EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
Navigant International, Inc.
and
FMTTM Acquisition Corporation;
and
SATO Travel Holding Co., Inc.
and
The Stockholders of SATO Travel Holding Co., Inc.
Dated as of June 7, 2001
TABLE OF CONTENTS
Page
----
1. THE ACQUISITION 1
1.1 The Merger. 1
1.2 Effective Time. 1
1.3 Effects of the Merger. 1
1.4 Certificate of Incorporation. 2
1.5 Directors. 2
1.6 Officers. 2
1.7 Conversion of FMTTM Capital Stock. 2
1.8 Conversion of Company Capital Stock. 2
1.9 General Conversion Mechanics. 4
1.10 Escrow. 5
1.11 Closing Deliveries. 5
1.12 Fractional Shares, Endorsement. 6
1.13 Stockholders' Representative. 6
1.14 Accounting Terms. 8
2. CLOSING 8
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8
3.1 Due Organization. 8
3.2 Authorization; Validity. 9
3.3 No Conflicts. 9
3.4 Capital Stock of the Company. 9
3.5 Subsidiaries and Debt Interests. 10
3.6 Names; Predecessor Status. 10
3.7 Required Governmental Filings and Consents. 11
3.8 Company Financial Condition. 11
3.9 Financial Statements. 11
3.10 Liabilities and Obligations; Claims. 12
3.11 Books and Records. 12
3.12 Bank Accounts; Powers of Attorney. 12
3.13 Accounts and Notes Receivable. 13
3.14 Permits. 13
3.15 Related Party Transactions. 13
3.16 Real Estate and Real Property. 14
3.17 Personal Property. 15
3.18 Intellectual Property. 15
3.19 ARC Accreditation and Bonding Requirements. 16
3.20 Significant Customers; Preferred Vendors; Material Contracts. 17
3.21 Government Contracts. 18
3.22 Insurance. 20
3.23 Environmental Matters. 21
TABLE OF CONTENTS
(continued)
Page
----
3.24 Labor and Employment Matters. 21
3.25 Employee Benefit Plans. 23
3.26 Taxes. 25
3.27 Conformity with Law; Litigation. 28
3.28 Relations with Governments. 28
3.29 Absence of Changes. 28
3.30 Inventory. 30
3.31 Disclosure. 30
4. REPRESENTATIONS OF NII AND FMTTM 31
4.1 Due Organization. 31
4.2 Authorization; Validity of Obligations. 31
4.3 No Conflicts. 31
4.4 NII Common Stock. 32
4.5 NII Capitalization. 32
4.6 Required Governmental Filings and Consents. 33
4.7 SEC Reports and Financial Statements. 33
4.8 Related Party Transactions. 34
4.9 Conformity with Law; Relations with Governments; Litigation. 34
4.10 Absence of Changes. 35
4.11 Reliance. 35
4.12 Disclosure. 35
5. COVENANTS 35
5.1 Tax Matters. 35
5.2 Employee Benefit Plans. 38
5.3 Cooperation. 39
5.4 Access to Information; Confidentiality; Public Disclosure. 39
5.5 Former Stockholder Payments. 40
5.6 HSR. 40
5.7 Appointment of Directors and Officers. 40
5.8 Registration Rights and Trading Restrictions. 40
5.9 Conversion of Options. 41
5.10 Operation of the Business. 41
5.11 Negative Covenant. 42
5.12 Operation of NII's Business. 43
5.13 NII and FMTTM Negative Covenants. 44
5.14 Notification. 44
5.15 Nasdaq Listing; Form S-8. 45
5.16 Blue Sky Laws. 45
5.17 Directors and Officers Insurance. 46
TABLE OF CONTENTS
(continued)
Page
----
5.18 Stockholders Representations and Warranties. 46
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF NII AND FMTTM 48
6.1 Representations and Warranties; Performance of Obligations. 48
6.2 No Litigation. 48
6.3 No Material Adverse Effect. 49
6.4 Indebtedness. 49
6.5 Consents and Approvals. 49
6.6 [Reserved] 49
6.7 Lender Approval. 49
6.8 Charter Documents. 49
6.9 Closing Financial Condition. 49
6.10 Former Stockholder Payments. 49
6.11 FIRPTA Compliance. 49
6.12 Option Notice and Consent. 49
6.13 Employment Agreement. 50
6.14 Registration Rights Agreement. 50
6.15 Management Bonus. 50
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS AND
THE COMPANY 50
7.1 Representations and Warranties; Performance of Obligations. 50
7.2 No Litigation. 50
7.3 No Material Adverse Effect. 50
7.4 Consents and Approvals. 51
7.5 Former Stockholder Payments. 51
7.6 Charter Documents. 51
7.7 [Reserved] 51
7.8 Lender Approval. 51
7.9 Registration Rights Agreement. 51
8. INDEMNIFICATION 51
8.1 General Indemnification by the Stockholders. 51
8.2 Indemnification by NII and FMTTM. 52
8.3 Limitation and Expiration. 52
8.4 Indemnification Procedures. 54
8.5 Survival; Effect of Knowledge. 56
8.6 Exclusive Remedies. 56
8.7 Waiver of Claims. 56
8.8 Right of Set-Off. 56
TABLE OF CONTENTS
(continued)
Page
----
8.9 Arbitration 57
9. SOLICITATION; CONFIDENTIALITY 57
9.1 Prohibited Activities. 57
9.2 Confidentiality. 58
9.3 Damages. 58
9.4 Reasonable Restraint. 59
9.5 Severability; Reformation. 59
9.6 Independent Covenant. 59
9.7 Materiality. 59
10. GENERAL 59
10.1 Termination. 59
10.2 Effect of Termination. 60
10.3 Successors and Assigns. 60
10.4 Entire Agreement; Amendment; Waiver. 60
10.5 Counterparts. 60
10.6 Brokers and Agents. 60
10.7 Expenses. 61
10.8 Specific Performance; Remedies. 61
10.9 Notices. 61
10.10 Governing Law. 62
10.11 Severability. 62
10.12 Absence of Third Party Beneficiary Rights. 62
10.13 Mutual Drafting. 62
10.14 Further Representations. 62
10.15 Definitions. 63
EXHIBITS
Exhibit A -- List of Stockholders
Exhibit 1.2 -- Certificate of Merger
Exhibit 1.5 -- Directors of Surviving Corporation
Exhibit 1.6 -- Officers of Surviving Corporation
Exhibit 1.10 -- Escrow Allocation
Exhibit 5.8(c) -- Transfers of NII Common Stock
Exhibit 6.13 -- Employment Agreement
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of this 7th day of June, 2001, by and among Navigant International,
Inc., a Delaware corporation ("NII"), and FMTTM Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of NII ("FMTTM"), and SATO
Travel Holding Co., Inc., a Delaware corporation (the "Company"), and the
Stockholders of the Company listed on Exhibit A (the "Stockholders"). Except as
otherwise set forth in this Agreement, capitalized terms shall have the
definitions set forth in Section 10.15.
BACKGROUND
NII, FMTTM, the Company and the Stockholders have determined that the
merger of FMTTM and the Company on the terms set forth herein (the "Merger") is
advisable and in the best interests of their respective corporations and
stockholders and their respective boards of directors have approved this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. THE ACQUISITION
1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, in accordance with the Delaware General
Corporation Law (the "DGCL"), FMTTM shall be merged with and into the Company in
accordance with this Agreement and the separate existence of FMTTM shall cease.
The Company shall be the surviving corporation in the Merger (hereinafter
sometimes referred to as the "Surviving Corporation").
1.2 Effective Time. Upon the terms and subject to the conditions
hereof, a certificate of merger, in the form attached hereto as Exhibit 1.2 (the
"Certificate of Merger") shall be duly prepared, executed and acknowledged by
the Surviving Corporation and thereafter delivered to the Secretary of State of
the State of Delaware for filing on the Closing Date. Pursuant to Section 251 of
the DGCL, the Merger shall become effective as of the date and at such time (the
"Merger Effective Time") as the Certificate of Merger and any other documents
necessary to effect the Merger in accordance with the DGCL are duly filed (the
"Merger Filing") with the Secretary of State of the State of Delaware.
1.3 Effects of the Merger. The Merger shall have the effects set forth
in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Merger Effective Time, and as a result of the Merger, all the
properties, rights, privileges, powers and franchises of the Company and FMTTM
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and FMTTM shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 Certificate of Incorporation. The Certificate of Incorporation of
FMTTM shall be the Certificate of Incorporation of the Surviving Corporation.
The Bylaws of FMTTM shall be the Bylaws of the Surviving Corporation.
1.5 Directors. The directors of the Surviving Corporation shall be as
set forth on Exhibit 1.5, each to hold office from the Merger Effective Time in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation and until his or her successor is duly elected and qualified.
1.6 Officers. The officers of the Surviving Corporation shall be as set
forth on Exhibit 1.6, each to hold office from the Merger Effective Time in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation and until his or her successor is duly appointed and qualified.
1.7 Conversion of FMTTM Capital Stock. At the Merger Effective Time,
each issued and outstanding share of common stock, par value $0.01 per share, of
FMTTM shall be converted into and become one fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation.
