\n EXHIBIT A – ESCROW AGREEMENT
\n EXHIBIT B – EMPLOYMENT AGREEMENT – B. ACREE
\n EXHIBIT C – EMPLOYMENT AGREEMENT – D. LYLES<\/p>\n Schedule 1.2 — Add-Backs
\n Schedule 1.3 — Post-Closing Audit Checklist
\n Schedule 3.1 — Due Organization
\n Schedule 3.3 — No Conflicts
\n Schedule 3.4 — Capital Stock
\n Schedule 3.5 — Subsidiaries, Etc.
\n Schedule 3.6 — Predecessor Status
\n Schedule 3.7 — Government Filings
\n Schedule 3.9 — Financial Statements
\n Schedule 3.10 — Liabilities and Obligations
\n Schedule 3.12 — Bank Accounts; Powers of Attorney
\n Schedule 3.13 — Accounts Receivable
\n Schedule 3.15 — Related Party Transactions
\n Schedule 3.16 — Real Property
\n Schedule 3.17 — Personal Property
\n Schedule 3.18 — Intellectual Property
\n Schedule 3.19 — ARC Bonding; Debt Memoranda
\n Schedule 3.20 — Significant Customers; Material Contracts and Commitments
\n Schedule 3.21 — Government Contracts
\n Schedule 3.22 — Insurance
\n Schedule 3.23 — Environmental Matters
\n Schedule 3.24 — Labor and Employment Matters
\n Schedule 3.25 — Employee Benefit Plans
\n Schedule 3.26 — Taxes
\n Schedule 3.27 — Conformity with Law; Litigation
\n Schedule 3.29 — Absence of Changes
\n Schedule 3.30 — Inventory
\n Schedule 3.31 — Year 2000 Compliance
\n<\/c><\/s><\/caption>\n<\/table>\n
-iv-<\/p>\n
STOCK PURCHASE AGREEMENT<\/p>\n
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made and entered
\ninto as of this 17th day of September 17, 1998, by and among Navigant
\nInternational, Inc., a Delaware corporation (“NII”), Professional Travel
\nCorporation, a Colorado corporation and wholly-owned subsidiary of NII (“PTC”),
\nWorld Express Travel, Inc., an Alaska corporation (the “Company”), and Robert B.
\nAcree (the “Shareholder”). Except as otherwise set forth in this Agreement,
\ncapitalized terms shall have the definitions set forth in Section 10.13.<\/p>\n
BACKGROUND<\/p>\n
PTC desires to acquire, and the Shareholder desires to sell to PTC,
\nall of the outstanding capital stock of the Company (the “Acquisition”).<\/p>\n
NOW, THEREFORE, in consideration of the premises and of the
\nrepresentations, warranties, covenants and agreements herein contained, the
\nparties hereto, intending to be legally bound, agree as follows:<\/p>\n
1. THE ACQUISITION<\/p>\n
1.1 The Purchase and Sale. At the Closing (as defined in Section 2)
\n ———————
\nand subject to and upon the terms and conditions of this Agreement, the
\nShareholder shall sell and deliver to PTC and PTC shall purchase from the
\nShareholder all of the outstanding shares of capital stock of the Company (the
\n“Company Capital Stock”), free and clear of all Liens.<\/p>\n
1.2 Consideration. For purposes of this Agreement, the
\n ————-
\n“Consideration” shall be, subject to adjustment pursuant to this Section 1.2 and
\nSection 1.3, equal to: (i) (A) the Company’s earnings before interest and taxes
\n(“Adjusted EBIT”) for the twelve (12)-month period ended July 5, 1998 (the
\n“Trailing Period”), determined in accordance with generally accepted accounting
\nprinciples (“GAAP”) consistently applied and adjusted to reflect the add-back of
\nthose nonrecurring expenses specified on Schedule 1.2 attached hereto (the “Add-
\nBacks”), times (B) * , minus (ii) the sum of (y) the Adjusted Interest Bearing
\nDebt (as defined below) and (z) the amount by which the Company’s tangible net
\nworth as of August 30, 1998 is less than * . As used in this Agreement,
\n“Adjusted Interest Bearing Debt” shall be equal to (a) the amount of interest
\nbearing liabilities owed by the Company as of August 30, 1998 to any third
\nparty, including without limitation, banks, financial institutions, pension
\nplans, employee benefit plans, other related plans and current or former
\nstockholders of the Company but excluding office equipment leases and ordinary
\ncourse accounts payable, minus (b) the amount of interest bearing debt owed to
\nfinancial institutions by the Company to finance its customer accounts
\nreceivable (“A\/R Finance Debt”); provided, however, that the deduction for the
\nA\/R Finance Debt shall in no event be greater than ninety percent (90%) of the
\ntotal amount of the Company’s customer accounts receivable as of August 30,
\n1998. The parties agree that the calculation of Adjusted EBIT shall include any
\ndeductions for amortization of <\/p>\n
goodwill related to the Acquisition based on a thirty-five (35) year life. The
\nConsideration shall be paid to the Shareholder, subject to Section 1.4 below, in
\nimmediately available funds at the Closing.<\/p>\n
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
\nSEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
\nTHE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.<\/p>\n
1.3 Post-Closing Adjustments. The Consideration shall be subject to
\n ————————
\nadjustment after the Closing Date as specified in this Section 1.3.<\/p>\n
(a) Within one hundred twenty (120) days following the Closing
\nDate, NII shall cause its then current auditor (“NII’s Accountant”) to audit
\n(the “Post-Closing Audit”) the Company’s books to determine the accuracy of the
\ninformation set forth on the Closing Financial Certificate (as defined in
\nSection 6.8). The parties acknowledge and agree that for purposes of determining
\nthe actual tangible net worth of the Company as of August 30, 1998 (the “Actual
\nClosing Net Worth”), the value of the assets of the Company shall, except with
\nthe prior written consent of NII, be calculated as provided in the last
\nparagraph of Section 6.8. The Shareholder shall cooperate and shall use his
\nreasonable efforts to cause the officers and employees of the Company to
\ncooperate with NII and NII’s Accountant after the Closing Date in furnishing
\ninformation, documents, evidence and other assistance to NII’s Accountant to
\nfacilitate the completion of the Post-Closing Audit within the aforementioned
\ntime period. Without limiting the generality of the foregoing, within two (2)
\nweeks after the Closing the Shareholder shall provide NII’s Accountant with the
\ninformation and\/or documents requested on the Post-Closing Audit Checklist set
\nforth as Schedule 1.3 hereto in order to facilitate the completion of the
\nPost-Closing Audit by NII’s Accountant within the aforementioned time period. In
\nthe event that NII’s Accountant determines that the actual Adjusted EBIT (the
\n“Actual Adjusted EBIT”) of the Company for the Trailing Period was less than the
\nCertified Adjusted EBIT (as defined in Section 6.8), or that the Actual Closing
\nNet Worth was less than both of the Certified Closing Net Worth (as defined in
\nSection 6.8) and *, NII shall deliver a written notice (the “Financial
\nAdjustment Notice”) to the Shareholder setting forth (i) the determination made
\nby NII’s Accountant of the Actual Adjusted EBIT and\/or the Actual Closing Net
\nWorth, (ii) the amount of the Consideration that would have been payable at
\nClosing pursuant to Section 1.2 had the Actual Adjusted EBIT and the Actual
\nClosing Net Worth been reflected on the Closing Financial Certificate instead of
\nthe Certified Adjusted EBIT and the Certified Closing Net Worth, and (iii) the
\namount by which the Consideration would have been reduced at Closing had the
\nActual Adjusted EBIT and the Actual Closing Net Worth been used in the
\ncalculations pursuant to Section 1.2(c) (the “Consideration Adjustment”).<\/p>\n
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
\nSEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
\nTHE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.<\/p>\n
(b) The Shareholder shall have thirty (30) days from the receipt
\nof the Financial Adjustment Notice to notify NII that the Shareholder disputes
\nsuch Financial Adjustment Notice. If NII has not received notice of such a
\ndispute within such 30-day period, NII shall be entitled to receive from the
\nShareholder the Consideration Adjustment. The Consideration Adjustment shall
\nfirst be applied against the Escrow Fund. If there is not a sufficient amount
\nremaining in the Escrow Fund (as defined in Section 1.4) to satisfy the entire
\nConsideration Adjustment, the remaining unpaid amount of the Consideration
\nAdjustment shall be promptly paid by the Shareholder in cash. If, <\/p>\n
-2-<\/p>\n
however, the Shareholder has delivered notice of such a dispute to NII within
\nsuch thirty (30)-day period, then NII’s Accountant shall select an independent
\naccounting firm of nationally recognized standing that has not represented any
\nof the parties hereto within the preceding two (2) years to review the Company’s
\nbooks, the Closing Financial Certificate and the Financial Adjustment Notice
\n(and related information) to determine the amount, if any, of the Consideration
\nAdjustment. Such independent accounting firm shall be ratified by the
\nShareholder and NII within five (5) business days of its selection unless there
\nis an actual conflict of interest. The independent accounting firm shall be
\ndirected to consider only those agreements, contracts, commitments or other
\ndocuments (or summaries thereof) that were either (i) delivered or made
\navailable to NII’s Accountant in connection with the transactions contemplated
\nhereby, or (ii) reviewed by NII’s Accountant during the course of the Post-
\nClosing Audit. The independent accounting firm shall make its determination of
\nthe Consideration Adjustment, if any, within thirty (30) days of its selection.
\nThe determination of the independent accounting firm shall be final and binding
\non the parties hereto, and upon such determination, NII shall be entitled to
\nreceive from the Shareholder the Consideration Adjustment. The costs of the
\nindependent accounting firm shall be borne by the party (either NII or the
\nShareholder) whose determination of the Consideration Adjustment was further
\nfrom the determination of the independent accounting firm, or equally by NII and
\nthe Shareholder in the event that the determination by the independent
\naccounting firm is equidistant between each party’s calculation of the
\nConsideration Adjustment.<\/p>\n
(c) Within 120 days following the first anniversary of the
\nClosing, NII’s Accountant shall review the books of the Company to determine (i)
\nthe gross revenues less cash rebates to, and revenue shared with, customers (the
\n“Net Revenues”) of the Company’s ten largest customers for the twelve (12)-month
\nperiod beginning on the first day of the first calendar month following the
\nClosing, calculated in accordance with GAAP consistently applied (the “Measured
\nRevenues”), and (ii) the Net Revenues of the Company’s ten largest customers for
\nthe twelve (12)-month period ended on the last day of the month in which the
\nClosing occurs, calculated in accordance with GAAP consistently applied (the
\n“Target Revenues”). For the purposes of this provision, Measured Revenues shall
\nexclude any Net Revenues from such customers shifted to the Company from other
\nNII agencies at NII’s request and Target Revenues shall be reduced by the Net
\nRevenues from any such customers who transfer from the Company to NII or any
\nSubsidiary or Affiliate of NII, at NII’s request. In addition, Net Revenues
\nshall exclude (a) complimentary tickets, (b) any consideration the Company is
\nrequired to provide to its customers in lieu of complimentary tickets (because
\nsuch tickets are not available to the Company due to decisions made, or actions
\ntaken, by NII), and (c) revenues attributable solely and directly to a change in
\nthe manner in which base commissions are calculated and paid by any airline. If,
\npursuant to such determination by NII’s Accountant, the Measured Revenues are
\nless than the Target Revenues, then NII shall be entitled to payment out of the
\nEscrow Fund an amount equal to the Target Revenues minus the Measured Revenues
\n(the “Revenues Adjustment”); provided, however, that if the Revenues Adjustment
\nis greater than the the amounts then remaining in the Escrow Fund, the Escrow
\nFund shall be reduced to zero. Promptly after such determination by NII’s
\nAccountant, the Company shall deliver to the Shareholder the determination of
\nNII’s Accountants, including the amount of any Revenues Adjustment pursuant to
\nthis Section 1.3(c) (“Revenues Adjustment Notice”). The Shareholder shall have
\nthirty (30) days from the receipt of the Revenues Adjustment Notice to notify
\nNII that the <\/p>\n
-3-<\/p>\n
Shareholder disputes such Revenues Adjustment Notice. If NII has not received
\nnotice of such a dispute within such thirty (30)-day period, NII and the
\nShareholder shall instruct the Escrow Agent (as defined in Section 1.4) to
\nrelease an amount equal to the Revenues Adjustment to NII from the Escrow Fund.
\nIf, however, the Shareholder has delivered notice of such a dispute to NII, then
\nNII’s Accountant shall select an independent accounting firm of nationally
\nrecognized standing that has not represented any of the parties hereto within
\nthe two (2)-year period preceding the date of the Revenues Adjustment Notice to
\nreview the Company’s books and the Revenues Adjustment Notice (and related
\ninformation) to determine the amount, if any, of the Revenues Adjustment. Such
\nindependent accounting firm shall be ratified by the Shareholder and NII within
\nfive (5) business days of its selection unless there is an actual conflict of
\ninterest. The independent accounting firm shall be directed to consider only
\nthose agreements, contracts, commitments or other documents (or summaries
\nthereof) that were used in determining the Target Revenues, the Measured
\nRevenues and the Revenues Adjustment. The independent accounting shall make its
\ndetermination of the Revenues Adjustment, if any within thirty (30) days of its
\nselection. The determination of the independent accounting firm shall be final
\nand binding on the parties hereto, and upon such determination, NII shall be
\npaid the Revenues Adjustment, if any, from the Escrow Fund. The costs of the
\nindependent accounting firm shall be borne by the party (either NII or the
\nShareholder) whose determination of the Revenues Adjustment shall be furthest
\nfrom the independent accounting firm’s determination of the Revenues Adjustment,
\nor equally by NII and the Shareholder in the event that the determination by the
\nindependent accounting firm is equidistant between each party’s determination of
\nthe Revenues Adjustment. Notwithstanding anything to the contrary in this
\nAgreement, if either the Shareholder’s or Dianne M. Lyles’ employment with the
\nCompany is terminated without cause or his or her place of employment is
\nrelocated outside of Alaska or Washington without consent of such person (as
\nprovided in each person s employment agreement to be entered into with the
\nCompany on the Closing Date), the Revenues Adjustment under this Section 1.3(c)
\nwill be zero.<\/p>\n
1.4 Escrow. Upon Closing, NII shall deliver, or shall cause to be
\n ——
\ndelivered, directly to NationsBank, NA, as escrow agent (the “Escrow Agent”),
\ncash equal to 20% of the Consideration, as such may be adjusted pursuant to
\nSections 1.2, 1.3(a) and 1.3(b), to be deducted from the Consideration and held
\nin an escrow fund (collectively with all interest and earnings thereon, the
\n“Escrow Fund”) pursuant to the terms set forth herein and in an escrow agreement
\nto be entered into by and among the Shareholder, NII and the Escrow Agent,
\nsubstantially in the form attached hereto as Exhibit A (the “Escrow Agreement”).
\nSubject to the terms of this Agreement, the Escrow Fund shall be available to
\nsatisfy any post-Closing adjustment to the Consideration under Sections 1.2,
\n1.3(a) and 1.3(b), the Revenues Adjustment under Section 1.3(c), or any
\nindemnification obligations of the Shareholder pursuant to Article 8 for Claims
\n(as defined in Section 8.4) made on or prior to the twelve (12)-month
\nanniversary of the Closing Date (the “Release Date”). Promptly following the
\nRelease Date, NII shall sign a Release Certificate (as defined in the Escrow
\nAgreement) for the release to the Shareholder of the amount remaining in the
\nEscrow Fund on the Release Date less an amount equal to the sum of (i) the
\nTarget Revenues, (ii) any pending Claim for indemnification made by any
\nShareholder Indemnified Party (as defined in Section 8.1), and (iii) any
\nindemnification obligations of the Shareholder pursuant to Article 8 that have
\nnot yet been fully satisfied as provided herein. Upon the final determination of
\nthe Revenues Adjustment, if any, pursuant to Section 1.3(c)<\/p>\n
-4-<\/p>\n
(the “Target Revenue Release Date”), NII and the Shareholder shall instruct the
\nEscrow Agent to release (1) to NII the amount of the Revenues Adjustment, if
\nany, and (2) to the Shareholder an amount equal to the Target Revenues minus the
\nsum of (A) the Revenues Adjustment, if any, plus (B) any Claims still pending
\nunder Article 8 as of the Target Revenue Release Date. As promptly as possible
\nfollowing the final resolution of all claims for indemnification made by a
\nShareholder Indemnified Party pending as of the Release Date, NII and the
\nShareholder shall deliver to the Escrow Agent a Release Certificate providing
\ndelivery instructions to be followed by the Escrow Agent in paying out the
\nremaining Escrow Funds, if any, less an amount equal to the Target Revenues if
\nresolution of pending indemnification claims occurs prior to the Target Revenue
\nRelease Date. The Release Certificate that provides for the release of all
\nremaining Escrow Funds shall also provide for termination of the escrow and the
\nEscrow Agreement, as provided in the Escrow Agreement.<\/p>\n
1.5 Exchange of Certificates.
\n ————————<\/p>\n
(a) NII to Provide Consideration. In exchange for the
\n —————————-
\noutstanding shares of capital stock of the Company, NII shall cause to be made
\navailable to the Shareholder, the Consideration, as adjusted pursuant to
\nSections 1.2 and 1.3.<\/p>\n
(b) Certificate Delivery Requirements. At the Closing, the
\n ———————————
\nShareholder shall deliver to NII or PTC the certificates (the “Certificates”)
\nrepresenting all Company Capital Stock, duly endorsed in blank by the
\nShareholder, or accompanied by blank stock powers duly executed by the
\nShareholder and with all necessary transfer tax and other revenue stamps,
\nacquired at the Shareholder’s expense, affixed and canceled. The Shareholder
\nshall promptly cure any deficiencies with respect to the endorsement of the
\nCertificates or other documents of conveyance with respect to the stock powers
\naccompanying such Certificates.<\/p>\n
(c) Lost, Stolen or Destroyed Certificates. In the event any
\n ————————————–
\ncertificates evidencing shares of Company Capital Stock shall have been lost,
\nstolen or destroyed, NII shall cause payment to be made in exchange for such
\nlost, stolen or destroyed certificates, upon the execution of an affidavit of
\nthat fact and agreeing to indemnify the Company and NII for any claim that may
\nbe made against NII or the Company with respect to the certificates alleged to
\nhave been lost, stolen or destroyed, which indemnity shall be in such form as
\napproved by NII; provided, however, that NII may, in its discretion and as a
\ncondition precedent to the issuance thereof, require the owner of such lost,
\nstolen or destroyed certificates to deliver a bond in such sum as it may
\nreasonably direct as indemnity against any claim that may be made against NII
\nwith respect to the certificates alleged to have been lost, stolen or destroyed.<\/p>\n
(d) No Liability. Notwithstanding anything to the contrary in
\n ————
\nthis Section 1.4, no party hereto shall be liable to a holder of shares of
\nCompany Capital Stock for any amount paid to a public official pursuant to any
\napplicable abandoned property, escheat or similar law.<\/p>\n
1.6 Accounting Terms; Excluded Branches. Except as otherwise
\n ———————————–
\nexpressly provided herein or in the schedules (the “Schedules”), all accounting
\nterms used in this Agreement shall be <\/p>\n
-5-<\/p>\n
interpreted, and all financial statements, Schedules, certificates and reports
\nas to financial matters required to be delivered hereunder, (unless otherwise
\nspecified hereunder or in a Schedule) shall be prepared in accordance with GAAP
\nconsistently applied. In addition, none of the financial data of the Company
\nincluded herein, or used to calculated any amounts required as set forth herein
\nor in the Company Financial Statements (as defined in Section 3.9) shall include
\nthe financial data or results of operations of AWT (as defined in Section 5.14)
\nor ValuTravel (as defined in Section 5.14).<\/p>\n
2. CLOSING<\/p>\n
The consummation of the Acquisition and the other transactions
\ncontemplated by this Agreement (the “Closing”) shall take place at the offices
\nof Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California
\n94304-1050 on September 17, 1998, providing that all conditions to Closing shall
\nhave been satisfied or waived, or at such other time and date as NII, the
\nCompany and the Shareholder may mutually agree, which date shall be referred to
\nas the “Closing Date.”<\/p>\n
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER<\/p>\n
To induce NII and PTC to enter into this Agreement and consummate the
\ntransactions contemplated hereby, the Company and the Shareholder, jointly and
\nseverally, represent and warrant to NII and PTC as follows (for purposes of this
\nAgreement, the phrases “knowledge of the Company” or the “Company’s knowledge,”
\nor words of similar import, mean the knowledge of the Shareholder and Dianne M.
