17.2;
or
(b) the assets and liabilities of the Company to be divided
between the parties in the manner described in Clause
17.3; or
(c) where Hogg is the Breaching Party, WTT may take over the
management and operational control of the Company in
which event that Shareholders shall procure that Hogg's
"A" Ordinary Shares are reclassified as "B" Ordinary
Shares, that WTT's "B" Ordinary Shares are reclassified
as "A" Ordinary Shares and that one of the Directors
appointed by Hogg be removed from the Board.
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17.2 PRICE
17.2.1 The purchase price of the shares to be bought and sold
pursuant to Sub-Clause 17.1 shall be a sum equal to 50 per
cent. of the Fair Value of the Company less a discount of ten
per cent.
17.2.2 "Fair Value" shall be determined by the Auditors on the
following principles:
(a) the Auditors shall be considered to be acting as experts
and not as arbitrators; and
(b) the Auditors shall value the relevant Shares using the
following principles:
(1) valuing the relevant Shares as on an arm's length
sale between a willing vendor and a willing
purchaser;
(2) if the Company is then carrying on business as a
going concern, on the assumption that it will
continue to do so;
(3) the relevant Shares are capable of being
transferred without restriction;
(4) each Share whatever its class has the same value
corresponding to its proportion of the value of
all the Shares taken as a whole;
(5) no reduced or additional value is attached to any
holding of Shares by virtue only of the transferor
not having the right to appoint a majority of
Directors to the board or the number of votes
which may be cast at a Board Meeting by a
Director;
(6) the application in all other respects of
principles and practices consistent with those
customarily applied in the previous audited
accounts of the Company.
(c) the Auditors shall deduct from the fair value of the
Company the Sterling equivalent of any sum paid in terms
of Clause 12.5(a) of the US Operating Agreement.
17.2.3 The Shareholders shall procure that the Auditors prepare and
deliver to the Shareholders, within 45 days of the date of the
Termination Notice or Change of Control Notice, a report (the
"Report") setting out the details of their determination
pursuant to Clause 17.2.2 (the "Fair Value Determination").
17.2.4 Unless a Shareholder shall, within 15 days of receipt of such
Report, serve a notice ("Objection Notice") in writing on the
other that it objects to the Fair Value Determination
(identifying the reason for any objection and the amount or
item or all calculation which is/are in dispute), the parties
shall be deemed to have agreed to the Fair Value
Determination.
17.2.5 If, within the period referred to in 17.2.4, a party shall
give to the other an Objection Notice then the parties shall
use their respective best endeavours to reach agreement on
adjustments to the Fair Value Determination as applicable.
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17.2.6 If the parties are unable to reach agreement in respect of the
Fair Value Determination, within thirty days of the date of
the Objection Notice, the Fair Value will be determined by two
appraisers, one chosen by each Shareholder, in accordance with
the assumptions described in Clause 17.2.2. If the two
appraisal values (the "Fair Value Appraisal") differ by 10% or
less (such percentage difference to be computed by subtracting
the lesser of the Fair Value Appraisals from the greater of
the Fair Value Appraisals and dividing that difference by the
greater of the Fair Value Appraisals), then the Fair Value of
the Shares shall equal the average of the two Fair Value
Appraisals. In the event that the Fair Value Appraisals vary
by more than 10%, a third appraiser shall be chosen by the
initial two appraisers to conduct an independent appraisal of
the Shares, and on the basis of that independent appraisal,
the third appraiser shall, in the exercise of his own
professional judgment, determine which of the two Fair Value
Appraisals is the most commercially reasonably, and that Fair
Value Appraisal shall be the Fair Value.
17.3 DIVISION OF ASSETS AND LIABILITIES
17.3.1 The Company shall, as soon as practicable, and in any event
within 15 days after receipt of a copy of a Termination Notice
containing the election in Clause 17.1.1(b) procure that the
Auditors prepare a financial statement (the "Financial
Statement") for the Company as at the date of the Termination
Notice within 45 days of receipt of the Termination Notice.
The Financial Statement shall contain such information as is
reasonably required for the parties to identify all of the
assets and liabilities of the Company.
17.3.2 The Financial Statement shall be delivered to both
Shareholders and unless either party shall, within 15 days of
receipt of such Financial Statement, serve a notice
("Objection Notice") in writing on the other that it objects
to the Financial Statement (identifying the reason for any
objection and the amount or item or all calculation which
is/are in dispute), the parties shall be deemed to have agreed
to the Financial Statement.
17.3.3 If, within the period referred to in Clause 17.3.2, either
Shareholder shall give to the other an Objection Notice then
the parties shall use their respective best endeavours to
reach agreement on adjustments to the Financial Statement as
applicable.
17.3.4 The parties shall thereafter enter into good faith
negotiations for the division of the assets and liabilities of
the Company.
17.3.5 If the Shareholders are unable to reach agreement in respect
of the terms for division of the assets and liabilities of the
Company the Shareholders shall negotiate in good faith for a
further period of 90 days for the sale of the Company to a
third party.
17.3.6 If, after the expiry of the 90 days referred to in Clause
17.3.5, the Shareholders have not agreed on the terms of the
sale of the Company to a third party, the Shareholders shall
procure that the Company be wound up.
17.4 COMPANY BRAND NAME
17.4.1 Where termination is pursuant to Clause 16.2.1, the
Non-Breaching Party shall;or
17.4.2 upon WTT ceasing to be a Shareholder pursuant to Clause
16.4.5(b), WTT shall
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in addition to any other rights it may have, also be entitled to all
rights in respect of the corporate name of the Company PROVIDED THAT
where the corporate name of the Company (or any part) contains any word
or words the same or similar to the corporate name or any distinctive
part of the corporate name or mark of such Shareholder or an Associate
of the Shareholder including, in the case of WTT, TRX Inc.(or any
person controlling such Shareholder) the remaining party shall procure
that within 30 days thereof the corporate name and/or mark of the
Company shall be changed so as to exclude such word or words or name or
mark.
17.5 LICENCE
Upon the division of the assets of the Company in accordance with
Clause 17.3 the WTT Licence shall terminate and WTT shall offer Hogg a
non-exclusive licence in respect of use of the TTG Products and OFS
Corporate Products in the Territory and the OFS Products in the OFS
Territory on terms substantially the same as the Software Licence
Agreement between the Company and HRPLC.
17.6 COMPLETION
17.6.1 Completion of the sale and purchase of Shares pursuant to the
provisions of Clauses 16.3.3 or 17.1.1(a) shall take place at
the registered office of the Company on (i) the date specified
in those Clauses, where applicable, or (ii) on the second
Business Day after the price payable therefor has been agreed
or determined in accordance with the provisions thereof, or
(iii) such other time and/or place as the affected parties may
agree.
17.6.2 At any completion of the sale and purchase of Shares pursuant
to Clauses 16.3.3 or 17.1.1(a), the relevant seller shall
deliver to the purchaser duly executed share transfers for the
Shares being sold in favour of the purchaser (or as it may
direct) together with the relevant share certificate(s)
therefor (or an acceptable indemnity in lieu thereof) in
return for cleared funds representing the sum due.
17.7 RELEASE OF GUARANTEES/INDEMNITIES
If either party (the "Defaulting Party") shall become bound to transfer
all its Shares, the other party shall upon, or immediately prior to
completion of such transfer, procure:
17.7.1 the immediate release of all guarantees, indemnities and
similar covenants (if any) given by the defaulting party in
favour (or for the benefit) of the Company and pending such
release shall indemnify and keep the defaulting party fully
and effectively indemnified from and against all claims
arising thereunder except where the breach relates to such
guarantee indemnity or covenant); and
17.7.2 the immediate repayment to the defaulting party of all monies
advanced to the Company by that outgoing party by way of loan
(or loan stock) and then outstanding (if any) together with
all interest (if any) down to the date of actual payment; and
17.7.3 Nothing in this Clause 17.7 shall apply to a transfer of
Shares in accordance with Clause 14.3 or affect the liability
of any person to whom this Clause applies in respect of any
liabilities incurred prior to the transfer of its Shares under
Clause 17.1.1(a).
18. GUARANTEES
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18.1 HRPLC, in consideration of WTT and WT Technologies entering into this
Agreement, undertakes with WTT and WT Technologies that Hogg will
perform its obligations under this Agreement and shall indemnify WTT
and WT Technologies against all losses, liabilities and costs which WTT
or WT Technologies may incur as a result of any breach of Hogg's
obligations under this Agreement .
18.2 WT Technologies, in consideration of HRPLC and Hogg entering into this
Agreement, undertakes with Hogg and HRPLC that WTT will perform its
obligations under this Agreement and shall indemnify Hogg and HRPLC
against all losses, liabilities and costs which WTT or WT Technologies
may incur as a result of any breach of WTT's obligations under this
Agreement.
18.3 The following provisions shall apply to the undertakings in Clauses
18.1 and 18.2:
18.3.1 the undertakings shall be continuing obligations and shall
remain in full force and effect until the discharge in full of
the obligations of Hogg or WTT (as the case may be) under this
Agreement and shall not be satisfied by any intermediate
satisfaction of the whole or any part of those obligations;
18.3.2 the liability of HRPLC or WT Technologies (as the case may be)
shall not be affected or released by any neglect or
forbearance in enforcing the obligations of Hogg or WTT (as
the case may be) or by any amendment or variation of their
obligations or by any other act, omission, matter or thing
whatsoever whereby HRPLC or WT Technologies as a surety only
would or might have been affected or released;
18.3.3 although as between HRPLC and Hogg, HRPLC is a surety for
Hogg, HRPLC shall for all purposes under this Clause 18 be
treated as a principal obligor rather than as a surety; and
18.3.4 although as between the WT Technologies and WTT, WT
Technologies is a surety for WTT, WT Technologies shall for
all purposes under this Clause 18 be treated as a principal
obligor rather than as a surety.
19. SUPREMACY AND GENERAL COVENANT
19.1 AGREEMENT TO PREVAIL
If any provisions of the Memorandum or Articles conflict with any of
the provisions of this Agreement the provisions of this Agreement shall
prevail. To the extent permitted by law, Hogg and WTT shall each
exercise all Voting Rights and other rights and powers available to
them to procure the alteration of the Memorandum or Articles to the
extent necessary to permit the Company and its affairs to be carried
out as provided herein. For the avoidance of doubt, the Memorandum and
Articles do not conflict and are not to be treated as conflicting with
any provision of this Agreement by which the parties agree to procure
that anything be or not be done.
19.2 LEGEND ON SHARES
19.2.1 The Shareholders shall procure that all certificates
representing Shares shall bear the following restrictive
legend:
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT
TO, AND TRANSFER OR PLEDGE OF SUCH SHARES IS RESTRICTED BY,
THE TERMS OF AN AGREEMENT, DATED ________, 2000, A COPY OF
WHICH IS ON FILE AT THE REGISTERED OFFICE OF THE COMPANY. NO
TRANSFER OR PLEDGE OF ANY SHARE REPRESENTED BY THIS
CERTIFICATE SHALL BE VALID UNLESS MADE IN ACCORDANCE WITH THE
TERMS OF THE AGREEMENT.
19.2.2 The Secretary shall endorse each certificate with any
additional legend (or legends) as he or she shall deem
necessary, upon the opinion of counsel to the Company, to
comply with any applicable laws and regulations. In the event
that any additional legend (or legends) are required, each
Shareholder shall surrender to the Company all of its
certificates representing shares of the Company. After such
endorsement, each of the certificates so surrendered shall be
returned to the Shareholder owning such certificate.
Thereafter, all certificates representing shares of the
Company shall bear an identical endorsement. A copy of this
Agreement shall be filed with the Secretary of the Company.
19.3 FURTHER ASSURANCE
To the extent permitted by law, the Shareholders shall each exercise
all Voting Rights and other powers of control available to them in
relation to the Company so as to procure (so far as each is
respectively able by the exercise of such rights and powers) that the
obligations under this Agreement and the Articles are duly observed and
given full force and effect and all actions required of the parties
hereunder are carried out and in a timely manner. Without limitation
Hogg and WTT shall each use their best endeavours to procure that each
of the Directors appointed by them shall execute and do all such acts
and things and give and confer all such powers and authorities as they
would have been required to execute, do, give and/or confer had they
been a party to this Agreement.
19.4 QUORA OF MEETINGS
To the extent permitted by law, each of Hogg and WTT shall exercise all
Voting Rights and other powers of control available to them to ensure
that any Board Meeting or Shareholder meeting has the necessary quorum
throughout.
20. ANNOUNCEMENTS
20.1 RESTRICTIONS
No party to this Agreement shall make any announcement concerning the
provisions or subject matter of this Agreement or containing any
information about the other without the prior written consent of the
other parties (which shall not be unreasonably withheld or delayed).
20.2 PERMITTED ANNOUNCEMENTS
Clause 20.1 shall not apply if and to the extent that such announcement
is required by law or by any securities exchange or regulatory or
governmental body having jurisdiction over it and whether or not the
requirement has the force of law but any such announcement shall be
made only after consultation with the other parties hereto.
20.3 CONTINUANCE OF RESTRICTIONS
The restrictions contained in this Clause 20 shall survive Completion
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and shall continue throughout the term of this Agreement and for the
period ending on the third anniversary of its termination or, if
earlier, in respect of any party, the period ending on the third
anniversary of it ceasing to be a party.
21. REMEDIES
The parties agree that damages would not be an adequate remedy for a
breach of this Agreement and that each party is entitled to the
remedies of injunction, specific performance and any other equitable
relief in respect of any threatened or actual breach of this Agreement.
22. WARRANTY AND INDEMNITY
22.1 WTT warrants at the date of this Agreement that the aggregate worldwide
turnover of all economic interests over which Mr J. A. Fentener van
Vlissingen exercises decisive influence including, for the avoidance of
doubt, the BCD Group for the purposes of Council Regulation (EEC) No.
4064/89, as amended and taking into account the regulations and notices
of the Commission of the European Communities on Council Regulation
(EEC) No. 4064/89 (together the "EC Merger Regulation"), and calculated
in accordance with the EC Merger Regulation does not exceed
(pound)1,000,000,000 for the year ending 31 December 1998.
22.2 In the event of a breach of Clause 22.1 by WTT, to the extent permitted
by applicable law, WTT agrees to indemnify Hogg and its Associates for
the total amount of any fine, penalty payment or other sum levied by
the Commission of the European Communities on Hogg and its Associates
as a result of a failure to notify this Agreement and all related
agreements to the Commission of the European Communities in accordance
with the EC Merger Regulation including, without limitation, all
reasonable costs and expenses incurred by it.
22.3 Hogg warrants at the date of this Agreement that the worldwide turnover
of the HRPLC Group for the purpose of the EC Merger Regulation and
calculated in accordance with the EC Merger Regulation does not exceed
(pound)1,000,000,000 for the year ending 31 March 1999.
22.4 In the event of a breach of Clause 22.4 by Hogg, to the extent
permitted by applicable law, Hogg agrees to indemnify WTT and its
Associates for the total amount of any fine, penalty payment or other
sum levied by the Commission of the European Communities on WTT and its
Associates as a result of a failure to notify this Agreement and all
related agreements to the Commission of the European Communities in
accordance with the EC Merger Regulation including, without limitation,
all reasonable costs and expenses incurred by it.
22.5 If circumstances arise under which any Shareholder determine that a
notification is advisable under any applicable competition laws or
regulations to the relevant competition authority, both parties shall
cooperate in the preparation, drafting and submission of said
notification and in the timely response to all enquiries from the
relevant competition authority and shall provide all information
necessary for the preparation of such a notification.
23. PROVISIONS RELATING TO THIS AGREEMENT
23.1 ENUREMENT
This Agreement shall be binding upon and enure for the benefit of (i) a
Permitted Transferee and (ii) any other successors of the parties
hereto upon execution of a Deed of Adherence in the form attached in
Schedule 3 hereto.
23.2 ASSIGNMENT
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<PAGE> 40
This Agreement shall not be assignable without the prior written
agreement of Hogg and WTT.
23.3 WHOLE AGREEMENT AND VARIATIONS
23.3.1 This Agreement, together with any documents referred to in it,
constitutes the whole agreement between the parties relating
to its subject matter and supersedes and extinguishes any
prior drafts, agreements and undertakings, whether in writing
or oral, relating to such subject matter except to the extent
the same are repeated in this Agreement.
23.3.2 Each of the parties acknowledges that it has not been induced
to enter into this Agreement by any representation, statement,
warranty, promise or assurance by the other (or any other
person).
23.3.3 No variation of this Agreement shall be effective unless made
in writing and signed by each of the relevant parties directly
affected by the relevant provision of this Agreement.
23.4 RIGHTS AND OTHER MATTERS
23.4.1 The rights, powers, privileges and remedies provided in this
Agreement are cumulative and are not exclusive of any rights,
powers, privileges or remedies provided by law or otherwise.
23.4.2 No failure to exercise nor any delay in exercising any right,
power, privilege or remedy under this Agreement shall in any
way impair or affect the exercise thereof or operate as a
waiver thereof in whole or in part.
23.4.3 No single or partial exercise of any right, power, privilege
or remedy under this Agreement shall prevent any further or
other exercise thereof or the exercise of any other right,
power, privilege or remedy.
23.5 INVALIDITY
If any provision or term of this Agreement is held or rendered illegal,
invalid or unenforceable under any applicable law, such provision or
term shall, insofar as it is severable from the remaining provisions or
terms, be deemed omitted from this Agreement and shall not adversely
affect the remaining provisions or terms. Any such illegal, invalid or
unenforceable provision or term shall be considered not severable if
and to the extent that its omission from this Agreement would or may
materially alter or affect the commercial intent or effect of this
Agreement. In such event, the parties shall use their best endeavours
to replace any such illegal, invalid or unenforceable provision or term
with valid provisions and terms which most closely reflect their
commercial intent and effect. For the avoidance of doubt, if and to the
extent required by law, the parties' performance of the obligations
under this Agreement which have been held or rendered illegal, invalid
or unenforceable shall be deemed suspended pending such modification or
termination (as appropriate) of this Agreement in accordance with this
Clause 23.5.
23.6 COUNTERPARTS
This Agreement may be executed in any number of counterparts which
shall together constitute one Agreement. Any party may enter into this
Agreement by signing any such counterpart.
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23.7 COSTS
Except as otherwise expressly provided herein each party shall bear its
own costs and expenses arising out of or in connection with the
preparation, negotiation and implementation of this Agreement.
23.8 NOTICES
23.8.1 Any notice or other communication required to be given under
this Agreement or in connection with the matters contemplated
by it shall, except where otherwise specifically provided, be
in writing in the English language and shall be addressed as
provided in this Clause and may be:
(a) personally delivered, in which case it shall be deemed
to have been given upon delivery at the relevant
address; or
(b) if within the United Kingdom, sent by first class
pre-paid post, in which case it shall be deemed to have
been given two Business Days after the date of posting;
or
(c) if from or to any place outside the United Kingdom, sent
by pre-paid priority airmail, in which case it shall be
deemed to have been given six Business Days after the
date of posting; or
(d) sent by fax, in which case it shall be deemed to have
been given when confirmation of its transmission has
been recorded by the sender's fax machine provided that
any notice dispatched by fax after 17.00 hours (at the
place where such fax is to be received) on any day shall
be deemed to have been received at 08.00 a.m. on the
next Business Day.
23.8.2 The addresses and other details of the parties referred to in
this Clause are, subject to notification of change, as below:
Name: Hogg /HRPLC
For the attention of: The Company Secretary
Address: Abbey House
282 Farnborough Road
Farnborough
Hampshire GU14 7NJ
Fax number: 01252 542 444
Name: WTT/WT Technologies
For the attention of: Timothy J. Severt
Address: Suite 635
6 W. Druid Hills Drive
Atlanta Georgia 30329
USA
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<PAGE> 42
Fax number: 001 404 814 2967
With copies to:
For the attention of: the President
WT Technologies
Address: Suite 635
6W Druid Hills Drive
Atlanta, Georgia 30329
USA
Fax Number: 001 404 814 2967
and:
For the attention of: Jeff Haidet
Long Aldridge & Norman LLP
Address: 303 Peachtree Street
Suite 5300
Atlanta, Georgia 30308
USA
Fax Number: 001 404 527 5198
Name: Fortdove Limited
For the attention of: The Managing Director
Address: Abbey House
282 Farnborough Road
Farnborough
Hampshire GU14 7NJ
Fax number: 01252 542444
23.8.3 Any party to this Agreement shall use reasonable endeavours to
notify the others of any change to its address or other
details specified in Clause 23.8.2 as soon as possible prior
to such change and, if after, immediately thereafter, provided
that such notification shall only be effective on the date
specified in such notice or five business days after the
notice is given, whichever is later.
23.9 NOT A PARTNERSHIP/AGENCY
Nothing in this Agreement shall, nor shall it be deemed to, constitute
a partnership between the parties, or any of them. Nothing in this
Agreement shall authorise any party to act as agent or representative
of the others (or any of them) or to authorise any such party to assume
or create an obligation on behalf of the other (or others), except as
expressly provided in this Agreement.
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<PAGE> 43
24. LAW AND SETTLEMENT OF DISPUTES
24.1 ENGLISH LAW
This Agreement shall be governed by, and construed in accordance with,
English law and the parties hereby submit to the exclusive jurisdiction
of the English courts.
24.2 SETTLEMENT OF DISPUTES
24.2.1 The parties agree to work together in good faith
constructively to resolve any disputes between them. In the
event that any dispute arises, then the parties shall continue
to meet their obligations and rights under this Agreement
during the dispute resolution process.
24.2.2 Without prejudice to Clause 24.2.1, in the event that either
Shareholder is negotiating the sale of Shares to the other (in
accordance with Clauses 14.4.1, 16.3.3, 16.4.5 or 17.7.1) or
to a third party (in accordance with Clauses 14.4.2 or 17.3.5)
both Shareholders shall procure that the Company continues to
operate the Business in its usual manner and, in the case of a
sale to a third party, to cooperate (at the selling
Shareholder's cost) with the selling Shareholder's reasonable
requests in relation to the provision of due diligence
information to such third parties.
24.3 MEETING OF REPRESENTATIVES
Except as otherwise provided in this Agreement, in the event of any
dispute between the parties arising from this Agreement, or any duty of
care arising from or connected with the subject matter of this
Agreement, the parties agree that a representative of the board of each
of the Shareholders shall meet and seek resolution of the dispute in
good faith.
24.4 RECOURSE TO COURT
Nothing in this Clause 24 shall prevent either party from having
recourse to a court of competent jurisdiction for the sole purpose of
seeking a preliminary injunction or such other provisional declaratory
relief (for the avoidance of doubt this does not include summary
judgment) as it considers necessary to avoid irreparable damage.
AS WITNESS the hands of the duly authorised representatives of the parties the
day and year first above written.
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SCHEDULE 1: BUSINESS PLAN
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The establishment and 4 year plan of travel technology and online fulfillment
services for Europe.
AUTHOR: W.BRINDLE
VERSION: 1.21
DATE: SUNDAY, FEBRUARY 06, 2000
1.
2.
3.
4.
TABLE OF CONTENTS
1. Executive Summary
1.1 FINANCIAL SUMMARY
2. Background
3. Products
4. Target Market
5. Market Analysis
6. Competition
7. Market Opportunity
8. Financials
8.1 - TTG BUREAU
8.2 - OFS
1. EXECUTIVE SUMMARY
As travel agencies turn their revenue stream away from commission into
one of product and service charging, the need for creating new service
entities is becoming more important.
With the predicted growth of online technology and the subsequent
changes in the existing distribution model and revenue streams, there
is a growing demand for special services as new business opportunities
in travel emerge with e-commerce.
The NewCo plan is structured to take advantage of the products,
knowledge and leading edge activities in this area within WTT and Hogg
Robinson.
NewCo will carry its own brand image well apart from BTIUK and will
form part of the Hogg Robinson e-commerce division. All support, email,
business models etc. will be the same for both the US and European
entities.
NewCo will focus its operations on
the European travel market, including 3rd party agents and travel
portals
BTI Partners
Hogg Robinson entities
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<PAGE> 46
NewCo will consist of 2 departments, one dealing in Bureau software
services (hereinafter referred to as TTG) and the other dealing in
Online Fulfilment Services (OFS).
The initial focus will be on three business opportunities that exist in
Europe. These are:
i. Bureau Services
ii. Managed Travel (focusing on online fulfillment of Web enabled
Corporate Travel requirement)
iii. Unmanaged Travel (servicing travel direct Portals)
Further opportunities exist with regards to a.o. MIS, Meetings Planning
software and also establishing a full service online travel agent.
These will be addressed after Newco has started operations although the
online agent could form a key element of Newco's strategy.
As the borders breakdown within Europe and E-commerce permits Euro
E-Centres to grow, the demand for centralized fulfillment and service
models will increase. With the rationalization to the Euro and growth
of E-ticket on European and intercontinental routes, the need for a
local market corporate online service will diminish.
We are just at the start of this change and many of the services
offered by NewCo will be leading edge for the travel industry.
There are several challenges ahead in the start up of NewCo, but cost
pressures and the commoditisation of certain travel types will force
change in the market.
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1.1 FINANCIAL SUMMARY
The following outlines a summary of the financial projections for the business:
FINANCIAL YEAR PROJECTIONS
TTG SOFTWARE/ OFS COMBINED
<TABLE>
<CAPTION>
00/01 01/02 02/03 03/04
YEAR 1 YEAR 2 YEAR 3 YEAR 4
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BUREAU PNRS .......... 1,417,000 3,984,500 5,216,000 6,441,000
RESASSIST PNRS ....... 52,100 220,550 482,500 988,500
OFS TICKETS .......... 72,517 533,833 1,215,000 2,078,333
INCOME CORRE
CoRRe UK .......... $ 148,750 $ 350,000 $ 370,000 $ 370,000
CoRRe SK .......... $ 81,250 $ 258,000 $ 275,000 $ 275,000
CoRRe Kuoni ....... $ 91,875 $ 306,250 $ 336,000 $ 336,000
CoRRe BTI ......... $ 58,800 $ 96,000 $ 110,400 $ 110,400
CoRRe 3rd Party ... $ 35,000 $ 175,000 $ 560,000 $ 1,050,000
INCOME RESASSIST
ResAssist HR ...... $ 50,063 $ 230,175 $ 365,625 $ 496,125
ResAssist BTI ..... $ 23,813 $ 76,875 $ 143,750 $ 170,000
ResAssist 3rd Party $ 101,625 $ 437,500 $ 1,312,500 $ 3,500,000
HIGHLIGHTER
Highliter HR ...... $ 59,500 $ 140,000 $ 148,000 $ 148,000
Highliter SK ...... $ 32,500 $ 103,200 $ 110,000 $ 110,000
Highliter BTI ..... $ 22,050 $ 36,000 $ 41,400 $ 41,400
Highliter 3rd Party $ 10,500 $ 52,500 $ 168,000 $ 315,000
OFS SALES
HR OFS Corp PNRs .. $ 182,400 $ 692,000 $ 1,828,000 $ 3,200,000
OFS Corp PNRs ..... $ 35,938 $ 382,662 $ 1,211,000 $ 3,266,667
OFS Portal ........ $ 330,050 $ 2,520,000 $ 4,500,000 $ 5,780,000
- ----------------------------------------------------------------------------------
TOTAL REVENUE ........ $ 1,264,113 $ 5,856,162 $11,479,675 $19,168,592
- ----------------------------------------------------------------------------------
TOTAL COSTS .......... $ 3,404,126 $ 4,929,213 $ 7,448,100 $10,304,578
- ----------------------------------------------------------------------------------
BALANCE .............. ($2,140,013) $ 926,949 $ 4,031,575 $ 8,864,013
- ----------------------------------------------------------------------------------
RUNNING BALANCE ...... ($2,140,013) ($1,213,064) $ 2,818,511 $11,682,525
==================================================================================
</TABLE>
2.
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BACKGROUND
The corporate travel business is set for major change, largely driven
by
o Increasingly complex customer demands
o The need to pay by transaction differentiation
o Reduced remunerations from producers
o Rapid technology developments
These four drivers of change all create the rapid growth of
opportunities to make travel reservations without using the travel
agent (either leisure or Corporate). Both producers (airlines, hotels
etc.) and new entrants have set up Self Service Reservation (SSR)
systems on the Internet. These systems have initially targeted the
individual leisure traveler, but are today being more and more refined
for corporations and corporate travelers through growth in business to
business intranets.
In most business developed for the Internet, the traditional rules of
diminishing returns have been displaced by rules of increasing returns,
i.e. early adopters stand a good chance to become decisive market
leaders, as is the case with companies such as Microsoft, Intel and
Cisco.
The lead in these areas has definitely been taken by the USA. The
lessons learned however in the USA have caused faster uptakes and
demand in Europe as the technology being used is now more mature.
NewCo is being formed to take control of this change as it happens in
Europe.
The following chart reflects the growth of MS Expedia in the UK vs the
same start-up in the USA. Although it is consumer rather than corporate
traffic it shows the faster acceptance curve now that the technology is
becoming globally accepted.
[GRAPHIC]
Although managed corporate travel online may have had a slow growth in the USA,
if you apply the same logic as has happened to consumer acceptance in the UK
then the corporations will move at a quicker pace as well. It also suggests that
direct portal take up should be quicker.
(A)
Newco will be made up of two sales lines creating 2 departments. The rationale
for this is based upon a different sales/product approach to different market
segments.
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<PAGE> 49
A. Bureau and software services will provide a wide array of travel
transaction software to corporations, industry suppliers, and travel
agencies. Major products include:
o CORRE(R): an automated quality control system
o RESASSIST(TM): an electronic booking system
o CRS SCREEN HIGHLIGHTER(R)/RESNOTEs(TM): an agent point of sale
tool.
Over the past few years, TTG in the USA has been moving towards service bureau
sales and operations and away from pure software license sales. At the present
time, TTG offers ResAssist and CoRRe combined as a service bureau.
B. OFS will operate in two different market areas within the travel
industry: Travel Portal and Corporate. From a high level perspective,
OFS will grow by offering the most cost effective operational
infrastructure. o diversify into new customer areas.
o PORTAl
The Consumer segment covers leisure-related transactions for
air, hotel, and car that are not part of formal vacation
packages. This will also enable the non-managed same market
that is going to direct to Airline travel portals to be
secured.
o CORPORATe
The corporate electronic fulfillment market consists of two
large segments: Agency Managed and Corporate Direct. Agency
managed is for an agency that holds a contract with a
Corporation and we conduct the e-fulfilment of the online
business behind the agency. Corporate Direct is targeted
directly at the corporate who wants to use the fulfillment
options independently of their agency.
As the use of online bookings grows in Corporations, agents are being tasked
with stripping cost out of the structure to provide a cheaper alternative. This
can primarily be achieved by obtaining economies of scale through combining
services, adopting and incorporating technology. Travel Agents are not
delivering the services as cheap as the corporations are looking for. As
electronic media (e-ticket, phone and web) integrate themselves into travel the
users themselves are starting to segment. If a corporation has a high volume of
point to point traffic which enables automation to drop the voice and human
booking process, then the cost of that service has got to be cheaper. This is
the segment that the airlines and new entrants are chasing.
3. Products
Newco will offer 2 product lines, Service Bureau and Online Fulfilment.
3.1 SERVICE BUREAU & SOFTWARE SERVICES
Over the past few years, TTG in the USA has been moving towards service
bureau sales and operations and away from pure software license sales. At
the present time, TTG offers ResAssist and CoRRe combined as a service
bureau. These products are aimed at the travel transaction software market
and the European variants of their US counterparts.
CoRRe - Quality Assurance
This product offering will be centered around the heart of the
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<PAGE> 50
transaction process. CoRRe robotic applications and a bureau is being
established to maintain QC on bookings for Hogg and BTI partners in the
first stage. The bureau will be set up to sell its services to other
agencies and providers (like web engines) from day one as well.
Hogg Robinson is already implementing the Quality Assurance products
(the CoRRe family of products) and significant experience in the
development of the bureau services is already in place within Hogg
Robinson.
A repositioning and widening of a range of bureau services to European
agencies and to BTI partners outside the Americas is a logical next
step.
As cost pressure continues to increase on conventional travel agencies,
the necessity of outsourcing a range of services to reliable cost
effective outsourcers is inevitable. The demand for our bureau services
can be increased by demand form the Corporate community and also from
the halo effect created as the products and services are offered by HR
and other major agencies in response to RFP's. Major Corporations are
now very aware of the tools an agency requires to operate their
business efficiently. This will soon create a major demand on quality
applications and agencies will dispose of their own applications.
It is planned to run the bureau as a sister company of Claybrook being
housed in the same building and sharing bureau operator staff during
the start-up phase.
o ResAssist
Will become the de facto online booking product of NewCo. It
will be adapted to provide automated bookings within the
European arena on Galileo and Amadeus. The Sabre variant
remains as the USA version. ResAssist will be sold as a
managed bureau service, to travel agents and corporations
direct.
o Profilesync.com
Will be sold alongside ResAssist for online (web) updating of
client profiles by the corporate user.
o CRS Screen Highlighter/Res Notes
Definition needed
o Technology Consulting/License Sales
Definition needed
3.2 ONLINE FULFILMENT SERVICES
3.2.1 AGENCY MANAGED AND CORPORATE DIRECT
The objective of business fulfillment is to offer wither Travel Agents
or Corporations the ability to offer or be offered a utility service
for bookings made electronically.
This service can also be combined with MIS offer for statistical
reporting. It is clear that Managed Travel will dramatically change the
Business Travel services sector although debate continues on the actual
pace of change. We are developing low, medium and high takeoff
scenarios to shape our forecasts in this arena. Partnerships are key
but note essential to optimize growth. Microsoft (AXI) and Saber (BTS)
are two targeted partners with Amadeus of significant interest because
of its initiatives with both SAP and Cap Gemini. Oracle is also a
potential partner now that it has purchased E-Travel.
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The Managed Travel Service is however based on ResAssist being
installed and used within the plane.
The service is based on electronic servicing where the cost of
producing an online reservation for the best value and service is where
business will be won. The cheapest option, without loss of service, is
the target.
3.2.2 NON-MANAGED /TRAVEL PORTAL
The European scenario is more complex to drive to critical mass for a
number of reasons, e.g. Charter airlines not included in the CRS
inventory, significant package holiday market rather than mix and
match, language variation, internet usage by country.
The TravelPortal product will be targeted at airline, hotel, car and
rail (producers) websites. The service will consist of the following:-
4. Target Market
4.1 Territory
Newco's market has ben defined in a Shareholders Agreement to be
Europe, BTI Partners and Hogg Robinson owned entities. For
Non-managed/Portal OFS business, Newco is restricted to deliver
services from UK and Nordic. The initial focus for OFS will thus be in
the UK and Nordic markets, and for TTG, Galileo and Amadeus markets.
This will give a European spread.
The only product that will require market control will be Highlighter.
Its distributed design means that local site support and installation
will be required. Therefore only a single site sale in one market could
be expensive and difficult to support.
4.2 TARGET CLIENTS FOR OFS
Target is Corporations and Travel Management Companies for managed
travel. Primary markets will be UK & Nordic for Yr1 and Yr2, with the
validity of the service to be built on HR Corporate business.