1.8 Conversion of Company Capital Stock.
(a) At the Merger Effective Time, by virtue of the Merger and
without any action by the holder thereof, each issued and outstanding
share of the capital stock of the Company (the "Company Capital Stock")
shall be converted into the right to receive, subject to the escrow
provisions set forth in Section 1.10 below, (x) at the Closing, (A)
$2.0769 in cash, and (B) 0.11303 of a validly issued, fully paid and
nonassessable share of NII Common Stock, and (y) subject to the
provisions of Sections 1.8(b) through (e) hereof, the right to receive
at the Contingent Payment Date, (A) $0.2215 in cash, and (B) an
allocable pro rata share of that number of shares of NII Common Stock
equal to the quotient obtained by dividing 1,920,000 by the NII
Contingent Stock Value (collectively, the "Exchange Ratio"). The "NII
Contingent Stock Value" shall equal the average closing price of NII
Common Stock for the thirty (30) trading days ending on the last
trading day prior to the Contingent Payment Date. The closing price of
NII Common Stock on a trading day, for purposes of this calculation,
shall be the day's last reported trade price during normal trading
hours (after hours trading prices are not to be used) as reported on
the Nasdaq National Market or such other exchange or trading market on
which the NII Common Stock is then traded. The cash and shares of NII
Common Stock payable and issuable to the Stockholders pursuant to
clause (x) of the Exchange Ratio shall be referred to as such holder's
"Initial Merger Consideration," and the cash and shares of NII Common
Stock payable and issuable to the Stockholders pursuant to clause (y)
of the Exchange Ratio shall be referred to as such holder's "Contingent
Merger Consideration." Together, the Initial Merger Consideration and
the Contingent Merger Consideration shall be referred to as the "Merger
Consideration."
(b) Except as provided in Section 1.8(c), the Contingent
Merger Consideration shall be paid by NII to the Stockholders if, on
the first anniversary of the Closing Date:
2
(i) the Surviving Corporation (A) has retained
contracts with the United States Navy, through award or
otherwise, and such contracts, taken as a whole, are on terms
not less favorable to the Surviving Corporation than its
current contracts with the Navy, taken as a whole and (B) has
signed (or has been awarded) contracts with the United States
Army under the DTR Solicitation (or other Army solicitations)
with a total combined projected annual RFP Contract Air Volume
of One Hundred Million Dollars ($100,000,000) or more; or
(ii) the total business awarded to the Surviving
Corporation from either re-awarded or extended contracts with
the Navy and any newly awarded Army contracts represents more
than One Hundred Million ($100,000,000) in total combined
projected annual RFP Contract Air Volume above the total
actual air sales of the Surviving Corporation's current Navy
contracts in the Trailing Period.
(c) Provided that the Navy and Army shall not have previously
awarded or indicated an intent to award the contracts identified in
Section 1.8(b) to a Person other than the Surviving Corporation, the
Contingent Merger Consideration shall be paid by NII to the
Stockholders prior to the first anniversary of the Closing Date upon
the occurrence of any of the following events:
(i) the employment by the Surviving Corporation of
the Person identified on Exhibit 6.13 shall have terminated
for reasons other than (1) the voluntary action of such Person
other than as a result of a "Constructive Termination" (as
defined in such Person's employment agreement with Surviving
Corporation), (2) death or "Disability" of such Person (as
defined in such Person's employment agreement with the
Surviving Corporation), or (3) for "Cause" (as defined in such
Person's employment agreement with the Surviving Corporation);
(ii) NII or an Affiliate sells the Surviving
Corporation or Scheduled Airlines Traffic Offices, Inc., or a
successor thereof, to a Person not an Affiliate of NII;
(iii) NII or an Affiliate sells the military travel
business of the Surviving Corporation or Scheduled Airlines
Traffic Offices, Inc. or a successor to a Person not an
Affiliate of NII;
(iv) either Xxxxxxxx X. Xxxxx or Xxxxxx X. Xxxxx
shall have been removed from the Board of Directors of NII for
reasons other than for cause (as contemplated in NII's Charter
Documents); or
(v) NII shall have breached its obligations under
Section 1.8(e), and such breach shall not have been cured
after notice of such a breach shall have been received by NII
from the Stockholders.
(d) On or before the date that is thirty (30) days after the
first anniversary of the Closing Date (the "Contingent Payment Date"),
NII shall deliver written notice (the "Contingent Payment Notice") to
the Stockholders' Representative stating whether the events required to
have occurred pursuant to Section 1.8(b) for the Contingent Merger
Consideration to become due and payable have occurred, and if the
Contingent Payment Notice states that the Contingent Merger
Consideration will not be paid, a reasonable description of the reasons
for not making such payment. If the Stockholders' Representative
requests, NII shall grant to the
3
Stockholders' Representative reasonable access to the books and records
of the Surviving Corporation to review the matters relating to
determination of whether the conditions for payment of the Contingent
Merger Consideration had been met. The Stockholders' Representative
shall have ten (10) business days from the date of the delivery of the
Contingent Payment Notice to object to the non-payment of the
Contingent Merger Consideration by the delivery to NII of a written
notice (a "Notice of Objection") describing in reasonable detail the
grounds for the objection. If the Stockholders' Representative timely
delivers a Notice of Objection to NII, NII and the Stockholders'
Representative shall and use their reasonable best efforts to resolve
the dispute. If such a resolution is reached, the determination by such
parties of whether the Contingent Merger Consideration has become due
and payable shall be final and binding on all parties hereto. In the
event NII and the Stockholders' Representative are unable to resolve
their dispute, NII and the Stockholders' Representative shall submit
their dispute to a nationally or internationally recognized accounting
firm that has not represented NII, FMTTM or the Company during the
preceding two (2) years and that is mutually agreeable to NII and the
Stockholders' Representative (the "Reviewing Accountants"), it being
agreed that the only permitted reason for objecting to a proposed
accounting firm shall be the presence of a conflict of interest. The
Reviewing Accountants shall deliver to each of the Stockholders and
NII, as promptly as practicable, but in no event later than twenty (20)
days after submission of the disputed items, a report setting forth its
determination of whether the Contingent Merger Consideration is due and
payable. Such report shall be final and binding on the parties hereto.
The fees, costs and expenses of the Reviewing Accountants shall be
borne equally by NII and the Stockholders' Representative.
(e) The parties acknowledge and agree that it is in the
interests of both NII and the Company that the Surviving Corporation
obtain the contracts and minimum air volumes contemplated in Section
1.8(b) as the conditions to payment of the Contingent Merger
Consideration. Accordingly, after the Closing and during the period
prior to the Contingent Payment Date, NII, on behalf of itself and the
Surviving Corporation, agrees to take, and to cause its Affiliates to
take, all commercially reasonable steps to support the efforts of the
Surviving Corporation after the Closing to obtain such contracts and to
achieve such minimum air volumes and not to take any action that would
directly and unreasonably hinder or delay the Surviving Corporation's
ability to obtain such contracts and to achieve such minimum air
volumes.
1.9 General Conversion Mechanics.
(a) As a result of the Merger and without any action on the
part of the holders thereof, at the Merger Effective Time, all shares
of Company Capital Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and
each holder of shares of Company Capital Stock shall thereafter cease
to have any rights with respect to such shares of Company Capital
Stock, except the right to receive, without interest, the Merger
Consideration and cash for fractional shares of NII Common Stock in
accordance with Section 1.12 upon the surrender of a certificate that,
immediately prior to the Merger Effective Time, represented an
outstanding share or shares of Company Capital Stock.
(b) Notwithstanding anything contained herein to the contrary,
each share of Company Capital Stock issued and held in the Company's
treasury or by a wholly-owned Subsidiary of the Company immediately
prior to the Merger Effective Time, and each share of
4
Company Capital Stock or Option owned by NII or FMTTM at or immediately
prior to the Merger Effective Time, if any, shall, by virtue of the
Merger, cease to be outstanding and shall be cancelled and retired and
shall cease to exist without payment of any consideration therefor.
1.10 Escrow. At the Closing, NII shall deliver into escrow with an
escrow agent (the "Escrow Agent") mutually agreeable to the Stockholders'
Representative and NII pursuant to the terms and conditions of an Escrow
Agreement mutually acceptable to NII and the Stockholders' Representative (the
"Escrow Agreement"), the following amount of cash and NII Common Stock (the
"Escrow Amount"): an aggregate of $900,000 in cash and 293,877 shares of NII
Common Stock, which amount shall be allocated among the Stockholders as set
forth on Exhibit 1.10 (which Exhibit shall be attached at Closing) and deducted
accordingly from the amount of the Initial Merger Consideration to be delivered
to each Stockholder at the Closing. The Escrow Amount will be disbursed by the
Escrow Agent in accordance with the terms of the Escrow Agreement.
1.11 Closing Deliveries.
(a) At the Closing, each Stockholder shall deliver to NII and
FMTTM the certificates (each a "Certificate") representing all of its
issued and outstanding Company Capital Stock (which in the aggregate
with all of the Certificates delivered by all of the Stockholders shall
represent all of the issued and outstanding Company Capital Stock),
duly endorsed in blank by such Stockholder, or accompanied by blank
stock powers duly executed by such Stockholder and with all necessary
transfer tax and other revenue stamps, acquired at such Stockholder's
expense, affixed and canceled. Each Stockholder shall promptly cure any
deficiencies with respect to the endorsement of any of its Certificates
or other documents of conveyance with respect to the stock powers
accompanying such Certificates.
(b) At the Closing, NII and FMTTM shall deliver to each holder
of Company Capital Stock the cash portion of the Initial Merger
Consideration payable to such holder at the Closing by wire transfer of
immediately available funds and, provided that the Company shall have
delivered instructions to NII as to the allocation of the shares of NII
Common Stock that constitute part of the Initial Merger Consideration
among the Stockholders at least two business days in advance of the
Closing, certificates (bearing appropriate restrictive legends
reflecting the transfer restrictions contemplated under this Agreement)
for such shares representing the number of shares of NII Common Stock
payable to such holder at the Closing (and if such instructions are not
delivered to NII within such time, NII shall deliver evidence to the
Stockholders at Closing that NII has irrevocably instructed its
transfer agent to deliver such shares to the Stockholders) less the
amount of Initial Merger Consideration included in the Escrow Amount
for each such holder. At the Contingent Payment Date, if the Contingent
Merger Consideration is payable, NII and FMTTM shall deliver to each
recipient of Initial Merger Consideration or their successors or
assigns the cash portion of the Contingent Merger Consideration payable
to such Person on the Contingent Payment Date by wire transfer of
immediately available funds and, provided that the Company shall have
delivered instructions to NII as to the allocation of the shares of NII
Common Stock that constitute part of the Initial Merger Consideration
among the Stockholders at least two business days in advance of the
Contingent Payment Date, certificates representing the number of shares
of NII Common Stock payable to such holder at the Contingent Payment
Date (and if such instructions are not delivered to NII within such
time,
5
NII shall deliver evidence to the Stockholders at the Contingent
Payment Date that NII has irrevocably instructed its transfer agent to
deliver such shares to the Stockholders).