\nLyles, including facts of which he or she, in the reasonably prudent exercise of
\nhis or her duties, should be aware, except as otherwise provided herein):<\/p>\n
3.1 Due Organization. The Company is a corporation duly organized,
\n —————-
\nvalidly existing and is in good standing under the laws of the jurisdiction of
\nits incorporation and is duly authorized and qualified to do business under all
\napplicable laws, regulations, ordinances and orders of public authorities and to
\nown, operate and lease its properties and to carry on its business in the places
\nand in the manner as now conducted. The Company is duly qualified, and in good
\nstanding, as a foreign corporation in each other jurisdiction in which it does
\nbusiness and\/or owns or leases property. Schedule 3.l hereto contains a list of
\nall jurisdictions in which the Company is authorized or qualified to do
\nbusiness. The Company has delivered to NII true, complete and correct copies of
\nthe Articles of Incorporation and Bylaws (collectively, the “Charter Documents”)
\nof the Company. The Company is not in violation of any Charter Documents. The
\nminute books of the Company have been made available to NII (and have been or
\nwill be delivered at Closing, along with the Company’s original stock ledger and
\ncorporate seal, to NII) and are correct and, except as set forth in Schedule
\n3.1, complete in all material respects.<\/p>\n
3.2 Authorization; Validity. The Company has the full legal right,
\n ———————–
\ncorporate power and authority to enter into this Agreement and the transactions
\ncontemplated hereby and to perform its obligations pursuant to the terms of this
\nAgreement. The Shareholder has the full legal right and authority to enter into
\nthis Agreement and the transactions contemplated hereby. The execution and<\/p>\n
-6-<\/p>\n
delivery of this Agreement by the Company and the performance by the Company of
\nthe transactions contemplated herein have been duly and validly authorized by
\nthe Board of Directors of the Company and the Shareholder, and this Agreement
\nhas been duly and validly authorized by all necessary corporate action. This
\nAgreement is a legal, valid and binding obligation of the Company and the
\nShareholder, enforceable in accordance with its terms.<\/p>\n
3.3 No Conflicts. Except as set forth on Schedule 3.3, the
\n ————
\nexecution, delivery and performance of this Agreement, the consummation of the
\ntransactions contemplated hereby, and the fulfillment of the terms hereof will
\nnot:<\/p>\n
(a) conflict with, or result in a breach or violation of, any of
\nthe Charter Documents of the Company;<\/p>\n
(b) (i) conflict with, or result in a default (or would
\nconstitute a default but for any requirement of notice or lapse of time or both)
\nunder, any document, agreement or other instrument to which the Company or the
\nShareholder is a party or by which the Company or the Shareholder is bound, or
\n(ii) result in the creation or imposition of any Lien on any of the Company’s
\nproperties pursuant to (x) any law or regulation to which the Company or the
\nShareholder or any of their respective property is subject, or (y) any judgment,
\norder or decree to which the Company or the Shareholder is bound or any of their
\nrespective property is subject;<\/p>\n
(c) result in a termination or impairment of any contractual
\nright or Permit (as defined in Section 3.14); or<\/p>\n
(d) violate any law, order, judgment, rule, regulation, decree
\nor ordinance to which the Company or the Shareholder is subject or by which the
\nCompany or the Shareholder is bound.<\/p>\n
3.4 Capital Stock of the Company.
\n —————————-<\/p>\n
(a) The authorized capital stock of the Company consists of
\n100,000 shares of common stock, $1.00 par value, of which 5,000 shares are
\nissued and outstanding. All of the issued and outstanding shares of the capital
\nstock of the Company have been duly authorized and validly issued, are fully
\npaid and nonassessable and are owned of record and beneficially by the
\nShareholder free and clear of all Liens. All of the issued and outstanding
\nshares of the capital stock of the Company were offered, issued, sold and
\ndelivered by the Company in compliance with all applicable state and federal
\nlaws concerning the offer, issuance and sale of securities. Further, none of
\nsuch shares was issued in violation of any preemptive rights. There are no
\nvoting agreements or voting trusts with respect to any of the outstanding shares
\nof the capital stock of the Company.<\/p>\n
(b) Except as set forth on Schedule 3.4, no option, warrant,
\ncall, subscription right, conversion right or other contract or commitment of
\nany kind exists of any character, written or oral, which may obligate the
\nCompany to issue, sell or otherwise transfer any shares of capital stock. The
\nCompany has no obligation (contingent or otherwise) to purchase, redeem or
\notherwise acquire any of its equity securities or any interests therein or to
\npay any dividend or make any <\/p>\n
-7-<\/p>\n
distribution in respect thereof. As a result of the Acquisition, PTC will be the
\nrecord and beneficial owner of all outstanding capital stock of the Company.<\/p>\n
3.5 Subsidiaries and Debt Interests.
\n ——————————-<\/p>\n
(a) The Company has not in the past had and currently has no
\nSubsidiaries.<\/p>\n
(b) Except as set forth in Schedule 3.5 the Company does not
\npresently own, of record or beneficially, or control, directly or indirectly,
\nany capital stock, securities convertible into capital stock or any other equity
\ninterest in any corporation, partnership association or business entity, nor is
\nthe Company, directly or indirectly, a participant in any joint venture,
\npartnership or other noncorporate entity.<\/p>\n
(c) Except as set forth in Schedule 3.5, there are no
\npromissory notes or other debt instruments that have been issued to, or are held
\nby, the Company.<\/p>\n
3.6 Predecessor Status; Etc. Schedule 3.6 sets forth a listing
\n ———————–
\nof all legal names, trade names, fictitious names or other names (including,
\nwithout limitation, any names of divisions or operations) of the Company and all
\nof their predecessor companies during the five-year period immediately preceding
\nthe Closing, including without limitation the names of any entities from which
\nthe Company has acquired material assets. During the five-year period
\nimmediately preceding the Closing, the Company has operated only under the names
\nset forth on Schedule 3.6 in the jurisdiction or jurisdictions set forth on
\nSchedule 3.6. The Company has not been a Subsidiary or division of another
\ncorporation or a part of an acquisition which was later rescinded.<\/p>\n
3.7 Required Governmental Filings and Consents. Except as set
\n ——————————————
\nforth on Schedule 3.7, the execution, delivery and performance of this Agreement
\nand the consummation of the transactions contemplated hereby and thereby, will
\nnot require any consent, approval, authorization or permit of, or filing with or
\nnotification to, (a) any governmental or regulatory authority, domestic or
\nforeign, except (i) for applicable requirements, if any, of the Securities Act
\nof 1933, as amended, the Securities Exchange Act of 1934, as amended (the
\n“Securities Act”), state securities or Blue Sky laws and the Bylaws of the
\nNational Association of Securities Dealers, Inc., and (ii) where the failure to
\nobtain such consents, approvals, authorization or permits, or to make such
\nfilings or notifications, would not prevent or delay consummation of the
\nAcquisition or otherwise prevent the Company or the Shareholder from performing
\nits or his obligations under this Agreement or (b) an other third party.<\/p>\n
3.8 Company Financial Conditions .
\n —————————-<\/p>\n
(a) The Company’s revenues for (i) the fiscal year ended
\nJanuary 4, 1998, were not less than $8,000,000, and (ii) the Trailing Period
\nwere not less than $7,200,000.<\/p>\n
(b) The Company’s earnings before interest and taxes (without
\nthe addition of any add-backs and before any deduction for amortization of
\ngoodwill related to the Acquisition) for the fiscal year ended January 4, 1998,
\nwere not less than $ * (or * % of revenues for such fiscal <\/p>\n
-8-<\/p>\n
year), and the Company’s earnings before interest and taxes (after the addition
\nof Add-Backs set forth on Schedule 1.2 and before any deduction for amortization
\nof goodwill related to the Acquisition) for the Trailing Period were not less
\nthan the greater of $ * or * % of the Company’s revenues for the Trailing
\nPeriod.<\/p>\n
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
\nWITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE
\nSECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.<\/p>\n
(c) The sum of the Company’s outstanding long-term or short-term
\nindebtedness to banks, the Shareholder, pension plans, employee benefit plans
\nand other related plans or other financial institutions and creditors
\n(including, but not limited to, former shareholders of the Company) as of August
\n30, 1998 and the Closing Date (in each case including the current portion
\nthereof, but excluding the notes payable to finance customer accounts receivable
\n(but only to the extent that the amounts due under such notes are equal to, or
\nless than, 90% of the outstanding balance of the Company’s customer accounts
\nreceivable), trade payables, office equipment leases and other ordinary course
\naccounts payable) shall not be greater than $253,000.<\/p>\n
Any damages arising out of this Section 3.8 shall be limited to those
\nthat impact Adjusted EBIT for the Trailing Period or the Company’s tangible net
\nworth as of August 30, 1998, and considered in the calculation of the
\nConsideration Adjustment pursuant to Section 1.3.<\/p>\n
For purposes of Section 3.8(a) and (b), calculation of amounts as of
\nthe Closing shall be made in accordance with the last paragraph of Section 6.8.<\/p>\n
3.9 Financial Statements. Schedule 3.9 includes (a) true, complete and
\n ——————–
\ncorrect copies of the Company’s unaudited balance sheet as of January 4, 1998
\nand income statement for the year ended January 4, 1998 (collectively, the
\n“Year-End Financials”) (b) true, complete and correct copies of the Company’s
\nunaudited balance sheet as of July 5, 1998, and unaudited income statement as of
\nJuly 5, 1998 (the “July Financials”) and (c) true, complete and correct copies
\nof the Company’s unaudited balance sheet (the “Interim Balance Sheet”) as of
\nAugust 30, 1998 (the “Interim Balance Sheet Date”) and income statement, for the
\neight (8)-month period then ended (collectively, the “Interim Financials,” and
\ntogether with the Year-End Financials and the July Financials, the “Company
\nFinancial Statements”). To the best of the Company’s and the Shareholder’s
\nknowledge, the Company Financial Statements have been prepared in accordance
\nwith GAAP consistently applied, subject in the case of the Interim Financials,
\nto (i) normal year-end adjustments, which individually or in the aggregate will
\nnot be material, (ii) the exceptions stated on Schedule 3.9, and (iii) the
\nomission of footnote information. Each unaudited balance sheet included in the
\nCompany Financial Statements presents fairly the financial condition of the
\nCompany as of the date indicated thereon, and each of the income statements
\nincluded in the Company Financial Statements presents fairly the results of its
\noperations for the periods indicated thereon. Since the dates of the Company
\nFinancial Statements, there have been no material changes in the Company’s
\naccounting policies other than as requested by NII to conform the Company’s
\naccounting policies to GAAP.<\/p>\n
-9-<\/p>\n
3.10 Liabilities and Obligations; Claims.
\n ———————————–<\/p>\n
(a) Except as set forth on Schedule 3.10, the Company is not
\nliable for or subject to any liabilities other than:<\/p>\n
(i) those liabilities reflected on the Interim Balance
\nSheet and not previously paid or discharged;<\/p>\n
(ii) those liabilities arising in the ordinary course of
\nits business consistent with past practice under any contract, commitment or
\nagreement specifically disclosed on any Schedule to this Agreement or not
\nrequired to be disclosed thereon because of the term or amount involved or
\notherwise (but no liabilities for breaches thereof); and<\/p>\n
(iii) those liabilities incurred since the Interim Balance
\nSheet Date in the ordinary course of business consistent with past practice,
\nwhich liabilities are not, individually or in the aggregate, material (none of
\nwhich is a liability for breach of contract, breach of warranty for
\ninfringement, claim or lawsuit).<\/p>\n
(b) Schedule 3.10 includes a reasonable estimate of the
\nmaximum amount of each liability which is not fixed or which is contested.<\/p>\n
(c) The Shareholder has no claim against the Company, nor is
\nthe Company or the Shareholder aware that any third party has any claims against
\nthe Company.<\/p>\n
(d) Schedule 3.10 also includes a summary description of all
\nplans or projects involving the opening of new operations, expansion of any
\nexisting operations or the acquisition of any real property or existing
\nbusiness, to which management of the Company has made any material expenditure
\nin the two-year period prior to the date of this Agreement, which if pursued by
\nthe Company would require additional material expenditures of capital.<\/p>\n
(e) For purposes of this Section 3.10, the term “liabilities”
\nshall include without limitation any direct or indirect liability, indebtedness,
\nguaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
\nobligation or responsibility, either accrued, absolute, contingent, mature,
\nunmature or otherwise, fixed or unfixed, choate or inchoate, liquidated or
\nunliquidated, secured or unsecured. Schedule 3.10 contains a complete list of
\nall the Company’s interest bearing indebtedness (excluding office leases and
\nordinary course accounts payable), including the names of creditors, payment
\nterms, balances due and security interests.<\/p>\n
3.11 Books and Records. The Company has made and kept books and
\n —————–
\nrecords and accounts, which accurately, completely and fairly reflect the
\nactivities of the Company. The Company has not engaged in any transaction,
\nmaintained any bank account, or used any corporate funds except for
\ntransactions, bank accounts, and funds which have been and are reflected in its
\nnormally maintained books and records.<\/p>\n
-10-<\/p>\n
3.12 BANK ACCOUNTS; POWERS OF ATTORNEY. Schedule 3.12 sets forth a
\n ———————————
\ncomplete and accurate list, as of the date of this Agreement, of:<\/p>\n
(a) the name of each financial institution in which the Company
\nhas any account or safe deposit box;<\/p>\n
(b) the names in which the accounts or boxes are held;<\/p>\n
(c) the type of account;<\/p>\n
(d) the name of each Person authorized to draw thereon or have
\naccess thereto; and<\/p>\n
(e) the name of each Person holding a general or special power
\nof attorney from the Company and a description of the terms of such power.<\/p>\n
3.13 ACCOUNTS AND NOTES RECEIVABLE. On the Closing Date, the Company
\n —————————–
\nwill deliver to NII a complete and accurate list, as of a date not more than two
\n(2) business days prior to the Closing Date, of the accounts and notes
\nreceivable of the Company (including without limitation receivables from and
\nadvances to employees, the Shareholder, override receivables and financial
\nassistance segment receivables), which includes an aging of all accounts and
\nnotes receivable showing amounts due in thirty (30)-day aging categories
\n(collectively, the “Accounts Receivable”). All Accounts Receivable represent
\nvalid obligations arising from sales actually made or services actually
\nperformed in the ordinary course of business. The Accounts Receivable are
\ncurrent and collectible net of any respective reserves shown on the Company’s
\nbooks and records (which reserves are adequate and calculated consistent with
\npast practice). Subject to such reserves, each of the Accounts Receivable,
\nexcept as set forth on Schedule 3.13, will be collected in full, without any
\nset-off, within one hundred and twenty (120) days after the Closing Date. There
\nis no contest, claim, or right of set-off, other than rebates and returns in the
\nordinary course of business, under any contract with any obligor of an Account
\nReceivable relating to the amount or validity of such Account Receivable.<\/p>\n
3.14 PERMITS. The Company owns or holds all licenses, franchises,
\n ——-
\npermits and other governmental authorizations, including without limitation
\npermits, titles (including without limitation motor vehicle titles and current
\nregistrations), licenses and franchises necessary for the continued operation of
\nits business as it is currently being conducted (the “Permits”). The Permits are
\nvalid, and the Company has not received any notice that any governmental
\nauthority intends to modify, cancel, terminate or fail to renew any Permit. No
\npresent or former officer, manager, employee or agent of the Company or any
\naffiliate thereof, or any other Person owns or has any proprietary, financial or
\nother interest (direct or indirect) in any Permits. The Company has conducted
\nand is conducting its business in compliance with the requirements, standards,
\ncriteria and conditions set forth in the Permits and other applicable orders,
\napprovals, variances, rules and regulations and is not in violation of any of
\nthe foregoing.<\/p>\n
-11-<\/p>\n
3.15 RELATED PARTY TRANSACTIONS. Except as set forth in SCHEDULE 3.15,
\n ————————–
\nno officer, director or shareholder of the Company, or any ancestor, sibling,
\ndescendant or spouse of any of such Persons, or any Person in which any of such
\nPersons has an interest (each a “Related Party”) has, directly or indirectly,
\n(i) an interest in any entity that furnished or sold within the immediately
\npreceding year, or furnishes or sells, services or products that the Company
\nfurnishes or sells, or proposes to furnish or sell, or (ii) an interest in any
\nentity that purchases from or sells or furnishes to, the Company, any good or
\nservices or (iii) a beneficial interest in any Material Contract (as defined in
\nSection 3.20); provided, however, that ownership of no more than one percent
\n(1%) of the outstanding voting stock of a publicly traded corporation shall not
\nbe deemed an “interest in any Person” for purposes of this Section 3.15. Neither
