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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-KSB
[X]Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1999.
[_]Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
Commission File No. 0-24812
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Divot Golf Corporation
(Name of small business issuer as specified in its charter)
Delaware 56-1781650
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
927 Lincoln Road, Suite 200 Miami Beach, FL 33139
(Address of principal executive offices)
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(305) 538-2727
(Issuer's telephone number)
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Securities registered pursuant to Section 12(b) of the Exchange Act:
NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
(Title of class)
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [_] No [X]
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B in this form and no disclosure will be contained, to the
best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [_]
The issuer's revenues for the most recent fiscal year were $130,860.
As of February 16, 2000, the aggregate market value of the common stock held
by non-affiliates of the issuer was $7,429,967, based upon the average bid and
asked price of such common stock as of such date. As of February 16, 2000,
there were 13,753,642 shares of common stock outstanding and 5,685 shares of
preferred stock outstanding.
Documents Incorporated by Reference
None.
Transitional small business disclosure format Yes [_] No [X]
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DIVOT GOLF CORPORATION
FORM 10-KSB
YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
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PART I
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ITEM 1. Description of Business........................................ 3
ITEM 2. Description of Property........................................ 19
ITEM 3. Legal Proceedings.............................................. 19
ITEM 4. Submission of Matters to a Vote of Security holders............ 21
PART II
ITEM 5. Market for the Common Equity and Related Stockholder Matters... 23
ITEM 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 24
ITEM 7. Financial Statements........................................... 32
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure........................................... 32
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of The Exchange Act.............. 33
ITEM 10. Executive Compensation......................................... 34
ITEM 11. Security Ownership of Certain Beneficial Owners and
Management..................................................... 37
ITEM 12. Certain Relationships and Related Transactions................. 37
ITEM 13. Exhibits and Reports on Form 8-K............................... 39
SIGNATURES............................................................... 42
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information contained in this Annual Report on Form 10-KSB may
contain forward-looking statements. Such statements include, in particular,
statements about our plans, strategies and prospects under the headings
"Description of Business" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." You can identify forward-
looking statements by our use of forward-looking terminology such as "may,"
"will," "expect," "anticipate," "estimate," "continue" or other similar words.
Although we believe that our plans, intentions and expectations reflected in
or suggested by such forward-looking statements are reasonable, we cannot
assure you that our plans, intentions or expectations will be achieved. When
considering such forward-looking statements, you should keep in mind the
following important factors that could cause our actual results to differ
materially from those contained in any forward-looking statement:
. we have a limited operating history as an e-commerce company;
. we have a limited operating history as a company that specializes in
Internet travel distribution;
. we may not be able to complete our acquisition activity, including
acquiring the 3D animation asset from AnimInet, the stock of Wilhelmina
TravelFile.com and the GDS and ancillary contracts and related furniture
and equipment from Orbit Network, as quickly or on as favorable terms as
anticipated, if at all;
. we may not be able to hire and retain qualified employees;
. we may experience difficulties in maintaining our competitiveness if we
are unable to keep up with technological advancements;
. we may not be able to integrate our acquired assets quickly or
successfully into our existing business plan or corporate structure;
. we may not be able to meet our short-term or long-term liquidity needs
on terms favorable to us, if at all;
. we may experience technological difficulties in our delivery of
application software products;
. our operating performance and business strategy depends upon the
continued viability and growth of the Internet and the travel business;
. we compete in a highly competitive industry with low barriers to entry;
and
. we may have incorrectly assessed our potential monetary liabilities and
expenses with respect to various court proceedings in which we are
currently involved.
Given these uncertainties, we caution you not to place undue reliance on
forward-looking statements. We undertake no obligation to publicly release the
results of any revisions to these forward-looking statements that may be made
to reflect any future events or circumstances or to reflect the occurrence of
unanticipated events.
ITEM 1. DESCRIPTION OF BUSINESS
General
We were incorporated in Delaware on November 12, 1991 under the name
"Longview Golf Corporation." We changed our name to "Brassie Golf Holdings,
Ltd." on September 18, 1992, and then again, on March 29, 1993, to "Brassie
Golf Corporation." On June 2, 1998, we changed our name to "Divot Golf
Corporation." We expect to ask our stockholders to approve at our next annual
meeting a proposal to change our name to "Orbit Travel.com Corporation." Our
executive offices are located at 927 Lincoln Road, Suite 200, Miami Beach, FL
33139, and our telephone number is (305) 538-2727.
Recent Developments
Acquisition Activity. On October 5, 1999, California-based Orbit Network,
Inc. publicly issued a press release stating that we had announced that we had
signed a definitive merger agreement to acquire California-based Orbit Network
in a stock for stock exchange. However, upon completion of our due diligence
review of Orbit Network, we and Orbit Network mutually agreed to cancel this
merger agreement and agreed to enter into the transactions we discuss below.
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We entered into a right to use agreement with Orbit Network as of November
1, 1999 pursuant to which we paid $500,000 in cash for a six-month right to
use and operate Orbit Network's Global Distribution Systems ("GDS") contracts
with Amadeus Marketing, S.A., The Sabre Group, Inc., Galileo International,
L.L.C. and WorldSpan, L.P., its services agreement with America OnLine and
related furniture and equipment. As part of this right to use agreement, we
operate the "TravelFile" website that provides travel suppliers and Internet
users travel planning services. We are entitled under the right to use
agreement to retain any revenues for a six-month period that may be generated
from the GDS and ancillary contracts. Also, as part of the right to use
agreement, we paid $100,000 (included in the $500,000 paid November 1, 1999)
for an option (exercisable in our sole and absolute discretion) to purchase
Orbit Network's rights under the GDS and ancillary contracts and related
furniture and equipment for the assumption of $5.1 million of Orbit Network
debt. This purchase option expires on May 1, 2000, unless extended by us for
an additional six months. We cannot assure you that we will exercise this
purchase option or that we will otherwise acquire the GDS and ancillary
contracts and related furniture and equipment nor can we assure you that, if
we do not acquire the GDS and ancillary contracts and related furniture and
equipment, that we will be able to extend the term of the right to use
agreement. See "--Risk Factors--We may not be able to implement our
acquisition growth strategy, which would have an adverse effect on our
business and competitive position in the industry."
On November 17, 1999, our wholly owned subsidiary, OrbitTravel.com, Inc.,
entered into a joint venture agreement with Web Travel Systems, Ltd., a wholly
owned subsidiary of British Airways, pursuant to which we and Web Travel
Systems formed Bonveno.com, Ltd. We each own a 50% interest in Bonveno.
Bonveno is intended to be a European-based online travel information and
reservation system for the distribution of travel-related information and
services to European travel product providers and the traveling public. Also
on November 17, 1999, OrbitTravel entered into an operational agreement with
Bonveno pursuant to which we would provide technical support, licenses and
technical maintenance, a software development agreement pursuant to which we
would develop software applications, and a management agreement which sets
forth an operational management structure, marketing policy, content sharing
and product distribution policy for our joint venture.
On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by David Noosinow, one of our directors and executive
officers, entered into an asset purchase agreement with Mark Savoretti
pursuant to which Spartan Capital agreed to acquire the intellectual property
assets related to the TravelFile website previously owned by Orbit Network for
$600,000 in cash and the issuance of 3.0 million shares of our common stock.
Mr. Savoretti, a creditor of Orbit Network, acquired these assets from Orbit
Network through a judicial foreclosure proceeding on January 13, 2000 after
Orbit Network failed to pay $771,000 owed to Mr. Savoretti. Immediately upon
execution of this asset purchase agreement, Spartan Capital Management, LLC
assigned all of its rights and obligations under the agreement to us for $10.
One of the obligations assigned is an obligation to enter into consulting
agreements with Mark Savoretti and another person, under which we would pay a
total of $450,000 over three years. We thereafter acquired the intellectual
property assets related to the TravelFile website directly from Mr. Savoretti
in exchange for $60,000 in cash, a note payable in the amount of $540,000 and
3.0 million shares of common stock, which would represent approximately 0.4%
of our common stock assuming all of the transactions and issuances described
in this Annual Report are consummated.
On February 24, 2000, we executed a non-binding letter of intent to acquire
from AnimInet, Inc. intellectual property assets related to AnimInet's 3-D
Internet asset for approximately 473.9 million shares of our common stock,
which would represent approximately 52.6% of our common stock assuming all of
the transactions and issuances described in this Annual Report are
consummated. These intellectual property assets primarily include the software
being developed by AnimInet to create "Streaming Intelligent Beings," which
are digital 3D computerized personalities that would communicate directly with
Internet users. AnimInet is a corporation formed solely by Dean Miller, one of
our executive officers. We currently expect the stockholders of Orbit Network,
who are each accredited investors under Rule 501 of the Securities Act, to
individually purchase all of AnimInet's common stock. This letter of intent
expires on May 1, 2000. We currently do not have a sufficient number of
authorized and unissued shares available under our charter to consummate such
an acquisition. Although we currently expect to ask our stockholders to
approve a reverse stock split on an up to 20-for-1 basis,
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we cannot assure you that we would be successful in obtaining such approval.
We cannot assure you that this acquisition will be consummated or that it will
be consummated on the terms set forth in the letter of intent. See "--Risk
Factors--We may not be able to implement our acquisition growth strategy,
which would have an adverse effect on our business and competitive position in
the industry."
On January 31, 2000, we entered into an agreement with Wilhelmina Artist
Management LLC pursuant to which we would acquire all of the outstanding
common stock of its wholly owned subsidiary, WilhelminaTravelFile.com, in
exchange for approximately 80.0 million shares of our common stock, which
would represent approximately 9.0% of our common stock assuming all of the
transactions and issuances described in this Annual Report are consummated. We
believe that Wilhelmena is one of the world's leading talent management
agencies. Wilhelmina and WilhelminaTravelFile.com have entered into an
exclusive license pursuant to which WilhelminaTravelFile would showcase
Wilhelmena-provided content through an Internet website dedicated to travel
information and services. We expect that Wilhelmena models and other
celebrities would act as on-screen hosts for travel destinations providing
travel tips and inside information, offering special promotions and branded
product offerings. Unless the transaction has closed, either party may
terminate the Wilhelmina agreement at any time after February 15, 2000. We
cannot assure you that we will be able to consummate this acquisition. We
currently do not have a sufficient number of authorized and unissued shares
available under our charter to consummate such an acquisition. Although we
currently expect to ask our stockholders to approve a reverse stock split on
an up to 20-for-1 basis, we cannot assure you that we would be successful in
obtaining stockholder approval for any such actions. See "--Risk Factors--We
may not be able to implement our acquisition growth strategy, which would have
an adverse effect on our business and competitive position in the industry."
On January 9, 2000, OrbitTravel.com, our wholly owned subsidiary, executed
an exclusive content distribution agreement with AsiaGateway.com, Ltd. Under
the terms of this agreement, we were required to issue 200,000 shares of our
common stock 30 days from the execution date of this agreement. As of February
16, 2000, since we have not issued such shares, either party may terminate
this agreement. Assuming consummation of this transaction, Asiagateway.com
would act as our distribution, marketing and sales partner for the Asian
region. Asiagateway.com is a provider of commerce, community and content for
the Asian marketplace. Content produced and compiled by Asiagateway.com would
be integrated into our online travel services. Our online travel services, in
turn, would be featured in Asiagateway.com.
On February 7, 2000, OrbitTravel.com, our wholly owned subsidiary, executed
a three-year consulting services agreement and joint content agreement with
Laspata/Decaro Studio Corporation, an organization of designers and
photographers, pursuant to which Laspata/Decaro would provide us with media
consulting services regarding brand building and promotion. In addition,
Laspata/Decaro would contribute their library of destination images,
photography and other content for use within our TravelFile service. We also
expect LaSpata/Decaro to assist us in the creation of new video, multi-media,
and rich-media content for our online services. We are required to issue under
the agreement 2.5 million shares of our common stock vesting in equal annual
installments over the three-year term of the agreement, which would represent
approximately 0.3% of our common stock assuming all of the transactions and
issuances described in this Annual Report are consummated. In addition, we
would issue to Laspata/Decaro an additional 100,000 shares upon
Laspata/Decaro's completion of each of the following tasks: (1) the
development and implementation of a promotion and marketing plan; and (2) the
provision of additional proprietary content and the implementation of an
agreed-upon operations strategy.
Financing Activity. On February 15, 2000, Teakwood Ventures, LLC, an
accredited investor under Rule 501 of the Securities Act, agreed to fund up to
$10 million pursuant to a funding commitment letter and subscription agreement
whereby Teakwood Ventures agreed to purchase: (1) 11,223,334 shares of our
common stock at $0.1782 per share on or before March 30, 2000; (2) 11,223,334
shares of our common stock at $0.1782 per share on or before June 30, 2000;
and (3) 18,856,065 shares of our common stock at $0.3182 per share on or
before September 30, 2000. Teakwood Ventures' agreement to purchase our common
stock on these varying dates is subject to several conditions, including the
condition that the shares to be issued to Teakwood Ventures must be freely
tradeable. We cannot assure you that these conditions will be met. Therefore,
we cannot assure
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you that we will consummate all or part of this transaction. In addition, if
our total equity market capitalization is less than $200 million on any of the
dates that Teakwood Ventures purchases our shares of common stock, we have
agreed to proportionally reduce the per share price of the common stock to be
purchased by Teakwood Ventures. For example, if our total equity market
capitalization is $100 million on September 30, 2000, the purchase price per
share would be $0.1591 and we would consequently be required to issue
37,712,130 shares to Teakwood Ventures. In addition, our agreement with
Teakwood Ventures requires that we appoint two directors who are nominated by
Teakwood Ventures to our board.
Since the end of 1999, we have issued or agreed to issue approximately 113.8
million shares of common stock for no cash consideration to various executive
officers, employees, consultants and other third parties. A portion of these
shares have been issued or will be issued to settle various disputes and
contingent liabilities. See "Legal Proceedings." We have issued, or expect to
issue, these shares in a series of unrelated registered and private offerings.
See also "--Risk Factors--Future issuances and sales into the market of up to
an additional 166.5 million shares of our common stock will dilute our current
stockholders and may depress the market price of our common stock."
In addition, we have offered to issue approximately 52.7 million additional
shares of our common stock to existing security holders in exchange for all of
our outstanding convertible preferred stock and convertible debt, other than
the notes that OrbitTravel.com, our wholly owned subsidiary, has issued. As of
February 25, 2000, the holders of all of our convertible preferred stock and
all of our convertible debt have accepted this offer. We currently expect to
issue these shares within 10 business days after the date we have filed this
Annual Report on Form 10-K. See also "--Risk Factors--Future issuances and
sales into the market of up to an additional 166.5 million shares of our
common stock will dilute our current stockholders and may depress the market
price of our common stock."
Since its inception on October 6, 1999, our wholly owned subsidiary,
OrbitTravel.com, has issued approximately $2.78 million of debt that is
convertible into approximately 5.6 million shares of our common stock.
However, we currently expect to exchange these notes for approximately 61.0
million shares of our common stock. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
On January 9, 2000, OrbitTravel executed a content distribution agreement
with AsiaGateway.com, Ltd. Under the terms of this agreement, we were required
to issue 200,000 shares of our common stock 30 days from the execution date of
this agreement. As of February 16, 2000, since we have not issued such shares,
either party may terminate this agreement.
We currently expect to ask our stockholders to approve a reverse stock split
on an up to 20-for-1 basis. We cannot assure you that we will be successful in
obtaining such approval. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources" for a table setting forth our expected capitalization assuming all
of the transactions and issuances described in this Annual Report are
consummated and we effect a reverse stock split on an up to 20-for-1 basis.
Our History
Golf Course Ownership, Design, and Management. By mid-1997, we owned four
golf courses and managed more than 20 others. Through April 1998, we were
engaged in acquiring, designing, developing, constructing, owning, operating
and managing private, semi-private and public golf courses in the United
States.
World Golf Village. We were also focused on business opportunities in the
World Golf Village resort, a destination golf resort located near
Jacksonville, Florida. We anticipated becoming actively involved in the
development of various amenities, including a restaurant, spa, rental
properties, and a laundry facility, at the World Golf Village. We acquired one
parcel of land in the World Golf Village and various license agreements at the
World Golf Village in December 1996 and a second parcel of land in January
1998. We developed a unique platform for sales of consumer products, called
Interactive Information Technology and Entertainment (IIT&E), via the virtual
golf pro shop, a product and service based portal with direct access to the
Intranet at World Golf Village and the Internet.
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Refocusing on Golf Related Products and Services. Due to labor and capital
intensive programs associated with golf courses and the poor operating results
of our golf course ownership, design, and management activities, we decided to
refocus our business strategy. We elected to continue our efforts in the World
Golf Village. Instead of focusing on the ownership, design and management of
golf courses, we decided to focus on developing, licensing and marketing golf-
related products and services. In July 1997, we sold the division responsible
for managing the third party-owned golf courses. In August 1997, we sold our
golf course design subsidiary. From November 1997 through April 1998, we sold
the golf courses we owned.
To implement that new strategic focus, we acquired the following golf-
related products companies in April 1998:
. Divot Golf Corporation, a designer and supplier of golf accessories,
Divot Development Corporation and Divot Corporation. Our acquisition of
Divot Golf Corporation gave us a patent on a uniquely- designed golf
ball, and a patented divot repair tool that contains a built-in ball
marker and club head face cleaner. In addition, we acquired the assets
of Divot Spa WGV, Inc.
. Miller Golf, Inc., a supplier of golf accessory products. Miller Golf
offered a wide range of logoed golf products, including bag tags, tees,
ball markers, divot tools, score cards, towels, rainwear, umbrellas,
hats, head covers, tournament prizes and awards.
. Talisman Tools Incorporated, a manufacturer of greens repair tools.
Talisman produced an upscale, divot repair tool.
Citizens Bank Loan. We acquired Miller subject to a line of credit with
Citizens Bank of Massachusetts. The credit agreement from Citizens Bank to
Miller was entered into immediately prior to our closing the purchase of
Miller and provided for a $2 million line of credit, of which approximately
$0.8 million was outstanding at the time we acquired Miller. This new credit
facility was secured by Miller's assets and included a covenant prohibiting
Miller from paying more than $100,000 in dividends or intercompany advances to
us (as Miller's parent company) without Citizen Bank's consent.
In late 1998, we were contemplating another acquisition. Citizens Bank was
planning on providing financing for that acquisition and was planning on being
a minority equity holder in that to-be-acquired company. In September,
Citizens Bank orally agreed to advance $500,000 directly to us (Miller's
parent company) against the Miller line of credit to help finance the final
payment due on a promissory note held by the sellers of Miller. Subsequently,
the parties terminated the acquisition discussions. Citizens Bank then sent a
notice of default citing a breach of the covenant prohibiting an advance from
Miller to us in excess of $100,000 without the bank's permission. At that
time, including the $500,000 advance, only $1.3 million was outstanding on the
Miller line of credit. However, as a result of the purported default, Citizens
Bank refused to advance Divot or Miller any further funds under our line of
credit.
By February 1999, we were substantially out of cash and unable to take any
legal action with respect to the purported default. We therefore negotiated a
forbearance agreement whereby Citizens Bank agreed to refrain from foreclosing
on Miller's assets if the loan was repaid by May 25, 1999. As part of that
forbearance agreement, Miller reaffirmed its grant of a security interest in
its assets, and we (the parent company) pledged our stock of Miller to the
bank as security for the loan.
Foreclosure and Write-off of Assets. We were unable to repay or refinance
the loan. We negotiated a sale of the assets of Miller. However, Citizens Bank
failed to accept the sale of its note to the new purchaser. In June 1999,
after Citizens Bank sold the note to other third parties, such third parties
foreclosed on our interest in Miller. Since the purported event of default and
notice of default were in 1998, we wrote off the Miller assets as of December
31, 1998.
After we acquired Talisman Tools Incorporated, a third party threatened to
sue us for patent infringement if we sold products based on the design of the
repair tool acquired in the Talisman transaction. We subsequently refused to
make the final payments due to the parties from whom we purchased Talisman.
Although this third
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party has since stopped threatening to sue us for patent infringement, the
former Talisman shareholders then sued us for failing to pay them the
consideration still due under the acquisition agreement. The molds that we
acquired from Talisman Tools were ultimately seized as part of the Miller
asset foreclosure. We have written off the investment in Talisman as of
December 31, 1998. We have engaged local counsel to vigorously defend this
claim and to seek to rescind the original acquisition agreement and recover
amounts we paid on the closing date.
Certain Additional History. In or around January 1998, we determined that
Internet technology strategies developed under our IIT&E platform could
increase our growth and utilize licenses we had at the World Golf Village.
IIT&E incorporated golf and spa destination travel packages and consumer
products; products and services to be offered ranged from logo premiums,
travel packages for golf, spa, fishing and residence club share offered via
the Internet, the Intranet at the World Golf Village and a web based portal,
www.divot.com, our virtual golf pro shop.
We developed www.divot.com, the virtual golf pro shop, in association with
Hitachi PC and other strategic partners. The www.divot.com website was under
development to enable IIT&E to sell golf, spa and travel related products and
services, since we owned the parcels and the World Golf Village, along with
world class amenities, and anticipated the purchase of Miller Golf Inc. from
which the logo products would be delivered in a business-to-business e-
commerce platform. In mid-1998, we acquired the exclusive rights to golf-
related content on the www.freeride.com Internet community. We also retained
the services of Internet service provider Rare Medium to assist in the
development of our website and to serve as host of www.divot.com.
Through a press release, we announced that we would launch live at the golf
PGA Show held in January 1999 in Orlando, Florida. We had successfully
initiated a soft launch of the website at the PGA Show held in Las Vegas,
Nevada in August 1998.
At our board of directors meeting in November 1998, Mr. Cellura presented
concerns regarding soft sales and potential problems in the golf industry and
slower absorption of developed amenities at the World Golf Village. Mr.
Cellura addressed our high cost of ownership of factories and land and the
absence of available capital to fund our operations. There was a proposal to
refocus on IIT&E Internet strategies, close our headquarters in Tampa,
Florida, and move to New York City where we had relationships with various
Internet companies interested in www.divot.com.
In June 1999, Mr. Cellura, reassumed the position of our CEO. Upon Mr.
Cellura's reassuming his position as CEO, funding commitments were established
to take us forward, providing for the deployment of IIT&E Internet strategies.
Our New Strategy
We have ceased our operations as a golf related products and services
company and are repositioning ourselves as a value-added services provider
specializing in business to business e-commerce applications and providing
distribution services and on-line marketing solutions to the travel industry
worldwide. Through our wholly owned subsidiary, "OrbitTravel.com," we are an
independent travel distribution and e-commerce company that specializes in
assisting travel suppliers and tourism destinations to promote, distribute and
sell their products electronically to travel buyers worldwide, via the
Internet, airline Global Distribution Systems ("GDSs"), America Online,
Private Intranets and other electronic distribution networks.
You should carefully review our "Risk Factors" beginning on page 11.
Marketing
Our target customers are travel suppliers, which include independent hotels,
leisure resorts, cruise lines, tour operators, destination marketing
organizations, entertainment venues, and tourism attractions worldwide. Our
goal is to create an on-line travel marketplace or "Travel Exchange" that
allows travel suppliers to post on-line displays of product and service
offerings to a global travel purchasing audience consisting of travel agents
and travel planning consumers.
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We believe that our existing technology and global distribution network
allow travel suppliers to cost-effectively reach a much broader, global market
than would otherwise be available to them. The primary products and services
that we provide are based on the distribution network and technology behind
our branded on-line distribution channel TravelFile, an on-line leisure travel
information and reservation service. On January 27, 2000, we acquired the
intellectual property assets related to the TravelFile website previously
owned by Orbit Network from Mark Savoretti, a creditor of Orbit Network who
acquired the assets in a judicial foreclosure proceeding, for $60,000 in cash,
a note payable in the amount of $540,000 and the issuance of 3.0 million
shares of our common stock.
We believe that we have strong relationships in place and provide a range of
services to a number of leading travel industry trade and professional groups
including the Caribbean Tourism Organization, the Caribbean Coalition for
Tourism, Advanstar Publishing (publishers of Travel Agent Magazine and the
Premier Hotel & Resort Guides) and the American Society of Travel Agents.
We charge travel suppliers for access to our global distribution system and
for promotional and advertising opportunities that are available throughout
the service. We also charge travel suppliers transaction fees for referrals
and booking transactions using our e-commerce systems and for production
services associated with creating and maintaining client's on-line sales and
marketing systems.
Our marketing plan is to focus initially on establishing long-term strategic
relationships with key travel industry participants that provide access to
large groups of customers, large inventories of bookable travel products and
services, and valuable endorsements to our targeted market segments. We
believe that these relationships will provide us with the core content
required to build and grow the user community and to drive e-commerce to
participating travel suppliers.
Products and Services
TravelFile, which we acquired on January 27, 2000, is an on-line leisure
travel destination information and reservation service which allows travel
suppliers to continually post and manage product and service offerings to a
global travel purchasing audience through the GDS and ancillary contracts that
we license from Orbit Network. TravelFile is a content provider for the AOL
Travel Channel.
In addition, we currently offer the following other products and services
through our right to use Orbit Network's GDS and ancillary contracts:
Caribbean Vacation Planner Online. Carribean Vacation Planner Online is an
on-line sales and marketing service for travel suppliers and destinations of
the Caribbean region. This service is produced in cooperation with the
Ministers of Tourism for each of the countries of the Caribbean region, under
the auspices of their official tourism promotion association, the Caribbean
Tourism Organization.
Bonveno. We have entered into a joint venture with Web Travel Systems, a
wholly owned subsidiary of British Airways, pursuant to which we expect to
jointly create a European-based full service on-line travel supplier branded
"Bonveno." Bonveno expects to develop and provide access for us to the
European on-line travel market by incorporating our technology to deliver
worldwide destination information and provide the ability for travel suppliers
to promote their products and services and directly accept and process on-line
bookings.
WilhelminaTravelFile.com: Through our subsidiary, OrbitTravel.com, Inc., we
have arranged to acquire all the issued and outstanding stock of
WilhelminaTravelFile.com, Inc. a wholly owned subsidiary of Wilhelmina Artist
Management, LLC, which has granted WilhelminaTravelFile.com an exclusive
license to showcase Wilhelmina-provided content through an Internet Website
dedicated to travel information and services, which we anticipate will be
marketed in part by professional models and celebrity talent.
AsiaGateway.com: Our subsidiary, OrbitTravel.com, Inc., has entered into a
content distribution agreement with AsiaGateway.com, Ltd., which provides for
the integration of Asia-related Internet content
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produced and compiled by AsiaGateway.com into our online travel services,
which in turn will be prominently featured in Asiagateway.com.
Laspata/Decaro Studios: Our subsidiary, OrbitTravel.com, Inc., has entered
into a Consulting Services and Joint Content Agreement with Laspata/Decaro
Studio Corporation, which calls for the provision of media consulting services
regarding brand building and promotion, and also calls for the contribution by
Laspata/Decaro of their library of destination images, photography and other
content for use within the TravelFile service, along with the creation of new
video, multi-media, and rich-media content for our online services.
TripRequest.com. TripRequest.com is an on-line service that allows Internet
users to place an order for travel by completing an on-line "trip request"
order form. Trip requests are then posted to the TravelFile server, pursuant
to which participating travel suppliers and travel agents that pay us a
subscriber fee can access, bid on, and respond to the trip requests posted.
Custom Branded On-line Travel Products and Services. We provide travel
content and services that can be "private labeled" for distribution and
integration into a wide variety of other on-line services and e-commerce
applications.
Consulting/Production Services. Our consulting and production services focus
on travel automation, data processing, e-commerce, and Internet applications.
We operate as an application service provider to the travel industry.
Other Services. As part of our evolution from a golf company to an Internet
travel business, we are developing www.divot.com, which we expect to be a
portal for the sale of golf, spa and travel-related products and services. In
addition, we own the exclusive right to provide and manage golf-related
content on the www.freeride.com Internet community. We have been exploring the
development of these golf-related services since 1998 as an ancillary part of
our golf business.
Competition
Online travel is still at a very early stage of growth and there is no
single dominant company or business model that has yet emerged as dominant in
the marketplace. We compete with the following:
. Direct competitors such as Vacations.com (formerly TravelOn),
VacationSpot.com, Destinations.com, WorldRes, Online Vacation Mall, Mark
Travel Corporation, Atlas Travel Technologies and Preview Travel;
. The major on-line travel sites such as Travelocity, Expedia, and
Preview;
. The major Internet "portals" such as Yahoo, Excite, Lycos, etc.;
. Secondary on-line travel sites such as Trip.com, OneTravel, TravelScape,
BizTravel.com, Travelbyus.com, GetThere.com, CheapFares.com,
TravelNavigator.com, ByeByeNow.com and VacationSpot.com;
. Travel agency driven distribution systems such as Vacations.com,
Uniglobe.com, Carlson Wagonlits, PositiveSpace.com, The Travel Company,
Global Vacation Group, Rosenbluth Travel and Liberty/Go Go Travel;
. Niche players in specific areas of interest such as ski, golf, spa,
lifestyle or other areas of interest such as TravelWeb, WorldRes, Ski
Travel Online.com, Golf Travel Online.com and Great Outdoors.com; and
. Global Distribution Systems (GDSs) such as SABRE, Galileo and Preview.
Technology
Our TravelFile data is stored in a proprietary data management system of
inter-related index files and memory resident indices. The data management
system operates on Compaq Digital Alphaserver machines which
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are powered by the Digital Alpha AXP processor and a Hitachi 8 Way Server. We
also maintain multiple 56Kb digital links to provide connectivity to the GDS
vendors and T1 digital links to America Online and the World Wide Web.
Currently, we support systems that operate 24 hours-a-day within a central
computer system located at our leased facility in Whitefish, Montana. The
systems incorporate the following elements:
Hardware/Network:
. Compaq Digital Alpha Server Host Platform (similar to those used by
Amazon.com and Yahoo.com.), Hitachi 8 Way Server.
. Fully RAIDed drive sets for added reliability and performance.
. Redundant power supplies.
. Load balanced servers.
. Full UPS support.
. 100Base-T and 10Base-T Ethernet.
. T1 connection to the Internet and AOL and four dedicated 56k connections
to GDS distribution partners.
. Year 2000 compliance.
Software:
. NT, Unix, and Open VMS operating systems.
. Custom code ANSI C compliant.
. Year 2000 compliance.
. C++, Java program foundation
Employees
At February 16, 2000, we have 35 full-time employees. None of our employees
belong to any unions, and we believe we have good relations with our
employees.
Risk Factors
Investing in our securities involves a high degree of risk. You should
carefully consider the following factors and other information in this Annual
Report on Form 10-KSB, including our consolidated financial statements and the
related notes, before making a decision to invest in our securities.
Additional risks and uncertainties, including those generally affecting the
market in which we operate or that we currently deem immaterial, may also
impair our current or future business.
We have not filed any periodic reports required under the federal securities
laws since the third quarter of 1998.
We have not filed any periodic reports that we were required to file under
the federal securities laws since the third quarter of 1998. We cannot assure
you that claims asserting violations of federal securities laws will not be
asserted even if we file with the SEC these required reports. In addition, the
SEC may impose fines, penalties or assessments against us. We may not have
sufficient funds to pay such fines, penalties or assessments against us. We
may not have sufficient funds to pay such fines, penalties or assessments or
to defend claims against us by third parties.
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We have a history of losses and therefore cannot assure you that we will be
profitable.
We have recently experienced operating and net losses. We lost approximately
$16.0 million in 1998 and approximately $7.7 million in 1999. In the future,
we may not be able to generate sufficient revenue from operations to pay all
of our operating or other expenses. If we fail to generate sufficient cash
from our operations to pay these expenses, our management will need to
identify other sources of funds. We may not be able to borrow money or issue
more shares of common stock to meet our cash needs. Even if we can complete
such financing transactions, they may not be on terms favorable to us. If we
cannot raise sufficient capital to fund our operations, we may not be able to
continue our business and the value of our securities could decline or even
become worthless. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a more complete description of our
historical results of operations and liquidity and capital needs.
If we fail to attract and retain qualified employees, our revenues could
decrease.
Our future success depends in large part upon our ability to attract, train
and retain additional highly skilled executive-level management and creative
technical, consulting, marketing and sales personnel. The competition in the
Internet business for such personnel is intense, and we cannot be sure that we
will be successful in attracting, training and retaining such personnel. If we
fail to attract and retain qualified employees, our revenues could decrease.
Potential fluctuations in quarterly results make financial forecasting
difficult and could affect our common stock price.
As a result of our limited operating history in the Internet business and
the emerging nature of our markets, we believe that quarter-to-quarter
comparisons of results of operations are not necessarily meaningful. Also, it
is difficult to forecast quarterly results due to the difficulty in predicting
the amount and timing of client expenditures, acquisitions and employee
utilization. Quarterly results of operations may fluctuate significantly in
the future as a result of a variety of factors, many of which are outside of
management's control. You should not rely on the results of any one quarter as
an indication of future performance.
Our business depends on our network infrastructure, including our ability to
obtain sufficient network capacity.
The success of our business depends on the capacity, reliability and
security of our network infrastructure. We may need to use substantial
financial, operational and management resources to expand and adapt our
network infrastructure. We may not be able to expand or adapt our network
infrastructure to meet additional demand on a timely basis and at a
commercially reasonable cost, or at all.
Our lack of an operating history in the Internet travel business makes it
difficult for you to evaluate our business.
Prior to November 1, 1999, we were a manufacturer and seller of golf
accessories. We have only been in the Internet business and the travel
business since November 1, 1999. Our business and prospects must therefore be
considered in light of the risks and uncertainties frequently encountered by
companies in their early stages of development. These risks are further
amplified by the fact that we are operating in the new and rapidly evolving
Internet services market. You should be aware that:
. our business model and strategy is new and evolving; and
. we may not be able to successfully implement our business models and
strategies.
We cannot assure you that we will be successful in meeting these challenges
and addressing these risks and uncertainties. If we are unable to do so, our
business will not be successful.
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We may incur significant losses and generate negative operating cash flow in
the future.
We may incur significant losses and generate negative operating cash flow.
We will use significant amounts of cash as we continue to enhance our product
and service offerings. The extent to which we experience negative cash flow
will depend upon a number of factors, including the following:
. the number and size of future acquisitions and investments, if any;
. the expense and time required to integrate prior and future acquired
assets;
. the time and effort required to capture integrated marketing synergies;
. our ability to generate increased revenues and cash flow; and
. potential regulatory developments that may apply to our operations.
We may be unable to implement our acquisition growth strategy, which would
have an adverse effect on our business and competitive position in the
industry.
We have entered into an agreement to acquire AnimInet's 3D animation asset
and acquire the stock of Wilhelmina TravelFile.com and have an option to
purchase Orbit Network's GDS and ancillary contracts and related furniture and
equipment. Acquiring these assets are important to our business strategy. In
addition, we are required to repay a $540,000 note due to Mark Savoretti for
our acquisition of the TravelFile intellectual property assets. If we cannot
successfully complete the acquisitions of these assets, we may not be
successful in repositioning our company as an Internet service company. We
currently do not have a sufficient number of authorized but unissued shares of
common stock available for issuance under our charter to consummate these
acquisitions. Although we currently expect to ask our stockholders to approve
a reverse stock split on an up to 20-for-1 basis, we cannot assure you that we
will be successful in obtaining such approval so that we would be able to
consummate these acquisitions.
Our business strategy includes acquiring and growing other assets that fit
within our operating model. We may not be able to complete or identify future
acquisitions or realize the anticipated results
of future acquisitions. Some of the risks that we may encounter in
implementing our acquisition growth strategy include:
. expenses and difficulties in identifying potential targets and the costs
associated with acquisitions that we fail to consummate;
. expenses, delays and difficulties of integrating acquired assets into
our existing organization;
. diversion of management's attention;
. impact on our financial condition due to the timing of the acquisition;
and
. expenses of any undisclosed or potential legal liabilities of any
acquired company.
Additionally, in pursuing acquisition opportunities, we may compete with
other companies with similar growth strategies, some of which may be larger
than us and that have greater financial and other resources. Some of these
competitors may have equity securities that trade in more liquid markets or at
higher per share prices and therefore may be able to use equity consideration
more readily than we could. Competition for acquisition targets could also
result in increased prices for acquisition targets and a diminished pool of
companies available for acquisition.
A failure to successfully integrate the assets that we have acquired or
expect to acquire could result in increased operating costs and lost revenues.
Our success depends in large part on our ability to integrate the operations
and management of the independent Internet operations and assets that we have
acquired or expect to acquire in the future. If we fail to integrate
acquisitions successfully, we could suffer increased operating costs and lost
revenues. We will have to
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expend substantial managerial, operating, financial and other resources to
integrate these businesses and implement our business model. In particular, to
integrate newly acquired Internet assets successfully, we must:
. install and standardize adequate operational control systems;
. employ qualified personnel to provide technical and marketing support in
new as well as existing locations;
. eliminate redundancies in overlapping systems and personnel;
. obtain sufficient working capital to integrate newly acquired assets,
including hardware and software platforms;
. incorporate acquired technology and products into our existing service
offerings;
. implement and maintain uniform standards, procedures and policies;
. standardize marketing and sales efforts under common brand names; and
. expand our managerial, operational, technical and financial resources.
The process of consolidating and integrating acquired operations and assets
takes a significant period of time, places a significant strain on resources
and could prove to be even more expensive and time-consuming than we predict.
We may increase expenditures in order to accelerate the integration and
consolidation process with the goal of achieving longer-term revenue increases
and improved profitability. We cannot assure you that our projected long-term
revenue increases and improved profitability can or will be realized. We also
cannot assure you that our resources will be sufficient to manage the growth
in our business or that we will be successful in implementing our expansion
program in whole or in part. In addition, we cannot assure you that we will be
able to integrate additional employees into our organization or to manage
combined operations effectively.
Our growth may strain our resources, which could adversely affect our
business performance.
Our growth may strain our managerial and operational resources. A key part
of our strategy is to grow, primarily by acquiring other companies and assets.
We cannot assure you that our executive officers will be able to manage our
growth effectively. To manage future growth, our management must establish
effective operational and financial systems, procedures and controls and
expand, train, retain and manage our employee base. If our
systems, procedures and controls are inadequate to support our operations, our
expansion could be halted, and we could lose opportunities to increase our
revenues. Any inability to manage growth effectively could adversely affect
our business performance.
We may not be able to generate sufficient cash flow from operations to
finance our future acquisition strategy. We may seek to raise additional funds
through public or private financing, strategic relationships or other
arrangements. Such additional funding may not be available on terms acceptable
to us, or at all. We may have to sell stock at prices lower than those paid by
existing stockholders, which would result in dilution, or we may have to sell
stock or bonds with rights superior to rights of holders of our common stock.
Any debt financing might involve restrictive covenants that would limit our
operating flexibility. If adequate funds are not available on acceptable
terms, we may be unable to develop or enhance our services and products, take
advantage of future opportunities or respond to competitive pressures.
Your securities could experience wide fluctuations in trading price and
volume.
Publications indicate that the stock of Internet companies often trade at
overly inflated prices. If investor interest in these stocks declines, the
price for our common stock could drop suddenly and significantly, even if our
operating results are positive. In addition, the trading volume of Internet-
related stocks is often volatile. If the trading volume of our common stock
experiences significant changes, the price of our common stock could be
adversely affected.
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Wide fluctuations in the trading price or volume of our common stock could
also be caused by:
. actual or anticipated variations in our results of operations;
. announcements of technological innovations;
. new services introduced by us or our competitors;
. changes in clients' purchasing habits;
. changes in financial estimates by financial analysts; and
. conditions and trends in the Internet industry.
Difficulties with regard to the delivery of application software products via
the Internet could adversely affect our ability to grow our business.
We believe that our business could suffer if problems arise in the delivery
of application software products via the Internet. Recent innovations have led
to an increasing market for the delivery of widely used application software
products over the Internet. We expect to offer services related to this new
market. However, the market for delivery of application software products is
relatively new and uncertain. We may not be able to generate revenues related
to this market if it cannot develop or acquire effective technology to deliver
and host products demanded by our clients. In addition, existing capabilities
and bandwidth across the industry may not be sufficient to handle the
increasing demand for application software products. Finally, we cannot assure
you that we will be able to attract application providers to our services.
We have anti-takeover provisions in our charter documents that could prevent
or delay a change in control or adversely affect the market price of our
common stock.
Our charter gives our board of directors the authority to issue up to one
million shares of preferred stock and to determine the rights and preferences
of the preferred stock without obtaining shareholder approval. The existence
of this preferred stock could make it more difficult or discourage an attempt
to obtain control of us by means of a tender offer, merger, proxy contest or
otherwise. Furthermore, the preferred stock could be issued with other rights,
including economic rights, senior to our common stock, and, therefore,
issuance of the preferred stock could have an adverse effect on the market
price of our common stock. We do not have any present plans to issue preferred
stock.
In addition, our bylaws provide for staggering our board of directors into
three classes of directors. Generally, stockholders elect each director class
for a three-year term. The staggered directors' terms may affect the ability
of our stockholders to change control of us even if such a change in control
would be in your best interest. However, since all of our directors have been
appointed since the last annual meeting of stockholders, the terms of all of
our current directors expire at the next meeting of stockholders.
Some provisions of Delaware law could make it more difficult for a third
party to acquire us or hinder a change in management even if doing so would be
beneficial to our shareholders. In addition, we may in the future adopt other
measures that may have the effect of delaying, deferring or preventing an
unsolicited takeover, even if such a change in control were at a premium price
or favored by a majority of unaffiliated shareholders. These measures may be
adopted without any further vote or action by our shareholders.
We compete in a new and highly competitive market that has low barriers to
entry.
We compete in the relatively new and intensely competitive Internet
business. We expect competition to intensify as the market evolves. Many of
our competitors have longer operating histories, larger client bases, longer
relationships with clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public resources.
There are relatively few barriers preventing competitors from entering the
Internet business. As a result, new market entrants pose a threat to our
business. We do not own any patented technology that precludes or inhibits
competitors from entering the information technology services market. Existing
or future competitors may develop or offer services that are comparable or
superior at a lower price, which could significantly reduce our revenues.
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Our business depends on continued growth in the use of the Internet and the
use of Internet related travel products.
Our future success is substantially dependent upon continued growth in the
use of the Internet because both companies primarily use Internet-based
technology to create solutions. To the extent that businesses do not consider
the Internet a viable commercial medium, our client base may not grow. For
companies that have historically relied upon alternative means of commerce and
communications, adoption of the Internet as a tool requires the understanding
and acceptance of a new way of doing business and exchanging information. In
particular, companies that have already invested substantial resources in
other means of conducting commerce and exchanging information may be reluctant
or slow to adopt a new, Internet-based strategy that may make their existing
personnel and infrastructure obsolete.
In addition, our business may be indirectly impacted if the number of users
on the Internet does not increase or if commerce over the Internet does not
become more accepted and widespread. The use and acceptance of the Internet
may not increase for a number of reasons, including:
. actual or perceived lack of security of information, such as credit card
numbers;
. high cost or lack of availability of access;
. congestion of traffic or other usage delays on the Internet;
. inconsistent quality of service or the lack of availability of cost-
effective, high-speed service;
. governmental regulation;
. uncertainty regarding intellectual property ownership; and
. lack of high-speed modems and other communications equipment.
Published reports have also indicated that capacity constraints caused by
growth in the use of the Internet may impede further development of the
Internet to the extent that users experience shutdowns, delays, transmission
errors and other difficulties. If the necessary infrastructure, products,
services or facilities are not developed, or if the Internet does not become a
viable and widespread commercial medium, we could suffer a significant loss of
revenues.
We need to keep pace with changing communications technologies in order to
compete effectively in the Internet services market.
Our success depends on our ability to keep pace with the rapid changes
occurring in communications technologies and the new and improved devices and
services that result from these changes. Any inability to respond quickly and
cost-effectively to changing communications technologies and devices could
make existing and planned future service offerings non-competitive and may
cause us to lose significant revenues. For example, if the Internet is
rendered obsolete or less important by faster, more efficient technologies, we
must be prepared to offer non-Internet-based solutions or risk losing current
and potential clients.
Government regulation and legal uncertainties could add additional costs to
doing business on the Internet, which could adversely affect our business.
There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. However, laws and regulations may
be adopted in the future that address issues relevant to the Internet
business, including user privacy, pricing and the characteristics and quality
of products and services. For example, the Telecommunications Act of 1996
sought to prohibit transmitting various types of information and content over
the Internet. Several telecommunications companies have petitioned the FCC to
regulate Internet service providers and on-line service providers in a manner
similar to long distance telephone carriers and to impose access fees on those
companies. This could increase the cost of transmitting data over the
Internet. Also, the European Union is currently considering the adoption of
new laws and regulations that could restrict widespread use of the Internet.
Moreover, it may take years to determine the extent to which existing laws
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relating to issues such as property ownership, libel and personal privacy
issues apply to the Internet. Any new laws or regulations relating to the
Internet or the manner in which existing laws are applied to the Internet
could adversely affect our business.
After Orbit Network publicly issued a press release stating that we had
announced that we had signed a definitive merger agreement to acquire Orbit
Network, we subsequently canceled the previously announced agreement and
modified the structure of the intended transaction with Orbit Network.
On October 5, 1999, Orbit Network publicly issued a press release stating
that we had announced that we had signed a definitive merger agreement to
acquire Orbit Network in a stock for stock exchange. Upon completion of our
due diligence review of Orbit Network, we and Orbit Network mutually agreed to
cancel this previously announced agreement. Subsequently, we entered into a
right to use agreement with Orbit Network as of November 1, 1999 pursuant to
which we currently have a right to use Orbit Network's GDS and ancillary
contracts and related furniture and equipment and have an option to purchase
such contracts. In addition, we acquired the intellectual property assets
related to Orbit Network's TravelFile website from Mark Savoretti, a creditor
of Orbit Network who had acquired such intellectual property assets through a
judicial foreclosure proceeding on January 13, 2000.
Future issuances and sales into the market of up to an additional 166.5
million shares of our common stock will dilute our current stockholders and
may depress the market price of our common stock.
As of February 16, 2000, we had approximately 13.8 million shares of our
common stock outstanding. In addition, we have agreed to issue an additional
113.8 million shares of common stock for no cash consideration to various
executive officers, employees, consultants and other third parties. A portion
of these shares have been issued or will be issued to settle various disputes.
See "Legal Proceedings." We have issued, or expect to issue, these shares in a
series of unrelated public and private offerings.
In addition, we have offered to issue approximately 52.7 million additional
shares of our common stock to existing security holders in exchange for all of
our outstanding convertible preferred stock and convertible notes, other than
the notes that OrbitTravel.com, our wholly owned subsidiary, has issued since
its inception on October 6, 1999. As of February 25, 2000, the holders of all
of our convertible preferred stock and all of our convertible debt have
accepted this offer. We currently expect to issue these shares on, or within
10 business days after, the date we have filed this Annual Report on Form 10-
KSB.
The issuance of all of these shares of common stock, particularly the shares
that we have agreed to issue for no cash consideration, will result in
immediate and severe dilution in net tangible book value to our current
stockholders. Since we currently have a shareholders' deficit, we are unable
to calculate the dilution in net tangible book value to our current
stockholders. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
In addition, when we issue these shares of common stock, the market price of
our common stock could fall. These issuances also might make it more difficult
for us to sell equity or equity-related securities in the future at a time and
price that we deem appropriate or to use equity as consideration for future
acquisitions.
All of the shares that are issued in exchange for outstanding convertible
preferred stock and convertible notes are restricted but may be eligible for
resale if the holders comply with Rule 144 of the Securities Act. We believe
that all or substantially all of the holders of our convertible preferred
stock and convertible debt securities have held such securities in excess of
one year. Therefore, upon issuance of the common stock, such holders may be
deemed to have complied with Rule 144(d) of the Securities Act since their
holding period for the common stock may "tack" with their holding period for
the convertible security as permitted by Rule 144(d)(ii) of the Securities
Act. Persons who have held these securities for more than two years will be
able to resell their shares under Rule 144(k) of the Securities Act.
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Since up to 27.4% of our common stock is or will be concentrated in the hands
of our executive officers and directors, these persons may be able to directly
control our future.
Upon our issuance of an additional 166.5 million shares of common stock, our
Board of Directors and executive officers will collectively own up to 27.4% of
our common stock, assuming none of the acquisitions that we describe in this
Annual Report are consummated. Joseph R. Cellura, our chief executive officer,
will individually own approximately 15.2% of our common stock, assuming none
of the acquisitions that we describe in this Annual Report are consummated. As
a result, Mr. Cellura and our other executive officers may be able to exercise
significant influence over all matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership also may have the effect of
delaying or preventing a change in control of us.
We may not be able to satisfy our obligations under various settlement
agreements.
During 1998 and 1999, we agreed to settle various disputes with executive
officers, stockholders and third parties. See "Legal Proceedings." As part of
the settlement of some these disputes, we entered into settlement agreements
pursuant to which we must make substantial cash payments in the near future
totalling $636,000. We may in the future be required to pay additional amounts
in settlement or satisfaction of other pending litigations. We do not
currently have sufficient cash on hand to satisfy these obligations. We cannot
assure you that we will be able to raise sufficient capital on acceptable
terms or at all to satisfy such obligations. If we are unable to fully perform
under our settlement agreements, the counterparties may seek court action to
enforce the terms of such agreements.
Significant fluctuation in the market price of our common stock could result
in securities class action claims against us.
Significant price and value fluctuations have occurred with respect to our
common stock over the past year and often occurs with respect to the
securities of Internet-related companies. Our common stock price is likely to
be volatile in the future. In the past, following periods of downward
volatility in the market price of a company's securities, class action
litigation has often been pursued against such companies. If similar
litigation were pursued against us, it could result in substantial costs and a
diversion of our management's attention and resources.
We could be subject to successor liability with regard to liabilities of
Orbit Network.
We have acquired from Mark Savoretti, a creditor of Orbit Network, the
intellectual property assets relating to the TravelFile website formerly owned
by Orbit Network. Mr. Savoretti acquired these assets from Orbit Network in a
judicial foreclosure proceeding on January 13, 2000 after Orbit Network failed
to pay $771,000 owed to Mr. Savoretti. In addition, we have an option to
acquire Orbit Network's GDS and ancillary contracts and related furniture and
equipment as part of the right to use agreement that we entered into with
Orbit Network as of November 1, 1999. We also have entered into a non-binding
letter of intent with AnimInet to acquire AnimInet's 3D animation asset.
AnimInet is a corporation formed solely by Dean Miller, one of our executive
officers. We currently expect the stockholders of Orbit Network to
individually acquire all of AnimInet's common stock. We cannot assure you that
we will not succeed to any of the liabilities of Orbit Network.
The employment contracts with our executive officers could have the effect of
precluding or otherwise delaying a change in control of us that could be
beneficial to our stockholders.
The employment contracts with our executive officers provide for the payment
of significant severance payments in the event these officers are terminated.
For example, Mr. Cellura's employment agreement, which expires on June 24,
2006, would require us to pay him upon termination an aggregate severance
amount of up to $2.15 million plus the remaining base salary amounts due to
him under the agreement if we terminate him without cause. Even if we are
successful in terminating Mr. Cellura's employment with cause, we would be
required to pay him $900,000. This could have the effect of precluding or
otherwise delaying a change of control
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of us that would otherwise be in the best interest of our stockholders. See
"Executive Compensation--Employment Contracts."
ITEM 2. DESCRIPTION OF PROPERTY
Our principal business office is located at 927 Lincoln Road, Suite 200,
Miami Beach, FL 33139. Our phone number is (305) 538-2727. We occupy 800
square feet at this location at a fixed cost of $100 per month on a triple net
basis.
We lease additional space at One Union Square South 10-J, New York, NY
10003. Effective August 1, 1999, we took occupancy of less than 1,000 square
feet of newly leased office space at the above address. Additionally, on
December 17, 1999, we took occupancy of less than 1,000 square feet of
additional space at the same building location. One-year leases ending July
31, 2000 and December 31, 2000 provide for rent on a monthly basis of $5,495,
and $3,425, respectively.
On December 1, 1999, we leased 6,000 square feet at 100 Second Street East
in Whitefish, Montana for a term of six months. This lease provides for
monthly rental of $7,500 during the first six months. The intellectual
property assets relating to TravelFile are located at our facility in
Whitefish.
ITEM 3. LEGAL PROCEEDINGS
In connection with our February 21, 1996 Agreement in Principle with our
three Pension Fund Partners, definitive agreements were reached during the
second quarter of 1996 with regards to two of our four previously owned golf
courses. However, our efforts to interpret the Agreement in Principle and
negotiate with EPI Pension Fund regarding the two other courses were
unsuccessful. On May 31, 1996, EPI Pension Fund commenced an action against us
claiming breach of contract, specific performance, a constructive trust and
temporary and permanent injunctive relief. At a hearing conducted on July 12,
1996 in the Circuit Court in and for Hillsborough County, Florida, the court
issued a preliminary injunction which required us to transfer to EPI Pension
Fund 45% of the outstanding equity in our GLV and GMW subsidiaries whereby we
retained 30% of the outstanding equity in each of these two subsidiaries and
EPI Pension Fund owned the remaining 70%. We filed an appeal brief to this
preliminary injunction on August 14, 1996 in the 2nd District Court of Appeals
for the 13th Judicial District in and for Hillsborough County, Florida. The
District Court denied this appeal on February 11, 1997. We entered into a
settlement agreement with the EPI Pension Fund on October 15, 1997, which
purported to resolve all outstanding issues between us and the EPI Pension
Fund. We failed to perform all of our obligations under the settlement
agreement. On February 10, 1998, the Circuit Court entered an order directing
us to perform fully all of our obligations under the settlement agreement
prior to February 24, 1998. At a hearing on March 26, 1998, we offered partial
performance under the settlement agreement which was t}22ent which was taken
under advisement by the Circuit Court and opposing counsel and will be ruled
upon at a hearing to be scheduled in the future.
We submitted a proposed settlement to the EPI Pension Fund, with a $3,000
good faith deposit. The terms of the proposed settlement include a down
payment to be made within 30 days of executing the settlement documents with a
balloon payment to be delivered at the end of one year. The deferred payment
will be non-interest bearing. We have requested that we be permitted to prepay
the settled amount at a discount. We do not know if the settlement will be
secured. A penalty will be imposed upon default on the proposed settlement in
addition to EPI Pension Fund's rights to enforce the original judgment of
$152,000. We cannot assure you that the proposed settlement will be accepted
by the EPI Pension Fund or that the terms will be substantially similar to
those disclosed above.
On October 22, 1998, Robert Hochstein filed a complaint in federal court
against us, Mr. Cellura and other entities controlled by Mr. Cellura alleging
that we violated various federal and state securities laws. On February 16,
2000, we and Mr. Hochstein executed a settlement pursuant to which we agreed
to pay $150,000 and to issue 850,000 shares of our common stock (of which we
had already issued 400,000 shares) in settlement
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<PAGE>
of this dispute. We issued 450,000 shares to Mr. Hochstein on February 25,
2000. We paid him $100,000 on February 17, 2000 and have agreed to pay the
additional $50,000 by June 16, 2000. If we fail to pay the $50,000 when due or
the remaining 450,000 shares of our common stock are not freely tradeable by
the terms of the settlement agreement, we have agreed that a judgment for
$575,000 may be entered into against us, Mr. Cellura and other entities
controlled by Mr. Cellura. If the price of our common stock falls below 30
cents per share for two trading days before March 18, 2000, we have agreed to
repurchase 400,000 shares of our common stock for a minimum of 30 cents per
share.
In January and May of 1999, a group of our former stockholders and employees
and stockholders and employees of various companies that we acquired in April
1998, which formerly were controlled by Mr. Cellura, our chief executive
officer, filed three lawsuits in the United States District Court for the
Southern District of New York against us, these various acquired corporations,
Mr. Cellura and several of our other executive officers and stockholders. The
complaints alleged, among other things, that (1) we had failed to issue an
aggregate of 15.0 million shares of our common stock (such number of shares is
prior to the effect of a 15-for-1 reverse stock split effected with regard to
our common stock on June 2, 1998), (2) we and our officers committed fraud in
the issuance of securities, and (3) various breaches of contract. The parties
to the lawsuit entered into a settlement agreement as of June 29, 1999
pursuant to which the plaintiffs agreed to release the defendants from all of
the claims in the lawsuits in exchange for: (1) a note payable in the amount
of $225,000; (2) the issuance of 7.65 million shares of our common stock; and
(3) the assignment by Mr. Cellura of all of his rights, title or interest to
the profits generated from a few parcels of land in the World Golf Village.
Mr. Cellura assigned these rights to the plaintiffs on June 24, 1999. In
August 1999, we instructed our transfer agent to issue these shares, which
were ultimately issued on February 29, 2000. As of February 16, 2000, we have
not repaid any amounts due under the $225,000 note payable. This note payable
currently matures on March 31, 2000. We cannot assure you that we will have
sufficient funds available to repay the note payable upon maturity or that we
would be able to extend the maturity date of the note payable. If we are not
able to repay the note payable according to its terms, we cannot assure you
that the plaintiffs will not seek court action to enforce the terms of the
settlement agreement. We would incur substantial expenses if we must defend
any additional actions in connection with these lawsuits.
In June 1999, Joseph R. Cellura, our chief executive officer, threatened to
file a lawsuit against us alleging, among other things, that: (1) Mr. Cellura
suffered substantial monetary loss in the defense of the lawsuits we refer to
in the previous paragraph; (2) Mr. Cellura suffered real and substantial
damage to his personal character as a result of the filing of these lawsuits;
(3) we failed to issue to Mr. Cellura and other stockholders in various
companies controlled by him an aggregate of 20.0 million shares of our common
stock and 5.0 million options to purchase shares of our common stock (such
number of shares is prior to the effect of a 15-for-1 reverse stock split
effected with regard to our common stock on June 2, 1998); and (4) we failed
to indemnify Mr. Cellura as required by our indemnity agreement with him in
connection with these lawsuits. We and Mr. Cellura agreed to enter into a
settlement agreement, effective as of June 29, 1999, pursuant to which Mr.
Cellura agreed to release us from these claims in exchange for: (1) a note
payable in the amount of $250,000; and (2) the issuance of approximately 27.34
million shares of our common stock. As of February 16, 2000, we have repaid
$64,000 due under the $250,000 note payable. This note payable currently
matures on April 30, 2000. We cannot assure you that we will have sufficient
funds available to repay the remaining amounts outstanding under the note
payable upon maturity or that we would be able to extend the maturity date of
the note payable. If we are not able to repay the note payable according to
its terms, we cannot assure you that Mr. Cellura will not seek court action to
enforce the terms of the settlement agreement. We would incur substantial
expenses if we must defend any such court action.
After we acquired Talisman Tools, a third party threatened to sue us for
patent infringement if we sold products based on the design of the repair tool
that we acquired in the Talisman acquisition. We subsequently refused to repay
the remaining $90,000 that we owed as part of the acquisition agreement.
Although this third party has since stopped threatening to sue us for patent
infringement, the former Talisman shareholders then sued us for failing to
repay these amounts. The molds that we acquired from Talisman were ultimately
seized as part of the Miller asset foreclosure. We have written off the
investment in Talisman as of December 31, 1998. We have engaged local counsel
to vigorously defend this claim and to seek to rescind the original
acquisition
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<PAGE>
agreement and recover amounts we paid on the closing date. Due to the inherent
uncertainties of the litigation process and the judicial system, we are not
able to predict the outcome of this litigation.
Kirk Scoggins, a holder of our convertible preferred stock, paid $97,915 on
our behalf during 1998 to satisfy some of our payroll obligations to
employees. In full satisfaction of the amounts we owe to Mr. Scoggins and
other litigation threatened by Mr. Scoggins, we entered into a settlement
agreement with Mr. Scoggins as of January 31, 2000 pursuant to which we have
agreed to issue to Mr. Scoggins approximately 4.5 million shares of our common
stock and deliver to Mr. Scoggins specific items of personal property owned by
us and by Mr. Cellura.
Clifford F. Bagnall, one of our former directors and a current executive
officer, had threatened to file a lawsuit against us alleging that we owe Mr.
Bagnall amounts due under his employment contract in force while he was an
executive officer and that (1) Mr. Bagnall suffered substantial monetary loss
in the defense of the May 1999 lawsuits by the former stockholders of various
companies formerly controlled by Mr. Cellura; (2) Mr. Bagnall suffered real
and substantial damage to his personal character as a result of the filing of
the lawsuits; and (3) we failed to indemnify Mr. Bagnall as required by our
indemnity agreement with him in connection with these lawsuits. We and Mr.
Bagnall agreed to enter into a settlement agreement, effective as of January
31, 2000, pursuant to which Mr. Bagnall agreed to release us from this claim
in exchange for: (1) a note payable in the amount of $100,000; and (2) the
issuance of 5.3 million shares of our common stock. As of February 16, 2000,
we have not repaid any amounts due under the $100,000 note payable. This note
payable currently matures on May 15, 2000. We cannot assure you that we will
have sufficient funds available to repay the note payable upon maturity or
that we would be able to extend the maturity date of the note payable. If we
are not able to repay the note payable according to its terms, we cannot
assure you that Mr. Bagnall will not seek court action to enforce the terms of
the settlement agreement. We would incur substantial expenses if we must
defend any such court action.
Kenneth Craig, one of our former directors and executive officers, had
threatened to file a lawsuit against us alleging that we owe Mr. Craig amounts
due under his employment contract in force while he was an executive officer.
We and Mr. Craig agreed to enter into a separation agreement, effective as of
September 1, 1999, pursuant to which Mr. Craig agreed to release us from this
claim in exchange for: (1) a note payable in the amount of $75,000; and (2)
the issuance of 3.5 million shares of our common stock. As of February 16,
2000, we have not repaid any amounts due under the $75,000 note payable. This
note payable currently matures on June 30, 2000. We cannot assure you that we
will have sufficient funds available to repay the note payable upon maturity
or that we would be able to extend the maturity date of the note payable. If
we are not able to repay the note payable according to its terms, we cannot
assure you that Mr. Craig will not seek court action to enforce the terms of
the settlement agreement. We would incur substantial expenses if we must
defend any such court action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of the security holders since June
1998. We currently expect our board of directors to establish a March 1, 2000
record date for the purpose of determining which of our stockholders may sign
a non-unanimous written consent action in lieu of a meeting approving the
following matters:
. a proposal to change our name to OrbitTravel.com Corporation;
. a proposal to ratify the appointment of Ernst & Young LLP as independent
auditors for 1999;
. proposals to ratify the employment agreements of Messrs. Cellura,
Noosinow and Dollinger; and
. proposals to ratify all settlement agreements.
In addition, we currently expect to call a 1999 annual meeting of
stockholders at which we expect our stockholders to vote on, among other
things, the following matters:
. the election of Joseph R. Cellura, David A. Noosinow, Douglas R.
Dollinger, and two representatives of Teakwood Ventures as our
directors;
. a proposal to effect a reverse stock split of our common stock on an up
to 20-for-1 basis;
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<PAGE>
. a proposal to ratify the terms of our letter of intent to acquire the 3D
animation asset from AnimInet; and
. a proposal to ratify the terms of our right to use agreement with Orbit
Network pursuant to which we have the right to use, and have an option
to purchase, Orbit Network's GDS and ancillary contracts and related
furniture and equipment.
We cannot assure you that each of these matters will be submitted to our
stockholders, whether at a meeting or by a written consent, or, if such
proposals are submitted, that they will be approved.
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<PAGE>
PART II
ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information and Dividends
On February 16, 2000, we had approximately 180 stockholders of record of our
common stock. We have not declared or paid any dividend on our common stock
since our inception. We do not anticipate declaring or paying any dividends on
our common stock for the foreseeable future.
Prior to March 22, 1999, trading of our common stock had been quoted on the
Nasdaq SmallCap Market. Our common stock was de-listed from the Nasdaq
SmallCap Market as a result of our failure to meeting various listing
requirements. The following table sets forth, the quarterly range of the high
and low closing prices of the common stock as reported by the Nasdaq SmallCap
Market from the beginning of 1998 until March 22, 1999:
<TABLE>
<CAPTION>
Closing Price
Per Share
-------------
Period or Quarter High Low
----------------- -------------
<S> <C> <C>
First Quarter 1998............................................ $ 9.38 $ 5.63
Second Quarter 1998........................................... 6.56 1.84
Third Quarter 1998............................................ 2.94 .69
Fourth Quarter 1998........................................... 1.06 .22
January 1, 1999 through March 22, 1999........................ .50 .13
</TABLE>
A 1-for-15 reverse stock split was effectuated on June 16, 1998 to raise the
per share price of our common stock and to increase the number of shares
available for issuance. All dollar amounts in the above table have been
revised to reflect the reverse stock split.
Since our common stock was de-listed on March 22, 1999 from Nasdaq SmallCap
Market, our common stock has been traded over-the-counter under the symbol
"PUTT." The following table sets forth the quarterly high and low sales prices
per share of our common stock reported on the over-the-counter market since
March 23, 1999:
<TABLE>
<CAPTION>
Closing Price
Per Share
--------------
Period or Quarter High Low
----------------- ------- ------
<S> <C> <C>
March 23, 1999 through March 31, 1999......................... $ .22 $.13
Second Quarter 1999........................................... .17 .09
Third Quarter 1999............................................ .14 .09
Fourth Quarter 1999........................................... .45 .09
January 1, 2000 through February 16, 2000..................... 1.13 .14
</TABLE>
On February 16, 2000, the last reported sales price of our common stock on
the over-the-counter market was $.69 per share.
On February 16, 2000, we had 5,685 shares of convertible preferred stock
outstanding. This convertible preferred stock has a liquidation value of
$1,000 per share. The holders of the convertible preferred stock are entitled
to 18% cumulative dividends payable quarterly. Since the convertible preferred
stock carries rights to cumulative 18% dividends, dividends that are not paid
accrue. During 1999 and 1998, we accrued $1,000,000 and $730,000,
respectively, in dividends payable. We would be required to pay these accrued
dividends before any dividends are allowed to be paid on our common stock. Our
charter allows the holders of the convertible preferred stock to convert their
shares into shares of our common stock by dividing $1,000 per share of
convertible preferred stock by the "conversion price." The "conversion price"
is a formula based on the lesser of $10.50 or 75% of the average closing price
during the 10 trading-day period prior to conversion.
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<PAGE>
We have offered to issue approximately 52.7 million shares of our common
stock to existing security holders in exchange for all of our outstanding
convertible preferred stock. As of February 25, 2000, the holders of all of
our convertible preferred stock have accepted this offer. We currently expect
to issue these shares on, or within 10 business days after, the date we have
filed this Annual Report on Form 10-KSB.
Sales of Unregistered Securities
The following sets forth all of our sales of unregistered securities during
1998 and 1999:
<TABLE>
<CAPTION>
Brief description of the purchaser
Date Securities and the consideration therefor
- ------------------------ ------------------------------- -------------------------------------
<S> <C> <C>
January 1, 1998 4,020 shares of preferred Issuance of convertible preferred
to June 30, 1998 stock stock
January 1, 1998-- 457,402 shares of common Issuance of common stock for
December 31, 1998 stock conversions
of convertible debentures
January 1, 1998-- 46,429 shares of common Conversions of preferred stock
December 31, 1998 stock
January 16, 1998 50,000 shares of common Issuance of common stock for funding
stock related to acquisition of Parcel 11
at World Golf Village
February 19, 1998 94,304 shares of common Issuance of common stock for exercise
stock of warrants under convertible
debentures.
April 3, 1998 53,333 shares of common Issuance of common stock for
stock acquisition
of Miller Golf
April 20, 1998 10,000 shares of common Issuance of common stock for
stock acquisition
of Talisman Tools
May 4, 1998 1,933 shares of common Issuance of stock for right of first
stock refusal
on possible land acquisition
July 14, 1998-- July 31, $1.5 million of our notes Issuance of notes under private
1998 placement
July 30, 1998 500,000 shares of common Issuance of common stock under
stock private placement
October 30, 1998 354,463 shares of common Issuance of common stock for
stock acquisition of possible joint venture
January 1, 1999-- 1,293,601 shares of common Conversions of preferred stock
December 31, 1999 stock
February 11, 1999 400,000 shares of common stock Issuance of common stock in
settlement of litigation
August 24, 1999 7,650,000 shares of common Issuance of common stock in
stock settlement of litigation
October 1, 1999-- $1.68 million of OrbitTravel Issuance of notes under private
December 31, 1999 convertible notes placement
</TABLE>
We believe that we took reasonable steps to ensure that each of the offerees
in these transactions were accredited investors under Rule 501 of the
Securities Act.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with
the consolidated financial statements for 1997, 1998 and 1999 included in this
Annual Report on Form 10-KSB and in our Annual Report on Form 10-KSB for the
year ended December 31, 1997.
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<PAGE>
Overview and Background
We were incorporated in Delaware on November 12, 1991 under the name
"Longview Golf Corporation." We changed our name to "Brassie Golf Holdings,
Ltd." on September 18, 1992, and then again, on March 29, 1993, to "Brassie
Golf Corporation." On June 2, 1998, we changed our name to "Divot Golf
Corporation."
By mid 1997, we owned four golf courses and managed more than 20 others.
Through April 1998, we were engaged in acquiring, designing, constructing,
operating and managing private, semi-private and public golf courses in the
United States. We were also focused on business opportunities in the World
Golf Village resort. The World Golf Village is a destination golf resort
located near Jacksonville, Florida.
Due to labor and capital intensive programs associated with golf courses and
the poor operating results of our golf course ownership, design, and
management activities, we decided to refocus our business strategy. We elected
to continue our efforts in the World Golf Village. But instead of focusing on
the ownership, design, and management of golf courses, we decided to focus on
developing, licensing, and marketing of golf-related products and services. In
July 1997, we sold the division responsible for managing the third party-owned
golf courses. In August 1997, we sold our golf course design subsidiary. From
November 1997 through April 1998, we sold the golf courses we owned.
To implement our new strategic focus, in April 1998 we acquired three golf-
related products companies, Divot Golf Corporation, Miller Golf, Inc. and
Talisman Tools Incorporated. After defaulting on a newly obtained line of
credit with Citizens Bank in February 1999, third parties foreclosed on our
Miller Golf assets after Citizens Bank sold the notes to such third parties.
In addition, we wrote off the newly acquired Divot Golf and Talisman Tools
assets as of December 31, 1998. As a result of our poor operating performance
in the golf industry and perceived opportunities in the e-commerce industry,
we have ceased our operations as a golf related products and services company
and are repositioning ourselves as a value added services provider
specializing in e-commerce applications and providing essential distribution
services and on-line marketing solutions to the travel industry worldwide.
Recent Developments
Acquisition Activity. On October 5, 1999, Orbit Network publicly issued a
press release stating that we had announced that we had signed a definitive
merger agreement to acquire Orbit Network in a stock for stock exchange.
However, upon completion of our due diligence review of Orbit Network, we and
Orbit Network mutually agreed to cancel this merger agreement and agreed to
enter into the transactions we discuss below.
We entered into a right to use agreement with Orbit Network as of November
1, 1999 pursuant to which we paid $500,000 in cash for a six-month right to
use and operate Orbit Network's GDS contracts with Amadeus, Sabre, Galileo and
World Span, its services agreement with AOL and related furniture and
equipment. As part of this right to use agreement,we operate the "TravelFile"
website that provides travel suppliers and Internet users travel planning
services. We are entitled under the right to use agreement to retain any
revenues for a six-month period that may be generated from the GDS and
ancillary contracts. Also, as part of the right to use agreement, we paid
$100,000 (included in the $500,000 paid on November 1, 1999) for an option
(exercisable in our sole and absolute discretion) to purchase in Orbit
Network's rights under the GDS and ancillary contracts and related furniture
and equipment for the assumption of $5.1 million of Orbit Network debt. This
purchase option expires on May 1, 2000, unless extended by us for an
additional six months. We cannot assure you that we will exercise this
purchase option or that we will otherwise acquire the GDS and ancillary
contracts and related furniture and equipment nor can we assure you that, if
we do not acquire the GDS and ancillary contracts and related furniture and
equipment, that we will be able to extend the term of the right to use
agreement. See "Description of Business -- Risk Factors -- We may be unable to
implement our acquisition growth strategy, which would have an adverse effect
on our business and competitive industry."
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<PAGE>
On November 17, 1999, our wholly owned subsidiary, OrbitTravel.com, Inc.,
entered into a joint venture agreement with Web Travel Systems, Ltd., a wholly
owned subsidiary of British Airways, pursuant to which we and Web Travel
Systems formed Bonveno.com, Ltd. We each own a 50% interest in Bonveno.
Bonveno is intended to be a European-based online travel information and
reservation system for the distribution of travel-related information and
services to European travel product providers and the traveling public. Also
on November 17, 1999, OrbitTravel entered into an operational agreement with
Bonveno pursuant to which we would provide technical support, licenses and
technical maintenance, a software development agreement pursuant to which we
would develop software applications, and a management agreement which sets
forth an operational management structure, marketing policy, content sharing
and product distribution policy for our joint venture.
On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by David Noosinow, one of our directors and executive
officers, entered into an asset purchase agreement with Mark Savoretti
pursuant to which Spartan Capital agreed to acquire the intellectual property
assets related to the TravelFile website previously owned by Orbit Network for
$600,000 in cash and the issuance of 3.0 million shares of our common stock.
Mr. Savoretti, a creditor of Orbit Network, acquired these assets from Orbit
Network through a judicial foreclosure proceeding on January 13, 2000 after
Orbit Network failed to pay $771,000 owed to Mr. Savoretti. Immediately upon
execution of this asset purchase agreement, Spartan Capital Management, LLC
assigned all of its rights and obligations under the agreement to us for $10.
One of the obligations assigned is an obligation to enter into consulting
agreements with Mr. Savoretti and another person, under which we would pay a
total of $450,000 over three years. We thereafter acquired the intellectual
property assets related to the TravelFile website directly from Mr. Savoretti
in exchange for $60,000 in cash, a note payable in the amount of $540,000 and
3.0 million shares of common stock, which would represent approximately 0.4%
of our common stock assuming all of the transactions described in this Annual
Report are consummated.
On February 24, 2000, we executed a non-binding letter of intent to acquire
from AnimInet, Inc. intellectual property assets related to AnimInet's 3-D
Internet asset for approximately 473.9 million shares of our common stock,
which would represent approximately 52.6% of our common stock assuming all of
the transactions described in this Annual Report are consummated. These
intellectual property assets primarily include the software being developed by
AnimInet to create "Streaming Intelligent Beings," which are digital 3D
computerized personalities that would communicate directly with Internet
users. AnimInet is a corporation formed solely by Dean Miller, one of our
executive officers. We currently expect the stockholders of Orbit Network, who
are each accredited investors under Rule 501 of the Securities Act, to
individually purchase all of AnimInet's common stock. This letter of intent is
subject to the execution of a definitive agreement and customary due
diligence. We currently do not have a sufficient number of authorized and
unissued shares available under our charter to consummate such an acquisition.
Although we currently expect to ask our shareholders to approve a reverse
stock split on an up to 20-for-1 basis, we cannot assure you that we would be
successful in obtaining such approval. This letter of intent is subject to the
execution of definitive agreements and customary due diligence. We cannot
assure you that this acquisition will be consummated or that it will be
consummated on the terms set forth in the letter of intent. See "Description
of Business -- Risk Factors -- We may be unable to implement our acquisition
growth strategy, which would have an adverse effect on our business and
competitive position in the industry."
On January 31, 2000, we entered into an agreement with Wilhelmina Artist
Management LLC pursuant to which we would acquire all of the outstanding
common stock of its wholly owned subsidiary, WilhelminaTravelFile.com, in
exchange for approximately 80.0 million shares of our common stock, which
would represent approximately 9.0% of our common stock assuming all of the
transactions described in this Annual Report are consummated. We believe that
Wilhelmena is one of the world's leading talent management agencies.
Wilhelmina and WilhelminaTravelFile.com have entered into an exclusive license
pursuant to which WilhelminaTravelFile would showcase Wilhelmena-provided
content through an Internet website dedicated to travel information and
services. We expect that Wilhelmena models and other celebrities would act as
on-screen hosts for travel destinations providing travel tips and inside
information, offering special promotions and branded
26
<PAGE>
product offerings. Unless the transaction has closed, either party may
terminate the Wilhelmina agreement at any time after February 15, 2000. We
cannot assure you that we will be able to consummate this acquisition. We
currently do not have a sufficient number of authorized and unissued shares
available under our charter to consummate such an acquisition. Although we
currently expect to ask our stockholders to approve a reverse stock split on
an up to 20-for-1 basis, we cannot assure you that we would be successful in
obtaining such approval. See "Description of Business -- Risk Factors -- We
may be unable to implement our acquisition growth strategy, which would have
an adverse effect on our business and competitive position in the industry."
On January 9, 2000, OrbitTravel.com, our wholly owned subsidiary, executed a
content distribution agreement with AsiaGateway.com, Ltd. Under the terms of
this agreement, we were required to issue 200,000 shares of our common stock
30 days from the execution date of this agreement. As of February 16, 2000,
since we have not issued such shares, either party may terminate this
agreement. Assuming consummation of this transaction, Asiagateway.com would
act as our distribution, marketing and sales partner for the Asian region.
Asiagateway.com is a provider of commerce, community and content for the Asian
marketplace. Content produced and compiled by Asiagateway.com would be
integrated into our online travel services. Our online travel services, in
turn, would be featured in Asiagateway.com.
On February 7, 2000, OrbitTravel.com, our wholly owned subsidiary, executed
a three-year consulting services agreement and joint content agreement with
Laspata/Decaro Studio Corporation, an organization of designers and
photographers, pursuant to which Laspata/Decaro would provide us with media
consulting services regarding brand building and promotion. In addition,
Laspata/Decaro would contribute their library of destination images,
photography and other content for use within our TravelFile service. We also
expect LaSpata/Decaro to assist us in the creation of new video, multi-media,
and rich-media content for our online services. We are required to issue under
the agreement 2.5 million shares of our common stock vesting in equal annual
installments over the three-year term of the agreement, which would represent
approximately 0.3% of our common stock assuming all of the transactions and
issuances described in this Annual Report are consummated. In addition, we
would issue to Laspata/Decaro an additional 100,000 shares upon
Laspata/Decaro's completion of each of the following tasks: (1) the
development and implementation of a promotion and marketing plan; and (2) the
provision of additional proprietary content and the implementation of an
agreed-upon operations strategy.
Financing Activity. On February 15, 2000, Teakwood Ventures, LLC, an
accredited investor under Rule 501 of the Securities Act, agreed to fund up to
$10 million pursuant to a funding commitment letter and subscription agreement
whereby Teakwood Ventures agreed to purchase: (1) 11,223,334 shares of our
common stock at $0.1782 per share on or before March 30, 2000; (2) 11,223,334
shares of our common stock at $0.1782 per share on or before June 30, 2000;
and (3) 18,856,065 shares of our common stock at $0.3182 per share on or
before September 30, 2000. Teakwood Ventures' agreement to purchase our common
stock on these varying dates is subject to several conditions, including the
condition that the shares to be issued to Teakwood Ventures must be freely
tradeable. We cannot assure you that these conditions will be met. Therefore,
we cannot assure you that we will consummate all or part of this transaction.
In addition, if our total equity market capitalization is less than $200
million on any of the dates that Teakwood Ventures purchases our shares of
common stock, we have agreed to proportionally reduce the per share price of
the common stock to be purchased by Teakwood Ventures. For example, if our
total equity market capitalization is $100 million on September 30, 2000, the
purchase price per share would be $0.1591 and we would consequently be
required to issue 37,712,130 shares to Teakwood Ventures. In addition, our
agreement with Teakwood Ventures requires that we appoint two directors who
are nominated by Teakwood Ventures to our board.
Since the end of 1999, we have issued or agreed to issue approximately 113.8
million shares of common stock for no cash consideration to various executive
officers, employees, consultants and other third parties. A portion of these
shares have been issued or will be issued to settle various disputes and
contingent liabilities. See "Legal Proceedings." We have issued, or expect to
issue, these shares in a series of unrelated registered and private offerings.
See "Description of Business -- Further issuances and sales into the market of
up to an additional 166.5 million shares of our common stock will dilute our
current stockholders and may depress the market price of our common stock."
27
<PAGE>
In addition, we have offered to issue approximately 52.7 million additional
shares of our common stock to existing security holders in exchange for all of
our outstanding convertible preferred stock and convertible debt, other than
the notes that OrbitTravel.com, our wholly owned subsidiary, has issued. As of
February 25, 2000, the holders of all of our convertible preferred stock and
all of our convertible debt have accepted this offer. We currently expect to
issue these shares within 10 business days after the date we have filed this
Annual Report on Form 10-K. "See Description of Business--Risk Factors--
Further issuances and sales into the market of up to an additional 166.5
million shares of our common stock will dilute our current stockholders and
may depress the market price of our common stock.
Since its inception on October 6, 1999, our wholly owned subsidiary,
OrbitTravel.com, has issued approximately $2.78 million of debt that is
convertible into approximately 5.6 million shares of our common stock.
However, we currently expect to exchange these notes for approximately 61.0
million shares of our common stock. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations-- Liquidity and Capital
Resources."
On January 9, 2000, OrbitTravel executed an exclusive content distribution
agreement with AsiaGateway. Under the terms of this agreement, we were
required to issue 200,000 shares of our common stock 30 days from the
execution date of this agreement. As of February 16, 2000, since we had not
issued such shares, either party may terminate this agreement.
We currently expect to ask our stockholders to approve a reverse stock split
on a 20-for-1 basis. We cannot assure you that we will be successful in
obtaining such approval. See "--Liquidity and Capital Resources" for a table
setting forth our expected capitalization assuming all of the transactions and
issuances described in this Annual Report are consummated and we effect a
reverse stock split on an up to 20-for-1 basis.
Results of Operations
During 1998, we derived our revenues primarily from golf-related products
and services. As a result of our agreement with Orbit Network pursuant to
which we have licensed Orbit Network's GDS contracts since November 1, 1999,
we have derived fee revenues for use of the TravelFile website. Because of
this transition, we believe that period-to-period comparisons may not be
meaningful. The period-to-period change in each of our revenue categories is
as follows:
Comparison of 1999 to 1998
Revenues. Revenues in 1998 consisted solely of the sale of golf-related
equipment and accessories. Revenues in 1999 consisted solely of the Internet
related revenues generated under Orbit Network's GDS contracts that we have
licensed under a right to use agreement from Orbit Network since November 1,
1999. Revenues decreased by $5,906,123, or 98%, from $6,036,983 in 1998 to
$130,860 in 1999. We discontinued our golf-related equipment and accessories
business in December 1998 and did not have any business operations until the
commencement of our Internet business on November 1, 1999.
Operating Expenses. Operating expenses in 1998 consisted of $3,841,147 of
golf-related costs, $6,715,625 of general and administrative expenses and
$270,844 of depreciation and amortization expense. Operating expenses in 1999
consisted of costs of Internet related revenues of $487,812, $5,951,452 of
general and administrative costs and $5,986 of depreciation and amortization
expense. Operating expenses decreased by $4,382,366, or 40%, from $10,827,616
in 1998 to $6,445,250 in 1999. This decrease was due to the fact that in 1998
we discontinued our golf related equipment and accessories business.
Other Expenses. Other expenses in 1998 consisted of $6,958,750 of expense
for loss on investments, including the losses incurred on the foreclosures of
Miller Golf and the properties held at the World Golf Village. Interest
expense and amortization of debt discount totalled $3,471,485 and litigation
settlement expense was $740,004. In addition, we wrote off substantially all
our costs incurred in pursuit of business ventures in the golf industry. These
expenses were offset by a $523,799 gain on sale of golf course and $135,755 of
interest income. Other expenses in 1999 consisted of $982,917 related to the
settlement of litigation and $230,211 related to other costs incurred in
closing the corporate offices in Tampa, FL. In addition, interest expense
totalled $167,824.
28
<PAGE>
Other expenses decreased by $9,835,902, or 88%, from $11,216,294 in 1998 to
$1,380,392 in 1999. This decrease was due to the discontinuance of the golf-
related equipment and accessories business in December 1998.
Net Loss. Net loss decreased by $8,312,145, or 52%, from $16,006,927 in 1998
to $7,694,782 in 1999.
Comparison of 1998 to 1997
Revenues. Revenues in 1997 consisted of golf revenues, management and design
fees and resident membership. Revenues in 1998 consisted of the sale of golf-
related equipment and accessories. Revenues increased by $1,943,384, or 47%,
from $4,093,599 in 1997 to $6,036,983 in 1998. We discontinued our golf-
related equipment and accessories business in December 1998 and did not have
any business operations until the commencement of our Internet business on
November 1, 1999.
Operating Expenses. Operating expenses in 1997 consisted of golf course
operating and related expenses of $2,384,901, general and administrative
expenses of $3,090,713 and depreciation and amortization expense of $871,222.
Operating expenses in 1998 consisted of $3,841,147 of golf-related costs,
$6,715,625 of general and administrative expenses and $270,844 of depreciation
and amortization expense. Operating expenses increased by $4,167,409, or 63%,
from $6,660,207 in 1997 to $10,827,616 in 1998. This increase was due to the
compensation expenses incurred as part of the settlements with executive
officers.
Other Expenses. Other expenses in 1997 consisted of interest expense, loss
on investments and amortization of debt discount on convertible debentures.
Other expenses in 1998 consisted of interest expense of $635,926, loss on
investments, including write downs of assets in business ventures and golf-
related business of $7,664,359 and litigation settlement expenses of $740,004.
This was partially offset by the gain of $523,799 on the sale of a golf course
and interest income of $135,755. Other expenses increased by $7,795,868, or
228%, from $3,420,426 in 1997 to $11,216,294 in 1998. This increase was due to
the amortization of debt discount on convertible debentures and the losses
incurred on foreclosure and write-off of investments in the golf-related
equipment and accessories business discontinued in December 1998.
Net Loss. Net loss increased by $10,019,893, or 167%, from $5,987,034 in
1997 to $16,006,927 in 1998.
Liquidity and Capital Resources
Capitalization. Our charter authorizes the issuance of 200.0 million shares
of common stock and 1.0 million shares of preferred stock. As of February 16,
2000, we had approximately 13.8 million shares of common stock outstanding. In
addition, as of such date, we had approximately 5,685 shares of preferred
stock outstanding that are convertible into 42.6 million shares of common
stock, $1.5 million of notes outstanding (other than the OrbitTravel notes)
that are convertible into 10.1 million shares of common stock. In addition, as
of February 16, 2000, OrbitTravel had issued $2.78 million of notes
convertible into 5.6 million shares. However, we currently expect to exchange
these notes for approximately 61.0 million shares of our common stock.
We have offered to issue approximately 52.7 million shares of our common
stock to existing securityholders in exchange for all of our outstanding
convertible preferred stock and convertible debt, other than the notes that
OrbitTravel has issued. As of February 25, 2000, the holders of all of our
convertible preferred stock and all of our convertible debt have accepted this
offer. We currently expect to issue these shares within 10 business days after
the date we have filed this Annual Report on Form 10-KSB.
Since the end of 1999, we have issued or agreed to issue an additional 113.8
million shares of common stock for no cash consideration to various executive
officers, employees, consultants and other third parties. A portion of these
shares have been issued or will be issued to settle various disputes. See
"Legal Proceedings." We have issued, or expect to issue, these shares in a
series of unrelated registered and private offerings. See "Description of
Business--Risk Factors--Future issuances and sales into the market of up to an
additional 166.5 million shares of our common stock will dilute our current
stockholders and may depress the market price of our common stock."
On February 15, 2000, we and Teakwood Ventures, LLC, an accredited investor
under Rule 501 of the Securities Act, executed a funding commitment letter and
subscription agreement pursuant to which Teakwood
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<PAGE>
Ventures agreed to purchase: (1) 11,223,334 shares of our common stock at
$0.1782 per share on or before March 30, 2000; (2) 11,223,334 shares of our
common stock at $0.1782 per share on or before June 30, 2000; and (3)
18,856,065 shares of our common stock at $0.3182 per share on or before
September 30, 2000. Teakwood Ventures' agreement to purchase our common stock
on these varying dates is subject to several conditions, including the
condition that the shares to be issued to Teakwood Ventures must be freely
tradeable. We cannot assure you that these conditions will be met. Therefore,
we cannot assure you that we will consummate all or part of this transaction.
In addition, if our total equity market capitalization is less than $200
million on any of the dates that Teakwood Ventures purchases our shares of
common stock, we have agreed to proportionally reduce the per share price of
the common stock to be purchased by Teakwood Ventures. For example, if our
total equity market capitalization is $100 million on September 30, 2000, the
purchase price per share would be $0.1591 and we would consequently be
required to issue 37,712,130 shares to Teakwood Ventures.
You should carefully review our consolidated financial statements and the
accompanying notes for a more complete discussion of our capitalization.
Current and Future Liquidity Needs. We have not generated net cash from
operations for any period since 1996. We have primarily financed our
operations since 1996 through private sales of equity and debt securities. As
of January 31, 2000, our principal source of liquidity was approximately
$456,000 in cash. We estimate that monthly operational cash requirements are
approximately $300,000. As part of our monthly operational cash requirements,
we are obligated to pay an aggregate of approximately $92,000 to our executive
officers under the terms of their employment agreements. In addition, as
discussed below, we have significant short-term financing cash requirements.
We currently do not have sufficient funds to meet our current cash and
financing needs beyond February 29, 2000 nor do we expect to generate
sufficient cash from operations to meet these needs. We cannot assure you that
we will be able to obtain funds to finance our current cash and financing
needs on acceptable terms, if at all. In addition, any increases in
anticipated expenses would further strain our liquidity and capital resources.
We must raise additional capital from public or private equity or debt sources
in order to finance operating losses, anticipated growth and contemplated
capital expenditures. If such sources of financing are insufficient or
unavailable, we will be required to modify our operating plans in accordance
with the extent of available funding. We may not be able to raise any such
capital on acceptable terms or at all. Further, we cannot assure you that we
will be able to raise sufficient capital to continue our operations. If we
cannot continue our operations, we may be forced to discontinue our business
and liquidate our assets.
All of the notes that have been issued by OrbitTravel.com mature six months
from the date of issuance. Approximately $500,000 of these notes will mature
on March 29, 2000. We cannot assure you that we will have sufficient capital,
or be able to raise sufficient capital, to repay our obligations under these
notes nor can we assure you that we would be successful in extending the
maturity dates of these notes. All of the notes that have been issued by
OrbitTravel.com are convertible into shares of our common stock at a
conversion price of $.50 per share. However, when OrbitTravel issued these
notes, we were contemplating consummating a merger with Orbit Network. The
stated conversion price of $.50 assumed that we had effected a
recapitalization of our common stock in connection with such a merger. Upon
completion of our due diligence review of Orbit Network, we and Orbit Network
mutually agreed to cancel our merger agreement and agreed to enter into the
other transactions we discuss in this Annual Report on Form 10-KSB.
Consequently, in order to ensure that the purchasers of the OrbitTravel notes
receive the same proportion of our shares of common stock that they would have
received had we effected a recapitalization of our common stock, we currently
expect to offer to exchange such holders' notes for shares of common stock
based on an exchange ratio of $.0455. Thus, instead of issuing approximately
5.6 million shares upon conversion of these notes, we expect to exchange these
notes for approximately 61.0 million shares. The issuance of any shares of our
common stock upon conversion of these OrbitTravel notes could result in
dilution in net tangible book value to our current stockholders.
In addition, we cannot assure you that we will have sufficient capital to
pay the $636,000 that we are required to pay as of February 16, 2000 under
various settlement agreements with employees, former employees and other
creditors. See "Legal Proceedings" and "Certain Relationships and Related
Party Transactions."
30
<PAGE>
On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by David Noosinow, one of our directors and executive
officers, entered into an asset purchase agreement with Mark Savoretti
pursuant to which Spartan Capital agreed to acquire the intellectual property
assets related to the TravelFile website previously owned by Orbit Network for
$60,000 in cash, a note payable in the amount of $540,000 and the issuance of
3.0 million shares of our common stock. Mr. Savoretti, a creditor of Orbit
Network, acquired these assets from Orbit Network through a judicial
foreclosure proceeding on January 13, 2000 after Orbit Network failed to pay
$771,000 owed to Mr. Savoretti. Immediately upon execution of this asset
purchase agreement, Spartan Capital assigned all of its rights and obligations
under the agreement to us for $10. One of the obligations assigned is an
obligation to enter into consulting agreements with Mark Savoretti and another
person, under which we would pay a total of $450,000 over three years. We
thereafter acquired the intellectual property assets related to the TravelFile
website directly from Mr. Savoretti in exchange for $60,000 in cash, a note
payable in the amount of $540,000 and 3.0 million shares of the Company's
common stock, which would represent approximately 0.4% of our common stock
assuming all of the transactions and issuances described in this Annual Report
are consummated. On the date of closing, we paid Mr. Savoretti $60,000 and
executed a promissory note in the amount of $540,000. This note is payable in
cash upon the effective date of any registration statement of ours registering
any of our common stock under the Securities Act. We cannot assure you that we
will be able to raise sufficient capital, on acceptable terms or otherwise, to
satisfy our obligations under Mr. Savoretti's note.
On February 24, 2000, we executed a non-binding letter of intent to acquire
from AnimInet, intellectual property assets related to AnimInet's 3-D Internet
asset for approximately 473.9 million shares of our common stock, which would
represent approximately 52.6% of our common stock assuming all of the
transactions and issuances described in this Annual Report are consummated.
These intellectual property assets primarily include the software being
developed by AnimInet to create "Streaming Intelligent Beings," which are
digital 3D computerized personalities that would communicate directly with
Internet users. AnimInet is a corporation formed solely by Dean Miller, one of
our executive officers. We currently expect the stockholders of Orbit Network,
who are each accredited investors under Rule 501 of the Securities Act, to
individually purchase all of AnimInet's common stock. This letter of intent is
subject to the execution of a definitive agreement and customary due
diligence. We cannot assure you that this acquisition will be consummated or
that it will be consummated on the terms set forth in the letter of intent. We
currently do not have a sufficient number of authorized and unissued shares
available under our charter to consummate such an acquisition. Although we
currently expect to ask our stockholders to approve a reverse stock split on
an up to 20-for-1 basis, we cannot assure you that we would be successful in
obtaining such approval.
On January 31, 2000, we entered into an agreement with Wilhelmina Artist
Management LLC pursuant which we would acquire all of the outstanding common
stock of WilhelminaTravelFile.com in exchange for approximately 80.0 million
shares of our common stock, which would represent appproximately 9.0% of our
common stock assuming all of the transactions and issuances described in this
Annual Report are consummated. Unless the transaction has closed, either party
may terminate the Wilhelmina agreement at any time after February 15, 2000. We
cannot assure you that we will be able to consummate this acquisition. We
currently do not have a sufficient number of authorized and unissued shares
available under our charter to consummate such an acquisition. Although we
currently expect to ask our stockholders to appove a reverse stock split on an
up to 20-for-1 basis, we cannot assure you that we would be successful in
obtaining stockholder approval for any such actions.
31
<PAGE>
The following table sets forth the beneficial ownership of our common stock
assuming all of the transactions and issuances described in this Annual Report
are consummated.
<TABLE>
<CAPTION>
Number of
Shares Owned
Number of After
Shares Owned Reverse Percent
Before Reverse Stock Split of All
Name/Category of Stockholder Stock Split of 20 to 1 Shares
- ---------------------------- -------------- ------------ -------
<S> <C> <C> <C>
Current stockholders (1).................. 13,753,642 687,682 1.6%
Officers and directors (2)................ 46,797,374 2,339,869 5.3
Other future recipients................... 119,753,749 5,987,687 13.5
AnimInet.................................. 473,928,276 23,696,414 53.5
Orbit Travel noteholders (3).............. 109,890,110 5,494,506 12.4
Wilhelmina Artist......................... 80,000,000 4,000,000 9.0
Teakwood Ventures, LLC.................... 41,302,733 2,065,136 4.7
----------- ---------- ----
Total................................. 885,425,884(4) 44,271,294 100%
=========== ========== ====
</TABLE>
- --------
(1) As of February 16, 2000. Includes 2.5 million shares issued to Mr.
Dollinger, our General Counsel, as part of the settlement of litigation in
which he served as plaintiff's counsel.
(2) Excludes 2.5 million shares issued to Mr. Dollinger as part of the
settlement of litigation in which he served as plaintiff's counsel.
(3) Assumes the exchange of all of the OrbitTravel notes based on an exchange
ratio of $.0455 per share. Includes shares of common stock that will be
offered in exchange for an additional $2.2 million of debt that we expect
to issue.
(4) We currently expect that if we exercise our option to purchase the GDS and
ancillary contracts from Orbit Network for the assumption of approximately
$5.1 million in Orbit Network debt, we will exchange that debt for
approximately 137.4 million shares of our common stock. We cannot assure
you that we will exercise our option, or if we do exercise our option,
that we will exchange the debt for shares. This number in the table
excludes any shares that may be issued in an exchange.
ITEM 7. FINANCIAL STATEMENTS
See page F-1 of the financial reported included in this Annual Report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth information regarding our executive officers
and directors:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Joseph R. Cellura.............. 45 Chairman of the Board of Directors and
Chief Executive Officer
Douglas R. Dollinger........... 44 General Counsel and Director
David A. Noosinow.............. 40 President and Director
Clifford F. Bagnall............ 45 Chief Financial Officer
Dean E. Miller................. 42 Vice President of Sales
</TABLE>
Joseph R. Cellura has served as our Chairman of the Board of Directors and
Chief Executive Officer since June 1999. Mr. Cellura previously served as our
Chairman of the Board of Directors and Chief Executive Officer from June 1997
until February 1999. During the interim period between serving as our Chairman
of the Board of Directors and Chief Executive Officer, Mr. Cellura
independently sought different business opportunities for us. Mr. Cellura
originally joined us as a result of our acquisition of Divot Corporation and
Divot Development Corporation. Mr. Cellura had served as an executive officer,
and owned a majority interest of the common stock, of Divot Corporation since
1989 and of Divot Development Corporation since 1994. Prior to his coming to
work with the company, Mr. Cellura had been involved in varied and
progressively more responsible positions throughout his career with extensive
travel experience throughout the USA, Europe and Asia. Mr. Cellura is
recognized for his vision, creativity, marketing, and management leadership,
in addition to several challenging turn around strategies which have provided
experience and knowledge in legal stratagem and capital markets. During the
period 1976-1992, Mr. Cellura had a successful career in investment banking
and the financial industry with Shearson & Kidder Peabody & Co. Mr. Cellura
attended the University of New York.
Dean E. Miller has served as our Vice President since January 5, 2000. Mr.
Miller previously served as our President from September 1, 1999 through
October 31, 1999 and as a director from August 23, 1999 through January 5,
2000. In addition to his duties with us, Mr. Miller is the president and sole
owner of AnimInet, Inc. We have entered into an agreement to purchase
AnimInet's 3D animation asset. See "Certain Relationships and Related
Transactions." Before joining us, Mr. Miller served as Vice President of Sales
and Corporate Marketing at Hitachi PC. Before joining Hitachi PC, Mr. Miller
worked in various capacities in the personal computer industry.
Douglas R. Dollinger has served as our Corporate Counsel since December 1,
1999 and as a Director since July 1999. Before joining us, Mr. Dollinger was
engaged in the private practice of law. Mr. Dollinger received his law degree
from the City University of New York at Queens College in 1988.
David A. Noosinow has served as our Secretary, and Director, since January
5, 2000 and, since February 1, 2000 is also serving as our President. Since
January 1997, Mr. Noosinow has been the Executive Director of Spartan Capital
Management, LLC. Mr. Noosinow brings to the organization over 15 years of
experience in the financial industry. Previously, Mr. Noosinow was the sole
proprietor and executive director of Spartan Capital Management, LLC, an
investment banking consulting company. Prior to forming Spartan Capital, Mr.
Noosinow had a career in the investment banking industry as Senior Vice
President with Prudential Securities, as Vice President with CS First Boston,
and as Associate Director with Bear Stearns & Company, Inc. Mr. Noosinow holds
a Bachelor's Degree in Business Administration from Northern Arizona
University, with a major in Finance.
Clifford F. Bagnall has served as our Chief Financial Officer since October
1998. Mr. Bagnall also served as a director from September 1997 through
January 5, 2000 and as our Chief Operating Officer from September 1997 through
January 5, 2000. Before joining us, Mr. Bagnall served as an independent
financial and operational consultant for various public and private companies.
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<PAGE>
Each of our directors and executive officers are required to file with the
SEC, by a specified date, reports regarding his transactions involving our
common stock. To our knowledge, based solely on information furnished to us,
none of our directors and executive officers filed any such reports during
1999. We are not aware of any transactions involving our common stock by any
of our directors or executive officers.
Our financing arrangement with Teakwood Ventures described above under
"Description of Business--Recent Developments--Financing Activity" includes a
commitment for the addition of two Teakwood appointees to our five member
board of directors.
ITEM 10. EXECUTIVE COMPENSATION
Our directors have served without compensation for their services as
directors, but have been reimbursed for expenses incurred in connection with
their duties. It is anticipated that directors will continue to serve without
compensation (other than reimbursement of expenses). Other than the employment
contracts described below, we had no standard arrangements or policies for
compensation of our executives. The Board of Directors will, from time to
time, determine the compensation of our senior management in accordance with
our prevailing financial condition as the Board shall determine and provide
other incentives to promote successful management of our business. There were
no bonus, stock option or other incentive plans in effect for any level of
management as of the end of 1998 or 1999 except for our 1998 Incentive Stock
Option Plan and 1994 Stock Option Plan and performance bonuses included in the
employment agreement of Mr. Cellura as more fully described below.
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<PAGE>
The following table sets forth information with respect to compensation paid
to each of the persons who served as our Chief Executive Officer during 1998
and 1999. No other executive officer received compensation in excess of
$100,000 during 1998 or 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Securities
Compensation Underlying
---------------- Options All Other
Year Salary Bonus (#) Compensation
Name and Principal Position ---- -------- ------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Joseph R. Cellura............... 1999 $ 53,798 $ -- -- $155,362
Chief Executive Officer 1998 187,500 -- 333,333 199,000
1997 45,406 -- -- --
Jeremiah Daly................... 1999 $ -- $ -- -- $ --
Former Chief Executive Officer 1998 177,083 65,000 200,000 --
1997 18,750 -- -- --
Kenneth Craig................... 1999 $ -- $ -- -- $ 12,500
Former Chief Executive Officer 1998 -- -- -- 10,500
1997 -- -- -- --
James A. McNulty................ 1999 $ -- $ -- -- --
Former Chief Financial Officer 1998 104,323 -- 233,333 $ 48,500
1997 -- -- -- --
Clifford F. Bagnall............. 1999 $ -- $ -- -- $ 14,000
Chief Financial Officer 1998 142,552 65,000 200,000 --
1997 41,657 -- -- --
</TABLE>
Mr. Cellura served on our Board of Directors as our Chairman and Chief
Executive Officer from June 1997 until he resigned on February 16, 1999. On
February 17, 1999, the remaining members of the Board elected Jeremiah M.
Daly, another Board member and our then President, to serve as Chairman and
Chief Executive Officer. Mr. Daly resigned from all of those positions,
including as a member of our Board, effective April 28, 1999, at which time
our Board appointed Kenneth Craig to serve as President and Chief Executive
Officer. Mr. Craig was appointed Chairman on May 6, 1999. He was succeeded as
Chairman and Chief Executive Officer by Mr. Cellura on June 24, 1999. Mr.
Craig's service to us was terminated under a separation agreement, dated
September 1, 1999, which settled his claims that we wrongfully dismissed him
from his elected offices. See "Legal Proceedings."
All stock options that we have granted since our inception have been
forfeited. At the end of 1999, there were no unexercised options or stock
appreciation rights held by our executives which were outstanding.
Employment Contracts
We have entered into employment agreements with our executive management,
including a seven-year employment agreement with Mr. Cellura that was
effective as of June 24, 1999. Under our agreement with Mr. Cellura, we have
agreed to pay him an annual base salary of at least $250,000. We have also
agreed to
35
<PAGE>
reimburse Mr. Cellura approximately $9,000 per month to enable Mr. Cellura to
maintain an office and residence in New York City. In addition to these
amounts, we have agreed to pay Mr. Cellura an annual performance/incentive
bonus on the following terms:
<TABLE>
<CAPTION>
Mr. Cellura's
Our Fiscal Year Revenue Bonus
----------------------- ------------------
<S> <C>
$0 to $2.0 million........................................ 5% of base salary
$2.0 million to $5.0 million.............................. 15% of base salary
$5.0 million to $10.0 million............................. 30% of base salary
$10.0 million or greater.................................. 50% of base salary
</TABLE>
In addition to these revenue-based bonuses, we have agreed to pay Mr. Cellura,
Mr. Noosinow and Mr. Dollinger an aggregate bonus, to share ratably with each
other, equal to two percent of the gross proceeds that we receive in
connection with public and private equity and debt offerings. We have also
agreed to pay Mr. Cellura, Mr. Noosinow and Mr. Dollinger an aggregate bonus,
to share ratably with each other in the event a third party acquires us, equal
to five percent of the purchase price.
The employment agreement with Mr. Cellura also provides for the issuance of
5.0 million options to purchase shares of our common stock upon our adoption
of a new stock option plan, all of which will be immediately exercisable. Mr.
Cellura's employment agreement provides anti-dilution protection to Mr.
Cellura such that in the event we ever issue any additional shares at a price
less than the exercise price then in effect for the options granted to Mr.
Cellura, the exercise price of his options will be proportionately reduced. In
addition to requiring us to record compensation expense each time the exercise
price of his options is reduced, this provision could have the effect of
discouraging us from undertaking various financing transactions in the future
that may otherwise be in your best interest.
If we terminate Mr. Cellura's employment agreement without cause at any time
during the term of his seven-year employment agreement, we are required to
fulfill the following severance obligations:
(1) we must continue to reimburse Mr. Cellura after termination of his
employment for approximately $9,000 per month to enable Mr. Cellura to
maintain an office and residence in New York City for the balance of the
term of the agreement;
(2) in the event Mr. Cellura continues after termination of his
employment to hold options, warrants or other securities convertible into
our common stock, the exercise prices of such securities will be
proportionately reduced if we issue common stock at a price lower than the
exercise price then in effect for his convertible securities;
(3) we must pay Mr. Cellura a lump sum equal to the sum of the present
value of 100% of his base salary for the balance of the term of the
employment agreement;
(4) we must pay Mr. Cellura an additional lump sum equal to $1.25
million;
(5) we must execute a UCC-1 financing statement on behalf of Mr. Cellura
enabling him to record a lien against our assets to secure payment of the
$1.25 million severance payment;
In addition, regardless of whether or not we have previously terminated Mr.
Cellura's employment, if upon expiration of Mr. Cellura's seven-year
employment term, we elect not to offer Mr. Cellura an additional five-year
employment contract, we must pay him an additional lump sum of $900,000.
We may only avoid these severance obligations if we terminate Mr. Cellura's
employment for cause. In order for us to terminate Mr. Cellura's employment
for cause, we must follow the procedures set forth in his employment
agreement. We would be required to give Mr. Cellura 90 days' prior written
notice of his termination for cause. Mr. Cellura would have 90 additional days
to elect whether or not to object to his termination. If Mr. Cellura objects,
our board would be required to convene a special meeting within 30 days, at
which Mr. Cellura would have the right to attend, to review his objection and
determine whether or not sufficient evidence exists to terminate Mr. Cellura's
employment for cause. Mr. Cellura may again object to our board's
determination by filing a request for arbitration of this matter within 30
days of the board's determination. The
36
<PAGE>
arbitration would be required to take place within 60 days of notice of the
request. If Mr. Cellura objects to termination of his employment for cause,
Mr. Cellura would remain in his position as our chief executive officer, and
continue to receive amounts due to him under the employment agreement, until
the matter has been finally determined. This process could take up to 10
months. Even if we are successful in terminating Mr. Cellura's employment for
cause, if upon expiration of Mr. Cellura's seven-year employment term, we
elect not to offer Mr. Cellura an additional five-year employment contract, we
must pay him an additional lump sum of $900,000.
In addition to our employment agreement with Mr. Cellura, we have entered
into employment agreements with each of our other executive officers. We have
filed each of these agreements as an exhibit to this Annual Report on Form 10-
KSB. Our agreements with Messrs. Noosinow and Dollinger are substantially
similar to our agreement with Mr. Cellura except as follows: (1) Mr.
Noosinow's base salary is at least $225,000 and his severance payment upon
termination without cause would be $900,000; and (2) Mr. Dollinger's base
salary is at least $180,000 and his severance payment upon termination without
cause would be $900,000.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
We set forth below information regarding the beneficial ownership of our
common stock as of February 16, 2000 by each director, each executive officer,
all executive officers and directors as a group and each person known to us to
beneficially own more than 5% percent of our common stock. For purposes of
this table, we assume that the holders of all of our convertible debt and
convertible preferred stock (other than notes issued by OrbitTravel, our
wholly owned subsidiary) have accepted our offer to exchange such securities
for an aggregate of 52.7 million shares of our common stock and that we have
issued all 113.8 million shares of common stock for no cash consideration to
various executive officers, employees, consultants and other third parties.
See "Description of Business--Recent Developments--Financing Activity."