(c) In the event any Certificates shall have been lost, stolen
or destroyed, NII and FMTTM shall cause payment of Merger Consideration
to be made in exchange for such lost, stolen or destroyed certificates,
upon the execution of an affidavit of that fact and agreement to
indemnify the Company, NII and FMTTM for any claim that may be made
against the Company, NII or FMTTM with respect to the Certificates
alleged to have been lost, stolen or destroyed, which indemnity shall
be in such form as approved by NII and FMTTM.
(d) Notwithstanding anything to the contrary in this Section
1.11, no party hereto shall be liable to a holder of shares of Company
Capital Stock for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.12 Fractional Shares, Endorsement.
(a) No fractional shares of NII Common Stock shall be issued
in the Merger. All fractional shares of NII Common Stock that a holder
of shares of Company Capital Stock would otherwise be entitled to
receive as a result of the Merger shall be aggregated and, if a
fractional share results from such aggregation, such holder shall be
entitled to receive, in lieu thereof, an amount in cash determined by
multiplying (i) the fraction of a share of NII Common Stock to which
such holder would otherwise have been entitled by (ii) $12.25, in the
case of shares of NII Common Stock payable at Closing, or the NII
Contingent Stock Value, in the case of shares of NII Common Stock
payable on the Contingent Payment Date. No interest will be paid or
will accrue on any cash paid or payable in lieu of any fractional
shares of NII Common Stock.
(b) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the shares of Company
Capital Stock represented by the Certificate or Certificates
surrendered in exchange therefor, it shall be a condition to such
payment that the Certificate or Certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to NII any transfer or
other taxes required as a result of such payment to a Person other than
the registered holder of such Certificates or establish to the
reasonable satisfaction of NII that such tax has been paid or is not
payable.
(c) If at any time during the period between the date of this
Agreement and the Closing Date, any change in the terms of any
outstanding shares of capital stock of NII shall occur, including by
reason of any reclassification, reorganization, recapitalization, stock
split or combination, exchange or readjustment of shares, or any stock
dividend thereon with a record date during such period, the number of
shares of NII Common Stock constituting all or part of the Merger
Consideration shall be appropriately adjusted in accordance with such
change.
1.13 Stockholders' Representative.
(a) Each Stockholder, by signing this Agreement, designates
Stuart Mill Capital LLC, a Delaware limited liability company ("Stuart
Mill"), as the "Stockholders' Representative" for purposes of this
Agreement. The Stockholders and their successors shall be
6
bound by any and all actions taken by the Stockholders' Representative
on their behalf under or otherwise relating to this Agreement and the
transactions contemplated hereunder as if such actions were expressly
ratified and confirmed by each of them. In the event Stuart Mill is
unable or unwilling to serve or shall resign, the Stockholders'
Representative shall be selected by the holders of a majority of the
Company Capital Stock outstanding immediately prior to the Closing.
Each successor Stockholders' Representative shall have all the power,
rights, authority and privileges hereby conferred upon the original
Stockholders' Representative.
(b) NII and FMTTM shall be entitled to rely upon any
communication or writings given or executed by the Stockholders'
Representative on behalf of the Stockholders. All communications or
writings to be sent to Stockholders pursuant to this Agreement may be
addressed to the Stockholders' Representative and any communication or
writing so sent shall be deemed notice to all of the Stockholders
hereunder. The Stockholders hereby consent and agree that the
Stockholders' Representative is authorized to accept deliveries,
including any notice, on behalf of the Stockholders pursuant hereto.
(c) The Stockholders' Representative is hereby appointed and
constituted the true and lawful attorney-in-fact of each Stockholder,
with full power in her name and on her behalf to act according to the
terms of this Agreement in the absolute discretion of the Stockholders'
Representative; and in general to do all things and to perform all acts
including, without limitation, executing and delivering all agreements,
certificates, receipts, instructions, notices and other instruments
contemplated by or deemed advisable in connection with Article 8 of
this Agreement. This power of attorney and all authority hereby
conferred is granted subject to the interest of the other Stockholders
hereunder and in consideration of the mutual covenants and agreements
made herein, and shall be irrevocable and shall not be terminated by
any act of any Stockholder, by operation of law, whether by such
Stockholder's death, disability or any other event.
In performing any of their duties under this Agreement, or upon the
claimed failure to perform his duties hereunder, the Stockholders'
Representative shall not be liable to the Stockholders for any damages, losses
or expenses which they may incur as a result of any act, or failure to act under
this Agreement or the Escrow Agreement; provided, however, that the
Representative shall be liable for damages arising out of actions or omissions
that both (i) were taken or omitted not in good faith and (ii) constituted
willful default or gross negligence under this Agreement or the Escrow
Agreement. Accordingly, the Stockholders' Representative shall not incur any
such liability with respect to (x) any action taken or omitted to be taken in
good faith upon advice of his counsel given with respect to any questions
relating to the duties and responsibilities of the Stockholders' Representative
hereunder; or (y) any action taken or omitted to be taken in reliance upon any
document, including any written notice or instructions provided for in this
Agreement or the Escrow Agreement, not only as to its due execution and to the
validity and effectiveness of its provisions, but also as to the truth and
accuracy of any information contained therein, which the Stockholders'
Representative shall in good faith believe to be genuine, to have been signed or
presented by the purported proper person or persons and to conform with the
provisions of this Agreement and the Escrow Agreement. The limitation of
liability provisions of this Section shall survive the termination of this
Agreement and the resignation of the Stockholders' Representative. The
stockholders of the Company shall severally indemnify the Stockholders'
Representative and hold him harmless against any loss,
7
liability or expense (including any expenses of legal counsel retained by the
Stockholders' Representative) incurred without willful default, gross negligence
or bad faith on the part of the Stockholders' Representative and arising out of
or in connection with the acceptance or administration of his duties hereunder;
provided, however, no Stockholder shall be liable for indemnity under this
sentence for an amount in excess of the Merger Consideration delivered to such
Stockholder under this Agreement.
1.14 Accounting Terms. Except as otherwise expressly provided herein or
in the Schedules (the "Schedules"), all accounting terms used in this Agreement
shall be interpreted, and all financial statements, Schedules, certificates and
reports as to financial matters required to be delivered hereunder shall be
prepared, in accordance with GAAP consistently applied.
2. CLOSING
The consummation of the Merger and the other transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxx,
Xxxxxx & Xxxxxxxxx at 0000 Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxxxx 00000, as
soon as practicable after the date on which all conditions to Closing shall have
been satisfied or waived, or at such other time and date as NII and FMTTM, the
Company and the Stockholders may mutually agree, which date shall be referred to
as the "Closing Date"; provided, however, that for accounting purposes the
transactions contemplated hereby shall have an effective date and time of 11:59
p.m. on May 31, 2001.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce NII and FMTTM to enter into this Agreement and consummate the
transactions contemplated hereby, the Company represents and warrants to NII and
FMTTM as follows (for purposes of this Agreement, the phrases "knowledge of the
Company" or the "Company's knowledge," or words of similar import, mean the
knowledge of the Stockholders and the members of the Board of Directors and
officers of the Company, including facts of which the members of the Company's
Board of Directors and officers, in the reasonably prudent exercise of their
duties, should be aware):
3.1 Due Organization. The Company is a corporation duly organized,
validly existing and is in good standing under the laws of the jurisdiction of
its incorporation and, except as set forth on Schedule 3.1, is duly authorized
and qualified to do business under all applicable laws, regulations, ordinances
and orders of public authorities to own, operate and lease its properties and to
carry on its business in the places and in the manner as now conducted. The
Company is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which it does business and/or owns or leases property, except
where the failure to so qualify or be in good standing would not have a Material
Adverse Effect on the Company. Schedule 3.1 hereto contains a list of all
jurisdictions in which the Company is authorized or qualified to do business.
The Company has delivered to NII and FMTTM true, complete and correct copies of
its Certificate of Incorporation and Bylaws (collectively, the "Charter
Documents"). The Company is not in violation of any Charter Documents. The
Company has made available the correct and complete corporate minute books,
original stock ledger and corporate seal to NII and FMTTM.
8
3.2 Authorization; Validity. The Company has the full legal right,
corporate power and authority to enter into this Agreement and the transactions
contemplated hereby and to perform its obligations pursuant to the terms of this
Agreement. The execution and delivery of this Agreement by the Company and the
performance by the Company of the transactions contemplated herein have been
duly and validly authorized by the Board of Directors of the Company, and this
Agreement has been duly and validly authorized by all necessary corporate
action. This Agreement is the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, subject to Bankruptcy Laws and
Equitable Principles.