\nthe Shareholder nor any officer or director of the Company has any interest,
\neither directly or indirectly, in any property, real or personal, tangible or
\nintangible, used in or pertaining to the Company’s business, including any
\ninterest in the Intellectual Property (as defined in Section 3.18), except for
\nrights as a shareholder, and except for rights under any Company Plan (as
\ndefined in Section 3.25). No employee, shareholder, officer or director of the
\nCompany, or their spouses or children, is indebted to the Company nor is the
\nCompany indebted to any of them.<\/p>\n
3.16 REAL ESTATE AND REAL PROPERTY.
\n —————————–<\/p>\n
(a) The Company does not own and never has owned any real
\nestate.<\/p>\n
(b) For purposes of this Agreement, “Real Property” means all
\ninterests in real property including, without limitation, leaseholds and
\nsubleaseholds, purchase options, easements, licenses, rights to access,
\nrights-of-way and all buildings and other improvements thereon, used by the
\nCompany, together with any additions thereto or replacements thereof. Schedule
\n3.16 contains a complete and accurate description of all Real Property
\n(including street address, legal description (where known), owner and Company’s
\nuse thereof) and, to the Company’s knowledge, any claims, liabilities, security
\ninterests, mortgages, liens, pledges, conditions, charges, covenants, easements,
\nrestrictions, encroachments, leases or encumbrances of any nature thereon
\n(“Encumbrances”). The Real Property listed on Schedule 3.16 includes all
\ninterests in real property necessary to conduct the business and operations of
\nthe Company.<\/p>\n
(c) Except as set forth in SCHEDULE 3.16:<\/p>\n
(i) The Company has obtained all approvals of governmental
\nauthorities (including certificates of use and occupancy, licenses and permits)
\nrequired in connection with the use, occupation and operation of the Real
\nProperty.<\/p>\n
(ii) The Real Property is suitable and adequate for the uses
\nto which it is currently devoted. The Real Property and its continued use,
\noccupancy and operation as used, occupied and operated in the conduct of the
\nCompany’s business does not constitute a nonconforming use and is not the
\nsubject of a special use permit under any applicable law.<\/p>\n
-12-<\/p>\n
(iii) The Company is not in violation of any law (including
\nany code, rule, regulation, zoning or building ordinance or health or safety
\nordinance), and no notice from any governmental authority has been served upon
\nthe Company claiming any violation of any such law, or requiring or calling
\nattention to the need for any work, repairs, construction, alterations or
\ninstallations on or in connection with such Real Property with which the Company
\nhas not complied.<\/p>\n
(iv) Neither the Real Property nor the structures,
\nfacilities and improvements on the Real Property have suffered any damage by
\nfire or other casualty which has not heretofore been completely repaired and
\nrestored to its original condition in accordance with the term of the Leases (as
\ndefined below).<\/p>\n
(v) There are no parties other than the Company in
\npossession of any of the Real Property or any portion thereof, and there are no
\nsubleases, licenses, concessions or other agreements, written or oral, granting
\nto any party or parties the right of use or occupancy of any portion of the Real
\nProperty or any portion thereof.<\/p>\n
(vi) All oral or written leases, subleases, licenses,
\nconcession agreements or other use or occupancy agreements pursuant to which the
\nCompany leases from any other party any real property, including all amendments,
\nrenewals, extensions, modifications or supplements to any of the foregoing or
\nsubstitutions for any of the foregoing (collectively, the “Leases”) are valid
\nand in full force and effect. The Company has provided NII with true and
\ncomplete copies of all of the Leases, all amendments, renewals, extensions,
\nmodifications or supplements thereto, and all material correspondence related
\nthereto, including all correspondence pursuant to which any party to any of the
\nLeases declared a default thereunder or provided notice of the exercise of any
\noption granted to such party under such Lease. The Leases and the Company’s
\ninterests thereunder are free of all Encumbrances. The Company has not received
\nany notice of default under any Leases, and the Company is in full compliance
\nwith the terms and provisions of the Leases and there are no material
\nmaintenance or capital improvement obligations thereon. The Company has not
\ngiven notice of default to the lessors under any Leases and, to the knowledge of
\nthe Company, the lessors are in full compliance with the provisions of the
\nLeases, and there are no material maintenance or capital improvement obligations
\nor the lessor thereon. No Lease is with a Related Party.<\/p>\n
(vii) Except as set forth on Schedule 3.16, none of the
\nLeases requires the consent or approval of any party thereto in connection with
\nthe consummation of the transactions contemplated hereby.<\/p>\n
(viii) All personal property and trade fixtures owned or
\nleased by the Company and used or usable in the conduct of their business in the
\nReal Property may be removed from the Real Property at the termination of the
\nLease without violating the terms of the Lease.<\/p>\n
(d) Notwithstanding the above, with respect to any of the common
\nareas used by the Company, its employees, consultants or customers, in
\nconnection with the Company’s use of any Leased premises, the representations
\nmade in this Section 3.16 shall be limited to the actual knowledge of the
\nCompany and the Shareholder.<\/p>\n
-13-<\/p>\n
3.17 PERSONAL PROPERTY.
\n —————–<\/p>\n
(a) SCHEDULE 3.17 sets forth a complete and accurate list of
\nall personal property included on the Interim Balance Sheet and all other
\npersonal property owned or leased by the Company with a current book value in
\nexcess of $20,000 both (i) as of the Interim Balance Sheet Date and (ii)
\nacquired since the Interim Balance Sheet Date (the “Personal Property”).
\nSCHEDULE 3.17 also lists all leases for Personal Property (true, correct and
\ncomplete copies of which have been provided to NII) and indicates which assets
\nare currently owned, or were formerly owned, by the Shareholder or business or
\npersonal affiliates of the Shareholder or of the Company.<\/p>\n
(b) All leases set forth on SCHEDULE 3.17 are in full force and
\neffect and constitute valid and binding agreements of the Company, and the
\nCompany is not in breach of any of their terms. The Personal Property used by
\nthe Company that is material to the operation of the business is either owned by
\nthe Company or leased under an agreement listed on SCHEDULE 3.17.<\/p>\n
3.18 INTELLECTUAL PROPERTY.
\n ———————<\/p>\n
(a) The Company is the true and lawful owners of, or are
\nlicensed or otherwise possess legally enforceable rights to use, the Marks (as
\ndefined below) listed on SCHEDULE 3.18. Such schedule lists (i) all of the Marks
\nregistered in the United States Patent and Trademark Office (“PTO”) or the
\nequivalent thereof in any state of the United States or in any foreign country,
\nand (ii) all of the unregistered Marks, that the Company now owns or uses in
\nconnection with its business. The Company owns or has the unrestricted legally
\nenforceable right to use all of the trademarks, service marks, and trade names
\nemployed in the operation of its business as currently conducted or proposed to
\nbe conducted. The Marks listed on SCHEDULE 3.18 will not cease to be valid
\nrights of the Company by reason of the execution, delivery and performance of
\nthis Agreement or the consummation of the transactions contemplated hereby. For
\npurposes of this Section 3.18, the term “Mark” shall mean all right, title and
\ninterest in and to any United States or foreign trademarks, service marks and
\ntrade names used by the Company in the operation of its business as currently
\nconducted, including any registration or application for registration of any
\ntrademarks and services marks in the PTO or the equivalent thereof in any state
\nof the United States or in any foreign country, as well as any unregistered
\nmarks used by the Company, and any trade dress (including logos, designs,
\ncompany names, business names, fictitious names and other business identifiers)
\nused by the Company in the United States or any foreign country.<\/p>\n
(b) The Company is the true and lawful owner of, or are licensed
\nor otherwise possess legally enforceable rights to use, all rights in the
\nPatents (as defined below) listed on SCHEDULE 3.18 and the Copyrights (as
\ndefined below) listed on SCHEDULE 3.18. Such Patents and Copyrights constitute
\nall of the Patents and Copyrights that the Company now owns or is licensed to
\nuse. The Company owns or has the unrestricted legally enforceable right to use
\nall Patents and Copyrights employed in the operation of its businesses as
\ncurrently conducted or proposed to be conducted. For purposes of this Section
\n3.18, the term “Patent” shall mean any United States or foreign patent to which
\nthe Company has title as of the date of this Agreement, as well as any
\napplication for a United States or foreign patent made by the Company; and the
\nterm “Copyright” <\/p>\n
-14-<\/p>\n
shall mean any United States or foreign copyright (registered or unregistered)
\nowned by the Company as of the date of this Agreement, including any application
\nfor a United States or foreign copyright registration made by the Company.<\/p>\n
(c) The Company is the true and lawful owner of, or is licensed
\nor otherwise has the unrestricted legally enforceable right to use, all rights
\nin the software (including, without limitation, software used by the Company in
\nits mid-office and back office operations), trade secrets, franchises or similar
\nrights (collectively, “Other Rights”) listed on SCHEDULE 3.18. Those Other
\nRights constitute all of the Other Rights that the Company now owns or is
\nlicensed to use. The Company owns or has the unrestricted right to use all
\nsoftware, trade secrets, franchises or similar rights employed in the operation
\nof its business as currently conducted or as proposed to be conducted.<\/p>\n
(d) The Marks, Patents, Copyrights and Other Rights listed on
\nSCHEDULE 3.18 are referred to collectively herein as the “Intellectual
\nProperty.” The Intellectual Property owned by the Company is referred to herein
\ncollectively as the “Company Intellectual Property.” All other Intellectual
\nProperty, including software used by the Company’s mid-office and back office
\noperations, is referred to herein collectively as the “Third Party Intellectual
\nProperty.” The Company has taken all actions necessary to maintain and protect
\nthe Company Intellectual Property. Except as indicated on SCHEDULE 3.18, the
\nCompany has no obligation to compensate any Person for the use of any
\nIntellectual Property nor has the Company granted to any Person any license,
\noption or other rights to use in any manner any Intellectual Property, whether
\nrequiring the payment of royalties or not. SCHEDULE 3.18 includes the name of
\neach licensor of Third Party Intellectual Property.<\/p>\n
(e) The Company is not, and will not be as a result of the
\nexecution and delivery of this Agreement or the performance of its obligations
\nhereunder, in violation of any Third Party Intellectual Property license,
\nsublicense or agreement described in SCHEDULE 3.18. The Company has not
\ninfringed or misappropriated nor does it currently infringe or misappropriate
\nany Third party Intellectual Property. No claims with respect to the Company
\nIntellectual Property or Third Party Intellectual Property are currently pending
\nor, to the knowledge of the Company, are threatened by any Person, nor, to the
\nCompany’s knowledge, do any grounds for any claims exist: (i) to the effect that
\nthe manufacture, sale, licensing or use of any product as now used, sold or
\nlicensed or proposed for use, sale or license by the Company infringes on any
\nThird party Intellectual Property; (ii) against the use by the Company of any
\nIntellectual Property used in the Company’s business as currently conducted by
\nthe Company; (iii) challenging the ownership, validity or effectiveness of any
\nof the Company Intellectual Property; or (iv) challenging the Company’s license
\nor legally enforceable right to use of the Third Party Intellectual Property. To
\nthe Company’s knowledge, there is no unauthorized use, infringement or
\nmisappropriation of any of the Company Intellectual Property by any third party.
\nThe Company (x) has not been sued or charged in writing as a defendant in any
\nclaim, suit, action or proceeding which involves a claim or infringement of
\nThird Party Intellectual Property and which has not been finally terminated or
\nbeen informed or notified by any third party that the Company may be engaged in
\nsuch infringement or (y) has never agreed to <\/p>\n
-15-<\/p>\n
indemnify any Person for or against any interference, infringement,
\nmisappropriation or other conflict with respect to any Intellectual Property.<\/p>\n
3.19 ARC ACCREDITATION AND BONDING REQUIREMENTS. The Company is, and
\n ——————————————
\nat Closing will be, accredited with the Airlines Reporting Company (“ARC”), and
\nhas no knowledge of any fact, matter or circumstance which by itself, or with
\nthe passage of time, may give rise to an action by ARC terminating the Company’s
\naccreditation. SCHEDULE 3.19 includes a list of all currently open and
\noutstanding correspondence between the Company and ARC during the twelve month
\nperiod ending on the date hereof, copies of which have been provided to NII. The
\nCompany does, and at Closing will, have the bond required by ARC, in the amount
\nrequired by ARC. SCHEDULE 3.19 sets forth the amount of the bond, the expiration
\ndate of the bond, the name of the company issuing the bond, and the premium for
\nthe bond. Except in the ordinary course of business, the Company has no unpaid
\nor contested debit memoranda with ARC, or any airline. SCHEDULE 3.19 lists a
\nrepresentative sample of contested debit memoranda the Company had with ARC or
\nan airline during the twelve (12) month period ending on the date hereof.<\/p>\n
3.20 SIGNIFICANT CUSTOMERS; PREFERRED VENDORS; MATERIAL CONTRACTS.
\n ————————————————————<\/p>\n
(a) SCHEDULE 3.20(A) sets forth a complete and accurate list of
\nall Significant Customers and Preferred Vendors. For purposes of this Agreement,
\n“Significant Customers” are the twenty (20) customers that were responsible for
\nthe highest amount of revenues of the Company during each of the past four (4)
\nfiscal quarters. For purposes of this Agreement, “Preferred Vendors” are all
\nairlines with which the Company has override agreements and all hotel and rental
\ncar companies with which the Company has an agreement establishing commission
\nrates in excess of those generally paid in the industry (“Preferred Vendor
\nAgreement”) or similar arrangements.<\/p>\n
(b) Except as set forth in SCHEDULE 3.20(B), the Company is
\nnot a party to any written or oral (i) collective bargaining agreement or
\ncontract with any labor union; (ii) bonus, pension, profit sharing, retirement,
\nstock bonus, thrift or other form of incentive, deferred or other compensation
\nplan; (iii) stock purchase, stock option or similar plan or practice, whether
\nformal or informal; (iv) contract for the employment of any officer, individual
\nemployee, or other Person on a full-time or consulting basis; (v) other contract
\nwith any of its employees, officer or directors; (vi) agreement or indenture
\nrelating to the borrowing of money or to mortgaging, pledging or otherwise
\nplacing a lien on any of its assets; (vii) guaranty of any obligation for
\nborrowed money or otherwise, other than endorsements made for collection; (viii)
\nlease or agreement under which it is lessee of, or holds or operates any
\nproperty, real or personal, owned by any other party involving in excess of
\n$20,000 per year; (ix) lease or agreement under which it is lessor of or permits
\nany third party to hold or operate any property, real or personal, owned or
\ncontrolled by it involving in excess of $20,000, (x) contract, purchase order or
\ngroup of related contracts or purchase orders with the same party for the sale
\nof products or services under which the undelivered balance of such products or
\nservices has a sales price in excess of $20,000; (xi) other contract or group of
\nrelated contracts with the same party either continuing over a period of more
\nthan six months from the date or dates thereof, not terminable by it on 30 days’
\nor less notice without penalty or involving more than $20,000; (xii) Preferred
\nVendor Agreement or airline override agreements, (xiii) ARC Agency <\/p>\n
-16-<\/p>\n
Agreements and bonds required by ARC; (xiv) contract which prohibits it from
\nfreely engaging in business anywhere in the world; (xv) franchise agreement;
\n(xvi) assignment, license, indemnity or other agreement with respect to any form
\nof Intellectual Property or any Computer Reservation Systems (“CRS”) Agreement;
\n(xvii) warranty agreement with respect to services rendered or products
\nlicensed; (xviii) life, hospitalization, medical, dental or disability insurance
\nor other welfare benefit plan, program or arrangement, whether formal or
\ninformal; (xix) agreements regarding the provision of telephone and other
\ncommunication services; or (xx) other agreement material to any of them or not
\nentered into in the ordinary course of business (collectively all referred to
\nherein as the “Material Contracts.”)<\/p>\n
(c) SCHEDULE 3.20(C) contains a description of the Company’s
\npolicies with respect to booking back-to-back tickets and passive or phantom
\nsegments. SCHEDULE 3.20(C) also contains a description of the Company’s policies
\nregarding clearance of hotel commissions.<\/p>\n
(d) Except to the extent set forth on SCHEDULE 3.20(D), (i)
\nnone of the Company’s Significant Customers has canceled or substantially
\nreduced or, to the knowledge of the Company, is currently attempting or
\nthreatening to cancel or substantially reduce, any purchases from the Company,
\n(ii) none of the Company’s Preferred Vendors has altered, modified, reduced or
\ncanceled, or threatened to alter, modify, reduce or cancel, the terms of any
\nMaterial Contract of which it is a party, (iii) the Company has complied with
\nall of their commitments and obligations and are not in default under any of the
\nMaterial Contracts, and no notice of default has been received with respect to
\nany thereof, and (iv) there are no Material Contracts that were not negotiated
\nat arm’s length. The Company has not received any material customer complaints
\nconcerning its services.<\/p>\n
(e) Each Material Contract, except those terminated pursuant
\nto Section 5.4, is valid and binding on the Company and is in full force and
\neffect and is not subject to any default thereunder by any party obligated to
\nthe Company pursuant thereto. Except as specifically identified on SCHEDULE
\n3.20(E) (the “Unobtained Consents”), the Company has obtained all necessary
\nconsents, waivers and approvals of parties to any Material Contracts that are
\nrequired in connection with any of the transactions contemplated hereby, or are
\nrequired by any governmental agency or other third party or are advisable in
\norder that any such Material Contract remain in effect without modification
\nafter the Acquisition and without giving rise to any right to termination,
\ncancellation or acceleration or loss of any right or benefit (“Third Party
\nConsents”). All Third Party Consents are listed on SCHEDULE 3.20(E). The
\nShareholder agrees to provide all Unobtained Consents to NII promptly after
\nClosing.<\/p>\n
(f) The Company is not a “women’s business enterprise” (“WBE”)
\nor “woman-owned business concern” as defined in 48 C.F.R.ss. 52.204-5, or a
\n“minority business enterprise” (“MBE”) or “minority-owned business concern” as
\ndefined in 48 C.F.R.ss.52.219- 8, nor has it held itself out to be such to any
\nof its customers.<\/p>\n
(g) The outstanding balance on all loans or credit agreements
\neither (i) between the Company and any Person in which the Shareholder owns a
\nmaterial interest, or (ii) guaranteed by <\/p>\n
-17-<\/p>\n
the Company for the benefit of any Person in which the Shareholder owns a
\nmaterial interest, are set forth in SCHEDULE 3.20(G).<\/p>\n
(h) The pledge, hypothecation or mortgage of all or
\nsubstantially all of the Company’s assets (including, without limitation, a
\npledge of the Company’s contract rights under any Material Contract) will not,
\nexcept as set forth on Schedule 3.20(h), (i) result in the breach or violation
\nof, (ii) constitute a default under, (iii) create a right of termination under,
\nor (iv) result in the creation or imposition of (or the obligation to create or
\nimpose) any lien upon any of the assets of the Company (other than a lien
\ncreated pursuant to the pledge, hypothecation or mortgage described at the start
\nof this Section 3.20) pursuant to any of the terms and provisions of, any
\nMaterial Contract to which the Company is a party or by which the property of
\nthe Company is bound.<\/p>\n
3.21 GOVERNMENT CONTRACTS.
\n ——————–<\/p>\n
(a) Except as set forth on SCHEDULE 3.21, the Company is not a
\nparty to any government contracts.<\/p>\n
(b) The Company has not been suspended or debarred from bidding
\non contracts or subcontracts for any agency or instrumentality of the United
\nStates Government or any state or local government, nor, to the knowledge of the
\nCompany, has any suspension or debarment action been threatened or commenced.