<TABLE>
<CAPTION>
Number of
Shares Percent
Beneficially of All
Name of Beneficial Owner Owned Shares (1)
- ------------------------ ------------ ---------
<S> <C> <C>
Joseph R. Cellura....................................... 27,333,333 15.2%
David A. Noosinow....................................... 6,000,000 3.3
Douglas R. Dollinger.................................... 6,300,000 3.5
Dean E. Miller.......................................... 4,264,041 2.4
Clifford F. Bagnall..................................... 5,400,000 3.0
All executive officers and directors
as a group (5 persons)................................. 49,297,374 27.4
</TABLE>
- --------
(1) Assumes 180,304,765 shares outstanding.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 15, 1998, we acquired the issued and outstanding capital stock of
Divot Golf Subsidiary, Inc., a Florida corporation, which was wholly owned by
Mr. Cellura. Mr. Cellura is our Chairman of the Board and Chief Executive
Officer. The purchase price was $500,000, payable $300,000 in cash and the
remainder in a promissory note. We delivered to the seller a good-faith, non-
refundable deposit of $300,000 in November 1997 which was applied toward the
purchase price. The note bore interest at a rate of 6% and provided for
quarterly payments of interest only. We repaid the note in full prior to
October 15, 1998. The assets of DGS included its name, patent and licensing
rights and molds for producing a divot repair tool.
On January 7, 1998, we loaned Mr. Cellura $65,388. This loan was originally
evidenced by an unsecured promissory note which bears interest at the rate of
6%. The terms of the loan require that it be repaid on or
37
<PAGE>
before June 30, 1998. Mr. Cellura did not participate in the Board's decision
to approve this loan. We believe that the terms of this loan were commercially
reasonable. We forgave this note payable and recorded the $65,388 as
compensation expense. We have also made advances to Mr. Cellura and to Divot
Development Corporation, a Florida corporation which is wholly-owned by Mr.
Cellura, in the total aggregate amount of $141,500. Effective December 31,
1999, these advances have been offset against certain accruals and payables to
Mr. Cellura or discharged as part of his settlement agreement.
In January and May of 1999, a group of our former stockholders and employees
and stockholders and employees of various companies that we acquired in April
1998, which formerly were controlled by Mr. Cellura, our chief executive
officer, filed three lawsuits in the United States District Court for the
Southern District of New York against us, these various acquired corporations,
Mr. Cellura and several of our other executive officers and stockholders. The
complaints alleged, among other things, that (1) we had failed to issue an
aggregate of 15.0 million shares of our common stock (such number of shares is
prior to the effect of a 15-for-1 reverse stock split effected with regard to
our common stock on June 2, 1998), (2) we and our officers committed fraud in
the issuance of securities, and (3) various breaches of contract. The parties
to the lawsuit entered into a settlement agreement as of June 29, 1999
pursuant to which the plaintiffs agreed to release the defendants from all of
the claims in the lawsuits in exchange for: (1) a note payable in the amount
of $225,000; (2) the issuance of 7.65 million shares of our common stock; and
(3) the assignment by Mr. Cellura of all of his rights, title or interest to
the profits generated from a few parcels of land in the World Golf Village.
Mr. Cellura assigned these rights to the plaintiffs on June 24, 1999. We
instructed our transfer agent to issue the 7.65 million shares of our common
stock in August 1999, and such shares were ultimately issued February 29,
2000. Jeremiah Daly, our former Chief Executive Officer, received 333,334
shares. Douglas Dollinger, a lawyer who filed the lawsuit on behalf of the
plaintiffs, received 2.5 million shares. Mr. Dollinger currently serves as our
General Counsel and is one of our directors. As of February 16, 2000, we have
not repaid any amounts due under the $225,000 note payable. This note payable
currently matures on March 31, 2000. We cannot assure you that we will have
sufficient funds available to repay the note payable upon maturity or that we
would be able to extend the maturity date of the note payable. If we are not
able to repay the note payable according to its terms, we cannot assure you
that the plaintiffs will not seek court action to enforce the terms of the
settlement agreement. We would incur substantial expenses if we must defend
any additional actions in connection with these lawsuits.
In June 1999, Joseph R. Cellura, our chief executive officer, threatened to
file a lawsuit against us alleging, among other things, that: (1) Mr. Cellura
had suffered substantial monetary loss in the defense of the lawsuits we refer
to in the previous paragraph; (2) Mr. Cellura had suffered real and
substantial damage to his personal character as a result of the filing of
these lawsuits; (3) we failed to issue to Mr. Cellura and other stockholders
in various companies controlled by him an aggregate of 20.0 million shares of
our common stock and 5.0 million options to purchase shares of our common
stock (such number of shares is prior to the effect of a 15-for-1 reverse
stock split effected with regard to our common stock on June 2, 1998); and (4)
we failed to indemnify Mr. Cellura as required by our indemnity agreement with
him in connection with these lawsuits. We and Mr. Cellura agreed to enter into
a settlement agreement, effective as of June 29, 1999, pursuant to which Mr.
Cellura agreed to release us from these claims in exchange for: (1) a note
payable in the amount of $250,000; and (2) the issuance of approximately 27.34
million shares of our common stock. As of February 16, 2000, we have repaid
$64,000 due under the $250,000 note payable. This note payable currently
matures on April 30, 2000. We cannot assure you that we will have sufficient
funds available to repay the remaining amounts outstanding under the note
payable upon maturity or that we would be able to extend the maturity date of
the note payable. If we are not able to repay the note payable according to
its terms, we cannot assure you that Mr. Cellura will not seek court action to
enforce the terms of the settlement agreement. We would incur substantial
expenses if we must defend any such court action.
Clifford F. Bagnall, one of our former directors and our current chief
financial officer, had threatened to file a lawsuit against us alleging that
we owe Mr. Bagnall amounts due under his employment contract in force while he
was an executive officer. We and Mr. Bagnall agreed to enter into a settlement
agreement, effective as of January 31, 2000, pursuant to which Mr. Bagnall
agreed to release us from this claim in exchange for: (1) a note payable in
the amount of $100,000; and (2) the issuance of 5.3 million shares of our
common stock. As of
38
<PAGE>
February 16, 2000, we have not repaid any amounts due under the $100,000 note
payable. This note payable currently matures on May 15, 2000. We cannot assure
you that we will have sufficient funds available to repay the note payable
upon maturity or that we would be able to extend the maturity date of the note
payable. If we are not able to repay the note payable according to its terms,
we cannot assure you that Mr. Bagnall will not seek court action to enforce
the terms of the settlement agreement. We would incur substantial expenses if
we must defend any such court action.
Kenneth Craig, one of our former directors and executive officers, has
threatened to file a lawsuit against us alleging that we owe Mr. Craig amounts
due under his employment contract in force while he was an executive officer.
We and Mr. Craig agreed to enter into a separation agreement, effective as of
September 1, 1999, pursuant to which Mr. Craig agreed to release us from this
claim in exchange for: (1) a note payable in the amount of $75,000; and (2)
the issuance of 3.5 million shares of our common stock. As of February 16,
2000, we have not repaid any amounts due under the $75,000 note payable. This
note payable currently matures on June 30, 2000. We cannot assure you that we
will have sufficient funds available to repay the note payable upon maturity
or that we would be able to extend the maturity date of the note payable. If
we are not able to repay the note payable according to its terms, we cannot
assure you that Mr. Craig will not seek court action to enforce the terms of
the settlement agreement. We would incur substantial expenses if we must
defend any such court action.
On February 24, 2000, we executed a non-binding letter of intent to acquire
AnimInet's intellectual property assets related to AnimInet's 3-D Internet
asset for approximately 473.9 million shares of our common stock, which would
represent approximately 53.3% of our common stock assuming all of the
transactions and issuances described in this Annual Report are consummated.
AnimInet is a corporation formed solely by Dean Miller, one of our executive
officers. We currently expect the stockholders of Orbit Network, who are each
accredited investors under Rule 501 of the Securities Act, to individually
purchase all of AnimInet's common stock. Mr. Miller will likely receive a
portion of the cash proceeds from such an offering in exchange for the
cancellation of his shares of AnimInet common stock.
On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by David Noosinow, one of our directors and executive
officers, entered into an asset purchase agreement with Mark Savoretti
pursuant to which Spartan Capital agreed to acquire the intellectual property
assets related to the TravelFile website previously owned by Orbit Network for
$600,000 in cash and the issuance of 3.0 million shares of our common stock.
Mr. Savoretti, a creditor of Orbit Network, acquired these assets from Orbit
Network through a judicial foreclosure proceeding on January 13, 2000 after
Orbit Network failed to pay approximately $770,000 owed to Mr. Savoretti.
Immediately upon execution of this asset purchase agreement, Spartan Capital
Management, LLC assigned all of its rights and obligations under the agreement
to us for $10. One of the obligations assigned is an obligation to enter into
consulting agreements with Mr. Savoretti and another person, under which we
would pay a total of $450,000 over three years. We thereafter acquired the
intellectual property assets related to the TravelFile website directly from
Mr. Savoretti in exchange for $60,000 in cash, a note payable in the amount of
$540,000 and 3.0 million shares of common stock, which would represent
approximately 0.4% of our common stock assuming all of the transactions and
issuances described in this Annual Report are consummated.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<C> <S>
2.1(1) Stock Purchase Agreement effective as of April 20, 1998 by and among
us, Talisman Tools Incorporated and Daniel S. Shedd and Dixon Newbold
2.2(2) Stock Purchase Agreement effective as of April 15, 1998 by and among
us, Divot Golf Corporation, a Florida corporation, and Joseph R.
Cellura
2.3(3) Stock Purchase Agreement effective as of January 28, 1998 by and among
us, Miller Golf, Inc. and Robert Marchetti, Louis Katon and John
Carroll
2.4 Sale and Assignment Agreement dated as of January 27, 2000 by and
among Mark Savoretti and Spartan Capital Management, LLC
</TABLE>
39
<PAGE>
<TABLE>
<C> <S>
2.5 Assignment Agreement dated as of January 27, 2000 by and among us and
Spartan Capital Management, LLC
2.6 Right to Use Agreement dated as of November 1, 1999 by and among us
and Orbit Network, Inc.
2.7 Letter of Intent dated as of February 9, 2000 by and among us and
AnimInet, Inc.
2.8 Stock Acquisition Agreement dated as of January 31, 2000 by and among
us and Wilhelmina Artist Management LLC
3.1(4) Our Certificate of Incorporation
3.2(4) Our Bylaws
3.3(5) Amendment to our Certificate of Incorporation filed July 18, 1994
4.1(6) Certificate of Designations, Preferences and Rights of our 1997
Convertible Preferred Stock dated December 29, 1997
4.2(6) Certificate of Designations, Preferences and Rights of 10,500 shares
of our 1997 Convertible Preferred Stock dated January 13, 1998
4.3 Form of Exchange Letter between us and the holders of our 1997
Convertible Preferred Stock
4.4 Funding Commitment Letter and Subscription Agreement as of February
15, 2000 by and between us and Teakwood Ventures, LLC
10.1(7) Form of Warrant issued to the Summit Stockholders dated June 30, 1995
10.2(7) Form of Warrant and Registration Rights Agreement issued to financial
advisor dated June 30, 1995
10.3(8) Agreement in Principle dated February 21, 1996 between us, Gordon
Ewart, our four golf course subsidiaries and our three pension fund
partners.
10.4(6) Form of Convertible Debenture Agreement dated November 18, 1997
between us and the signatories, with form of warrant to purchase
shares of our common stock
10.5(6) Form of Private Placement Purchase Agreement dated December 3, 1997
between us and the signatories, with form of warrant to purchase
shares of our common stock
10.6(3) Form of Private Placement Memorandum dated April 3, 1998 between us
and the signatories, with form of warrant to purchase shares of our
common stock.
10.7 Employment Agreement dated June 24, 1999 between us and Joseph R.
Cellura
10.8 Employment Agreement dated November 1, 1999 between us and Dean E.
Miller
10.9 Employment Agreement dated November 1, 1999 between us and David A.
Noosinow
10.10 Employment Agreement dated December 1, 1999 between us and Douglas R.
Dollinger
10.11 Intentionally Omitted
10.12 Intentionally Omitted
10.13 Form of Exchange Letter between us and the holders of our convertible
debt
10.14 Settlement Agreement dated as of June 24, 1999 between us and Joseph
R. Cellura
10.15 Separation Agreement dated as of September 1, 1999 between us and
Kenneth Craig
10.16 Settlement Agreement dated as of January 31, 2000 between us and
Clifford F. Bagnall
10.17 Settlement Agreement dated as of January 31, 2000 between us and Kirk
Scoggins
10.18 Memorandum of Settlement dated as of June 29, 1999 between us and the
Plaintiff Group
10.19(9) Our 1998 Incentive Stock Option Plan
10.20 Form of OrbitTravel.com, Inc. Convertible Note
10.21 Management Agreement dated November 17, 1999 between OrbitTravel.com,
Inc. and Bonveno.com Limited
10.22 European Specific Software Development Agreement dated November 17,
1999 between OrbitTravel.com, Inc. and Bonveno.com Limited
10.23 Operational Agreement dated November 17, 1999 between
OrbitTravel.com, Inc. and Bonveno.com Limited
10.24 Interactive Services Agreement between America Online, Inc. and Orbit
Network, Inc. dated as of May 1, 1999
10.25 Agreement dated as of July 1, 1996 between Applied Information
Services, Inc. and Amadeus Marketing, S.A.
10.26 Associate Distribution and Services Agreement dated as of April 2,
1998 between Orbit Network, Inc. and The Sabre Group, Inc.
</TABLE>
40
<PAGE>
<TABLE>
<C> <S>
10.27 Services Display and Reservations Agreement dated as of November 24,
1998 between Orbit Network, Inc. and Galileo International, L.L.C.
10.28 Associate Participation Global Reference System Agreement dated as of
August 2, 1999 between Orbit Network, Inc. and WorldSpan, L.P.
10.29 Certificate of Incorporation of OrbitTravel.com, Inc.
10.30 Bylaws of OrbitTravel.com, Inc.
10.31 Joint Venture Agreement dated November 17, 1999 among WebTravel Systems
Limited, OrbitTravel.com, Inc. and Bonveno.com Limited
10.32 Form of Indemnification Agreement
10.33 Joint Content Distribution Agreement dated January 9, 2000 between
OrbitTravel.com, Inc. and
AsiaGateway.com, Ltd.
10.34 Consulting Services Agreement and Joint Consent Agreement dated February
7, 2000 by and among
OrbitTravel and Laspata/Decaro Studio Corp.
21 Our subsidiaries
27 Financial Data Schedule
</TABLE>
- --------
(1) Incorporated by reference from our Current Report on Form 8-K dated April
20, 1998.
(2) Incorporated by reference from our Current Report on Form 8-K dated April
15, 1998.
(3) Incorporated by reference from our Current Report on Form 8-K dated April
8, 1998.
(4) Incorporated by reference from our Form 10 filed on December 13, 1993.
(5) Incorporated by reference from our Form 10 filed on September 15, 1994.
(6) Incorporated by reference from our Annual Report on Form 10-KSB for 1997.
(7) Incorporated by reference from our Annual Report on Form 10-K for 1995.
(8) Incorporated by reference from our Current Report on Form 8-K dated August
30, 1996.
(9) Incorporated by reference from our Registration Statement on Form S-8 filed
September 1, 1998.
(b) Reports on Form 8-K
We filed no Current Reports on Form 8-K during the fourth quarter of 1999.
41
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized on February 29, 2000.
DIVOT GOLF CORPORATION
/s/ Joseph R. Cellura
By: ---------------------------------
Joseph R. Cellura
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ Joseph R. Cellura Chairman of the Board of February 29, 2000
- ---------------------------------- Directors and Chief Executive
Joseph R. Cellura Officer
/s/ Douglas R. Dollinger General Counsel and Director February 29, 2000
- ----------------------------------
Douglas R. Dollinger
/s/ David A. Noosinow President and Director February 29, 2000
- ----------------------------------
David A. Noosinow
/s/ Clifford F. Bagnall Chief Financial Officer February 29, 2000
- ---------------------------------- (principal accounting officer)
Clifford F. Bagnall
</TABLE>
42
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Divot Golf Corporation
We have audited the accompanying consolidated balance sheets of Divot Golf
Corporation and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, shareholders' deficit and cash flows
for each of the two years in the period ended December 31, 1999. These
financial statements are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits 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 consolidated financial position of Divot Golf
Corporation and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States.
The accompanying consolidated financial statements have been prepared
assuming that the Corporation will continue as a going concern. As more fully
described in Note 1, the Corporation has incurred recurring operating losses,
has pending litigation, has a shareholder's deficit of approximately $13
million, and has a working capital deficiency. These conditions raise
substantial doubt about the Corporation's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The consolidated financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
ERNST & YOUNG LLP
Raleigh, North Carolina
February 10, 2000,
except for Note 11, as to which the date is
February 29, 2000
F-1
<PAGE>
DIVOT GOLF CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
--------------------------
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 174,492 $ 568
Trade accounts receivable, net................... 82,608 --
Accounts receivable from related parties......... 114,332 155,362
Prepaid expenses and other current assets........ 288,442 --
------------ ------------
Total current assets........................... 659,874 155,930
Furniture and equipment at cost:
Furniture and equipment.......................... 94,850 114,366
Less accumulated depreciation ................... (22,827) (16,843)
------------ ------------
72,023 97,523
Other assets....................................... 136,425 --
------------ ------------
Total assets................................... $ 868,322 $ 253,453
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable................................. $ 1,210,614 $ 914,216
Accrued expenses................................. 1,562,666 1,252,127
Accrued compensation and payroll................. 5,328,122 188,708
Amounts due to related parties................... 60,500 34,000
Dividends payable................................ 1,730,000 730,000
Notes payable.................................... 3,392,504 1,717,504
Notes payable to related parties................. 661,800 410,000
------------ ------------
Total current liabilities...................... 13,946,206 5,246,555
Other liabilities.................................. -- 200,000
Commitments and Contingencies (Note 10)
Shareholders' deficit:
Convertible Preferred Stock, $.001 par value;
1,000,000 shares authorized; 286,835 and 287,025
shares issued and outstanding (aggregate
liquidation preference of $5,585,000 and
$5,775,000) at December 31, 1999 and 1998,
respectively.................................... 287 287
Common Stock, $.001 par value; 200,000,000 shares
authorized; 13,753,642 and 4,410,041 shares
issued and outstanding at December 31, 1999 and
1998, respectively.............................. 13,754 4,410
Additional paid-in capital....................... 42,523,558 41,722,902
Accumulated deficit.............................. (55,404,546) (46,709,764)
Convertible Preferred Stock held in treasury,
281,250 shares.................................. (210,937) (210,937)
------------ ------------
Total shareholders' deficit.................... (13,077,884) (5,193,102)
------------ ------------
Total liabilities and shareholders' deficit.... $ 868,322 $ 253,453
============ ============
</TABLE>
See accompanying notes.
F-2
<PAGE>
DIVOT GOLF CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1999 1998
----------- ------------
<S> <C> <C>
Operating revenues:
Golf product revenues............................. $ -- $ 6,036,983
Internet related revenues......................... 130,860 --
----------- ------------
Total operating revenues........................ 130,860 6,036,983
Operating expenses:
Cost of golf product revenues..................... -- 3,841,147
Cost of internet related revenues................. 487,812 --
General and administrative expenses............... 5,951,452 6,715,625
Depreciation and amortization expense............. 5,986 270,844
----------- ------------
Total operating expenses........................ 6,445,250 10,827,616
----------- ------------
(6,314,390) (4,790,633)
Other income (expense):
Interest expense -- contractual................... (167,824) (635,926)
Amortization of debt discount on convertible
debentures....................................... -- (2,835,559)
Loss on investments............................... -- (6,958,750)
Write down of assets.............................. -- (705,609)
Gain on sale of golf course....................... -- 523,799
Interest and other income......................... 560 135,755
Litigation settlement expense..................... (982,917) (740,004)
Other expense..................................... (230,211) --
----------- ------------
(1,380,392) (11,216,294)
----------- ------------
Net loss.......................................... $(7,694,782) $(16,006,927)
----------- ------------
Basic and diluted loss per common share............. $ (1.03) $ (4.78)
=========== ============
Weighted average number of common shares
outstanding........................................ 8,469,500 3,641,700
=========== ============
</TABLE>
See accompanying notes.
F-3
<PAGE>
DIVOT GOLF CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Convertible
Convertible Preferred
Common Stock Preferred Stock Additional Treasury Stock
------------------ ------------------ Paid-in Accumulated -------------------
Shares Amount Shares Amount Capital Deficit Shares Amount Total
---------- ------- --------- ------- ----------- ------------ -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December
31, 1997............. 2,842,167 $ 2,842 283,170 $ 283 $32,083,757 $(29,285,060) (281,250) $(210,937) $ 2,590,885
Net loss.............. -- -- -- -- -- (16,006,927) -- -- (16,006,927)
Issuance of Warrants
in connection with
issuance of debt..... -- -- -- -- 1,907,328 -- -- -- 1,907,328
Issuance of Common
Stock in connection
with a private
placement............ 551,933 552 -- -- 1,431,346 -- -- -- 1,431,898
Issuance of Preferred
Stock in connection
with acquisition..... -- -- 3,000 3 2,999,997 -- -- -- 3,000,000
Issuance of Preferred
Stock in connection
with a private
placement............ -- -- 1,020 1 1,019,999 -- -- -- 1,020,000
Accrued Preferred
Stock dividends in
arrears.............. -- -- -- -- -- (730,000) -- -- (730,000)
Preferred Stock
dividend --
conversion
discount............. -- -- -- -- 687,777 (687,777) -- -- --
Issuance of Common
Stock in connection
with Warrant
exercise............. 94,304 94 -- -- (94) -- -- -- --
Issuance of Common
Stock in connection
with conversion of
debentures........... 457,412 458 -- -- 1,058,055 -- -- -- 1,058,513
Issuance of Common
Stock in connection
with conversion of
Preferred Stock...... 46,429 46 (165) -- (46) -- -- -- --
Issuance of Common
Stock for
acquisitions......... 417,796 418 -- -- 534,783 -- -- -- 535,201
---------- ------- --------- ------ ----------- ------------ -------- --------- ------------
Balance at December
31, 1998............. 4,410,041 $ 4,410 287,025 $ 287 $41,722,902 $(46,709,764) (281,250) $(210,937) $ (5,193,102)
Net loss.............. -- -- -- -- -- (7,694,782) -- -- (7,694,782)
Issuance of Common
Stock in connection
with conversion of
Preferred Stock...... 1,293,601 1,294 (190) -- (1,294) -- -- -- --
Accrued Preferred
Stock dividends in
arrears.............. -- -- -- -- (1,000,000) -- -- (1,000,000)
Issuance of Common
Stock in connection
with settlement of
litigation........... 8,050,000 8,050 -- -- 801,950 -- -- -- 810,000
---------- ------- --------- ------ ----------- ------------ -------- --------- ------------
Balance at December
31, 1999............. 13,753,642 $13,754 286,835 $ 287 $42,523,558 $(55,404,546) (281,250) $(210,937) $(13,077,884)
========== ======= ========= ====== =========== ============ ======== ========= ============
</TABLE>
See accompanying notes.
F-4
<PAGE>
DIVOT GOLF CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1999 1998
----------- ------------
<S> <C> <C>
Operating Activities
Net loss........................................... $(7,694,782) $(16,006,927)
Adjustments to reconcile net loss to net cash used
in operating activities:
Discount on convertible debentures............... -- 2,835,559
Loss on investments ............................. -- 6,958,750
Loss on disposal of furniture and equipment...... 40,378 --
Issuance of shares in settlement of litigation... 810,000 --
Depreciation and amortization.................... 5,986 270,844
Gain on sale of golf course...................... -- (523,799)
Writedown of license, deposits and property and
equipment....................................... -- 705,609
Trade accounts receivable........................ (82,608) 352,018
Accounts receivable from related parties......... 41,030 5,181
Prepaid expenses and other assets................ (424,867) 133,780
Accounts payable................................. 296,398 625,007
Accrued expenses and other liabilities........... 110,539 743,039
Accrued compensation............................. 5,139,414 --
Amounts due to related parties................... 26,500 34,000
----------- ------------
Net cash used in operating activities.............. (1,732,012) (3,866,939)
----------- ------------
Investing Activities
Payments for intangible assets..................... -- --
Purchases of property and equipment, net........... (20,864) (2,245,966)
Change in restricted cash.......................... -- 135,019
Proceeds from sale of subsidiaries................. -- 1,875,913
----------- ------------
Net cash used in investing activities.............. (20,864) (235,034)
----------- ------------
Financing Activities
Proceeds from borrowings........................... 1,675,000 1,717,504
Payments on borrowings............................. -- (4,065,328)
Proceeds from notes payable to related parties..... 251,800 410,000
Proceeds from issuance of common stock............. -- 1,967,099
Proceeds from sale of convertible preferred stock,
net............................................... -- 4,020,000
----------- ------------
Net cash provided by financing activities.......... 1,926,800 4,049,275
----------- ------------
Increase (decrease) in cash........................ 173,924 (52,698)
Cash at beginning of year.......................... 568 53,266
----------- ------------
Cash at end of year................................ $ 174,492 $ 568
----------- ------------
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest........... $ -- $ 463,643
=========== ============
</TABLE>
See accompanying notes.
F-5
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. BUSINESS OF THE COMPANY, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES
Divot Golf Corporation ("the Company") is engaged in the development,
licensing and marketing of golf-related businesses. Additionally, the Company
plans to reposition itself by providing specialized e-commerce applications
and providing essential distribution services and on-line marketing solutions
to the travel industry worldwide.
As of December 31, 1999, the Company has a net working capital deficiency of
$13,286,332 and a shareholders' deficit of $13,077,884. The Company has had
recurring net losses, pending litigation and is not generating sufficient
revenues from its operations to fund its activities and therefore is dependent
on additional financing from external sources. These factors among others
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern. The
Company is actively working to raise additional equity and debt financing and,
if successful, management believes that the Company will have adequate
resources to continue to meet its current debt obligation, fund capital
improvements and expand and develop its businesses. There is no assurance that
such additional funding will be completed and the inability to obtain such
financing would have a material adverse effect on the Company.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and all wholly and majority-owned subsidiaries. All material intercompany
accounts and transactions are eliminated in consolidation.
Furniture and Equipment
Furniture and equipment is recorded at cost. Depreciation on furniture and
equipment begins when the assets are placed into service and is charged to
operations over the estimated useful lives of the assets (3 to 5 years),
utilizing the straight-line method for financial reporting purposes and
accelerated methods for tax purposes.
Other Assets
Other assets consist primarily of financing costs and an option to purchase
assets of Orbit Network, Inc. (Note 9). Costs incurred in obtaining long-term
debt obligations are capitalized at cost and amortized over the lives of the
respective loans.
Cash and Cash Equivalents
The Company considers highly liquid, short-term investments with a maturity
of three months or less when purchased to be cash equivalents.
Revenues
Revenues for product related sales, net of allowance for returns, are
recognized at the time merchandise is shipped to the customer.
Internet related revenues are derived from development of Internet services
including creating, hosting and maintaining Web sites, informational listings,
banner advertising and transactions including fees for online brochure
ordering. Certain advertising contracts include guarantees of a minimum number
of impressions. To the extent minimum guaranteed impressions are not met, the
Company defers revenue recognition until the guaranteed impression levels are
achieved. Contract terms range from one to twelve months. Revenues are
recognized ratably over the term of each contract.
F-6
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Stock Based Compensation
On January 1, 1996, the company adopted Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("FAS 123"), which
requires companies to recognize as expense the fair value of all stock-based
awards on the date of grant, or continue to apply the provisions of Accounting
Principles Board Opinion No. 25 ("APB 25") and provide pro forma net income
and pro forma earnings per share disclosures for employee stock option grants
as if the fair-value-based method defined in FAS 123 had been applied. The
Company has elected to continue to apply the provisions of APB 25 and provide
the pro forma disclosure provisions of FAS 123 (See Note 7, "Stock Options").
Advertising Expense
The cost of advertising is expensed as incurred. The Company incurred $4,000
and $100,000 in advertising costs during the years ended December 31, 1999 and
1998, respectively.
Use of Estimates
The preparation of the 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
accompanying notes. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company's primary financial instrument subject to potential
concentration of credit risk is trade accounts receivable which are unsecured.
The Company provides an allowance for doubtful accounts based on its analysis
of potentially uncollectible accounts. The Company's trade receivables arise
principally from the development of Internet related services. As of December
31, 1999, the Company had no significant concentrations of credit risk with
any individual customers.
Net Loss Per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share ("FAS 128"). FAS
128 replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants
and convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented to conform to the FAS 128
requirements. Stock options, warrants and the convertible debentures are
considered anti-dilutive and therefore have not been included in the
computation.
Long Lived Assets
Impairment losses are recognized when expected future cash flows are less
than the assets' carrying value. Accordingly, when indicators of impairment
are present, the Company evaluates the carrying value of furniture and
equipment in relation to the operating performance and future undiscounted
cash flows of the underlying business. The Company adjusts the net book value
of the underlying assets if the sum of expected future cash flows is less than
book value.
F-7
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Fair Value of Debt
The Company estimates that the fair value of notes payable approximates the
carrying value based upon its effective current borrowing rate for debt with
similar terms and remaining maturities. Disclosure about fair value of
financial instruments is based upon information available to management as of
December 31, 1999. Although management is not aware of any factors that would
significantly affect the fair value of amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements since that
date.
Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("FAS
130"). FAS 130 requires that total comprehensive income and comprehensive
income per share be disclosed with equal prominence as net income and earnings
per share. Comprehensive income is defined as changes in stockholders' equity
exclusive of transactions with owners such as capital contributions and
dividends. The Company adopted this Standard in 1998. The Company did not
report any items of other comprehensive income in any of the years presented.
Segment Reporting
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, Disclosure about Segments of an Enterprise and
Related Information ("FAS 131"), which superceded Statement of Financial
Accounting Standards No. 14, Financial Reporting for Segments of Business
Enterprise. FAS 131 establishes standards for the public reporting of
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. Since the Company only operates in one
segment, the adoption of FAS 131 did not affect the Company's net loss or
financial position.
Impact of Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("FAS 133"). FAS 133 establishes a new model for
accounting for derivatives and hedging activities and supercedes several
existing standards. FAS 133, as amended by FAS 137, is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. The Company
does not expect that the adoption of FAS 133 will have a material impact on
the consolidated financial statements.
2. NOTES PAYABLE
Notes payable consists of the following at December 31:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Unsecured convertible 7% and 9% debentures due at
various dates in 2000, principal and interest payable
at maturity, unless converted into common stock........ $1,675,000 $ --
Unsecured 7% notes payable due January 1999, principal
and interest payable at maturity....................... 1,527,500 1,527,500
Other notes payable..................................... 190,004 190,004
---------- ----------
$3,392,504 $1,717,504
========== ==========
</TABLE>
F-8
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Notes payable to related parties consists of the following at December 31:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Unsecured 6% notes, with principal and interest payable on
demand..................................................... $410,000 $410,000
Unsecured 12% note to former employee due March 2000, with
principal and interest payable at maturity................. 225,000 --
Other notes payable......................................... 26,800 --
-------- --------
$661,800 $410,000
======== ========
</TABLE>
Convertible Debentures
During November 1997, the Company issued $2,269,995 of convertible
debentures payable on December 31, 1998. The holders of the debentures are
entitled to convert the debentures into common stock of the Company at a
conversion price equal to the lesser of (i) $2.55 per share or (ii) 70% of the
average closing bid of the common stock during the last five trading days
prior to conversion. The debentures accrue interest, payable quarterly
commencing March 1, 1998, at a rate of 5% per annum. If the Company does not
file a Registration Statement with the Securities and Exchange Commission
("SEC") to register securities in a public offering within 120 days from
November 18, 1997, the interest rate shall increase to 18% per annum. If the
Effective Date of the Registration Statement has not occurred by the 180th day
after November 18, 1997, then the interest rate shall further increase to 24%
per annum until the Effective Date. The accrued interest is convertible into
common stock of the Company at the same conversion price as the debenture
principal. In any event, each holder cannot as a result of such conversions
beneficially own more than 4.99% of the then outstanding common stock. In the
event that the debenture holder proposes to convert all or any portion of the
principal and interest at a conversion price of less than $0.05, the Company
shall have the option to redeem all or any part of the amount proposed to be
converted at a redemption price of 125% of the amount of the principal and
interest proposed to be converted.
As of December 31, 1997, $1,259,346 of the debentures' principal had been
converted into shares of common stock, leaving $1,010,649 of convertible
debentures outstanding.
During the year ended December 31, 1998, the remaining $1,010,649 of the
debentures were converted into 457,412 shares of common stock, which equated
to $1,058,513 in equity, including accrued interest on discount, net of
finance fees.
During 1998, the Company issued $3 million of convertible notes. These
convertible notes were secured by a subordinated pledge of the common stock of
Miller Golf, Inc. (see Note 8), which matured on December 31, 1999, and
accrued interest at 7% per annum, payable quarterly beginning on July 1, 1998.
The notes were convertible into shares of the Company's common stock at the
lesser of $7.50 per share or 75% of the average closing bid price of the
common stock during the last five trading days prior to conversion. The
convertible note holders also received warrants to purchase 98,182 shares of
common stock at $7.50 per share. On May 31 and June 9, 1998, the holders of
these convertible debentures and warrants exchanged the debt and warrants for
3,000 shares of the Company's 7% Cumulative Convertible Preferred Stock
("Preferred Stock") and warrants to purchase approximately 133,000 shares of
the Company's common stock at $15.00 per share, exercisable for three years
from the date of issuance.
From October through December of 1999, the Company issued $1,675,000 of 7%
and 9% convertible debentures maturing at various dates through June 2000.
Immediately upon the closing of a merger transaction between OrbitTravel.com,
Inc., a wholly owned subsidiary, and the Company, the debenture holders shall
automatically convert all principal and interest into common stock of the
Company at a fixed conversion price of $.50 per common share. In the event the
merger has not occurred by the maturity date, all principal and unpaid
F-9
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
interest shall be payable on demand. If, by the maturity date, the conversion
has not taken place or the principal and interest have not been repaid, the
interest rate attributable to the principal sum shall continue to accrue
thereafter at a rate of 12% per annum. Certain debenture agreements contain
covenants which require the Company to perform a reverse split of not less
than fifteen shares of the Company's common stock for one share of common
stock. Certain debenture agreements also contain additional terms including
registration rights and default provisions.
Notes Payable
During July and August of 1998, the Company issued $1,527,500 of unsecured
7% notes maturing in January 1999. The Company is in default on these notes as
of December 31, 1999. In connection with the issuance of the notes, the
Company issued warrants to purchase 1,222,000 shares of common stock of the
Company at $1.25 per share. The warrants are exercisable for a period of three
years from the date of issuance. The estimated fair value of these warrants,
$1,793,328, has been recorded as paid-in-capital.
3. LEASES
The Company rents office space under operating leases which expire at
various times through 2000. Total rent expense for the Company was
approximately $32,000 and $388,000 for the years ended December 31, 1999 and
1998, respectively.
4. RELATED PARTY TRANSACTIONS
The Company funded expenses on behalf of certain entities affiliated through
common ownership. Accounts receivable from related parties were $114,332 and
$155,362 at December 31, 1999 and 1998, respectively. The Company expects
payment of the amount outstanding at December 31, 1999 within the next twelve
months; accordingly, the amounts are classified as current assets.
In January 2000, the Company executed three settlement agreements relating
to 1999 and 1998 employment contracts with a former employee and two
executives currently employed by the Company. The Company agreed to pay
$425,000 during 2000 and issue 36,133,333 shares of common stock that the
Company expects to issue in the first quarter of 2000. The Company recorded an
additional $4.7 million of compensation expense in the Statement of Operations
for the year ended December 31, 1999 and has accrued $5.1 million in accrued
compensation at December 31, 1999 for these settlement agreements.
5. INCOME TAXES
Under Financial Accounting Standards Board Statement No. 109, Accounting for
Income Taxes, the liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
F-10
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1999 1998
----------- ------------
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation and amortization........ $ -- $ --
----------- ------------
$ -- $ --
=========== ============
Deferred tax assets:
Book over tax depreciation and amortization........ $ -- $ 130,000
Net operating loss carryforwards................... 11,850,000 8,000,000
Loss on forfeiture................................. 80,000 1,920,000
Legal contingency.................................. 530,000 436,000
Other.............................................. -- 4,000
----------- ------------
Total deferred tax assets............................ 12,460,000 10,490,000
=========== ============
Valuation allowance for deferred tax assets.......... (12,460,000) (10,490,000)
=========== ============
Net deferred tax assets.............................. -- --
=========== ============
Net deferred taxes $ -- $ --
=========== ============
</TABLE>
At December 31, 1999, the Company has a net operating loss carryforward of
$29 million which will begin to expire in the year 2007. Given the changes in
the business and ownership, management believes it is highly unlikely that
$11.1 million of the net operating loss will be available to offset future
losses. The tax benefits of these items are reflected in the above table of
deferred tax assets and liabilities. U.S. tax rules impose limitations on the
use of net operating losses following certain changes in ownership. If a
change were to occur, the limitation could reduce the amount of these benefits
that would be available to offset future taxable income each year, starting
with the year of ownership change.
The reconciliation of income tax attributable to continuing operations
computed at the U.S. federal statutory tax rates to income tax expense is:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
Income tax benefit at U.S. statutory rate........... $(1,730,000) $(5,153,000)
Amortization and write-off of goodwill.............. -- 105,000
State tax benefit, net.............................. (250,000) (736,000)
Interest expense for which no tax benefit was
provided........................................... -- 176,000
Excess compensation................................. 953,000 --
Other items......................................... 3,900 12,100
Change in valuation allowance....................... 1,023,100 5,595,900
----------- -----------
Tax expense......................................... $ -- $ --
=========== ===========
</TABLE>
F-11
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. SHAREHOLDERS' DEFICIT
Effective June 2, 1998, the Company increased the number of common shares
authorized from 50 million to 200 million. During 1998, the Company issued
551,933 shares of common stock with a value of $1,431,898, of which 501,933
shares were issued to accredited investors in a private placement offering for
proceeds of $1,014,969 and 50,000 shares, with a fair value of $422,000, were
issued in connection with the issuance of notes payable. In addition, the
Company issued 417,796 shares of common stock with a value of $535,201 in
connection with acquisitions. The value of the issued stock was determined
based on the fair market value of the Company's stock on the date of the
transaction.
During 1998, the Company closed on 68 units of private placement offerings
of 7% Cumulative Convertible Preferred Stock ("Preferred Stock") for
$1,020,000. In addition, the Company issued 200 units of private placement
offerings for $3,000,000, in exchange for $3,000,000 of convertible debentures
obtained in 1998 in order to finance the Miller acquisition (see Note 8). The
Preferred Stock was offered in units of 15 Preferred Shares, with each such
share having a liquidation value of $1,000 and 667 warrants, for a price of
$15,000 per unit.
In connection with the sale and issuance of the Preferred Stock in 1998, the
Company issued warrants, exercisable immediately, to purchase 178,756 shares
of common stock of the Company at $15.00 per share for a period of three years
from the date of issuance.
The holders of the Preferred Stock are entitled to a cash dividend equal to
$180 per share payable quarterly commencing April 1, 1998, although the
Company has the option to utilize shares of its common stock, under certain
conditions, to satisfy the dividend requirement. The purchaser has the right
to convert the Preferred Stock immediately into a number of shares of the
Company's common stock equal to $1,000 per share of Preferred Stock divided by
the Conversion Price. The Conversion Price means the lesser of (1) $10.50 or
(2) 75% of the average of the closing bid price of a share of the Company's
common stock during the ten trading days prior to such conversion provided
that the holder can not as a result of such conversion beneficially own more
than 4.99% of the then outstanding common stock. In the event the Conversion
Price falls below $7.50, the Company may redeem, at $1,250 per share plus any
accrued but unpaid dividends, all (but not any part) of shares proposed to be
converted. In conjunction with the discount allowed on the conversion of the
Preferred Stock into common stock, the Company has recorded dividends of
$687,777. The Preferred Stock does not carry any voting rights. As of December
31, 1999, 393 units of Preferred Stock had been sold. The Company recorded
preferred dividends in arrears of $1,000,000 and $730,000, or $.07 and $.16
per share of common stock, during 1999 and 1998, respectively.
As of December 31, 1999, warrants to purchase 4,002,332 shares of the
Company's common stock were outstanding. These warrants have exercise prices
ranging from $2.55 to $36.00 per share; 66,667 warrants expire January 20,
2000 (exercise prices range from $11.25 to $22.50); 60,000 warrants expire
June 30, 2000 (exercise price equals $36.00 per share); 16,667 warrants expire
September 28, 2000 (exercise price equals $36.00 per share); 908,438 warrants
expire November 18, 2000 (exercise price equals $2.55 per share or 70% of the
average closing bid of the common stock during the last five trading days
prior to conversion); 1,002,742 warrants expire November 18, 2000 (exercise
price equals $5.10 per share or 70% of the average closing bid of the common
stock during the last five trading days prior to conversion); 264,000 warrants
expire December 3, 2000 (exercise price equals $15.00 per share); 56,667
warrants expire January 28, 2001 (exercise price equals $3.00 per share);
181,818 warrants expire April 2, 2002 (exercise price equals $6.00 per share);
and 223,333 warrants expire January 28, 2003 (exercise prices range from $2.81
to $3.00 per share); 1,222,000 warrants expire from July 14, 2001 through July
30, 2001 (exercise price equals $15.00 per share).
Subsequent to March 22, 1999, the Company's common stock was de-listed from
the Nasdaq SmallCap Market as a result of the Company's failure to meet
various listing requirements.
F-12
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Loss per Share
The following table sets forth the computation of basic and diluted earnings
per share in accordance with Statement No. 128, Earnings per Share:
<TABLE>
<CAPTION>
December 31
-------------------------
1999 1998
----------- ------------
<S> <C> <C>
Numerator:
Net loss...................................... $(7,694,782) $(16,006,927)
Accrued preferred stock dividends in arrears.. (1,000,000) (730,000)
Preferred stock dividends--conversion
discount..................................... -- (687,777)
----------- ------------
Numerator for basic and dilutive earnings per
share--income available to common
stockholders................................. $(8,694,782) $(17,424,704)
Denominator:
Denominator for basic and diluted earnings per
share--weighted-average shares............... 8,469,500 3,641,700
----------- ------------
Basic and diluted loss per share.............. $ (1.03) $ (4.78)
=========== ============
</TABLE>
The following number of potentially convertible shares of common stock
related to convertible preferred stock, convertible debentures, warrants, and
stock options are as follows at:
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
For conversion of convertible preferred stock........ 48,136,178 30,422,758
For conversion of convertible debentures............. 4,290,000 --
Outstanding warrants................................. 4,002,332 4,012,332
Outstanding stock options............................ -- 818,500
Possible future issuance under stock option plan..... 1,600,000 781,500
---------- ----------
Total shares potentially convertible............... 58,028,510 36,035,090
========== ==========
</TABLE>
As of December 31, 1999, the Company had 128,217,848 common shares available
to be issued.
7. STOCK OPTIONS
Stock Option Plan
On June 3, 1994, the Board of Directors and the stockholders of the Company
adopted the Brassie Golf Corporation 1994 Stock Option and Restricted Stock
Purchase Plan (the "1994 Stock Option Plan") as an incentive for key
employees. The purchase price for any Stock Awards and the exercise price for
any Options may not be less than the fair market value for the common stock on
the date of grant. Unless otherwise agreed between the grantee and the
Company, the Stock Awards and Options expire 90 days after termination of the
grantee's relationship with the Company. The 1994 Stock Option Plan provides
that an aggregate of 100,000 shares be reserved for future issuance.
During April 1998, the Board of Directors and shareholders approved the
formation of the Divot Golf Corporation 1998 Stock Option Plan (the "1998
Plan") for the purpose of attracting and retaining certain key employees of
the Company. The 1998 Plan provides that an aggregate of 1,500,000 of the
Company's authorized shares be reserved for future issuance. In the case of
initial grants, the exercise price will be fixed by the Board of Directors on
the date of grant.
F-13
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
On May 22, 1998, the Company issued a total of 16,000 options to employees
of the Company under the 1994 Stock Option Plan. These options vest over a
three year period and have an exercise price of $2.55 per share, which
approximates the fair value of the stock price on the date of grant.
On June 15, 1998, the Company issued a total of 733,333 options with
immediate vesting to certain officers and key employees of the Company under
the 1998 Plan. These options have an exercise price of $2.81 per share which
equals the fair value of the stock price on the date of grant. On September 2,
1998, the Company issued a total of 240,000 options with immediate vesting to
certain officers and key employees of the Company under the 1998 Plan. These
options have an exercise price ranging from $1.50 to $2.81 per share, which
exceeds the fair value of the stock price on the date of grant.
On September 3, 1998, the Company issued a total of 69,167 options to
employees and consultants to the Company under the 1998 Plan. These options
vest over a three year period and have an exercise price of $2.81 per share,
which exceeds the fair value of the stock price on the date of grant.
Options Outstanding, Common Stock
<TABLE>
<CAPTION>
Options Outstanding
----------------------
Weighted
Shares Average
Available Number Exercise
For Grant Of Shares Price
---------- ----------- ---------
<S> <C> <C> <C>
Balances at December 31, 1997................ 60,383 39,617 $ 2.90
1998 Plan adopted.......................... 1,500,000 -- --
Options granted............................ (1,058,500) 1,058,500 $2.77
Options forfeited.......................... 279,617 (279,617) $2.67
Options exercised.......................... -- -- --
---------- ----------- -------
Balances at December 31, 1998................ 781,500 818,500 $2.81
---------- ----------- -------
Options granted............................ -- -- --
Options forfeited.......................... 818,500 (818,500) $2.81
Options exercised.......................... -- -- --
---------- ----------- -------
Balances at December 31, 1999................ 1,600,000 -- $ --
========== =========== =======
</TABLE>
The weighted average fair values of options granted during 1998 were $1.63.
No options were granted during 1999. The estimated fair value of each option
granted is calculated using the Black-Scholes option-pricing model. The
weighted-average assumptions used in the model were as follows:
<TABLE>
<CAPTION>
1998
----
<S> <C>
Risk-free interest rate................................................... 5.11%
Expected years until exercise............................................. 3
Expected stock volatility................................................. 1.19
Dividend yield............................................................ 0%
</TABLE>
F-14
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Since the stock options granted during 1998 had exercise prices which were
greater than or equal to the fair value of the common stock on the date of
grant, no compensation expense was recognized during 1998. The following table
reflects pro forma net loss had the Company elected to adopt the fair value
approach of FAS 123:
<TABLE>
<CAPTION>
1999 1998
----------- ------------
<S> <C> <C>
Net loss:
As reported........................................ $(7,694,782) $(16,006,927)
Pro forma.......................................... (7,458,336) (16,243,370)
Diluted loss per share:
As reported........................................ $ (1.03) $ (4.78)
Pro forma.......................................... (1.00) (4.85)
</TABLE>
These pro forma amounts may not be representative of future disclosures
since the estimated fair value of stock options is amortized to expense over
the vesting period, and additional options may be granted in future years.
8. LOSS ON INVESTMENTS
On April 8, 1998, the Company completed its $4.3 million acquisition of all
the issued and outstanding stock of Miller Golf, Inc. ("Miller"). This
transaction was accounted for using the purchase method of accounting with
results of operations of Miller included in the Company's operations from the
date of acquisition. The Company recorded the acquired assets and liabilities
at their estimated fair value. The excess of the purchase price over the fair
value of net assets acquired was recorded as goodwill. The Miller stock was
acquired from its shareholders for a combination of $3 million in cash, $1
million in notes payable to the sellers and 53,333 shares of the Company's
common stock which, in the aggregate, had a fair market value of $300,000 at
the date of closing. The sellers' notes were paid in full on September 16,
1998.
Prior to the acquisition of Miller, a $2 million line of credit was entered
into between Miller and a financial institution. This line of credit was
secured by Miller's assets and included certain covenants. Miller violated a
covenant prohibiting Miller from paying more than $100,000 in dividends or
intercompany advances by advancing the company $500,000 in 1998. In 1999, the
financial institution sold the debt to a third party who foreclosed on the
Company's interest in Miller. Since the default occurred during 1998, the
assets of Miller were written off as of December 31, 1998. The Company
recorded a loss of approximately $3.8 million in connection with this
foreclosure, which is reflected in loss on investments in the 1998
consolidated financial statements.
On April 15, 1998, the Company completed its $500,000 stock acquisition of
Divot Golf Subsidiary, Inc. ("DGS"), which was accounted for using the
purchase method of accounting. Accordingly, the Company recorded the acquired
assets and liabilities at their estimated fair value. The DGS stock was
acquired from its sole shareholder, Joseph R. Cellura, who serves as Director,
Chairman of the Board, and Chief Executive Officer of the Company. The
purchase price consisted of a combination of (i) $300,000 in cash and (ii) a
short term promissory note in the principal amount of $200,000 (the "Note").
The Note provides for interest accruing at 6% per annum, payable quarterly
beginning June 30, 1998. The Note was paid in full as of September 30, 1998.
The assets of DGS included its name, certain patent and licensing rights, and
molds for producing a divot repair tool. When Miller's assets were seized due
to the foreclosure, the assets of DGS were also seized. Therefore, the assets
of DGS were written off as of December 31, 1998. Since no activity occurred in
DGS prior to the seizure of its assets, no operations have been recorded in
the Company's statements of operations. The Company recorded a loss of
approximately $500,000 in connection with this seizure of assets, which is
included in the loss on write-off of investments line item in the 1998
consolidated financial statements.
F-15
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
On April 20, 1998, the Company completed its $136,879 acquisition of all of
the issued and outstanding stock of Talisman Tools Incorporated ("Talisman"),
which was accounted for using the purchase method of accounting. Accordingly,
the Company recorded the acquired assets and liabilities at their estimated
fair value. The Talisman stock was acquired for a combination of (i) two
short-term, non-interest bearing promissory notes in the aggregate amount of
$55,000 payable on May 20, 1998 (ii) $46,875 of the Company's common stock
(10,000 shares valued at the date of closing) and (iii) assumed notes of
$35,004. Talisman is a manufacturer of high-quality greens repair tools. The
assets of Talisman included a pending patent on the specialized divot repair
tool and the proprietary process of producing the divot repair tool.
Subsequent to the purchase, the Company was threatened to be sued for patent
infringement if the Company sold products based on the design of the repair
tool that the Company acquired as part of the Talisman acquisition. As a
result, the Company ceased making payments on the loan to the sellers of
Talisman. The sellers of Talisman sued Divot for failing to pay them
consideration still due them under the acquisition agreement. The molds that
the Company acquired from Talisman were ultimately seized as part of the
Miller asset foreclosure. The assets of Talisman were written off as of
December 31, 1998. Since no activity occurred in Talisman prior to the lawsuit
and write-off of assets, no operations have been recorded in the Company's
statements of operations. The Company recorded a loss of approximately
$140,000 in connection with this write-off, which is included in loss on
investments in the 1998 consolidated financial statements.
During 1998, the Company was delinquent on two loans payable to banks which
were secured by land. During 1999, the loans were foreclosed upon and the land
was seized by the banks. Since the purported event of default was in 1998, the
Company wrote off the land as of December 31, 1998. In connection with this
foreclosure, the Company recognized a loss of approximately $1,500,000, which
is included in loss on investments in the 1998 consolidated financial
statements.
The Company recorded approximately $1,000,000 as a loss on investments in
the 1998 consolidated financial statements for amounts spent on possible
business ventures which were aborted during 1998 as follows:
<TABLE>
<S> <C>
Divot-RFG Joint Venture, L.L.C. .................................... $ 200,000
Mobilesuites........................................................ 190,000
Tour Tavern......................................................... 150,000
Honma J.V. ......................................................... 100,000
Other............................................................... 360,000
----------
$1,000,000
==========
</TABLE>
Due to the aborted business interests during 1998, certain licenses,
deposits and fixed assets were written off in the amount of $705,609 which
represents the net book value of the assets at December 31, 1998. The loss is
reflected in the write down of assets line item in the 1998 consolidated
financial statements.
9. ACQUISITION AND DISPOSITION OF ASSETS
On April 2, 1998, the Company sold its leasehold interest in the golf course
assets at The Gauntlet at Curtis Park, a wholly owned subsidiary, for
$5,400,000 of which approximately $4,800,000 was used to reduce the Company's
debt. The net realized gain on the sale of the golf course was approximately
$524,000.
On November 1, 1999, the Company entered into a right to use agreement with
Orbit Network, Inc. pursuant to which the Company paid $500,000 in cash for a
six-month right to use and operate Orbit Network's Global Distribution Systems
("GDS") contracts with various travel agencies and tourism organizations, its
services agreement with America OnLine and related furniture and equipment. As
part of this right to use agreement, the Company will operate the "TravelFile"
website that provides travel suppliers and Internet users travel planning
F-16
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
services. The Company is entitled under the right to use agreement to retain
any revenues for a six-month period that may be generated from these GDS and
ancillary contracts. Also, as part of the right to use agreement, the Company
paid $100,000 (included in $500,000 paid November 1, 1999) for the option to
purchase in its sole and absolute discretion the GDS and ancillary contracts
and related furniture and equipment for the assumption of $5.1 million of
Orbit Network debt. This purchase option expires on May 1, 2000, unless
otherwise extended.
10. COMMITMENTS AND CONTINGENCIES
The Company has employment agreements with certain of its executive
officers, the terms of which expire at various times through June 24, 2006.
Such agreements provide for minimum salary levels, as well as for incentive
bonuses which are payable if specified management goals are attained. In
addition, the Company is required to issue 18 million stock options to these
executives during 2000 to purchase the Company's common stock at an exercise
price equal to the fair market value at the date of issuance. Minimum
commitments for future salaries, excluding bonuses, by year and in the
aggregate consist of the following at December 31, 1999:
<TABLE>
<S> <C>
2000................................................................. $ 835,000
2001................................................................. 835,000
2002................................................................. 835,000
Thereafter........................................................... 1,957,000
----------
$4,462,000
==========
</TABLE>
In connection with the Company's February 21, 1996 Agreement in Principle
with the Company's three Pension Fund Partners, definitive agreements were
reached during the second quarter of 1996 with regards to two of the Company's
four previously owned golf courses. However, the Company's efforts to
interpret the Agreement in Principle and negotiate with EPI Pension Fund
regarding the two other courses were unsuccessful. On May 31, 1996, EPI
Pension Fund commenced an action against the Company claiming breach of
contract, specific performance, a constructive trust and temporary and
permanent injunctive relief. At a hearing conducted on July 12, 1996, the
court issued a preliminary injunction which required the Company to transfer
to EPI Pension Fund 45% of the outstanding equity in the Company's GLV and GMW
subsidiaries whereby the Company retained 30% of the outstanding equity in
each of these two subsidiaries and EPI Pension Fund owned the remaining 70%.
The Company filed an appeal brief to this preliminary injunction on August 14,
1996. The court denied this appeal on February 11, 1997. The Company entered
into a settlement agreement with the EPI Pension Fund on October 15, 1997,
which intended to resolve all outstanding issues between the Company and the
EPI Pension Fund. The Company failed to perform all of the Company's
obligations under the settlement agreement. On February 10, 1998, the court
entered an order directing the Company to perform fully all of the Company's
obligations under the settlement agreement prior to February 24, 1998. At a
hearing on March 26, 1998, the Company offered partial performance under the
settlement agreement which was taken under advisement by the court and
opposing counsel and will be ruled upon at a hearing to be scheduled in the
future.
The Company submitted a proposed settlement to the EPI Pension Fund, with a
$3,000 good faith deposit. The terms of the proposed settlement include a down
payment to be made within 30 days of executing the settlement documents with a
balloon payment to be delivered at the end of one year. The deferred payment
will be non-interest bearing. The Company has requested that it be permitted
to prepay the settled amount at a discount. The Company does not know if the
settlement will be secured. A penalty will be imposed upon default on the
proposed settlement in addition to EPI Pension Fund's rights to enforce the
original judgment of $152,000. The Company cannot be assured that the proposed
settlement will be accepted by the EPI Pension Fund or that the terms will be
substantially similar to those disclosed above.
F-17
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company is involved in other legal proceedings as a part of its normal
course of business. Management does not believe that the ultimate resolution
of these matters will have a material impact on the Company's results of
operations or financial position in any quarterly or annual period.
11. SUBSEQUENT EVENTS
On January 9, 2000, OrbitTravel.com, the Company's wholly owned subsidiary,
executed a content distribution agreement for a term of three years with
AsiaGateway.com, Ltd. Under the terms of this agreement, the Company was
required to issue 200,000 shares of its common stock 30 days from the
execution of this agreement. As of February 16, 2000, since the Company has
not issued such shares, either party may terminate this agreement.
On January 27, 2000, Spartan Capital Management, LLC, a limited liability
company controlled by one of the Company's directors and executive officers,
assigned to the Company its rights and obligations under an agreement dated as
of the same date pursuant to which the Company purchased the intellectual
property assets related to the TravelFile website previously owned by Orbit
Network for $60,000 in cash, a note payable due in 2000 in the amount of
$540,000, and the future issuance of 3,000,000 shares of the Company's common
stock. A creditor of Orbit Network acquired these assets from Orbit Network
through a judicial foreclosure proceeding on January 13, 2000. Under the terms
of the agreement, the Company is required to pay two independent contractors a
total of $450,000 over three years in exchange for professional consulting
services to the Company.
A holder of the Company's convertible preferred stock ("the holder") paid
$97,915 on the Company's behalf during 1998 to satisfy some of the Company's
payroll obligations to employees. In full satisfaction of the amounts the
Company owes to the holder and other litigation threatened by the holder, the
Company entered into a settlement agreement with the holder as of January 31,
2000 pursuant to which the Company has agreed to issue to the holder
approximately 4.5 million shares of the Company's common stock and deliver to
the holder specific items of personal property owned by the Company and by the
Chairman and CEO of the Company.
On January 31, 2000, the Company entered into an agreement with Wilhelmina
Artist Management LLC pursuant to which the Company would acquire all of the
outstanding common stock of its wholly owned subsidiary,
WilhelminaTravelFile.com, in exchange for approximately 80 million shares of
the Company's common stock. Unless the transaction has closed, either party
may terminate the Wilhelmina agreement at any time after February 15, 2000.
On February 7, 2000, OrbitTravel.com executed a three-year consulting
services agreement and joint content agreement with Laspata/Decaro Studio
Corporation, an organization of designers and photographers, pursuant to which
Laspata/Decaro would provide the Company with media consulting services
regarding brand building and promotion. In addition, Laspata/Decaro would
contribute their library of destination images, photography and other content
for use with the Company's TravelFile service. Under the agreement, the
Company will issue 2.5 million shares of the Company's common stock vesting in
equal annual installments over the three-year term of the agreement. In
addition, the Company has verbally agreed to issue Laspata/Decaro an
additional 100,000 shares upon Laspata/Decaro's completion of each of the
following tasks: (1) the development and implementation of a promotion and
marketing plan; and (2) the provision of additional proprietary content and
the implementation of an agreed-upon operations strategy.
On February 15, 2000, an accredited investor agreed to fund up to $10
million pursuant to a funding commitment letter and subscription agreement
whereby the investor agreed to purchase: (1) 11,223,334 shares of the
Company's common stock at $0.1782 per share on or before March 30, 2000; (2)
11,223,334 shares of the Company's common stock at $0.1782 per share on or
before June 30, 2000; and (3) 18,856,065 shares of the
F-18
<PAGE>
DIVOT GOLF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Company's common stock at $0.3182 per share on or before September 30, 2000.
The investor's agreement to purchase the Company common stock is subject to
several conditions, including the condition that the shares to be issued to
the investor must be freely tradeable. In addition, if the Company's total
equity market capitalization is less than $200 million on any dates that the
investor purchases the Company's common stock, the Company has agreed to
proportionally reduce the per share price of the common stock to be purchased
by the investor. The agreement also requires that the Company appoint two
directors who are nominated by the investor to the Company's board.
On February 24, 2000, the Company executed a non-binding letter of intent to
acquire from AnimInet, Inc. intellectual property assets related to AnimInet's
3-D Internet asset for approximately 473.9 million shares of the Company's
common stock. These intellectual property assets primarily include the
software being developed by AnimInet to create "Streaming Intelligent Beings,"
which are digital 3D computerized personalities that would communicate
directly with Internet users. AnimInet is a corporation formed solely by one
of the Company's executive officers. This letter of intent expires on May 1,
2000.
On October 22, 1998, an individual ("the plaintiff") filed a complaint
against the Company, the Chairman and CEO of the Company and other entities
controlled by him alleging that the Company violated various federal and state
securities laws. On February 16, 2000, the Company and the plaintiff executed
a settlement pursuant to which the Company agreed to pay $150,000 during 2000
and to issue 850,000 shares of the Company's common stock in settlement of
this dispute. Of these shares, 400,000 shares were issued during 1999 and the
remaining 450,000 shares were issued on February 25, 2000. If the Company
fails to pay the amounts due in 2000 or 450,000 shares of the 850,000 shares
of the Company's common stock are not freely tradeable by the terms of the
settlement agreement, the Company has agreed that a judgment for $575,000 may
be entered into against the Company, the Chairman and CEO of the Company and
other entities controlled by him. If the price of the Company's common stock
falls below 30 cents per share for two trading days before March 18, 2000, the
Company has agreed to repurchase 400,000 shares of the Company's common stock
for a minimum of 30 cents per share.
In January and May of 1999, a group of former stockholders and employees
(including a former officer of the Company) and stockholders and employees of
various companies, formerly controlled by the Chairman and CEO of the Company,
filed three lawsuits against the Company, these various acquired corporations,
the Chairman and several of the Company's other executive officers and
stockholders. The complaints alleged, among other things, that (1) the Company
had failed to issue an aggregate of 15 million shares of the Company's common
stock (such number of shares is prior to the effect of a 15-for-1 reverse
stock split effected with regard to the Company's common stock on June 2,
1998), (2) the Company and its officers had committed fraud in the issuance of
securities, and (3) various breaches of contract. The parties to the lawsuit
entered into a settlement agreement as of June 29, 1999 pursuant to which the
plaintiffs agreed to release the defendants from all of the claims in the
lawsuits in exchange for: (1) a note payable to a former officer of the
Company in the amount of $225,000; (2) the issuance of 7.65 million shares of
the Company's common stock (of which 333,334 shares were issuable to the
Company's former officer); and (3) the assignment by the Chairman of the
Company of all of his rights, title or interest to the profits generated from
a few parcels of land in the World Golf Village. The Chairman assigned these
rights to the plaintiffs on June 24, 1999. The Company ordered the 7.65
million shares to be issued in August 1999 and those shares were delivered on
February 29, 2000. As of February 10, 2000, the Company has not repaid any
amounts due under the $225,000 note payable. This note payable currently
matures on March 31, 2000.
F-19
<PAGE>
EXHIBIT 2.4
SALE AND ASSIGNMENT AGREEMENT
This SALE AND ASSIGNMENT AGREEMENT (hereinafter referred to as "the Agreement")
is made and entered into as of January 27, 2000, by and between MARK
SAVORETTI ("Seller"), an individual resident of the State of Florida, and
SPARTAN CAPITAL MANAGEMENT, INC. ("Buyer") a Delaware corporation.
R E C I T A L S:
A. WHEREAS, Seller has good and clear title in and to certain tangible
and intangible personal and intellectual property (the "Assets") by virtue of
the following set of circumstances:
(i) As of January 29, 1997, Applied Information Systems, Inc., a Montana
corporation, ("AIS") was in default under certain payment obligations
owed to Seller, which obligations were secured by a first-position
security interest in certain tangible and intangible personal and
intellectual property (the "Assets") which Seller held as a secured
creditor of AIS;
(ii) Seller subsequently acquired all rights, title and interest in and to
the Assets through strict foreclosure pursuant to M.C.A. (S)
30-9-505(2)(a);
(iii) Seller subsequently entered into an Asset Sale and Purchase Agreement
dated April 14, 1997, wherein Seller agreed to sell, transfer and
convey the Assets to Orbit Network, Inc., a Delaware corporation
("Orbit Network");
(iv) Pursuant to the Asset Sale and Purchase Agreement, and as a material
part of the purchase price of the Assets, Orbit Network executed and
delivered to Seller a Promissory Note dated April 14, 1997, in the
principle sum of $771,000, and further granted Seller a purchase
money security interest in the Assets by executing a Security
Agreement;
(v) Seller duly perfected Seller's purchase money security interest in
the Assets by filing the Financing Statements in the offices of the
Montana Secretary of State and California Secretary of State;
(vi) On November 5, 1998, Seller filed an action in Federal District Court
for the District of Montana seeking to foreclose Seller's security
interest in the Assets (the "Civil Action") pursuant to M.C.A.(S)
30-9-101, et seq.;
(vii) As of the date set forth above, the Civil Action is proceeding
towards a stipulated Judgment entered in favor of Seller, which
grants Seller full title and possession in and to the Assets (the
"Foreclosure Judgment");
B. WHEREAS, Seller now desires to sell and deliver the all of his right,
title and interest in and to the Assets to the Buyer, and Buyer desires to
acquire, accept, and receive the Assets from Seller for use in Buyer's future
business operations, all upon the
<PAGE>
terms and conditions set forth herein,.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in consideration of the mutual covenants and
agreements contained herein, the Parties hereby agree as follows:
A G R E E M E N T S:
--------------------
1. Sale of Assets: In consideration of the mutual covenants, representations,
--------------
and obligations contained in this Agreement, Seller does hereby sell,
transfer, convey, assign, and deliver to Buyer, and Buyer agrees to
purchase, accept and receive from Seller, all of the Seller's right, title
and interest in and to the specific items of tangible and intangible
personal property and intellectual property owned by the Seller
specifically identified and listed in the Security Agreement attached
hereto as Exhibit "A" and by this reference incorporated herein (the
----------
"Assets"). The sale, transfer, conveyance, assignment, and delivery of the
Assets from the Seller to the Buyer shall be evidenced by a Bill of Sale
which the Seller agrees to execute and deliver to Buyer simultaneously with
the execution of this Agreement. In addition to the Bill of Sale, the
Seller hereby agrees to hereinafter properly execute and deliver to Buyer,
upon Buyer's reasonable request, any such additional documentation or
instruments as may be reasonably necessary to evidence and establish the
sale, transfer, conveyance, and assignment of all right, title, and
interest in and to the Assets from the Seller to the Buyer. If the Seller
fails to provide any such documentation or instruments within ten (10)
business days after the Seller receives a written request from the Buyer
for the same, then the Seller hereby appoints Buyer as his limited attorney
in fact, with the power to execute the requested documents or instruments
in the Seller's name as the Buyer deems reasonably necessary in its
discretion, and any such documents or instruments shall have the same force
and effect as if signed by the Seller.
2. Purchase Price: In consideration for the Seller's sale and transfer of
--------------
Assets as set forth in Section 1 above, Buyer hereby covenants, represents,
warrants and agrees to the following:
(a) $50,000 Cash Payment to Seller. Simultaneously with the execution of
------------------------------
this Agreement, Buyer shall pay to Seller a cash payment in the sum of
Fifty Thousand Dollars ($50,000). Buyer shall pay the cash payment of
$50,000 to Seller in immediately available and collectible funds in
the form of a bank wire transfer directly into the following
designated bank account:
Name of Bank: First Union
Routing Number: 063000021
Name of Account: Gail L. Allen
Account Number: 1090005764101
<PAGE>
(b) $10,000 Cash Payment to Seller's Legal Counsel. The Parties
----------------------------------------------
acknowledge and recognize that the law firm of Worden, Thane & Haines,
P.C. (referred to herein as "WTH") of Missoula, Montana has served as
Seller's legal counsel in the Civil Action. The Parties further
acknowledge and agree that WTH has a lien upon Seller's Claims in the
Civil Action, including any proceeds thereof, pursuant to M.C.A. (S)
37-61-420, which lien shall not exceed the sum of Twenty-Five Thousand
Dollars ($25,000). Buyer desires to acquire all of Seller's rights in
the Assets free and clear of any lien authorized under M.C.A. (S) 37-
61-420. Accordingly, Seller hereby authorizes and instructs Buyer to
pay to WTH a cash payment in the sum of Ten Thousand Dollars
($10,000), immediately upon execution of this Agreement, in partial
satisfaction of sums due and owing by Seller to WTH. Buyer agrees to
pay WTH a cash payment in the sum of Ten Thousand Dollars ($10,000) in
immediately available and collectible funds in the form of a bank wire
transfer directly into the following designated bank account:
Name of Bank: First Interstate Bank
Missoula Office
Address of Bank: 101 East Front
Missoula, MT 59802
Routing Number: 092901683
Name of Account: Worden, Thane & Haines, P.C.
Account Number: 1400922793
(c) Issuance of Shares. Buyer shall transfer to Seller Three Million
------------------
(3,000,000) shares of the common stock of OrbitTravel.com, Inc, a
Delaware corporation (the "Shares"), which Shares are currently held
in Buyer's account. The Shares shall be fully-paid, non-assessable,
and evidenced by four (4) separate and distinct stock certificates to
be issued in the name of Seller, with each such stock certificate
representing Seven Hundred and Fifty Thousand (750,000) Shares. The
parties understand and agree that the Shares will be subject to the
following registration rights and transfer restrictions:
(1) Shares Subject to Registration Rights. Buyer hereby represents
-------------------------------------
and warrants to Seller the Shares will be registered for sale
immediately upon the effective filing of a Form SB-2 Registration
Statement with the Securities and Exchange Commission ("SEC").
(2) Transfer Restrictions. The Shares will be subject to the
---------------------
following "staggered lockup" transfer restrictions under which
Seller may sell, transfer, trade or otherwise dispose of the
Shares at the following times and in the following amounts:
(A) Immediately upon the effective date of registration of the
<PAGE>
Shares with the SEC, Seller shall have the unrestricted right to
sell, transfer, trade or otherwise dispose of any number of the
Shares not to exceed twenty five percent (25%) of the total
Shares;
(B) Commencing ninety (90) days following the effective date of
registration of the Shares with the SEC, Seller shall have the
unrestricted right to sell, transfer, trade or otherwise dispose
of any number of the Shares not to exceed fifty percent (50%) of
the total Shares;
(C) Commencing one hundred and eighty (180) days following the
effective date of registration of the Shares with the SEC, Seller
shall have the unrestricted right to sell, transfer, trade or
otherwise dispose of any number of the Shares not to exceed
seventy five percent (75%) of the total Shares;
(D) Commencing two hundred and seventy (270) days following the
effective date of registration of the Shares with the SEC, Seller
shall have the unrestricted right to sell, transfer, trade or
otherwise dispose of all or any portion of the 3,000,000 Shares;
and
(E) Any additional restrictions imposed by federal and/or state
securities laws.
(d) $535,000 Buyer Note. Simultaneously with the execution of this Agreement,
-------------------
Buyer shall execute and deliver to and in favor of Seller a Promissory Note
in the amount of $535,000.00 (the "Buyer Note") in the form attached hereto
as Exhibit "B" attached hereto and by this reference incorporated herein.
Pursuant to the terms of the Buyer Note, Buyer shall have an unconditional
obligation to pay Seller the principal sum of $535,000.00, together with
accrued interest thereon at the rate of ten percent (10%) per annum
commencing on the Closing Date. The Buyer Note shall become immediately due
and payable in full upon the earliest date to occur of the following: (i) )
that date upon which OrbitTravel.com, Inc., Divot Golf Corporation, or the
Buyer receives any money, proceeds or other consideration resulting from
any filing of a registration statement with the SEC or any public sale of
securities to be issued by either OrbitTravel.com, Inc., Divot Golf
Corporation, or the Buyer; or (ii) that date which is 180 days following
the Effective Date of this Agreement. Buyer represents, warrants and
guarantees that the Buyer Note shall be satisfied and paid from any of the
money, proceeds or other consideration received by Buyer from the sale of
securities. Buyer represents, warrants and guarantees that the Buyer Note
shall be disclosed as a payment obligation and a portion of the "use of
proceeds" with respect to any registration statement hereafter filed by or
on behalf of OrbitTravel.com,
<PAGE>
Inc. with the SEC, including, but not limited to, any Registration
Statement. In addition to the foregoing, Buyer agrees to the following
terms and conditions.
(1) Guarantee of Buyer Note: Buyer's payment obligations under the Buyer
-----------------------
Note shall be unconditionally guaranteed by OrbitTravel.com, Inc. and
Divot Golf Corporation, which guarantee shall be reflected in the
Note.
(2) Prepayment of Buyer Note. Buyer shall be entitled to prepay at any
------------------------
time, without penalty, all or any portion of the unpaid principal
balance outstanding under Buyer Note.
(3) Due on Sale or Transfer. If Buyer sells, transfers, conveys, assigns,
-----------------------
delivers or otherwise disposes of all or any portion of the Assets,
otherwise than in the normal and ordinary course of Buyer's continuing
and on-going business operations, without Seller's prior written
consent, then the entire outstanding principal balance due from Buyer
under Buyer Note, together with any accrued but unpaid interest and
any late payment charges due thereon, shall immediately become due and
payable.
(4) Grant of Security Interest to Seller. To secure Buyer's complete,
------------------------------------
timely and full performance of Buyer's obligations under this
Agreement and the Buyer Note executed by Buyer in accordance with this
Agreement, Buyer hereby grants to Seller a first-position security
interest in and to the Assets, together with any and all proceeds
derived therefrom. Buyer agrees to execute a security agreement in
favor of Seller as the secured party. In the event Buyer fails to
timely and fully make all payments due and owing to Seller under this
Agreement or the Buyer Note, or otherwise fails to timely satisfy and
perform all other duties and obligations under this Agreement or any
documents or instruments executed in accordance with this Agreement,
then Seller may, at Seller's sole option, elect to exercise any and
all of Seller's rights and remedies under the Uniform Commercial Code
adopted in Montana or in any other state having jurisdiction over the
Collateral.
(e) $15,000 Payment to Seller's Legal Counsel. Buyer desires to acquire all of
-----------------------------------------
Seller's rights in the Assets free and clear of any lien authorized under
M.C.A. (S) 37-61-420. Accordingly, in addition to the cash payment to WTH
under Section 2(b) of this Agreement, Seller hereby authorizes and
instructs Buyer to pay to WTH an additional cash payment in the sum of
Fifteen Thousand Dollars ($15,000) in complete satisfaction of all other
sums due and owing by Seller to WTH. The $15,000 cash payment from Buyer to
WTH shall become immediately due and payable in full upon the earliest date
to occur of the following: (i) that date upon which the Buyer
<PAGE>
receives any money, proceeds or other consideration resulting from any
filing of a registration statement with the SEC or any public sale of
securities to be issued by OrbitTravel; or (ii) that date which is 180 days
following the Effective Date of this Agreement. Any sum due and owing to
WTH under this Section 2(e) shall be paid by Buyer prior to the payment of
any sums to Seller under Section 2(c) of this Agreement. Buyer shall pay
WTH the cash payment in the sum of $15,000 in immediately available and
collectible funds in the form of a bank wire transfer directly into the
bank account designated in Section 2(b) of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary,
Seller shall remain responsible for and agrees to satisfy in full any and
all sums due and owing to WTH with respect to legal services rendered by
WTH to Seller in the Civil Action.
(f) Consulting Agreement with Seller. Simultaneously with the execution of this
--------------------------------
Agreement, Buyer shall enter into and execute a Consulting Agreement to
hire and retain Seller as an independent contractor to provide professional
consulting services to Buyer. Pursuant to the terms of the Consulting
Agreement, Buyer shall pay Seller the total sum of Two Hundred Twenty Five
Thousand Dollars ($225,000.00), payable in thirty-six (36) equal monthly
installments of Six Thousand Two Hundred Fifty Dollars ($6,250.00) per
installment. The term of the Consulting Agreement shall be for a period of
36 months commencing on the Closing Date, and may not be terminated prior
to the end of such 36-month term without Seller's prior written consent. In
the event Buyer attempts to terminate such Consulting Agreement prior to
expiration of the 36-month term, then Buyer shall immediately become
obligated to pay all remaining sums owing to Seller for the remaining term
of the Consulting Agreement.
(g) Consulting Agreement With Gail L. Allen. In addition to the Seller
---------------------------------------
Consulting Agreement, simultaneously with the execution of this Agreement
Buyer shall also enter into and execute a Consulting Agreement to hire and
retain Gail L. Allen as an independent contractor to provide professional
consulting services to Buyer. The Consulting Agreement with Gail L. Allen
shall contain the same terms as those set forth in the Consulting Agreement
entered into by and between Buyer and Seller.
(h) Assumption and Satisfaction of Jansec and Pierre Equipment Leases.
-----------------------------------------------------------------
Buyer acknowledges that AIS, Orbit Network and Seller are in default and
have failed to pay all sums due and owing under the following Equipment
Leases: (i) Equipment Lease with Pierre; and (ii) Equipment Lease with
Jansec. Buyer agrees to assume and become responsible for the timely and
immediate payment, satisfaction, and discharge of any and all sums which
are due and owing or may hereafter become due and owing by AIS, Orbit
<PAGE>
Network, or Seller under the above-referenced Equipment Leases.
3. Representations and Warranties of Seller: Seller hereby represents and
----------------------------------------
warrants to Buyer as follows:
(a) Seller's Interests: Seller hereby represents and warrants that,
------------------
subject to subsection (i) below, Seller will transfer full and clear
title to the Assets by virtue of the Foreclosure Judgment, and that
Seller's interests in and to the Assets are senior and superior to
those of any third person or entity. Seller further warrants that
title to the Assets shall be delivered to Buyer free and clear of any
lien, interest, or encumbrance, and that no third person or entity has
claimed an interest in and to the Assets that may be senior to the
interests of the Seller.
(i) Ginsberg Lien: . On or about February 5, 1997, Orbit Network
-------------
granted a security interest in all of its contract rights and
general intangible personal property to Jerome Z. Ginsberg (the
"Ginsberg Lien"), which security interest also included
after-acquired assets. Seller makes the following representations
with respect to the Ginsberg Lien:
(A) Seller will undertake Seller's best efforts in the Civil
Action to notify Ginsberg of the pending Civil Action and to
foreclose the Ginsberg Lien as a subordinate lien in
conjunction with the foreclosure sale of the Collateral in
the Civil Action; and
(B) To the extent that Ginsberg successfully obtains a judgment
from a court of competent jurisdiction declaring the
Ginsberg's holds a security interest in the Assets which has
priority over Savoretti's security interest and that
Ginsberg is entitled to levy upon and execute upon the
Assets in satisfaction of Ginsberg's priority lien, then
Seller agrees to indemnify the Buyer as set forth in the
immediately following subparagraph (i)(C).
(C) In the event Ginsberg successfully obtains a judgment from a
court of competent jurisdiction declaring that Ginsberg
holds a security interest in the Assets which has priority
over Seller's security interest and that Ginsberg is
entitled to levy upon and execute upon the Assets in
satisfaction of Ginsberg's priority lien, then Seller shall
indemnify Buyer from and against any amount payable to
Ginsberg as a result of such action (through judgment,
settlement, or otherwise), to the extent that the Ginsberg
Lien is not satisfied by the Account Proceeds described in
Section 4(h) of this Agreement (the "Ginsberg
Indemnification"). Seller shall have the right to
participate in the defense of any action initiated by
Ginsberg, and Buyer shall have the right to participate in
any such defense. If Seller or the Buyer are unable to
successfully defend any such action by Ginsberg, and
Ginsberg obtains a judgment
<PAGE>
from a court of competent jurisdiction declaring that
Ginsberg holds a security interest in the Assets which has
priority over Seller's security interest and that Ginsberg
is entitled to levy upon and execute upon the Assets in
satisfaction of Ginsberg's priority lien, then Seller's
obligation to indemnify the Buyer from and against the
Ginsberg Lien shall be limited to the following:
(1) To the extent that the Ginsberg Lien is equal to or
less than $115,000, then the Account Proceeds shall
first be used to satisfy the Ginsberg Lien. If the
Account Proceeds are insufficient to satisfy the amount
of the Ginsberg Lien, then Seller shall then pay 100%
of the difference between the amount of the Ginsberg
Lien not in excess of $115,000 and the amount of the
Account Proceeds; and
(2) If and to the extent that the Ginsberg Lien exceeds
$115,000, then pay fifty percent (50%) of that portion
of the Ginsberg Lien which exceeds $115,000.00 and the
Buyer shall be responsible to pay fifty percent (50%)
of that portion of the Ginsberg Lien which exceeds
$115,000.00.
(ii) EVI Lien: Electric Ventures, Inc. ("EVI") was also a party
--------
to the Security Agreement between Orbit Network and Seller
concerning the Assets, and was granted a security interest
in the Assets thereby. Seller has been informed by both
OrbitTravel.com, Inc. and EVI that all cash amounts due to
EVI have been paid, and that any promised Orbit Network
share issuances have been effected. In reliance upon such
representations, the Seller represents and warrants that he
shall deliver the Assets free and clear of any claim by EVI.
(b) No Prior Pledge, Sale, or Assignment: As of the date of this
------------------------------------
Agreement, Seller has not sold, assigned or otherwise pledged all
or any portion of his right, title, and interest in and to the
Assets to any third person or entity, nor has Seller agreed to
any such sale, assignment, or pledge.
(c) No Bankruptcy: The Seller has not sought protection under any
-------------
bankruptcy statute, nor can any trustee in bankruptcy or any
creditor of Seller lay claim to the Assets transferred in
accordance with this Agreement.
(d) Indemnification: With the exception of the Ginsberg Lien, Seller
---------------
hereby agrees to indemnify, defend, and hold harmless the Buyer,
including its parent, affiliates, subsidiaries, successors,
assigns, officers, directors, agents, and employees, from and
against the amount of any and all final judgments (including, but
not limited to, attorneys' fees, expert witness costs, court
costs, and expenses) that may be entered against the Buyer in any
forum, by
<PAGE>
reason of Seller's failure to assign all of his right, title and
interest in and to the Assets being assigned and/or a breach by Seller
of the representations set forth in this Section 3.
(e) Assignment of Security Interest. Upon execution hereof, Seller shall
-------------------------------
execute five (5) separate copies of UCC-3 forms reflecting the
assignment of Seller's security interest in and to the Assets to the
Buyer, and provide the Buyer with such executed UCC-3 forms. In the
event any lien is hereafter asserted against the Assets following the
execution of this Agreement by any person or entity which is not a
party to this Agreement, and such lien does not have priority over or
is subordinate to Seller's purchase money security interest, then the
Buyer shall be entitled to exercise Seller's rights and remedies under
the Uniform Commercial Code with respect to such subordinate lien.
(f) No Warranty: Seller sells, transfers, conveys, assigns and delivers
-----------
the Assets to the Buyer "AS IS" and "WHERE IS" and "WITH ALL FAULTS."
With the exception of Seller's warranties with respect to title,
Seller hereby disclaims all express or implied warranties with respect
to Assets, including disclaimer of the implied warranty of
merchantability and the implied warranty of fitness for a particular
purpose.
4. Representations and Warranties of Buyer: Buyer hereby represents and
---------------------------------------
warrants to Seller as follows:
(a) Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the state of its incorporation;
(b) Buyer has the full power and authority to enter into, execute and
deliver this Agreement and to perform and discharge its duties and
obligations hereunder;
(c) This Agreement constitutes a legal, valid and binding obligation of
the Buyer which is enforceable against Buyer according to the terms
contained herein;
(d) Buyer is not in violation of any provision of its Articles of
Incorporation, its Bylaws, or any other corporate or organizing
instrument to which the Buyer is a party, and the execution and
delivery of this Agreement and the consummation of the transaction
contemplated herein will not result in any such violation;
(e) Impairment. Buyer shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of ownership or
assets, consolidation, merger, dissolution, bankruptcy proceeding, or
any other voluntary or involuntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Agreement or the
Buyer Note executed by Buyer in accordance with this Agreement, but
will act at all times in good faith to assist all Parties in the
carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to
<PAGE>
protect the rights of all Parties under this Agreement.
(f) No Knowledge. Buyer, each Guarantor, and their respective officers,
------------
agents and representatives have no knowledge of:
(1) Claims or demands being made against the Assets by any person or
entity which is not a party to this Agreement, with the exception
of EVI and Ginsberg;
(2) Financial records or other information indicating that EVI has
not received payment for any and all debts, obligations or other
advances due and owing from Orbit Network to EVI, to the extent
such debts, obligations or other advances are subject to the
terms and conditions of the Security Agreement.
(3) Any other recorded security interest in the Assets being
transferred;
(4) Any factors or conditions which would have a material adverse
effect on the present or future financial condition of Buyer or
its ability to satisfy and discharge its duties, obligations and
liabilities as provided in this Agreement and any documents,
instruments and agreements executed in connection with this
Agreement.
(g) No Transfer of Assets: Until Buyer has satisfied, discharged, and
---------------------
performed all of its obligations under this Agreement and pays Seller
all sums due under the Buyer Note, Buyer will not sell, transfer,
assign, or otherwise dispose of any of the Assets other than in the
ordinary course of Buyer's continuing and ongoing business operations,
without first obtaining Seller's prior written consent.
(h) Escrow Account: The Buyer hereby agrees to establish an escrow account
--------------
for the express purpose of satisfying the Ginsberg Lien, in the event
the Seller is unsuccessful in his efforts to foreclose Ginsberg's
security interest in the Assets. Buyer shall cause 50,000 shares of
OrbitTravel.com common stock to be deposited in escrow (the "Escrowed
Stock"). The Escrowed Stock shall be registered through the Form SB-2
Registration Statement referenced in Section 2(c)(1) of this
Agreement. In the event that Ginsberg brings an action to foreclose
the Ginsberg Lien, which action is reduced to a money judgment or
settlement (the terms of which are agreed to by Buyer and Seller), the
Buyer shall liquidate the Escrowed Stock at the market price, and
shall utilize the proceeds (the "Account Proceeds") towards
satisfaction of any such judgment or settlement. Seller shall retain
any Account Proceeds that are in excess of any such judgment or
settlement.
5. Survival of Representations and Warranties. The Parties acknowledge and
------------------------------------------
agree that all covenants, representations and warranties contained in this
Agreement shall survive the Effective Date and the full satisfaction and
performance of this Agreement by each Party. Notwithstanding the full
<PAGE>
satisfaction and performance of this Agreement by any Party, each Party
shall be entitled to pursue any remedy available at law or in equity upon
the occurrence of any breach or default by any other Party with respect to
any term, condition, covenant, representation or warranty contained in this
Agreement.
6. Confidentiality. The Parties hereby agree that the terms and conditions of
---------------
this Agreement shall remain absolutely confidential and, absent an order of
a court of competent jurisdiction, shall not be disclosed or discussed by
either Party or their respective attorneys or other representatives with
any person, entity or governmental agency not a party to this Agreement.
This provision does not prohibit any Party from discussing the terms of
this Agreement with such Party's accountants or other legal advisors,
provided, however, that all such individuals shall also agree to abide by
the confidentiality provisions of this Agreement.
7. Waiver. No waiver of any term, provision, or condition of this Agreement,
------
whether by conduct or otherwise, in any one or more instances, shall be
deemed to be, or shall constitute, a waiver of any other provision hereof,
whether or not similar, nor shall any such waiver constitute a continuing
waiver, and no waiver shall be binding unless executed by the Party making
such waiver.
8. Time of Essence. Time will be of the essence in complying with the terms
---------------
and conditions of this Agreement.
9. Successors Bound By Agreement. This Agreement shall inure to the benefit of
-----------------------------
and be binding upon the Parties to this Agreement and their respective
beneficiaries, successors in interest and assignees.
10. Further Documents. Each Party shall execute such documents and instruments
-----------------
and take such other steps as may be necessary to accomplish the agreements,
obligations and purposes set forth in this Agreement.
11. Merger of Prior Agreements. This Agreement supersedes, merges and voids any
--------------------------
and all prior or contemporaneous discussions, negotiations, written or oral
agreements and all undertakings between the Parties with respect to the
subject matter hereof. The Parties hereby waive and release each other from
any claims, actions or causes of action which relate in any manner to any
prior discussions, negotiations, written or oral agreements, and
undertakings between the Parties with respect to the subject matter hereof.
12. Entire Agreement. This Agreement, including any exhibits and attachments
----------------
hereto, embodies the entire agreement and understanding of the Parties and
supersedes any and all oral or written understandings or agreements
relating to its subject matter. There are no restrictions, promises,
representations, warranties, covenants, or undertakings between the Parties
other than those expressly set forth or referred to herein.
13. Modification. This Agreement shall not be modified, altered, changed or
------------
<PAGE>
amended in any respect, except by a written agreement executed by the party
against whom enforcement of the modification or amendment is sought.
14. Attorney's Fees and Costs. If any Party deems it necessary to commence a
-------------------------
legal proceeding to enforce the terms of this Agreement or any document or
instrument executed in accordance with this Agreement, the Parties agree
that the breaching party or unsuccessful party will pay the reasonable
attorney's fees and legal costs of any and all Parties, both at trial and
on appeal. For purposes of this Section, a party shall be considered an
"unsuccessful party" if such party is ordered, directed or required to pay
more compensation or consideration under a settlement agreement or final
judgment than any amount offered by the unsuccessful party, in writing, to
settle the dispute prior to the commencement of a legal action.
15. Delivery of Assets/Governing Law. The parties understand and agree that the
--------------------------------
Assets referenced in this Agreement are present and shall be delivered by
the Seller in the State of Montana. Notwithstanding the foregoing, this
Agreement and the legal relations between the parties hereto shall be
governed by and construed in accordance with the laws of the State of New
York, and the parties hereby consent to the jurisdiction of the courts of
the State of New York and the Federal District Court for the Southern
District of New York, without giving effect to any choice of law statutes,
rules or principles.
16. No Third Party Beneficiaries: This Agreement is made sole for the benefit
----------------------------
of the parties to this Agreement and their respective successors and
assigns, and no other person or entity shall have or acquire any right by
virtue of this Agreement.
17. Execution in Counterparts and Via Facsimile. This Agreement and all
-------------------------------------------
instruments or documents in accordance herewith may be executed in one or
more counterparts or duplicates, and via facsimile, each of which shall be
deemed to be an original copy of this Agreement and all of which, when
taken together, shall be deemed to constitute one and the same Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement to be
effective as of the date first set forth on Page 1 hereof.
SPARTAN CAPITAL MANAGEMENT, LLC, MARK SAVORETTI
a Delaware corporation
By: /s/ David Noosinow By: /s/ Mark Savoretti
------------------------ --------------------
Mark Savoretti
Name: David A. Noosinow
-----------------------
Title: Executive Director
----------------------
<PAGE>
EXHIBIT "A"
DESCRIPTION OF ASSETS
The Assets which are the subject of this Asset Sale and Purchase
Agreement and which the Seller hereby sells, transfers, conveys, assigns and
delivers to the Buyer in accordance with this Agreement are described as
follows:
(a) All right, title and interest in and to all items of tangible and
intangible personal property and intellectual property owned, held or
used in the management and operation of Applied Information Services,
Inc. ("AIS"), a Montana corporation, which the Seller acquired from AIS
through strict foreclosure under MCA ss. 30-9-505(2)(a), including, but
not limited to, the Assets described in the "Asset List of Applied
Information Services, Inc." attached hereto and made a part of this
Exhibit "A";
(b) WITH THE EXCEPTION OF ANY AIS CORPORATE RECORD BOOKS, MINUTES,
SHAREHOLDER LISTS, ACCOUNTING RECORDS, PAYROLL RECORDS, FINANCIAL
STATEMENTS AND TAX RECORDS WHICH THE SELLER DID NOT ACQUIRE THROUGH
STRICT FORECLOSURE UNDER MCA SS. 30-9-502(2)(A), any other books,
documents, accounts, correspondence, manuals, lists or other
information pertaining to or relating to: (i) Trade secrets concerning
the business and affairs of AIS; (ii) contracts rights and other
intangible rights of AIS with respect to any of AIS's suppliers,
distributors, vendors or customers; (iii) the fixed assets, equipment,
inventory and supplies of AIS; (iv) AIS customer lists; (v) AIS
customer registration files and databases; (vi) AIS vendor and supplier
lists; (vii) AIS marketing, sales, promotional and other literary,
written or video material, and applications for any and all of the
foregoing; (viii) computer software and computer programs designed,
developed, written or improved by AIS; and (ix) computer data, computer
input, computer databases, technologies, systems and structures created
by or used by AIS in the operation of its business and affairs;
(c) All intellectual property rights, trade secrets and copyrights,
whether patentable or nonpatentable and whether or not reduced to
practice, or any other intangible property right of any kind which may
be embodied in the assets of AIS which the Seller acquired from AIS
through strict foreclosure under MCA ss. 30-9-505(2)(a), including, but
not limited to: all licenses of and rights to use licenses for all
revisions, enhancements, improvements, modifications, translations,
abridgments, condensations and expansions developed or created by AIS,
inventions, discoveries, trade secrets, processes, formulas, know-how,
United States and foreign patents, patent applications, patent
disclosures and all related continuations, continuations-in-part,
divisional, reissue, reexamination, utility, model, certificate of
invention and design patents, registrations and applications for
registration of such inventions and patents, trade names, trademarks,
trademark registrations, applications for trademark registrations,
logos, copyrights, and copyright registrations owned or, where not
owned, used by, AIS in its business;
<PAGE>
(d) WITH THE EXCEPTION OF AIS'S ACCOUNTS RECEIVABLE ACQUIRED BY AND
RETAINED BY THE SELLER, all claims, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights of setoff, rights
of recoupment and all rights under warranties, in connection with any
of the foregoing; and
(e) Any and all other rights which the Seller now has or may hereafter
acquire from AIS through strict foreclosure under MCA ss.
30-9-505(2)(a) as a secured creditor.
<PAGE>
EXHIBIT "B"
PROMISSORY NOTE
Principal Amount: New York, NY
$535,000.00 January 27, 2000
- -----------
FOR VALUE RECEIVED, the undersigned, Spartan Capital Management, Inc.
("Borrower"), promises to pay to the order of Mark Savoretti ("Lender"), in
lawful money of the United States of America, the principal sum of Five Hundred
Thirty Five Thousand and No/100 Dollars ($535,000.00) plus simple interest
thereon from the date hereof until this Note is paid in full.
Repayment of the Principal Sum. The Principal Sum shall be due and
------------------------------
payable in one (1) installment of Five Hundred Thirty Five Thousand and No/100
Dollars ($535,000) on the earlier of: (i) the receipt by the Borrower of
proceeds from a Form SB-2 Registration Statement filed by OrbitTravel.com, Inc.;
or (ii) 180 days following the date set forth above (the "Maturity Date").
-------------
Interest: Interest shall accrue on the unpaid Principal Sum at the rate
--------
of ten percent (10%) per annum. Accrued and unpaid interest shall be payable,
together with the unpaid Principal Sum, on the Maturity Date. If the Maturity
Date should fall on a weekend or national holiday, payment shall be due on the
following business day. Interest on this Note shall be computed on the basis of
the actual number of days elapsed during which the unpaid Principal Sum is
outstanding, divided by a year of three hundred sixty-five (365) days. All
payments under this Note shall be applied first to the payment of accrued and
unpaid interest with the remainder applied to the unpaid Principal Sum in
inverse chronological order.
3. Events of Default: The occurrence of any of the events set out below
-----------------
(Events of Default) shall, at the option of the Lender, make all interest and
principal remaining on due under this Note immediately due and payable, without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or other notices or demands of any kind, except as
specified herein:
(a) Borrower shall fail to timely pay any installment of interest or
principal in accordance with the terms of this Note, within ten (10)
days after receipt of written notice of such failure from the Lender,;
(b) Borrower shall file any petition or action for relief under any
bankruptcy, arrangement, reorganization, insolvency, or moratorium
law, or any other law
<PAGE>
or laws for the relief of or relating to debtors, or shall, with
respect to any involuntary petition or action for relief under such
law or laws, consent or fail to timely object to the relief requested
in such petition;
(c) An involuntary petition shall be filed under any bankruptcy statute
against Borrower, or a receiver, trustee, custodian, or similar
officer of the court shall be appointed to take possession of all or
any substantial part of Borrower's properties, unless such petition or
appointment is dismissed or withdrawn or ceases to be in effect within
sixty (60) days from the date of the filing or appointment;
4. Notices: Any communications between the parties or notices provided
-------
for in this Note may be given by mailing them, first class, postage prepaid, to
Lender at:
Mark Savoretti
10075 Ulmerton Road
Largo, FL 34641
And to Borrower at:
Spartan Capital Management, Inc.
One Union Square South, No. 10-J,
New York NY 10003
Attention: Joseph R. Cellura
or to such other address as either party may indicate to the other in writing
after the date of this Note.
5. Assignment: This Note shall bind and inure to the benefit of the parties
----------
and their respective successors and assigns; provided, however, that Borrower
shall not assign this Note or any of the rights, duties, or obligations of
Borrower under this Note without the prior written consent of Lender.
6. Governing Law: This Note shall be interpreted under the laws of the
-------------
State of New York, without giving effect to the conflict of law principles
thereof.
Spartan Capital Management, LLC
a Delaware Corporation
By: /s/ David A. Noosinow
---------------------------
Authorized Signatory
<PAGE>
GUARANTEE
Divot Golf Corporation, a Delaware corporation, and OrbitTravel.com, Inc.,
a Delaware corporation, acting jointly and severally, do herby unconditionally
guarantee the full and timely satisfaction and performance of the Borrower's
payment obligations under this Promissory Note. In the event of Borrower's
default, Lender shall be entitled to immediately seek and obtain satisfaction
and performance of Borrower's obligations from the Guarantors, either jointly or
severally, without the obligation to first seek satisfaction or performance from
the Borrower.
DIVOT GOLF CORPORATION
Per: /s/ Joseph R. Cellura
---------------------------------------
Joseph R. Cellura, Chairman and C.E.O.
ORBITTRAVEL.COM, INC.
Per: /s/ Joseph R. Cellura
---------------------------------------
Joseph R. Cellura, Chairman and C.E.O.
<PAGE>
EXHIBIT 2.5
ASSIGNMENT
This ASSIGNMENT is entered into as of January 27, 2000, by and among
SPARTAN CAPITAL MANAGEMENT, LLC ("Spartan"), a Delaware limited liability
company, and Divot Golf Corporation ("Divot"), a Delaware corporation.
WHEREAS, Spartan entered into a Sale and Assignment Agreement with Mark
Savoretti dated as of January 27, 2000 (the "Agreement"); and
WHEREAS, simultaneously with the execution by Spartan of the Agreement, the
parties hereto desire that Spartan assign all of its rights and obligations
under the Agreement to Travel.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in consideration of the mutual covenants and
agreements contained herein:
1. In exchange for the payment by Divot of $10.00, Spartan hereby assigns
all its rights and obligations under the Agreement to Divot.
2. This Assignment is effective as of the date hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement to be
effective as of the date set forth above.
SPARTAN CAPITAL MANAGEMENT, LLC
By: /s/ David A. Noosinow
----------------------------
Name: David A. Noosinow
--------------------------
Title: Executive Director
-------------------------
DIVOT GOLF CORPORATION
By: /s/ Joseph R. Cellura
----------------------------
Name: Joseph R. Cellura
--------------------------
Title: Chairman & CEO
-------------------------
<PAGE>
EXHIBIT 2.6
RIGHT TO USE AGREEMENT
----------------------
THIS RIGHT TO USE AGREEMENT ("Agreement"), effective as of the 1st day of
November, 1999 (the "Effective Date"), is entered into by and among
OrbitNetwork, Inc. ("Network") and Divot Golf Corporation ("Divot").
Recitals
--------
WHEREAS, Network is substantially engaged in the operation and maintenance
of a networked travel service via the Internet under the name TravelFile, and in
connection therewith, is a party to certain contracts and agreements with its
affiliates, sponsors, suppliers, customers and related third parties, such
contracts and agreements being more particularly described in Exhibit A
---------
(together with all rights, privileges, duties and obligations thereunder, the
"Contracts"); and
WHEREAS, each of the parties desires that Network license to Divot certain
furniture, equipment and related assets more particularly described in Exhibit B
---------
(the "Fixed Assets"); and
WHEREAS, Divot desires to license the Contracts from Network, including the
right to receive all revenues attributable therefrom, and, in connection
therewith, receive an exclusive option to purchase the Contracts and the Fixed
Assets from Network; and
WHEREAS, Network desires to license the Contracts to Divot, including the
right to receive all revenues attributable therefrom, and to grant Divot an
exclusive option to purchase the Contracts and the Fixed Assets, upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Network and Divot hereby agree as
follows:
ARTICLE I
---------
Term of Agreement
-----------------
The term of this Agreement shall commence on the Effective Date and shall
continue in full force and effect for six months thereafter (the "Term"),
subject to earlier termination as hereinafter provided.
ARTICLE II
----------
Grant of License
----------------
2.1 License. Subject to the terms and conditions of this Agreement,
-------
Network hereby grants to Divot, as an independent contractor, an exclusive
license to, during the Term of this Agreement, (a) manage, maintain, operate and
perform the Contracts in accordance with Article VII hereof; (b) receive all
revenues attributable from Divot's management, maintenance, performance and
operation of the Contracts in accordance with Article VIII hereof; and (c) use
the Fixed Assets in a commercially reasonable manner (collectively, the
"License").
-1-
<PAGE>
2.2 Assumption. Subject to the terms and conditions of this Agreement,
----------
Divot hereby accepts the License and assumes the management, maintenance,
operation and performance of the Contracts and the Fixed Assets and the right to
receive all revenues attributable therefrom, as an independent contractor. In
connection therewith, Divot shall be liable for any and all obligations or
liabilities associated with such Contracts and the Fixed Assets as set forth in
Exhibit C (the "Assumed Liabilities"). Except for the Assumed Liabilities,
- ---------
Divot shall not assume nor become liable for any obligation or liability of
Network, whether known, unknown, absolute, contingent or otherwise (the
"Retained Liabilities").
2.3 Ownership and Title. If and until the Option (as defined in Section
3.1) is exercised, Network shall at all times own any and all
-------------------
rights, title and interest in the Contracts and the Fixed Assets, and all
documentation thereto, including any and intangible or intellectual property
rights therein.
2.4. Transfer. The License shall not be transferred, assigned or
--------
sublicensed by Divot without the prior written consent of Network.
2.5 Third Party Consents. To the extent that Network's rights under any
--------------------
of the Contracts may not be licensed without the consent of another person which
has not been obtained, this Agreement shall not constitute an agreement to
license the same if an attempted license would constitute a breach thereof or
be unlawful, and Network, at its expense, shall use reasonable efforts to obtain
any such required consent(s); provided, however, that nothing contained in the
foregoing sentence shall require Network to make any payments or any other
consideration to such other person other than payments due under the Contracts.
If such consent with respect to any Contract shall not be obtained, and the
Contract in question permits Network to subcontract or assign its rights and
obligations thereunder (or does not prohibit Network from subcontracting or
assigning such rights and obligations), then Network shall subcontract or assign
all (but not less than all) of such rights and obligations to Divot. Divot may,
at its option, accept each such subcontract or assignment.
ARTICLE III
-----------
Option to Purchase
------------------
3.1 Grant of Option. Subject to the terms and conditions set forth in
---------------
this Article, Network hereby grants to Divot an exclusive and non-transferable
option to purchase all, but not less than all, of the rights, title and interest
to the Contracts and the Fixed Assets and all benefits and burdens thereunto
appertaining (the "Option"). Upon exercise of the Option, Divot would assume
the Assumed Liabilities and Network would retain the Retained Liabilities.
3.2 Period of Option. The Option granted hereby shall vest and become
----------------
exercisable by Divot upon the Effective Date and, to the extent not previously
exercised, shall continue for six months thereafter until lapsing on 5:00 p.m.,
Eastern Time, on May 1, 2000 (the "Expiration Date") unless this Agreement is
sooner terminated in whole or in part pursuant to Article X, upon which the
Option shall terminate as of the day of notice of such termination by either
party, but in no event later than the Expiration Date, unless the parties
otherwise agree to extend Expiration Date.
3.3 Exercise of Option. The Option may be exercised by Divot at any
------------------
time prior to the Expiration Date or earlier termination of the Option pursuant
to Section 3.2, by the assumption of $4,373,595 of Network convertible debt,
plus accrued and unpaid interest.
-2-
<PAGE>
3.4 Nontransferability. The Option shall not be transferred, assigned or
------------------
sublicensed by Divot without the prior written consent of Network.
ARTICLE IV
----------
Purchase Price and Closing
--------------------------
4.1 Purchase Price. In consideration of the License and Option granted to
--------------
Divot by Network pursuant to Articles II and III above, Divot agrees to pay
Network a purchase price in the principal amount of Five Hundred Thousand
Dollars ($500,000.00) (the "Purchase Price"). The Purchase Price shall be paid
to Network at the Closing.
4.2 Closing. The closing of the purchase and sale of the License and
-------
Option (the "Closing") shall occur contemporaneously with the execution of this
Agreement on the Effective Date at the offices of Divot, or at such other place
as may be mutually agreed upon in writing by Divot and Network.
ARTICLE V
---------
Representations and Warranties of Network
-----------------------------------------
5.1 Authorization and Enforceability. Network hereby warrants and
--------------------------------
represents that:
(a) It has all requisite corporate power and authority to enter into,
and fully perform pursuant to, this Agreement, and that no approvals or
consents of any persons are necessary in connection with the execution of
this Agreement by Network and the performance of its obligations hereunder;
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
properly authorized by all requisite corporate action on the part of
Network; and
(c) This Agreement has been duly executed and delivered by Network.
5.2 Books and Records. Network warrants that its books, records and
-----------------
accounts maintained with respect to the Contracts accurately and fairly reflect,
in reasonable detail, the material transactions related to the Contracts; and
all information provided by Network in this Agreement or any exhibit attached
hereto, or otherwise furnished by Network to Divot is
-3-
<PAGE>
complete and accurate in all material respects and does not fail to state any
material fact necessary to make the information contained therein not
misleading.
5.3 Title to Contracts. Network warrants that it is a party and a
------------------
signatory to all of the Contracts and that it has good and valid title to the
Fixed Assets, free and clear of all liens, claims, charges, security interests
and other encumbrances and defects of title of any kind or nature, and all of
Network's rights under any Contract or Fixed Asset to be licensed to Divot
hereunder may be licensed without the consent of another person.
5.4 Compliance with Law; Authorizations. Network warrants that as of
-----------------------------------
the Closing Date, it shall not be in violation of any law, ordinance or
governmental or regulatory rule or regulation, whether federal, state, local or
foreign, to which the Contracts or the Fixed Assets are subject ("Regulations"),
except where such failures to comply which, in the aggregate, would not have a
material adverse effect on the Contracts or the Fixed Assets. As of the
Effective Date, Network shall own, hold, possess or lawfully use all franchises,
licenses, permits, easements, rights, applications, filings, registrations and
other authorizations ("Authorizations") which are necessary for the management
and operation of the Contracts and the Fixed Assets free and clear of all liens,
charges, restrictions and encumbrances and in compliance with all Regulations,
except where such failures to comply in the aggregate would not have a material
adverse effect on the management and operation of the Contracts and the Fixed
Assets.
5.5 Intellectual Property Matters. Network warrants that the License of
-----------------------------
the Contracts does not infringe upon or unlawfully or wrongfully use any rights
under patent law, copyright law, moral rights law, trade secret law, trademark
law, unfair competition law or other similar rights (the "Trade Rights"). No
litigation or claims are pending and, to Network's knowledge, (a) no inquiries
or investigations are pending and (b) no litigation, claims, inquiries or
investigations are threatened, which challenge or threaten to challenge
Network's right, title and interest with respect to the Trade Rights.
5.6 The Contracts. Network warrants that to Network's knowledge, each
-------------
of the Contracts is valid and enforceable in accordance with its terms; Network
is, and all other parties thereto are, in material compliance with the
provisions thereof; Network is not, and to Network's knowledge, no other party
thereto is, in default in the performance, observance or fulfillment of any
material obligation, covenant or condition contained therein; and no event has
occurred which with or without the giving of notice or lapse of time, or both,
would constitute a material default under any Contract. No Contract by its
terms requires the consent of any party to its assignment in connection with the
transaction contemplated hereby.
5.7 Litigation and Claims. To the best of Network's knowledge, there is
---------------------
no litigation, arbitration, governmental proceeding or investigation pending or
threatened against Network or related to any of the Contracts licensed to Divot
which could reasonably be expected (a) to have a material adverse effect on
Divot's ability to manage, maintain, operate or perform the Contracts, or (b) to
prevent the consummation of the transactions hereunder.
5.8 Governmental Approval. No consent, authorization, order or approval
---------------------
of, or filing or registration with, any governmental commission, board or other
regulatory body is required in connection with the execution and delivery by
Network of the transactions contemplated hereunder, except where the failure to
obtain such consents, authorizations or approvals or to make such filings or
registrations would not prevent the consummation of the transactions
contemplated hereunder.
-4-
<PAGE>
ARTICLE VI
----------
Representations and Warranties of Divot
---------------------------------------
6.1 Authorization and Enforceability. Divot hereby warrants and
--------------------------------
represents that:
(a) It has all requisite corporate power and authority to enter into,
and fully perform pursuant to, this Agreement;
(b) The execution, delivery and performance of this Agreement and the
consummation of the transaction contemplated hereby have been duly and
properly authorized by all requisite corporate action on the part of Divot;
and
(c) This Agreement has been duly executed and delivered by Divot.