3.3 No Conflicts. Except as set forth on Schedule 3.3, the execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of, any
of the Charter Documents of the Company;
(b) (i) conflict with, or result in a default (or would
constitute a default but for any requirement of notice or lapse of time
or both) under, any document, agreement or other instrument to which
the Company is a party or by which the Company is bound, or (ii) result
in the creation or imposition of any lien, charge or encumbrance (other
than Permitted Liens) on any of the Company's properties pursuant to
(x) any law or regulation to which the Company, or any of its property
is subject, or (y) any judgment, order or decree to which the Company
is bound or any of its property is subject;
(c) result in a termination or impairment of any contractual
right or Permit (as defined in Section 3.14); or
(d) violate any law, order, judgment, rule, regulation, decree
or ordinance to which the Company or any of its Subsidiaries is subject
or by which the Company or any of its Subsidiaries is bound; except, in
the case of paragraphs (b), (c) and (d), where such conflict, default,
creation, imposition, termination, impairment or violation would not
have a Material Adverse Effect on the Company.
3.4 Capital Stock of the Company.
(a) The authorized capital stock of the Company consists of
19,500,000 shares of common stock, $0.01 par value, of which 13,000,000
shares are issued and outstanding, and 500,000 shares of preferred
stock, par value $0.01 per share, of which no shares are issued and
outstanding. All of the issued and outstanding shares of the capital
stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and are owned of record and beneficially
as set forth on Schedule 3.4, free and clear of any Liens created by or
through the Company (other than pursuant to the Company's Stockholders
Agreement). Assuming the accuracy of the representations and warranties
of the Company's stockholders given in connection with the
subscription, purchase and receipt of shares of the Company's capital
stock, and assuming compliance by such stockholders with all applicable
state and federal laws concerning the offer, issuance and sale of
securities, including applicable state "blue sky" laws, all of the
issued and outstanding shares of the capital stock of the Company were
offered,
9
issued, sold and delivered by the Company in compliance with all
applicable state and federal laws concerning the offer, issuance and
sale of securities, including applicable state "blue sky" laws.
Further, none of such shares was issued in violation of any preemptive
rights created by or through the Company. Except as set forth on
Schedule 3.4, there are no voting agreements or voting trusts with
respect to any of the outstanding shares of the capital stock of the
Company.
(b) The Company has issued options to purchase 580,000 shares
of Company Common Stock (the "Company Options"). Schedule 3.4 sets
forth a complete and accurate list of the holders of the Company
Options along with the number of Company Options held by each such
holder, the date of issuance, the exercise price, the vesting schedule,
the expiration date and the amounts exercisable as of the date hereof.
Other than the Company Options and except as set forth on Schedule 3.4,
there is no outstanding subscription, option, warrant, call, right,
agreement or commitment relating to the issuance, sale, delivery or
transfer by any Person (including any right of conversion or exchange
under any outstanding security or other instrument) of the Company's
capital stock or any other outstanding security of the Company
convertible into capital stock of the Company. Except as set forth on
Schedule 3.4, the Company has no obligation (contingent or otherwise)
to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay any dividend or make any
distribution in respect thereof. Assuming compliance by the holders
thereof with all applicable state and federal laws governing the
issuance of securities with respect to the issuance thereof, all of the
issued and outstanding Company Options were offered, issued and
delivered by the Company in compliance with all applicable state and
federal laws governing the issuance of securities. The Company has no
knowledge of any non-compliance by any holder of Company Options with
any state or federal laws governing the issuance of securities with
respect to the issuance of such Company Options.
3.5 Subsidiaries and Debt Interests.
(a) Except as set forth on Schedule 3.5, the Company has no
Subsidiaries and does not presently own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any
corporation, association or business entity, nor does the Company,
directly or indirectly, have any equity or ownership interest in any
joint venture, partnership or other noncorporate entity. Except as set
forth on Schedule 3.5, the Company owns all of the capital stock of
each of its Subsidiaries free and clear of all Liens (other than
Permitted Liens).
(b) Except as reflected on the Interim Balance Sheet or as
disclosed on Schedule 3.5, there are no promissory notes or other debt
instruments that have been issued to, or are held by, the Company.
3.6 Names; Predecessor Status. Schedule 3.6 sets forth a listing of all
legal names, trade names, fictitious names or other names (including, without
limitation, any names of divisions) of the Company during the two-year period
immediately preceding the Closing. During the two-year period immediately
preceding the Closing, the Company has operated only under the names set forth
on Schedule 3.6. The Company has not been a Subsidiary or division of another
corporation.
10
3.7 Required Governmental Filings and Consents. Except as set forth on
Schedule 3.7, the execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby and thereby
by the Company, will not require the Company to obtain or make (as the case may
be) any consent, approval, authorization or permit of, or filing with or
notification to any Governmental Authority except for (a) applicable
requirements, if any, of the HSR Act, the DGCL, the Securities Act, the Exchange
Act, state securities or Blue Sky laws and the Bylaws of the National
Association of Securities Dealers, Inc., or (b) where the failure to obtain such
consents, approvals, authorization or permits, or to make such filings or
notifications (other than under proviso (a) of this exception), would not
prevent or delay consummation of the Merger or otherwise prevent the Company
from performing its or their obligations under this Agreement or have a Material
Adverse Effect on the Company.
3.8 Company Financial Condition.
(a) The Company's net income from operations for the twelve
month period (the "Trailing Period") ending December 31, 2000 was
$2,591,842.
(b) The Company's Adjusted EBITDA as of December 31, 2000, was
not less than $12,316,754.
(c) As of May 15, 2001, the sum of the Company's outstanding
long-term or short-term interest and non-interest bearing indebtedness
for borrowed money, guarantees, and letters of credit with banks and
other financial institutions (in each case including the current
portion thereof, but excluding trade payables and other ordinary course
accounts payable) ("Indebtedness") was not more than $12,785,810 and
the sum of the Company's outstanding Indebtedness less outstanding
letters of credit was not more than $11,530,000.
3.9 Financial Statements. Attached to Schedule 3.9 are (a) true,
complete and correct copies of the Company's audited balance sheet as of
December 31, 2000, and statements of income and cash flows for the year ended
December 31, 2000 (collectively, the "Year-End Financials") and (b) true,
complete and correct copies of the Company's unaudited balance sheet (the
"Interim Balance Sheet") as of April 29, 2001 (the "Interim Balance Sheet
Date"), and statements of income and cash flows for the four-month period then
ended (collectively, the "Interim Financials," and together with the Year-End
Financials, the "Company Financial Statements"). The Company Financial
Statements have been prepared in accordance with GAAP applied on a basis
consistent with prior periods, subject in the case of the Interim Financials, to
(i) normal year-end adjustments, (ii) the exceptions stated on Schedule 3.9, and
(iii) the omission of footnote information. The Company Financial Statements
present fairly in all material respects the financial condition and results of
operations of the Company as of the date indicated thereon and for the periods
indicated therein. Since the dates of the Company Financial Statements, there
have been no material changes in the Company's accounting policies other than as
requested by NII and FMTTM to conform the Company's accounting policies to GAAP.
The Company has made available to NII and FMTTM copies of each management letter
delivered to the Company by independent public accountants in connection with
the Financial Statements or relating to any review by such accountants of the
internal controls of the Company or any of its Subsidiaries during the two-year
period ended December 31, 2000.
11
3.10 Liabilities and Obligations; Claims.
(a) Except as set forth on Schedule 3.10, the Company is not
liable for or subject to any liabilities other than:
(i) those liabilities reflected or reserved against
on the Interim Balance Sheet and not previously paid or
discharged;
(ii) liabilities not required by GAAP to be reflected
or reserved against on the Interim Balance Sheet; provided
that Schedule 3.10 sets forth a complete and accurate list and
description of all of the Company's off-balance sheet
financings in excess of $250,000, including operating and
capital leases;
(iii) those liabilities arising in the ordinary
course of its business consistent with past practice under any
contract, commitment or agreement specifically disclosed on
any Schedule to this Agreement or not required to be disclosed
thereon because of the term or amount involved or otherwise;
(iv) liabilities which would not have a Material
Adverse Effect on the Company; and
(v) those liabilities incurred since the Interim
Balance Sheet Date in the ordinary course of business
consistent with past practice (none of which is a liability
for breach of contract, breach or warranty for infringement,
claim or lawsuit) or incurred in connection with or as a
result of the transactions contemplated by this Agreement.
(b) No Stockholder has asserted any claim against the Company.
(c) For purposes of this Section 3.10, the term "liabilities"
shall include without limitation any direct or indirect liability,
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, or obligation, either accrued, absolute, contingent,
mature, unmature or otherwise, fixed or unfixed, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured. Schedule 3.10
contains a complete list of all the Company's Indebtedness, including
the names of creditors, payment terms, balances due and security
interests.
3.11 Books and Records. The Company has made and kept books and records
and accounts which accurately, completely and fairly reflect the activities of
the Company in all material respects. The Company has not engaged in any
transaction, maintained any bank account, or used any corporate funds except for
transactions, bank accounts, and funds which have been and are reflected in its
normally maintained books and records.
3.12 Bank Accounts; Powers of Attorney. Schedule 3.12 sets forth a
complete and accurate list, as of the date of this Agreement, of:
(a) the name of each financial institution in which the
Company has any account or safe deposit box;
12
(b) the names in which the accounts or boxes are held;
(c) the type of account;
(d) the name of each Person authorized to draw thereon or have
access thereto; and
(e) the name of each Person holding a general or special power
of attorney from the Company and a description of the terms of such
power.
3.13 Accounts and Notes Receivable. All accounts receivable ("Accounts
Receivable") reflected on the Interim Balance Sheet represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of the Company's business. The reserves for doubtful accounts reflected
on the Interim Balance Sheet have been established in accordance with GAAP. To
the knowledge of the Company, there is no material contest, claim, or right of
set-off, other than rebates and returns in the ordinary course of business,
under any contract with any obligor of any Accounts Receivable relating to the
amount or validity of such Accounts Receivable.