\nThere is no valid basis for the Company’s suspension or debarment from bidding
\non contracts or subcontracts for any agency of the United States Government or
\nany state or local government.<\/p>\n
(c) The Company has not been, nor is it now being, audited, or
\ninvestigated by any government agency, or the inspector general or auditor
\ngeneral or similar functionary of any agency or instrumentality, nor, to the
\nknowledge of the Company, has such audit or investigation been threatened.<\/p>\n
(d) The Company has no dispute pending before a contracting
\noffice of, nor any current claim (other than the Accounts Receivable) pending
\nagainst, any agency or instrumentality of the United States Government or any
\nstate or local government, relating to a contract.<\/p>\n
(e) The Company is not in default or violation of any government
\ncontracts and has not, with respect to any government contract, received a cure
\nnotice advising the Company that it is or was in default or would, if it failed
\nto take remedial action, be in default under such contract.<\/p>\n
(f) The Company has not submitted any inaccurate, untruthful, or
\nmisleading cost or pricing data, certification, bid, proposal, report, claim, or
\nany other information relating to a contract to any agency or instrumentality of
\nthe United States Government or any state or local government.<\/p>\n
(g) No employee, agent, consultant, representative, or affiliate
\nof the Company is in receipt or possession of any competitor or government
\nproprietary or procurement sensitive <\/p>\n
-18-<\/p>\n
information related to the Company’s business under circumstances where there is
\nreason to believe that such receipt or possession is unlawful or unauthorized.<\/p>\n
(h) Each of the Company’s government contracts has been
\nissued, awarded or novated to the Company in the Company’s name.<\/p>\n
3.22 INSURANCE. SCHEDULE 3.22 sets forth a complete and accurate
\n ———
\nlist, as of the Interim Balance Sheet Date, of all insurance policies carried by
\nthe Company and all insurance loss runs or workmen’s compensation claims
\nreceived for the past two (2) policy years. The Company has delivered to NII
\ntrue, complete and correct copies of all current insurance policies, all of
\nwhich are in full force and effect. All premiums payable under all such policies
\nhave been paid and the Company and are otherwise in full compliance with the
\nterms of such policies. Such policies of insurance are of the type and in
\namounts customarily carried by Persons conducting businesses similar to that of
\nthe Company. To the knowledge of the Company, there have been no threatened
\nterminations of, or material premium increases with respect to, any of such
\npolicies.<\/p>\n
3.23 ENVIRONMENTAL MATTERS.
\n ———————<\/p>\n
(a) Hazardous Material. To the Company’s and the Shareholder’s
\n ——————
\nactual knowledge, other than as set forth on SCHEDULE 3.23, no underground
\nstorage tanks and no amount of any substance that has been designated by any
\nGovernmental Entity or by applicable federal, state, local or other applicable
\nlaw to be radioactive, toxic, hazardous or otherwise a danger to health or the
\nenvironment, including, without limitation, PCBs, asbestos, petroleum,
\nurea-formaldehyde and all substances listed as hazardous substances pursuant to
\nthe Comprehensive Environmental Response, Compensation, and Liability Act of
\n1980, as amended, or defined as a hazardous waste pursuant to the United States
\nResource Conservation and Recovery Act of 1976, as amended, and the regulations
\npromulgated pursuant to said laws, but excluding office and janitorial supplies
\nproperly and safely maintained (a “Hazardous Material”), are present in, on or
\nunder any property, including the land and the improvements, ground water and
\nsurface water thereof, that the Company has at any time owned, operated,
\noccupied or leased. SCHEDULE 3.23 identifies all underground and aboveground
\nstorage tanks, and the capacity, age and contents of such tanks, located on Real
\nProperty owned or leased by the Company.<\/p>\n
(b) Hazardous Materials Activities. The Company has not
\n ——————————
\ntransported, stored, used, manufactured, disposed of or released, or exposed its
\nemployees or others to, Hazardous Materials in violation of any law in effect on
\nor before the Closing Date, nor has the Company disposed of, transported, sold,
\nor manufactured any product containing a Hazardous Material (collectively,
\n“Company Hazardous Materials Activities”) in violation of any rule, regulation,
\ntreaty or statute promulgated by any Governmental Entity in effect prior to or
\nas of the date hereof to prohibit, regulate or control Hazardous Materials or
\nany Company Hazardous Material Activity.<\/p>\n
(c) Permits. The Company does not hold any environmental
\n ——-
\napprovals, permits, licenses, clearances and consents and, to the actual
\nknowledge of the Company, none is required for <\/p>\n
-19-<\/p>\n
the conduct of the Company’s business as such business is currently being
\nconducted or is proposed to be conducted.<\/p>\n
(d) Environmental Liabilities. No action, proceeding, revocation
\n ————————-
\nproceeding, amendment procedure, writ, injunction or claim is pending, or to the
\nactual knowledge of the Company, threatened concerning any Hazardous Material or
\nany Company Hazardous Materials Activity. To the actual knowledge of the
\nCompany, there are no past or present actions, activities, circumstances,
\nconditions, events, or incidents that could involve the Company (or any Person
\nwhose liability the Company has retained or assumed, either by contract or
\noperation of law) in any environmental litigation, or impose upon the Company
\n(or any Person whose liability the Company has retained or assumed, either by
\ncontract or operation of law) any environmental liability including, without
\nlimitation, common law tort liability.<\/p>\n
3.24 LABOR AND EMPLOYMENT MATTERS. With respect to employees of and
\n —————————-
\nservice providers to the Company:<\/p>\n
(a) for purposes of this Section 3.24 and Section 3.25, the
\nphrases “Company’s knowledge,” “to the knowledge of the Company” or words of
\nsimilar import include, in addition to those Persons designated in the first
\nparagraph of this Section, the knowledge of anyone responsible for the Company’s
\nhuman resources;<\/p>\n
(b) the Company is and has been in compliance in all material
\nrespects with all applicable laws respecting employment and employment
\npractices, terms and conditions of employment and wages and hours, including
\nwithout limitation any such laws respecting employment discrimination, sexual
\nharassment, workers’ compensation, family and medical leave, the Immigration
\nReform and Control Act, and occupational safety and health requirements, and
\nhave not and are not engaged in any unfair labor practice;<\/p>\n
(c) there is not now, nor within the past three (3) years has
\nthere been, any unfair labor practice complaint against the Company pending or,
\nto the Company’s knowledge, threatened, before the National Labor Relations
\nBoard, the Equal Employment Opportunity Commission or any other comparable state
\nor local authority;<\/p>\n
(d) there is not now, nor within the past three (3) years has
\nthere been, any labor strike, slowdown or stoppage actually pending or, to the
\nCompany’s knowledge, threatened, against or directly affecting the Company;<\/p>\n
(e) to the Company’s knowledge, no labor representation
\norganization effort exists nor has there been any such activity within the past
\nthree (3) years;<\/p>\n
(f) no grievance or arbitration proceeding arising out of or
\nunder collective bargaining agreements is pending and, to the Company’s
\nknowledge, no claims therefor exist or have been threatened;<\/p>\n
-20-<\/p>\n
(g) the employees of the Company are not now and have never
\nbeen represented by any labor union, and no collective bargaining agreement is
\nbinding and in force against the Company or currently being negotiated by the
\nCompany;<\/p>\n
(h) all Persons classified by the Company as independent
\ncontractors do satisfy and have satisfied the requirements of law to be so
\nclassified, and the Company has fully and accurately reported their compensation
\non IRS Forms 1099 when required to do so. SCHEDULE 3.24 contains a list of all
\nIRS Forms 1099 that have been issued by the Company in the last three (3) fiscal
\nyears, and the aggregate amount in dollars reported under IRS Forms 1099 for
\neach such fiscal year;<\/p>\n
(i) the Company is not aware that any executive or key
\nemployee or any group of employees has plans to terminate his, her or their
\nemployment with the Company; and<\/p>\n
(j) except as described in SCHEDULE 3.24, there have been no
\nclaims or allegations brought against the Company or any officer, director or
\nemployee of the Company or other Person with whom an employee may have dealings
\nthrough his or her employment by Company, with respect to employment, employment
\npractices or terms or conditions of employment, including without limitation
\nclaims alleging sexual harassment or discrimination.<\/p>\n
3.25 EMPLOYEE BENEFIT PLANS.
\n ———————-<\/p>\n
(a) Definitions.
\n ———–<\/p>\n
(i) “Benefit Arrangement” means any benefit
\narrangement, obligation, custom, or practice, whether or not legally
\nenforceable, to provide benefits, other than salary, as compensation for
\nservices rendered, to present or former directors, employees, agents, or
\nindependent contractors, other than any obligation, arrangement, custom or
\npractice that is an Employee Benefit Plan, including, without limitation,
\nemployment agreements, severance agreements, executive compensation
\narrangements, incentive programs or arrangements, sick leave, vacation pay,
\nseverance pay policies, plant closing benefits, salary continuation for
\ndisability, consulting, or other compensation arrangements, workers’
\ncompensation, retirement, deferred compensation, bonus, stock option or
\npurchase, hospitalization, medical insurance, life insurance, tuition
\nreimbursement or scholarship programs, any plans subject to Section 125 of the
\nCode, and any plans providing benefits or payments in the event of a change of
\ncontrol, change in ownership, or sale of a substantial portion (including all or
\nsubstantially all) of the assets of any business or portion thereof, in each
\ncase with respect to any present or former employees, directors, or agents.<\/p>\n
(ii) “Code” means the Internal Revenue Code of 1986, as
\namended.<\/p>\n
(iii) “Company Benefit Arrangement” means any Benefit
\nArrangement sponsored or maintained by the Company or with respect to which the
\nCompany has or may have any liability (whether actual, contingent, with respect
\nto any of its assets or otherwise) as of the Closing Date, in each case with
\nrespect to any present or former directors, employees, or agents of the Company.<\/p>\n
-21-<\/p>\n
(iv) “Company Plan” means, as of the Closing Date, any
\nEmployee Benefit Plan for which the Company is the “plan sponsor” (as defined in
\nSection 3(16)(B) of ERISA) or any Employee Benefit Plan currently or formerly
\nmaintained by the Company or to which the Company is obligated to make payments,
\nin each case with respect to any present or former employees of the Company.<\/p>\n
(v) “Employee Benefit Plan” has the meaning given in
\nSection 3(3) of ERISA.<\/p>\n
(vi) “ERISA” means the Employee Retirement Income
\nSecurity Act of 1974, as amended, and all regulations and rules issued
\nthereunder, or any successor law.<\/p>\n
(vii) “ERISA Affiliate” means any Person that, together
\nwith the Company, would be or was at any time treated as a single employer under
\nSection 414 of the Code or Section 4001 of ERISA and any general partnership of
\nwhich the Company is or has been a general partner.<\/p>\n
(viii) “IRS” means the Internal Revenue Service.<\/p>\n
(ix) “Multiemployer Plan” means any Employee Benefit
\nPlan described in Section 3(37) of ERISA.<\/p>\n
(x) “Qualified Plan” means any Employee Benefit Plan
\nthat meets, purports to meet, or is intended to meet the requirements of Section
\n401(a) of the Code.<\/p>\n
(xi) “Welfare Plan” means any Employee Benefit Plan
\ndescribed in Section 3(1) of ERISA.<\/p>\n
(b) SCHEDULE 3.25 contains a complete and accurate list of all
\nCompany Plans and Company Benefit Arrangements. SCHEDULE 3.25 specifically
\nidentifies all Company Plans (if any) that are Qualified Plans.<\/p>\n
(c) With respect, as applicable, to Employee Benefit Plans and
\nBenefit Arrangements:<\/p>\n
(i) true, correct and complete copies of all the
\nfollowing documents with respect to each Company Plan and Company Benefit
\nArrangement, to the extent applicable, have been delivered to NII or its
\ndesignee: (A) all documents constituting the Company Plans and Company Benefit
\nArrangements, including but not limited to, trust agreements, insurance
\npolicies, service agreements, and formal and informal amendments thereto; (B)
\nthe most recent Forms 5500 or 5500C\/R and any financial statements attached
\nthereto and those for the prior three (3) years; (C) the last Internal Revenue
\nService determination letter, the last IRS determination letter that covered the
\nqualification of the entire plan (if different), and the materials submitted by
\nthe Company to obtain those letters; (D) the most recent summary plan
\ndescription; (E) the most recent written descriptions of all non-written
\nagreements relating to any such plan or arrangement; (F) all <\/p>\n
-22-<\/p>\n
notices that were given within the four (4) years preceding the date of this
\nAgreement by the IRS, Department of Labor, or any other governmental agency or
\nentity with respect to any plan or arrangement; and (G) employee manuals or
\nhandbooks containing personnel or employee relations policies;<\/p>\n
(ii) the World Express Travel Savings & Retirement Plan
\n(the “Company 401(k) Plan”) is the only Qualified Plan and is further described
\non SCHEDULE 3.25. The Company has never maintained or contributed to another
\nQualified Plan. The Company 401(k) Plan qualifies under Section 401(a) of the
\nCode, and any trusts maintained pursuant thereto are exempt from federal income
\ntaxation under Section 501 of the Code, and nothing has occurred with respect to
\nthe design or operation of any Qualified Plan that could cause the loss of such
\nqualification or exemption or the imposition of any liability, lien, penalty, or
\ntax under ERISA or the Code;<\/p>\n
(iii) the Company has never sponsored or maintained, had
\nany obligation to sponsor or maintain, or had any liability (whether actual or
\ncontingent, with respect to any of its assets or otherwise) with respect to any
\nEmployee Benefit Plan subject to Section 302 of ERISA or Section 412 of the Code
\nor Title IV of ERISA (including any Multiemployer Plan);<\/p>\n
(iv) each Company Plan and each Company Benefit
\nArrangement has been maintained in accordance with its constituent documents and
\nwith all applicable provisions of the Code, ERISA and other laws, including
\nfederal and state securities laws;<\/p>\n
(v) there are no pending claims or lawsuits by,
\nagainst, or relating to any Employee Benefit Plans or Benefit Arrangements that
\nare not Company Plans or Company Benefit Arrangements that would, if successful,
\nresult in liability of the Company or the Shareholder, and no claims or lawsuits
\nhave been asserted, instituted or, to the knowledge of the Company, threatened
\nby, against, or relating to any Company Plan or Company Benefit Arrangement,
\nagainst the assets of any trust or other funding arrangement under any such
\nCompany Plan, by or against the Company with respect to any Company Plan or
\nCompany Benefit Arrangement, or by or against the plan administrator or any
\nfiduciary of any Company Plan or Company Benefit Arrangement, and the Company
\ndoes not have knowledge of any fact that could form the basis for any such claim
\nor lawsuit. The Company Plans and Company Benefit Arrangements are not presently
\nunder audit or examination (nor has notice been received of a potential audit or
\nexamination) by the IRS, the Department of Labor, or any other governmental
\nagency or entity, and no matters are pending with respect to the Company 401(k)
\nPlan under the IRS’s Voluntary Compliance Resolution program, its Closing
\nAgreement Program, or other similar programs;<\/p>\n
(vi) no Company Plan or Company Benefit Arrangement
\ncontains any provision or is subject to any law that would prohibit the
\ntransactions contemplated by this Agreement or that would give rise to any
\nvesting of benefits, severance, termination, or other payments or liabilities as
\na result of the transactions contemplated by this Agreement;<\/p>\n
(vii) with respect to each Company Plan, there has
\noccurred no non-exempt “prohibited transaction” (within the meaning of Section
\n4975 of the Code) or transaction prohibited <\/p>\n
-23-<\/p>\n
by Section 406 of ERISA or breach of any fiduciary duty described in Section 404
\nof ERISA that would, if successful, result in any liability for the Company or a
\nshareholder, officer, director, or employee of the Company;<\/p>\n
(viii) all reporting, disclosure, and notice requirements
\nof ERISA and the Code have been fully and completely satisfied with respect to
\neach Company Plan and each Company Benefit Arrangement;<\/p>\n
(ix) all amendments and actions required to bring the
\nCompany Benefit Plans into conformity with the applicable provisions of ERISA,
\nthe Code, and other applicable laws have been made or taken except to the extent
\nsuch amendments or actions (A) are not required by law to be made or taken until
\nafter the Closing and (B) are disclosed on SCHEDULE 3.25;<\/p>\n
(x) payment has been made of all amounts that the
\nCompany is required to pay as contributions to the Company Benefit Plans as of
\nthe last day of the most recent fiscal year of each of the plans ended before
\nthe date of this Agreement; all benefits accrued under any unfunded Company Plan
\nor Company Benefit Arrangement will have been paid, accrued, or otherwise
\nadequately reserved in accordance with GAAP as of the Interim Balance Sheet
\nDate; and all monies withheld from employee paychecks with respect to Company
\nPlans have been transferred to the appropriate plan within thirty (30) days of
\nsuch withholding;<\/p>\n
(xi) the Company has not prepaid or prefunded any
\nWelfare Plan through a trust, reserve, premium stabilization, or similar
\naccount, nor does it provide benefits through a voluntary employee beneficiary
\nassociation as defined in Section 501(c)(9) of the Code;<\/p>\n
(xii) no statement, either written or oral, has been
\nmade by the Company to any Person with regard to any Company Plan or Company
\nBenefit Arrangement that was not in accordance with the Company Plan or Company
\nBenefit Arrangement and that could have an adverse economic consequence to the
\nCompany;<\/p>\n
(xiii) the Company has no liability (whether actual,
\ncontingent, with respect to any of its assets or otherwise) with respect to any
\nEmployee Benefit Plan or Benefit Arrangement that is not a Company Benefit
\nArrangement or with respect to any Employee Benefit Plan sponsored or maintained
\n(or which has been or should have been sponsored or maintained) by any ERISA
\nAffiliate;<\/p>\n
(xiv) all group health plans of the Company and its
\naffiliates, as further described on SCHEDULE 3.25, have been operated in
\nmaterial compliance with the requirements of Sections 4980B of the Code (and its
\npredecessor), 5000 of the Code and Part 7 of ERISA, and the Company has
\nprovided, or will have provided before the Closing Date, to individuals entitled
\nthereto all required notices and coverage pursuant to Section 4980B of the Code
\nwith respect to any “qualifying event” (as defined therein) occurring before or
\non the Closing Date; and<\/p>\n
(xv) no employee or former employee of the Company or
\nbeneficiary of any such employee or former employee is, by reason of such
\nemployee’s or former employee’s <\/p>\n
-24-<\/p>\n
employment, entitled to receive any benefits, including, without limitation,
\ndeath or medical benefits (whether or not insured) beyond retirement or other
\ntermination of employment as described in Statement of Financial Accounting
\nStandards No. 106, other than (i) death or retirement benefits under a Qualified
\nPlan, (ii) deferred compensation benefits accrued as liabilities on the Closing
\nStatement or (iii) continuation coverage mandated under Section 4980B of the
\nCode or other applicable law.<\/p>\n
(d) SCHEDULE 3.25 hereto contains the most recent quarterly
\nlisting of workers’ compensation claims and a schedule of workers’ compensation
\nclaims of the Company for the last three (3) fiscal years.<\/p>\n
(e) SCHEDULE 3.25 hereto sets forth an accurate list, as of
\nthe date hereof, of all employees of the Company who may earn more than $75,000
\nin fiscal 1998, all officers and all directors, and lists all employment
\nagreements (written or oral) with such employees, officers and directors and the
\nrate of compensation (and the portions thereof attributable to salary, bonus,
\nand other compensation respectively) of each such Person as of the Interim
\nBalance Sheet Date.<\/p>\n
(f) The Company has not declared or paid any bonus
\ncompensation in contemplation of the transactions contemplated by this
\nAgreement.<\/p>\n
(g) Except as set forth on SCHEDULE 3.25, there are no
\nContingent Deferred Sales Charges (“CDSC’s”) or similar surrender fees, asset
\ncharges or other penalties that will become payable as a result of the
\ntermination of any Company Plan or Company Benefit Arrangement or the merger of
\nthe assets of such Company Plan or Company Benefit Arrangement into a plan or
\nbenefit arrangement of NII. To the extent that any such CDSC’s or similar
\ncharges or penalties are payable upon such event, the Shareholder shall pay such
\namounts at Closing or, with the concurrence of NII, NII may pay such amounts and
\nthe Consideration shall be reduced accordingly.<\/p>\n
3.26 TAXES.
\n —–<\/p>\n
(a) (i) The Company has timely filed all Tax Returns (as
\ndefined below) due on or before the Closing Date, and such Tax Returns are true,
\ncorrect and complete in all respects.<\/p>\n
(ii) The Company has paid in full on a timely basis all
\nTaxes (as defined below) owed by it, whether or not shown on any Tax Return.<\/p>\n
(iii) The amount of the Company’s liability for unpaid
\nTaxes as of the Interim Balance Sheet Date did not exceed the amount of the
\ncurrent liability accruals for Taxes (excluding reserves for deferred Taxes)
\nshown on the Interim Balance Sheet, and the amount of the Company’s liability
\nfor unpaid Taxes for all periods or portions thereof ending on or before the
\nClosing Date will not exceed the amount of the current liability accruals for
\nTaxes (excluding reserves for deferred Taxes) as such accruals are reflected on
\nthe books and records of the Company on the Closing Date.<\/p>\n
-25-<\/p>\n
(iv) The Company has filed all reports and has created
\nand\/or retained all records required under Section 6038 of the Code with respect
\nto its ownership by and transactions with related parties. Each related foreign
\nperson required to maintain records under Section 6038(A) with respect to
\ntransactions between Company and the related foreign person has maintained such
\nrecords. All documents that are required to be created and\/or preserved by the
\nrelated foreign person with respect to transactions with the Company are either
\nmaintained in the United States, or the Company is exempt from the record
\nmaintenance requirements of Section 6038A of the Code with respect to such
\ntransactions under Section 1.6038-1. The Company is not a party to any recorded
\nmaintenance agreement with the IRS with respect to Section 6038A of the Code.