6.2 Governmental Approvals. No consent, authorization, order or approval
----------------------
of, or filing or registration with, any governmental commission, board or other
regulatory body is required in connection with the execution and delivery by
Divot of the transactions contemplated hereunder.
6.3 Litigation and Claims. To the best of Divot's knowledge, there is no
---------------------
litigation, arbitration, governmental proceeding or investigation pending or
threatened or prospect against Divot which could reasonably be expected (a) to
have a material adverse on the ability of Divot to manage, maintain, operate or
perform the Contracts on or after the Effective Date or (b) to prevent the
consummation of the transactions contemplated herein.
ARTICLE VII
-----------
Management of the Contracts
---------------------------
7.1 General Management Duties. During the term of this Agreement, Divot
-------------------------
shall use due diligence and its best efforts to manage, maintain, operate and
perform any and all responsibilities, duties and obligations, currently in
effect or hereafter arising, with respect to the Contracts; shall provide such
services as are customarily provided by Network under the Contracts; shall
consult with Network and keep Network advised as to all major or extraordinary
matters and decisions affecting the Contracts; and shall refrain from altering,
modifying, amending, or waiving any terms or provisions of the Contracts except
in the reasonable and ordinary course of performing any duties and obligations
with respect to the Contracts. Divot shall, without limiting the foregoing,
perform the following services and duties for Network in a faithful, diligent
and efficient manner:
(a) Maintain businesslike relations with third parties of the
Contracts and all affiliates and customers of Divot subject to performance
of the Contracts, whose service requests shall be received, considered and
recorded in systematic fashion in order to show the action taken with
respect to each;
-5-
<PAGE>
(b) Pay all general and specific fees, charges, taxes or assessments
arising as a result the management or performance of the Contracts or any
part thereof;
(c) Pay all sums and deposits becoming due and payable under the
provisions of any Contract or any part thereof, and otherwise perform all
covenants and obligations required to be performed under the provisions of
all such Contracts (to the extent that the performance of such covenants
and obligations are within the control of Divot);
(d) Perform such other acts Divot deems reasonable, necessary and
proper in the discharge of Divot's duties under this Agreement; and
(e) Obtain and maintain all licenses, permits and certificates
required by Federal, state or local authorities for the management,
maintenance and operation of the Contracts.
In exercising the foregoing development duties, Divot shall have the
authority to enter into and maintain in effect such contracts, licenses,
agreements and other undertakings on behalf of Network and in Network's name as
Divot shall from time to time reasonably consider appropriate, subject to
applicable laws, ordinances, regulations and permits and to such limitations as
are set forth herein. Divot also hereby agrees to seek to renew on behalf of
Network any of the Contracts on substantially similar terms (or better from
Network's perspective) that expire during the term of this agreement.
7.2 Divot To Act on Behalf of Network. In the performance of Divot's
---------------------------------
duties hereunder, Divot shall act solely as an independent contractor on behalf
of Network and solely for Network's account and upon Network's credit.
7.3 Costs of Management. All costs incurred by Divot in connection with
-------------------
the management, maintenance, operation or performance of the Contracts shall be
borne by Divot.
7.4 Legal Proceedings. Divot shall have the right, in its sole discretion
-----------------
and on behalf of Network if necessary, to institute any and all legal and/or
administrative actions or proceedings to collect revenue, assessments, charges
and other income from the Contracts, to cancel or terminate any Contract or part
thereof for the breach thereof or default thereunder by a third party.
7.5 Debts of Network. Except for Assumed Liabilities, all costs,
----------------
expenses, debts and liabilities owed to third persons which were incurred by
Network pursuant to its ownership,
-6-
<PAGE>
management, maintenance, operation, and performance of the Contracts, to the
extent paid, satisfied, fulfilled or extinguished by Divot, shall be fully and
promptly reimbursed by Network to Divot.
7.6 Licenses and Permits. Divot shall use its best
--------------------
efforts to obtain and maintain all licenses and permits required of Network in
connection with the performance of the Contracts. Network agrees to execute and
deliver any and all applications and other documents and otherwise to cooperate
with Divot in applying for, obtaining and maintaining such licenses and permits.
7.7 Network's Assistance. To the extent Divot may reasonably request from
--------------------
time to time, Network shall cooperate with and use its reasonable best efforts
assist Divot with the management, maintenance, operation and performance of the
Contracts. Notwithstanding anything provided herein to the contrary, if Network
is contacted directly by any person or entity regarding the management or
performance of the Contracts, Network shall promptly refer such person or entity
to Divot.
ARTICLE VIII
------------
Contract Revenues
-----------------
8.1 Revenues. All monies and revenues attributable and earned in
--------
connection with Divot's management, maintenance, operation or performance of the
Contracts shall be, and Network shall take all reasonable and necessary steps to
assure that all such monies and revenues are, paid directly to and received
directly by Divot. To the extent any monies or revenues are received by Network
for or on behalf of Divot in connection with Divot's management, maintenance,
operation and performance of the Contracts, Network shall cause such monies or
revenues be immediately paid to Divot or placed in a depository account
established and designated by Divot. Such monies or revenues shall not be
commingled by Network with any funds belonging to, or held on behalf of, anyone
other than Divot, and shall not be reduced for any holding or transmitting
expenses incurred by Network.
ARTICLE IX
----------
Indemnification
---------------
9.1 Indemnification of Divot. Subject to the provisions of this Article,
------------------------
(a) Network agrees to promptly and diligently defend and hold and
save Divot, its directors, officers, agents, employees, successors and
assigns (an "Indemnified Divot Party") free and harmless from and against
all expenses, claims, liabilities, losses, judgments or damages, including
reasonable attorneys' fees actually incurred, which any Indemnified Divot
Party may suffer or incur, arising out of or in connection with any of the
following:
(i) any misrepresentation, breach of warranty or nonfulfillment
of any agreement or covenant on the part of Network under this
Agreement; and
(ii) any gross negligence or willful misconduct of Network or
its agents, employees or others under the direction or control of
Network.
-7-
<PAGE>
(b) In connection with the foregoing, Network agrees to retain legal
counsel as selected by Divot, or to reimburse any Indemnified Divot Party
for any legal costs that it or any of them actually incurs in retaining its
own counsel, at Divot's option and at Network's sole expense.
9.2 Indemnification of Network. Subject to the provisions of this Article,
--------------------------
(a) Divot agrees to promptly and diligently defend and hold and save
Network, its directors, officers, agents, employees, successors and assigns
(an "Indemnified Network Party") free and harmless from and against all
expenses, claims, liabilities, losses, judgments or damages, including
reasonable attorneys' fees actually incurred, which any Indemnified Network
Party may suffer or incur, arising out of or in connection with any of the
following:
(i) any misrepresentation, breach of warranty or nonfulfillment
of any agreement or covenant on the part of Divot under this
Agreement; and
(ii) any gross negligence or willful misconduct of Network or
its agents, employees or others under the direction or control of
Divot.
(b) In connection with the foregoing, Divot agrees to retain legal
counsel as selected by Network, or to reimburse any Indemnified Network
Party for any legal costs that it or any of them actually incurs in
retaining its own counsel, at Network's option and at Divot's sole expense.
It is expressly understood and agreed that the provisions of Sections 9.1
and 9.2 above shall survive the termination of this Agreement to the extent of
any cause of action arising prior to such termination.
ARTICLE X
---------
Termination
-----------
10.1 Events of Termination. This Agreement shall immediately terminate,
---------------------
without further notice, upon the occurrence of any one or more of the following:
(a) The mutual written consent signed by Network and Divot;
-8-
<PAGE>
(b) The Option is Exercised by Divot in accordance with Article IV;
or
(c) Just cause is shown. "Just cause" shall mean Divot's or
Network's failure to perform any one of its obligations under this
Agreement, or to perform its duties within the terms and conditions of this
Agreement, after written notice from the non-breaching party is given of
such failure and the breaching party does not cure such breach within
thirty (30) days of such written notice.
10.2 Effect of Termination. If this Agreement is terminated in accordance
---------------------
with its terms, except as set forth herein to the contrary, all obligations of
the parties shall cease as of the date of termination, provided that:
(a) Divot and Network shall each be liable to the other for all of
their respective obligations arising hereunder through the date of termination
and for any obligations expressly stated herein to survive any such termination;
(b) Neither party shall be deemed to have waived any rights or
remedies at law or in equity which may have arisen by reason of a breach or
default by the other party in performance of its obligations hereunder; and
(c) In the event of termination for reasons other than just cause as
set forth in Section 10.1(c) above arising from the actions of omissions of
Divot, Divot shall be entitled to receive all monies and revenues attributable
to the Contracts, if any, as provided in Article VIII. Notwithstanding anything
contained herein to the contrary, upon any termination of this Agreement, Divot
shall make a full and complete accounting to Network with respect to all matters
outstanding as of the date of termination, and shall assign to Network all of
its right, title and interest under the Contracts as Network may designate and
deliver to Network all books, records, documents, and other property, whether
tangible or intangible, relating to the Contracts.
ARTICLE XI
----------
Miscellaneous Provisions
------------------------
11.1 Notices. All notices, demands, requests and other communications
-------
required or permitted hereunder shall be in writing and shall be deemed to be
properly delivered or made if personally served or sent by United States
certified mail, return receipt requested, postage prepaid, addressed to the
other party at its address set forth below or at such other address as either
party may from time to time designate by notice to the other, and shall be
deemed effective upon actual receipt, Alternatively, either party may use a
nationally-recognized overnight express courier service, and such notice shall
be deemed effective the next business day after deposit with such nationally-
recognized overnight express courier service, or upon actual receipt, whichever
is sooner.
To Divot: Divot Golf Corporation
201 N. Franklin Street, Suite 200
Tampa, Florida 33602
Attention: Joseph R. Cellura
-9-
<PAGE>
To Network: OrbitNetwork, Inc.
100 Second Street East
Whitefish, MT 59937
Attention: Dean E. Miller
Any party hereto may, at any time, by ten (10) days' written notice given
to the other party hereto, designate any other address in substitution of the
foregoing address to which such notice or communication shall be given.
11.2 Severability. If any term, covenant or condition of this Agreement or
------------
the application thereof to any person or circumstance shall, to any extent, be
held to be invalid or unenforceable, then the remainder of this Agreement, or
the application of such term, covenant or condition to persons or circumstances
other than those as to which it is held to be invalid or unenforceable, shall
not be affected thereby, and each term, covenant or condition of this Agreement
shall be valid and shall be enforced to the fullest extent permitted by law.
11.3 Modification. This Agreement may be amended or modified only by a
------------
written instrument executed by Divot and Network.
11.4 Intentionally omitted.
11.5 Article and Section Headings. Article and Section headings contained
-----------------------------
in this Agreement are for convenience of reference only and shall not be deemed
to have any substantive effect or to limit or define the provisions contained
herein.
11.6 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns; provided, however, that Divot shall not have the right to
assign this Agreement without the prior written consent of Network, it being the
intent of the parties hereto that the services of Divot hereunder are personal
in nature.
11.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without regard to the
conflicts of law provisions thereof.
11.8 Independent Contractor. Divot shall be an independent contractor for
----------------------
all purposes hereunder other than as licensee of the Contracts, and shall not
hold itself out as an agent of Network in any context other than as licensee of
the Contracts pursuant to the terms of this Agreement. Divot, unless
specifically authorized in writing by Network, shall not enter into any
contract, sign any agreement or incur any expense on behalf of or in the name of
Network. Any other relationship between Network and Divot outside the scope of
this Agreement to the contrary notwithstanding, nothing contained herein is
intended to, nor shall it be deemed or construed to, constitute Network and
Divot as partners, joint venturers or otherwise other than as principal and
independent contractor or agent, as the case may be.
-10-
<PAGE>
Signatures Appear on Following Page
-11-
<PAGE>
IN WITNESS WHEREOF, Network and Divot has each caused this Agreement to be
executed and sealed by its duly authorized signatories as of the date first
above written.
ORBIT NETWORK, INC.
By: /s/ Dean Miller
-------------------------------------
Name: Dean Miller
-----------------------------------
Title: President
----------------------------------
DIVOT GOLF CORPORATION
By: /s/ Joseph R. Cellura
-------------------------------------
Name: Joseph R. Cellura
-----------------------------------
Title: Chairman & CEO
----------------------------------
-12-
<PAGE>
EXHIBIT A
---------
LICENSED CONTRACTS
1. Agreement between Orbit Network, Inc. and Amadeus (as set out in Exhibit
10.25 Form 10-KSB for the year ended December 31, 1999).
2. Agreement between Orbit Network, Inc. and Sabre (as set out in Exhibit 10.26
to Form 10-KSB for the year ended December 31, 1999).
3. Agreement between Orbit Network, Inc. and Galileo (as set out in Exhibit
10.27 to Form 10-KSB for the year ended December 31, 1999).
4. Agreement between Orbit Network, Inc. and WorldSpan (as set out in Exhibit
10.28 to Form 10-KSB for the year ended December 31, 1999).
5. Interactive Services Agreement between America Online, Inc. and Orbit
Network, Inc. (as set out in Exhibit 10.24 to Form 10-KSB for the year ended
December 31, 1999).
-13-
<PAGE>
EXHIBIT B
---------
FURNITURE & EQUIPMENT
To be determined prior to option purchase date.
-14-
<PAGE>
EXHIBIT C
---------
ASSUMED LIABILITIES
NONE
-15-
<PAGE>
Exhibit 2.7
DIVOT GOLF CORPORATION
One Union Square South, 10J
New York, New York 10003
(212) 353-8468
February 24, 2000
AnimInet, Inc.
Attn: Mr. Dean E. Miller
Dear Dean:
The purpose of this letter (this "Letter of Intent") is to outline our
mutual intent to enter into definitive agreements (the "Definitive Agreements")
pursuant to which Divot Golf Corporation, a Delaware corporation ("Divot"), will
acquire (the "Transaction") all of the intellectual property assets directly and
indirectly relating to AnimInet, Inc.'s 3-D animation "Streaming Intelligent
Beings" technology (the "Assets"). This Letter of Intent sets forth certain
terms agreed upon in principle that will be embodied in the Definitive
Agreements and is non-binding, except as provided in Section 9.
1. Purchase Price. The aggregate purchase price for the Assets will be
--------------
473,928,276 shares of common stock of Divot (the "Purchase Price"). The shares
of common stock to be delivered shall be subject to proportional adjustment due
to a subdivision, recapitalization, stock split, stock dividend or other event
with regard to the common stock of Divot.
2. Standstill Agreement. AnimInet agrees that until the expiration of this
--------------------
Letter of Intent, and excluding actions with respect to Divot and its designees,
they will not, directly or indirectly, and will not permit any other person,
directly or indirectly, to: (a) solicit, encourage, initiate or participate in
any negotiations, inquiries or discussions with respect to any offer or proposal
to acquire all or any significant part of the business, assets or capital stock
of AnimInet, whether by merger, consolidation, other business combination,
purchase of assets, tender or exchange offer or otherwise (each of the foregoing
constituting an "Acquisition Transaction"); (b) disclose, in connection with an
Acquisition Transaction, any information not customarily disclosed to any
person, other than Divot or its representatives, concerning the business or
assets of AnimInet or afford to any person, other than Divot or its
representatives, access to its properties, books or records, except in the
ordinary course of business and as required by law or pursuant to a governmental
request for information; (c) enter into or execute any agreement relating to an
Acquisition Transaction; or (d) make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Transaction.
<PAGE>
3. Representations and Warranties. Divot and AnimInet shall jointly and
------------------------------
severally make in the Definitive Agreements customary representations and
warranties to Buyer, including, without limitation, representations and
warranties concerning: (i) AnimInet's due organization, (ii) due authorization
of the transaction, (iii) AnimInet's capitalization, (iv) the transaction not
violating any constituent document of AnimInet, law, regulation or contract, (v)
accuracy of financial statements, books and records, (vi) absence of any
undisclosed liabilities, (vii) collectibility of accounts and notes receivable,
(viii) validity of intellectual property and absence of infringement thereof or
of third-party intellectual property, (ix) absence of environmental liabilities,
(x) the quality and condition of assets, (xi) status of material contracts,
(xii) presence of good, valid and marketable title to properties and absence of
encumbrances thereon, (xiii) employment matters, including employment
agreements, employee plans and ERISA matters, (xiv) compliance with laws,
regulations and contracts, (xv) absence of pending or threatened litigation,
(xvi) taxes, (xvii) absence of adverse changes or material events since the
balance sheet date, (xviii) disclosure of related party transactions, and (xix)
absence of improper payments.
4. Closing. (a) The closing of the Transaction will take place on or
-------
before May 1, 2000, at the offices of Divot or Divot's counsel, unless mutually
extended upon agreement by both parties.
(b) The closing will be subject to standard closing conditions
customary to transactions of this type.
5. Access. AnimInet agrees to make available to Divot for inspection,
------
upon reasonable request, all physical assets, books and records of AnimInet and
to use best efforts to obtain the cooperation of AnimInet's accountants, counsel
and agents with Divot's inspection efforts.
6. Expenses. Each party hereto shall pay its own expenses in connection
--------
with the preparation, negotiation and execution of this Letter of Intent, the
Definitive Agreements and the other documents contemplated therein, as well as
the closing of the Transaction.
7. Counterparts. This Letter of Intent may be executed in two or more
------------
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
8. Governing Law. This Letter of Intent shall be governed by and
-------------
construed and enforced in accordance with the laws of the State of New York,
notwithstanding its conflicts of laws rules.
9. Binding Effect. This Letter of Intent is an expression of the
--------------
understanding of the parties with regard to the Transaction; however, none of
the terms set forth above,
<PAGE>
except for those contained in Section 2, which the parties expressly
acknowledge shall be binding agreements, shall be binding upon the parties.
If the terms and conditions stated above are satisfactory to you, please
indicate your agreement by signing and returning to us the enclosed copy of this
Letter of Intent. We look forward to working with you toward a successful
completion of the transaction contemplated herein.
Sincerely,
DIVOT GOLF CORPORATION
By: /s/ Joseph R. Cellura
---------------------
Joseph R. Cellura
AGREED TO AND ACKNOWLEDGED THIS 25th DAY OF FEBRUARY, 2000.
ANIMINET, INC.
By: /s/ Dean E. Miller
------------------
Dean E. Miller
<PAGE>
EXHIBIT 2.8
STOCK ACQUISITION AGREEMENT
This STOCK ACQUISITION AGREEMENT (the "Agreement"), is made and entered
into as of January 31, 2000, by and among OrbitTravel.com, Corporation ("Buyer")
a Delaware corporation formerly known as Divot Golf Corporation, with its
executive office located at One Union Square South Suite 10-F, New York, NY
10003, USA, and Wilhelmina Artist Management LLC, a New York limited liability
company ("Seller"), with its executive office located at 300 Park Avenue South,
Second Floor, New York, NY 10010.
RECITALS
--------
I. Seller owns 1,000 shares of common stock of WilhelminaTravelFile.com,
Inc. ("WTF"), a Delaware corporation, which constitutes all issued and
outstanding shares of capital stock of WTF (such shares hereinafter
referred to as the "WTF Stock"); and
II. Seller desires to exchange its WTF stock for shares of the Buyer's
common stock in a tax free transaction in accordance with the terms and
subject to the conditions set forth in this Agreement (the
"Acquisition").
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, promises, representations and warranties set forth herein, and for
other good and valuable consideration, intending to be legally bound hereby, the
parties agree as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES
- ------------------------------------------
1.1 Acquisition of Stock: Subject to the terms and conditions hereof, at
--------------------
the Closing (as hereinafter defined), Seller will transfer to Buyer,
and Buyer will receive from Seller, all right, title and interest of
Seller in the WTF Stock.
1.2 Consideration: The aggregate acquisition consideration (the
-------------
"Acquisition Consideration") for the WTF stock shall be a number of
shares of Buyer's common stock, .001 par value, equivalent to ten
percent (10%) of the issued and outstanding shares of Buyer on a fully
diluted basis (calculated as of the Closing Date) and rounded to the
nearest whole share, to be issued to Seller at the Closing (the "Buyer
Stock").
1.3 The Closing: The closing of the Acquisition (the "Closing") will take
-----------
place as promptly as practicable, but no later than five (5) business
days following satisfaction or waiver of the conditions set forth in
Article 6, at the offices of Buyer located at One Union Square South,
Suite 10-J, New York, New York 10003, unless another place or time is
agreed to by the parties. The date upon which the Closing actually
occurs is herein referred to as the "Closing Date". On the Closing
Date, the parties hereto shall cause the Acquisition to be consummated
in accordance with the relevant provisions of applicable law. The
parties currently intend that the Closing Date will occur on or prior
to January 28, 2000.
(a) Procedure at the Closing: At the Closing, the parties agree
------------------------
that the following shall occur:
<PAGE>
(i) The parties shall have satisfied each of the
conditions set forth in Sections 5 and 6, and shall
deliver any and all documents required by such
Sections, unless such delivery is waived.
(ii) Seller will assign and transfer to Buyer all of
Seller's right, title, and interest in and to the WTF
Stock by delivering to Seller a certificate or
certificates representing the WTF Stock, in genuine
and unaltered form, duly endorsed in blank or
accompanied by duly executed stock powers endorsed in
blank, with requisite stock transfer tax stamps, if
any, attached.
(iii) Buyer shall execute, provide and deliver to Seller a
certificate or certificates representing the Buyer
Stock, in genuine and unaltered form, duly endorsed
in blank or accompanied by duly executed stock powers
endorsed in blank, with requisite stock transfer
stamps, if any, attached.
1.4 Taking of Necessary Action; Further Action: If, at any time after the
------------------------------------------
Closing, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest Buyer with full right, title
and possession to the WTF Stock, or to vest Seller with full right,
title, and possession to the Buyer Stock, the officers and directors of
both Buyer and Seller are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such
lawful and necessary action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER
- ---------------------------------------------------
Seller hereby represents and warrants to Buyer as follows:
2.1 Organization, Standing, and Power: Seller is a limited liability
---------------------------------
company duly organized, validly existing, and in good standing under
the laws of the State of New York.
(a) WTF is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware; has all
requisite corporate power to own, lease, and operate its
properties and to carry on its business as currently being
conducted; is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so
qualified and in good standing would have a material adverse
effect on the business, assets (including intangible assets),
properties, liabilities (contingent or otherwise), financial
condition, or operations (a "Material Adverse Effect") of WTF;
and WTF does not directly or indirectly own any equity or
similar interest in, or any interest convertible or
exchangeable or exercisable for any equity or similar interest
in, any corporation, partnership, joint venture, or other
business association or entity. WTF is not in violation of any
of the provisions of its Certificate of Incorporation or
Bylaws.
2.2 WTF Capital Structure: The authorized capital stock of WTF consists of
---------------------
One Thousand (1,000) shares of WTF Common Stock, $1.00 par value, of
which Five Hundred (500) shares are issued and outstanding and are held
of record by Seller. All outstanding shares
2
<PAGE>
of WTF Stock have been duly authorized and validly issued, are fully
paid and nonassessable, and are subject to no preemptive rights or
rights of first refusal created by statute, the Certificate of
Incorporation, or Bylaws of WTF or any agreement to which WTF is a
party or by which it is bound. Seller owns all of the issued and
outstanding capital stock of WTF free and clear of any mortgage,
pledge, assessment, security interest, lease, lien, adverse claim,
levy, charge, or other encumbrance of any kind, or any contract or
agreement to grant any of the foregoing ("Liens"). The delivery of a
certificate or certificates at the Closing representing the WTF Stock
will transfer to Buyer good and valid title to the WTF Stock, free and
clear of all Liens.
(a) There are (i) no equity securities of any class of WTF or any
securities exchangeable into or exercisable for such equity
securities issued, reserved for issuance, or outstanding and
(ii) no outstanding subscriptions, options, warrants, puts,
calls, rights, or other commitments or agreements of any
character to which WTF is a party or by which it is bound
obligating WTF to issue, deliver, sell, repurchase, or redeem,
or cause to be issued, delivered, sold, repurchased, or
redeemed, any equity securities of WTF or obligating WTF to
grant, extend, accelerate the vesting of, change the price of,
or otherwise amend or enter into any such option, warrant,
call, right, commitment, or agreement.
2.3 Authority: Seller has all requisite corporate power and authority to
---------
enter into this Agreement and the other documents required to be
executed and delivered by Seller hereunder (collectively, the "Seller
Transaction Documents") and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and
the other Seller Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Seller. This Agreement
and the other Seller Transaction Documents have been duly executed and
delivered by Seller and constitute the valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to creditors'
rights generally, and general principles of equity.
(a) The execution and delivery by Seller of this Agreement and the
other Seller Transaction Documents do not, and the
consummation of the transactions contemplated hereby and
thereby will not: (i) conflict with, or result in any
violation or breach of any provision of the Certificate of
Formation or Operating Agreement of Seller, or the Certificate
of Incorporation or Bylaws of WTF, (ii) result in any
violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default under, or give rise to a
right of termination, cancellation, or acceleration of any
material obligation or loss of any benefit under any note,
mortgage, indenture, lease, contract, or other agreement or
obligation to which Seller or WTF is a party or by which
Seller or WTF or any of their properties or assets may be
bound; (iii) conflict with or violate any permit, concession,
franchise, license, judgment, order, decree, statute, law,
ordinance, rule, or regulation applicable to Seller or WTF or
any of their properties or assets; or (iv) require Seller or
WTF to obtain any consent, approval, or action of, make any
filing with or give any notice to any entity or person
3
<PAGE>
as a result or under the terms of any contract or agreement to
which Seller or WTF is a party or by which their properties or
assets are bound, except in the case of (ii) and (iii) for
such violations, breaches, defaults, rights, or conflicts
which would not be reasonably likely to have a Material
Adverse Effect on WTF or materially affect the ability of
Seller to consummate the transactions contemplated by this
Agreement in accordance with its terms, and, except in the
case of (iv) for such consents, approvals or actions which, if
not obtained or made, would not be reasonably likely to have a
Material Adverse Effect on WTF or materially adversely affect
the ability of Seller to consummate the transactions
contemplated by this Agreement in accordance with its terms.
(b) No consent, approval, order, or authorization of, or
registration, declaration, or filing with, any governmental
entity is required by Seller or WTF in connection with the
execution and delivery of this Agreement or the other Seller
Transaction Documents or the consummation of the transactions
contemplated hereby or thereby except for such consents,
authorizations, filings, approvals, and registrations which,
if not obtained or made, would not be reasonably likely to
have a Material Adverse Effect on WTF or materially adversely
affect the ability of Seller to consummate the transactions
contemplated by this Agreement in accordance with its terms.
2.4 Absence of Undisclosed Liabilities: WTF was formed on January 14, 2000,
----------------------------------
and does not have any liabilities, either accrued or contingent, and
whether due or to become due.
2.5 Absence of Certain Changes or Events: Since the date of its formation,
------------------------------------
WTF has conducted its business in the ordinary course and in a manner
consistent with past practices, and has not suffered any event or
occurrence that has had or could reasonably be expected to have a
Material Adverse Effect on WTF;
2.6 Taxes: Any and all federal, state and other tax returns and reports
-----
required to be filed by WTF have been duly filed and all taxes and
other assessments and levies (including all interest and penalties)
which may be owed by WTF as of the date of this Agreement have been
paid in full.
2.7 Intellectual Property: WTF owns, or is licensed or otherwise possesses
---------------------
legally enforceable rights to use, all patents, trademarks, trade
names, service marks, and copyrights, and any applications for and
registrations of such Intellectual Property, and all processes,
formulae, methods, schematics, technology, know-how, computer software
programs or applications, and tangible or intangible proprietary
information or materials that are necessary to conduct the business of
WTF as currently conducted.
2.8 Contracts: WTF is a party to a binding agreement with the Seller that
---------
provides an exclusive license for the electronic distribution via the
Internet of certain travel related information (the "License
Agreement"), a true and accurate copy of which is attached hereto as
Exhibit "A" and by this reference incorporated herein. WTF is not a
party or subject to any other binding agreements, obligations, or
commitments, written or oral:
4
<PAGE>
(a) that call for any fixed and/or contingent payment or
expenditure or any related series of fixed an/or contingent
payments or expenditures by or to WTF totaling more than
$25,000.00 in any calendar year;
(b) with agents, advisors, salesmen, representatives, contractors,
or consultants that are not cancelable by it on no more than
thirty (30) days notice and without liability, penalty, or
premium;
(c) that restricts WTF from carrying on anywhere in the world its
business or any portion thereof as currently conducted;
(d) to provide funds to or to make any investment in any other
person or entity (in the form of a loan, capital contribution,
or otherwise);
(e) with respect to obligations as guarantor, surety, co-signer,
endorser, co-maker, indemnitor, or otherwise in respect of the
obligation of any other person or entity;
(f) for any line of credit, standby financing, revolving credit,
or other similar financial arrangement;
(g) with any distributor, original equipment manufacturer, value
added remarketer or other person for the distribution of any
WTF products.
WTF is not in material default under or in material breach or violation
of, nor is there any valid basis for any claim of material default by
WTF under, or material breach or violation by WTF of, any contract,
commitment, or restriction to which WTF is a party or by which WTF or
any of its properties or assets is bound (including the License
Agreement). To WTF's or Seller's knowledge, no other party is in
material default under or in material breach or violation of, nor is
there any valid basis for any claim of material default by any other
party under any contract, commitment, or restriction to which WTF is a
party or by which WTF or any of its properties or assets is bound.
2.9 Compliance with Laws: WTF has complied in all material respects with,
--------------------
is not in material violation of, and has not received any notices of
violation with respect to, any statute, law, or regulation applicable
to the ownership or operation of its business.
2.10 Litigation: There is no action, suit, proceeding, claim, arbitration,
----------
or investigation pending before any agency, court, or tribunal, or, to
Seller's and WTF's knowledge, threatened against WTF or any of its
properties or officers or directors (in their capacities as such).
There is no judgment, decree, or order against WTF or, to Seller's or
WTF's knowledge, any of its directors or officers (in their capacities
as such) that could prevent, enjoin, or materially alter or delay any
of the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on WTF.
2.11 Restrictions on Business: There is no agreement, judgment, injunction,
------------------------
order, or decree binding upon WTF which has or could reasonably be
expected to have the effect of
5
<PAGE>
prohibiting or materially impairing any current business practice of
WTF or the conduct of its business as currently conducted.
2.12 Governmental Authorization: WTF has obtained each governmental consent,
--------------------------
license, permit, grant, or other authorization of a governmental entity
that is required for the operation of the business of WTF as currently
conducted except for those which, if not obtained, would not be
reasonably likely to have a Material Adverse Effect on WTF.
2.13 Broker's and Finder's Fees: Seller has not incurred, nor will it incur,
--------------------------
directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.14 Investment Representations:
--------------------------
(a) The Buyer Stock is being acquired for Seller's own account,
for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended,
or other applicable securities laws.
(b) Seller is an "Accredited Investor" as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended.
(c) Seller shall abide by the lockup provisions concerning the
Buyer Stock set forth in Section 3.4(b) of this Agreement.
2.15 No Misrepresentation: No representation or warranty by Seller in this
--------------------
Agreement, and no written statement, certificate, or schedule furnished
or to be furnished by or on behalf of Seller pursuant to this
Agreement, when taken together, contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER
- --------------------------------------------------
Buyer represents and warrants to Seller as follows:
3.1 Organization, Standing, and Power: Buyer is a corporation duly
---------------------------------
organized and validly existing under the laws of the State of Delaware.
Buyer has the corporate power to own its properties and to carry on its
business as now being conducted.
3.2 Authority: Buyer has all requisite corporate power and authority to
---------
enter into this Agreement and the other documents required to be
executed and delivered by Buyer hereunder (collectively, the "Buyer
Transaction Documents") and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and
the other Buyer Transaction Documents and the consummation of the
6
<PAGE>
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Buyer. This Agreement
and the other Buyer Transaction Documents to which they are parties
have been duly executed an delivered by Buyer and constitute the valid
and binding obligations of Buyer, enforceable against Buyer in
accordance with their terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium, or other similar
laws and other similar laws affecting creditors' rights generally, and
(ii) general principles of equity.
(a) The execution and delivery by Buyer of this Agreement and the
other Buyer Transaction Documents do not, and the consummation
of the transactions contemplated hereby and thereby will not:
(i) conflict with, or result in any violation or breach of any
provision of the Certificate or Articles of Incorporation or
Bylaws of Buyer, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both)
a default under, or give rise to a right of termination,
cancellation, or acceleration of any material obligation or
loss of any benefit under any note, mortgage, indenture,
lease, contract, or other agreement or obligation to which
Buyer is a party or by which Buyer or any of its properties or
assets may be bound; (iii) conflict with or violate any
permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule, or regulation
applicable to Buyer or any of its properties or assets; or
(iv) require Buyer to obtain any consent, approval, or action
of, make any filing with, or give any notice to any entity or
person as a result or under the terms of any contract or
agreement to which Buyer is a party or by which their
properties or assets are bound, except in the case of (ii) and
(iii) for such violations, breaches, defaults, rights, or
conflicts which would not be reasonably likely to have a
Material Adverse Effect on Buyer and its parents and
subsidiaries, taken as a whole, or materially affect the
ability of Buyer to consummate the transactions contemplated
by this Agreement in accordance with its terms.
(b) No consent, approval, order, or authorization of, or
registration, declaration, or filing with, any Governmental
Entity (as defined in Section 8.2) is required by Buyer in
connection with the execution and delivery of this Agreement
or the other Buyer Transaction Documents or the consummation
of the transactions contemplated hereby or thereby except for
such consents, authorizations, filings, approvals, and
registrations which, if not obtained or made, would not be
reasonably likely to have a Material Adverse Effect on Buyer
or materially adversely affect the ability of Buyer to
consummate the transactions contemplated by this Agreement in
accordance with its terms.
3.3 Investment Representations:
--------------------------
(d) The WTF Stock is being acquired for Buyer's own account, for
investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the
meaning of the Securities Act of 1933, as amended, or other
applicable securities laws.
(e) Buyer is an "Accredited Investor" as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended.
7
<PAGE>
3.4 The Buyer Stock: The Buyer Stock to be issued in accordance with the
---------------
terms and provisions of this Agreement will be duly authorized, validly
issued, fully paid, and non-assessable.
(a) Registration: As soon as practicable (but in no event later
------------
than sixty (60) days following the Closing, Buyer shall
prepare and file with the Securities and Exchange Commission
("SEC") a form SB-2, registering 100% of the Buyer Stock
issued to Seller in accordance with this Agreement, and Buyer
shall use its best efforts to have such Registration Statement
declared effective by the SEC within ninety (90) days
following the Closing. Following the effective registration of
the Buyer Stock, such shares shall be freely tradable under
the federal securities laws and any applicable state "blue
sky" laws, and shall not be "restricted securities" as defined
in Rule 144 of the Securities Act of 1933 ("Rule 144").
3.5 Brokers' and Finders' Fees: Buyer has not incurred, nor will it incur,
--------------------------
directly or indirectly, any liability for brokerage or finders' fees or
agent's commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
SECTION 4. ADDITIONAL AGREEMENTS
- --------------------------------
4.1 Limitation on Trading/Staggered Lockup. In consideration for Buyer
--------------------------------------
performing its obligation to register the Buyer Stock issued to Seller
pursuant to this Agreement, the Seller hereby agrees not to sell, make
any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of ("Trade") such Buyer Stock or other securities
exercisable or exchangeable for, or convertible into, Buyer Stock,
except as follows:
(i) The Buyer Stock shall be subject to a "Staggered lockup," such
that the Seller may only Trade up to twenty five percent (25%)
of the aggregate amount of its initially issued registered
Buyer Stock at the following times: (1) immediately following
the effective date of Registration; (2) ninety (90) days
following the effective date of Registration; (3) one hundred
eighty (180) days following the effective date of
Registration; and (4) any amount of Buyer Stock two hundred
seventy (270) days following the effective date of
Registration; and
(ii) In accordance with such other limitations as may be imposed
upon the shares by applicable governmental regulations.
4.2 Confidentiality: "Confidential Information" as used in this Agreement
---------------
shall mean any information, not generally known in the trade or
industry, which was obtained from the parties to this Agreement, or
which was learned, discovered, developed, conceived, originated, or
prepared during or as a result of any performance hereunder and which
falls within the following general categories: (i) information relating
to trade secrets of the parties; (ii)information relating to existing
or contemplated products, services, technology, designs, computer
systems, computer software and research, or developments of the
parties; (iii) information relating to business plans, sales or
8
<PAGE>
marketing methods, methods of doing business, customer lists, customer
usages and/or requirements, names of sales representatives, and
supplier information of the parties; (iv) information relating to
proprietary computer software not generally known to the public; and
(v) any other confidential information that the parties may wish to
protect by patent, copyright, or by keeping such information secret and
confidential.
(a) The party which receives confidential information from the
other party agrees to maintain such information in secrecy at
all times, and to take reasonable steps, including such steps
as it takes to protect its own proprietary information, prior
to and (if applicable) after termination of this Agreement, to
prevent the duplication or disclosure of any such confidential
and proprietary information, other than by or to its own
employees or agents who must have access to such information
to perform such party's obligations hereunder. Information of
either party shall not be subject to the obligations imposed
by this Section if such information is publicly available or
is lawfully obtained by the disclosing party from another
source free of restrictions or is independently developed by
the disclosing party.
4.2 Expenses: Regardless of whether the transaction provided for herein is
--------
consummated, all fees and expenses incurred in connection with such
share exchange including, without limitation, all legal, accounting,
financial advisory, consulting and all other fees and expenses of third
parties incurred by a party in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the
transactions contemplated hereby, shall be the obligation of the
respective party incurring such fees and expenses.
4.3 Public Disclosure: Following the execution of this Agreement, the
-----------------
parties shall agree to the text of the initial public disclosure to be
made concerning the transaction discussed in this Agreement. The
parties shall further agree on the timing and nature of such
disclosure. No disclosure (whether or not in response to an inquiry) of
the existence or nature of this Agreement shall be made by any party
hereto unless approved in writing by duly authorized officers of all
parties prior to release, provided that such approval shall not be
unreasonably withheld and subject in any event to Buyer's parent's
obligation to comply with applicable securities laws and stock market
regulations.
4.4 Reasonable Efforts: Subject to the terms and conditions provided in
------------------
this Agreement, each of the parties hereto shall use its reasonable
efforts to take promptly, or cause to be taken, all actions, and to do
promptly, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby to obtain all necessary
waivers, consents and approvals and to effect all necessary
registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions contemplated by this Agreement for the
purpose of securing to the parties hereto the benefits contemplated by
this Agreement.
4.5 Notification of Certain Matters: Seller shall give prompt notice to
-------------------------------
Buyer, and Buyer shall give prompt notice to Seller, of (a) the
occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is likely to cause any representation or
warranty
9
<PAGE>
of any party, respectively, contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Closing except as
contemplated by this Agreement, and (b) any failure of Seller or Buyer,
as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this
Section 4.5 shall not limit or otherwise affect any remedies available
to the party receiving such notice.
4.6 Taxes: The parties understand and agree that the transaction
-----
contemplated hereby is intended to be a tax-free exchange of shares as
described in the Internal Revenue Code.
SECTION 5. CONDITIONS TO THE CLOSING
- ------------------------------------
5.1 Conditions to Obligations of Each Party: The respective obligations of
---------------------------------------
each party to this Agreement to effect the transactions provided for
herein shall be subject to the satisfaction at or prior to the Closing
of the following conditions:
(a) Director and/or Stockholder Approval: Director and/or
------------------------------------
Stockholder approval shall have been obtained;
(b) No Injunctions or Restraints; Illegality: No temporary
----------------------------------------
restraining order, preliminary or permanent injunction, or
other order issued by any court of competent jurisdiction or
other legal or regulatory restraint or prohibition preventing
the consummation of the transactions provided for herein shall
be in effect;
(c) Regulatory Approvals and Third Party Consents: All
---------------------------------------------
governmental and third party consents, orders and approvals
legally required for the consummation of the transactions
provided for herein shall have been obtained and be in effect
as of the Closing;
5.2 Additional Conditions to the Obligations of Buyer: The obligations of
-------------------------------------------------
Buyer to effect the transactions provided for herein are subject to the
satisfaction of each of the following additional conditions, any of
which may be waived in writing exclusively by Buyer:
(a) The representations and warranties of Seller set forth in this
Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier
date) as of the Closing Date, except for changes contemplated
by this Agreement and except in all cases for such breaches
of, inaccuracies in or omissions from such representations and
warranties that do not have a Material Adverse Effect.
(b) Seller shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) The exclusive license granted to WTF by Seller shall be in
full force and effect in accordance with its terms as of the
Closing Date.
10
<PAGE>
5.3 Additional Conditions to the Obligations of Seller: The obligations of
--------------------------------------------------
Seller to effect the transactions provided for herein are subject to
the satisfaction of each of the following additional conditions, any of
which may be waived in writing exclusively by Seller:
(a) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier
date) as of the Closing Date, except for changes contemplated
by this Agreement and except in all cases for such breaches
of, inaccuracies in or omissions from such representations and
warranties that do not have a Material Adverse Effect.
(b) Buyer shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
SECTION 6. TERMINATION, AMENDMENT, AND WAIVER
- ---------------------------------------------
6.1 Termination: This Agreement may be terminated and the transaction
-----------
abandoned at any time prior to the Closing:
(a) By mutual consent of the parties;
(b) By either party if: (i) the Closing has not occurred by
February 15, 2000 (provided that the right to terminate this
Agreement under this clause 6.1(b)(i) shall not be available
to any party whose willful failure to fulfill any obligation
hereunder has been the cause of, or resulted in, the failure
of the Closing to occur on or before such date); (ii) there
shall be a final non-appealable order of a federal or state
court in effect preventing consummation of the transactions
provided for herein; or (iii) there shall be any statute,
rule, regulation or order enacted, promulgated or issued or
deemed applicable to the transactions provided for herein by
any governmental entity that would make consummation of the
transactions provided for herein illegal;
(c) By either party if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to the transactions provided for
herein by any governmental entity, which would: (i) prohibit
Buyer's ownership of the WTF Stock; (ii) prohibit Seller's
ownership of the Buyer Stock; or (iii) compel Buyer to dispose
of or hold separate, as a result of the Acquisition, any
material portion of the business or assets of WTF.
Where action is taken to terminate this Agreement pursuant to this
Section 6.1, it shall be sufficient for such action to be authorized by
the Board of Directors (as applicable) of the party taking such action.
6.2 Effect of Termination: In the event of termination of this Agreement as
---------------------
provided in Section 6.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of either party
or their respective officers, directors or stockholders,
11
<PAGE>
provided that each party shall remain liable for any breaches of this
Agreement prior to its termination.
6.4 Amendment: Except as is otherwise required by applicable law, this
---------
Agreement may be amended by the parties hereto at any time only by
execution of an instrument in writing signed on behalf of each of the
parties hereto.
6.5 Extension; Waiver: At any time prior to the Closing, either party may,
-----------------
to the extent legally allowed, (a) extend the time for the performance
of any of the obligations of the other party hereto, (b) waive any
inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto, and (c)
waive compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right of such party at a
later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term in
this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or breach
or a waiver of any other condition or of the breach of any other term
of this Agreement.
SECTION 7. INDEMNIFICATION
- --------------------------
7.1 Survival of Representations and Warranties: All of the representations
------------------------------------------
and warranties of Seller and Buyer contained in this Agreement shall
survive the Closing Date for a period of twelve (12) months after which
they shall expire and be of no further force or effect.
7.2 Seller's Indemnification: Seller hereby agrees to indemnify and hold
------------------------
harmless Buyer, including its affiliates, subsidiaries, successors,
assigns, officers, directors, agents, and employees, from and against
any and all liabilities, damages, losses, expenses, claims, demands,
suits, fines, or judgments (including, but not limited to, attorneys'
fees, expert witness costs, court costs, and expenses) that may at any
time be threatened against, suffered by, accrued against, charged to,
or recoverable from Buyer in any forum, by reason of:
(a) The breach in any material respect of any representation or
warranty of Seller contained in or made pursuant to this
Agreement;
(b) A material breach in any covenant or agreement of Seller
contained in this Agreement;
7.3 Buyer's Indemnification: Buyer hereby agrees to indemnify and hold
-----------------------
harmless Seller, including its affiliates, subsidiaries, successors,
assigns, officers, directors, agents, and employees, from and against
any and all liabilities, damages, losses, expenses, claims, demands,
suits, fines, or judgments (including, but not limited to, attorneys'
fees, expert witness costs, court costs, and expenses) that may at any
time be threatened against,
12
<PAGE>
suffered by, accrued against, charged to, or recoverable from Seller in
any forum, by reason of:
(a) The breach in any material respect of any representation or
warranty of Buyer contained in or made pursuant to this
Agreement;
(b) A material breach in any covenant or agreement of Buyer
contained in this Agreement;
SECTION 8. GENERAL PROVISIONS
- ------------------------------
8.1 Non-Survival of Representations and Warranties: Except as explicitly
----------------------------------------------
set forth in this Agreement, the representations and warranties set
forth in this Agreement shall not survive beyond the Closing.
8.2 Notices: All notices and other communications hereunder shall be in
-------
writing, shall be effective when received, and shall in any event be
deemed to have been received (a) when delivered, if delivered
personally or by commercial delivery service, (b) three (3) business
days after deposit with U.S. Mail, if mailed by registered or certified
mail (return receipt requested), (c) one (1) business day after the
business day of deposit with Federal Express or similar nationally
recognized overnight courier for next day delivery (or, two (2)
business days after such deposit if deposited for second business day
delivery), if delivered by such means, or (d) one (1) business day
after delivery by facsimile transmission with copy by U.S. Mail, if
sent via facsimile plus mail copy (with acknowledgment of complete
transmission), to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to Buyer, to:
OrbitTravel.com, Inc.
One Union Square South, No. 10-J
New York NY 10003
Attention: Joseph Cellura, Chairman & CEO
if to Seller, to:
Wilhelmina Artist Management, LLC
300 Park Avenue South
2nd Floor
New York, NY 10010
Attention: Dieter Esch, Managing Member
8.3 Interpretation: The words "include," "includes" and "including" when
-------------- ------- -------- ---------
used herein shall be deemed in each case to be followed by the words
"without limitation." The word "agreement" when used herein shall be
------------------ ---------
deemed in each case to mean any contract, commitment or other
agreement, whether oral or written, that is legally binding. The
13
<PAGE>
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When reference is made herein to "the
business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include
all direct and indirect subsidiaries of such entity.
8.4 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 counterparts have
been signed by each of the parties and delivered to the other party, it
being understood that all parties need not sign the same counterpart.
Execution of this Agreement via facsimile shall have the same force of
authority as an original signature.
8.5 Entire Agreement: This Agreement, the schedules and Exhibits hereto,
----------------
and the documents and instruments and other agreements among the
parties hereto referenced herein: (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof; and
(b) are not intended to confer upon any other person any rights or
remedies hereunder.
8.6 Severability: In the event that any provision of this Agreement or the
------------
application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the
application of such provision to other persons or circumstances will be
interpreted in such a manner so as reasonably to effect the intent of
the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the
economic, business and other purposes of such void or unenforceable
provision.
8.7 Other Remedies: Except as otherwise provided herein, any and all
--------------
remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy.
8.8 Specific Performance: The parties hereto 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 the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof
in any court of the United States or any state having jurisdiction,
this remedy being in addition to any other remedy to which they are
entitled at law or in equity.
8.9 Governing Law: This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, regardless of the
conflicts of law principles thereof. Each of the parties hereto
consents to the exclusive jurisdiction of the courts of the State
14
<PAGE>
of New York, and any federal court sitting in the Southern District of
the State of New York, and that process may be served upon them in any
manner authorized by the laws of the State of New York for such persons
and waives and covenants not to assert or plead any objection which
they might otherwise have to the laying of venue in such jurisdiction
and such process.
8.10 Assignment: No party may assign either this Agreement or any of its
----------
rights, interests, or obligations hereunder without the prior written
approval of the other parties hereto. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
8.11 Absence of Third Party Beneficiary Rights: No provisions of this
-----------------------------------------
Agreement are intended, nor shall be interpreted, to provide or create
any third party beneficiary rights or any other rights of any kind in
any client, customer, affiliate, partner of any party hereto or any
other person or entity unless specifically provided otherwise herein.
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement
to be signed by their duly authorized respective officers, as of the date first
written above.
ORBITTRAVEL.COM, INC.
By: /s/ Joseph R. Cellura
-----------------------------------------
Joseph R. Cellura
Chairman and CEO
WILHELMINA ARTIST MANAGEMENT, LLC
By: /s/ D. Esch
-----------------------------------------
Print: Dieter Esch
-------------------------------------
Title: President
-------------------------------------
15
<PAGE>
EXHIBIT 4.3
February __, 2000
Dear Divot Golf Corporation Preferred Stockholder:
Divot Golf Corporation ("Divot") hereby offers to exchange all of your
outstanding shares of preferred stock and outstanding warrants pursuant to the
terms and conditions contained herein (the "Exchange"). By acknowledging below,
you agree to the terms and conditions of the Exchange as set forth below.
You hereby agree to irrevocably surrender, duly endorse, if applicable, and
tender to Divot all of your outstanding shares of preferred stock and
outstanding warrants in exchange for the right to receive the number of fully
paid and nonassessable shares of Divot's common stock equal to the product
obtained by multiplying the total number of shares of preferred stock that you
own by the liquidiation preference of $1,000, multiplied by the conversion ratio
of $.15. Divot shall cause to be issued your shares of common stock within 10
business days of the filing with the SEC by Divot of its Annual Report on Form
10-KSB for the year ended December 31, 1999. Simultaneously with the issuance of
the common stock pursuant hereunder (the "Effective Time"), all of your shares
of preferred stock and warrants of Divot then issued and outstanding shall cease
to be outstanding and be automatically canceled with no further action.
As of the Effective Time, all of your rights, privileges, preferences and
limitations with respect to any and all shares of preferred stock and warrants
(including any accrued and unpaid dividends) held by you shall automatically
cease to exist and shall thereafter remain null, void and unexercisable.
No certificates representing fractional shares of Divot common stock will
be issued as a result of the Exchange. Any fractional share interest to which a
Divot stockholder would otherwise be entitled to receive shall be rounded up to
the nearest whole share if such fraction is 0.5 or greater and shall be rounded
down to the nearest whole share if such fraction is less than 0.5.
As promptly as practicable after receipt of the surrendered instrument or
instruments, Divot shall issue and deliver to you a certificate for the number
of full shares of common stock of Divot to which you are entitled by virtue of
the Exchange.
The rights and privileges of each share of Divot common stock issued
pursuant to the Exchange shall be identical to the rights and privileges of the
Divot common stock then issued and outstanding prior to the Exchange. Further,
the shares of Divot common stock issued pursuant to the Exchange are intended to
qualify as securities exempt from registration pursuant to Section 3(a)(9) of
the Securities Act of 1993, as amended, by the fact that the Divot preferred
stock and warrants will be exchanged by Divot with its existing security-holders
exclusively.
You hereby represent and warrant that you have held your shares of
preferred stock for a minimum of one year. Based on your above representation,
we have been advised by outside counsel that
<PAGE>
you have complied with the required holding period for restricted securities
under Rule 144(d) of the Securities Act of 1933. Within three business days of
Divot's notice from a broker that you intend to sell your shares of common
stock, Divot will use its best efforts to cause its outside counsel to issue a
letter stating that, based in part upon your representation, you have complied
with the required holding period under Rule 144(d) of the Securities Act of
1933.
Sincerely,
Joseph R. Cellura
Chief Executive Officer
AGREED AND ACCEPTED:
_______________________________
Signature of Stockholder
Printed Name: ________________________________
Address: ________________________________
________________________________
Facsimile: ________________________________
-2-
<PAGE>
EXHIBIT 4.4
FUNDING COMMITMENT LETTER AND SUBSCRIPTION AGREEMENT
This Funding Commitment Letter and Subscription Agreement ("Letter") is
executed on this 15th Day of February, 2000, by and between Teakwood Ventures,
LLC "Subscriber," a Delaware LLC, and Divot Golf Corporation (the "Company") a
Delaware corporation. This Letter is intended to set forth the definitive
agreement between the parties concerning the purchase of Divot common stock by
Subscriber.
1. SUBSCRIPTION. Subscriber hereby subscribes to purchase the following
Units of shares of Company's common stock (the "Divot Common") in the
manner set forth herein:
A. Unit One: Two Million Dollars ($2,000,000.00) of Divot Common,
priced at Seventeen Point Eight Two Cents ($.1782) per share
(11,223,334 shares), based on a Market Capitalization for the
Company in the amount of $28,000,000.00. Subscriber hereby
subscribes for the purchase of Unit One on or before March 30,
2000.
B. Unit Two: Two Million Dollars ($2,000,000.00) of Divot Common,
priced at Seventeen Point Eight Two Cents ($.1782) per share
(11,223,334 shares), based on a Market Capitalization for the
Company in the amount of $28,000,000.00. Subscriber hereby
subscribes for the purchase of Unit Two on or before June 30,
2000.
C. Unit Three: Six Million Dollars ($6,000,000.00) of Divot Common,
priced at Thirty One Point Eight Two Cents ($.3182) per share
(18,856,065 shares), based on a Market Capitalization for the
Company in the amount of $50,000,000.00. Subscriber hereby
subscribes for the purchase of Unit Three on or before September
30, 2000.
This share price set forth in this Subscription shall be subject to
modification in accordance with Section 2 of this Letter. All funds
shall be paid via wire transfer in accordance with instructions to be
provided by the Company in the amount equal to the purchase price for
the Unit(s) hereby subscribed for. A Unit will be deemed purchased when
payment is made for such Unit in the amount and in the manner set forth
in this Agreement.
2. CONDITIONS TO SUBSCRIPTION. The Subscription set forth in Section 1 of
this Agreement is conditioned upon the following covenants, agreements,
representations, and warranties of the Company, which shall remain in
full force and effect during the term of this letter (unless such
covenant is to remain in effect for a longer period in accordance with
its terms):
(a) Repricing Limit Loss: The Company hereby agrees that if the per
share market price of Divot Common falls below an amount
equivalent to a total market capitalization of $200,000,000.00,
and such reduction in market price
<PAGE>
remains in effect on any of the dates Subscriber has subscribed
for the purchase of a Unit, the share price effective for the
purchase of such Unit shall be adjusted by the same percentage of
the loss in value of the Divot Common.
(b) REGISTRATION OF SHARES: When purchased in accordance with this
Subscription, the Divot Common shall be registered pursuant to the
filing by the Company of an SB-2 Registration Statement with the
Securities and Exchange Commission.
(c) TRADEABILITY: When purchased in accordance with this Subscription,
the Divot Common shall be freely tradable by the Subscriber upon
the effective date of the SB-2.
(d) SHARE CERTIFICATES: When purchased by Subscriber in accordance
with this Letter, the Company shall issue share certificates
representing the purchased Divot Common in accordance with the
Subscriber's instructions.
(e) SEATS ON BOARD OF DIRECTORS: The Company shall make two (2)
outside seats available for the Subscriber's appointees on the
Company's Board of Directors which shall continue to consist of
five (5) members. The Company shall undertake all steps necessary
to ensure the election of the Subscriber appointees to the Company
Board at the next annual meeting of Company shareholders. In
addition, the Company hereby confirms the appointment of Aditha
Reksono as a Special Advisor to the Company's International
Advisory Board.
(f) BUSINESS DEVELOPMENT: The Company shall actively seek out and
include the involvement of Subscriber in all global business
development activities, including international investments and
strategic partnerships.
(g) NO COMMISSIONS: The Company hereby represents and warrants that no
commissions shall be paid to any individual or entity in
connection with Subscriber's investment as described in this
Letter.
3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER: As an inducement to the
Company to offer to the Subscriber the Divot Common for which it has
subscribed, the Subscriber hereby represents and warrants to the
Company as follows, such representations and warranties to survive the
Subscriber's becoming a shareholder of the Company
(a) This Letter constitutes the valid and legally binding obligation
of the Subscriber, enforceable against the Subscriber in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization and other similar laws
now or hereafter in effect relating to creditors' rights
generally.
<PAGE>
(b) The execution, delivery and performance by the Subscriber of this
Letter and the transactions contemplated hereby and thereby will
not constitute a breach of any terms or provisions of, or a
default under, (i) any outstanding indenture, mortgage, loan
agreement or other similar contract or agreement to which the
Subscriber or any of the Subscriber's affiliates is a party or by
which the Subscriber or any such affiliate or its or their
property is bound, (ii) if the Subscriber is a corporation or
other legal entity, its Certificate or Articles of Incorporation
or By-Laws or other constituent documents, (iii) any law, rule or
regulation, or (iv) any order, writ, judgment or decree having
applicability to it.
(c) No consent, license, approval or authorization of any governmental
body, authority, bureau or agency is required on the part of the
Subscriber or any of the Subscriber's affiliates in connection
with the execution, delivery and performance of this Letter, or
the consummation of the transactions contemplated hereby or
thereby.
(d) The Subscriber has received and read carefully all documents
furnished to the Subscriber relating to and describing the Company
and the Divot Common. The Subscriber has had access to all
additional information necessary to verify the accuracy of the
information furnished to it, and has taken all the steps necessary
to evaluate the merits and risks of an investment in the Company.
The Subscriber understands that the Business Plan contains the
reasonable estimates of Company's management and that no assurance
can be given that the financial projections can be met. Subscriber
understands that these securities are highly speculative.
(e) The Subscriber is an "Accredited Investor" as that term is defined
in Section 501(a) of Regulation D promulgated under the Securities
Act of 1933, as amended.
4. GOVERNING LAW. This Letter shall be governed by and construed in
accordance with the laws of the State of New York as if performed
entirely within such state, without giving effect to conflicts of law.
5. NOTICES. Any notice or communication required under this Agreement to
be made to either party shall be typewritten in English and shall be
considered delivered when personally delivered, delivered by registered
U.S. Mail with confirmed receipt (postage prepaid), or delivered by
overnight courier to the address of the party as set forth below:
(a) IF TO THE COMPANY: Divot Golf Corporation
---------------------- One Union Square South, Suite 10-F
New York, NY 10003
Attention: Joseph R. Cellura, Chairman & CEO
<PAGE>
(b) IF TO THE SUBSCRIBER: Teakwood Ventures, LLC
------------------------- 276 5th Avenue, Suite 603,
New York, NY 10001
Attention: Aditha Reksono
6. TITLES AND CAPTIONS: All article and section titles or captions in this
Agreement are for convenience only. They shall not be deemed a part of
this Agreement, and in no way define, limit, extend, or describe the
scope or intent of any of its provisions.
7. BINDING EFFECT: This Agreement shall be binding upon and inure to the
benefit of the Parties and their successors, legal representatives, and
permitted assigns.
8. ENTIRE AGREEMENT: This Letter constitutes the entire agreement between
the parties hereto, and supersedes all prior and contemporaneous
agreements, arrangements, negotiations, and understandings between the
parties hereto relating to the subject matter hereof. There are no
other understandings, statements, promises or inducements between the
parties, oral or otherwise, contrary to the terms of this Letter. No
representations, warranties, covenants, or conditions, express or
implied, whether by statute or otherwise, other than as set forth
herein have been made by any party hereto.
IN WITNESS WHEREOF, the parties have executed this Funding Commitment
Letter and Subscription Agreement as of the date first set forth above.
DIVOT GOLF CORPORATION TEAKWOOD VENTURES, LLC
/s/ Joseph R. Cellura /s/ Aditha Reksono
- --------------------- ------------------
Joseph R. Cellura Aditha Reksono
Chairman and C.E.O. Managing Director
<PAGE>
EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
OrbitTravel.com CORPORATION
AND
JOSEPH R. CELLURA
THIS AGREEMENT IS INTENDED TO AMEND AND RESTATE THE EXECUTIVE EMPLOYMENT
AGREEMENT (this "Agreement") is made and entered into and to be effective as of
June 24, 1999, by and between OrbitTravel.com Corporation f/k/a Divot Golf
Corporation f/k/a Brassie Golf Corporation, a Delaware corporation (the
"Company"), and JOSEPH R. CELLURA as Chairman & Chief Executive Officer
("Executive").
WHEREAS, the Company under its former name Divot golf Corporation f/k/a
BRASSIE GOLF CORPORATION and Executive entered into an Employment Agreement; and
the parties hereby wish to acknowledge the Company name change. The Company and
the Executive hereby acknowledge that OrbitTravel.com Corporation, a Delaware
Corporation has undergone a name change form its former names DIVOT GOLF
CORPORATION f/k/a BRASSIE GOLF CORPORATION and, that all of the obligations,
terms, rights, duties, privileges and which have vested and are due Employee or
from Employee and due Company are to remain in full force and effect throughout
the term of the Agreement and any extension thereto.
WHEREAS, the Company and Executive desire to enter into this Agreement to
assure the Company of the unique and valuable services of the Executive as
Chairman & Chief Executive Officer and to set forth the respective rights and
duties of the parties hereto; and
WHEREAS, the Company: (i) is presently in the business of providing
Internet travel, entertainment and related access services over the Internet
through its ownership and management of various proprietary and technological
holdings, licensing rights, subscription agreements and other related services;
and (ii) intends to invest its available resources in one or more new business
ventures (such activities, present and future, being hereinafter referred to as
the "Business").
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth herein, the Company and Executive agree as
follows:
1
<PAGE>
ARTICLE I
Employment
- ----------
1.1 Employment and Title: The Company hereby employs Executive and Executive
--------------------
hereby accepts such employment, as Chairman & Chief Executive Officer of
the Company, all upon the terms and conditions set forth herein.
1.2 Services: During the Term (as hereinafter defined) hereof, Executive agrees
--------
to perform diligently and in good faith the duties of Chairman & Chief
Executive Officer of the Company under the direction of the Board of
Directors of the Company (the "Board of Directors") Executive agrees to
devote his best efforts and substantially all of his full business time,
energies and abilities to the services to be performed hereunder and for
the exclusive benefit of the Company. Executive shall be vested with such
authority as is generally commensurate with the position of Chairman &
Chief Executive Officer of the Company, as further outlined below.
1.3 Location: The principal place of employment and the location of Executive's
--------
principal offices shall be in both the State of Florida, the State of New
York and the United Kingdom; provided, however, Executive shall form time
to time temporarily perform outside each of these States, such services as
are reasonably required for the proper execution of his duties under this
Agreement.
1.4 Representations: Each party represents and warrants to the other that he/it
---------------
has full power and authority to enter into and perform this Agreement and
that his/its execution and performance of this Agreement shall not
constitute a default under or breach of any of the terms of any agreement
to which he/it is a party or under which he/it is bound. Each party
represents that no consent or approval of any third party is required for
his/its execution, delivery and performance of this Agreement or that all
consents or approvals of any third party required for his/its execution,
delivery and performance of this Agreement have been obtained.
1.5 Sole Discretion: As the term "sole discretion" is used in this Agreement,
---------------
unless otherwise defined, it will be interpreted as the exercise of
reasonable discretion applying normal business practices to a contractual
relationship between a company and its chairman and chief executive
officer.
2
<PAGE>
ARTICLE II
Term
- ----
2.1 Term: The term of Executive's employment hereunder (the "Term") shall
----
commence as of the date hereof (the "Commencement Date") and shall continue
through the seventh anniversary of the Commencement Date (the "Scheduled
Termination Date") unless earlier terminated pursuant to the provisions of
this Agreement.
2.2 Renewal: This Agreement shall be renewed for successive one year terms
-------
unless either party hereto provides written notice of non-renewal at least
thirty (30) days prior to the Scheduled Termination Date of each such term.
Notwithstanding the foregoing, each renewal hereof shall constitute a
separate and distinct agreement. If notice of non-renewal is given by
either party, all terms of this Agreement shall remain in full force and
effect until the earlier of the following (i) a new employment agreement is
entered into by the parties, or (ii) employment is terminated under the
terms and conditions in Article VII hereof.
ARTICLE III
Compensation
- ------------
3.1 Base Salary: As compensation for the services to be rendered by Executive,
-----------
the Company shall pay Executive, during the Term of this Agreement, an
annual base salary equal to Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00), which base salary shall accrue monthly (prorated for periods
less than a month) and shall be paid in equal bimonthly installments, in
arrears. The base salary will be reviewed annually, or more frequently, as
appropriate, by the Board of Directors or the Compensation Committee of the
Board of Directors, as the case may be, in its sole discretion, provided
that the annual base salary shall not be decreased below Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00).
3.2 Vacation & Holidays As further compensation for services to be rendered by
--------------------
the executive, the executive shall accrue twenty one days of annual paid
vacation or leave and shall enjoy all regular state and federal holidays.
3.3 Accrued Pension the company shall provide a retroactive pension and
---------------
compensation retirement plan for the executive. The executive shall have
vested eleven years (11) of accrued time on the date of the execution of
this contract. The company further agrees to pay into the pension fund all
deficiencies in interest and principal payments so as
3
<PAGE>
to bring executive current over the vesting period.
3.4 Stock Options: The Company shall issue Executive options to purchase Five
-------------
Million (5,000,000) shares of the Company's common stock at a per share
market value option price as soon as practicable after the date on which
the Company's proposals regarding a Stock Option Plan commencing the year
2000 and an increase in the Company's authorized common stock are adopted
by the Company's shareholders, if necessary. The Options shall not be
subject to any vesting period. All options shall have an exercise period of
five (5) years. The number and price of the option shares shall be subject
to equitable adjustment in the event the Company's 1-for-20 reverse stock
split is adopted by the Company's shareholders.
(a) Default Provision In the event the company defaults on said severance
-----------------
and the Executive and the company are unable to arrive at a mutually
agreed upon extension the Executive may elect a conversion to
preferred stock at a basis of a seventy five percent (75%) of market
on a ten day trailing average.
(b) No Dilution or Impairment: OrbitTravel.com Corporation f/k/a Divot
-------------------------
Golf Corporation hereby agrees that it shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer
of capital stock or assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this
Agreement, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of Executive
against dilution or other impairment of the Shares issued hereunder.
(c) Anti-Dilution Provision The effects of anti-dilution pursuant to the
------------------------
terms and conditions as contained herein provide that the company
shall be entitled to issue additional shares of its capital stock in
connection with mergers and acquisitions and financing in the ordinary
course of business; provided, however, that in case the Company shall,
at any time after the date hereof, reorganize, recapitalize, issue or
sell any shares of Common Stock or issue warrants, options or other
securities convertible into, or exercisable or exchangeable for,
shares of Common Stock ("Convertible Securities") for a consideration,
or in the case of the issuance of Convertible Securities, an exercise
price or conversion price per share less than the Fair Market Value or
the Exercise Price in effect immediately prior to the issuance or sale
of such securities, then forthwith upon such issuance or sale,
4
<PAGE>
the Exercise Price shall be reduced to the price determined by
dividing (I) an amount equal to the sum of (a) the number of shares of
Common Stock outstanding (after giving effect to the conversion or
exercise of all Convertible Securities) immediately prior to such
issuance or sale multiplied by the then existing Exercise Price and
(b) the aggregate amount of the consideration, if any, received by the
Company upon such issuance or sale by (ii) the total number of shares
of Common Stock outstanding (after giving effect to the conversion or
exercise of all Convertible Securities) immediately after such
issuance or sale. In no event shall the Exercise Price be adjusted
pursuant to this computation. In the event of a stock split, stock
divided, or other recapitalization pursuant to which the number of
outstanding shares of capital stock of the Company shall increase, the
number of shares covered by any unexercised portion of this Option and
the related Exercise Price per share shall be adjusted
proportionately. In the event of a combination or other
recapitalization pursuant to which the number of outstanding shares of
capital stock of the Company shall be reduced, the number of shares
covered by any unexercised portion of this Option and the related
Exercise Price per share shall not be subject to adjustment and shall
remain as in effect prior to such combination or recapitalization.
(d) Executive shall be entitled to receive: (i) a lump sum payment equal
to the sum of the present value of 100% of Executive's base salary for
the balance of the term of this Agreement; and (ii) a lump sum
severance payment in the amount of Nine Hundred Thousand Dollars
($900,000.00) (collectively, the "Severance Payments") which shall be
paid by the Company within sixty (60) days of the date of termination.
In addition, in the event of a termination without cause for any
reason other than death, Executive shall be entitled to receive the No
renewal Payment (as defined in Section 7.7);
(e) Right of Lien Executive shall be issued a UCC 1 which shall be
recorded by the company in the amount of Nine Hundred Thousand Dollars
($900,000.00) (collectively, the "Severance Payments") for the purpose
of security in the event of default under the provisions of this
agreement. Upon payment in full of all shares and money Executive
shall release said lien.
(f) Except as provided in Article XI, this Agreement shall thereupon be of
no further force or effect. Any amounts due from Company pursuant
above and not paid to Executive as and when due shall accrue interest
at the prime rate of interest as established from
5
<PAGE>
time to time by Chase Manhattan Bank of New York. Company may purchase
insurance to cover all or any part of its obligations set forth in
this Section, and Executive agrees to take a physical examination to
facilitate the purchase of such insurance.
3.5 Incentive Compensation: The Company shall pay Executive, during the Term of
----------------------
this Agreement, an annual performance/incentive bonus which shall be
calculated as follows:
Fiscal Year
Revenue Bonus
------- -----
$0 - 2,000,000 Five Percent (5%) of Base Salary
$2,000,00 to $5,000,000 Fifteen Percent (15%) of Base Salary
$5,000,00 to $10,000,000 Thirty Percent (30%) of Base Salary
In excess of $10,000,001 Fifty Percent (50%) of Base Salary
Sale of Company Five Percent of the Purchase Price
Capital Raised Two Percent of all Capital Raised
3.4 Benefits: Executive shall be entitled, during the Term hereof, to the same
--------
medical, hospital dental, vision and life insurance coverage and benefits
as are available to the Company's most senior executive officers on the
Commencement Date.
3.5 Withholding: Any and all amounts payable under this Agreement. including,
-----------
without limitation, amounts payable under this Article Ill and Article VII,
are subject to withholding for such federal, state and local taxes as the
Company, in its reasonable judgment, determines to be required pursuant to
any applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses, and Insurance
- -------------------------------------------
4.1 Working Facilities and Expenses. Executive shall be furnished with an
office at the principal executive offices of the Company, or at such other
location as agreed to by Employee and the Company, and other working facilities
and secretarial and other assistance suitable to his position and reasonably
required for the performance of his duties hereunder The Company hereby agrees
to advance expenses to Employee, subject to the provisions of this Section 4.1,
all of the costs of Employee's maintaining an office and residence in New York
City, New York, which costs are currently estimated to be approximately $9,000
per month. The Company shall promptly advance the Employee for all of Employee's
reasonable expenses incurred while employed, and performing his duties under and
in accordance
6
<PAGE>
with the terms and conditions of this Agreement, subject to Employee's full and
appropriate documentation, including, without limitation, receipts for all such
expenses in the manner required pursuant to Company's policies arid procedures
and the Internal Revenue Code of 1986, as amended (the "Code"), and applicable
regulations as are in effect from time to time.
4.2 Insurance. The Company may secure in its own name or otherwise, and at
its own expense, life, disability, and other insurance covering Employee or
Employee and others, and Employee shall not have any right, title or interest in
or to such insurance other than as expressly provided herein. Employee agrees to
assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations to be conducted by such physicians(s)
as the Company or such insurance company may designate and by signing such
applications and other written instruments as may be required by any insurance
company to which application is made for such insurance.
ARTICLE V
Illness or Incapacity
- ---------------------
5.1 Right to Terminate: If, during the Term of this Agreement, Executive shall
------------------
be unable to perform in all material respects his duties hereunder for a
period exceeding six (6) consecutive months by reason of illness or
incapacity, this Agreement may be terminated by the Company in its sole
discretion pursuant to Section 7.2 hereof.
5.2 Right to Replace: If Executive's illness or incapacity, whether by physical
----------------
or mental cause, renders him unable for a minimum period of one hundred
eighty (180) consecutive calendar days to carry out his duties and
responsibilities as set forth herein, the Executive shall have the right to
designate a person to replace Executive temporarily in the capacity
described in Article I hereof; provided, however, that if Executive returns
to work from such illness or incapacity within the six (6) month period
following his designation due to such illness or incapacity he shall be
entitled to be reinstated in the capacity described in Article I hereof
with all rights, duties and privileges attendant thereto.
5.3 Rights Prior to Termination: Executive shall be entitled to his full
---------------------------
remuneration and benefits hereunder during such illness or incapacity
unless and until an election is made by the Board of Directors of the
Company to terminate this Agreement in accordance with the provisions of
this Article V.
5.4 Determination of illness or Incapacity: For purposes of this Article V. the
--------------------------------------
term "illness or incapacity" shall mean Executive's inability to perform
his duties hereunder substantially on a full-time basis due to
7
<PAGE>
physical or mental illness as determined by the Board of Directors in
accordance with the Company's long-term disability insurance policy or, in
the event Company does not have a long-term disability insurance policy in
effect, in accordance with the following procedure: Executive and the
Company each shall designate a physician who shall jointly select a third
physician and the three (3) physicians selected would then determine
whether or not any illness or incapacity is such as to prevent Executive
from performing his duties hereunder.
5.5 Executive's Right of Designation: Nothwithstanding Paragraph 5.2 Executive
--------------------------------
shall have the right to and be entitled to temporarily designate his
replacement in the event of incapacity for a period not to exceed an
additional six months of illness as defined in paragraph 5.1.
ARTICLE VI
Confidentiality
- ---------------
6.1 Confidentiality: During the Term of this Agreement and thereafter,
---------------
Executive agrees to maintain the confidential nature of the Company's trade
secrets, including, without limitation, development ideas, acquisition
strategies and plans, financial information, records, "know-how", methods
of doing business, customer, supplier and distributor lists and all other
confidential information of the Company. Executive shall not use (other
than in connection with his employment), in any way whatsoever, such trade
secrets except as authorized in writing by the Company. Executive shall,
upon the termination of his employment, deliver to the Company any and all
records, books, documents or any other materials whatsoever (including all
copies thereof) containing such trade secrets, which shall be and remain
the property of the Company.
6.2 Non-Removal of Records: All documents, papers, materials, notes, books,
----------------------
correspondence, drawings and other written and graphic records relating to
the Business of the Company which Executive shall prepare or use, or come
into contact with, shall be and remain the sole property of the Company.
ARTICLE VII
Termination
- -----------
7.1 Termination For Cause: This Agreement and the employment of Executive may
---------------------
be terminated by the Company for "Just Cause" or "Proper Cause" and only in
any of the following circumstances:
8
<PAGE>
(a) Just Cause: "Just Cause" shall mean that Executive has been judicially
----------
convicted or has pleaded nolo contend ere to any one of the following
offenses: (i) Executive has been judicially determined to have
committed any fraud, theft, misappropriation or similar act against
the Company or Executive has been judicially declared to have
misappropriated, or embezzled funds in connection with the Company's
business; or (ii) any felony that the Board determines is detrimental
to the Company's reputation or that otherwise interferes with
Executive's ability to perform his duties under this Agreement.
(b) Proper Cause: "Proper Cause" shall mean an Executive is in default in
------------
a material respect in the performance of Executive's obligations,
services or duties hereunder, which shall include, without limitation:
(i) Executive's willful disregard of the lawful written instructions
of the Executive Committee or the Board of Directors concerning the
performance of his duties within the scope hereof; (ii) Any conduct of
the Executive which is materially inconsistent with the published
policies of the Company, as promulgated from time to time and which
are generally applicable to all senior executives; or (iii)
Executive's breach of any other material provision of this Agreement,
provided, however, that Executive shall be given written notice of
--------------
such default and a reasonable opportunity to cure such default.
An event-giving rise to termination of the Executive's employment, whether
for Just Cause or Proper Cause, shall henceforth be referred to as
"Termination Events."
7.2 Termination Procedure: In the event that the Board determines that a
---------------------
Termination Event has taken place with respect to the Executive, the Board
shall undertake the following procedure to terminate Executive's
employment:
(a) The Board shall present Executive with ninety (90) day's advance
written notice of Executive's Just Cause or Proper Cause termination,
and shall include with such notice a copy of the minutes of the
meeting of the Board that reference the Board's determination that a
Termination Event has taken place.
(b) Executive shall have ninety (90) days after his receipt of the Board's
written notice of Just Cause or Proper Cause termination in which to
deliver to the Board a written objection to such
9
<PAGE>
termination. Upon its receipt of Executive's written objection, the
Board will be required to do the following:
(1) Within thirty (30) day's of its receipt of Executive's
written objection, the Board shall convene a Special Meeting
to review such objection. Executive shall receive notice of,
and shall have the right to be present at any such meeting,
and may present evidence that serves to contradict the
Board's determination that a Termination Event has occurred.
The Board shall have thirty (30) days following such Special
Meeting in which to reverse its decision to terminate
Executive. If the Executive has not been informed of such
reversal within such thirty (30) day period, Executive shall
have thirty (30) days in which to appeal the matter to
binding arbitration.
(c) Arbitration Procedure: Should Executive elect to submit the Board's
---------------------
decision to binding arbitration, such arbitration shall take place
within sixty (60) days, in accordance with the American International
Commercial Arbitration Rules. The number of arbitrators shall be
three; the Board shall choose one arbitrator, the Executive shall
choose one arbitrator, and both arbitrators shall choose a third
arbitrator. The place of arbitration shall be New York City, New York,
and the language of the arbitration shall be English. No discovery
shall be permitted in such dispute, other than exchange of relevant
documents ordered by the arbitrators. The maximum number of days of
hearings in such arbitration shall be 3, all of which shall occur
consecutively. The arbitrators' decision shall be limited to whether a
Just Cause or Proper Cause termination is justified under the
circumstances. Such decision shall be binding upon all parties.
7.3 Executive to Remain in Position: Notwithstanding any other provision of
-------------------------------
this Agreement to the contrary, should Executive object to a Just Cause or
Proper Cause Termination Notice, he shall remain in his position, with the
same duties and for the same compensation as set forth in this Agreement,
during the course of such objection, until such time as Executive accepts
the Board's decision or a final decision is rendered with respect to the
matter or that the has been determined through arbitration or appeal.
10
<PAGE>
(a) A Termination for cause delivered to Executive pursuant to this
Agreement shall be effective as of the date set forth in a written
notice of termination delivered to Executive (which shall be no less
than thirty (30) days following the delivery of written notice), but
shall not be earlier than the date such written notice is delivered to
Executive.
7.4 Termination Without Cause: This Agreement and the employment of the
-------------------------
Executive may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company by its giving not less than sixty (60)
days written notice to Executive in the event of an illness or
incapacity described in Section 5.1; or
(c) At the election of the Executive by his giving not less than sixty
(60) days written notice to the Company; or
(d) Upon the Scheduled Termination Date or on the last day of any renewal
term in the event of non-renewal of this Agreement; or
(e) Upon Executive's death.
A Termination Without Cause under Section 7.4(b), (c) or (d) hereof shall
be effective upon the date set forth in a written notice of termination
delivered hereunder, which shall be not less than sixty (60) days nor more
than one hundred twenty (120) days after the giving of such notice. A
Termination Without Cause under Section 7.4(a), (d) or (e) hereof shall be
automatically effective upon the date of mutual agreement, or the Scheduled
Termination Date or the last day of any renewal term, or the date of death
of the Executive, as the case may be.
7.5 Effect of Termination For Cause: If Executive's employment is terminated
-------------------------------
For Cause:
(a) Executive shall be entitled to accrued base salary under Section 3.1
Through the date of termination which shall be paid by the Company
within sixty (60) days of the date of termination;
(b) Executive shall be entitled to reimbursement for expenses accrued
through the date of termination in accordance with the provisions of
Section 4.1 hereof which shall be paid by the
11
<PAGE>
Company within sixty (60) days of the date of termination; and
(c) Except as provided in Article XI, this Agreement shall thereupon be of
no further force and effect.
7.6 Effect of Termination Without Cause: If Executive's employment is
-----------------------------------
terminated Without Cause except pursuant to Section 7.4(c) or (e) hereof:
(g) Executive shall be entitled to accrued base salary under Section 3.1
through the date of termination which shall be paid by the Company
within sixty (60) days of the date of termination;
(h) Executive shall be entitled to reimbursement for expenses accrued
through the Scheduled Termination Date in accordance with the
provisions of Section 4.1 hereof which shall be paid by the Company
within sixty (60) days of the date of termination;
(i) Default Provision In the event the company defaults on said severance
-----------------
and the Executive and the company are unable to arrive at a mutually
agreed upon extension the Executive may elect a conversion to
preferred stock at a base of a twenty five percent (25%) discount to
market on a ten day trailing average.
(j) No Dilution or Impairment: OrbitTravel.com Corporation f/k/a Divot
-------------------------
Golf Corporation hereby agrees that it shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer
of capital stock or assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this
Agreement, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of Executive
against dilution or other impairment of the Shares issued hereunder.
(k) Anti-Dilution Provision The effects of anti-dilution pursuant to the
-----------------------
terms and conditions as contained herein provide that the company
shall be entitled to issue additional shares of its capital stock in
connection with mergers and acquisitions and financing in the ordinary
course of business; provided, however, that in case the Company shall,
at any time after the date hereof, reorganize, recapitalize, issue or
sell any shares of Common Stock or issue warrants, options or other
securities convertible into, or exercisable or exchangeable for,
shares of Common Stock ("Convertible Securities") for a consideration,
or in the
12
<PAGE>
case of the issuance of Convertible Securities, an exercise price or
conversion price per share less than the Fair Market Value or the
Exercise Price in effect immediately prior to the issuance or sale of
such securities, then forthwith upon such issuance or sale, the
Exercise Price shall be reduced to the price determined by dividing
(I) an amount equal to the sum of (a) the number of shares of Common
Stock outstanding (after giving effect to the conversion or exercise
of all Convertible Securities) immediately prior to such issuance or
sale multiplied by the then existing Exercise Price and (b) the
aggregate amount of the consideration, if any, received by the Company
upon such issuance or sale by (ii) the total number of shares of
Common Stock outstanding (after giving effect to the conversion or
exercise of all Convertible Securities) immediately after such
issuance or sale. In no event shall the Exercise Price be adjusted
pursuant to this computation. In the event of a stock split, stock
divided, or other recapitalization pursuant to which the number of
outstanding shares of capital stock of the Company shall increase, the
number of shares covered by any unexercised portion of this Option and
the related Exercise Price per share shall be adjusted
proportionately. In the event of a combination or other
recapitalization pursuant to which the number of outstanding shares of
capital stock of the Company shall be reduced, the number of shares
covered by any unexercised portion of this Option and the related
Exercise Price per share shall not be subject to adjustment and shall
remain as in effect prior to such combination or recapitalization.
(l) Executive shall be entitled to receive: (i) a lump sum payment equal
to the sum of the present value of 100% of Executive's base salary for
the balance of the term of this Agreement; and (ii) a lump sum
severance payment in the amount of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000.00) (collectively, the "Severance
Payments") which shall be paid by the Company within sixty (60) days
of the date of termination. In addition, in the event of a termination
without cause for any reason other than death, Executive shall be
entitled to receive the No renewal Payment (as defined in Section
7.7);
(m) Right of Lien Executive shall be issued a UCC 1 which shall be
recorded by the company in the amount of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000.00) (collectively, the "Severance
Payments") for the purpose of security in the event of default under
the provisions of this agreement. Upon payment in full of all shares
and money Executive shall release said lien.
13
<PAGE>
(n) Except as provided in Article XI, this Agreement shall thereupon be of
no further force or effect. Any amounts due from Company pursuant
above and not paid to Executive as and when due shall accrue interest
at the prime rate of interest as established from time to time by
Chase Manhattan Bank of New York. Company may purchase insurance to
cover all or any part of its obligations set forth in this Section,
and Executive agrees to take a physical examination to facilitate the
purchase of such insurance.
7.7 Non-Renewal of Agreement: In the event that Company shall not have made a
------------------------
Qualifying Offer (as hereinafter defined) to Executive on or before the
Scheduled Termination Date of this Agreement, and no other agreement
between Executive and Company relating to the extension of Executive's
employment shall have been entered into by the Scheduled Termination Date,
Executive shall receive (after having given the Company written notice of
its failure to deliver a Qualifying Offer, and after not having received
such Qualifying Offer from the Company within five (5) business days from
the delivery of such notice to the Company) a contract termination payment
of $900,000.00 (the "No renewal Payment") from the Company. Such Non-
renewal Payment shall be due within sixty (60) days following the Scheduled
Termination Date of Executive's employment.
(a) Qualifying Offer: The term "Qualifying Offer" shall mean a written
----------------
offer of employment to Executive which: (i) shall be for a period of
not less than five years from the Scheduled Termination Date, (ii)
shall include the types of compensation contained in this Agreement,
(iii) shall constitute a reasonable offer taking into account
Executive's compensation set forth in this Agreement; (iv) the
Company's financial and operating performance during the term of this
Agreement; (v) any other then-current circumstances relevant to the
determination of Executive's compensation by Company for the period
specified in (i); (vi) shall not contain any terms or provisions which
reduce Executive's title or duties as stated herein, and (vii) shall
state that it is irrevocable for 30 days from the date of delivery
thereof.
(b) In the event that the parties shall disagree as to whether or not an
offer timely made by Company in accordance with the foregoing
constitutes a Qualifying Offer, the parties shall submit such
disagreement to arbitration by a qualified individual executive
compensation expert of national reputation, who shall not have had
dealings with either party during the preceding five (5) years.
7.8 Constructive Termination: Prior to the expiration of the Term,
------------------------
14
<PAGE>
Executive shall have the right to terminate his employment under this
Agreement, upon thirty (30) days' notice to the Company given within sixty
(60) days following the occurrence of any of the following events
("Constructive Termination Events"); provided, however, that the Company
shall have twenty (20) days after the date such notice has been given to
the Company in which to cure the conduct or cause specified in such notice:
(a) A material breach by the Company of a material obligation of the
Company under this Agreement;
(b) A failure of the Company to pay when due to the Executive any annual
base salary, annual bonus or other earned bonus or awards or
commissions referred to in this Agreement;
(c) The relocation of the Executive's principal place of employment to a
location not within a 30 mile radius of such place of employment on
the Effective Date;
(d) A material reduction by the Company of the Executive's duties or
responsibilities;
(e) The failure of the Company to obtain an agreement reasonably
satisfactory to the Executive from any successor to assume and agree
to perform this Agreement, or, if the business for which the
Executive's services are principally performed is sold or transferred,
the failure of the Company to obtain such an agreement from the
purchaser or transferee of such business; or
(f) The Company shall fail to grant Executive's stock options for provided
for herein.
Following a Constructive Termination Event and proper notice by the
Executive as set forth herein, Executive may terminate his employment with
the Company and shall be entitled to receive the Severance Payments and the
No renewal Payment as set forth in Sections 7.6 and 7.7 of this Agreement.
In the event the Executive terminates Executive's employment as a result of
a Constructive Termination Event and the Company objects in writing to the
Executive's determination that there was Constructive Termination Event
within (30) days after Executive has notified the Company of
15
<PAGE>
the same, the matter shall be resolved by arbitration in accordance with
the provisions of Section 7.2(c). If the Company fails to object to any
such determination of Constructive Termination in writing within such
thirty (30) day period, it shall be deemed to have waived its right to
object to that determination. If such arbitration determines that there was
not proper Constructive Termination, such termination shall be deemed to be
a termination pursuant to subsection 7.4(c).
7.9 Certain Payments: The parties believe that the payments to Executive
----------------
hereunder do not constitute "Excess Parachute Payments" under Section 28OG
of the Code. Notwithstanding such belief, if any payment or benefit under
this Agreement is determined to be an `Excess Parachute Payment," Company
shall pay Executive an additional amount (the "Tax Payment") such that (i)
the excess of all Excess Parachute Payments (including payments under this
sentence) over the sum of excise tax thereon under Section 4999 of the Code
and income tax thereon under Subtitle A of the Code and under applicable
state law is equal to (ii) the excess of all Excess Parachute Payments
(excluding payments under this sentence) over income tax thereon under
Subtitle A of the Code and under applicable state law.
ARTICLE VIII
Non-Competition and Non-Interference
- ------------------------------------
8.1 Non-Competition: Executive may advise, lend money, manage, control,
---------------
trade, sell, lease, license or otherwise own technology in any private
-------
company, however, Executive's ownership interest may not directly or
------- -------
indirectly exceed 70% of the total issued and outstanding shares of any one
company whether said company is or is not in direct competition with the
Company. Executive shall be permitted to own up to 70% of the issued and
outstanding shares of capital stock of any corporation which has a class of
equity securities registered under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended.
8.2 Non-Interference: Executive agrees, that during the Term hereof and, in the
----------------
case of a Termination For Cause or a Termination Without Cause pursuant to
Section 7.2(d) hereof, for a period of one (1) year thereafter, Executive
will not, directly, indirectly or as an agent on behalf of or in
conjunction with any person, firm, partnership corporation or other entity,
induce or entice any employee of the
16
<PAGE>
Company to leave such employment or cause anyone else to do so.
8.3 Severability: If any covenant or provision contained in this Article VIII
------------
is judicially determined to be void or unenforceable in whole or in part,
it shall not be deemed to affect or impair the validity of any other
covenant or provision. If, in any arbitration or judicial proceeding, a
tribunal shall refuse to enforce all of the separate covenants deemed
included in this Article VIII, then such unenforceable covenants shall be
deemed eliminated from the provisions hereof for the purpose of such
proceedings to the extent necessary to permit the remaining separate
covenants to be enforced in such proceedings.
ARTICLE IX
Remedies
- --------
9.1 Equitable Remedies: Executive and the Company agree that the services to
------------------
be rendered by Executive pursuant to this Agreement, and the rights and
interests granted and the obligations to be performed by Executive to the
Company pursuant to this Agreement, are of a special, unique, extraordinary
and intellectual character, which gives them a peculiar value, the loss of
which cannot be reasonably or adequately compensated in damages in any
action at law, and that a breach by Company of any of the terms of this
Agreement will cause the Executive great and irreparable injury and damage.
The parties hereby expressly agree that the Executive shall be entitled to
the remedies of injunction, specific performance, and other equitable
relief to prevent a breach of Articles VI and VIII of this Agreement, both
pendente lite and permanently, as such breach would cause irreparable
injury to Executive and a remedy at law would be inadequate and
insufficient. Therefore, Executive may in addition to pursuing other
remedies, obtain an injunction from any court having jurisdiction in the
matter restraining any further violation.
9.2 Rights and Remedies Preserved: Nothing in this Agreement shall limit any
-----------------------------
right or remedy the Company or Executive may have under this Agreement or
pursuant to them, for any breach of this Agreement by the other party. The
rights granted to the parties herein are cumulative and the election of one
shall not constitute a waiver of such party's right to assert all other
legal remedies available under the circumstances.
17
<PAGE>
ARTICLE X
Miscellaneous
- -------------
10.1 No Waivers: The failure of either party to enforce any provision of this
----------
Agreement shall not be construed as a waiver of any such provision nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
10.2 Notices: Any notice to be given to the Company and Executive under the
-------
terms of this Agreement may he delivered personally, by telecopy, telex or
other form of written electronic transmission, or by registered or
certified mail, postage prepaid, and shall be addressed as follows:
If to the Company: OrbitTravel .com. Corporation
c/o Joseph R. Cellura &
Douglas R. Dollinger, Esq.,
One Union Square South, Suite 10-J
New York, New York
Attention: Legal Committee
With a Copy to: Michael Swimmer, Esq.
11 Stage Coach Road
Wawick, New York 10990
If to Executive: Joseph R. Cellura
One Union Square South 10J
New York, New York USA 10003
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (1) when personally
delivered, (ii) when telecopied, telexed or transmitted by other form of
written electronic transmission (upon confirmation of receipt) or (iii) on
the third day after it is mailed by registered or certified mail, postage
prepaid, as provided herein.
10.3 Severability: The provisions of this Agreement are severable and if any
------------
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 Successors and Assigns: The rights and obligations of the Company under
----------------------
this Agreement shall inure to the benefit of and be binding
18
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upon the successors and assigns of the Company, including the survivor
upon any merger, consolidation, share exchange, or combination of the
Company with any other entity. Executive shall not have the right to
assign, delegate or otherwise transfer any duty or obligation to be
performed by him hereunder to any person or entity.
10.5 Entire Agreement: This Agreement supersedes all prior and contemporaneous
----------------
agreements and understandings between the parties hereto, oral or
written, and may not be modified or terminated orally- No modification,
termination or attempted waiver shall be valid unless in writing, signed
by the party against whom such modification, termination or waiver is
sought to be enforced. This Agreement was the subject of negotiation by
the parties hereto and their counsel. The parties agree that no prior
drafts of this Agreement shall be admissible as evidence (whether in any
arbitration or court of law) in any proceeding, which involves the
interpretation of any provisions of this Agreement.
10.6 Governing Law: This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Florida without
reference to the conflict of law principles thereof.
10.7 Section Headings: The section headings contained herein are for the
----------------
purposes of convenience only and are not intended to define or limit the
contents of said sections.
10.8 Attorneys Fees: In the event of any litigation arising out of this
--------------
Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party reasonable attorneys fees and costs incurred.
10.9 Further Assurances: Each party hereto shall cooperate and shall take such
------------------
further action and shall execute and deliver such further documents as
may be reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement.
10.10 Gender: Whenever the pronouns "he" or "his" are used herein they shall
------
also be deemed to mean "she'' or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though
in the plural and words in the plural shall be read and construed as
though in the singular in all cases where they would so apply.
10.11 Counterparts: This Agreement may be executed in counterparts, all of
------------
which taken together shall be deemed one original.
10.12 Survival: The provisions of Articles VI, VII, VIII, IX and X, of this
--------
19
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Agreement shall survive the termination of this Agreement whether upon, or
prior to, the Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first above written.
OrbitTravel.com Corporation Executive
a Delaware Corporation
By: /s/ JOSEPH R. CELLURA /s/ JOSEPH R. CELLURA
-------------------------------- ----------------------------
Name: JOSEPH R. CELLURA JOSEPH R. CELLURA
------------------------------
Title: Chairman & CEO
-----------------------------
Chairman & Chief Executive Officer
/s/ Douglas R. Dollinger
----------------------------
Witness Douglas R. Dollinger
By: /s/ David A. Noosinow seal:
--------------------------------
Vice Chairman & Vice President
Notary
By: /s/ Michael Swimmer
--------------------------------
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EXHIBIT 10.8
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
OrbiTtravel.com CORPORATION
AND
DEAN E. MILLER
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of November 1, 1999, by and between Orbittravel.com Corporation
f/k/a Divot Golf Corporation f/k/a Brassie Golf Corporation, a Delaware
corporation (the "Company"), and DEAN E. MILLER Vice President of Marketing &
Sales ("Executive").
WHEREAS, the Company and Executive desire to enter into this Agreement
to assure the Company of the services of the Executive and to set forth the
respective rights and duties of the parties hereto; and
WHEREAS, the Company: (i) is presently in the business of providing
Internet travel, entertainment and related access services over the Internet
through its ownership and management of various proprietary and technological
holdings, licensing rights, subscription agreements and other related services;
and (ii) intends to invest its available resources in one or more new business
ventures (such activities, present and future, being hereinafter referred to as
the "Business").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Executive
agree as follows:
ARTICLE I
Employment
- ----------
1.1 Employment and Title: The Company hereby employs Executive and
--------------------
Executive hereby accepts such employment, as Vice President of
Marketing & Sales of the Company, all upon the terms and conditions
set forth herein.
1.2 Services: During the Term (as hereinafter defined) hereof, Executive
--------
agrees to perform diligently and in good faith the duties of Vice
President of Marketing & Sales of the Company under the direction of
the Board of Directors of the Company (the "Board of Directors") or
the Executive Committee of the Board of Directors (the "Executive
Committee"). Executive agrees to devote his best efforts and
substantially all of his full business time, energies and abilities to
the
1
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services to be performed hereunder and for the exclusive benefit of
the Company. Executive shall be vested with such authority as is
generally commensurate with the position of Vice President of
Marketing & Sales, as further outlined below.
1.3 Location: The principal place of employment and the location of
--------
Executive's principal offices shall be in the States of Florida,
Georgia and New York; provided, however, Executive shall, from time to
time, temporarily perform outside of the States of Florida, Georgia
and New York, such services as are reasonably required for the proper
execution of his duties under this Agreement.
1.4 Representations: Each party represents and warrants to the other that
---------------
he/it has full power and authority to enter into and perform this
Agreement and that his/its execution and performance of this Agreement
shall not constitute a default under or breach of any of the terms of
any agreement to which he/it is a party or under which he/it is bound.
Each party represents that no consent or approval of any third party
is required for his/its execution, delivery and performance of this
Agreement or that all consents or approvals of any third party
required for his/its execution, delivery and performance of this
Agreement have been obtained.
1.5 Sole Discretion: As the term "sole discretion" is used in this
---------------
Agreement, unless otherwise defined, it will be interpreted as the
exercise of reasonable discretion applying normal business practices
to a contractual relationship between a company and its chairman and
chief executive officer.
ARTICLE II
Term
- ----
2.1 Term: The term of Executive's employment hereunder (the "Term") shall
----
commence as of the date hereof (the "Commencement Date") and shall
continue through the fifth anniversary of the Commencement Date (the
"Scheduled Termination Date") unless earlier terminated pursuant to
the provisions of this Agreement.
2.2 Renewal: This Agreement shall be renewed for successive one year terms
-------
unless either party hereto provides written notice of non-renewal at
least sixty (60) days prior to the Scheduled Termination Date of each
such term. Notwithstanding the foregoing, each renewal hereof shall
constitute a separate and distinct agreement. If notice of non-renewal
is given by either party, all terms of this Agreement shall remain in
full force and effect until the earlier of the following (i) a new
employment agreement is entered into by the parties, or (ii)
2
<PAGE>
employment is terminated under the terms and conditions in Article VII
hereof.
ARTICLE III
Compensation
- ------------
3.1 Base Salary: As compensation for the services to be rendered by
-----------
Executive, the Company shall pay Executive, during the Term of this
Agreement, an annual base salary equal to One Hundred Eighty Thousand
and 00/100 Dollars ($180,000.00), which base salary shall accrue
monthly (prorated for periods less than a month) and shall be paid in
equal bimonthly installments based on the amount of One Hundred Fifty
Thousand dollars ($150,000), in arrears. The base salary of One
Hundred Fifty Thousand dollars ($150,000.00) will be paid in bimonthly
installments and will be reviewed annually, or more frequently, as
appropriate, by the Board of Directors or the Compensation Committee
of the Board of Directors, as the case may be, in its sole discretion,
provided that the annual base salary shall not be decreased below One
Hundred Fifty Thousand Dollars ($150,000.00).
3.2 Vacation & Holidays As further compensation for services to be
-------------------
rendered by the executive, the executive shall accrue twenty one days
of annual paid vacation or leave and shall enjoy all regular state and
federal holidays.
3.3 Stock Options: The Company shall issue Executive options to purchase
-------------
Three Million (3,000,000) shares of the Company's common stock at a
per share market value option price as soon as practicable after the
date on which the Company's proposals regarding a Stock Option Plan
commencing the year 2000 and an increase in the Company's authorized
common stock are adopted by the Company's shareholders, if necessary.
The Options shall not be subject to any vesting period. All options
shall have an exercise period of five (5) years. The number and price
of the option shares shall be subject to equitable adjustment in the
event the Company's 1-for-20 reverse stock split is adopted by the
Company's shareholders. (not to be confused with anti-dilution)
3
<PAGE>
3.4 Incentive Compensation: The Company shall pay Executive, during the
----------------------
Term of this Agreement, an annual performance/incentive bonus which
shall be calculated as follows:
Fiscal Year
Revenue Bonus
------- -----
$0 - 2,000,000 Five Percent (5%) of Base Salary
$2,000,00 to $5,000,000 Fifteen Percent (15%) of Base Salary
$5,000,00 to $10,000,000 Thirty Percent (30%) of Base Salary
In excess of $10,000,001 Fifty Percent (50%) of Base Salary
3.5 Benefits: Executive shall be entitled, during the Term hereof, to the
--------
same medical, hospital dental and life insurance coverage and benefits
as are available to the Company's most senior executive officers on
the Commencement Date.
3.6 Withholding: Any and all amounts payable under this Agreement.
-----------
including, without limitation, amounts payable under this Article Ill
and Article VII, are subject to withholding for such federal, state
and local taxes as the Company, in its reasonable judgment, determines
to be required pursuant to any applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses, and Insurance
- -------------------------------------------
4.1 Working Facilities and Expenses: Executive shall be furnished with an
-------------------------------
office at the principal executive offices of the Company, or at such
other location as agreed to by Executive and the Company, and other
working facilities and secretarial and other assistance suitable to
his position and reasonably required for the performance of his duties
hereunder. The Company hereby agrees to reimburse Executive, subject
to the provisions of this Section 4.1, all of the costs of Executive's
maintaining a residence and office in New York. The Company shall
promptly reimburse Executive for all of Executive's reasonable
expenses incurred while employed, and performing his duties under and
in accordance with the terms and conditions of this Agreement, subject
to Executive's full and appropriate documentation, including, without
limitation, receipts for all such expenses in the manner required
pursuant to Company's policies and procedures and the Internal Revenue
Code of 1986, as amended (the "Code"), and applicable regulations as
are in effect from time to time.
4.2 Insurance: The Company may secure in its own name or otherwise, and at
---------
its own expense, life, disability, and other insurance covering
Executive or Executive and others, and Executive shall not have any
4
<PAGE>
right, title or interest in or to such insurance other than as
expressly provided herein. Executive agrees to assist the Company in
procuring such insurance by submitting to the usual and customary
medical and other examinations to be conducted by such physicians(s)
as the Company or such insurance company may designate and by signing
such applications and other written instruments as may be required by
any insurance company to which application is made for such insurance.
ARTICLE V
Illness or Incapacity
- ---------------------
5.1 Right to Terminate: If, during the Term of this Agreement, Executive
------------------
shall be unable to perform in all material respects his duties
hereunder for a period exceeding six (6) consecutive months by reason
of illness or incapacity, this Agreement may be terminated by the
Company in its sole discretion pursuant to Section 7.2 hereof.
5.2 Right to Replace: If Executive's illness or incapacity, whether by
----------------
physical or mental cause, renders him unable for a minimum period of
ninety (90) consecutive calendar days to carry out his duties and
responsibilities as set forth herein, the Company shall have the right
to designate a person to replace Executive temporarily in the capacity
described in Article I hereof; provided, however, that if Executive
returns to work from such illness or incapacity within the six (6)
month period following his inability due to such illness or
incapacity, he shall be entitled to be reinstated in the capacity
described in Article I hereof with all rights, duties and privileges
attendant thereto.
5.3 Rights Prior to Termination: Executive shall be entitled to his full
---------------------------
remuneration and benefits hereunder during such illness or incapacity
unless and until an election is made by the Company to terminate this
Agreement in accordance with the provisions of this Article V.
5.4 Determination of illness or Incapacity: For purposes of this Article
--------------------------------------
V. the term "illness or incapacity" shall mean Executive's inability
to perform his duties hereunder substantially on a full-time basis due
to physical or mental illness as determined by the Board of Directors
in accordance with the Company's long-term disability insurance policy
or, in the event Company does not have a long-term disability
insurance policy in effect, in accordance with the following
procedure: Executive and the Company each shall designate a physician
who shall jointly select a third physician and the three (3)
physicians selected would then determine whether or not any illness or
incapacity is such as to prevent Executive from performing his duties
hereunder.
5
<PAGE>
ARTICLE VI
Confidentiality
- ---------------
6.1 Confidentiality: During the Term of this Agreement and thereafter,
---------------
Executive agrees to maintain the confidential nature of the Company's
trade secrets, including, without limitation, development ideas,
acquisition strategies and plans, financial information, records,
"know-how", methods of doing business, customer, supplier and
distributor lists and all other confidential information of the
Company. Executive shall not use (other than in connection with his
employment), in any way whatsoever, such trade secrets except as
authorized in writing by the Company. Executive shall, upon the
termination of his employment, deliver to the Company any and all
records, books, documents or any other materials whatsoever (including
all copies thereof) containing such trade secrets, which shall be and
remain the property of the Company.
6.2 Non-Removal of Records: All documents, papers, materials, notes,
----------------------
books, correspondence, drawings and other written and graphic records
relating to the Business of the Company which Executive shall prepare
or use, or come into contact with, shall be and remain the sole
property of the Company.
ARTICLE VII
Termination
- -----------
7.1 Termination For Cause: This Agreement and the employment of Executive
---------------------
may be terminated by the Company for "Just Cause" or "Proper Cause"
and only in any of the following circumstances:
(a) Just Cause: "Just Cause" shall mean that Executive has been
----------
judicially convicted or has pleaded nolo contendere to any
one of the following offenses: (i) Executive has been
judicially determined to have committed any fraud, theft,
misappropriation or similar act against the Company or
Executive has been judicially declared to have
misappropriated, or embezzled funds in connection with the
Company's business; or (ii) any felony that the Board
determines is detrimental to the Company's reputation or
that otherwise interferes with Executive's ability to
perform his duties under this Agreement.
6
<PAGE>
(b) Proper Cause: "Proper Cause" shall mean an Executive is in
------------
default in a material respect in the performance of
Executive's obligations, services or duties hereunder, which
shall include, without limitation: (i) Executive's willful
disregard of the lawful written instructions of the
Executive Committee or the Board of Directors concerning the
performance of his duties within the scope hereof; (ii) Any
conduct of the Executive which is materially inconsistent
with the published policies of the Company, as promulgated
from time to time and which are generally applicable to all
senior executives; or (iii) Executive's breach of any other
material provision of this Agreement, provided, however,
that Executive shall be given written notice of such default
--------------
and a reasonable opportunity to cure such default.
An event giving rise to termination of the Executive's employment,
whether for Just Cause or Proper Cause, shall henceforth be referred
to as "Termination Events."
7.2 Termination Procedure: In the event that the Board determines that a
---------------------
Termination Event has taken place with respect to the Executive, the
Board shall undertake the following procedure to terminate Executive's
employment:
(a) The Board shall present Executive with thirty (30) day's
advance written notice of Executive's Just Cause or Proper
Cause termination, and shall include with such notice a copy
of the minutes of the meeting of the Board that reference
the Board's determination that a Termination Event has taken
place.
(b) Executive shall have thirty (30) days after his receipt of
the Board's written notice of Just Cause or Proper Cause
termination in which to deliver to the Board a written
objection to such termination. Upon its receipt of
Executive's written objection, the Board will be required to
do the following:
(1) Within ten (10) day's of its receipt of
Executive's written objection, the Board
shall convene a Special Meeting to
review such objection. Executive shall
receive notice of, and shall have the
right to be present at any such meeting,
and may present evidence that serves to
contradict the Board's determination
that a Termination Event has occurred.
The Board shall have five (5) days
following such Special Meeting in which
to reverse its decision to terminate
Executive. If the Executive has not been
informed of such reversal within such
five (5) day
7
<PAGE>
period, Executive shall have ten (10)
days in which to appeal the matter to
binding arbitration.
(c) Arbitration Procedure: Should Executive elect to submit the
---------------------
Board's decision to binding arbitration, such arbitration
shall take place within thirty (30) days, in accordance with
the American International Commercial Arbitration Rules. The
number of arbitrators shall be three; the Board shall choose
one arbitrator, the Executive shall choose one arbitrator,
and both arbitrators shall choose a third arbitrator. The
place of arbitration shall be New York City, New York, and
the language of the arbitration shall be English. No
discovery shall be permitted in such dispute, other than
exchange of relevant documents ordered by the arbitrators.
The maximum number of days of hearings in such arbitration
shall be 3, all of which shall occur consecutively. The
arbitrators' decision shall be limited to whether a Just
Cause or Proper Cause termination is justified under the
circumstances. Such decision shall be binding upon all
parties.
7.3.1 Executive to Remain in Position: Notwithstanding any other provision
-------------------------------
of this Agreement to the contrary, should Executive object to a Just
Cause or Proper Cause Termination Notice, he shall remain in his
position, with the same duties and for the same compensation as set
forth in this Agreement, during the course of such objection, until
such time as Executive accepts the Board's decision or a final
decision is rendered with respect to the matter or that the has been
determined through arbitration or appeal.
(a) A Termination for cause delivered to Executive pursuant to
this Agreement shall effective as of the date set forth in a
written notice of termination delivered to Executive (which
shall be no less than thirty (30) days following the
delivery of written notice), but shall not be earlier than
the date such written notice is delivered to Executive.
7.4 Termination Without Cause: This Agreement and the employment of the
-------------------------
Executive may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company by its giving not less than
sixty
8
<PAGE>
(60) days written notice to Executive in the event of
an illness or incapacity described in Section 5.1; or
(c) At the election of the Executive by his giving not less than
sixty (60) days written notice to the Company; or
(d) Upon the Scheduled Termination Date or on the last day of
any renewal term in the event of non-renewal of this
Agreement; or
(e) Upon Executive's death.
A Termination Without Cause under Section 7.4(b), (c) or (d) hereof
shall be effective upon the date set forth in a written notice of
termination delivered hereunder, which shall be not less than sixty
(60) days nor more than one hundred twenty (120) days after the giving
of such notice. A Termination Without Cause under Section 7.4(a), (d)
or (e) hereof shall be automatically effective upon the date of mutual
agreement, or the Scheduled Termination Date or the last day of any
renewal term, or the date of death of the Executive, as the case may
be.