3.14 Permits. The Company owns or holds all licenses, franchises,
security clearances, permits and other governmental authorizations, including
without limitation permits, titles (including without limitation motor vehicle
titles and current registrations), licenses and franchises necessary for the
continued operation of the Company's business as it is currently being
conducted, except for such licenses, franchises, permits and other governmental
authorizations which the failure to own or hold would not have a Material
Adverse Effect on the Company (the "Permits"). The Permits are valid, and the
Company has not received any notice that any governmental authority intends to
modify, cancel, terminate or fail to renew any Permit. No present or former
officer, manager, employee or agent of the Company, or any affiliate thereof, or
any other Person owns or has any proprietary, financial or other interest
(direct or indirect) in any Permits. The Company has conducted and is conducting
its business in compliance with the requirements, standards, criteria and
conditions set forth in the Permits and other applicable orders, approvals,
variances, rules and regulations and is not in violation of any of the
foregoing, except where noncompliance or violation would not have a Material
Adverse Effect on the Company.
3.15 Related Party Transactions. Except as set forth on Schedule 3.15,
neither Stuart Mill, nor any officer nor director of the Company nor of any
ancestor, sibling, descendant or spouse of any of such Persons (each a "Related
Party") (i) is Affiliated with any entity that furnished or sold, or furnishes
or sells, services or products that the Company furnishes or sells, or (ii) is
Affiliated with any entity that purchases from or sells or furnishes to, the
Company, any good or services or (iii) has a beneficial interest in any Material
Contract; provided, however, that ownership of no more than one percent (1%) of
the outstanding voting stock of a publicly traded corporation shall not be
deemed an "interest in any Person" for purposes of this Section 3.15. Neither
Stuart Mill nor any officer nor director of the Company has any interest, either
directly or indirectly, in any property, real or personal, tangible or
intangible, used in or pertaining to the business of the Company, including any
interest in the Intellectual Property, except for rights as a Stockholder and
except for rights under any Company Plan or as an
13
employee of the Company. No employee, stockholder, officer or director of the
Company, or their spouses or children, is indebted to the Company nor is the
Company indebted to any of them (except for expense advancements and
reimbursements in the ordinary course of the Company's business).
3.16 Real Estate and Real Property. Schedule 3.16 contains a complete
and accurate description of all Real Property owned or leased by the Company or
any of its Subsidiaries (including street address, legal description (where
known), fee owner and the Company's use thereof). The Real Property listed on
Schedule 3.16 includes all interests in Real Property necessary to conduct the
business and operations of the Company as presently conducted.
(a) The Company does not own a fee simple interest in any real
estate.
(b) Except as set forth in Schedule 3.16:
(i) The Company has obtained all approvals of
governmental authorities (including certificates of use and
occupancy, licenses and permits) required in connection with
the use, occupation and operation of the Real Property, except
for (x) approvals, certificates of use and occupancy, licenses
and permits which the failure to obtain would not have a
Material Adverse Effect on the Company and (y) approvals that
it is the landlord's obligation to obtain pursuant to the
Leases.
(ii) The Company is not in violation of any law
(including any code, rule, regulation, zoning or building
ordinance or health or safety ordinance) with respect to the
Real Property, and no notice from any Governmental Authority
has been served upon the Company claiming any violation of any
such law with respect to the Real Property, or requiring or
calling attention to the need for any work, repairs,
construction, alterations or installations on or in connection
with such Real Property with which the Company or the
Subsidiary has not complied in all material respects.
(iii) Neither the portion of the Real Property leased
by the Company pursuant to the Leases nor any of the
structures, facilities and improvements on the Real Property
not included in the premises covered by the Leases but
necessary to the Company's full use and enjoyment of such
premises has suffered any damage by fire or other material
casualty which has not heretofore been repaired and restored
in accordance with the terms of the Leases.
(iv) There are no parties other than the Company in
possession of any of the portions of the Real Property leased
by the Company pursuant to the Leases and there are no
subleases, material licenses, material concessions or other
material agreements, written or oral, granting to any party or
parties the right of use or occupancy of such portions of the
Real Property.
(v) All oral or written leases, subleases, licenses,
concession agreements or other use or occupancy agreements
pursuant to which the Company leases from any other party any
real property, including all amendments, renewals, extensions,
modifications or supplements to any of the foregoing or
substitutions for any of the foregoing (collectively, the
"Leases") are valid and in full force and effect. The Company
has provided or made available NII and FMTTM true and complete
copies of all of the Leases, and all correspondence related
14
thereto pursuant to which any party to any of the Leases
declared a default thereunder or provided notice of the
exercise of any option granted to such party under such Lease.
To the Company's knowledge, the Leases and the Company's
interests thereunder are free of all Encumbrances (other than
Encumbrances constituting Permitted Liens). The Company has
not received any notice of default which has not been cured
under any Lease, and the Company is in material compliance
with the terms and provisions of the Leases and there are no
material maintenance or capital improvement obligations of the
Company with respect to the Real Property leased by the
Company, except as set forth in the Leases. The Company has
not given notice of default which has not been cured to the
lessors under any Lease and, to the knowledge of the Company,
the lessors are in material compliance with the provisions of
the Leases, and there are no maintenance or capital
improvement obligations of the lessor with respect to the Real
Property leased by the Company, except as set forth in the
Leases.
(vi) Except as set forth on Schedule 3.16, none of
the Leases requires the consent or approval of any party
thereto in connection with the consummation of the
transactions contemplated hereby.
(vii) All material personal property and trade
fixtures owned or leased by the Company and used or usable in
the conduct of its business in the Real Property may be
removed from the Real Property at the termination of the
Leases without violating the terms of the Leases (other than
violations that would not have a Material Adverse Effect on
the Company).
(c) Notwithstanding the above, with respect to any of the
common areas used by the Company, its employees, consultants or
customers, in connection with the Company's use of any Leased premises,
the representations made in this Section 3.16 shall be limited to the
actual knowledge of the Company.
3.17 Personal Property. Schedule 3.17 sets forth a complete and
accurate list of all personal property included on the Interim Balance Sheet
with a value in excess of $100,000 owned or leased by the Company (the "Personal
Property"). All leases set forth on Schedule 3.17 are in full force and effect
and constitute valid and binding agreements of the Company (subject to
Bankruptcy Laws and Equitable Principles), and the Company is not in breach of
any of their terms where such breach would have a Material Adverse Effect on the
Company.
3.18 Intellectual Property.
(a) Schedule 3.18 lists (i) all of the Marks registered in the
PTO or the equivalent thereof in any state of the United States or in
any foreign country, and (ii) to the knowledge of the Company, all of
the unregistered Marks that the Company now owns or uses in connection
with its business. The Company is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights to use, the
Marks listed on Schedule 3.18. The Company owns or has the legally
enforceable right to use all of the trademarks, service marks, and
trade names employed in the operation of its business as currently
conducted. The Marks listed on Schedule 3.18 will not cease to be valid
rights of the Company by reason of the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
15
(b) The Company is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights to use, all
rights in all Patents and Copyrights employed in and material to the
operation of its business as currently conducted. Such Patents and
Copyrights are listed on Schedule 3.18.
(c) The Company is the true and lawful owner of, or is
licensed or otherwise possesses the legally enforceable right to use,
all rights in the Software and trade secrets employed in the operation
of its business as currently conducted.
(d) The Marks, Patents, and Copyrights listed on Schedule 3.18
are referred to collectively herein as the "Company Intellectual
Property." Except as listed on Schedule 3.18, the Company Intellectual
Property is owned by the Company free and clear of all Liens (other
than Permitted Liens). All other intellectual property not owned by the
Company and not otherwise constituting Company Intellectual Property,
including Software, is referred to herein collectively as the "Third
Party Intellectual Property." The Company has taken all actions
reasonably necessary to maintain and protect the Company Intellectual
Property material to its business and has taken customary measures to
protect the confidentiality of its trade secrets, know-how, or other
confidential information. Except as stated on Schedule 3.18, the
Company has no obligation to compensate any Person for the use of any
Company Intellectual Property nor has the Company granted to any Person
any license, option or other rights to use in any manner any Company
Intellectual Property, whether requiring the payment of royalties or
not. Schedule 3.18 includes the name of each licensor of Third-Party
Intellectual Property that is material to the Company.
(e) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation in any material respect of any
Third-Party Intellectual Property license, sublicense or agreement
described in Schedule 3.18. The Company is not currently infringing or
misappropriating any Third-Party Intellectual Property. No claims with
respect to the Company Intellectual Property or Third-Party
Intellectual Property are currently pending or, to the knowledge of the
Company, are threatened by any Person: (i) to the effect that the
manufacture, sale, licensing or use of any product as now used, sold or
licensed by the Company infringes on any Third-Party Intellectual
Property; (ii) against the use by the Company of any Company
Intellectual Property or Third Party Intellectual Property; (iii)
challenging the ownership, validity or effectiveness of any of the
Company Intellectual Property; or (iv) challenging the Company's
license or legally enforceable right to use of the Third-Party
Intellectual Property. To the Company's knowledge, there is no
unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party. The Company has not,
within the two years prior to the date of this Agreement, agreed to
indemnify any Person for or against any interference, infringement,
misappropriation or other conflict with respect to any Intellectual
Property.
3.19 ARC Accreditation and Bonding Requirements. The Company is
accredited with ARC, and has no knowledge of any fact, matter or circumstance
which by itself, or with the passage of time, would give rise to an action by
ARC terminating the Company's accreditation. The Company has the bond required
by ARC, in the amount required by ARC. Schedule 3.19 sets forth the amount of
the bond, the expiration date of the bond, the name of the company
16
issuing the bond, and the premium for the bond. Except those obtained in the
ordinary course of business, the Company has no unpaid or contested debit
memoranda with ARC or any airline.