\nEach related foreign person that has engaged in transactions with the Company
\nhas authorized the Company to act as its limited agent solely for purposes of
\nSections 7602, 7603 and 7604 of the Code with respect to any request by the IRS
\nto examine records or produce testimony related to any transaction with the
\nCompany, and each such authorization remains in full force and effect.<\/p>\n
(v) The Company has a taxable year for each year
\nending on the Sunday closest to January 1 of the following year.<\/p>\n
(vi) The Company currently utilizes the accrual method
\nof accounting for income Tax purposes and such method of accounting has not
\nchanged in the past five (5) years. The Company has not agreed to, and is not
\nand will not be required to, make any adjustments under Section 481(a) of the
\nCode as a result of a change in accounting methods.<\/p>\n
(vii) The Company has withheld and paid over to the
\nproper governmental authorities all Taxes required to have been withheld and
\npaid over and complied with all information reporting and backup withholding
\nrequirements, including maintenance of required records with respect thereto, in
\nconnection with amounts paid to any employee, independent contractor, creditor,
\nor other third party.<\/p>\n
(viii) Except as disclosed in SCHEDULE 3.26(A), the Tax
\nReturns of the Company have never been audited by a government or taxing
\nauthority nor is any such audit in process, pending or threatened (either in
\nwriting or verbally, formally or informally). No deficiencies exist or have been
\nasserted (either in writing or verbally, formally or informally) or are expected
\nto be asserted with respect to Taxes of the Company, and the Company has not
\nreceived notice (either in writing or verbally, formally or informally) or
\nexpects to receive notice that it has not filed a Tax Return or paid Taxes
\nrequired to be filed or paid by it. The Company is not a party to any action or
\nproceeding for assessment or collection of Taxes, and no such event has been
\nasserted or threatened (either in writing or verbally, formally or informally)
\nagainst the Company or any of its assets. No waiver or extension of any statute
\nof limitations is in effect with respect to Taxes or Tax Returns of the Company.
\nThe Company has disclosed in its federal income tax returns all positions taken
\ntherein that could give rise to a substantial understatement penalty within the
\nmeaning of Section 6662 of the Code.<\/p>\n
(ix) There are (and as of immediately following the
\nClosing there will be) no Liens on the assets of the Company relating to or
\nattributable to Taxes.<\/p>\n
-26-<\/p>\n
(x) To the Company’s knowledge, there is no basis for the
\nassertion of any claim relating or attributable to Taxes which, if adversely
\ndetermined, would result in any Lien on the assets of the Company or otherwise
\nhave an adverse effect on the Company or its business.<\/p>\n
(xi) None of the Company’s assets are treated as “tax
\nexempt use property” within the meaning of Section 168(h) of the Code.<\/p>\n
(xii) There are no contracts, agreements, plans or
\narrangements, including but not limited to the provisions of this Agreement,
\ncovering any employee or former employee of the Company that, individually or
\ncollectively, could give rise to the payment of any amount (or portion thereof)
\nthat would not be deductible pursuant to Sections 280G, 404 or 162 of the Code.<\/p>\n
(xiii) The Company has not filed any consent agreement under
\nSection 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
\nto any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
\nthe Code) owned by the Company.<\/p>\n
(xiv) The Company is not, and has not been at any time, a
\nparty to a tax sharing, tax indemnity or tax allocation agreement, and the
\nCompany has not assumed the tax liability of any other Person under contract.<\/p>\n
(xv) The Company is not, and has not been at any time
\nduring the applicable period specified in Section 897(c)(1)(A)(ii) of the Code,
\na “United States real property holding corporation” within the meaning of
\nSection 897(c)(2) of the Code.<\/p>\n
(xvi) The Company’s tax basis in its assets for purposes of
\ndetermining its future amortization, depreciation and other federal income tax
\ndeductions is accurately reflected on the Company’s tax books and records.<\/p>\n
(xvii) The Company has not been a member of an affiliated
\ngroup filing a consolidated federal income Tax Return and does not have any
\nliability for the Taxes of another Person under Treas. Reg.ss.1.1502-6 (or any
\nsimilar provision of state, local or foreign law), as a transferee or successor,
\nby contract or otherwise.<\/p>\n
(xviii) The Company has no net operating losses or other Tax
\nattributes presently subject to limitation under Sections 382, 383 or 384 of the
\nCode, or the federal consolidated return regulations.<\/p>\n
(b) (i) The Company has, since July 1, 1989, been an S
\nCorporation within the meaning of Section 1361 of the Code.<\/p>\n
(ii) Except as disclosed on SCHEDULE 3.26(B), the Company
\ndoes not have a net recognized or a net unrealized built-in gain within the
\nmeaning of Section 1374 of the Code.<\/p>\n
(iii) SCHEDULE 3.26(B) contains an accurate and complete
\ndescription of Company’s current and accumulated earnings and profits.<\/p>\n
-27-<\/p>\n
(iv) Except as disclosed on SCHEDULE 3.26(B), the Company
\nwill not be liable for any Tax under Section 1374 of the Code in connection with
\nthe deemed sale of Company’s assets caused by the Section 338 Election. The
\nCompany has not in the past 10 years, acquired assets from another corporation
\nin a transaction in which the Company’s Tax basis for the acquired assets was
\ndetermined, in whole or in part, by reference to the Tax basis of the acquired
\nassets (or any other property) in the hands of the transferor.<\/p>\n
(c) For purposes of this Agreement:<\/p>\n
(i) the term “Tax” shall include any tax or similar
\ngovernmental charge, impost or levy (including without limitation income taxes,
\nfranchise taxes, transfer taxes or fees, sales taxes, use taxes, gross receipts
\ntaxes, value added taxes, employment taxes, excise taxes, ad valorem taxes,
\nproperty taxes, withholding taxes, payroll taxes, minimum taxes or windfall
\nprofit taxes) together with any related penalties, fines, additions to tax or
\ninterest imposed by the United States or any state, county, local or foreign
\ngovernment or subdivision or agency thereof; and<\/p>\n
(ii) the term “Tax Return” shall mean any return
\n(including any information return), report, statement, schedule, notice, form,
\nestimate, or declaration of estimated tax relating to or required to be filed
\nwith any governmental authority in connection with the determination,
\nassessment, collection or payment of any Tax.<\/p>\n
3.27 CONFORMITY WITH LAW; LITIGATION.
\n ——————————- <\/p>\n
(a) The Company has not violated any law or regulation or any
\norder of any court or federal, state, municipal or other governmental
\ndepartment, commission, board, bureau, agency or instrumentality having
\njurisdiction over it.<\/p>\n
(b) No Shareholder has, at any time: (i) committed any
\ncriminal act (except for minor traffic violations); (ii) engaged in acts of
\nfraud, dishonesty, gross negligence or moral turpitude; (iii) filed for personal
\nbankruptcy; or (iv) been an officer, director, manager, trustee or controlling
\nshareholder of a corporation or other entity that filed for bankruptcy or
\nChapter 11 protection.<\/p>\n
(c) Except as set forth on SCHEDULE 3.27, there are no claims,
\nactions, suits or proceedings, pending or, to the knowledge of the Company,
\nthreatened against or affecting the Company, at law or in equity, or before or
\nby any federal, state, municipal or other governmental department, commission,
\nboard, bureau, agency or instrumentality having jurisdiction over it and no
\nnotice of any claim, action, suit or proceeding, whether pending or threatened,
\nhas been received. There are no arbitration or mediation proceedings pending or,
\nto the knowledge of the Company, threatened. There are no judgments, orders,
\ninjunctions, decrees, stipulations or awards (whether rendered by a court or
\nadministrative agency or by arbitration) against the Company or against any of
\nits properties or business.<\/p>\n
3.28 RELATIONS WITH GOVERNMENTS. The Company has not made,
\n ————————–
\noffered or agreed to offer anything of value to any governmental official,
\npolitical party or candidate for government <\/p>\n
-28-<\/p>\n
office, nor has it otherwise taken any action that would cause the Company to be
\nin violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
\nlaw of similar effect.<\/p>\n
3.29 ABSENCE OF CHANGES. Since January 4, 1998, the Company has
\n ——————
\nconducted its business in the ordinary course and, except as contemplated herein
\nor as set forth on SCHEDULE 3.29, there has not been:<\/p>\n
(a) any change, by itself or together with other changes, that
\nhas adversely affected, or is likely to adversely affect, the business,
\noperations, affairs, prospects, properties, assets, profits or condition
\n(financial or otherwise) of the Company;<\/p>\n
(b) any damage, destruction or loss (whether or not covered by
\ninsurance) adversely affecting the properties or business of the Company;<\/p>\n
(c) any change in the authorized capital of the Company or in
\nits outstanding securities or any change in its ownership interests or any grant
\nof any options, warrants, calls, conversion rights or commitments;<\/p>\n
(d) any declaration or payment of any dividend or distribution
\nin respect of the capital stock, or any direct or indirect redemption, purchase
\nor other acquisition of any of the capital stock of the Company;<\/p>\n
(e) any increase in the compensation, bonus, sales commissions
\nor fee arrangements payable or to become payable by the Company to any of its
\nofficers, directors, shareholders, employees, consultants or agents, except for
\nordinary and customary bonuses and salary increases for employees in accordance
\nwith past practice, nor has the Company entered into or amended any Company
\nBenefit Arrangement, Company Plan, employment, severance or other agreement
\nrelating to compensation or fringe
\nbenefits;<\/p>\n
(f) any work interruptions, labor grievances or claims filed,
\nor any similar event or condition of any character, materially adversely
\naffecting the business or future prospects of the Company;<\/p>\n
(g) any sale or transfer, or any agreement to sell or
\ntransfer, any material assets property or rights (including without limitation
\nany Company Intellectual Property) of the Company to any Person, including
\nwithout limitation the Shareholder and his Affiliates;<\/p>\n
(h) any cancellation, or agreement to cancel, any indebtedness
\nor other obligation owing to the Company, including without limitation any
\nindebtedness or obligation of the Shareholder and his affiliates, provided that
\nthe Company may negotiate and adjust bills in the course of good faith disputes
\nwith customers in a manner consistent with past practice;<\/p>\n
(i) any plan, agreement or arrangement granting any
\npreferential rights to purchase or acquire any interest in any of the assets,
\nproperty or rights of the Company or requiring consent of any party to the
\ntransfer and assignment of any such assets, property or rights;<\/p>\n
-29-<\/p>\n
(j) any purchase or acquisition of, or agreement, plan or
\narrangement to purchase or acquire, any property, rights or assets outside of
\nthe ordinary course of business of the Company;<\/p>\n
(k) any waiver of any material rights or claims of the
\nCompany;<\/p>\n
(l) any breach, amendment or termination of any material
\ncontract, agreement, license, permit or other right to which the Company is a
\nparty;<\/p>\n
(m) any transaction by the Company outside the ordinary course
\nof business;<\/p>\n
(n) any capital expenditure or commitment by the Company,
\neither individually or in the aggregate, exceeding $20,000;<\/p>\n
(o) any change in accounting methods or practices (including
\nany change in depreciation or amortization policies or rates) by the Company;<\/p>\n
(p) any creation or assumption by the Company of any mortgage,
\npledge, security interest or lien or other encumbrance on any asset (other than
\nliens arising under existing lease financing arrangements which are not material
\nand liens for Taxes not yet due and payable);<\/p>\n
(q) any entry into, amendment of, relinquishment, termination
\nor non-renewal by the Company of any contract, lease transaction, commitment or
\nother right or obligation requiring aggregate payments by the Company in excess
\nof $20,000;<\/p>\n
(r) any loan by the Company to any Person or entity, incurring
\nby the Company, of any indebtedness, guaranteeing by the Company of any
\nindebtedness, issuance or sale of any debt securities of the Company or
\nguaranteeing of any debt securities of others;<\/p>\n
(s) the commencement or notice or, to the knowledge of the
\nCompany, threat of commencement, of any lawsuit or proceeding against, or
\ninvestigation of, the Company or any of its affairs;<\/p>\n
(t) any discharge or satisfaction of any Lien or Encumbrance
\nor payment of any obligation or liability other than current liabilities in the
\nordinary course of business;<\/p>\n
(u) any charitable contribution or pledge;<\/p>\n
(v) any investment in or steps to incorporate any Subsidiary;
\nor<\/p>\n
(w) negotiation or agreement by the Company or any officer or
\nemployee thereof to do any of the things described in the preceding clauses (a)
\nthrough (v) (other than negotiations with NII and its representatives regarding
\nthe transactions contemplated by this Agreement).<\/p>\n
3.30 INVENTORY. Except as set forth in Schedule 3.30 the Company
\n ———
\nhas no material inventories, except for general office supplies.<\/p>\n
-30-<\/p>\n
3.31 Year 2000 Compliance.
\n ——————–<\/p>\n
(a) As used in this Section 3.31, the term “System” refers to
\nhardware, firmware, software and other equipment, systems and components of such
\nequipment or system, and the term “Year 2000 Compliant” as it applies to a
\nSystem means that the System:<\/p>\n
(i) Will function properly and completely as designed before,
\nduring and after January 1, 2000, without changes in operation in connection
\nwith dates after December 31, 1999;<\/p>\n
(ii) Will not abnormally end or abort or provide invalid or
\nincorrect results as a result of date data, specifically including date data
\nwhich represents or references dates after December 31, 1999, or dates falling
\nin different centuries;<\/p>\n
(iii) Will respond to two digit date input in a way that resolves
\nthe ambiguity as to century in a disclosed, defined and predetermined manner and
\nwill store and provide output of date information in ways that are unambiguous
\nas to century; and<\/p>\n
(iv) Will correctly recognize and process the date of February
\n29, and any related data, during leap years, including the leap year occurring
\nin the year 2000.<\/p>\n
(b) SCHEDULE 3.31 describes (i) the steps the Company has
\ncompleted to date in order to determine whether or not its Systems are Year 2000
\nCompliant, (ii) the degree to which its Systems are Year 2000 Compliant and a
\nlist or description of its Systems that are not Year 2000 Compliant, (iii) the
\ncosts incurred to date in order that its Systems will be Year 2000 Compliant,
\nand (iv) the expected costs that will need to be incurred in the future for its
\nSystems to be completely Year 2000 Compliant (broken down by hardware and
\nsoftware).<\/p>\n
(c) The parties agree that this Section 3.31 shall not apply to (1)
\nany CRS System that NII elects to use on an enterprise-wide basis at all its
\nlocations, including the Company, or (2) the Company’s Apollo or Sabre\/ADSX
\nSystems if NII actively prevents the Company from making any necessary
\nreplacements or modifications to its CRS Systems to make such Systems Year 2000
\nCompliant following the Closing.<\/p>\n
3.32 DISCLOSURE. The Company has delivered to NII or PTC true and
\n ———-
\ncomplete copies of each agreement, contract, commitment or other document (or
\nsummaries thereof) that is referred to in the Schedules or that has been
\nrequested by NII or PTC. All written agreements, lists, schedules, instruments,
\nexhibits, documents, certificates, reports, statements and other writings
\nfurnished pursuant hereto or in connection with this Agreement or the
\ntransactions contemplated hereby, are and will be complete and accurate in all
\nmaterial respects. No representation or warranty by the Shareholder or the
\nCompany contained in this Agreement, in the Schedules attached hereto or in any
\ncertificate furnished or to be furnished by the Shareholder or the Company to
\nNII in connection herewith or pursuant hereto contains or will contain any
\nuntrue statement of a material fact or omits or will omit to state any material
\nfact necessary in order to make any statement contained herein or therein not
\nmisleading. There is no fact known to the Shareholder that has specific
\napplication to the <\/p>\n
-31-<\/p>\n
Shareholder or the Company (other than general economic or industry conditions)
\nand that materially adversely affects or, as far as the Shareholder can
\nreasonably foresee, materially threatens, the assets, business, prospects,
\nfinancial condition, or results of operations of the Company that has not been
\nset forth in this Agreement or any Schedule hereto.<\/p>\n
4. REPRESENTATIONS OF NII AND PTC<\/p>\n
To induce the Company and the Shareholder to enter into this Agreement and
\nconsummate the transactions contemplated hereby, NII and PTC represent and
\nwarrant to the Company and the Shareholder as follows:<\/p>\n
4.1 DUE ORGANIZATION. NII is a corporation duly organized, validly
\n —————-
\nexisting and in good standing under the laws of the State of Delaware, and is
\nduly authorized and qualified to do business under all applicable laws,
\nregulations, ordinances and orders of public authorities to carry on its
\nbusiness in the places and in the manner as now conducted. NII is not in
\nviolation of its Certificate of Incorporation or Bylaws, each as amended to date
\n(the “NII Charter Documents”). PTC is a corporation duly organized, validly
\nexisting and in good standing under the laws of the State of Colorado, and is
\nduly authorized and qualified to do business under all applicable laws,
\nregulations, ordinances and orders of public authorities to carry on its
\nbusiness in the places and in the manner as now conducted. PTC is not in
\nviolation of its Articles of Incorporation or Bylaws, each as amended to date
\n(the “PTC Charter Documents”).<\/p>\n
4.2 AUTHORIZATION; VALIDITY OF OBLIGATIONS. The representatives of NII and
\n ————————————–
\nPTC executing this Agreement have all requisite corporate power and authority to
\nenter into and bind NII and PTC to the terms of this Agreement, each of NII and
\nPTC has the full legal right, power, and corporate authority to enter into this
\nAgreement and the transactions contemplated hereby and thereby. The execution
\nand delivery of this Agreement by NII and PTC and the performance by them of the
\ntransactions contemplated herein and therein have been duly and validly
\nauthorized by the Board of Directors of NII and PTC, as the case may be, and
\nthis Agreement have been duly and validly authorized by all necessary corporate
\naction. This Agreement is a legal, valid and binding obligation of NII and PTC
\nenforceable in accordance with its terms.<\/p>\n
4.3 NO CONFLICTS. The execution, delivery and performance of this
\n ————
\nAgreement, the consummation of the transactions contemplated hereby and the
\nfulfillment of the terms hereof will not:<\/p>\n
(a) conflict with, or result in a breach or violation of the NII
\nCharter Documents or the PTC Charter Documents;<\/p>\n
(b) conflict with, or result in a default (or would constitute
\na default but for a requirement of notice or lapse of time or both) under any
\ndocument, agreement or other instrument to which NII or PTC is a party, or
\nresult in the creation or imposition of any lien, charge or encumbrance on any
\nof NII’s or PTC’s properties pursuant to (i) any law or regulation to which<\/p>\n
-32-<\/p>\n
either NII, PTC or any of their property is subject, or (ii) any judgment, order
\nor decree to which NII or PTC is bound or any of their property is subject;<\/p>\n
(c) result in termination or any impairment of any material
\npermit, license, franchise, contractual right or other authorization of NII or
\nPTC; or<\/p>\n
(d) violate any law, order, judgment, rule, regulation, decree or
\nordinance to which NII or PTC is subject, or by which NII or PTC is bound.<\/p>\n
4.4 INVESTMENT INTENT. PTC (a) understands that the shares of Company
\n —————–
\nCapital Stock have not been, and will not be, registered under the Securities
\nAct, or under any state securities laws, and are being offered and sold in
\nreliance upon federal and state exemptions for transactions not involving any
\npublic offering, (b) is acquiring the Company Capital Stock for its own account
\nfor investment purposes, and not with a view to a distribution thereof, (c) is a
\nsophisticated investor with knowledge and experience in business and financial
\nmatters, (d) has received certain information concerning the Company and has had
\nthe opportunity to obtain additional information as desired in order to evaluate
\nthe merits and the risks inherent in holding the Company Capital Stock and (d)
\nis able to bear the economic risk and lack of liquidity inherent in holding the
\nCompany Capital Stock. The parties acknowledge that this representation is made