7.5 Effect of Termination For Cause: If Executive's employment is
-------------------------------
terminated For Cause:
(a) Executive shall be entitled to accrued base salary under
Section 3.1 Through the date of termination which shall be
paid by the Company within sixty (60) days of the date of
termination;
(b) Executive shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with
the provisions of Section 4.1 hereof which shall be paid by
the Company within sixty (60) days of the date of
termination; and
(c) Except as provided in Article XI, this Agreement shall
thereupon be of no further force and effect.
7.6 Effect of Termination Without Cause: If Executive's employment is
-----------------------------------
terminated Without Cause except pursuant to Section 7.4(c) or (e)
hereof:
(a) Executive shall be entitled to accrued base salary under
Section 3.1 through the date of termination which shall be
paid by the Company within sixty (60) days of the date of
termination;
(b) Executive shall be entitled to reimbursement for expenses
9
<PAGE>
accrued through the Scheduled Termination Date in accordance
with the provisions of Section 4.1 hereof which shall be
paid by the Company within sixty (60) days of the date of
termination;
(c) Executive shall be entitled to receive: (i) a lump sum
payment equal to the sum of the present value of 100% of
Executive's base salary for the balance of the term of this
Agreement; and (ii) a lump sum severance payment in the
amount of Three Hundred Fifty Thousand Dollars ($350,000.00)
(collectively, the "Severance Payments") which shall be paid
by the Company within sixty (60) days of the date of
termination. In addition, in the event of a termination
without cause for any reason other than death, Executive
shall be entitled to receive the No renewal Payment (as
defined in Section 7.7);
(d) Right of Lien Executive shall be issued a UCC 1 which shall
be recorded by the company in the amount of Three Hundred
Fifty Thousand Dollars ($350,000.00) (collectively, the
"Severance Payments") for the purpose of security in the
event of default under the provisions of this agreement.
Upon payment in full of all shares and money Executive shall
release said lien.
(e) Except as provided in Article XI, this Agreement shall
thereupon be of no further force or effect. Any amounts due
from Company pursuant above and not paid to Executive as and
when due shall accrue interest at the prime rate of interest
as established from time to time by Chase Manhattan Bank of
New York. Company may purchase insurance to cover all or any
part of its obligations set forth in this Section, and
Executive agrees to take a physical examination to
facilitate the purchase of such insurance.
7.7 Non-Renewal of Agreement: In the event that Company shall not have
------------------------
made a Qualifying Offer (as hereinafter defined) to Executive on or
before the Scheduled Termination Date of this Agreement, and no other
agreement between Executive and Company relating to the extension of
Executive's employment shall have been entered into by the Scheduled
Termination Date, Executive shall receive (after having given the
Company written notice of its failure to deliver a Qualifying Offer,
and after not having received such Qualifying Offer from the Company
within five (5) business days from the delivery of such notice to the
Company) a contract termination payment of $350,000.00 (the
"Non-renewal Payment") from the Company. Such Non-renewal Payment
shall be due within sixty (60) days following the Scheduled
Termination Date of Executive's employment.
(a) Qualifying Offer: The term "Qualifying Offer" shall mean a
----------------
10
<PAGE>
written offer of employment to Executive which: (i) shall be
for a period of not less than five years from the Scheduled
Termination Date, (ii) shall include the types of
compensation contained in this Agreement, (iii) shall
constitute a reasonable offer taking into account
Executive's compensation set forth in this Agreement; (iv)
the Company's financial and operating performance during the
term of this Agreement; (v) any other then-current
circumstances relevant to the determination of Executive's
compensation by Company for the period specified in (i);
(vi) shall not contain any terms or provisions which reduce
Executive's title or duties as stated herein, and (vii)
shall state that it is irrevocable for 30 days from the date
of delivery thereof.
(b) In the event that the parties shall disagree as to whether
or not an offer timely made by Company in accordance with
the foregoing constitutes a Qualifying Offer, the parties
shall submit such disagreement to arbitration by a qualified
individual executive compensation expert of national
reputation, who shall not have had dealings with either
party during the preceding five (5) years.
7.8 Constructive Termination: Prior to the expiration of the Term,
------------------------
Executive shall have the right to terminate his employment under this
Agreement, upon thirty (30) days' notice to the Company given within
sixty (60) days following the occurrence of any of the following
events ("Constructive Termination Events"); provided, however, that
the Company shall have twenty (20) days after the date such notice has
been given to the Company in which to cure the conduct or cause
specified in such notice:
(a) A material breach by the Company of a material obligation of
the Company under this Agreement;
(b) A failure of the Company to pay when due to the Executive
any annual base salary, annual bonus or other earned bonus
or awards or commissions referred to in this Agreement;
(c) The relocation of the Executive's principal place of
employment to a location not within a 30 mile radius of such
place of employment on the Effective Date;
(d) A material reduction by the Company of the Executive's
duties or responsibilities;
11
<PAGE>
(e) The failure of the Company to obtain an agreement reasonably
satisfactory to the Executive from any successor to assume
and agree to perform this Agreement, or, if the business for
which the Executive's services are principally performed is
sold or transferred, the failure of the Company to obtain
such an agreement from the purchaser or transferee of such
business; or
(f) The Company shall fail to grant Executive's stock options
for provided for herein.
Following a Constructive Termination Event and proper notice by the
Executive as set forth herein, Executive may terminate his employment
with the Company and shall be entitled to receive the Severance
Payments and the Non-renewal Payment as set forth in Sections 7.6 and
7.7 of this Agreement. In the event the Executive terminates
Executive's employment as a result of a Constructive Termination Event
and the Company objects in writing to the Executive's determination
that there was Constructive Termination Event within (30) days after
Executive has notified the Company of the same, the matter shall be
resolved by arbitration in accordance with the provisions of Section
7.2(c). If the Company fails to object to any such determination of
Constructive Termination in writing within such thirty (30) day
period, it shall be deemed to have waived its right to object to that
determination. If such arbitration determines that there was not
proper Constructive Termination, such termination shall be deemed to
be a termination pursuant to subsection 7.4(c).
7.9 Certain Payments: The parties believe that the payments to Executive
----------------
hereunder do not constitute "Excess Parachute Payments" under Section
28OG of the Code. Notwithstanding such belief, if any payment or
benefit under this Agreement is determined to be an `Excess Parachute
Payment," Company shall pay Executive an additional amount (the "Tax
Payment") such that (i) the excess of all Excess Parachute Payments
(including payments under this sentence) over the sum of excise tax
thereon under Section 4999 of the Code and income tax thereon under
Subtitle A of the Code and under applicable state law is equal to (ii)
the excess of all Excess Parachute Payments (excluding payments under
this sentence) over income tax thereon under Subtitle A of the Code
and under applicable state law.
12
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ARTICLE VIII
Non-Competition and Non-Interference
- ------------------------------------
8.1 Non-Competition: Executive may advise, lend money, manage, control,
---------------
trade, sell, lease, license or otherwise own technology in any private
-------
company, however, Executive's ownership interest may not directly or
------- -------
indirectly exceed 50% of the total issued and outstanding shares of
any one company whether said company is or is not in direct
competition with the Company. Executive shall be permitted to own up
to 5% of the issued and outstanding shares of capital stock of any
corporation which has a class of equity securities registered under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended.
8.2 Non-Interference: Executive agrees, that during the Term hereof and,
----------------
in the case of a Termination For Cause or a Termination Without Cause
pursuant to Section 7.2(d) hereof, for a period of one (1) year
thereafter, Executive will not, directly, indirectly or as an agent on
behalf of or in conjunction with any person, firm, partnership
corporation or other entity, induce or entice any employee of the
Company to leave such employment or cause anyone else to do so.
8.3 Severability: If any covenant or provision contained in this Article
------------
VIII is judicially determined to be void or unenforceable in whole or
in part, it shall not be deemed to affect or impair the validity of
any other covenant or provision. If, in any arbitration or judicial
proceeding, a tribunal shall refuse to enforce all of the separate
covenants deemed included in this Article VIII, then such
unenforceable covenants shall be deemed eliminated from the provisions
hereof for the purpose of such proceedings to the extent necessary to
permit the remaining separate covenants to be enforced in such
proceedings.
ARTICLE IX
Remedies
- --------
9.1 Equitable Remedies: Executive and the Company agree that the services
------------------
to be rendered by Executive pursuant to this Agreement, and the rights
and interests granted and the obligations to be performed by Executive
to the Company pursuant to this Agreement, are of a special, unique,
extraordinary and intellectual character, which gives
13
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them a peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in any action at law, and that a
breach by Company of any of the terms of this Agreement will cause the
Executive great and irreparable injury and damage. The parties hereby
expressly agree that the Executive shall be entitled to the remedies
of injunction, specific performance, and other equitable relief to
prevent a breach of Articles VI and VIII of this Agreement, both
pendente lite and permanently, as such breach would cause irreparable
injury to Executive and a remedy at law would be inadequate and
insufficient. Therefore, Executive may in addition to pursuing other
remedies, obtain an injunction from any court having jurisdiction in
the matter restraining any further violation.
9.2 Rights and Remedies Preserved: Nothing in this Agreement shall limit
-----------------------------
any right or remedy the Company or Executive may have under this
Agreement or pursuant to them, for any breach of this Agreement by the
other party. The rights granted to the parties herein are cumulative
and the election of one shall not constitute a waiver of such party's
right to assert all other legal remedies available under the
circumstances.
ARTICLE X
Miscellaneous
- -------------
10.1 No Waivers: The failure of either party to enforce any provision of
----------
this Agreement shall not be construed as a waiver of any such
provision nor prevent such party thereafter from enforcing such
provision or any other provision of this Agreement.
10.2 Notices: Any notice to be given to the Company and Executive under the
-------
terms of this Agreement may he delivered personally, by telecopy,
telex or other form of written electronic transmission, or by
registered or certified mail, postage prepaid, and shall be addressed
as follows:
If to the Company: OrbitTravel .com Corporation
c/o Joseph R. Cellura,
One Union Square South, Suite 10-J
New York, New York
Attention: Legal Committee
With a Copy to: Michael Swimmer, Esq.
14
<PAGE>
11 Stage Coach Road
Warwick, New York 11990
If to Executive: Dean E. Miller
One Union Square South, Suite 10-F
New York, New York 10003
Either party may hereafter notify the other in writing of any change
in address. Any notice shall be deemed duly given (1) when personally
delivered, (ii) when telecopied, telexed or transmitted by other form
of written electronic transmission (upon confirmation of receipt) or
(iii) on the third day after it is mailed by registered or certified
mail, postage prepaid, as provided herein.
10.3 Severability: The provisions of this Agreement are severable and if
------------
any provision of this Agreement shall be held to be invalid or
otherwise unenforceable, in whole or in part, the remainder of the
provisions, or enforceable parts thereof, shall not be affected
thereby.
10.4 Successors and Assigns: The rights and obligations of the Company
----------------------
under this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, including the survivor upon
any merger, consolidation, share exchange, or combination of the
Company with any other entity. Executive shall not have the right to
assign, delegate or otherwise transfer any duty or obligation to be
performed by him hereunder to any person or entity.
10.5 Entire Agreement: This Agreement supersedes all prior and
----------------
contemporaneous agreements and understandings between the parties
hereto, oral or written, and may not be modified or terminated orally-
No modification, termination or attempted waiver shall be valid unless
in writing, signed by the party against whom such modification,
termination or waiver is sought to be enforced. This Agreement was the
subject of negotiation by the parties hereto and their counsel. The
parties agree that no prior drafts of this Agreement shall be
admissible as evidence (whether in any arbitration or court of law) in
any proceeding which involves the interpretation of any provisions of
this Agreement.
10.6 Governing Law: This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Florida without
reference to the conflict of law principles thereof.
10.7 Section Headings: The section headings contained herein are for the
----------------
purposes of convenience only and are not intended to define or limit
15
<PAGE>
the contents of said sections.
10.8 Attorneys Fees: In the event of any litigation arising out of this
--------------
Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party reasonable attorneys fees and costs incurred.
10.9 Further Assurances: Each party hereto shall cooperate and shall take
------------------
such further action and shall execute and deliver such further
documents as may be reasonably requested by the other party in order
to carry out the provisions and purposes of this Agreement.
10.10 Gender: Whenever the pronouns "he" or "his" are used herein they shall
------
also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as
though in the plural and words in the plural shall be read and
construed as though in the singular in all cases where they would so
apply.
10.11 Counterparts: This Agreement may be executed in counterparts, all of
------------
which taken together shall be deemed one original.
10.12 Survival: The provisions of Articles VI, VII, VIII, IX and X, of this
--------
Agreement shall survive the termination of this Agreement whether
upon, or prior to, the Scheduled Termination Date hereof.
ARTICLE XI
Survival
- --------
11.1 Survival. The provisions of Articles VI, VII, VIII, IX and X, of this
Agreement shall survive the termination of this Agreement whether
upon, or prior to, the Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
OrbitTravel.com Corporation
a Delaware Corporation
By: /s/ Joseph R. Cellura
-------------------------
Title Chairman & CEO
/s/ Dean E. Miller
-------------------------------
DEAN E. MILLER Executive
16
<PAGE>
EXHIBIT 10.9
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
OrbiTtravel.com CORPORATION
AND
DAVID A. NOOSINOW
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into as of November 1, 1999, by and between Orbittravel.com Corporation f/k/a
Divot Golf Corporation f/k/a Brassie Golf Corporation, a Delaware corporation
(the "Company"), and DAVID A. NOOSINOW as Vice President ("Executive").
WHEREAS, the Company and Executive desire to enter into this Agreement to
assure the Company of the services of the Executive and to set forth the
respective rights and duties of the parties hereto; and
WHEREAS, the Company: (i) is presently in the business of providing
Internet travel, entertainment and related access services over the Internet
through its ownership and management of various proprietary and technological
holdings, licensing rights, subscription agreements and other related services;
and (ii) intends to invest its available resources in one or more new business
ventures (such activities, present and future, being hereinafter referred to as
the "Business").
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth herein, the Company and Executive agree as
follows:
ARTICLE I
Employment
- ----------
1.1 Employment and Title: The Company hereby employs Executive and Executive
--------------------
hereby accepts such employment, as Vice Chairman, Vice President and
Secretary of the Company, all upon the terms and conditions set forth
herein.
1.2 Services: During the Term (as hereinafter defined) hereof, Executive agrees
--------
to perform diligently and in good faith the duties of Vice Chairman, Vice
President and Secretary of the Company under the direction of the Board of
Directors of the Company (the "Board of Directors") or the Executive
Committee of the Board of Directors (the "Executive Committee"). Executive
agrees to devote his best efforts and substantially all of his full
business time, energies and
1
<PAGE>
abilities to the services to be performed hereunder and for the exclusive
benefit of the Company. Executive shall be vested with such authority as is
generally commensurate with the position of Senior Corporate Counsel of the
Company, as further outlined below.
1.3 Location: The principal place of employment and the location of Executive's
--------
principal offices shall be in the States of Florida, Georgia New York;
provided, however, Executive shall form time to time temporarily perform
outside of the States of Florida, Georgia and New York, such services as
are reasonably required for the proper execution of his duties under this
Agreement.
1.4 Representations: Each party represents and warrants to the other that he/it
---------------
has full power and authority to enter into and perform this Agreement and
that his/its execution and performance of this Agreement shall not
constitute a default under or breach of any of the terms of any agreement
to which he/it is a party or under which he/it is bound. Each party
represents that no consent or approval of any third party is required for
his/its execution, delivery and performance of this Agreement or that all
consents or approvals of any third party required for his/its execution,
delivery and performance of this Agreement have been obtained.
1.5 Sole Discretion: As the term "sole discretion" is used in this Agreement,
---------------
unless otherwise defined, it will be interpreted as the exercise of
reasonable discretion applying normal business practices to a contractual
relationship between a company and its chairman and chief executive
officer.
ARTICLE II
Term
- ----
2.1 Term: The term of Executive's employment hereunder (the "Term") shall
----
commence as of the date hereof (the "Commencement Date") and shall continue
through the fifth anniversary of the Commencement Date (the "Scheduled
Termination Date") unless earlier terminated pursuant to the provisions of
this Agreement.
2.2 Renewal: This Agreement shall be renewed for successive one year terms
-------
unless either party hereto provides written notice of non-renewal at least
sixty (60) days prior to the Scheduled Termination Date of each such term.
Notwithstanding the foregoing, each renewal hereof shall constitute a
separate and distinct agreement. If notice of non-renewal is given by
either party, all terms of this Agreement shall remain in full force and
effect until the earlier of the following (i) a new employment agreement is
entered into by the parties, or (ii)
2
<PAGE>
employment is terminated under the terms and conditions in Article VII
hereof.
ARTICLE III
Compensation
- ------------
3.1 Base Salary: As compensation for the services to be rendered by Executive,
-----------
the Company shall pay Executive, during the Term of this Agreement, an
annual base salary equal to Two Hundred Twenty Five Thousand and 00/100
Dollars ($225,000.00), which base salary shall accrue monthly (prorated for
periods less than a month) and shall be paid in equal bimonthly
installments, in arrears. The base salary will be reviewed annually, or
more frequently, as appropriate, by the Board of Directors or the
Compensation Committee of the Board of Directors, as the case may be, in
its sole discretion, provided that the annual base salary shall not be
decreased below Two Hundred Thousand and 00/100 Dollars ($225,000.00).
3.2 Vacation & Holidays As further compensation for services to be rendered by
-------------------
the executive, the executive shall accrue twenty one days of annual paid
vacation or leave and shall enjoy all regular state and federal holidays.
3.3 Stock Options: The Company shall issue Executive options to purchase Five
-------------
Million (5,000,000) shares of the Company's common stock at a per share
market value option price as soon as practicable after the date on which
the Company's proposals regarding a Stock Option Plan commencing the year
2000 and an increase in the Company's authorized common stock are adopted
by the Company's shareholders, if necessary. The Options shall not be
subject to any vesting period. All options shall have an exercise period of
five (5) years. The number and price of the option shares shall be subject
to equitable adjustment in the event the Company's 1-for-20 reverse stock
split is adopted by the Company's shareholders.
(a) Default Provision In the event the company defaults on said severance
-----------------
and the Executive and the company are unable to arrive at a mutually
agreed upon extension the Executive may elect a conversion to
preferred stock at a base of a twenty five percent (25%) discount to
market on a ten day trailing average.
(b) No Dilution or Impairment: orbittravel.com Corporation f/k/a Divot
-------------------------
Golf Corporation hereby agrees that it shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer
of capital stock or assets, consolidation, merger, dissolution, issue
or sale of securities or any other
3
<PAGE>
voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Agreement, but will at all times in good
faith assist in the carrying out of all such terms and in the taking
of all such action as may be necessary or appropriate in order to
protect the rights of Executive against dilution or other impairment
of the Shares issued hereunder.
(c) Anti-Dilution Provision The effects of anti-dilution pursuant to the
-----------------------
terms and conditions as contained herein provide that the company
shall be entitled to issue additional shares of its capital stock in
connection with mergers and acquisitions and financing in the ordinary
course of business; provided, however, that in case the Company shall,
at any time after the date hereof, reorganize, recapitalize, issue or
sell any shares of Common Stock or issue warrants, options or other
securities convertible into, or exercisable or exchangeable for,
shares of Common Stock ("Convertible Securities") for a consideration,
or in the case of the issuance of Convertible Securities, an exercise
price or conversion price per share less than the Fair Market Value or
the Exercise Price in effect immediately prior to the issuance or sale
of such securities, then forthwith upon such issuance or sale, the
Exercise Price shall be reduced to the price determined by dividing
(I) an amount equal to the sum of (a) the number of shares of Common
Stock outstanding (after giving effect to the conversion or exercise
of all Convertible Securities) immediately prior to such issuance or
sale multiplied by the then existing Exercise Price and (b) the
aggregate amount of the consideration, if any, received by the Company
upon such issuance or sale by (ii) the total number of shares of
Common Stock outstanding (after giving effect to the conversion or
exercise of all Convertible Securities) immediately after such
issuance or sale. In no event shall the Exercise Price be adjusted
pursuant to this computation. In the event of a stock split, stock
divided, or other recapitalization pursuant to which the number of
outstanding shares of capital stock of the Company shall increase, the
number of shares covered by any unexercised portion of this Option and
the related Exercise Price per share shall be adjusted
proportionately. In the event of a combination or other
recapitalization pursuant to which the number of outstanding shares of
capital stock of the Company shall be reduced, the number of shares
covered by any unexercised portion of this Option and the related
Exercise Price per share shall not be subject to adjustment and shall
remain as in effect prior to such combination or recapitalization.
(d) Executive shall be entitled to receive: (i) a lump sum payment
4
<PAGE>
equal to the sum of the present value of 100% of Executive's base
salary for the balance of the term of this Agreement; and (ii) a lump
sum severance payment in the amount of Nine Hundred Thousand Dollars
($900,000.00) (collectively, the "Severance Payments") which shall be
paid by the Company within sixty (60) days of the date of termination.
In addition, in the event of a termination without cause for any
reason other than death, Executive shall be entitled to receive the No
renewal Payment (as defined in Section 7.7);
(e) Right of Lien Executive shall be issued a UCC 1 which shall be
recorded by the company in the amount of Nine Hundred Thousand Dollars
($900,000.00) (collectively, the "Severance Payments") for the purpose
of security in the event of default under the provisions of this
agreement. Upon payment in full of all shares and money Executive
shall release said lien.
(f) Except as provided in Article XI, this Agreement shall thereupon be of
no further force or effect. Any amounts due from Company pursuant
above and not paid to Executive as and when due shall accrue interest
at the prime rate of interest as established from time to time by
Chase Manhattan Bank of New York. Company may purchase insurance to
cover all or any part of its obligations set forth in this Section,
and Executive agrees to take a physical examination to facilitate the
purchase of such insurance.
3.3 Incentive Compensation: The Company shall pay Executive, during the Term of
----------------------
this Agreement, an annual performance/incentive bonus which shall be
calculated as follows:
Fiscal Year
Revenue Bonus
------- -----
$0 - 2,000,000 Five Percent (5%) of Base Salary
$2,000,00 to $5,000,000 Fifteen Percent (15%) of Base Salary
$5,000,00 to $10,000,000 Thirty Percent (30%) of Base Salary
In excess of $10,000,001 Fifty Percent (50%) of Base Salary
Sale of Company Five Percent of the Purchase Price
Capital Raised Two Percent of all Capital Raised
3.4 Benefits: Executive shall be entitled, during the Term hereof, to the same
--------
medical, hospital dental and life insurance coverage and benefits as are
available to the Company's most senior executive officers on the
Commencement Date.
3.5 Withholding: Any and all amounts payable under this Agreement.
-----------
5
<PAGE>
including, without limitation, amounts payable under this Article Ill and
Article VII, are subject to withholding for such federal, state and local
taxes as the Company, in its reasonable judgment, determines to be required
pursuant to any applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses, and Insurance
- -------------------------------------------
4.1 Working Facilities and Expenses: Executive shall be furnished with an
-------------------------------
office at the principal executive offices of the Company, or at such other
location as agreed to by Executive and the Company, and other working
facilities and secretarial and other assistance suitable to his position
and reasonably required for the performance of his duties hereunder. The
Company hereby agrees to reimburse Executive, subject to the provisions of
this Section 4.1, all of the costs of Executive's maintaining a residence
and office in New York. The Company shall promptly reimburse Executive for
all of Executive's reasonable expenses incurred while employed, and
performing his duties under and in accordance with the terms and conditions
of this Agreement, subject to Executive's full and appropriate
documentation, including, without limitation, receipts for all such
expenses in the manner required pursuant to Company's policies and
procedures and the Internal Revenue Code of 1986, as amended (the "Code"),
and applicable regulations as are in effect from time to time.
4.2 Insurance: The Company may secure in its own name or otherwise, and at its
---------
own expense, life, disability, and other insurance covering Executive or
Executive and others, and Executive shall not have any right, title or
interest in or to such insurance other than as expressly provided herein.
Executive agrees to assist the Company in procuring such insurance by
submitting to the usual and customary medical and other examinations to be
conducted by such physicians(s) as the Company or such insurance company
may designate and by signing such applications and other written
instruments as may be required by any insurance company to which
application is made for such insurance.
ARTICLE V
Illness or Incapacity
- ---------------------
5.1 Right to Terminate: If, during the Term of this Agreement, Executive shall
------------------
be unable to perform in all material respects his duties hereunder for a
period exceeding six (6) consecutive months by reason of illness or
incapacity, this Agreement may be terminated by the Company in its sole
discretion pursuant to Section 7.2 hereof.
6
<PAGE>
5.2 Right to Replace: If Executive's illness or incapacity, whether by physical
----------------
or mental cause, renders him unable for a minimum period of ninety (90)
consecutive calendar days to carry out his duties and responsibilities as
set forth herein, the Company shall have the right to designate a person to
replace Executive temporarily in the capacity described in Article I
hereof; provided, however, that if Executive returns to work from such
illness or incapacity within the six (6) month period following his
inability due to such illness or incapacity, he shall be entitled to be
reinstated in the capacity described in Article I hereof with all rights,
duties and privileges attendant thereto.
5.3 Rights Prior to Termination: Executive shall be entitled to his full
---------------------------
remuneration and benefits hereunder during such illness or incapacity
unless and until an election is made by the Company to terminate this
Agreement in accordance with the provisions of this Article V.
5.4 Determination of illness or Incapacity: For purposes of this Article V. the
--------------------------------------
term "illness or incapacity" shall mean Executive's inability to perform
his duties hereunder substantially on a full-time basis due to physical or
mental illness as determined by the Board of Directors in accordance with
the Company's long-term disability insurance policy or, in the event
Company does not have a long-term disability insurance policy in effect, in
accordance with the following procedure: Executive and the Company each
shall designate a physician who shall jointly select a third physician and
the three (3) physicians selected would then determine whether or not any
illness or incapacity is such as to prevent Executive from performing his
duties hereunder.
5.5 Executive's Right of Designation: Nothwithstanding Paragraph 5.2 Executive
--------------------------------
shall have right to and be entitled to temporarily designate his
replacement in the event of incapacity for a period not to exceed an
additional six months of illness as defined in paragraph 5.1.
ARTICLE VI
Confidentiality
- ---------------
6.1 Confidentiality: During the Term of this Agreement and thereafter,
---------------
Executive agrees to maintain the confidential nature of the Company's trade
secrets, including, without limitation, development ideas, acquisition
strategies and plans, financial information, records, "know-how", methods
of doing business, customer, supplier and distributor lists and all other
confidential information of the Company.
7
<PAGE>
Executive shall not use (other than in connection with his employment), in
any way whatsoever, such trade secrets except as authorized in writing by
the Company. Executive shall, upon the termination of his employment,
deliver to the Company any and all records, books, documents or any other
materials whatsoever (including all copies thereof) containing such trade
secrets, which shall be and remain the property of the Company.
6.2 Non-Removal of Records: All documents, papers, materials, notes, books,
----------------------
correspondence, drawings and other written and graphic records relating to
the Business of the Company which Executive shall prepare or use, or come
into contact with, shall be and remain the sole property of the Company.
ARTICLE VII
Termination
- -----------
7.1 Termination For Cause: This Agreement and the employment of Executive may
---------------------
be terminated by the Company for "Just Cause" or "Proper Cause" and only in
any of the following circumstances:
(a) Just Cause: "Just Cause" shall mean that Executive has been judicially
----------
convicted or has pleaded nolo contendere to any one of the following
offenses: (i) Executive has been judicially determined to have
committed any fraud, theft, misappropriation or similar act against
the Company or Executive has been judicially declared to have
misappropriated, or embezzled funds in connection with the Company's
business; or (ii) any felony that the Board determines is detrimental
to the Company's reputation or that otherwise interferes with
Executive's ability to perform his duties under this Agreement.
(b) Proper Cause: "Proper Cause" shall mean an Executive is in default in
------------
a material respect in the performance of Executive's obligations,
services or duties hereunder, which shall include, without limitation:
(i) Executive's willful disregard of the lawful written instructions
of the Executive Committee or the Board of Directors concerning the
performance of his duties within the scope hereof; (ii) Any conduct of
the Executive which is materially inconsistent with the published
policies of the Company, as promulgated from time to time and which
are generally applicable to all senior executives; or (iii)
Executive's breach of any other material provision of this Agreement,
8
<PAGE>
provided, however, that Executive shall be given written notice of
--------------
such default and a reasonable opportunity to cure such default.
An event giving rise to termination of the Executive's employment, whether
for Just Cause or Proper Cause, shall henceforth be referred to as
"Termination Events."
7.2 Termination Procedure: In the event that the Board determines that a
---------------------
Termination Event has taken place with respect to the Executive, the Board
shall undertake the following procedure to terminate Executive's
employment:
(a) The Board shall present Executive with thirty (30) day's advance
written notice of Executive's Just Cause or Proper Cause termination,
and shall include with such notice a copy of the minutes of the
meeting of the Board that reference the Board's determination that a
Termination Event has taken place.
(b) Executive shall have thirty (30) days after his receipt of the Board's
written notice of Just Cause or Proper Cause termination in which to
deliver to the Board a written objection to such termination. Upon its
receipt of Executive's written objection, the Board will be required
to do the following:
(1) Within ten (10) day's of its receipt of Executive's written
objection, the Board shall convene a Special Meeting to review
such objection. Executive shall receive notice of, and shall
have the right to be present at any such meeting, and may
present evidence that serves to contradict the Board's
determination that a Termination Event has occurred. The Board
shall have five (5) days following such Special Meeting in
which to reverse its decision to terminate Executive. If the
Executive has not been informed of such reversal within such
five (5) day period, Executive shall have ten (10) days in
which to appeal the matter to binding arbitration.
(c) Arbitration Procedure: Should Executive elect to submit the Board's
---------------------
decision to binding arbitration, such arbitration shall take place
within thirty (30) days, in accordance with the American International
Commercial Arbitration Rules. The number of arbitrators shall be
three; the Board shall choose one arbitrator, the Executive shall
choose one arbitrator, and both arbitrators shall choose a third
arbitrator. The place of arbitration shall be New York City, New York,
and the language of the arbitration
9
<PAGE>
shall be English. No discovery shall be permitted in such dispute, other
than exchange of relevant documents ordered by the arbitrators. The
maximum number of days of hearings in such arbitration shall be 3, all of
which shall occur consecutively. The arbitrators' decision shall be
limited to whether a Just Cause or Proper Cause termination is justified
under the circumstances. Such decision shall be binding upon all parties.
7.3.1 Executive to Remain in Position: Notwithstanding any other provision of
-------------------------------
this Agreement to the contrary, should Executive object to a Just Cause or
Proper Cause Termination Notice, he shall remain in his position, with the
same duties and for the same compensation as set forth in this Agreement,
during the course of such objection, until such time as Executive accepts
the Board's decision or a final decision is rendered with respect to the
matter or that the has been determined through arbitration or appeal.
(a) A Termination for cause delivered to Executive pursuant to this
Agreement shall effective as of the date set forth in a written
notice of termination delivered to Executive (which shall be no less
than thirty (30) days following the delivery of written notice), but
shall not be earlier than the date such written notice is delivered
to Executive.
7.4 Termination Without Cause: This Agreement and the employment of the
-------------------------
Executive may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company by its giving not less than sixty
(60) days written notice to Executive in the event of an illness or
incapacity described in Section 5.1; or
(c) At the election of the Executive by his giving not less than sixty
(60) days written notice to the Company; or
(d) Upon the Scheduled Termination Date or on the last day of any
renewal term in the event of non-renewal of this Agreement; or
(e) Upon Executive's death.
A Termination Without Cause under Section 7.4(b), (c) or (d) hereof
10
<PAGE>
shall be effective upon the date set forth in a written notice of
termination delivered hereunder, which shall be not less than sixty (60)
days nor more than one hundred twenty (120) days after the giving of such
notice. A Termination Without Cause under Section 7.4(a), (d) or (e)
hereof shall be automatically effective upon the date of mutual agreement,
or the Scheduled Termination Date or the last day of any renewal term, or
the date of death of the Executive, as the case may be.
7.5 Effect of Termination For Cause: If Executive's employment is terminated
-------------------------------
For Cause:
(a) Executive shall be entitled to accrued base salary under Section 3.1
Through the date of termination which shall be paid by the Company
within sixty (60) days of the date of termination;
(b) Executive shall be entitled to reimbursement for expenses accrued
through the date of termination in accordance with the provisions of
Section 4.1 hereof which shall be paid by the Company within sixty
(60) days of the date of termination; and
(c) Except as provided in Article XI, this Agreement shall thereupon be
of no further force and effect.
7.6 Effect of Termination Without Cause: If Executive's employment is
-----------------------------------
terminated Without Cause except pursuant to Section 7.4(c) or (e) hereof:
(g) Executive shall be entitled to accrued base salary under Section 3.1
through the date of termination which shall be paid by the Company
within sixty (60) days of the date of termination;
(h) Executive shall be entitled to reimbursement for expenses accrued
through the Scheduled Termination Date in accordance with the
provisions of Section 4.1 hereof which shall be paid by the Company
within sixty (60) days of the date of termination;
(i) Default Provision In the event the company defaults on said
-----------------
severance and the Executive and the company are unable to arrive at
a mutually agreed upon extension the Executive may elect a
conversion to preferred stock at a base of a twenty five percent
(25%) discount to market on a ten day trailing average.
(j) No Dilution or Impairment: orbittravel.com Corporation f/k/a Divot
-------------------------
Golf Corporation hereby agrees that it shall not, by
11
<PAGE>
amendment of its Certificate of Incorporation or through any
reorganization, transfer of capital stock or assets, consolidation,
merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement, but will at all
times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate
in order to protect the rights of Executive against dilution or
other impairment of the Shares issued hereunder.
(k) Anti-Dilution Provision The effects of anti-dilution pursuant to the
-----------------------
terms and conditions as contained herein provide that the company
shall be entitled to issue additional shares of its capital stock in
connection with mergers and acquisitions and financing in the
ordinary course of business; provided, however, that in case the
Company shall, at any time after the date hereof, reorganize,
recapitalize, issue or sell any shares of Common Stock or issue
warrants, options or other securities convertible into, or
exercisable or exchangeable for, shares of Common Stock
("Convertible Securities") for a consideration, or in the case of
the issuance of Convertible Securities, an exercise price or
conversion price per share less than the Fair Market Value or the
Exercise Price in effect immediately prior to the issuance or sale
of such securities, then forthwith upon such issuance or sale, the
Exercise Price shall be reduced to the price determined by dividing
(I) an amount equal to the sum of (a) the number of shares of Common
Stock outstanding (after giving effect to the conversion or exercise
of all Convertible Securities) immediately prior to such issuance or
sale multiplied by the then existing Exercise Price and (b) the
aggregate amount of the consideration, if any, received by the
Company upon such issuance or sale by (ii) the total number of
shares of Common Stock outstanding (after giving effect to the
conversion or exercise of all Convertible Securities) immediately
after such issuance or sale. In no event shall the Exercise Price be
adjusted pursuant to this computation. In the event of a stock
split, stock divided, or other recapitalization pursuant to which
the number of outstanding shares of capital stock of the Company
shall increase, the number of shares covered by any unexercised
portion of this Option and the related Exercise Price per share
shall be adjusted proportionately. In the event of a combination or
other recapitalization pursuant to which the number of outstanding
shares of capital stock of the Company shall be reduced, the number
of shares covered by any unexercised portion of this Option and the
related Exercise Price per share shall not be subject to adjustment
and shall remain as in effect prior to such
12
<PAGE>
combination or recapitalization.
(l) Executive shall be entitled to receive: (i) a lump sum payment equal
to the sum of the present value of 100% of Executive's base salary
for the balance of the term of this Agreement; and (ii) a lump sum
severance payment in the amount of Nine Hundred Thousand Dollars
($900,000.00) (collectively, the "Severance Payments") which shall
be paid by the Company within sixty (60) days of the date of
termination. In addition, in the event of a termination without
cause for any reason other than death, Executive shall be entitled
to receive the No renewal Payment (as defined in Section 7.7);
(m) Right of Lien Executive shall be issued a UCC 1 which shall be
recorded by the company in the amount of Nine Hundred Thousand
Dollars ($900,000.00) (collectively, the "Severance Payments") for
the purpose of security in the event of default under the provisions
of this agreement. Upon payment in full of all shares and money
Executive shall release said lien.
(n) Except as provided in Article XI, this Agreement shall thereupon be
of no further force or effect. Any amounts due from Company pursuant
above and not paid to Executive as and when due shall accrue
interest at the prime rate of interest as established from time to
time by Chase Manhattan Bank of New York. Company may purchase
insurance to cover all or any part of its obligations set forth in
this Section, and Executive agrees to take a physical examination to
facilitate the purchase of such insurance.
7.7 Non-Renewal of Agreement: In the event that Company shall not have made a
------------------------
Qualifying Offer (as hereinafter defined) to Executive on or before the
Scheduled Termination Date of this Agreement, and no other agreement
between Executive and Company relating to the extension of Executive's
employment shall have been entered into by the Scheduled Termination Date,
Executive shall receive (after having given the Company written notice of
its failure to deliver a Qualifying Offer, and after not having received
such Qualifying Offer from the Company within five (5) business days from
the delivery of such notice to the Company) a contract termination payment
of $900,000.00 (the "Nonrenewal Payment") from the Company. Such
Nonrenewal Payment shall be due within sixty (60) days following the
Scheduled Termination Date of Executive's employment.
(a) Qualifying Offer: The term "Qualifying Offer" shall mean a written
----------------
offer of employment to Executive which: (i) shall be for a period of
not less than five years from the Scheduled Termination
13
<PAGE>
Date, (ii) shall include the types of compensation contained in this
Agreement, (iii) shall constitute a reasonable offer taking into
account Executive's compensation set forth in this Agreement; (iv)
the Company's financial and operating performance during the term of
this Agreement; (v) any other then-current circumstances relevant to
the determination of Executive's compensation by Company for the
period specified in (i); (vi) shall not contain any terms or
provisions which reduce Executive's title or duties as stated
herein, and (vii) shall state that it is irrevocable for 30 days
from the date of delivery thereof.
(b) In the event that the parties shall disagree as to whether or not an
offer timely made by Company in accordance with the foregoing
constitutes a Qualifying Offer, the parties shall submit such
disagreement to arbitration by a qualified individual executive
compensation expert of national reputation, who shall not have had
dealings with either party during the preceding five (5) years.
7.8 Constructive Termination: Prior to the expiration of the Term, Executive
------------------------
shall have the right to terminate his employment under this Agreement,
upon thirty (30) days' notice to the Company given within sixty (60) days
following the occurrence of any of the following events ("Constructive
Termination Events"); provided, however, that the Company shall have
twenty (20) days after the date such notice has been given to the Company
in which to cure the conduct or cause specified in such notice:
(a) A material breach by the Company of a material obligation of the
Company under this Agreement;
(b) A failure of the Company to pay when due to the Executive any annual
base salary, annual bonus or other earned bonus or awards or
commissions referred to in this Agreement;
(c) The relocation of the Executive's principal place of employment to a
location not within a 30 mile radius of such place of employment on
the Effective Date;
(d) A material reduction by the Company of the Executive's duties or
responsibilities;
(e) The failure of the Company to obtain an agreement reasonably
satisfactory to the Executive from any successor to assume and
14
<PAGE>
agree to perform this Agreement, or, if the business for which the
Executive's services are principally performed is sold or
transferred, the failure of the Company to obtain such an agreement
from the purchaser or transferee of such business; or
(f) The Company shall fail to grant Executive's stock options for
provided for herein.
Following a Constructive Termination Event and proper notice by the
Executive as set forth herein, Executive may terminate his employment with
the Company and shall be entitled to receive the Severance Payments and
the Nonrenewal Payment as set forth in Sections 7.6 and 7.7 of this
Agreement. In the event the Executive terminates Executive's employment as
a result of a Constructive Termination Event and the Company objects in
writing to the Executive's determination that there was Constructive
Termination Event within (30) days after Executive has notified the
Company of the same, the matter shall be resolved by arbitration in
accordance with the provisions of Section 7.2(c). If the Company fails to
object to any such determination of Constructive Termination in writing
within such thirty (30) day period, it shall be deemed to have waived its
right to object to that determination. If such arbitration determines that
there was not proper Constructive Termination, such termination shall be
deemed to be a termination pursuant to subsection 7.4(c).
7.9 Certain Payments: The parties believe that the payments to Executive
----------------
hereunder do not constitute "Excess Parachute Payments" under Section 28OG
of the Code. Notwithstanding such belief, if any payment or benefit under
this Agreement is determined to be an `Excess Parachute Payment," Company
shall pay Executive an additional amount (the "Tax Payment") such that (i)
the excess of all Excess Parachute Payments (including payments under this
sentence) over the sum of excise tax thereon under Section 4999 of the
Code and income tax thereon under Subtitle A of the Code and under
applicable state law is equal to (ii) the excess of all Excess Parachute
Payments (excluding payments under this sentence) over income tax thereon
under Subtitle A of the Code and under applicable state law.
15
<PAGE>
ARTICLE VIII
Non-Competition and Non-Interference
- ------------------------------------
8.1 Non-Competition: Executive may advise, lend money, manage, control,
---------------
trade, sell, lease, license or otherwise own technology in any private
-------
company, however, Executive's ownership interest may not directly or
------- -------
indirectly exceed 20% of the total issued and outstanding shares of any
one company whether said company is or is not in direct competition with
the Company. Executive shall be permitted to own up to 5% of the issued
and outstanding shares of capital stock of any corporation which has a
class of equity securities registered under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
8.2 Non-Interference: Executive agrees, that during the Term hereof and, in
----------------
the case of a Termination For Cause or a Termination Without Cause
pursuant to Section 7.2(d) hereof, for a period of one (1) year
thereafter, Executive will not, directly, indirectly or as an agent on
behalf of or in conjunction with any person, firm, partnership corporation
or other entity, induce or entice any employee of the Company to leave
such employment or cause anyone else to do so.
8.3 Severability: If any covenant or provision contained in this Article VIII
------------
is judicially determined to be void or unenforceable in whole or in part,
it shall not be deemed to affect or impair the validity of any other
covenant or provision. If, in any arbitration or judicial proceeding, a
tribunal shall refuse to enforce all of the separate covenants deemed
included in this Article VIII, then such unenforceable covenants shall be
deemed eliminated from the provisions hereof for the purpose of such
proceedings to the extent necessary to permit the remaining separate
covenants to be enforced in such proceedings.
ARTICLE IX
Remedies
- --------
9.1 Equitable Remedies: Executive and the Company agree that the services to
------------------
be rendered by Executive pursuant to this Agreement, and the rights and
interests granted and the obligations to be performed by Executive to the
Company pursuant to this Agreement, are of a special, unique,
extraordinary and intellectual character, which gives them a peculiar
value, the loss of which cannot be reasonably or
16
<PAGE>
adequately compensated in damages in any action at law, and that a breach
by Company of any of the terms of this Agreement will cause the Executive
great and irreparable injury and damage. The parties hereby expressly
agree that the Executive shall be entitled to the remedies of injunction,
specific performance, and other equitable relief to prevent a breach of
Articles VI and VIII of this Agreement, both pendente lite and
permanently, as such breach would cause irreparable injury to Executive
and a remedy at law would be inadequate and insufficient. Therefore,
Executive may in addition to pursuing other remedies, obtain an injunction
from any court having jurisdiction in the matter restraining any further
violation.
9.2 Rights and Remedies Preserved: Nothing in this Agreement shall limit any
-----------------------------
right or remedy the Company or Executive may have under this Agreement or
pursuant to them, for any breach of this Agreement by the other party. The
rights granted to the parties herein are cumulative and the election of
one shall not constitute a waiver of such party's right to assert all
other legal remedies available under the circumstances.
ARTICLE X
Miscellaneous
- -------------
10.1 No Waivers: The failure of either party to enforce any provision of this
----------
Agreement shall not be construed as a waiver of any such provision nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
10.2 Notices: Any notice to be given to the Company and Executive under the
-------
terms of this Agreement may he delivered personally, by telecopy, telex or
other form of written electronic transmission, or by registered or
certified mail, postage prepaid, and shall be addressed as follows:
If to the Company: OrbitTravel .com Corporation
c/o Joseph R. Cellura,
One Union Square South, Suite 10-J
New York, New York
Attention: Legal Committee
With a Copy to: Michael Swimmer, Esq.
11 Stage Coach Road
17
<PAGE>
Warwick, New York 11990
If to Executive: David A. Noosinow
One Union Square South, Suite 10-F
New York, New York 10003
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (1) when personally
delivered, (ii) when telecopied, telexed or transmitted by other form of
written electronic transmission (upon confirmation of receipt) or (iii) on
the third day after it is mailed by registered or certified mail, postage
prepaid, as provided herein.
10.3 Severability: The provisions of this Agreement are severable and if any
------------
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 Successors and Assigns: The rights and obligations of the Company under
----------------------
this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any
merger, consolidation, share exchange, or combination of the Company with
any other entity. Executive shall not have the right to assign, delegate
or otherwise transfer any duty or obligation to be performed by him
hereunder to any person or entity.
10.5 Entire Agreement: This Agreement supersedes all prior and contemporaneous
----------------
agreements and understandings between the parties hereto, oral or written,
and may not be modified or terminated orally- No modification, termination
or attempted waiver shall be valid unless in writing, signed by the party
against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties
hereto and their counsel. The parties agree that no prior drafts of this
Agreement shall be admissible as evidence (whether in any arbitration or
court of law) in any proceeding which involves the interpretation of any
provisions of this Agreement.
10.6 Governing Law: This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Florida without
reference to the conflict of law principles thereof.
10.7 Section Headings: The section headings contained herein are for the
----------------
purposes of convenience only and are not intended to define or limit the
contents of said sections.
18
<PAGE>
10.8 Attorneys Fees: In the event of any litigation arising out of this
--------------
Agreement, the prevailing party shall be entitled to recover from the non-
prevailing party reasonable attorneys fees and costs incurred.
10.9 Further Assurances: Each party hereto shall cooperate and shall take such
------------------
further action and shall execute and deliver such further documents as may
be reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement.
10.10 Gender: Whenever the pronouns "he" or "his" are used herein they shall
------
also be deemed to mean "she'' or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in
the plural and words in the plural shall be read and construed as though
in the singular in all cases where they would so apply.
10.11 Counterparts: This Agreement may be executed in counterparts, all of
------------
which taken together shall be deemed one original.
10.12 Survival: The provisions of Articles VI, VII, VIII, IX and X, of this
--------
Agreement shall survive the termination of this Agreement whether upon, or
prior to, the Scheduled Termination Date hereof.
ARTICLE XI
Survival
- --------
11.1 Survival. The provisions of Articles VI, VII, VIII, IX and X, of this
Agreement shall survive the termination of this Agreement whether upon, or prior
to, the Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
Orbittravel.com Corporation
a Delaware Corporation
By: /s/ Joseph R. Cellura
------------------------------
Title Chairman & CEO
/s/ David A. Noosinow
---------------------------------
DAVID A. NOOSINOW Executive
19
<PAGE>
EXHIBIT 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
OrbitTravel.com CORPORATION
AND
DOUGLAS R. DOLLINGER
--------------------
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into as of December 1, 1999 by and between OrbitTravel.com Corporation f/k/a
Divot Golf Corporation f/k/a Brassie Golf Corporation, a Delaware corporation
(the "Company"), and DOUGLAS R. DOLLINGER as Corporate Counsel ("Executive").
WHEREAS, the Company and Executive desire to enter into this Agreement to
assure the Company of the services of the Executive and to set forth the
respective rights and duties of the parties hereto; and
WHEREAS, the Company: (i) is presently in the business of providing
Internet travel, entertainment and related access services over the Internet
through its ownership and management of various proprietary and technological
holdings, licensing rights, subscription agreements and other related services;
and (ii) intends to invest its available resources in one or more new business
ventures (such activities, present and future, being hereinafter referred to as
the "Business").
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth herein, the Company and Executive agree as
follows:
ARTICLE I
Employment
- ----------
1.1 Employment and Title. The Company hereby employs Executive Executive
hereby accepts such employment, as Corporate Counsel, a member of the Board of
Directors and Director of the Legal committee of the Company, all upon the terms
and conditions set forth herein.
1.2 Services. During the Term (as hereinafter defined) hereof, Employee
agrees to perform diligently and in good faith the duties of Corporate Counsel,
a member of the Board of Directors and Director of the Legal committee of the
Company under the direction of the Board of Directors of the Company (the "Board
of Directors"). Employee agrees to devote his best efforts and substantially all
of his full business time, energies and abilities to the services to be
performed hereunder and for the exclusive benefit of the Company. Employee shall
be vested
<PAGE>
with such authority as is generally commensurate with the position of Corporate
Counsel, a member of the Board of Directors and Director of the Legal committee
of the Company, as further outlined below./1/
1.3 Location. The principal place of employment and the location of
Employee's principal offices shall be in the State of New York; provided,
however, Employee shall form time to time temporarily perform outside of the
State of New York, such services as are reasonably required for the proper
execution of his duties under this Agreement.
1.4 Representations. Each party represents and warrants to the other that
he/it has full power and authority to enter into and perform this Agreement and
that his/its execution and performance of this Agreement shall not constitute a
default under or breach of any of the terms of any agreement to which he/it is a
party or under which he/it is bound. Each party represents that no consent or
approval of any third party is required for his/its execution, delivery and
performance of this Agreement or that all consents or approvals of any third
party required for his/its execution, delivery and performance of this Agreement
have been obtained.
1.5 Sole Discretion. As the term "sole discretion" is used in this
Agreement, unless otherwise defined, it will be interpreted as the exercise of
reasonable discretion applying normal business practices to a contractual
relationship between a company and its Corporate Counsel, a member of the Board
of Directors and Director of the Legal committee.
ARTICLE II
Term
- ----
2.1 Term. The term of Executive's employment hereunder (the "Term") shall
commence as of the date hereof (the "Commencement Date") and shall continue
through the fifth anniversary of the Commencement Date (the "Scheduled
Termination Date") unless earlier terminated pursuant to the provisions of this
Agreement.
2.2 Renewal. This Agreement shall be renewed for successive one year terms
unless either party hereto provides written notice of non-renewal at least sixty
(60) days prior to the Scheduled Termination Date of each such term.
Notwithstanding the foregoing, each renewal hereof shall constitute a separate
and distinct agreement. If notice of non-renewal is given by either party. all
terms of this Agreement shall remain in full force and effect until the earlier
of the
- -----------------------
/1/ The company acknowledges that the Employee is an Attorney licensed in the
State of New York. That at the time of the Agreement Employee is obligated to
various clients for whom Employee remains duty-bound to conclude the legal
representation afforded them by the Employee. The Company agrees that Employee
is authorized to continue his representation of those clients for so long as it
may take to conclude their legal representation. Employee agrees not to
undertake the legal representation of any new clients without the express
written consent of the OrbitTravel Board of Directors.
<PAGE>
following (i) a new employment agreement is entered into by the parties, or (ii)
employment is terminated under the terms and conditions in Article VII hereof.
ARTICLE III
Compensation
- ------------
3.1 Base Salary. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement, an
annual base salary equal to One Hundred Eighty Thousand and 00/100 Dollars
($180,000.00), which base salary shall accrue monthly (prorated for periods less
than a month) and shall be paid in equal bimonthly installments, in arrears. The
base salary will be reviewed annually, or more frequently, as appropriate, by
the Board of Directors or the Compensation Committee of the Board of Directors,
as the case may be, in its sole discretion, provided that the annual base salary
shall not be decreased below One Hundred Eighty Thousand and 00/100 Dollars
($180,000.00). Employee may choose cash payment of one hundred eighty thousand
dollars to be paid as cash or at the election of Employee to be paid in stock at
a fifteen percent (15%) discount to the market based on a ten day trailing
average.
3.1 Vacation & Holidays As further compensation for services to be rendered by
-------------------
the executive, the executive shall accrue twenty one days of annual paid
vacation or leave and shall enjoy all REGULAR state and federal holidays.
3.2 Stock Options. The Company shall issue Executive options to purchase
--------------
Five Million (5,000,000) shares of the Company's common stock at a per share
market value option price as soon as practicable after the date on which the
Company's proposals regarding a Stock Option Plan commencing the year 2000 and
an increase in the Company's authorized common stock are adopted by the
Company's shareholders, if necessary. The Options shall not be subject to any
vesting period. All options shall have an exercise period of five (5) years. The
number and price of the option shares shall be subject to equitable adjustment
in the event the Company's 1-for-20 reverse stock split is adopted by the
Company's shareholders.
(a) Default Provision In the event the company defaults on said severance
-----------------
and the Executive and the company are unable to arrive at a mutually
agreed upon extension the Executive may elect a conversion to
preferred stock at a base of a twenty five percent (25%) discount to
market on a ten day trailing average.
(b) No Dilution or Impairment: orbittravel.com Corporation f/k/a Divot
-------------------------
Golf Corporation hereby agrees that it shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer
of capital stock or assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to
avoid the
<PAGE>
observance or performance of any of the terms of this Agreement, but
will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of Executive against
dilution or other impairment of the Shares issued hereunder.
(c) Anti-Dilution Provision The effects of anti-dilution pursuant to the
----------------------------
terms and conditions as contained herein provide that the company
shall be entitled to issue additional shares of its capital stock in
connection with mergers and acquisitions and financing in the ordinary
course of business; provided, however, that in case the Company shall,
at any time after the date hereof, reorganize, recapitalize, issue or
sell any shares of Common Stock or issue warrants, options or other
securities convertible into, or exercisable or exchangeable for,
shares of Common Stock ("Convertible Securities") for a consideration,
or in the case of the issuance of Convertible Securities, an exercise
price or conversion price per share less than the Fair Market Value or
the Exercise Price in effect immediately prior to the issuance or sale
of such securities, then forthwith upon such issuance or sale, the
Exercise Price shall be reduced to the price determined by dividing
(I) an amount equal to the sum of (a) the number of shares of Common
Stock outstanding (after giving effect to the conversion or exercise
of all Convertible Securities) immediately prior to such issuance or
sale multiplied by the then existing Exercise Price and (b) the
aggregate amount of the consideration, if any, received by the Company
upon such issuance or sale by (ii) the total number of shares of
Common Stock outstanding (after giving effect to the conversion or
exercise of all Convertible Securities) immediately after such
issuance or sale. In no event shall the Exercise Price be adjusted
pursuant to this computation. In the event of a stock split, stock
divided, or other recapitalization pursuant to which the number of
outstanding shares of capital stock of the Company shall increase, the
number of shares covered by any unexercised portion of this Option and
the related Exercise Price per share shall be adjusted
proportionately. In the event of a combination or other
recapitalization pursuant to which the number of outstanding shares of
capital stock of the Company shall be reduced, the number of shares
covered by any unexercised portion of this Option and the related
Exercise Price per share shall not be subject to adjustment and shall
remain as in effect prior to such combination or recapitalization.
(d) Executive shall be entitled to receive: (i) a lump sum payment equal
to the sum of the present value of 100% of Executive's base salary for
the balance of the term of this Agreement; and (ii) a lump sum
severance payment in the amount of Nine Hundred Thousand Dollars
($900,000.00) (collectively, the "Severance Payments") which shall be
<PAGE>
paid by the Company within sixty (60) days of the date of termination.
In addition, in the event of a termination without cause for any
reason other than death, Executive shall be entitled to receive the No
renewal Payment (as defined in Section 7.7);
(e) Right of Lien Executive shall be issued a UCC 1 which shall be
recorded by the company in the amount of Nine Hundred Thousand Dollars
($900,000.00) (collectively, the "Severance Payments") for the purpose
of security in the event of default under the provisions of this
agreement. Upon payment in full of all shares and money Executive
shall release said lien.
(f) Except as provided in Article XI, this Agreement shall thereupon be of
no further force or effect. Any amounts due from Company pursuant
above and not paid to Executive as and when due shall accrue interest
at the prime rate of interest as established from time to time by
Chase Manhattan Bank of New York. Company may purchase insurance to
cover all or any part of its obligations set forth in this Section,
and Executive agrees to take a physical examination to facilitate the
purchase of such insurance.
3.3 Incentive Compensation. The Company shall pay Employee, during the
Term of this Agreement, an annual performance/incentive bonus which shall be
calculated as follows:
Fiscal Year
Revenue Bonus
------- -----
$0 - 2,000,000 Five Percent (5%) of Base Salary
$2,000,00 to $5,000,000 Fifteen Percent (15%) of Base Salary
$5,000,00 to $10,000,000 Thirty Percent (30%) of Base Salary
In excess of $10,000,001 Fifty Percent (50%) of Base Salary
Sale of Company Five Percent of the Purchase Price
Capital Raised Two Percent of all Capital Raised
3.4 Benefits. Employee shall be entitled, during the Term hereof, to the
same medical, hospital dental and life insurance coverage and benefits as are
available to the Company's most senior executive officers on the Commencement
Date.
3.5 Withholding. Any and all amounts payable under this Agreement.
including, without limitation, amounts payable under this Article Ill and
Article VII, are subject to withholding for such federal, state and local taxes
as the Company, in its reasonable judgment, determines to be required pursuant
to any applicable law, rule or regulation.
ARTICLE IV
<PAGE>
Working Facilities, Expenses and Insurance
- ------------------------------------------
4.1 Working Facilities and Expenses. Employee shall maintain his own
office, or shall be provided an office at the discretion of management or at
such other location as agreed to by Employee and the Company, and other working
facilities and secretarial and other assistance suitable to his position and
reasonably required for the performance of his duties hereunder The Company
hereby agrees to reimburse Employee for pre approved expenses associated with
the maintainance of an office at such other location than employees home office.
The Company shall promptly reimburse Employee for all pre approved expenses or
such other of Employee's reasonable expenses incurred while employed, and
performing his duties under and in accordance with the terms and conditions of
this Agreement, subject to Employee's full and appropriate documentation,
including, without limitation, receipts for all such expenses in the manner
required pursuant to Company's policies arid procedures and the Internal Revenue
Code of 1986, as amended (the "Code"), and applicable regulations as are in
effect from time to time.
4.2 Insurance. The Company may secure in its own name or otherwise, and at
its own expense, life, disability, and other insurance covering Employee or
Employee and others, and Employee shall not have any right, title or interest in
or to such insurance other than as expressly provided herein. Employee agrees to
assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations to be conducted by such physicians(s)
as the Company or such insurance company may designate and by signing such
applications and other written instruments as may be required by any insurance
company to which application is made for such insurance.
ARTICLE V
Illness or Incapacity
- ---------------------
5.1 Right to Terminate. If, during the Term of this Agreement, Employee
shall be unable to perform in all material respects his duties hereunder for a
period exceeding six (6) consecutive months by reason of illness or incapacity,
this Agreement may be terminated by the Company in its sole discretion pursuant
to Section 7.2 hereof.
5.2 Right to Replace. If Employee's illness or incapacity, whether by
physical or mental cause, renders him unable for a minimum period of ninety (90)
consecutive calendar days to carry out his duties and responsibilities as set
forth herein, the Company shall have the right to designate a person to replace
Employee temporarily in the capacity described in Article I hereof; provided,
however, that if Employee returns to work from such illness or incapacity within
the six (6) month period following his inability due to such illness or
incapacity, he shall be entitled to be reinstated in the capacity described in
Article I hereof with all rights, duties
<PAGE>
and privileges attendant thereto.
5.3 Rights Prior to Termination. Employee shall be entitled to his full
remuneration and benefits hereunder during such illness or incapacity unless and
until an election is made by the Company to terminate this Agreement in
accordance with the provisions of this Article V.
5.4 Determination of illness or Incapacity. For purposes of this Article
V. the term "illness or incapacity" shall mean Employee's inability to perform
his duties hereunder substantially on a full-time basis due to physical or
mental illness as determined by the Board of Directors in accordance with the
Company's long-term disability insurance policy or, in the event Company does
not have a long-term disability insurance policy in effect, in accordance with
the following procedure: Employee and the Company each shall designate a
physician who shall jointly select a third physician and the three (3)
physicians selected would then determine whether or not any illness or
incapacity is such as to prevent Employee from performing his duties hereunder.
5.5 Executive's Right of Designation: Notwithstanding Paragraph 5.2
--------------------------------
Executive shall have the right to and be entitled to temporarily designate his
replacement in the event of incapacity for a period not to exceed an additional
six months of illness as defined in paragraph 5.1.
ARTICLE VI
Confidentiality
- ---------------
6.1 Confidentiality. During the Term of this Agreement and thereafter,
Executive agrees to maintain the confidential nature of the Company's trade
secrets, including, without limitation, development ideas, acquisition
strategies and plans, financial information, records, "know-how", methods of
doing business, customer, supplier and distributor lists and all other
confidential information of the Company. Executive shall not use (other than in
connection with his employment), in any way whatsoever, such trade secrets
except as authorized in writing by the Company. Executive shall, upon the
termination of his employment, deliver to the Company any and all records,
hooks, documents or any other materials whatsoever (including all copies
thereof) containing such trade secrets, which shall be and remain the property
of the Company.
6.2 Non-Removal of Records. All documents, papers, materials, notes,
books, correspondence, drawings and other written and graphic records relating
to the Business of the Company which Employee shall prepare or use, or come into
contact with, shall be and remain the sole property of the Company.
<PAGE>
ARTICLE VII
Termination
- -----------
7.1 Termination For Cause: This Agreement and the employment of Executive may
---------------------
be terminated by the Company for "Just Cause" or "Proper Cause" and only in
any of the following circumstances:
(a) Just Cause: "Just Cause" shall mean that Executive has been
----------
judicially convicted or has pleaded nolo contendere to any one of the
following offenses: (i) Executive has been judicially determined to
have committed any fraud, theft, misappropriation or similar act
against the Company or Executive has been judicially declared to have
misappropriated, or embezzled funds in connection with the Company's
business; or (ii) any felony that the Board determines is detrimental
to the Company's reputation or that otherwise interferes with
Executive's ability to perform his duties under this Agreement.
(b) Proper Cause: "Proper Cause" shall mean an Executive is in default
------------
in a material respect in the performance of Executive's obligations,
services or duties hereunder, which shall include, without limitation:
(i) Executive's willful disregard of the lawful written instructions
of the Executive Committee or the Board of Directors concerning the
performance of his duties within the scope hereof; (ii) Any conduct of
the Executive which is materially inconsistent with the published
policies of the Company, as promulgated from time to time and which
are generally applicable to all senior executives; or (iii)
Executive's breach of any other material provision of this Agreement,
provided, however, that Executive shall be given written notice of
--------------
such default and a reasonable opportunity to cure such default.
An event giving rise to termination of the Executive's employment, whether
for Just Cause or Proper Cause, shall henceforth be referred to as
"Termination Events."
7.2 Termination Procedure: In the event that the Board determines that a
---------------------
Termination Event has taken place with respect to the Executive, the Board
shall undertake the following procedure to terminate Executive's
employment:
(a) The Board shall present Executive with thirty (30) day's advance
written notice of Executive's Just Cause or Proper Cause termination,
and shall include with such notice a copy of the minutes of the
meeting of the
<PAGE>
Board that reference the Board's determination that a Termination
Event has taken place.
(b) Executive shall have thirty (30) days after his receipt of the Board's
written notice of Just Cause or Proper Cause termination in which to
deliver to the Board a written objection to such termination. Upon its
receipt of Executive's written objection, the Board will be required
to do the following:
(1) Within ten (10) day's of its receipt of Executive's written
objection, the Board shall convene a Special Meeting to
review such objection. Executive shall receive notice of,
and shall have the right to be present at any such meeting,
and may present evidence that serves to contradict the
Board's determination that a Termination Event has occurred.
The Board shall have five (5) days following such Special
Meeting in which to reverse its decision to terminate
Executive. If the Executive has not been informed of such
reversal within such five (5) day period, Executive shall
have ten (10) days in which to appeal the matter to binding
arbitration.
(c) Arbitration Procedure: Should Executive elect to submit the Board's
---------------------
decision to binding arbitration, such arbitration shall take place
within thirty (30) days, in accordance with the American International
Commercial Arbitration Rules. The number of arbitrators shall be
three; the Board shall choose one arbitrator, the Executive shall
choose one arbitrator, and both arbitrators shall choose a third
arbitrator. The place of arbitration shall be New York City, New York,
and the language of the arbitration shall be English. No discovery
shall be permitted in such dispute, other than exchange of relevant
documents ordered by the arbitrators. The maximum number of days of
hearings in such arbitration shall be 3, all of which shall occur
consecutively. The arbitrators' decision shall be limited to whether a
Just Cause or Proper Cause termination is justified under the
circumstances. Such decision shall be binding upon all parties.
7.3.1 Executive to Remain in Position: Notwithstanding any other provision of
- --------------------------------------
this Agreement to the contrary, should Executive object to a Just Cause
or Proper Cause Termination Notice, he shall remain in his position, with
the same duties and for the same compensation as set forth in this
Agreement,
<PAGE>
during the course of such objection, until such time as Executive accepts
the Board's decision or a final decision is rendered with respect to the
matter or that the has been determined through arbitration or appeal.
(a) A Termination for cause delivered to Executive pursuant to this
Agreement shall effective as of the date set forth in a written notice
of termination delivered to Executive (which shall be no less than
thirty (30) days following the delivery of written notice), but shall
not be earlier than the date such written notice is delivered to
Executive.
7.4 Termination Without Cause: This Agreement and the employment of the
-------------------------
Executive may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto; or
(b) At the election of the Company by its giving not less than sixty (60)
days written notice to Executive in the event of an illness or
incapacity described in Section 5.1; or
(c) At the election of the Executive by his giving not less than sixty
(60) days written notice to the Company; or
(d) Upon the Scheduled Termination Date or on the last day of any renewal
term in the event of non-renewal of this Agreement; or
(e) Upon Executive's death.
A Termination Without Cause under Section 7.4(b), (c) or (d) hereof shall
be effective upon the date set forth in a written notice of termination
delivered hereunder, which shall be not less than sixty (60) days nor more
than one hundred twenty (120) days after the giving of such notice. A
Termination Without Cause under Section 7.4(a), (d) or (e) hereof shall be
automatically effective upon the date of mutual agreement, or the Scheduled
Termination Date or the last day of any renewal term, or the date of death
of the Executive, as the case may be.
7.5 Effect of Termination For Cause: If Executive's employment is terminated
-------------------------------
For Cause:
(a) Executive shall be entitled to accrued base salary under Section 3.1
Through the date of termination which shall be paid by the Company
within sixty (60) days of the date of termination;
<PAGE>
(b) Executive shall be entitled to reimbursement for expenses accrued
through the date of termination in accordance with the provisions of
Section 4.1 hereof which shall be paid by the Company within sixty
(60) days of the date of termination; and
(c) Except as provided in Article XI, this Agreement shall thereupon be of
no further force and effect.
7.6 Effect of Termination Without Cause: If Executive's employment is
-----------------------------------
terminated Without Cause except pursuant to Section 7.4(c) or (e) hereof:
(g) Executive shall be entitled to accrued base salary under Section 3.1
through the date of termination which shall be paid by the Company
within sixty (60) days of the date of termination;
(h) Executive shall be entitled to reimbursement for expenses accrued
through the Scheduled Termination Date in accordance with the
provisions of Section 4.1 hereof which shall be paid by the Company
within sixty (60) days of the date of termination;
(i) Default Provision In the event the company defaults on said severance
-----------------
and the Executive and the company are unable to arrive at a mutually
agreed upon extension the Executive may elect a conversion to
preferred stock at a base of a twenty five percent (25%) discount to
market on a ten day trailing average.
(j) No Dilution or Impairment: orbittravel.com Corporation f/k/a Divot
-------------------------
Golf Corporation hereby agrees that it shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer
of capital stock or assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this
Agreement, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of Executive
against dilution or other impairment of the Shares issued hereunder.
(k) Anti-Dilution Provision The effects of anti-dilution pursuant to the
-----------------------
terms and conditions as contained herein provide that the company
shall be entitled to issue additional shares of its capital stock in
connection with mergers and acquisitions and financing in the ordinary
course of business; provided, however, that in case the Company shall,
at any time after the date hereof, reorganize, recapitalize, issue or
sell any shares of Common Stock or issue warrants, options or other
securities convertible into, or exercisable or exchangeable for,
shares of Common Stock ("Convertible Securities") for a consideration,
or in the
<PAGE>
case of the issuance of Convertible Securities, an exercise price or
conversion price per share less than the Fair Market Value or the Exercise
Price in effect immediately prior to the issuance or sale of such
securities, then forthwith upon such issuance or sale, the Exercise Price
shall be reduced to the price determined by dividing (I) an amount equal to
the sum of (a) the number of shares of Common Stock outstanding (after
giving effect to the conversion or exercise of all Convertible Securities)
immediately prior to such issuance or sale multiplied by the then existing
Exercise Price and (b) the aggregate amount of the consideration, if any,
received by the Company upon such issuance or sale by (ii) the total number
of shares of Common Stock outstanding (after giving effect to the
conversion or exercise of all Convertible Securities) immediately after
such issuance or sale. In no event shall the Exercise Price be adjusted
pursuant to this computation. In the event of a stock split, stock divided,
or other recapitalization pursuant to which the number of outstanding
shares of capital stock of the Company shall increase, the number of shares
covered by any unexercised portion of this Option and the related Exercise
Price per share shall be adjusted proportionately. In the event of a
combination or other recapitalization pursuant to which the number of
outstanding shares of capital stock of the Company shall be reduced, the
number of shares covered by any unexercised portion of this Option and the
related Exercise Price per share shall not be subject to adjustment and
shall remain as in effect prior to such combination or recapitalization.
(l) Executive shall be entitled to receive: (i) a lump sum payment equal to the
sum of the present value of 100% of Executive's base salary for the balance
of the term of this Agreement; and (ii) a lump sum severance payment in the
amount of Nine Hundred Thousand Dollars ($900,000.00) (collectively, the
"Severance Payments") which shall be paid by the Company within sixty (60)
days of the date of termination. In addition, in the event of a
termination without cause for any reason other than death, Executive shall
be entitled to receive the No renewal Payment (as defined in Section 7.7);
(m) Right of Lien Executive shall be issued a UCC 1 which shall be recorded by
the company in the amount of Nine Hundred Thousand Dollars ($900,000.00)
(collectively, the "Severance Payments") for the purpose of security in the
event of default under the provisions of this agreement. Upon payment in
full of all shares and money Executive shall release said lien.
(n) Except as provided in Article XI, this Agreement shall thereupon be of no
further force or effect. Any amounts due from Company pursuant above and
not paid to Executive as and when due shall accrue interest
<PAGE>
at the prime rate of interest as established from time to time by Chase
Manhattan Bank of New York. Company may purchase insurance to cover all or
any part of its obligations set forth in this Section, and Executive agrees
to take a physical examination to facilitate the purchase of such
insurance.
7.7 Non-Renewal of Agreement: In the event that Company shall not have made a
------------------------
Qualifying Offer (as hereinafter defined) to Executive on or before the
Scheduled Termination Date of this Agreement, and no other agreement
between Executive and Company relating to the extension of Executive's
employment shall have been entered into by the Scheduled Termination Date,
Executive shall receive (after having given the Company written notice of
its failure to deliver a Qualifying Offer, and after not having received
such Qualifying Offer from the Company within five (5) business days from
the delivery of such notice to the Company) a contract termination payment
of $900,000.00 (the "Nonrenewal Payment") from the Company. Such
Nonrenewal Payment shall be due within sixty (60) days following the
Scheduled Termination Date of Executive's employment.
(a) Qualifying Offer: The term "Qualifying Offer" shall mean a written
----------------
offer of employment to Executive which: (i) shall be for a period of
not less than five years from the Scheduled Termination Date, (ii)
shall include the types of compensation contained in this Agreement,
(iii) shall constitute a reasonable offer taking into account
Executive's compensation set forth in this Agreement; (iv) the
Company's financial and operating performance during the term of this
Agreement; (v) any other then-current circumstances relevant to the
determination of Executive's compensation by Company for the period
specified in (i); (vi) shall not contain any terms or provisions which
reduce Executive's title or duties as stated herein, and (vii) shall
state that it is irrevocable for 30 days from the date of delivery
thereof.
(b) In the event that the parties shall disagree as to whether or not an
offer timely made by Company in accordance with the foregoing
constitutes a Qualifying Offer, the parties shall submit such
disagreement to arbitration by a qualified individual executive
compensation expert of national reputation, who shall not have had
dealings with either party during the preceding five (5) years.
7.8 Constructive Termination: Prior to the expiration of the Term, Executive
------------------------
shall have the right to terminate his employment under this Agreement, upon
thirty (30) days' notice to the Company given within sixty (60) days
following the occurrence of any of the following events ("Constructive
Termination Events"); provided, however, that the Company shall have twenty
(20) days after the date such notice has been given to the Company in which
to cure the conduct or cause specified in such notice:
<PAGE>
(a) A material breach by the Company of a material obligation of the Company
under this Agreement;
(b) A failure of the Company to pay when due to the Executive any annual base
salary, annual bonus or other earned bonus or awards or commissions
referred to in this Agreement;
(c) The relocation of the Executive's principal place of employment to a
location not within a 30 mile radius of such place of employment on the
Effective Date;
(d) A material reduction by the Company of the Executive's duties or
responsibilities;
(e) The failure of the Company to obtain an agreement reasonably satisfactory
to the Executive from any successor to assume and agree to perform this
Agreement, or, if the business for which the Executive's services are
principally performed is sold or transferred, the failure of the Company to
obtain such an agreement from the purchaser or transferee of such business;
or
(f) The Company shall fail to grant Executive's stock options for provided for
herein.
Following a Constructive Termination Event and proper notice by the Executive as
set forth herein, Executive may terminate his employment with the Company and
shall be entitled to receive the Severance Payments and the Nonrenewal Payment
as set forth in Sections 7.6 and 7.7 of this Agreement. In the event the
Executive terminates Executive's employment as a result of a Constructive
Termination Event and the Company objects in writing to the Executive's
determination that there was Constructive Termination Event within (30) days
after Executive has notified the Company of the same, the matter shall be
resolved by arbitration in accordance with the provisions of Section 7.2(c). If
the Company fails to object to any such determination of Constructive
Termination in writing within such thirty (30) day period, it shall be deemed to
have waived its right to object to that determination. If such arbitration
determines that there was not proper Constructive Termination, such termination
shall be deemed to be a termination pursuant to subsection 7.4(c).
<PAGE>
7.9 Certain Payments: The parties believe that the payments to Executive
----------------
hereunder do not constitute "Excess Parachute Payments" under Section 28OG
of the Code. Notwithstanding such belief, if any payment or benefit under
this Agreement is determined to be an `Excess Parachute Payment," Company
shall pay Executive an additional amount (the "Tax Payment") such that (i)
the excess of all Excess Parachute Payments (including payments under this
sentence) over the sum of excise tax thereon under Section 4999 of the Code
and income tax thereon under Subtitle A of the Code and under applicable
state law is equal to (ii) the excess of all Excess Parachute Payments
(excluding payments under this sentence) over income tax thereon under
Subtitle A of the Code and under applicable state law.
ARTICLE VIII
Non-Competition and Non-Interference
- ------------------------------------
8.1 Non-Competition. Executive may advise, lend money, manage, control,
trade, sell, lease, license or otherwise own technology in any private company,
---------------
however, Executive's ownership interest may not directly or indirectly exceed
-------
20% of the total issued and outstanding shares of any one company whether said
company is or is not in direct competition with the Company. Employee shall be
permitted to own up to 5% of the issued and outstanding shares of capital stock
of any corporation which has a class of equity securities registered under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
8.2 Non-Interference. Employee agrees, that during the Term hereof and, in
the case of a Termination For Cause or a Termination Without Cause pursuant to
Section 7.2(d) hereof, for a period of one (6) months thereafter, Employee will
not, directly, indirectly or as an agent on behalf of or in conjunction with any
person, firm, partnership corporation or other entity, induce or entice any
employee of the Company to leave such employment or cause anyone else to do so.
Employee agrees to provide a non-event and comprehensive transition of his or
her responsibilities to any new Employee being brought in to the Company to
serve in the capacity of the departing employee.
8.3 Severability. If any covenant or provision contained in this Article
VIII is judicially determined to be void or unenforceable in whole or in part,
it shall not be deemed to affect or impair the validity of any other covenant or
provision. If, in any arbitration or judicial proceeding, a tribunal shall
refuse to enforce all of the separate covenants deemed included in this Article
VIII, then such unenforceable covenants shall be deemed eliminated from the
provisions hereof for the purpose of such proceedings to the extent necessary to
permit the remaining separate
<PAGE>
covenants to be enforced in such proceedings.
ARTICLE IX
Remedies
- --------
9.1 Equitable Remedies. Executive and the Company agree that the services
to be rendered by Executive pursuant to this Agreement, and the rights and
interests granted and the obligations to be performed by Executive to the
Company pursuant to this Agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and that a breach by Company of any of the terms of this Agreement will cause
the Employee great and irreparable injury and damage. Employee and hereby
expressly agrees that the each shall be entitled to the remedies of injunction,
specific performance and other equitable relief to prevent a breach of Articles
VI and VIII of this Agreement, both pendente lite and permanently, as such
breach would cause irreparable injury to each and a remedy at law would be
inadequate and insufficient. Therefore, the parties may in addition to pursuing
other remedies, obtain an injunction from any court having jurisdiction in the
matter restraining any further violation.
9.2 Rights and Remedies Preserved. Nothing in this Agreement shall limit
any right or remedy the Company or Employee may have under this Agreement or
pursuant to them, for any breach of this Agreement by the other party. The
rights granted to the parties herein are cumulative and the election of one
shall not constitute a waiver of such party's right to assert all other legal
remedies available under the circumstances.
ARTICLE X
Miscellaneous
- -------------
10.1 No Waivers. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of any such provision nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
10.2 Notices. Any notice to be given to the Company and Employee under the
terms of this Agreement may he delivered personally, by telecopy, telex or other
form of written electronic transmission, or by registered or certified mail,
postage prepaid, and shall be addressed as follows:
If to the Company: OrbitTravel .com Corporation
C/O Joseph Cellura, Suite 10-J
One Union Square Station
<PAGE>
New York, New York
Attention: CEO
With a Copy to: David W. Brand, Esq.
Brand & Brand
100 Ring Road West, Penthouse Suite
Garden City, New York 11530
If to Employee: Douglas R. Dollinger
11 Stage Coach Road
Warwick, New York 10990
Either party may hereafter notify the other in writing of any change in address.
Any notice shall be deemed duly given (1) when personally delivered, (ii) when
telecopied, telexed or transmitted by other form of written electronic
transmission (upon confirmation of receipt) or (iii) on the third day after it
is mailed by registered or certified mail, postage prepaid, as provided herein.
10.3 Severability. The provisions of this Agreement are severable and if
any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 Successors and Assigns. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any merger,
consolidation, share exchange or combination of the Company with any other
entity. Employee shall not have the right to assign, delegate or otherwise
transfer any duty or obligation to be performed by him hereunder to any person
or entity.
10.5 Entire Agreement. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally- No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding which involves the interpretation of any provisions of this
Agreement.
10.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without reference to
the conflict of law principles thereof.
10.7 Section Headings. The section headings contained herein are for the
<PAGE>
purposes of convenience only and are not intended to define or limit the
contents of said sections.
10.8 Attorneys Fees. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to recover from the non-
prevailing party reasonable attorneys fees and costs incurred.
10.9 Further Assurances. Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement.
10.10 Gender. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she'' or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in
the plural and words in the plural shall be read and construed as though in
the singular in all cases where they would so apply.
10.11 Counterparts. This Agreement may be executed in counterparts, all of
which taken together shall be deemed one original.
ARTICLE XI
Survival
- --------
11.1 Survival. The provisions of Articles VI, VII, VIII, IX and X, of this
Agreement shall survive the termination of this Agreement whether upon, or prior
to, the Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
OrbitTravel.com Corporation
a Delaware Corporation
By: /s/ David A. Noosinow By: /s/ Joseph R. Cellura
----------------------------- -----------------------------
David A. Noosinow Title Chairman & CEO
Vice Chairman & Vice President
/s/ Douglas R. Dollinger
--------------------------------
DOUGLAS R. DOLLINGER, Employee
<PAGE>
EXHIBIT 10.13
February __, 2000
Dear Divot Golf Corporation Debt Securities Holder:
Divot Golf Corporation ("Divot") hereby offers to exchange all of your
outstanding debt securities and outstanding warrants for shares of Divot common
stock pursuant to the terms and conditions contained herein (the "Exchange").
By acknowledging below, you agree to the terms and conditions of the Exchange as
set forth below.
You hereby agree to irrevocably surrender, duly endorse, if applicable, and
tender to Divot all of your notes and other written instruments representing
your debt securities and your outstanding warrants in exchange for the right to
receive the number of fully paid and nonassessable shares of Divot's common
stock equal to the total outstanding principal of your debt securities,
multiplied by the conversion ratio of $.15. Divot shall cause to be issued your
shares of common stock within 10 business days of the filing with the SEC by
Divot of its Annual Report on Form 10-KSB for the year ended December 31, 1999.
Simultaneously with the issuance of the common stock pursuant hereunder (the
"Effective Time"), all of your debt securities and warrants of Divot then issued
and outstanding shall cease to be outstanding and be automatically canceled with
no further action.
As of the Effective Time, all of your rights, privileges, preferences and
limitations with respect to any and all debt securities and warrants held by you
(including any accrued and unpaid interest) shall automatically cease to exist
and shall thereafter remain null, void and unexercisable.
No certificates representing fractional shares of Divot common stock will
be issued as a result of the Exchange. Any fractional share interest to which a
Divot stockholder would otherwise be entitled to receive shall be rounded up to
the nearest whole share if such fraction is 0.5 or greater and shall be rounded
down to the nearest whole share if such fraction is less than 0.5.
As promptly as practicable after receipt of the surrendered instrument or
instruments, Divot shall issue and deliver to you a certificate for the number
of full shares of common stock of Divot to which you are entitled by virtue of
the Exchange.
The rights and privileges of each share of Divot common stock issued
pursuant to the Exchange shall be identical to the rights and privileges of the
Divot common stock then issued and outstanding prior to the Exchange. Further,
the shares of Divot common stock issued pursuant to the Exchange are intended to
qualify as securities exempt from registration pursuant to Section 3(a)(9) of
the Securities Act of 1933, as amended, by the fact that the Divot debt
securities and warrants will be exchanged by Divot with its existing security-
holders exclusively.
You hereby represent and warrant that you have held your debt securities
for a minimum of one year. Based on your above representation, we have been
advised by outside counsel that you have complied with the required holding
period for restricted securities under Rule 144(d) of the Securities Act of
1933. Within three business days of Divot's notice from a broker that you
intend to sell your shares of
<PAGE>
common stock, Divot will use its best efforts to cause its outside counsel to
issue a letter stating that, based in part upon your representation, you have
complied with the required holding period under Rule 144(d) of the Securities
Act of 1933.
Sincerely,
Joseph R. Cellura
Chief Executive Officer
AGREED AND ACCEPTED:
_______________________________
Signature of Holder
Printed Name: ________________________________
Address: ________________________________
________________________________
Facsimile: ________________________________
-2-
<PAGE>
EXHIBIT 10.14
SETTLEMENT AGREEMENT AND GENERAL RELEASE
----------------------------------------
THIS SETTLEMENT AGREEMENT AND RELEASE (hereinafter referred to as "the
Agreement") is made and entered into as of June 24, 1999 by and among
OrbitTravel.com Corporation ("Orbit") f/k/a DIVOT GOLF CORPORTION, ("Divot")
f/k/a Brassie Golf Corporation, a Delaware corporation, and JOSEPH R. CELLURA
("Cellura") an individual resident of the State of Florida and an Officer of
Divot Golf Corporation, all of whom collectively shall hereinafter be referred
to as the "Cellura."
R E C I T A L S:
----------------
A. WHEREAS, Cellura was an Officer and majority shareholder of Divot
Development, Divot Partners Ltd., and Divot Corporation;
B. WHEREAS, Divot Development, Divot Partners Ltd., and Divot Corporation
were acquired by Brassie Golf Corporation in or about October 1996,
pursuant to an acquisition Agreement with the Board of Directors of
Brassie Golf Corporation for consideration of Five Hundred Thousand
Dollars ($500,000.00) plus the issuance of Five Million (5,000,000)
shares of common stock and Five Million (5,000,000) options of Brassie
Golf Corporation's treasury stock to Cellura, with an additional
Fifteen Million shares (15,000,000) to be issued and distributed among
the remaining shareholders of Divot Development, Divot Partners Ltd.,
and Divot Corporation;
C. WHEREAS for additional consideration, Cellura became employed by Divot
as Divot's Chairman and Chief Executive Officer, pursuant to that
certain Employment Agreement dated September 3, 1997 (the "Employment
Agreement"), a copy of which is attached hereto as Exhibit "A" and by
this reference incorporated herein;
D. WHEREAS, Cellura and Divot also entered into various other agreements,
including, but not limited to, that certain Indemnity Agreement dated
August 1, 1997 (the "Indemnity Agreement"), which required Divot to
hold harmless and indemnify Cellura from and against any and all claims
brought against Cellura that result from Cellura's position as an
officer and director of Divot f/k/a Brassie Golf Corporation. A copy of
the Indemnity Agreement is attached hereto as Exhibit "B" and by this
reference incorporated herein;
E. WHEREAS, the Board failed and refused to approve and undertake the
Share Issuance, which failure resulted in various legal actions filed
against Cellura in the Federal District Court for the Middle District
of Florida and the Southern District of New York (the "Civil Actions").
The Civil Actions were filed as a direct result of the failure of the
Board to undertake the Share issuance.
F. WHEREAS, the Board also failed and refused to indemnify Cellura against
the Civil Actions as required by the Indemnity Agreement, which failure
resulted in a
<PAGE>
substantial monetary loss by Cellura in the defense of the Civil
Actions. In addition, Cellura suffered real and substantial damage to
his personal character as a result of the filing of the Civil Actions,
and has thus contemplated the filing of various tort actions against
Divot, including (but not limited) an action sounding in defamation.
G. WHEREAS, Divot has agreed to issue to Cellura, and Cellura has agreed
to accept, 27,333,333 shares of Divot common stock in settlement of
each of his claims specifically for his claims sounding in defamation,
together with Two Hundred Fifty Thousand Dollars ($250,000.00) in cash.
This agreement provides for full and complete satisfaction of all
debts, obligations, and existing and potential claims and causes of
action Cellura may have against Divot as a result of the Civil Actions
and any breach by the Board of the Employment Agreement, the Indemnity
Agreement, and any other agreement between Cellura and Divot;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual covenants and
agreements contained herein, the Parties hereby agree as follows:
A G R E E M E N T S:
--------------------
1. COVENANTS OF DIVOT: In full and complete satisfaction of any and all
existing and potential debts, obligations, claims, and causes of
action, including, but not limited to, those arising under any breach
on the part of the Board under the Employment Agreement, the Indemnity
Agreement, and any other agreement between Cellura and Divot, Divot
does hereby agree to the following:
(A) CASH PAYMENT: Within ninety (90) days following the execution of
this Agreement, Divot shall pay to Cellura the sum of $250,000.00
(the "Cash Payment").
(B) ISSUANCE OF SHARES TO CELLURA: Immediately upon the execution
hereof, Divot shall issue to Cellura 27,333,333 fully paid and
non-assessable shares (the "Shares") of its Common Stock, .001 par
value, which shares shall be dated as of June 30,1998 evidenced by
a Divot standard stock certificate issued in the name of Cellura.
As to all the Shares, Cellura shall be granted all the rights and
privileges afforded to other stockholders of Divot. Additionally
Cellura's shares shall be granted demand registration rights and
piggy back registration rights.
(C) ISSUANCE OF SHARES TO THE J.R.CELLURA TRUST: Immediately upon the
execution hereof, Divot shall issue to Cellura the Twenty Seven
Million Three Hundred and Thirty Three Thousand shares
(27,333,333) said shares shall be fully paid and non-assessable
shares (also, the "Shares") of its Common Stock, .001 par value,
which shares shall be evidenced by a Divot standard stock
certificate issued in the name of the Joseph R. Cellura As to
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all the Shares shall be granted with all the rights and privileges
afforded to other stockholders of Divot. Additionally the shares
shall issued will provide for demand registration rights and piggy
back registration rights.
(D) DEFAULT PROVISION In the event the company defaults on said
payable and Cellura and the company are unable to arrive at a
mutually agreed upon extension Cellura may elect a conversion to
preferred stock at a basis of seventy five percent (75%) of market
based on a ten day trailing average.
(E) NO DILUTION OR IMPAIRMENT: orbittravel.com Corporation f/k/a Divot
Golf Corporation hereby agrees that it shall not, by amendment of
its Certificate of Incorporation or through any reorganization,
transfer of capital stock or assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the terms of this Agreement, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in
order to protect the rights of Cellura against dilution or other
impairment of the Shares issued hereunder.
(F) ANTI-DILUTION PROVISION The effects of anti-dilution pursuant to
the terms and conditions as contained herein provide that the
company shall be entitled to issue additional shares of its
capital stock in connection with mergers and acquisitions and
financing in the ordinary course of business; provided, however,
that in case the Company shall, at any time after the date hereof,
reorganize, recapitalize, issue or sell any shares of Common Stock
or issue warrants, options or other securities convertible into,
or exercisable or exchangeable for, shares of Common Stock
("Convertible Securities") for a consideration, or in the case of
the issuance of Convertible Securities, an exercise price or
conversion price per share less than the Fair Market Value or the
Exercise Price in effect immediately prior to the issuance or sale
of such securities, then forthwith upon such issuance or sale, the
Exercise Price shall be reduced to the price determined by
dividing (I) an amount equal to the sum of (a) the number of
shares of Common Stock outstanding (after giving effect to the
conversion or exercise of all Convertible Securities) immediately
prior to such issuance or sale multiplied by the then existing
Exercise Price and (b) the aggregate amount of the consideration,
if any, received by the Company upon such issuance or sale by (ii)
the total number of shares of Common Stock outstanding (after
giving effect to the conversion or exercise of all Convertible
Securities) immediately after such issuance or sale. In no event
shall the Exercise Price be adjusted pursuant to this computation.
In the event of a stock split, stock divided, or other
recapitalization pursuant to which the number of outstanding
shares of capital stock of the Company shall increase,
the number of shares covered by any unexercised portion of this
Option and the related Exercise Price per share shall be adjusted
proportionately. In the event of a combination or other
recapitalization pursuant to which the number of outstanding
shares of capital stock of the Company shall be reduced, the
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<PAGE>
number of shares covered by any unexercised portion of this Option
and the related Exercise Price per share shall not be subject to
adjustment and shall remain as in effect prior to such combination
or recapitalization.
(G) RIGHT OF LIEN Executive shall be issued a UCC 1 which shall be
recorded by the company in the amount of Two Hundred Fifty
Thousand Dollars ($250,000.00) (collectively, the "Payment") for
the purpose of security in the event of default under the
provisions of this agreement. Upon payment in full of all shares
and money Cellura shall release said lien.
(H) EXCEPT AS PROVIDED IN ARTICLE XI, this Agreement shall there upon
be of no further force or effect. Any amounts due from Company
pursuant above and not paid to Cellura as and when due shall
accrue interest at the prime rate of interest as established from
time to time by Chase Manhattan Bank of New York.
(I) RELEASE: Upon execution of this Agreement, Divot, including its
successors, officers, administrators, attorneys, agents, and
assigns, and anyone else acting by or through Divot, hereby
releases and forever discharges Cellura, and all his heirs,
beneficiaries, settlors, trustees, and personal representatives,
and anyone else claiming under or through Cellura, from and
against any and all claims, charges, complaints, demands, actions
or causes of action of any kind in any federal, state, or other
court, arbitral forum, or federal, state, or other administrative
agency, whether known or not now known, which Divot may have
against Cellura in connection with or arising from the Civil
Actions, the Employment Agreement, the Indemnity Agreement, and
any other agreement between Divot and Cellura.
(J) FUTURE DAMAGES: Inasmuch as the injuries, damages, and losses
resulting from the matters described herein may not be fully known
and may be more numerous or more serious than it is now understood
or expected, Divot agrees, as a further consideration of this
Agreement, that this Release applies to any and all injuries,
damages, and losses resulting from the Civil Actions, the
Employment Agreement, the Indemnity Agreement, and any other
agreement between Divot and Cellura, even though now
unanticipated, unexpected, and unknown.
(K) REPRESENTATIONS: Divot represents that no additional claims are
contemplated against any other party potentially liable for the
losses, damages, and injuries for which this Release is given. In
the event any additional claim is made which directly or
indirectly results in additional liability exposure to Cellura for
the losses, injuries, and damages for which this Release is given,
Divot covenants and agrees to indemnify and save Cellura harmless
from all such claims and demands, including reasonable attorney's
fees and all other expenses necessarily incurred.
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2. COVENANTS OF CELLURA: By execution hereof, Cellura does hereby agree to
accept the Cash Payment, the Shares, as set forth above in full and
complete satisfaction of all potential claims against Divot which
Cellura may have that arise from the Civil Actions, and any breach by
Divot of the Employment Agreement, the Indemnity Agreement, or any
other agreement between Divot and Cellura. Cellura further agrees to
the following:
(A) RELEASE: Upon execution of this Agreement, Cellura, and all his
heirs, beneficiaries, settlors, trustees, and personal
representatives, and anyone else claiming under or through Cellura
does hereby release and forever discharge Divot, including its
successors, officers, administrators, attorneys, agents, and
assigns, and anyone else acting by or through Divot, from and
against any and all claims, charges, complaints, demands, actions
or causes of action of any kind in any federal, state, or other
court, arbitral forum, or federal, state, or other administrative
agency, whether known or not now known, which Cellura may have
against Divot in connection with or arising from the Civil
Actions, the Employment Agreement, the Indemnity Agreement, and
any other agreement between Divot and Cellura.
(B) FUTURE DAMAGES: Inasmuch as the injuries, damages, and losses
resulting from the matters described herein may not be fully known
and may be more numerous or more serious than it is now understood
or expected, Cellura agrees, as a further consideration of this
Agreement, that this Release applies to any and all injuries,
damages, and losses resulting from the Civil Actions, the
Employment Agreement, the Indemnity Agreement, and any other
agreement between Divot and Cellura, even though now
unanticipated, unexpected, and unknown.
(C) REPRESENTATIONS: Cellura represents that no additional claims are
contemplated against any other party potentially liable for the
losses, damages, and injuries for which this Release is given. In
the event any additional claim is made which directly or
indirectly results in additional liability exposure to Divot for
the losses, injuries, and damages for which this Release is given,
Cellura does covenant and agree to indemnify and save Divot
harmless from all such claims and demands, including reasonable
attorney's fees and all other expenses necessarily incurred.
3. COVENANTS COMMON TO BOTH PARTIES:
(A) NO ADMISSION OF LIABILITY: The parties agree that nothing
contained in this Agreement shall constitute or be treated as an
admission of liability or wrongdoing by any party or its heirs,
executors, administrators, attorneys, successors, agents, or
assigns.
(B) CONFIDENTIALITY: Neither the parties to this Agreement nor their
attorneys shall disclose or publicize, either to the media, the
courts, or any other third
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<PAGE>
party, informally or in any way, the terms of the settlement set
forth herein, unless required by this Agreement or otherwise by
law.
(C) DISCLAIMER: Each party has: (i) carefully read this Settlement
Agreement and Release, together with the exhibits attached hereto;
(ii) has discussed its legal effects with their respective
attorneys; (iii) fully understands the contents hereof; and (iv)
executes the same of their own free will and accord without
duress, coercion, or undue influence. Each party agrees that this
Agreement shall be binding upon their respective successors,
heirs, personal representatives, and assigns.
4. ENTIRE AGREEMENT: This Agreement contains the entire agreement among
the parties relating to the subject matter of this Agreement,
supersedes any and all oral or written understandings or agreements
relating to its subject matter, and may not be altered or amended
except by an instrument in writing signed by the party or parties to be
charged.
5. BINDING AGREEMENT: This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective heirs,
executors, administrators, successors, and assigns. It shall be
construed and enforced in accordance with the laws of the State of New
York and the State of Florida and Delaware.
6. NOTICES: Any notices required by this Agreement shall be sent to the
Party's address as follows:
IF TO DIVOT:
One Union Square South, Suite 10-J
New York, NY 10003
IF TO CELLURA:
One Union Square South, Suite 10-J
New York, NY 10003
7. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
8. TITLES AND CAPTIONS: All article and section titles or captions in this
Agreement are for convenience only. They shall not be deemed a part of
this Agreement, and in no way define, limit, extend, or describe the
scope or intent of any of its provisions. The recital clauses set forth
in this Agreement are hereby incorporated into and are made a part of
this Agreement
9. AMENDMENTS: No supplement, modification, or amendment of any term,
provision, or condition of this Agreement shall be binding or
enforceable unless
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<PAGE>
executed in writing by the party against whom enforcement is sought as
to such supplementary or modified or amended term or condition.
10. ENTIRE AGREEMENT AND WAIVER: This Agreement constitutes the entire
agreement between the parties hereto, and supersedes all prior and
contemporaneous agreements, arrangements, negotiations, and
understandings between the parties hereto relating to the subject
matter hereof. There are no other understandings, statements, promises
or inducements, oral or otherwise, contrary to the terms of this
Agreement. No representations, warranties, covenants, or conditions,
express or implied, whether by statute or otherwise, other than as set
forth herein have been made by any party hereto. No waiver of any term,
provision, or condition of this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or
shall constitute, a waiver of any other provision hereof, whether or
not similar, nor shall any such waiver constitute a continuing waiver,
and no waiver shall be binding unless executed by the party making such
waiver.
11. FURTHER DOCUMENTS: Each party hereto further agrees to execute such
documents and take such other steps as may be necessary to accomplish
the purposes herein.
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as
of the date first set forth above.
DIVOT GOLF CORPORATION
By: /s/ Joseph R. Cellura /s/ Joseph R. Cellura
--------------------------- ------------------------
JOSEPH R. CELLURA JOSEPH R. CELLURA
Title: Chairman & CEO
---------------------------
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<PAGE>
EXHIBIT 10.15
SEPARATION AGREEMENT
This Separation Agreement (the "Agreement") is entered into by Divot
Golf Corporation, a Delaware corporation formerly known as Brassie Golf
Corporation ("DGC,", "Employer," or the "Company"), and KENNETH CRAIG, an
individual ("CRAIG" or "Employee").
BACKGROUND
A. CRAIG has been employed as DGC's Chief Executive Officer and has
been Chairman of the Company's board of directors, pursuant to an Employment
Agreement between DGC and CRAIG dated March 1, 1999, (the "Employment
Agreement").
B. CRAIG and DGC have mutually agreed to the termination of Employee's
positions with the Company, on the terms and conditions set forth below.
THEREFORE, in consideration of the promises, covenants, and conditions
set forth in this Agreement, and for other good and valuable considerations, the
receipt and sufficiency of which are acknowledged, the Company and CRAIG,
intending to be legally bound, agree as follows:
TERMS AND CONDITIONS
1. BACKGROUND. The Background set forth above is true and may be
utilized in interpreting this Agreement, if necessary.
2. TERMINATIONS OF POSITIONS. The parties agree that subject to the
terms and conditions of this Agreement:
a. CRAIG voluntary resignation as Chief Executive Office of
the Company shall be deemed accepted by DGC and effective as
of the close of business on September 1, 1999 (the
"Termination Date");
b. CRAIG voluntary resignation as Chairman and a member of the
board of directors of the Company shall be deemed accepted by
DGC and effective as of the close of business on the
Termination Date; and, therefore
c. All positions held by CRAIG as an employee, officer, and/or
director of DGC, as well as all duties, responsibilities,
covenants, and/or obligations of CRAIG resulting from and/or
relating thereto--including, without limitation, those set
forth in or arising out of the Employment Agreement--shall be
deemed to have ceased, and are hereby terminated, effective as
of the close of business on the Termination Date.
3. FINANCIAL CONSIDERATIONS.
------------------------
a. TERMS. The parties agree to the severance payments to
CRAIG, reimbursements of expenses, and other financial terms
and conditions set forth on the attached Exhibit "A" to the
fully vested in CRAIG. The consideration provided to CRAIG by
the Company as described in Exhibit "A" shall be in lieu, and
in full satisfaction, of any other profit sharing, pension,
vacation pay, expense reimbursements, or severance pay
<PAGE>
which otherwise may have been due to Employee. (Annexed hereto
and made a part hereof as Exhibit "A" is a letter dated
September 1, 1999, wherein CRAIG agrees to accept Seventy-Five
Thousand Dollars $75,000 such as evidenced by the attached
Promissory Note due June 30, 2000, and 3,500,000 shares of
common stock to be issued immediately.)
b. INDEMNITY. Notwithstanding this or any other provisions of
this Agreement, the Indemnity Agreement DGC and CRAIG dated
March 1, 1999, shall remain in full force and effect in
accordance with its terms. Similarly, the consideration
provided to DGC by CRAIG which is described in Exhibit "A"
shall be in lieu, and in full satisfaction, of any other
reimbursement, repayment, or other obligation which otherwise
my have been due from CRAIG to the Company.
c. CONDITION PRECEDENT. This Agreement, including, without
limitation, the provisions of paragraphs 4 and 5, below, is
expressly contingent upon CRAIG's timely receipt from DGC of
the monies, in collected funds, and other consideration
described in Exhibit "A".
4. RELEASE BY EMPLOYEE. CRAIG, on behalf of himself and his heirs,
executors, attorneys, administrators and assigns, hereby completely, fully,
finally, and forever releases and discharges DGC, as well as DGC's officers,
directors and employees as of the date of execution of this Agreement,
collectively and individually (the "DGC Releasees") from any and all past,
present, or future claims, demands, complaints, actions, causes of action,
suits, judgments, executions, attachments, levies, garnishments, debts,
liabilities, profits, bonuses, reimbursements, obligations, costs, expenses,
sums of money, stock options, shares of stock, severance, profit sharing,
bonuses, salary, wages, accounts, reckonings, bonds, bills, covenants,
contracts, controversies, agreements, promises, trespasses, damages, and/or
compensation, of any nature whatsoever, at law or in equity, whether based on
contract, statute, tort, or strict liability, and whether for compensatory,
special, punitive, statutory, or any other damages or remedies ("Claims"), which
CRAIG now has or may have against the DGC Releasees, collectively or
individually, arising out of or related to any act, omission, matter, or thing
whatsoever, including without limitation, those arising out of or related to
Employee's employment by and/or serve to the Company as a director officer,
employee, or otherwise, and/or Employee's termination of employment with the
Company, and Employee waives all rights with respect thereto. However, nothing
in this provision shall release or otherwise affect any of DGC's duties or
obligations under i) this Agreement, or ii) the Indemnity Agreement between DGC
and CRAIG dated March 1, 1999, which shall remain in full force and effect in
accordance with its terms notwithstanding any term or conditions of this
Agreement, or iii) the consulting arrangement described herein or any future
agreements entered into between CRAIG and DGC.
5. RELEASE BY DGC. DGC, on behalf of itself and its officers,
directors, employees, agents, representatives and assigns hereby completely,
fully, finally, and forever releases and discharges CRAIG, as well as his heirs,
executors, attorneys, administrators and assigns, collectively and individually
(the " CRAIG Releasees") from any and all past, present, or future claims,
demands, complaints, actions, causes of action, suits, judgments, executions,
attachments, levies, garnishments, debts, liabilities, profits, bonuses,
reimbursements, obligations, costs, expenses, sums of money, stock options,
shares of stock, severance, profit sharing, bonuses, salary, wages, accounts,
reckonings, bonds, bills, covenants, contracts, controversies, agreements,
promises, trespasses, damages, and/or compensation, of any nature whatsoever, at
law or in equity, whether based on contract, statute, tort, or
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strict liability, and whether for compensatory, special, punitive, statutory, or
any other damages or remedies ("Claims"), which DGC now has or may have against
the CRAIG Releasees, collectively or individually, arising out of or related to
any act, omission, matter, or thing, whatsoever, including, without limitation,
those arising out of or related to Employee's employment by and/or service to
the Company as a director, officer, employee, or otherwise. This release also
includes DGC's agreement and obligation to expunge, revoke, or otherwise correct
any and all Form 1099s issued to CRAIG for tax years 1998 and 1999, and to
properly amend, modify, or otherwise correct all prior financial statements,
journal entries, or account statements of any kind to reflect that sums owed by
CRAIG to DGC do not exceed the amounts reflected in Exhibit "A". However,
nothing in this provision shall release or otherwise affect any of CRAIG's
duties or obligations under i) this Agreement, or ii) the Indemnity Agreement
between DGC and CRAIG dated March 1, 1999, which shall remain in full force and
effect in accordance with its terms notwithstanding any term or condition of
this Agreement, or iii) the consulting agreement described herein or any future
agreements entered into between CRAIG and DGC.
6. TAXES.
-----
a. TAX RESPONSIBILITY.
Each party shall be solely responsible for the payment of all
taxes which may be levied or imposed on, or due from that party arising out of
or resulting from the business transactions set forth in this Agreement.
b. INCONSISTENT POSITION.
No party shall take a position in an income tax return or
other document or communication submitted to a governmental agency which is
inconsistent with the provisions of this Agreement.
7. COOPERATION. The parties agree to cooperate with one another in the
defense of any claim that may be brought against another party of which the
cooperating party has knowledge, regardless of whether the party was involved in
the act, conduct, or event pursuant to which such claim arises. Further, the
parties agree to cooperate with one another as may be reasonably necessary for
any legitimate business purpose. After the execution of this Agreement, each
party agrees to execute and acknowledge, if required, any and all other
documents and writings that are reasonably necessary to effectuate and perfect
all the terms and conditions set forth in or imposed by this Agreement and all
Exhibits.
8. NO ADMISSIONS. Nothing in this Agreement shall operate as or be
construed as an indication, inference, presumption, admission, or as evidence
relative to any fact, issue of law, issue of liability, or any other matter on
the part of any party. Each party expressly denies any and all liability to any
other party and relative to any matters or issues addressed in, arising out of,
or related to this Agreement.
9. NONDISAGREEMENT. The parties--for themselves and all affiliated and
related companies and other persons, as well as their officers, directors,
employees, attorneys, representatives, agents, and assigns--agree that they will
not in any way disparage, damage, and/or otherwise impair the other party's
reputation, business dealings, and/or relationships with any former, current, or
prospective customers, employees, agents, business associates, investors,
lenders, and/or any other persons. This
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provision shall be broadly interpreted to include all verbal, written, or other
communication of any type or manner, as well as other acts or conduct.
10. CONFIDENTIALITY. This Agreement shall remain confidential and,
except as otherwise required by law, neither the Company nor Employee shall
disclose the terms or conditions of this Agreement to any person or entity
without the prior written consent of the other. However, this provision shall
not preclude the Company from making disclosures to the Securities and Exchange
Commission where required by law or from making disclosures as may be necessary
to comply, or demonstrate compliance, with any law, including, without
limitation, any tax or employment-related law. Nor shall this provision preclude
either party from disclosing this Agreement for any proper purposes to their
accountant or tax advisor. Similarly, nothing herein, shall preclude either
party from complying with any lawful subpoenas or court order which require
disclosure of the terms or conditions of this Agreement. If Employee becomes
aware of any disclosure or threatened disclosure of the contents of this
Agreement, the Employee shall notify the president of the Company by telephone
and facsimile within 24 hours of his becoming aware of the disclosure or
threatened disclosure. Further, either party shall give the other party
sufficient notice of any threatened judicially ordered disclosure (including a
subpoena), so that the other party may take whatever actions it deems
appropriate to protect the confidentiality of the Agreement, including, without
limitation, the entry of a protective order.
11. SPECIFIC PERFORMANCE. The parties acknowledge that the performance
of their respective obligations under the Agreement is essential to the
consummation of the transactions contemplated by the Agreement. Each of them
further acknowledge that no party will have an adequate remedy at law if any
other party fails to perform its or their obligations under the Agreement. In
such event, each party shall have the right to compel specific performance of
this Agreement. Further, notwithstanding any other provision of this Agreement,
the parties do not waive their right to, and shall be entitled to, any other
remedy at law or equity for a violation of this Agreement including damages.
12. AVOIDANCE OF PAYMENT. If, as a result of the filing of a bankruptcy
petition or other legal proceeding, or any order or ruling therein, or any
statute, regulation, rule, or other law or requirement, or for any other reason,
this Agreement or any of the Company's obligations to Employee hereunder become
unenforceable, or any money or property delivered by Company as consideration
for Employee's obligations hereunder is subsequently avoided in a legal
proceeding or for any other reason cannot be retained lawfully by Employee, then
the release set forth in paragraph 4 of this Agreement shall be void and the
Employee may commence and/or maintain any legal or other action that he may have
had against Employer or otherwise, prior to the effective date of this
Agreement, as well pursue a claim for breach of this Agreement. In the event the
consideration under this Agreement is avoided in a bankruptcy proceeding, the
Company agrees the Employee shall have a post-petition administrative claim to
the extent of any consideration avoided, provided, the payment, in full, of such
an administrative claim will operate to restore the release set forth in
paragraph 4, above. Any statute of limitations period and/or any other time
limitation relating to Employee's right to bring, maintain, or recover on, any
claim subject to the release set forth in paragraph 4 above is hereby tolled
until 5:00 p.m. on the tenth business day after one calendar year from the date
on which any and all charges, claims, or appeals which may affect the
consideration due Employee under this Agreement are legally and finally
determined and resolved in a manner which is binding on the parties and all
others with standing with respect thereto.