This will be GDS derived fulfillment.
The travel portal business is targeted at the airlines' and other
producers' direct sites. These portals will need to be serviced by the
specific host service. Therefore, large producer support will be
targeted for critical mass of development. As explained in market
analysis, the financial models are based on UK market % growth rather
than specific producer.
4.3 SERVICE BUREAU SOFTWARE SERVICES
CORRE(1)
Unlike OFS, the initial markets will be GDS focused with start up
volume transferring in from HR BTI UK, Nordic, France, Italy. Other BTI
partners will be added from the Germanic regions. Once this volume is
secured and performing, 3rd party activity will step up with approaches
to agencies and corporations. Both GDS of Amadeus & Galileo will be
approached for endorsement and even to form part of their own QC
program as well and then Sabre and Worldspan. This will give a broad
European coverage and extra channels to market.
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Advertisements and interviews will be made with trade and business
publications to start promoting the company's bureau services. The
objective will be to build brand neutrality as well as product
knowledge and superiority.
Work on the megas will commence on Amex through their Nordic subsidiary
Nymn & Shultz, and Carlson through local UK contacts.
The expected sales cycle for these accounts will be long, so a
concerted effort on smaller agencies will be made to also build a
neutral image.
CORRE (2)
This market is the QC & process engineering for the travel portals. To
support a fully automated PNR, CoRRe will be offered to portals as a
way of automating processes as it does for a normal agency operation.
RESASSIST
A similar approach will be made as for CoRRe, but the real customers
will be the corporations. The mega agencies will not approach ResAssist
due to their existing system deals (Amex & GetThere, Carlson and BTS),
but we will target the rest of the agency community, along with
Corporations direct. The bundling of an online model encapsulating QC,
booking and fulfillment will represent an attractive offer to
corporations and certain agencies.
HIGHLIGHTER
Unlike the other 2 products, Highlighter is a distributed application.
Its market is only travel agents, and English language. Within the plan
Highlighter has been given a transaction fee, however the market spread
of the product will need to be reviewed so as not to deplete support
too much.
5. Market Analysis
The travel transaction software and services business is moving towards
a service bureau offering as opposed to a straight software license
business model. Under the service bureau approach, a fee is collected
for each transaction processed by the system. A service bureau is more
desirable than standalone software sales mainly due to the ongoing
revenue stream without the latter's constant re-selling efforts.
There are four basic reasons for the move towards the service bureau.
o CORPORATIONS ARE UNBUNDLING TRADITIONAL AGENCY SERVICES,
INCLUDING TECHNOLOGY SOLUTIONS. In the past, travel agencies
have performed most technology development and transaction
processing services on an in-house basis. In turn, agencies
provided a one-stop source of technology services to corporate
customers. Now, however, corporations are beginning to
unbundle agency services in favor of the most efficient value
provider. In certain cases, they are even specifying the use
of specific technology products such as ResAssist in their
travel RFP regardless of which agency ultimately wins the bid.
o THE BUSINESS USE OF TRANSACTIONAL OUTSOURCING HAS BECOME A
RELATIVELY STANDARD PRACTICE IN MANY BUSINESSES. The agency
community has begun to recognize that their core competencies
involve customer management and relationship building as
opposed to processes involving transactional operations. As a
result, more agencies are becoming open to the idea of
outsourcing.
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o THE SERVICE BUREAU APPROACH GENERALLY INVOLVES PROCESSES THAT
DO NOT TOUCH THE CUSTOMER. Examples include quality control,
expense management, and customer fulfillment.
o THE ECONOMICS OF A SERVICE BUREAU ARE EXTREMELY COMPELLING IN
A LOW-MARGIN BUSINESS. As the full effects of the commission
caps take hold, and with further reductions in commissions and
overrides likely over the next few years, the potential cost
reduction from an efficient service bureau operation becomes
extremely attractive.
At present, most of the major software products for sale within the
industry are associated with a service bureau configuration. However,
travel specific products tend to still associate themselves with local
agency control. Therefore software components tend to be distributed rather
than in a bureau today.
As input to the business plan, we have analysed the European market GDS
PNRs and the projected development for UK airline portals.
The following figures show the available GDS PNR volume, booked by travel
agents, by market in Europe :
- ------------------------------------ ----------------------------------
UK 13.9M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
IRELAND 1.2M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
GERMANY 12.2M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
SWITZERLAND 2.1M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
AUSTRIA 1.2M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
FRANCE 9.5M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
BELGIUM 1.8M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
THE NETHERLANDS 2.6M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
ITALY 4.5M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
GREECE 1.0M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
SWEDEN 4.2M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
NORWAY 3.5M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
DENMARK 2.0M
- ------------------------------------ ----------------------------------
- ------------------------------------ ----------------------------------
FINLAND 2.0M
- ------------------------------------ ----------------------------------
There are 61.7 Million agency booked PNRs available in the above countries in
the European market.
Of this volume:-
15m in the UK and Ireland representing 24% of the overall volume. 11.7m
in Nordic, representing 18.9% of the overall volume.
Of the UK and Nordic volumes:-
Amex has 2.2m of UK and 2.0m of Nordic
Cwlit 1.1m of UK and 1.2m of Nordic
BTI 1.2m of UK and 1.6m of Nordic
Therefore 4.5m PNRs rest in the megas in the UK and 4.8m in Nordic. Within these
two territories, 6.5m PNRs are with Amex and CWL who are longer term sales
targets leaving 10.5m PNRs with other third parties for target in the UK and
6.9m for Nordic.
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Campaigns will start in the UK, Ireland and Nordic first with France and Germany
as secondary focus markets. That enables the focus to be on Hogg Robinson main
markets to build critical mass, and also for English language focus.
The business plan for CoRRe bureau is based upon a percentage conversion of the
17.4m third party (non mega) UK/Nordic business. ResAssist HR is based upon a
percentage pick-up of the BTI UK projected e-commerce volume. ResAssist 3rd
party is based on converting a percentage of the 17.5m market volume to
self-service reservations.
OFS:
CORPORATE
The take up of online bookings has been slow, but within Europe this
has mainly been due to lack of travel policy and systems. More
corporations are now requesting travel intranets to be built that offer
the ability to conduct e-commerce transactions. By providing systems
that maintain policy/compliance and book quickly, corporations are
beginning to realize the potential cost savings. They are also slowly
realizing that an e-commerce programme requires commitment.
The business plan for HR business has been built on the assumption of
2%, 4%, 8% and 12% conversion from Y1 to Y4. The 3rd party corporate
market plan has been based on converting 33% of the 3rd party ResAssist
sales.
NON-MANAGED/TRAVEL PORTAL
The portal direct model is a fast growing business as travel is a top
focus for internet portals. Industry figures for the US show that
5.4%(1) of airline bookings were made online in 1999. To assess the
business potential from the UK, the total scheduled air passenger
volumes were researched. The CAA shows that the UK Air Market equates
to 61m(2) uplifted passengers in 1998. 35m of these were directly
attributable to BA ,showing the dominant volume the main carrier holds.
The business plan is based on capturing a percentage of the online
volume for fulfilment. Without growing the available air volume, the
assumption of a growth in online bookings with 5 percentage points per
annum has been taken, giving an online market of 5% (of total airline
bookings) in YR1, 10% YR2, 15% YR3 and 20% YR4. BA, who has contributed
with the assumptions, would themselves produce in the region of 1.75m,
3.5m, 5.25m and 7m transactions respectively over the four years with
these assumptions.
OFS has targeted a market share of 2.5%, 7%, 10% and 12% of that e-
online market.
6. COMPETITION
NewCo's competitors include those organizations offering comparable travel
software products and service bureau-style transaction processing operations.
Technology companies in Europe have tended to build upon Back Office Systems.
More recently large travel management companies in Amadeus markets have been
developing their own systems.
US companies active in the European market place are Aqua, ATS and TTG. Neither
have claimed a significant business volume due to the costs associated with
achieving critical mass on a variable distributed platform.
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The main market in Europe is the UK, and all 3 of the above systems, plus some
smaller domestic players can be found. The main reason for this is language and
that the main US systems of Galileo, Sabre and Worldspan are prevalent in the
market.
The major European system houses have built their domestic business on the back
of large travel management companies, and have started venturing outside of
their markets. Partner S/W (Eurolloyd), TRISS (Bennett) ICSAT (Kuoni, CWLIT) are
some examples of this.
New market entrants have started to offer European self booking systems that
will compete with ResAssist. The most well known of these systems is KDS (Klee
Data Systems), who supply a variety of applications to the French speaking
markets. The KDS Wave system is not a Service Bureau configuration though and
needs to be installed by each client on individual server structures.
Apart from the private companies as listed above, the US system houses of
GetThere.com and Oracle E-travel also have a presence within Europe.
GetThere.com is by far the most aggressive system in Europe winning a few
accounts, but they are now focusing mainly on being a B2B supplier to start-up
travel portals.
The GDS also have their products available in the market, but no QC products.
Sabre BTS, Amadeus Corporate Traveller, Worldspan TripManager and Galileo
TravelPoint are all on offer but have limited success.
Amadeus has most recently started a program of investment into 3rd party
software companies, they have a 49% interest in ICSAT and the Amadeus NDC in
Germany has the controlling interest in Partner Software. Relationships between
Amadeus and SAP, Amadeus and Eriksson pose probably the strongest threat in the
future.
In general the European market does not have a class international travel
software house with large backing. The barriers to entry have always been to
great and local market focus has been the only way.
7. MARKET OPPORTUNITY
Both service bureau and software competitors are at a competitive disadvantage
relative to NewCo. This is primarily due to the fact that they have no client as
large as BTI for reference and ongoing development. In addition, NewCo will have
a cost advantage through the transaction volume of Hogg Robinson in Europe and
WTP in the USA.
The market for electronic booking transactions is expected to grow
significantly. Fulfillment is becoming an import part of the e-commerce world
both from a customer retention and cost reduction perspective.
OFS in the USA has the lowest cost structure in the market along with no direct
competitors for its core fulfillment service. This model will be used as a key
opportunity to gain business within Europe. NewCo will also leverage Hogg
Robinson's strong relations with key players in the travel industry and with the
corporate community.
Like the USA, Corporate travel transaction services are undergoing a fundamental
change in Europe. All participants in the market value lower transaction costs,
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and corporations are looking at the cost of a process rather than its value
relative to the ticket price. Outsourcing will become more accepted by potential
customers, as the cost of the process will be driven by volume.
As online corporate transaction volume grows, the demand for a neutral processor
will also grow. This will free up corporate travel management companies from
basic staff requirements, and enable them to focus on developing added-value
skills to differentiate themselves.
NewCo will be positioned to take advantage of this change as it happens.
The above scenarios are however relatively reactive to the fact that someone
else will take the lead and we will offer certain services.
Another opportunity could be creating our own online travel agent. A few already
exist like e-bookers and deckchair.com, but this could be a new avenue for NewCo
to investigate and establish a separate company.
Both Hogg Robinson and WTP will be offering online travel agency services but
aimed at the B2B market and not B2C. We have the knowledge and the product to
offer a BTC service and the timing could be perfect to start such a venture. A
separate business case will need to be built for this venture.
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SCHEDULE 2: COMPLETION AGREEMENTS
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(a) WTT Licence
(b) Shared Services Agreement between the Company and HRPLC
(c) Software Development Agreement between the Company and HRPLC
(d) Software Licence Agreement between the Company and HRPLC
(e) Software Licence Agreement between HRPLC and the Company
(f) Service Bureau Software Services Agreement between the Company and
HRPLC
(g) Service Bureau/Outsourcing Agreement for Online Fulfillment Services
between the Company and HRPLC
(h) Reciprocal Software Development Agreement between the Company and WTT
(i) Software Support Agreement between the Company and WTT
(j) Software Support Agreement between the Company and HRPLC
(k) Operating Agreement between WT Technologies and Hogg Robinson
International Benefits Limited
(l) Bill of Sale and General Assignment between WT Technologies and Hogg
Robinson International Benefits Limited
(m) Loan Note
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SCHEDULE 3: DEED OF ADHERENCE
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THIS DEED OF ADHERENCE is made on [ ] 200[ ]
By [ ] of [ ] (the "COVENANTOR") in favour of the persons whose names are set
out in the schedule to this Deed and is SUPPLEMENTAL to the Shareholders
Agreement dated [ ] made by [ ] (the "SHAREHOLDERS AGREEMENT")
THIS DEED WITNESSES as follows:
1. The Covenantor confirms that it has been given and read a copy of the
Shareholders Agreement and covenants with each person name in the
schedule to this Deed to perform and be bound by all the terms of the
Shareholders Agreement, except clauses [ ], as if the Covenantor were a
Shareholder who is a party to the Shareholders Agreement.
2. This Deed is governed by English law.
IN WITNESS WHEREOF this Deed has been executed by the Covenantor and is intended
to be and is hereby delivered on the date first above written.
SCHEDULE
[Parties to Shareholders Agreement including those who have executed earlier
deeds of adherence.]
EXECUTED as a deed by )
[ ] ) ..........................................
Director's signature
..........................................
Director's name
..........................................
Director/Secretary's signature
..........................................
Director/Secretary's name
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SCHEDULE 4: TARGETS
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<TABLE>
<CAPTION>
OFS SERVICES TARGET BUSINESS PLAN TARGET TARGET # ACTUAL STATUS
<S> <C> <C> <C> <C> <C>
75%
UK Airline passengers
61,000,000
Portal share 15.0%
Portal passengers
9,150,000
NEWCO MARKET SHARE 10.0% 7.5% 2 FAIL
Newco transactions
915,000
Price/Transaction, USD
6
NEWCO OFS SERVICES SALES 1 FAIL
5,490,000 4,117,500
</TABLE>
If the Company fails to meet OFS Services Target # 1, then Target # 2 shall be
measured. If the Company also fails to meet Target # 2, then the Company has
failed to meet the OFS Services Target.
<TABLE>
<CAPTION>
TTG TARGET (CORRE ONLY) BUSINESS PLAN TARGET TARGET #
<S> <C> <C> <C> <C>
75%
TTL Newco CoRRe PNR's
4,240,000
3RD PARTY SHARE 10.0% 7.5% 2 FAIL
3rd party PNR's
424,000
Price/Transaction, USD
0.50
NEWCO TTG CORRE SALES 1 FAIL
212,000 159,000
</TABLE>
If the Company fails to meet TTG Target # 1, then Target # 2 shall be measured.
If the Company also fails to meet Target 2, the Company has failed to meet the
TTG Target.
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<TABLE>
<CAPTION>
OFS CORPORATE SERVICES TARGET BUSINESS PLAN TARGET TARGET # ACTUAL STATUS
<S> <C> <C> <C> <C> <C>
75%
PNR's in UK and Nordic Countries
17,500,000
Percentage of PNR:s on SSR 15.0%
SSR PNR's
2,625,000
Newco market share 10.0%
Newco ResAssist transactions
262,500
OFS CORPORATE SHARE 33.33% 25.0% 2 FAIL
OFS Corporate transactions
87,500
Price/Transaction, USD
14.00
OFS CORPORATE SERVICES SALES 1 FAIL
1,225,000 918,750
</TABLE>
If the Company fails to meet the TTG Target, then the OFS Corporate Services
Target shall be measured.
If the Company fails to meet OFS Corporate Services Target # 1, then Target # 2
shall be measured. If the Company also fails to meet Target # 2, the Company has
failed to meet the OFS Corporate Services Target.
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ANNEX A: ARTICLES
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COMPANY NUMBER: 3841799
COMPANIES ACTS 1985 AND 1989
---------------------------------------
ARTICLES OF ASSOCIATION
FOR
FORTDOVE LIMITED
---------------------------------------
Adopted by a Written Resolution dated February 2000
MCDERMOTT, WILL & EMERY
7 BISHOPSGATE
LONDON
EC2N 3AQ
TEL: 020 7577 6900
FAX: 020 7577 6950
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COMPANY NUMBER: 3841799
1. INTERPRETATION
1.1 In these Articles:
""A" DIRECTOR" means a Director appointed an "A" Director pursuant to
ARTICLE 20.1;
""A" SHARE" means an "A" Share of (pound)1 in the capital of the
CompaNY;
""A" SHAREHOLDER" means a holder of "A" Shares;
"ACT" means the Companies Act 1985 including any statutory modification
or re-enactment thereof for the time being in force;
"ADDITIONAL DIRECTOR" means a Director appointed pursuant to Article
20.3;
"ARTICLES" means these articles of association of the Company;
"ASSOCIATE" means in relation to any Shareholder any subsidiary
undertaking or parent undertaking of that Shareholder, or any other
subsidiary undertaking of such parent undertaking, and for these
purposes "parent undertaking" means, in relation to another undertaking
(a subsidiary undertaking) an undertaking which holds (directly or
indirectly) at least 75 per cent. of the Voting Rights in the
undertaking and "subsidiary undertaking" shall be construed
accordingly;
"AUDITORS" means the auditors from time to time of the Company;
""B" DIRECTOR" means a Director appointed a "B" Director pursuant to
ARTICLE 20.2;
""B" SHARE" means a "B" Share of (pound)1 in the capital of the
CompaNY;
""B" SHAREHOLDER" means a holder of "B" Shares;
"BOARD" means the board of Directors of the Company from time to time;
"BUSINESS DAY" means any day (other than a Saturday or Sunday) on which
banks are open for business in England and Atlanta, Georgia;
"CLEAR DAYS" in relation to the period of a notice means that period
excluding the day when the notice is given or deemed to be given and
the day for which it is given or on which it is to take effect;
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"DIRECTOR" means any director from time to time of the Company,
including (where applicable) any alternate director;
"EXECUTED" includes any mode of execution;
"OFFICE" means the registered office of the Company;
"HOLDER" or "MEMBER" in relation to Shares means the person whose name
is entered in the register of members as the holder of the Shares;
"SEAL" means the common seal of the Company;
"SECRETARY" means the secretary of the Company or any other person
appointed to perform the duties of the secretary of the Company,
including a joint, assistant or deputy secretary;
"SHARES" means any and/or all of the "A" Shares and "B" Shares;
"TRANSFER NOTICE" has the meaning set out in ARTICLE 10;
"UNITED KINGDOM" means Great Britain and Northern Ireland;
"VOTING RIGHTS" means voting rights exercisable at general meeting of
members of a Company;
"WRITING" shall be deemed to include photocopy, telex, facsimile,
telegram and other methods of reproducing or communicating in writing
in visible form.
1.2 Unless the context otherwise requires, words or expressions contained
in these Articles bear the same meaning as in the Act but excluding any
statutory modification thereof not in force when these Articles become
binding on the Company.
2. PRIVATE COMPANY
The Company is a "Private Company" within the meaning of Section 1 of
the Act and accordingly no shares in or debentures of the Company shall
be offered to the public (whether for cash or otherwise) and the
Company shall not allot or agree to allot (whether for cash or
otherwise) any shares in or debentures of the Company with a view to
all or any of those shares or debentures being offered for sale to the
public.
3. SHARE CAPITAL
3.1 The share capital of the Company at the date of adoption of these
Articles is (pound)100 divided into 50 "A" Shares and 50 "B" Shares.
The "A" Shares and the "B" Shares shall entitle the holders of those
shares to the respective rights and privileges and subject them to the
respective restrictions and provisions contained in these Articles.
3.2 Subject to the provisions of the Act, Shares may be issued which are to
be redeemed or are to be liable to be redeemed at the option of the
Company or the holder on such terms and in such manner as the Company
may by special resolution determine.
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3.3 The Company may exercise the powers of paying commissions conferred by
the Act. Subject to the provisions of the Act, any such commission may
be satisfied by the payment of cash or by the allotment of fully or
partly paid Shares or partly in one way and partly in the other.
3.4 Except as required by law, no person shall be recognised by the Company
as holding any Share upon any trust and (except as otherwise provided
by these Articles or by law) the Company shall not be bound by or
recognise any interest in any Share except an absolute right to the
entirety thereof in the holder.
3.5 The rights conferred upon the holders of the "A" Shares and "B" Shares
shall be deemed to be varied by:
3.5.1 the reduction of the capital paid up on any of those Shares;
3.5.2 by the creation or issue of further Shares ranking in priority
to them for the payment of a dividend or of capital; or
3.5.3 any amendment to the Memorandum of Association or these
Articles;
but shall not be deemed to be varied by:
3.5.4 the creation or issue of further Shares ranking subsequent to
them; or
3.5.5 by the Company purchasing an equal number of "A" Shares and
"B" Shares.
4. ALLOTMENT OF SHARES
4.1 Subject to the provisions of these Articles and the Act, the Directors
shall have authority to allot, grant options over, offer or otherwise
deal with or dispose of any unissued Shares (whether forming part of
the original or any increased share capital) on such terms and
conditions as the Company may by ordinary resolution determine.
4.2 In exercising their authority under ARTICLE 4.1 the Directors shall not
be required to have regard to Sections 89(1) and 90(1) to (6)
(inclusive) of the Act which Sections shall be excluded from applying
to the Company.
5. SHARE CERTIFICATES
5.1 Every member, upon becoming the holder of any Shares, shall be entitled
without payment to one certificate for all the Shares held by him (and,
upon transferring a part of his holding of Shares, to a certificate for
the balance of such holding) or several certificates each for one or
more of his Shares upon payment for every certificate after the first
of such reasonable sum as the Directors may determine. Every
certificate shall be sealed with the seal and shall specify the number,
class and distinguishing numbers (if any) of the Shares to which it
relates and the amount or respective amounts paid up thereon.
5.2 The Company shall not be bound to issue more than one certificate for
Shares held jointly by several persons and delivery of a certificate to
one joint holder shall be a sufficient delivery to all of them.
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5.3 If a share certificate is defaced, worn-out, lost or destroyed, it may
be renewed on such terms (if any) as to evidence and indemnity and
payment of the expenses reasonably incurred by the Company in
investigating evidence as the Directors may determine but otherwise
free of charge, and (in the case of defacement or wearing-out) on
delivery up of the old certificate.
6. LIEN
6.1 The Company shall have a first and paramount lien on every Share,
whether fully paid or not, for all moneys (whether presently payable or
not) payable at a fixed time or called in respect of that Share. The
Company shall also have a first and paramount lien on all Shares,
whether fully paid or not, standing registered in the name of any
person indebted or under liability to the Company, whether he shall be
the sole registered holder thereof or shall be one of two or more joint
holders, for all moneys presently payable by him or his estate to the
Company. The Directors may at any time declare any Share to be wholly
or in part exempt from the provisions of this ARTICLE 6.1. The
Company's lien on a Share shall extend to any amount payable in respect
of it.
6.2 The Company may sell in such manner as the Directors determine any
Shares on which the Company has a lien if a sum in respect of which the
lien exists is presently payable and is not paid within fourteen clear
days after notice has been given to the holder of the Share or to the
person entitled to it in consequence of the death or bankruptcy of the
holder, demanding payment and stating that if the notice is not
complied with the Shares may be sold.
6.3 To give effect to a sale the Directors may authorise some person to
execute an instrument of transfer of the Shares sold to, or in
accordance with the directions of, the purchaser. The title of the
transferee to the Shares shall not be affected by any irregularity in
or invalidity of the proceedings in reference to the sale.
6.4 The net proceeds of the sale, after payment of the costs, shall be
applied in payment of so much of the sum for which the lien exists as
is presently payable, and any residue shall (upon surrender to the
Company for cancellation of the certificate for the Shares sold and
subject to a like lien for any moneys not presently payable as existed
upon the Shares before the sale) be paid to the person entitled to the
Shares at the date of the sale.
7. CALLS ON SHARES AND FORFEITURE
7.1 Subject to the terms of allotment, the Directors may make calls upon
the members in respect of any moneys unpaid on their Shares (whether in
respect of nominal value or premium) and each member shall (subject to
receiving at least fourteen clear days' notice specifying when and
where payment is to be made) pay to the Company as required by the
notice the amount called on his Shares. A call may be required to be
paid by instalments. A call may, before receipt by the Company of any
sum due thereunder, be revoked in whole or part and payment of a call
may be postponed in whole or part. A person upon whom a call is made
shall remain liable for calls made upon him notwithstanding the
subsequent transfer of the Shares in respect whereof the call was made.
7.2 A call shall be deemed to have been made at the time when the
resolution of the Directors authorising the call was passed.
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7.3 The joint holders of a Share shall be jointly and severally liable to
pay all calls in respect thereof.
7.4 If a call remains unpaid after it has become due and payable the person
from whom it is due and payable shall pay interest on the amount unpaid
from the day it became due and payable until it is paid at the rate
fixed by the terms of allotment of the Share or in the notice of the
call or, if no rate is fixed, at the appropriate rate (as defined by
the Act) but the Directors may waive payment of the interest wholly or
in part.
7.5 An amount payable in respect of a Share on allotment or at any fixed
date, whether in respect of nominal value or premium or as an
instalment of a call, shall be deemed to be a call and if it is not
paid the provisions of these Articles shall apply as if that amount had
become due and payable by virtue of a call.
7.6 Subject to the terms of allotment, the Directors may make arrangements
on the issue of Shares for a difference between the holders in the
amounts and times of payment of calls on their Shares.
7.7 If a call remains unpaid after it has become due and payable the
Directors may give to the person from whom it is due not less than
fourteen clear days' notice requiring payment of the amount unpaid
together with any interest which may have accrued and all expenses that
may have been incurred by the Company by reason of such non-payment.
The notice shall name the place where payment is to be made and shall
state that if the notice is not complied with the Shares in respect of
which the call was made will be liable to be forfeited.
7.8 If the notice is not complied with any Share in respect of which it was
given may, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors and the forfeiture shall
include all dividends or other moneys payable in respect of the
forfeited Shares and not paid before the forfeiture.
7.9 Subject to the provisions of the Act, a forfeited Share may be sold,
re-allotted or otherwise disposed of on such terms and in such manner
as the Directors determine either to the person who was before the
forfeiture the holder or to any other person and at any time before
sale, re-allotment or other disposition, the forfeiture may be
cancelled on such terms as the Directors think fit. Where for the
purposes of its disposal a forfeited Share is to be transferred to any
person the Directors may authorise some person to execute an instrument
of transfer of the Share to that person.
7.10 A person any of whose Shares have been forfeited shall cease to be a
member in respect of them and shall surrender to the Company for
cancellation the certificate for the Shares forfeited but shall remain
liable to the Company for all moneys which at the date of forfeiture
were presently payable by him to the Company in respect of those Shares
with interest at the rate at which interest was payable on those moneys
before the forfeiture or, if no interest was so payable, at the
appropriate rate (as defined in the Act) from the date of forfeiture
until payment but the Directors may waive payment wholly or in part or
enforce payment without any allowance for the value of the Shares at
the time of forfeiture or for any consideration received on their
disposal.
7.11 A statutory declaration by a Director or the Secretary that a Share has
been forfeited on a specified date shall be conclusive evidence of the
facts stated in it as against all persons claiming to be entitled to
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the Share and the declaration shall (subject to the execution of an
instrument of transfer if necessary) constitute a good title to the
Share and the person to whom the Share is disposed of shall not be
bound to see to the application of the consideration, if any, nor shall
his title to the Share be affected by any irregularity in or invalidity
of the proceedings in reference to the forfeiture or disposal of the
Share.
8. TRANSFER OF SHARES
8.1 The instrument of transfer of a Share may be in any usual form or in
any other form which the Directors may approve and shall be executed by
or on behalf of the transferor and, unless the Share is fully paid, by
or on behalf of the transferee.
8.2 The Directors may refuse to register the transfer of a Share on which
the Company has a lien. The Directors may also refuse to register a
transfer unless:
8.2.1 it is permitted by ARTICLE 9 or has been made in accordance
with ARTICLE 10 and 11;
8.2.2 it is lodged at the office or at such other place as the
Directors may appoint and is accompanied by the certificate
for the Shares to which it relates and such other evidence as
the Directors may reasonably require to show the right of the
transferor to make the transfer;
8.2.3 it is in respect of only one class of shares; and
8.2.4 it is in favour of not more than four transferees; and
8.3 If the Directors refuse to register a transfer of a Share, they shall
within 10 Business Days after the date on which the transfer was lodged
with the Company send to the transferee and the transferor notice of
the refusal.
8.4 No fee shall be charged for the registration of any instrument of
transfer or other document relating to or affecting the title to any
Share.
8.5 The Company shall be entitled to retain any instrument of transfer
which is registered, but any instrument of transfer which the Directors
refuse to register shall be returned to the person lodging it when
notice of the refusal is given.
9. PERMITTED TRANSFERS
9.1 A member may at any time transfer all of its Shares (the "Relevant
Shares") to an Associate. The Associate may at any time transfer all of
the Relevant Shares to the member or another Associate of the member.
Article 10 shall not apply to the transfer of any Relevant Shares
pursuant to this Article 9.1.
9.2 If the Relevant Shares have been transferred under ARTICLE 9.1 by a
member (the "Transferor" to its Associate (the "Transferee") and
subsequently the Transferee ceases to be an Associate of the Transferor
then the Transferee shall forthwith transfer the Relevant Shares to the
Transferor or at the Transferor's option to an Associate of the
Transferor. If the Transferee fails to transfer the Relevant Shares
within twenty-eight days of the Transferee ceasing to be an Associate
of the Transferor then the Transferee shall be deemed to have served a
Transfer Notice in respect of the Relevant Shares and the provisions of
ARTICLE 10 shall apply accordingly. The Transfer Notice shall be
irrevocable.
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9.3 The Directors may require the holder of the Relevant Shares or the
person named as transferee in any transfer lodged for registration to
furnish the Directors with such information and provide such other
documentation as the Directors may reasonably consider necessary for
the purpose of ensuring that a transfer of Shares is permitted under
ARTICLE 9.1. If the information is not provided within twenty-eight
days of the request the directors may refuse to register the transfer
of the Relevant Shares.
10. TRANSFERS SALE TO THIRD PARTIES
10.1 Before a member (the "Vendor") transfers or disposes all, but not some
only of its shares ("Offered Shares") the Vendor shall give notice in
writing (the "Transfer Notice") to the other member (the "Purchaser")
of its intention to sell the Offered Shares and to negotiate with the
Purchaser in good faith the price and corresponding terms of purchase
for the Offered Shares. In the event that by the forty-fifth day after
the date of the Offer Notice (the "Third Party Date") the Vendor does
not accept the Purchaser's final proposed price and corresponding terms
(the "Final Offer"), the Vendor shall notify the Purchaser in writing
that the Purchaser's final price and terms have been rejected.
10.2 In the event the Purchaser does not accept the Final Offer, the Vendor
may sell the Offered Shares to a third party or parties; provided,
however, that any sale to a third party of the Offered Shares must be
evidenced by a letter of intent which must be signed within six months
of the Third Party Date and the contemplated transaction must be
completed within one year of the Third Party Date. The sale of the
Offered Shares to a third party or parties shall be for a price not
less than 95% of the Final Offer.
10.3 In the event of a sale to a third party in accordance with Article
10.2, the Board shall be reconstituted and the "A" Shareholder and the
"B" Shareholder shall each be entitled to and shall appoint three
Directors (who shall be designated "A" Directors and "B" Directors
respectively) and each such Director shall be entitled to one vote. For
the avoidance of doubt, the members may also agree to jointly appoint
such further number of Directors as they may determine and each such
further Director shall be entitled to one vote.
11. CONVERSION OF "A" AND "B" SHARES
11.1 When an "A" Share is transferred to a "B" Shareholder it shall be
converted into a "B" Share.
11.2 When a "B" Share is transferred to an "A" Shareholder it shall be
converted into an "A" Share.
12. TRANSMISSION OF SHARES
12.1 If a member dies the survivor or survivors where he was a joint holder,
and his personal representatives where he was a sole holder or the only
survivor of joint holders, shall be the only persons recognised by the
Company as having any title to his interest; but nothing herein
contained shall release the estate of a deceased member from any
liability in respect of any Share which had been jointly held by him.
12.2 A person becoming entitled to a Share in consequence of the death or
bankruptcy of a member may, upon such evidence being produced as the
Directors may properly require, elect either to become the holder of
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the Share or to have some person nominated by him registered as the
transferee. If he elects to become the holder he shall give notice to
the Company to that effect. If he elects to have another person
registered he shall execute an instrument of transfer of the Share to
that person. ARTICLE 10 relating to the transfer of Shares shall apply
to the notice or instrument of transfer as if it were an instrument of
transfer executed by the member and the death or bankruptcy of the
member had not occurred.
12.3 A person becoming entitled to a Share in consequence of the death or
bankruptcy of a member shall have the rights to which he would be
entitled if he were the holder of the Share, except that he shall not,
before being registered as the holder of the Share, be entitled in
respect of it to attend or vote at any meeting of the Company or at any
separate meeting of the holders of any class of shares in the Company.
13. ALTERATION OF SHARE CAPITAL
13.1 Subject to the provisions of the Act, the Company may by Ordinary
Resolution:
13.1.1 increase its share capital by new shares of such amount as the
resolution prescribes;
13.1.2 consolidate and divide all or any of its share capital into
shares of larger amount than its existing shares;
13.1.3 subject to the provisions of the Act, sub-divide its shares,
or any of them, into shares of smaller amount and the
resolution may determine that, as between the shares resulting
from the sub-division, any of them may have any preference or
advantage as compared with the others; and
13.1.4 cancel shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the
amount of the shares so cancelled.
13.2 Whenever as a result of a consolidation of shares any members would
become entitled to fractions of a share, the Directors may, on behalf
of those members, sell the shares representing the fractions for the
best price reasonably obtainable to any person (including, subject to
the provisions of the Act, the Company) and distribute the net proceeds
of sale in due proportion among those members, and the Directors may
authorise some person to execute an instrument of transfer of the
shares to, or in accordance with the directions of, the purchaser. The
transferee shall not be bound to see to the application of the purchase
money nor shall his title to the shares be affected by any irregularity
in or invalidity of the proceedings in reference to the sale.
13.3 Subject to the provisions of the Act, the Company may by Special
Resolution reduce its share capital, any capital redemption reserve and
any share premium account in any way.
14. PURCHASE OF OWN SHARES
Subject to the provisions of the Act, the Company may purchase its own
shares (including any redeemable shares) and, for so long as it is a
private company, make a payment in respect of the redemption or
purchase of its own shares whether out of its distributable profits or
out of the proceeds of a fresh issue of shares or otherwise.
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15. GENERAL MEETINGS
15.1 All General Meetings other than Annual General Meetings shall be called
Extraordinary General Meetings.
15.2 The Directors may call General Meetings and, on the requisition of
members pursuant to the provisions of the Act, shall forthwith proceed
to convene an Extraordinary General Meeting for a date not later than
twenty-eight days after receipt of the requisition. If there are not
within the United Kingdom sufficient Directors to call a General
Meeting, any Director or any member of the Company may call a General
Meeting.