3.20 Significant Customers; Preferred Vendors; Material Contracts.
(a) Schedule 3.20(a) sets forth a complete and accurate list
of all Significant Customers and Preferred Vendors. For purposes of
this Agreement, "Significant Customers" are the twenty (20) customers
(with the determination of the identity of such customers being done by
aggregating contracts with a single customer) that were responsible for
the highest amount of revenues of the Company during the Company's
fiscal year 2000. For purposes of this Agreement, "Preferred Vendors"
are all airlines with which the Company has override agreements and all
hotel and rental car companies with which the Company has an agreement
establishing commission rates in excess of those generally paid in the
industry ("Preferred Vendor Agreement").
(b) Schedule 3.20(b) sets forth each of the following
contracts to which the Company is party: (i) collective bargaining
agreements or contracts with any labor union; (ii) stock purchase,
stock option or similar plan or practice, whether formal or informal;
(iii) contracts for the employment of any officer or individual
employee, or other individual on a full-time consulting basis; (iv)
agreements or indentures relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a lien (other than Permitted
Liens) on any of its assets in an amount exceeding $250,000; (v)
guaranties of any obligation for borrowed money or otherwise, other
than endorsements made for collection, in an amount exceeding $250,000
(vi) contracts, purchase orders or group of related contracts or
purchase orders with the same party for the sale of products or
services under which the undelivered balance of such products or
services has a sales price in excess of $250,000 for the last fiscal
year; (vii) Preferred Vendor Agreements or airline override agreements,
(viii) ARC Agency Agreements and bonds required by ARC; (ix) contracts
which prohibit it from freely engaging in business anywhere in the
world; (x) franchise agreements; (xi) assignments, licenses,
indemnities or other agreements with respect to any form of
Intellectual Property or any CRS Agreement, other than Commercial
Software; (xii) warranty agreements with respect to services rendered
or products licensed; (xiii) agreements regarding the provision of
telephone and other communication services in the United States, Canada
and the United Kingdom (collectively all referred to herein as the
"Material Contracts").
(c) Schedule 3.20(c) contains a description of the Company's
policies with respect to booking back-to-back tickets and passive or
phantom segments. Schedule 3.20(c) also contains a description of the
Company's policies regarding clearance of hotel commissions.
(d) Except to the extent set forth on Schedule 3.20(d), since
December 31, 2000 (i) none of the Company's Significant Customers has
canceled or substantially reduced or, to the knowledge of the Company,
is currently attempting or threatening to cancel or substantially
reduce, any purchases from the Company, (ii) none of the Company's
Preferred Vendors has materially altered, modified, reduced or
canceled, or threatened to materially alter, modify, reduce or cancel,
the terms of any Material Contract to which it is a party, (iii) the
Company has complied with all of its commitments and obligations in all
material respects and is not in default in any material respect under
any of the Material Contracts, and no notice of
17
default has been received with respect to any thereof, and (iv) there
are no Material Contracts that were not negotiated at arm's length.
(e) Each Material Contract, is valid and binding on the
Company (subject to Bankruptcy Laws and Equitable Principles) and is in
full force and effect and to the knowledge of the Company is not
subject to any default thereunder by any party obligated to the Company
pursuant thereto. All necessary consents, waivers and approvals of
parties to and novations of any Material Contracts that are required in
connection with any of the transactions contemplated hereby, or are
required by any governmental agency or other third party in order that
any such Material Contract remain in effect without modification after
the Merger and without giving rise to any right to termination,
cancellation or acceleration or loss of any right or benefit ("Third
Party Consents") are listed on Schedule 3.20(e).
(f) The outstanding balances on all loans or credit agreements
either (i) between the Company and any Person in which any Stockholder
(other than General Electric Pension Trust or an Affiliate thereof)
owns a more than five percent (5%) interest, or (ii) guaranteed by the
Company for the benefit of any Person in which any Stockholder owns a
greater than five percent (5%) interest, are set forth in Schedule
3.20(f).
3.21 Government Contracts.
(a) Schedule 3.21 sets forth (i) a list of all material
current and open Government Bids to which the Company or any of the
Company's Subsidiaries (collectively for the purposes of this Section
3.21, the "Company") is a party as of the date of this Agreement and
(ii) a list of all material Government Contracts for which there are or
could reasonably be expected to be outstanding performance obligations.
Except as set forth in Schedule 3.21, With respect to any such
Government Contract or Government Bid (A) the Company has complied in
all material respects with all terms and conditions of each Government
Contract or Government Bid; (B) the Company has complied in all
material respects with the requirements of all applicable laws,
regulations, written directives, or agreements pertaining to each
Government Contract or Government Bid and to the Company's performance
on its Government Contracts; and (C) all representations and
certifications executed, acknowledged or set forth in, or pertaining to
each Government Contract or Government Bid were, when given, and to the
extent any such representation or certification pertains to future
events which have yet to occur the Company has no reason to believe
they are not still, complete and correct in all material respects and
the Company has complied in all material respects with all such
representations and certifications.
(b) Except as set forth in Schedule 3.21, (i) the Company has
not since January 1, 2000, received from a party to a material
Government Contract any written show-cause notice, stop work order,
cure notice, notice of termination, or termination concerning a
material Government Contract presently in effect or for which there are
or reasonably could be expected to be outstanding performance
obligations, and (ii) has no knowledge of any unresolved show cause
notice, stop work order, cure notice, notice of termination, or
termination received from a party to a material Government Contract and
concerning a material Government Contract presently in effect or for
which there are or reasonably could be expected to be outstanding
performance obligations.
18
(c) Except as set forth in Schedule 3.21, The Company has not
to its knowledge received a written negative determination of
responsibility concerning a Government Bid or Government Contract.
(d) The Company has not to its knowledge received any request
within three years prior to the date hereof by any Governmental
Authority for a contract price adjustment including, without
limitation, based upon (i) a claim by any Governmental Authority of
defective pricing or (ii) any cost incurred by the Company that has
been questioned in writing or challenged in writing or disallowed or
has been the subject of any investigation, and, within three years
prior to the date hereof, no money due to the Company has been (or has
been attempted to be) withheld or set off with respect to any
Government Contract.
(e) Except as set forth on Schedule 3.21, neither the Company
nor any of its directors, officers employees, consultants or agents is
(or since January 12, 1999, has been) under administrative, civil or
criminal investigation, indictment or information or equivalent
official government charge or allegation by any Governmental Authority
with respect to any alleged irregularity, misstatement or omission
arising under or relating to any Government Contract of the Company or
Government Bid of the Company. The Company has not initiated or made a
voluntary disclosure to the U.S. Government with respect to any alleged
misstatement or omission or other possible violation of law in
connection with any Government Contract of the Company and/or
Government Bid of the Company. Since January 12, 1999, the Company has
not conducted or initiated an internal investigation with respect to
any alleged misstatement or omission or other possible violation of law
in connection with any Government Contract of the Company and/or
Government Bid of the Company. Except as set forth on Schedule 3.21, to
the knowledge of the Company, there has been no irregularity,
misstatement or omission or other possible violation of law arising
under or relating to any Government Contract or Government Bid that has
led or reasonably could be expected to lead, either before or after the
Closing, to a Material Adverse Effect.
(f) There exist (i) no outstanding claims or requests for
equitable adjustment or other contractual action for relief against the
Company, either by a Governmental Authority or by any prime contractor,
subcontractor, vendor or other Person, arising or relating to any
Government Contract or Government Bid, and (ii) no disputes between the
Company and the U.S. Government under the Contract Disputes Act of
1978, as amended (the "Contract Disputes Act") or material disputes
between the Company and any prime contractor, subcontractor, vendor or
other person arising under or relating to any Government Contract of
the Company or Government Bid of the Company. Except as set forth in
Schedule 3.21, the Company has no knowledge of any fact(s) that
constitute the basis for and could reasonably be expected to result in
a claim or dispute under clause (i) or (ii) of the immediately
preceding sentence. The Company has no interest in any pending or
potential material claim under the Contract Disputes Act against the
U.S. Government or any prime contractor, subcontractor or vendor
arising under or relating to any Government Contract or Government Bid.
(g) Neither the Company nor any of its directors, officers or
employees (nor, to the Company's knowledge, any of the Company's
consultants or agents to the extent acting for or on behalf of the
Company), is (or since January 12, 1999, has been) suspended or
debarred or proposed to be suspended or debarred or declared ineligible
from doing business with any
19
Governmental Authority or is the subject of a finding of
nonresponsibility or ineligibility for contracting with any
Governmental Authority. Except as set forth in Schedule 3.21, to the
Company's knowledge, no facts or circumstances exist that would warrant
or could reasonably lead to the institution of suspension or debarment
proceedings or the finding of nonresponsibility or ineligibility on the
part of the Company or any such director, officer, or employee (or any
consultant or agent, to the extent acting for or on behalf of the
Company).
(h) To the Company's knowledge, the cost accounting systems
with respect to Government Contracts of the Company are in compliance
with all applicable laws, to the extent noncompliance reasonably could
be expected to lead to a Material Adverse Effect.
(i) The Company has not engaged in any conduct that reasonably
could be expected to lead to the imposition of a material Liability
upon the Company or the Buyer relating to mischarging, fraud, false
claims, false certifications, and the Foreign Corrupt Practices Act
that reasonably could be expected to lead to a Material Adverse Effect.
(j) Since January 12, 1999, the Company has complied in all
material respects with all of its obligations under Government
Contracts relating to any government furnished property or similar
property or equipment owned by the United States or any contractor.
(k) To the knowledge of the Company, the Company within the
past three years has not violated and is not presently in violation of
(i) any laws, directives, or regulations relating to security
clearances or the protection of classified information; (ii) its
security agreements relating thereto; or (iii) any laws, directives, or
regulations relating to export controls.