13. TIME OF ESSENCE. All times and dates in this Agreement shall be of
the essence.
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<PAGE>
14. NOTICES. Any notice or other communication required or permitted to
be given under this Agreement shall be sufficient if in writing, and if hand
delivered, sent by Federal Express or comparable overnight courier, or sent by
registered or certified mail, return receipt requested, to the address of each
party shown below, or to such other address as a party may designate in writing
in accordance with the provisions of this paragraph.
15. ENTIRE AGREEMENT. This Agreement and its exhibits represents the
entire agreement of the parties with respect to the matters set forth herein.
Correspondence, memoranda, notes, discussions, representations, or agreements,
whether written or oral, originating before the date of this Agreement are
replaced in total by this Agreement, except as provided in the succeeding
sentence. Notwithstanding the execution of this Agreement or any terms,
conditions, or other provisions hereof, the Indemnity Agreement between DGC and
CRAIG dated March 1, 1999, shall remain in full force and effect in accordance
with its terms.
16. AMENDMENT. This Agreement may be amended only by a writing signed
by all parties.
17. SEVERABILITY. If any part of this Agreement is determined to be
illegal or unenforceable, all other parts shall be given effect separately and
shall not be affected.
18. NONWAIVER. No assent or waiver, express or implied, of any breach
of any one or more of the covenants, conditions or provisions of this Agreement
shall be deemed a waiver of any subsequent breach, or a waiver of any other
covenant, condition or provision of this Agreement.
19. EXHIBITS. Each Exhibit to this document is an integral part of, and
is incorporated into this Agreement by this reference.
20. INTERPRETATION. Whenever the context of this Agreement so requires,
the masculine, feminine, and/or neuter gender, and the singular or plural
number, shall each include the others. Additionally, titles and headings of the
various sections of this Agreement are intended solely for convenience of
reference and are not intended to explain, modify or place any interpretation
upon any of the provisions of this Agreement. This Agreement and any related
instruments shall not be construed more strictly against any party regardless of
who was more responsible for its preparation, it being recognized that this
Agreement and any related instruments are the product of extensive negotiations
between the parties and that all parties have contributed substantially and
materially to the final preparation of this Agreement.
21. ATTORNEYS' FEES. In the event of litigation arising out of or
relating to this Agreement, the prevailing party shall be entitled to recover
from the other party all reasonable costs and expenses of such litigation,
including reasonable attorneys' fees and costs of appeal. The term "attorneys'
fees" shall include, but not be limited to, fees incurred by attorneys,
paralegals, or other staff members operating under the supervision of an
attorney.
22. GOVERNING LAW, VENUE AND JURISDICTION. This Agreement shall be
construed in accordance with Florida law. The parties agree that personal
jurisdiction over them shall be proper, and conclusive venue for any action
arising out of or related to this Agreement shall be in the Circuit Curt of
Hillsborough County, Florida.
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<PAGE>
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be an
original, but each counterpart shall together constitute one and the same
instrument. A facsimile copy of this Agreement and any signatures hereon shall
be considered for all purposes as originals.
24. EXECUTORY AND CONDITION SUBSEQUENT. All provisions which involve
obligations which must or may be performed subsequent to the execution of this
Agreement, are otherwise executory, or involve conditions subsequent, shall
survive the execution of this document, closing of any and all transactions set
forth herein, and thereafter shall continue to bind the parties in accordance
with their terms.
25. BINDING EFFECT. This Agreement shall be binding upon the parties
and their respective heirs, devisees, legal representatives, personal
representatives, successors, and assigns.
THE UNDERSIGNED BEING DULY AUTHORIZED TO EXECUTE THIS INSTRUMENT, HAVE
CAREFULLY READ THE FOREGOING AGREEMENT, FULLY UNDERSTAND IT, HAVE RECEIVED THE
ADVICE OF AN ATTORNEY REGARDING THIS MATTER (OR, AFTER BEING ADVISED TO SEEK
COUNSEL, HAVE DECLINED TO DO SO), AND HAVE KNOWINGLY AND VOLUNTARILY ENTERED
INTO THIS AGREEMENT INTENDING TO BE LEGALLY BOUND.
DIVOT GOLD CORPORATION
By: /s/ Joseph R. Cellura /s/ Kenneth W. Craig
_______________________________ _______________________
JOSEPH R. CELLURA KENNETH CRAIG
Its: Chief Execute Office
Date: 2/10/00 Date: September 1, 1999
_____________________________
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<PAGE>
Exhibit A
Ken Craig
612 Downs Avenue
Tampa, Florida 33617
September 1, 1999
Joe Cellura
3203 Oakmont Mason Circle
Tampa, Florida 33629
Subject: Resignation
Dear Joe Cellura:
This letter represents our Agreement regarding the terms of my resignation from
Divot Golf Corporation ("Divot") as President and as a member of the Board of
Directors.
It is understood and agreed as follows:
1. Divot will execute a note in my behalf in the amount of
$75,000 due and payable June 30, 2000.
2. Divot will deliver to me or my directive 3,500,000 shares of
non-restricted common stock.
Sincerely,
/s/ Ken Craig
Ken Craig
<PAGE>
PROMISSORY NOTE
Principal Amount: New York, NY
$75,000.00 February 10, 2000
- ----------
FOR VALUE RECEIVED, the undersigned, Divot Golf Corporation
("Borrower"), a Delaware corporation, promises to pay to the order of KENNETH
CRAIG ("Lender"), in lawful money of the United States of America, the principal
sum of Seventy Five Thousand and No/100 Dollars ($75,000.00) (the "Principal
Sum").
1. REPAYMENT OF PRINCIPAL SUM: The Principal Sum shall be due and
payable in one (1) installment of Seventy Five Thousand and No/100 Dollars
($75,000.00) on or before June 30, 2000 (the "Maturity Date") (unless this Note
is converted by the Lender in accordance with Section 4 below). If the Maturity
Date should fall on a weekend or national holiday, payment shall be due on the
following business day.
2. INTEREST: Interest shall not accrue on the Principal Sum during the
term hereof. However, should the Borrower fail to repay the Principal Sum in
full on or before the Maturity Date, or otherwise default under the terms of
this Note, interest shall apply on the entire amount of the unpaid Principal Sum
at the rate of twelve percent (12%) per annum. Such interest on the unpaid
Principal Sum shall be calculated as of the date set forth above, and shall
continue to accrue until the Principal Sum and the accumulated interest are paid
in full. Interest on this Note shall be computed on the basis of the actual
number of days elapsed during which the unpaid Principal Sum is outstanding,
divided by a year of three hundred sixty-five (365) days. All payments under
this Note shall be applied first to the payment of accrued and unpaid interest
with the remainder applied to the unpaid Principal Sum in inverse chronological
order.
3. USE OF PROCEEDS: Borrower hereby agrees that the proceeds obtained
from the Lender as represented by this Note shall be applied towards the
settlement of an employment contract.
4. CONVERSION: At the option of the Lender, all principal and interest
represented by this Note shall convert into fully paid and non-
<PAGE>
assessable shares of the common stock of the Borrower at the price (the
"Conversion Price") of Twenty Five Cents ($.25) per share. This Note may be
converted in full by the Lender by surrender of this Note with a Subscription
Agreement duly executed by the Lender to the Borrower. Such conversion shall be
deemed to have been effected immediately prior to the close of business on the
date on which this Note shall have been so surrendered to the Borrower; and at
such time the rights of the Lender shall, to the extent of the principal amount
thereof converted, cease, and the person or persons in whose name or names any
certificate or certificates for Common Stock (or other securities) shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record thereof.
5. REPRESENTATIONS AND WARRANTIES OF BORROWER: Borrower represents and
warrants that:
(a) Borrower is a corporation duly organized and existing under the
laws of the state of Delaware. It has the power to own its
property and to carry on its business as it is now being
conducted;
(b) Borrower has full power and authority (corporate and other) to
borrow the sums provided for in this Note, to execute and
deliver this Note and any other instrument or agreement
required under this Note, and to perform and observe the terms
and provisions of this Note and of all such other notes,
instruments, and agreements;
(c) The officers of Borrower executing this Note are duly and
properly in office and fully authorized to execute it; and
(d) This Note has been duly authorized, executed, and delivered by
Borrower, and is a legal, valid, and binding agreement of
Borrower, enforceable against it in accordance with its terms,
and any other instrument or agreement required under this Note
has been so authorized and, when executed and delivered, will
be similarly valid, binding, and enforceable.
6. EVENTS OF DEFAULT: The occurrence of any of the events set out below
(Events of Default) shall, at the option of the Lender, make all interest and
principal remaining on due under this Note immediately due and payable, without
notice of default, presentment or demand for payment,
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<PAGE>
protest or notice of nonpayment or dishonor, or other notices or demands of any
kind, except as specified herein:
(a) Borrower shall fail to pay, within ten (10) days after the date
when due, any payment of principal in accordance with the terms
of this Note;
(b) Any representation or warranty by Borrower in this Note or in
any agreement, instrument, or certificate executed under this
Note shall prove to have been false or misleading in any
material respect when made;
(c) Borrower shall file any petition or action for relief under any
bankruptcy, arrangement, reorganization, insolvency, or
moratorium law, or any other law or laws for the relief of or
relating to debtors, or shall, with respect to any involuntary
petition or action for relief under such law or laws, consent
or fail to timely object to the relief requested in such
petition;
(d) an involuntary petition shall be filed under any bankruptcy
statute against Borrower, or a receiver, trustee, custodian, or
similar officer of the court shall be appointed to take
possession of all or any substantial part of Borrower's
properties, unless such petition or appointment is dismissed or
withdrawn or ceases to be in effect within sixty (60) days from
the date of the filing or appointment.
7. NOTICES: Any communications between the parties or notices provided
for in this Note may be given by mailing them, first class, postage prepaid,
to Lender at ____________________________________________________, and to
Borrower at _______________________________________, or to such other address
as either party may indicate to the other in writing after the date of this
Note.
8. ASSIGNMENT: This Note shall bind and inure to the benefit of the
parties and their respective successors and assigns; provided, however, that
Borrower shall not assign this Note or any of the rights, duties, or obligations
of Borrower under this Note without the prior written consent of Lender.
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<PAGE>
9. NO WAIVER: No delay or omission to exercise any right, power, or
remedy accruing to Lender on any breach or default of Borrower under this Note
shall impair any such right, power, or remedy of Lender, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence in
such breach or default, or waiver of or acquiescence in any similar breach or
default occurring later; nor shall any waiver of any single breach or default be
considered a waiver of any other prior or subsequent breach or default. Any
waiver, permit, consent, or approval of any kind by Lender of any breach or
default under this Note, or any waiver by Lender of any provision or condition
of this Note, must be in writing and shall be effective only to the extent
specifically set forth in that writing. All remedies, either under this Note or
by law or otherwise afforded to Lender, shall be cumulative and not alternative.
10. ATTORNEY'S FEES: In the event of any legal action or suit in
relation to this Note or any note or other instrument or agreement required
under this Note, or in the event that Lender incurs any legal expense in
protecting its rights under this Note or under any security agreement in any
legal proceeding, Borrower, in addition to all other sums which Borrower may be
called on to pay, will pay to Lender the amount of such legal expense and will,
if Lender prevails in such action, pay to Lender a reasonable sum for its
attorney's fees and all other costs and expenses.
11. GOVERNING LAW: This Note shall be interpreted under the laws of the
United States and the State of New York, without giving effect to the conflict
of law principles thereof. Any dispute arising from this Note or the loan
represented thereby shall be subject to the sole jurisdiction of the courts of
the State of New York.
DIVOT GOLF CORPORATION
a Delaware Corporation
By: /s/ Joseph R. Cellura
__________________________
Name: Joseph R. Cellura
________________________
Title: Chairman & CEO
_______________________
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<PAGE>
EXHIBIT 10.16
SETTLEMENT AGREEMENT AND GENERAL RELEASE
----------------------------------------
THIS SETTLEMENT AGREEMENT AND RELEASE (hereinafter referred to as "the
Agreement") is made and entered into as of January 31st, 2000 by and among
DIVOT GOLF CORPORTION, ("Divot") a Delaware corporation, and CLIFFORD F. BAGNALL
("Bagnall") an individual and resident of the State of Florida, both of whom
collectively shall hereinafter be referred to as the "Parties."
R E C I T A L S:
A. WHEREAS, Bagnall was and is employed by Divot pursuant to that certain
Employment Agreement dated September 2, 1997 (the "Employment
Agreement");
B. WHEREAS, Divot desires to terminate Bagnall's employment with Divot,
and Bagnall has agreed to such termination, and to fully and completely
release Divot from any and all liability associated with Bagnall's
employment and the termination thereof, in consideration of the
covenants of Divot as set forth in this Agreement;
C. WHEREAS, Divot has agreed to pay to Bagnall, and Bagnall has agreed to
accept, the sum of One Hundred Thousand Dollars ($100,000.00) in cash,
and 5,300,000 shares of Divot common stock, in full and complete
satisfaction of all debts, obligations, and existing and potential
claims and causes of action Bagnall may have against Divot as a result
of or arising out of Divot's employment of Bagnall, the termination of
that employment, the Employment Agreement, and any other agreement
between Bagnall and Divot.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual covenants and
agreements contained herein, the Parties hereby agree as follows:
A G R E E M E N T S:
--------------------
1. COVENANTS OF DIVOT: Divot does hereby agree to the following:
(a) CASH PAYMENT: Within ninety (90) days following the execution of
this Agreement, Divot shall pay to Bagnall the sum of $100,000
(the "Cash Payment as evidenced by the Promissory Note of this
date.").
(b) ISSUANCE OF SHARES TO BAGNALL: Within thirty (30) days following
the execution of this Agreement, Divot shall issue to Bagnall
5,300,000 fully paid and non-assessable shares (the "Shares") of
its Common Stock, .001 par value, which shares shall be evidenced
by a Divot standard stock certificate issued in the name of
Bagnall. As to the Shares, Bagnall shall be granted all the rights
and privileges afforded to other stockholders of Divot.
<PAGE>
Additionally, the Shares issued will provide for demand
registration rights and piggyback registration rights.
(i) SHARES TO BE INCLUDED IN REGISTRATION STATEMENT: Divot
shall cause the Shares to be listed in the earlier filing
of the Form S-8 or Form SB-2 Registration Statement that
Divot is preparing to file with the Securities and
Exchange Commission concurrently with the execution of
this Agreement. Upon the successful filing of the S-8 or
Registration Statement, the Shares shall be registered
(such that the Shares issued to Bagnall shall become
freely tradable to the public).
2. COVENANTS OF BAGNALL: By execution hereof, Bagnall agrees to accept the
Cash Payment and the Shares in full and complete satisfaction of any
and all potential claims against Divot which Bagnall may have that
arise by virtue of Divot's employment of Bagnall, Divot's actions
and/or inactions associated with Bagnall's employment, the termination
of Bagnall's employment, the Employment Agreement, and any other
agreement between Divot and Bagnall. Bagnall further agrees to the
following:
(a) RELEASE: Upon payment of Cash and delivery of Shares, Bagnall, and
all his heirs, beneficiaries, settlors, trustees, and personal
representatives, and anyone else claiming under or through Bagnall
does hereby release and forever discharge Divot, including its
successors, officers, administrators, attorneys, agents, and
assigns, and anyone else acting by or through Divot, from and
against any and all claims, charges, complaints, demands, actions
or causes of action of any kind in any federal, state, or other
court, arbitral forum, or federal, state, or other administrative
agency, whether known or not now known, which Bagnall may have
against Divot in connection with or arising from Divot's
employment of Bagnall, Divot's actions and/or inactions associated
with Bagnall's employment, the termination of Bagnall's
employment, the Employment Agreement, and any other agreement
between Divot and Bagnall.
(i) FUTURE DAMAGES: Inasmuch as the injuries, damages, and losses
resulting from the matters described herein may not be fully
known and may be more numerous or more serious than it is now
understood or expected, Bagnall agrees, as a further
consideration of this Agreement, that this Release applies to
any and all injuries, damages, and losses resulting from
Divot's employment of Bagnall, Divot's actions and/or
inactions associated with Bagnall's employment, the
termination of Bagnall's employment, the Employment
Agreement, and any other agreement between Divot and Bagnall,
even though now unanticipated, unexpected, and unknown.
(b) REPRESENTATIONS: Bagnall represents that no additional claims are
contemplated against any other party potentially liable for the
losses, damages,
2
<PAGE>
and injuries for which this Release is given. In the event any
additional claim is made which directly or indirectly results in
additional liability exposure to Divot for the losses, injuries,
and damages for which this Release is given, Bagnall covenants and
agrees to indemnify and save Divot harmless from all such claims
and demands, including reasonable attorney's fees and all other
expenses necessarily incurred.
3. COVENANTS COMMON TO BOTH PARTIES:
(a) NO ADMISSION OF LIABILITY: The parties agree that nothing
contained in this Agreement shall constitute or be treated as an
admission of liability or wrongdoing by any party or its heirs,
executors, administrators, attorneys, successors, agents, or
assigns.
(b) CONFIDENTIALITY: Neither the parties to this Agreement nor their
attorneys shall disclose or publicize, either to the media, the
courts, or any other third party, informally or in any way, the
terms of the settlement set forth herein, unless required by this
Agreement or otherwise by law.
(c) DISCLAIMER: Each party has: (i) carefully read this Settlement
Agreement and Release, together with the exhibits attached hereto;
(ii) has discussed its legal effects with their respective
attorneys; (iii) fully understands the contents hereof; and (iv)
executes the same of their own free will and accord without
duress, coercion, or undue influence. Each party agrees that this
Agreement shall be binding upon their respective successors,
heirs, personal representatives, and assigns.
4. ENTIRE AGREEMENT: This Agreement contains the entire agreement among
the parties relating to the subject matter of this Agreement,
supersedes any and all oral or written understandings or agreements
relating to its subject matter, and may not be altered or amended
except by an instrument in writing signed by the party or parties to be
charged.
5. BINDING AGREEMENT: This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and their respective heirs,
executors, administrators, successors, and assigns. It shall be
construed and enforced in accordance with the laws of the State of New
York.
6. NOTICES: Any notices required by this Agreement shall be sent to the
Party's address as follows: (i) IF TO DIVOT: One Union Square South,
Suite 10-J, New York, NY 10003; (ii) IF TO BAGNALL: 14032 Ellesmere
Drive, Tampa, Florida 33624.
7. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
3
<PAGE>
8. SIGNATURE BY FACSIMILE: The parties agree that this Agreement will be
considered signed when the signature of a party is delivered by
facsimile transmission. Such facsimile signature shall be treated in
all respects as having the same effect as an original signature.
9. TITLES AND CAPTIONS: All article and section titles or captions in this
Agreement are for convenience only. They shall not be deemed a part of
this Agreement, and in no way define, limit, extend, or describe the
scope or intent of any of its provisions. The recital clauses set forth
in this Agreement are hereby incorporated into and are made a part of
this Agreement
10. AMENDMENTS: No supplement, modification, or amendment of any term,
provision, or condition of this Agreement shall be binding or
enforceable unless executed in writing by the party against whom
enforcement is sought as to such supplementary or modified or amended
term or condition.
11. ENTIRE AGREEMENT AND WAIVER: This Agreement constitutes the entire
agreement between the parties hereto, and supersedes all prior and
contemporaneous agreements, arrangements, negotiations, and
understandings between the parties hereto relating to the subject
matter hereof. There are no other understandings, statements, promises
or inducements, oral or otherwise, contrary to the terms of this
Agreement. No representations, warranties, covenants, or conditions,
express or implied, whether by statute or otherwise, other than as set
forth herein have been made by any party hereto. No waiver of any term,
provision, or condition of this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or
shall constitute, a waiver of any other provision hereof, whether or
not similar, nor shall any such waiver constitute a continuing waiver,
and no waiver shall be binding unless executed by the party making such
waiver.
12. FURTHER DOCUMENTS: Each party hereto further agrees to execute such
documents and take such other steps as may be necessary to accomplish
the purposes herein.
13. INDEMNITY: The parties agree that the Indemnity Agreement dated
August 1, 1997 by and between both parties shall continue in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first set forth above.
DIVOT GOLF CORPORATION CLIFFORD F. BAGNALL
A Delaware Corporation
By: /s/ Joseph R. Cellura /s/ Clifford F. Bagnall
--------------------- -----------------------
Name: Joseph R. Cellura Clifford F. Bagnall
-------------------
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<PAGE>
EXHIBIT 10.17
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is entered into on this 31st day of
January, 2000, by and between OrbitTravel.Com Corporation f/k/a Divot Golf
Corporation ("Divot") a Delaware corporation, and Kirk Scoggins ("Claimant"), an
individual and resident of the State of Florida.
RECITALS
I. WHEREAS, pursuant to an agreement concerning the conversion of certain
Divot preferred stock held by Claimant into common shares of Divot, which
agreement is attached hereto as Exhibit "A" and by this reference
incorporated herein, Claimant has a contractual claim against Divot for
damages (the "Claim");
II. WHEREAS, Divot had an unsatisfied payroll obligation in the amount of
$97,915.00, which Claimant paid on behalf of Divot. Divot then satisfied
its obligation to Claimant, which satisfaction is acknowledged by this
Agreement;
III. WHEREAS, the parties intend that this Agreement: (1) govern the issuance of
Divot common stock to Claimant in settlement of the Claim, and (2)
acknowledge the satisfaction of any amounts owing to Claimant by virtue of
his payment of Divot's payroll obligation.
AGREEMENTS
1. Issuance of Shares: Within ninety days following the execution of this
------------------
Agreement Divot shall cause to be issued four million four hundred fifty-
two thousand seven hundred sixty-six (4,452,766) shares of its common
stock, .001 par value, to be issued to Claimant in settlement of the
Claim (the "Settlement Shares"). When so issued, the Settlement Shares
shall be fully paid, non-assessable, and freely tradable upon completion
of registration of an SB2 filing, and shall be represented by a
certificate or certificates in a form standardized by Divot for
representation of its shares.
2. Acceptance of Shares and Release: Claimant shall accept the Settlement
--------------------------------
Shares in full and complete satisfaction of any amounts collectible by
Claimant under the Claim, and in full settlement of any additional claim
Claimant may have against Divot as of the date of this Agreement, even
though such additional claim may be unanticipated, unexpected, and unknown.
In consideration of the issuance of the Settlement Shares, Claimant shall
release and forever discharge Divot, its successors, officers,
administrators, and assigns, from and against any and all claims, charges,
complaints, demands, actions or causes of action of any kind in any forum,
which Claimant may have against Divot as of the date of this Agreement.
1
<PAGE>
3. Payroll Obligation: The parties hereby agree to the following with regard
------------------
to Divot's payroll obligation to TeamStaff in the amount of $97,915.00 (the
"Payroll Obligation"):
(a) Payment of Payroll Obligation: The parties acknowledge and agree
-----------------------------
that Claimant paid the Payroll Obligation on behalf of Divot, on the
date and in the manner set forth in Exhibit "B" attached hereto and by
this reference incorporated herein. The parties further acknowledge
that, following Claimant's payment of the Payroll Obligation on behalf
of Divot, Divot was indebted to Claimant in an amount equal to the
Payroll Obligation.
(b) Satisfaction of Debt and Release: The parties acknowledge and agree
--------------------------------
that Divot offered to Claimant, and Claimant accepted, certain items
of personal and corporate property in full and complete satisfaction
of any amounts owed by Divot to Claimant by virtue of Claimant's
satisfaction of the Payroll Obligation. The specific items of personal
property are listed in Exhibit "C" and by this reference incorporated
herein. Claimant hereby acknowledges receipt of said items in full
settlement of any debt owed by Divot to Claimant by virtue of
Claimant's payment of the Payroll Obligation on behalf of Divot.
Claimant further agrees that the release set forth in Section 2 of
this Agreement is intended to address any claim Claimant may have
against Divot in connection with Claimant's payment of the Payroll
Obligation.
4. Entire Agreement: This Agreement contains the entire agreement among the
----------------
parties relating to the subject matter of this Agreement, supersedes any
and all oral or written understandings or agreements relating to its
subject matter, and may not be altered or amended except by an instrument
in writing signed by the party or parties to be charged.
5. Binding Agreement: This Agreement shall be binding upon and inure to the
-----------------
benefit of each of the parties hereto and their respective heirs,
executors, administrators, successors, and assigns. It shall be construed
and enforced in accordance with the laws of the State of New York.
6. Further Documents: Each party hereto further agrees to execute such
-----------------
documents and take such other steps as may be necessary to accomplish the
purposes herein.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first set forth above.
DIVOT GOLF CORPORATION CLAIMANT
By: /s/ Joseph R. Cellura By: /s/ Kirk Scoggins
------------------------ -------------------
Joseph R. Cellura, Kirk Scoggins
Chairman and C.E.O.
2
<PAGE>
EXHIBIT "A"
DOUBLE INDEMNITY AGREEMENT
3
<PAGE>
EXHIBIT "B"
Kirk A. Scoggins
1901 Brookline Street
Tampa, Florida 33629
February 8, 1999
Joseph R. Cellura Chairman & CEO
Divot Golf Corporation
201 North Franklin Street
Tampa, Florida 33602
Dear Joe:
Please let this letter serve as documentation of the agreements reached by you
and I during our negotiations over the past 3 months. Pursuant to paragraph 6
and the notice provisions contained therein, of the private placement memorandum
dated December 3, 1997, I have notified you that Divot Golf Corporation is in
default and that I have provided my demand that the company redeem my preferred
units per the terms of the agreement and as modified by our understandings
outlined below. Given the current circumstances of the company I consider this
prudent business given my investments in Divot and the potential for the loss of
the money I have invested.
The following represents the investments I have made along with payroll advances
from TeamStaff Companies. My initial investment was $225,000 plus the now
accrued interest, dividends and penalties of approximately $15,000. In addition,
during 1998, $60,000 was advanced as payroll, which was converted, to additional
preferred units per the same terms of the Private Placement Purchase Agreement.
The company issued me common shares in error. I have the certificates that need
to be returned to the company. Please provide me with an addendum to my Private
Placement Purchase Agreement evidencing the additional $60,000 in preferred
units and I will forward to you these common stock certificates. Additionally,
based on the agreements you and I made in December detailed below, I authorized
a second advance for payroll of $97,914. My conditions and our Agreements
reached as a condition of my providing these additional advances are summarized
below;
A. Agree to a structure regarding the redemption of my preferred
units. I agree to structure my demand for redemption of my
preferred stock through a combination of $300,000 converted to
debt and the balance of $225,000 I would retain as preferred
units. Divot has converted $300,000 of my redemption demand
into debt as evidenced by the promissory notes executed and
delivered to me on February 1, 1999. I still own the original
amount of preferred units in the amount of $225,000.
C. In December, 1998, I agreed to make available additional
payroll advances of up to $125,000, inclusive of any interest
and penalties per the terms of Client Service Agreement
between Divot and TeamStaff, provided that Divot execute a
separate promissory note for the $125,000 and that Divot agree
to secure both the new $125,000 note and the $300,000 note
referenced above. (in a total amount of $425,000) in the form
of a mortgage against both parcel 2 and parcel 11 in the World
Golf Village project. You agreed to these conditions and
provided me with the promissory notes and mortgage agreements,
which I have now recorded.
Now that we have these matters agreed to and documented, I am working as I said
I would to assist you in overcoming some of the obstacles the company faces. I
am interested in the potential acquisition of Miller Golf Inc. and traveled to
Boston February 9, 1999 to meet with you Gordon Ewart and Citizens Bank to see
what can be done in the way of an acquisition. I have also had conversations
with other interested parties and will keep you updated.
4
<PAGE>
I have also initiated the process of negotiations with your landlord, One Tampa
City Center, for TeamStaff to assume the lease at One Tampa City Center for the
office space suite number 200 and 2550. We have been approved as tenants by the
landlord and are negotiating currently through Cushman & Wakefield to assume
that space as soon as possible. I can make no commitments on this outcome but am
hopeful we will be able to come to an agreement. As an inducement for TeamStaff
to assume your forward obligations under the lease we have agreed that all of
the furniture and fixtures currently resident at suite 200, One Tampa City
Center will be transferred at no cost to TeamStaff and in a manner which
TeamStaff dictates
I have also introduced you to some of my contacts that have a preliminary
interest in purchasing the properties at the World Golf Village. Good luck
during these difficult times for you and Divot Golf Corp.
Sincerely
/s/ Kirk A. Scoggins
Kirk A. Scoggins
5
<PAGE>
EXHIBIT "C"
Property Delivered in lieu of Debt
10 Hitachi Vision Book elite laptop computers
1 Office Suite
1 911 JRC personal property
6
<PAGE>
EXHIBIT 10.18
MEMORANDUM OF SETTLEMENT
------------------------
This Memorandum of Settlement (the "Agreement") is entered into effective
upon the date of execution by the last party hereto to sign, by Douglas White,
Jeremiah M. Daly, Kathleen Miller, Robert Gewant, Leon Leavitt, Nicholas Brown,
and Charles Rowley (collectively, "the Plaintiff Group"), and Divot Corporation,
Divot Development Corporation, Divot Golf Realty, Inc., Divot Golf Corporation,
Divot Partners, Ltd., Divot Golf WGV, Ltd., Divot Golf WGV, Inc., Divot
Properties WGV, Inc., Joseph R. Cellura, Ellee M. Knight, Clifford Bagnall, and
Robert W. Baird & Co. (collectively "the Defendant Group").
BACKGROUND
----------
A. The Plaintiff Group is comprised of individuals and entities with
alleged claims against the Defendant Group arising out of the various business
relationships between the parties, and specifically the activities and conduct
of the Defendant Group with respect to a project known as the World Golf Village
and the operation of Divot Golf Corporation.
B. There are currently pending two federal court actions brought by
different members of the Plaintiff Group against different members of the
Defendant group. Those cases are:
1. Douglas E. White v. Joseph R. Cellura, et al., Case No.: 99CIV-3528
---------------------------------------------
United States District Court for the Southern District of New York
2. Jeremiah M. Daly v. Joseph R. Cellura, et al., Case No.: 99CIV-3914
---------------------------------------------
United States District Court for the Southern District of New York
(collectively, "the Lawsuits").
C. The parties to this Agreement have determined that it is in their mutual
best interests to revolve their disputes, including, but not limited to, the
Lawsuits.
<PAGE>
TERMS
-----
1. Consideration: In consideration for the making of this Agreement, the
-------------
payments, transfers, representations, warranties, and releases identified below,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties have entered into this Agreement
intending to be legally bound.
2. No Admissions: Nothing in this Agreement shall operate as or be
-------------
construed as an indication, inference, presumption, admissions, or as evidence
relative to any fact, issue of law, issue of liability, or any other matter on
the part of any member of the Plaintiff Group or Defendant Group.
3. Payment: Upon the execution of this Agreement, Divot Golf Corporation
-------
will execute and deliver a $225,000 promissory note in favor of the Plaintiff
Group.
4. Issuance of Shares in Divot Golf Corporation: Upon the effective date,
--------------------------------------------
or as soon thereafter as reasonably possible, Divot Golf Corporation will issue
7.65 million shares of its common stock, with an issue effective date of July 1,
1998, as directed by counsel for the Plaintiff Group.
5. Assignment of Profits Interest: Upon the effective date of this
------------------------------
Agreement, or as soon thereafter as reasonably possible, counsel for Joseph R.
Cellura will deliver Mr. Cellura's Assignment of Contract to counsel for the
individuals of the Plaintiff Group as specified in the Assignment of Contract,
assigning all of Mr. Cellura's rights, title, or interest in and to the
Agreements for Profits in the World Golf Village, parcels 10, 12/13, 15, and 18,
to the individuals named in said assignment, in the form attached as Exhibit
"A."
6. General Releases and Dismissals: Upon the effective date, or as soon
-------------------------------
thereafter as reasonably possible, counsel for the Plaintiff Group will deliver
to counsel for Joseph R.
2
<PAGE>
Cellura, signed General Releases in the form attached hereto as Exhibit "B",
from all members of the Plaintiff Group. Separate General Releases will be
prepared and delivered to counsel with respect to all potential claims against
Ellee M. Knight. In addition, counsel for the Plaintiff Group will immediately
file and serve, upon the effective date, dismissals with prejudice as to the
Defendant Group in the two pending Lawsuits.
7. Representation of the Plaintiff Group: The members of the Plaintiff
-------------------------------------
Group represent that no actions, lawsuits, reports, complaints, or referrals of
any kind have been instituted against any member of the Defendant Group, other
than the two pending Lawsuits, and that no member of the Plaintiff Group
presently intends to, nor will they upon completion of the terms of this
Agreement, institute any proceeding against any member of the Defendant Group,
either through civil, criminal, or administrative proceedings.
8. Confidentiality: The parties agree that the terms and conditions of
---------------
this Agreement shall remain confidential and the parties agree not to disclose
them, unless legally required to do so by lawful process or other requirements
of applicable law, including, but not limited to, federal securities laws. Each
party shall immediately provide notice to their counsel, who will in turn notify
opposing counsel, concerning any effort by any third-party to obtain information
protected under this provision. In the event any party hereto is contacted by a
member of the media regarding this Agreement, or any settlement between the
Plaintiff Group and Defendant Group, the parties agree that the response to such
an inquiry will be that "the parties have amicably settled all matters."
9. Severability: The duties, rights, and obligations of the parties
------------
hereunder are severable, and in no way conditioned upon the performance of any
other party to this Agreement. In the event of a default by any party to this
Agreement, or the breach of any provision of this
3
<PAGE>
Agreement by any of the parties hereunder, such breach or default shall in no
way effect the rights or obligations of the remaining parties who are not in
default.
10. Governing Law and Jurisdiction: This Agreement, the Assignment of
------------------------------
Contract, and all General Releases arising from this Agreement will be
construed and interpreted in accordance with Florida law. The parties agree that
jurisdiction for any dispute arising from this Agreement shall be proper and
exclusive in the federal courts for the Southern District of New York or the
Middle District of Florida.
11. Counterparts: This Agreement may be executed in any number of
------------
counterparts, all of which shall be deemed to be an original instrument, but all
such documents shall constitute one and the same instrument. A facsimile copy of
this Agreement and any signature thereon shall be construed for all purposes as
originals.
DIVOT CORPORATION
/s/ Douglas White By: /s/ Joseph R. Cellura
- ---------------------------------- ----------------------------
DOUGLAS WHITE JOSEPH R. CELLURA
----------------------------
Date: Printed Name
----------------------------
Its: Chairman & CEO
----------------------------
Date: 6/29/99
----------------------------
/s/ Jeremiah M. Daly
- ----------------------------------
JEREMIAH M. DALY
Date: 6/29/99
-----------------------------
DIVOT DEVELOPMENT CORPORATION
/s/ Kathleen Miller
- ----------------------------------
KATHLEEN MILLER
Date: 6/29/99
----------------------------
By: /s/ Joseph R. Cellura
----------------------------
/s/ Robert Gewant JOSEPH R. CELLURA
- ---------------------------------- ----------------------------
ROBERT GEWANT Printed Name
Its: Chairman & CEO
Date: 6/29/99 ----------------------------
---------------------------- Date: 6/29/99
----------------------------
4
<PAGE>
DIVOT GOLF REALTY, INC.
/s/ Leon Leavitt
- ------------------------------
LEON LEAVITT
Date: 6/29/99
-------------------------
By: /s/ Joseph R. Cellura
----------------------------
JOSEPH R. CELLURA
/s/ Nicholas Brown
- ------------------------------ ----------------------------
NICHOLAS BROWN Printed Name
Its: President & CEO
Date: 6/29/99 ----------------------------
------------------------- Date: 6/29/99
----------------------------
/s/ Charles Rowley
- ------------------------------
CHARLES ROWLEY DIVOT GOLF CORPORATION
Date: 6/29/99
-------------------------
By: /s/ Ken Craig
---------------------------------
KEN CRAIG
---------------------------------
Printed Name
Its: PRESIDENT
---------------------------------
Date: 6-29-99
---------------------------------
DIVOT PARTNERS, LTD.
By: /s/ Joseph R. Cellura
---------------------------------
JOSEPH R. CELLURA
---------------------------------
Printed Name
Its: Chairman & CEO Divot Development
Corporation General Partners DPL Ltd
---------------------------------
Date: 6/29/99
---------------------------------
DIVOT GOLF WGV, LTD.
By: /s/ Joseph R. Cellura
----------------------------
JOSEPH R. CELLURA
----------------------------
Printed Name
Its: President & CEO
----------------------------
Date: 6/29/99
----------------------------
5
<PAGE>
DIVOT GOLF WGV, INC.
By: /s/ Joseph R. Cellura
----------------------------
JOSEPH R. CELLURA
----------------------------
Printed Name
Its: President & CEO
----------------------------
DATE: 6/29/99
----------------------------
DIVOT PROPERTIES WGV, INC.
By: /s/ Joseph R. Cellura
----------------------------
JOSEPH R. CELLURA
----------------------------
Printed Name
Its: Chairman & CEO
----------------------------
Date: 6/29/99
----------------------------
/s/ JOSEPH R. CELLURA
----------------------------------
JOSEPH R. CELLURA
Date: 6/29/99
----------------------------
/s/ Ellee M. Knight
----------------------------------
ELLEE M. KNIGHT
Date: 6/29/99
----------------------------
/s/ Clifford F. Bagnall
----------------------------------
CLIFFORD BAGNALL
Date: 6/30/99
----------------------------
6
<PAGE>
EXHIBIT 10.20
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"), NOR HAS IT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE. NO TRANSFER OF THIS NOTE WILL BE PERMITTED UNLESS A REGISTRATION
STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE
IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR AS OTHERWISE PERMITTED BY BORROWER,
OR IN THE OPINION OF COUNSEL SATISFACTORY TO BORROWER REGISTRATION UNDER THE ACT
IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH
APPLICABLE STATE SECURITIES LAWS.
PROMISSORY NOTE
Principal Amount: New York, NY
$100,000.00 October 1, 1999
FOR VALUE RECEIVED, the undersigned, Orbittravel.com, Inc.
("Borrower"), a Delaware corporation and wholly-owned subsidiary of Divot Golf
Corporation, promises to pay to the order of ___________________ ("Lender"), in
lawful money of the United States of America, the principal sum of One Hundred
Thousand and No/100 Dollars ($100,000.00) plus simple interest thereon from the
date hereof until this Note is paid in full.
1. Repayment of the Principal Sum. The Principal Sum shall be due and
------------------------------
payable in one (1) installment of One Hundred Thousand and No/100
Dollars ($100,000.00) 180 days following the date set forth above (the
"Maturity Date").
-------------
2. Interest. Interest shall not accrue on the Principal Sum until ninety
--------
(90) days following the date set forth above (the "Interest Accrual Date"). From
the Interest Accrual Date until the Maturity Date, interest shall accrue on the
unpaid Principal Sum at the rate of seven percent (7%) per annum. Unless this
Note is converted in accordance with Section 3 below, accrued and unpaid
interest shall be payable, together with the unpaid Principal Sum, on the
Maturity Date. If the Maturity Date should fall on a weekend or national
holiday, payment shall be due on the following business day. Interest on this
Note shall be computed on the basis of the actual number of days elapsed during
which the unpaid Principal Sum is outstanding, divided by a year of three
hundred sixty-five (365) days. All payments under this Note shall be applied
first to the payment of accrued and unpaid interest with the remainder applied
to the unpaid Principal Sum in inverse chronological order.
(a) Increased Rate After Maturity Date: If, by the Maturity Date, (i) this
----------------------------------
Note has not been converted in accordance with its terms or (ii) the Borrower
does not repay the Principal Sum and any accrued accrued interest thereon, then
the interest rate attributable to the Principal Sum shall increase to twelve
percent (12%) per annum.
1
<PAGE>
3. Conversion: All principal and interest represented by this Note shall
----------
automatically convert into fully paid and non-assessable shares of the common
stock of Divot Golf Corporation ("Divot") at the price (the "Conversion Price")
of Fifty Cents ($.50) per share, immediately upon the closing (the "Closing") of
a merger transaction (the "Merger") between the Borrower and Divot, without any
-----------
action on the part of the Lender. The agreement relating to the Merger (the
- --------------------------------
"Merger Agreement") shall provide for and reflect the conversion provision set
forth in this Section 3.
4. Registration of Conversion Shares: Any shares of Divot issued to
---------------------------------
Lender in accordance with the conversion right set forth in Section 3 of this
Note (the "Conversion Shares") shall, following the Closing, be registered by
Divot (so that Lender's Conversion shares shall become freely tradable to the
public by the Lender) as follows: (i) fifty percent (50%) of the Conversion
Shares within ninety (90) days following the Closing (the "Effective
Registration Date"); and (ii) twenty five percent (25%) of the aggregate amount
of the Conversion Shares at the following times: (a) ninety (90) days following
the Effective Registration Date; and (b) one hundred eighty (180) days following
the Effective Registration Date. The Merger Agreement shall provide for and
reflect the registration provision set forth in this Section 4.
5. Representations and Warranties of Borrower. Borrower represents and
------------------------------------------
warrants that:
(a) Borrower is a corporation duly organized and existing under the laws
of the state of Delaware. It has the power to own its property and to
carry on its business as it is now being conducted;
(b) Borrower has full power and authority (corporate and other) to borrow
the sums provided for in this Note, to execute and deliver this Note
and any other instrument or agreement required under this Note, and to
perform and observe the terms and provisions of this Note and of all
such other notes, instruments, and agreements;
(c) The officers of Borrower executing this Note are duly and properly in
office and fully authorized to execute it; and
(d) This Note has been duly authorized, executed, and delivered by
Borrower, and is a legal, valid, and binding agreement of Borrower,
enforceable against it in accordance with its terms, and any other
instrument or agreement required under this Note has been so
authorized and, when executed and delivered, will be similarly valid,
binding, and enforceable.
2
<PAGE>
6. Events of Default. The occurrence of any of the events set out below
-----------------
(Events of Default) shall, at the option of the Lender, make all interest and
principal remaining on due under this Note immediately due and payable, without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or other notices or demands of any kind, except as
specified herein:
(a) Borrower shall fail to pay, within ten (10) days after the date when
due, any installment of interest or principal in accordance with the
terms of this Note;
(b) Any representation or warranty by Borrower in this Note or in any
agreement, instrument, or certificate executed under this Note shall
prove to have been false or misleading in any material respect when
made;
(c) Borrower shall file any petition or action for relief under any
bankruptcy, arrangement, reorganization, insolvency, or moratorium
law, or any other law or laws for the relief of or relating to
debtors, or shall, with respect to any involuntary petition or action
for relief under such law or laws, consent or fail to timely object to
the relief requested in such petition;
(d) An involuntary petition shall be filed under any bankruptcy statute
against Borrower, or a receiver, trustee, custodian, or similar
officer of the court shall be appointed to take possession of all or
any substantial part of Borrower's properties, unless such petition or
appointment is dismissed or withdrawn or ceases to be in effect within
sixty (60) days from the date of the filing or appointment;
7. Notices. Any communications between the parties or notices provided
-------
for in this Note may be given by mailing them, first class, postage prepaid, to
Lender at:
Attn: ___________________
___________________
___________________
___________________
and to Borrower at:
OrbitTravel.com, Inc.
One Union Square South, No. 10-J,
New York, NY 10003
Attention: Joseph R. Cellura, Chairman & CEO
or to such other address as either party may indicate to the other in writing
after the date of this Note.
8. Assignment. This Note shall bind and inure to the benefit of the
----------
parties and their respective successors and assigns; provided, however, that
Borrower shall not assign this Note or
3
<PAGE>
any of the rights, duties, or obligations of Borrower under this Note without
the prior written consent of Lender.
9. No Waiver. No delay or omission to exercise any right, power, or
---------
remedy accruing to Lender on any breach or default of Borrower under this Note
shall impair any such right, power, or remedy of Lender, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence in
such breach or default, or waiver of or acquiescence in any similar breach or
default occurring later; nor shall any waiver of any single breach or default be
considered a waiver of any other prior or subsequent breach or default. Any
waiver, permit, consent, or approval of any kind by Lender of any breach or
default under this Note, or any waiver by Lender of any provision or condition
of this Note, must be in writing and shall be effective only to the extent
specifically set forth in that writing. All remedies, either under this Note or
by law or otherwise afforded to Lender, shall be cumulative and not alternative.
10. Attorney's Fees. In the event of any legal action or suit in relation
---------------
to this Note or any note or other instrument or agreement required under this
Note, or in the event that Lender incurs any legal expense in protecting its
rights under this Note or under any security agreement in any legal proceeding,
Borrower, in addition to all other sums which Borrower may be called on to pay,
will pay to Lender the amount of such legal expense and will, if Lender prevails
in such action, pay to Lender a reasonable sum for its attorney's fees and all
other costs and expenses.
11. Governing Law. This Note shall be interpreted under the laws of the
-------------
State of New York, without giving effect to the conflict of law principles
thereof.
OrbitTravel.com, Inc.
a Delaware Corporation
By:____________________________
Joseph R. Cellura
Chairman and CEO
4
<PAGE>
EXHIBIT 10.21
DATED
------------------------------
BONVENO.COM LIMITED (1)
and
ORBITTRAVEL.COM, INC. (2)
------------------------------
MANAGEMENT AGREEMENT
------------------------------
Wragge & Co
<PAGE>
CONTENTS
--------
<TABLE>
<CAPTION>
Clause Heading Page
<S> <C>
1 Definitions............................................... 1
2 Duration.................................................. 3
3 Management Infrastructure................................. 3
4 Management Facilities..................................... 4
5 Marketing and Distribution................................ 5
6 Marketing and Distribution in the European Territory...... 5
7 Restrictions.............................................. 6
8 Marketing and Distribution in the Non-European Territory.. 6
9 Global Customers.......................................... 7
10 Product & Pricing......................................... 7
11 Additional Obligations.................................... 7
12 Revenue Sharing........................................... 8
13 Confidentiality........................................... 9
14 Force Majeure............................................. 9
15 Consequences of Termination............................... 10
16 Assignment................................................ 10
17 General................................................... 10
18 Notices................................................... 11
19 Law....................................................... 12
20 Jurisdiction.............................................. 12
Schedule 1.................................................... 14
Schedule 2.................................................... 15
Schedule 3.................................................... 16
Schedule 4.................................................... 17
Schedule 5.................................................... 18
</TABLE>
<PAGE>
THIS AGREEMENT is made on 1999 BETWEEN
(1) BONVENO.COM LIMITED (Registered in England No. 3831828 whose registered
office is at Renaissance House, Foundation Park, Maidenhead, SL6 3UD
("Bonveno"); and
(2) ORBITTRAVEL.COM, INC. a body corporate organised and existing under the
laws of Delaware, USA having its principal place of business at 100 Second
Street East, Whitefish, MT 59937 ("Orbittravel").
WHEREAS:
(A) Together with Web Travel Systems Limited the parties are members of a joint
venture agreement (the "JV Agreement") dated and Bonveno is the
joint venture company for providing and marketing an internet based travel
and leisure booking system to businesses and consumers in the European
Territory.
(B) Orbittravel is, under a separate agreement of today's date, providing
support, licences and maintenance for the Bonveno Service, and development,
support, licences and maintenance for the Global Product (the "Operational
Agreement").
(C) Orbittravel is, under a separate agreement of today's date, providing
software development to Bonveno for the Bonveno Service (the "European
Specific Software Development Agreement").
(D) Orbittravel and Bonveno have agreed an operational management structure,
marketing policy, content sharing and product distribution policy in
accordance with the terms of this agreement (the "Agreement").
In consideration of the mutual covenants and undertakings set out below THE
PARTIES AGREE as follows:
1 Definitions
-----------
1.1 In this Agreement unless the context otherwise requires:
"Accounting Dates" means the 31st March, 31st June, 31st September and the
31st December in each year;
"Board" means the board of Bonveno constituted and operating in accordance
with the JV Agreement;
"Bonveno Service" has the meaning set out in the Operational Agreement;
"Business Day" means a day (other than a Saturday or Sunday) on which the
banks are ordinarily open for business in the City of London;
"Commencement Date" means
"Confidential Information" means secret or confidential, commercial,
financial, marketing, technical or other information, know-how, trade
secrets and other
1
<PAGE>
information in any form or medium whether disclosed orally or in writing
before or after the date of this Agreement, together with any reproductions
of such information in any form or medium or any part(s) of this
information (and "confidential" means that the information, either in its
entirety or in the precise configuration or assembly of its components, is
not publicly available);
"Content" means certain leisure travel information to be presented in a
format to be agreed to in writing from time to time between the parties,
which is to be shared between the parties as set out in Schedule 5, and
shall be divided between Territory Content and the Extra-Territory Content;
"European Territory" means those countries listed in Schedule 1;
"European Content Territory" means the territory set out in Part 1 of
Schedule 1;
"European Distribution Territory" means the territory set out in Part 2
of Schedule 1;
"European Territory Content" means the Content for locations in the
European Territory;
"Extra-Territory Content" means Content for locations outside the European
Territory;
"Force Majeure" means any event outside the reasonable control of either
party affecting its ability to perform any of its obligations (other than
payment) under this Agreement including Act of God, fire, flood, lightning,
war, revolution, act of terrorism, riot or civil commotion, but excluding
strikes, lock-outs or other industrial action, whether of the affected
party's own employees or others, failure of supplies of power, fuel,
transport, equipment, raw materials or other goods or services;
"Global Customers" means a customer or distributor located or operating
both within the European Territory and the Non-European Territory and who
wishes to deal in one transaction with both the European Territory and the
Non-European Territory;
"Global Product" has the same meaning as set out in the Operational
Agreement;
"Group Company" means in relation to any company that company and every
other company which is for the time being a subsidiary or holding company
of that company or a subsidiary of any such holding company (and the terms
"subsidiary" and "holding company" shall have the meanings given to them by
Sections 736 and 736A of the Companies Act 1985);
"Joint Committee" means the Joint Steering Committee, the Joint Sales and
Marketing Committee and the Joint Operations Committee;
"Month" means a calendar Month;
"Non-European Territory" means the world excluding the European Territory;
"Products" means the Bonveno Service and/or the Global Product;
2
<PAGE>
"Programs" has the meaning set out in the Operational Agreement;
"Subscription Revenue" means the total amount paid by a third party,
excluding taxes, for the inclusion of Content, display of advertising on,
or use of, the Bonveno Service and/or the Global Product
"Web Travel System" means the Internet based travel booking system licensed
to Bonveno by Web Travel Systems Limited;
"Web Travel Systems Limited" has the meaning set out in the Operational
Agreement;
"Year" means a period of twelve Months commencing on the Commencement Date
and on each successive anniversary of the Commencement Date and ending on
the day before each successive anniversary of the Commencement Date.
1.2 The headings to clauses are inserted for convenience only and shall not
affect the interpretation or construction of this Agreement.
1.3 Words imparting the singular shall include the plural and vice versa. Words
imparting a gender include every gender and references to persons include
an individual, company, corporation, firm or partnership.
1.4 All sums payable under this Agreement are exclusive of VAT or any other
applicable tax or duty payable upon such sums which shall be added if
appropriate at the rate prevailing at the relevant tax point.
1.5 The words and phrases "other", "including" and "in particular" shall not
limit the generality of any preceding words or be construed as being
limited to the same class as any preceding words where a wider construction
is possible.
1.6 References to any statute or statutory provision shall include (i) any
subordinate legislation made under it, (ii) any provision which it has
modified or re-enacted (whether with or without modification), and (iii)
any provision which subsequently supersedes it or re-enacts it (whether
with or without modification).
1.7 All references in this Agreement to Clauses and Schedules are to the
clauses and schedules to this Agreement unless otherwise stated.
2 Duration
--------
2.1 This Agreement shall come into force on the Commencement Date and shall
continue in force for so long as the JV Agreement continues and shall
automatically terminate on the termination of the JV Agreement.
2.2 The termination of this Agreement shall be without prejudice to the rights
and remedies of either party which may have accrued up to the date of
termination and is subject to the provision of Clause 15.
3 Management Infrastructure
- - -------------------------
3.1 The management infrastructure will include the following boards and
committees:
3
<PAGE>
(a) Shareholders Board - this board is the board of Bonveno constituted
and operating in accordance with the JV Agreement;
(b) Joint Steering Committee - this committee shall be established to
review the marketing, product, distribution and content strategies and
ensure that viable, mutually acceptable implementation plans are in
place to support them. The parties shall appoint their allotted
representatives in writing, to the other parties, within 30 days of
the Commencement Date. The Joint Steering Committee shall meet and
conduct its meetings in accordance with the procedures set out in
Schedule 2.
(c) Joint Sales & Marketing Committee - this committee shall be
established to review the tactical sales and marketing plans and
issues. The parties shall appoint their allotted representatives by
notice in writing, to the other parties, within 30 days of the
Commencement Date. The Joint Sales & Marketing Committee shall meet
and conduct its meeting in accordance with the procedures set out in
Schedule 3.
(d) Joint Operations Committee - this committee shall be established to
review the performance of the Operations Agreement. The parties shall
appoint their allotted representatives by notice in writing, to the
other parties, within 30 days of the Commencement Date. The Joint
Operations Committee shall meet and conduct its meeting in accordance
with the procedures set out in Schedule 4.
3.2 Key Points of Contact
---------------------
Each party shall appoint key points of contact ("Key Points of Contact") on
all joint matters as required by a Joint Committee to assist with day to
day management and regular communication between the management and
operational teams. Each party shall notify the other in writing of their
Key Points of Contact within 30 days of a request from a Joint Committee to
do so.
4 Management Facilities
---------------------
4.1 Except as specifically provided for in the Operational Agreement Bonveno
shall provide and bear the cost of all office accommodation, office
services, and equipment - for staff based in the European Territory.
4.2 Except as specifically provided for in the Operational Agreement
Orbittravel shall provide and bear the cost of all office accommodation,
office services and equipment for staff based in the Non-European
Territory.
4.3 Wherever possible, Bonveno shall provide employees and contractors of
Orbittravel with the benefit of its Group company discounts on air travel
(with British Airways or a subsidiary of it) wherever such travel is
necessary to effectuate a legitimate business purpose of Bonveno as
determined by the Bonveno Managing Director. The procedure of making such
a determination shall be agreed in writing from time to time between the
parties.
4
<PAGE>
5 Marketing and Distribution
--------------------------
5.1 Separate brand identities will be established for both the Bonveno Service
and the Global Product:
(a) Bonveno will own and define the Bonveno corporate identity for the
European Territory;
(b) Orbittravel will own and define the Global Product corporate identity
for outside the Non-European Territory.
5.2 The parties agree that for Global Customers whose headquarters are in the
European Territory, the right to market, sell and manage such customers in
respect of the Bonveno Service and the Global Product shall vest in Bonveno
exclusively. Orbittravel shall have the right to market, sell and manage
Global Customers' headquartered in the Non-European Territory in respect of
the Bonveno Service and the Global Product.
5.3 For Global Customers, joint agreed proposals will be prepared as agreed
between the parties in writing from time to time.
5.4 Either party may use the other's trade marks for advertising purposes in
accordance with the Operational Agreement.
5.5 Income derived from Global Customers will be allocated between the parties
in the proportion and in the manner decided by the Joint Steering
Committee.
6 Marketing and Distribution in the European Territory
----------------------------------------------------
6.1 Except in the case of Global Customers, Bonveno shall have the exclusive
right to market the Bonveno Service in the European Territory. This shall
include, but not be limited to:
(a) Representation at trade fairs, exhibitions and shows within the
Territory except where it is agreed between the parties that joint
stands would be more appropriate, including but not limited to, the
World Travel Market London. The funding for such joint stands will be
agreed between the parties in writing;
(b) Direct Marketing communications and literature, PR and advertising in
the European Territory;
(c) Branding and corporate and product identity.
6.2 Subject to Clauses 7 and 9, Orbittravel hereby appoints Bonveno as its
exclusive representative for the marketing of the Global Product within the
European Territory. Such representation will be in accordance with the
principles and instructions laid down by the Joint Steering Committee.
6.3 Bonveno will be exclusively responsible for all distribution of, sales and
contractual matters in relation to the Bonveno Service and Global Product
within the European Territory except for existing contracts for text-based
service provision to GDS suppliers. This is without prejudice to the
ability of Orbittravel to meeting unsolicited
5
<PAGE>
third party requests for the provision of the Bonveno Service and the
Global Product in a European Territory.
7 Restrictions
------------
7.1 Bonveno will not actively seek to sell or distribute either the Bonveno
Service or Global Product outside the European Territory without
Orbittravel's prior written consent. Orbittravel will not seek to market,
sell or distribute either the Bonveno Service or Global Product within the
European Territory.
7.2 Notwithstanding the foregoing section, nothing in this Agreement will
prevent Orbittravel from utilising the Global Products in services or
products that do not compete or could not reasonably be provided by the
Bonveno Service within the European Territory.
7.3 Orbittravel will not actively seek to sell or distribute the Global Service
or any service or product within the European Territory that competes with
the Bonveno Service.
8 Marketing and Distribution in the Non-European Territory
--------------------------------------------------------
8.1 Subject to Clauses 7 and 9, Orbittravel shall have the exclusive right to
market the Global Product in the Non-European Territory. This shall include
but not be limited to:
(a) Representation at trade fairs, exhibitions and shows in the
Non-European Territory, except where it is agreed between the parties
that joint stands would be more appropriate, including but not limited
to, international trade shows in the Non-European Territory. The
funding for such joint stands will be agreed between the parties;
(b) Marketing communications and literature, public relations and
advertising in the Non-European Territory;
(c) Branding, corporate and product identity.
8.2 Bonveno hereby appoints Orbittravel as its exclusive representative for the
marketing of Bonveno Service in the Non-European Territory. Such
representation will be in accordance with the principles and instructions
agreed between Bonveno and Orbittravel in writing from time to time.
8.3 Subject to the provisions of Clauses 7 and 9 Orbittravel will be
exclusively responsible for all distribution of, sales and contractual
matters in relation to the Bonveno Service and Global Product within the
Non-European Territory.
8.4 Orbittravel will be exclusively responsible for the sale of Content into
the Bonveno Service outside the European Territory in accordance with the
procedures practices and contribution laid down by the Joint Steering
Committee from time to time.
8.5 Except in the case of Global Customers, Orbittravel will not actively seek
to market, sell or distribute either the Bonveno Service or Global Product
within the European Territory without Bonveno's prior written consent.
Nothing in this Clause 8.5 shall
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prevent Orbittravel from meeting unsolicited third party requests for the
provision of the Global Product or the Bonveno Service in the European
Territory.
9 Global Customers
----------------
9.1 The Joint Steering Committee shall focus primarily on customers for the
Bonveno Service only in the European Territory, and shall only address and
approach Global Customers on an ad hoc basis.
9.2 When the Joint Steering Committee deems it appropriate to approach a Global
Customer, it shall determine which party is to take responsibility for
sales and marketing to such Global Customers.
9.3 Each party will co-operate with the other in relation to Global Customers
and follow the directions of the Joint Sales and Marketing Committee.
10 Product & Pricing
-----------------
10.1 Bonveno and Orbittravel shall in relation to the Bonveno Service and
Global Product agree where possible:
(a) common pricing structures;
(b) common rate cards;
(c) common product packaging;
(d) common pricing parameters to travel suppliers;
these items will be reviewed on at least a quarterly basis.
10.2 Notwithstanding Clause 10.1, the parties reserve the right to formulate
their own product and pricing definitions, to take local market conditions
into account. (i.e., where local market conditions militate against common
pricing structures or a common rate card). The parties shall discuss local
market conditions through the Joint Steering Committee and/or Operations
Committee to determine the feasibility of (a) through (d) above.
11 Additional Obligations
----------------------
11.1 Each party owns the advertising inventory in relation to its own service,
and shall co-operate to sell advertising capacity on each other's services.
11.2 Except in the case of Global Customers, Bonveno will bear its costs
relating to sales promotion and Content acquisition in the European
Territory for the effective operation and marketing of the Bonveno Service.
11.3 Bonveno will assist in obtaining the necessary licences to enable Galileo
GDS content to be accessed through the Bonveno Service and Global Product
and will also assist in procuring the necessary licences in favour of
Orbittravel to use the Web Travel Systems product.
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11.4 Other than Global Customers for whom a party is responsible in accordance
with Clause 9, Orbittravel and Bonveno will refer travel suppliers from
outside their territories to each other.
12 Revenue Sharing
---------------
12.1 For sales of advertising to be placed in the other party's Service, to be
displayed in the other party's territory, after any Sales Commission has
been deducted from the Subscription Revenue, the seller shall receive a
commission of 25% of the remaining Subscription Revenue (the "Advertising
Revenue Sharing Commission") from the other party.
12.2 Both parties will review and assess the applicability of a revenue sharing
model for all other transaction revenues ("Transaction Revenue Sharing
Commission") and, where appropriate, jointly agree a revenue sharing model.
12.3 Any Transaction Revenue Sharing Commission payable under this Agreement
shall be calculated at the Accounting Dates and payment shall be made
within 2 months of each Accounting Date.
12.4 At such Accounting Date, each party shall deliver to the other party a
statement in writing showing the amount of such Advertising Revenue Sharing
Commission and Transaction Revenue Sharing Commission due and giving all
necessary particulars of how such commission has been calculated. Payments
of such commission may be set off against the payments of Transaction
Revenue Sharing Commission due from each party to the other.
12.5 Each party shall, within two (2) Months following the end of each Year,
provide a statement certified to be true and correct by its Chief
Accountant confirming that the statement(s) delivered for the period ending
on the preceding calendar Year were in all material respects correct, (such
certificates to be provided at the producing paying party's own expense).
12.6 Where any statement delivered pursuant to this Clause 12 shows that an
under payment has occurred, the relevant adjustment shall be made, and the
amount of any underpayment or over-payment and Advertising Revenue Sharing
Commission and Transaction Revenue Sharing Commission shall be paid with or
deducted from the next payment of Advertising Revenue Sharing Commission
and Transaction Revenue Sharing Commission due under this Agreement. Where
the amount of an underpayment exceeds the next payment of Advertising
Revenue Sharing Commission and Transaction Revenue Sharing Commission due,
the difference shall be deducted from subsequent Advertising Revenue
Sharing Commission and Transaction Revenue Sharing Commission payments
until the difference is rectified.
12.7 Each party shall be solely responsible for its own costs of carrying out
its obligations under this Agreement. Upon written request, each party
shall be permitted access, during ordinary business hours, to such of the
other party's books and financial records as may be necessary to calculate
the Advertising Revenue Sharing Commission and Transaction Revenue Sharing
Commission due to the inspecting party for any period of time during the
term of this Agreement. The inspecting party
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shall bear the cost of any audit unless a discrepancy of greater than 10%
is discovered, in which case the offending party shall be responsible for
such costs.
13 Confidentiality
---------------
13.1 Each party shall keep and procure to be kept secret and confidential all
Confidential Information belonging to the other party disclosed or obtained
as a result of the relationship of the parties under this Agreement and
shall not use nor disclose the same save for the purposes of the proper
performance of this Agreement or with the prior written consent of the
other party. Where disclosure is made to any employee, consultant, sub-
contractor or agent, it shall be done subject to obligations equivalent to
those set out in this Agreement and each party agrees to ensure that if the
other party so requests prior to such disclosure such employee, consultant,
sub-contractor or agent enters into a deed of covenant with the other party
in a form reasonably acceptable to that other party containing obligations
equivalent to those set out in this Clause 13. Each party shall use its
best endeavours to procure that any such employee, consultant, sub-
contractor or agent complies with such obligations. Each party shall be
responsible to the other party in respect of any disclosure or use of such
Confidential Information by a person to whom disclosure is made.
13.2 The obligations of confidentiality in this Clause 13 shall not extend to
any matter which either party can show:
(a) is in, or has become part of, the public domain other than as a result
of a breach of the obligations of confidentiality under this
Agreement; or
(b) was in its written records prior to the Commencement Date; or
(c) was independently disclosed to it by a third party entitled to
disclose the same; or
(d) is required to be disclosed under any applicable law, or by order of a
court or governmental body or authority of competent jurisdiction.
14 Force Majeure
-------------
14.1 If either party is affected by Force Majeure it shall immediately notify
the other party in writing of the matters constituting the Force Majeure
and shall keep that party fully informed of their continuance and of any
relevant change of circumstances whilst such Force Majeure continues.
14.2 The party affected by Force Majeure shall take all reasonable steps
available to it to minimise the effects of Force Majeure on the performance
of its obligations under this Agreement.
14.3 Save as provided in Clause 2 Force Majeure shall not entitle either party
to terminate this Agreement and neither party shall be in breach of this
Agreement, or otherwise liable to the other, by reason of any delay in
performance, or non-performance of any of its obligations due to Force
Majeure.
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14.4 If the party affected by Force Majeure fails to comply with its obligations
under Clauses 14.1 and 14.2 above then no relief for Force Majeure,
including the provisions of Clause 14.3 above, shall be available to it and
the obligations of each party shall continue in force.
15 Consequences of Termination
---------------------------
15.1 Upon termination of this Agreement for any reason whatsoever:
(a) Subject to Clause 2 above the relationship of the parties shall cease
save as (and to the extent) expressly provided for in this Clause 15;
(b) the provisions of Clauses 13, 19 and 20 and any provision which
expressly or by implication is intended to come into or remain in
force on or after termination shall continue in full force and effect;
(c) Bonveno and Orbittravel shall meet as soon as possible to establish
and implement operational procedures to direct the continuing
operations of Bonveno in the absence of the provisions of this
Agreement. However, if this Agreement has terminated as a consequence
of a termination of the JV Agreement, the wind-up procedures set forth
therein for the termination of operations of Bonveno shall come into
effect.
16 Assignment
----------
16.1 This Agreement is personal to both parties. Neither party shall assign,
delegate, sub-contract, transfer, charge or otherwise dispose of all or any
of its rights and responsibilities under this Agreement.
16.2 Clause 16.1 above shall not apply to any assignment by either party of its
rights in relation to this Agreement to another Group Company on terms that
if any such assignee shall cease to be a Group Company then (unless such
rights shall previously have been assigned to a continuing Group Company or
the other parties shall have agreed otherwise) such rights shall terminate.
16.3 No person who is not a party to this Agreement (including any employee,
officer, agent, representative or sub-contractor of either party) shall
have right to enforce any term of this Agreement which expressly or by
implication confers a benefit on that person without the express prior
agreement in writing of the parties which agreement must refer to this
Clause 16.3.
17 General
-------
17.1 Nothing in this Agreement shall create, or be deemed to create, a
partnership or joint venture or relationship of employer and employee or
principal and agent between the parties and no employee of either party
shall be deemed to be or have become an employee of the other party.
17.2 This Agreement contains the entire agreement between the parties in
relation to its subject-matter. Each of the parties irrevocably and
unconditionally waives any right it
10
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may have to claim damages for, and/or to rescind this Agreement because of,
breach of any warranty not contained in this Agreement, or any
misrepresentation whether or not contained in this Agreement, unless such
misrepresentation was made fraudulently.
17.3 No purported alteration or variation of this Agreement shall be effective
unless it is in writing, refers specifically to this Agreement and is
signed by a director of each of the parties to this Agreement.
17.4 The rights and remedies of either party in respect of this Agreement shall
not be diminished, waived or extinguished by the granting of any
indulgence, forbearance or extension of time granted by such party to the
other nor by any failure of, or delay by the said party in ascertaining or
exercising any such rights or remedies. The waiver by either party of any
breach of this Agreement shall not prevent the subsequent enforcement of
that provision and shall not be deemed to be a waiver of any subsequent
breach of that or any other provision.
17.5 If at any time any part of this Agreement (including any one or more of the
clauses of this Agreement or any sub-clause or paragraph or any part of one
or more of these clauses) is held to be or becomes void or otherwise
unenforceable for any reason under any applicable law, the same shall be
deemed omitted from this Agreement and the validity and/or enforceability
of the remaining provisions of this Agreement shall not in any way be
affected or impaired as a result of that omission.
17.6 This Agreement may be entered into in the form of two counterparts, each
executed by one of the parties and, provided that the parties shall so
enter into the Agreement, each of the executed counterparts shall be deemed
to be an original but, taken together, they shall constitute one
instrument.
17.7 Each of the parties shall, and shall use their reasonable endeavours to
procure that any necessary third parties shall, execute and deliver to the
other party such other instruments and documents and take such other action
as is necessary to fulfil the provisions of this Agreement in accordance
with its terms.
18 Notices
-------
18.1 Any notices sent under this Agreement must be in writing and may be served
by personal delivery or by sending the notice by air mail post or facsimile
or electronic data transmission at the address given above or at such other
address as the relevant party may give for the purpose of service of
notices under this Agreement and every such notice shall be deemed to have
been served upon delivery if served by hand or at the expiration of 5
Business Days after despatch of the same if delivered by air mail post or
at ten hours am local time of the recipient on the next Business Day
following despatch if sent by facsimile or electronic data transmission.
18.2 To prove service of any notice it shall be sufficient to show in the case
of a notice delivered by hand that the same was duly addressed and
delivered by hand and in the case of a notice served by post that the same
was duly addressed prepaid and posted in the manner set out above. In the
case of a notice given by facsimile or electronic data transmission, it
shall be sufficient to show that it was despatched in a legible and
complete form to the correct telephone number or electronic data number or
address
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without any error message provided that a confirmation copy of the
transmission is sent to the recipient by air mail post in the manner set
out above. Failure to send a confirmation copy will invalidate the service
of any facsimile or electronic data transmission.
19 Law
---
19.1 This Agreement shall be governed by, and construed in accordance with, the
laws of England.
20 Jurisdiction
------------
20.1 Subject to 20.2 all disputes arising out of or relating to this Agreement
shall be subject to the non-exclusive jurisdiction of the English Courts to
which the parties irrevocably submit.
20.2 The parties may jointly agree that a dispute arising out of or relating to
this Agreement shall be finally settled under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with such Rules. Such arbitration shall
take place in the English language in London.
12
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IN WITNESS OF THE ABOVE the parties have signed this Agreement on the date
written at the head of this Agreement.
SIGNED by ) /s/ Authorized Signatory
) -------------------------------------
on behalf of ) Director & Authorised Signatory
BONVENO.COM LIMITED )
in the presence of: )
/s/ Geoff Mullet
- ------------------------
SIGNED by )
) /s/ Joseph R. Cellura
------------------------------
on behalf of ) Director & Authorised Signatory
ORBITTRAVEL.COM, INC ) Chairman & CEO
in the presence of: )
/s/ Joseph R. Cellera
- -----------------------
Chairman & CEO
/s/ David A. Noosinow
- ------------------------
VP
13
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EXHIBIT 10.22
DATED
------------------------------------
BONVENO.COM LIMITED (1)
and
ORBITTRAVEL.COM, INC. (2)
------------------------------------
EUROPEAN SPECIFIC SOFTWARE
DEVELOPMENT AGREEMENT
------------------------------------
Wragge & Co.
<PAGE>
CONTENTS
--------
Clause Heading Page
1 Definitions........................................................... 2
2 Obligations........................................................... 5
3 Development of the European Specific Software......................... 6
4 Payment and expenses.................................................. 7
5 Development Schedule and delays....................................... 7
6 Testing and acceptance................................................ 7
7 Confidentiality....................................................... 9
8 Duration.............................................................. 9
9 Termination........................................................... 9
10 Consequences of Termination.......................................... 10
11 Intellectual Property Rights......................................... 10
12 Limitation of Liability.............................................. 11
13 General.............................................................. 11
14 Entire Agreement..................................................... 11
15 Variations........................................................... 11
16 Waiver............................................................... 11
17 Severability......................................................... 12
18 Compliance........................................................... 12
19 Law.................................................................. 12
20 Jurisdiction......................................................... 12
21 Notices.............................................................. 12
22 Non-Solicitation of Staff............................................ 13
23 Disputes............................................................. 13
Schedule 1............................................................... 16
Schedule 2............................................................... 17
<PAGE>
THIS AGREEMENT is made on 1999
BETWEEN:
(1) BONVENO.COM LIMITED (Registered in England & Wales No. 3831828) whose
registered office is at Renaissance House, Foundation Park, Maidenhead, SL6
3UD ("Bonveno") and
(2) ORBITTRAVEL.COM, INC., a body corporate organised and existing under the
laws of Delaware, U.S.A., , having its principal place of business at 100
Second Street East, Whitefish, Montana, USA 59937("Orbittravel").
RECITAL:
(A) Together with Web Travel Systems Limited, the parties are members of a
joint venture agreement (the "JV Agreement") and Bonveno is the joint
venture company for providing and marketing an internet based travel and
leisure booking system to businesses and consumers in the European
Territory.
(B) Orbittravel is, under an agreement of today's date, providing support,
licences and maintenance for the European Specific Software, and
development, support, licences and maintenance for the Global Software (the
"Operational Agreement").
(C) Orbittravel and Bonveno have also agreed, under an agreement of today's
date, a management structure, marketing policy, content sharing and
distribution policy (the "Management Agreement").
(D) Orbittravel has agreed to provide software development to Bonveno for the
European Specific Software on the terms and conditions of this Agreement
(the "Agreement").
In consideration of the mutual covenants and undertakings set out below THE
PARTIES AGREE as follows:
1 Definitions
-----------
1.1 In this Agreement unless the context otherwise requires: "Acceptance" means
the acceptance procedure set out in Clause 6.5;
"Additional Development Fees" means the fees for Development outside the
scope of the Product Plan as agreed between the parties;
"Additional Development Specification" means a specification issued by
Bonveno setting out the operational requirement of each element of the
Development outside the scope of the Product Plan as agreed between the
parties;
"Application Software" has the meaning set out in the Operational
Agreement;
"Bonveno Service" means the Global Product and the European Specific
Software;
2
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"Build Definitions" means the details and specifications of the component
software, hardware and documentation used in the creation, development and
maintenance of the Programs;
"Business Day" means a day (other than a Saturday or Sunday) on which the
banks are ordinarily open for business in the City of London;
"Central Equipment" has the meaning specified in the Operational Agreement;
"Change Control Procedures" has the meaning specified in the Operational
Agreement.
"Commencement Date" means
"Confidential Information" means secret or confidential commercial,
financial, marketing, technical or other information, know-how, trade
secrets and other information in any form or medium whether disclosed
orally or in writing before or after the date of this Agreement, together
with any reproductions of such information in any form or medium or any
part(s) of this information (and "Confidential" means that the information,
either in its entirety or in the precise configuration or assembly of its
components, is not publicly available;
"Configuration Management" means the management of Build Definitions
including a change of control procedure to be put in place between the
parties, in writing, from time to time, that allows for Bonveno to submit
suggestions for the Build Definitions in writing;
"Cost Estimate" means a detailed cost estimate to be provided by
Orbittravel to Bonveno in the format of the sample cost estimate form in
Schedule 2;
"Defect" has the meaning specified in the Operational Agreement;
"Development Environment" means all software toolkits and software
development tools used by Orbittravel in the creation, maintenance,
testing, training and development of the Programs;
"Development Schedule" means the time schedule owned, created and
maintained by Orbittravel, but agreed between the parties in accordance
with Clause 5.1, for the completion of the Phases of preparation,
Acceptance and delivery of the European Specific Software;
"Documentation" means the operating manuals, user instructions, technical
literature and all other related materials (including without limitation,
the Product Plan) supplied to Bonveno by Orbittravel for aiding the use and
modification of the Programs as corrected or modified from time to time
pursuant to any provision of this Agreement;
"European Specific Software" means the developments to the Global Product
in accordance with this Agreement and detailed in the Product Strategy,
Product Requirement Specifications, Product Plan and specified to be
implemented in the Development Schedule as European Specific Software
requirements or developments requested by the issue of a Additional
Development Specification by Bonveno;
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"Global Product" has the meaning set out on the Operational Agreement;
"Intellectual Property Rights" means any patent, copyright, design right,
registered design, trade mark, service mark, know-how, utility model,
unregistered design or, where relevant, any application for any such right,
or other industrial or intellectual property right anywhere in the world;
"Licence" means the licence granted by Orbittravel to Bonveno under the
Operational Agreement;
"Maintenance Services" has the meaning set out in the Operational
Agreement;
"Phase" means a time period phase of the Development Schedule;
"Principal Development Fees" means the fees payable by Bonveno to
Orbittravel for development of the European Specific Software in accordance
with Schedule 1 and as agreed in writing between the parties from time to
time;
"Product Requirement Specification" means the detailed product technical
specification created by Orbittravel in accordance with the Development
Schedule;
"Product Strategy Document" means the document owned and produced by
Bonveno that specifies the required functionality of both the Application
Software and Host Software and which is annexed at Schedule 4 of the
Operations Agreement;
"Product Plan" means the document owned, created and maintained by
Orbittravel which provides a high level functional specification of the
Programs in accordance with the Product Strategy Document;
"Program Materials" means the Programs and the Documentation;
"Programs" has the meaning specified in the Operational Agreement;
"Ready for Use" means fully installed, and tested and accepted in
accordance with Clause 6;
"System" means the Programs and the Equipment;
"Technical Documents" means the more detailed technical documents that will
be created and maintained by Orbittravel and used for software development
covering coding, testing, integration, interfacing and quality assurance;
"Training Plan" means the Training Plan set out in Schedule 6 of the
Operational Agreement that specifies the training to be provided to Bonveno
by Orbittravel on Acceptance of the Phases;
"Use" means to load, store, run, display and use any software program
provided by Orbittravel in accordance with the terms of this Agreement and
"User" shall be interpreted accordingly;
"Warranty Period" means a period of 6 months from the date of Acceptance of
each stage or element of the European Specific Software;
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<PAGE>
"Web Travel Systems Limited" has the meaning set out in the Operational
Agreement;
"Year" means a period of twelve months commencing on the Commencement Date
and on each successive anniversary of the Commencement Date and ending on
the day before each successive anniversary of the Commencement Date.
1.2 The headings to clauses are inserted for convenience of reference only and
shall not affect the interpretation or construction of this Agreement.
1.3 Words imparting the singular shall include the plural and vice versa. Words
imparting a gender include every gender and references to persons include
an individual, company, corporation, firm or partnership.
1.4 The words and phrases "other", "including" and "in particular" shall not
limit the generality of any preceding words or be construed as being
limited to the same class as any preceding words where a wider construction
is possible.
1.5 References to any statute or statutory provision shall include (i) any
subordinate legislation made under it, (ii) any provision which it has
modified or re-enacted (whether with or without modification), and (iii)
any provision which subsequently supersedes it or re-enacts it (whether
with or without modification).
1.6 All payments to be made by the parties pursuant to this Agreement must be
made in Sterling unless otherwise agreed by the parties.
1.7 All of Bonveno's rights in this Agreement will be deemed to extend to
Bonveno's subsidiaries.
2 Obligations
-----------
2.1 Orbittravel hereby agrees to develop the European Specific Software in
accordance with the terms and conditions of this Agreement.
2.2 Orbittravel agrees to maintain, licence and support the Programs, including
the European Specific Software, in accordance with the provisions in the
Operational Agreement.
2.3 In consideration of the payment by Bonveno of the Additional Development
Fees and the Principal Development Fees, Orbittravel agrees to make
developments to the European Specific Software in accordance with the
European Specific Requirements in the Product Plan and Development
Schedule; and
2.4 Orbittravel hereby agrees to provide Documentation, and training in
accordance with Clause 6, for the European Specific Software upon the terms
and conditions contained in this Agreement.
2.5 Should Orbittravel wish to utilise the European Specific Software, Bonveno
hereby agrees to grant it a sub-licence for the Use of the same on
reasonable terms and for a royalty to be agreed.
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3 Development of the European Specific Software
---------------------------------------------
3.1 Orbittravel will provide the European Specific Software, in Phases, in
accordance with the requirements of the Additional Development
Specification, the Development Schedule, Product Plan and Product Strategy
Document (which is set out in Schedule 4 of the Operational Agreement).
3.2 Orbittravel will produce the Product Requirement Specification derived from
the Product Strategy Document for each element of the European Specific
Software in co-operation with Bonveno.
3.3 Orbittravel will produce the Product Plan for the Programs in accordance
with the Product Strategy Document and Product Requirement Specification
and will deliver the same to Bonveno for approval.
3.4 Bonveno will communicate any amendments it requires to the Product Plan, in
respect of the European Specific Software, within 14 days of its delivery
(or redelivery, as the case may be) to Bonveno. Bonveno will follow the
Change Control Procedures established by the Parties with regard to any
such amendments.
3.5 No later than ten (10) Business Days prior to the commencement of the
development of the European Specific Software in a Phase, Orbittravel shall
submit a Cost Estimate to Bonveno for approval. Bonveno shall convey its
approval or otherwise within 3 Business Days of delivery of the Costs
Estimate.
3.6 Additional Development
----------------------
(a) In the event that Bonveno requires additional European Specific
Software, as set out in the Additional Development Specification,
Orbittravel will if it agrees to undertake such work, be entitled to
charge Bonveno at Orbittravel's preferential rate as agreed in writing
between the parties from time to time.
(b) Orbittravel will produce a Development Schedule, in respect of such
additional requirements and submit it to Bonveno for its agreement
(including details of the Additional Development Fees for such
development) for any additional work required to implement those
changes.
(c) Upon agreement of the Development Schedule, Orbittravel will commence
the Development in accordance with the Development Schedule and
Additional Development Specification.
3.7 Orbittravel shall be responsible for Configuration Management and create a
Build Definition for each major System release. The Build Definition will
identify Host Software, Application Software and System Software, with
release and version numbers.
3.8 Orbittravel will establish, support and fund a suitable Development
Environment for the production and testing of the Application Software and
not pass any of this cost on to Bonveno under any circumstances.
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3.9 Orbittravel shall be responsible for integration of the European Specific
Software with the System Software, Host Software and Application Software
to form the Bonveno Service.
3.10 Orbittravel shall, where applicable, work directly with Web Travel Systems
Limited to ensure proper integration is achieved between the European
Specific Software, Application Software and Host Software.
3.11 Orbittravel shall bear the cost and be responsible for all software tools
required for development of the Application Software.
3.12 Orbittravel shall where applicable enable remote access into the
development environment for the purposes of conducting interfacing tests
and other remote access tests.
4 Payment and expenses
--------------------
4.1 The Principal Development Fees will be invoiced on Acceptance of each Phase
(which Acceptance shall not be unreasonably withheld), as detailed in
Schedule 1.
4.2 The Additional Development Fees will be invoiced on the Acceptance of each
Phase (which Acceptance shall not be unreasonably withheld), as detailed in
the relevant Development Schedule.
4.3 All charges properly due and payable by Bonveno under this Agreement shall
be paid within thirty (30) days after the receipt by Bonveno of
Orbittravel's invoice.
5 Development Schedule and delays
-------------------------------
5.1 Orbittravel will consult with Bonveno and, within thirty (30) days after
the Commencement Date, Orbittravel will provide Bonveno with a suggested
timetable detailing when each of the developments to end of Phase 2
including Phase 0 and Phase 1 to the European Specific Software will take
place. When both parties agree the content of the timetable, it will form
the Development Schedule. Both parties may from time to time agree to
reasonable changes to the Development Schedule. The Development Schedule
will be documented in the Product Plan.
5.2 Orbittravel undertakes to complete each Phase by the date specified in the
Development Schedule.
5.3 Orbittravel shall provide the developments to the European Specific
Software Ready for Use on or before the Completion Date.
6 Testing and acceptance
----------------------
6.1 Orbittravel shall have full responsibility for providing final checks on
the System Software, Host Software, Application Software and European
Specific Software and full end-to-end System testing before release.
7
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6.2 Orbittravel will perform regression testing as necessary to ensure that all
software releases are valid at both the component level and system level.
6.3 After the developments to the European Specific Software have been fully
installed on the Equipment, Orbittravel shall give to Bonveno at least 7
days' prior written notice (or such shorter notice as may be agreed between
the parties) of the date (the "Testing Date") on which Orbittravel will be
ready to perform acceptance tests. Bonveno may and Orbittravel shall attend
such tests on the Testing Date. Orbittravel shall provide all necessary
facilities to enable such tests to be carried out.
6.4 On the Testing Date Orbittravel shall process, in the presence of the
authorised representatives of Bonveno, should they elect to be present,
suitable test data on the Equipment using the European Specific Software.
6.5 Bonveno shall accept the European Specific Software immediately after it
has correctly processed such test data by achieving the expected results,
and the European Specific Software will be Accepted and released in writing
by Bonveno.
6.6 The European Specific Software shall not be deemed to have incorrectly
processed such test data by reason of any failure to provide any facility
or function not specified in the Product Plan, the Development Schedule or
Additional Development Specification.
6.7 If the European Specific Software shall fail to process such test data
correctly then repeat tests shall be carried out on the same terms and
conditions within a reasonable time thereafter but in any event no later
than 14 days thereafter. Orbittravel shall not be entitled to make any
charge for attending such repeat tests, except to the extent that such
failure is not attributable to any act or omission of Orbittravel.
6.8 If such repeat tests demonstrate that the European Specific Software is not
in accordance with the Product Plan, Development Schedule or Additional
Development Specification then Bonveno may by written notice to Orbittravel
require Orbittravel to fix (without prejudice to its other rights and
remedies) a new date for carrying out further tests on the European
Specific Software on the same terms and conditions as the repeat tests
(save that all costs which Bonveno may incur as a result of carrying out
such tests shall be reimbursed by Orbittravel). If the European Specific
Software shall fail such further tests then Bonveno shall, at its option be
entitled to proceed under Clause 6.9 or may by written notice require
Orbittravel to retest in accordance with this Clause 6.8;
6.9 If Bonveno have elected to proceed under this Clause in accordance with
Clause 6.8 above, it may by written notice to Orbittravel elect to accept
the European Specific Software subject to an abatement of the fees payable,
such abatement to be in such an amount as, taking into account the
circumstances, is reasonable. In the absence of written agreement as to
abatement within 14 days after the date of such notice Bonveno shall be
entitled to reject the European Specific Software in accordance with Clause
6.10
6.10 If the parties are unable to agree an abatement of charges in accordance
with Clause 6.9 above, Bonveno may by written notice to Orbittravel reject
the European Specific Software as not being in conformity with this
Agreement, in which event this
8
<PAGE>
Agreement shall automatically terminate and Orbittravel shall (without
prejudice to Bonveno's other rights and remedies) forthwith refund to
Bonveno all sums previously paid to Orbittravel under this Agreement
7 Confidentiality
---------------
7.1 Each party shall keep and procure to be kept secret and confidential all
Confidential Information belonging to the other party disclosed or obtained
as a result of the relationship of the parties under this Agreement and
shall not use nor disclose the same save for the purposes of the proper
performance of this Agreement or with the prior written consent of the
other party. Where disclosure is made to any employee, consultant,
sub-contractor or agent, it shall be done subject to obligations equivalent
to those set out in this Agreement and each party agrees to ensure that if
the other party so requests prior to such disclosure such employee,
consultant, sub-contractor or agent enters into a deed of covenant with the
other party in a form reasonably acceptable to that other party containing
obligations equivalent to those set out in this Clause 7. Each party shall
use its best endeavours to procure that any such employee, consultant,
sub-contractor or agent complies with such obligations. Each party shall be
responsible to the other party in respect of any disclosure or use of such
Confidential Information by a person to whom disclosure is made.
7.2 The obligations of confidentiality in this Clause 7.2 shall not extend to
any matter which either party can show:
(a) is in, or has become part of, the public domain other than as a result
of a breach of the obligations of confidentiality under this
Agreement; or
(b) was independently disclosed to it by a third party entitled to
disclose the same; or
(c) is required to be disclosed under any applicable law, or by order of a
court or governmental body or authority of competent jurisdiction; or
(d) was independently developed by that party without prior reference to
any Confidential Information received directly or indirectly from the
other party.
7.3 The obligations relating to confidentiality under this Agreement shall
survive any termination of this Agreement.
8 Duration
--------
8.1 This Agreement shall come into force on the Commencement Date and (subject
to the provisions for earlier termination in Clause 9 below) shall continue
in force thereafter unless and until either party gives to the other not
less than 6 months' prior written notice of termination subject always to
the provisions of Clause 9 below.
9 Termination
-----------
This Agreement continue in force for so long as the Operational Agreement
continues and shall automatically terminate on the termination of the
Operational Agreement.
9
<PAGE>
10 Consequences of Termination
---------------------------
10.1 Upon termination of this Agreement for any reason whatsoever:
(a) the services to be provided by Orbittravel under the Agreement shall
cease and the Agreement shall terminate except to the extent to which
the Agreement is required to continue in force for the purposes of
Bonveno completing any contractual obligations which Bonveno has
entered into prior to the date of termination and which require the
use of the Programs or Orbittravel's maintenance services;
(b) the licences granted under the Operational Agreement shall continue in
full force and effect;
(c) the agreement of the parties relating to confidentiality contained in
Clause 9 of this Agreement shall continue in full force and effect and
each party shall be responsible for keeping and procuring to be kept
secret and confidential all of the other party's Confidential
Information, and other information and know-how acquired from and
through the other party under this Agreement and shall not disclose
the same to any third party and shall use its best endeavours to
prevent disclosure of such except as expressly permitted by this
Agreement;
(d) where either party has been a recipient of Confidential Information
(the "Recipient") it shall forthwith return or procure to be returned
to the other (the "Originator") at such place as the Originator
directs and at the Originator's expense (or if the Originator so
requires by notice in writing to the Recipient, destroy) all of the
Originator's Confidential Information, (together with each and every
copy of it and all literature and packaging relating to it) and shall
make no further use of the Programs, literature, packaging or any of
the Originator's secret or Confidential Information save for the
purpose of completing any contractual obligations in accordance with
Clause 10.1(a) above.
10.2 Termination shall be without prejudice to any rights of either party
against the other which may have accrued up to the date of termination.
11 Intellectual Property Rights
----------------------------
11.1 The European Specific Software and the related Documentation and all parts
thereof and all Intellectual Property Rights therein is and shall remain
the property of Orbittravel
11.2 The copyright and all other intellectual property rights of whatever nature
in any corrected or modified versions of the Programs made pursuant to this
Agreement is and shall remain the property of Orbittravel.
11.3 Orbittravel hereby undertakes to indemnify Bonveno and to keep Bonveno
indemnified fully at all times against all claims, demands, actions,
proceedings, damages, losses, costs and expenses (including, without
limitation, legal and other professional advisers' fees) which are made or
brought against or incurred by Bonveno
10
<PAGE>
howsoever arising for infringement of third party Intellectual Property
Rights by Bonveno's or Bonveno's customers' use of the European Specific
Software.
12 Limitation of Liability
-----------------------
12.1 Orbittravel shall indemnify Bonveno and keep Bonveno fully and effectively
indemnified on demand against any loss of or damage to any tangible
property or injury to or death of any person caused by: any negligent act
or omission or wilful misconduct of Orbittravel, its employees, agents or
sub-contractors or by any defect in the design or workmanship of the
European Specific Software.
12.2 Except in respect of injury to or death of any person under Clause 12.1
(for which no limit applies) the liability of Orbittravel under Clause 12.1
in respect of each event or series of connected events shall not exceed.
2.5 million [British pounds].
13 General
-------
13.1 Neither party shall pledge the credit of the other party nor represent
itself as being the other party, nor an agent, employee or representative
of the other party and neither party shall hold itself out as such nor as
having any power or authority to incur any obligation of any nature,
express or implied on behalf of the other party and nothing in this
Agreement shall create, or be deemed to create, a joint venture or
relationship of employer and employee or principal and agent between the
parties and no employee of either party shall be deemed to be or have
become an employee of the other party.
13.2 Orbittravel may not assign, sub-contract, transfer, charge or otherwise
dispose of all or any of its rights and responsibilities under this
Agreement, without the prior written consent of Bonveno which will not be
unreasonably withheld.
14 Entire Agreement
----------------
14.1 This Agreement contains the entire agreement between the parties in
relation to its subject-matter. Each of the parties irrevocably and
unconditionally waives any right it may have to claim damages for, and/or
to rescind this Agreement because of breach of any warranty not contained
in this Agreement, or any misrepresentation not contained in this
Agreement, unless such misrepresentation was made fraudulently.
15 Variations
----------
15.1 No purported alteration or variation of this Agreement shall be effective
unless it is in writing, refers specifically to this Agreement and is
signed by a director of each of the parties to this Agreement.
16 Waiver
------
16.1 The rights and remedies of either party in respect of this Agreement shall
not be diminished, waived or extinguished by the granting of any
indulgence, forbearance or extension of time granted by such party to the
other nor by any failure of, or delay by the said party in ascertaining or
exercising any such rights or remedies. Any waiver of any breach of this
Agreement shall be in writing. The waiver by either party of any
11
<PAGE>
breach of this Agreement shall not be deemed to be a waiver of any
subsequent breach of that or any other provision.
17 Severability
------------
17.1 If at any time any part of this Agreement (including any one or more of the
clauses of this Agreement or any sub-clause or paragraph or any part of one
or more of these clauses) is held to be or becomes void or otherwise
unenforceable for any reason under any applicable law, the same shall be
deemed omitted from this Agreement and the validity and/or enforceability
of the remaining provisions of this Agreement shall not in any way be
affected or impaired as a result of that omission.
18 Compliance
----------
18.1 Each of the parties shall, and shall use their reasonable endeavours to
procure that any necessary third parties shall, execute and deliver to the
other party such other instruments and documents and take such other action
as is necessary to fulfil the provisions of this Agreement in accordance
with its terms.
19 Law
---
19.1 This Agreement shall be governed by, and construed in accordance with, the
laws of England.
20 Jurisdiction
------------
20.1 Subject to Clause 23, all disputes arising out of or relating to this
Agreement shall be subject to the exclusive jurisdiction of the English
Courts to which the parties irrevocably submit.
21 Notices
-------
21.1 Any notices sent under this Agreement must be in writing and may be served
by personal delivery or by sending the notice by air mail post or facsimile
or electronic data transmission at the address given below or at such other
address as the relevant party may give for the purpose of service of
notices under this Agreement and every such notice shall be deemed to have
been served upon delivery if served by hand or at the expiration of 5
Business Days after despatch of the same if delivered by air mail post or
at ten hours am local time of the recipient on the next Business Day
following despatch if sent by facsimile or electronic data transmission.
21.2 To prove service of any notice it shall be sufficient to show in the case
of a notice delivered by hand that the same was duly addressed and
delivered by hand and in the case of a notice served by air mail post that
the same was duly addressed prepaid and posted in the manner set out above.
In the case of a notice given by facsimile or electronic data transmission,
it shall be sufficient to show that it was despatched in a legible and
complete form to the correct telephone number or electronic data number or
address without any error message provided that a confirmation copy of the
transmission is sent to the recipient by air mail post in the manner set
out above. Failure to send a confirmation copy will invalidate the service
of any facsimile or electronic data transmission.
12
<PAGE>
21.3 Notices to Orbittravel to be sent to:
Name: Jeff Arcel - Vice President - Business Development
Address: 100 Second Street East, Whitefish, MT, USA, 59937
Fax: (406) 863-4874
E-mail: [email protected]
21.4 Notices to Bonveno to be sent to:
Name: Geoff Mullett
Address: Renaissance House, Foundation Park, Maidenhead, Berkshire,
SL6 3UD
Fax: (0044) 1628 413 555
E-mail: [email protected]
22 Non-Solicitation of Staff
-------------------------
22.1 Each party undertakes to the other that during the term of this Agreement
and for the period of 6 months after its termination, it shall not:
(a) make any offer of employment or enter into any discussions or
negotiations with a view to making any offer of employment to: any
person employed by the other or any associated or parent company of
the other at any time during the period of this Agreement, and with
whom it has had personal contact or dealing ("Employee");
(b) solicit or attempt to solicit services from any Employee on their own
account;
(c) have business dealings with or attempt to have business dealings with
any Employee (other than pursuant to this Agreement); or
(d) entice or attempt to entice any Employee away from the other or any
associated company of the other.
22.2 Each party shall pay liquidated damages to the other if it breaches its
undertaking given in Clause 22.1, the amount of such liquidated damages
being calculated in accordance with Clause 22.3.
22.3 The amount of liquidated damages payable pursuant to Clause 22.2 shall be a
sum equal to the gross salary of the Employee in question for the 12 month
period during which the said breach of undertaking occurs and for the
avoidance of doubt the parties agree that the liquidated damages referred
to in this Clause 22 are a genuine pre-estimate of the loss that each party
may suffer as a result of the other breaching its undertaking given in
Clause 22.1.
23 Disputes
--------
23.1 Either party may call a management meeting of the parties by service of not
less than 10 Business Days' written notice and each party agrees to procure
that an authorised representative of that party shall attend all such
meetings called in accordance with this Clause 23.1.
23.2 Those attending the relevant meeting shall use all reasonable endeavours to
resolve disputes arising out of this Agreement. If the meeting fails to
resolve the dispute within 10 Business Days of its being referred to it,
either party by notice in writing
13
<PAGE>
may refer the dispute to the Chief Executive of each party who shall
co-operate in good faith to resolve the dispute as amicably as possible
within 10 Business Days of the dispute being referred to them.
23.3 In the event the Chief Executives are unable to resolve the dispute within
that 10 Business Day period, the parties shall consider whether or not it
would be suitable to refer the matter in dispute to an arbitrator or an
expert appointed by the parties or to enter into an alternative dispute
resolution procedure with the assistance of a mediator appointed by the
parties or, in default of agreement, by the Centre for Dispute Resolution,
Prince's House, 95 Gresham Street, London EC2V 7NA (or such alternative
address as may be associated from time to time with the Centre for Dispute
Resolution). If the parties are unable to agree on an alternative method of
resolving the dispute, either party shall be entitled to bring proceedings
in accordance with Clause 20.
14
<PAGE>
IN WITNESS OF THE ABOVE the parties have signed this Agreement on the date
written at the head of this Agreement.
SIGNED for )
and on behalf of ) /s/ Joseph R. Cellura
-----------------------------
ORBITTRAVEL.COM, INC. ) Director/Authorised Signatory
SIGNED for )
and on behalf of ) /s/ Authorized Signatory
---------------------------------
BONVENO.COM LIMITED ) Director/Authorised Signatory
15
<PAGE>
EXHIBIT 10.23
DATED
------------------------------------
BONVENO.COM LIMITED (1)
and
ORBITTRAVEL.COM, INC. (2)
------------------------------------
OPERATIONAL AGREEMENT
------------------------------------
Wragge & Co
<PAGE>
CONTENTS
--------
Clause Heading Page
1 Definitions..............................................................4
2 Scope & Terms of Agreement...............................................9
3 Orbittravel's Obligations................................................9
4 Licence.................................................................11
5 Software Maintenance....................................................12
6 Central Equipment Services..............................................13
7 Product Support.........................................................13
8 Operational Services....................................................15
9 Assignment of Existing Content..........................................15
10 Trade Marks.............................................................16
11 Fees and Payment........................................................16
12 Warranties..............................................................16
13 Escrow..................................................................18
14 Confidentiality.........................................................18
15 Force Majeure...........................................................19
16 Termination.............................................................19
17 Consequences of Termination.............................................20
18 Assignment..............................................................21
19 General.................................................................21
20 Notices.................................................................22
21 Dispute Resolution Procedure............................................23
22 Law.....................................................................23
23 Jurisdiction............................................................23
Schedule 1..................................................................25
<PAGE>
Schedule 2..................................................................27
Schedule 3..................................................................28
Schedule 4..................................................................29
Schedule 5..................................................................30
Schedule 6..................................................................34
Schedule 7..................................................................45
<PAGE>
THIS AGREEMENT is made on BETWEEN
(1) BONVENO.COM LIMITED (Registered in England No. 3831828) whose
registered office is at Renaissance House, Foundation Park, Maidenhead,
SL6 3UD ("Bonveno"); and
(2) ORBITTRAVEL.COM, INC., a body corporate organised and existing under
the laws of Delaware, U.S.A., having its principal place of business at
100 Second Street East, Whitefish, MT 59937 ("Orbittravel").
WHEREAS:
(A) Together with Web Travel Systems Limited the parties are members of a
joint venture agreement (the "JV Agreement") and Bonveno is the joint
venture company for providing and marketing an internet based travel
and leisure booking system to businesses and consumers in the European
Territory.
(B) Orbittravel is, under this agreement, providing support, licences and
maintenance for the European Specific Software, and development,
support, licences and maintenance for the Global Product (the
"Agreement").
(C) Orbittravel is, under an agreement of today's date, providing software
development to Bonveno for the European Specific Software (the
"European Specific Software Development Agreement").
(D) Orbittravel and Bonveno have also agreed, under an agreement of today's
date, a management structure, marketing policy, content sharing and
distribution policy (the "Management Agreement").
In consideration of the mutual covenants and undertakings set out below THE
PARTIES AGREE as follows:
1 Definitions
-----------
1.1 In this Agreement unless the context otherwise requires:
"Additional Services" means those services to be provided by
Orbittravel as detailed in the Management Agreement;
"Application Software" means Orbittravel's proprietary software that
will be utilised as components of the Bonveno Service; specifically the
applications commercially marketed by Orbittravel as "Travelfile" and
any subsequent developments or enhancements of it and the New
Development Programs;
"Bonveno Service" means the service provided using the version of the
Global Product, incorporating the European Specific Software, and
related New Development Programs that is to be distributed, marketed
and used in the European Territory;
"Business Day" means a day (other than a Saturday or Sunday) on which
the banks are ordinarily open for business in the City of London;
<PAGE>
"Central Equipment" means all the hardware required to run the Programs
which includes, but is not limited to, central processing systems,
storage facilities, power supplies, modems, communications interfaces
(excluding public telecommunications lines), other Input/output devices
such as printers, specialist (ticket) printers, scanners, and any
related monitoring and diagnostic systems; where either:
1) it is based in United States of America and is under the control of
Orbittravel;
2) it is based in the European Territory and relates to Orbittravel's
contract with a third party outside the scope of the Agreement;
"Central Equipment Services" means the maintenance of the Central
Equipment in accordance with Clause 6;
"Central Equipment Services Fee" means the fee payable in accordance
with Schedule 2 for the Central Equipment Services;
"Change Control Procedures" are those procedures to be agreed in
writing between the parties to be undertaken by the parties to amend
the Product Plan, which procedures shall include (but not be limited
to), the preparation of a change request form by one party, and the
examination and approval of such form by the other;
"Change Control Documentation" are those documents which detail the
nature of a requested change to the Product Plan, as set forth in the
Change Control Procedures;
"Client Side Application" means software developed by Orbittravel for
use by the customer on the customer's systems with the Global Product;
"Commencement Date" means
"Confidential Information" means secret or confidential commercial,
financial, marketing, technical or other information, know-how, trade
secrets and other information in any form or medium whether disclosed
orally or in writing before or after the date of this Agreement,
together with any reproductions of such information in any form or
medium or any part(s) of this information (and "confidential" means
that the information, either in its entirety or in the precise
configuration or assembly of its components, is not publicly
available);
"Content" means travel and leisure information relating to the areas
and in the format identified in Schedule 5 of the Management Agreement
or as agreed in writing from time to time between the parties, to be
shared as set out in Schedule 5 of the Management Agreement, and
divided between Territory Content and the Extra-Territory Content;
"Content Providers" means organisations that are providing the Content
to be included within the Programs, including but not limited to,
organisations such as hotel chains, car hire companies, airlines, rail
and ferry companies;
<PAGE>
"Defect" means any defect or deficiency in the Programs or any other
software supplied by Orbittravel under this Agreement which renders it
non-compliant with the requirements of the functional specifications;
"Development Services" means the development services that are to be
provided by Orbittravel for the development of the Global Product;
"Development Schedule" means the schedule for the development testing
and implementations of this New Development Software and Central
Equipment contained within the Product Plan;
"Documentation" means the operating manuals, user instructions,
technical literature and all other related materials (including without
limitation, the functional specification) supplied to Bonveno by
Orbittravel for aiding the use and modification of the European
Specific Software and Global Product or Application Software as
corrected or modified from time to time pursuant to any provision of
this Agreement;
"European Specific Software" means those parts of the Bonveno Service
that distinguish it from the Global Product, as defined as Developments
in the European Specific Software Agreement;
"European Territory" means the territory specified in Part 1 of
Schedule 1 of the Management Agreement;
"Extra-Territory Content" means the Content relating to territories
outside the European Territory;
"Fees" means the charges and fees specified in Schedule 2 for the
Services to be provided under this Agreement;
"Force Majeure" means any event outside the reasonable control of
either party affecting its ability to perform any of its obligations
(other than payment) under this Agreement including Act of God, fire,
flood, lightning, war, revolution, act of terrorism, riot or civil
commotion, strikes, lock-outs or other industrial action, whether of
the affected party's own employees or others, failure of supplies of
power, fuel, transport, equipment, raw materials or other goods or
services excluding virus attacks, worms and other such unauthorised
programs;
"Global Product" means the System Software, Host Software and
Application Software (including Client Side Applications and New
Development Programs);
"Global Systems" means the Central Equipment, and Global Product and
any other software and hardware used in relation to the Global Product;
"Group" means in relation to any company that company and every other
company which is for the time being a subsidiary or holding company of
that company or a subsidiary of any such holding company (and the terms
"subsidiary" and "holding company" shall have the meanings given to
them by Sections 736 and 736A of the Companies Act 1985);
<PAGE>
"Host Software" means the software that is to be licensed to
Orbittravel and Bonveno from Web Traveller Systems and provides access
to Global Distribution Systems and airline reservation systems, and is
external to the Application Software or such other software as the
parties may agree from time to time;
"Intellectual Property Rights" means any patent, copyright (including
rights in computer programs), database right, moral right, design
right, registered design, trade mark, service mark, know-how, utility
model, unregistered design or, where relevant, any application for any
such right, or other industrial or Intellectual Property Rights
subsisting;
"Joint Steering Committee" has the meaning set out in the Management
Agreement;
"Licence" means the software licence granted under Clause 4 of this
Agreement;
"Location" means such physical location of the Global Product and the
European Specfic Software as the parties agree from time to time;
"Major Disaster" means any Act of God, fire, flood, lightning, war,
explosion, revolution, act of terrorism, earthquake or other
significant disaster excluding communications failures;
"Modifications" means any upgrading, modifying or re-writing of the
Programs (excluding the New Development Programs);
"Month" means a calendar month;
"New Development Programs" means those programs (excluding the European
Specific Software) to be developed by Orbittravel in accordance with
the Product Strategy;
"Operations Fee" means the fees specified in Schedule 2 and payable by
Bonveno to Orbittravel for providing the Operational Services under
this Agreement;
"Operational Services" means the operational services to be provided by
Orbittravel in accordance with Clause 8 and as specified in Schedule 5;
"Product Plan" means the document owned, created and maintained by
Orbittravel which provides a high level functional specification of the
Programs in accordance with the Product Strategy Document.
"Product Requirement Specification" means the functional requirements
of the Programs produced in accordance with the direction of the Joint
Steering Committee which describes the functionality, performance and
other aspects of the Bonveno Service and/or Global Product and/or New
Development Programs and which shall be deemed to include any
corrections or modifications made from time to time pursuant to any
provision of this Agreement;
<PAGE>
"Product Strategy" means the agreed future development of the Programs
set out in Schedule 4 and as amended and updated from time to time by
agreement in writing between the parties;
"Programs" means the European Specific Software and/or the Global
Product;
"Release Note" means a description of the relevant New Development
Programs (or any other new development) including details of its
intended function, any uncorrected defects and any amendments or
modifications to enhance the operation of the Programs;
"Support Hours" means between the hours of 0700 to 1800 GMT Monday to
Friday and 0800 to 1300 GMT Saturdays;
"Service Levels" means the service levels relating to the Services set
out in Schedule 3;
"Services" means the Central Equipment Services, Operational Services,
Development Services and Maintenance Services;
"Software Maintenance" means the software maintenance services set out
in Clause 5;
"Software Maintenance Fee" means the fee payable by Bonveno to
Orbittravel for Software Maintenance Services in accordance with
Schedule 2;
"Support Line" means the telephone number to be agreed in writing
between the parties used by Bonveno for reporting a Defect;
"System Software" means third party software which supplies standard
and system-level functionality, including but not limited to operating
systems, data management systems, web site infrastructure,
communications stacks and backup/restore utilities;
"Territory Content" means the Content within the European Territory;
"Training Plan" means the training in the use of the Programs to be
provided by Orbittravel for Bonveno's staff, the details of which are
set out in Schedule 7
"Use" means to load, store, run, display and use any software program
provided by Orbittravel in accordance with the terms of this Agreement;
"Web Travel Systems" means Web Travel Systems Limited (Registered in
England No.02070671) whose registered office is at Web Travel Systems
Limited, 4 Roxborough Way, Foundation Park, Maidenhead, Berks, SL6 3UD
"Year" means a period of twelve months commencing on the Commencement
Date and on each successive anniversary of the Commencement Date and
ending on the day before each successive anniversary of the
Commencement Date;
1.2 The headings to clauses are inserted for convenience only and shall not
affect the interpretation or construction of this Agreement.
<PAGE>
1.3 Words imparting the singular shall include the plural and vice versa.
Words imparting a gender include every gender and references to persons
include an individual, company, corporation, firm or partnership.
1.4 All sums payable under this Agreement are exclusive of VAT or any other
applicable tax or duty payable upon such sums which shall be added if
appropriate at the rate prevailing at the relevant tax point.
1.5 The words and phrases "other", "including" and "in particular" shall
not limit the generality of any preceding words or be construed as
being limited to the same class as any preceding words where a wider
construction is possible.