16. NOTICE OF GENERAL MEETINGS
16.1 An Annual General Meeting and an Extraordinary General Meeting called
for the passing of a Special Resolution or a resolution appointing a
person as a Director shall be called by at least twenty-one clear days'
notice. All other Extraordinary General Meetings other than a meeting
called for the passing of an elective resolution may be called by
shorter notice if it is so agreed:
16.1.1 in the case of an Annual General Meeting, by all the members
entitled to attend and vote thereat; and
16.1.2 in the case of any other meeting by a majority in number of
the members having a right to attend and vote, being (i) a
majority together holding not less than such percentage in
nominal value of the shares giving that right as has been
determined by elective resolution in accordance with the Act
or (ii) if no such elective resolution is in force a majority
together holding not less than ninety-five per cent in nominal
value of the Shares giving that right.
16.2 Every notice convening a General Meeting shall specify the time and
place of the meeting and the general nature of the business to be
transacted and, in the case of an Annual General Meeting, shall specify
the meeting as such. Every notice convening a General Meeting shall
also comply with the provisions of Section 372(3) of the Act as to
giving information to members in regard to their right to appoint
proxies.
16.3 Subject to the provisions of these Articles and to any restrictions
imposed on any Shares, notices of and other communications relating to
any General Meeting shall be given to all the members entitled to
receive the same, to all persons entitled to a Share in consequence of
the death or bankruptcy of a member and to the Directors and Auditors.
16.4 The accidental omission to give notice of a meeting to, or the
non-receipt of notice of a meeting by, any person entitled to receive
notice shall not invalidate the proceedings at that meeting.
17. PROCEEDINGS AT GENERAL MEETINGS
17.1 No business shall be transacted at any General Meeting unless a quorum
is present at the time when the meeting proceeds to business and whilst
the business of the meeting is being transacted. A quorum shall consist
of at least one "A" Shareholder and one "B" Shareholder, present in
person or by proxy or (being a corporation) represented in accordance
with Section 375 of the Act, together owning not less than one half in
nominal value of the issued shares.
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17.2 If a quorum is not present, within half an hour from the time appointed
for a General Meeting the General Meeting shall stand adjourned to the
same day in the next week at the same time and place or to such other
day and at such other time and place as the Directors may determine;
and if at the adjourned General Meeting a quorum is not present within
half an hour from the time appointed therefor such adjourned General
Meeting shall be dissolved.
17.3 The Chairman, if any, of the Board or in his absence the deputy
Chairman of the Board or in his absence some other Director nominated
by the Directors shall preside as chairman of the General Meeting, but
if neither the Chairman nor the deputy Chairman nor such other Director
(if any) be present within fifteen minutes after the time appointed for
holding the General Meeting and willing to act, the Directors present
shall elect one of their number to be chairman and, if there is only
one Director present and willing to act, he shall be chairman.
17.4 If no Director is willing to act as Chairman, or if no Director is
present within fifteen minutes after the time appointed for holding the
General Meeting, the members present and entitled to vote shall choose
one of their number to be chairman.
17.5 A Director shall, notwithstanding that he is not a member, be entitled
to attend and speak at any General Meeting and at any separate meeting
of the holders of any class of shares in the Company.
17.6 The Chairman may, with the consent of a General Meeting at which a
quorum is present (and shall if so directed by the meeting), adjourn
the General Meeting from time to time and from place to place, but no
business shall be transacted at an adjourned General Meeting other than
business which might properly have been transacted at the General
Meeting had the adjournment not taken place. It shall not be necessary
to give any such notice of such adjourned General Meetings.
17.7 A resolution put to the vote of a General Meeting shall be decided on a
show of hands unless before, or on the declaration of the result of,
the show of hands a poll is duly demanded. Subject to the provisions of
the Act, a poll may be demanded:
17.7.1 by the Chairman; or
17.7.2 by at least two members having the right to vote at the
meeting; or
17.7.3 by a member or members representing not less than one-tenth of
the total voting rights of all the members having the right to
vote at the meeting; or
17.7.4 by a member or members holding shares conferring a right to
vote at the meeting being shares on which an aggregate sum has
been paid up equal to not less than one-tenth of the total sum
paid up on all the shares conferring that right;
and a demand by a person as proxy for a member shall be the same as a
demand by the member.
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17.8 The demand for a poll may, before the poll is taken, be withdrawn but
only with the consent of the chairman and a demand so withdrawn shall
not be taken to have invalidated the result of a show of hands declared
before the demand was made.
17.9 A poll shall be taken as the chairman directs and he may appoint
scrutineers (who need not be members) and fix a time and place for
declaring the result of the poll. The result of the poll shall be
deemed to be the resolution of the meeting at which the poll was
demanded.
17.10 In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman shall not be entitled to a casting vote in addition
to any other vote he may have.
17.11 A poll demanded on the election of a Chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken either forthwith or at such time and place as
the Chairman directs not being more than thirty days after the poll is
demanded. The demand for a poll shall not prevent the continuance of a
meeting for the transaction of any business other than the question on
which the poll was demanded. If a poll is demanded before the
declaration of the result of a show of hands and the demand is duly
withdrawn, the meeting shall continue as if the demand had not been
made.
17.12 No notice need be given of a poll not taken forthwith if the time and
place at which it is to be taken are announced at the meeting at which
it is demanded. In any other case at least seven clear days' notice
shall be given specifying the time and place at which the poll is to be
taken.
17.13 Subject to any statutory provision a resolution in writing expressed to
be an ordinary, special or extraordinary resolution signed by or on
behalf of all the members of the Company who would be entitled to
receive notice of and attend and vote on such resolution at a General
Meeting or of the holders of any class of shares thereof shall be as
valid and effectual as if the same had been passed at such a General
Meeting duly convened and held, or of the holders of any such class of
shares, duly convened and held, and may consist of several documents in
the like form each signed by one or more persons. In the case of a
corporation the resolution may be signed on its behalf by a director
thereof or by its duly appointed attorney or duly authorised
representative.
17.14 Any member or his proxy may validly participate in a General Meeting
through the medium of conference telephone, video-conferencing
equipment or similar form of communication equipment provided that all
persons participating in the meeting are able to hear and speak to each
other throughout the meeting. A person so participating shall be deemed
to be present in person at the meeting and shall be counted in a quorum
and entitled to vote. A resolution passed at any meeting held in this
manner and signed by the Chairman shall be as valid and effectual as if
it had been passed at a meeting of the Board (or, as the case may be,
of that committee) duly convened and held, notwithstanding that fewer
than two directors or alternate directors are physically present at the
same place. Such a meeting shall be deemed to take place where the
largest group of those participating is assembled, or, if there is no
such group, at the location of the Chairman.
18. VOTES OF MEMBERS
18.1 Subject to any rights or restrictions attached to any Shares contained
in these Articles, on a show of hands every member who (being an
individual) is present in person or (being a corporation) is present by
a duly authorised representative, not being himself a member entitled
to vote, shall have one vote and on a poll every member shall have one
vote for every Share of which he is the holder.
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18.2 In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of
the votes of the other joint holders; and seniority shall be determined
by the order in which the names of the holders stand in the register of
members.
18.3 A member in respect of whom an order has been made by any court having
jurisdiction (whether in the United Kingdom or elsewhere) in matters
concerning mental disorder may vote, whether on a show of hands or on a
poll, by his receiver, curator bonis or other person authorised in that
behalf appointed by that court, and any such receiver, curator bonis or
other person may, on a poll, vote by proxy. Evidence to the
satisfaction of the Directors of the authority of the person claiming
to exercise the right to vote shall be deposited at the office before
the time appointed for holding the meeting or adjourned meeting at
which the right to vote is to be exercised and in default the right to
vote shall not be exercisable.
18.4 No member shall vote at any General Meeting or at any separate meeting
of the holders of any class of shares in the Company, either in person
or by proxy, in respect of any Share held by him unless all moneys
presently payable by him in respect of that Share have been paid.
18.5 No objection shall be raised to the qualification of any voter except
at the meeting or adjourned meeting at which the vote objected to is
tendered, and every vote not disallowed at the meeting shall be valid.
Any objection made in due time shall be referred to the chairman whose
decision shall be final and conclusive.
18.6 On a poll votes may be given either personally or by proxy. A member
may appoint more than one proxy to attend on the same occasion.
18.7 An instrument appointing a proxy shall be in writing, executed by or on
behalf of the appointor and shall be in the following form (or in a
form as near thereto as circumstances allow or in any other form which
is usual or which the Directors may approve):
" PLC/Limited
I/We, , of
being a member/members of the above-named company, hereby appoint
of , or failing him,
of , as my/our proxy to vote in my/our name[s] and on my/our
behalf at the annual/extraordinary general meeting of the company to be
held on 19 , and at any adjournment thereof.
Signed on 19 ."
18.8 Where it is desired to afford members an opportunity of instructing the
proxy how he shall act the instrument appointing a proxy shall be in
the following form (or in a form as near thereto as circumstances allow
or in any other form which is usual or which the Directors may
approve):
" PLC/Limited
I/We, , of
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being a member/members of the above-named company, hereby appoint
of , or failing him, of , as my/our
proxy to vote in my/our name[s] and on my/our behalf at the
annual/extraordinary general meeting of the company to be held on
19 , and at any adjournment thereof.
This form is to be used in respect of the resolutions mentioned below
as follows:
Resolution No 1 *for *against
Resolution No 2 *for *against.
*Strike out whichever is not desired.
Unless otherwise instructed, the proxy may vote as he thinks fit or
abstain from voting.
Signed this day of 19 ."
18.9 The instrument appointing a new proxy and any authority which it is
executed or a copy of such authority certified notarially or in some
other way approved by the Directors may:
18.9.1 be deposited at the office or at such other place within the
United Kingdom as is specified in the notice convening the
meeting or in any instrument of proxy sent out by the Company
in relation to the meeting before the time for holding the
meeting or adjourned meeting at which the person named in the
instrument proposes to vote; or
18.9.2 in the case of a poll taken more than 48 hours after it is
demanded, be deposited as aforesaid after the poll has been
demanded and before the time appointed for the taking of the
poll; or
18.9.3 where the poll is not taken forthwith but is taken not more
than 48 hours after it was demanded, be delivered at the
meeting at which the poll was demanded to the Chairman or to
the Secretary or to any Director;
and an instrument of proxy which is not deposited or delivered in a
manner so permitted shall be invalid.
18.10 A vote given or poll demanded by proxy or by the duly authorised
representative of a corporation shall be valid notwithstanding the
previous determination of the authority of the person voting or
demanding a poll unless notice of the determination was received by the
Company at the office or at such other place at which the instrument of
proxy was duly deposited before the commencement of the meeting or
adjourned meeting at which the vote is given or the poll demanded or
(in the case of a poll taken otherwise than on the same day as the
meeting or adjourned meeting) the time appointed for taking the poll.
19. NUMBER OF DIRECTORS
The number of Directors (other than alternate directors) shall be not
less than five and not more than seven.
20. APPOINTMENT AND REMOVAL OF DIRECTORS
20.1 A majority of the "A" Shareholders shall be entitled at any time and
from time to time to appoint up to three Directors to the Board and
shall at any time be entitled to require the removal or substitution of
any such Director so appointed by it. Any Director so appointed by the
"A" Shareholder shall be designated as an "A" Director. A vacancy in
the appointment of an "A" Director must be filled within 30 days.
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20.2 A majority of the "B" Shareholders shall be entitled at any time and
from time to time to appoint up to two Directors to the Board and shall
at any time be entitled to require the removal or substitution of any
such Director so appointed by it. Any Director so appointed by the "B"
Shareholder(s) shall be designated as a "B" Director. A vacancy in the
appointment of a "B" Director must be filled within 30 days.
20.3 The Shareholders shall be entitled to appoint or remove up to two
Additional Directors to the Board.
20.4 No share of either class shall confer any right to vote upon a
resolution for the removal from office of a director appointed by
holders of shares of the other class.
20.5 Any appointment of a director shall be made by notice served in writing
on the Company and signed by the persons appointing the director. In
the case of a corporation the notice may be signed on its behalf by a
director or the secretary of the corporation or by its duly appointed
attorney or duly authorised representative.
21. DISQUALIFICATION AND REMOVAL OF DIRECTORS
21.1 The office of a Director shall be vacated if:
21.1.1 a Director resigns his office by notice in writing to the
Company delivered to the office or tenders such resignation at
a meeting of Directors;
21.1.2 a Director is removed from office by his appointor in
accordance with ARTICLES 20.1 AND 20.2;
21.1.3 he ceases to be a director by virtue of any provision of the
Act or he becomes prohibited by law from being a director;
21.1.4 he becomes bankrupt or makes any arrangement or composition
with his creditors generally;
21.1.5 he is, or may be, suffering from mental disorder and either:
(a) he is admitted to hospital in pursuance of an
application for admission for treatment under the Mental
Health Act 1983 or, in Scotland, an application for
admission under the Mental Health (Scotland) Act 1960,
or
(b) an order is made by a court having jurisdiction (whether
in the United Kingdom or elsewhere) in matters
concerning mental disorder for his detention or for the
appointment of a receiver, curator bonis or other person
to exercise powers with respect to his property or
affairs; or
21.1.6 the member who appointed the Director transfers or no longer
holds the Shares which entitled it to appoint the Director.
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21.2 The Directors shall not be required to retire by rotation.
21.3 No person shall be disqualified from being or becoming a Director of
the Company by reason of his attaining or having attained the age of 70
years or any other age.
22. CHAIRMAN
22.1 A majority of the "A" Shareholders shall appoint a Chairman and a
majority of the "B" Shareholders shall appoint a deputy Chairman.
22.2 If the Chairman is unable to attend any meeting of the Board or of the
Company, the deputy Chairman shall chair the meeting at which the
Chairman is not present and if the deputy Chairman is not present
within five minutes after the time appointed for the meeting the
Directors or members present at such meeting shall be entitled to
appoint another Director to act in his place.
22.3 The Chairman and the deputy Chairman shall not have a second or casting
vote on any matter.
23. ALTERNATE DIRECTORS
23.1 Any Shareholder (other than an alternate director) may appoint any
Director, or any other person approved by resolution of the Directors
and willing to act, to be an alternate director and may remove from
office an alternate director so appointed by him.
23.2 A Director, or any other such person may act as an alternate director
to represent more than one Director and an alternate director shall be
entitled at any meeting of the Directors or of any committee of the
Directors to one vote for every Director whom he represents in addition
to his own vote (if any) as a Director, but he shall count as only one
for the purpose of determining whether a quorum is present.
23.3 An alternate director shall be entitled to receive notice of all
meetings of Directors and of all meetings of committees of Directors of
which his appointor is a member, to attend and vote at any such meeting
at which the Director appointing him is not personally present, and
generally to perform all the functions of his appointor as a Director
in his absence but shall not be entitled to receive any remuneration
from the Company for his services as an alternate director save that he
may be paid by the Company such part (if any) of the remuneration
otherwise payable to his appointor as such appointor may by notice in
writing to the Company from time to time direct.
23.4 An alternate director shall cease to be an alternate director if his
appointor ceases to be a Shareholder; but, if a Director retires but is
reappointed or deemed to have been reappointed at the meeting at which
he retires, any appointment of an alternate director made by him which
was in force immediately prior to his retirement shall continue after
his reappointment. The appointment of an alternate director shall also
terminate automatically on the happening of any event which if he were
a Director would cause him to vacate his office as a Director.
23.5 Any appointment or removal of an alternate director shall be by notice
to the Company signed by the Shareholder making or revoking the
appointment or in any other manner approved by the Directors provided
that no Shareholder shall appoint or remove any alternate director
without reasonable prior consultation, where practically possible, with
the other Shareholder.
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23.6 Save as otherwise provided in these Articles, an alternate director
shall be deemed for all purposes to be a Director and shall alone be
responsible for his own acts and defaults and he shall not be deemed to
be the agent of the Shareholder appointing him.
24. POWERS OF DIRECTORS
24.1 Subject to the provisions of the Act and any directions given by
Special Resolutions of the Company the business of the Company shall be
managed by the Directors who may exercise all the powers of the
Company. No alteration of the memorandum or these Articles or any such
direction shall invalidate any prior act of the Directors which would
have been valid if that alteration had not been made or that direction
had not been given. The powers given by this ARTICLE 24.1 shall not be
limited by any special power given to the Directors by these Articles
and a meeting of Directors at which a quorum is present may exercise
all powers exercisable by the Directors.
24.2 The Directors may, by power of attorney or otherwise, appoint any
person to be the agent of the Company for such purposes and on such
conditions as they determine, including authority for the agent to
delegate all or any of his powers.
25. DELEGATION OF DIRECTORS' POWERS
The Directors may delegate any of their powers to an operating
committee consisting of such members as shall be nominated and
appointed by a majority of the "A" Shareholders, subject to the prior
approval of such candidates by the "B" Shareholders . They may also
delegate to any managing director or any Director holding any other
executive office such of their powers as they consider desirable to be
exercised by him. Subject to any such conditions, the proceedings of a
committee with two or more members shall be governed by ARTICLE 27
relating to the proceedings of Directors so far as they are capable of
applying.
26. DIRECTORS' APPOINTMENTS AND INTERESTS
26.1 Subject to the provisions of the Act the Directors may appoint one or
more of their number to the office of managing director or to any other
executive office under the Company and may enter into an agreement or
arrangement with any Director for his employment by the Company or for
the provision by him of any services outside the scope of the ordinary
duties of a Director. Any such appointment, agreement or arrangement
may be made upon such terms as the Directors determine and they may
remunerate any such Director for his services as they think fit. Any
appointment of a Director to an executive office shall terminate if he
ceases to be a Director but without prejudice to any claim to damages
for breach of the contract of service between the Director and the
Company.
26.2 Provided that any Director has disclosed his interest in accordance
with section 317 of the Act a Director:
26.2.1 may be a party to, or otherwise interested in, any transaction
or arrangement with the Company or in which the Company is
otherwise interested;
26.2.2 may be a director or other officer of, or employed by, or a
party to any transaction or arrangement with, or otherwise
interested in, any body corporate promoted by the Company or
in which the Company is otherwise interested;
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26.2.3 shall not, by reason of his office, be accountable to the
Company for any benefit which he derives from any such office
or employment or from any such transaction or arrangement or
from any interest in any such body corporate and no such
transaction or arrangement shall be liable to be avoided on
the ground of any such interest or benefit; and
26.2.4 may vote at a meeting of directors or of a committee of
directors on any resolution concerning a matter in which he
has, directly or indirectly, an interest or duty and if he
does so vote, his vote shall be counted and he shall be
counted in the quorum present at a meeting in relation to any
such resolution.
26.3 For the purposes of ARTICLE 26.2:
26.3.1 a general notice given to the Directors that a Director is to
be regarded as having an interest of the nature and extent
specified in the notice in any transaction or arrangement in
which a specified person or class of persons is interested
shall be deemed to be a disclosure that the Director has an
interest in any such transaction of the nature and extent so
specified; and
26.3.2 an interest of which a Director has no knowledge and of which
it is unreasonable to expect him to have knowledge shall not
be treated as an interest of his.
27. PROCEEDINGS OF DIRECTORS
27.1 Subject to the provisions of these Articles, the Directors may regulate
their proceedings as they think fit. A Director may, and the Secretary
at the request of a Director shall, call a meeting of the Board which
shall be held in London or such other location in the United Kingdom as
the members shall agree in writing. Each of the Directors (and, where
appropriate, their alternates) shall be entitled to receive written
notice of every meeting of the Board and of every committee meeting of
the Board of which they are a member. The notice shall specify the
place, the day and the hour of the meeting and a written agenda
outlining the matters to be discussed at the meeting and shall be given
to each Director (unless all the Directors shall otherwise agree) at
least seven days prior to the commencement of the meeting in the manner
described in ARTICLE 27.2. No business other than those specified in
the notice may be conducted at the meeting unless all the Directors
unanimously agree.
27.2 A notice may be given to any Director either personally or by sending
it by post or facsimile machine to him at the address supplied by him
to the Company for the giving of such notices. Any such notice, if sent
by post, shall be deemed to have been served or delivered on the day
after the same was put in the post, and in proving such service or
delivery it shall be sufficient to prove that the notice or document
was properly addressed, stamped first class (airmail if overseas) and
put in the post. Any such notice, if sent by facsimile machine, shall
be deemed to have been served or delivered at the time of the
transmission.
27.3 Save where agreed in writing by all the members to the contrary,
questions arising at a Board meeting shall be decided by a majority of
votes. Each "A" and "B" Director (or his alternate) shall be entitled
to three votes each and any Additional Directors shall be entitled to
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one vote each save that if one or more "A" Director(s) or "B"
Director(s) (as the case may be) is absent from such meeting, any "A"
Director or "B" Director or their alternates (as the case may be)
present at such meeting shall be entitled to cast the number of votes
of all the "A" Directors or "B" Directors (as the case may be) not
present at such meeting.
27.4 The quorum for meetings of the Board shall be one "A" Director and one
"B" Director. A person who holds office only as an alternate director
shall, if his appointor is not present, be counted in the quorum. No
meeting of the Board (or any committee thereof) may proceed to business
no transact any business unless a quorum is present at the start of and
through such meeting.
27.5 If and for so long as the number of Directors is reduced below the
quorum prescribed by ARTICLE 27.4, the continuing Directors may act for
the purpose of convening a general meeting of the Company but for no
other purpose.
27.6 All acts done by a meeting of Directors, or of a committee of
Directors, or by a person acting as a Director shall, notwithstanding
that it be afterwards discovered that there was a defect in the
appointment of any Director or that any of them were disqualified from
holding office, or had vacated office, or were not entitled to vote, be
as valid as if every such person had been duly appointed and was
qualified and had continued to be a Director and had been entitled to
vote.
27.7 A resolution in writing signed or approved by letter, telex or
facsimile transmission by all the Directors entitled to receive notice
of a meeting of Directors or of a committee of Directors shall be as
valid and effectual as if it had been passed at a meeting of Directors
or (as the case may be) a committee of Directors duly convened and held
and, when signed or approved as aforesaid, may consist of several
documents in the like form each signed by one or more Directors; but a
resolution signed by an alternate director need not also be signed by
his appointor and, if it is signed by a Director who has appointed an
alternate director, it need not be signed by the alternate director in
that capacity.
27.8 Any director or his alternate may validly participate in a meeting of
the directors through the medium of conference telephone,
video-conferencing equipment or similar form of communication equipment
provided that all persons participating in the meeting are able to hear
and speak to each other throughout the meeting. A person so
participating shall be deemed to be present in person at the meeting
and shall be counted in a quorum and entitled to vote. A resolution
passed at any meeting held in this manner and signed by the Chairman
shall be as valid and effectual as if it had been passed at a meeting
of the Board (or, as the case may be, of that committee) duly convened
and held, notwithstanding that fewer than two directors or alternate
directors are physically present at the same place. Such a meeting
shall be deemed to take place where the largest group of those
participating is assembled, or, if there is no such group, at the
location of the Chairman.
27.9 A Director may vote, at any meeting of the Directors or of any
committee of the Directors, on any resolution, notwithstanding that it
in any way concerns or relates to a matter in which he has, directly or
indirectly, any kind of interest whatsoever, and of he shall vote on
any such resolution as aforesaid his vote shall be counted; and in
relation to any such resolution as aforesaid he shall (whether or not
he shall vote on the same) be taken into account in calculating the
quorum present at the meeting.
28. REMUNERATION AND EXPENSES OF DIRECTORS
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The Directors shall not be entitled to any remuneration or other
benefits or any reimbursement of expenses incurred in the performance
of their duties as a Director except in accordance with the terms of
their service agreement (if any) or unless otherwise agreed by all the
members in writing.
29. SECRETARY
Subject to the provisions of the Act, the Secretary shall be appointed
by the Directors for such term, at such remuneration and upon such
conditions as they may think fit; and any Secretary so appointed may be
removed by them.
30. MINUTES
30.1 The Directors shall cause minutes to be kept (including the names of
the Directors present) of all proceedings at General Meetings, of
meetings of the holders of any class of shares in the Company, of Board
meetings, and of committees of Directors.
30.2 Draft minutes of the meetings referred to in ARTICLE 30.1 shall be
circulated by the Secretary to each Director for approval prior to the
relevant meeting or the next subsequent meeting of the Board.
31. THE SEAL
31.1 If the Company has a seal it shall only be used with the authority of
the Directors or of a committee of Directors. The Directors may
determine who shall sign any instrument to which the seal is affixed
and unless otherwise so determined it shall be signed by a Director and
by the Secretary or a second Director. The obligation under ARTICLE 5
relating to the sealing of share certificates shall apply only if the
Company has a seal.
31.2 The Company may exercise the powers conferred by Section 39 of the Act
with regard to having an official seal for use abroad, and such powers
shall be vested in the Directors.
32. DIVIDENDS
32.1 Subject to the provisions of the Act the Company may by Ordinary
Resolution declare interim or final dividends in accordance with the
respective rights of the members, but no dividend shall exceed the
amount recommended by the Directors.
32.2 Subject to the provisions of the Act, the Directors may approve the
distribution of interim dividends if it appears to them that they are
justified by the profits of the Company available for distribution and
the Shareholders approve such payment.
32.3 Except as otherwise provided by the rights attached to shares, all
dividends shall be declared and paid according to the amounts paid up
on the shares on which the dividend is paid. All dividends shall be
apportioned and paid proportionately to the amounts paid up on the
shares during any portion or portions of the period in respect of which
the dividend is paid; but, if any share is issued on terms providing
that it shall rank for dividend as from a particular date, that share
shall rank for dividend accordingly.
32.4 A General Meeting declaring a dividend may, upon the recommendation of
the Directors, direct that it shall be satisfied wholly or partly by
the distribution of assets and, where any difficulty arises in regard
to the distribution, the Directors may settle the same and in
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particular may issue fractional certificates and fix the value for
distribution of any assets and may determine that cash shall be paid to
any member upon the footing of the value so fixed in order to adjust
the rights of members and may vest any assets in trustees.
32.5 Any dividend or other moneys payable in respect of a share may be paid
by cheque sent by post to the registered address of the person entitled
or, if two or more persons are the holders of the share or are jointly
entitled to it by reason of the death or bankruptcy of the holder, to
the registered address of that one of those persons who is first named
in the register of members or to such person and to such address as the
person or persons entitled may in writing direct. Every cheque shall be
made payable to the order of the person or persons entitled or to such
other person as the person or persons entitled may in writing direct
and payment of the cheque shall be a good discharge to the Company. Any
joint holder or other person jointly entitled to a share as aforesaid
may give receipts for any dividend or other moneys payable in respect
of the share.
32.6 The Directors may deduct from any dividend or other moneys payable to
any member or in respect of a Share any moneys presently payable by
that member to the Company in respect of that Share.
32.7 No dividend or other moneys payable in respect of a share shall bear
interest against the Company unless otherwise provided by the rights
attached to the share.
32.8 Any dividend which has remained unclaimed for twelve years from the
date when it became due for payment shall, if the Directors so resolve,
be forfeited and cease to remain owing by the Company.
33. ACCOUNTS
Each member shall have a right to inspect any accounting records and
other books or documents of the Company.
34. CAPITALISATION OF PROFITS AND RESERVES
34.1 The Directors may, with the sanction of an ordinary resolution of the
Company, capitalise any sum standing to the credit of any of the
Company's reserve accounts (including its share premium account and
capital redemption reserve) or any sum standing to the credit of its
profit and loss account by appropriating such sum to the members in the
proportions in which such sum would have been divisible amongst them
had the same been a distribution of profits by way of dividend.
34.2 The Directors may do all acts and things considered necessary or
expedient to give effect to any such capitalisation, with full power to
the Directors to make such provisions as they think fit for the case of
Shares becoming distributable in fractions (including provisions
whereby the benefit of fractional entitlements accrues to the Company
rather than to the members concerned). The Directors may authorise any
person to enter on behalf of all the members interested into an
agreement with the Company providing for any such capitalisation and
matters incidental thereto and any agreement made under such authority
shall be effective and binding on all concerned.
35. NOTICES
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35.1 Any notice to be given to or by any person pursuant to these Articles
shall be in writing except that a notice calling a meeting of the
Directors need not be in writing.
35.2 The Company may give any notice to a member either personally, by
sending it by post in a prepaid envelope addressed to the member at his
registered address, by sending it to the member by facsimile
transmission or by leaving it at that address. In the case of joint
holders of a Share, all notices shall be given to the joint holder
whose name stands first in the register of members in respect of the
joint holding and notice so given shall be sufficient notice to all the
joint holders.
35.3 A member present, either in person or by proxy, at any meeting of the
Company or of the holders of any class of shares in the Company shall
be deemed to have received notice of the meeting and, where requisite,
of the purposes for which it was called.
35.4 Every person who becomes entitled to a Share shall be bound by any
notice in respect of that Share which, before his name is entered in
the register of members, has been duly given to a person from whom he
derives his title.
35.5 Proof that an envelope containing a notice was properly addressed,
prepaid and posted shall be conclusive evidence that the notice was
given. A notice shall be deemed to be given at the expiration of 48
hours after the envelope containing it was posted except in the case of
a facsimile transmission, where notice shall be deemed to have been
given on receipt by the Company from its facsimile machine of a report
of successful transmission.
35.6 A notice may be given by the Company to the persons entitled to a Share
in consequence of the death or bankruptcy of a member by sending or
delivering it, in any manner authorised by these Articles for the
giving of notice to a member, addressed to them by name, or by the
title of representatives of the deceased, or trustee of the bankrupt or
by any like description at the address, if any, within the United
Kingdom supplied for that purpose by the persons claiming to be so
entitled. Until such an address has been supplied, a notice may be
given in any manner in which it might have been given if the death or
bankruptcy had not occurred.
36. WINDING UP
If the Company is wound up, the liquidator may, with the sanction of an
extraordinary resolution of the Company and other sanction required by
the Act, divide among the members in specie the whole or any part of
the assets of the Company and may, for that purpose, value any assets
and determine how the division shall be carried out as between the
members or different classes of members. The liquidator may, with the
like sanction, vest the whole or any part of the assets in trustees
upon such trusts for the benefit of the members as he with the like
sanction determines, but no member shall be compelled to accept any
assets upon which there is a liability.
37. INDEMNITY
37.1 Every Director or other officer of the Company or the Auditors shall be
indemnified out of the assets of the Company against all losses or
liabilities which he may sustain or incur in or about the execution of
the duties of his office or otherwise in relation thereto including any
liability incurred by him in defending any proceedings whether civil or
criminal, or in connection with any application under Section 144 or
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Section 727 of the Act in which relief is granted to him by the Court,
and no Director or other officer shall be liable for any loss, damage
or misfortune which may happen to or be incurred by the Company in the
execution of the duties of his office or in relation thereto. But this
ARTICLE 37.1 shall only have effect in so far as its provisions are not
avoided by Section 310 of the Act.
37.2 The Directors shall have power to purchase and maintain for any
Director, officer of the Company or the Auditors insurance against any
such liability as is referred to in Section 310(1) of the Act.
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ANNEX B: COMPLETION BOARD RESOLUTION
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FORTDOVE LIMITED (THE "COMPANY")
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS
HELD AT 200 ALDERSGATE STREET, LONDON, EC1A 4JJ
ON FEBRUARY 2000 AT PM
---------------------------------------------
PRESENT:
IN ATTENDANCE:
---------------------------------------------
1. CHAIRMAN
took the chair. The chairman declared that a quorum was
present and that notice of the meeting had been given to all directors
in accordance with the articles of association of the Company.
2. PURPOSE OF MEETING
The chairman reported that the meeting had been convened for the
purpose of considering and, if thought fit, approving (i) the entering
into of a shareholders agreement between Hogg Robinson plc ("HRPLC"),
Hogg Robinson Services Limited ("HRSL"), WTT UK Limited ("WTT"), WT
Technologies Inc. and the Company (the"SHAREHOLDERS AGREEMENT") and
(ii) all actions and the entering into of all documents contemplated by
the Shareholders Agreement.
3. DIRECTORS' INTERESTS
Each of the directors declared his interest, direct or indirect, in the
business to be transacted at the meeting, as required by the articles
of association of the Company, statute or otherwise.
4. EXECUTION OF SHAREHOLDERS AGREEMENT
4.1 An execution copy of the Shareholders Agreement was produced to the
meeting:
4.2 After full and careful consideration, IT WAS UNANIMOUSLY RESOLVED that:
4.2.1 The arrangements reflected in, and the transactions
contemplated by the Shareholders Agreement, were in the best
commercial interests of the Company and accordingly were
approved;
4.2.2 each of the directors be severally authorised to execute the
Shareholders Agreement on behalf of the Company in the form of
the copy produced to the meeting, with any amendments he may
in his absolute discretion approve; and
4.2.3 each director or the secretary be severally authorised to sign
any document and to do any other acts and things as he may in
his or her absolute discretion, consider necessary or
desirable, in connection with the Sharehoders Agreement.
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5. WRITTEN RESOLUTIONS
5.1 There was produced to the meeting a form of written resolutions which
would be effective to pass resolutions to:
5.1.1 reclassify the existing issued ordinary shares of(pound)1 as
an "A" Ordinary Share of(pound)1;
5.1.2 reclassify the 99 unissued but authorised ordinary shares
of(pound)1 each as 49 "A" shares of(pound)1 each and 50 "B"
shares of(pound)1 each;
5.1.3 alter the Company's articles of association; and
5.1.4 change the Company's name to e-TRX Limited.
6. APPROVAL OF WRITTEN RESOLUTIONS
6.1 IT WAS RESOLVED that:
6.1.1 the form of written resolutions be approved; and
6.1.2 the secretary be instructed to submit the form of the written
resolutions to the members for consideration and, if
appropriate, signature.
7. ADJOURNMENT
The meeting was then adjourned for consideration of the form of written
resolutions by or on behalf of all the members. On resumption it was
reported that the special and ordinary resolutions set out in the form
of written resolutions had been passed.
8. ALLOTMENT OF NEW SHARES
8.1 The following application for shares was produced to the meeting:
NAME OF APPLICANT NUMBER AND CLASS OF AMOUNT TO BE PAID
SHARES APPLIED FOR
(POUND)
WTT 1 "B" Ordinary Share of(pound)1 1
8.2 IT WAS RESOLVED that:
8.2.1 one "B" Ordinary Share of(pound)1 each be allotted fully paid
for cash at par to the applicant;
8.2.2 the name of the allottee be entered in the register of members
as the holder of the shares allotted to it; and
8.2.3 a certificate in respect of the shares allotted be executed
and issued to the allottee.
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9. RESIGNATION OF SECRETARY
A letter from Clifford Chance Secretaries Limited resigning from the
office of secretary was produced to the meeting. IT WAS RESOLVED that
the resignation be accepted with effect from the close of the meeting
and be recorded in the Company's books.
10. APPOINTMENT OF DIRECTORS AND REPLACEMENT OF SECRETARY
10.1 IT WAS RESOLVED that:
10.1.1 Ralph Manaker and N.H. Davis having consented in writing to
act, be appointed directors of the Company with immediate
effect;
10.1.2 Keith Burgess, having consented in writing to act, be
appointed secretary of the Company with effect from the close
of the meeting; and
10.1.3 these appointments be recorded in the Company's books.
11. REGISTERED OFFICE
It was reported that the Company had been incorporated with its
registered office at 200 Aldersgate Street, London EC1A 4JJ and IT WAS
RESOLVED that the registered office be changed to Abbey House, 282
Farnborough Road, Farnborough, Hampshire, GU14 7NJ.