(l) To the Company's knowledge, Schedule 3.21(l) sets forth a
list and description of each final audit, inspection or investigation,
or in the absence thereof, a draft thereof, received by the Company
within three years prior to the date hereof and performed by or for any
prime or higher-tiered contractor or subcontractor, or Governmental
Authority, including the Defense Contract Audit Agency, the Defense
Contract Management Command, the Defense Contract Administration
Service Management Area, the Defense Criminal Investigative Service,
any government agencies under the supervision of the Secretary of
Defense, any investigative agency, the Defense Security Service, any
Inspector General, the Department of Justice, the Department of State,
or the General Accounting Office (other than routine audits by resident
auditors, none of which is material to the business of the Company).
(m) Schedule 3.21(m) sets forth a list and description of each
settlement agreement concerning Government Contracts between the
Company and the U.S. Government which currently has or is expected to
have a binding effect on the Company after the Closing Date, and under
which the Company has material unperformed obligations with respect
thereto.
3.22 Insurance. Schedule 3.22 sets forth a complete and accurate list,
as of the Interim Balance Sheet Date, of all insurance policies carried by the
Company and all insurance loss runs or workmen's compensation claims received by
the Company under such policies for the past two (2) policy years. The Company
has delivered or made available to NII and FMTTM true,
20
complete and correct copies of all current insurance policies, all of which are
in full force and effect. All premiums payable under all such policies have been
paid and the Company is otherwise in full compliance with the terms of such
policies in all material respects. Such policies of insurance are of the type
and in amounts customarily carried by Persons conducting businesses similar to
that of the Company. To the knowledge of the Company, there have been no
threatened terminations of, or premium increases with respect to, any of such
policies.
3.23 Environmental Matters.
(a) Hazardous Materials. Other than as set forth on Schedule
3.23, to the knowledge of the Company, no underground storage tanks and
no amount of Hazardous Materials are present in, on or under any
property, including the land and the improvements, ground water and
surface water thereof, that the Company has at any time owned,
operated, occupied or leased. Schedule 3.23 identifies all underground
and aboveground storage tanks, and the capacity, age and contents of
such tanks, known by the Company to be located on Real Property owned
or leased by the Company.
(b) Hazardous Materials Activities. The Company has not
transported, stored, used, manufactured, disposed of or released, or
exposed its employees or others to, Hazardous Materials in violation of
any law in effect on or before the date hereof, nor has the Company
disposed of, transported, sold, or manufactured any product containing
a Hazardous Material (collectively, "Company Hazardous Materials
Activities") in violation of any rule, regulation, treaty or statute
promulgated by any Governmental Authority in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or
any Company Hazardous Material Activity. Schedule 3.23(b) identifies
all Company Hazardous Materials Activities currently conducted or
formerly conducted within the past five (5) years.
(c) Permits. The Company does not hold any environmental
approvals, permits, licenses, clearances and consents and none is
required for the conduct of the Company's businesses as such businesses
are currently being conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim
against the Company is pending, or to the knowledge of the Company,
threatened in writing against the Company concerning any Hazardous
Material or any Company Hazardous Materials Activity. To the knowledge
of the Company, there are no past or present actions, activities,
circumstances, conditions, events, or incidents that could involve the
Company (or any Person whose liability the Company has retained or
assumed, either by contract or operation of law) in any environmental
litigation, or impose upon the Company (or any Person whose liability
the Company has retained or assumed, either by contract or operation of
law) any material environmental liability including, without
limitation, common law tort liability.
3.24 Labor and Employment Matters. Except as disclosed in Schedule
3.24, with respect to employees of and service providers to the Company:
(a) for purposes of this Section 3.24 and Section 3.25, the
phrases "Company's knowledge," "to the knowledge of the Company" or
words of similar import
21
include, in addition to those Persons designated in the first paragraph
of this Section, the Company's Director of Human Resources;
(b) the Company is and, for the past two (2) years has been,
in compliance in all material respects with all employment agreements
and applicable domestic and foreign laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, including without limitation any such laws respecting employment
discrimination, sexual harassment, workers' compensation, family and
medical leave, the Immigration Reform and Control Act, and occupational
safety and health requirements. No claims controversies,
investigations, or suits are pending or, to the Company's knowledge,
threatened with respect to such agreements or laws, either by private
individuals or by governmental agencies, and except as set forth on
Schedule 3.24(b) all United States based employees are at-will;
(c) there is not now, nor within the past two (2) years has
there been, any unfair labor practice complaint against the Company
pending or, to the Company's knowledge, threatened, before the National
Labor Relations Board, the Equal Employment Opportunity Commission or
any other comparable state, local or foreign authority nor is the
Company engaged nor, to the Company's knowledge, has it within such
period engaged in any unfair labor practice;
(d) there is not now, nor within the past two (2) years has
there been, any labor strike, slowdown or stoppage actually pending or,
to the Company's knowledge, threatened, against the Company;
(e) to the Company's knowledge, no labor representation
organization effort exists nor has there been any such activity within
the past two (2) years;
(f) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and, to the Company's
knowledge, no claims therefor exist or have been threatened;
(g) with the exception of those working in Germany, the
employees of the Company are currently not, and have ever been
represented by any labor union and no collective bargaining agreement
is binding and in force against the Company or currently being
negotiated by the Company;
(h) all Persons classified by the Company as independent
contractors do satisfy and have satisfied the requirements of law to be
so classified, and the Company has fully and accurately reported the
compensation of all independent contractors hired by the Company on IRS
Forms 1099 when required to do so. Schedule 3.24 contains a list of all
IRS Forms 1099 that have been issued by the Company in the last two (2)
fiscal years, and the aggregate amount in dollars reported under IRS
Forms 1099 for each such fiscal year;
(i) within the last two (2) years, there have been no claims
brought against the Company or, to the knowledge of the Company,
against any officer, director or employee of the Company or other
Person with whom an employee may have dealings through her employment
22
by the Company, with respect to employment, employment practices or
terms or conditions of employment, including without limitation claims
alleging sexual harassment or discrimination.
3.25 Employee Benefit Plans.
(a) Schedule 3.25 contains a complete and accurate list of all
Company Plans and Company Benefit Arrangements.
(b) With respect, as applicable, to Employee Benefit Plans and
Benefit Arrangements:
(i) true, correct, and complete copies of all the
following documents with respect to each Company Plan and
Company Benefit Arrangement, to the extent applicable, have
been delivered or made available to NII and FMTTM or its
designee: (A) all documents constituting the Company Plans and
Company Benefit Arrangements, including but not limited to,
trust agreements, insurance policies, service agreements, and
formal and informal amendments thereto; (B) the most recent
Forms 5500 or 5500C/R and any financial statements attached
thereto and those for the prior three (3) years; (C) the last
IRS determination letter, and the last IRS determination
letter that covered the qualification of the entire plan (if
different); (D) the most recent summary plan description; (E)
the most recent written descriptions of all non-written
agreements relating to any such plan or arrangement; (F) all
notices that were issued to the Company within the two (2)
years preceding the date of this Agreement by the IRS,
Department of Labor, or any other domestic or foreign
governmental agency or entity with respect to any Company Plan
or Company Benefit Arrangement; and (G) current Company
employee manuals or handbooks containing personnel or employee
relations policies;
(ii) the 401(k) Plan (the "Company 401(k) Plan") is
the only Qualified Plan. The Company has never maintained or
contributed to another Qualified Plan. No action or omission
by the Company during the past two years has caused the
Company 401(k) Plan to not be qualified under Section 401(a)
of the Code (or if such plan is not qualified, such lack of
qualification can be corrected under an available IRS
correction method with an expense, including correction, to
the Company of less than $100,000; provided however that only
for purposes of calculating whether the expense to the Company
was less than $100,000 professional fees shall not be included
in the calculation), and any trusts maintained pursuant
thereto are exempt from federal income taxation under Section
501 of the Code, and to the Company's knowledge nothing has
occurred with respect to the design or operation of any
Qualified Plan that could cause the loss of such qualification
or exemption or the imposition of any liability, lien,
penalty, or tax under ERISA or the Code;
(iii) the Company has never sponsored or maintained,
had any obligation to sponsor or maintain, or had any
liability (whether actual or contingent, with respect to any
of its assets or otherwise) with respect to any Employee
Benefit Plan subject to Section 302 of ERISA or Section 412 of
the Code or Title IV of ERISA (including any Multiemployer
Plan);
(iv) each Company Plan, Company Benefit Arrangement,
or Foreign Benefit Plan or Arrangement has been maintained in
all material respects in accordance with its
23
constituent documents and with all applicable provisions of
the Code, ERISA and other domestic and foreign laws, including
federal and state securities laws;
(v) there are no pending claims or lawsuits by,
against, or relating to any Employee Benefit Plans or Benefit
Arrangements that are not Company Plans or Company Benefit
Arrangements that would, if successful, result in liability of
the Company, and no claims or lawsuits have been instituted
or, to the knowledge of the Company, threatened by, against,
or relating to any Company Plan or Company Benefit
Arrangement, against the assets of any trust or other funding
arrangement under any such Company Plan, by or against the
Company with respect to any Company Plan or Company Benefit
Arrangement, or by or against the plan administrator or any
fiduciary of any Company Plan or Company Benefit Arrangement.