1.6 References to any statute or statutory provision shall include (i) any
subordinate legislation made under it, (ii) any provision which it has
modified or re-enacted (whether with or without modification), and
(iii) any provision which subsequently supersedes it or re-enacts it
(whether with or without modification).
1.7 All references in this Agreement to Clauses, and Schedules are to the
clauses, and schedules to this Agreement unless otherwise stated.
2 Scope & Terms of Agreement
--------------------------
2.1 In consideration for the Fees:
(a) Bonveno appoints Orbittravel, and Orbittravel accepts
appointment, to provide the Services at the specified Service
Levels where appropriate in accordance with the relevant
provisions of this Agreement; and
(b) Orbittravel hereby agrees to grant Bonveno a licence to use
the Programs and the New Development Programs and European
Specific Software on the terms set out in Clause 4 commencing
on the Commencement Date and continuing for the term of this
Agreement, in accordance with the provisions of this
Agreement. .
2.2 This Agreement shall come into force on the Commencement Date and
(subject to the provisions for earlier termination in Clause 16 below),
and with the exception of the Licence which shall continue perpetually,
shall continue in force for the duration of the Joint Venture Agreement
and thereafter unless and until either party gives to the other not
less than 6months' prior written notice of termination given at any
time after such termination.
3 Orbittravel's Obligations
-------------------------
3.1 Orbittravel hereby agrees to:
(a) prepare and write the Product Requirement Specifications as
determined by the Joint Steering Committee;
(b) prepare and write the Product Plan;
<PAGE>
(c) develop, test, enhance, maintain and upgrade the Global System
in accordance with the Product Strategy and Product Plan;
(d) install and test the Programs on the Central Equipment;
(e) develop, test and provide the New Development Programs ready
for Use in accordance with Product Strategy and Product Plan
by the dates set out in the Development Schedule;
(f) provide the Documentation and training on the Programs in
accordance with the Training Plan; and
(g) provide the Services and Additional Services
upon the terms and conditions of this Agreement and in accordance with
the Service Levels where appropriate.
3.2 Orbittravel will, at the direction and request of the Joint Steering
Committee produce Product Requirement Specifications for each requested
element of the New Development Programs in co-operation, where
applicable with Bonveno.
3.3 Orbittravel will develop and produce the Product Plan in accordance
with the Product Strategy and incorporating the Product Requirement
Specifications and the Development Schedule in accordance with the
priorities set out in the Product Strategy and as directed by the Joint
Steering Committee from time to time.
3.4 The Product Plan will be submitted to the Joint Steering Committee for
approval. Without undue delay, Orbittravel will incorporate any
amendments required by the Joint Steering Committee to the Product
Plan, in accordance with the Change Control Procedures.
3.5 Once approval from the Joint Steering Committee has been granted,
Orbittravel will implement the Product Plan in accordance with the
Development Schedule.
3.6 Changes to the Product Plan may be requested by either party from time
to time through their respective Key Points of Contact (as defined in
the Management Agreement). All such requested changes shall be
submitted utilising the Change Control Procedures. In the event that
the Key Points of Contact are unable to agree on the nature of the
requested changes, the matter shall be submitted to the Joint Steering
Committee.
3.7 The Product Plan will be reviewed by the Joint Steering Committee every
three months from the Commencement Date and, in the event the Joint
Steering Committee requires changes to the Product Plan, it shall
communicate the request utilising the Change Control Procedures.
Following its receipt of a valid change control document, Orbittravel
shall incorporate the requested changes into an amended Product Plan
and present the same to the Joint Steering Committee within the time
frame set forth in the change control document.
<PAGE>
3.8 Orbittravel will develop the New Development Programs in accordance
with the Product Requirement Specifications, the Product Plan and the
Development Schedule
3.9 Upon actual approval of the Product Plan, Orbittravel will commence the
developments in accordance with the Product Plan and the Development
Schedule and where appropriate any Additional Development
Specifications
3.10 Orbittravel shall have full responsibility for testing the New
Development Software on the Central Equipment and in connection with
System Software, Host Software, Application Software and European
Specific Software and full end-to-end System testing before release.
Bonveno shall provide appropriate staff to assist Orbittravel in
testing responsibilities.
3.11 Orbittravel will perform regression testing as necessary to ensure that
all software releases are valid at both the component level and system
level.
3.12 Orbittravel will be responsible for ensuring that each item of New
Development Software is compatible with each other, the Programs and
the Central Equipment.
3.13 Orbittravel shall be responsible for integration of the New Development
Programs, the System Software, Host Software, Application Software and
European Specific Software to form the Bonveno Service.
3.14 Orbittravel will incorporate into the Programs the New Development
Programs ready for Use by Bonveno on the implementation dates
identified in the Development Schedule. Each New Development Program
will, from its implementation date, be licensed to Bonveno in
accordance with Clause 4 below.
3.15 Orbittravel will issue a Release Note at least 2 weeks prior to the
relevant implementation.
3.16 From each respective implementation date the relevant New Development
Program will form part of the Global Product and be treated for all
purposes as such.
3.17 Out-of-pocket, travel & subsistence expenses incurred by Orbittravel in
the performance of its duties under this Agreement shall be reimbursed
by Bonveno, providing they are pre-approved by Bonveno, such approval
not to be unreasonably withheld or delayed.
4 Licence
-------
4.1 In consideration of Bonveno entering into the JV Agreement:
(a) Orbittravel hereby grants to Bonveno a personal,
non-assignable, exclusive, irrevocable, perpetual,
royalty-free, fully paid-up licence, to Use the European
Specific Software in the Bonveno Service, any Modifications or
developments to such software and to promote,
<PAGE>
distribute, market and offer the Bonveno Service in the
European Territory; and
(b) Orbittravel hereby grants to Bonveno a personal,
non-assignable, non-exclusive, irrevocable, perpetual, royalty
free, fully-paid-up licence to Use the Global Product and any
developments or Modifications to the Global Product under this
Agreement and the European Specific Software in the Bonveno
Service throughout the world.
4.2 The Licence granted herein extends to use of the Programs, any
Modifications or developments made by Orbittravel in connection with
the Programs, and any Documentation associated with the Programs. No
licence is granted under this Agreement to use any other product or
proprietary technology of Orbittravel. No licence is granted to prepare
make, or have made derivatives based on the Programs, no right to grant
sub licences to any third party or parties is granted under this
Agreement other than for the operation and provision of the Bonveno
Service as envisaged by this Agreement and the Management Agreement.
4.3 Bonveno and its employees, agents, representatives, and assigns, shall
not do any of the following, each of which constitute an unlicenced use
of the licenced Programs:
(a) Duplicate, manufacture, copy, or reproduce the licenced
Programs, in whole or in part, except that Bonveno may make
one copy for backup and archival purposes;
(b) Modify, adapt, translate, reverse engineer, decompile, or
disassemble components of the Programs.
4.4 Orbittravel hereby agrees to provide operating manuals and training
relating to the Programs upon the terms and conditions contained in
this Agreement
4.5 Orbittravel grants Bonveno a licence and right to use, edit, copy,
duplicate and convert into electronic or hard-copy from any part or all
of the Documentation subject to Clause 14, Orbittravel also agrees that
Bonveno may use the Documentation for training purposes.
5 Software Maintenance
--------------------
During the term of this Agreement Orbittravel shall provide Bonveno
with each of the following maintenance services:
5.1 Error correction
----------------
During the term of this Agreement, Orbittravel will correct all Defects
reported by Bonveno through the Support Line as follows:
(a) Fault Reporting.
(b) Fix Options and Solutioning.
<PAGE>
(c) Estimation and prioritisation.
(d) Scheduling.
(e) Escalation Procedures.
(f) Fix Reports and Status Reports.
(g) Testing.
(h) Support Correction.
5.2 Enhancements to the Global Product
----------------------------------
(a) Upon Orbittravel creating or developing Modifications to the
Global Product, Orbittravel will:
(i) provide reasonable advance notice and information to
Bonveno of the planned modifications to the Global
Product and the consequences or likely consequences
of such modifications on the Bonveno Service
(including but not limited to details of
functionality and performance consequences of the
Programs);
(ii) automatically licence any and all Modifications to
Bonveno, on the same terms as the Licence for the
Programs granted by this Agreement in Clause 4.
(iii) provide appropriate Documentation, and if necessary,
train appropriate members of the Bonveno prior to the
Modifications becoming effective.
5.3 Training
--------
Orbittravel undertakes to provide training in the use of the Programs
in accordance with the Training Plan in Schedule 6.
6 Central Equipment Services
--------------------------
6.1 Orbittravel shall provide maintenance to the Central Equipment in
accordance with details of the Services set out in Schedule 1 and with
the Service Levels set forth in Schedule 3.
7 Product Support
---------------
7.1 In addition to the support and maintenance services supplied by
Orbittravel in clauses 5 and 6, Orbittravel shall provide, in
conjunction with Bonveno, support for users and Content Providers of
the Bonveno Service as set out below:
<PAGE>
(a) Help Desk. Bonveno shall provide a first line product support service
in the European Territory in the form of a Helpdesk (the "Helpdesk").
The Helpdesk shall, during the Support Hours, offer the following
services:
(i) Direct telephone support for travel agents, suppliers and
distributors only. Local rate calls will be provided for
larger customers; national and international rate calls may be
provided for smaller customers. The Helpdesk personnel will be
proficient in a number of European languages.
(ii) Email support for travel agents, suppliers and distributors.
The Helpdesk shall support an email service for dealing with
support issues.
(iii) Email support for individual consumers. The Helpdesk shall
support an email service for dealing with support issues.
(iv) Fault tracking reporting and resolution system. Any Central
Equipment Defects or Defects in the Programs shall be dealt
with in accordance with Clauses 5 and 6.
(b) Second Line Support. Bonveno and Orbittravel shall provide technical
and application back-up for the Helpdesk, either by telephone or by
email, during the Support Hours, through suitable second line support
personnel:
i) Calls will be made from Bonveno to Orbittravel through direct
line, pager or email. Orbittravel personnel shall deal with
the Helpdesk, not the end user.
ii) Orbittravel shall respond with an acknowledgement within 30
minutes
iii) Orbittravel shall respond with an appropriate answer within 4
hours
iv) If no answer can be found within 4 hours, Orbittravel shall
respond with the timeframe it expects to answer the
questions/issues.
v) Problem logs will be routed to the appropriate person if an
online problem is found. Full procedures for problem logs will
be decided between the parties and documented.
(c) Online User Group. Orbittravel will establish an online user group
forum feature in accordance with the Product Plan that will be
accessible by Bonveno Service users and which shall address typical
issues faced by the user community. Within this service, Orbittravel
shall provide a section on "Frequently Asked Questions" that will be
regularly updated by both parties
<PAGE>
8 Operational Services
--------------------
8.1 In consideration for the payment of the Operational Service Fee,
Orbittravel shall provide Bonveno, and where appropriate, Bonveno shall
provide to Orbittravel the Operational Services specified in Schedule
5.
8.2 Each party shall use all reasonable efforts to obtain and maintain
Content, in accordance with the specification in Schedule 5, and to
obtain Content or contract to include such Content in the Programs.
8.3 Both Bonveno and Orbittravel shall use all reasonable efforts to
promptly supply and maintain up-to-date the Content in the Programs.
8.4 Bonveno will, in accordance with the Product Strategy, be provided with
the facility online to directly input, manipulate, amend and delete
Territory Content but shall not amend any Extra-Territory Content.
8.5 All Intellectual Property Rights in the Extra-Territory Content shall
vest in Orbittravel absolutely, and Bonveno hereby assigns by way of
assignment of all present and future Intellectual Property Rights all
such rights as it has in the Extra-Territory Content to Orbittravel,
and, in so far as it is not so able hereby to assign such rights, it
undertakes to assign such rights as and when they are created and to do
all acts and execute all agreements necessary to vest such rights in
Orbittravel.
8.6 Bonveno is hereby granted a personal, non-assignable irrevocable
perpetual royalty-free world-wide non-exclusive licence to use the
Extra-territory Content for the purposes of the Bonveno System.
8.7 All Intellectual Property Rights in the Territory Content shall vest in
Bonveno absolutely, and Orbittravel hereby assigns by way of assignment
of present and future Intellectual Property Rights all such rights as
it has in the Territory Content to Bonveno, and in so far as it is not
so able hereby to assign such rights, it undertakes to assign such
rights as and when they are created and to promptly do all acts and
execute all agreements necessary to vest such rights in Bonveno.
8.8 Orbittravel is hereby granted a personal, non-assignable, irrevocable,
perpetual, royalty-free, non-exclusive licence to use the Territory
Content outside the European Territory for the purpose of any
Orbittravel product. Orbittravel undertakes that neither it or any
member of its Group will use the Territory Content without Bonveno's
prior consent which shall not be unreasonably withheld.
9 Assignment of Existing Content
------------------------------
9.1 Orbittravel hereby assigns, or undertakes to assign on renewal of the
relevant contract, its existing Territory Content to Bonveno and any
Intellectual Property Rights in such Content in accordance with Clause
8.7 above.
<PAGE>
9.2 Bonveno hereby assigns, or undertake to assign on renewal of the
relevant contract, its existing Extra Territory Content, to Orbittravel
and any Intellectual Property Rights in it in accordance with Clause
8.5 above.
10 Trade Marks
-----------
10.1 Orbittravel grants Bonveno a non-exclusive licence and right to use the
names "Travelfile", "TourTek" and "Orbittravel" and their associated
logos and any future trade marks used in or relating to the Global
Product in Bonveno's sales and marketing literature subject to prior
approval of each such use by Orbittravel which shall not be
unreasonably withheld or delayed.
10.2 Bonveno grants Orbittravel a non-exclusive licence and right to use the
Bonveno name logos any future trade marks used in or relating to the
Bonveno Service in Orbittravel's sales and marketing literature subject
to prior approval of each such use by Bonveno which shall not be
unreasonably withheld or refused.
11 Fees and Payment
----------------
11.1 Bonveno shall pay the Fees to Orbittravel as set out and in the manner
specified in Schedule 2.
12 Warranties
----------
12.1 Orbittravel represents and warrants to Bonveno that:
Programs:
--------
(a) the Application Software, System Software, Host Software,
Bonveno Service, European Specific Software (when developed)
and New Development Programs (when developed) will interface
correctly with each other and with the Central Equipment,
error free, without Defect, to form the Programs that will
operate correctly, error free and without Defect;
(b) the Programs provide the facilities and functions set out in
their respective Product Specification Requirements, Product
Strategy and Product Plans as appropriate; and
(c) the Documentation and the Training Plan will provide adequate
instructions to enable Bonveno to make full and proper use of
the Programs.
Application Software and New Development Programs:
--------------------------------------------------
(d) it has the right to market, support, develop and supply to
Bonveno the Application Software and New Development Programs
and related Documentation and such modifications to the
Application Software or New Development Programs and related
Documentation as may be provided for under this Agreement;
<PAGE>
(e) none of the Application Software or New Development Programs
infringe nor will the Use of the same by Bonveno or its agents
or customers in accordance with this Agreement cause Bonveno
to infringe any third party's Intellectual Property Rights;
(f) neither the performance nor functionality nor accuracy of the
Application Software or New Development Programs is or shall
be adversely affected by dates prior to, during and after the
Year 2000.
(g) the Application Software or New Development Programs contain
or shall contain no material errors or Defects.
(h) the New Development Programs shall provide the facilities and
functions set out in their respective Product Specification
Requirements, Product Strategy and Product Plans as
appropriate.
Host Software
-------------
(i) it has the right to market, support and supply to Bonveno the
Host Software and related Documentation;
(j) it will automatically assign to Bonveno such benefit as it is
able to pass on of any warranties received from Web Traveller
Systems in the licence granted to Orbittravel.
System Software
---------------
(k) it has the right to use the System Software and related
Documentation to comply with its obligations under this
Agreement;
European Specific Software
--------------------------
(l) the European Specific Software, upon completion of the
relevant Development Schedule, in accordance with the phases
shall be complete in all respects and shall perform the
functions described in the agreed Product Plan and Technical
Documents;
(m) it has the right to market, support, develop and supply to
Bonveno the European Specific Software and related
Documentation as may be provided for under this Agreement;
(n) no element of the European Specific Software infringes, nor
will the use of the same by Bonveno or its agents or customers
in accordance with this Agreemnt cause Bonveno to infringe any
third party's Intellectual Property Rights;
(o) the European Specific Software shall be designed, developed,
configured and implemented in a good and workmanlike manner in
accordance with the Product Strategy Document and Product
Plan;
<PAGE>
(p) neither performance, nor functionality, nor accuracy of the
European Specific Software is or shall be adversely affected
by dates prior to, during, and after the Year 2000;
(q) the European Specific Software contains no material errors or
Defects and profides the facilities and functions set out in
the Product Plan and the Documentation and the Training Plan
will provide adequate instructions to enable Bonveno to make
full and proper us of the Programs and the European Specific
Software in conjunction with the Equipment without reference
to any other person or document.
12.2 In the event of any breach of the above warranties or in the event that
any Defect is discovered in the Programs or in any constituent part of
them during the term of this Agreement then Orbittravel shall use its
best endeavours to promptly remedy such breach of warranty or such
Defect at no additional expense to Bonveno and this shall be Bonveno's
sole remedy for such breach of warranty or for such defect (without
predjudice to Bonveno's rights under clause 16).
12.3 Save as expressly set out in this Clause 12, no warranties are given in
respect of the Programs , Documentation, or the Services and any other
warranties implied (by statute, common law or otherwise) are hereby
excluded to the fullest extent as permitted by law.
13 Escrow
------
13.1 The parties shall within 45 days of the Commencement Date collectively
enter into an escrow agreement with the National Computing Centre
Limited which will be substantially in the form attached at Schedule 7
and that this escrow agreement will be maintained and complied with
during the term of this Agreement and for a period of three (3) years
following its termination for any reason. Bonveno is and shall remain
solely responsible for all costs associated with the establishment and
maintenance of the software escrow.
14 Confidentiality
---------------
14.1 Each party shall keep and procure to be kept secret and confidential
all Confidential Information belonging to the other party disclosed or
obtained as a result of the relationship of the parties under this
Agreement and shall not use nor disclose the same save for the purposes
of the proper performance of this Agreement or with the prior written
consent of the other party. Where disclosure is made to any employee,
consultant, sub-contractor or agent, it shall be done subject to
obligations equivalent to those set out in this Agreement and each
party agrees to ensure that if the other party so requests prior to
such disclosure such employee, consultant, sub-contractor or agent
enters into a deed of covenant with the other party in a form
reasonably acceptable to that other party containing obligations
equivalent to those set out in this Clause 14. Each party shall use its
best endeavours to procure that any such employee, consultant,
sub-contractor or agent complies with such obligations. Each party
shall be responsible to the other party in respect of any disclosure or
use of such Confidential Information by a person to whom disclosure is
made.
<PAGE>
14.2 The obligations of confidentiality in this Clause 14 shall not extend
to any matter which either party can show:
(a) is in, or has become part of, the public domain other than as
a result of a breach of the obligations of confidentiality
under this Agreement; or
(b) was in its written records prior to the Commencement Date; or
(c) was independently disclosed to it by a third party entitled to
disclose the same; or
(d) is required to be disclosed under any applicable law, or by
order of a court or governmental body or authority of
competent jurisdiction.
15 Force Majeure
-------------
15.1 If either party is affected by Force Majeure it shall immediately
notify the other party in writing of the matters constituting the Force
Majeure and shall keep that party fully informed of their continuance
and of any relevant change of circumstances whilst such Force Majeure
continues.
15.2 The party affected by Force Majeure shall take all reasonable steps
available to it to minimise the effects of Force Majeure on the
performance of its obligations under this Agreement.
15.3 Force Majeure shall not entitle either party to terminate this
Agreement and neither party shall be in breach of this Agreement, or
otherwise liable to the other, by reason of any delay in performance,
or non-performance of any of its obligations due to Force Majeure.
15.4 If the party affected by Force Majeure fails to comply with its
obligations under Clauses 15.1 and 15.2 above then no relief for Force
Majeure, including the provisions of Clause 15.3 above, shall be
available to it and the obligations of each party shall continue in
force.
16 Termination
-----------
16.1 At any time following the termination of the JV Agreement, either party
may immediately terminate this Agreement without payment of
compensation or other damages caused to the other party solely by such
termination by giving notice in writing to the other party if any one
or more of the following events happens:
(a) the other party commits a material breach of any of its
obligations under this Agreement which is incapable of remedy;
(b) the other party fails to remedy, where it is capable of
remedy, or persists in any breach of any of its obligations
under this Agreement (save as to payment) after having been
required in writing to remedy or desist from such breach
within a period of 90 days;
<PAGE>
(c) any sum payable under this Agreement is not paid within 28
days of its due date for payment in accordance with this
Agreement;
(d) the other party appears on reasonable grounds to be unable to
pay its debts within the meaning of Section 268 of the
Insolvency Act 1986 or presents its own or has presented
against it a bankruptcy petition or a bankruptcy order is made
against it;
(e) the other party proposes a voluntary arrangement within the
meaning of Section 1 or Section 253 of the Insolvency Act
1986, or an interim order is made in relation to the other
party under Section 252 of the Insolvency Act 1986, or any
other steps are taken or negotiations commenced by the other
party or any of its creditors with a view to proposing any
kind of composition, compromise or arrangement involving the
other party and any of its creditors;
(f) the other party has any distress or execution levied on its
assets which is not paid out within fourteen days of its being
levied;
(g) the other party is deemed to be unable to pay its debts within
the meaning of Section 123 of the Insolvency Act 1986, or
calls a meeting for the purpose of passing a resolution to
wind it up, or such a resolution is passed, or a resolution is
passed by the directors of the other party to seek a winding
up or administration order, or the other party presents, or
has presented, a petition for a winding up order, or presents,
or has presented, a petition to appoint an administrator, or
has an administrative receiver, or receiver appointed over all
or any part of its business, undertaking, property or assets;
(h) a secured lender to the other party takes any steps to obtain
possession of the property on which it has security or
otherwise to enforce its security;
(i) the other party suffers or undergoes any procedure analogous
to any of those specified in Clause 16.1(d) to (h) inclusive
above or any other procedure available in the country in which
the other party is constituted, established or domiciled
against or to an insolvent debtor or available to the
creditors of such a debtor;
16.2 The termination of this Agreement shall be without prejudice to the
rights and remedies of either party which may have accrued up to the
date of termination.
17 Consequences of Termination
---------------------------
17.1 Upon termination of this Agreement for any reason whatsoever:
(a) (subject to Clause 16.2 above) the relationship of the parties
shall cease save as (and to the extent) expressly provided for
in this Clause 17;
(b) the Licences granted under Clause 4 and Clause 8 shall
continue without further payment by Bonveno and, upon request,
Orbittravel shall promptly deliver to Bonveno one entire
error-free copy of the object code, and in the case that
Bonveno lawfully terminates under clause 16
<PAGE>
above, the source code, development environment and software
tools, of the Global Product and the European Specific
Software together with all New Development Programs that have
been developed prior to the date of termination, a copy of the
data files in agreed format relating to the Territory Content
and Extra-Territory Content and the Documentation;
(c) the licence of the Extra-Territory Content in the European
Territory provided for under Clause 8 above shall in the event
of lawful termination by Orbittravel under Clause 16 above
become non-exclusive from the date of termination;
(d) the provisions of Clauses 12, 13, 14, 17, 18, 21, 22 and 23
and any provision which expressly or by implication is
intended to come into or remain in force on or after
termination shall continue in full force and effect;
(e) each of the parties shall immediately return to the other
party (or, if the other party so requests by notice in
writing, destroy) all of the other party's property in its
possession at the date of termination, including all of its
Confidential Information, together with all copies of such
Confidential Information and shall certify that it has done
so, and shall make no further use of such Confidential
Information.
18 Assignment
----------
18.1 This Agreement and the Licences are personal to both parties. Neither
party shall assign, delegate, sub-contract, transfer, charge or
otherwise dispose of all or any of its rights and responsibilities
under this Agreement without the express prior written consent of the
other.
18.2 Clause 18.1 above shall not apply to any assignment by any/either party
of its rights in relation to this Agreement to another member of its
Group on terms that if any such assignee shall cease to be a member of
the Group then (unless such rights shall previously have been assigned
to a continuing member of the Group or the other parties shall have
agreed otherwise) such rights shall terminate.
18.3 Any person who is not a party to this Agreement (including any
employee, officer, agent, representative or sub-contractor of either
party) shall have no right to enforce any term of this Agreement which
expressly or by implication confers a benefit on that person without
the express prior agreement in writing of the parties which agreement
must refer to this Clause 18.3.
19 General
-------
19.1 Neither party shall pledge the credit of the other party nor represent
itself as being the other party, nor an agent, partner, employee or
representative of the other party and neither party shall hold itself
out as such nor as having any power or authority to incur any
obligation of any nature, express or implied, on behalf of the other
party. Nothing in this Agreement shall create, or be deemed to create,
a partnership or joint venture or relationship of employer and
<PAGE>
employee or principal and agent between the parties and no employee of
either party shall be deemed to be or have become an employee of the
other party.
19.2 This Agreement together with the associated JV Agreement, Licence
Agreement, and Management Agreement, contains the entire agreement
between the parties in relation to its subject-matter. Each of the
parties irrevocably and unconditionally waives any right it may have to
claim damages for, and/or to rescind this Agreement because of, breach
of any warranty not contained in this Agreement, or any
misrepresentation whether or not contained in this Agreement, unless
such misrepresentation was made fraudulently.
19.3 No purported alteration or variation of this Agreement shall be
effective unless it is in writing, refers specifically to this
Agreement and is duly executed by signed by a director of each of the
parties to this Agreement.
19.4 The rights and remedies of either party in respect of this Agreement
shall not be diminished, waived or extinguished by the granting of any
indulgence, forbearance or extension of time granted by such party to
the other nor by any failure of, or delay by the said party in
ascertaining or exercising any such rights or remedies. Any waiver of
any breach of this Agreement shall be in writing. The waiver by either
party of any breach of this Agreement shall not prevent the subsequent
enforcement of that provision and shall not be deemed to be a waiver of
any subsequent breach of that or any other provision.
19.5 If at any time any part of this Agreement (including any one or more of
the clauses of this Agreement or any sub-clause or paragraph or any
part of one or more of these clauses) is held to be or becomes void or
otherwise unenforceable for any reason under any applicable law, the
same shall be deemed omitted from this Agreement and the validity
and/or enforceability of the remaining provisions of this Agreement
shall not in any way be affected or impaired as a result of that
omission.
19.6 This Agreement may be entered into in the form of two counterparts,
each executed by one of the parties but, taken together, executed by
all, and, provided that both the parties shall so enter into the
Agreement, each of the executed counterparts, shall be deemed to be an
original but, taken together, they shall constitute one instrument.
19.7 Each of the parties shall, and shall use their reasonable endeavours to
procure that any necessary third parties shall, execute and deliver to
the other party such other instruments and documents and take such
other action as is necessary to fulfil the provisions of this Agreement
in accordance with its terms.
20 Notices
-------
20.1 Any notices sent under this Agreement must be in writing and may be
served by personal delivery or by sending the notice by registered air
mail post or facsimile or electronic data transmission at the address
given above or at such other address as the relevant party may give for
the purpose of service of notices under this Agreement and every such
notice shall be deemed to have been served upon delivery if served by
hand or at the expiration of ten (10) Business Days after
<PAGE>
despatch of the same if delivered by registered air mail post or at ten
hours am local time of the recipient on the next Business Day following
despatch if sent by facsimile or electronic data transmission.
20.2 To prove service of any notice it shall be sufficient to show in the
case of a notice delivered by hand that the same was duly addressed and
delivered by hand, and in the case of a notice served by post that the
same was duly addressed, prepaid, and posted in the manner set out
above. In the case of a notice given by facsimile or electronic data
transmission, it shall be sufficient to show that it was despatched in
a legible and complete form to the correct telephone number or
electronic data number or address without any error message provided
that a confirmation copy of the transmission is sent to the recipient
by registered air mail post in the manner set out above. Failure to
send a confirmation copy will invalidate the service of any facsimile
or electronic data transmission.
21 Dispute Resolution Procedure
----------------------------
21.1 If a dispute between the parties should arise under this Agreement, the
parties' respective Key Points of Contact shall use their reasonable
endeavors to resolve the same.
21.2 If the Key points of Contact are unable to resolve a dispute in
accordance with Clause 21.1, then the dispute shall be referred to the
Joint Steering Committee, which shall use all reasonable endeavours to
resolve such dispute within 10 Business Days.
21.2 In the event the Joint Steering Committee is unable to resolve the
dispute within that 10 Business Day period, the parties shall refer the
matter in dispute to an arbitrator or an expert appointed by the
parties or, in default of agreement over the choice of expert or
arbitrator, as shall be appointed at the request of either party by the
Centre for Dispute Resolution, Princes House, 95 Gresham Street,
London, EC2V 7NA. If the parties are unable to agree on an alternative
method of resolving the dispute, either party shall be entltled to
bring proceedings in accordance with Clause 22.
22 Law
---
22.1 This Agreement shall be governed by, and construed in accordance with,
the laws of England.
23 Jurisdiction
------------
23.1 Subject to clause 21, all disputes arising out of or relating to this
Agreement shall be subject to the exclusive jurisdiction of the English
Courts to which the parties irrevocably submit.
<PAGE>
IN WITNESS OF THE ABOVE the parties have signed this Agreement on the date
written at the head of this Agreement.
SIGNED by ) /s/ Geoff Mullet
) ---------------------
on behalf of ) Director & Authorised Signatory
BONVENO.COM LIMITED )
in the presence of: )
/s/ Authorized Signatory
..........................
SIGNED by ) /s/ David A. Noosinow
) -----------------------------------
on behalf of ) Director & Authorised Signatory
ORBITTRAVEL.COM, INC. )
in the presence of: )
/s/ Joseph R. Cellura
- ---------------------
Chairman & CEO
<PAGE>
Exhibit 10.24
CONFIDENTIAL
INTERACTIVE SERVICES AGREEMENT
------------------------------
This agreement (the "Agreement"), effective as of May 1, 1999 (the
"Effective Date"), is made and entered into by and between America Online, Inc.
("AOL"), a Delaware corporation, with its principal offices at 22000 AOL Way,
Dulles, Virginia 20166, and Orbit Network ("Interactive Content Provider" or
"ICP"), a Delaware corporation, with its principal offices at 505A San Marin Dr.
Suite 300, Novato, CA 94945 (each a "Party" and collectively the "Parties").
INTRODUCTION
------------
AOL and ICP each desires that ICP provide the Online Area (as defined
below) through the AOL Network (as defined below), subject to the terms and
conditions set forth in this Agreement. Defined terms used but not defined in
the body of the Agreement or in Exhibit C shall be as defined on Exhibit B
attached hereto.
TERMS
-----
1. DISTRIBUTION; PROGRAMMING
1.1 ONLINE AREA. ICP shall work diligently to develop and
implement the Online Area, consisting of the specific Content
described on Exhibit A.1 attached hereto. ICP shall develop
the design of the Online Area in consultation with AOL and in
accordance with any standard design and content publishing
guidelines provided to ICP by AOL (including, without
limitation, any HTML publishing guidelines). ICP shall not
authorize or permit any third party to distribute the Licensed
Content or any other Content of ICP through the AOL Network
absent AOL's prior written approval. The inclusion of any
additional Content in the Online Area (including, without
limitation, any features, functionality or technology) not
expressly described on Exhibit A shall be subject to AOL's
prior written approval.
1.2 LICENSE. ICP hereby grants AOL a worldwide license to use,
market, license, store, distribute, display, communicate,
perform, transmit and promote the Licensed Content (or any
portion thereof) through such areas or features of the AOL
Network as AOL deems appropriate.
1.3 OTHER INTERACTIVE AREAS.
1.3.1 AOL Approval. ICP shall not be permitted to
establish any "pointers" or links between the
Licensed Content and any other area on or outside of
the AOL Network, including, without limitation, sites
on the World Wide Web portion of the Internet,
without the prior written approval of AOL. AOL hereby
approves the tourism links set forth in Exhibit A. In
addition, AOL may restrict its approval (at any time)
to specific portions of Content, Products, or
functionality within a Linked Interactive Site. In
such case, establishment of the link from the
Licensed Content to the Linked Interactive Site will
be subject to mutual agreement of the Parties
<PAGE>
regarding the means by which access will be
restricted to the approved portions of the Linked
Interactive Site. The Customized Web Site (as defined
below) and all Linked ICP Interactive Sites shall
comply with the Operating Standards set forth in
Exhibit E.
1.3.2 Management. AOL shall have no obligations of any
kind with respect to any Linked Interactive Site. ICP
shall be responsible for any hosting or communication
costs associated with any Linked Interactive Sites
(including, without limitation, the costs associated
with (i) any agreed-upon direct connections between
the AOL Network and a Linked Interactive Site or (ii)
a mirrored version of a Linked Interactive Site). Any
Linked Interactive Sites shall be subject to the
license set forth in Section 1.2 above. ICP will
permit AOL Members to access and use any ICP
Interactive Site free of charge during the Term. AOL
Members shall not be required to go through a
registration process (or any similar process) in
order to access and use any ICP Interactive Site. For
a period of two years after the expiration or earlier
termination of this Agreement, ICP will allow AOL
Members to access any ICP Interactive Site on terms
and conditions no less favorable than the terms and
conditions available to other users of the ICP
Interactive Site.
1.3.3 Excessive Traffic Diversion. ICP shall use
reasonable efforts to ensure that AOL traffic is
generally either kept within a Linked ICP Interactive
Site or channeled back into the AOL Network. To the
extent that AOL notifies ICP in writing that, in
AOL's reasonable judgment, links from the Linked ICP
Interactive Site cause an excessive amount of AOL
traffic to be diverted outside of such site and the
AOL Network in a manner that has a detrimental effect
on the traffic flow of the AOL audience, then ICP
shall immediately reduce the number of links out of
such site(s). In the event that ICP cannot or does
not so limit diverted traffic from the Linked ICP
Interactive Site, AOL reserves the right to terminate
the links from the AOL Network to the Linked ICP
Interactive Site at issue.
1.4 CONTENT PAYMENTS. There are no content or carriage-related
payments.
1.5 EXCLUSIVITY. ICP shall comply with the exclusivity
restrictions set forth on Exhibit A.2.
2. ADVERTISING AND TRANSACTIONS
2.1 ADVERTISING SALES. AOL owns all right, title and interest in
and to the advertising and promotional spaces within the AOL
Network (including, without limitation, advertising and
promotional spaces on any AOL page containing a link or
pointer to the Customized Web Site and any AOL forms or pages
which are included within, preceding, framing or otherwise
associated with the Licensed Content or preceding, following
or framing any Linked Interactive Sites). Within the top half
of every page of the Online Area, AOL shall have the right to
place AOL Advertisements in (or otherwise use for its own
promotional purposes) (a) the uppermost banner advertisement
slot and (b) the uppermost sponsorship slot. ICP shall have
the right to license or sell AOL Advertisements through the
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remainder of the advertising inventory (exclusive of (a) and
(b) above) specified by AOL within the Online Area, subject to
AOL's right of approval over each AOL Advertisement. The
specific advertising inventory within any AOL forms or pages
shall be as reasonably determined by AOL.
2.2 ADVERTISING POLICIES.
2.2.1 AOL Advertisements. Any AOL Advertisements sold by ICP
or its agents shall be subject to AOL's then-standard
advertising policies and exclusivity and other preferential
contractual commitments. ICP shall not sell an AOL
Advertisement to any entity reasonably construed to be in
competition with AOL.
2.2.2 Linked Interactive Site Advertisements. To the extent
AOL approves any links or pointers to an ICP Interactive Site
pursuant to Section 1.3.1, ICP shall ensure that AOL Members
linking to any Linked ICP Interactive Site from the AOL
Network do not receive advertisements, promotions or links for
any entity reasonably construed to be in competition with AOL,
in violation of AOL's exclusivity or preferential contractual
commitments or in violation of AOL's then-standard advertising
policies. In the event that AOL notifies ICP in writing that
any advertising or promotional Content associated with any
Linked ICP Interactive Site (a "Linked ICP Interactive Site
Advertisement") is in violation of AOL's then-standard
advertising policies, then ICP shall take commercially
reasonable steps to block access by AOL Members to such
advertising using ICP's then-available ad server or other
technology. In the event that ICP cannot, through its
commercially reasonable efforts, block access by AOL Members
to the advertising in question, then ICP shall provide AOL
prompt written notice of such fact. AOL may then, at its
option, either (i) restrict access from the AOL Network to the
advertising in question using technology available to AOL or
(ii) terminate the link from the AOL Network to the Linked ICP
Interactive Site until such time as the advertising in
question is no longer displayed. ICP will cooperate with AOL's
reasonable requests to the extent AOL elects to implement any
such access restrictions.
2.3 ADVERTISING REVENUES. Each Party shall be entitled to one
hundred percent (100%) of all Advertising Revenues
generated by such Party.
2.4 INTERACTIVE COMMERCE. To the extent ICP desires to offer, sell
or license Products through the Online Area, ICP and AOL shall
discuss in good faith the terms and conditions which would
apply to such activities. Notwithstanding such discussions,
all merchandising shall be subject to (i) the terms of this
Agreement, (ii) the requirements posted at keyword
"Marketplace Policy" on the America Online(R) brand service
(or such other keyword as AOL may designate during the Term),
(iii) approval by AOL of all Products to be offered, (iv) the
then-current requirements of AOL's merchant certification
program, (v) ICP implementing sufficient procedures to protect
the security of all merchandising on the site (i.e., ICP shall
as of the Effective Date use 40-bit SSL technology and, if
requested by AOL, 128-bit SSL), and (vi) ICP taking all
reasonable steps necessary to conform its promotion and sale
of Products through the Online Area to the then-existing
technologies identified by AOL which are optimized for the AOL
Network including, without limitation, any "quick checkout"
tool which AOL may implement
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to facilitate purchase of Products by AOL Members through the
Online Area. AOL hereby approves the license or sale of
Vacation Packages to the specific destination where such
Vacation Package is sold (i.e., ICP may sell a Vacation
Package to Los Angeles in the destination travel information
for Los Angeles, California or the United States). ICP may
sell any AOL-approved Vacation Packages of general interest on
the non-destination pages of the Customized Web Site specified
in Exhibit A. No other Products shall be offered, sold or
licensed on or through the Online Area.
3. PRODUCTION AND SUPPORT
3.1 PRODUCTION WORK. Except as otherwise provided herein, ICP
shall be responsible for all production, including
maintenance. In the event that ICP requests AOL's production
assistance in connection with (i) the initial development,
design and construction of the Online Area, (ii) ongoing
programming and maintenance related to the Online Area, (iii)
a redesign of or addition to the Online Area (e.g., a change
to an existing screen format or construction of a new custom
form), (iv) construction and maintenance of an approved
advertising, sponsorship or promotional area or online
"store," (v) production to modify work performed by a third
party provider or (vi) any other type of production work, ICP
shall work with AOL to develop detailed production plans for
the requested production assistance (the "Production Plan").
Following receipt of the final Production Plan, AOL shall
notify ICP of (i) AOL's availability to perform the requested
production work, (ii) the proposed fee or fee structure for
the requested production and maintenance work and (iii) the
estimated development schedule for such work. To the extent
the Parties reach agreement regarding implementation of
agreed-upon Production Plan, such agreement shall be reflected
in a separate work order signed by the Parties. All fees to be
paid to AOL for any such production work shall be paid in
advance. To the extent ICP elects to retain a third party
provider to perform any such production work, work produced by
such third party provider must generally conform to AOL's
production standards available at Keyword "Styleguide." The
specific production resources which AOL allocates to any
production work to be performed on behalf of ICP shall be as
determined by AOL in its sole discretion. With respect to any
routine production, maintenance or related services which AOL
reasonably determines are necessary for AOL to perform in
order to support the proper functioning and integration of the
Online Area ("Routine Services"), ICP will pay the
then-standard fees charged by AOL for such Routine Services.
3.2 PUBLISHING TOOLS. AOL shall determine in its sole discretion,
which of its proprietary publishing tools (each a "Tool")
shall be made available to ICP in order to develop and
implement the Licensed Content during the Term. ICP shall be
granted a nonexclusive license to use any such Tool, which
license shall be subject to: (i) ICP's compliance with all
rules and regulations relating to use of the Tools, as
published from time to time by AOL, (ii) AOL's right to
withdraw or modify such license at any time, and (iii) ICP's
express recognition that AOL provides all Tools on an "as is"
basis, without warranties of any kind.
3.3 TRAINING AND SUPPORT. AOL shall make available to ICP standard
AOL training support programs related to ICP's management and
maintenance of the
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<PAGE>
Licensed Content. ICP can select its training and support
program from the options then offered by AOL. ICP shall be
responsible to pay the fees associated with its chosen
training and support package. In addition, ICP will pay travel
and lodging costs associated with its participation in any AOL
training programs (including AOL's travel and lodging costs
when training is conducted at ICP's offices).
3.4 FORMAT. The Online Area shall be produced in HTML format on a
cul-de-sac customized web site accessible only to AOL Members
("Customized Web Site"). AOL shall have no obligation to carry
or distribute the Customized Web Site through any portion of
the AOL Network.
4. PROMOTION
4.1 COOPERATION. Each Party shall cooperate with and reasonably
assist the other Party in supplying Content for marketing and
promotional activities which relate to the Online Area.
4.2 INTERACTIVE SITE. Within each ICP Interactive Site, ICP shall
include the following ( the "AOL Promo"): a prominent
promotional button or banner (at least 90 x 30 pixels or 70 x
70 pixels in size) appearing "above the fold" on the first
screen of the ICP Interactive, to promote such AOL products or
services as AOL may designate (for example, the America Online
brand service, the CompuServe brand service, the AOL.com site,
the Digital City services or the AOL Instant Messenger
service) and. at AOL's option, download or order the
then-current version of client software for such AOL products
or services. Orbit shall not be required to include this
promotional button or banner on sites operated by Orbit on
behalf of its clients. AOL will provide the creative content
to be used in the AOL Promo. ICP shall post (or update, as the
case may be) the creative content supplied by AOL within the
spaces for the AOL Promo within five days of its receipt of
such content from AOL. Without limiting any other reporting
obligations of the Parties contained herein, ICP shall provide
AOL with monthly written reports specifying the number of
Impressions to the pages containing the AOL Promo during the
prior month. In the event that AOL elects to serve the AOL
Promo to the ICP Interactive Site from an ad server controlled
by AOL or its agent, ICP shall take all reasonable operational
steps necessary to facilitate such ad serving arrangement,
including, without limitation, inserting HTML code designated
by AOL on the pages of the ICP Interactive Site on which the
AOL Promo will appear. In addition, within each ICP
Interactive Site, ICP shall provide prominent promotion for
the keywords associated with ICP's Online Area and links from
the ICP Interactive Site to the relevant topic areas on AOL's
AOL.com site.
4.3 OTHER MEDIA. In ICP's television, radio, print, public service
announcements and "out of home" (e.g., buses and billboards)
advertisements and in any publications, programs, features or
other forms of media over which ICP exercises at least partial
editorial control, ICP will include specific references or
mentions (verbally where possible) of the availability of
ICP's Online Area through the America Online(R) brand service,
which are at least as prominent as any references that ICP
makes to any ICP Interactive Site (by way of site name,
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<PAGE>
related company name, URL or otherwise). Without limiting the
generality of the foregoing, ICP's listing of the "URL" for
any ICP Interactive Site will be accompanied by an equally
prominent listing of the "keyword" term on AOL for ICP's
Online Area. This shall be done with the following treatment:
"America Online Keyword _____" or another AOL-approved
treatment.
4.4 PREFERRED ACCESS PROVIDER. When promoting AOL, ICP shall
promote AOL as the preferred access provider through which a
user can access ICP's Content (and ICP shall not implement or
authorize any other promotions on behalf of any third parties
which are inconsistent with the foregoing). Promotion of AOL
as the preferred access provider shall be more prominent than
any promotion of any other Internet service provider.
4.5 AOL COMPONENT PRODUCTS. To the extent ICP offers or promotes
any products or services similar to AOL's "component products
and services (e.g. Netfind or other search/directory services,
NetMail or free/discount email, Instant Messenger,
yellow/white pages, "My AOL" type personalized information,
classifieds, etc.), ICP shall provide equal or greater
promotions for such AOL-designated products.
4.6 NEW MEMBER PROGRAMS. The Parties shall execute any New Member
acquisition programs described on Exhibit A.3 attached hereto.
5. PAYMENTS AND REPORTING.
5.1 PAYMENT SCHEDULE. Except as otherwise specified in Section
1.4, each Party agrees to pay the other Party all amounts
received and owed to such other Party as described herein on a
quarterly basis within sixty (60) days of the end of the
quarter in which such amounts were collected by such Party.
The first quarter for which payment is to be made shall (i)
begin on the first day of the month following the month of
execution of this Agreement and (ii) include the portion of
the month of execution following the Effective Date (unless
the Agreement was executed on the first day of a month, in
which case the quarter shall be deemed to begin on the first
day of such month).
5.2 REPORTING. On no less than a monthly basis, each Party shall
supply or make available to the other Party reports containing
the following information:
5.2.1 Usage Data. AOL shall make available to ICP a monthly
report specifying usage information for the Online
Area for the prior month in the format which is
generally made available to similarly situated
interactive content providers. In addition, for any
ICP Interactive Site which AOL is caching, AOL shall
supply ICP with monthly reports reflecting aggregate
impressions by AOL Members to the cached version of
the ICP Interactive Site during the prior month. For
each Linked ICP Interactive Site, ICP will supply AOL
with monthly reports which reflect total impressions
by AOL Members to the Linked ICP Interactive Site
during the prior month and total impressions by all
users to the Linked ICP Interactive Site during the
prior month. AOL reserves the right to require ICP to
provide additional information, as requested by AOL,
with respect
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to any transactions involving AOL Members at the ICP
Interactive Site during the period in question.
5.2.3. Promotional Commitments. ICP shall provide to AOL a
monthly report documenting its compliance with any
promotional commitments it has undertaken pursuant to
Section 4 in the form attached as Exhibit D hereto.
5.2.4. Exclusivity Restrictions. ICP shall submit to AOL a
monthly certification that it is in full compliance
with all exclusivity restrictions set forth in this
Agreement in the form attached as Exhibit D hereto.
6. TERM, TERMINATION AND COMMERCIAL LAUNCH.
6.1. TERM. Unless earlier terminated as set forth herein, the
initial term of this Agreement shall be one (1) year from the
Effective Date ("Initial Term"). Upon the expiration of the
Initial Term, AOL shall have one (1) option to renew this
Agreement for an additional one (1) year term (the "Renewal
Term" and, together with the Initial Term, the "Term") upon
the same terms and conditions. Upon the expiration or
termination of this Agreement, AOL may, at its discretion,
continue to promote one or more "pointers" or links from the
AOL Network to an ICP Interactive Site and continue to use
ICP's trade names, trade marks and service marks in connection
therewith.
6.2 TERMINATION FOR BREACH. Either Party may terminate this
Agreement at any time in the event of a material breach by the
other Party which remains uncured after thirty (30) days
written notice thereof.
6.3 TERMINATION FOR BANKRUPTCY/INSOLVENCY. Either Party may
terminate this Agreement immediately following written notice
to the other Party if the other Party (i) ceases to do
business in the normal course, (ii) becomes or is declared
insolvent or bankrupt, (iii) is the subject of any proceeding
related to its liquidation or insolvency (whether voluntary or
involuntary) which is not dismissed within ninety (90)
calendar days or (iv) makes an assignment for the benefit of
creditors.
6.4 TERMINATION FOR CHANGE OF BUSINESS. AOL may terminate this
Agreement upon thirty (30) days written notice thereof to ICP
in the event ICP materially changes its business from its
business as a travel destination content provider as of the
Effective Date.
6.5 SITE AND CONTENT PREPARATION. ICP shall achieve Site and
Content Preparation within sixty (60) days after the Effective
Date. "Site and Content Preparation" shall mean that ICP shall
have completed production of the Online Area and the Licensed
Content in accordance with this Agreement and completed all
other necessary work to prepare the Online Area and the
Licensed Content and any other related areas or screens to
launch on the AOL Network as contemplated hereunder. In the
event ICP has not achieved Site and Content Preparation within
ninety (90) days after the Effective Date, then in addition
to
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any other remedies available, AOL shall have the right to
terminate this Agreement by giving ICP written notice thereof.
If ICP is delayed in achieving Site and Content Preparation
due to a failure by AOL to perform its obligations under this
Agreement and ICP notifies AOL in writing of such failure and
the resulting delay, then the sixty (60) day and ninety (90)
day periods referenced in this Section shall each be extended
by the amount of time of ICP's delay solely attributable to
such failure by AOL.
7. TERMS AND CONDITIONS. The legal terms and conditions set forth on
Exhibit C attached hereto are hereby made a part of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the Effective Date.
AMERICA ONLINE, INC. ORBIT NETWORK
By: /s/ Jonathan R. Edson By: /s/ F. William Guerin
--------------------------------- -----------------------------
Print Name: Jonathan R. Edson Print Name: F. William Guerin
------------------------ ---------------------
Title: Exec. Director Business Affair Title: President
------------------------------- --------------------------
Date: Date: 10/4/99
-------------------------------- ---------------------------
Tax ID/EIN#: 943006627
8
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EXHIBIT A
A.1 -- DESCRIPTION OF THE ONLINE AREA
ICP shall create an Online Area dedicated to destination travel information. The
Online Area shall consist of destination travel information for (1) all
countries, (2) all states of the United States, and (iii) major U.S. and
international cities:
o City-level information for major US and International cities
o State-level information for all US states
o Country level information for all countries.
The Online Area will include overviews of destinations with maps and listing of
Information Offices, a directory of tourism offices for North America and select
international destinations with an embedded URL link to each tourism office's
web site. The Online Area will also include Travelogue style editorial content
for a minimum of 50 states, each Caribbean island and the top 100 cities
worldwide.
ICP will manage the content of TravelFile, provide appropriate updates to
content, and continue to add to and enhance the travel content available through
TravelFile. The Online Area will be developed and maintained in HTML. ICP will
be responsible for all publishing and similar day to day area management
activities. AOL will have final approval over all links that lead users outside
of the Online Area as well as the look and feel of the Online Area.
In the event of an AOL Travel Channel redesign, ICP agrees to incorporate the
AOL Travel Channel "look and feel" into the Online Area, within a mutually
agreed upon timeframe. In addition, AOL reserves the right to host the
TravelFile database and to design its own user interface in place of ICP's user
interface.
THE TRAVELFILE DESTINATION MASTER RECORD (DMR)
This screen is the "heart" of the AOL TravelFile service. Based around the
TravelFile database, the Destination Master Record is the primary interface for
the user to gather information on local tourism authorities as well as to obtain
information on travel products and services offered from TravelFile's
participating travel supplier partners and from the TravelFile database.
The goal for this page is to produce the best possible user interface to complex
destination content by creating a highly useful and functional destination
information resource that meets the needs of vacation shoppers.
DMR FEATURES
TRAVELFILE DATABASE INDEX: This list features Tourism Offices (with relevant
links), Featured Suppliers (with relevant links), City Directory, Calendar of
Events, Images, and video etc. This simple Index provides access to listings and
information contained in the TravelFile database for the destination that is
being accessed. By selecting from this list of TravelFile "Types" users can
access a summary list of information displays for individual travel suppliers
associated with a given destination. This information may be displayed biased
based on the level of visibility that a particular supplier has purchased.
PROXIMITY MAPS/GIS SYSTEM: These prominently displayed destination references
are designed to provide the user with an easy to use visual reference for each
featured location. Although the first version will pull from a limited number of
maps for simple reference, subsequent enhancements will allow users to query
from a hosted Geographic Information System (GIS) to access maps that meet user
defined criteria.
HIGHLIGHTED PACKAGES: This area will feature destination specific packages. The
same logic that is used in displaying tourism office information will be used in
displaying relevant packages for a destination.
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DMR SPONSORSHIP ADVERTISING: DMR sponsorship ensures that a TravelFile sponsor's
message will be seen on any screens for a given destination or group of
destinations.
FEATURE ARTICLES/DESTINATION TRAVELOGUE: Basic destination information (Atlas
style) for each destination along with travelogue style descriptive text. In the
initial stages, ICP staff will create the content. Ultimately content will come
from tourism office partners or sponsored destination deals that will underwrite
the development and compilation of content.
LINKS TO RELATED TRAVELFILE DESTINATIONS (COOKIE OR BREAD CRUMB): The
hierarchical structure of the TravelFile database's makes it possible to allow
users to quickly and easily access other destinations located near or within the
destination that is being viewed. This is accomplished via a dynamically
generated menu of related destination choices. By choosing from any of the
destination choices displayed on this sub-menu, a DMR for that destination is
automatically generated.
LINKS TO COMPLEMENTARY RESOURCES: This area is reserved for links that will
allow users to move into other destination related information resources,
functional features, and services. Buttons are dynamically generated and only
appear when a resource is available for the destination being viewed. In the
future, it is the goal of the TravelFile Product Team to add the following
elements to each DMR.
- Images/Multimedia Slide Show/Streaming Video for each Destination
- Helpful Travel Tips
Traveling With Kids
What to Pack
What you need to Know before You Go
- Relevant Travel Advisory Links
- Links to local resources
- Local coupons
- Order form for brochures from participating Destination Marketing
Organizations and suppliers.
- Related local news
-
TRAVELFILE AOL HOMEPAGE AND OVERALL FEATURES
BRANDING ELEMENTS: The AOL logo, TravelFile logo, and tag line "Tourism
Information" will be prominently displayed throughout the site. The branding
elements including the overall design, color scheme, typography and graphic
elements will be consistent throughout the site.
TRAVELFILE EZ DESTINATION SEARCH: Highly visible, prominently displayed simple
access path designed to allow users to quickly and easily access an in-depth
profile of the "Destination Master Record (see next section for description)"
for any travel destination.
BOTTOM BANNER AD: This is a premium advertising opportunity for the site. These
are classic Internet Banner Ads that will be displayed in rotation on the bottom
of the page through out the site.
HIGHLIGHTED VACATION PACKAGES
HIGHLIGHTED TRAVEL SUPPLIER DISPLAYS
HIGHLIGHTED EVENTS: One of the most prominent features of the TravelFile Main
Menu, these dynamic lists will feature highlighted vacation package products
from participating travel packagers, top travel suppliers from the TravelFile
directories, top event picks, or other sales oriented content choices. These
"pick lists" incorporate the ability for a user to choose from the display of
highlighted vacation packages, highlighted travel suppliers or highlighted event
displays at the click of a button. By selecting any of the items displayed on
the lists the user will be instantly transported to an in-depth display for that
travel package, travel supplier or event.
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CONTACT AND LEGAL: Provides a direct link to TravelFile staff via e-mail for
suggestions, inquiries, and comments along with prominently displayed liability
disclaimers to protect Orbit Network, Inc.
FEATURE CONTENT: Compelling, highly visible feature stories focused on driving
users to travel supplier displays or highlighting areas of interest and content
within the TravelFile service. Feature stories can include in-depth profiles for
destinations (see Destination of the Month), analysis of trends in the leisure
travel market, highlights on specific areas of interest or activities, general
vacation promotion, etc. Content created by TravelFile staff will include
feature articles from staff writers. These articles provide wit, perspective,
viewpoint, and entertainment value to the TravelFile service. Our writers are
very prolific and have created many articles covering a broad range of topics
that will be accessed in a variety of ways throughout the TravelFile service.
CONTESTS AND PROMOTIONS: We will strive to keep a fresh and lively interaction
with on-line users. Through the use of special promotions and on-line contests
(conducted in cooperation with participating travel suppliers) the service will
encourage repeat use and strive to generate user enthusiasm. Contests and
special promotions will be prominently displayed throughout the site.
NAVIGATION BAR: The Navigation Bar allows users to access other functions and
features of the TravelFile service. For the initial version of TravelFile the
functional features that will be accessible from the Main Menu include:
- Customer Service/Contact Us
- Destination of the Month
- About Orbit
- Vacations/Packages
- Travel News
- Advertising with Orbit Network
- Search
- Special Features
A.2 -- EXCLUSIVITY RESTRICTIONS
None.
A.3 -- NEW MEMBER PROGRAMS
To the extent the Parties wish to enter into new member programs, they shall do
so by separate written amendment or agreement.
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EXHIBIT B
DEFINITIONS. The following definitions shall apply to this Agreement:
ADVERTISING REVENUES. Aggregate amounts collected plus the fair market value of
any other compensation received (such as barter advertising) by ICP, AOL or
either Party's agents, as the case may be, arising from the license or sale of
promotions, advertisements, links, pointers, sponsorships or similar services or
rights on or through the Online Area ("AOL Advertisements").
AFFILIATE. Any agent, distributor or franchisee of AOL, or an entity in which
AOL holds at least a nineteen percent (19%) equity interest.
AOL LOOK AND FEEL. The distinctive and particular elements of graphics, design,
organization, presentation, layout, user interface, navigation, trade dress and
stylistic convention (including the digital implementations thereof) which are
associated with online areas within the AOL Network and the total appearance and
impression substantially formed by the combination, coordination and interaction
of these elements.
AOL MEMBER(S). Authorized users of the AOL Network, including any sub-accounts
using the AOL Network under an authorized master account.
AOL PURCHASER. (i) Any person or entity who enters the Online Area and/or a
Linked ICP Interactive Site from the AOL Network including, without limitation,
from any third party area therein (to the extent entry from such third party
area is traceable through both Parties' commercially reasonable efforts), and
generates Commissions Revenues and/or Transaction Revenues (regardless of
whether such person or entity provides an e-mail address during registration or
entrance to the Customized Web Site which includes a domain other than an
"AOL.com" domain); and (ii) any other person or entity who, when purchasing a
product, good or service through an ICP Interactive Site, provides an AOL.com
domain name as part of such person or entity's e-mail address and provided that
any person or entity who has previously satisfied the definition of AOL
Purchaser will remain an AOL Purchaser, and any subsequent purchases by such
person or entity (e.g., as a result of e-mail solicitations or any off-line
means for receiving orders requiring purchasers to reference a specific
promotional identifier or tracking code) will also give rise to Commission
Revenues and/or Transaction Revenues hereunder (and will not be conditioned on
the person or entity's satisfaction of clauses (i) or (ii) above.
AOL SERVICE. The narrow-band U.S. version of the America Online(R) brand
service, specifically excluding (a) AOL.com or any other AOL Interactive Site,
(b) the international versions of an America Online service (e.g., AOL Japan),
(c) the CompuServe(R) brand service and any other CompuServe products or
services, (d) "ICQ(TM)," "AOL NetFind(TM)," "AOL Instant Messenger(TM),"
"Digital City(TM)", "NetMail(TM)," Love@AOL", Entertainment Asylum," "Hometown
AOL" or any similar independent product or service which may be offered by,
through or with the U.S. version of the America Online(R) brand service, (e) any
programming or content area offered by or through the U.S. version of the
America Online(R) brand service over which AOL does not exercise complete
operational control (including, without limitation, Content areas controlled by
other parties and member-created Content areas), (f) any yellow pages, white
pages, classifieds or other search, directory or review services or Content
offered by or through the U.S. version of the America Online(R) brand service,
(g) any property, feature, product or service which AOL or its affiliates may
acquire subsequent to the Effective Date and (h) any other version of an America
Online service which is materially different from the narrow-band U.S. version
of the America Online brand service, by virtue of its branding, distribution,
functionality, Content and services, including, without limitation, any
co-branded version of the service and any version distributed through any
broadband distribution platform or through any platform or device other than a
desktop personal computer.
AOL NETWORK. (i) The AOL Service and (ii) any other product or service owned,
operated, distributed or authorized to be distributed by or through AOL or its
Affiliates worldwide through which such party elects to offer the Licensed
Content (which may include, without limitation, AOL-related Internet sites,
"offline" information browsing products, international versions of the AOL brand
service, and CompuServe).
CHANGE OF CONTROL. (a) The consummation of a reorganization, merger or
consolidation or sale or other disposition of substantially all of the assets of
a party or (b) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1933,
as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of more than 50% of either (i) the then outstanding
shares of common stock of such party; or (ii) the combined voting power of the
then outstanding voting securities of such party entitled to vote generally in
the election of directors.
COMMISSIONS REVENUES. Aggregate commission revenues earned by ICP from
commissionble sales by ICP of Vacation Packages to AOL Purchasers, less service
fees, refunds, cancellations, insurance charges, port charges, taxes and other
non-commissionable items.
CONFIDENTIAL INFORMATION. Any information relating to or disclosed in the course
of negotiating and implementing the Agreement, which is, or should be reasonably
understood to be, confidential or proprietary to the disclosing Party,
including, but not limited to, the content of negotiations between the Parties,
the material terms of this Agreement, information about AOL Members, technical
processes and formulas, source codes, product designs, sales, cost and other
unpublished financial information, product and business plans, projections and
marketing data. "Confidential Information" shall not include information (a)
already lawfully known to or independently developed by the receiving Party, (b)
disclosed in published materials, (c) generally known to the public, (d)
lawfully obtained from any third party or (e) required or reasonably advised to
be disclosed by law.
CONTENT. Text, images, video, audio (including, without limitation, music used
in time relation with text, images, or video), and other data, products,
services, advertisements, promotions, links, pointers, technology and software.
ICP INTERACTIVE SITE. Any interactive site or area (other than the Online Area)
which is managed, maintained or owned by ICP or its agents or to which ICP
provides and/or licenses Content, including, by way of example and without
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limitation, (i) an ICP site on the World Wide Web portion of the Internet or
(ii) a channel or area delivered through a "push" product such as the Pointcast
Network or interactive environment such as Microsoft's proposed "Active
Desktop."
INTERACTIVE SERVICE. An entity offering one or more of the following: (i) online
or Internet connectivity services (e.g., an Internet service provider); (ii) an
interactive site or service featuring a broad selection of aggregated third
party interactive content or navigation thereto (e.g., an online service or
search and directory service) and/or marketing a broad selection of products
and/or services across numerous interactive commerce categories (e.g., an online
mall or other leading online commerce site); and (iii) communications software
capable of serving as the principal means through which a user creates, sends
and receives electronic mail or real time online messages.
KEYWORD(TM) SEARCH TERMS. The Keyword(TM) online search terms made available on
the AOL Service for use by AOL Members, combining AOL's Keyword(TM) online
search modifier with a term or phrase specifically related to ICP (and
determined in accordance with the terms of this Agreement).
LAUNCH DATE. The earliest date upon which the Online Area is made available
through the AOL Network.
LICENSED CONTENT. All Content provided by ICP or its agents to AOL or its
Affiliates for distribution through the AOL Network in connection with the
subject matter of this Agreement.
LINKED INTERACTIVE SITE. Any site or area outside of the AOL Service which is
linked to the Online Area (through a "pointer" or similar link) in accordance
with the terms and conditions of this Agreement..
LINKED ICP INTERACTIVE SITE. Any ICP Interactive Site which is also a Linked
Interactive Site.
NEW MEMBER. Any person or entity (a) who registers for the AOL Network using
ICP's special promotion identifier and (b) who remains an AOL Member for two
paid billing cycles.
ONLINE AREA. The specific area within the Customized Web Site, as described in
Exhibit A, which shall be developed, managed or marketed by ICP pursuant to this
Agreement, including but not limited to the Licensed Content, message boards,
chat and other AOL Member-supplied content areas contained therein (but
excluding any Linked Interactive Sites other than sites which are exclusively
available to AOL Members).
PRODUCTS. Any product, good or service which ICP offers, sells or licenses to
AOL Members through (i) the Online Area, (ii) any Linked ICP Interactive Site or
(iii) an "offline" means (e.g., toll-free number) for receiving orders related
to specific offers within the Online Area requiring purchasers to reference a
specific promotional identifier or tracking code, including, without limitation,
products sold through surcharged downloads (to the extent permitted hereunder).
TERM. The period beginning on the Effective Date and ending upon the expiration
or earlier termination of the Agreement.
TRANSACTION REVENUES. Aggregate amounts paid by AOL Purchasers and AOL Members
in connection with the sale, licensing, distribution or provision of any
Products (other than Vacation Packages) to AOL Members and products, goods and
services (other than Vacation Packages) to AOL Purchasers, including, in each
case, handling, shipping, service charges, and excluding, in each case, (a)
amounts collected for sales or use taxes or duties and (b) credits and
chargebacks for returned or canceled goods or services, but not excluding cost
of goods sold or any similar cost.
VACATION PACKAGES. Any leisure travel offer involving two or more of the
following travel features: air, hotel (or other lodging), and car (or other land
transportation) which is offered directly by a travel agent and reserved through
a CRS.
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EXHIBIT C
I. ONLINE AREA
AOL TERMS OF SERVICE; UNSPECIFIED CONTENT. AOL shall have the right to remove,
or direct ICP to remove any Content from the Online Area which, as reasonably
determined by AOL: (i) violates AOL's then-standard Terms of Service (as set
forth on the America Online(R) brand service), the terms of this Agreement or
any other standard, written AOL policy; or (ii) is not specifically described on
Exhibit A. To the extent ICP wishes to implement any rules of conduct or terms
of service related to the Online Area which are separate from or supplementary
to AOL's Terms of Service, ICP must obtain the prior written approval of the AOL
Legal Department.
CONTESTS. ICP shall take all steps necessary to ensure that any contest,
sweepstakes or similar promotion conducted or promoted through the Online Area
(a "Contest") complies with all applicable federal, state and local laws and
regulations. ICP shall provide AOL with (i) at least thirty (30) days prior
written notice of any Contest and (ii) upon AOL's request, an opinion from ICP's
counsel confirming that the Contest complies with all applicable federal, state
and local laws and regulations.
AOL LOOK AND FEEL. ICP acknowledges and agrees that AOL shall own all right,
title and interest in and to the AOL Look and Feel. In addition, AOL shall
retain editorial control over the portions of the AOL pages and forms which
frame the Licensed Content (the "AOL Frames"). AOL may, at its discretion,
incorporate navigational icons, links and pointers or other Content into such
AOL Frames.
MANAGEMENT. ICP shall review, delete, edit, create, update and otherwise manage
all Content available on or through the Online Area, including but not limited
to the Licensed Content and message boards, in a timely and professional manner
and in accordance with the terms of this Agreement, AOL's then-standard Terms of
Service and any generally applicable guidelines and service standards for
interactive content providers published by AOL. In managing the Online Area, ICP
agrees to refrain from editing or altering any opinion expressed by an AOL
Member within the Online Area, except in cases when ICP (i) has a good faith
belief that the Content in question violates an applicable law, regulation,
third party right or portion of AOL's Terms of Service or (ii) obtains AOL's
prior approval. ICP shall ensure that the Online Area is reasonably current and
well-organized, and shall employ all necessary procedures to insure the accuracy
of the Licensed Content. ICP warrants that the Online Area, the Licensed
Content, and any Linked ICP Interactive Sites: (i) will conform to AOL's
applicable Terms of Service; (ii) will not infringe on or violate any copyright,
trademark, U.S. patent or any other third party right, including without
limitation, any music performance or other music related rights; and (iii) will
not contain any Content which violates any applicable law or regulation. AOL
shall have no obligations with respect to the Content available on or through
the Online Area, including, but not limited to, any duty to review or monitor
any such Content.
OPERATIONS. AOL shall be entitled to require reasonable changes to Licensed
Content to the extent such Licensed Content will, in AOL's good faith judgement,
adversely affect technical operations of the AOL Network.
DUTY TO INFORM. ICP shall promptly inform AOL of any information related to the
Licensed Content of which ICP becomes aware which could reasonably lead to a
claim, demand or liability of or against AOL and/or its Affiliates by any third
party.
RESPONSE TO QUESTIONS/COMMENTS; CUSTOMER SERVICE. ICP shall respond promptly and
professionally to questions, comments, complaints and other reasonable requests
regarding the Licensed Content by AOL Members or on request by AOL, and shall
cooperate and assist AOL in promptly answering the same.
CLASSIFIEDS. To the extent ICP desires to implement any classifieds listing
features through the Online Area, ICP shall obtain AOL's prior written approval.
Such approval may be conditioned upon, among other things, ICP's conformance
with any then-applicable service-wide technical or other standards related to
online classifieds.
MESSAGE BOARDS. Any Content submitted by ICP or its agents within message boards
or any comparable vehicles will be subject to the license grant relating to
submissions to "public areas" set forth in the Proprietary Rights section of the
Terms of Service. ICP acknowledges that it has no rights or interest in AOL
Member submissions to message boards within the Online Area.
STATEMENTS THROUGH AOL NETWORK. ICP shall not make, publish, or otherwise
communicate through the AOL Network any deleterious remarks concerning AOL or it
Affiliates, directors, officers, employees, or agents (including, without
limitation, AOL's business projects, business capabilities, performance of
duties and services, or financial position) which remarks are based on the
relationship established by this Agreement or information exchanged hereunder.
This section is not intended to limit good faith editorial statements made by
ICP based upon publicly available information, or information developed by ICP
independent of its relationship with AOL and its employees and agents.
ACCOUNTS. ICP shall be granted a reasonable number of accounts for the America
Online(R) brand service for the exclusive purpose of enabling it and its agents
to perform ICP's duties under this Agreement. The accounts shall be of the type
determined by AOL to be necessary for ICP to perform its duties hereunder, and
shall be subject to such monthly subscription charges as AOL shall determine
(not to exceed monthly subscription charges generally available to the public
for a similar type of account), provided, however, that in any event ICP shall
be responsible for any surcharges, including, without limitation, all premium
charges, transaction charges and any applicable communication surcharges
incurred by any such account. ICP shall be responsible for the actions taken
under or through its accounts (which actions are subject to AOL's then-standard
Terms of Service) Upon the termination of this Agreement, all accounts, related
screen names and any associated usage credits or similar rights shall
automatically terminate. AOL shall have no liability for loss of any data or
content related to the proper termination of any account.
KEYWORD. Any Keyword Search Terms to be directed to the Online Area or an ICP
Interactive Site shall be (i) subject to availability for use by ICP and (ii)
<PAGE>
limited to the combination of the Keyword(TM) search modifier combined with a
registered trademark of ICP. AOL reserves the right to revoke at any time ICP's
use of any Keyword Search Terms which do not incorporate registered trademarks
of ICP. ICP acknowledges that its utilization of a Keyword Search Term will not
create in it, nor will it represent it has, any right, title or interest in or
to such Keyword Search Term, other than the right, title and interest ICP holds
in ICP's registered trademark independent of the Keyword Search Term. Without
limiting the generality of the foregoing, ICP will not: (a) attempt to register
or otherwise obtain trademark or copyright protection in the Keyword Search
Term; or (b) use the Keyword Search Term, except for the purposes expressly
required or permitted under this Agreement. This Section shall survive the
completion, expiration, termination or cancellation of this Agreement.
LAUNCH DATE. In the event that any terms contained herein relate to or depend on
the launch date of the online area or other property contemplated by this
Agreement, then it is the intention of the Parties to record such Launch Date in
a written instrument signed by both Parties promptly following such Launch Date;
provided that, in the absence of such a written instrument, the Launch Date
shall be as reasonably determined by AOL based on the information available to
AOL.
II. TRADEMARKS
TRADEMARK LICENSE. In designing and implementing the Promotional Materials and
subject to the other provisions contained herein, ICP shall be entitled to use
the following trade names, trademarks and service marks of AOL: the "America
Online(R)" brand service, "AOL(TM)" service/software and AOL's triangle logo;
and AOL and its Affiliates shall be entitled to use the trade names, trademarks
and service marks of ICP associated with the Online Area (collectively, together
with the AOL marks listed above, the "Marks"); provided that each Party: (i)
does not create a unitary composite mark involving a Mark of the other Party
without the prior written approval of such other Party and (ii) displays symbols
and notices clearly and sufficiently indicating the trademark status and
ownership of the other Party's Marks in accordance with applicable trademark law
and practice.
RIGHTS. Each Party acknowledges that its utilization of the other Party's Marks
will not create in it, nor will it represent it has, any right, title or
interest in or to such Marks other than the licenses expressly granted herein.
Each Party agrees not to do anything contesting or impairing the trademark
rights of the other Party.
QUALITY STANDARDS. Each Party agrees that the nature and quality of its products
and services supplied in connection with the other Party's Marks shall conform
to quality standards communicated in writing by the other Party for use of its
trademarks. Each Party agrees to supply the other Party, upon request, with a
reasonable number of samples of any Materials publicly disseminated by such
Party which utilize the other Party's Marks. Each Party shall comply with all
applicable laws, regulations and customs and obtain any required government
approvals pertaining to use of the other Party's Marks.
PROMOTIONAL MATERIALS/PRESS RELEASES. Each Party will submit to the other Party,
for its prior written approval, which shall not be unreasonably withheld or
delayed, any press releases related to the Online Area and/or referencing the
other Party and/or its trade names, trademarks and service marks. Each Party
will submit to the other Party, for its prior written approval, which shall not
be unreasonably withheld or delayed, any other marketing, advertising, press
releases or other promotional materials related to the Online Area and/or
referencing the other Party and/or its trade names, trademarks and service marks
(the "Promotional Materials"); provided, however, that, following the initial
public announcement of the business relationship between the Parties in
accordance with the approval and other requirements contained herein, either
Party's subsequent factual reference to the existence of a business relationship
between AOL and ICP, including, without limitation, the availability of the
Online Area on the AOL Network, or use of screen shots of the Online Area (so
long as the AOL Network is clearly identified as the source of such screen
shots) for promotional purposes shall not require the approval of the other
Party. Once approved, the Promotional Materials may be used by a Party and its
affiliates for the purpose of promoting the Online Area and the content
contained therein and reused for such purpose until such approval is withdrawn
with reasonable prior notice. In the event such approval is withdrawn, existing
inventories of Promotional Materials may be depleted.
INFRINGEMENT PROCEEDINGS. Each Party agrees to promptly notify the other Party
of any unauthorized use of the other Party's Marks of which it has actual
knowledge. Each Party shall have the sole right and discretion to bring
proceedings alleging infringement of its Marks or unfair competition related
thereto; provided, however, that each Party agrees to provide the other Party,
at such other Party's expense, with its reasonable cooperation and assistance
with respect to any such infringement proceedings.
III. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to the other Party that: (i) such Party has
the full corporate right, power and authority to enter into this Agreement, to
grant the licenses granted hereunder and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; (iv) such Party's
Promotional Materials will neither infringe on any copyright, U.S. patent or any
other third party right nor violate any applicable law or regulation and (v)
such Party acknowledges that the other Party makes no representations,
warranties or agreements related to the subject matter hereof which are not
expressly provided for in this Agreement.
IV. CONFIDENTIALITY
Each Party acknowledges that Confidential Information may be disclosed to the
other Party during the course of this Agreement. Each Party agrees that it will
take reasonable steps, at least substantially equivalent to the steps it takes
to protect its own proprietary information, during the term of this Agreement,
and for a period of three years following expiration or termination of this
Agreement, to prevent the disclosure of Confidential Information of the other
Party, other than to its employees, or its other agents who must have access to
such Information of the other Party, other than to its employees, or its other
agents who must have access to such
<PAGE>
Confidential Information for such Party to perform its obligations hereunder,
who will each agree to comply with this section. Notwithstanding the foregoing,
either Party may issue a press release or other disclosure containing
Confidential Information without the consent of the other Party, to the extent
such disclosure is required by law, rule, regulation or government or court
order. In such event, the disclosing Party will provide at least five (5)
business days prior written notice of such proposed disclosure to the other
Party. Further, in the event such disclosure is required of either Party under
the laws, rules or regulations of the Securities and Exchange Commission or any
other applicable governing body, such Party will (i) redact mutually agreed-upon
portions of this Agreement to the fullest extent permitted under applicable
laws, rules and regulations and (ii) submit a request to such governing body
that such portions and other provisions of this Agreement receive confidential
treatment under the laws, rules and regulations of the Securities and Exchange
Commission or otherwise be held in the strictest confidence to the fullest
extent permitted under the laws, rules or regulations of any other applicable
governing body.
V. RELATIONSHIP WITH AOL MEMBERS
(a) SOLICITATION OF AOL MEMBERS. During the term of the Agreement and for a two
year period thereafter, ICP will not use the AOL Network (including, without
limitation, the e-mail network contained therein) to solicit AOL Members on
behalf of another Interactive Service. More generally, ICP will not send
unsolicited, commercial e-mail (i.e., "spam") through or into AOL's products or
services, absent a Prior Business Relationship. For purposes of this Agreement,
a "Prior Business Relationship" will mean that the AOL Member to whom commercial
e-mail is being sent has voluntarily either (i) engaged in a transaction with
ICP or (ii) provided information to ICP through a contest, registration, or
other communication, which included clear notice to the AOL Member that the
information provided could result in commercial e-mail being sent to that AOL
Member by ICP or its agents. Any commercial e-mail communications to AOL Members
which are otherwise permitted hereunder will (a) include a prominent and easy
means to "opt-out" of receiving any future commercial e-mail communications from
ICP and (b) AOL's then-standard restrictions on distribution of bulk e-mail
(e.g., related to the time and manner in which such e-mail can be distributed
through or into the AOL product or service in question).
(b) COLLECTION OF MEMBER INFORMATION. ICP shall ensure that its collection, use
and disclosure of information obtained from AOL Members under this Agreement
("Member Information") complies with (i) all applicable laws and regulations and
(ii) AOL's standard privacy policies, available on the AOL Service at the
keyword term "Privacy" (or, in the case of ICP's Linked Interactive Site, ICP's
standard privacy policies so long as such policies are prominently published on
the site and provide adequate notice, disclosure and choice to users regarding
ICP's collection, use and disclosure of user information). ICP will not disclose
Member Information collected hereunder to any third party in a manner that
identifies AOL Members as end users of an AOL product or service or use Member
Information collected under this Agreement to market another Interactive
Service.
(c) E-MAIL NEWSLETTERS. Any e-mail newsletters sent to AOL Members by ICP or its
agents shall (i) be subject to AOL's policies on use of the e-mail
functionality, including but not limited to AOL's policy on unsolicited bulk
e-mail, (ii) be sent only to AOL Members requesting to receive such newsletters,
(iii) not contain Content which violates AOL's Terms of Service, and (iv) not
contain any advertisements, marketing or promotion for any other Interactive
Services Provider.
(d) EMAIL MARKETING. To the extent ICP is otherwise permitted to send
communications to AOL Members (in accordance with the other requirements
contained herein): (i) any solicitations in such communications to purchase
products or services shall promote the Online Area, including without
limitation, the Customized Web Site available through the AOL Network as the
principal means through which to purchase any such products or services; (ii)
any direct links to specific offers within such communications shall link to the
Online Area, including without limitation, the Customized Web Site; (iii) any
sales arising from such communications shall be subject to any revenue sharing
provisions which may be contained herein; and (iv) ICP shall limit the subject
matter of such communications to those categories of products, services and/or
content which are specifically contemplated by this Agreement.
VI. TREATMENT OF CLAIMS
LIABILITY. EXCEPT AS PROVIDED BELOW IN THE "INDEMNITY" SECTION, UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM THE USE OF OR
INABILITY TO USE THE AOL NETWORK OR ONLINE AREA OR ANY OTHER PROVISION OF THIS
AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS
OR LOST BUSINESS. EXCEPT AS PROVIDED BELOW IN THE "INDEMNITY" SECTION, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR MORE THAN THE AGGREGATE AMOUNTS
PAYABLE HEREUNDER IN THE YEAR IN WHICH THE EVENT GIVING RISE TO SUCH LIABILITY
OCCURRED; PROVIDED THAT EACH PARTY SHALL REMAIN LIABLE FOR THE AGGREGATE AMOUNT
OF ANY PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY UNDER THE PROVISIONS OF THIS
AGREEMENT.
NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE AOL NETWORK,
THE ONLINE AREA OR ANY AOL PUBLISHING TOOLS, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES
ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, AOL SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING
THE PROFITABILITY OF THE ONLINE AREA.
INDEMNITY. Either Party will defend, indemnify, save and hold harmless the other
Party and the officers, directors, agents, affiliates, distributors, franchisees
and employees of the other Party from any and all third party claims, demands,
liabilities, costs or expenses, including reasonable attorneys' fees
("Liabilities"), resulting from the indemnifying Party's material breach of any
duty, representation, or warranty of this Agreement. In addition, ICP will
defend, indemnify, save and hold harmless the other Party and the officers,
directors,
<PAGE>
agents, affiliates, distributors, franchisees and employees of the other Party
from any and all third party Liabilities arising out of or in any way connected
to the Licensed Content.
If a Party entitled to indemnification hereunder (the "Indemnified Party")
becomes aware of any matter it believes is indemnifiable hereunder involving any
claim, action, suit, investigation, arbitration or other proceeding against the
Indemnified Party by any third party (each an "Action"), the Indemnified Party
shall give the other Party (the "Indemnifying Party") prompt written notice of
such Action. Such notice shall (i) provide the basis on which indemnification is
being asserted and (ii) be accompanied by copies of all relevant pleadings,
demands, and other papers related to the Action and in the possession of the
Indemnified Party. The Indemnifying Party shall have a period of ten (10) days
after delivery of such notice to respond. If the Indemnifying Party elects to
defend the Action or does not respond within the requisite ten (10) day period,
the Indemnifying Party shall be obligated to defend the Action, at its own
expense, and by counsel reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall cooperate, at the expense of the Indemnifying Party,
with the Indemnifying Party and its counsel in the defense and the Indemnified
Party shall have the right to participate fully, at its own expense, in the
defense of such Action. If the Indemnifying Party responds within the required
ten (10) day period and elects not to defend such Action, the Indemnified Party
shall be free, without prejudice to any of the Indemnified Party's rights
hereunder, to compromise or defend (and control the defense of) such Action. In
such case, the Indemnifying Party shall cooperate, at its own expense, with the
Indemnified Party and its counsel in the defense against such Action and the
Indemnifying Party shall have the right to participate fully, at its own
expense, in the defense of such Action. Any compromise or settlement of an
Action shall require the prior written consent of both Parties hereunder, such
consent not to be unreasonably withheld or delayed.
ACKNOWLEDGMENT. AOL AND ICP EACH ACKNOWLEDGES THAT THE PROVISIONS OF THIS
AGREEMENT WERE NEGOTIATED TO REFLECT AN INFORMED, VOLUNTARY ALLOCATION BETWEEN
THEM OF ALL RISKS (BOTH KNOWN AND UNKNOWN) ASSOCIATED WITH THE TRANSACTIONS
CONTEMPLATED HEREUNDER. THE LIMITATIONS AND DISCLAIMERS RELATED TO WARRANTIES
AND LIABILITY CONTAINED IN THIS AGREEMENT ARE INTENDED TO LIMIT THE
CIRCUMSTANCES AND EXTENT OF LIABILITY. THE PROVISIONS OF THIS SECTION VI SHALL
BE ENFORCEABLE INDEPENDENT OF AND SEVERABLE FROM ANY OTHER ENFORCEABLE OR
UNENFORCEABLE PROVISION OF THIS AGREEMENT.
VII. MISCELLANEOUS
AUDITING RIGHTS. Each Party shall maintain complete, clear and accurate records
of all expenses, revenues, fees, transactions and related documentation
(including agreements) in connection with the performance of this Agreement
("Records"). All such Records shall be maintained for a minimum of five (5)
years following termination of this Agreement. For the sole purpose of ensuring
compliance with this Agreement, AOL shall have the right, at its expense, to
conduct a reasonable and necessary copying and inspection of portions of the
Records of ICP that are directly related to amounts payable to AOL pursuant to
this Agreement, which right may, at AOL's option, be exercised by directing an
independent certified public accounting firm to conduct such inspection. For the
sole purpose of ensuring compliance with this Agreement, ICP shall have the
right, at its expense, to direct an independent certified public accounting firm
subject to strict confidentiality restrictions to conduct a reasonable and
necessary copying and inspection of portions of the Records of AOL that are
directly related to amounts payable to ICP pursuant to this Agreement. Any such
audit may be conducted after twenty (20) business days prior written notice,
subject to the following. Such audits shall not be made more frequently than
once every twelve months. No such audit of AOL shall occur during the period
beginning on June 1 and ending October 1. In lieu of providing access to its
Records as described above, AOL shall be entitled to provide the ICP with a
report from an independent certified public accounting firm confirming the
information to be derived from such Records.
EXCUSE. Neither Party shall be liable for, or be considered in breach of or
default under this Agreement on account of, any delay or failure to perform as
required by this Agreement as a result of any causes or conditions which are
beyond such Party's reasonable control and which such Party is unable to
overcome by the exercise of reasonable diligence.
INDEPENDENT CONTRACTORS. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or partner of the other
Party. Neither Party shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement shall not be interpreted or
construed to create an association, agency, joint venture or partnership between
the Parties or to impose any liability attributable to such a relationship upon
either Party.
NOTICE. Any notice, approval, request, authorization, direction or other
communication under this Agreement will be given in writing and will be deemed
to have been delivered and given for all purposes (i) on the delivery date if
delivered by electronic mail on the AOL Network (to screenname
"[email protected]" in the case of AOL) or by confirmed facsimile; (ii) on the
delivery date if delivered personally to the Party to whom the same is directed;
(iii) one business day after deposit with a commercial overnight carrier, with
written verification of receipt; or (iv) five business days after the mailing
date, whether or not actually received, if sent by U.S. mail, return receipt
requested, postage and charges prepaid, or any other means of rapid mail
delivery for which a receipt is available. In the case of AOL, such notice will
be provided to both the Senior Vice President for Business Affairs (fax no.
703-265-1206) and the Deputy General Counsel (fax no. 703-265-1105), each at the
address of AOL set forth in the first paragraph of this Agreement. In the case
of ICP, except as otherwise specified herein, the notice address shall be the
address for ICP set forth in the first paragraph of this Agreement, with the
other relevant notice information, including the recipient for notice and, as
applicable, such recipient's fax number or AOL e-mail address, to be as
reasonably identified by AOL.
NO WAIVER. The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such
<PAGE>
provision or right in that or any other instance; rather, the same shall be and
remain in full force and effect.
RETURN OF INFORMATION. Upon the expiration or termination of this Agreement,
each Party shall, upon the written request of the other Party, return or destroy
(at the option of the Party receiving the request) all confidential information,
documents, manuals and other materials specified the other Party.
SURVIVAL. Section 1.3.2 of this Agreement, and Sections IV, V, VI, and VII of
this Exhibit C, shall survive the completion, expiration, termination or
cancellation of this Agreement.
ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and supersedes
any and all prior agreements of the Parties with respect to the transactions set
forth herein. Neither Party shall be bound by, and each Party specifically
objects to, any term, condition or other provision which is different from or in
addition to the provisions of this Agreement (whether or not it would materially
alter this Agreement) and which is proffered by the other Party in any
correspondence or other document, unless the Party to be bound thereby
specifically agrees to such provision in writing.
AMENDMENT. No change, amendment or modification of any provision of this
Agreement shall be valid unless set forth in a written instrument signed by the
Party subject to enforcement of such amendment.
FURTHER ASSURANCES. Each Party shall take such action (including, but not
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
ASSIGNMENT. ICP shall not assign this Agreement or any right, interest or
benefit under this Agreement without the prior written consent of AOL.
Assumption of this Agreement by any successor to ICP (including, without
limitation, by way of merger, consolidation or sale of all or substantially all
of ICP's stock or assets) shall be subject to AOL's prior written approval. In
the event of (i) any Change of Control of ICP, or any assignment or assumption
of this Agreement, without AOL's prior written consent or (ii) any Change of
Control of AOL, AOL shall have the right to terminate this Agreement upon
written notice to ICP. Subject to the foregoing, this Agreement shall be fully
binding upon, inure to the benefit of and be enforceable by the Parties hereto
and their respective successors and assigns. Notwithstanding the foregoing, ICP
may assign to Surge Components, Inc. ("Surge"), a New York corporation, upon
written notice thereof to AOL so long as (i) Surge's business and ICP's business
remains in all substantial respects the same as on the Effective Date, (ii) any
such assignment shall not release ICP of any liability hereunder, (iii) Surge
has the resources necessary to fulfill all of ICP's obligations hereunder, (iv)
Surge agrees in writing to be bound by the terms and conditions of this
Agreement, and (v) neither Surge nor its Affiliates is an Interactive Service.
CONSTRUCTION; SEVERABILITY. In the event that any provision of this Agreement
conflicts with the law under which this Agreement is to be construed or if any
such provision is held invalid by a court with jurisdiction over the Parties to
this Agreement, (i) such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in accordance with
applicable law, and (ii) the remaining terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect.
REMEDIES. Except where otherwise specified, the rights and remedies granted to a
Party under this Agreement are cumulative and in addition to, and not in lieu
of, any other rights or remedies which the Party may possess at law or in
equity.
APPLICABLE LAW; JURISDICTION. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the Commonwealth of
Virginia except for its conflicts of laws principles. Each Party irrevocably
consents to the exclusive jurisdiction of the courts of the Commonwealth of
Virginia and the federal courts situated in the Commonwealth of Virginia, in
connection with any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default under this Agreement, or
otherwise arising under or by reason of this Agreement.
EXPORT CONTROLS. Both parties shall adhere to all applicable laws, regulations
and rules relating to the export of technical data and shall not export or
re-export any technical data, any products received from the other Party or the
direct product of such technical data to any proscribed country listed in such
applicable laws, regulations and rules unless properly authorized.
HEADINGS. The captions and headings used in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same document.
<PAGE>
EXHIBIT D
CERTIFICATION OF COMPLIANCE WITH COMMITMENTS
REGARDING PROMOTIONS AND EXCLUSIVITY
Pursuant to Section 4 of the Interactive Services Agreement between Orbit
Network ("ICP") and America Online, Inc. ("AOL"), dated as of May 1, 1999 (the
"Agreement"), the following report is delivered to AOL for the month ending
__________ (the "Month"):
I. PROMOTIONAL COMMITMENTS
ICP hereby certifies to AOL that ICP completed the following promotional
commitments during the Month:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TYPE OF PROMOTION DATE(S) OF DURATION/CIRCULATION OF PROMOTION RELEVANT CONTRACT
PROMOTION SECTION
- ------- ----------------------- ------------------- ---------------------------------- ----------------------
1.
- ------- ----------------------- ------------------- ---------------------------------- ----------------------
2.
- ------- ----------------------- ------------------- ---------------------------------- ----------------------
3.
</TABLE>
II. EXCLUSIVITY COMMITMENTS
ICP hereby certifies to AOL that ICP was in full compliance with the exclusivity
restrictions (if applicable) specified in Exhibit A of the Agreement throughout
the Month.
IN WITNESS WHEREOF, this Certificate has been executed this ________ day of
__________________, 199__.
ORBIT NETWORK
By: _________________________________
Print Name: ________________________
Title: ______________________________
Date: _______________________________
<PAGE>
EXHIBIT E
TECHNICAL OPERATING STANDARDS
1. ICP Site Infrastructure. ICP will be responsible for all communications,
hosting and connectivity costs and expenses associated with the Customized
Web Site and all Linked Interactive Sites (collectively, "ICP Sites"). ICP
will provide all hardware, software, telecommunications lines and other
infrastructure necessary to meet traffic demands on the ICP Site(s) from
the AOL Network. ICP will design and implement the network between the AOL
Service and ICP Site(s) such that (i) no single component failure will have
a materially adverse impact on AOL Members seeking to reach the ICP Site(s)
from the AOL Network and (ii) no single line under material control by the
ICP will run at more than 70% average utilization for a 5-minute peak in a
daily period. In this regard, ICP will provide AOL, upon request, with a
detailed network diagram regarding the Architecture and network
infrastructure supporting the ICP Site(s). In the event that ICP elects to
create a custom version of the ICP Site(s) in order to comply with the
terms of this Agreement, ICP will bear responsibility for all aspects of
the implementation, management and cost of such customized site.
2. Optimization; Speed. ICP will use commercially reasonable efforts to ensure
that: (a) the functionality and features within the ICP Site(s) are
optimized for the client software then in use by AOL Members; and (b) the
ICP Site(s) is designed and populated in a manner that minimizes delays
when AOL Members attempt to access such site. At a minimum, ICP will ensure
that each ICP Site's data transfers initiate within fewer than fifteen (15)
seconds on average. Prior to commercial launch of any material promotions
described herein, ICP will permit AOL to conduct performance and load
testing of the ICP Site(s) (in person or through remote communications),
with such commercial launch not to commence until such time as AOL is
reasonably satisfied with the results of any such testing.
3. User Interface. ICP will maintain a graphical user interface within the ICP
Site(s) that is competitive in all material respects with interfaces of
other similar sites based on similar form technology. AOL reserves the
right to review and approve the user interface and site design prior to
launch of the Promotions and to conduct focus group testing to assess
compliance with respect to such consultation and with respect to ICP's
compliance with the preceding sentence.
4. Technical Problems. ICP agrees to use commercially reasonable efforts to
address material technical problems (over which ICP exercises control)
affecting use by AOL Members of the ICP Site(s) (an "ICP Technical
Problem") promptly following notice thereof. In the event that ICP is
unable to promptly resolve an ICP Technical Problem following notice therof
from AOL (including, without limitation, infrastructure deficiencies
producing user delays), AOL will have the right to regulate the promotions
it provides to ICP hereunder until such time as ICP corrects the ICP
Technical Problem at issue.
5. Monitoring. ICP will ensure that the performance and availability of each
ICP Site(s) is monitored on a continuous basis. ICP will provide AOL with
contact information (including e-mail, phone, pager and fax information, as
applicable, for both during and after business hours) for ICP's principal
business and technical representatives, for use in cases when issues or
problems arise with respect to the ICP Site(s).
6. Telecommunications. Where applicable the ICP will utilize encryption
methodology to secure data communications between the Parties' data
centers. The network between the Parties will be configured such that no
single component failure will significantly impact AOL Users. The Network
will be sized such that no single line over which the ICP has matorial
control runs at more than 70% average utilization for a 5-minute peak in a
daily period.
7. Security. ICP will utilize Internet standard encryption technologies (e.g.,
Secure Socket Layer - SSL) to provide a secure environment for conducting
transactions and/or transferring private member information (e.g. credit
card numbers, banking/financial information, and member address
information) to and from the ICP Site(s). ICP will facilitate periodic
reviews of the ICP Site(s) by AOL in order to evaluate the security risks
of such site. ICP will promptly remedy any security risks or breaches of
security as may be identified by AOL's Operations Security team.
8. Technical Performance.
i. ICP will design the ICP Site(s) to support the AOL-client embedded
versions of the Microsoft Internet Explorer 3.XX and 4.XX browsers
(Windows and Mackintosh), the Netscape Browser 4.XX and make
<PAGE>
commercially reasonable efforts to support all other AOL browsers
listed at: http://webmaster.info.aol.com).
ii. To the extent ICP creates customized pages on the ICP Site(s) for AOL
Members, ICP will develop and employ a methodology to detect AOL
Members (e.g. examine the HTTP User-Agent field in order to identify
the "AOL Member-Agents" listed at: "http://webmaster. info.aol.com/).
iii. ICP will periodically review the technical information made available
by AOL at http://webmaster.info.aol.com.
iv. ICP will design its site to support HTTP 1.0 or later protocol as
defined in RFC 1945 and to adhere to AOL's parameters for refreshing or
preventing the caching of information in AOL's proxy system as outlined
in the document provided at the following URL:
http://webmaster.info.aol.com. The ICP is responsible for the
manipulation of these parameters in web based objects so as to allow
them to be cached or not cached as outlined in RFC 1945.
v. Prior to releasing material, new functionality or features through the
ICP Site(s) ("New Functionality"), ICP will use commercially reasonable
efforts to either (i) test the New Functionality to confirm its
compatibility with AOL Service client software and (ii) provide AOL
with written notice of the New Functionality so that AOL can perform
tests of the New Functionality to confirm its compatibility with the
AOL Service client software. Should any new material, new functionality
or features through the partner Site be released without notification
to AOL, AOL will not be responsible for any adverse member experience
until such time that compatibility tests can be performed and the new
material, functionality or features qualified for the AOL Service.
9. AOL Internet Services ICP Support. AOL will provide ICP with access to the
standard online resources, standards and guidelines documentation,
technical phone support, monitoring and after-hours assistance that AOL
makes generally available to similarly situated web-based partners. AOL
support will not, in any case, be involved with content creation on behalf
of ICP or support for any technologies, databases, software or other
applications which are not supported by AOL or are related to any ICP area
other than the ICP Site(s). Support to be provided by AOL is contingent on
ICP providing to AOL demo account information (where applicable), a
detailed description of the ICP Sites's software, hardware and network
architecture and access to the ICP Site(s) for purposes of such performance
and load testing as AOL elects to conduct.
<PAGE>
EXHIBIT 10.25
AMADEUS - APPLIED INFORMATION SERVICES
BYPASS CONNECTION AGREEMENT
---------------------------
This Agreement is made and entered into in Madrid, as of the lst day of July,
1996, by and between AMADEUS Marketing, S.A. a Spanish corporation, domiciled at
Salvador de Madariaga, 1, Madrid, Spain (hereinafter "AMADEUS") and Applied
Information Services, Inc., a Montana corporation, domiciled at 100 Second
Street East, Whitefish, 59937 Montana, USA (hereinafter "AIS").
(collectively referred as "the Parties" and individually as "Party").
RECITALS
(1) WHEREAS, the AMADEUS System is an advanced computer reservations system
service that provides information regarding schedules, fares, and availability
of air transport and other related services, in, addition to facilities for
making reservations, issuing tickets on such services, and other travel related
facilities.
(2) WHEREAS, AMADEUS is authorized to provide AMADEUS Subscribers with access
to the AMADEUS System.
(3) WHEREAS, AIS is a software and hardware company operating and maintaining
an advanced electronic reservation system known as TRAVEL FILE that permits (i)
providers of travel related products and services to be accessed and booked by
the users of TRAVEL FILE, (ii) multinational travel agencies to make use of a
corporate E-mail facility and specific corporate information pages within the
TRAVEL FILE application (herein after referred to as Proprietary Network
Partition - PNP).
(4) WHEREAS, AMADEUS and AIS are interested in connecting the AMADEUS System
with TRAVEL FILE in order to enable AMADEUS Subscribers to access TRAVEL FILE,
on the terms and conditions hereinafter described.
NOW, THEREFORE, in consideration of the promises and the mutual obligations
hereinafter set forth, AMADEUS and AIS hereby agree as follows.
1. DEFINITIONS
-----------
The terms below have the following definitions for the purpose of this
Agreement.
(a) "Access" shall mean the access of an AMADEUS Subscriber to TRAVEL FILE,
(either the travel related database or the Proprietary Network, Partition),
through the Bypass Connection.
(b) "AMADEUS Group" means the group of legal entities established in order to
organise, develop, operate and distribute the AMADEUS System, including
AMADEUS Global Travel Distribution S.A., AMADEUS Data Processing GmbH and
Co, Beteiligungs-Kommanditgesellschafr, AMADEUS Marketing S.A. AMADEUS
Development Company S.A., AMADEUS Marketing S.A.R.L., CRS AMADEUS America,
SRL, and AMADEUS Asia, Ltd.
-1-
<PAGE>
(c) The "AMADEUS System" shall mean AMADEUS computerised travel information and
distribution system which contains information about schedules,
availability, fares and related services and through which reservations can
be made and/or tickets issued.
(d) "Booking" shall mean a reservation or purchase of a product or service of
any Travel Service Provider bookable in the TRAVEL FILE data base
application, by a Subscriber or any other user, using the Bypass
Connection, as provided in this Agreement. Such reservation or purchase
shall contain a confirmation element (HK or similar) and that has not been
cancelled 24 hours prior to the departure or consumption of the service.
(e) "Bypass Connection" means the physical direct computer to computer link,
including communications and functional interface between the AMADEUS
System in Erding, Germany, and TRAVEL FILE in Montana via which AMADEUS
Subscribers can perform an Access to TRAVEL FILE.
(f) "National Marketing Company" or "NMC" means a company that has entered into
a contract with AMADEUS Marketing whereby it undertakes the obligation,
among other things, to distribute AMADEUS products and services in a
defined territory.
(g) "Proprietary Network Partition" (PNP) shall mean the part of the TRAVEL
FILE application that fulfils the function of a corporate E-mail facility
for multinational travel agencies, and includes specific corporate
information pages.
(h) "Subscriber" shall mean any airline office, travel agent or other seller of
travel related services that contracts with AMADEUS Marketing, a National
Marketing Company, or a distribution system to use the AMADEUS system to
obtain information, make reservations and issue documents involving travel
related services.
(i) "TRAVEL FILE" shall mean the computerized travel information and
reservation application and data base operated by AIS through which its
users can (i) access to and make reservations in the travel related
information stored in its database, and (ii) also access the Proprietary
Network Partition.
(j) "Travel Service Provider" shall mean any entity that has contracted with
AIS for the display of its travel related information product and services
in the TRAVEL FILE database.
2. GENERAL TERMS OF AGREEMENT
--------------------------
2.1 The Parties hereby agree to establish a Bypass Connection from the AMADEUS
System to TRAVEL FILE, which will enable AMADEUS Subscribers to access the
TRAVEL FILE database in order to obtain information and/or book Travel
Service Providers products and services stored in the TRAVEL FILE database.
2.2 AMADEUS shall have the right, at any time, to contract with parties to
constitute them as AMADEUS Subscribers, to terminate agreements with
AMADEUS Subscribers, and to contract to provide the AMADEUS System to other
parties, including competitors of AIS.
-2-
<PAGE>
2.3 AMADEUS shall have the exclusive right to authorise AMADEUS Subscribers to
perform access to TRAVEL FILE through the Bypass Connection.
2.4 The Bypass Connection to the AMADEUS System will also enable AMADEUS
Subscriber groups that have signed separate contracts with AIS to access in
addition to the TRAVEL FILE database. The Proprietary Network Partition AIS
will inform AMADEUS of these groups of AMADEUS Subscribers.
3. TECHNICAL ASPECTS OF THE INTERFACE
----------------------------------
3.1 The technical aspects of the Bypass Connection between the AMADEUS System
and the AIS System as well as the agenda for its implementation are set
forth in Annex I to this Agreement, which forms an integral part of it.
3.2 Annex I will also include provisions on the following non exclusive list of
items.
- Interface
- Repair and Maintenance
- Availability
4. OBLIGATIONS OF AIS
------------------
4.1 AIS will process and respond promptly to questions and correspondence from
AMADEUS concerning TRAVEL FILE.
4.2 AIS will undertake promotional and marketing activities to enrol Travel
Service Providers as participants in TRAVEL FILE at its own cost and
expense.
4.3 AIS shall inform AMADEUS, of new options and/or changes to TRAVEL FILE
being developed by AIS that directly impact the Bypass Connection, and will
notify AMADEUS, prior to implementation upon giving at least 60 (sixty)
days prior written notification. Such notification shall include detailed
documentation describing the options and/or changes to be implemented in
TRAVEL FILE.
In the event such options and/or changes restrict or otherwise affect
AMADEUS ability to deliver their services to the AMADEUS Subscribers then
AMADEUS, at is sole discretion and without further liability to AIS, may
refuse to make such options and/or changes available through the AMADEUS
System.
4.4 AIS will monitor the number of Access performed by AMADEUS Subscribers in
TRAVEL FILE via the Bypass Connection, and keep records for billing
purposes. Within thirty (30) days after the end of each calendar month, AIS
will remit, in a manner and format agreed by the Parties, to AMADEUS the
information on the number of Access performed in TRAVEL FILE via the Bypass
Connection by AMADEUS Subscribers.
AIS shall also provide to AMADEUS monthly reports on the number of Access
performed by AMADEUS Subscribers from the SRG International and Thomas Cook
organisations, to their Proprietary Network Partitions.
-3-
<PAGE>
Notwithstanding the previous, AIS will make such records available to
AMADEUS for inspection with reasonable advanced notice. AIS shall be
responsible for the accuracy of the statistical information provided to
AMADEUS.
4.5 AIS shall provide to AMADEUS reasonable escalation and contact procedures
agreeable to both Parties.
4.6 AIS acknow1edges that AMADEUS is subject to the provisions of the European
Union Code of Conduct for Computer Reservation Systems, (Council Regulation
EEC No, 2299/89 as amended by Council Regulation 3089/93) and other
European or state regulations applicable to the software, system, and data
protection, and agrees to comply with all applicable dispositions and
regulations on data security and protection.
4.7 AIS shall not make any unauthorised use of AMADEUS' corporate name, logos,
trademarks, or service marks in any and all advertising materials on any
nature whatsoever. Except as provided below, any and all representations,
whether oral or written, express or implied, or any products or services
offered by AIS, which suggest any affiliation or special relationship with
AMADEUS or otherwise in any manner concern or refer directly or indirectly
to AMADEIS name, logos, trademarks or service marks, including but not
limited to the name "AMADEUS" will first be provided to AMADEUS in writing
and must receive AMADEUS' prior written approval before any such material
may be released or representation made.
AMADEUS authorises AIS to refer to AMADEUS as its distribution channel in
press releases or other sales documents. Whenever the name AMADEUS is used
it has to be written in uppercase.
4.8 AIS will not copy or transfer to any third party any software, provided by
AMADEUS. AIS will not license to any third party the use of any software
provided by AMADEUS, without the prior written consent of AMADEUS.
4.9 AIS shall make TRAVEL FILE available as much as possible, but in no event
shall TRAVEL FILE be unavailable more than five percent (5%) of the time in
any calendar month, including scheduled and maintenance related downtime.
Furthermore when unavailable, AIS will provide its best effort to
re-establish the availability as early as possible.
4.10 AIS will maintain both its software and hardware as necessary to sustain a
reasonable quality of system operation and to sustain a response time of a
maximum of 4 seconds at the TRAVEL FILE application.
4.11 If any error in data transmitted are due to circumstances under AIS's
direct control, AIS shall use its best efforts to correct such errors in a
timely manner.
4.12 Training
AIS will provide, at its own cost and expense, training on the TRAVEL FILE
application, including training material and documentation, to the AMADEUS
Subscribers that will have access to the TRAVEL FILE application through
the Bypass Connection.
-4-
<PAGE>
For European based AMADEUS Subscribers, these training courses shall be
organised by the AIS office in Europe. The number of participants and the
location of the training will be agreed upon by the Parties.
Training of AMADEUS Subscribers in other markets shall be discussed and
agreed upon between the Parties.
4.13 Help Desk
AIS will provide to AMADEUS Subscribers a twenty-four hour per day, seven
days per week technical and functional Help Desk, reachable by a toll free
telephone line, to support all TRAVEL FILE products and services available
through the Bypass Connection.
In case AIS wishes AMADEUS National Marketing Companies to undertake
specific support to AMADEUS Subscribers on the TRAVEL FILE application, the
Parties agree to negotiate mutually acceptable training fees for such
training services.
5. OBLIGATIONS OF AMADEUS
----------------------
5.1 Upon implementation of the Bypass Connection, AMADEUS shall undertake its
best efforts to make the TRAVEL FILE application available to all AMADEUS
Subscribers within the shortest time frame possible.
5.2 If any error in data transmitted are due to circumstances under AMADEUS'
direct control, AMADEUS shall use its best efforts to correct such errors
in a timely manner.
5.3 AMADEUS retains the right to enhance or modify the functions or services of
the AMADEUS System at its discretion at any time during the term of this
Agreement. Any such enhancements or modifications will not materially alter
the services provided under this Agreement. The enhancements or
modifications that directly impact the Bypass Connection will be notified
by AMADEUS to AIS 60 (sixty) days prior to implementation.
6. CHARGES
-------
6.1. AMADEUS will bear:
6.1.1 the communication costs incurred within the AMADEUS network and
necessary for the transmission of the information from the AMADEUS
System in Erding to the AMADEUS Subscribers.
6.1.2 all costs and expenses related to the co- operation with AIS,
including attendance to meetings.
-5-
<PAGE>
6.2 AIS shall bear all costs and expenses related to:
6.2.1 co-operation with AMADEUS, including attendance to meetings.
6.2.2 developments in TRAVEL FILE necessary for the implementation of the
Bypass Connection.
6.3 AIS agrees to pay to AMADEUS.
6.3.1 the monthly fee described in Annex 11 to this Agreement. This fee
includes the Bypass Connection development costs (including
maintenance costs) for the part that corresponds to AIS specific
needs.
6.3.2 Bypass Connection costs from TRAVEL FILE in Montana to the AMADEUS
System in Erding.
6.4 The charges set forth in the attached Schedules of this Agreement, and
described in the preceding paragraph, may be revised annually on the 1st of
January of each year. AMADEUS will give AIS at least thirty (30) days prior
written notice of any modification. In the event that the revised price is
excessive and not proportional to the services provided under this
Agreement, AIS shall have the right to terminate the Agreement as set forth
in Article 12.5.
7. INVOICING AND PAYMENT
---------------------
7.1 AMADEUS shall submit a monthly invoice to AIS for all charges and fees due
to AMADEUS under this Agreement and incurred during the preceding month.
7.2 AIS will settle the invoice by paying the amounts due to AMADEUS or any
entity AMADEUS may designate within thirty (30) days.
7.3 AIS shall pay a late payment charge computed at the rate of one and
one-half percent per month on the unpaid amounts due hereunder for said
month (or fraction thereof) that such payment is in default.
8 USE OF THE AMADEUS SYSTEM BY AIS
--------------------------------
8.1 So long as it is connected to the AMADEUS System, the Bypass Connection
will be used by AIS for the purposes and functions permitted by this
Agreement, and in strict accordance with operation procedures and rules
issued from time to time by AMADEUS.