12, AUDITORS
IT WAS RESOLVED that Pricewaterhouse Coopers (London) be appointed
auditors of the Company on terms and at a remuneration to be agreed.
13. CHANGE IN ACCOUNTING REFERENCE DATE
IT WAS RESOLVED that the Company's accounting reference date for the
purposes of section 224 of the Act be changed to 31 March in every year
and that the Company's current accounting reference period which would
otherwise end on 30 September 2000 be extended to end on 31 March 2001.
14. TABLING OF ANCILLARY DOCUMENTS
14.1 Execution copies of each of the following documents were produced to
the meeting:
14.1.1 a licence agreement between Technology Licensing Company LLC
and the Company;
14.1.2 a reciprocal software development agreement between the
Company and WorldTravel Technologies LLC ("WTT LLC");
14.1.3 a software support agreement between WTT LLC and the Company;
14.1.4 an Escrow agreement between WTT LLC, TLC and the Company;
14.1.5 a software licence agreement between the Company and HRPLC;
14.1.6 a software development agreement between the Company and
HRPLC;
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14.1.7 a software support agreement between the Company and HRPLC;
14.1.8 a service bureau/outsourcing agreement for online fulfilment
services between the Company and HRPLC;
14.1.9 a service bureau software services agreement between the
Company and HRPLC;
14.1.10 a shared services agreement between the Company and HRPLC;
14.1.11 a licence agreement between HRPLC and the Company;
14.1.12 deed poll constituting (pound)1,250,000 floating rate
unsecured loan notes 2002, such notes to be issued in
accordance with the terms of the Shareholders' Agreement.
(together the "DOCUMENTS")
15. EXECUTION OF ANCILLARY DOCUMENTS
15.1 After full and careful consideration, IT WAS UNANIMOUSLY RESOLVED that:
15.1.1 The arrangements reflected in, and the transactions
contemplated by the Documents, were in the best commercial
interests of the Company and accordingly were approved;
15.1.2 each of the directors be severally authorised to execute the
Documents on behalf of the Company in the form of the copy
produced to the meeting, with any amendments he may in his
absolute discretion approve; and
15.1.3 each director or the secretary be severally authorised to sign
any document and to do any other acts and things as he may in
his or her absolute discretion, consider necessary or
desirable, in connection with the Documents.
16. FILING OF DOCUMENTS
16.1 The secretary was instructed to arrange for the filing of the following
documents with the Registrar of Companies:
16.1.1 notice of change in situation of registered office (form 287);
16.1.2 change of accounting reference date (form 225);
16.1.3 copies of the special resolutions passed by written resolution
today together with a cheque for (pound)10 being the fee for
the proposed change in the Company's name; and
16.1.4 a copy of the articles of association of the Company as
altered, signed by the chairman.
16.1.5 return of allotments (form 88(2)); and
16.1.6 notices of appointments and resignations of directors and
secretary (forms 288a and 288b).
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17. CLOSING OF MEETING
There being no further business, the Chairman declared the meeting
closed.
..........................
Chairman
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ANNEX C: COMPLETION SPECIAL RESOLUTION
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Company No. 3841799
THE COMPANIES ACTS 1985 AND 1989
-----------------------------------------
PRIVATE COMPANY LIMITED BY SHARES
-----------------------------------------
RESOLUTIONS IN WRITING
OF
FORTDOVE LIMITED
We, Hogg Robinson Services Limited, being the sole member of the Company who at
the date of these resolutions is entitled to attend and vote at a general
meeting of the Company, RESOLVE, in accordance with section 381A of the
Companies Act 1985, to pass the following as written resolutions:
1. THAT the one existing Ordinary Share of (pound)1 be reclassified as an
"A" Ordinary Share of (pound)1, having the rights set out in the new
articles of association referred to in resolution 4.
2. THAT the 99 unissued but authorised shares of (pound)1 each be
reclassified as 49 "A" ordinary shares of (pound)1 each 50 "B" ordinary
shares of (pound)1, each having the rights set out in the new articles
of association referred to in resolution 4.
3. THAT the name of the Company be changed to e-TRX LIMITED.
4. THAT new articles of association in the form of the annexed draft,
initialled by the chairman for the purpose of identification, be adopted
in substitution for the Company's existing articles of association.
SIGNATURE: __________________________________
FOR AND ON BEHALF OF HOGG ROBINSON SERVICES LIMITED
DATE: __________________________________
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ANNEX D: OBJECTS CLAUSE
NOT USED
94
<PAGE> 97
ANNEX E: LOAN NOTE
95
<PAGE> 98
FORTDOVE LIMITED
(the "COMPANY")
DEED POLL CONSTITUTING
UNSECURED LOAN NOTES 2002
MCDERMOTT, WILL & EMERY
7 BISHOPSGATE
LONDON
EC2N 3AQ
TEL: 020 7577 6900
FAX: 020 7577 6950
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<PAGE> 99
THIS DEED POLL is made on February 2000
BY
FORTDOVE LIMITED, a company incorporated in England and Wales (registered no.
3841799) whose registered office is at 200 Aldersgate Street, London EC1A
4JJ(the "COMPANY").
WHEREAS:
In order to evidence the funding of the activities of the Company
provided by the noteholder (the "NOTEHOLDER"), the Company has agreed
to issue Notes to the Noteholder for the term and on the conditions
contained herein.
THIS DEED WITNESSES as follows:
1. INTERPRETATION
1.1 In this Deed:
<TABLE>
<CAPTION>
<S> <C>
"BOARD" means the board of directors of the Company from time to time;
"BUSINESS DAY" means a day other than a Saturday or Sunday on which clearing banks
are open for business in London;
"CONDITIONS" means the conditions of the Notes in the form set out in the
Schedule (as they may be modified in accordance with the provisions
of this Deed);
"MATURITY DATE" means 31 March 2002 (or, if such day is not a business day, the next
business day);
"NOTES" means the floating rate unsecured loan Notes 2002 originally
constituted by this Deed or, as the case may be, the amount thereof for
the time being issued and outstanding;
"PRINCIPAL AMOUNT means, in relation to a Note, the principal amount of the Note at
OWING" par less any deductions made pursuant to Condition 3 upon redemption
of the Note;
"RATE" means the bank base rate of Barclays Bank plc from time to time; and
"REGISTER" means the register of Notes referred to in Clause 5.
</TABLE>
1.2 In this Deed, reference to:
1.2.1 a "SUBSIDIARY" or "HOLDING COMPANY" is to be construed in
accordance with section 736 of the Companies Act 1985;
1.2.2 a statutory provision includes the statutory provision as
modified or re-enacted or both before the date of this Deed
and any subordinate legislation made under the statutory
provision before the date of this Deed;
1.2.3 a person includes a body corporate, association or
partnership;
1.2.4 a clause or schedule, unless the context otherwise requires,
is a reference to a clause or schedule of or to this Deed; and
1.2.5 a condition is to one of the Conditions.
1.3 The headings in this Deed do not affect its interpretation.
2. CONSTITUTION OF THE NOTES
2.1 The Notes are called(pound)1,250,000 Floating Rate Unsecured Loan Notes
2002.
2.2 The Board may issue the Notes to the Noteholder at such times and on
such conditions as provided for in this Deed and in the Conditions.
2.3 Notes may be issued in the amount of(pound)25,000 or an integral
multiple thereof.
2.4 The principal amount of the Notes is limited to(pound)1,250,000 (THE
"MAXIMUM PRINCIPAL AMount").
2.5 The Notes shall be held subject to and with the benefit of the
Conditions, which shall be binding on the Company and on the
Noteholder, and which shall have effect in the same manner as if they
were set out in this Deed.
3. REDEMPTION AND INTEREST
3.1 As and when a Note is due to be redeemed in accordance with this Deed
and the Conditions, the Company shall pay to the Noteholder the
Principal Amount Owing of the Note together with accrued interest
(after deduction of tax, if any) up to but excluding the date of
redemption.
3.2 Until a Note is redeemed in accordance with this Deed and the
Conditions, the Company shall pay to the Noteholder interest (after
deduction of tax, if any) on the principal amount of the Note in
accordance with the Conditions.
4. CERTIFICATES
4.1 The Noteholder is entitled without charge to a certificate
substantially in the form of the certificate in the Schedule upon the
issue of a Note.
4.2 Each certificate shall be substantially in the form set out in the
Schedule, shall have the Conditions endorsed on it and shall be
executed by the Company in accordance with its articles of association
or in such other manner as may be permitted by statute.
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<PAGE> 100
4.3 Upon redemption of part of the principal amount of a Note the relevant
certificate shall be cancelled and a new certificate for the balance of
the principal amount shall be issued in lieu without charge.
5. REGISTER
5.1 The Company shall keep a Register of Notes issued at its registered
office and enter in it:
5.1.1 The date of issue of each Note;
5.1.2 The principal amount of each Note;
5.1.3 The serial number of each certificate issued; and
5.1.4 The date of redemption of each Note.
5.2 The Company shall enter in the Register any change to the information
specified in Clause 5.1.
5.3 The Noteholder may inspect the Register at all reasonable times during
office hours and may request, and be provided with a copy of the
Register or any part of it without charge. The Register may be closed
during such period or periods not exceeding in whole 30 days in any
year.
6. OBLIGATIONS
6.1 The Company shall comply in all respects with the provisions of this
Deed and the provisions of the Schedule.
6.2 This Deed is for the benefit of the Noteholder and the Noteholder may
sue for compliance by the Company with its obligations under this Deed
in relation to Notes held by the Noteholder.
7. AMENDMENT OF THE DEED
7.1 The Company may amend this Deed from time to time by deed expressed to
be supplemental to this Deed without the written consent of the
Noteholder if such change would not (in the opinion of the Board) be
prejudicial to the interests of the Noteholder, or if such amendment is
of a formal, minor or technical nature, or if it is made to correct a
manifest error in its terms.
7.2 The Company shall endorse on this Deed a memorandum of execution of any
deed supplemental to this Deed.
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8. GOVERNING LAW AND JURISDICTION
8.1 This Deed is governed by English Law.
8.2 The courts of England shall have jurisdiction to hear and decide any
suit, action or proceedings, and to settle any disputes which may arise
out of or in connection with this Deed or the Notes (respectively,
"PROCEEDINGS" and "DISPUTES") and, for these purposes, the Company and
the Noteholder irrevocably submit to the jurisdiction of the courts of
England.
8.3 The Company and the Noteholder irrevocably waive any objection which
they might at any time have to the courts of England being nominated as
the forum to hear and decide any Proceedings and to settle any Disputes
and agree not to claim that the courts of England are not a convenient
or appropriate forum.
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SCHEDULE - CERTIFICATE AND CONDITIONS
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<PAGE> 103
Certificate No. [ ] Amount(POUND)[ ]
FORTDOVE LIMITED (REGISTERED NO. 3841799)
(Incorporated in England and Wales under the Companies Act 1985)
----------------------
(POUND)1,250,000 FLOATING RATE UNSECURED LOAN NOTES 2002
Issued pursuant to the Memorandum and Articles of Fortdove Limited (the
"COMPANY") and created by resolution of the Board of Directors of the Company
passed on [ ].
THIS IS TO CERTIFY THAT [ ] is the holder of [ ] Unsecured Loan Notes 2002 of
the Company (the "NOTES") which are constituted by a Deed Poll (the "DEED") made
by the Company and dated [ ] February 2000. The Notes are issued with the
benefit of and subject to the provisions contained in the Deed and the
Conditions endorsed hereon.
Interest (after deduction of tax, if any) is payable on the Notes represented by
this certificate as specified in Condition 3. The Notes are redeemable in
accordance with Condition 4.
A copy of the Deed is available for inspection at the Company's registered
office.
The Notes are governed by English law.
Issued on [ ]
Executed as a Deed by: )
FORTDOVE LIMITED ) ....................................
Director's Signature
....................................
Director's name
....................................
Director/Secretary's signature
....................................
Director/secretary's name
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<PAGE> 104
CONDITIONS
1. INTERPRETATION
Words and expressions defined in the Deed unless the context otherwise requires
have the same meanings in these Conditions.
2. STATUS OF NOTE
The Note constitutes direct, general and unconditional obligations of the
Company which at all times rank at least pari passu with all other future,
unsecured obligations of the Company, except for those obligations preferred by
law.
3. PAYMENT OF PRINCIPAL
3.1 Unless previously redeemed, the Company will pay to the Noteholder the
Principal Amount Owing together with interest calculated in accordance
with Condition 4 on the Maturity Date.
3.2 Any amounts payable under this Condition 3 are subject to any
deductions or withholdings for or on account of any tax, as may be
required by law.
4. INTEREST
4.1 Interest on a Note is payable on the date of redemption of the Note,
which date shall be no later than the Maturity Date.
4.2 The annual rate of interest on a Note is the Rate plus one (1) per
cent.
4.3 Interest is calculated on the basis of a 365 day year and actual days
elapsed.
4.4 Interest ceases to accrue on a Note as and from the date of redemption
of the Note.
4.5 The Company shall pay interest in accordance with Condition 4.1 (after
deduction of tax, if any) to the Noteholder at the close of business on
the day specified in Condition 4.1.
4.6 Any amounts payable under this Condition 4 are subject to any
deductions or withholdings for or on account of any tax, as may be
required by law.
5. REDEMPTION
5.1 Notwithstanding any other provision of these Conditions, the Company
may at any time before the Maturity Date redeem a Note by giving not
less than 30 days' notice of such redemption to the Noteholder and by
paying to the Noteholder the Principal Amount Owing together with
accrued interest (after deduction of tax, if any) up to but excluding
that date.
5.2 The Notes become immediately redeemable together with accrued interest
(after deduction of tax, if any) up to but excluding the date of
redemption on the occurrence of any of the following events:
5.2.1 the passing by the Company of an effective resolution for its
winding up or the making by a court of competent jurisdiction
of an order for the winding up of the Company or the
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dissolution of the Company otherwise than for the purpose of a
solvent amalgamation or reconstruction on terms previously
sanctioned by the Noteholder;
5.2.2 the making of an administration order in relation to the
Company or the appointment of a receiver over, or the taking
possession or sale by an encumbrancer of, any of the Company's
assets; or
5.2.3 the making by the Company of an arrangement or composition
with its creditors generally or the making by the Company of
an application to a court of competent jurisdiction for
protection of its creditors generally.
6. SET-OFF
In the event that any payments of interest or principal become due and
payable to the Noteholder at a time when there is a claim against the
Noteholder by the Company, the Company shall be entitled to pay any
such interest or principal due into a joint interest-bearing deposit
account in the joint names of the Noteholder's solicitors and the
Company's solicitors (the "ESCROW ACCOUNT") pending resolution of such
claim. Upon resolution of such claim the Company shall be entitled to
payment from the Escrow Account of an amount which does not exceed the
amount due to it from the Noteholder in relation to the resolved claim,
with the balance standing to the credit of the Escrow Account being
payable to the Noteholder. Interest accrued in the Escrow Account shall
follow capital. This Condition is without prejudice to the Noteholder's
right to accrue and receive interest on Notes.
7. DEALINGS
No application has been or will be made to any stock exchange for the
Notes to be listed or dealt in.
8. PROCEDURE ON REDEMPTION AND IN RELATION TO UNCLAIMED MONEYS
8.1 No later than the due date for redemption of each Note, the Noteholder
shall deliver to the Company at its registered address (or at another
address of which notice is given for that purpose) the certificate for
the Note for cancellation. Upon delivery, and upon provision of a
receipt (if the Company so requires) for the amount payable in respect
of the Note, the Company will pay to the Noteholder such amount.
8.2 The Company may invest or otherwise use all unclaimed amounts in
respect of a Note until claimed in accordance with Condition 8.1. The
payment of an unclaimed amount into a bank account does not constitute
the Company a trustee in respect of it. The Company is not responsible
for the safe custody of the amount or related interest and the Company
is, and the Noteholder is not, entitled to interest accrued on the
amount. Amounts of interest on a Note which remain unclaimed by the
Noteholder for a period of five years and amounts of principal which
remain unclaimed for a period of ten years, in each case from the date
on which the relevant payment first becomes due, revert to the Company,
and the Noteholder ceases to be entitled to the amounts.
9. NOTICES
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9.1 A notice to be given to or by the Noteholder under the Deed or these
Conditions shall be in writing.
9.2 A notice or other document may be given to the Noteholder by the
Company either personally or by sending it by post in a pre-paid
envelope addressed to the Noteholder at its registered address, by
leaving it at that address (or at another address of which notice is
given for that purpose) in an envelope addressed to the Noteholder, or
by sending it by facsimile to the Noteholder at the facsimile number of
the Noteholder of which notice is given for that purpose.
9.3 A notice or other document addressed to the Noteholder at its
registered address or address for service in the United Kingdom is, if
sent by post, deemed to be given or delivered within 24 hours after it
was posted if pre-paid as first class post and within 48 hours after it
was posted if pre-paid as second class post, and in proving service it
is sufficient to prove that the envelope containing the notice or
document was properly addressed, pre-paid and posted. A notice or
document left at a registered address or address for service in the
United Kingdom is deemed to be given or delivered on the day it is
left. A notice or document sent by facsimile is deemed to be given or
delivered upon production of a record of successful transmission by the
sender's facsimile machine.
10. PAYMENT OF AMOUNTS IN RESPECT OF NOTES
10.1 The Company may pay principal amounts, interest or any other amount
payable in respect of a Note in cash or by cheque, warrant or money
order, by a bank or other funds transfer system, or by such other
method as the Noteholder may in writing direct. The Noteholder may give
an effective receipt for principal amounts, interest or any other
amount paid in respect of a Note.
10.2 Every cheque, warrant or order is sent at the risk of the person
entitled to the payment and shall be made payable to the order of the
person or persons so entitled. The payment of the cheque, warrant or
order is a good discharge for the Company. If payment is made by a bank
or other funds transfer, or by another method at the direction of the
Noteholder, the Company is not responsible for amounts lost or delayed
in the course of the transfer or in carrying out those directions.
10.3 If the due date for payment of an amount in respect of a Note is not a
business day, the Noteholder is not entitled to payment of the amount
until the next following business day and is not entitled to any
further interest or other payment as a result of the delay in payment.
11. TRUSTS NOT RECOGNISED
Except as ordered by a court of competent jurisdiction or as required
by law, the Company shall not recognise the Noteholder as holding a
Note on trust and is not bound by or otherwise compelled to recognise
(even if it has notice of it) an equitable, contingent, future, partial
or other claim to or interest in a Note other than an absolute right in
the Noteholder to the whole of the Note.
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12. TRANSFERS
The Noteholder may not transfer a Note and is deemed to be the holder
of a Note until the Maturity Date unless redeemed by the Company before
that date.
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IN WITNESS WHEREOF this Deed has been executed by the Company and is hereby
delivered on the date first above written.
Executed as a Deed by: )
FORTDOVE LIMITED ) ....................................
Director's Signature
....................................
Director's name
....................................
Director/Secretary's signature
....................................
Director/secretary's name
106
<PAGE> 109
ANNEX F: WTT LICENCE
107
<PAGE> 110
ANNEX F: WTT LICENCE
NOT USED
108
<PAGE> 111
ANNEX G: WTT LOAN NOTE
NOT USED
109
<PAGE> 112
ANNEX H: PRODUCTS CREATED BY HRPLC
110
<PAGE> 113
HR TRAVEL RELATED PRODUCTS
<TABLE>
<CAPTION>
HARDWARE CRS SOFTWARE
<S> <C> <C> <C> <C>
1. E-Ticket Reclaim PC/AS400 Galileo Visual Basic, RPG, DB2
2. Visa Checker PC Galileo Galileo Focalpoint, Visual Basic
3. Central Air Ticket Refund AS400 Galileo DB2, RPG
</TABLE>
DESCRIPTION
1) E-RECLAIM
Application that checks for eligibility of e-tickets for refunds. VB
code interrogates DB2 database of e-tickets issued with travel date of
more than one month ago and then checks ticket status on Galileo.
2) VISA CHECKER
VB Application that checks bookings queued to it. Compares nationality
of travellers against countries being visited and advises if visa is
required.
3) CENTRAL AIR REFUNDS
Produces computer generated refund notices for any air refund required.
111
<PAGE> 114
ANNEX I: BUSINESS CONTEMPLATED BY THE SHAREHOLDERS
112
<PAGE> 115
WTT AND ITS ASSOCIATES
E-COMMERCE SOLUTIONS
WTPI's E-Commerce Solutions group is charged with the design, development and
operation of WTP's intranet, Internet and all E-Commerce products. It will be
staffed with web designers, software developers, website managers, marketing and
advertising specialists, content editors and other Internet experts.
In the year 2000, the E-Commerce Solutions Group will focus on the following
five key web and E-Commerce projects:
WORLDTRAVEL PARTNERS CORPORATE INTRANET
The first project for WTPI is the development of a corporate intranet, a
powerful inter-company web site for sharing and disseminating information. The
site will offer a global employee directory, document repository, bulletin
boards, divisional and departmental sections, news and information, travel
features and articles, employment listings, and many other useful sections. The
intranet will be introduced in March 2000.
WORLDTRAVEL PARTNERS CORPORATE WEBSITE
The WTPI team is redesigning the WTP corporate Internet site
(WWW.WORLDTRAVEL.COM), the external web site for sharing information about our
company. The site will get an updated, high-tech look-and-feel and will be
integrated with our intranet site to share important information, such as
employment listings, WTP product and service information and travel news. The
WTP Internet site will be re-launched in the March/April 2000 timeframe.
WORLDTRAVELNET CORPORATE TRAVEL MANAGEMENT ENVIRONMENT
WTPI will be developing WorldTravelNet (WTN), a "next generation" business
travel tool for our travelers. WorldTravelNet will provide travel services
directly to our travelers including expense reporting, travel news and features
and customized vacations. WTN will be designed to integrate with mobile devices,
such as personal digital assistants and cellular phones, so the traveler can
take advantage of a host of en route services. In addition, the product will be
connected with our corporate booking engine, so they can make travel plans from
virtually anywhere. WTPI is targeting July 2000 for completion.
WORLDTRAVELVACATIONS
The team will be redesigning and re-launching WorldTravelVacations.com with an
upscale look-and-feel and many advanced capabilities. The new site will have
loads of valuable vacation information to produce more qualified leads. It also
will be outfitted with a "vacation shopper" graphical comparison tool, which
will allow visitors to compare and choose vacations. The re-launch of
WorldTravelVacations.com is targeted for August 2000.
SMALL/UNMANAGED BUSINESS TRAVEL MANAGEMENT SYSTEM
Another project on the drawing board is an online travel management tool for
small and/or unmanaged business--currently an untapped market for WTP. The
proposed system will use technology developed by Travel Technologies Group, as
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<PAGE> 116
well as the capabilities built into WTN. It will include client self-management
and setup functionality, along with a new simplified financial model.
TRAVELER LOGISTICS
In addition, WTPI's Traveler Logistics group will be implementing enhanced
traveler services, such as concierge services, traveler advocacy services, a
frequent traveler program, a 24-hour E-Commerce help desk and continued
enhancements to our corporate on-line fulfillment services.
HOGG AND ITS ASSOCIATES
E-COMMERCE SOLUTIONS
Hogg Robinson's E-Commerce Solutions group is charged with the design,
development and operation of HR's intranet, Internet and all E-Commerce
products. It will be staffed with web designers, software developers, website
managers, marketing and advertising specialists, content editors and other
Internet experts.
In the year 2000 and onwards HR E-Commerce will focus on the following key web
and E-Commerce projects:
Hogg Robinson Corporate Intranet
HR is developing a corporate intranet, a powerful inter-company web site for
sharing and disseminating information. The site will offer a global employee
directory, document repository, bulletin boards, divisional and departmental
sections, news and information, travel features and articles, employment
listings, and many other useful sections. The first phase is now active.
Hogg Robinson Corporate Website
The HR team is redesigning the HR corporate Internet site
(WWW.HOGGROBINSON.COM), and all associated sites sharing information about our
company. The site will get an updated, high-tech look-and-feel and will be
integrated with our intranet site to share important information, such as
employment listings, HR product and service information and travel news. All HR
companies will have the websites developed through HR e-Commerce.
BTI Travel Portal
HR is developing a Corporate Travel Portal, a business travel tool for our
travelers. HR will provide travel services directly to our travelers including
expense reporting, travel news and links to non-bookable services. HR will be
designed to integrate with mobile devices, such as personal digital assistants
and cellular phones, so the traveler can take advantage of a host of en route
services. In addition, the product is connected with our corporate booking
engine, so they can make travel plans from virtually anywhere.
Your Leisure Online
Available as a service for corporate clients to book leisure vacations.
Business Travel Direct Online
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<PAGE> 117
HR is creating an online travel management tool for small and/or unmanaged
business. The proposed system will use technology developed by HR and NewCo as
well as the capabilities built into BTI Travel Portal. The site will also offer
the HR services such as healthcare, and purchasing clubs.
In addition, Hogg Robinson Travel companies will be implementing enhanced
traveler services, such as concierge services, traveler advocacy services, a
frequent traveler program, a 24-hour E-Commerce help desk and continued
enhancements to our corporate on-line fulfillment services.
In addition to the above Hogg Robinson E-Commerce will continue to develop
products and solutions for all Hogg Robinson companies.
Others
1. Portal business and fulfillment in the Health & Financial Services
sectors.
2. Development and selling of products to support th business in (1)
above.
3. Fulfillment of the following travel Portal sites:
(a) GetThere.com
(b) Hotel Chain Fulfillment (Rainbow Hotels)
(c) Any portal where service commencement must be prior to supply
of the OFS prodcut suite running without reliance on Tbase.
(d) Hotel Bank
(e) web Travel Services (FSS)
4. Delivery of Third Party services for HR Travel Portal sites such as
Mapping products, Passport & Visa Policy, and Destination Weather data.
5. Sabre QCS deployment and support of BTS
6. ICSAT backend product deployment
115
<PAGE> 118
AS WITNESS the hands of the duly authorised representatives of the parties the
day and year first above written.
Signed by )
for and on behalf of )
HOGG ROBINSON plc ) ..................................
Signed by )
for and on behalf of )
HOGG ROBINSON SERVICES LTD ) ..................................
Signed by )
for and on behalf of )
WTT UK LIMITED ) ..................................
Signed by )
for and on behalf of )
WT TECHNOLOGIES, INC ) ..................................
Signed by )
for and on behalf of )
FORTDOVE LIMITED ) ..................................
116
<PAGE> 1
EXHIBIT 10.19
WORLDTRAVEL TECHNOLOGIES, LLC
AND
TECHNOLOGY LICENSING COMPANY
----------------------------------
SOFTWARE LICENCE AGREEMENT
----------------------------------
MCDERMOTT WILL & EMERY
7 BISHOPSGATE
LONDON
EC2N 3AQ
<PAGE> 2
TABLE OF CONTENTS
1. DEFINITIONS
2. LICENCE TO USE THE SOFTWARE
3. THE LICENSOR'S RIGHTS IN THE SOFTWARE
4. LICENCE FEE, CHARGES AND PAYMENT
5. SOFTWARE WARRANTY
6. INTELLECTUAL PROPERTY RIGHTS INDEMNITY
7. LIMITATION OF LIABILITY
8. TERM, TERMINATION AND EFFECTS OF TERMINATION
9. ESCROW
10. DISPUTE RESOLUTION
11. CONFIDENTIALITY
12. GENERAL PROVISIONS
SCHEDULES
SCHEDULE A - SOFTWARE / PRODUCTS
SCHEDULE B - SUBLICENCE BETWEEN WTT2 AND NEWCO
(i)
<PAGE> 3
THIS SOFTWARE LICENCE AGREEMENT ("the Agreement") is made on the day
of 2000
BETWEEN
1. WORLDTRAVEL TECHNOLOGIES , LLC, with its principal place of business at
6 W. Druid Hills Drive, Atlanta, Georgia 30329 ("the Licensor"); and
2. TECHNOLOGY LICENSING COMPANY LLC, with its principal place of business
at 6 W. Druid Hills Drive, Atlanta, Georgia 30329 ("the Licensee" or
"TLC").
1. DEFINITIONS
1.1 In this Agreement, the following words and phrases have these meanings:
"BTI GROUP means those travel agents which from time to time are party
to a partnership agreement with Business Travel International (BTI), a
Dutch registered company.
"CORPORATE TRAVEL SERVICES" means travel services provided to a
business entity's employees and/or contractors which are paid for or
reimbursed by such business entity, which has contracted directly with
Licensee, a travel agency, web portal, or other entity to provide such
services.
"DELIVERY" (WITH "DELIVER" AND "DELIVERED" BEING CONSTRUED ACCORDINGLY)
means in respect of any Software Release the point in time from which
such Software Release is first used in a live environment with a
Customer, other than a test customer provided always that such Software
shall be deemed to be Delivered 3 months from the date upon which such
Software is first installed by the Licensee;
"ENHANCEMENT" means changes to the Product that provide additional
features and/or functionality, expanding the capabilities of the
Product, or so significantly expand a function as to be considered a
new function.
"ESCROW AGREEMENT" means an agreement for the deposit of the source
code relating to the Software in the form set out in Schedule E of the
Newco Sublicense.
1
<PAGE> 4
"GROUP" means in relation to a company, that company and each
subsidiary of the company and its subsidiaries for the time being.
"IMPROVEMENTS" means new functionality that addresses areas that were
not covered in the Initial Software Release for the Product, or so
significantly expands a function as to be considered a new function.
"INTELLECTUAL PROPERTY" means all letters patent, trade marks and
service marks, registered designs, utility models, applications for any
of the foregoing and the right to apply therefor in any part of the
world; design rights, copyrights, topography rights, brand names, trade
names, logos and business names and all or any similar or equivalent
rights arising or subsisting in any country in the world;
"MODIFICATION" means changes to the Product that affect existing
functionality, usually including streamlining processes, revising
screens for clarity and similar changes.
"NEWCO" means Fortdove Limited, a company incorporated in England and
Wales under number 3841799 whose registered office is at 200 Aldersgate
Street, London, EC1A 4JJ.
"NEWCO SUBLICENCE" means the sublicence of the Software granted by the
Licensee to Newco, as permitted by this Agreement, in the form set out
in Schedule B hereto.
"PRODUCT" means a logical grouping of Licensor's Software which is sold
by a specific product name. The Products licensed under this Agreement
are listed in Schedule A to the Newco Sublicense.
"SCHEDULE" means the Schedule(s) attached to and incorporated into this
Agreement.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement of on or
about even date entered into between Hogg Robinson plc, Hogg Robinson
Services Limited, WTT UK Limited, WT Technologies Inc, FortDove
Limited, and the Licensee for the establishment and operation of the
Licensee as a joint venture company.
"SOFTWARE" means the Products listed in Schedule A to the Newco
Sublicense and related user and training documentation, including all
Software Releases provided by Licensor from time to time.
2
<PAGE> 5
"SOFTWARE RELEASE" means a complete or partial delivery of one or more
Licensor Products, usually on magnetic media but which may be
transmitted electronically at the Licensor's discretion, or otherwise
as agreed between the Parties.
Software Releases shall include:
(a) Initial Software Release - the initial delivery of the
Product(s) licensed hereunder;
(b) Upgrade Release (Upgrade) - changes to the Product(s)
delivered after the Initial Software Release.
(c) Corrective Release (Fix) - changes to the Product(s) delivered
to correct a bug that impairs normal operation of the
Product(s), which may be provided within an Upgrade or under a
support agreement.
"SPECIFICATIONS" means the functional and technical specifications of
the Software, to include those functional and technical specifications
which are to be supplied by the Licensor within 6 months after the date
of this Agreement which shall be in a form and of a standard similar to
those set out in Schedule F of the Newco Sublicense, (if applicable).
In any period during 6 months after the date of this Software Licence
Agreement where a relevant element of Software has no specification
available, the term "Specification" in respect of that element of
Software shall be deemed to refer to the level of performance and
functionality achieved in the corresponding element of Software in use
in the United States in a SABRE environment at that time;
"SUPPORT AND MAINTENANCE AGREEMENT" means the support and maintenance
agreement between WTT and Newco for the maintenance of the Software of
or about even date;
"TERRITORY" means the geographical areas and entities in which and to
which Newco has the exclusive right to provide services using the
Software, as provided in Clause 2 of the Newco Sublicense. Reference to
an entity as a "Territory" confers in itself no grant of rights in
respect of the geographical area in which that entity is based;
"VALUE ADDED TAX" means value added tax as provided for in the UK Value
Added Tax Act 1994 of the United Kingdom and any other tax of a similar
fiscal nature whether imposed in the United Kingdom (instead of or in
addition to value added tax) or elsewhere;
3
<PAGE> 6
"WORKING DAY(s)" means days when banks in London and Atlanta are open
for business excluding Saturday and Sunday;
"WTT" means WorldTravel Technologies, LLC with its principal place of
business at 6 W Druid Hills Drive, Atlanta, Georgia 30329.
1.2 In this Agreement, a reference to:
1.2.1 a "subsidiary" or "holding company" is to be construed in
accordance with Section 736 of the UK Companies Act 1985 of
the United Kingdom and a "subsidiary undertaking" or "parent
undertaking" is to be construed in accordance with Section
258 of the UK Companies Act 1985 of the United Kingdom;
1.2.2 a statutory provision includes a reference to the statutory
provision as modified or re-enacted or both from time to time
before the date of this Agreement and any subordinate
legislation made or other thing done under the statutory
provisions before the date of this Agreement;
1.2.3 a document is a reference to that document as modified from
time to time;
1.2.4 a person includes a reference to a government, state, state
agency, corporation, body corporate, association or
partnership;
1.2.5 a person includes a reference to that person's legal personal
representatives, successors and permitted assigns;
1.2.6 the singular includes the plural and vice versa unless the
context otherwise requires;
1.2.7 a clause or schedule, unless the context otherwise requires,
is a reference to a clause or a schedule of this Agreement.
1.3 The headings in this Agreement do not affect its interpretation.
4
<PAGE> 7
2. LICENCE TO USE THE SOFTWARE
2.1 Subject to the restrictions contained in Clause 2.2, the Licensor
hereby grants to the Licensee a perpetual, irrevocable (save as
expressly provided herein), royalty-free licence to use the Software
only to sub-license the Software to Newco on the terms set out in
Schedule B hereto.
2.2 The Licensor agrees to be bound by and to comply with the terms of
Clause 2 of the Newco Sublicense, as if it were named as Licensor
therein.
2.3 The licence and exclusivity granted under this Agreement applies to the
Initial Software Release and all subsequent Software Releases supplied
under this Agreement, including any and all Upgrade Releases provided
by Licensor to Licensee which are accepted by Licensee, which shall
replace the relevant part(s) of the Software previously licensed.
2.4 The Licensor shall provide and license to the Licensee, who may
sublicence the same to Newco, such know-how as the Licensee agrees with
the Licensor shall be provided and licensed in order to install the
Software, commence operation of the systems and implement any new
Product. Each party shall bear all its costs and expenses in any such
provision and licensing of know-how to it by the Licensor unless
otherwise agreed in writing by the Parties.