\nsolely for the purpose of the Company complying with federal and state
\nsecurities and blue sky laws, and for no other purposes.<\/p>\n
5. COVENANTS<\/p>\n
5.1 TAX MATTERS.
\n ———–<\/p>\n
(a) The following provisions shall govern the allocation of
\nresponsibility as between the Company, on the one hand, and the Shareholder, on
\nthe other, for certain tax matters following the Closing Date:<\/p>\n
(i) The Shareholder shall prepare or cause to be prepared and
\nfile or cause to be filed, within the time and in the manner provided by law,
\nall Tax Returns of the Company for all periods ending on or before the Closing
\nDate that are due after the Closing Date. The Shareholder shall pay on or before
\nthe due date of such Tax Returns the amount of all Taxes shown as due on such
\nTax Returns to the extent that such Taxes are not reflected in the current
\nliability accruals for Taxes (excluding reserves for deferred Taxes) shown on
\nthe Company’s books and records as of the Closing Date. Notwithstanding the
\nforegoing, the Company agrees to pay to the Shareholder at Closing $25,000 for
\nTaxes for the period beginning on August 31, 1998 and ending on the Closing
\nDate. Such Returns shall be prepared and filed in accordance with applicable law
\nand in a manner consistent with past practices and shall be subject to review
\nand approval by NII. To the extent reasonably requested by the Shareholder or
\nrequired by law, NII shall participate in the filing of any Tax Returns filed
\npursuant to this paragraph.<\/p>\n
(ii) If there are Tax Returns that will be required to be filed
\nfor any period which begin before the Closing Date and end after the Closing
\nDate, the Company shall prepare or cause to be prepared and file or cause to be
\nfiled any Tax Returns for such Tax periods. Except as <\/p>\n
-33-<\/p>\n
set forth in Section 5.11, the Shareholder shall pay to the Company within
\nfifteen (15) days after the date on which Taxes are paid with respect to such
\nperiods an amount equal to the portion of such Taxes which relates to the
\nportion of such taxable period ending on the Closing Date to the extent such
\nTaxes are not reflected in the current liability accruals for Taxes (excluding
\nreserves for deferred Taxes) shown on the Company’s books and records as of the
\nClosing Date. For purposes of this Section 5.1, in the case of any Taxes that
\nare imposed on a periodic basis and are payable for a Taxable period that
\nincludes (but does not end on) the Closing Date, the portion of such Tax which
\nrelates to the portion of such Taxable period ending on the Closing Date shall
\n(x) in the case of any Taxes other than Taxes based upon or related to income or
\nreceipts, be deemed to be the amount of such Tax for the entire Taxable period
\nmultiplied by a fraction the numerator of which is the number of days in the
\nTaxable period ending on the Closing Date and the denominator of which is the
\nnumber of days in the entire Taxable period, and (y) in the case of any Tax
\nbased upon or related to income or receipts be deemed equal to the amount which
\nwould be payable if the relevant Taxable period ended on the Closing Date. Any
\ncredits relating to a Taxable period that begins before and ends after the
\nClosing Date shall be taken into account as though the relevant Taxable period
\nended on the Closing Date. All determinations necessary to give effect to the
\nforegoing allocations shall be made in a manner consistent with prior practice
\nof the Company.<\/p>\n
(iii) NII and the Company on one hand and the Shareholder on the
\nother hand shall (A) cooperate fully, as reasonably requested, in connection
\nwith the preparation and filing of Tax Returns pursuant to this Section 5.1 and
\nany audit, litigation or other proceeding with respect to Taxes; (B) make
\navailable to the other, as reasonably requested, all information, records or
\ndocuments with respect to Tax matters pertinent to the Company for all periods
\nending prior to or including the Closing Date; and (C) preserve information,
\nrecords or documents relating to Tax matters pertinent to the Company that is in
\ntheir possession or under their control until the expiration of any applicable
\nstatute of limitations or extensions thereof.<\/p>\n
(iv) The Shareholder shall timely pay all transfer,
\ndocumentary, sales, use, stamp, registration and other Taxes and fees arising
\nfrom or relating to the transactions contemplated by this Agreement, and the
\nShareholder shall, at his own expense, file all necessary Tax Returns and other
\ndocumentation with respect to all such transfer, documentary, sales, use, stamp,
\nregistration, and other Taxes and fees. If required by applicable law, NII and
\nthe Company will join in the execution of any such Tax Returns and other
\ndocumentation.<\/p>\n
(b) The Company shall, prior to the Closing, maintain its status as
\nan S Corporation for federal and state income tax purposes.<\/p>\n
5.2 ACCOUNTS RECEIVABLE. In the event that all Accounts Receivable, except
\n ——————-
\nas set forth on Schedule 3.13, are not collected in full (net of reserves
\nspecified in Section 3.13) within one hundred and twenty (120) days after the
\nClosing then, at the request of the Company the Shareholder shall pay (based on
\ntheir percentage ownership of Company Capital Stock immediately prior to the
\nClosing) the Company an amount equal to the Accounts Receivable, (net of
\nreserves specified Section 3.13) including any interest or other fees incurred
\nwith respect to such Accounts Receivable not so collected, and upon receipt of
\nsuch payment the Company shall assign to the Shareholder the<\/p>\n
-34-<\/p>\n
uncollected Accounts Receivable and shall also thereafter promptly remit any
\npayment received by the Company with respect to such assigned Accounts
\nReceivable. Upon the written request of the Company, the Shareholder shall
\nprovide it with a status report concerning the collection of assigned Accounts
\nReceivable.<\/p>\n
5.3 EMPLOYEE BENEFIT PLANS. If reasonably requested by NII, the Company
\n ———————-
\nshall terminate or freeze any Company Plan or Company Benefit Arrangement
\nsubstantially contemporaneously with the Closing; provided that (i) any
\nterminated Company Plan or Company Benefit Arrangement will be replaced with
\nsuch plans or arrangements as are generally provided by NII to like-situated
\nemployees and (ii) such termination by itself does not result in any liability
\nto the Shareholder.<\/p>\n
5.4 RELATED PARTY AGREEMENTS. The Company and\/or the Shareholder, as the
\n ————————
\ncase may be, shall terminate in a commercially reasonable manner and time frame,
\nat no cost to NII or the Company any agreements with a Related Party which NII
\n(or Affiliate of NII) requests the Company or the Shareholder to terminate at or
\nafter Closing. Notwithstanding the foregoing, with respect to any Company Plan
\nor Company Benefit Arrangement that is not terminated or merged into an existing
\nNII plan or benefit arrangement of NII (or Affiliate of NII) substantially
\ncontemporaneously with the Closing, the Shareholder shall cooperate (and shall
\nuse their reasonable efforts to cause the officers and employees of the Company
\nthat are responsible for administering any such Company Plan or Company Benefit
\nArrangement to cooperate) with NII on and after the Closing Date in continuing
\nto administer and maintain such Company Plan or Company Benefit Arrangement in
\naccordance with its constituent documents and with all applicable provisions of
\nthe Code, ERISA and other laws, including applicable federal and state
\nsecurities laws, until such time as the Company Plan or Company Benefit
\nArrangement are terminated or merged into a plan or benefit arrangement of NII
\n(or Affiliate of NII).<\/p>\n
5.5 COOPERATION.
\n ———–<\/p>\n
(a) The Company, the Shareholder, NII and PTC shall each deliver or
\ncause to be delivered to the other on the Closing Date, and at such other times
\nand places as shall be reasonably agreed to, such instruments as the other may
\nreasonably request for the purpose of carrying out this Agreement. In connection
\ntherewith, if required, the president or chief financial officer of the Company
\nshall execute any documentation reasonably required by NII’s independent public
\naccountants (in connection with such accountant’s audit of the Company) or the
\nNasdaq National Market.<\/p>\n
(b) The Shareholder and the Company shall cooperate and use their
\nreasonable efforts to have the present officers, directors and employees of the
\nCompany cooperate with NII on and after the Closing Date in furnishing
\ninformation, evidence, testimony and other assistance in connection with any
\nfiling obligations, actions, proceedings, arrangements or disputes of any nature
\nwith respect to matters pertaining to all periods prior to the Closing Date.<\/p>\n
-35-<\/p>\n
(c) Each party hereto shall cooperate in obtaining all consents and
\napprovals required under this Agreement to effect the transactions contemplated
\nhereby.<\/p>\n
5.6 ACCESS TO INFORMATION; CONFIDENTIALITY; PUBLIC DISCLOSURE. NII and
\n ———————————————————
\nPTC agree to abide by the terms of the Confidentiality Agreement dated June 29,
\n1998 between NII, the Company and the Shareholder (the “Confidentiality
\nAgreement”).<\/p>\n
5.7 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the Company
\n —————————
\nshall have satisfied any requirement for notice of the transactions contemplated
\nby this Agreement under applicable collective bargaining agreements, if
\nrequested by NII, and shall provide NII with proof that any required notice has
\nbeen sent.<\/p>\n
5.8 SOFT DOLLARS. All “soft dollars” (whether in the form of free airline
\n ————
\ntickets, free airline upgrade certificates, credit cards paid for by airlines or
\nairline override revenue converted to the Company’s “soft dollar” accounts, or
\nother similar arrangements) available to the Company from airlines and other
\nvendors of the Company, or that may be awarded to the Company in connection with
\nthe Company’s business, shall be used only for the Company’s legitimate business
\npurposes, which shall include free tickets given to employees as a bonus or
\nperquisite, and not for the personal benefit or use of the Shareholder (or his
\nfamily or friends) or any of the Company’s other employees.<\/p>\n
5.9 TRANSITION. The Shareholder shall not take any action that is designed
\n ———-
\nor intended to have the effect of discouraging any lessor, licensor, customer,
\nsupplier or other business associate of any of the Company, its Subsidiaries or
\nNII from maintaining the same business relationships with the Company and its
\nSubsidiaries after the Closing as it maintained with the Company prior to the
\nClosing. The Shareholder shall refer all customer inquiries relating to the
\nbusiness of the Company or NII from and after the Closing.<\/p>\n
5.10 [NOT USED]<\/p>\n
5.11 338 ELECTION.
\n ————<\/p>\n
(a) At NII’s option, the Company and the Shareholder will join with
\nNII in making an election under Section 338 of the Code (and any corresponding
\nelection under state, local, and foreign tax law) with respect to the purchase
\nand sale of the stock of the Company hereunder (a “Section 338 Election”). The
\nShareholder will include any income, gain, loss deduction, or other tax item
\nresulting from the Section 338 Election on his Tax Returns to the extent
\npermitted by applicable law. The Shareholder shall also pay any Tax imposed on
\nthe Company attributable to the making of the Section 338 Election, including
\nbut not limited to, (i) any Tax imposed under Section 1374 of the Code, (ii) any
\ntax imposed under Section 1.338(h)(10)-1(e)(5) of the Treasury Regulations, or
\n(iii) any state, local or foreign Tax imposed on Company’s gain, and the
\nShareholder shall indemnify NII, the Company against any tax or other liability
\narising out of any failure to pay any such Taxes. In the event that the Section
\n338 Election results in additional Tax for the Shareholder, NII shall pay to the
\nShareholder the difference between (i) the Tax paid by the Shareholder as a
\nresult of the Section 338 Election and (ii) the Tax that would have been paid by
\nthe Shareholder if the<\/p>\n
-36-<\/p>\n
Section 338 Election had not been made by the Shareholder. Prior to filing the
\nreturn, at NII’s cost, the Shareholder shall have NII’s Accountant review the
\nreturn to ensure that the Section 338 Election is properly made and executed and
\nthe calculation of the difference is properly calculated. Any payment by NII
\nhereunder shall be within made ten (10) days following the date of completion of
\nsuch review by NII’s Accountant.<\/p>\n
(b) NII, the Company and the Shareholder agree that the consideration
\nand the liabilities of the Company (plus other relevant items) will be allocated
\nto the assets of Company for all purposes (including Tax and financial
\naccounting) in a manner determined by NII in its sole discretion. NII, the
\nCompany, and the Shareholder will file all Tax Returns (including amended
\nreturns and claims for refund and information reports in a manner consistent
\nwith such values.<\/p>\n
(c) Notwithstanding anything to the contrary herein, any liability
\narising from the 338 Election will not be considered a liability of the Company
\nfor purposes of determining the Consideration, as such amount may be adjusted
\npursuant to the terms of this Agreement, to be paid hereunder, or in determining
\nthe net worth of the Company hereunder.<\/p>\n
5.12 PERMITTED DISTRIBUTION. Prior to the Closing, the Company may, in its
\n ———————-
\nsole discretion, make a cash distribution (the “Permitted Distribution”) to the
\nShareholder in an amount equal to (i) the tangible net worth of the Company,
\ndetermined in accordance with GAAP but not taking into account any Interim
\nPeriod Add-Backs, as of August 30, 1998, minus (ii) *.<\/p>\n
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
\nSEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
\nTHE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.<\/p>\n
5.13 TRAVEL AND ENTERTAINMENT BUDGET. Unless otherwise consented to by NII,
\n ——————————-
\nin the twelve months following Closing, the Company’s expenses for travel and
\nentertainment shall be no more than $55,000, which amount shall exclude costs
\nand expenses incurred at the request of or required by NII.<\/p>\n
5.14 TRANSFER OF ARC NUMBER. Upon the Closing Date, the Company and
\n ———————-
\nValuTravel, Inc. (“ValuTravel”) will apply for a change of ownership of the
\nbranch ARC number currently being used by ValuTravel and in the Company’s name.
\nUpon receipt of ARC’s approval of the application, the ARC number shall be
\npromptly transferred to ValuTravel. In addition, upon the Closing, Alaska
\nWorldTours, Inc. (“AWT”) shall begin using such ARC number, and terminate using
\nthe ARC number currently used by AWT.<\/p>\n
5.15 FIRST NATIONAL BANK OF ANCHORAGE LOAN. As soon as possible, and no
\n ————————————-
\nlater than ten (10) days, following the Closing, the Company shall be removed as
\na co-borrower from the loan in the principal amount of approximately $122,000
\nwith First National Bank of Anchorage that was entered into for the purchase of
\nreal estate owned by the Shareholder.<\/p>\n
5.16 SEATTLE LEASE. As soon as practicable after the Closing, the Company
\n ————-
\nshall enter into a lease for the Company’s location at 1900 West Emerson Place,
\nSuite 100, Seattle, Washington (the “Seattle Location”) which lease shall
\ninclude commercially reasonable terms, and, in particular, shall include the
\nfollowing terms: (i) a base rental of no more than $13.67 per square feet per
\nmonth; (ii) lease space of at least 3,468 square feet; and (iii) a term of not
\nless than three (3) years.<\/p>\n
-37-<\/p>\n
5.17 GLACIER BREWHOUSE PHONE LEASE. As soon as possible and no later than
\n —————————–
\nten (10) days, after the Closing, the Company shall enter into a lease agreement
\nwith Glacier Brewhouse for the lease by Glacier Brewhouse of certain phone lines
\nof the Company, which lease agreement shall contain commercially reasonable
\nterms for the Company, and in any event such terms as would be obtained from a
\nbona fide third party lease of a similar nature.<\/p>\n
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF NII AND PTC<\/p>\n
The obligations of NII and PTC to effect the Acquisition is subject to the
\nsatisfaction or waiver, at or before the Closing Date, of the following
\nconditions and deliveries:<\/p>\n
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All of the
\n ———————————————————-
\nrepresentations and warranties of the Shareholder and the Company contained in
\nthis Agreement shall be true, correct and complete on and as of the Closing Date
\nwith the same effect as though such representations and warranties had been made
\non and as of such date; all of the terms, covenants, agreements and conditions
\nof this Agreement to be complied with, performed or satisfied by the Company and
\nthe Shareholder on or before the Closing Date shall have been duly complied
\nwith, performed or satisfied; and a certificate to the foregoing effects dated
\nthe Closing Date and signed on behalf of the Company and by the Shareholder
\nshall have been delivered to NII.<\/p>\n
6.2 NO LITIGATION. No temporary restraining order, preliminary or
\n ————-
\npermanent injunction or other order issued by any court of competent
\njurisdiction or other legal or regulatory restraint or provision challenging
\nPTC’s proposed acquisition of the Company, or limiting or restricting NII’s or
\nPTC’s conduct or operation of the business of the Company (or its own business)
\nfollowing the Acquisition shall be in effect, nor shall any proceeding brought
\nby an administrative agency or commission or other governmental authority or
\ninstrumentality, domestic or foreign, seeking any of the foregoing be pending.