8.2 AIS shall take all precautions necessary to prevent unauthorized operation
of the Bypass Connection. AIS shall not use any data accessed or
transmitted under this Agreement to develop or publish any reservation,
ticketing, sales, cargo, tariff or similar guide in any manner whatsoever.
AIS shall not copy, publish, disclose or otherwise make available to any
third party the compilations of provider services or
-6-
<PAGE>
any other data obtained from the AMADEUS System to any person, form,
corporation, partnership or entity in any form or manner.
9. ACCURACY OF DATA IN TRAVEL FILE
-------------------------------
9.1 AIS shall cause its Travel Service Providers to be responsible for
maintaining the accuracy of all data in the TRAVEL FILE data base.
9.2 AIS further agrees to cause its Travel Service Providers to acknowledge all
reservations in a reasonable time period (in any event no later than twenty
four (24) hours from time of receipt), and to guarantee to AMADEUS
Subscribers and customers of AMADEUS Subscribers its data, including but
not limited to the policies, rates and descriptions as displayed in the
TRAVEL FILE data base on the date of Booking of Travel Service Provider
products and services via the Bypass Connection. AIS shall cause its Travel
Service providers to be responsible directly to AMADEUS Subscribers for
providing the Travel Service Providers products and services as displayed
via the AMADEUS System.
9.3 AIS makes no express or implied representation or warranty relating to
information, inserted into TRAVEL FILE by the Travel Service Providers. AIS
shall, however, upon learning of any errors, communicate them to the
responsible Travel Service Provider as quickly as possible and will require
that they be immediately corrected. If such Travel Service Provider does
not correct the information within twenty-four (24) hours of notification,
TRAVEL FILE will inhibit access to such Travel Service Provider by AMADEUS
Subscribers or remove the incorrect information.
9.4 AMADEUS does not undertake to perform any verification of any sort of
Travel Service Providers data displayed via the AMADEUS System. AMADEUS
makes no representation whatsoever to AIS, or any third party, as to the
accuracy of the Travel Service Providers data displayed in the TRAVEL FILE
application via the AMADEUS System.
10. LIABILITY OF AMADEUS AND AIS
----------------------------
10.1 AMADEUS and AIS agree to use their best efforts to maintain the
availability of the AMADEUS System and the AIS System, respectively, but
shall have no liability for interruptions in the operation.
10.2 Each Party disclaims and the other Party hereby waives any warranties,
guarantees or representations of any kind, express or implied, including
but not limited to any warranty of merchantability or fitness for intended
use of the AMADEUS System and TRAVEL FILE, data or services furnished
hereunder or any liability in negligence or tort with respect to any
equipment, data or services furnished hereunder. AIS and AMADEUS agree that
neither Party shall be liable to it for consequential damages under any
circumstances, and that the remedies of the Parties specified in this
Agreement are their sole and exclusive remedies.
10.3 Neither Party shall be liable to the other for failure to perform or for
delays in performance hereunder caused directly or indirectly by any cause
beyond its responsible control including, but not limited to, acts of God,
war, terrorism,
-7-
<PAGE>
embargo, strikes or other labour disputes, work stoppages, riots, civil
unrest, fires, acts of government, delays in delivery of services of
subcontractors or subsuppliers, or for any failures or delays caused by
the electrical or telephone line suppliers or for other common carriers.
10.4 Each Party hereby agrees to release and to indemnify and to hold the
other, its officers, directors, agents, attorneys, and employees
harmless from and against any and all liabilities, damages, losses,
expenses, claims, demands. suits, fines or judgements including but not
limited to attorneys fees, costs and expenses incident hereto which may
be suffered by, accrued against, be charged to or recoverable from the
other Party, its officers, directors, agents, attorneys or employees
arising out of any act, error or omission, or in any way connected with
AIS's use of the Bypass Connection or related to the access or use by
AMADEUS Subscribers of the AIS System, or arising out of the performance
or failure to perform each Party's obligations hereunder, excepting only
such liabilities, damages, losses, expenses, claims, demands, suits,
fines or judgements as result solely from the gross negligence of each
Party, its officers, directors, agents, attorneys or employees.
10.5 All the indemnities contained in Paragraph 10.4 shall continue in full
force and effect in accordance with their terms, notwithstanding the
expiration or other termination of this Agreement, and are expressly
made for the benefit of and shall be enforceable by AMADEUS or its
successors, assigns, and agents.
11. TERM
----
11.1 This Agreement shall be effective as of the date of implementation of
the Bypass Connection between the AIS System and the AMADEUS System and
will be valid until June 30, 1999.
11.2 This Agreement shall be automatically renewed for additional one year
periods, unless either Party gives at least six months prior written
notice to the other of its intention not to renew the Agreement.
12. TERMINATION
-----------
12.1 In the event of material default by AIS, AMADEUS may terminate AIS's
access to the Bypass Connection on ten days written notice to AIS
AMADEUS may, at its option, require AIS to give adequate assurance of
future performance of this Agreement by immediately curing any default
hereunder.
12.2 AIS shall be considered in material default for purposes of Article 12.1
in the following circumstances.
12.2.1 If AIS performs or permits any unauthorised repairs, modifications,
relocation or use of the Bypass Connection, equipment or data provided
hereunder, fails to pay any charges due hereunder, or defaults in the
performance of any of its obligations hereunder and such default is not
cured within fifteen days after written notice by AMADEUS, or
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<PAGE>
12.2.2 If AIS breaches any other term of this Agreement or any other agreement
between AIS and AMADEUS, or its corporate affiliates, which breach is
not cured within fifteen days after written notice by AMADEUS, or
12.2.3 If AIS becomes insolvent, makes any assignment for the benefit of
creditors, calls a meeting of creditors, offers a composition or
extension to creditors, suspends payment, consents to or suffers the
appointment of a receiver, a trustee, a committee of creditors or a
liquidating agent files or has filed against it a petition in bankruptcy
or seeking reorganisation, arrangement or readjustment or its debts or
its dissolution or liquidation or for any other relief under any
bankruptcy or insolvency law, or has entered against it any judgment or
decree for its dissolution which remains undismissed or undischarged or
unbonded for a period of thirty days.
12.3 AIS may cancel this Agreement effective on ten days written notice to
AMADEUS in the event of material default by AMADEUS.
12.4 AMADEUS shall be considered in material default for purposes of Article
12.3 under the following circumstances.
12.4.1 If AMADEUS breaches any term of this Agreement, which breach continues
uncured for fifteen days after written notice by AIS or
12.4.2 If AMADEUS becomes insolvent, makes any assignment for the benefit of
creditors, calls a meeting of creditors, offers a composition or
extension to creditors, suspends payment, consents to or suffers the
appointment of a receiver, a trustee, a committee of creditors or a
liquidating agent, files or has filed against it a petition in
bankruptcy or seeking reorganisation, arrangement or readjustment or its
debts or its dissolution or liquidation or for any other relief under
any bankruptcy or insolvency law, or has entered against it any
judgement or decree for its dissolution which remains undismissed or
undischarged or unbonded for a period of thirty days.
12.5 In the event that the revised price is excessive and not proportional
with the services provided under this Agreement, AIS shall, before
implementation of the new price, have the right to terminate the
Agreement giving six (6) months prior written notification to AMADEUS.
In such case, during the six month period between the notification and
the termination of the Agreement, the non-revised price shall apply.
12.6 In the event of any termination of this Agreement, including but not
limited to any termination pursuant to this Article, the Party which is
not in breach may declare all advances, expenditures and liabilities
immediately due and payable without demand or otherwise reduce such
unpaid advances, expenditures and liabilities to judgement, and in
addition proceed to exercise any one or more of its rights or remedies
accorded by applicable law.
12.7 Should any CRS industry resolutions or governmental laws or regulations
become effective after the execution of this Agreement which directly or
indirectly affect the terms and conditions set forth in this Agreement,
the Parties hereto may agree to amend this Agreement to comply with such
industry resolutions, governmental law or regulation, or failing to
reach such agreement, either Party, at its option, may immediately
terminate this Agreement as of the date such industry resolution,
governmental law or regulation is to be effective and the Agreement
shall automatically terminate as of such effective date without either
Party incurring any
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<PAGE>
further liability or obligation with respect to the Agreement after such
effective date, but provided AIS obligation to pay any charges due
hereunder shall continue through the period of AIS actual use of the Bypass
Connection.
13. OBLIGATIONS UPON TERMINATION
----------------------------
13.1 Upon the termination of this Agreement, AMADEUS shall have the right to
cancel the Bypass Connection between both Systems and both Parties shall
have the right to retake possession of software, training materials,
proprietary marks, and any other confidential information belonging to
AMADEUS. AMADEUS agrees to return all material and confidential information
which are AIS property. AIS agrees to return all material which are AMADEUS
property.
13.2 AIS agrees to cease all use of any AMADEUS proprietary marks
13.3 Both Parties agree to maintain the confidentiality of any proprietary
information provided by the other Party.
13.4 Upon termination of the Agreement for whatever reason, except for Article
12.3, AIS shall promptly pay to AMADEUS, for the unexpired term of the
Agreement, the part of the monthly fee set forth in Annex II corresponding
to the development costs.
14. NOTICES
-------
All notices, requests, demands or other communications under this Agreement
shall be in writing and delivered if sent by registered mail or teletype,
and shall be deemed to have been given when received at the addresses set
forth at the beginning of this Agreement. Either of these addresses may be
changed on ten (10) days prior written notice to the other Party.
For: AMADEUS Marketing S.A. For: Applied Information Services, Inc.
Salvador de Madariaga Mr. Jeff Arcel, President
11th Floor 100 Second Street East
E-28027 Madrid Whitefish, Montana 59937
SPAIN USA
15. WAIVER
------
Failure of either Party to insist upon strict performance of any of the
covenants or conditions of this Agreement or to exercise any right or
option herein contained shall not be construed as a waiver or
relinquishment of such or any other covenant, condition, right or option or
of either Party's right thereafter to enforce each and every term and
condition of this Agreement.
16. CONFIDENTIALITY
---------------
The content and terms of this Agreement are deemed to be proprietary and
confidential information and shall not be disclosed by either Party except
with the prior written consent of the other Party, unless such disclosure
is required pursuant
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<PAGE>
to judicial or administrative process, in which case the respective Party
shall immediately so notify the other one.
17. SEVERABILITY
------------
In the event that any one or more of the provisions of this Agreement shall
be determined to be invalid, unenforceable or illegal, such invalidity,
illegality and unenforceability shall not affect any other provisions of
this Agreement and the Agreement shall be construed as if such invalid,
illegal or unenforceable provision had been replaced by a valid legal and
enforceable provision that as fully as possible carries out the Parties
intent as evidenced by the invalid, illegal or unenforceable provision.
18. ASSIGNMENT AND MERGER
---------------------
18.1 AIS shall not transfer or assign this Agreement, or any right or obligation
hereunder, or any right to use the proprietary marks of AMADEUS, without
the prior written consent of AMADEUS, which consent shall not be
unreasonably withheld.
18.2 In the event AIS merges with or is acquired by any other person or entity
not presently owning an interest in or having a controlling interest in
AIS, then AMADEUS, at its sole option, may immediately terminate this
Agreement without any obligation or liability to AIS.
18.3 AMADEUS may, at its own discretion, assign performance of responsibilities
to be performed by AMADEUS under this Agreement to AMADEUS National
Marketing Companies in local markets served by AMADEUS provided that no
such assignment shall materially affect the level of service and the
computer link provided hereunder.
19. FORCE MAJEURE
-------------
Neither Party shall be liable for delays or failure in the performance
under this Agreement caused by Acts of God, war, strike, internal or
external labor dispute, work stoppage, fire, act of government, or any
other cause, whether similar or dissimilar, wholly beyond the control of
the Party. This shall not excuse either Party from the obligation to make
the payments specified under this Agreement upon the termination of the
force majeure.
20. ENTIRE AGREEMENT
----------------
20.1 This Agreement is the entire agreement of the Parties relating to the
subject matter hereof (Bypass Connection) and shall supersede any
previously executed agreements between the Parties, written or oral.
20.2 Unless otherwise provided herein, the terms and conditions set forth in
this Agreement shall apply to each Schedule and Annexes to this Agreement
executed by the Parties whether such Schedule and Annexes are
simultaneously executed
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<PAGE>
herewith or executed hereafter. Such Schedules are attached hereto and
incorporated herein or executed hereafter.
20.3 Any amendment of this Agreement must be in writing and signed by the
authorised representatives of the Parties.
21. GOVERENING LAW AND DISPUTE RESOLUTION
-------------------------------------
21.1 This Agreement and any difference or dispute arising out of it or related
to it shall be governed, construed and interpreted in accordance with the
laws of Spain.
21.2 Any dispute arising in connection with this Agreement shall be finally
settled by arbitration according to the Rules of Arbitration of the
International Chamber of Commerce, Paris, by three arbitrators, appointed
according to said rules. The place of arbitration shall be Paris (France)
and the language of the procedure shall be the English one
IN WITNESS THEREOF, AMADEUS and AIS have executed this Agreement as of the
day and year first above written.
<TABLE>
<CAPTION>
AMADEUS MARKETING, S.A. APPLIED INFORMATION SERVICES, Inc.
<S> <C>
Signature /s/ Hans Jorgensen Signature /s/ Mark Savoretti
------------------------------------- ---------------------------
Name Hans Jorgensen Name Mark Savoretti
------------------------------------- ---------------------------
Title Director Sales & Vendor Services Title President
------------------------------------- ---------------------------
Date 8th July, 1996 Date 7/1/96
------------------------------------- ---------------------------
</TABLE>
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<PAGE>
ANNEX I
AMADEUS - AIS BYPASS CONNECTION
The following outlines the technical and operational aspects of the AMADEUS -
AIS Bypass Connection. The functional and technical details of it need to be
worked out jointly between the technical specialists of AIS and AMADEUS.
Development, test and implementation of the Bypass Connection will be done based
on these functional and technical specifications in a phased approach.
A communication link must be established between the AMADEUS System and TRAVEL
FILE.
The Bypass Connection function provides AMADEUS Subscribers with the capability
to Access TRAVEL FILE via their AMADEUS terminal as if directly connected to
TRAVEL FILE.
Once the AMADEUS Subscriber has established his permanent bypass session to
TRAVEL FILE, he can perform single or multiple transactions in the native
language of TRAVEL FILE. When the AMADEUS Subscriber has established his
permanent bypass session with TRAVEL FILE, the AMADEUS Subscriber acts as a
Travel File user and it is the responsibility of AIS to allow the AMADEUS
Subscriber the functionality, displays and updates of TRAVEL FILE.
It is the responsibility of AIS to determine allowable functions and provide
necessary security for AMADEUS Subscribers.
The session to TRAVEL FILE is started when the user enter the AMADEUS bypass
entry which is 1TVO//.
Once the bypass session has been established the AMADEUS Subscriber must perform
all following entries in TRAVEL FILE's native language.
The AMADEUS System passes input data to TRAVEL FILE and does not translate or
edit the transactions.
The use by the AMADEUS Subscriber of TRAVEL FILE's functions may be limited due
to the existence in TRAVEL FILE of special features (i.e. screen size, tabbing,
character set) that may be not supported by the AMADEUS System at the networks'
or terminals' levels.
TRAVEL FILE shall provide the AMADEUS Subscriber with a display which contains
input fields that allow the AMADEUS Subscriber to terminate the bypass session
at any time desired by the AMADEUS Subscriber.
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<PAGE>
ANNEX II
A. CHARGES
-------
1. AIS agrees to pay to AMADEUS a monthly fee as follows:
1.1 Year One (July 1st, 1996 to June 30th, 1997) ECU 4,000 (four thousand)
1.2 Year Two (July 1st, 1997 to June 30th, 1998) ECU 6,000 (six thousand)
For Access over 40,000 a fee of ECU 1,000 (one thousand) for every
additional 10,000 Access will apply.
1.3 Year Three (July 1st, 1998 to June 30th, 1999) ECU 8,000 (eight thousand)
For Access over 40,000 a fee of ECU 1,000 (one thousand) for every
additional 10,000 Access will apply.
1.4 The number of Access that will be counted shall not include the Access of
SRG International and Thomas Cook to their Proprietary Network Partitions.
1.5 The Parties shall revise every 6 months the number of Access of SRG
International and Thomas Cook AMADEUS Subscribers to their Proprietary Network
Partition and may decide to apply certain charges for it.
2. From the monthly fee described in paragraph 1 above, ECU 1,333 (one
thousand three hundred and thirty three) corresponds to the cost of the
developments in the AMADEUS System necessary to implement the Bypass Connection.
-14-
<PAGE>
SIDE LETTER to the
AMADEUS - APPLIED INFORMATION SERVICES
BYPASS CONNECTION AGREEMENT
With reference to the AMADEUS - APPLIED INFORMATION SERVICES BYPASS CONNECTION
AGREEMENT ("the Agreement"), signed on the 1 of July 1996 by and between
AMADEUS Marketing, S.A., a Spanish Corporation with principal offices at
Salvador de Madariaga, 1.28027 Madrid, Spain (hereinafter referred to as
"AMADEUS"),
and
Applied Information Services, Inc., a Montana corporation, domiciled at 100
Second Street East, Whitefish, 59937 Montana, USA (hereinafter "AIS").
WHEREAS, at the time of signature of the Agreement AMADEUS and AIS acknowledge
that AIS is unable to comply with the training and help desk obligations
described in the Agreement,
WHEREAS, AIS believes that within a short period will be able to fulfil the
training and help desk obligations
WHEREAS, the Parties believe that the Bypass Connection can be used by SRG
International and by Thomas Cook without the initial training and the full help
desk services,
the Parties hereby have agreed to the following:
(1) The Bypass Connection established from the AMADEUS System to TRAVEL
FILE will be opened or accessible only for SRG International and Thomas Cook
AMADEUS Subscribers, and only upon completion of the requirement described in
the following paragraph.
(2) Before access is given to SRG International and Thomas Cook, AIS will
provide AMADEUS with a written commitment from SRG International and Thomas Cook
stating that they agree to start using the Bypass Connection for a period of 90
days, without the training and help desk services required by AIS under the
Agreement.
(3) AIS will, within a period of 90 days from the signature of the
Agreement, comply with the training and help desk obligations described in the
Agreement. In the event that after that initial period of 90 days AIS is still
not able to comply with the training and help desk obligations, the Parties may
agree to extend the period to other 90 days. If after the second period of 90
days AIS is not able to comply with the training and help desk obligations
AMADEUS shall have the right to terminate the Agreement upon giving 10 days
prior written notification to AIS. It is expressly specified that in this case
the provisions of 13.4 shall apply.
<PAGE>
(4) AIS agrees to establish during the 90 days periods a Help Desk
telephone number in Whitefish, Montana, which will be operational from 6:00 AM
to 11:00 PM, Montana time. AIS shall make its best efforts to implement as soon
as possible a free Help Desk telephone number for the European based AMADEUS
Subscribers.
(5) AMADEUS agrees that during the first 90 days period, starting July 1st,
1996 until September 30th, 1996 the monthly fee to be paid by AIS to AMADEUS, as
set forth in Article 6.3 and Annex II of the Agreement, shall be ECU 1,000 (one
thousand).
In the event the second 90 day period is applicable, starting from October
1st, to December 31st, 1996 the flat monthly fee of ECU 2,000 (two thousand)
shall apply.
As soon as AIS is able to comply with the training and help desk
obligations described in the Agreement, the prices described in Annex II shall
apply.
During the period in which the above indicated reduced monthly fees are
applicable, AMADEUS agrees to consider the proportional monthly amount of the
development costs, (described in Annex II, Clause 2, of the Agreement) as paid
by AIS.
(6) AIS will inform SRG International and Thomas Cook of the telephone Help
Desk Service via the AMADEUS general information pages and through electronic
marketing messages.
(7) AIS agrees to make its best efforts to provide training courses to SRG
International and Thomas Cook in the event that these last request it. If the
training are requested AIS may use quick reference cards or video material, if
accepted by the requester of the training. AIS may request to AMADEUS assistance
from AMADEUS NMCs for the provision of such training courses. AMADEUS will
contact the corresponding AMADEUS NMC in order to agree on the conditions, but
AIS will always be responsible for the trainer.
(8) AMADEUS will discuss and decide on a case by case basis the opening of
the access to other AMADEUS Subscribers that may be interested to start using
the Bypass Connection in the same conditions as SRG International and Thomas
Cook.
Except for the amount of the monthly fee, and the training and help desk
obligations, to which the special conditions described in this Side Letter shall
apply, the Agreement shall remain applicable.
The terms and conditions described in this Side Letter shall apply until AIS
complies with the training and help desk obligations as described in the
Agreement.
This Side Letter has been executed as of the 1 day of July 1996.
For AMADEUS Marketing S.A. For Applied Information Services, Inc.
Signature: /s/ Hans Jorgensen Signature: /s/ Mark Savoretti
Name: Hans Jorgensen Name: Mark Savoretti
Title: Director Sales & Vendor Services Title: President
<PAGE>
EXHIBIT 10.26
SABRE Extension Program
Associate Distribution and Services Agreement
This Agreement is made as of the date set forth below between The SABRE Group,
Inc., a Delaware Corporation, having its principal place of business at 4255
Amon Carter Boulevard, Fort Worth, Texas 76155 ("TSG") and the provider of goods
or services identified on the signature page of this Agreement ("Vendor")
RECITALS
WHEREAS, TSG provides computerized reservations services with related data
processing activities primarily marketed to SABRE Users.
WHEREAS, Vendor provides the services and/or products defined on the attached
Schedule A ("Product"); and
WHEREAS, the parties desire to enter into a co-marketing agreement mutually
beneficial to both parties, and provide for the optional sale or use of Vendor's
Product through the SABRE System.
NOW THEREFORE, in consideration of the mutual covenants set forth below, the
parties agree as follows:
1. DEFINITIONS. The following terms shall have the meanings indicated when
used in this Agreement:
1.1 "AGREEMENT" shall mean this SABRE Extention Program Associate Distribution
and Services Agreement.
1.2 "BOOKING" shall mean for each reservation, purchase or other transaction
related to Vendor's Product that is created in or processed through the SABRE
System, the quantity of items or units of service specified in such transaction,
less cancellations.
1.3 "CANCELLATION" shall mean only those reservations, purchases or other
transactions related to Vendor's Product that are canceled or processed through
the SABRE System by a SABRE User.
1.4 "DRS" shall mean the Direct Reference System, which is a static display
contained in the SABRE System which Vendor uses to communicate information to
SABRE Users.
1.5 "GDS" shall mean a global distribution system (commonly referred to as a
computerized reservation system [CRS]). A GDS collects, stores, processes,
displays and distributes information through computer terminals concerning air
and ground transportation, lodging and other travel related products and
services offered by travel suppliers and which enables users to reserve or
otherwise confirm the use of, or make inquiries or obtain information in
relation to, such products and services, and/or issue documents for the
acquisition or use of such products and services.
1.6 "GDS RULES" shall mean rules and regulations established by governmental
entities for the operation of GDSs, including those in effect in the United
States, Canada, and the European Community.
1.7 "SABRE DATABASE" shall mean the information stored, displayed and
distributed through the SABRE system as maintained by TSG.
1.8 "SABRE EQUIPMENT" shall mean any computer hardware connected to the SABRE
System, and furnished to Vendor by TSG.
1.9 "SABRE SYSTEM" shall mean TSG's GDS which has electronic facilities able to
provide, store, communicate, distribute, process and document such information
as is from time to time stored in the SABRE Database, including Internet
hyperlinks to travel service content maintained by third parties.
1.10 "SABRE USER" shall mean any person or entity that utilizes any version of
the SABRE System including versions marketed by licensees.
1.11 "TERRITORY" shall mean the assigned geographic region where the Vendor
distributes the Product.
2. EQUIPMENT
2.1 If Vendor is not on the date hereof a party to an agreement with either TSG
or a suitable third party, pursuant to which it can receive data from and
transmit data to the SABRE System, Vendor may enter into such agreement in order
to enable it to receive the benefits of the SABRE System.
2.2 In that event, Vendor may enter into a separate agreement with TSG (the
"Access Agreement").
2.3 TSG agrees that the SABRE Equipment and access to the SABRE System will be
afforded Vendor at TSG's prevailinag rates and charges.
2.4 Vendor agrees that its use of the SABRE Equipment and its access to the
SABRE System will be governed by the terms and conditions defined in the Access
Agreement.
2.5 Notwithstanding anything to the contrary contained either in this Agreement
or in the Access Agreement, should either TSG or Vendor terminate this Agreement
for any reason, then the Access Agreement will be deemed to have been terminated
simultaneously.
2.6 TSG shall provide to Vendor initial training and/or one set of training
materials, required to operate the SABRE Equipment and maintain data provided by
Vendor for its Product. Additional training at Vendor's request above and
beyond TSG's normal and customary training, as determined by TSG in its sole
discretion, will be charged to the Vendor at TSG's prevailing rate.
2.7 TSG shall provide Vendor with written copies of its procedures and
changes thereto pertaining to the operation of
<PAGE>
the SABRE System, and Vendor shall fully comply with such procedures.
2.8 TSG shall maintain a help desk facility for the purpose of answering
Vendor's questions regarding the operation of the SABRE System and data within
the SABRE System.
3. THE SABRE SYSTEM
3.1 The SABRE System shall among other things:
3.1.1 provide both Vendor and SABRE Users with a display of descriptive
data pertaining to Vendor and its products
3.1.2 transmit upon request from a SABRE User, a list of Products together
with price and other relevant data; and
3.1.3 effect orders and cancellations of orders previously made, upon input
by SABRE Users, and to transmit such orders or cancellations to Vendor.
3.2 TSG makes no representations or warranties as to the number or identity of
the parties having access to the SABRE System. Vendor agrees that any SABRE
User shall be entitled to use, reserve or purchase Vendor's travel services or
products via the SABRE System. Vendor authorizes the release of all data input
into the SABRE System to all SABRE Users for their information and use. Vendor
acknowledges that TSG has, and shall continue to have the right, at any time, to
contract with parties to constitute them as SABRE Users, to terminate agreements
with SABRE Users, and to contract to provide the SABRE System to other parties,
including competitors of Vendor.
3.3 TSG retains the right, in its sole discretion, to modify or alter the
operation of the SABRE System at any time it deems such modification or
alteration to be desirable, provided, however, that TSG shall use its reasonable
efforts to give Vendor sixty (60) days prior written notice of such
modifications or alterations, other than which are those corrective in nature,
which would materially affect the services provided to Vendor under this
Agreement. Any and all costs incurred by Vendor or any third party in
connection with or as a result of such alterations or modifications shall be
borne by Vendor or such other party as the case may be, provided that Vendor
elects to participate in such alterations or modifications.
4. CONFIDENTIALITY
4.1 Each Party acknowledges that material the other deems confidential or
proprietary may come into its possession in connection with this Agreement, the
disclosure of which to third parties will be damaging. Each party agrees,
therefore, to hold such material in strict confidence and agrees that it will
not disclose it to any third party or make use of it other than for the
performance of this Agreement. Material shall be considered confidential or
proprietary if it is not generally known regardless of whether such material is
or may be copyrighted or characterized as trade secret. The obligations set
forth herein shall not apply, however, to (i) information that is or becomes,
through no fault of the receiving party, publicly available, (ii) information
that is already or becomes known by the receiving party, (iii) information that
is furnished to either party hereto by a third party without the breach of any
obligation of confidentiality or the theft or misappropriation of any trade
secret; (iv) information that is developed separately by the recipient without
breach of this Agreement, as can be established through documentation; or (v)
subject to Article 4.2, information required to be disclosed by law.
4.2 In the event confidential or proprietary information is validly subpoenaed
or otherwise requested or demanded by any court of governmental authority, the
party to which such subpoena, request, or demand is directed shall give the
other party prompt notice prior to responding and shall exercise its best
efforts, in cooperation with the other party, to quash or limit such subpoena,
request, or demand. Upon the termination of this Agreement, each party shall
promptly deliver to the other party any confidential or proprietary material or
information provided by the other party pursuant to this Agreement. The terms
of this paragraph shall survive the termination of this Agreement.
5. RESPONSIBILITIES OF TSG
5.1 TSG will use its reasonable efforts to assist Vendor in promoting and
marketing the Product. TSG, using such means as it determines in its sole
discretion, will inform SABRE Users that may be affected or that may find the
product useful of the availability of the Product from Vendor.
5.2 DRS via the SABRE System
5.2.1 If Vendor desires, TSG shall enter the text of Vendor's DRS into the
SABRE System, as provided by Vendor. TSG will not be required to verify the
accuracy of the text of the DRS, as submitted by Vendor to TSG. However,
TSG agrees to incorporate accurately the text of the DRS, as submitted by
Vendor, into the SABRE System; provided however that TSG's sole liability
for failure to incorporate Vendor's text accurately shall be to correct any
inaccuracy as soon as reasonably possible after written notice from Vendor
stating the necessary correction.
5.2.2 Vendor acknowledges and agrees that TSG will not undertake to perform
any verification of any sort of the text submitted to TSG by Vendor for
input into the SABRE system and that TSG's function hereunder is solely to
perform the services set forth within this Agreement. TSG makes not
representation whatsoever to Vendor or any third party as to the accuracy
of the text submitted by Vendor for input by TSG into the SABRE System.
5.2.3 Notwithstanding section 5.2.2 above, TSG retains the right to review
the text pertaining to the Product and Vendor agrees to provide TSG, on
request, all data pertaining to the Product that supports the accuracy or
veracity of the text regarding the Product. TSG may, in its sole
discretion, after review of the data, approve or disapprove the input of
such data into the SABRE System.
5.2.4 TSG shall provide one free update to the DRS upon participation in
the program. In addition, TSG will continue to provide one free update each
annual renewal for the length of the contract. The charge for updates to
Vendor's DRS in excess of the one free update every year shall be TSG's
prevailing charge at the time of the update.
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5.2.5 TSG may, at any time, and in its sole discretion, require Vendor to
remove any part of its DRS text that TSG believes is inappropriate for
display to SABRE Users, in TSG's sole discretion. TSG reserves the right to
limit the number of DRS pages available to Vendor.
5.2.6 TSG makes no warranty or representation as to the number or identity
of SABRE Users that will be informed of the Product via the DRS.
6. RESPONSIBILITIES OF VENDOR
6.1 Vendor will not discriminate in any manner, whatsoever, against any SABRE
User on account of the SABRE User's selection, possession, or use of the SABRE
System.
6.2 Vendor agrees to guarantee to SABRE Users and clients of SABRE Users the
accuracy of Vendor's policies, rates, and availability data as displayed in the
SABRE System. Vendor will be responsible directly to SABRE Users and clients of
SABRE Users for providing Vendor's services as displayed in the SABRE System.
Vendor shall, on request, certify the accuracy of all data pertaining to it or
its operations which have been supplied to TSG for input into the SABRE System
or been otherwise distributed pursuant to or in connection with this Agreement.
6.3 Vendor will use its reasonable effort to provide through the SABRE System
all rates which are offered by the Vendor. In no event shall Vendor make
available rates through any other GDS that are not made available through the
SABRE System.
6.4 Vendor agrees to return confirmation to, or respond to all requests
received from, the SABRE User within 24 hours or next day of business from the
time of such request.
6.5 Vendor agrees to pay TSG as per the terms identified on the attached
Schedule A.
6.6 Vendor agrees to provide customer support services as outlined on the
attached Schedule A.
6.7 Vendor shall maintain complete and accurate records of its sales of the
Product to SABRE Users. Vendor will make available to TSG monthly reports of
the sales of the Product to SABRE Users. During the term of this Agreement and
for one year following its termination for any reason, at TSG's request, Vendor
will make available to TSG or its designated representative, Vendor's books and
records such that TSG or its designated representative may conduct an audit, at
TSG's own expense, to determine that it has received all fees to which it is
entitled. Any adjustments necessary as a result of the audit will occur within
fifteen (15) days after notice has been given of the necessity for an
adjustment.
6.8 The Vendor shall be responsible for the contents of all text given to TSG
for input into the SABRE System, and shall prepare and maintain the text in
accordance with TSG's guidelines for data format, layout and organization.
Failure to comply with these guidelines may result in the immediate removal,
without prior notice, of the text from the SABRE System.
6.9 The Vendor shall ensure that the content of the information and the
description and offering of the Product therein shall be in compliance with all
local, state/province and federal laws.
6.10 The rights and benefits hereunder shall not extend to any product or
service not listed on the attached Schedule A hereto unless Vendor has obtained
the prior written consent of TSG.
6.11 TSG retains the right to change the Vendor's two letter and/or three
letter Code assigned to Vendor due to operational necessities. Vendor agrees
that TSG shall not be liable to Vendor for any costs or expenses incurred by
Vendor as a result of the change in such codes.
7. PROMOTION
7.1 The promotion of the Product(s) to the SABRE Users is solely the
responsibility of the Vendor.
7.2 At its own cost and expense, Vendor may communicate with the SABRE Users in
such manner as it deems appropriate to draw attention to the availability of the
Product(s).
7.3 Vendor shall obtain prior approval from TSG with respect to any promotional
communications that use any of TSG's registered servicemarks or trademarks or
that undertake to instruct the SABRE Users on the use of the SABRE System.
Similarly, TSG shall obtain the prior approval from Vendor to use any of the
Vendor's registered servicemarks or trademarks in any promotional communications
undertaken by TSG. Such approval shall not be unreasonably withheld or delayed
by either party.
7.4 Failure to obtain prior approval pursuant to Article 7.3 from TSG shall
result in a $5,000.00 USD fee payable by Vendor to TSG within fifteen (15) days
of receipt of notification for each occurrence.
7.5 In the event that the Vendor shall publish any promotional announcement and
literature generally describing GDS services, such general announcements and
literature shall include references to the SABRE System, and Vendor shall at all
times comply with Article 7.3 herein.
8. TERM
Except as otherwise stated herein, the initial terms of this Agreement shall be
for two (2) years, commencing on the execution of this Agreement ("Initial
Term"). This Agreement shall automatically renew for successive one (1) year
periods unless otherwise terminated pursuant to the terms of this Agreement.
Notwithstanding the above, if Vendor's Product as defined in the attached
Schedule A is not fully functional and available for use by SABRE Users within
four (4) months of the start of the Initial Term, TSG may at its sole option
terminate this Agreement by giving Vendor thirty (30) days advance notice at any
time prior to the end of the sixth (6th) month of this Agreement.
9. PAYMENT
9.1 Vendor shall pay TSG the following fees and charges without any right to
set-off or deduction except as specifically provided herein.
9.1.1 Deposit Fee. The sum of $1,000.00 USD or 25% of the annual minimum
fee, whichever is greater, payable by way of a certified check accompanying
this
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Agreement, which fee shall be held by TSG. JSG may, at its option, apply
any portion of all of this fee towards any balance due TSG by Vendor for
fees as set forth herein or for SABRE Equipment monthly lease fees. This
deposit does not eliminate Vendor's payment obligation as set forth herein.
TSG agrees to return the deposit, or balance, if any, without interest, to
Vendor upon termination of this Agreement provided that Vendor's payments
and monthly SABRE Equipment fees have been current for the duration of this
Agreement.
9.1.2 Implementation Fee. Vendor agrees to pay to TSG a non-refundable fee
of $300.00 USD. This fee shall be paid upon execution of this Agreement by
way of a certified check.
9.1.3 Product Specific Fees. Vendor shall pay to TSG a Product Specific Fee
as defined on the attached Schedule A.
9.2 TSG may increase the Product Specific Fee at any time after the initial
Term of this Agreement. Such increases will be effective upon thirty (30) days'
written notice to Vendor and will not exceed fifteen percent (15%) in any twelve
(12) month period.
9.3 Vendor shall remit to TSG payments required pursuant to this Agreement on a
monthly basis within thirty (30) days after receipt of invoice. Any disputes
arising from such invoice shall not delay payment as described hereto. Time
being of the essence, such payments should be forwarded directly to:
The SABRE Group, Inc.
Associate Receivables
Box 845249
Dallas, Texas 75248-5249
9.4 All fees not paid when due shall accrue interest at the rate of ten percent
(10%) per annum or the higher amount permitted by law, whichever is less,
commencing on the 31st day after Vendor's receipt of invoice.
9.5 Upon termination of this Agreement for any reason whatsoever, all unpaid
charges owed by Vendor shall become immediately due and payable, and Vendor
shall forthwith remit payment thereof with no right to set off or deduction
whatsoever.
10. NOTICES
Any notices or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been given when delivered personally, when
received via messenger or by express delivery service, or when deposited in a
regularly maintained receptacle for the United States Postal Service, postage
prepaid, and addressed as follows or as the parties may from time to time
designate in writing.
If to TSG:
The SABRE Group, Inc.
SABRE Travel Information Network
P. O. Box 619615 MD 3531
DFW Airport, TX 75261-9615
USA
Facsimile: 817-963-4200
Delivery: 4200 American Boulevard
Fort Worth, Texas 76155
USA
Attn: Manager/SABRE Extension Program
If to Vendor:
Orbit Network Inc.
10 Commercial Blvd.
Novato, CA 94949
USA
Facsimile: 415-883-1102
Delivery Same
Attn: Mr. Bill Guerin
11. TAXES
Vendor shall pay all taxes (including without limitation, sales, use and
personal property taxes) fees, licenses, and assessments imposed by any federal,
state, or local authority and required to be paid by either TSG or Vendor as a
result of the services or products to be provided pursuant to this Agreement
except for taxes based upon or measured by TSG's net income.
12. INDEMNITY
Vendor agrees to defend, indemnify, and hold TSG harmless against all
liabilities, damages, losses, claims, fines, penalties, and judgments,
including all costs and expenses incidental thereto which may be charged to or
recoverable from TSG by reason of any loss, damage, or injury, directly or
indirectly, arising out of or in connection with the Product or Vendor's
failure to perform its obligations pursuant to this Agreement. In the event
of Vendor's failure to defend under this provision, TSG may, at its own
option, defend as it sees fit in either Vendor's or TSG's name as
appropriate, and TSG
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may settle any claim or take any such action as may be necessary or advisable
and any judgment, fines, costs, interests, bond, or other expense shall be
payable by Vendor. The settlement sum and reasonable attorneys' fees shall be
added to the amount owing TSG and shall be payable by Vendor on TSG's demand.
This provision shall survive the termination of this Agreement.
13. PATENT INFRINGEMENT CLAIMS
13.1 Each party ("Indemnitor") will defend, at its own expense, any action
brought against the other party ("Indemnitee") to the extent that it is based on
a claim that the Indemnitor's system or associated hardware or software provided
to Indemnitee by Indemnitor infringes a patent, trademark, or copyright of the
United States only, and Indemnitor will pay those costs and damages finally
awarded against Indemnitee in any such action that are attributable to any such
claim, provided, however, such defense and payment are conditioned on all of the
following:
13.1.1 that Indemnitor will be notified promptly in writing by Indemnitee
of any notice of such claim;
13.1.2 that Indemnitor will have control of the defense in any action on
such claim and all negotiations for its settlement or compromise;
13.1.3 that no un-authorized changes of any kind whatsoever have been made
to the Indemnitor's system or associated hardware or software; and
13.1.4 should the Indemnitor's system or associated hardware or software
become or, in Indemnitor's opinion, be likely to become the subject of a
claim of infringement of a United States patent, Indemnitee permits
Indemnitor to replace or modify the same so that it becomes non-infringing
or make other arrangements, as Indemnitor deems fit in its sole discretion,
to allow for continued use of the Indemnitor's system or associated
hardware or software.
14. FAILURE OR DELAY OF SERVICE
Except for Vendor's obligations to make payments hereunder, neither party shall
be deemed in default under this Agreement as a result of a failure to perform
its obligations under this Agreement if such failure is caused by acts of God,
war, or the public enemy, strike, labor stoppage, fire, flood, weather,
mechanical difficulty, power shortage, or any other cause beyond the reasonable
control of that party. The party unable to perform for such reason shall notify
the other party without delay.
15. DISCLAIMER
15.1 TSG DISCLAIMS AND VENDOR HEREBY WAIVES ALL WARRANTIES EXPRESSED OR
IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR INTENDED USE FOR A PARTICULAR PURPOSE OF ANY EQUIPMENT, DATA, OR
SERVICES FURNISHED HEREUNDER OR ANY LIABILITY IN CONTRACT, TORT, OR STRICT
LIABILITY (EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) WITH RESPECT TO
THE EQUIPMENT, DATA OR SERVICES FURNISHED HEREUNDER. TSG'S LIABILITY HEREUNDER
FOR BREACH OF CONTRACT, TORT, OR UNDER ANY THEORY WHATSOEVER SHALL BE LIMITED TO
THE COMPENSATION TSG HAS RECEIVED PURSUANT TO THIS AGREEMENT DURING THE THREE
YEARS IMMEDIATELY PRECEDING THE EVENT OR CIRCUMSTANCES GIVING RISE TO TSG'S
LIABILITY.
15.2 VENDOR AGREES THAT TSG SHALL NOT BE LIABLE TO IT FOR ANY SPECIAL,
EXEMPLARY, INDIRECT, OR CONSEQUENTIAL DAMAGES UNDER ANY CIRCUMSTANCES WHETHER IN
CONTRACT, TORT, OR UNDER ANY OTHER THEORY OF RECOVERY.
16. TITLE
Title and full and complete ownership to all TSG-owned or developed software
used in the performance of this Agreement shall remain with TSG. Vendor
acknowledges and agrees that the SABRE System is TSG's proprietary information
and trade secret, whether or not any portion thereof is or may be validly
copyrighted or patented. Any manuals or other documentation in any form and any
and all copies thereof, and any and all parts or abstracts thereof, are for the
exclusive use of TSG, and are subject to the confidentiality provisions set out
herein.
17. ASSIGNMENT
Neither party shall transfer or assign this Agreement, or any right or
obligation under it, by operation of law or otherwise, without the prior written
consent of the other party, except that TSG may assign this Agreement to any
affiliate or to any other entity which succeeds to all or part ownership or
operation of the SABRE System without such consent.
18. EXCLUSIVITY AND RIGHTS REGARDING OTHER PRODUCTS
18.1 This is a non-exclusive Agreement and similar Agreements may be entered
into by TSG or Vendor with any other party.
18.2 Vendor agrees that during the term of this Agreement it will not enter
into a co-marketing agreement for the Product with any other GDS that is more
favorable to the GDS than that offered to TSG. In the event Vendor enters into
such co-marketing agreement with another GDS on more favorable terms, Vendor
will immediately make available to TSG such more favorable terms, effective as
of the date of the agreement with the other GDS.
19. TERMINATION
19.1 Either party shall be entitled to terminate this Agreement immediately
upon any of the following events:
19.1.1 In the event the other party becomes insolvent; makes any assignment
for the benefit of creditors; calls a meeting of creditors; offers a
composition or extension to creditors, suspends payment; consents to or
suffers the appointment of a receiver, a trustee, a committee of creditors,
or a liquidation agent; files or has filed against a petition in bankruptcy
seeking reorganization, arrangement, or readjustment of its debts or its
dissolution, or liquidation, or requests any other relief under any
bankruptcy or insolvency law; or
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19.1.2 In the event the other party has entered against it any judgment or
decree for its dissolution which remains undismissed or undischarged or
unbonded for a period of thirty (30) days; or
19.1.3 The other party fails to make any payment required by this Agreement
when due and fails to cure such breach within fifteen (15) days after
receipt of written notice thereof from TSG; or
19.1.4 Either party breaches any term of this Agreement, which breach
continues uncured for fifteen (15) days after receipt of written notice
thereof from the other party.
19.2 If any portion of this Agreement is declared or found to be illegal,
unlawful, unenforceable or void under any statute, regulation, or executive
order of the federal government or any state or local authority, both parties
shall be relieved of all obligations arising out of such provision; but, if
capable of performance, the remainder of this Agreement will not be affected.
19.3 TSG and Vendor each shall have the right to terminate this Agreement at
any time with or without cause after the initial Term of this Agreement upon not
less than thirty (30) days written notification, and the parties shall have no
further obligations hereunder except as stated in Articles 4, 12, 13, 15 and 16
herein and as otherwise provided herein.
19.4 Notwithstanding any other provision herein, upon termination for any
reason whatsoever of this Agreement, Vendor shall remain liable for the payment
of any fees then payable or that become payable in the future pursuant to
Article 9 herein for the Product that is sold prior to the termination of this
Agreement, regardless of whether or not the fee for such Product is collected
prior to the termination of this Agreement, and Vendor shall be liable for a pro
rata share of any Minimum Payment due pursuant to Article 9 herein.
19.5 Either party breaches any term of this Agreement, which breach continues
uncured for fifteen (15) days after receipt of written notice thereof from the
other party.
20. INDEPENDENT CONTRACTORS
20.1 TSG and Vendor acknowledge that each party is an independent contractor.
Nothing in this Agreement is intended nor shall be construed to create an
agency, partnership, or joint venture relationship between the two parties.
20.2 TSG shall have the right to market the Product as one provided by a third-
party company, and TSG may include such disclaimers as it deems necessary, in
its sole discretion, including without limitation, the following:
"This product is provided by a third-party company, and is intended to enhance
the services you offer your clients. Support and service of the product is the
sole responsibility of the third-party company. TSG makes no representations or
warranties, expressed or implied, about such product."
21. GOVERNING LAW
This Agreement and any disputes arising hereunder shall be governed by the laws
of the United States and the State of Texas without regard to its conflict of
laws rules. Each party hereby consents to the non-exclusive jurisdiction of the
courts of the State of Texas and the United States District Court for the
Northern District of Texas in any dispute arising out of this Agreement. The
United Nations Convention on the International Sales of Goods is specifically
excluded from this Agreement.
22. WAIVER
No waiver of any breach of any provision of this Agreement by either party shall
constitute a waiver of any subsequent breach of the same or any other provision
hereof and no waiver shall be effective unless made in writing.
23. GDS RULES
In the event the terms of this Agreement become inconsistent with any applicable
GDS Rules, at TSG's option, this Agreement shall either, (i) terminate upon
written notice from TSG, or (ii) be modified to be consistent with the GDS
Rules, provided that such modification does not materially diminish Vendor's
rights hereunder.
24. ATTORNEYS FEES
In the event that any legal proceeding at law or in equity arises hereunder or
in connection herewith (including any appellate proceedings or bankruptcy
proceedings), the prevailing party shall be awarded costs, reasonable expert
witness fees, and reasonable attorneys' fees incurred in connection with such
legal proceedings.
25. HEADINGS
The headings to this Agreement are for convenience only and shall not affect the
meaning or constructions of any paragraphs.
26. ENTIRE AGREEMENT
This Agreement is the entire Agreement of the parties and shall supersede any
previously executed Agreements or oral understandings between the parties which
relate to the subject matter of this Agreement. This Agreement may not be
amended or modified except in writing and signed by the parties.
NOW, THEREFORE, in consideration of the foregoing, both parties agree to the
terms and conditions of this Agreement on the date set forth below. The parties
have executed this Agreement as of this 2nd day of April, 1998.
The SABRE Group, Inc.
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/s/ F. William Guerin /s/ Renee E. Alexander
- --------------------- ----------------------
(Signature) (Signature)
Bill Guerin Renee Alexander
President, Orbit Network Inc. Manager, SABRE Extension Program
March 5, 1998 4/2/98
- --------------------- ----------------------
(Date) (Date)
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Exhibit 10.27
GALILEO CONTRACT NO. 34209
-----
GALILEO(R) SERVICES DISPLAY
AND RESERVATIONS AGREEMENT
--------------------------
This Agreement made and entered into as of this 24th day of November, 1998,
between GALILEO INTERNATIONAL, L.L.C., a Delaware limited liability
company, whose principal place of business is located at 9700 West Higgins
Road, Rosemont, Illinois 60018 ("GT") and ORBIT NETWORK, INC., a Delaware
corporation whose principal place of business is located at 10 Commercial
Boulevard, Novato, California 94949 ("Vendor").
WITNESSETH:
-----------
WHEREAS, GI owns and markets its computerized reservations and ticketing and
other services ("Galileo Services"); and
WHEREAS, Vendor owns and operates a computer system ("Orbit System") and has
developed a computerized database ("TravelFile"); and
WHEREAS, GI has developed a Galileo Services communications capability (the
"Direct Link") which will enable Galileo Subscribers to query TravelFile and
possibly, the travel related products and services of third party vendors
(respectively "Third Party Products" and "Third Party Vendors"); and
WHEREAS, Vendor desires to participate in Galileo Services for purposes of
facilitating the display of TravelFile and Third Party Products, and, at GI's
sole option, provide booking capabilities for Third Party Products, through
Galileo Services via the Direct Link;
NOW, THEREFORE, in consideration of the premises and the mutual obligations
hereinafter set forth, GI and Vendor hereby agree as follows:
1. DEFINITIONS
-----------
For the purpose of this Agreement and its attachment, the following words
and terms shall have the following meanings:
A. "Ancillary Services" means limited access to Galileo Services by
Vendor solely for the purpose of facilitating the display of
TravelFile or Third Party Products.
B. "TravelFile" means Vendor's computerized database, which resides on
the Orbit System, which contains listings and information about
TravelFile Advertisers' (as defined in Section 1.I below) products and
services.
D. "Direct Link" means a Galileo Services communications capability
which, when a request for information or a transaction is being made
for a TravelFile Advertisers' products or services through TravelFile,
or for Third Party Products, by a GS through Galileo Services,
simultaneously transmits the transaction data or request to the Orbit
System.
E. "Galileo Services" or "Galileo" means GI's computerized reservations
and ticketing service and other services. For purposes of this
Agreement, Galileo Services may include services of Galileo(R),
Appolo(R) and any other computerized reservation system or authorized
agent thereof with whom GI has an agreement to distribute such
services or similar service ("Related CRS"). Said parties shall not be
considered third parties under this Agreement.
F. "Galileo Subscriber" or "GS" means any authorized user of Galileo
Services or any portion thereof.
Galileo and Apollo are registered trademarks of Galileo International in the
United States and/or other countries.
<PAGE>
G. "Third Party Vendor" means a third party, other than a TravelFile
Advertiser, who has been approved by GI and is included in Attachment
A, who has contracted with Vendor to provide access to its travel-
related products and services through the Direct Link to Galileo
Subscribers.
H. "Third Party Products" means information and the travel related
products and services of the Third Party Vendors as set forth in
Attachment A hereto.
I. "TravelFile Advertiser" means a third party entity who has contracted
with Vendor to list its travel related products or services through
TravelFile, where such products or services directly benefit the
consumer and are generally considered destination related. For the
purposes of this Agreement, a vendor whose services are listed in
TravelFile does not have to be under contract with the Vendor to be
included in a TravelFile vendor listing.
2. RESPONSIBILITIES OF VENDOR
--------------------------
A. Vendor, at its own cost, shall coordinate TravelFile Services with
Galileo Services to provide as advantageous and uniform reservations
services to all GSs as it provides through other computerized
reservations systems.
B. Vendor shall be responsible for ensuring that the contents of
TravelFile Services provided by it under this Agreement are current
and accurate.
C. Vendor is responsible for continually maintaining TravelFile,
including, but not limited to, the appropriate maintenance of rates,
charges, procedures, availability, and marketing information, pursuant
to the following guidelines:
(i) All data is to be logically indexed by Vendor;
(ii) All data is to be stored by Vendor in a "user friendly" format
requiring a minimum of input by GS to retrieve;
(iii) All data must be displayed in a literate, easily discernible
manner; and
(iv) Data must be maintained by Vendor in a timely manner and all
obsolete data must be deleted.
D. Vendor's use of the Direct Link shall be limited to the provision of
TravelFile to GSs through Galileo Services, or the provision of Third
Party Products approved by GI and included in Attachment A to this
Agreement. This does not include the acceptance of bookings, unless
terms related to the acceptance of bookings are specifically outlined
in Attachment A hereto. The data provided by Vendor through TravelFile
shall be of a quality and content at least equal to that provided by
Vendor through other computerized reservations systems.
E. Vendor shall be responsible for all of its costs associated with the
advertising, promotion and marketing of the availability of TravelFile
to others, including GSs. Vendor may use the GI service marks
"Galileo" and "Apollo" in promotional materials, provided that GI's
written approval for each such use is first obtained and Vendor
complies with any and all conditions GI may impose to protect the use
of GI's service marks. Vendor must state in all such materials that
"Galileo and Apollo are registered trademarks or service marks of
Galileo International".
F. Vendor is solely responsible for processing and responding to
questions and correspondence from GSs, consumers and others regarding
TravelFile or Third Party Products provided pursuant to this
Agreement.
G. Vendor shall make available to GI the same improvements, enhancements
or additions to TravelFile offered by Vendor to other end users of
other computerized reservations systems.
H. If Vendor participates in two or more computerized reservations
systems by offering TravelFile, then Vendor agrees not to recommend to
others any other systems over Galileo Services and it shall not
disparage Galileo Services in any way.
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I. Vendor shall pay one hundred percent (100%) of the costs associated
with the provision of telecommunications circuit(s) for the Direct
Link between Galileo and the Orbit System and Vendor shall pay GI for
such charges within thirty (30) days after the date of each monthly
invoice. In addition to monthly line charges, these communications
costs include all charges for installation, deinstallation, circuit
moves, circuit upgrades, and protocol changes. In the event Vendor
requires GI hardware (terminals, printers, etc.), such hardware shall
be contracted for under a separate Ancillary Services Agreement.
J. Upon execution of this Agreement, Vendor shall establish, and Vendor
shall enforce consistently and non-discriminatorily during the term of
this Agreement, objective and verifiable standards of quality and
performance of all of Vendor's travel information suppliers whose
products and services are reflected in TravelFile.
K. Vendor shall be responsible for all Third Party Product and TravelFile
Advertiser data and shall be subject to the same responsibilities as
defined in this Agreement as if the data were its own.
L. Following execution of this Agreement Vendor reserves the right to
contract with additional third party vendors and, if approved by GI,
the Agreement shall be amended to add such approved third party vendor
to Attachment A. Vendor agrees to terminate the display of any
transmission of Third Party Vendor data immediately unless such Third
Party Vendor is indicated on the Attachment A to this Agreement, or an
agreement has been reached between Vendor and GI to offer said service
and this Agreement is amended to indicate same.
M. Vendor shall provide GI with thirty (30) days prior written notice in
the event of termination of any Third Party Vendor listed on
Attachment A.
3. RESPONSIBILITIES OF GI
----------------------
A. During the term of and in accordance with this Agreement, GI shall
provide GSs with access to TravelFile and Third Party Products through
Galileo Services via the Direct Link.
B. GI shall communicate procedures to GSs which allow them to access
TravelFile through Galileo Services.
C. GI shall inform GSs of TravelFile and Third Party Products, as made
available under this Agreement; however, GI shall have no liability of
any kind whatsoever to any party as a result of or in any way
associated with the contents or accuracy of TravelFile or Third Party
Products provided by Vendor through Galileo Services.
D. GI reserves the right to request that Vendor discontinue display of
information in TravelFile or Third Party Products which, in GI's
reasonable judgment, fail to conform to acceptable standards of
practice and service or to the terms of this Agreement; provided,
however, GI shall give Vendor thirty (30) days prior written notice in
order that Vendor may remedy such defects in said standards.
Notwithstanding the provisions of the previous sentence, GI reserves
the right, upon notifying Vendor, to request Vendor to immediately
delete any subject matter which it reasonably considers to be
inappropriate, misleading or defamatory.
E. Except for those duties set forth herein, GI assumes no responsibility
for any other duties in connection with Vendor's services or any
TravelFile Advertiser or Third Party Products, including without
limitation, providing written confirmations of reservations,
confirmation number call-backs, answering complaints or any other form
of customer follow-up or contact.
F. GI may advertise, promote and market the availability of TravelFile or
Third Party Products provided to others pursuant to this Agreement,
including GSs. GI may use Vendor's tradename "TravelFile" in such
advertising, promotional and marketing efforts provided that Vendor's
written approval for each such use is first obtained and GI complies
with any and all conditions Vendor may impose to protect the use of
Vendor's tradename. GI must state in all such materials that
"TravelFile is a registered trademark of Orbit Network".
-3-
<PAGE>
4. FEES AND PAYMENTS
-----------------
A. Vendor agrees to pay for services covered by this Agreement as set
forth on Attachment A hereto.
B. Vendor shall reimburse GI for one hundred percent (100%) of the
installation charges and recurring monthly cost of the
telecommunications services referred to in Article 2.I and any fees
associated with de-installation and circuit moves.
C. GI shall invoice Vendor for all fees and charges hereunder. The
determination of Vendor's total invoiced fees and charges shall be
based solely on Galileo's records. All payments required under this
Agreement are due within thirty (30) days after receipt of invoice;
failure to pay invoices in timely fashion shall subject Vendor to a
late payment charge of one and one-half percent (1 1/2%) of the
delinquent balance per month compounded or the maximum rate permitted
by law, whichever is less. Notwithstanding, if Vendor disputes any
invoiced fees or charges, Vendor shall pay the entire invoice within
the timeframe set forth herein and shall identify such dispute in
writing within sixty (60) days from the date of invoice. GI shall
investigate such dispute, and if GI determines that such dispute is
valid, GI shall credit Vendor in the amount of the dispute found to be
valid.
D. GI reserves the right to increase or decrease the charge for any
service provided pursuant to this Agreement under thirty (30) days
prior written notice to Vendor. Among other things, this includes the
right to introduce charges for existing or new services provided
pursuant to this Agreement and the right to change the method by which
charges are calculated or assessed.
5. TERM
----
This Agreement shall commence on August 1, 1998 (the "Commencement Date")
and, subject to the provisions of this Article, shall continue in full
force and effect for fifteen (15) months from the Commencement Date. Prior
to the end of such fifteen month term, the parties shall re-evaluate the
relationship between the parties to determine the feasibility of extending
this Agreement or negotiate a new agreement.
6. PROMOTION, ADVERTISING AND PUBLICITY
------------------------------------
GI and Vendor, from time to time, may promote and advertise the services
provided for under this Agreement in accordance with programs developed in
cooperation with each other. Promotions under this Agreement relating to
Vendor and its services, which include, but are not limited to, the use of
Vendor's trademarks, service marks, or logos, shall be subject to prior
written approval of Vendor. Promotions under this Agreement relating to GI
and its services, which include, but are not limited to, the use of GI's
trademarks, service marks, or logos, shall be made only upon written
approval of GI.
7. SUBSCRIBER LISTING
------------------
Vendor agrees that any GS listing which may be provided to Vendor, at GI's
discretion and upon the payment of its prevailing rates, is proprietary to
and is the trade secret of GI, and Vendor shall treat such listing as
confidential. Any such listing is deemed to be confidential information
subject to the provisions of Article 14. Vendor shall permit only those of
its officers, directors, agents and employees with a need to know to have
access to the listing in the performance of their duties under this
Agreement, and to take all reasonable measures necessary to ensure that its
officers, directors, agents and employees are informed of and comply with
these confidentiality requirements.
8. ENHANCEMENTS OR MODIFICATIONS OF GALILEO SERVICES OR FUNCTIONS
--------------------------------------------------------------
A. GI retains the right to enhance or modify Galileo Services at GI's
discretion during the term of this Agreement. Any enhancement or
modification of Galileo Services may be offered by GI to Vendor at any
time after acceptance of this Agreement. Any such enhancement or
modification may be provided at
-4-
<PAGE>
GI's sole discretion as available, pursuant to a written supplement to
this Agreement and subject to charges, terms and conditions mutually
acceptable to GI and Vendor.
B. At any time during the term of this Agreement, GI may at its
discretion offer to Vendor computerized functions in addition to
Galileo Services. Any such additional function may be provided at GI's
sole discretion as available, pursuant to a written Agreement and
subject to charges, terms and conditions mutually acceptable to GI and
Vendor.
9. TAXES AND FEES
--------------
A. In addition to any other charges or sums payable to GI under this
Agreement, Vendor shall pay when due, or, at GI's election, reimburse
and indemnify and hold GI and its owners harmless from and against,
all sales, use, excise, franchise, withholding, real property, and
other taxes and any and all domestic and foreign duties or import,
export or license fees, howsoever designated (together with any
related interest or penalties not arising from fault on the part of
GI), now or hereafter imposed by any local or foreign taxing
authority, or governmental agency or other similar bodies arising out
of or in connection with this Agreement. Vendor shall reimburse GI for
all such taxes, fees and charges within thirty (30) days of receipt of
GI's invoice therefor. Notwithstanding the foregoing Vendor shall not
be responsible for any taxes payable or based on GI's net income.
B. Notwithstanding Article 9.A above, unless otherwise agreed in writing
in advance by the parties hereto, GI shall be responsible for the
filing of all personal property tax returns and shall pay all taxes
indicated thereon. Vendor shall reimburse GI for all such taxes, fees
and charges within thirty (30) days of receipt of GI's invoice
therefor.
C. Upon the request of GI, Vendor shall provide reasonable assistance to
GI in the filing of any documents or the making of any statement in
connection with the recovery of any taxes referred to in this Article.
D. Vendor shall reimburse GI upon demand for all expenses (including
without limitation all costs, expenses, losses, legal and accountant's
fees and disbursements, penalties and interest) incurred by GI in
making payment, protesting payment or endeavoring to obtain refund of
any such taxes, fees or other charges.
10. TITLE
-----
A. Title and full and complete ownership rights to all GI-owned or
developed software contained in Galileo Services used in the
performance of this Agreement shall remain with GI. Vendor understands
and agrees that such software constitutes trade secrets and GI's
proprietary information whether any portion thereof is or may be
validly copyrighted or patented. In addition, any data processing
documentation, supplied to Vendor in any form by GI, with respect to
the operation of Galileo Services, and any and all copies thereof, are
for the exclusive use of Vendor and shall not be disclosed or made
available to any other person, firm, corporation or governmental
entity in any form or manner whatsoever, except as provided in Article
14. Vendor expressly acknowledges and agrees that, notwithstanding
anything to the contrary herein, all passenger name record ("PNR"),
passenger information, and other data and information entered into
Galileo Services is owned by GI and GI has sole discretion concerning
such information.
B. Title and full and complete ownership rights to all Vendor-owned
information provided to GI by Vendor hereunder shall remain with
Vendor. Such information may be disclosed or made available to GSs,
other travel agents and the general public solely to facilitate the
display of Vendor's services as provided hereunder, and may not be
disclosed or made available, any other form or manner whatsoever, to
any other person, firm, corporation or governmental agency.
11. NON-EXCLUSIVITY
---------------
Vendor and GI understand and agree that this is a non-exclusive Agreement
and that similar agreements may be entered into by either party with any
other person or entity.
-5-
<PAGE>
12. ASSIGNMENT
----------
Neither party may assign or otherwise transfer any of its rights or
obligations under this Agreement to any third party without the prior
written consent of the other party, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, GI may assign this Agreement
without Vendor's consent to a corporate affiliate or successor of it. Any
violation of this provision shall be cause for immediate termination of
this Agreement or, at the option of the non- assigning party, the
non-assigning party may declare the assignment of any of the rights or
obligations under the Agreement null and void ab initio.
---------
13. CHANGE IN OWNERSHIP
-------------------
GI may terminate this Agreement immediately, without liability, upon
written notice, if, after the date of this Agreement any third party
acquires control of or a controlling interest in Vendor.
14. CONFIDENTIALITY
---------------
A. Except in any proceeding to enforce any of the provisions of this
Agreement, neither party (the "User") shall, without the prior written
consent of the other party (the "Owner"), publicize or disclose to any
third party, either directly or indirectly: (1) this Agreement or any
of the terms or conditions of this Agreement; or (ii) any confidential
or proprietary information or data, either oral or written, received
from and designated as such by the Owner (hereinafter collectively
"Confidential Information").
B. If either party is served with a subpoena or other legal process
requiring the production or disclosure of any Confidential
Information, then that party, before complying, shall immediately
notify the Owner and shall use its best efforts to permit the Owner a
reasonable period of time to intervene and contest disclosure or
production.
C. If the user breaches this Article 14, then the Owner may terminate
this Agreement immediately, upon written notice to the User.
D. Upon termination of this Agreement, each party must return any and all
Confidential Information received from the other party. The provisions
of this Article shall continue in force in accordance with their
terms, notwithstanding the termination of this Agreement for any
reason.
15. FORCE MAJEURE
-------------
Except for any payment obligations, neither party shall be deemed to be in
default or liable for any delays in the event and to the extent that
performance thereof is delayed or prevented by acts of God, public enemy,
war, civil disorder, fire, flood, explosion, riot, labor disputes, work
stoppage or strike, unavailability of equipment, any act or order or any
governmental authority, or any other cause, whether similar or dissimilar,
beyond its control.
16. INDEPENDENT CONTRACTORS
-----------------------
This Agreement is not intended to and shall not be construed to create or
establish any agency, partnership or joint venture relationship between the
parties hereto.
17. TERMINATION FOR CAUSE
---------------------
A. If either party (the "Defaulting Party") becomes insolvent, if the
other party (the "Insecure Party") has evidence that the Defaulting
Party is not paying its bills when due without just cause; if the
Defaulting Party takes any step leading to its cessation as a going
concern, or if the Defaulting Party either causes or suspends
operations for reasons other than a strike, then the Insecure Party
may immediately
-6-
<PAGE>
terminate this Agreement on notice to the Defaulting Party unless the
Defaulting Party immediately gives adequate assurance of the future
performance of this Agreement by establishing an irrevocable letter of
credit -- issued by a U.S. bank acceptable to the Insecure Party, on
terms and conditions acceptable to the Insecure Party, and in an
amount sufficient to cover all amounts potentially due from the
Defaulting Party under this Agreement -- that may be drawn upon by the
Insecure Party if the Defaulting Party does not fulfill its
obligations under this Agreement in a timely manner.
B. If bankruptcy proceedings are commenced with respect to either party
(the "Bankrupt") and if this Agreement has not otherwise terminated,
then the other party (the "Other Party") may suspend all further
performance of this Agreement until the Bankrupt assumes or rejects
this Agreement pursuant to Section 365 of the Bankruptcy Code or any
similar or successor provision. Any such suspension of further
performance by the Other Party pending the Bankrupt's assumption or
rejection shall not be a breach of this Agreement and shall not affect
the Other Party's right to pursue or enforce any of its rights under
this Agreement or otherwise.
C. If either party (the "Defaulting Party") fails to observe or perform
any of its obligations under this Agreement, and such failure
continues for a period of thirty (30) days after written notice to the
Defaulting Party by the other party thereof (except in the case of any
payments due, where the period to cure such nonpayment shall be five
(5) days after notice), then, without prejudice to any other rights or
remedies the other party may have, this Agreement shall terminate
without further notice as of the expiration date of such notice
period. Notwithstanding anything to the contrary herein, in the event
Vendor is the Defaulting Party, then GI may, at its sole option and
without prejudice to any other of its rights or remedies, reduce or
restrict provision of services provided under the Agreement without
termination of the Agreement.
18. NON-WAIVER, POST-TERMINATION RIGHTS
-----------------------------------
The right of either party to require strict performance and observance of
any obligations under this Agreement shall not be affected in any way by
any previous waiver, forbearance or course of dealing. Exercise by either
party of its right to under this Agreement shall not affect or impair its
right to bring suit for any default or breach of this Agreement. All
obligations of each party that have accrued before termination or that are
of a continuing nature shall survive termination.
19. INVALIDITY, SEVERABILITY
------------------------
In the event that any material provision in this Agreement is or is about
to be prohibited or declared unenforceable in any jurisdiction, or becomes
impractical or uneconomical to perform as a result of any impending or
actual change in any applicable law, GI shall, at its option, have the
right to terminate this Agreement, or to amend, supersede, or delete the
prohibited, unenforceable, impracticable or uneconomical provision or
provisions, upon written notice to Vendor. If any provision of this
Agreement is held invalid or otherwise unenforceable, the enforceability of
the remaining provisions shall not be impaired thereby.
20. INDEMNIFICATION
---------------
A. Vendor shall indemnify and hold harmless GI, its owners, officers,
directors, employees, and agents from all liabilities, damages,
losses, claims, suits, judgments, costs, and expenses, including costs
and reasonable attorneys' fees, directly or indirectly incurred by GI
from any claims by third parties arising out of or in connection with
Vendor's failure of performance of its obligations under this
Agreement.
B. To the extent of its obligations under Article 21, GI shall indemnify
and hold harmless Vendor, its officers, directors, employees and
agents from and against any and all liabilities, damages, losses,
claims, suits, judgments, costs, and expenses, including costs and
reasonable attorneys' fees, directly or indirectly incurred by Vendor
from any claims by third parties arising out of or in connection with
GI's failure of performance of its obligations under this Agreement.
C. Vendor shall indemnify and hold harmless GI, its owners, officers,
directors, employees, and agents from all liabilities, damages,
losses, claims, suits, judgments, costs, and expenses, including costs
and
-7-
<PAGE>
reasonable attorneys' fees, directly or indirectly incurred by GI from
any claims by third parties arising out of or in connection with
Galileo Subscribers' acts or omissions in selling the services or
products of Vendor or any Third Party Vendor or TravelFile Subscriber.
D. Each party shall indemnify and hold harmless the other party, its
officers, directors, employees, and agents from all liabilities,
damages, losses, claims, suits, judgments, costs, and expenses,
including costs and reasonable attorneys' fees, directly or indirectly
incurred by the other party from claims by third parties arising out
of or in connection with the indemnifying party's products or services
supplied in connection with this Agreement.
E. If, pursuant to this Agreement, either party (the "Provider") provides
computer services to the other party (the "User") or permits the User
to use its logo, service marks, or trademarks, then the Provider shall
indemnify and hold harmless the User from all liabilities, damages,
losses, claims, suits, judgments, costs, and expenses, including costs
and reasonable attorneys' fees, directly or indirectly incurred by the
User arising out of or in connection with any claim that the use of
the Provider's computer services, logo, service marks, or trademarks
infringes any existing patent, copyright, trademark, or property
right.
21. REPRESENTATIONS AND WARRANTY
----------------------------
A. GI REPRESENTS AND WARRANTS THAT:
(i) IT IS THE OWNER OR LICENSEE OF THE SOFTWARE USED IN GALILEO
SERVICES; AND
(ii) IT HAS THE RIGHT TO PROVIDE GALILEO SERVICES TO VENDOR.
B. VENDOR'S REMEDIES FOR BREACH OF THE WARRANTIES SET FORTH IN PARAGRAPH
21.A OF THIS AGREEMENT SHALL BE SOLELY LIMITED TO REPLACEMENT OF THE
SOFTWARE CAUSING THE BREACH OF WARRANTY.
C. EACH PARTY HERETO REPRESENTS THAT:
(i) THE INDIVIDUAL SIGNING THIS AGREEMENT OR ANY AMENDMENT TO THIS
AGREEMENT, ON BEHALF OF VENDOR OR GI, AS THE CASE MAY BE, IS, OR
AT THE MATERIAL TIME SHALL BE, DULY AUTHORIZED TO EXECUTE THIS
AGREEMENT OR AMENDMENT ON BEHALF OF VENDOR OR GI, AS THE CASE MAY
BE, AND HAS FULL POWER AND AUTHORITY TO BIND VENDOR OR GI, AS THE
CASE MAY BE, TO THE TERMS AND CONDITIONS HEREOF; AND
(ii) THIS AGREEMENT CONSTITUTES A LEGAL, VALID, AND BINDING AGREEMENT
OF VENDOR OR GI, AS THE CASE MAY BE, ENFORCEABLE IN ACCORDANCE
WITH ITS TERMS.
D. THE WARRANTIES AND REMEDIES SET FORTH IN ARTICLES 21.A AND 21.B ARE
----------------------------------------------------------------------
EXCLUSIVE AND GI MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
-------------------------------------------------------------
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY
----------------------------------------------------------------------
OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO GALILEO SERVICES
---------------------------------------------------------------------
OR SOFTWARE.
------------
E. EXCEPT FOR THE INDEMNIFICATION SET FORTH IN ARTICLE 20.B COVERING A
BREACH OF THE EXCLUSIVE WARRANTIES SPECIFIED HEREIN, EXCEPT FOR A
BREACH OF THE EXCLUSIVE WARRANTIES SPECIFIED IN ARTICLE 21.A AND
EXCEPT FOR THE RIGHT TO RECEIVE THE EXCLUSIVE REMEDY SPECIFIED IN
ARTICLE 21.B, VENDOR HEREBY WAIVES AND RELEASES GI FROM ANY AND ALL
OTHER OBLIGATIONS AND LIABILITIES AND ALL RIGHTS, CLAIMS AND REMEDIES
IT MAY HAVE AGAINST GI, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE DUE TO ANY DEFECTS, ERRORS, MALFUNCTIONS OR INTERRUPTIONS OF
SERVICE TO GALILEO SERVICES OR THE SOFTWARE, INCLUDING ANY LIABILITY,
OBLIGATION, RIGHT, CLAIM OR REMEDY
-8-
<PAGE>
IN TORT OR FOR LOSS OF REVENUE OR PROFIT OR ANY OTHER DIRECT,
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES.
F. EACH PARTY ACKNOWLEDGES THAT, IN ENTERING INTO THIS AGREEMENT,
IT DOES NOT DO SO ON THE BASIS OF, AND DOES NOT RELY ON, ANY
REPRESENTATION, WARRANTY OR OTHER PROVISION EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT.
22. EXPENSES
--------
In the event of a breach of this Agreement, the prevailing party in any
action to enforce the terms of this Agreement shall be entitled to
reimbursement of its reasonable expenses in such enforcement, including
reasonable attorney's fees.
23. GOVERNING LAW
-------------
This Agreement and all disputes arising under or in connection with this
Agreement, including actions in tort, shall be governed by the internal
laws of the State of Illinois without regard to its conflicts of laws
principles. All actions brought to enforce or arising out of this Agreement
shall be brought in federal or state courts located with the County of
Cook, State of Illinois, Vendor hereby consenting to personal jurisdiction
and venue therein. GI shall be entitled to take such steps as it may
consider necessary or desirable in order to enforce any judgment or order
against Vendor with respect to this Agreement in any jurisdiction where
Vendor trades or has assets.
24. NOTICES
-------
All notices, requests, demands or other communications given or required
hereunder shall be in writing in the English language and shall be sent by
first class mail, registered or certified mail, postage prepaid, or by
overnight or express mail, facsimile or telex to the relevant party at its
address as set forth below or to such other address as such party shall
designate in writing for that purpose.
If to GI: If to Vendor:
Galileo International Orbit Network
9700 West Higgins Road 10 Commercial Boulevard
Rosemont, Illinois 60018 Novato, California 94949
Attn: LEGAL - Contract Notices Attn: Legal Department
Notice sent via electronic means shall be effective immediately if sent on
a business day prior to 5:00 p.m. local time of the recipient. All other
notices shall be effective the first business day after transmission.
25. NON-ENGLISH VERSIONS
--------------------
If any non-English versions of this Agreement are created, then in the
event of a conflict between this English version and any non-English
version, this English version shall prevail.
26. ENTIRE AGREEMENT
----------------
A. This Agreement, including Attachment A, constitutes the entire
agreement and understanding of the parties on the subject matter
hereof, and, as of the effective date, supersedes Covia Agreement No.
19488 and all other prior agreements, whether written or oral, between
the parties concerning the subject matter hereof, excluding amounts
due GI or any of its predecessors that may have accrued under a prior
agreement between the parties. Any such prior amounts shall be deemed
an obligation of this Agreement for which all provisions herein shall
apply.
-9-
<PAGE>
B. This Agreement may be modified only by further written agreement
signed by all of the parties to this Agreement, except as otherwise
expressly provided herein.
IN WITNESS WHEREOF, Vendor and GI have executed this Agreement as of the day and
year first above written.
ORBIT NETWORK, INC. GALILEO INTERNATIONAL, L.L.C.
By /s/ F. William Guerin By /s/ Joan E. Dienst
-------------------------------- -------------------------------------
Name F. William Guerin Name Joan E. Dienst
------------------------------ -----------------------------------
Title President Title Vice President, Sales & Marketing
----------------------------- ----------------------------------
Date Date November 24, 1998
------------------------------ -----------------------------------
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<PAGE>
ATTACHMENT A Galileo Contract No. 34209
- ------------ -----
1. Vendor agrees to pay GI a monthly fee of $7,500.00 USD for the provision of
TravelFile to Galileo Subscribers using the Apollo system.
2. Vendor agrees to pay GI the applicable fees, as set forth in Table I below,
for Third Party Products made available to GSs through the Direct Link.
Such Third Party Products will be permitted only with written approval by
GI and may require an additional fee to be paid to GI by Vendor or said
Third Party Vendor, as indicated below.
Table I
-------
<TABLE>
<CAPTION>
Subject to Separate Booking
Third Party Vendor Product to be Distributed Agreement with GI Allowed Fee
- ------------------ ------------------------- ----------------- ------- ---
<S> <C> <C> <C> <C>
Solarnet Datebase of Tours No No $500.00 USD Per
month
Eurostar Eurostar Passenger No Yes $1.00 USD Per
Service reservations Net Passenger
Segment*
</TABLE>
* For a period of twelve (12) months after the effective date of this Agreement,
GI will provide the first 2,500 Eurostar Net Passenger Segments booked each
month at no charge to Vendor. Each Net Passenger Segment booked exceeding 2,500
per month will be charged at the rate of $1.00 USD per Net Passenger Segment.
This introductory offer only applies to Eurostar.
Vendor shall provide GI with a monthly report detailing the number of Net
Passenger Segments (passengers x rail segments) transacted through Galileo
Services via the Direct Link. Such report shall include for each booking: agency
pseudo city code, country of booking agency, date of booking, content of each
name field, and the number of rail segments. GI shall have the right to audit
Vendor's records pertaining to such bookings. Vendor agrees to submit its
monthly report within thirty (30) days after the end of each month to:
GALILEO INTERNATIONAL
9700 WEST HIGGINS ROAD
ROSEMONT, ILLINOIS 60018 U.S.A.
ATTN: TRAVEL DIRECTOR MANAGER, Duane Graf
GI reserves the right to examine Vendor's books at reasonable times and upon
reasonable notice to the extent necessary to verify the data specified above or
to the extent necessary to supplement incomplete or missing data required under
this Agreement. If GI discovers any discrepancies in Vendor's data, GI reserves
the right to request that Vendor makes appropriate adjustments in any payments
based upon such audit.
<PAGE>
EXHIBIT 10.28
WORLDSPAN
ASSOCIATE PARTICIPATION
GLOBAL REFERENCE SYSTEM AGREEMENT
THIS WORLDSPAN Associate Participation Agreement ("Agreement") is effective
this 2nd day of August, 1999, between WORLDSPAN, L.P., having its principal
place of business at 300 Galleria Parkway, N.W., Suite 2100, Atlanta,
Georgia 30339 ("WORLDSPAN"). and Orbit Network Inc. ("Associate"), having
its principal place of business at 505A San Marin Drive, Suite 300, Novato,
CA 94945.
WHEREAS, WORLDSPAN is a computer reservation system vendor providing access
to its WORLDSPAN System to travel agencies and others in the travel industry.
WHEREAS, Associate operates and/or markets products, goods or services to
the travel industry.
WHEREAS,WORLDSPAN is prepared to provide Associate access to WORLDSPAN's
Global Reference System ("GRS"), a static informational display capable of
storing information and other marketing opportunities.
WHEREAS, Associate desires to provide information to WORLDSPAN users
through the GRS and other marketing opportunities.
NOW THEREFORE, it is agreed:
1. DEFINITIQNS
-----------
The capitalized terms used in this Agreement and any supplement or
addendum to this Agreement shall have the meanings described below:
AccessPLUS- Shall mean supplemental services provided by WORLDSPAN to
----------
permit enhanced connectivity between the WORLDSPAN CRS and Associate
System.
ARINC - Shall mean Aeronautical Radio, Inc.
-----
Associate System - Shall mean Associate's automated reservation
-----------------
system.
Confidential Information - Shall mean proprietary information, data,
-------------------------
drawings, specifications. documentation, manuals, plans, and other
materials marked as "Confidential", "Sensitive" or "Proprietary",
except, (i) information known to the receiving party prior to
disclosure, (ii) information developed by the receiving party
independent of any confidential materials provided by the disclosing
party, or (iii) information which is publicly known or publicly
available in the relevant trade or industry.
CRS - Shall mean a computerized reservation system as used by travel
----
agents and other entities that market or sell travel related products
and services to collect store, process, display and distribute
information concerning air and ground transportation, lodging and
other travel related goods and services, and enable users to: (i)
inquire about, reserve or otherwise confirm the availability of such
goods and service; and/or (ii) issue tickets to permit the purchase or
use of such goods and services.
1
<PAGE>
GRS -Shall mean Global Reference System, a static display contained in
---
the WORLDSPAN System which Associate may use to communicate
information to WORLDSPAN Users (sometimes referred to as "Direct
Reference System DRS").
IATA - Shall mean the International Air Transport Association.
----
Product - Shall mean one or more of the products, goods or services
-------
operated or provided by Associate to WORLDSPAN Users pursuant to this
Agreement as agreed to by the parties from time to time.
PNR - Shall mean a passenger name record created by a WORLDSPAN User
----
in the WORLDSPAN System.
SITA - Shall mean Societe Internationale de Telecommunications
----
Aeronautiques.
WTS - Shall mean WORLDSPAN TRAVEL SUPPLIERS.
---
WORLDSPAN User - Shall mean a person or entity which utilizes the
--------------
WORLDSPAN System, directly or indirectly to transact travel related
business.
WORLDSPAN System - Shall mean the CRS provided by WORLDSPAN on the
----------------
date of this Agreement or in the future regardless of the facilities
employed to permit access to such system.
2. RESPONSIBILITIES OF ASSOCIATE
-----------------------------
A. Associate will, at its own cost, provide through Associate System
its Product, and such other products or services as may be
mutually agreed upon by the parties through the WORLDSPAN System
in a uniform manner to all WORLDSPAN Users. If Associate
participates in other CRSs, Associate will provide products,
services and service levels through the WORLDSPAN System to
WORLDSPAN Users which are at least equal to those provided to any
such other CRS and its user including, but not limited to, data
bases, communications methods and methods of access to Associate
System, except for methods not permitted due to technical
limitations in the WORLDSPAN System. If Associate participates
in other CRSs, Associate shall pay WORLDSPAN fees comparable to
those paid to any such other CRS.
B. Associate shall be responsible for all costs associated with the
Product provided to WORLDSPAN Users, except for the initial
system briefing to WORLDSPAN Users, which will be the
responsibility of WORLDSPAN.
C. Associate shall ensure that the information provided through the
GRS shall be in compliance with all local, state, and federal
laws.
D. Associate shall not provide Products through GRS without prior
written consent of WORLDSPAN.
E. Associate shall, via CRT entry or other mutually agreed upon
facility, create and update as applicable GRS information in the
WORLDSPAN System. The format of the Information contained in GRS
shall be determined by WORLDSPAN. Associate shall, at a minimum,
provide information to effectively communicate the Product to
WORLDSPAN Users. Associate shall be responsible for, and assumes
all liability with respect to, the entry, updating and accuracy
of this information in GRS as well as information otherwise
provided by Associate pursuant to this Agreement. Information
entered into GRS which WORLDSPAN
2
<PAGE>
in its sole discretion determines to be inappropriate,
misleading, or defamatory, may be deleted by WORLDSPAN from GRS,
without liability, upon notice to Associate. Associate shall at
all times comply with WORLDSPAN's GRS keyword indexing scheme.
F. To permit Product information to be provided to WORLDSPAN Users,
Associate will either: (1) lease from WORLDSPAN AT WORLDSPAN'S
then current monthly charges, a sufficient number of WORLDSPAN
terminals subject to the terms of a separate WORLDSPAN Equipment
and Software Addendum; or (2) arrange for dial-in access to the
WORLDSPAN System through WORLDSPAN licensed software programs and
access agreements pursuant to the terms of a separate World Dial
Link Addendum; or (3) secure WORLDSPAN's prior written approval
and certification of Associate's own software and/or hardware to
enable Associate to access the WORLDSPAN System; or (4) provide
text documentation to WORLDSPAN and authorize WORLDSPAN to create
and update GRS Information in the WORLDSPAN System as applicable,
according to the designated WORLDSPAN fees for such services.
G. Associate shall cooperate with WORLDSPAN in efforts to improve
the quantity and quality of all Products provided to WORLDSPAN
Users, especially those related to the dissemination of more
complete, accurate, and current data pertaining to the Products.
Associate also agrees to assist WORLDSPAN in expanding and
maintaining information concerning the Products in the WORLDSPAN
System, including the direct updating of Associate data by
Associate personnel through WORLDSPAN terminals and/or by other
means as mutually agreed.
H. Associate agrees that it will not discriminate against or
disfavor in any manner whatsoever any WORLDSPAN User on account
of that User's selection, possession or use of the WORLDSPAN
System.
I. Associate agrees promptly to pay WORLDSPAN all amounts due
pursuant to this Agreement, and all agreements, supplements,
addenda, schedules and exhibits now or hereafter completed
pursuant to this Agreement, without deduction, set-off
counterclaim.
J. The use of the WORLDSPAN international communications network is
restricted to WORLDSPAN business by various international
government regulations and agreements, and said network shall not
be utilized by Associate to conduct any Third Party
Communications Traffic. "Third Party Communications Traffic," for
purposes of this subsection, includes the use of the WORLDSPAN
international network to communicate with others in any manner,
including but not limited to direct message transmission or
depositing of information in the WORLDSPAN computer center for
the purpose of communication with others, which communications do
not pertain to WORLDSPAN business. WORLDSPAN shall have the right
to terminate this Agreement in the event Associate contravenes
the foregoing restrictions or WORLDSPAN is required by any
governmental authority having jurisdiction thereof to cease
handling Associates messages or communications, and WORLDSPAN
shall not be liable for any damages of any nature whatsoever
incurred by Associate due to such termination. Associate hereby
releases, discharges and agrees to indemnify, defend and save
harmless WORLDSPAN, its partners, affiliates, directors,
officers, agents and employees from and against any and all
claims or actions of any nature whatsoever arising out of or
attributable to any such termination, including but not limited
to any penalties or fines imposed upon WORLDSPAN as a result of
such Third Party Communications Traffic.
3
<PAGE>
K. Associate shall reasonably cooperate with WORLDSPAN to secure any
governmental approvals or exemptions necessary to put this
Agreement and any and all parts thereof into effect, and shall
assist WORLDSPAN to maintain such approvals or exemptions once
received.
3. RESPONSIBILITIES OF WORLDSPAN
-----------------------------
A. WORLDSPAN will provide WORLDSPAN Users with displays containing
information regarding the Products.
B. WORLDSPAN is not required to verify the accuracy of the text of
the GRS. Associate acknowledges and agrees that WORLDSPAN is not
required to perform any verification of any sort of the text
submitted to WORLDSPAN by Associate for input into the WORLDSPAN
System and WORLDSPAN's function hereunder is solely to perform
the services set forth within this Agreement. WORLDSPAN makes no
representation whatsoever to Associate; or any third party, as to
the accuracy or completeness of the text submitted by Associate
for input by WORLDSPAN into the WORLDSPAN System.
C. WORLDSPAN retains the right to review all data pertaining to the
information input into GRS and Associate agrees to provide
WORLDSPAN, on request, all data pertaining to such information
prior to input into the WORLDSPAN System. WORLDSPAN may, in its
sole discretion, after review of the data, deny the input of such
data into the WORLDSPAN System.
D. WORLDSPAN shall provide reasonable information to Associate to
substantiate the charges to Associate pursuant to this Agreement.
E. WORLIDSPAN shall maintain one or more facilities for the purpose
of responding to Associate's questions concerning the operation
of, or any data within, the WORLDSPAN System.
F. WORLDSPAN retains the right to enhance or modify, in whole or in
part, the WORLDSPAN System at its discretion. Any enhancement or
modification of the WORLDSPAN System will be offered to all
similar associates on a non-discriminatory basis; provided,
however, technical, equipment or resource limitations may make it
impratical or not feasible for WORLDSPAN to implement an
enhancement or modification at the same time or in the exact same
manner for all associates. In such case, WORLDSPAN will determine
the order and nature of implementation among all of its
associates in its sole discretion. The foregoing shall include,
but is not limited to, the right of WORLDSPAN to migrate or
include Associate, other WORLDSPAN associates and WORLDSPAN Users
to any new WORLDSPAN System. Nothing herein shall be construed to
require WORLDSPAN to develop or utilize any additional CRS.
G. At its own expense and discretion, WORLDSPAN may communicate with
WORLDSPAN Users to draw attention to the availability of the GRS
in the WORLDSPAN System, to encourage WORLDSPAN Users to refer to
the GRS in the WORLDSPAN System and generally to promote GRS in
the WORLDSPAN System.
4
<PAGE>
4. TERM
----
This Agreement shall become effective upon the date first written
above and will continue thereafter for an initial period of one
(1) year. Thereafter this Agreement will continue until
terminated by either party at any time thereafter upon not less
than thirty (30) days prior written notice to the other, or until
otherwise terminated pursuant to this Agreement.
5. FEES
----
A. Associate shall pay Five Hundred Dollars ($500.00) per month
to WORLDSPAN for ten (10) pages of GRS. Additional pages may
be added at the rate of Twenty-Five Dollars ($25.00) per
page.
B. If Associate desires to have WORLDSPAN input the GRS data,
WORLDSPAN will do so at the rate of Thirty Dollars ($30.00)
per hour initial set up plus Twenty-Five Dollars ($25.00)
per hour for maintenance/updates.
C. WORLDSPAN shall submit monthly invoices covering the fees
earned hereunder for that month and such invoices shall be
due and payable by Associate within thirty (30) days of the
date of each such invoice. WORLDSPAN may impose a late
payment fee at the rate of one percent (1%) per month for
any amount more than fifteen (15) days overdue. All payments
shall be in U. S. currency.
D. Following the expiration of the initial period, fees charged
to Associate pursuant to this Agreement may be increased
upon not less than thirty (30) days prior written notice by
WORLDSPAN
E. WORLDSPAN reserves the right to charge for any service which
it currently provides without separate charge including, but
not limited to, additional GRS pages of future enhancements
regarding credit card authorization. The services, which
Associate receives without separate charge from time to time
shall be referred to as "Additional Services." In the event,
WORLDSPAN decides to separately charge for any Additional
Services, WORLDSPAN shall give not less than sixty (60) days
prior written notice to Associate of WORLDSPAN's decision to
charge for such services. If Associate elects not to
participate in such Additional Services, Associate shall
notify WORLDSPAN at least thirty (30) days prior to the
effective date of the separate charge for such Additional
Services, and WORLDSPAN shall have no obligation to provide
such Additional Services to Associate after such effective
date.
F. Any charge for any Additional Services hereinafter imposed
may be modified by WORLDSPAN at its discretion on not less
than thirty (30) days prior written notice. If Associate
elects not to participate any longer in the Additional
Services, then Associate shall notify WORLDSPAN of such
election at least ten (10) days prior to the effective date
of such modified change, and WORLDSPAN shall not be
obligated to provide such Additional Services to Associate
after such effective date.
6. OTHER SYSTEMS
-------------
Associate acknowledges that users of other third parties utilizing or
marketing the WORLDSPAN System may be allowed access to information in
the GRS.
5
<PAGE>
7. TAXES
-----
In addition to any other charges set forth herein, Associate shall pay
to WORLDSPAN or reimburse WORLDSPAN, as appropriate, for all sales,
use, excise, property, or other similar taxes now or hereafter imposed
by any federal, state or local taxing authority on amounts paid to
WORLDSPAN by Associate. Notwithstanding the foregoing, Associate shall
not, in any event, be responsible for any taxes payable on WORLDSPAN's
net income or taxes in lieu of net income taxes, or for charges
imposed on WORLDSPAN for the privilege of doing business.
8. IDEMNIFICATION
-------------
A. Each party shall indemnify, defend and hold harmless the other
party, its directors, affiliates, partners, officers, employees
and agents, from all liabilities, damages, and expenses, and
claims for damages, suits, proceedings, recoveries, judgments or
executions (including but not limited to litigation costs,
expenses, and reasonable attorneys' fees) arising out of or in
connection with any claim that the use of the identifying party's
system or data (including, without limitation, software) by the
other party infringes any third party patent, copyright,
trademark or other property right.
B. Associates shall indemnify, defend and hold harmless WORLDSPAN,
its directors, affiliates, partners officers, employees and
agents from and against all liabilities, suits, costs, damages
and claims (including but not limited to litigation costs,
expenses and reasonable attorneys' fees) which may be suffered
by, accrued against, charged to or recoverable from WORLDSPAN,
its directors, affiliates, partners, officers, employees or
agents by reason of or in connection with Associate's performance
or failure to perform, or improper performance of any of
Associate's obligations under this Agreement.
9. DISCLAIMER
----------
A. WORLDSPAN DISCLAIMS AND ASSOCIATE HEREBY WAIVES ALL WARRANTIES,
EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
INTENDED USE, OR ANY LIBILITY IN NEGLIGENCE, TORT, STRICT
LIABILITY OR OTHERWISE, WITH RESPECT TO THE WORLDSPAN SYSTEM OR
FOR EQUIPMENT, DATA OR SERVICES FURNISHED HEREUNDER. ASSOCIATE
AGREES THAT WORLDSPAN SHALL NOT BE LIABLE FOR ANY INDIRECT,
INCIDENTIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES UNDER ANY
CIRCUMSTANCES, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUES,
EVEN IF ADVISED OF THE RISK OF SUCH DAMAGES IN ADVANCE.
B. WORLDSPAN shall have no responsibility or liability to Associate
due to the failure of any WORLDSPAN User or customer of any such
WORLDSPAN User to remit to Associate for sales made or any other
dispute relating to the arrangement between Associate and such
WORLDSPAN User or any such customer of such WORLDSPAN User.
6
<PAGE>
C. WORLDSPAN shall not be liable to Associate, nor deemed to be in
default of this Agreement, on account of any delays, errors,
malfunctions or breakdowns with respect to the WORLDSPAN System,
equipment, data or services provided hereunder, unless such
delay, error, malfunction or breakdown results solely from the
gross negligence or willfull misconduct of WORLDSPAN.
10. CONFIDENTIAL INFORMATION
------------------------
A. Confidential information disclosed by one party to another,
including but not limited to the list of WORLDSPAN Users provided
Associate, are for the exclusive use of the receiving party and
shall not be disclosed or made available to any other person,
firm, corporation, or governmental entity in any form or manner
whatsoever, provided, however, that in the event information,
materials, or documentation covered by this Agreement is
subpoenaed or otherwise requested or demanded by any court or
governmental authority, the receiving party shall give prompt
notice to the disclosing party prior to furnishing same, and
shall exercise its best efforts, in cooperation with the
disclosing party, to quash or limit such request, demand and/or
subpoena. The covenants set forth in this Section shall survive
indefinitely the termination, suspension or cancellation of this
Agreement.
B. WORLDSPAN in no way warrants or represents the number of
WORLDSPAN Users or that any WORLDSPAN User shall access GRS or
purchase any Product.
C. Title and full and complete ownership rights to all WORLDSPAN
owned or developed software associated with or contained in the
WORLDSPAN System or used by WORLDSPAN in the performance of this
Agreement shall remain with WORLDSPAN. Associate understands and
agrees that WORLDSPAN's owned or developed software is
WORLDSPAN's trade secret, proprietary information, and
confidential information whether any portion thereof is or may be
copyrighted or patented.
11. SYSTEM OPERATING STANDARDS
--------------------------
Associate will use equipment leased from WORLDSPAN, if applicable, and
the WORLDSPAN System in the manner indicated below:
A. Associate will take all precautions necessary to prevent
unauthorized and improper use and operation of the equipment and
the WORLDSPAN System. Misuse of the WORDSPAN System or equipment
shall include, but is not limited to, speculative booking or
reservation of space in anticipation of demand, interference with
WORLDSPAN's operations or systems, or improper access.
Associate's improper use of the WORLDSPAN System or equipment
will be considered a material breach of the Agreement, and
WORLDSPAN will have the right to deny or suspend Associate's
access to the WORLDSPAN System immediately without notice or
liability to Associate.
B. Associate will not use the WORLDSPAN System, of any data or
information from the WORLDSPAN System, to develop or publish any
reservation, rate, or tariff guide. Associate will not publish,
disclose or otherwise make available to any third party the
compilations of data from or through the WORLDSPAN System.
7
<PAGE>
12. TERMINATION
-----------
A. If Associate fails to timely make any payment required pursuant
to this Agreement and such failure continues for fifteen (15)
days after written notice by WORLDSPAN, WORLDSPAN may, in its
sole discretion, suspend services to Associate in whole or in
part or terminate this Agreement in its entirety.
B. Except for Associate's failure to make timely payment, if either
party shall refuse, neglect or fail to perform, observe or keep
any of the material covenants, terms or conditions contained
herein to be performed, observed or kept, and such refusal,
neglect or failure shall continue for a period of thirty (30)
days after written notice, the non-defaulting party shall have
the right, in addition to any other right or remedy it may have,
to terminate this Agreement.
C. If either party petitions for relief under the Bankruptcy Code of
the United States, or if voluntary bankruptcy proceedings are
instituted by a party under any federal, state or foreign
insolvency laws, or if such a proceeding is imminent, or if it is
adjudged bankrupt, or if it makes any assignment for the benefit
of its creditors of all of its assets; or if an involuntary
petition is filed or execution issued against it and not
dismissed or satisfied within thirty (30) days; or if its
interest hereunder passes by operation of law to any other
person, except in case of merger or acquisition the other party
may, at its option, terminate this Agreement by written notice
provided, however, that all monies owed hereunder prior to the
date of termination shall be immediately due and payable.
13. NOTICES
-------
All notices, requests, demands or other communications hereunder shall
be in writing, hand delivered, sent by first class mail, overnight
mail, facsimile or teletype and shall be deemed to have been given
when received at the following addresses:
If to WORLDSPAN:
WORLDSPAN, L.P.
300 Galleria Parkway, NW
Atlanta, Georgia 30339
U.S.A.
Teletype: HDQPM1P
Facsimile: 770-583-7296
ATTN: Manager - WORLDSPAN Travel Suppliers
With a copy to:
WORLDSPAN, L.P.
300 Galleria Parkway. NW
Atlanta, Georgia 30339
U.S.A.
Teletype: ATLMSIP
Facsimile: 770-583-7878
ATTN: Legal Department
8
<PAGE>
If to Associate:
________________________________
________________________________
________________________________
________________________________
Teletype:_________________________
Facsimile:_________________________
ATTN:___________________________
Any notice provided by facsimile or teletype which is received after 4:00
p.m. local time shall be deemed received the following business day. A
party may change its addresses for notice on not less than ten (10) days
prior written notice to the other party.
14. GENERAL PROVISIONS
------------------
A. Nothing in this Agreement is intended or shall be construed to create
or establish an agency, partnership, or joint venture relationship
between the parties hereto.
B. Neither party shall make any use of the other party's company name,
logo, trademarks or service marks, except following the party's prior
written consent, except that nothing contained in this provision shall
be construed as preventing either party from publicizing the existence
and general nature of this Agreement.
C. The captions appearing in this Agreement have been inserted as a
matter of convenience and in no way define, limit, or enlarge the
scope of this Agreement or any of the provisions thereof.
D. No waiver by either party of any one breach of this Agreement shall
constitute a waiver of any other breach of the same or any other
provision hereof and no waiver shall be effective unless made in
writing. The right of either party to require strict performance and
observance of any obligations hereunder shall not be affected in any
way by any previous wavier, forbearance of course of dealing.
E. Except for Associate's obligation to make payments hereunder, neither
party will be deemed in default of this Agreement as a result of a
failure to perform its obligations caused by acts of God or
governmental authority, strikes or labor disputes, fire, acts of war,
failure of third party suppliers, or for any other cause beyond the
control of the party.
F. Associate shall not sell, assign, license, sub-license or otherwise
convey in whole or in part to any third party this Agreement or the
services provided hereunder without the prior written consent of
WORLDSPAN, which consent shall not be unreasonably withheld.
G. This is a non-exclusive agreement. Similar agreements may be entered
into by either party with any other person.
H. This Agreement shall be governed by, construed and enforced according
to the laws of the State of Georgia and of the United States of
America, without regard to its conflict of laws and rules. Each party
hereby consents to the non-exclusive jurisdiction of the courts of the
State of Georgia and United States Federal Courts located in Georgia
to resolve any dispute arising out of this Agreement.
9
<PAGE>
I. This Agreement embodies the entire understanding of the parties and
supersedes all other prior agreements and understandings related to
the subject matter hereof, including but not limited to any prior
"WORLDSPAN Global Reference System Agreement." This Agreement may be
modified only by a further written agreement signed by the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duty authorized undersigned representatives of the day and
year first above written.
ASSOCIATE: WORLDSPAN, L.P.
Orbit Network Inc.
- --------------------------
(Company Name)
By: /s/ Pat Tidmore /s/ Lori Schwarofer
---------------------- --------------------------
(Signature) Market Development Manager
WORLDSPAN Travel Suppliers
C. Patton Tidmore
- --------------------------
(Print/Type Name)
Vice President, Marketing
- --------------------------
(Print/Type Title)
10
<PAGE>
WORLDSPAN
EQUIPMENT AND SOFTWARE ADDENDUM
THIS WORLDSPAN Equipment and Software Addendum ("Addendum") is effective
this 2nd day of August, 1999, between WORLDSPAN, L.P., having its principal
place of business at 300 Galleria Parkway, N.W., Suite 2100, Atlanta, Georgia
30339 ("WORLDSPAN"), and Orbit Network Inc. ("Associate"), having its principal
place of business at 505A San Marin Drive, Suite 300, Novato, CA 94945.
WHEREAS, WORLDSPAN desires to lease certain computer hardware, terminals,
partners and other devices ("Equipment"), to license certain software
("Software"), and to provide certain services, and Associate desires to accept
and pay for same, all according to the terms of this Addendum.
NOW, THEREFORE, it is agreed:
SECTION 1. PROVISION OF EQUIPMENT, SOFTWARE AND SERVICES
- ---------------------------------------------------------
A. WORLDSPAN agrees to lease to Associate, and Associate agrees to lease from
WORLDSPAN, Equipment, Software and services according to the terms of this
Addendum. Any Equipment and Software provided by WORLDSPAN will be used by
Associate solely for the purposes and functions necessary for Associate to
provide services to authorized users of the WORLDSPAN System and in strict
accordance with training and operating procedures, instructions, and rules
established by WORLDSPAN from time to time. Associate agrees to pay
WORLDSPAN for the Equipment, Software, services, communication charges and
other charges as set forth herein. Title to and ownership of the Equipment
and Software shall at all times remain in WORLDSPAN.
B. Associate agrees that it will not modify any of the Equipment used to
access the WORLDSPAN System, substitute different Equipment, or remove,
relocate or move the Equipment, without the prior written consent of
WORLDSPAN. At the termination of the Agreement, Associate agrees to
immediately return to WORLDSPAN, shipping prepaid, all of the Equipment
provided by WORLDSPAN in the same condition as delivered to Associate,
normal wear and tear excepted.
SECTION 2. INSTALLATION, RELOCATION AND REMOVAL
- ------------------------------------------------
A. WORLDSPAN shall confer with Associate to determine where Associate would
prefer to locate the Equipment on Associate's premises. Associate shall be
responsible, at its expense, for preparing the area for the installation of
the Equipment. This preparation will include items such as installing
cables and data communication lines, arranging for electrical service and
locating the Equipment in the area of installation. The area must be
prepared in accordance with the specifications provided by the
manufacturers of the Equipment and also by the suppliers of electrical and
communication lines. Associate must also insure that the installation does
not violate any building or electrical codes or any other law, ordinance or
regulation.
B. WORLDSPAN will notify Associate of the proposed date of installation, and
WORLDSPAN will use reasonable business efforts to complete installation
within thirty (30) days of such proposed date. WORLDSPAN shall not be
responsible for any delay in installation caused by Associate's failure to
prepare the installation area.
C. Associate agrees that only WORLDSPAN and its service representatives are
permitted to install, relocate, remove, or move the Equipment. Associate
shall give WORLDSPAN at least sixty (60) days prior written notice of
Associate's desire to relocate, remove or move the Equipment, and
<PAGE>
SECTION 3. REPAIRS AND MAINTENANCE
- -----------------------------------
A. WORLDSPAN (or its service representative) will provide, at its own expense,
normal repairs and maintenance for the Equipment. These services shall be
provided from 8:00 a.m. to 5:00 p.m. local time, Monday through Friday,
holidays excepted. Except in those instances that WORLDSPAN has
specifically instructed Associate on repair and maintenance procedures,
Associate will not attempt to perform repairs or maintenance on the
Equipment.
B. Associate shall maintain a written record of each occasion that repairs or
maintenance are performed. Associate agrees that it will make those records
available to WORLDSPAN for inspection upon request.
C. Except for damage caused by WORLDSPAN or its service representative,
Associate shall pay WORLDSPAN for repair and maintenance services when
damage results from: (1) accident, negligence or misuse; (2) failure or
variation of electrical power; (3) failure to properly maintain the
installation site, heating, air conditioning or humidity control; (4)
causes other than ordinary use; or (5) attachment or modification to the
WORLDSPAN Equipment performed or provided by anyone other than WORLDSPAN or
its service representative.
SECTION 4. USE OF EQUIPMENT AND SYSTEM
- ---------------------------------------
A. Associate agrees that it will operate the Equipment and access the
WORLDSPAN System in compliance with all operating and other instructions.
Associate shall prevent unauthorized operation and use of the Equipment and
the WORLDSPAN System. Misuse of the Equipment, including without
limitation, speculative booking or reservation of space in anticipation of
demand, interference with WORLDSPAN's operations or systems, or improper
access will be a material breach by Associate of the Agreement and this
Addendum, and WORLDSPAN will have the right to deny or suspend Associate's
access to the WORLDSPAN System immediately without notice or liability to
Associate.
B. Associate will protect the Equipment, Software, training materials and
Confidential Information from loss, theft, and damage and will return them
to WORLDSPAN at the termination of the Agreement in good condition and
repair. Associate is responsible for any loss, damage, or theft of any item
provided by WORLDSPAN.
SECTION 5. SOFTWARE AND CONFIDENTIAL INFORMATION
- ------------------------------------------------
A. For the purposes of this Section 5, Confidential Information shall include
WORLDSPAN's proprietary information, data, drawings, specifications,
documentation, manuals, plans and software, except: (1) information known
to Associate prior to disclosure by WORLDSPAN; (2) information developed by
Associate independent of any confidential materials provided by WORLDSPAN;
or (3) information which is publicly known or publicly available in the
relevant trade or industry. Confidential Information supplied by WORLDSPAN
to Associate pursuant to this Addendum is for the exclusive use of
Associate and shall not be disclosed or made available to any other person,
firm, corporation or governmental entity in any form or manner whatsoever;
provided, however, that in the event Confidential Information is subpoenaed
or otherwise requested or demanded by any court or governmental authority,
Associate shall give written notice to WORLDSPAN prior to furnishing the
same and shall exercise its best efforts, in cooperation with WORLDSPAN, to
quash or limit such request, demand and/or subpoena. Associate's
obligations include treating Confidential Information with at least the
concern and protective measures accorded any trade secrets and confidential
materials of Associate. Nothing herein shall be construed to require the
disclosure of Confidential Information to Associate, or to require
Associate to accept Confidential Information.
-2-
<PAGE>
B. As between WORLDSPAN and Associate, title and full and complete ownership
rights to all Software and Confidential Information utilized by WORLDSPAN
or provided to Associate in the performance of this Addendum shall remain
with WORLDSPAN. Associate agrees that WORLDSPAN owned, licensed or
developed Software is WORLDSPAN's or a third party's trade secret and
proprietary information, regardless of whether any portion thereof is or
may be validly copyrighted or patented. Any Software provided to Associate
is provided by license only. Associate's license is non-exclusive, non-
transferable and is limited to the right to use such Software in the United
States during the term of this Addendum only according to guidelines
established by WORLDSPAN from time to time. Such Software shall be utilized
by Associate only in accordance with this Addendum, and shall not be
copied, duplicated, reproduced, manufactured or disclosed in any form or by
any media to any other person or party. Associate agrees to abide by any
terms imposed by any third party that has directly or indirectly licensed
Associate to use Software pursuant to this Addendum. Upon termination of
this Addendum, Associate shall immediately return to WORLDSPAN any Software
provided by WORLDSPAN. Associate's license to use the Software shall
terminate upon termination of the Agreement. Nothing herein shall be
construed to require WORLDSPAN to deliver any Software to Associate, or to
require Associate to accept such Software.
SECTION 6. TRAINING
- -------------------
A. WORLDSPAN agrees to provide initial training at no additional charge, to a
mutually agreed upon number of Associate's employees at WORLDSPAN's
training facilities. WORLDSPAN shall provide transportation between the
airport and the training facility and Associate shall bear the cost of
other ground transportation and meals for its employees during training.
WORLDSPAN will make lodging arrangements, at Associate's expense, and, when
possible, provide complimentary air transportation for Associate's
employees to and from initial training. Associate shall pay WORLDSPAN for
the cost of any additional or recurrent training at WORLDSPAN's then
existing rates for such training. All training classes are taught in the
English language.