2.5 The Licensor shall procure that WTT shall provide Newco with technical
support or education services for the Software licensed in this
Agreement to TLC, which is sublicensed to Newco, pursuant to the
Support and Maintenance Agreement.
3. THE LICENSOR'S RIGHTS IN THE SOFTWARE
3.1 The Licensee acknowledges that the Software and all Intellectual
Property rights therein are proprietary to the Licensor or its
licensors and protected by copyright law and international treaty. The
Licensee acquires only the exclusive right to use the Software to
sublicence to Newco as provided for herein under the terms set out in
Schedule B hereto. Except as stated in this Agreement, the Licensor is
not transferring any rights of copyright or ownership of any
Intellectual Property in the Software or related documentation to the
Licensee. Licensor shall at all times retain all rights, title and
interest in the Software related documentation and any derivatives
thereof.
5
<PAGE> 8
3.2 The Licensee undertakes not to cause or permit the reverse engineering,
disassembly, or decompilation of the Software, except to reproduce
machine-readable object code portions for backup purposes and
installation of new releases of Software and except as provided under
section 50B of the Copyright, Designs and Patents Act 1988 of the
United Kingdom. The Licensee will not copy or permit any of the
Software to be copied by any means, except for bona fide internal
security, installation, or backup purposes as provided under section
50A of the Copyright, Designs and Patents Act 1988, or for reasonable
operational purposes (provided always that where copied for such
reasonable operational purposes such copying shall be pursuant to a
reasonable operational requirement upon the Licensee and shall be done
only where strictly necessary and in good faith). Any copies made shall
include all copyright or proprietary notices. The restrictions in this
clause are imposed under penalty of termination but not exclusive of
Licensor's other remedies.
3.3 Copyright subsists in all Software including its documentation and the
Licensee will not delete, remove, alter or conceal any proprietary
marks, notices or restrictions on the Software unless otherwise agreed
in writing between the Parties.
3.4 The Licensee will inform all relevant employees, agents,
sub-contractors and sub-licensees that the Software constitutes the
Licensor's or its licensors' Confidential Information, and that all
Intellectual Property rights in it belong to Licensor or its licensors,
and the Licensee will take all necessary steps to ensure that the
Licensee's employees, agents, sub-contractors and sub-licensees comply
with the provisions of this clause.
3.5 The Licensee agrees to indemnify the Licensor in respect of any losses
or expenses incurred by the Licensor as a result of the Software being
obtained by any third party whether through deliberate misuse of the
Software object codes by the Licensee or through the breach by the
Licensee of this Agreement or through wilful negligence.
4. CONSIDERATION.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties herein agree to and accept the mutual
obligations and promises contained in this Agreement.
5. SOFTWARE WARRANTY
6
<PAGE> 9
5.1 The Licensor warrants to the Licensee and to Newco that it has the
right to license the Software as provided in this Agreement. The
Licensor warrants that for a period of six months from Delivery of the
Initial Software Release to Licensee, or from the date of Delivery of a
subsequent Upgrade Release only where such Upgrade Release constitutes
a major version release evidenced by the attachment to such Upgrade
Release of a new Product version number ("the Warranty Period"), the
Software shall operate substantially in accordance with the
Specifications including any subsequent Modifications to the
Specifications agreed to by both parties. The Licensor warrants that
upon Delivery to the best of its knowledge the Software shall be free
of any and all "time bombs" or disabling mechanisms and the Licensor
agrees to pay for any data lost as a result of the same. The Licensor
further warrants that its quality testing procedures include testing
for software viruses using such virus testing utilities as are agreed
from time to time. If during the Warranty Period, the Software does not
operate substantially in accordance with the Specifications and if the
Licensor is unwilling or unable to correct all material deficiencies,
incompatibilities, defects or errors identified in the Software within
a reasonable time frame acceptable to both parties, the Licensor may
provide the Licensee with a modified version of the Software that does
not contain such material deficiencies, incompatibilities, defects or
errors. In the event that the Licensor is unable to correct all
material deficiencies, incompatibilities, defects or errors, either
through remedial action or the provision of a new copy of the Software
the Licensor shall be in material breach of this Agreement. Without
prejudice to the other remedies of the Licensee hereunder and
elsewhere, the Licensor shall immediately refund to the Licensee any
related royalty paid by the Licensee for the Software.
5.2 The Licensee shall notify the Licensor in writing of failure of the
Software to operate in substantial conformity with the Specifications
within 10 (ten) Working Days following discovery thereof. Provided that
the Licensee notifies the Licensor of such failure prior to expiration
of the Warranty Period, the Licensor will investigate and take
corrective action in respect of material non-conformities as
expeditiously as is possible in the circumstances. If any Software
fails to operate in accordance with the Specifications, the Licensor
will use all reasonable efforts to correct the Software so that it will
operate substantially in accordance with the Specifications. If the
Licensor determines that the reported error non-conformity is not due
to any error or defect in the Software supplied by the Licensor and is
not due to any other fault or negligence of the Licensor or its
supplier, the Licensee shall compensate the Licensor for its services
on a time and materials basis at the Licensor's reasonable rates.
7
<PAGE> 10
5.3 Licensor further warrants that the disks (if any) on which the Software
is provided will be free from defects in materials and workmanship
under normal use and service during the Warranty Period.
5.4 This clause constitutes the only warranty provided by the Licensor in
respect of the Software and the Licensor's obligations set out in this
Agreement replace all undertakings, guarantees, and warranties, express
or implied, in law or otherwise, including any warranty of satisfactory
quality or fitness for a particular purpose, which the Licensee must
have sole responsibility for determining. Without prejudice to the
warranty given by the Licensor hereunder, the Licensee acknowledges in
this connection that:
(a) The Software cannot be tested in advance in every possible
operating combination and environment;
(b) It is not possible to produce Software known to be error-free
in all circumstances;
(c) Not all errors can be rectified.
5.5 The Licensor shall not be liable to the Licensee or Newco for any claim
or defect arising from (i) any alteration or modification of any
Software which is not provided or approved by Licensor; (ii) problems
with the Licensee's equipment or with other software not provided by
Licensor; or (iii) any other cause beyond Licensor's control.
5.6 EXCEPT AS EXPRESSLY PROVIDED IN THIS CLAUSE, NO EXPRESS OR IMPLIED
WARRANTY IS MADE BY LICENSOR WITH RESPECT TO THE PRODUCTS, ANY SOFTWARE
RELEASE, THE DOCUMENTATION OR ANY OTHER MATTER, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR
PURPOSE. WITHOUT PREJUDICE TO THE WARRANTY GIVEN IN CLAUSE 5.1 THAT THE
SOFTWARE WILL OPERATE SUBSTANTIALLY IN ACCORDANCE WITH THE
SPECIFICATIONS, AS THE SAME MAY BE MODIFIED BY AGREEMENT, THE LICENSOR
DOES NOT WARRANT THAT ALL ERRORS IN THE SOFTWARE CAN OR WILL BE
CORRECTED.
5.7` The Licensee warrants to the Licensor that it will treat the Software
as Confidential Information (as provided in Clause 11).
6. INTELLECTUAL PROPERTY RIGHTS INDEMNITY
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6.1 Subject to the terms of this clause, and at the Licensor's own expense,
the Licensor will defend or cause to be defended or, at the Licensor's
option, settle any claim or action brought against the Licensee or
Newco in respect of any claimed infringement of any Intellectual
Property right by the Software ("Claim"). Subject to the other
conditions of this clause, the Licensor will indemnify the Licensee and
Newco against any liability, damage or expense with respect to any
Claim, provided that the Licensee or Newco:
(a) Notifies the Licensor promptly in writing of the Claim
immediately on becoming aware of it;
(b) Grants sole control of the conduct of the defence, settlement
or appeal of the Claim to Licensor;
(c) Gives the Licensor complete and accurate information to the
best of its knowledge and full co-operation and assistance to
enable the Licensor to settle or defend the Claim; and
(d) Has complied fully with the terms of this Agreement.
If the Licensee or Newco desire to have separate legal representation
in any such Claim, the provisions of this clause shall not prevent
Licensee's or Newco's participation with Licensor in the Claim,
provided that Licensee or Newco will be responsible for the costs and
fees of its separate legal representation, and provided that Licensor
shall continue to have full control of the conduct of the Claim.
6.2 The Licensor shall have no liability under this clause for any alleged
or actual infringement arising from
(a) The combination of the Software with any other software not
supplied by Licensor; or
(b) The modification or alteration of the Software unless the
modification or alteration was made, supplied or approved
expressly by Licensor.
6.3 If any part of the Software should become the subject of any Claim, or
if a court judgement is made that the Software does infringe, or if the
use or licensing of any part of the Software is restricted, the
Licensor shall, at the Licensor's option and expense:
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<PAGE> 12
(a) either obtain or procure for the Licensee and Newco the right
to continue to use the Software; or
(b) Replace or modify the Software so that it becomes
non-infringing, but substantially functionally equivalent; or
(c) If the use of the Software is prevented by permanent
injunction and neither of the above options (a) or (b) is
reasonably possible or effective, the Licensor shall accept
its return and terminate the Agreement and refund to the
Licensee/Newco an amount equal to the sum paid by the
Licensee/Newco for the Product or Software Release, without
prejudice to any other right the Licensee/Newco shall have
under this Agreement.
6.4 In no circumstances will the Licensor be liable for any costs or
expenses incurred by the Licensee without the Licensor's written
authorisation.
7. LIMITATION OF LIABILITY
7.1 The Licensee agrees that the Licensee has accepted these terms and
conditions in the knowledge that the Licensor's liability is limited
and that the licence fee and charges payable have been calculated
accordingly.
7.2 The Licensor's total liability arising in connection with this
Agreement (including liability for interest and costs) will not exceed
in aggregate the total licence fees paid by the Licensee under this
Agreement and by Newco under the Newco Sublicense except in the case of
liability for death or personal injury caused by the Licensor's
negligence, which will not be subject to a financial limit.
7.3 Except as expressly stated in this clause and elsewhere in this
Agreement, any liability by the Licensor for any breach of this
Agreement will be limited in the aggregate of damages, costs, fees and
expenses to the total licence fees paid or due to be paid by the
Licensee under this Agreement and by Newco under the Newco Sublicence.
For the avoidance of doubt, the limitation contained in this Clause
shall not apply to the indemnity given by the Licensor under Clause 6,
subject to its terms.
7.4 Except as expressly stated in this Agreement, neither the Licensor nor
its officers, employees, agents or sub-contractors shall be liable to
the Licensee in connection with the Licensor's performance of this
Agreement or the Licensee's or Newco's use of the Software. In no event
will the Licensor, its officers, employees, agents or sub-contractors
be liable to the Licensee or Newco for special, indirect or
consequential damages
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<PAGE> 13
arising out of this Agreement or the breach thereof, or arising out of
the Licensee's or Newco's possession of, use of or inability to use the
Software or any part thereof, including but not limited to any damages
for loss of profits or arising from loss of data or unfitness for use
even if that loss or damage was reasonably foreseeable or either party
was aware of the possibility of that loss or damage arising, and
whether such damages are based in contract, tort, negligence, strict
liability or otherwise.
8. TERM, TERMINATION AND EFFECTS OF TERMINATION
8.1 This Agreement shall be effective on the date above written and shall
continue indefinitely unless terminated as provided in this Clause.
8.2 This Agreement shall terminate upon the splitting of the assets of
Newco, as provided under Clause 17.5 of the Shareholders Agreement and
shall be replaced by a non-exclusive license of the Software, to be
granted to the successor company/ies of the relevant assets.
8.3 Any termination of this Agreement will be without prejudice to any
other legal remedies, accrued rights or outstanding liabilities of
either of the parties at the date of termination.
8.4 If this Agreement is terminated for any reason, the Licensee shall
satisfy the Licensor that the Licensee has ceased to use the Software
and has deleted the Software and all copies of any part of the Software
from the Licensee's systems and that the Licensee can no longer
reproduce the Software in any way, and the Licensee shall return to the
Licensor immediately all related documentation or other tangible
property in the Licensee's possession belonging to Licensor, including
all copies of the Products or Software Releases.
8.5 Such provisions of this Agreement as are required to survive its
termination or expiry in order to give full force and effect to the
rights and obligations of the parties hereunder shall be deemed to so
survive.
9. ESCROW
The parties shall use their best endeavours to enter into the Escrow
Agreement in the form set out in Schedule E to the Newco Sublicense
within 30 days of the date of this Agreement, provided that no changes
shall be made to the form of the Escrow
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Agreement save such as are strictly necessary to satisfy the
requirements of Fort Knox Escrow Services, Inc. ("Fort Knox"), as
contracting party to that document and an extension shall be permitted
to the 30 day period save as is strictly necessary to accommodate the
requirements of Fort Knox.
10. DISPUTE RESOLUTION
10.1 INITIAL PROCEDURES: The parties shall make all reasonable efforts to
resolve all disputes without resorting to litigation. If a dispute
arises between the parties, the parties shall each appoint a
representative, who shall work together to attempt to reach an amicable
resolution. The representatives shall use their best efforts to resolve
the dispute or to negotiate an appropriate modification or amendment.
10.2 ESCALATION: Except as otherwise provided in this Agreement, neither
party shall be permitted to bring proceedings against the other (save
for injunctive relief) until the parties' representatives conclude in
good faith that an amicable resolution of the dispute through continued
negotiation is unlikely.
10.3 ARBITRATION: If the parties are unable to reach a resolution of any
matter within the negotiating procedures outlined herein, either party
may submit this matter to arbitration under the Rules of the American
Arbitration Association. If the parties resort to arbitration, no
arbitrator shall be entitled to award punitive damages.
11. CONFIDENTIALITY
11.1 The Receiving Party shall:
11.1.1 keep the Confidential Information confidential;
11.1.2 not disclose the Confidential Information to any person, other
than in accordance with this clause 11, unless it first
obtains the Disclosing Party's written consent; and
11.2.3 not use the Confidential Information for any purpose other
than the performance of its obligations under this Agreement
or, in the case of
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<PAGE> 15
Licensee, the use, management, support, maintenance or
development of the Custom Software, as defined in that
Reciprocal Software Development Agreement of on or about even
date between WTT and Newco..
11.2 The Licensee may disclose Confidential Information to its employees,
the other members of Licensee's Group (and their employees), permitted
sublicensees, and to third parties (and their employees) contracted (or
with whom Licensee is negotiating with a view to contracting) to
provide auditing, hardware or software facilities management, support,
maintenance or development services to any member of Licensee's Group,
to the extent reasonably necessary for the purposes of this Agreement.
11.3 During the term of this Agreement the Licensor may disclose
Confidential Information to its employees and to the Licensor's Group
and its employees to the extent reasonably necessary for the purposes
of this Agreement.
11.4 The Receiving Party shall ensure that each person who receives
Confidential Information pursuant to clause 11.2 (a "RECIPIENT") is
made aware of and is subject to a written obligation to comply with all
the Receiving Party's obligations of confidentiality under this
Agreement as if the Recipient was a party to this Agreement.
11.5 The Receiving Party may disclose Confidential Information where
disclosure is required by law, a court of competent jurisdiction or by
a regulatory body with authority over its business, provided that the
Receiving Party gives the Disclosing Party prior reasonable notice of
the disclosure.
11.6 The obligations contained in this Clause do not apply to Confidential
Information which:
11.6.1 is at the date of this Agreement within or at any time after
the date of this Agreement comes into the public domain other
than through breach of this Agreement by the Receiving Party
or any Recipient;
11.6.2 can be shown by the Receiving Party to the reasonable
satisfaction of the Disclosing Party to have been known by the
Receiving Party before disclosure by the Disclosing Party to
the Receiving Party; or
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11.6.3 subsequently comes lawfully into the possession of the
Receiving Party from a third party.
11.7 For the purposes of this clause, "CONFIDENTIAL INFORMATION" means all
information of a confidential nature disclosed (whether in writing,
verbally or by any other means and whether directly or indirectly) by
one party (the "DISCLOSING PARTY") to the other party (the "RECEIVING
PARTY") whether before or after the date of this Agreement including,
without limitation, any information relating to the Disclosing Party's
products, operations, processes, plans or intentions, product
information, the Software, Intellectual Property Rights, market
opportunities and business affairs or those of its customers, clients
or other contacts. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, the provisions of this Section 11,
Confidentiality, shall survive any termination or expiration of this
Agreement.
12. GENERAL PROVISIONS
12.1 ENTIRE AGREEMENT AND VARIATIONS
This Agreement including the Schedules constitutes the entire agreement
between the parties relating to the Software. Each party confirms that
it has not relied upon any representation not recorded in this
Agreement as an inducement to enter into this Agreement. No variation
of these terms and conditions will be valid unless confirmed in writing
by authorised signatories of both parties. This Agreement shall be
binding upon the successors and assigns of the parties hereto.
12.2 SEVERABILITY
If any of the provisions of this Agreement is judged to be illegal or
unenforceable, the continuation in full force and effect of the
remainder of them will not be prejudiced.
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12.3 WAIVER
No forbearance or delay by either party in enforcing its respective
rights will prejudice or restrict the rights of that party, and no
waiver of any such rights or of any breach of any terms of this
contract will be deemed to be a waiver of any other right or of any
later breach.
12.4 INDEPENDENT CONTRACTORS
The relationship between parties is that of independent contractor.
Neither of the parties is agent for the other, and neither of the
parties has any authority to enter into any contract, whether expressly
or by implication, in the name of the other party, without that party's
prior written consent.
12.5 ASSIGNMENT
Neither party will assign this Agreement or any benefits or interests
arising under this Agreement without the prior written consent of the
other party.
12.6 NOTICES
Notices under this Agreement shall be deemed given when delivered by
hand, on the fifth business day after such notice is deposited in the
mail, registered or certified, return receipt requested, postage
prepaid, or sent via facsimile to the following address:
WTT WTT2
----------------------------- -----------------------------
-------------------------------- ----------------------------------
-------------------------------- ----------------------------------
Attention: [______________] Attention: [_______________]
Either party may change its address by giving the other written notice
of the new address.
12.7 FORCE MAJEURE
12.7.1 If a party (the "Affected Party") is prevented, hindered or delayed
from or in performing any of its obligations under this Agreement by a
Force Majeure Event:
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12.7.1.1 the Affected Party's obligations under this Agreement are
suspended while the Force Majeure Event continues and to the
extent that it is prevented, hindered or delayed;
12.7.1.2 as soon as reasonably possible after the start of the Force
Majeure Event the Affected Party shall notify the other party
in writing of the Force Majeure Event, the date on which the
Force Majeure Event started and the effects of the Force
Majeure Event on its ability to perform its obligations under
this Agreement;
12.7.1.3 the Affected Party shall make all reasonable efforts to
mitigate the effects of the Force Majeure Event on the
performance of its obligations under this Agreement; and
12.7.1.4 as soon as reasonably possible after the end of the Force
Majeure Event the Affected Party shall notify the other party
in writing that the Force Majeure Event has ended and resume
performance of its obligations under this Agreement.
12.7.2 If the Force Majeure Event continues for more than three months
starting on the day the Force Majeure Event starts, a party may
terminate this Agreement by giving not less than 30 days' written
notice to the other party.
12.7.3 In this clause, "Force Majeure Event" means an event beyond the
reasonable control of the Affected Party including, without limitation,
act of God, war, riot, civil commotion, malicious damage, compliance
with a law or governmental order, rule, or regulation , an accidental
breakdown of plant or machinery not due to the negligence of the
Affected Party, fire, flood and storm.
12.8 GOVERNING LAW AND JURISDICTION
This agreement shall be governed by and construed according to the laws
of the State of Georgia of the United States of America, without regard
to its choice of laws provisions.
(SIGNATURES ON NEXT PAGE)
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IN WITNESS WHEREOF the undersigned as duly authorised representatives of the
parties to this Agreement have entered into this Agreement as of the date
written above.
- --------------------------------------------------
FOR AND ON BEHALF OF
WORLDTRAVEL TECHNOLOGIES , LLC
Name:
--------------------------------------------
Date:
--------------------------------------------
- --------------------------------------------------
FOR AND ON BEHALF OF
TECHNOLOGY LICENSING COMPANY, LLC
Name:
--------------------------------------------
Date:
--------------------------------------------
17
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Schedule A: Software and Products
18
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SCHEDULE B:
Licence between Technology Licencing Company, LLC and Fortdove Limited
19
<PAGE> 1
Exhibit 10.20
TECHNOLOGY LICENSING COMPANY, LLC
AND
FORTDOVE LIMITED
--------------------------
SOFTWARE LICENCE AGREEMENT
--------------------------
<PAGE> 2
CONTENTS
CLAUSE PAGE
1. Definitions............................................................1
2. Licence to use the Software............................................4
3. The Licensor's Rights in the Software..................................6
4. Royalty Charges and Payment............................................7
5. Software Warranty......................................................7
6. Intellectual Property Rights Indemnity.................................9
7. Limitation of Liability...............................................10
8. Term, Termination and Effects of Termination..........................10
9. Escrow................................................................11
10. Non-Solicitation......................................................11
11. Joint Oversight Committee.............................................12
12. Dispute Resolution....................................................12
13. Confidentiality.......................................................13
14. General Provisions....................................................14
15. Counterparts..........................................................16
SCHEDULE A The Software and Products licensed under these terms and
conditions are as follows:....................................................18
SCHEDULE B Agreed form End User Sub-licence..................................24
SCHEDULE C Support and Maintenance Agreement.................................38
SCHEDULE D Definition of Europe..............................................51
SCHEDULE E Agreed From Escrow Agreement......................................53
SCHEDULE F Specifications....................................................68
SCHEDULE G Software/Products Capable of Sublicence..........................112
<PAGE> 3
THIS SOFTWARE LICENCE AGREEMENT ("the Agreement") is made on the day of
2000
BETWEEN
(1) TECHNOLOGY LICENSING COMPANY LLC, with its principal place of business at
6 W. Druid Hills Drive, Atlanta, Georgia 30329 ("the Licensor"); and
(2) FORTDOVE LIMITED, registered in England and Wales under company number
3841799 with its registered office at 200 Aldersgate Street, London EC1A
4JJ ("the Licensee")
1. DEFINITIONS
1.1 In this Agreement, the following words and phrases have these meanings:
"AMERICAS" means all countries and territories in continental North
America and continental South America (including Central America) and
includes any territories of the United States of America not forming part
of continental North America;
"BTI GROUP" means those travel agents which from time to time are party to
a partnership agreement with Business Travel International ("BTI"), a
Dutch registered company;
"CORPORATE TRAVEL SERVICES" means travel services provided to a business
entity's employees and/or contractors which are paid for or reimbursed by
such business entity which has contracted directly with Licensee or with a
travel agency, web portal, or other entity to provide such services;
"DELIVERY" (WITH "DELIVER" AND "DELIVERED" BEING CONSTRUED ACCORDINGLY)
means in respect of any Software Release the point in time from which such
Software Release is first used in a live environment with a Customer,
other than a test customer provided always that such Software shall be
deemed to be Delivered 3 months from the date upon which such Software is
first installed by the Licensee;
"EFFECTIVE DATE" means the date hereof, unless otherwise agreed in writing
between the parties;
"ENHANCEMENT" means changes to the Product that provide additional
features and/or functionality, expanding the capabilities of the Product,
or so significantly expand a function as to be considered a new function;
"ESCROW AGREEMENT" means an agreement for the deposit of the source code
relating to the Software in the form set out in Schedule E; "GROUP" means,
in relation to a company, that company and each subsidiary of the company
and its subsidiaries for the time being;
"HOGG ROBINSON GROUP" means the Group of companies of which Hogg Robinson
plc is the ultimate holding company, together with all its travel
franchisees;
"ICC" means Independent Computer Company Limited, which prior to the date
of this Agreement was contracted to distribute the TTG Software in part of
the Territory;
"IMPROVEMENTS" means new functionality that addresses areas that were not
covered in the Initial Software Release for the Product, or so
significantly expands a function as to be considered a new function;
<PAGE> 4
"INTELLECTUAL PROPERTY" means all letters patent, trade marks and service marks,
registered designs, utility models, applications for any of the foregoing and
the right to apply therefor in any part of the world; design rights, copyrights,
topography rights, brand names, trade names, logos and business names and all or
any similar or equivalent rights arising or subsisting in any country in the
world;
"MODIFICATION" means changes to the Product that affect existing functionality,
usually including streamlining processes, revising screens for clarity and
similar changes; OFS CORPORATE SERVICES" means Corporate Travel Services
processed using OFS Software;
"OFS SERVICES" means travel services, other than OFS Corporate Services
processed using the OFS Software;
"OFS SOFTWARE" means the Software identified with the label "OFS" in Schedule A
hereto;
"OFS TERRITORY" means the United Kingdom, Ireland, Sweden, Norway, Denmark,
Finland, Estonia, Latvia and Lithuania;
"PRODUCT" means a logical grouping of Licensor's Software which is sold by a
specific product name. The Products licensed under this Agreement are listed in
Schedule A;
"SCHEDULE" means the Schedule(s) attached to and incorporated into this
Agreement;
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement of on or about even
date entered into between Hogg Robinson Plc, Hogg Robinson Services Limited,
WTT UK Limited, WT Technologies Inc and the Licensee for the establishment and
operation of the Licensee as a joint venture company;
"SOFTWARE" means the Products listed in Schedule A and related user and
training documentation, including all Software Releases provided by Licensor
from time to time;
"SOFTWARE RELEASE" means a complete or partial delivery of one or more Licensor
Products, usually on magnetic media but which may be transmitted electronically
at the Licensor's discretion, or otherwise as agreed between the Parties.
Software Releases shall include:
(a) Initial Software Release -- the initial delivery of the Product(s)
licensed hereunder;
(b) Upgrade Release (Upgrade) -- changes to the Product(s) delivered
after the Initial Software Release.
(c) Corrective Release (Fix) -- changes to the Product(s) delivered to
correct a bug that impairs normal operation of the Product(s), which
may be provided within an Upgrade or under a support agreement;
"SPECIFICATIONS" means the functional and technical specifications of the
Software, to include those functional and technical specifications which are to
be supplied by the Licensor within 6 months after the date of this Agreement
which shall be in a form and of a standard similar to those set out in Schedule
F, (if applicable). In any period during 6 months after the date of this
Software License Agreement where a relevant element of Software has no
specification available, the term "Specification" in respect of that element of
Software shall be deemed to refer to the level of performance and functionality
achieved
<PAGE> 5
in the corresponding element of Software in use in the United States in a
SABRE environment at that time;
"SUPPORT AND MAINTENANCE AGREEMENT" means the document attached at Schedule
C to this Software Licence Agreement;
"TERRITORY" means the geographical areas and entities in which and to which
Newco has the exclusive right to provide services using the Software, as
provided in Clause 2. Reference to an entity as a "Territory" confers in
itself no grant of rights in respect of the geographical area in which that
entity is based;
"TTG SOFTWARE" means the Software products set out in Schedule A hereto,
other than those identified within the label "OFS";
"VALUE ADDED TAX" means value added tax as provided for in the UK Value
Added Tax Act 1994 and any other tax of a similar fiscal nature whether
imposed in the United Kingdom (instead of or in addition to value added
tax) or elsewhere;
"WORKING DAY(S)" means days when banks in London and Atlanta are open for
business excluding Saturday and Sunday;
"WTT" means WT Technologies Inc (soon to be known as TRX Inc) with its
principal place of business at 6W Druid Hills Drive, Atlanta, Georgia
30329.
1.2 In this Agreement, a reference to:
1.2.1 a "subsidiary" or "holding company" is to be construed in
accordance with Section 736 of the UK Companies Act 1985 and a
"subsidiary undertaking" or "parent undertaking" is to be
construed in accordance with Section 258 of the UK Companies Act
1985;
1.2.2 a statutory provision includes a reference to the statutory
provision as modified or re-enacted or both from time to time
before the date of this Agreement and any subordinate legislation
made or other thing done under the statutory provisions before
the date of this Agreement;
1.2.3 a document is a reference to that document as modified from time
to time;
1.2.4 a person includes a reference to a government, state, state
agency, corporation, body corporate, association or partnership;
1.2.5 a person includes a reference to that person's legal personal
representatives, successors and permitted assigns;
1.2.6 the singular includes the plural and vice versa unless the
context otherwise requires;
1.2.7 a clause or schedule, unless the context otherwise requires, is a
reference to a clause or a schedule of this Agreement.
1.3 The headings in this Agreement do not affect its interpretation.
<PAGE> 6
2. LICENCE TO USE THE SOFTWARE
2.1 The Licensor hereby grants to the Licensee a perpetual, irrevocable (save
as expressly provided herein), royalty bearing licence to use the TTG
Software to provide services or to sub-licence the TTG Software, (only as
expressly permitted under this Agreement) as follows:
2.1.1 to third parties in Europe (as defined in Schedule D attached
hereto), with such licence to be exclusive in Europe;
2.1.2 to any entity which is at least 50% owned within the Hogg
Robinson Group and is controlled by a company in the Hogg
Robinson Group with the exception of Rider Canada, with such
licence to be exclusive in respect of any such entity;
2.1.3 to a member of the BTI Group outside the Americas, with such
licence to be exclusive in respect of any such entity.
2.2 For the avoidance of doubt, the exclusivity granted to the Licensee under
clauses 2.1.2 and 2.1.3 above does not prevent the Licensor from
sub-licensing the TTG Software or from providing services using the TTG
Software in the geographic areas in which the entities referred to in
clauses 2.1.2 and 2.1.3 are situated with the exception of Europe. The
licence granted hereunder is subject to the terms and conditions of this
Agreement, including its termination provisions. The royalty payable is
specified under Clause 4 of this Agreement.
2.3 The Licensor hereby grants to the Licensee a perpetual, irrevocable (save
as expressly provided herein), royalty bearing licence to use the OFS
Software to provide OFS Corporate Services or to sub-licence the OFS
Software, (only as expressly permitted under this Agreement) as follows:
2.3.1 to third parties in Europe (as defined in Schedule D attached
hereto), with such licence to be exclusive in Europe;
2.3.2 to any entity which is at least 50% owned within the Hogg
Robinson Group and is controlled by a company in the Hogg
Robinson Group with the exception of Rider Canada, with such
licence to be exclusive in respect of any such entity;
2.3.3 to a member of the BTI Group outside the Americas, with such
licence to be exclusive in respect of any such entity.
2.4 For the avoidance of doubt, the exclusivity granted to the Licensee under
clauses 2.3.2 and 2.3.3 above does not prevent the Licensor from
sub-licensing the OFS Software or from providing services using the OFS
Software in the geographic areas in which the entities referred to in
clauses 2.3.2 and 2.3.3 are situated with the exception of Europe. The
licence granted hereunder is subject to the terms and conditions of this
Agreement, including its termination provisions. The royalty payable is
specified under Clause 4 of this Agreement.
2.5 The Licensor hereby grants to the Licensee a perpetual, irrevocable (save
as expressly provided herein), royalty-bearing non-exclusive licence to use
the OFS Software to provide OFS Services (as defined herein) and to
sub-license the OFS Software (only as expressly permitted under this
Agreement), to any third party, anywhere in the world, provided that the
Licensee may only perform such OFS Services wholly from a location within
the OFS Territory.
<PAGE> 7
2.6 The Licensor, nor any member of the Licensor's Group shall not, nor shall
license or permit any third party to carry out OFS Services from within the
OFS Territory. For the avoidance of doubt, the licence granted to the
Licensee under clause 2.5 above shall not prevent the Licensor from using
the OFS Software to provide OFS Services to clients located anywhere in the
world, including within the OFS Territory, provided that such OFS Services
are provided and processed wholly from a location outside the OFS
Territory.
2.7 Except as expressly provided herein (including under Clause 2.8), the
Licensor shall not grant a licence of the TTG Software to or permit any
third party to carry out services using the TTG Software in the Territory
and neither shall the Licensor or any member of its Group provide such
services or in any way exploit or commercialise the TTG Software in the
Territory.
2.8 To the extent that the Licensee reasonably requires to use any part of the
TTG Software for the proper provision of OFS Services, the Licensor hereby
grants to the Licensee a perpetual irrevocable, (save as expressly
provided herein) royalty bearing, non-exclusive licence to use such part of
the TTG Software to provide such OFS Services, not withstanding that such
services are performed outside the Territory granted to the Licensee under
Clause 2.1. Likewise, to the extent that the Licensor reasonably requires
to use any part of the TTG Software for the proper provision of OFS
Services, it is permitted to use the TTG Software within the exclusive
Territory granted to the Licensee under Clause 2.1, notwithstanding the
exclusivity granted to the Licensee under that subclause.
2.9 Except as expressly provided herein, the Licensor shall not grant a licence
of the OFS Software for the purpose of carrying out OFS Corporate Services
or permit any third party to carry out OFS Corporate Services using the OFS
Software in the Territory and neither shall the Licensor or any member of
its Group provide such services or in any way exploit or commercialise the
OFS Software in relation to OFS Corporate Services in the Territory.
2.10 The Licensor agrees with the Licensee that it will be bound by and shall
comply with the obligations and restrictions placed upon WTT under Clause
10 of the Shareholders Agreement, as if it were named as WTT thereunder. To
the extent that Clause 10 of the Shareholders Agreement incorporates
exceptions to the restrictions placed on the Licensor and the Licensee
under this Clause 2, such exceptions are deemed to be incorporated herein.
Further, to the extent that the provisions of Clause 10 of the Shareholders
Agreement amend or are inconsistent with the provisions of this Clause 2,
the provisions of Clause 10 of the Shareholders Agreement shall prevail and
shall be deemed to be incorporated herein. For the purposes of this
Agreement, any deemed incorporation of a provision of the Shareholders
Agreement under this Clause shall survive any termination of the
Shareholders Agreement.
2.11 The licence and exclusivity granted under this Agreement applies to the
Initial Software Release and all subsequent Software Releases supplied
under this Agreement, including any and all Upgrade Releases provided by
Licensor to Licensee which are accepted by Licensee, which shall replace
the relevant part(s) of the Software previously licensed.
2.12 The exclusivity granted under this Clause 2 may be withdrawn by the
Licensor in respect of all or any part of the Software, in the
circumstances provided for under Clauses 16.4.4(a) and 16.4.7 and 16.4.8 of
the Shareholders Agreement.
2.13 Notwithstanding the exclusivity granted to the Licensee under Clause 2.1,
the Licensor a member of Licensor's Group may continue to support any
sub-licences granted and bureau
<PAGE> 8
services provided by ICC under contracts in existence at the date of
this Agreement, provided that the Licensor shall not permit ICC to
enter into any new-licences or service bureau agreements after the
date hereof and provided further that the Licensor shall deliver to
the Licensee a schedule of such ICC sub-licences/service bureau
agreements within 30 days of the date hereof.
2.14 The Licensor shall provide and license to the Licensee such know-how
as the Licensee agrees with the Licensor shall be provided and
licensed in order to install the Software and commence operation of
the systems and during the implementation of any new Product. Each
party shall bear all its costs and expenses in any such provision and
licensing of know-how to it by the Licensor unless otherwise agreed
in writing by the Parties.