\nThere shall be no action, suit, claim or proceeding of any nature pending or
\nthreatened against NII, PTC, the Company, their respective properties or any of
\ntheir officers or directors, that could materially and adversely affect the
\nbusiness, assets, liabilities, financial condition, results of operations or
\nprospects of the Company.<\/p>\n
6.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
\n ————————–
\nchanges in the business, operations, affairs, prospects, properties, assets,
\nexisting and potential liabilities, obligations, profits or condition (financial
\nor otherwise) of the Company, since January 4, 1998 and NII shall have received
\na certificate signed on behalf of the Company and by the Shareholder dated the
\nClosing Date to such effect.<\/p>\n
6.4 CONSENTS AND APPROVALS. Except for any Unobtained Consents, all
\n ———————-
\nnecessary consents of, and filings with, any governmental authority or agency or
\nthird party, relating to the consummation by the Company and the Shareholder of
\nthe transactions contemplated hereby, shall have been obtained and made.<\/p>\n
6.5 OPINION OF COMPANY COUNSEL. NII shall have received an opinion from
\n ————————–
\ncounsel to the Company and the Shareholder, dated the Closing Date, in a form
\nreasonably satisfactory to NII.<\/p>\n
-38-<\/p>\n
6.6 CHARTER DOCUMENTS. NII shall have received (a) a copy of the Articles
\n —————–
\nof Incorporation of the Company certified by an appropriate authority in the
\nstate of its incorporation and (b) a copy of the Bylaws of the Company certified
\nby the Secretary of the Company, as the case may be, and such documents shall be
\nin form and substance reasonably acceptable to NII.<\/p>\n
6.7 DUE DILIGENCE REVIEW. The Company shall have made such deliveries as
\n ——————–
\nare called for by this Agreement. NII shall be fully satisfied in its sole
\ndiscretion with the results of its review of all of the Schedules, whether
\ndelivered before or after the execution hereof, and such deliveries, and its
\nreview of, and other due diligence investigations with respect to, the business,
\noperations, affairs, prospects, properties, assets, existing and potential
\nliabilities , obligations, profits and condition (financial or otherwise) of the
\nCompany.<\/p>\n
6.8 DELIVERY OF CLOSING FINANCIAL CERTIFICATE. NII shall have received a
\n —————————————–
\ncertificate (the “Closing Financial Certificate”), dated as of the Closing Date,
\nsigned on behalf of the Company and by the Shareholder, setting forth:<\/p>\n
(a) the tangible net worth of the Company as of August 30, 1998,
\ntaking into account the Permitted Distribution (the “Certified Closing Net
\nWorth”);<\/p>\n
(b) the revenues of the Company for the fiscal year ended January 4,
\n1998;<\/p>\n
(c) the revenues of the Company for the Trailing Period;<\/p>\n
(d) the actual earnings of the Company before interest and taxes
\n(without any adjustment for Add-Backs) for the fiscal year ended January 4,
\n1998, in dollars and as a percent of revenues for such period;<\/p>\n
(e) the Adjusted EBIT, in dollars and as a percent of revenues for
\nthe Trailing Period (the “Certified Adjusted EBIT”); and<\/p>\n
(f) the sum of the Company’s total outstanding long-term and short-
\nterm indebtedness to banks, the Shareholder, pension plans, employee benefit
\nplans and other related plans and other financial institutions and creditors
\n(including, but not limited to, former shareholders of the Company) as of August
\n30, 1998 and as of the Closing Date excluding the trade payables, office
\nequipment leases and other ordinary course accounts payable.<\/p>\n
The parties acknowledge and agree that for purposes of determining the
\nCertified Closing Net Worth and the Certified Adjusted EBIT, without the prior
\nwritten consent of NII, the Company shall not take account of any increase in
\nintangible assets (including without limitation goodwill, franchises and
\nintellectual property) acquired or accounted for after January 4, 1998.<\/p>\n
6.9 FIRPTA COMPLIANCE. The Shareholder shall have delivered to NII a
\n —————–
\nproperly executed statement in a form reasonably acceptable to NII for purposes
\nof satisfying NII’s obligations under Treas. Reg.ss.1.1445-2(b).<\/p>\n
-39-<\/p>\n
6.10 EMPLOYMENT AGREEMENTS. Each of the Shareholder and Dianne M. Lyles
\n ———————
\nshall have entered into an employment agreement with the Company in
\nsubstantially the form attached hereto as Exhibit B and C, respectively (each an
\n“Employment Agreement”).<\/p>\n
6.11 ESCROW AGREEMENT. The Escrow Agent and the Shareholder shall have
\n —————-
\nexecuted and delivered the Escrow Agreement.<\/p>\n
6.12 ESTOPPEL CERTIFICATES. Except with respect to any Unobtained Consents,
\n ———————
\nthe Company shall have delivered to NII such estoppel certificates and similar
\ndocuments from the Company’s lessors as shall be requested by NII.<\/p>\n
6.13 RESIGNATIONS. The Company shall have delivered to NII resignations of
\n ————
\nsuch directors and officers of the Company as shall have been requested by NII.<\/p>\n
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDER AND THE COMPANY<\/p>\n
The obligation of the Shareholder and the Company to effect the Acquisition
\nare subject to the satisfaction or waiver, at or before the Closing Date, of the
\nfollowing conditions and deliveries:<\/p>\n
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All of the
\n ———————————————————-
\nrepresentations and warranties of NII and PTC contained in this Agreement shall
\nbe true, correct and complete on and as of the Closing Date with the same effect
\nas though such representations and warranties had been made as of such date; all
\nof the terms, covenants, agreements and conditions of this Agreement to be
\ncomplied with, performed or satisfied by NII and\/or PTC on or before the Closing
\nDate shall have been duly complied with, performed or satisfied; and a
\ncertificate to the foregoing effects dated the Closing Date and signed by the
\nPresident or any Vice President of NII and of PTC shall have been delivered to
\nthe Company and the Shareholder.<\/p>\n
7.2 NO LITIGATION. No temporary restraining order, preliminary or permanent
\n ————-
\ninjunction or other order issued by any court of competent jurisdiction or other
\nlegal or regulatory restraint or provision challenging PTC’s proposed
\nacquisition of the Company, or limiting or restricting NII’s or PTC’s conduct or
\noperation of the business of the Company (or its own business) following the
\nAcquisition shall be in effect, nor shall any proceeding brought by an
\nadministrative agency or commission or other governmental authority or
\ninstrumentality, domestic or foreign, seeking any of the foregoing be pending.
\nThere shall be no action, suit, claim or proceeding of any nature pending or
\nthreatened against NII or PTC or the Company, their respective properties or any
\nof their officers or directors that could materially and adversely affect the
\nbusiness, assets, liabilities, financial condition, results of operations or
\nprospects of NII and its Subsidiaries taken as a whole.<\/p>\n
7.3 CONSENTS AND APPROVALS. All necessary consents of, and filings with,
\n ———————-
\nany governmental authority or agency or third party relating to the consummation
\nby NII and PTC of the transactions contemplated herein, shall have been obtained
\nand made.<\/p>\n
-40-<\/p>\n
7.4 EMPLOYMENT AGREEMENT. The Company shall have afforded each of the
\n ——————–
\nShareholder and Dianne M. Lyles an opportunity to enter into the Employment
\nAgreement.<\/p>\n
7.5 ESCROW AGREEMENT. The Escrow Agent and NII shall have executed
\n —————-
\nand delivered the Escrow Agreement.<\/p>\n
8. INDEMNIFICATION<\/p>\n
8.1 GENERAL INDEMNIFICATION BY THE SHAREHOLDER. The Shareholder
\n ——————————————
\ncovenants and agrees to indemnify, defend, protect and hold harmless NII, PTC
\nand their respective officers, directors, employees, stockholders, assigns,
\nsuccessors and affiliates (individually, a “Shareholder Indemnified Party” and
\ncollectively, “Shareholder Indemnified Parties”) from, against and in respect
\nof:<\/p>\n
(a) all liabilities, losses, claims, damages, punitive damages,
\ncauses of action, lawsuits, administrative proceedings (including informal
\nproceedings), investigations, audits, demands, assessments, adjustments,
\njudgments, settlement payments, deficiencies, penalties, fines, interest
\n(including interest from the date of such damages) and costs and expenses
\n(including without limitation reasonable attorneys’ fees and disbursements of
\nevery kind, nature and description) (collectively, “Damages”) suffered,
\nsustained, incurred or paid by the Indemnified Parties in connection with,
\nresulting from or arising out of, directly or indirectly:<\/p>\n
(i) any breach of any representation or warranty of the
\nShareholder or the Company set forth in this Agreement or any schedule or
\ncertificate, delivered by or on behalf of the Shareholder or the Company in
\nconnection herewith; or<\/p>\n
(ii) any nonfulfillment of any covenant or agreement by the
\nShareholder or, prior to the Closing Date, the Company, under this Agreement; or<\/p>\n
(iii) the business, operations or assets of the Company
\nprior to the Closing Date or the actions or omissions of the Company’s
\ndirectors, officers, shareholders, employees or agents prior to the Closing
\nDate, other than Damages arising from matters expressly disclosed in the Company
\nFinancial Statements, this Agreement or the schedules to this Agreement; or<\/p>\n
(iv) the matters disclosed on Schedules 3.23 (environmental
\nmatters), 3.25 (employee benefit plans), 3.26 (taxes) (excluding any Damages
\ntriggered by the Section 338(h)(10) Election), and 3.27 (conformity with law;
\nlitigation); or<\/p>\n
(v) the business, operations or assets of AWT or
\nValuTravel, including the transfer of the Company’s interest in such assets and
\noperations to AWT and ValuTravel, respectively; or<\/p>\n
(vi) the failure of the Company to obtain the Unobtained
\nConsents (except for any consents required under the Company’s lease for the
\nproperty at 408-410 Marine Way, Kodiak, Alaska, its agreement with ARC, its
\nagreements for the use of the Apollo and Sabre\/ADSX<\/p>\n
-41-<\/p>\n
Systems, its loan agreement with 1st National Bank of Anchorage, its loan
\nagreement with Merrill Lynch Credit Corp., and its contract with the Alaska
\nHousing Finance Corporation) prior to Closing; or<\/p>\n
(vii) the failure of the Shareholder to remove the Company as a
\nco-borrower from the loan with First National Bank of Anchorage under Section
\n5.15, and any actions or inactions taken by the Shareholder with respect to such
\nloan prior to the Closing Date; or<\/p>\n
(viii) the inability of the Company to negotiate and enter into
\na lease for the Seattle Location with the terms set forth in Section 5.16; or<\/p>\n
(ix) the inability of the Company to negotiate and enter into
\na lease agreement with Glacier Brewhouse for the use of certain phone lines by
\nGlacier Brewhouse; or<\/p>\n
(x) any claim by any Taxing authority, whether federal, state
\nor local, with respect to (i) the designation of Nancy Machetti or any other
\nperson as an independent contractor of the Company, or (ii) the provision of
\ntemporary housing to certain employees; or<\/p>\n
(xi) the alleged sexual harassment claim disclosed on Schedule
\n3.24; and<\/p>\n
(b) any and all Damages incident to any of the foregoing or to the
\nenforcement of this Section 8.1.<\/p>\n
8.2 GENERAL INDEMNIFICATION BY NII AND PTC. NII and PTC covenant and
\n ————————————–
\nagree to indemnify, defend, protect and hold harmless the Shareholder and his
\nrespective heirs, assigns and successors (individually, an “NII Indemnified
\nParty” and collectively, the “NII Indemnified Parties”) from, against and in
\nrespect of:<\/p>\n
(a) all Damages suffered, sustained, incurred or paid by the
\nShareholder Indemnified Parties in connection with, resulting from or arising
\nout of, directly or indirectly:<\/p>\n
(i) any breach of any representation or warranty of NII
\nor PTC set forth in this Agreement or any schedule or certificate, delivered by
\nor on behalf of NII or PTC pursuant hereto; or<\/p>\n
(ii) any nonfulfillment of any covenant or agreement by
\nNII or PTC under this Agreement; or<\/p>\n
(iii) the business operations or assets of the Company
\nafter the Closing Date or the actions or omissions of the Company’s directors,
\nofficers, shareholders, employees or agents after the Closing Date, other than
\nDamages arising from matters expressly disclosed in this Agreement;<\/p>\n
(iv) as a result of a Section 338 Election; and<\/p>\n
-42-<\/p>\n
(b) any and all Damages incident to any of the foregoing or to
\nthe enforcement of this Section 8.2.<\/p>\n
8.3 LIMITATION AND EXPIRATION. Notwithstanding the above:
\n ————————- <\/p>\n
(a) there shall be no liability for indemnification under
\nSection 8.1 unless and only to the extent that the aggregate amount of Damages
\nexceeds * (the “Indemnification Threshold”); provided, however, that the
\nIndemnification Threshold shall not apply to (i) adjustments to the
\nConsideration as set forth in Sections 1.3 and 1.4; and (ii) Damages arising out
\nof any breaches of the covenants of the Shareholder set forth in Sections 1, 5,
\n8, 9 and 10 of this Agreement or representations and warranties made in Sections
\n3.4 (capital stock of the Company), 3.8 (Company financial conditions), 3.20
\n(significant customers; material contracts and commitments), 3.23 (environmental
\nmatters), 3.25 (employee benefit plans), 3.26 (taxes) (subject to Sections 5.1
\nand 5.11) or 3.31 (year 2000 compliance); or Damages described in Section
\n8.1(a)(iv), (v), (vi), (vii), (viii), (ix), (x) or (xi);<\/p>\n
* THIS CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
\nSEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
\nTHE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.<\/p>\n
(b) the aggregate amount of the Shareholder’s or NII’s liability
\nunder this Article 8 shall not exceed the Consideration; provided, however, that
\nthe Shareholder’s liability for damages arising out of any breaches of the
\nrepresentations made in Sections 3.4 (capital stock of the Company), 3.23
\n(environmental matters), 3.25 (employee benefit plans), 3.26 (taxes) or Section
\n8.1(a)(ii), (iv), (v), (vii), (viii), (ix), (x) and (xi) shall not be subject to
\nsuch limitation and shall not count toward the limitation described in the first
\nclause of this Section 8.3(b); and<\/p>\n
(c) the indemnification obligations of the Shareholder under
\nthis Article 8, or under any certificate or writing furnished in connection
\nherewith, shall terminate at the date that is the later of the applicable dates
\nin clause (i) or (ii) of this Section 8.3(c):<\/p>\n
(i) (1) except as to representations, warranties, and
\ncovenants specified in clause (i)(2) of this Section 8.3(c), the second
\nanniversary of the Closing Date; or<\/p>\n
(2) with respect to representations and warranties
\ncontained in Sections 3.4 (capital stock of the Company), 3.23 (environmental
\nmatters), 3.25 (employee benefit plans), 3.26 (taxes), and the indemnification
\nset forth in Sections 8.1(a)(ii), (iv), (v), (vii), (viii), (ix), and (x)on (A)
\nthe date that is six (6) months after the expiration of the longest applicable
\nfederal or state statute of limitation (including extensions thereof), or (B) if
\nthere is no applicable statute of limitation, five (5) years after the Closing
\nDate; or<\/p>\n
(ii) the final resolution of claims or demands pending as of
\nthe relevant dates described in clause (i) of this Section 8.3(c) (such claims
\nreferred to as “Pending Claims”).<\/p>\n
(iii) notwithstanding anything to the contrary in this
\nAgreement, the representations and warranties set forth in Section 3.31 (year
\n2000 compliance) shall survive until December 31, 2000; and<\/p>\n
-43-<\/p>\n
(d) the indemnification obligations of NII shall terminate at
\nthe date that is the later of (i) two (2) years from the Closing Date and (ii)
\nthe resolution of all Pending Claims under Section 8.2.<\/p>\n
8.4 INDEMNIFICATION PROCEDURES. All claims or demands for
\n ————————–
\nindemnification under this Article 8 (“Claims”) shall be asserted and resolved
\nas follows:<\/p>\n
(a) In the event that any Shareholder Indemnified Party or an
\nNII Indemnified Party (each an “Indemnified Party”) has a Claim against any
\nparty obligated to provide indemnification pursuant to Section 8.1 or 8.2 hereof
\n(an “Indemnifying Party”) which does not involve a Claim being asserted against
\nor sought to be collected by a third party, the Indemnified Party shall with
\nreasonable promptness notify the Indemnifying Party of such Claim, specifying
\nthe nature of such Claim and the amount or the estimated amount thereof to the
\nextent then feasible (the “Claim Notice”). If the Indemnifying Party does not
\nnotify the Indemnified Party within twenty-one (21) days after the date of
\ndelivery of the Claim Notice that it disputes such Claim, with a detailed
\nstatement of the basis of such position (the “Dispute Notice”), the amount of
\nsuch Claim shall be conclusively deemed a liability of the Indemnifying Party
\nhereunder.<\/p>\n
(b) (i) In the event that any Claim for which the Indemnifying
\nParty would be liable to an Indemnified Party hereunder is asserted against an
\nIndemnified Party by a third party (a “Third Party Claim”), the Indemnified
\nParty shall deliver a Claim Notice to the Indemnifying Party. The Indemnifying
\nParty shall have twenty-one (21) days from date of delivery of the Claim Notice
\nto notify the Indemnified Party (A) whether the Indemnifying Party disputes
\nliability to the Indemnified Party hereunder with respect to the Third Party
\nClaim, and, if so, the basis for such a dispute, and (B) if such party does not
\ndispute liability, whether or not the Indemnifying Party desires, at the sole
\ncost and expense of the Indemnifying Party, to defend against the Third Party
\nClaim, provided that the Indemnified Party is hereby authorized (but not
\nobligated) to file any motion, answer or other pleading and to take any other
\naction which the Indemnified Party shall deem necessary or appropriate to
\nprotect the Indemnified Party’s interests.<\/p>\n
(ii) In the event that the Indemnifying Party notifies the
\nIndemnified Party that the Indemnifying Party does not dispute the Indemnifying
\nParty’s obligation to indemnify with respect to the Third Party Claim, the
\nIndemnifying Party shall defend the Indemnified Party against such Third Party
\nClaim by appropriate proceedings, provided that, unless the Indemnified Party
\notherwise agrees in writing, the Indemnifying Party may not settle any Third
\nParty Claim (in whole or in part) if such settlement does not include a complete
\nand unconditional release of the Indemnified Party. If the Indemnified Party
\ndesires to participate in, but not control, any such defense or settlement the
\nIndemnified Party may do so at its sole cost and expense. If the Indemnifying
\nParty elects not to defend the Indemnified Party against a Third Party Claim,
\nwhether by failure of such party to give the Indemnified Party timely notice as
\nprovided herein or otherwise, then the Indemnified Party, without waiving any
\nrights against such party, may settle or defend against such Third Party Claim
\nin the Indemnified Party’s sole discretion and the Indemnified Party shall be
\nentitled to recover from the Indemnifying Party the amount of any settlement or
\njudgment<\/p>\n
-44-<\/p>\n
and, on an ongoing basis, all indemnifiable costs and expenses of the
\nIndemnified Party with respect thereto, including interest from the date such
\ncosts and expenses were incurred.<\/p>\n
(iii) If at any time, in the reasonable opinion of the
\nIndemnified Party, notice of which shall be given in writing to the Indemnifying
\nParty, any Third Party Claim seeks material prospective relief which could have
\nan adverse effect on any Indemnified Party or the Company or any of its
\nSubsidiaries, the Indemnified Party shall have the right to control or assume
\n(as the case may be) the defense of any such Third Party Claim and the amount of
\nany judgment or settlement and the reasonable costs and expenses of defense
\nshall be included as part of the indemnification obligations of the Indemnifying
\nParty hereunder. If the Indemnified Party elects to exercise such right, the
\nIndemnifying Party shall have the right to participate in, but not control, the
\ndefense of such Third Party Claim at the sole cost and expense of the
\nIndemnifying Party.<\/p>\n
(c) Nothing herein shall be deemed to prevent the Indemnified
\nParty from making a Claim, and an Indemnified Party may make a Claim hereunder,
\nfor potential or contingent Damages provided the Claim Notice sets forth the
\nspecific basis for any such potential or contingent claim or demand to the
\nextent then feasible and the Indemnified Party has reasonable grounds to believe
\nthat such Claim may be made.<\/p>\n
(d) Subject to the provisions of Section 8.3, the Indemnified
\nParty’s failure to give reasonably prompt notice as required by this Section 8.4
\nof any actual, threatened or possible claim or demand which may give rise to a
\nright of indemnification hereunder shall not relieve the Indemnifying Party of
\nany liability which the Indemnifying Party may have to the Indemnified Party
\nunless the failure to give such notice materially and adversely prejudiced the
\nIndemnifying Party.<\/p>\n
(e) The parties will make appropriate adjustments for any Tax
\nbenefits, Tax detriments or insurance proceeds in determining the amount of any
\nindemnification obligation under this Article 8, provided that no Indemnified
\nParty shall be obligated to continue pursuing any payment pursuant to the terms
\nof any insurance policy.<\/p>\n
(f) The parties agree that an Indemnified Party and the Company
\nshall use all reasonable commercial efforts to recover any Damages from a third
\nparty that would likely be deemed responsible for such Damages to the extent
\nthat the Indemnified Party and the Company has the right to make such Claim
\nagainst such third party.<\/p>\n
8.5 SURVIVAL OF REPRESENTATIONS WARRANTIES AND COVENANTS. All
\n —————————————————-
\nrepresentations, warranties and covenants made by the Company, the Shareholder,
\nNII and PTC in or pursuant to this Agreement or in any document delivered
\npursuant hereto shall be deemed to have been made on the date of this Agreement
\n(except as otherwise provided herein) and, if a Closing occurs, as of the
\nClosing Date. The representations of the Company and the Shareholder will
\nsurvive the Closing and will remain in effect until, and will expire upon, the
\ntermination of the indemnification obligations as provided in Section 8.3. The
\nrepresentations of NII will survive the Closing and will remain in effect until,
\nand will expire upon, the termination of the indemnification obligations as
\nprovided in Section 8.3.<\/p>\n
-45-<\/p>\n
8.6 REMEDIES CUMULATIVE. The remedies set forth in this Article 8 are
\n ——————-
\ncumulative and shall not be construed to restrict or otherwise affect any other
\nremedies that may be available to the Indemnified Parties under any other
\nagreement or pursuant to statutory or common law.<\/p>\n
8.7 RIGHT TO SET OFF. NII shall have the right, but not the
\n —————-
\nobligation, in its sole discretion to set off, in whole or in part, against the
\nEscrow Fund any amounts finally determined under Section 8.3 to be owed to an
\nIndemnified Party by the Shareholder under Section 8.1 hereof. If under Section
\n8.3, a Shareholder Indemnified Party does not receive a Dispute Notice within
\nthe time period specified in Section 8.3, NII and PTC may exercise its right of
\noffset against the Escrow Fund. Notwithstanding anything to the contrary set
\nforth herein, NII shall first set off amounts finally determined under Section
\n8.3 to be owed to NII by the Shareholder under Section 8.1 hereof against the
\nEscrow Fund prior to making claims against any other assets of the Shareholder.<\/p>\n
9. NONCOMPETITION<\/p>\n
9.1 PROHIBITED ACTIVITIES. The Shareholder will not, for a period of
\n ———————
\nfour (4) years following the Closing Date, for any reason whatsoever, directly
\nor indirectly, for himself or on behalf of or in conjunction with any other
\nPerson or business of whatever nature, unless otherwise consented to by NII in
\nwriting:<\/p>\n
(a) engage, as an officer, director, shareholder, owner,
\npartner, member, joint venturer, whether as an employee, independent contractor,
\nconsultant or adviser, or as a sales representative, in any business selling any
\nproducts or services in direct competition with the Company’s (including its
\nSubsidiaries’) or NII’s business, including the development, manufacturing,
\nmarketing and transfer, whether by sale or license, of software for travel
\nbusinesses (the “Business”), within one hundred (100) miles of anywhere where
\nthe Company or NII conducts the Business, as of the Closing Date (the
\n“Territory”);<\/p>\n
(b) call upon any Person who is, at that time, within the
\nTerritory, an employee of the Business for the purpose or with the intent of
\nenticing such employee away from or out of the employ of the Business, except
\nthat this provision shall not apply to Dianne M. Lyles;<\/p>\n
(c) call upon any Person who is, at that time, or that has been,
\nwithin one year prior to that time, a customer of the Business within the
\nTerritory for the purpose of soliciting or selling products or services in
\ncompetition with the Business within the Territory; or<\/p>\n
(d) call upon any prospective acquisition candidate that was, to
\nthe knowledge of the Shareholder, either called upon by NII as a prospective
\nacquisition candidate for the Business or was the subject of an acquisition
\nanalysis conducted by NII for the Business. The Shareholder, to the extent
\nlacking the knowledge described in the preceding sentence, shall immediately
\ncease all contact with such prospective acquisition candidate upon being
\ninformed that NII had called upon such candidate or made an acquisition analysis
\nthereof.<\/p>\n
Notwithstanding the above, the foregoing covenant shall not be deemed
\nto prohibit the Shareholder from acquiring as an investment of not more than one
\npercent (1%) of the capital stock<\/p>\n
-46-<\/p>\n
of a competing business whose stock is traded on a national securities exchange
\nor over- the-counter. For purposes of this Article 9, the references to “NII”
\nshall mean Navigant International, Inc., together with its Subsidiaries and
\nAffiliates. For purposes of this Article 9, the Business shall not include the
\nShareholder’s involvement with AWT, ValuTravel or World Express Tours, Inc.; nor
\nshall the Shareholder’s relationship with such entities be deemed a breach or
\nviolation of this Article 9.<\/p>\n
9.2 CONFIDENTIALITY. The Shareholder recognizes that by reason of his
\n —————
\nownership of the Company and his employment by the Company, he has acquired
\nconfidential information and trade secrets concerning the operation of the
\nCompany, the use or disclosure of which could cause the Company or its
\nAffiliates or Subsidiaries substantial loss and damages that could not be
\nreadily calculated and for which no remedy at law would be adequate.