B. WORLDSPAN may, upon reasonable notice to Associate, during normal business
hours of Associate, monitor and evaluate the proficiency of Associate's
employees' use of the WORLDSPAN System. WORLDSPAN shall use reasonable
efforts to ensure that this monitoring and evaluation shall be conducted in
a manner that will not unreasonably interfere with Associate's business. If
WORLDSPAN determines that Associate's employees are not properly using the
Equipment or the WORLDSPAN System, Associate and WORLDSPAN will arrange for
Associate's employees to receive additional training sufficient to assure
proficient and effective use. Associate shall bear all expenses associated
with such additional training.
SECTION 7. ADDITIONAL CHARGES
- -----------------------------
A. Associate shall promptly pay or reimburse WORLDSPAN, as appropriate, for
all sales, use, personal property, license and franchise taxes, duties,
import fees or other charges or assessments charged or levied in connection
with the delivery, installation, maintenance, possession, use or removal of
the Equipment or WORLDSPAN System, as well as any other governmental
charges or assessments which arise as a result of this Addendum or which
may be imposed (excluding any taxes on or measured by the net income of
WORLDSPAN).
B. Associate agrees to pay WORLDSPAN for maintenance or repair services not
provided by WORLDSPAN according to Section 3 of this Addendum, or for
services provided outside of the established work periods, if requested by
Associate.
C. Associate shall reimburse WORLDSPAN for any costs incurred by WORLDSPAN to
collect amounts due under the Addendum including, but not limited to,
reasonable attorneys' fees and court costs.
-3-
<PAGE>
SECTION 8. ADDITIONAL FUNCTIONS
- --------------------------------
Additional and replacement functions, services or equipment may be offered
by WORLDSPAN from time to time. Any additional and replacement functions,
services, software or equipment will be provided to Associate, as available,
subject to WORLDSPAN's then prevailing terms and charges.
SECTION 9. INDEMNIFICATION AND INSURANCE
- -----------------------------------------
A. Associate shall indemnify, defend and hold harmless WORLDSPAN, its
partners, affiliates, officers, directors, employees and agents from and
against any and all liabilities, suits, costs, damages and claims
(including litigation costs, expenses and reasonable attorneys' fees) which
may be suffered by, accrued against, charged to or recoverable from
WORLDSPAN, its partners, affiliates, officers, directors, employees or
agents by reason of or in connection with Associate's performance or
failure to perform, or improper performance of, any of Associate's
obligations under this Addendum.
B. Associate shall take all necessary precautions to protect the WORLDSPAN
System and the Equipment, Software and training materials. At its own cost,
Associate shall procure and maintain insurance in an amount not less than
the Minimum Insurance Value provided in Schedule A, insuring the Equipment
and Software against all risk of loss, or damage including, without
limitation, the risks of fire, theft and other such risks as are
customarily insured in a standard all risk policy. Associate acknowledges
that the Minimum Insurance Value amount includes only equipment and
software replacement charges and that Associate may also be obligated to
pay WORLDSPAN for installation, removal or other services rendered in
connection with the replacement of lost or damaged Equipment or Software.
Such insurance shall also provide the following:
1. Full replacement value coverage for the Equipment and Software;
2. An endorsement naming WORLDSPAN as co-insured and as a loss payee with
regard to the Equipment and other items provided by WORLDSPAN
hereunder; and
3. An endorsement requiring the insurer to give WORLDSPAN at least thirty
(30) days prior written notice of any intended cancellation; non-
renewal, or material change in coverage.
Failure of Associate to maintain the insurance coverage required
herein shall not relieve Associate of its responsibility to return the
Equipment or Software to WORLDSPAN, or to pay WORLDSPAN the full
replacement value of any Equipment or Software which is damaged or
destroyed. Upon request, Associate shall provide WORLDSPAN a certificate or
certificates of insurance reflecting the insurance coverage required by
this Section.
SECTION 10. LIMITATION OF LIABILITY
- ------------------------------------
A. WORLDSPAN DISCLAIMS, AND ASSOCIATE HEREBY WAIVES, ALL WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR INTENDED USE, OR
ANY LIABILITY IN NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE. WITH
REGARD TO ANY CRS, EQUIPMENT, SOFTWARE OR DATA PROVIDED HEREUNDER,
ASSOCIATE AGREES THAT WORLDSPAN SHALL NOT BE LIABLE UNDER ANY CIRCUMSTANCES
FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES, INCLUDING,
BUT NOT LIMITED TO, LOSS OF REVENUES, EVEN IF ADVISED OF THE RISK OF SUCH
DAMAGES IN ADVANCE.
-4-
<PAGE>
B. WORLDSPAN shall not be liable to Associate, nor deemed to be in default of
this Addendum, on account of any delays, errors, malfunctions or breakdowns
with respect to the WORLDSPAN System, Equipment, data or services provided
hereunder, unless such delay, error, malfunction or breakdown results
solely from the gross negligence or willful misconduct of WORLDSPAN.
SECTION 11. PAYMENT
- --------------------
A. Associate agrees to pay WORLDSPAN all amounts due pursuant to this
Addendum, including but not limited to the charges set forth on Schedule A,
within thirty (30) days of invoice.
B. All charges pursuant to this Addendum are subject to change upon thirty
(30) days' prior written notice to Associate by WORLDSPAN.
SECTION 12. NOTICES
- --------------------
All notices, requests, demands or other communications hereunder shall be
in writing, hand delivered, sent by first class mail, overnight mail, facsimile
or teletype and shall be deemed to have been given when received at the
following addresses:
If to WORLDSPAN:
WORLDSPAN, L.P.
300 Galleria Parkway, NW
Atlanta, Georgia 30339
U.S.A.
Teletype: HDQAS1P
Facsimile: 770/583-7296
ATTN: Manager WORLDSPAN Travel Suppliers
with a copy to:
WORLDSPAN, L.P.
300 Galleria Parkway, NW
Atlanta, Georgia 30339
U.S.A.
Teletype: ATLMS1P
Facsimile: 770-583-7878
ATTN: Legal Department
if to Associate:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Teletype:
--------------------
Facsimile:
--------------------
ATTN:
------------------------
SECTION 13. TERM AND TERMINATION
- ---------------------------------
A. This Addendum shall become effective on the date first written above, and
shall continue in full force and effect for an initial term of one year,
and thereafter until terminated by either party upon not less than thirty
(30) days prior written notice to the other party, unless earlier
terminated
-5-
<PAGE>
as provided herein. This Addendum may be terminated without automatically
terminating the Agreement.
B. If any of the following events of default occur, then WORLDSPAN shall give
Associate notice that such an event has occurred and if Associate falls
fully to cure such default within fifteen (15) days of such notice, then
WORLDSPAN may, following such failure to cure, terminate the Addendum, or
suspend services under the Addendum in whole or in part:
1. Associate ceases to do business as a going concern, files a voluntary
petition in bankruptcy, makes an assignment for the benefit of
creditors of all or substantially all of its assets, or petitions for
reorganization, liquidation or dissolution under any federal or state
bankruptcy law or similar law; or
2. Associate uses the Equipment, the Software or the CRS for any improper
purpose; or
3. Associate is in default of any material obligation owed WORLDSPAN
pursuant to this Addendum; or
4. Associate fails to timely make any payment required pursuant to this
Addendum; or
5. Associate terminates or cancels this Addendum or any part thereof.
C. If any of the following events of default occur, Associate shall give
WORLDSPAN notice that such an event has occurred and if WORLDSPAN fails to
cure such default within fifteen (15) days of such notice, then Associate
may, following such failure to cure, terminate this Addendum:
1. WORLDSPAN ceases to do business as a going concern, files a voluntary
petition in bankruptcy, makes an assignment for the benefit of
creditors of all or substantially all of its assets, or petitions for
reorganization, liquidation or dissolution under any federal or state
bankruptcy law or similar law; or
2. WORLDSPAN provides any Equipment pursuant to this Addendum that fails
in its essential purpose and such failure prevents Associate from
reasonably conducting its business, which Equipment is not replaced or
repaired by WORLDSPAN; or
3. WORLDSPAN is in default of any material obligation owed Associate
pursuant to this Addendum.
D. Upon termination of this Addendum pursuant to this Section 13, WORLDSPAN
shall be entitled immediately to retake possession of the Equipment and
Software without any process of law and terminate access to the CRS.
Termination of the Addendum for any reason shall not relieve either party
of rights or obligations arising prior to the effective date of
termination. Nothing in this Section 13 shall be construed as a limitation
upon any rights or remedies the parties may have elsewhere in this
Addendum, at law, equity, or otherwise.
SECTION 14. GENERAL PROVISIONS
- -------------------------------
A. Nothing in this Addendum is intended to or shall be construed to create or
establish an agency, partnership, or joint venture relationship between the
parties hereto.
B. Associate shall not make any use of any WORLDSPAN name, logo, trademark or
service mark without WORLDSPAN's prior written consent.
-6-
<PAGE>
C. Headings used in this Addendum have been inserted as a matter of
convenience only and in no way define, limit or enlarge the scope of this
Addendum or any of its provisions. Capitalized terms shall have the
meanings assigned in the Agreement.
D. In the event that any material provision of this Addendum is determined to
be invalid, unenforceable or illegal, then such provision shall be deemed
to be superseded and the Addendum modified with a provision which most
nearly corresponds to the intent of the parties and is valid, enforceable
and legal.
E. This Addendum shall be governed by, construed and enforced according to the
laws of the State of Georgia and of the United States of America, without
regard to its conflict of laws and rules. Each party hereby consents to the
non-exclusive jurisdiction of the courts of the State of Georgia and United
States Federal Courts located in Georgia to resolve any dispute arising out
of this Addendum.
F. Except for Associate's obligation to make payments hereunder, neither party
will be deemed in default of this Addendum as a result of a failure to
perform its obligations caused by acts of God or governmental authority,
strikes or labor disputes, fires, acts of war, failure of third party
suppliers, or for any other cause beyond the control of the party.
G. No waiver of any breach of any provision of this Addendum by either party
shall constitute a waiver of any subsequent breach of the same or any other
provisions thereof, and no waiver shall be effective unless made in
writing.
H. This Addendum constitutes the final and complete understanding between the
parties concerning the subject matter hereof. Any prior agreements,
understandings or communications written or otherwise are deemed superseded
by this Addendum. This Addendum may be modified only by a further writing
executed by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Addendum to be executed by
their duly authorized undersigned representatives.
ASSOCIATE: WORLDSPAN, L.P.
Orbit Network Inc.
- ------------------------------
(Print Company Name)
/s/ Lori Schwarofer
By:/s/ Pat Tidmore -------------------
--------------- Market Development Manager
(Signature) WORLDSPAN Travel Suppliers
C. Patton Tidmore
- ------------------------------ August 2, 1999
(Print Name) --------------------------
Date
Vice President, Marketing
- ------------------------------
Title
-7-
<PAGE>
EXHIBIT 10.29
CERTIFICATE OF INCORPORATION
OF
ORBITTRAVEL.COM, INC.
_____________________________
FIRST. The name of this corporation shall be:
ORBITTRAVEL.COM, INC.
SECOND. Its registered office in the State of Delaware is to be
located at 1013 Centre Road, in the City of Wilmington, County of New Castle,
19805, and its registered agent at such address is THE COMPANY CORPORATION.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
Ten Thousand (10,000) shares of Common Stock with a par value of One Tenth of
One Cent (0.001) amounting to Ten Dollars ($10.00).
FIFTH. The name and mailing address of the incorporator is as
follows:
Kimberly Wright
The Company Corporation
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend
or repeal the by-laws.
IN WITNESS WHEREOF, The undersigned, being the incorporator
hereinbefore named, has executed, signed and acknowledged this certificate of
incorporation this sixth day of October, A.D. 1999.
/s/ Kimberly Wright
--------------------------
Kimberly Wright
Incorporator
<PAGE>
EXHIBIT 10.30
Bylaws
of
orbittravel.com, Inc.
adopted October 20, 1999
<PAGE>
BYLAWS
OF
orbittravel.com, Inc.
ARTICLE I
OFFICES
The registered office of the Corporation shall be located in the State of
Delaware. The Corporation may have such other offices, either within or without
the State of Delaware, as the Board of Directors may designate or as the
business of the Corporation may require from time to time.
ARTICLE II
SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall be
--------------
held on the 20th day in the month of October in each year, beginning with the
year 2000, at the hour of 9:00 a.m., for the purpose of electing Directors and
for the transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday in the state where
such meeting is held, such meeting shall be held on the next succeeding business
day. If the election of Directors shall not be held on the day designated herein
for any annual meeting of the shareholders, or at any adjournment thereof, the
Board of Directors shall cause the election to be held at a special meeting of
the shareholders as soon thereafter as conveniently may be.
SECTION 2. Special Meetings. Special meetings of the shareholders, for any
----------------
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President or by the Board of Directors, and shall be called by the President
at the request
<PAGE>
of the holders of not less than fifty one percent (51%) of all the outstanding
shares of the Corporation entitled to vote at the meeting.
SECTION 3. Place of Meeting. The Board of Directors may designate any
----------------
place, either within or without the State of Delaware, unless otherwise
prescribed by statute, as the place of meeting for any annual meeting or for any
special meeting. A waiver of notice signed by all shareholders entitled to vote
at a meeting may designate any place, either within or without the State of
Delaware, unless otherwise prescribed by statute, as the place for the holding
of such meeting. If no designation is made, the place of meeting shall be the
principal office of the Corporation.
SECTION 4. Notice of Meeting. Written notice stating the place, day and
-----------------
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall unless otherwise prescribed by statute,
be delivered not less than ten (10) nor more than sixty (60) days before the
date of the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States Mail, addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation, with postage thereon
prepaid.
SECTION 5. Closing of Transfer Books or Fixing of Record. For the purpose
---------------------------------------------
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the Corporation may provide
that the stock transfer books shall be closed for a stated period, but not to
exceed in any case sixty (60) days. If the stock transfer books shall be closed
for the purpose of determining shareholders entitled to notice of or to vote at
a meeting of shareholders, such books shall be closed for at least fifty (50)
days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty (60) days and, in case of a
meeting of shareholders, not less than ten (10) days, prior to the date on which
the particular action requiring such determination of shareholders is to be
taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
SECTION 6. Voting Lists. The officer or agent having charge of the stock
------------
transfer books for shares of the corporation shall make a complete list of the
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in
<PAGE>
alphabetical order, with the address of and the number of shares held by each.
Such list shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting for the purposes thereof.
SECTION 7. Quorum. A majority of the outstanding shares of the Corporation
------
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of shareholders, a shareholder may vote
-------
in person or by proxy executed in writing by the shareholder or by his or her
duly authorized attorney-in-fact. Such proxy shall be filed with the secretary
of the Corporation before or at the time of the meeting. A meeting of the Board
of Directors may be had by means of a telephone conference or similar
communications equipment by which all persons participating in the meeting can
hear each other, and participation in a meeting under such circumstances shall
constitute presence at the meeting.
SECTION 9. Voting of Shares. Each outstanding share entitled to vote shall
----------------
be entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
SECTION 10. Voting of Shares by Certain Holders. Shares standing in the
-----------------------------------
name of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe or, in the absence of such provision,
as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name, if authority to do so be
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
<PAGE>
Shares of its own stock belonging to the Corporation shall not be voted
directly or indirectly, at any meeting, and shall not be counted in determining
the total number of outstanding shares at any given time.
SECTION 11. Informal Action by Shareholders. Unless otherwise provided by
-------------------------------
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
--------------
shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number of directors of
---------------------------------
the Corporation shall be fixed by the Board of Directors, but in no event shall
be less than one (1) Each director shall hold office until the next annual
meeting of shareholders and until his successor shall have been elected and
qualified.
SECTION 3. Regular Meetings. A regular meeting of the Board of Directors
----------------
shall be held without other notice than this Bylaw immediately after, and at the
same place as, the annual meeting of shareholders. The Board of Directors may
provide, by resolution, the time and place for the holding of additional regular
meetings without notice other than such resolution.
SECTION 4. Special Meetings. Special meetings of the Board of Directors
----------------
may be called by or at the request of the President or any two directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix the place for holding any special meeting of the Board of Directors
called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at least
------
one (1) day previous thereto by written notice delivered personally or mailed to
each director at his business address, or by telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States Mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any directors may waive notice of any meeting. The attendance
of a director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.
<PAGE>
SECTION 6. Quorum. A majority of the number of directors fixed by Section 2
------
of this Article III shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors, but if less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
SECTION 7. Manner of Acting. The act of the majority of the directors
----------------
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. Action Without a Meeting. Any action that may be taken by the
------------------------
Board of Directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed before such
action by all of the directors.
SECTION 9. Vacancies. Any vacancy occurring in the Board of Directors may
---------
be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors, unless otherwise provided
by law. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election by the Board of
Directors for a term of office continuing only until the next election of
directors by the shareholders.
SECTION 10. Compensation. By resolution of the Board of Directors, each
------------
director may be paid his expenses, if any, of attendance at each meeting of the
Board of Directors, and may be paid a stated salary as a director or a fixed sum
for attendance at each meeting of the Board of Directors or both. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefore.
SECTION 11. Presumption of Assent. A director of the Corporation who is
---------------------
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof, or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
ARTICLE IV
OFFICERS
SECTION 1. Number. The officers of the Corporation shall be a President,
------
one or more Vice Presidents, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers as
may be deemed necessary may be elected or appointed by the Board of Directors,
including a Chairman of the Board. In its discretion, the Board of Directors may
leave unfilled for any such
<PAGE>
period as it may determine any office except those of President and Secretary.
Any two or more offices may be held by the same person, except for the offices
of President and Secretary which may not be held by the same person. Officers
may be directors or shareholders of the Corporation.
SECTION 2. Election and Term of Office. The officers of the Corporation to
---------------------------
be elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected and shall have qualified, or until his death, or until he shall resign
or shall have been removed in the manner hereinafter provided.
SECTION 3. Removal. Any officer or agent may be removed by the Board of
-------
Directors whenever, in its judgment, the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election of appointment of an officer
or agent shall not of itself create contract rights, and such appointment shall
be terminable at will.
SECTION 4. Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. President. The President shall be the principal executive
---------
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors, unless there is a Chairman of
the Board, in which case the Chairman shall preside. He may sign, with the
Secretary or any other proper officer of the Corporation thereunto authorized by
the Board of Directors, certificates for shares of the Corporation, any deeds,
mortgages, bonds, contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. Vice President. In the absence of the president or in event of
--------------
his death, inability or refusal to act, the Vice President shall perform the
duties of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. The Vice President shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors.
If there is more than one Vice President, each Vice President shall succeed
to the duties of the President in order of rank as determined by the Board of
Directors. If no
<PAGE>
such rank has been determined, then each Vice President shall succeed to the
duties of the President in order of date of election, the earliest date having
the first rank.
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the
---------
proceedings of the shareholders and of the Board of Directors in one or more
minute books provided for that purpose; (b) see that all notices are duly given
in accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all documents, the execution of
which on behalf of the Corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President certificates
for shares of the Corporation, the issuance of which shall have been authorized
by resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the Corporation; and (g) in general perform all duties
incident to the office of the Secretary and such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody of
---------
and be responsible for all funds and securities of the Corporation; (b) receive
and give receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article VI of these Bylaws; and (c) in general perform
all of the duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the President or by the Board of
Directors. If required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and with such sureties
as the Board of Directors shall determine.
SECTION 9. Salaries. The salaries of the officers shall be fixed from
--------
time to time by the Board of Directors, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
ARTICLE V
INDEMNITY
The Corporation shall indemnify its directors, officers and employees as
follows:
(a) Every director, officer, or employee of the Corporation shall be
indemnified by the Corporation against all expenses and liabilities, including
counsel fees, reasonably incurred by or imposed upon him in connection with any
proceeding to which he may become involved, by reason of his being or having
been a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of the corporation, partnership, joint venture, trust or enterprise, or
any settlement thereof, whether or not he is a director, officer, employee or
<PAGE>
agent at the time such expenses are incurred, except in such cases wherein the
director, officer, or employee is adjudged guilty of willful misfeasance or
malfeasance in the performance of his duties; provided that in the event of a
settlement the indemnification herein shall apply only when the Board of
Directors approves such settlement and reimbursement as being for the best
interests of the Corporation.
(b) The Corporation shall provide to any person who is or was a director,
officer, employee, or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of the
corporation, partnership, joint venture, trust or enterprise, the indemnity
against expenses of suit, litigation or other proceedings which is specifically
permissible under applicable law.
(c) The Board of Directors may, in its discretion, direct the purchase of
liability insurance by way of implementing the provisions of this Article V.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any officer or
---------
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the
-----
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for the
-------------------
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
<PAGE>
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares of the
-----------------------
Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the Board of
Directors so to do, and sealed with the corporate seal. All certificates for
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the Corporation. All certificates surrendered to the Corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefore upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation shall
------------------
be made only on the stock transfer books of the Corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes. Provided, however, that
upon any action undertaken by the shareholders to elect S Corporation status
pursuant to Section 1362 of the Internal Revenue Code and upon any shareholders
agreement thereto restricting the transfer of said shares so as to disqualify
said S Corporation status, said restriction on transfer shall be made a part of
the Bylaws so long as said agreement is in force and effect.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st day of January
and end on the 31st day of December of each year.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
<PAGE>
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words, "Corporate Seal."
ARTICLE XI
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or director of the Corporation under the provisions of
these Bylaws or under the provisions of the Articles of Incorporation or under
the provisions of the applicable Business Corporation Act, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, 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.
The above Bylaws are certified to have been adopted by the Board of
Directors of the Corporation on the 20th day of October 1999.
/s/ Seth D. Heyman
------------------------
Secretary
<PAGE>
EXHIBIT 10.31
DATED 17TH NOVEMBER 1999
WEB TRAVEL SYSTEMS LIMITED (1)
ORBITTRAVEL.COM, INC. (2)
AND
BONVENO.COM LIMITED (3)
---------------------------------------------------------
JOINT VENTURE AGREEMENT
RELATING TO BONVENO.COM LIMITED
---------------------------------------------------------
-----------------
WRAGGE&CO
-----------------
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
--------
CLAUSE HEADING PAGE
<S> <C>
1 Definitions, Interpretation, and Condition Precedent..........................................1
2 Preliminary steps.............................................................................5
3 The Board.....................................................................................5
4 Shareholders' Meetings........................................................................8
5 Business of the Company and limitation on the Board's power of management.....................8
6 Working capital...............................................................................9
7 Guarantees, indemnities, other security.......................................................9
8 Accounting information........................................................................9
9 Dividend policy...............................................................................9
10 Share Option Scheme..........................................................................10
11 Dealings with and transfers of shares........................................................10
12 Deadlock provisions..........................................................................13
14 Restrictive covenants........................................................................15
15 Rights to information and confidentiality....................................................17
16 Guarantees and indemnities...................................................................18
17 Dividends and interest: Taxation.............................................................18
18 Claims by or against Shareholders............................................................19
19 Parties bound................................................................................19
20 Assignability................................................................................19
21 Not a partnership............................................................................19
22 Force majeure................................................................................19
23 This Agreement to prevail over the Articles..................................................20
24 Remedies to be cumulative....................................................................20
25 Costs........................................................................................20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
26 Further assurance............................................................................21
27 Announcements and circulars..................................................................21
28 Entire agreement.............................................................................21
29 Miscellaneous................................................................................21
30 Notices......................................................................................22
31 Choice of law, submission to jurisdiction and address for service............................22
Schedule 1............................................................................................23
Schedule 2............................................................................................25
Schedule 3............................................................................................26
Schedule 4............................................................................................28
</TABLE>
<PAGE>
THIS AGREEMENT is dated 1999 and is made BETWEEN:
(1) WEB TRAVEL SYSTEMS LIMITED (registered in England and Wales number
02070671) having its registered office at Renaissance House 4
Roxborough Way, Foundation Park, Maidenhead, Berkshire SL6 3UD)
("WTS");
(2) ORBITTRAVEL.COM, INC. (a company incorporated under the laws of
Delaware) having its principal office at 100 Second Street East,
Whitefish, MT 59937 U.S.A ("ORBITTRAVEL"); and
(3) BONVENO.COM LIMITED (registered in England and Wales number 3831828)
having its registered office at Renaissance House aforesaid ("THE
COMPANY").
WHEREAS:
(A) the Company is a private company limited by shares incorporated in
England and Wales with number 3831828 under the Companies Act 1985 on
26 August 1999 and at the date of this Agreement has an authorised
share capital of (pound)1,000 divided into 1,000 Ordinary Shares of
(pound)1 each of which 2 such shares have been issued and are fully
paid and beneficially owned by WTS.
(B) WTS and Orbittravel have established the Company for the purpose of
selling, settling and fulfilling travel related bookings and
reservations and selling informational display and advertising based on
Internet technology for both end consumers and third party information
providers including but not limited to travel agents and global
distribution systems within the Territory (as defined in the Management
Agreement) ("THE BUSINESS") and this Agreement will regulate the
operation and management of the Company and the relationship between
its shareholders.
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS, INTERPRETATION, AND CONDITION PRECEDENT
----------------------------------------------------
1.1 In this Agreement unless the context otherwise requires:
(a) the following expressions have the following meanings:
""A" DIRECTOR" means a Director of the Company appointed by
the "A" Shareholder;
"THE ARTICLES" means the new Articles of Association of the
Company in the agreed form as altered from time to time;
""A" SHAREHOLDER" means the holder or holders for the time
being of all the "A" Shares;
""A" SHARES" means "A" Ordinary Shares of(pound)1 each in the
capital of the Company;
1
<PAGE>
"THE AUDITORS" means the auditors of the Company for the time
being and from time to time;
""B" DIRECTOR" means a Director of the Company appointed by
the "B" Shareholder;
"THE BOARD" means the Board of Directors of the Company for
the time being and from time to time;
"B" SHAREHOLDER" means the holder or holders for the time
being of all the "B" Shares;
""B" SHARES" means "B" Ordinary Shares of(pound)1 each in the
capital of the Company;
"BUSINESS DAY" means a day on which banks are open for normal
banking business in the City of London (excluding Saturdays
and Sundays) and "BUSINESS DAYS" shall be construed
accordingly;
"COMPLETION" means completion of the subscription for Shares
provided for in clause 2;
"CONTROL" means control as defined in section 840 ICTA;
"THE DECISION PERIOD" means the period of 20 Business Days
from the referral of a matter to the Chief Executives /
Managing Directors of the Shareholders pursuant to clauses
3.14 and 5.2;
"DEFAULT INTEREST RATE" means 3 per cent above the base
lending rate of Barclays Bank plc for the time being and from
time to time;
"DIRECTOR" means an "A" Director or a "B" Director, as the
case may require, and "DIRECTORS" shall be construed
accordingly;
"EQUITY SHARE CAPITAL" means equity share capital as defined
in section 744 Companies Act 1985;
"EVENT OF DEFAULT" means all or any of the matters set out in
clause 13.1;
"GROUP" means in relation to any company, that company and any
company which is a subsidiary of that company and for the
purposes of this Agreement "SUBSIDIARY" has the meaning given
to that expression by section 736 Companies Act 1985;
"ICTA" means the Income and Corporation Taxes Act 1988;
"INSOLVENCY EVENT" means, in respect of any party, that such
company has ceased to trade or has had a receiver,
administrative receiver, administrator or manager appointed
over the whole or any part of its assets or undertaking, or
who has become insolvent or gone into liquidation (unless such
liquidation is for the purposes of a solvent reconstruction or
amalgamation), compounded with its creditors generally or has
otherwise
2
<PAGE>
been unable to meet its debts as they fall due or has suffered
any similar action in consequence of debt;
"INVESTOR DOCUMENT" means the investor information in relation
to the Company in the agreed form at Appendix 1 hereto;
"THE MANAGEMENT AGREEMENT" means an agreement proposed to be
entered into whereby Orbittravel and the Company have agreed
an operational management structure, marketing policy, content
sharing and product distribution policy for the Company;
"THE PARTIES" means the parties to this Agreement;
"THE PURCHASER" means a party acquiring Shares in accordance
with this Agreement;
"RELEVANT PERCENTAGE" means in respect of each Shareholder the
percentage of the total equity share capital of the Company
held by that Shareholder at the relevant time;
"THE RESTRICTED PRODUCTS" means travel booking, reservation
and information systems and the sale of informational displays
and advertising based on Internet technology and all other
products of a type which are similar to and could compete with
products manufactured, produced, distributed or sold by the
Company;
"THE RESTRICTED SERVICES" means services providing managed
bureaux based Internet corporate travel booking and
information systems and all other services of a type which are
similar to the services supplied by the Company;
"THE SHAREHOLDERS" means the "A" Shareholder and the "B"
Shareholder together and "Shareholder" shall mean either of
them;
"SHARES" means "A" Shares or "B" Shares or, as the context
requires, "A" Shares and "B" Shares;
"TERRITORY" means the "European Territory" as defined in the
Management Agreement.
any document expressed to be "in the agreed form" means a
document in a form approved by (and for the purpose of
identification signed or initialled by or on behalf of) the
Parties;
(b) references:
(i) to clauses and the schedules are unless otherwise
stated to clauses of and the schedules to this
Agreement;
(ii) to any English legal term for any action, remedy,
method of judicial proceeding, legal document, legal
status, Court, official or any legal concept or thing
shall in respect of any jurisdiction other
3
<PAGE>
than England be deemed to include what most nearly
approximates in that jurisdiction to the English
legal term;
(iii) to any enactment (meaning any statute or statutory
provision, whether of the United Kingdom or
elsewhere, subordinate legislation as defined by
section 2(1) Interpretation Act 1978 and any other
subordinate legislation made under any such statute
or statutory provision) shall be construed as
references to:
(A) any enactment which that enactment has
directly or indirectly replaced (whether
with or without notification); and
(B) that enactment as re-enacted, replaced or
modified from time to time, whether before,
on or after the date hereof;
provided that nothing in this clause 1.1(b) shall
increase the liability under this agreement of any
party beyond that which exists immediately following
this Agreement coming into effect;
(c) references to this Agreement or any other document or to any
specified provision of this Agreement or any other document
are to this Agreement, that document or that provision as in
force for the time being and as amended from time to time in
accordance with the terms of this agreement or that document
or, as the case may be, with the agreement of the relevant
parties;
(d) the contents table and the descriptive headings to clauses,
schedules and paragraphs are inserted for convenience only,
have no legal effect and shall be ignored in the
interpretation of this Agreement;
(e) the words and phrases "other", "including" and "in particular"
shall not limit the generality of any preceding words or be
construed as being limited to the same class as the preceding
words where a wider construction is possible;
(f) words importing the singular include the plural and vice
versa, words importing a gender include every gender and
references to persons include corporations, partnerships and
other associations or bodies whether incorporated or
otherwise;
(g) the Interpretation Act 1978 shall apply in the same way as it
applies to an enactment.
1.2 If at any time the "A" shares or the "B" Shares shall be held by more
than one member, references in this Agreement to the "A" Shareholder or
the "B" Shareholder shall, unless the context otherwise requires, be
construed as all the holders of the "A" Shares or the "B" Shares (as
the case may be) acting by the decision of the holders of a simple
majority of such shares.
1.3
4
<PAGE>
(a) This Agreement is conditional on the Parties procuring an
investor to invest not less than "5,000,000 in the Company
("THE INVESTMENT") in such manner and on such terms as may be
agreed between the Parties within 120 Business Days hereof
("THE INVESTMENT DATE").
(b) If such condition is not fulfilled by the Investment Date (or
such later date as the Parties may agree) then the provisions
of this Agreement shall forthwith terminate and cease to be of
effect and no Party shall have any claim against the other
except with respect to any breach of this Agreement occurring
prior to termination. In this event the Parties shall
co-operate to wind up the Company and return any surplus funds
to the Parties in the Relevant Percentages.
(c) For the avoidance of doubt the arbitration provisions
contained in clause 12 of this Agreement shall not apply to
this clause 1.3.
2 PRELIMINARY STEPS
-----------------
2.1 Immediately following the execution of this Agreement the Parties shall
procure that a meeting of the Board is convened and held at which will
be transacted the business set out in the draft minutes in schedule 1
and the Parties shall join in taking all such steps as may be necessary
to procure that:
(a) the Resolutions of the Board set out in such minutes shall be
passed and implemented; and
(b) at the Extraordinary General Meeting referred to in and
convened at such Board Meeting, the Special Resolution set out
in the draft notice of Extraordinary General Meeting in
schedule 2 shall be passed.
2.2 Immediately following the passing of the Special Resolution set out in
schedule 2:
(a) WTS shall subscribe for 3998 "A" Shares in cash at par; and
(b) Orbittravel shall subscribe for 4000 "B" Shares in cash at
par
2.3 Immediately following the making of the subscriptions referred to in
clause 2.2, the Parties shall procure that a meeting of the Board is
convened and held at which will be transacted the business set out in
the draft minutes in schedule 3 and the Parties shall join in taking
such steps as may be necessary to procure that the resolutions of the
Board set out in such minutes shall be passed and implemented.
3 THE BOARD
---------
3.1 The "A" Shareholder shall have the right to appoint and maintain in
office two "A" Directors and the first "A" Directors shall be Michael
Thorne and Geoffrey Mullett.
3.2 The "B" Shareholder shall have the right to appoint and maintain in
office two "B" Directors and the first "B" Directors shall be Joseph
Cellura and Peter Short.
5
<PAGE>
3.3 The Shareholders shall procure that the persons referred to in clauses
3.1 and 3.2 are appointed as Directors on Completion and that at all
times during the continuance of this agreement there shall be at least
1 person appointed by each Shareholder and maintained in office as a
Director of the Company (save in accordance with clauses 11.15(d) and
13.6(c)).
3.4 The "A" Shareholder:
(a) shall have for so long as it is the holder of "A" Shares the
right to remove from office any "A" Director and (subject to
clause 3.3) if it wishes to do so appoint a replacement "A"
Director by giving notice in writing (signed by a director or
the secretary of the "A" Shareholder) to the Secretary of the
Company at its registered office or at a meeting of the Board;
and
(b) shall be responsible for and shall indemnify the "B"
Shareholder and the Company against any loss, liability or
cost that either of them may suffer or incur as a result of
any claim by any "A" Director for unfair or wrongful dismissal
or otherwise arising out of any such removal.
3.5 The "B" Shareholder:
(a) shall have for so long as it is the holder of "B" Shares the
right to remove from office any "B" Director and (subject to
clause 3.3) if it wishes to do so appoint a replacement "B"
Director by giving notice in writing (signed by a director or
the secretary of the "B" Shareholder) to the Secretary of the
Company at its registered office or at a meeting of the
Directors; and
(b) shall be responsible for and shall indemnify the "A"
Shareholder and the Company against any loss, liability or
cost that either of them may suffer or incur as a result of
any claim by any "B" Director for unfair or wrongful dismissal
or otherwise arising out of any such removal.
3.6 The Directors shall not be entitled to any remuneration in their
capacity as Directors of the Company but shall be entitled to
reimbursement of their reasonable expenses incurred in the course of
their duties.
3.7 Any Director may, by giving notice in writing to the Shareholder who
did not appoint him, appoint an alternate and may, in the same way,
remove an alternate so appointed by him. An alternate shall be entitled
to receive notice of all meetings of the Board and attend and vote as
such at any meeting at which the Director appointing him is not
personally present, and generally in the absence of his appointor to do
all the things which his appointor is authorised or empowered to do. A
Director who is also an alternate shall be entitled, in the absence of
his appointor:
(a) to a separate vote on behalf of his appointor in addition to
his own vote; and
(b) to be counted as part of the quorum of the Board on his own
account and in respect of the Director for whom he is the
alternate.
6
<PAGE>
3.8 Unless otherwise agreed by an "A" Director and a "B" Director meetings
of the Board shall be held at least once every 3 months and otherwise
as circumstances require.
Meetings of the Board may be held via teleconference or
videoconference. No Board meeting shall normally be convened on less
than seven Business Days' notice, but Board meetings may be convened by
giving not less than 72 hours' notice if the interests of the Company
would in the opinion of a Shareholder or a Director be likely to be
adversely affected to a material extent if the business to be
transacted at such Board meeting were not dealt with as a matter of
urgency or if all the Directors agree.
3.9 Documents relating to issues to be considered by Directors at any Board
meeting shall be distributed in advance of the meeting to all members
of the Board and their duly appointed alternates so as to ensure that
they are received at least 7 days prior to the date fixed for such
meeting.
3.10 The quorum for the transaction of business at any meeting of the Board
shall be one "A" Director and one "B" Director.
3.11 The Shareholders shall use all reasonable endeavours to ensure that
their respective appointees as Directors (or their alternates) shall
attend each meeting of the Board and to procure that a quorum (in
accordance with the provisions of this Agreement and the Articles) is
present throughout each such meeting.
3.12 If within 1 hour from the time appointed for a Board meeting a quorum
is not present, the meeting shall be adjourned to the next day or as
soon as otherwise practicable at the same time and place (or such other
place, date and time as the Directors shall agree). Each Director not
present at the original meeting shall be notified by either or both of
the Shareholders by any form of notice in writing permitted by clause
30 of the date time and place of the adjourned meeting. If at the
adjourned meeting a quorum is not present within 1 hour from the time
appointed for the meeting, those Directors present shall constitute a
quorum. Notwithstanding the foregoing, no quorum shall exist unless at
least one "A" Director and one "B" Director is present at the adjourned
meeting.
3.13 No resolution of the Directors shall be effective unless carried by a
majority of the Directors present including at least one "A" Director
and one "B" Director.
3.14 If a resolution submitted to a duly convened meeting of the Board is
not carried at that meeting, then, without prejudice to the Board's
ability to consider any other business put to it at such meeting, the
meeting shall (on the written request of any Director or his alternate
at such meeting) be adjourned for three Business Days and then
reconvened. If such resolution is not carried at the adjourned meeting,
it shall be referred to the respective Chief Executives/Managing
Directors of the Shareholders for their decision within the Decision
Period. If the respective Chief Executives/Managing Directors fail to
reach a decision within the Decision Period, the Shareholders shall
procure that the matter which is the subject of such resolutions shall
not be implemented and clause 12 shall apply.
3.15 The "A" Directors shall be entitled to appoint a Chairman for meetings
of the Board held during the period of six months from Completion and
the "B" Directors shall be entitled to appoint a Chairman for meetings
of the Board held
7
<PAGE>
during the subsequent six months. Thereafter, such Chairman shall be
appointed alternatively for periods of six months by the "A" Directors
and the "B" Directors. The first Chairman shall be Michael Thorne. The
Chairman of the Board shall not have a second or casting vote.
4 SHAREHOLDERS' MEETINGS
----------------------
4.1 The Shareholders shall use all reasonable endeavours to procure that
their respective representatives attend each meeting of the members of
the Company and that a quorum (in accordance with the provisions
contained in the Articles) is present throughout each such meeting.
4.2 If within 1 hour from the time appointed for a general meeting a quorum
is not present, the meeting shall be adjourned to the next day, or as
soon as otherwise practicable at the same time and place or such other
place, date and time as the Shareholders shall agree and each
Shareholder shall be notified by the Company by any form of notice in
writing permitted by clause 30 of the date, time and place of the
adjourned meeting. If at the adjourned meeting a quorum is not present
within 1 hour of the time appointed for the meeting, the Shareholders
present shall constitute a quorum.
4.3 The quorum for the transaction of business at any Shareholders' Meeting
shall by one "A" Shareholder and one "B" Shareholder.
5 BUSINESS OF THE COMPANY AND LIMITATION ON THE BOARD'S POWER OF MANAGEMENT
-------------------------------------------------------------------------
5.1 The Shareholders agree that the business of the Company shall be
conducted and developed in accordance with the Investor Document as the
same may be amended or varied from time to time by the Board.
5.2 The Shareholders shall exercise their powers in the Company to procure
that the Company shall not transact any of the business described in
schedule 4 (Reserved Matters) without the prior written approval of
each of the Shareholders. If, in respect of any of the business set out
in schedule 4, the prior written approval of one or more of the
Shareholders is not forthcoming in circumstances where a Shareholder
wishes the Company to transact the relevant business, then the matter
shall be referred to the respective Chief Executives/Managing Directors
of the Shareholders for their consideration. If the respective Chief
Executives/Managing Directors fail to reach agreement within the
Decision Period, the Shareholders shall procure that the relevant
business is not transacted and clause 12 shall apply.
5.3 Orbittravel shall provide to the Company from time to time as required
by the Board the services, facilities and personnel referred to in the
Management Agreement on the terms set out in the Management Agreement.
WTS and Orbittravel also agree to provide such other services to the
Company as the Board shall from time to time require on such terms as
shall be agreed between each of them respectively and the Board.
8
<PAGE>
6 WORKING CAPITAL
---------------
6.1 The Shareholders agree that the finance necessary to meet the working
capital is(pound)5,000,000.00 as described in the Investor Document.
6.2 The Shareholders agree that the finance referred to in clause 6.1 shall
be provided by the issue of such number of Ordinary Shares in the
capital of the Company as agreed by the Shareholders to a financial
investor, the terms and conditions of such issue to be agreed between
the Company and such financial investor.
6.3 Neither of the Shareholders shall be obliged to make any loans or to
subscribe for any more of the share capital of the Company than under
its obligation set out in clause 2 of this Agreement.
7 GUARANTEES, INDEMNITIES, OTHER SECURITY
---------------------------------------
7.1 Neither of the Shareholders shall be obliged to give any guarantee,
indemnity or security in respect of the Company's liabilities or
obligations.
8 ACCOUNTING INFORMATION
----------------------
8.1 The Company shall provide to each of the Shareholders:
(a) by not later than the fifteenth (15th) Business Day following
the end of the month to which they relate, monthly management
accounts for the Company containing such information as the
Shareholders shall agree from time to time;
(b) by not later than the fifteenth (15th) Business Day of each
month, a detailed cash-flow forecast for the Company in
respect of the period of six (6) months commencing on the
first day of the month next following the month in which such
forecast is produced; and
(c) annual audited accounts for the Company, within six (6) months
from the end of the period to which they relate.
9 DIVIDEND POLICY
---------------
9.1 The Company shall not declare, pay or make any dividend or other
distribution until all loans made to the Company by the Shareholders
have been repaid in full.
9.2 The Shareholders shall procure that:
(a) the Annual General Meeting of the Company at which the audited
accounts of the Company are laid before the members is held
not later than four (4) months after the end of the financial
year to which such accounts relate; and
(b) subject to clause 9.1 not later than four (4) weeks after the
audited accounts of the Company are laid before and adopted by
the Shareholders at the Annual General Meeting, such
percentage of the Company's profits available for distribution
in the relevant financial year as the Board shall
9
<PAGE>
resolve shall be distributed to the Shareholders by way of
dividend in their respective Relevant Percentages subject to
such reasonable and proper reserves being retained for working
capital requirements or other liabilities of the Company as
the Board may consider appropriate.
10 SHARE OPTION SCHEME
-------------------
10.1 Each of the Parties agrees that following Completion a share option
scheme equivalent on conversion to 15% of the authorised share capital
of the Company shall be established by the Company for the benefit of
such directors and employees of the Company as shall be agreed by the
Directors.
11 DEALINGS WITH AND TRANSFERS OF SHARES
-------------------------------------
11.1 Each Shareholder undertakes with the other that, during the continuance
of this Agreement, it shall not:
(a) mortgage (whether by way of fixed or floating charge), pledge
or otherwise encumber its legal or beneficial interest in the
whole or any of its Shares;
(b) subject to clause 11.3 and 11.1(d) sell, transfer or otherwise
dispose of all or any of its Shares or any legal or beneficial
interest therein or assign or otherwise purport to deal
therewith or with any interest therein;
(d) agree, whether conditionally or otherwise, to do any of the
foregoing;
other than, in any case, with the prior consent in writing of the other
Shareholder or in accordance with this Agreement PROVIDED THAT and
notwithstanding the foregoing or any other provision of this Agreement:
(i) both Shareholders may at any time transfer any Shares to any
member of their respective Groups or to any third party in the
share capital of which WTS or Orbittravel or any member of
their respective Groups has, or will immediately pursuant to
such transfer, have an interest provided that in the event the
assignee ceases to be a member of the assignor's Group or the
assignor ceases to hold any shares in the assignee, the
assignor shall procure that the benefit of this Agreement is
forthwith re-assigned to the assignor; and
(ii) either Shareholder may transfer up to 15% of its shareholding
in the Company to a third party from whom it receives a bona
fide offer.
11.2 If either of the Shareholders or any person on their behalf (including
without limitation any receiver, administrative receiver,
administrator, manager and/or liquidator) shall purport to deal with
any of its Shares in contravention of the provisions of this clause 11
it shall automatically be deemed to have given a Transfer Notice in
respect of its entire holding of Shares to be sold at the Sale Price
(as defined in clause11.9) and such Transfer Notice shall be
irrevocable.
10
<PAGE>
11.3 The Shareholders each agree that if either of them wishes to transfer
the entire legal and beneficial ownership of all but not some only of
its Shares to any third party from which a BONA FIDE offer has been
received (such Shareholder being a "VENDOR" and such transaction being
referred to in this clause 11.3 as a "TRANSFER"), the Vendor shall
serve on the Board (acting for the purposes of this clause 11 as agent
for the Company) a notice in writing of its wish to transfer all but
not some only of its Shares accompanied by the relevant share
certificates. Such notification (a "TRANSFER NOTICE") shall:
(a) state the number of Shares (the "SALE SHARES") which the
Vendor desires to Transfer;
(b) state, if applicable, the Sale Price for the Sale Shares and
constitute the Board as the Vendor's agent for the sale of the
Sale Shares at the Sale Price; and
(c) give details of the other person to whom the Vendor wishes to
Transfer the Sale Shares if no purchaser shall have been found
pursuant to clauses 11.5 to 11.8 (both inclusive).
The Vendor may, by notice in writing given to the Board within 10
Business Days after communication to it of the Auditors' written
opinion of the Sale Price pursuant to clause 11.9, withdraw the
Transfer Notice. Otherwise, a Transfer Notice once given or deemed to
be given shall not be capable of being withdrawn and may not, in any
circumstances, be varied. A Transfer Notice may not be given in
circumstances where arbitration is to take place or a Default Notice
has been given in accordance with clauses 12 or 13 respectively and the
procedures and actions relating thereto have not been completed.
11.4 Any Transfer of Shares pursuant to this clause 11 shall be made free
from any claims, equities, liens and encumbrances whatsoever and with
all rights attached to the Sale Shares as at the date of service of the
Transfer Notice, but without the benefit of any other warranties or
representations whatsoever.
11.5 Within 5 Business Days after the Board has received a Transfer Notice
or, if later, within 5 Business Days after the Sale Price has been
determined in accordance with clause 11.9 (and, if applicable, after
the Vendor has informed the Board that it does not wish to exercise the
right of withdrawal conferred by clause 11.3 or such right has ceased
to be exercisable) the Board shall offer the Sale Shares to the other
Shareholder giving details in writing of the number of the Sale Shares,
the Sale Price and of the person to whom the Vendor wishes to transfer
the Sale Shares. If the other Shareholder does not within 10 Business
Days of the date of the offer inform the Board that it wishes to
purchase all the Sale Shares at the Sale Price, that Shareholder shall
be deemed to have declined such offer.
11.6 The Board shall, on the expiry of the 10 day period referred to in
clause 11.5, notify the Vendor whether the other Shareholder is willing
to purchase the Sale Shares. If the other Shareholder is willing to
purchase all (but not some only) of the Sale Shares the Vendor shall be
bound, on receipt of the Sale Price in cash, to transfer the Sale
Shares to the other Shareholder.
11
<PAGE>
11.7 The purchase shall be completed as soon as reasonably practicable at a
place and time to be appointed by the Board when against payment of the
Sale Price and subject to payment by the Shareholder purchasing the
Sale Shares of any relevant stamp duties the Shareholder purchasing the
Sale Shares shall be registered as the holder of the Sale Shares in the
Register of Members of the Company, and a share certificate in the name
of the purchasing Shareholder in respect of the Sale Shares shall be
delivered.
11.8 If the other Shareholder declines or is deemed to have declined the
offer to purchase the Sale Shares pursuant to clause 11.5, the Vendor
may sell and transfer all (but not some only) of the Sale Shares at any
time within the following 3 months to the person named in the Transfer
Notice in pursuance of a BONA FIDE sale at any price not being less
than the Sale Price.
11.9 For the purposes of this clause 11 "THE SALE PRICE" means the price per
Share for the Sale Shares (if any) specified in the Transfer Notice as
being the price offered by the third party from which the Vendor has
received the BONA FIDE offer or (if no such price is so specified) the
fair value of the Sale Shares as the Vendor and the other Shareholder
shall agree or, failing agreement, as the Auditors (acting as experts
and not as arbitrators) shall state in writing to the Board and the
Shareholders to be in their opinion the fair selling value of the Sale
Shares on the open market, having regard to the fair value of the
business of the Company as a going concern and on the basis of an arm's
length transaction as between a willing vendor and a willing purchaser.
The determination of the Auditors shall be final and binding on all
concerned. The cost of obtaining the certificate of the Auditors shall
be borne by the Vendor. The Auditors shall be given by the Board, and
shall take account of, all information which a prudent prospective
purchaser of the entire issued share capital of the Company might
reasonably require if such purchaser were proposing to purchase it from
a willing vendor by private treaty and at arm's length.
11.10 Each of the Shareholders shall procure that prior to, and as a
condition precedent of, any Transfer of its Shares, any Purchaser
(other than an existing Shareholder) shall covenant to the remaining
Parties to this Agreement to observe and be bound by the terms of this
Agreement in a manner reasonably satisfactory to the remaining Parties.
11.11 Each of the Shareholders appoints the other (or any Director or
Directors nominated by those others) irrevocably, and by way of
security for the performance of its obligations under this clause 11
and as its attorney, to execute any necessary document, including,
without limitation, any Transfer of Shares. The Transferor hereby
irrevocably authorises the Directors to approve the registration of any
transfer of shares made in accordance with this clause 11.
11.12 The Company may receive the purchase monies on behalf of the Vendor,
but shall not be bound to earn or pay interest on them. The receipt by
the Company of the purchase monies shall be a good discharge to the
Purchaser, which shall not be bound to see to the application of them.
12
<PAGE>
11.13 If the Purchaser shall fail to deliver purchase monies to the Vendor on
the completion date, the purchase monies shall bear interest at the
Default Interest Rate calculated on a daily basis and compounded
monthly.
11.14 On a Transfer of Shares in accordance with this clause from one
Shareholder to the other Shareholder:
(a) if pursuant to this Agreement, one Shareholder disposes of its
Shares to the other Shareholder or a member of the other
Shareholder's Group, then the other Shareholder shall use all
reasonable endeavours to obtain the release of that
Shareholder from any guarantee, indemnity or other security
which that Shareholder may have given pursuant to this
Agreement and pending such release shall keep that Shareholder
full and effectively indemnified against any liability under
any such guarantees, indemnities or other security;
(b) the Vendor shall repay all loans, loan capital, borrowings and
indebtedness in the nature of borrowings outstanding to the
Company from the Vendor (together with any accrued interest
thereon);
(c) the Company (if and to the extent that by so doing it shall
not contravene section 151 Companies Act 1985) or the
Purchaser shall repay all loans, loan capital, borrowings and
interest in the nature of borrowings outstanding to the Vendor
from the Company (together with any accrued interest thereon);
(d) the Vendor shall procure the removal of any Directors or
Secretary of the Company appointed by it; and
(e) the Vendor shall co-operate by doing all such things and
executing all such documents as the Purchaser may reasonably
require to procure that the Company shall adopt new Articles
of Association in such form as the Purchaser may require.
12 DEADLOCK PROVISIONS
-------------------
12.1 If, pursuant to clauses 3.14 and 5.2, the respective Chief
Executives/Managing Directors of the Principal Shareholders have failed
to reach agreement within the Decision Period, then such dispute shall
be referred to and finally resolved by arbitration under the Rules of
the LCIA which Rules are deemed to be incorporated by reference into
this clause.
12.2 The number of arbitrators shall be one.
12.3 The place of arbitration shall be London, England.
12.4 The language to be used in the arbitral proceedings shall be English.
12.5 The length of any such arbitration shall be limited to three (3) days.
12.6 The Company shall bear the costs of any such arbitration.
13
<PAGE>
13 DURATION, TERMINATION AND CONSEQUENCES OF TERMINATION
-----------------------------------------------------
13.1 If either Shareholder ("THE DEFAULTING SHAREHOLDER") shall:
(a) commit a material breach or shall commit persistent breaches
of this Agreement which, if capable of remedy, have not been
so remedied within 10 Business Days of either or the other
Shareholder ("THE OTHER SHAREHOLDER") serving notice on
the Defaulting Shareholder requiring such remedy or
notwithstanding any such breach being remedied, such breach is
committed on 4 or more separate occasions; or
(b) be the subject of an Insolvency Event;
then the other Shareholder may, without prejudice to any other rights
and remedies which it may have, serve a written notice on the
Defaulting Shareholder ("A DEFAULT NOTICE") at any time during the 30
Business Days following an Event of Default coming to the notice of the
Other Shareholder.
13.2 The Default Notice may:
(a) require the Defaulting Shareholder immediately to offer all
(but not some only) of its Shares for sale to the Other
Shareholder and in such case the Defaulting Shareholder shall
be deemed to have served a Transfer Notice (as defined in
clause 11.3) in respect of all of its Shares and the
provisions of clauses 11.3 to 11.14 inclusive shall apply
mutatis mutandis save that the Defaulting Shareholder shall
sell its Shares to the Other Shareholder at the Default Sale
Price (which shall be 90% of the fair value of the Defaulting
Shareholder's Shares as determined by the Auditors in
accordance with clause 11.9); or
(b) require the Defaulting Shareholder immediately to purchase all
(but not some only) of the Other Shareholder's Shares who has
served the Default Notice and in such case that Other
Shareholder shall be deemed to have served a Transfer Notice
(as defined in clause 11.3) and the provisions of clauses 11.3
to 11.11 shall apply (mutatis mutandis), save that Other
Shareholder shall sell its Shares to the Defaulting
Shareholder at the Sale Price (which shall be the fair value
of the Sale Shares as determined by the Auditors in accordance
with clause 11.9) and the Defaulting Shareholder shall be
obliged to purchase the Shares of the other Shareholder.
13.3 If an Insolvency Event has occurred in relation to either of the
Shareholders or any holding company for the time being of either
Shareholder, then the other Shareholder may also serve on the
Defaulting Shareholder a notice (a "DISENFRANCHISEMENT NOTICE") in
respect of the Defaulting Shareholder's Shares ("THE RESTRICTED
SHARES") which shall automatically entitle the Other Shareholder to
exercise together all the rights of the Defaulting Shareholder in
relation to the Restricted Shares, including, without limitation:
(a) the right to attend and vote at general meetings of the
Company (whether on a show of hands or on a poll) as if it
were the holder of the Restricted Shares; and
14
<PAGE>
(b) the right to remove Directors appointed by the Defaulting
Shareholder and appoint its own nominated Directors as if it
were the holder of the Restricted Shares.
13.4 The recipient of the Disenfranchisement Notice hereby appoints the
Other Shareholder as its lawful attorney for the purpose of receiving
notices of and attending and voting at all meetings of the members of
the Company from the date of service of the Disenfranchisement Notice
and hereby authorises:
(a) the Company to send any notices in respect of the Restricted
Shares to the Other Shareholder; and
(b) the Other Shareholder to complete in such manner as it thinks
fit and to return proxy cards, forms of appointment of a
representative to attend a general meeting of the Company
pursuant to section 375 Companies Act 1985, consents to short
notice and any other document required to be signed by it in
its capacity as a member.
13.5 Any Transfer Notice deemed to be given in accordance with this clause
13 may not be withdrawn.
13.6 On a transfer of any Shares in accordance with this clause 13:
(a) the provisions of clause 11.14(a) (release of guarantees,
etc.) shall apply mutatis mutandis;
(b) the transferring Shareholder shall repay all loans, loan
capital, borrowings and indebtedness in the nature of
borrowings outstanding to the Company from that Shareholder
(together with any accrued interest thereon);
(c) the transferring Shareholder shall procure the resignation of
any Directors or Secretary of the Company appointed by it;
(d) subject to clause 29.3 this Agreement shall terminate;
(e) each Shareholder shall forthwith return to the other or the
Company (as appropriate) all of the property of such other or
the Company (as appropriate) in its possession.
13.7 The rights of the Parties under this clause 13 shall be without
prejudice to any claim that any party may have against any other for
damages for breach of contract.
14 RESTRICTIVE COVENANTS
---------------------
14.1 Each of the Shareholders agrees with the Company and the other
Shareholder that it will not, and will procure that each of the members
of its Group will not, whether by itself, its employees or agents or
otherwise howsoever, while such Shareholder remains the holder of any
Shares and for two years from the date on which such Shareholder ceases
to hold any Shares ("THE RESTRICTION PERIOD") directly or indirectly:
15
<PAGE>
(a) be engaged or interested in any capacity (whether for reward
or otherwise) in any business which is or is about to be
engaged in the development, production, distribution or sale
of the Restricted Products or any of them or the supply of the
Restricted Services or any of them in the Territory in
competition with the Company, PROVIDED THAT this restriction
shall not operate:
(i) to prohibit any such engagement in which none of the
duties or functions performed thereunder relate to
the development, production, distribution or sale of
the Restricted Products or any of them or the supply
of the Restricted Services or any of them;
(ii) to prohibit any party from holding in aggregate up to
five per cent. of the issued share capital of any
company which is or is about to be engaged in the
development, production, distribution or sale of the
Restricted Products or any of them or the supply of
the Restricted Services or any of them in competition
with the Company and the shares of which are listed
or dealt in on a recognised Stock Exchange;
(iii) to prohibit any party or any member of its Group from
purchasing shares of any company which (according to
its audited accounts for such period) in its most
recent accounting period derived 10% or less of its
revenues from the development, distribution or sale
of the Restricted Products or any of them or the
supply of the Restricted Services or any of them as
aforesaid.
(iv) to prohibit the "A" Shareholder from engaging in its
business which the Parties understand and agree might
or does involve the development, production,
distribution and/or sale of products similar to the
Restricted Products, and the supply of services
similar to the Restricted Services in the event that
the "A" Shareholder has transferred its shares to the
"B" Shareholder under the provisions of clause 13 .
The provisions of this clause 14.1(a)(iv) shall apply
mutatis mutandis to the "B" Shareholder so that
references to the "A" Shareholder are to the "B"
Shareholder and references to the "B" Shareholder are
to the "A" Shareholder. Notwithstanding any provision
of this Agreement to the contrary, both Shareholders
shall be free to engage in their business without
restriction outside of the Territory.
(b) solicit or entice away or endeavour to solicit or entice away
from the Company any director or manager or salesman employed
or otherwise engaged by the Company at any time during the
previous year, whether or not such person would commit any
breach of his contract of employment by reason of his leaving
the service of the Company;
(c) employ or otherwise engage any person who was at any time
during the previous year employed or otherwise engaged by the
Company and who by reason thereof is or is reasonably likely
to be in possession of any confidential information relating
to the Company.
16
<PAGE>
14.2 Each of the Shareholders agrees with the Company and the other
Shareholder that it will not, and will procure that each of the members
of its Group will not, at any time during the Restriction Period,
whether by itself, its employees or agents or otherwise howsoever,
directly or indirectly:
(a) engage in any trade or business or be associated with any
person, firm, company or other organisation engaged in any
trade or business using the name "Bonveno.com" or "Bonveno" or
incorporating such words or;
(b) do or permit anything to be done at any time which is harmful
to the reputation of the Company or which is likely to cause
any person to reduce the amount of business transacted between
that person and the Company or seek to change the terms of
such business in a manner adverse to the Company.
14.3 Each of paragraphs (a) to (c) of clause 14.1 and of paragraphs (a) and
(b) of clause 14.2 shall be deemed to constitute a separate agreement
and shall be construed independently of the other paragraphs in the
relevant clause.
14.4 While the parties consider that the restrictions aforesaid are
reasonable in all the circumstances, it is agreed that if any such
restrictions taken together shall be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the interests
of the relevant party or Parties but would be adjudged reasonable if
part or parts of the wording thereof were deleted or amended or
qualified or the periods thereof were reduced or the range of products
or area dealt with were thereby reduced in scope, then the relevant
restriction or restrictions shall apply with such modification or
modifications as may be necessary to make it or them valid and
effective.
15 RIGHTS TO INFORMATION AND CONFIDENTIALITY
-----------------------------------------
15.1 Notwithstanding the duties owed by each of the Directors to the
Company, any Director or any person designated for the purpose in
writing by a Shareholder shall be entitled to disclose any information
and provide relevant documents and materials about the Company and
discuss its affairs, finances and accounts with appropriate officers
and senior employees of the Shareholder in question. Each of the
Shareholders shall be entitled to disclose details of the Company's
affairs, finances and accounts to that Shareholder's professional and
financial advisers who are required to know the same to carry out their
duties. Any information, documents and materials supplied to or by a
Shareholder in accordance with clause 8 and this clause 15.1 shall,
subject to clause 15.3 be kept strictly confidential.
15.2 Subject to clause 15.3 and save as required by law or by any relevant
national or supranational regulatory authority each of the Parties
shall safeguard, treat as confidential and not use for the purposes of
its own business all information, documents and materials which it
acquires in connection with this Agreement and which relate to the
business of the Company or to any of the other Parties.
15.3 The obligations of confidentiality in this clause 15 shall survive the
termination of this Agreement and shall continue unless and until any
of the relevant confidential
17
<PAGE>
information enters the public domain through no fault of the relevant
party or of any other person owing a duty of confidentiality to the
Company.
15.4 A Shareholder which ceases to be a Shareholder shall thereupon
forthwith hand over to the Company all confidential information,
documents and correspondence belonging to or relating to the business
of the Company and shall, if so required by the Company, certify that
it has not kept any records or copies of such materials.
16 GUARANTEES AND INDEMNITIES
--------------------------
16.1 Each party hereby agrees to indemnify and hold harmless each of the
other parties, including their affiliates, subsidiaries, successors,
assigns, officers, directors, agents, and employees, from and against
any and all liabilities, damages, losses, expenses, claims, demands,
suits, fines, or judgments (including, but not limited to, attorneys'
fees, expert witness costs, court costs, and expenses) that may at any
time be threatened against, suffered by, accrued against, charged to,
or recoverable from that Party in any forum, by reason of that Party's
acts or omissions including, but not limited to:
(a) any alleged inaccuracy, copyright infringement or any other
claim arising in connection with the data produced by or for
the Party, including but not limited to any defamatory or
allegedly defamatory material placed online;
(b) misappropriation, violation, or infringement of any
proprietary rights, trademarks, trade names, or service marks
utilised by that Party;
(c) that Party's failure to obtain or maintain all permits and
licenses required under law in relation to this Agreement, and
(d) any injuries or death of persons or loss of, damage to, or
destruction of property (including loss of use thereof)
arising out of any act or omission of that Party or its
affiliates.
16.2 Each Party shall give prompt written notice to the other Parties of the
receipt of any claim or the commencement of any action which is or may
be covered by the indemnity set forth above. Upon receipt of such
notice, the party notified of the claim shall assume the defence
thereof and the other Parties shall, if required for the purpose of
such proceedings, lend their names thereto. The notifying Party shall
co-operate fully with the other Parties in defending or settling such
Claim, and shall perform all acts, execute all documents, and provide
all information and documents as are reasonably necessary for the
notified Party to perform its obligation. The notifying party shall not
compromise or settle any such Claim or any proceedings pursuant thereto
without the other Parties' prior written consent.
17 DIVIDENDS AND INTEREST: TAXATION
--------------------------------
17.1 Either Shareholder may by notice in writing at any time given to the
Company require the Company to join in making an election under section
247 ICTA (to the extent that such election may lawfully be made by the
Company).
18
<PAGE>
17.2 The Company shall not thereafter revoke any election which has been
made pursuant to clause 17.1 (whether by giving notice under section
248 (5) ICTA or otherwise) unless requested to do so by the relevant
shareholder.
18 CLAIMS BY OR AGAINST SHAREHOLDERS
---------------------------------
18.1 Where either of the Shareholders asserts any claim against the Company,
the other Shareholder shall be entitled to defend such claim in the
name and at the expense of the Company without any further authority.
18.2 Where either Shareholder asserts that the Company has any claim against
the other Shareholder , the Shareholder so asserting shall be entitled
to pursue such claim in the name and at the expense of the Company
without any further authority.
19 PARTIES BOUND
-------------
19.1 The Company undertakes with each of the Shareholders (so far as it may
lawfully bind itself) to be bound by and comply with the terms and
conditions of this Agreement insofar as the same relate to the Company
and to act in all respects as contemplated by this Agreement.
19.2 The Shareholders undertake with each other to exercise their powers in
relation to the Company so as to ensure that the Company fully and
promptly observes, performs and complies with its obligations under
this Agreement and to exercise their rights as Shareholders in a manner
consistent with this Agreement.
19.3 Each Shareholder undertakes with each of the other Parties that while
it remains a party to this Agreement it will not (except as expressly
provided for in this Agreement) agree to cast any of the voting rights
exercisable in respect of any of the shares held by it in accordance
with the directions, or subject to the consent of, any other person
(including another Shareholder).
20 ASSIGNABILITY
-------------
20.1 This Agreement shall be binding on and shall ensure for the benefit of
each Party's successors and permitted assigns.
20.2 Subject to clause 11 none of the Parties may, without the written
consent of the others, assign any of their respective rights or
obligations under this Agreement.
21 NOT A PARTNERSHIP
-----------------
21.1 Nothing in this Agreement shall create a partnership or establish a
relationship of principal and agent or any other fiduciary relationship
between or among any of the Parties.
22 FORCE MAJEURE
-------------
22.1 If and to the extent that any Party is hindered or prevented by
circumstances not now reasonably foreseeable and not within its
reasonable ability to control from performing any of its obligations
(other than in respect of the payment of money)
19
<PAGE>
under this Agreement and promptly so notifies the other party giving
full particulars of the circumstances in question, then the Party so
affected shall be relieved of liability to the other for failure to
perform such obligations but shall nevertheless use its best endeavours
to resume full performance of such obligations without avoidable delay,
and pending such resumption shall permit and shall use its best
endeavours to facilitate any efforts that the other Parties may make to
procure alternative supplies or services.
22.2 Where the period of non performance under clause 22.1 exceeds 45
Business Days either Shareholder shall be entitled to terminate this
Agreement forthwith by written notice to the other Shareholders and the
provisions of clause 13.2 to 13.7 (inclusive) shall apply mutatis
mutandis as if the Party suffering the event of force majeure was the
Defaulting Shareholder for the purpose of such clauses.
23 THIS AGREEMENT TO PREVAIL OVER THE ARTICLES
-------------------------------------------
23.1 In the event of any conflict, ambiguity or discrepancy between the
provisions of this Agreement and the Articles, the Shareholders shall
join in procuring that the Articles are altered to accord with the
provisions of this Agreement, which shall prevail as between the
Shareholders for so long as this Agreement remains in force.
23.2 Each of the Shareholders agrees with the other that it will:
(a) exercise all voting and other rights and powers vested in or
available to them respectively to procure the convening of all
meetings, the passing of all resolutions and the taking of all
steps necessary or desirable to give effect to this agreement;
and
(b) not exercise any rights conferred on it by the Articles which
are or may be inconsistent with its rights or obligations
under this agreement.
24 REMEDIES TO BE CUMULATIVE
-------------------------
24.1 No remedy conferred by any of the provisions of this Agreement is
intended to be exclusive of any other remedy available at law, in
equity, by statute or otherwise. Each and every other remedy shall be
cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law in equity, by statute or
otherwise. The election by any party to pursue one or more of such
remedies shall not constitute a waiver by such party of the right to
pursue any other available remedy.
24.2 Subject to the time limits in clauses 11.3, 11.5, 11.6 and 13.1 (for
which purposes time shall be of the essence), a Shareholder's failure
to insist on strict performance of any provision of this Agreement
shall not be deemed to be a waiver of that provision or of any right or
remedy for breach of a like or different nature. Subject as aforesaid,
no waiver shall be effective unless specifically made in writing and
signed by a duly authorised officer of the Shareholder granting such
waiver.
25 COSTS
-----
20
<PAGE>
25.1 Each of the Parties shall be responsible for its respective legal and
other costs incurred in relation to the preparation and completion of
this Agreement.
26 FURTHER ASSURANCE
-----------------
26.1 Each of the Parties shall, and shall use their respective reasonable
endeavours to procure that any necessary third parties shall, execute
and deliver to the other Parties such other instruments and documents
and take such other action as may be required to carry out, evidence
and confirm the provisions of this Agreement and the Articles.
27 ANNOUNCEMENTS AND CIRCULARS
---------------------------
27.1 Subject as required by law or by the London Stock Exchange Limited or
by any relevant national or supra-national regulatory authorities, all
announcements and circulars by or on behalf of any of the Parties and
relating to the subject matter of this Agreement shall be in terms to
be agreed between the Parties in advance of issue.
28 ENTIRE AGREEMENT
----------------
28.1 This Agreement, the Articles and all other agreements required by the
terms of this Agreement to be entered into by the Parties set forth the
entire agreement and understanding between the Parties or any of them
in connection with the Company and the arrangements described in this
Agreement.
28.2 No purported variation of this Agreement shall be effective unless made
in writing.
29 MISCELLANEOUS
-------------
29.1 If any term or provision in this Agreement shall be held to be illegal
or unenforceable, in whole or in part, under any enactment or rule of
law, such term or provision or part shall to that extent be deemed not
to form part of this Agreement but the enforceability of the remainder
of this Agreement shall not be affected.
29.2 This Agreement may be entered into in any number of counterparts and by
the Parties to it on separate counterparts, each of which when executed
and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument.
29.3 This Agreement shall cease to have effect in relation to a Shareholder
which ceases to hold any Shares save in respect of:
(a) any provision of this Agreement which is expressed to continue
after such cessation; and
(b) any liability which at the time of such cessation has accrued
to another party or which may accrue in respect of any act or
omission occurring prior to such cessation.
21
<PAGE>
30 NOTICES
-------
30.1 Any notice required to be given under this Agreement shall be deemed
duly served if left at or sent by registered or recorded delivery post
to any Party at its registered office. Any such notice shall be deemed
to be served at the time when the same is handed to or left at the
address of the Party to be served and, if served by post, on the day
(not being a Saturday, Sunday or public holiday) next following the day
of posting.
30.2 In proving the giving of a notice it shall be sufficient to prove that
the notice was left or that the envelope containing such notice was
properly addressed and posted or that the applicable means of
telecommunications was properly addressed and despatched (as the case
may be).
30.3 The Company undertakes with each of the Shareholders that it will
forthwith supply to each Shareholder a copy of any notice which may be
given to or served on the Company under this Agreement.
31 CHOICE OF LAW, SUBMISSION TO JURISDICTION AND ADDRESS FOR SERVICE
-----------------------------------------------------------------
31.1 This agreement shall be governed by and interpreted in accordance with
English law.
31.2 The Parties hereby submit to the exclusive jurisdiction of the High
Court of Justice in England save under the provisions of clause 12 of
this Agreement.
31.3 Orbittravel hereby undertakes that within one month of the Completion
Date it will notify both of the other Parties to the Agreement of the
person, firm or company who is authorised to accept service of all
legal process arising out of or connected with this Agreement and
service on such person, firm or company shall be deemed to be service
on the Party concerned.
IN WITNESS whereof this Agreement has been executed as a deed the day and year
first above written
22
<PAGE>
EXECUTED AS A DEED by )
WEB TRAVEL SYSTEMS )
LIMITED )
acting by:
Director /s/ Authorized Signatory
Director/Secretary /s/Geoff Mullet
EXECUTED AS A DEED by )
ORBITTRAVEL.COM, INC. )
acting by:
/s/ Joseph R. Cellura
Director, Chairman & CEO
Director/Secretary
/S/David A. Noosinow
EXECUTED AS A DEED by )
BONVENO.COM LIMITED )
acting by:
Director /s/ Authorised Signatory
Director/Secretary /s/ Geoff Mullet
23
<PAGE>
Exhibit 10.32
INDEMNIFCATION AGREEMENT
------------------------
THIS AGREEMENT is made and entered into as of ____________ by and between
OrbitTravel.com Corporation, a Delaware corporation (the `Company"), and
_______________("Indemnitee").
WITNESSETH:
-----------
WHEREAS, Indemnitee is a director and/or an executive officer of the
Company and provides unique and valuable services in such capacity or capacities
for the Company;
WHEREAS, the Company's Certificate of Incorporation ("Certificate") and
Bylaws (the "Bylaws") provide for the indemnification of the directors and
executive officers by the Company to the maximum extent authorized by the
Delaware General Corporation Law, as amended (the "Act");
WHEREAS, the Certificate, the Bylaws and the Act, by their nonexclusive
nature, permit agreements between the Company and Its directors and executive
officers with respect to indemnification of such directors and executive
officers;
WHEREAS, as a result of recent developments affecting the terms, scope, and
availability of directors' and officers' 1iabiliy insurance, there exists
general uncertainty as to the extent of protection which may be afforded the
Company's directors and executive officers by such insurance, if any such
Insurance is obtained; and
WHEREAS, in order to induce Indemnitee to serve or continue to serve as a
director and/or executive officer of the Company, as the case may be, the
Company has determined and agreed to enter into this Agreement with Indemnitee.
NOW, THEREFORE, in consideration of Indemnitee's service or continued
service as a director and/or executive officer after the date hereof the parties
hereto agree as follows:
1. Indemnification. The Company hereby agrees to hold harmless and
indemnify Indemnitee to the fullest extent permitted or required by the
provisions of the Act as it is presently constituted and as It may be amended
from time to time; provided, however, that in the case of any amendment to the
Act, the Company's obligations to hold harmless and indemnify Indemnitee shall
be changed only to the extent that such
1
<PAGE>
amendment to the Act permits or requires the Company to provide broader
indemnification rights than prior to such amendment.
2. Additional Indemnity. Subject only to the exclusions set forth in
Section 3 hereof, the Company hereby further agrees to hold harmless and
indemnify Indemnitee:
(a) Against any and all expenses (including attorneys' fees), costs,
judgments, fines, and amounts paid by Indemnitee in connection with the defense
or settlement of any threatened pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (including
an action by or in the right of the Company) to which the Indemnitee is, was, or
at any time becomes a party, witness or deponent or is threatened to be made a
party, witness or deponent by reason of the fact that Indemnitee is, was, or at
any time becomes a director, officer, Executive, or agent of the Company, or is
or was serving or at any time serves at the request of the Company as a
director, officer, Executive, or agent of another corporation, partnership,
limited liability company, joint venture, trusts or other enterprise; and
(b) Otherwise to the fullest extent as may be provided to Indemnitee
by the Company under the non-exclusivity provisions of the Act
3. Limitations on Additional Indemnity. No indemnity pursuant to Section
2 hereof shall be paid by the Company:
(a) If a judgment or other final adjudication establishes that
lndemnitee's actions, or omissions to act, were material to the cause of the
action so adjudicated and constitute: (i) a violation of the criminal law,
unless Indemnitee had reasonable cause to believe his conduct was lawful or bad
no reasonable cause to believe his conduct was unlawful; (ii) a transaction from
which Indemnitee derived an improper personal benefit; (iii) in the case of
Indemnitee being a director, a circumstance under which the liability provisions
of the Act are applicable; or (iv) willful misconduct or a conscious disregard
for the best interests of the Company in a proceeding by or in the right of the
Company or in a proceeding by or in the right of a shareholder & of the Company;
or
(b) If a final decision by a court having jurisdiction in the matter
shall determine that such indemnification is not Lawful.
4. Contribution. If the indemnification provided in Section 1 or 2 hereof
Is unavailable and may not be paid to lndemnitee for any reason other than those
set forth In paragraph (a) of Section 3 hereof, then in respect of any
threatened, pending, or completed action, suit, or proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such
2
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action, suit, or proceeding), the Company shall contribute to the amount of
expenses (including attorneys' fees). judgments, fines, and amounts paid or
payable by Indemnitee in such proportion as Is appropriate to reflect (a) the
relative benefits received by the Company on the one hand and Indemnitee on the
other hand from the transaction from which such action, suit, or proceeding
arose, and (b) the relative fault of the Company on the one hand and of
Indemnitee on the other hand in connection with the events which resulted in
such expenses, judgments, fines, or settlement amounts, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of the Indemnitee's on the other hand shall be determined by reference
to, among other things, the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent the circumstances resulting
in such expenses, judgments, fines, or settlement amounts.
5. Continuation of Obligations. All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee is a
director, officer, Executive, or agent of the Company (or Is or was serving at
the request of the Company as a director, officer, Executive, or agent of
another corporation, partnership, limited liability company, joint venture,
trust, or other enterprise) and shall continue thereafter so long as Indemnitee
shall be subject to any possible claim or threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, or investigative, by
reason of the fact that Indemnitee was a director or executive officer of the
Company or serving in any other capacity referred to herein and shall inure to
the benefit of the heirs, executors, and administrators of Indemnitee.
6. Notification and Defense of Claim. Promptly after receipt by lndemnitee
of notice of the commencement of any action, suit, or proceeding, Indemnitee
will, if a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof. The failure of
Indemnitee to notify the Company shall have no effect on the obligations of the
Company hereunder. With respect to any such action, suit, or proceeding:
(a) The Company will be entitled to participate therein at its own
expense.
(b) Except as otherwise provided below, to the extent that it may wish,
the Company shall be entitled to assume the defense thereof, with counsel
satisfactory to Indemnitee. After notice from the Company to Indemnitee of its
election to assume the defense thereof, the Company will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof except as
otherwise provided below. Indemnitee shall have
3
<PAGE>
the right to employ his counsel in such action, suit, or proceeding, but the
fees and expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of Indemnitee unless
(i) the employment of counsel by Indemnitee has been authorized by the Company,
(ii) Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of the defense of
such action, or (iii) the Company shall not in fact have employed counsel to
assume the defense of such action, In each of which cases the fees and expenses
of such counsel of Indemnitee shall be at the expense of the Company. The
Company shall not be entitled to assume the defense of any action, suit, or
proceeding brought by or on behalf of the Company.
(c) The Company shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any action or claim effected
without the Company's written consent. The Company shall not settle any action
or claim in any manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent. Neither the Company nor
Indemnitee will unreasonably withhold its, his consent to any proposed
settlement.
7. Advancement and Repayment of Expenses.
(a) In the event that Indemnitee employs his own counsel pursuant to
Section 6(b)(i), (ii), or (iii) above, the Company shall advance to Indemnitee,
prior to any final disposition of any threatened or pending action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, any and
all expenses (including legal fees and expenses) incurred in investigating or
defending any such action, suit, or proceeding within ten (10) days after
receiving copies of invoices presented to Indemnitee for such expenses.
(b) Indemnitee agrees and undertakes that Indemnitee will reimburse
the Company for all expenses paid by the Company to Indemnitee pursuant to
Section 7(a) hereof in the event and only to the extent that it shall be
ultimately determined by a court of competent jurisdiction that Indemnitee is
not entitled, under the provisions of the Act, the Bylaws, the Certificate, this
Agreement, or otherwise to be indemnified by the Company for such expenses.
8. Enforcement.
(a) The Company expressly confirms and agrees that it has entered
into this
Agreement and assumed the obligations imposed on the Company hereby in order to
Induce
4
<PAGE>
Indemnitee to serve or to continue to serve as a director and/or executive
officer of the Company, and acknowledges that Indemnitee is relying upon this
Agreement in serving or continuing to serve in such capacity.
(b) In the event Indemnitee is required to bring any action to enforce
rights or to collect monies due under this Agreement and is successful in such
action, the Company shall reimburse Indemnitee for all of lndemnitee's fees and
expenses in bringing and pursuing such action. The company hereby agrees at the
option of the executive to issue a combination of stock and cash to executive at
the election of the executive to receive any combination of cash or stock in the
form of options at a 35% discount to the market on a ten day trailing average.
9. Non-exclusivity. The indemnification provided by this Agreement shall
not be deemed exclusive of any rights to which Indemnitee may be entitled under
the Act, the Articles, the Bylaws, any agreement, any vote of shareholders or
disinterested directors, or otherwise, both as to action in indemnitee's
official capacity, and as to action In another capacity while holding such
office. The indemnification provided wider this Agreement shall continue as to
indemnitee for any action taken or not taken while serving in an Indemnified
capacity even though ho may have ceased to serve in such capacity at the time of
any action, suit, or other covered proceeding.
10. Liability Insurance. To the extent the Company maintains an Insurance
policy or policies providing directors' and officers' liability insurance,
indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for any director
or executive officer of the Company.
11. Severability. The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part hereof is declared invalid
or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without reference to
conflict or choice of law principles thereunder.
13. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Indemnitee and the Company, and their respective successors, assigns
and personal or legal representatives.
14. Amendment. This Agreement may not be amended or modified at any time
except by written instrument executed by the Company
5
<PAGE>
and mutually agreed to by Indemnitee & the Company.
15. Notices. Notices given pursuant to this Agreement shall be in writing,
and except as otherwise provided in this Agreement, shall be deemed given when
actually received by Indemnitee or actually received by the Company's President
or any officer of the Company. If sent by mail, such notices shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, if to the OrbitTravel.com Corporation, Attention: Chairman and CEO, One
Union Square, C/O Joseph R. Cellura, Suite 10-J, New York, New York 10003 , or
if to Indemnitee, at the address set forth below Indemnitee's signature of this
Agreement, or to such other address as the party to be notified shall have
theretofore given to the other party in writing.
16. Certain Rules of Construction. No party shall be considered as being
responsible for the drafting of this Agreement for the purpose of applying any
rule construing ambiguities against the drafter or otherwise. No draft of this
Agreement shall be taken into account in construing this Agreement.
17. No Waiver. No waiver by either party at anytime of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
OrbitTravel.com Corporation
a Delaware Corporation
By:___________________________
Title
______________________________
Executive
---------------------
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EXHIBIT 10.33
JOINT CONTENT DISTRIBUTION AGREEMENT
------------------------------------
This Exclusive Content Distribution Agreement ("Agreement") is entered into
this 9th day of January, 2000, by and between OrbitTravel.com, Inc., a
Delaware corporation ("OrbitTravel"), whose address is One Union Square South,
Suite 10-J, New York, NY 10003, and AsiaGateway.com, Ltd., a corporation
registered in the Cayman Islands ("AsiaGateway"), whose address is 276 5th
Avenue New York, NY.
RECITALS
--------
1. OrbitTravel is in the business of developing, providing, and operating on-
line interactive services, websites, computerized databases, and
communications systems within the travel industry that provide third
parties remote access to on-line computerized databases. OrbitTravel has
created and owns a computerized travel information and reservations system
for the on-line distribution of travel-related information and services
known as "TravelFile".
2. AsiaGateway maintains a website known as "AsiaGateway.com" which
distributes news and other informational content relating to the people,
nations, and business of Asia and the Pacific Rim.
3. The parties desire to establish an joint online content distribution
relationship whereby AsiaGateway shall actively promote and distribute
travel related content provided by OrbitTravel on the AsiaGateway.com
website, and OrbitTravel shall actively promote and distribute content
pertaining to Asia through OrbitTravel's distribution channels, all in
accordance with the terms and conditions of this Agreement.
AGREEMENTS
----------
SECTION 1. CONTENT DISTRIBUTION AND PROMOTION
- -------------------------------------------------
1.1 OrbitTravel Content: Immediately following the execution of this
-------------------
Agreement, OrbitTravel shall provide AsiaGateway with travel-related
informational Content to be included within AsiaGateway.com. For the
purposes of this Agreement, "Content" shall mean text, database files and
records, images, video, audio (including, without limitation, music used in
time relation with text, images, or video), and all other travel-related
data, products, services, advertisements, promotions, links, and pointers
utilized within an Internet Website. OrbitTravel hereby grants AsiaGateway
a limited license for the sole purpose of displaying such Content on the
AsiaGateway.com website, the term of which shall be concurrent with the
term of this Agreement.
(a) Form of Content: The nature and extent of the Content to be provided
---------------
by OrbitTravel to AsiaGateway shall be as agreed upon by the parties
from time
<PAGE>
to time. However, the parties anticipate the Content shall be provided
by OrbitTravel through various linked hypertext pages as follows:
(i) Home Page Button: OrbitTravel and AsiaGateway shall place an
----------------
animated button (gif) image, text link, or other graphic
representation on the AsiaGateway.com home page (the "Button").
The Button shall contain a travel-related message mutually agreed
upon by the parties, and shall remain a fixed presence on
AsiaGateway's Home Page from the date of its implementation
throughout the term of this Agreement. AsiaGateway will establish
a hypertext link from the Button to various HTML (Web) pages that
display the Content to be provided by OrbitTravel for display on
AsiaGateway.com. The Button and the corresponding Web pages shall
conform to the overall appearance ("look and feel") of
AsiaGateway.com, and shall be timely updated to conform to any
changes made to the look and feel of AsiaGateway.com.
(ii) Additional Travel Related Content: OrbitTravelTravel may provide
---------------------------------
AsiaGateway with additional travel related Content for inclusion
in the AsiaGateway Website, the extent and nature of which shall
be mutually agreed upon by the parties, which Content may include
(but shall not necessarily be limited to) text and images
pertaining to travel contests, featured destinations, hotspots,
travel advisories, and special events.
(b) Bookings: Visitors to the AsiaGateway Website shall have the ability
--------
to book travel reservations through the use of hypertext links to
OrbitTravel's booking engine. Any bookings made through the
AsiaGateway site shall be subject to the revenue sharing provisions of
Section 2.2 of this Agreement.
(c) Content Promotion: AsiaGateway shall display credit to OrbitTravel in
-----------------
connection with any travel-related Content displayed on-line, and, if
practicable, will brand the Content with the OrbitTravel logo.
AsiaGateway shall utilize its best efforts to promote the travel
related Content supplied by OrbitTravel to users of the AsiaGateway
Website.
(d) Content Updates: OrbitTravel shall be responsible for ensuring that
---------------
all Content provided by it is current, accurate, and conforms to
adequate technical and operational standards, and shall be further
responsible for deleting all obsolete Content on a regular basis.
1.2 AsiaGateway Content: Immediately following the execution of this Agreement,
-------------------
AsiaGateway shall provide OrbitTravel with Asia-related informational
Content. AsiaGateway shall provide all Content through a hypertext link
placed within OrbitTravel's distribution channel, or otherwise in a
compatible electronic file format in accordance with OrbitTravel's
specifications. AsiaGateway hereby grants OrbitTravel a limited license for
the sole purpose of displaying such Content on OrbitTravel's distribution
channels, the term of which shall be
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concurrent with the term of this Agreement. All Content so provided shall
be stored and displayed from OrbitTravel's server network. AsiaGateway
shall be responsible for ensuring that all Content is current, accurate,
and conforms to adequate technical and operational standards. AsiaGateway
shall be responsible for updating all rates, charges, procedures,
availability, marketing, and all other information to be distributed
on-line, and for deleting all obsolete Content on no less than a yearly
basis.
(a) Content Display: OrbitTravel shall have the right to display any
---------------
Content provided by AsiaGateway through any or all of OrbitTravel's
on-line distribution channels, including, but not limited to,
travelfile.com, travelfileaol.com, and the Global Distribution
Systems. Any Content display shall be at OrbitTravel's sole and
absolute discretion, and OrbitTravel reserves the right to refuse the
display of any Content that it determines to be inappropriate for
on-line display and distribution. OrbitTravel shall display credit to
AsiaGateway in connection with any Content displayed on-line, and, if
practicable, will brand the Content with the AsiaGateway logo.
(b) Content Promotion: OrbitTravel shall work with AsiaGateway to program
-----------------
and promote the availability of the AsiaGateway Content throughout
appropriate areas within OrbitTravel's distribution channels. In
addition, and in order to maximize the audience to OrbitTravel's
distribution channels, OrbitTravel may distribute, promote, and link
to individual or whole portions of the AsiaGateway Content from any
distribution channel area. Any promotion of the AsiaGateway Content
shall be subject to OrbitTravel's sole editorial discretion.
(c) Changes to Distribution Channels: OrbitTravel shall work with
--------------------------------
AsiaGateway to accommodate any change or alteration in OrbitTravel's
distribution channels that affect the distribution of the AsiaGateway
Content.
1.3 Promotional Rights: Either party shall have the right to make use of this
------------------
Agreement in such party's Website, media and sales kits, trade advertising,
and/or otherwise to its discretion, subject to the other party's right to
pre- approve any use of its logo, editorial or trademarks in the promoting
party's print materials and advertising. As soon as practicable following
the execution of this Agreement, the parties shall issue a joint press
release approved by each party to the industry press, announcing the
substance of this Agreement and AsiaGateway's official relationship for
value added content development with OrbitTravel.
1.4 Content Ownership: The parties understand and agree that, notwithstanding
-----------------
any licenses or other rights granted elsewhere herein, any and all rights
associated with the Content and related intellectual property provided by
either party for inclusion in the other party's Website is and shall remain
the sole property of the providing party. All other content and related
intellectual property associated
3
<PAGE>
with OrbitTravel.com's websites and distribution channels is and shall
remain the property of OrbitTravel.com, and all other content and related
intellectual property associated with AsiaGateway.com is and shall remain
the property of AsiaGateway.
SECTION 2. PAYMENTS AND REVENUE SHARING
- -------------------------------------------
2.1 Stock Issuance: In consideration for the distribution and promotional
--------------
duties undertaken by AsiaGateway pursuant to this Agreement, within thirty
(30) days following the execution hereof, OrbitTravel shall cause Divot to
issue to AsiaGateway 200,000 shares common stock, .001 par value. When so
issued, the OrbitTravel shares shall be considered fully paid and
nonassessable, and shall be represented by a certificate or certificates,
in genuine and unaltered form, duly endorsed in blank or accompanied by
duly executed stock powers endorsed in blank, with requisite stock transfer
stamps, if any, attached.
2.2 Revenue Sharing: The parties shall share any commissions or other revenues
---------------
realized through travel bookings completed through Content displayed on
AsiaGateway, with sixty percent (60%) of such commissions to be distributed
to OrbitTravel, and forty percent (40%) of such commissions to be
distributed to AsiaGateway. OrbitTravel shall be responsible for the
calculation of all such revenues, and shall provide AsiaGateway with a
written report (either in electronic or printed form) detailing the nature
and extent of such revenues, and shall pay AsiaGateway's revenue share, no
later than the tenth (10th) day of the month following that in which such
revenues were received by OrbitTravel.
SECTION 3. REPRESENTATIONS AND WARRANTIES
- --------------------------------------------
3.1 Each party represents and warrants that it will distribute the Content
provided by the other party in the manner set forth in this Agreement. Each
party further represents and warrants that it owns or otherwise has the
unlimited right to publish any and all printed material and/or graphics to
be distributed on-line. Each party further represents and warrants that the
Content provided to such party pursuant to this Agreement will be of the
same or superior quality (in terms of its editorial, community, and
functional appeal) as is available through such party's own publications or
websites.
SECTION 4. TERM AND TERMINATION
- -----------------------------------
4.1 Effective Period: This Agreement shall become effective as of the date set
----------------
forth above and shall remain in effect for three (3) years (the "Effective
Term"). Unless otherwise canceled following the expiration of the Effective
Term, this Agreement shall renew automatically for additional three (3)
year term following
4
<PAGE>
the expiration of the Effective Term, provided, however, that either party
may cancel the Agreement following the Effective Term, with or without
cause, by providing the other party with ninety (90) days written notice
thereof.
4.2 Termination: This Agreement shall terminate upon the occurrence of any one
-----------
or more of the following events:
(a) Either party fails to timely and properly perform any material
covenant, agreement, obligation, term, or condition contained herein,
and such failure continues for a period of thirty (30) days after
receipt by the defaulting party of written notice thereof from the
other party. The thirty (30) day cure period shall not apply if the
failure to perform is not capable of being cured.
4.3 Consequential Damages: Under no circumstance shall either party be liable
---------------------
to the other for lost profits, revenues, savings, or data, and any other
consequential, indirect, special, or incidental damages that may arise from
that a breach or default of the terms of this Agreement, including any
damages which may arise under any indemnities provided by either party
under this Agreement.
SECTION 5: INDEMNIFICATION
- ---------------------------
5.1 AsiaGateway Indemnification: AsiaGateway hereby agrees to indemnify and
---------------------------
hold harmless OrbitTravel, its affiliates, subsidiaries, successors,
assigns, officers, directors, agents, and employees, from and against any
and all liabilities, damages, losses, expenses, claims, demands, suits,
fines, or judgments (including, but not limited to, attorneys' fees, expert
witness costs, court costs, and expenses) that may at any time be
threatened against, suffered by, accrued against, charged to, or
recoverable against OrbitTravel in any forum, by reason of:
(a) Any alleged inaccuracy, copyright infringement or any other claim
arising in connection with the Content provided by AsiaGateway for
on-line distribution, including but not limited to any defamatory or
allegedly defamatory material placed on-line;
(b) Misappropriation, violation, or infringement of any proprietary
rights, trademarks, trade names, or service marks utilized by
AsiaGateway;
(c) AsiaGateway's failure to obtain or maintain all permits and licenses
required under law in relation to this Agreement, and
(d) Any injuries or death of persons or loss of, damage to, or destruction
of property (including loss of use thereof) arising out of any act or
omission of AsiaGateway or its affiliates.
5
<PAGE>
5.2 OrbitTravel Indemnification: OrbitTravel hereby agrees to indemnify and
---------------------------
hold harmless AsiaGateway, its affiliates, subsidiaries, successors,
assigns, officers, directors, agents, and employees, from and against any
and all liabilities, damages, losses, expenses, claims, demands, suits,
fines, or judgments (including, but not limited to, attorneys' fees, expert
witness costs, court costs, and expenses) that may at any time be
threatened against, suffered by, accrued against, charged to, or
recoverable against AsiaGateway in any forum, by reason of:
(e) Any alleged inaccuracy, copyright infringement or any other claim
arising in connection with the Content provided by OrbitTravel for
on-line distribution, including but not limited to any defamatory or
allegedly defamatory material placed on-line;
(f) Misappropriation, violation, or infringement of any proprietary
rights, trademarks, trade names, or service marks utilized by
OrbitTravel;
(g) OrbitTravel's failure to obtain or maintain all permits and licenses
required under law in relation to this Agreement, and
(h) Any injuries or death of persons or loss of, damage to, or destruction
of property (including loss of use thereof) arising out of any act or
omission of OrbitTravel or its affiliates.
SECTION 6. CONFIDENTIALITY
- ---------------------------
6.1 Confidential Information: For purposes of this Agreement, confidential
------------------------
information shall include (but not be limited to) any: (i) software, and
(ii) any and all trade secrets or other proprietary information of either
party concerning past, present, or future research, development, customers,
business activities or affairs, finances, properties, methods of operation,
processes, and systems which are reasonably considered by such party to be
confidential. The party which receives confidential information from the
other party agrees to maintain such information in secrecy at all times,
and to take reasonable steps, including such steps as it takes to protect
its own proprietary information, prior to and after termination of this
Agreement, to prevent the duplication of disclosure of any such
confidential and proprietary information, other than by or to its own
employees or agents who must have access to such information to perform
such party's obligations hereunder. Information of either party shall not
be subject to the obligations imposed by this Section if such information
is publicly available or is lawfully obtained by the disclosing party from
another source free of restrictions or is independently developed by the
disclosing party.
6
<PAGE>
SECTION 7. GENERAL PROVISIONS
- ---------------------------------
7.1 Notices: Any notice or communication required under this Agreement to be
-------
made to either party shall be typewritten in English and shall be
considered delivered when personally delivered, delivered by registered
U.S. Mail with confirmed receipt (postage prepaid), or delivered by
overnight courier to the address of the party as set forth above.
7.2 Titles and Captions: All article and section titles or captions in this
-------------------
Agreement are for convenience only. They shall not be deemed a part of this
Agreement, and in no way define, limit, extend, or describe the scope or
intent of any of its provisions.
7.3 Binding Effect: This Agreement shall be binding upon and inure to the
--------------
benefit of the Parties and their successors, legal representatives, and
permitted assigns.
7.4 Entire Agreement: This Agreement constitutes the entire agreement between
----------------
the parties hereto, and supersedes all prior and contemporaneous
agreements, arrangements, negotiations, and understandings between the
parties hereto relating to the subject matter hereof. There are no other
understandings, statements, promises or inducements between the parties,
oral or otherwise, contrary to the terms of this Agreement. No
representations, warranties, covenants, or conditions, express or implied,
whether by statute or otherwise, other than as set forth herein have been
made by any party hereto. No waiver of any term, provision, or condition of
this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or shall constitute, a waiver of any
other provision hereof, whether or not similar, nor shall any such waiver
constitute a continuing waiver, and no waiver shall be binding unless
executed by the party making such waiver.
7.5 No Partnership or Joint Venture: This Agreement, and the distribution and
-------------------------------
other rights provided hereunder, are not intended to, and shall not for any
reason, be deemed to create a partnership, joint venture, or similar
relationship between the parties.
7.6 Counterparts: This Agreement may be executed in one or more counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
7.7 Invalidity of Provisions: If any provisions of this Agreement is or becomes
------------------------
wholly or partly invalid, illegal, or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall continue in
force unaffected, and the parties shall meet as soon as possible and
negotiate in good faith upon a
7
<PAGE>
replacement provision that is legally valid and that as nearly as possible
achieves the objectives of the Agreement and produces an equivalent
economic effect.
7.8 Force Majeure: Neither party shall be liable to the other in the event and
-------------
to the extent that performance is delayed or prevented by any cause
reasonably beyond such party's control, including, but not limited to, acts
of God, public enemies, war, civil disorder, fire, flood, explosion, labor
disputes or strikes, or any acts or orders of any governmental authority,
inability to obtain supplies or materials (including, without limitation,
computer hardware) or any delay or deficiency caused by the electrical or
telephone line suppliers or other common carriers.
7.9 Governing Law/Arbitration: This Agreement shall be construed and governed
-------------------------
in accordance with the laws of the State of New York without regard to any
conflicts of law rules. Any controversy or claim arising out of or relating
to this agreement shall be determined by arbitration in accordance with the
International Arbitration Rules of the American Arbitration Association.
The number of arbitrators shall be one (1) and the place of arbitration
shall be New York City, New York, and the language of the arbitration shall
be in English.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the day
and year written above.
ORBITTRAVEL.COM, INC. ASIAGATEWAY.COM, LTD.
By: /s/ Joseph R. Cellura By: /s/ Aditha Reksono
----------------------- --------------------------
Title: Chairman & CEO Title: Chairman & CEO
--------------------- ------------------------
8
<PAGE>
Exhibit 10.34
CONSULTING SERVICES AGREEMENT & JOINT CONTENT AGREEMENT
-------------------------------------------------------
This CONSULTING SERVICES AGREEMENT ("Agreement"), is made effective
this 7th day of February, 2000, between OrbitTravel.com Inc. ("OrbitTravel"), a
Delaware corporation with its principal place of business at One Union Square
South, 10F, New York, New York 10003 and Laspata / Decaro Studio Corp., 74 Fifth
Avenue, New York, ("Consultant").
RECITALS
--------
I. OrbitTravel desires to retain Consultant to provide the services described
in this Agreement;
II. Consultant desires to provide such services to OrbitTravel pursuant to this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and conditions as set
forth herein, and other valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
AGREEMENTS
----------
1. SERVICES: Consultant shall perform for OrbitTravel the services described
in Exhibit "A" attached hereto and by this reference incorporated herein
(the "Services").
2. PAYMENT FOR SERVICES: OrbitTravel agrees to pay Consultant for the Services
in accordance with paragraph 1 contained herein Exhibit "A" attached hereto
and by this reference incorporated herein, which shall be executed by both
parties. OrbitTravel warrants and undertakes that all fully paid and
non-assessable shares of this common stock issued to the Consultant
pursuant to this Agreement in payment for Services and Past Services are
subject to rule 144 restriction until such time as the company has filed
and registered an SB2 with the United States Securities and Exchange
Commission. The services as described in Exhibit "B" attached hereto shall
apply to said agreement.
3. COOPERATION: During the term of this Agreement, the parties shall
communicate, cooperate, and provide each other with ready access to their
respective staff and resources as is necessary to provide the Services and
to otherwise effectuate the purposes of this agreement. Consultant shall
install a high speed modem for Internet access as a part of this agreement.
4. INDEPENDENT CONTRACTOR: Consultant is providing the Services to OrbitTravel
as an independent contractor, and this Agreement does not create an
employer/employee relationship, nor does this Agreement create a
relationship of joint ventures, partners, associates or any other
relationship between the parties other than that of independent contractor.
Consultant shall be working from their own office, using their own
equipment, and shall have no right to utilize the offices or equipment of
OrbitTravel unless specifically requested. Consultant shall have the right
to retain, and will be solely responsible for, its own salespersons,
employees, agents, and representatives. All such persons will be retained
by the Consultant at their own risk, expense, and supervision, and
Consultant shall have no right of compensation or reimbursement from or
against OrbitTravel in connection with such retention in the absence of a
prior written agreement between the parties. Consultant shall be solely
responsible for payment of all taxes as may be imposed on any income
derived by Consultant hereunder and for any and all other liabilities
arising out of Consultant's independent status. To the extent that
OrbitTravel pays any taxes or other sums on Consultant's behalf for any
reason, Consultant shall promptly indemnify or reimburse OrbitTravel for
any and all such sums.
5. CONFIDENTIAL INFORMATION: Both parties acknowledge that during the course
of performance of the Services referenced herein, they may come into
possession of each other's Confidential Information. For the purposes of
this agreement, "Confidential Information" shall mean any information, not
generally known in the trade or industry, which was obtained from
OrbitTravel, or which was learned, discovered, developed, conceived,
originated, or prepared during or as a
<PAGE>
result of Consultant's performance hereunder on behalf of OrbitTravel and
which falls within the following general categories: (i) information
relating to trade secrets; (ii) information relating to existing or
contemplated products, services, technology, designs, computer systems,
computer software and research, or developments; (iii) information relating
to business plans, sales or marketing methods, methods of doing business,
customer lists, customer usages and/or requirements, and supplier
information; (iv) the Consultant shall not be bound to the nondisclosure
obligation provided for in this paragraph is such confidential information
becomes public knowledge or known to third parties through no fault of the
Consultant. Upon termination of this Agreement, Consultant agrees to
deliver to OrbitTravel all computer disks, notebooks, and any other data in
relation thereto, containing, embodying, or evidencing any of the
Confidential Information or Trade Secrets described herein.
Both parties acknowledge that during the term of this contract the use of
consultants name may be used for the use of advertising and other public
media and press releases as to the content of service provided by mutual
agreement between the parties.
6. ASSIGNMENT: This Agreement shall be binding upon, and inure to the benefit
of OrbitTravel, its successors, and assigns. However, Consultant's duties
are personal and may not be delegated by Consultant without OrbitTravel's
express prior written consent.
7. TERM AND TERMINATION:
(a) This Consulting Service Agreement is for the term of three (3) years.
(b) During such term, either party may terminate this Agreement upon ninety
(90) days written notice.
8. GENERAL PROVISIONS:
(a) NOTICES: Any notice or communication required under this Agreement to
be made to either party shall be typewritten in English and shall be
considered delivered when personally delivered, delivered by registered
mail with confirmed receipt (postage prepaid), or delivered by
overnight courier to the address of the party as set forth above.
Either party may change such address by duly giving notice in
accordance with this Section 8(a).
(b) TITLES AND CAPTIONS: All article and section titles or captions in this
Agreement are for convenience only. They shall not be deemed a part of
this Agreement, and in no way define, limit, extend, or described the
scope or intent of any of its provisions.
(c) AMENDMENTS: No supplement, modification, or amendment of any term,
provision, or condition of this Agreement shall be binding or
enforceable unless executed in writing by the party against whom
enforcement is sought as to such supplementary or modified or amended
term or condition.
(d) ENTIRE AGREEMENT AND WAIVER: This Agreement, together with its
Exhibits, constitutes the entire agreement between the parties hereto,
and supercedes all prior and contemporaneous agreements, arrangements,
negotiations, and understandings between the parties hereto relating to
the subject matter hereof. There are no other understandings,
statements, promises or inducements, oral or otherwise, contrary to the
terms of this Agreement. No representations, warranties, covenants, or
conditions, express or implied, whether by statue of otherwise, other
than as set forth herein have been made by any party hereto. No waiver
of any term, provision, or condition of this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to
be, or shall constitute, a waiver of any other provision hereof,
whether not similar, nor shall any such waiver constitute a continuing
-2-
<PAGE>
waiver, and no waiver shall be binding unless expressly agreed in
writing by the party making such waiver.
(e) THIRD PARTIES: Nothing in this Agreement (whether express or implied)
is intended to confer upon any person other than the parties hereto and
their respective successors and permitted assigns, any rights or
remedies under or by reason of this Agreement, nor is anything in this
Agreement intended to relieve or discharge the liability of any other
party hereto, nor shall any provision hereof give any entity any right
to subrogation against or action over against any party.
(f) COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which together shall constitute one and the same
instrument.
(g) INVALIDITY OF PROVISIONS: If any provisions of this Agreement is or
becomes wholly or partly invalid, illegal, or unenforceable: (i) the
validity, legality, and enforceability of the remaining provisions
shall continue in force unaffected, and (ii) the parties shall meet as
soon as possible and negotiate in good faith upon a replacement
provision that is legally valid and that as nearly as possible achieves
the objectives of the Agreement and produces an equivalent economic
effect, which replacement provision shall apply as of the date that the
replaced provision had become invalid, illegal, or unenforceable.
(i) FORCE MAJEURE: Any prevention, delay or stoppage due to causes beyond
the parties' control, including, but not limited to, acts of God,
public enemies, war, civil disorder, fire, flood, explosion, labor
disputes or strikes, or any acts or orders of any governmental
authority, inability to obtain supplies or materials (including,
without limitation, computer hardware), shall excuse the performance of
that party of its obligations hereunder for a period equal to any such
prevention , delay, or stoppage.
(h) GOVERNING LAW: This Agreement shall be construed and governed in
accordance with the laws of the State of New York, U.S.A. without
regard to any conflicts of law rules.
(l) SURVIVABILITY: The provisions of Paragraphs 2, 5 and 7 shall survive
termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the day
and year written above.
OrbitTravel.com Corporation CONSULTANT
By: /s/ Joseph R. Cellura By: /s/ Charles DeCaro / Ma?? Laspata
------------------------------ ---------------------------------
Title: Chairman & CEO Title: Co-owner / co-owner
--------------------------- ------------------------------
LASPATA / DECARO
-3-
<PAGE>
EXHIBIT "A"
-----------
SERVICES
--------
Consultant shall provide OrbitTravel with the following business
development services:
Total share issuance 2,500,000 shares of common stock.
-4-
<PAGE>
LASPATA/DECARO STUDIO
PHOTO SESSION ESTIMATE - 8 SHOOT DAYS PLUS 15 TRAVEL/PREP DAYS
CARIBBEAN: ST. BARTS, BARBADOS, JAMAICA, BAHAMAS
HOTELS: HOTEL GUANAHANI, ROYAL PAVILION, HALF MOON, OCEAN CLUB
Photography Fee $ 140,000
Based on a 2 day shoot in
each city - 8 days
Styling Fee 24,000
Based on a 2 day shoot in
each city - 8 days
Film & Processing 11,248
Rough Work Prints 13,992
Photo Assistants 42,900
Based on 23 days
Styling Assistant 7,000
Wardrobe/Accessory Rental 80,000
Location Fees 50,000
Lighting Equipment 8,000
Props 4,000
Production Coordinators 40,000
Location Vans 8,000
Mess/Trucking/Shipping 2,000
Taxis/Limousines 9,500
Insurance 2,500
Long Distance Calls 4,000
Gratuities 7,000
Miscellaneous 20,000
Catering 8,000
Airfare 37,455
Hotels 107,500
Meals 20,000
Car Rental 20,000
Excess Baggage 5,000
Carnet 7,500
--------
Sub Total $ 679,095
<PAGE>
PHOTO SESSION ESTIMATE
CARIBBEAN: ST. BARTS, BARBADOS, JAMAICA, BAHAMAS
CONT.
Hair Stylist $ 45,036
Each Location $11,259
This includes 1 day travel, 2 shoot days,
20% agency and tax
Make-up $ 45,036
Each Location $11,259
This includes 1 day travel, 2 shoot days,
20% agency and tax
SUMMARY
- -------
Production Expenses $ 679,095
Hair Stylist 45,036
Make-up Artist 45,036
----------
Total $ 769,167
TOTAL ESTIMATED PHOTO SESSION $769,167
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES
------------
1. Amalgamated Equity Golf (a British Columbia Corporation)
2. OrbitTravel.com, Inc.
3. The Gauntlet at St. James, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 174,492
<SECURITIES> 0
<RECEIVABLES> 82,608
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 659,874
<PP&E> 94,850
<DEPRECIATION> 22,827
<TOTAL-ASSETS> 868,322
<CURRENT-LIABILITIES> 13,946,206
<BONDS> 0
0
287
<COMMON> 13,354
<OTHER-SE> (13,091,525)
<TOTAL-LIABILITY-AND-EQUITY> 868,322
<SALES> 130,860
<TOTAL-REVENUES> 130,860
<CGS> 487,812
<TOTAL-COSTS> 6,445,250
<OTHER-EXPENSES> 1,380,392
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 167,824
<INCOME-PRETAX> (7,694,782)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,694,782)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,694,782)
<EPS-BASIC> (1.07)
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