2.15 The Licensor shall provide the Licensee with technical support or
education services for the Software licensed in this Agreement
pursuant to the Support and Maintenance Agreement.
2.16 Subject to clause 14.5 hereunder the Licensee may not, and shall
procure that sub-licensees do not, sub-license, lease or assign any
of the Software or Products for money or any other consideration or
free of charge, except with the express prior written consent of the
Licensor, provided that the Software and/or Products set out at
Schedule G (as amended from time to time by the written agreement of
the Parties) may be sublicensed by the Licensee without the prior
written consent of the Licensor.
2.17 The Licensee shall ensure that the sub-licence of any Software
permitted under this Software Licence Agreement shall be subject to
the express condition that any end-user of properly sublicensed
Software which conducts business as a travel agent or agency may not
sublicense such Software to any other travel agent or agency other
than such travel agent's subsidiaries or affiliates within the same
Group. The Licensee may permit such travel agents to sub-license the
Software to its franchisees, only with the consent of the Licensor
such consent being deemed to be granted in respect of any
sub-licences granted by the Hogg Robinson Group to its current
franchisees at the date of execution of this Agreement and as agreed
from time to time thereafter. Any sub-licence of the Software by the
Licensee shall be on the terms of the sub-licence contained in
Schedule B unless otherwise agreed in writing between the Parties. In
the event of any conflict between the terms of this Agreement and the
sub-licence terms, the terms of this Agreement shall prevail.
3. THE LICENSOR'S RIGHTS IN THE SOFTWARE
3.1 The Licensee acknowledges that the Software and all Intellectual
Property rights therein are proprietary to the Licensor or its
licensors and protected by copyright law and international treaty.
The Licensee acquires only the exclusive right to use the Software
within the Territory. Except as stated in this Agreement, the
Licensor is not transferring any rights of copyright or ownership of
any Intellectual Property in the Software or related documentation to
the Licensee. Licensor shall at all times retain all rights, title
and interest in the Software related documentation and any
derivatives thereof.
3.2 The Licensee undertakes not to cause or permit the reverse
engineering, disassembly, or decompilation of the Software, except to
reproduce machine-readable object code portions for backup purposes
and installation of new releases of Software and except as provided
under section 50B of the Copyright, Designs and Patents Act 1988. The
Licensee will not copy or permit any of the Software to be copied by
any means, except for bona fide internal security, installation, or
backup purposes as provided under section 50A of the Copyright,
<PAGE> 9
Designs and Patents Act 1988, or for reasonable operational purposes
(provided always that where copied for such reasonable operational
purposes such copying shall be pursuant to a reasonable operational
requirement upon the Licensee and shall be done only where strictly
necessary and in good faith). Any copies made shall include all
copyright or proprietary notices. The restrictions in this clause are
imposed under penalty of termination but not exclusive of Licensor's
other remedies.
3.3 Copyright subsists in all Software including documentation and the
Licensee will not delete, remove, alter or conceal any proprietary
marks, notices or restrictions on the Software unless otherwise agreed
in writing between the Parties.
3.4 The Licensee will inform all relevant employees, agents,
sub-contractors and sub-licensees that the Software constitutes the
Licensor's or its licensors' confidential information, and that all
Intellectual Property rights in it belong to Licensor or its
licensors, and the Licensee will take all necessary steps to ensure
that the Licensee's employees agents, sub-contractors and
sub-licensees comply with the provisions of this clause.
3.5 The Licensee agrees to indemnify the Licensor in respect of any losses
or expenses incurred by the Licensor as a result of the Software
being obtained by any third party whether through deliberate misuse of
the Software object codes by the Licensee or through the breach by the
Licensee of this Agreement or through wilful negligence.
4. ROYALTY CHARGES AND PAYMENT
4.1 Use of the Software is conditional on payment by the Licensee of the
royalty. The royalty payable for use of the Software shall reflect the
fair market value of the licence granted hereunder. The parties shall
use all reasonable endeavours to agree on the amount of the royalty by
1 April 2000. In the event that the parties fail to agree on the
amount of the royalty by such date, either party may refer the matter
to an independent expert for determining the amount of the royalty.
4.2 The royalty and all the Licensor's charges in respect of any services
rendered by it are exclusive of Value Added Tax and any similar taxes.
All such taxes are payable by the Licensee and will be applied in
accordance with UK legislation in force at the tax point date.
4.3 Subject to Clause 4.1, all invoices will be payable within 30 days
from the invoice date. Payments which are not received within 30 days
from the invoice date will be considered overdue and will remain
payable by the Licensee and the Licensor shall be entitled to charge
interest for late payment from the date payable at the rate of 2%
above Barclays Bank Plc Base Rate both after and before any judgement.
This interest will accrue on a daily basis and be payable on demand.
If, after a written reminder by the Licensor, any invoice remains
payable after 60 days from the date of invoice without escalation to
the Management Representatives, the Licensor may at any time
thereafter terminate this agreement upon written notice to the
Licensee without prejudice to its remaining rights hereunder.
4.4 If the Licensor becomes entitled to terminate this Agreement for any
reason, any sums then due by the Licensee to the Licensor will
immediately become payable in full.
5. SOFTWARE WARRANTY
5.1 The Licensor warrants to the Licensee that it has the right to license
the Software as provided in this Agreement. The Licensor warrants that
for a period six months from Delivery of the
<PAGE> 10
Initial Software Release to Licensee, or from the date of Delivery of a
subsequent Upgrade Release only where such Upgrade Release constitutes a
major version release evidenced by the attachment to such Upgrade Release
of a new Product version number ("the Warranty Period"), the Software shall
operate substantially in accordance with the Specifications including any
subsequent Modifications to the Specifications agreed to by both parties.
The Licensor warrants that upon Delivery to the best of its knowledge the
Software shall be free of any and all "time bombs" or disabling mechanisms
and the Licensor agrees to pay for any data lost as a result of the same.
The Licensor further warrants that its quality testing procedures include
testing for software viruses using such virus testing utilities as are
agreed from time to time. If during the Warranty Period, the Software does
not operate substantially in accordance with the Specifications and if the
Licensor is unwilling or unable to correct all material deficiencies,
incompatibilities, defects or errors identified in the Software within a
reasonable time frame acceptable to both parties, the Licensor may provide
the Licensee with a modified version of the Software that does not contain
such material deficiencies, incompatibilities, defects or errors. In the
event that the Licensor is unable to correct all material deficiencies,
incompatibilities, defects or errors, either through remedial action or the
provision of a new copy of the Software the Licensor shall be in material
breach of this Agreement. Without prejudice to the other remedies of the
Licensee hereunder and elsewhere, the Licensor shall immediately refund to
the Licensee the related royalty paid by the Licensee for the Software.
5.2 The Licensee shall notify the Licensor in writing of failure of the
Software to operate in conformity with the Specifications within 10 (ten)
Working Days following discovery thereof. Provided that the Licensee
notifies the Licensor of such failure prior to expiration of the Warranty
Period, the Licensor will investigate and take corrective action in
respect of material non-conformities as expeditiously as is possible in
the circumstances. If any Software fails to operate in accordance with the
Specifications, the Licensor will use all reasonable efforts to correct
the Software so that it will operate substantially in accordance with the
Specifications. If the Licensor determines that the reported error
non-conformity is not due to any error or defect in the Software supplied
by the Licensor and is not due to any other fault or negligence of the
Licensor or its supplier, the Licensee shall compensate the Licensor for
its services on a time and materials basis at the Licensor's reasonable
rates.
5.3 Licensor further warrants that the disks (if any) on which the Software is
provided will be free from defects in materials and workmanship under
normal use and service during the Warranty Period.
5.4 This clause constitutes the only warranty provided by the Licensor in
respect of the Software and the Licensor's obligations set out in this
Agreement replace all undertakings, guarantees, and warranties, express or
implied, in law or otherwise, including any warranty of satisfactory
quality or fitness for a particular purpose, which the Licensee must have
sole responsibility for determining. Without prejudice to the warranty
given by the Licensor hereunder, the Licensee acknowledges in this
connection that:
(a) The Software cannot be tested in advance in every possible
operating combination and environment;
(b) It is not possible to produce Software known to be error-free in
all circumstances;
(c) Not all errors can be rectified.
<PAGE> 11
5.5 The Licensor shall not be liable to the Licensee for any claim or defect
arising from (i) any alteration or modification of any Software which is
not provided or approved by Licensor; (ii) problems with the Licensee's
equipment or with other software not provided by Licensor; (iii) any other
cause beyond Licensor's control.
5.6 EXCEPT AS EXPRESSLY PROVIDED IN THIS CLAUSE, NO EXPRESS OR IMPLIED WARRANTY
IS MADE BY LICENSOR WITH RESPECT TO THE PRODUCTS, ANY SOFTWARE RELEASE, THE
DOCUMENTATION OR ANY OTHER MATTER, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE. WITHOUT PREJUDICE TO
THE WARRANTY GIVEN IN CLAUSE 5.1 THAT THE SOFTWARE WILL OPERATE
SUBSTANTIALLY IN ACCORDANCE WITH THE SPECIFICATIONS, AS THE SAME MAY BE
MODIFIED BY AGREEMENT, THE LICENSOR DOES NOT WARRANT THAT ALL ERRORS IN THE
SOFTWARE CAN OR WILL BE CORRECTED.
5.7 The Licensee warrants to the Licensor that it will treat the Software as
Confidential Information (as provided in Clause 13).
6. INTELLECTUAL PROPERTY RIGHTS INDEMNITY
6.1 Subject to the terms of this clause, and at the Licensor's own expense, the
Licensor will defend or cause to be defended or, at the Licensor's option,
settle any claim or action brought against the Licensee in respect of any
claimed infringement of any Intellectual Property right by the Software or
by the grant of this License ("Claim"). Subject to the other conditions of
this clause, the Licensor will indemnify the Licensee against any
liability, damage or expense with respect to any Claim, provided that the
Licensee:
(a) Notifies the Licensor promptly in writing of the Claim immediately
on becoming aware of it;
(b) Grants sole control of the conduct of the defence, settlement or
appeal of the Claim to Licensor;
(c) Gives the Licensor complete and accurate information to the best
of its knowledge and full co-operation and assistance to enable
the Licensor to settle or defend the Claim; and
(d) Has complied fully with the terms of this Agreement.
If the Licensee desires to have separate legal representation in any such
Claim, the provisions of this clause shall not prevent Licensee's
participation with Licensor in the Claim, provided that Licensee will be
responsible for the costs and fees of its separate legal representation,
and provided that Licensor shall continue to have full control of the
conduct of the Claim.
6.2 The Licensor shall have no liability under this clause for any alleged or
actual infringement arising from
(a) The combination of the Software with any other software not
supplied by Licensor; or
(b) The modification or alteration of the Software unless the
modification or alteration was made, supplied or approved
expressly by Licensor.
<PAGE> 12
6.3 If any part of the Software should become the subject of any Claim, or if a
court judgement is made that the Software does infringe, or if the use or
licensing of any part of the Software is restricted, the Licensor shall, at
the Licensor's option and expense:
(a) Either obtain or procure for the Licensee the right to continue
to use the Software; or
(b) Replace or modify the Software so that it becomes non-infringing,
but substantially functionally equivalent; or
(c) If the use of the Software is prevented by permanent injunction
and neither of the above options (a) or (b) is reasonably
possible or effective, the Licensor shall accept its return and
terminate the Agreement and refund to the Licensee an amount
equal to the sum paid by the Licensee for the Product or Software
Release, without prejudice to any other right the Licensee shall
have under this Agreement.
6.4 In no circumstances will the Licensor be liable for any costs or expenses
incurred by the Licensee without the Licensor's written authorisation.
7. LIMITATION OF LIABILITY
7.1 The Licensee agrees that the Licensee has accepted these terms and
conditions in the knowledge that the Licensor's liability is limited and
that the licence fee and charges payable have been calculated accordingly.
7.2 The Licensor's total liability arising in connection with this Agreement
(including liability for interest and costs) will not exceed in aggregate
the total licence fee paid by the Licensee under this Agreement except in
the case of liability for death or personal injury caused by the Licensor's
negligence, which will not be subject to a financial limit.
7.3 Except as expressly stated in this clause and elsewhere in this Agreement,
any liability by the Licensor for any breach of this Agreement will be
limited in the aggregate of damages, costs, fees and expenses to the total
licence fees paid or due to be paid by the Licensee under this Agreement.
For the avoidance of doubt, the limitation contained in this Clause shall
not apply to the indemnity given by the Licensor under Clause 6, subject to
its terms.
7.4 Except as expressly stated in this Agreement, neither the Licensor nor its
officers, employees, agents or sub-contractors shall be liable to the
Licensee in connection with the Licensor's performance of this Agreement or
the Licensee's use of the Software. In no event will the Licensor, its
officers, employees, agents or sub-contractors be liable to the Licensee
for special, indirect or consequential damages arising out of this
Agreement or the breach thereof, or arising out of the Licensee's
possession of, use of or inability to use the Software or any part thereof,
including but not limited to any damages for loss of profits or arising
from loss of data or unfitness for use even if that loss or damage was
reasonably foreseeable or either party was aware of the possibility of that
loss or damage arising, and whether such damages are based in contract,
tort, negligence, strict liability or otherwise.
8. TERM, TERMINATION AND EFFECTS OF TERMINATION
8.1 This Agreement shall be effective on the Effective Date and shall continue
indefinitely unless terminated as provided in this Clause.
<PAGE> 13
8.2 This Agreement shall terminate upon the splitting of the assets of Newco,
as provided under Clause 17.5 of the Shareholders Agreement and shall be
replaced by a non-exclusive licence of the Software, to be granted to the
successor company/ies of the relevant assets.
8.3 This Agreement may be terminated immediately by notice in writing:
(a) By the Licensor, for the Licensee's material breach in the
circumstances set out in Clause 4.3;
(b) By either of the Licensor or Licensee if the other party is in
material breach of any of its obligations under this Agreement
(other than under Clause 8.2(a) above and fails to remedy the
breach (if capable of remedy) within a period of 30 days after
written notice of such breach.
(c) By either of the Licensor or Licensee if the other party is
involved in any legal proceedings concerning its solvency, or
ceases trading, or commits an act of bankruptcy or is adjudicated
bankrupt or enters into liquidation, whether compulsory or
voluntary, other than for the purposes of an amalgamation or
reconstruction, or makes an arrangement with its creditors or
petitions for an administration order or has a receiver or
manager appointed over all or any part of its assets or generally
becomes unable to pay its debts within the meaning of Section 123
or Section 268 of the Insolvency Act 1986 or equivalent
circumstances occur in any other jurisdiction.
8.4 Any termination of this Agreement will be without prejudice to any other
legal remedies, accrued rights or outstanding liabilities of either of the
parties at the date of termination.
8.5 If this Agreement is terminated for any reason, the Licensee shall satisfy
the Licensor that the Licensee has ceased to use the Software and has
deleted the Software and all copies of any part of the Software from the
Licensee's systems and that the Licensee can no longer reproduce the
Software in any way, and the Licensee shall return to the Licensor
immediately all related documentation or other tangible property in the
Licensee's possession belonging to Licensor, including all copies of the
Products or Software Releases.
8.6 Such provisions of this Agreement as are required to survive its
termination or expiry in order to give full force and effect to the rights
and obligations of the parties hereunder shall be deemed to so survive.
9. ESCROW
The parties shall use their best endeavours to enter into the Escrow
Agreement in the form set out in Schedule E hereto within 30 days of the
date of this Agreement, provided that no changes shall be made to the form
of the Escrow Agreement save such as are strictly necessary to satisfy the
requirements of Fort Knox as contracting party to that document and on
extension shall be permitted to the 30 day period save as is strictly
necessary to accommodate the requirements of Fort Knox.
10. NON-SOLICITATION
During the Term neither party shall employ, solicit or make any offers to
employ any employees used by the other in connection with the performance
of the Services, without the prior written consent of the other, which
consent shall not be unreasonably withheld. The
<PAGE> 14
non-breaching party shall be entitled, in addition to any other remedies
it may have at law or in equity, to a payment from the party in breach of
this Clause in an amount equal to three months' salary of any employee
that party employs, solicits or offers to employ in breach of this
Clause.
11. JOINT OVERSIGHT COMMITTEE
11.1 JOC Procedures: The following representatives will comprise a joint
oversight committee (the "JOC") which will meet as agreed necessary. The
functions of such committee, among other things, will be to provide
Product direction, review and analyze changed in the market, prioritize
resources to improve performance of the parties' obligations hereunder,
review and analyze the performance of the parties, and to review
recommendations and suggestions to enhance the performance of the
Products.
Licensor Designees(2): Scott Hancock Steve Reynolds
Licensee Designees(2): Bill Brindle Tony Berry
11.2 If a JOC Member resigns or leaves its employer, the party with a vacancy
will promptly appoint a replacement.
11.3 JOC Procedures: All actions of the JOC will be subject to the following
process:
11.3.1 An equal number of appointed representatives from each party must
be in attendance for the JOC to conduct a meeting.
11.3.2 Each party hereby appoints the following individual as its
Management Representative for purposes of this Agreement:
Licensor: Trip Davis
Licensee: Chris Fry
11.3.3 Thirty (30) days prior to replacing its Management
Representative, HR or Newco, as the case may be, shall notify the
other in writing identifying its proposed replacement.
12. DISPUTE RESOLUTION
12.1 Initial Procedures: The parties shall make all reasonable efforts to
resolve all disputes without resorting to litigation. If a dispute arises
between the parties, the JOC Representatives will attempt to reach an
amicable resolution. If either JOC Representative determines that an
amicable resolution cannot be reached, such JOC Representative shall
submit such dispute in writing to the Management Representatives (a
"Dispute Notice"), who shall use their best efforts to resolve it or to
negotiate an appropriate modification or amendment.
12.2 Escalation: Except as otherwise provided in this Agreement, neither party
shall be permitted to bring proceedings against the other (save for
injunctive relief) until the earlier of (i) the date that, after
commencing good faith negotiations, either of the Management
Representatives concludes in good faith that resolution of the dispute
through continued negotiation is unlikely, or (ii) sixty days from the
date of submission of a Dispute Notice by either party.
<PAGE> 15
12.3 Arbitration: If the parties are unable to reach a resolution of any
matter within the negotiating procedures outlined herein, either party
may submit this matter to arbitration under the Rules of the American
Arbitration Association. If the parties resort to arbitration, no
arbitrator shall be entitled to award punitive damages.
13. CONFIDENTIALITY
13.1 The Receiving Party shall:
13.1.1 keep the Confidential Information confidential;
13.1.2 not disclose the Confidential Information to any person, other
than in accordance with this clause 13, unless it first obtains
the Disclosing Party's written consent; and
13.1.3 not use the Confidential Information for any purpose other than
the performance of its obligations under this Agreement or, in
the case of Licensee, the use, management, support, maintenance
or development of the Custom Software.
13.2 The Licensee may disclose Confidential Information to its employees, the
other members of Licensee's Group (and their employees) and to third
parties (and their employees) contracted (or with whom Licensee is
negotiating with a view to contracting) to provide auditing, hardware or
software facilities management, support, maintenance or development
services to any member of Licensee's Group, to the extent reasonably
necessary for the purposes of this Agreement.
13.3 During the term of this Agreement the Licensor may disclose Confidential
Information to its employees and to the Licensor's Group and its
employees to the extent reasonably necessary for the purposes of this
Agreement.
13.4 The Receiving Party shall ensure that each person who receives
Confidential Information pursuant to clause 13.2 (a "Recipient") is made
aware of and complies with all the Receiving Party's obligations of
confidentiality under this Agreement as if the Recipient was a party to
this Agreement.
13.5 The Receiving Party may disclose Confidential Information where
disclosure is required by law, a court of competent jurisdiction or by a
regulatory body with authority over its business, provided that the
Receiving Party gives the Disclosing Party reasonable notice of the
disclosure.
13.6 The obligations contained in this Clause do not apply to Confidential
Information which:
13.6.1 is at the date of this Agreement within or at any time after the
date of this Agreement comes into the public domain other than
through breach of this Agreement by the Receiving Party or any
Recipient;
13.6.2 can be shown by the Receiving Party to the reasonable
satisfaction of the Disclosing Party to have been known by the
Receiving Party before disclosure by the Disclosing Party to the
Receiving Party; or
13.6.3 subsequently comes lawfully into the possession of the
Receiving Party from a third party.
<PAGE> 16
13.7 For the purposes of this clause, "Confidential Information" means all
information of a confidential nature disclosed (whether in writing,
verbally or by any other means and whether directly or indirectly) by one
party (the "Disclosing Party") to the other party ( the "Receiving Party")
whether before or after the date of this Agreement including, without
limitation, any information relating to the Disclosing Party's products,
operations, processes, plans or intentions, product information,
Intellectual Property Rights, market opportunities and business affairs or
those of its customers, clients or other contacts.
14. GENERAL PROVISIONS
14.1 Entire Agreement and Variations
This Agreement including the Schedules constitutes the entire agreement
between the parties relating to the Software. Each party confirms that it
has not relied upon any representation not recorded in this Agreement as an
inducement to enter into this Agreement. No variation of these terms and
conditions will be valid unless confirmed in writing by authorised
signatories of both parties. This Agreement shall be binding upon the
successors and assigns of the parties hereto.
14.2 Severability
If any of the provisions of this Agreement is judged to be illegal or
unenforceable, the continuation in full force and effect of the remainder
of them will not be prejudiced.
14.3 Waiver
No forbearance or delay by either party in enforcing its respective rights
will prejudice or restrict the rights of that party, and no wavier of any
rights or of any breach of any terms of this contract will be deemed to be
a waiver of any other right or of any later breach.
14.4 Independent Contractors
The relationship between parties is that of independent contractor. Neither
of the parties is agent for the other, and neither of the parties has any
authority to enter into any contract, whether expressly or by implication,
in the name of the other party, without that party's prior written consent.
14.5 Assignment
Neither party will assign this Agreement or any benefits or interests
arising under this Agreement without the prior written consent of the other
party.
14.6 Notices
Notices under this Agreement shall be deemed given when delivered by hand,
on the fifth business day after such notice is deposited in the mail,
registered or certified, return receipt requested, postage prepaid, or sent
via facsimile to the following address:
TECHNOLOGY LICENSING COMPANY, LLC FORTDOVE LIMITED (OR SUCH NAME
<PAGE> 17
6 W. Druid Hills Drive by which the company is later known)
Atlanta Abbey House
Georgia 282 Farnborough Road
30329 Farnborough
Hants GU14 7NJ
-------------------------------- ------------------------------------
Attention: Trip Davis (to be Attention: Company secretary
copied to Ralph Manaker at
World Travel Partners)
Either party may change its address by giving the other written notice of
the new address.
14.7 FORCE MAJEURE
14.7.1 If a party (the "Affected Party") is prevented, hindered or
delayed from or in performing any of its obligations under this
Agreement by a Force Majeure Event:
14.7.1.1 the Affected Party's obligations under this Agreement
are suspended while the Force Majeure Event continues
and to the extent that it is prevented, hindered or
delayed;
14.7.1.2 as soon as reasonably possible after the start of the
Force Majeure Event the Affected Party shall notify the
other party in writing of the Force Majeure Event, the
date on which the Force Majeure Event started and the
effects of the Force Majeure Event on its ability to
perform its obligations under this Agreement;
14.7.1.3 the Affected Party shall make all reasonable efforts to
mitigate the effects of the Force Majeure Event on the
performance of its obligations under this Agreement; and
14.7.1.4 as soon as reasonably possible after the end of the
Force Majeure Event the Affected Party shall notify the
other party in writing that the Force Majeure Event has
ended and resume performance of its obligations under
this Agreement.
14.7.2 If the Force Majeure Event continues for more than three months
starting on the day the Force Majeure Event starts, a party may
terminate this Agreement by giving not less than 30 days' written
notice to the other party.
14.7.3 In this clause, "Force Majeure Event" means an event beyond the
reasonable control of the Affected Party including, without
limitation, act of God, war, riot, civil commotion, malicious
damage, compliance with a law or governmental order, rule, or
regulation, an accidental breakdown of plant or machinery not due
to the negligence of the Affected Party, fire, flood and storm.
<PAGE> 18
14.8 GOVERNING LAW AND JURISDICTION
This agreement shall be governed by and construed according to the laws of
the State of Georgia of the United States of America, without regard to its
choice of laws provisions.
15. COUNTERPARTS
This Agreement may be executed in any number of counterparts, which shall
together constitute one Agreement.
<PAGE> 19
SCHEDULE A: THE SOFTWARE PRODUCTS
<PAGE> 20
SCHEDULE B: FORM END USER SUB-LICENSE
<PAGE> 21
SCHEDULE C: SUPPORT AND MAINTENANCE AGREEMENT
<PAGE> 22
SCHEDULE D: DEFINITION OF EUROPE
<PAGE> 23
SCHEDULE F: SPECIFICATIONS
<PAGE> 24
SCHEDULE G: SOFTWARE/PRODUCTS
CAPABLE OF SUBLICENSE
<PAGE> 25
IN WITNESS WHEREOF the undersigned as duly authorised representatives of the
parties to this Agreement have entered into this Agreement as of the date
written above.
- -------------------------
FOR AND ON BEHALF OF
TECHNOLOGY LICENSING COMPANY, LLC
Name: /s/ Ralph Manaker
--------------------
Date:
--------------------
- -------------------------
FOR AND ON BEHALF OF
FORTDOVE LIMITED
Name: /s/ Ralph Manaker
--------------------
Date:
--------------------
<PAGE> 1
EXHIBIT 10.22
WORLDTRAVEL TECHNOLOGIES LLC
and
FORTDOVE LIMITED
---------------------------------------------------------------------------
RECIPROCAL SOFTWARE DEVELOPMENT AGREEMENT
---------------------------------------------------------------------------
CLIFFORD CHANCE
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C> <C>
1. DEFINITIONS....................................................................................
2. DEVELOPMENT SERVICES TO BE PROVIDED BY DEVELOPER...............................................
3. IMPLEMENTATION AND ACCEPTANCE OF DESIGN SPECIFICATIONS AND CUSTOM SOFTWARE.....................
4. PROJECT MANAGEMENT; DELIVERY...................................................................
5. PERFORMANCE....................................................................................
6. ACCEPTANCE TESTING.............................................................................
7. BETA TESTING...................................................................................
8. PRICE AND PAYMENT..............................................................................
9. WARRANTIES AND REPRESENTATIONS.................................................................
10. CONFIDENTIALITY................................................................................
11. OWNERSHIP......................................................................................
12. INDEMNITY......................................................................................
13. GENERAL INDEMNITY..............................................................................
14. TERM AND TERMINATION...........................................................................
15. JOINT OVERSIGHT COMMITTEE......................................................................
16. DISPUTE RESOLUTION.............................................................................
17. FORCE MAJEURE..................................................................................
18. NON-SOLICITATION...............................................................................
19. MISCELLANEOUS..................................................................................
20. COUNTERPARTS...................................................................................
SCHEDULE 1 DELIVERY ORDER # ................................................................
SCHEDULE 2 CHANGE ORDER PROCEDURE...........................................................
</TABLE>
(i)
<PAGE> 3
THIS AGREEMENT is made on 2000
BETWEEN:
WORLDTRAVEL TECHNOLOGIES LLC, a company formed under the laws of Georgia, whose
principal place of business is at 6 W Druid Hills Drive, Atlanta, Georgia,
30329, USA ("WTT" or "Client/Developer", as the case may be;); and
FORTDOVE LIMITED, a company incorporated in England and Wales (registered no.
3841799), whose registered office is at 200 Aldersgate Street, London, EC1A 4JJ,
England ("NEWCO" or "Client/Developer", as the case may be;)
WHEREAS:
(A) Hogg Robinson, WTT and WTT's sole parent company WTT Inc have entered
into the Shareholders Agreement (as defined below);
(B) WTT and NEWCO wish to enter an agreement for the provision by either
party of certain software development services to the other in order
that each party may provide technical travel services and grant
sublicences of custom software to its customers.
1. DEFINITIONS
1.1 In this Agreement:
"ACCEPTANCE" means the satisfactory completion of Alpha Testing and
Beta Tests under Clauses 6 and 7;
"APPLICATION SOFTWARE means the software modules or components which
perform the functions and comply with the proposal and specifications
identified or set forth in the Design Specifications. Each Application
Software module or component, specification and proposal included or
referred to in the Design Specifications is expressly incorporated
herein by reference. The Application Software shall be delivered in
machine readable object code form
"ACCEPTANCE TESTS" are the acceptance test provisions of any Design
Specifications, the satisfactory completion of which shall also be
specified as Milestones;
"CLIENT" means the Party to this Agreement which is commissioning
development work from the Developer;
"CUSTOM SOFTWARE" shall mean the Application Software and the
Documentation;
"CUSTOMER" means an undertaking to whom a party, on any date, is
supplying (or in the preceding (12) months has supplied) goods or
services;
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"DELIVERY ORDER" is an order in the form of Schedule 1 submitted by
Client and ultimately signed by both parties under which Client and
Developer agree the additional terms on which work will be carried out
and the detail of the work to be performed;
"DESIGN SPECIFICATIONS" means, at a minimum, system flow charts,
program descriptions, file layouts, database structures, report layouts
and screen layouts, interface requirements and layouts, conversion
requirements and layouts, refined equipment requirements, acceptance
criteria and acceptance test scripts for improvements or enhancements
to the Licensed Products or for new products related to the Licensed
Products.
"DEVELOPER" means the party carrying out the development under this
Agreement;
"DOCUMENTATION" shall mean all operator and user manuals, training
materials, guides, listings, specifications and other materials
necessary for the complete understanding and use of the functionality
of the Application Software, including materials useful for design
(e.g., logic manuals, flow diagrams and principles of operation) and
machine-readable text of graphic files subject to display or print-out;
"EFFECTIVE DATE" means the date hereof, unless otherwise agreed in
writing between the parties;
"END USER LICENCE" means a licence of any Custom Software to an end
user Customer of Client, in the form attached as a Schedule to the
Software Licence Agreement;
"INTELLECTUAL PROPERTY" means all letters patent, trade marks and
service marks, registered designs, utility models, applications for any
of the foregoing and the right to apply therefor in any part of the
world; design rights, copyrights, topography rights, brand names, trade
names, logos and business names and all or any similar or equivalent
rights arising or subsisting in any country in the world;
"NEWCO PROJECT CO-ORDINATOR" means the person from time to time
assigned by NEWCO to co-ordinate NEWCO's involvement in the work
performed hereunder and whose name shall be notified to WTT by NEWCO;
"IMPLEMENTATION SCHEDULE" means the Custom Software implementation
schedule in any Delivery Order;
"INTELLECTUAL PROPERTY RIGHTS" means any intellectual property rights
anywhere in the world whether registrable or not, including, without
limitation, patent, trade marks, service marks, trade names, business
names, designs, copyright and related rights, topography rights,
know-how as well as applications for such rights;
"JOC" means the joint oversight committee as defined in Clause 15;
"JOC MEMBER" means a member of the JOC;
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"LICENSED PRODUCTS" shall mean those products listed in Schedule A of
the Software Licence Agreement;
"MANAGEMENT REPRESENTATIVES" means the persons nominated to represent
each party from time to time and initially as set out in Clause 15;
"MILESTONE" means a progress milestone referred to in any
Implementation Schedule;
"PERMITTED SUBLICENSEE" means a party who is a Customer of Client and
who has signed an End User Licence with Client;
"PROJECT" means any project for the development and delivery of Custom
Software under this Agreement.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement of on or
about even date entered into between WTT Inc, WTT, Hogg Robinson and
NEWCO for the establishment and operation of NEWCO as a joint venture
company;
"SOFTWARE DEVELOPMENT AGREEMENT" means this Agreement;
"SOFTWARE LICENCE AGREEMENT" means the agreement of on or about even
date between WTT 2 and NEWCO in terms of which WTT 2 licenses to NEWCO
the Licensed Products (as defined herein) on the terms and conditions
therein;
"SUPPORT AND MAINTENANCE AGREEMENT" means an agreement between Client
and a Permitted Sub-licensee in the form attached at Schedule B to the
Software Licence Agreement;
"TERM" means the term of this Agreement as set out in Clause 14.
"WTT INC" means WT Technologies Inc, a company formed under the laws of
Georgia, whose principal place of business is at 6 W Druid Hills Drive,
Atlanta, Georgia, 30329, USA;
"WTT PROJECT CO-ORDINATOR" means the person from time to time assigned
by WTT to supervise the performance of any work hereunder and whose name
shall be notified to NEWCO;
"WTT 2" means Technology Licensing Company, LLC, a company formed under
the laws of Georgia, whose principal place of business is at 6 W Druid
Hills Drive, Atlanta, Georgia, 30329, USA;
1.2 In this Agreement, a reference to:
1.2.1 a "SUBSIDIARY" or "HOLDING COMPANY" is to be construed in
accordance with Section 736 of the UK Companies Act 1985 and a
"SUBSIDIARY UNDERTAKING" or
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<PAGE> 6
"PARENT UNDERTAKING" is to be construed in accordance with
Section 258 of the UK Companies Act 1985;
1.2.2 a statutory provision includes a reference to the statutory
provision as modified or re-enacted or both from time to time
before the date of this Agreement and any subordinate
legislation made or other thing done under the statutory
provisions before the date of this Agreement;
1.2.3 a document is a reference to that document as modified from
time to time;
1.2.4 a person includes a reference to a government, state, state
agency, corporation, body corporate, association or
partnership;
1.2.5 a person includes a reference to that person's legal personal
representatives, successors and permitted assigns;
1.2.6 the singular includes the plural and vice versa unless the
context otherwise requires;
1.2.7 a clause or schedule, unless the context otherwise requires,
is a reference to a clause or a schedule of this Agreement.
1.3 The headings in this Agreement do not affect its interpretation.
2. DEVELOPMENT SERVICES TO BE PROVIDED BY DEVELOPER
2.1 Where Client wishes to enter an agreement for the provision of any
Custom Software related to Licensed Products, Developer shall have the
right of first refusal to perform any work required on such a Project.
Developer is not obligated to bid on development of Client-specific,
Customer-specific, or non-generic products;
2.2 Client shall deliver a Delivery Order for each Project to Developer. If
Developer wishes to perform the work as set out in the Delivery Order,
Developer shall countersign the Delivery Order and send it to Client to
be received by Client within a reasonable period from receipt of the
original Delivery Order by Developer. The Delivery Order shall include
an Implementation Schedule, and may be varied by written agreement
between the parties to reflect the terms on which the parties agree
Developer shall undertake the work.
2.3 Where Developer does not accept the Delivery Order strictly by the
procedure as set out in clause 2.2 above, Client may enter a contract
with a third party for the provision of such Custom Software.
2.4 Likewise, if Client considers that Developer's quotation for the
provision of Custom Software is not competitive, Client's required
timescales cannot be accommodated, or the Custom Software does not
otherwise meet Client's requirements, Client is entitled to commission
such Custom Software from a third party and Developer shall not
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<PAGE> 7
unreasonably refuse Client access to relevant interface definitions or
source code as reasonably necessary for Client to perform such
development, subject to Client's agreement to appropriate
confidentiality provisions for such definitions and source code. In no
circumstances shall the Developer's consent be considered to be
unreasonably withheld if it is withheld in circumstances where Developer
considers such access may result in Developer's interface definitions
and source code being made available to a competitor.