\nAccordingly, the Shareholder covenants and agrees with the Company and NII that
\nhe will not at any time, except in performance of the Shareholder’s obligations
\nto the Company or with the prior written consent of the Company pursuant to
\nauthority granted by a resolution of the board or director of the Company (the
\n“Board”), directly or indirectly, disclose any secret or confidential
\ninformation that he may learn or has learned by reason of his ownership of the
\nCompany or his employment by the Company, or any of its Subsidiaries and
\nAffiliates, or use any such information in a manner detrimental to the interests
\nof the Company or NII, unless (i) such information becomes known to the public
\ngenerally through no fault of any Shareholder, (ii) disclosure is required by
\nlaw or the order of any governmental authority under color of law, or (iii) the
\nShareholder reasonably believes that such disclosure is required in connection
\nwith the defense of a lawsuit against the Shareholder, provided that prior to
\ndisclosing any information pursuant to clause (i), (ii) or (iii) above, the
\nShareholder (as applicable) shall give prior written notice thereof to NII and
\nprovide NII with the opportunity to contest such disclosure and shall cooperate
\nwith efforts to prevent such disclosure. The term “confidential information”
\nincludes, without limitation, information not previously disclosed to the public
\nor to the trade by the Company’s or NII’s management with respect to the
\nCompany’s or NII’s, or any of their Affiliates’ or Subsidiaries’, products,
\nfacilities, and methods, trade secrets and other intellectual property,
\nsoftware, source code, systems, procedures, manuals, confidential reports,
\nproduct price lists, customer lists, financial information (including the
\nrevenues, costs, or profits associated with any of the Company’s products),
\nbusiness plans, prospects, or opportunities but shall exclude any information
\nalready in the public domain.<\/p>\n
9.3 DAMAGES. Because of the difficulty of measuring economic losses
\n ——-
\nto NII as a result of a breach of the foregoing covenant, and because of the
\nimmediate and irreparable damage that could be caused to NII for which it would
\nhave no other adequate remedy, each Shareholder agrees that the foregoing
\ncovenant may be enforced by NII in the event of breach by the Shareholder, by
\ninjunctions and restraining orders.<\/p>\n
9.4 REASONABLE RESTRAINT. The parties agree that the foregoing
\n ——————–
\ncovenants in this Article 9 impose a reasonable restraint on the Shareholder in
\nlight of the activities and business of NII on the date of the execution of this
\nAgreement, assuming the completion of the transactions contemplated hereby, and
\nthe current plans of NII; but it is also the intent of NII and the Shareholder
\nthat such covenants be construed and enforced in accordance with the changing
\nactivities and<\/p>\n
-47-<\/p>\n
business of NII throughout the term of this covenant. The parties further agree
\nthat so long as the Shareholder is not an employee of the Company, in the event
\nhe shall enter into a business or pursue other activities not in competition
\nwith NII or similar activities or business in locations the operation of which,
\nunder such circumstances, does not violate Section 9.1(a) or the terms of any
\nemployment agreement with NII, the Shareholder shall not be chargeable with a
\nviolation of this Article 9 if NII shall thereafter enter the same, similar or a
\ncompetitive (a) business, (b) course of activities or (c) location, as
\napplicable.<\/p>\n
9.5 SEVERABILITY; REFORMATION. The covenants in this Article 9 are
\n ————————-
\nseverable and separate, and the unenforceability of any specific covenant shall
\nnot affect the provisions of any other covenant. Moreover, in the event any
\ncourt of competent jurisdiction shall determine that the scope, time or
\nterritorial restrictions set forth are unreasonable, then it is the intention of
\nthe parties that such restrictions be enforced to the fullest extent which the
\ncourt deems reasonable, and the Agreement shall thereby be reformed.<\/p>\n
9.6 INDEPENDENT COVENANT. All of the covenants in this Article 9
\n ——————–
\nshall be construed as an agreement independent of any other provision in this
\nAgreement, and the existence of any claim or cause of action of the Shareholder
\nagainst NII, whether predicated on this Agreement or otherwise, shall not
\nconstitute a defense to the enforcement by NII of such covenants. The parties
\nexpressly acknowledge that the terms and conditions of this Article 9 are
\nindependent of the terms and conditions of any other agreements including, but
\nnot limited to, any employment agreements entered into in connection with this
\nAgreement. It is specifically agreed that the period of four (4) years stated at
\nthe beginning of this Article 9 during which the agreements and covenants of the
\nShareholder made in this Article 9 shall be effective, shall be computed by
\nexcluding from such computation any time during which the Shareholder is found
\nby a court of competent jurisdiction to have been in violation of any provision
\nof this Article 9. The covenants contained in Article 9 shall not be affected by
\nany breach of any other provision hereof by any party hereto and shall have no
\neffect if the transactions contemplated by this Agreement are not consummated.
\nNotwithstanding anything to the contrary contained herein, if NII is in breach
\nof its obligations to release the Escrow Fund, as provided the Escrow Agreement,
\nthe Shareholder shall be released from his obligations under this Article 9.<\/p>\n
9.7 MATERIALITY. The Company and the Shareholder hereby agree that
\n ———–
\nthe covenants set forth in this Article 9 are a material and substantial part of
\nthe transactions contemplated by this Agreement, supported by adequate
\nconsideration.<\/p>\n
10. GENERAL<\/p>\n
10.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
\n ———————-
\nparties hereunder may not be assigned (except by operation of law or to a
\nSubsidiary of NII or PTC) and shall be binding upon and shall inure to the
\nbenefit of the parties hereto, the successors of NII, and the heirs and legal
\nrepresentatives of the Shareholder.<\/p>\n
-48-<\/p>\n
10.2 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement and the
\n ———————————–
\nConfidentiality Agreement sets forth the entire understanding of the parties
\nhereto with respect to the transactions contemplated hereby. Each of the
\nSchedules to this Agreement is incorporated herein by this reference and
\nexpressly made a part hereof. Any and all previous agreements and understandings
\nbetween or among the parties regarding the subject matter hereof, whether
\nwritten or oral, are superseded by this Agreement. This Agreement shall not be
\namended or modified except by a written instrument duly executed by each of the
\nparties hereto or in accordance with Section 9.5. Any extension or waiver by any
\nparty of any provision hereto shall be valid only if set forth in an instrument
\nin writing signed on behalf of such party.<\/p>\n
10.3 COUNTERPARTS. This Agreement may be executed in any number of
\n ————
\ncounterparts and any party hereto may execute any such counterpart, which
\ncounterparts may be sent by telefax (with originals to follow), each of which
\nwhen executed and delivered shall be deemed to be an original, and all of which
\ncounterparts taken together shall constitute but one and the same instrument.<\/p>\n
10.4 BROKERS AND AGENTS. The Company and the Shareholder (as a group)
\n ——————
\nand NII and PTC (as a group) each represents and warrants to the other that it
\nhas not employed any broker or agent in connection with the transactions
\ncontemplated by this Agreement and agrees to indemnify the other against all
\nlosses, damages or expenses relating to or arising out of claims for fees or
\ncommission of any broker or agent employed or alleged to have been employed by
\nsuch party.<\/p>\n
10.5 EXPENSES. NII has and will pay the fees, expenses and
\n ———
\ndisbursements of NII and their agents, representatives, accountants and counsel
\nincurred in connection with the subject matter of this Agreement. The
\nShareholder (and not the Company) have and will pay the fees, expenses and
\ndisbursements of the Shareholder, the Company and their agents, representatives,
\nfinancial advisers, accountants and counsel incurred in connection with the
\nsubject matter of this Agreement.<\/p>\n
10.6 SPECIFIC PERFORMANCE; REMEDIES. Each party hereto acknowledges
\n ——————————
\nthat the other parties will be irreparably harmed and that there will be no
\nadequate remedy at law for any violation by any of them of any of the covenants
\nor agreements contained in this Agreement, including without limitation, the
\nconfidentiality obligations set forth in Section 5.6 and the noncompetition
\nprovisions set forth in Article 9. It is accordingly agreed that, in addition to
\nany other remedies which may be available upon the breach of any such covenants
\nor agreements, each party hereto shall have the right to obtain injunctive
\nrelief to restrain a breach or threatened breach of, or otherwise to obtain
\nspecific performance of, the other parties, covenants and agreements contained
\nin this Agreement.<\/p>\n
10.7 NOTICES. Any notice, request, claim, demand, waiver, consent,
\n ——-
\napproval or other communication which is required or permitted hereunder shall
\nbe in writing and shall be deemed given if delivered personally or sent by
\ntelefax (with confirmation of receipt), by registered or certified mail, postage
\nprepaid, or by recognized courier service, as follows:<\/p>\n
-49-<\/p>\n
If to NII or PTC to:<\/p>\n
Navigant International, Inc.
\n 84 Inverness Circle East
\n Englewood, Colorado 80112
\n Attn: Edward A. Adams, Chief Executive Officer
\n Attn: Eugene Over, Jr., General Counsel
\n (Telefax: (303) 706-0678)<\/p>\n
with a required copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati
\n 650 Page Mill Road
\n Palo Alto, California 94304
\n Attn: John V. Roos
\n (Telefax: (650) 493-6811)<\/p>\n
If to the Shareholder to:<\/p>\n
Robert B. Acree
\n c\/o World Express Travel, Inc.
\n 206 W. 34th Avenue
\n Anchorage, Alaska 99503<\/p>\n
and to:<\/p>\n
P.O. Box 241826
\n Anchorage, Alaska 99524-1826<\/p>\n
with a required copy to:<\/p>\n
Burr Pease & Kurtz, P.C.
\n 810 N. Street
\n Anchorage, Alaska 99501
\n Attn: Ralph Duerre
\n (Telefax: (907) 258-2530)<\/p>\n
or to such other address as the Person to whom notice is to be given may have
\nspecified in a notice duly given to the sender as provided herein. Such notice,
\nrequest, claim, demand, waiver, consent, approval or other communication shall
\nbe deemed to have been given as of the date so delivered, telefaxed, mailed or
\ndispatched and, if given by any other means, shall be deemed given only when
\nactually received by the addressees.<\/p>\n
10.8 GOVERNING LAW. This Agreement shall be governed by and construed,
\n ————-
\ninterpreted and enforced in accordance with the laws of Colorado.<\/p>\n
-50-<\/p>\n
10.9 SEVERABILITY. If any provision of this Agreement or the
\n ————
\napplication thereof to any Person or circumstances is held invalid or
\nunenforceable in any jurisdiction, the remainder hereof, and the application of
\nsuch provision to such Person or circumstances in any other jurisdiction, shall
\nnot be affected thereby, and to this end the provisions of this Agreement shall
\nbe severable. The preceding sentence is in addition to and not in place of the
\nseverability provisions in Section 9.5.<\/p>\n
10.10 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provision of this
\n —————————————–
\nAgreement is intended, nor will any provision be interpreted, to provide or to
\ncreate any third party beneficiary rights or any other rights of any kind in any
\nclient, customer, Affiliate, shareholder, employee or partner of any party
\nhereto or any other Person or entity.<\/p>\n
10.11 MUTUAL DRAFTING. This Agreement is the mutual product of the
\n —————-
\nparties hereto, and each provision hereof has been subject to the mutual
\nconsultation, negotiation and agreement of each of the parties, and shall not be
\nconstrued for or against any party hereto.<\/p>\n
10.12 FURTHER REPRESENTATIONS. Each party to this Agreement
\n ————————
\nacknowledges and represents that it has been represented by its own legal
\ncounsel in connection with the transactions contemplated by this Agreement, with
\nthe opportunity to seek advice as to its legal rights from such counsel. Each
\nparty further represents that it is being independently advised as to the tax
\nconsequences of the transactions contemplated by this Agreement and is not
\nrelying on any representation or statements made by the other party as to such
\ntax consequences.<\/p>\n
10.13 DEFINITIONS. For purposes of this Agreement, the following terms
\n ————
\nhave the meanings set forth below:<\/p>\n
“Affiliate” of any particular Person means any other Person
\ncontrolling, controlled by or under common control with such particular Person.<\/p>\n
“Lien” means any mortgage, security interest, pledge, hypothecation,
\nassignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
\ncharge, preference, priority or other security agreement, option, warrant,
\nattachment, right of first refusal, preemptive, conversion, put, call or other
\nclaim or right, restriction on transfer (other than restrictions imposed by
\nfederal and state securities laws), or preferential arrangement of any kind or
\nnature whatsoever (including any restriction on the transfer of any assets, any
\nconditional sale or other title retention agreement, any financing lease
\ninvolving substantially the same economic effect as any of the foregoing and the
\nfiling of any financing statement under the Uniform Commercial Code or
\ncomparable law of any jurisdiction).<\/p>\n
“Person” means an individual, a partnership, a limited liability
\ncompany, a corporation, an association, a joint stock company, a trust, a joint
\nventure, an unincorporated organization and a governmental entity or any
\ndepartment, agency or political subdivision thereof.<\/p>\n
“Subsidiary” means any corporation, partnership, association or other
\nbusiness entity of which (i) if a corporation, a majority of the total voting
\npower of shares of stock entitled (without regard to the occurrence of any
\ncontingency) to vote in the election of directors, managers or trustees<\/p>\n
-51-<\/p>\n
thereof is at the time owned or controlled, directly or indirectly, by that
\nPerson or one or more of the other Subsidiaries of that Person or a combination
\nthereof, or (ii) if a partnership, association or other business entity, a
\nmajority of the partnership or other similar ownership interest thereof is at
\nthe time owned or controlled, directly or indirectly, by any Person or one or
\nmore Subsidiaries of that Person or a combination thereof. For purposes hereof,
\na Person or Persons shall be deemed to have a majority ownership interest in a
\npartnership, association or other business entity if such Person or Persons
\nshall be allocated a majority of partnership, association or other business
\nentity gains or losses or shall be or control the managing director or general
\npartner of such partnership, association or other business entity.<\/p>\n
[SIGNATURE PAGE FOLLOWS]<\/p>\n
-52-<\/p>\n
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
\nof the day and year first above written.<\/p>\n
PROFESSIONAL TRAVEL CORPORATION<\/p>\n
By: \/s\/ Robert C. Griffith
\n ———————————-
\n Robert C. Griffith, Vice
\n President, Treasurer and Secretary<\/p>\n
NAVIGANT INTERNATIONAL, INC.<\/p>\n
By:\/s\/ Edward S. Adams
\n ———————————-
\n Edward S. Adams, Chief Executive
\n Officer<\/p>\n
WORLD EXPRESS TRAVEL, INC.<\/p>\n
By: \/s\/ Robert B. Acree
\n ———————————-
\n Robert B. Acree, President<\/p>\n
SHAREHOLDER<\/p>\n
\/s\/ Robert B. Acree
\n ———————————-
\n Robert B. Acree<\/p>\n
-53-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8307],"corporate_contracts_industries":[9525],"corporate_contracts_types":[9622,9627],"class_list":["post-43697","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-navigant-international-inc","corporate_contracts_industries-transportation__services","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43697","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43697"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43697"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43697"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43697"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}