2.5 In the event that Developer does not bid or refuses to do the
development requested by Client hereunder, Developer shall give Client
access to relevant interface definitions or source code as reasonably
necessary for Client to perform such development, subject to Client's
agreement to appropriate confidentiality provisions for such definitions
and source code.
3. IMPLEMENTATION AND ACCEPTANCE OF DESIGN SPECIFICATIONS AND CUSTOM
SOFTWARE
3.1 On execution of a Delivery Order hereunder, Developer shall, with
Client's cooperation, gather the necessary detailed requirements and
develop and deliver to Client a set of Design Specifications meeting
Client's requirements as set out in such Delivery Order. An authorised
representative of Developer shall certify to Client in writing that the
Design Specifications are fully capable of meeting Client's requirements
as contained in the Delivery Order, except as expressly agreed to
otherwise in writing by Client. If such Design Specifications are
prepared by Developer at Client's request and initiation under such a
Delivery Order, the Delivery Order shall provide for Client to pay for
the preparation of such Design Specifications at cost. The Design
Specifications shall be delivered to Client on or before the specified
time set forth in the Implementation Schedule. Within a mutually agreed
upon date after the delivery of the Design Specifications to Client ,
Developer shall notify Client in writing of its acceptance or rejection
of the Design Specifications. If the Design Specifications are rejected,
Client will specify the reasons for such rejection and Developer shall
revise and re-deliver amended Design Specifications to Client for
acceptance. If Client rejects the amended Design Specifications, Client
shall have the right to terminate that Project pursuant to this
Agreement. If Client has neither accepted nor rejected the Design
Specifications within a reasonable amount of time after the delivery
thereof, the Design Specifications shall be deemed to have been accepted
by Client.
3.2 Developer shall ensure that the Design Specifications:
3.2.1 adequately and accurately provide for the implementation of
the functions to be performed by the Custom Software as
described in the Delivery Order;
3.2.2 are written in a language readily comprehensible to Client's
employees and consultants involved in work which relates to
the Project (and likewise all reference portions of other
documents);
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<PAGE> 8
3.2.3 do not refer to any document not provided to or in the
possession of Client; and
3.2.4 include a module overview, definition or logical and data
processing flows, module processing logic, module inputs,
module outputs, file/database structure, module interfaces and
module processing components.
3.3 Developer will ensure that as far as reasonably possible the Design
Specifications include provision for necessary third party software and
compatible operating and infrastructure environment. Client will use
reasonable endeavours to raise with Developer any issues which it
believes are relevant to the operating environment and infrastructure
relating to the Custom Software.
4. PROJECT MANAGEMENT; DELIVERY
4.1 Project Co-ordinators
The parties shall both designate, upon commencement of this Agreement a
Project Co-ordinator to be assigned to supervise the work hereunder:
4.1.1 The first point of contact shall be NEWCO Project Co-ordinator
for WTT and shall be WTT Project Co-ordinator for NEWCO.
4.1.2 Either party may change its Project Co-ordinator from time to
time and shall immediately notify the other party of any such
change.
4.1.3 For purposes of any Delivery Order, WTT Project Co-ordinator
and NEWCO Project Co-ordinator shall also co-ordinate the
services provided under a Delivery Order, unless otherwise
agreed.
4.2 Periodic Progress Reports
Developer shall provide periodic progress reports as agreed in any
applicable Delivery Order accepted by Developer.
4.3 Change Order Procedure
All changes to the Design Specifications or to any Delivery Order must be
requested in writing and require mutual agreement, in accordance with the
procedure set forth in Schedule 2 attached hereto and incorporated herein
by reference. Evaluation and/or implementation of requested changes may
or may not result in any modification to the Development Fee,
Implementation Schedule or other terms of this Agreement. Developer
assumes the risk of any work performed or action taken by Developer based
upon oral statements, or on documents or notations, not in accordance
with the Design Specifications, this clause 4.3, any Delivery Order and
Schedule 2.
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5. PERFORMANCE
5.1 Performance of work associated with the development of Custom Software
shall be carried out in accordance with the relevant Delivery Order,
subject to any changes agreed under Clause 4.3.
5.2 Developer shall use all due skill and care in carrying out the Project
work and in developing the Custom Software.
5.3 Time shall be of the essence of the performance of the work under a
Delivery Order, which shall also mean in relation to any Milestone.
5.4 In the event any Milestone is not met due to any delay caused by
Developer's acts or omissions, and subject to any changes in the
Implementation Schedule agreed in writing under Clause 4.3 or otherwise,
Client shall not be required to remit the relevant payment except for
properly incurred actual out of pocket expenses, as evidenced by
appropriate written documentation, which is associated with such
Milestone, until such Milestone is met.
5.5 Additionally, Developer shall use commercially reasonable efforts to
ensure that such delay does not result in slippage of later Milestones.
5.6 In the event that the parties agree that, in respect of any individual
Project, Client has a right of termination at any milestone, then in the
event that Client exercises such right of termination, Client shall have
the option:
5.6.1 [to pay to the Developer the full amount due to the Developer,
up to and including the last achieved milestone, (including
any percentage of the Milestone Payment currently withheld by
the Client under the agreed payment structure) in which case
the Developer shall assign to the Client all the Intellectual
Property Rights in and, unless agreed otherwise, the
corresponding source code for, such partially completed
Software, unless such Software is generic and non-Client
specific in which case, the Developer shall grant to the
Client a non-exclusive licence to such software and access to
its source code for purposes of completion of the Software,
using its own resources or those of a third party contractor];
5.6.2 in the case where a percentage which is less than the full
payment amount associated with the completion of each achieved
Milestone has been made by the Client, the Client has the
option to pay no further amounts to the Developer, in which
case, the Client shall have no title, to interest in or right
to use the Software.
6. ACCEPTANCE TESTING
6.1 After Developer has certified to Client in writing that the Custom
Software has been delivered and installed, that Developer has tested the
Custom Software and that the Custom Software is fully operational and
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fully integrated with any and all pre-existing software or equipment in
Client environment in which the Custom Software must operate and is
ready for acceptance testing by Client; Client shall conduct Client
Alpha Testing, as set out in the Design Specifications ("CLIENT ALPHA
TESTING") at a time which is convenient for both parties and in
accordance with the relevant Implementation Schedule.
6.2 Developer personnel will be entitled to be present for the Acceptance
Tests.
6.3 If, the Custom Software fails the Alpha Testing, Client shall so notify
Developer in writing within a reasonable period following such failure
specifying the nature of the failure, and Developer shall use all
reasonable efforts to correct the failure after which Client shall
repeat the Alpha Testing, using the same procedure.
6.4 If the Custom Software again fails to pass the Alpha Testing, Client
shall have the option to terminate, in whole or in part, the applicable
Delivery Order.
6.5 In the event of termination under clause 6.4 above, Client shall
have the option:
6.5.1 to pay to the Developer the full amount due to the Developer,
up to and including the last achieved milestone, (including
any percentage of the Milestone Payment currently withheld by
the Client under the agreed payment structure) in which case
the Developer shall assign to the Client all the Intellectual
Property Rights in and, unless agreed otherwise, the
corresponding source code for, such partially completed
Software, unless such Software is generic and non-Client
specific in which case, the Developer shall grant to the
Client a non-exclusive licence to such software and access to
its source code for purposes of completion of the Software,
using its own resources or those of a third party contractor;
6.5.2 in the case where a percentage which is less than the full
payment amount associated with the completion of each achieved
Milestone has been made by the Client, the Client has the
option to pay no further amounts to the Developer, in which
case, the Client shall have no title, to interest in or right
to use the Software.
7. BETA TESTING
7.1 Upon successful completion of Alpha Testing, Client shall use the Custom
Software for an initial thirty (30) day period or as otherwise agreed in
writing, as set forth in the relevant Implementation Schedule, for the
processing of Client's data in a production-like environment (the "BETA
TEST"). The Beta Test shall be successfully completed upon notice from
Client to Developer that Client is satisfied, in its reasonable
discretion, that for a mutually agreed-upon period, (i) all of the
functions of the Custom Software have been provided and perform in
accordance with this Agreement and the Design Specifications, and (ii)
all reliability and performance standards have been met or exceeded (the
"FINAL CUSTOM SOFTWARE ACCEPTANCE").
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7.2 If the Custom Software fails to pass the Beta Test, Client shall so
notify Developer in writing specifying the nature of such failure(s) in
reasonable detail and Developer shall use all reasonable efforts to
correct the specified failure(s) after which Client shall commence a
second Beta Test.
7.3 If the Custom Software fails to pass this second Beta Test, Developer
acknowledges that Client shall have, upon written notice to Developer,
the option to terminate, in whole or in part, the applicable Delivery
Order. In the event of such termination, Client shall have the option:
7.3.1 to pay to the Developer the full amount due to the Developer,
up to and including the last achieved milestone, (including
any percentage of the Milestone Payment currently withheld by
the Client under the agreed payment structure) in which case
the Developer shall assign to the Client all the Intellectual
Property Rights in and, unless agreed otherwise, the
corresponding source code for, such partially completed
Software, unless such Software is generic and non-Client
specific in which case, the Developer shall grant to the
Client a non-exclusive licence to such software and access to
its source code for purposes of completion of the Software,
using its own resources or those of a third party contractor;
7.3.2 in the case where a percentage which is less than the full
payment amount associated with the completion of each achieved
Milestone has been made by the Client, the Client has the
option to pay no further amounts to the Developer, in which
case, the Client shall have no title, to interest in or right
to use the Software.
8. PRICE AND PAYMENT
8.1 In consideration for the development of the Design Specifications and
the discharge of Developer's obligations under this Agreement, Client
shall pay to Developer a fee (the "Development Fee"). The Development
Fee for each item of Custom Software shall be as agreed under each
Delivery Order on the principles set out in this Clause, or as
subsequently varied by written agreement between the parties from time
to time.
8.2 If non-generic or Client specific Custom Software is developed by
Developer, Client shall pay Developer at Developer's prevailing market
rates for such development, as agreed in the Delivery Order;
8.3 If Client requests Developer to develop Custom Software which relates to
the services bureau or other business lines of Developer, it shall pay
an agreed proportion of Developer's actual costs of development (which
shall not be more than the total cost of such development). In such case
Developer shall be liable to repay such development cost to Client as
and to the extent that it is able to do so (such ability to be
determined only by the amount of royalties and/or transaction fees it
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receives from commercialisation of the Custom Software) by paying to
Client 20% of all profits it earns on the licensing or commercialisation
of such Custom Software to third parties, the aggregate payment to
Client not to exceed the share of development costs paid by Client. The
repayment provisions in this clause will apply mutatis mutandis where
Developer grants to Client pursuant to Clauses 5.6.1, 6.5.1 and 7.3.1 a
non-exclusive licence to use the Software, as provided for therein.
8.4 Notwithstanding the foregoing or anything to the contrary contained
elsewhere in this Agreement, all development services provided by WTT to
NEWCO in order to complete and deliver, to successful, Beta-tested
standard, those versions or releases of the Software listed in Schedule
A of the Software Licence Agreement (the "Initial Software Releases")
shall be provided at no cost to NEWCO until at least the earlier of
8.4.1 the passing of Beta testing by such Initial Software Releases;
8.4.2 the date specified for delivery of such Software in Schedule A
(the "Delivery Date")
8.5 If any Initial Software Release has not passed Beta Test by its Delivery
Date, the Management Representatives shall meet to review the reasons
for the delay in delivery. Taking into account such reasons and the
extent of each party's responsibility for such delay, the Management
Representatives shall agree on whether the development of that initial
Software Release should continue and, if so, on what basis. In
particular the Management Representatives shall agree whether it is
equitable and appropriate for such development to continue on a no-cost
basis and, if not, the basis of any charge to be made by WTT in respect
of such development.
8.6 The provisions of Clause 8.5 are without prejudice to NEWCO's rights
generally under this Agreement and elsewhere, including pursuant to the
Shareholders' Agreement.
8.7 Payment, in respect of all Custom Software, will be made by Client in
accordance with the payment provisions of the relevant Implementation
Schedule, in default of which each instalment shall be payable upon
completion of each related Milestone by Developer and Acceptance by
Client in accordance with the relevant Delivery Order
8.8 Developer shall provide defect correction on all Custom Software during
the warranty period at no cost to Client.
8.9 Developer will submit the charges to be invoiced for services performed
in accordance with the Implementation Schedule, together with related
documentation, to the Client Project Co-ordinator for review and
approval prior to actual invoicing. The charges and/or expenses invoiced
in accordance with this clause 8, except for any amounts disputed by
Client, shall be payable by Client within thirty (30) days of Client's
receipt of each invoice. Any disputed charges shall not affect payment
of non-disputed charges and/or expenses, in accordance with the terms of
this Agreement. Disputed charges shall be dealt with under Clause 16.
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8.10 Developer shall maintain complete and accurate accounting records, in a
form in accordance with generally accepted accounting principles, to
substantiate Developer charges hereunder and Developer shall retain such
records for a period of three (3) years from the date of final payment
hereunder.
8.11 Client shall have the right to audit or have audited the books and
records of Developer relating to the amounts invoiced to Client
hereunder for the purpose of verifying the amounts due and payable
hereunder, upon at least five (5) business days' notice to Developer.
Developer shall afford access to Client's representatives for the
purpose of carrying out such audits. The cost of such audit shall be at
Client's expense; provided, however, that Developer will bear the cost
of the audit if the audit reveals any overpayment which, in the
aggregate, is greater than three percent (3%) of the amount which was
actually due for the period being audited.
9. WARRANTIES AND REPRESENTATIONS
9.1 Each party hereby represents and warrants to the other that:
9.1.1 such party has all requisite power and authority to execute
this Agreement and to perform its obligations thereunder. The
execution, delivery and performance of this Agreement and the
transactions contemplated thereby have been duly authorised
and approved by such party;
9.1.2 the execution and delivery of this Agreement by such party,
and the consummation by such party of the transactions
contemplated therein, will not breach or violate the
organisational documents or any material contract, agreement,
instrument, judgement, law or licence which is applicable to
such party, or to which such party is bound; and
9.1.3 it shall be responsible for obtaining any consent, approval or
authorisation of, or notice to, any governmental or regulatory
authority or agency which is required to be obtained by such
party in connection with its execution, delivery and
performance of this Agreement.
9.2 Except as expressly provided in this Clause , no express or implied
warranty is made by Developer with respect to any service, product,
software release, data compilation or any other matter, including,
without limitation, any implied warranties or conditions of
merchantability, satisfactory quality or fitness for a particular
purpose.
9.3 Developer hereby warrants and represents to Client as follows:
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9.3.1 The Custom Software to be developed hereunder shall be of
professional quality and will conform to generally accepted
standards for software in the software development field. Any
services performed by Developer which are determined by Client
to be to be of less than professional quality or which contain
errors or defects shall be corrected by Developer without
charge.
9.3.2 The Design Specifications and Custom Software will contain
only (i) original material created by Developer or (ii)
material which has been properly licensed from third parties
and has been used by Developer in accordance with the licenses
for such materials, provided that the inclusion of all such
third party materials shall have been agreed to by Client.
9.3.3 Neither any Design Specifications nor any Custom Software
developed by Developer under any Delivery Order has been or
will be assigned, transferred or otherwise encumbered, and
neither any Design Specifications nor any Custom Software nor
any portion thereof, infringes any patents, copyrights, trade
secrets, or other proprietary rights of any third party, and
Developer has no reason to believe that any such infringement
or claims thereof could be made by third parties.
9.3.4 Developer has obtained or will obtain all necessary rights and
licences to third party materials included in the Design
Specifications or Custom Software to enable Client to use the
Design Specifications and Custom Software for the purposes
allowed hereunder and has provided or will provide to Client
copies of all documents granting all such rights and licences.
9.3.5 To the best of Developer's knowledge the Custom Software, upon
Acceptance by Client, shall be free of any and all "time
bombs," disabling mechanisms and (as agreed) copy protect
mechanisms which may disable the Custom Software or such other
software, and Developer agrees to ensure that no data is lost
as a result of same that was present in the Custom Software
when accepted by Client. In addition, Developer warrants that
its quality assurance procedures include testing the Custom
Software for viruses using such virus testing utilities as are
agreed from time to time between the parties.
9.3.6 The Custom Software shall function properly and in substantial
conformity with the relevant Design Specifications and/or
Delivery Order for a period of six months after the relevant
Final Custom Software Acceptance ("the Warranty Period").
During such Warranty Period, Developer shall correct any
defects identified by Developer or by Client at no cost.
9.4 No other representation, condition or warranty, express or implied, is
made with respect to the Custom Software or any other software or
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services provided under this Agreement, including without limitation any
implied warranty of merchantability, satisfactory quality or fitness for
a particular purpose.
10. CONFIDENTIALITY
10.1 The Receiving Party shall:
10.1.1 keep the Confidential Information confidential;
10.1.2 not disclose the Confidential Information to any person, other
than in accordance with this clause 10, unless it first
obtains the Disclosing Party's written consent; and
10.1.3 not use the Confidential Information for any purpose other
than the performance of its obligations under this Agreement
or, in the case of Client, the use, management, support,
maintenance or development of the Custom Software.
10.2 Client may disclose Confidential Information to its employees, the other
members of Client Group (and their employees) and to third parties (and
their employees) contracted (or with whom Client is negotiating with a
view to contracting) to provide auditing, hardware or software
facilities management, support, maintenance or development services to
any member of Client Group, to the extent reasonably necessary for the
purposes of this Agreement.
10.3 During the term of this Agreement Developer may disclose Confidential
Information to its employees and to Developer to the extent reasonably
necessary for the purposes of this Agreement.
10.4 The Receiving Party shall ensure that each person who receives
Confidential Information pursuant to clause 10.2 (a "RECIPIENT") is made
aware of and complies with all the Receiving Party's obligations of
confidentiality under this Agreement as if the Recipient was a party to
this Agreement.
10.5 The Receiving Party may disclose Confidential Information where
disclosure is required by law, a court of competent jurisdiction or by a
regulatory body with authority over its business, provided that the
Receiving Party gives the Disclosing Party as much notice as is
reasonably possible of the disclosure.
10.6 The obligations contained in this clause 10 do not apply to
Confidential Information which:
10.6.1 is at the date of this Agreement or at any time after the date
of this Agreement comes into the public domain other than
through breach of this Agreement by the Receiving Party or any
Recipient.
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10.6.2 can be shown by the Receiving Party to the reasonable
satisfaction of the Disclosing Party to have been known by the
Receiving Party before disclosure by the Disclosing Party to
the Receiving Party; or
10.6.3 subsequently comes lawfully into the possession of the
Receiving Party from a third party.
10.7 For the purposes of this clause, "CONFIDENTIAL INFORMATION" means all
information of a confidential nature disclosed (whether in writing,
verbally or by any other means and whether directly or indirectly) by
one party (the "DISCLOSING PARTY") to the other party (the "RECEIVING
PARTY") whether before or after the date of this Agreement including,
without limitation, any information relating to the Disclosing Party's
products, operations, processes, plans or intentions, product
information, Intellectual Property Rights, market opportunities and
business affairs or those of its customers, clients or other contacts.
11. OWNERSHIP
11.1 Client agrees that any and all Intellectual Property which is related to
the service bureau or other business lines of Developer, which is
conceived, first reduced to practice, made or developed in the course of
work performed under this Agreement by Developer or by one or more of
Developer's employees, consultants, representatives or agents,
including, but not limited to, all software and documentation, and all
copyrights subsisting therein, are and shall remain the exclusive
property of Developer, and Client agrees to assign to Developer all
rights and title to such Intellectual Property, provided, however, that
if Client has totally funded the development of such Intellectual
Property Rights, Developer shall grant to Client a non-exclusive,
perpetual, paid-up license to such Intellectual Property Rights on the
terms of the Software Licence Agreement or such other terms as the
parties may agree. If the Client has partially funded the development of
such Intellectual Property Rights, the licence shall be granted on such
terms and at such cost as the parties may negotiate as part of the
development funding. Client may not use such Intellectual Property for
service bureau use unless there is an agreement in place between
Developer and Client providing specifically for such use.
11.2 Client acknowledges that the Intellectual Property referred to under
Clause 11.1 above is proprietary to Developer and that Developer is not
transferring any rights of copyright or ownership of any Intellectual
Property to Client. Developer shall at all times retain all rights,
title and interest in the Intellectual Property and related
documentation and any derivatives thereof.
11.3 Developer agrees that subject to Clauses 5.6; 6.5 and 7.3, any and all
Intellectual Property which is Client-specific or non-generic and was
requested by Client, which is conceived, first reduced to practice, made
or developed in the course of work performed under this Agreement by
Developer or by one or more of Developer's employees, consultants,
representatives or agents, including, but not limited to, all software
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and documentation, and all copyrights subsisting therein, shall be
considered a "work for hire" and shall be the exclusive property of
Client. Developer agrees to assign to Client all rights and title to
such Intellectual Property.
11.4 Developer acknowledges that the Intellectual Property referred to under
Clause 11.3 above is proprietary to Client and that Client is not
transferring any rights of copyright or ownership of any Intellectual
Property to Developer. Client shall at all times retain all rights,
title and interest in the Intellectual Property and related
documentation and any derivatives thereof.
11.5 Each party agrees that it will promptly sign all papers and do all acts
which may be reasonably necessary to enable the party owning
Intellectual Property in accordance with this clause 11 at the owning
party's expense, to file and prosecute applications for copyrights,
patents, and/or trademarks for the intellectual property owned by such
party hereunder.
11.6 Both parties undertake not to cause or permit the reverse engineering,
disassembly, or decompilation of any Software in which the Intellectual
Property rights are owned by the other party, except to reproduce
machine-readable object code portions for backup purposes and
installation of new releases of Software and except as provided under
section 50B of the UK Copyright Designs and Patents Act 1988. Neither
party will copy or permit any of such Software or related manuals or
documentation to be copied by any means, except for bona fide, internal
security, installation or backup purposes, and except as provided under
section 50A of the Copyright, Designs and Patents Act 1988 or for
reasonable operational purposes (provided always that where copied for
such reasonable operational purposes, such copying shall be pursuant to
a reasonable operational requirement upon that party and shall be done
only where strictly necessary and in good faith). Any copies made shall
include all copyright or proprietary notices. Neither party may tamper
with or remove any proprietary or copyright notices on such Software or
documentation. The restrictions in this clause are imposed under penalty
of termination but not exclusive of the parties' other remedies.
12. INDEMNITY
12.1 Infringement Indemnity
Developer shall indemnify, defend and hold Client and its officers,
directors, agents and employees harmless from and against any and all
liabilities, damages, losses, expenses, claims, demands, suits, fines or
judgements, including reasonable legal fees, and costs and expenses
incidental thereto, which may be suffered by, accrued against, charged
to or recoverable from Client or any of its officers, directors, agents
or employees, arising out of a claim that any Custom Software, or any
portion thereof, infringes any third party's Intellectual Property
Rights.
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12.2 Developer shall have no liability under this Clause 12 for any alleged
or actual infringement arising to a material extent from:
(a) any combination of the Custom Software with any software not
supplied or approved by Developer; or
(b) the modification or alteration of the Custom Software, unless
the modification or alteration was made, supplied or approved
expressly by Developer.
12.3 Litigation
Developer's obligations under this clause 12 shall be conditional on
Client:
12.3.1 promptly notifying Developer in writing of such a claim;
12.3.2 not making any admission as to liability or agreeing to any
settlement or compromise of the claim without Developer's
prior written consent;
12.3.3 giving Developer express authority to conduct all negotiations
and litigation, and to settle litigation, arising from such
claim; and
12.3.4 providing Developer with such available information and
assistance as Developer may reasonably require.
12.4 Developer shall have sole control of the defence and of all negotiations
for settlement of such action, except that no compromise or settlement
thereof may be effected or committed to by Developer without Client's
consent, such consent not to be unreasonably withheld. Client agrees to
reasonably co-operate with Developer in the defence or settlement of any
such claim. If all or any part of the Custom Software is, or in the
opinion of Developer may become, the subject of any claim or suit for
infringement of any Intellectual Property Rights, Developer may, and in
the event of any adjudication that the Custom Software or any part
thereof does infringe any third party's Intellectual Property Rights,
Developer shall, at its expense do one of the following things: (1)
procure for Client the right to use the Custom Software or the affected
part thereof; (2) replace the Custom Software or affected part with
other functionally equivalent programs; or (3) modify the Custom
Software or affected part to make it non-infringing.
13. GENERAL INDEMNITY
13.1 Developer shall indemnify, defend and hold Client and its officers,
directors, agents and employees harmless from and against any and all
liabilities, damages, losses, expenses, claims, demands, suits, fines or
judgments, including reasonable attorneys' fees, and costs and expenses
incidental thereto, which may be suffered by, accrued against, charged
to or recoverable from Client or any of its officers, directors, agents
or employees, arising out of or resulting from claims of bodily injury,
loss, claim or damage or physical destruction of property and any claims
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of third parties arising out of the performance of this Agreement and/or
any breach of this Agreement by Developer, its officers, directors,
agents, employees and subcontractors.
13.2 Nothing in this Agreement shall operate to limit or exclude the
liability of either party in respect of death or personal injury arising
as a result of the negligence of that party.
14. TERM AND TERMINATION
14.1 The Term of this Agreement will begin on the Effective Date and expire
on the tenth anniversary of the Effective Date (the "INITIAL TERM").
Upon the expiration of the Initial Term, this Agreement shall be
automatically renewed for consecutive additional one (1) year terms,
unless either party provides the other with notice of cancellation of
this Agreement at least thirty (30) days prior to expiration of the then
current term in which case this Agreement shall expire at the end of
such current term or unless otherwise terminated under this Clause.
14.2 A party (the "INITIATING PARTY") may terminate this Agreement with
immediate effect by written notice to the other party (the "BREACHING
PARTY") on or at any time after the occurrence of an event specified in
clause 14.4 in relation to the Breaching Party.
14.3 The events are:
14.3.1 the Breaching Party being in material breach of an obligation
under this Agreement and, if the breach is capable of remedy,
failing to remedy the breach within 30 days starting on the
day after receipt of written notice from the Initiating Party
giving details of the breach and requiring the Breaching Party
to remedy the breach;
14.3.2 the Breaching Party passing a resolution for its winding up or
a court of competent jurisdiction making an order for the
Breaching Party's winding up or dissolution; or
14.3.3 the making of an administration order in relation to the
Breaching Party or the appointment of a receiver over, or an
encumbrancer taking possession of or selling, an asset of the
Breaching Party.
14.4 Client may terminate work under a Delivery Order upon written notice to
Developer:
14.4.1 in the event that Client rejects any amended Design
Specifications pursuant to clause 3.1;
14.4.2 in the event that the Custom Software fails to pass Alpha
Testing as more particularly described in clause 6; or
14.4.3 in the event that the Custom Software fails to pass the Beta
Testing as more particularly described in clause 7; or
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14.4.4 for convenience, at any Milestone, as provided in Clause 5.6.
14.5 In the event of termination, each party will:
14.5.1 (i) Return all proprietary Confidential Information or
tangible property of the other party which is in its
possession to the other party.
14.6 Unless otherwise provided in this Agreement, immediately upon
termination Client shall pay to Developer all outstanding invoices and
other payments due to Developer in respect of Milestones attained by
Developer.
14.7 Both parties shall have an obligation to take such steps as may be
reasonably necessary to minimise damages to the parties on termination,
including without limitation, minimising all contractual obligations
that but for this Agreement, neither party would have entered into.
15. JOINT OVERSIGHT COMMITTEE
15.1 JOC PROCEDURES. The following representatives will comprise a joint
oversight committee (the "JOC") which will meet at least quarterly. The
functions of such committee, among other things, will be to provide
Product and Services direction, review and analyze changes in the
market, prioritize resources to improve performance of the parties'
obligations hereunder, review and analyze the performance of the
parties, and to review recommendations and suggestions to enhance the
performance of the Services.
WTT Designees (2): to be advised by WTT
Newco Designees (2): Bill Brindle
Tony Berry
15.2 If a JOC Member resigns or leaves its employer, the party with a vacancy
will promptly appoint a replacement.
15.3 JOC PROCEDURES. All actions of the JOC will be subject to the following
process. An equal number of appointed representatives from each party
must be in attendance for the JOC to conduct a meeting.
15.3.1 Each party hereby appoints the following individual as its
Management Representative for purposes of this Agreement:
WTT: Trip Davis
Newco: Chris Fry
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15.3.2 Thirty (30) days prior to replacing its Management
Representative, Client or Developer, as the case may be, shall
notify the other in writing identifying its proposed
replacement.
15.4 REPORT CONTENTS. Developer will prepare (i) a listing of key Service
activities, and (ii) definitions of measurements of qualitative and
quantitative service performance levels for each such key Service
activity ("Service Performance Levels"), and will submit such listings
and definitions to the JOC for approval. The Service Performance Levels
will be used to measure Client's and Developer's performance of their
responsibilities under this Agreement.
15.5 Performance Levels. Developer will deliver to the JOC for each calendar
quarter (within thirty (30) days of the end of such quarter), commencing
with the calendar quarter beginning April 1, 2000, service performance
reports ("SERVICE PERFORMANCE REPORTS") that identify, for each JOC
approved key Service activity, the Performance Level for that activity.
The JOC will review the parties' performance during the relevant time
period (including but not limited to the information, contained in the
Service Performance Reports), and will provide feedback to both
Developer and Client regarding the performance of their respective
responsibilities under this Agreement. The JOC will also periodically
review the definitions and measurements used in the Service Performance
Reports and revise them as necessary to reflect the most appropriate
measures of Developer and Client performance.
16. DISPUTE RESOLUTION.
16.1 This Agreement shall be governed by and construed according to the laws
of the State of Georgia of the United States of America, without regard
to its choice of laws provisions.
16.2 Initial Procedures.
The parties shall make all reasonable efforts to resolve all disputes
without resorting to litigation. If a dispute arises between the
parties, the JOC will attempt to reach an amicable resolution. If the
JOC determines that an amicable resolution cannot be reached, the JOC
shall submit such dispute in writing to the Management Representatives
(a "DISPUTE Notice"), who shall use their best efforts to resolve it or
to negotiate an appropriate modification or amendment.
16.3 Escalation.
Except as otherwise provided in this Agreement, neither party shall be
permitted to bring any proceedings against the other (save for
injunctive relief) until the earlier of (i) the date the Management
Representatives conclude in good faith that an amicable resolution of
the dispute through continued negotiation is unlikely, or (ii) sixty
(60) days from the date of submission of a Dispute Notice by either
party.
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16.4 If the parties are unable to resolve any matter within the negotiating
procedures set out herein, either party may submit this matter to
arbitration under the rules of the American Arbitration Association. If
the parties resort to arbitration, no arbitrator shall be entitled to
award punitive damages.
17. FORCE MAJEURE
17.1 If a party (the "AFFECTED PARTY") is prevented, hindered or delayed from
or in performing any of its obligations under this Agreement by a Force
Majeure Event:
17.1.1 the Affected Party's obligations under this Agreement are
suspended while the Force Majeure Event continues and to the
extent that it is prevented, hindered or delayed;
17.1.2 as soon as reasonably possible after the start of the Force
Majeure Event the Affected Party shall notify the other party
in writing of the Force Majeure Event, the date on which the
Force Majeure Event started and the effects of the Force
Majeure Event on its ability to perform its obligations under
this Agreement;
17.1.3 the Affected Party shall make all reasonable efforts to
mitigate the effects of the Force Majeure Event on the
performance of its obligations under this Agreement; and
17.1.4 as soon as reasonably possible after the end of the Force
Majeure Event the Affected Party shall notify the other party
in writing that the Force Majeure Event has ended and resume
performance of its obligations under this Agreement.
17.2 If the Force Majeure Event continues for more than three months starting
on the day the Force Majeure Event starts, a party may terminate this
Agreement by giving not less than 30 days' written notice to the other
party.
17.3 In this clause, "FORCE MAJEURE EVENT" means an event beyond the
reasonable control of the Affected Party including, without limitation,
act of God, war, riot, civil commotion, malicious damage, compliance
with a law or governmental order, rule, or regulation , an accidentor
breakdown of plant or machinery not due to the negligence of the
Affected Party, fire, flood and storm.
18. NON-SOLICITATION
During the Term and for six months following its termination, neither
party shall employ, solicit or make any offers to employ any employees
used by the other in connection with the performance of the Services,
without the prior written consent of the other, which consent shall not
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be unreasonably withheld. The non-breaching party shall be entitled, in
addition to any other remedies it may have at law or in equity, to a
payment from the party in breach of this Clause in an amount equal to
three months' salary of any employee that party employs, solicits or
offers to employ in breach of this Clause.
19. MISCELLANEOUS
19.1 Binding Nature and Assignment;
19.2 Neither party may assign or delegate its rights or obligations under
this Agreement without the prior written consent of the other, save that
a party shall not unreasonably withhold its consent to the assignment or
delegation by the other of its rights and/or obligations to a
majority-owned subsidiary of that party, provided that it is satisfied
that such subsidiary has the financial and other resources in order
properly to perform that party's obligations hereunder. Subject to the
foregoing limitation on assignment, this Agreement is binding upon and
inures to the benefit of the successors and assigns of the respective
parties hereto.
19.3 Notices
Notices under this Agreement shall be deemed given when delivered by
hand, on the fifth business day after such notice is deposited in the
mail, registered or certified, return receipt requested, postage
prepaid, or sent via facsimile to the following address:
WORLDTRAVEL TECHNOLOGIES LLC
6 W Druid Hills Drive FORTDOVE LIMITED (or such name by
Atlanta which the company is later known)
Georgia 30329 Abbey House
USA 282 Farnborough Road
Farnborough
Hants GU14 7NJ
------------------------- -------------------------
------------------------- -------------------------
Attention: Trip Davis Attention: COMPANY SECRETARY
Copied to Ralph Manaker
Either party may change its address by giving the other written notice
of the new address.
19.4 Relationship of Parties
Developer is acting as an independent contractor in providing its
services. Developer's personnel shall remain Developer's employees for
all purposes including, but not limited to, determining responsibility
for all payroll-related obligations. Developer shall at all times be
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responsible for supervising, directing and co-ordinating the
professional responsibilities and duties of all Developer's personnel in
respect of their performance of work carried out under this Agreement.
Except as otherwise expressly provided in this Agreement, Developer does
not undertake to perform any obligations of Client, whether regulatory
or contractual, or to assume any responsibility for the management of
Client's business.
19.5 Severability
19.6 If any provision of this Agreement is found to be prohibited by or
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Agreement which shall remain in force.
19.7 Waiver
No delay or omission by either party to exercise any right or power
under this Agreement or pursuant to applicable law shall impair such
right or power to be construed as a waiver thereof. A waiver by any
party of any covenant or breach shall not be construed to be a waiver of
any other covenant or succeeding breach.
19.8 Publicity
All media releases, public announcements and public disclosures by
either party relating to this Agreement, including, without limitation,
promotional or marketing material, but not including any disclosure
required by legal, accounting or regulatory requirements, shall be
approved by both parties prior to such release.
19.9 Entire Agreement
This Agreement constitutes the entire agreement between the parties
regarding the Custom Software and supersedes all prior agreements and
understandings. No amendment, modification, waiver or discharge of this
Agreement shall be valid unless in writing and signed by authorised
representatives of both parties.
19.10 Multiple Counterparts
This Agreement may be executed in a number of identical counterparts,
each of which shall be deemed an original for all purposes and all of
which constitute, collectively, one agreement.
19.11 Third Party Claims
This Agreement has been entered into for the sole benefit of WTT and
NEWCO, and in no event shall any third-party beneficiaries be created
thereby.
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19.12 Survival
Such provisions of this Agreement as are required to survive its
termination or expiry in order to give full force and effect to the
rights and obligations of the parties hereunder shall be deemed to so
survive.
20. COUNTERPARTS
This Agreement may be executed in any number of counterparts, which
shall together constitute one Agreement.
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SCHEDULE 1
Delivery Order
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SCHEDULE 2: CHANGE ORDER PROCEDURE
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
WORLDTRAVEL TECHNOLOGIES LLC FORTDOVE LIMITED
By: /s/ Ralph Manaker By: /s/ Ralph Manaker
--------------------------------- ---------------------------------
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<PAGE> 1
EXHIBIT 10.23
FORTDOVE LIMITED
AND
HOGG ROBINSON PLC
---------------------------------------------------------------------------
SERVICE BUREAU SOFTWARE SERVICES AGREEMENT
---------------------------------------------------------------------------
CLIFFORD CHANCE
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C> <C>
1. Definitions.....................................................................................1
2. Scope Of Services...............................................................................3
3. NEWCO's Proprietary Rights; HR Restrictions.....................................................4
4. Pricing And Payment.............................................................................5
5. Limited Warranty................................................................................6
6. Limitation Of Liability.........................................................................6
7. Force Majeure...................................................................................7
8. Term............................................................................................8
9. Termination.....................................................................................8
10. Non-Solicitation...............................................................................10
11. Confidentiality................................................................................11
12. Non-Competition................................................................................12
13. Joint Oversight Committee......................................................................12
14. Governing Law And Dispute Resolution...........................................................13
15. General........................................................................................14
16. Counterparts...................................................................................15
SCHEDULE 1 SOFTWARE AND SERVICES............................................................16
SCHEDULE 2 CHARGES..........................................................................20
</TABLE>
(i)
<PAGE> 3
THIS SERVICE BUREAU/SOFTWARE SERVICES AGREEMENT (this "Agreement") is made this
___ day of ___________, 2000 between
(1) FORTDOVE LIMITED company number 3841799 with registered address 200
Aldersgate Street, London, EC1A 4JJ ("NEWCO"); and
(2) HOGG ROBINSON PLC company number 2107443 of Abbey House, 181
Farnborough Road, Farnborough, Hampshire ("HR").
WHEREAS
(A) HR Group wishes to offer a quality control and other travel booking
related services to its own network and to certain customers;
(B) NEWCO provides certain technical services to the travel industry;
(C) HR and NEWCO wish to enter into an agreement for the provision by NEWCO
to HR of certain Services (as defined below), on the terms and
conditions set out herein.
1. DEFINITIONS
In this Agreement:
1.1 AMERICAS means all countries and territories in continental North
America and continental South America (including Central America) and
includes any territories of the United States of America not forming
part of continental North America;
1.2 CHARGES means the charges payable by HR to NEWCO in respect of the
Services, as set out in Schedule 2;
1.3 CORRE means the Software products set out in Part A of Schedule 1, as
enhanced or developed from time to time;
1.4 CUSTOMER means an undertaking to whom a party, on any date, is
supplying travel management services;
1.5 EFFECTIVE DATE means the date of signature unless agreed between the
parties;
1.6 GLOBAL DISTRIBUTION SYSTEM (OR "GDS") means the Sabre, Amadeus
Worldspan and the International version of Galileo computer systems or
networks used to check and make reservations of a travel related nature
and such other global distribution systems as may be agreed from time
to time;
1.7 GROUP means, in relation to a company, that company and each subsidiary
of the company and its subsidiaries for the time being;
1.8 HR GROUP means the Group of companies of which Hogg Robinson plc is the
ultimate holding company, together with all the travel franchisees of
such Group;
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1.9 SHAREHOLDERS AGREEMENT means the Shareholders Agreement of on or about
even date between WTT Inc, HR and Newco for the establishment and
operation of Newco as a joint venture company;
1.10 INTELLECTUAL PROPERTY RIGHTS means any intellectual property rights
anywhere in the world whether registrable or not, including, without
limitation, patent, trade marks, service marks, trade names, business
names, designs, copyright and related rights, topography rights,
know-how as well as applications for such rights;
1.11 JOC means the joint oversight committee to be established in accordance
with Clause 13;
1.12 MODIFICATIONS means changes to the Product that provide additional
features and/or functionality, expanding the capabilities of the
Product in existing functional areas, or affect existing functionality;
1.13 PRODUCT means the logical grouping of the Software, in object code
only, and related documentation which is sold by a specific product
name and which is employed in the provision of the Services;
1.14 SERVICE BUREAU means the computer facilities located at UK offices of
NEWCO and/or its subsidiaries from which NEWCO will provide the
Services and data information to HR;
1.15 SERVICES means the application of the Software by NEWCO to provide
quality assurance tests and other automated optimisation processes for
travel reservations;
1.16 SOFTWARE means the software programs licensed to or created by NEWCO
from time to time and used by NEWCO in the provision of the Services,
being the Products identified in Schedule 1 as amended from time to
time by written agreement between the parties and all associated
Software releases;
1.17 TERM means the term of this Agreement, as set out in Clause 8;
1.18 TRANSACTION means a non-voided ticketed transaction;
1.19 WTT INC means WT Technologies Inc. with principal place of business 6 W
Druid Hills Drive, Atlanta, Georgia, 30329, USA.
1.20 VALUE ADDED TAX means value added tax as provided for in the Value
Added Tax Act 1994 and any other tax of a similar fiscal nature whether
imposed in the United Kingdom (instead of or in addition to value added
tax) or elsewhere.
1.21 In this Agreement, a reference to:
1.21.1 a "subsidiary" or "holding company" is to be construed in
accordance with section 736 of the Companies Act 1985 and a
"subsidiary undertaking" or "parent undertaking" is to be
construed in accordance with section 258 of the Companies Act
1985;
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1.21.2 a statutory provision includes a reference to the statutory
provision as modified or re-enacted or both from time to time
before/whether before or after the date of this Agreement and
any subordinate legislation made or other thing done under the
statutory provisions before/whether before or after the date
of this Agreement;
1.21.3 a document is a reference to that document as modified from
time to time;
1.21.4 a person includes a reference to a government, state, state
agency, corporation, body corporate, association or
partnership;
1.21.5 a person includes a reference to that person's legal personal
representatives, successors and permitted assigns;
1.21.6 the singular includes the plural and vice versa unless the
context otherwise requires;
1.21.7 a clause or schedule, unless the context otherwise requires,
is a reference to a clause of a schedule to this Agreement.
1.22 The headings in this Agreement do not affect its interpretation.
2. SCOPE OF SERVICES
2.1 NEWCO shall provide the Services to HR during the Term subject to the
terms and conditions of this Agreement. HR may use the Services to
provide services to its end-user corporate clients and for use by all
travel agencies and (subject to Clause 2.2) travel fulfilment bureaux
within the HR Group, with the exception of any travel agency within the
HR Group which is located in the Americas and Rider Travel in Canada. In
addition, the rights conferred on HR under this Agreement to use the
Services expressly exclude the right of HR or the HR Group to use the
Services to provide Service Bureau services to any travel agencies not
within the HR Group.
2.2 The Software required to provide the Services will run and reside at the
Service Bureau. The Software will be run by NEWCO in consultation with
HR to meet HR's specific needs and requests, (to be mutually determined
and outlined by the JOC), in the provision of Services hereunder. NEWCO
shall provide information and reports to HR on the performance of the
Services, as reasonably required by HR.
2.3 At the request of HR, the Service Bureau will process transactions from
HR's company-owned locations or corporate clients everywhere in the
world, with the exception of the Americas and Rider Travel in Canada.
2.4 The Software will include adaptations for efficient use with each GDS.
2.5 From time to time, HR may request specific Modifications to the
Software. NEWCO agrees to negotiate in good faith with HR towards the
development of such Modifications and, subject to the outcome of such
negotiations, HR agrees to pay for such requested Modification(s) on the
terms set out in the Software Development Agreement of even date between
the parties hereto.
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2.6 All Modifications shall be made available to HR prior to or at the same
time as being made available to all other (if any) joint funders of the
Modifications, users and licensees of the Software, unless such
Modifications were totally funded by a third party. Subject to Clause
4.4, all Modifications offered as part of the Services to other users
and licensees will be made available to HR at Newco's then current rate
or less, at Newco's discretion. All such Modifications shall be loaded
on NEWCO's server as part of the Service Bureau.
2.7 All new Products shall be made available to HR prior to or at the same
time as being made available to other (if any) joint funders of the
Product, users and licensees of the Software, unless such Products were
totally funded by a third party. Subject to Clause 4.4 all new Products
offered as part of the Services to other users and licensees will be
made available to HR with the Parties having regard to any funding
provided to NEWCO from HR..
2.8 The JOC shall set priorities for the allocation of NEWCO resources
necessary to adequately perform under this Agreement. Once the JOC sets
a start date for any project or other matter to be undertaken under this
Agreement, such start date cannot be changed by NEWCO except by written
agreement between the parties. In setting such priorities and start
dates the JOC shall take into consideration other business issues facing
NEWCO and HR and other commitments of NEWCO and HR.
2.9 The JOC will periodically discuss and review HR's competitive
environment which shall include a review of HR's competitors'
technology, cost or pricing structure and service offerings, to the
extent such information is known (and to the extent that disclosure of
such information is not restricted by a third party). If the JOC
determines that NEWCO has ceased to be competitive in terms of the
technology associated with the Services, the Charges or the quality of
the Services then, the parties shall jointly determine, in good faith,
if a change in technology, cost or services should be made.
2.10 By the second anniversary of the Effective Date, HR shall put
Transactions through the Service Bureau at a rate of at least 1.6
million per annum, provided that the Software is available for the
provision of the Services by 1 April 2000. For the avoidance of doubt,
HR Transactions handled by OFS Corporate Services (or as a result of
12.2), will count towards this total.
3. NEWCO'S PROPRIETARY RIGHTS; HR RESTRICTIONS
3.1 HR acknowledges that the Software and the related documentation embody
valuable confidential and proprietary information of NEWCO and/or its
licensors, the development of which required the expenditure of
considerable time and money by NEWCO and/or its licensors, and are
protected by copyright law and international treaty. HR shall treat such
information so received in confidence and shall not use, copy, disclose,
nor permit any of its personnel, agents or sub-contractors to use, copy,
or disclose the same, for any purpose that is not specifically
authorised under this Agreement.
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<PAGE> 7
3.2 By virtue of this Agreement, HR acquires only the non-exclusive right as
described above to receive the Services provided by NEWCO through the
use of the Software and related documentation, and does not acquire any
licence thereto or any rights of ownership in such materials, except as
may be set forth in a separate agreement. HR shall not use the Services
to establish its own Service Bureau during the Term without the prior
written consent of NEWCO, except as provided in the Shareholders
Agreement. Nothing in this sub-clause shall affect HR's entitlement to
use the Services for the provision of services to its corporate
Customers under Clause 2.1.
3.3 NEWCO, and/or its licensors, at all times retain all right, title and
interest in the Software, related documentation, and any derivatives
thereof.
3.4 HR agrees not to remove, alter or conceal any product identification,
copyright notices, or other notices or proprietary restrictions from the
monthly data information reports provided to HR by NEWCO and to
reproduce any and all such notices on any copies of such materials.
3.5 HR recognises and acknowledges that any use or disclosure of the
Software by HR in breach of this Agreement may cause NEWCO irreparable
damage for which other remedies may be inadequate, and HR hereby
acknowledges as proper any request to a court of competent jurisdiction
by NEWCO for injunctive or other equitable relief seeking to restrain
such use or disclosure.
3.6 HR assumes full responsibility for the quality, accuracy and
completeness of the data transmitted or provided by HR or its Customers
to the Service Bureau, whether by means of the Software or otherwise,
including any inaccurate results obtained as a result of such data where
supplied corrupted, inaccurate or incomplete.
4. PRICING AND PAYMENT
4.1 The Charges are set forth on Schedule 2 attached hereto. HR shall make
all payments of Charges in sterling within thirty (30) days of receipt
of invoice (the "DUE DATE") according to the payment schedule set forth
on Schedule 2, and regardless of whether HR collects any fees from its
customers. NEWCO shall be entitled to charge interest on all amounts not
paid on the Due Date at the rate of 2% above Barclays Bank plc base
rate, from time to time in force. NEWCO has the right to suspend
performance of the Services on 15 days' written notice if payment of any
Charge remains outstanding (and is not disputed by HR) for more than 30
days following the Due Date.
4.2 The Charges do not include any charge for Value Added Tax and HR is
solely responsible for paying any and all Value Added Tax arising in
connection with the Services rendered to HR under this Agreement.
4.3 Both parties agree to take all reasonable steps to minimize taxes, which
might be assessed on either party based on the parties' performance
hereunder.
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<PAGE> 8
4.4 NEWCO agrees to treat HR as its most favoured customer in respect of the
Services. NEWCO represents that, in the aggregate all of the Charges and
other terms of this Agreement are substantially or materially comparable
to or better than the aggregate charges and other terms being offered by
NEWCO to any of its other customers for the Services (or services
substantially comparable), having regard to the type and volume of
services. If NEWCO offers more favourable aggregate prices and other
terms to any customer during the Term, such terms shall be made
available to HR.
4.5 To review compliance with Clause 4.4, HR may designate an independent
auditor who, at HR's expense will be permitted to examine NEWCO's
charges to other customers, provided, however, that such auditor must
sign a non-disclosure agreement with NEWCO prior to commencing any
examination. NEWCO shall afford reasonable access to the auditor to its
books and records, for the purpose of carrying out such an inspection.
4.6 HR's auditor will be permitted to report to HR only the fact that NEWCO
is or is not in compliance with this provision and will not be permitted
to disclose any specific information to HR regarding NEWCO's customers.
If the auditor reports that NEWCO is not in compliance with clause 4.4,
the auditor will report to NEWCO the changes which need to be made to
the charges and other terms of supply of the Services in order for NEWCO
to be in compliance with clause 4.4 and NEWCO shall implement such
changes within a reasonable period and upon request from HR, and the
auditor shall certify to HR that NEWCO is in compliance with this
provision, once the changes have been made.
5. LIMITED WARRANTY
5.1 NEWCO represents and warrants that it will provide the Services with
reasonable skill and care, in a timely, workmanlike fashion and in
accordance with industry standards.
5.2 NEWCO will not be liable to HR for any claim or effect arising from any
cause beyond the control of NEWCO, including any act of Force Majeure as
defined under Clause 7.
5.3 EXCEPT AS EXPRESSLY PROVIDED IN THIS CLAUSE, NO EXPRESS OR IMPLIED
WARRANTY IS MADE BY NEWCO WITH RESPECT TO ANY SERVICE, PRODUCT, SOFTWARE
RELEASE, DATA COMPILATION OR ANY OTHER MATTER, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY,
SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR PURPOSE. NEWCO DOES NOT
WARRANT THAT ALL ERRORS IN THE SOFTWARE CAN OR WILL BE CORRECTED OR THAT
THE FUNCTIONALITY OF THE SOFTWARE WILL MEET HR'S REQUIREMENTS.
6. LIMITATION OF LIABILITY
6.1 NEITHER HR, NEWCO NOR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR
AGENTS, WILL BE LIABLE TO THE OTHER FOR ANY CLAIMS FOR SPECIAL, INDIRECT
OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE SERVICES PROVIDED BY THIS
6
<PAGE> 9
AGREEMENT OR A BREACH OF THE AGREEMENT EVEN IF THAT DAMAGE WAS
REASONABLY FORESEEABLE OR EITHER PARTY WAS AWARE OF THE POSSIBILITY OF
THAT LOSS OR DAMAGE ARISING, WHETHER SUCH DAMAGES OR CLAIMS ARE BASED ON
BREACH OF WARRANTY OR CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT,
PRODUCTS LIABILITY OR OTHERWISE.
6.2 IN NO EVENT WILL EITHER PARTY'S LIABILITY FOR ANY DAMAGES OR INJURIES TO
EITHER PARTY HEREUNDER EVER EXCEED THE TOTAL CHARGES PAID BY HR FOR THE
SERVICES PROVIDED HEREUNDER, REGARDLESS OF THE FORM OF ACTION, WHETHER
IN CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT, PRODUCT LIABILITY OR
OTHERWISE.
6.3 Nothing in this Agreement shall operate to limit or exclude the
liability of either party in respect of death or personal injury arising
as a result of the negligence of that party.
7. FORCE MAJEURE
7.1 If a party (the "AFFECTED PARTY") is prevented, hindered or delayed from
or in performing any of its obligations under this Agreement by a Force
Majeure Event:
7.1.1 the Affected Party's obligations under this Agreement are
suspended while the Force Majeure Event continues and to the
extent that it is prevented, hindered or delayed;
7.1.2 as soon as reasonably possible after the start of the Force
Majeure the Affected Party shall notify the other party in
writing of the Force Majeure Event, the date on which the
Force Majeure Event started and the effects of the Force
Majeure Event on its ability to perform its obligations under
this Agreement;
7.1.3 the Affected Party shall make all reasonable efforts to
mitigate the effects of the Force Majeure Event on the
performance of its obligations under this Agreement; and
7.1.4 as soon as reasonably possible after the end of the Force
Majeure Event the Affected Party shall notify the other party
in writing that the Force Majeure Event has ended and resume
performance of its obligations under this Agreement.
7.2 If the Force Majeure Event continues for more than [three] months
starting on the day the Force Majeure Event starts, a party may
terminate this Agreement by giving not less than 30 days' written notice
to the other party.
7.3 In Clause 7, "FORCE MAJEURE EVENT" means an event beyond the reasonable
control of the Affected Party including, without limitation, act of God,
war, riot, civil commotion, malicious damage, compliance with a law or
7
<PAGE> 10
governmental order, rule, regulation or direction, accident or breakdown
of plant or machinery not due to the negligence of the Affected Party,
fire, flood and storm.
8. TERM
8.1 The initial term of this Agreement shall be ten years from the Effective
Date. Upon the expiration of the initial term this Agreement shall be
automatically renewed for a consecutive additional one (1) year terms,
unless either party provides the other with notice of cancellation of
this Agreement at least thirty (30) days prior to expiration of the then
current term in which case this Agreement shall expire at the end of
such current term or unless otherwise terminated under this Clause.
9. TERMINATION
9.1 A party (the "INITIATING PARTY") may terminate this Agreement with
immediate effect by written notice to the other party (the "BREACHING
PARTY") on or at any time after the occurrence of an event specified in
clause 9.2 in relation to the Breaching Party.
9.2 The events are:
9.2.1 the Breaching Party being in material breach of an obligation
under this Agreement and, if the breach is capable of remedy,
failing to remedy the breach within 30 days starting on the
day after receipt of written notice from the Initiating Party
giving details of the breach and requiring the Breaching Party
to remedy the breach;
9.2.2 the Breaching Party passing a resolution for its winding up or
a court of competent jurisdiction making an order for the
Breaching Party's winding up or dissolution;
9.2.3 the making of an administration order in relation to the
Breaching Party or the appointment of a receiver over, or an
encumbrancer taking possession of or selling, an asset of the
Breaching Party;
9.2.4 the Breaching Party making an arrangement or composition with
its creditors generally or making an application to a court of
competent jurisdiction for protection from its creditors
generally;
9.3 HR may terminate this agreement with immediate effect by written notice
to NEWCO within 60 days following a change of control of NEWCO (whether
such control is exercised as sole or joint control, with a third party)
occurring other than as a result of a change of control of HR; in this
clause, "CONTROL" means the ability to direct the affairs of another
whether by way of contract, ownership of shares or otherwise
howsoever/has the meaning given by section 416 or section 840 of the
Income and Corporation Taxes Act 1988 so that there is a change of
control whenever there is a change of control as defined in either
section 416 or section 840.
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<PAGE> 11
9.4 If there is any material change, as determined by either party; (1) in
any laws, ordinances, orders, rules or regulations governing the way the
parties may operate; (2) in travel industry conditions, including but
not limited to, airfares (e.g., net fares or net/net fare arrangements)
or compensation to HR, by action of any industry vendor, governing body
or client; or (3) in technology including but not limited to computer
reservation systems or the internet; which material change has the
effect of materially increasing or decreasing the cost of doing
business; then, either party shall have the right to provide written
notice to the other party of such change and both parties agree to
renegotiate in good faith the financial and/or service terms of this
Agreement. If the parties are unsuccessful in renegotiating mutually
satisfactory terms within 30 days of such material change, either party
shall have the right to terminate this Agreement at any time thereafter
upon at least sixty (60) days' advance written notice. Following such
termination, the parties shall co-operate to ensure that termination
assistance is provided to HR at a cost which is reasonable in the light
of the material change in circumstances.
9.5 Both parties shall have an obligation to take such steps as may be
reasonably necessary to minimize damages to the parties on termination,
including, but not limited to, minimising all contractual obligations
that but for the existence of this Agreement, neither party would have
entered into.
9.6 Without prejudice to each party's accrued rights and obligations, upon
termination of this Agreement for any reason, the parties' further
obligations hereunder will immediately cease. If the Agreement is
terminated due to a breach by NEWCO, NEWCO will be responsible for
submitting to HR all information and reports required under Exhibit A
for the portion of the month up to and including the effective
termination date. If the Agreement is terminated due to a breach by HR,
NEWCO will have no such obligation to provide such information and
reports to HR for the month when termination became effective.
9.7 In the event of termination of this Agreement by Newco, Newco will work
together with HR or a designated third party to identify the
information, materials and resources HR is entitled to receive and to
develop an overall plan for transitioning such items to HR in accordance
with the following provisions (collectively, "Termination Assistance").
The terms of this Agreement as they relate to Termination Assistance
shall remain in effect until Newco has completed its Termination
Assistance. Newco will provide the Termination Assistance described
below for a period of no less than ninety (90) days and no more than six
(6) months per HR's written request, except as provided in this Section.
Newco's obligation to provide Termination Assistance will be conditioned
upon HR paying to Newco all outstanding invoices prior to the
commencement of any Termination Assistance and will be conditioned upon
HR continuing to pay when due any and all fees due hereunder during the
Termination Assistance period. HR shall pay Newco standard hourly rates
and reasonable expenses for any Termination Assistance provided by
Newco. This fee is in addition to any other payments required under this
Agreement. Notwithstanding the termination or expiration of this
9
<PAGE> 12
Agreement, the terms and conditions of this Agreement will apply to all
services provided by Newco during such period. If HR requests
Termination Assistance beyond the available capacity of the Newco
on-site staff, such request will be treated as a request for additional
services and HR will pay the agreed upon charge for such additional
services. The provision of this Section will survive the expiration or
termination of this Agreement for any reason.
9.8 HR and Newco will jointly develop a plan (the "Transition Plan") to
effect the orderly transition and migration to HR or a designated third
party from Newco of all services then being performed or managed by
Newco under this Agreement (the "Termination Transition"). The
Transition Plan will set forth the tasks to be performed by HR and
Newco, the time for completing such tasks and the criteria for declaring
the transition "completed". The parties and their employees and agents
will co-operate in good faith to execute the plan and each party agrees
to perform those tasks assigned to it in the Transition Plan. Newco will
direct the execution of the Transition Plan. The Transition Plan will
include the following tasks and such other tasks as may be agreed upon
by HR and Newco:
9.8.1 Providing HR access to necessary data files and programs,
certain non-proprietary operational procedures and data and
documentation in Newco's possession related to the Services;
9.8.2 Returning all HR confidential and proprietary information in
Newco's possession, except for one copy which Newco may
retain, subject to its confidentiality obligations, for
internal record keeping purposes and for compliance with
applicable professional standards; and
9.8.3 Returning all HR data and documentation. Newco will deliver to
HR all HR data in a format application for use by HR and will
seek to minimise the amount of manual data entry or re-keying
necessary in connection with the transfer of such data to HR.
9.9 Obligation To Minimise Damages. Both parties shall have an obligation to
take such steps as may be reasonably necessary to minimise damages to
the parties on termination, including, but not limited to, minimise all
contractual obligations that but for the existence of this Agreement,
neither party would have entered into.
9.10 Such provisions of this Agreement as are required to survive its
termination or expiry in order to give full force and effect to the
rights and obligations of the parties hereunder shall be deemed to so
survive.
9.11 Termination of this Agreement does not constitute either party's
exclusive remedy for breach or non-performance by the other party and
each party is entitled to seek all other available remedies, both legal
and equitable, including injunctive relief.
10. NON-SOLICITATION
10.1 During the Term, neither party shall employ, solicit or make any offers
to employ any employees used by the other in connection with the
performance of the Services, without the prior written consent of the
10
<PAGE> 13
other, which consent shall not be unreasonably withheld. The
non-breaching party shall be entitled, in addition to any other remedies
it may have at law or in equity, to a payment from the party in breach
of this Clause in an amount equal to three months' salary of any
employee that party employs, solicits or offers to employ in breach of
this Clause.
11. CONFIDENTIALITY
11.1 During the course of this Agreement a party (the "Receiving Party") may
come into possession of technology, computer software, documentation,
trade secrets, products, copyrights or other confidential and
proprietary information ("Confidential Information") of the other (the
"Disclosing Party").
11.2 The Receiving Party:
11.2.1 may not use Confidential Information for a purpose other than
the performance of its obligations under this Agreement;
11.2.2 may not disclose Confidential Information to a person except
with the prior written consent of the Disclosing Party or in
accordance with clauses 11.3 and 11.4; and
11.2.3 shall make every effort to prevent the use or disclosure of
Confidential Information.
11.3 The Receiving Party may disclose Confidential Information to any of its
directors, other officers, employees and sub-contractors (a "RECIPIENT")
to the extent that disclosure is desirable for the purposes of this
Agreement.
11.4 The Receiving Party shall ensure that a Recipient is made aware of and
complies with the Receiving Party's obligations of confidentiality under
this Agreement as if the Recipient was a party to this Agreement.
11.5 Clauses 11.2 to 11.4 do not apply to Confidential Information which:
11.5.1 is at the date of this Agreement, or at any time after that
date becomes, publicly known other than by the Receiving
Party's or Recipient's breach of this Agreement;
11.5.2 can be shown by the Receiving Party to the Disclosing Party's
reasonable satisfaction to have been known by the Receiving
Party before disclosure by the Disclosing Party to the
Receiving Party; or
11.5.3 Is required to be disclosed by law or any regulatory
authority.
11.6 The Receiving Party`s obligation with respect to the Confidential
Information of the Disclosing Party shall survive the termination or
expiry of this Agreement.
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<PAGE> 14
12. NON-COMPETITION
12.1 The parties agree to be bound by the restrictions placed upon them
in clause 10 of the Shareholders Agreement.
12.2 During the term of this Agreement, NEWCO may sell or license Services or
Products directly to HR's Customers who are using products or services
which compete with the Products or Services, provided that NEWCO gives
notice of such sales activity to HR and shares equally with HR any
resulting net profits measured and paid on an annual basis. Other than
as provided herein or under the Shareholders Agreement, NEWCO may not
license or sell Products or Services to HR's Customers without HR's
consent.
13. JOINT OVERSIGHT COMMITTEE
13.1 JOC PROCEDURES. The following representatives will comprise a joint
oversight committee (the "JOC") which will meet at least quarterly. The
functions of such committee, among other things, will be to carry out
its obligations as expressed throughout this Agreement, to provide
Product and Services direction, review and analyze changes in the
market, prioritize resources to improve performance of the parties'
obligations hereunder, review and analyze the performance of the
parties, and to review recommendations and suggestions to enhance the
performance of the Services.
NEWCO Designees (2): Bill Brindle
Tony Berry
HR Designees (2): Barry Wheeler
Nigel Meyer
13.2 If a JOC Member resigns or leaves its employer or for any other reason
ceases to be a JOC Member, the party with a vacancy will promptly
appoint a replacement.
13.3 JOC PROCEDURES. All actions of the JOC will be subject to the following
process. An equal number of appointed representatives from each party
must be in attendance for the JOC to conduct a meeting.
13.3.1 Each party hereby appoints the following individual as its
Management Representative for purposes of this Agreement:
NEWCO: Chris Fry
HR: David Young
13.3.2 Thirty (30) days prior to replacing its Management
Representative, HR or NEWCO, as the case may be, shall notify
the other in writing identifying its proposed replacement.
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<PAGE> 15
13.4 REPORT CONTENTS. NEWCO will prepare (i) a listing of key Service
activities, and (ii) definitions of measurements of qualitative and
quantitative service performance levels for each such key Service
activity ("Service Performance Levels"), and will submit such listings
and definitions to the JOC for approval. The Service Performance Levels
will be used to measure HR's and NEWCO's performance of their
responsibilities under this Agreement.
13.5 Performance Levels. NEWCO will deliver to the JOC for each calendar
quarter (within thirty (30) days of the end of such quarter), commencing
with the calendar quarter beginning April 1, 2000, service performance
reports ("SERVICE PERFORMANCE REPORTS") that identify, for each JOC
approved key Service activity, the Service Performance Level for that
activity. The JOC will review the parties' performance during the
relevant time period (including but not limited to the information,
contained in the Service Performance Reports), and will provide feedback
to both NEWCO and HR regarding the performance of their respective
responsibilities under this Agreement. The JOC will also periodically
review the definitions and measurements used in the Service Performance
Reports and revise them as necessary to reflect the most appropriate
measures of NEWCO and HR performance.
14. GOVERNING LAW AND DISPUTE RESOLUTION
14.1 This Agreement is governed by and shall be construed in accordance with
English law.
14.2 INITIAL PROCEDURES. The parties shall make all reasonable efforts to
resolve all disputes without resorting to litigation. If a dispute
arises between the parties, the JOC Representatives will attempt to
reach an amicable resolution. If either JOC Representative determines
that an amicable resolution cannot be reached, such JOC Representative
shall submit such dispute in writing to the Management Representatives
(a "Dispute Notice"), who shall use their best efforts to resolve it or
to negotiate an appropriate modification or amendment.
14.3 ESCALATION. Except as otherwise provided in this Agreement, neither
party shall be permitted to bring proceedings against the other (save
for injunctive relief) until the earlier of (i) the date the Management
Representatives conclude in good faith that an amicable resolution of
the dispute through continued negotiation is unlikely, or (ii) sixty
days from the date of submission of a Dispute Notice by either party.
14.4 The courts of England and Wales have exclusive jurisdiction to hear and
decide any suit, action or proceedings, and to settle any disputes,
which may arise out of or in connection with this Agreement
(respectively, "PROCEEDINGS" and "DISPUTES") and, for these purposes,
each party irrevocably submits to the jurisdiction of the courts of
England and Wales.
14.5 Each party irrevocably waives any objection which it might at any time
have to the courts of England and Wales being nominated as the forum to
hear and decide any Proceedings and to settle any Disputes and agrees
not to claim that the courts of England and Wales are not a convenient
or appropriate forum.
13
<PAGE> 16
15. GENERAL
15.1 This Agreement, including the Exhibits attached hereto, represents the
entire understanding and agreement between the parties relating to the
subject matter, and supersedes any and all previous discussions and
communications. No employee or agent of NEWCO nor any distributor is
authorized to make any additional representations or warranties related
to the services provided hereunder or the Software. Any subsequent
amendments and/or additions hereto are effective only if in writing and
signed by both parties.
15.2 All media releases, public announcements and public disclosures by
either party relating to this Agreement, but not including any
disclosure required by legal, accounting or regulatory requirements,
shall be approved by both parties prior to such release.
15.3 Neither party may assign or delegate its rights or obligations under
this Agreement without the prior written consent of the other, save that
a party shall not unreasonably withhold its consent to the assignment or
delegation by the other of its rights and/or obligations to a
majority-owned subsidiary of that party, provided that it is satisfied
that such subsidiary has the financial and other resources in order
properly to perform that party's obligations hereunder. Subject to the
foregoing limitation on assignment, this Agreement is binding upon and
inures to the benefit of the successors and assigns of the respective
parties hereto.
15.4 NEWCO acknowledges that HR is entering into this agreement on behalf of
and for the benefit of its subsidiaries and its subsidiaries shall
accordingly have the benefit of and shall be entitled to enforce all
rights granted to HR under this Agreement.
15.5 The failure of either party at any time to require performance by the
other party of any provision hereof is not to affect in any way the full
rights of such party to require such performance at any time thereafter,
nor is the waiver by either party of a breach of any provision hereof to
be taken or held to be a waiver of the provision itself or any future
breach.
15.6 The parties hereto are independent contractors, and nothing in this
Agreement is to be construed to create a partnership, joint venture, or
agency relationship between NEWCO and HR.
15.7 If any provision of this Agreement is found to be prohibited by or
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Agreement which shall remain in force.
15.8 A notice under or in connection with this Agreement shall be in writing
and shall be delivered personally or sent by first class post pre-paid
recorded delivery (or air mail if overseas) or by telex or by fax, to
the party due to receive the notice, at its address set out in this
Agreement or another address specified by that party by written notice
to the other.
14
<PAGE> 17
15.9 In the absence of evidence of earlier receipt, a notice is deemed given:
15.9.1 if delivered personally, when left at the address referred to
in clause 15.6;
15.9.2 if sent by post except air mail, two days after posting it;
15.9.3 if sent by air mail, six days after posting it;
15.9.4 if sent by telex, when the proper answer-back is received; and
15.9.5 if sent by fax, on completion of its transmission.
16. COUNTERPARTS
This Agreement may be executed in any number of counterparts, which
shall together constitute one Agreement.
IN WITNESS WHEREOF, the undersigned duly authorized representatives of the
parties hereto have made and entered into this Agreement.
FORTDOVE LIMITED HOGG ROBINSON PLC
Signed:________________________ Signed:__________________________
15
<PAGE> 18
SCHEDULE 1
SOFTWARE AND SERVICES
16
<PAGE> 19
SCHEDULE 2 CHARGES
21
<PAGE> 1
EXHIBIT 21
Subsidiaries of the Registrant
Arthur H. Ltd., a Virginia corporation, d/b/a International Software Products
WorldTravel Technologies, L.L.C., a Georgia limited liability company.
Travel Technologies Group, L.P., a Georgia limited partnership.
Technology Licensing Company, LLC, a Georgia limited liability company.
Travel Technology, LLC, a Georgia limited liability company.
Fortdove Limited, a company incorporated under the laws of England and Wales.
WTT UK Limited, a company incorporated under the laws of England and Wales.
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made part of this
registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 18, 2000
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