The Company Plans and Company Benefit Arrangements are not
presently under audit or, to the knowledge of the Company,
examination (nor has notice been received of a potential audit
or examination) by the IRS, the Department of Labor, or any
other governmental agency or entity, and there are no matters
pending with respect to the Company 401(k) Plan under the
IRS's Employee Plans Compliance Resolution System, or other
similar programs;
(vi) except as set forth in Schedule 3.25, no Company
Plan or Company Benefit Arrangement contains any provision or
is subject to any law that would prohibit the transactions
contemplated by this Agreement or that would give rise to any
vesting of benefits, severance, termination, or other payments
or liabilities as a result of the transactions contemplated by
this Agreement;
(vii) with respect to each Company Plan, no
non-exempt "prohibited transaction" (within the meaning of
Section 4975 of the Code) or transaction prohibited by Section
406 of ERISA or breach of any fiduciary duty described in
Section 404 of ERISA has occurred in the prior two (2) years
that will result or has resulted in any liability for the
Company, either directly or by indemnification obligation;
(viii) all material reporting, disclosure, and notice
requirements of ERISA and the Code have been satisfied with
respect to each Company Plan and each Company Benefit
Arrangement;
(ix) [reserved]
(x) payment has been made of all amounts that the
Company is required to pay as contributions to the Company
Benefit Plans as of the last day of the most recent fiscal
year of each of the plans ended before the date of this
Agreement; all benefits accrued under any unfunded Company
Plan or Company Benefit Arrangement will have been paid,
accrued, or otherwise adequately reserved in accordance with
GAAP as of the Interim Balance Sheet Date; and all monies
withheld from employee paychecks with respect to Company Plans
have been transferred to the appropriate plan within the time
limits imposed by applicable regulations;
(xi) the Company has not prepaid or prefunded any
Company sponsored Welfare Plan through a trust, reserve,
premium stabilization, or similar account, nor
24
does it provide benefits through a voluntary employee
beneficiary association as defined in Section 501(c)(9) of the
Code;
(xii) the Company has no liability (whether actual,
contingent, with respect to any of its assets or otherwise)
with respect to any Benefit Arrangement or any Employee
Benefit Plan sponsored or maintained by any ERISA Affiliate;
(xiii) all group health plans of the Company and its
ERISA Affiliates have been operated in material compliance
with the requirements of Sections 4980B and 5000 of the Code
and Parts 6 and 7 of Title I of ERISA; and
(xiv) no employee or former employee of the Company
or beneficiary of any such employee or former employee is, by
reason of such employee's or former employee's employment,
entitled to receive any benefits, including, without
limitation, death or medical benefits (whether or not insured)
beyond retirement or other termination of employment as
described in Statement of Financial Accounting Standards No.
106, other than (i) benefits under a Qualified Plan, (ii)
deferred compensation benefits accrued as liabilities on the
Closing Statement or (iii) benefits mandated by applicable
law.
(c) [reserved]
(d) Schedule 3.25 hereto sets forth an accurate list, as of
the date hereof, of all employees of the Company who earned more than
$75,000 in fiscal 2000 or are scheduled to earn more than $75,000 in
fiscal year 2001, all officers and all directors, and all employment
agreements (written or oral) with such employees, officers and
directors and the rate of compensation (and the portions thereof
attributable to salary, bonus, and other compensation respectively) of
each such Person as of the Interim Balance Sheet Date.
(e) The Company has not declared or paid any bonus
compensation in contemplation of the transactions contemplated by this
Agreement.
(f) Except as set forth on Schedule 3.25, there are no
Contingent Deferred Sales Charges ("CDSC's") or similar surrender fees,
asset charges or other penalties that will become payable as a result
of the termination of any Qualified Plan or the merger of the assets of
such Qualified Plan into a plan or benefit arrangement of NII and
FMTTM.
3.26 Taxes.
(a) The Company and each of its Subsidiaries have timely filed
all Tax Returns required to have been filed, and such Tax Returns are
true, correct and complete in all respects.
(b) The Company and each of its Subsidiaries have paid in full
on a timely basis all Taxes owed by them (whether or not shown on any
Tax Return), except Taxes that have been fully reserved against on the
Company Financial Statements.
(c) The amount of the Company's and its Subsidiaries'
liability for accrued and unpaid Taxes as of the Interim Balance Sheet
Date did not exceed the amount of the current
25
liability accruals for Taxes (excluding reserves for deferred Taxes
established to reflect timing differences between book and Tax income)
shown on the Interim Balance Sheet, and the amount of the Company's and
its Subsidiaries' liability for unpaid Taxes as of the Closing Date do
not exceed the Closing Date Tax Reserves.
(d) The Company and each of its Subsidiaries currently file
federal income tax returns on the basis of a 52/53 week taxable year
ending on the Sunday nearest to December 31.
(e) The Company and each of its Subsidiaries currently
utilizes the accrual method of accounting for income Tax purposes and
has not changed its overall method of accounting in the past two (2)
years. Neither the Company nor any of its Subsidiaries have agreed to
make any voluntary change in method of accounting, and neither the
Company nor any of its Subsidiaries is or will be required to change
its method of accounting in any taxable year ending on or before the
Closing Date which would require the Company or any of its Subsidiaries
to take into account in computing taxable income for any Taxable Period
(or portion thereof) ending after the Closing Date any adjustments
under Section 481(a) of the Code.
(f) The Company and its Subsidiaries have withheld or
otherwise collected and paid over to the proper governmental
authorities all Taxes required to have been withheld or otherwise
collected and paid over and complied with all information reporting and
backup withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts paid to any
employee, independent contractor, creditor, or other third party.
(g) There is no governmental audit of the Tax Returns of the
Company and its Subsidiaries in process, pending or threatened by
written notice to the Company. No deficiencies exist or have been
asserted by written notice to the Company with respect to Taxes of the
Company or any of its Subsidiaries, and neither the Company nor any of
its Subsidiaries has received written notice or expects to receive
notice that it has not filed a Tax Return or paid Taxes required to
have been filed or paid by it that, in any case, has not been finally
resolved since the receipt of any such notice. Neither the Company nor
any of its Subsidiaries is a party to any action or proceeding for
assessment or collection of Taxes, and no such event has been asserted
or threatened in writing against the Company or its Subsidiaries, or
any of their assets, which has not been resolved. No waiver or
extension of any statute of limitations with respect to assessment or
collection of Taxes is in effect with respect to Taxes or Tax Returns
of the Company or its Subsidiaries. Except as set forth on Schedule
3.26(f), neither the Company nor any of its Subsidiaries have received
any written ruling of a Taxing Authority relating to Taxes. Neither the
Company nor any of its Subsidiaries has entered into any closing
agreement or similar written binding agreement with a Taxing Authority
relating to Taxes which would have continuing effect after the Closing
Date.
(h) There are no Liens on the assets of the Company or its
Subsidiaries relating to or attributable to Taxes, except Liens for
Taxes not currently due and payable.
(i) None of the assets of the Company or its Subsidiaries is
"tax exempt use property" within the meaning of Section 168(h) of the
Code. Neither the Company nor its
26
Subsidiaries is a party to any "safe harbor lease" that is subject to
the provisions of Section 168(f)(8) of the Code as in effect prior to
the Tax Reform Act of 1986. Any asset of the Company or its
Subsidiaries that is considered a "long term contract" within the
meaning of Section 460 of the Code has been correctly reported for tax
purposes.
(j) There are no contracts, agreements, plans or arrangements,
including but not limited to the provisions of this Agreement, covering
any employee or former employee of the Company or its Subsidiaries
that, individually or collectively, will give rise to the payment of
any amount (or portion thereof) in connection with the consummation of
the transactions contemplated by this Agreement that would not be
deductible pursuant to Section 280G of the Code.
(k) The Company and its Subsidiaries have not filed any
consent under Section 341(f) of the Code nor agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by the
Company or its Subsidiaries.
(l) Neither the Company nor any of its Subsidiaries (i) is a
party to any Tax allocation, Tax indemnity, Tax sharing agreement, or
any similar arrangement pursuant to which it has agreed to be liable
for or reimburse the Taxes of any Person other than the Company and its
Subsidiaries; or (ii) has any liability for Taxes of any Person other
than the Company and its Subsidiaries (x) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
result of being a member of an affiliated or consolidated group, other
than the affiliated group of which the Company is the common parent, on
or prior to the Closing Date, or (y) as a transferee or successor, by
contract or otherwise.
(m) The Company is not, nor has it been at any time during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
(n) Neither the Company nor any of its Subsidiaries is or has
ever been a member of an affiliated group filing a consolidated federal
income Tax Return other than one in which the Company was the common
parent, or filed or been included in a combined, consolidated or
unitary Tax Return, which included any members other than the Company
and its Subsidiaries.
(o) Neither the Company nor any of its Subsidiaries has net
operating losses or other Tax attributes presently subject to
limitation under Sections 382, 383 or 384 of the Code, or Treas. Reg.
Sections 1.1502-21 or 1.1502-15 (all determined without regard to the
effect of the transactions contemplated by this Agreement).
(p) During the five-year period ending on the date hereof,
neither the Company nor any subsidiary of the Company was a
distributing corporation or a controlled corporation in a transaction
intended to be governed by Section 355 of the Code. Neither the Company
nor any of its Subsidiaries is a party to any understanding or
arrangement described in Section 6111(d) which is required to have been
registered pursuant to Section 6111(a) of the Code.
27
(q) Neither the Company nor any of its Subsidiaries owns any
shares of NII and FMTTM. Neither the Company nor any of its
Subsidiaries has an "overall foreign loss" as such term is defined in
Section 904(f) or has any "dual consolidated loss" as such term is
defined in Section 1503(d). The Company has provided NII and FMTTM with
an accurate and complete list of all intercompany transactions on which
recognition of gain or loss has been deferred under Treas. Regs.
Section 1.1502-13 and the amount of any gain or loss remaining subject
to such deferral. There is no indebtedness between the Company and its
Subsidiaries, on the one hand, and NII and FMTTM or its affiliates, on
the other hand (except as contemplated under this Agreement).
(r) No excess loss account (as such term is defined in Treas.
Reg. Section 1.1502-19) exists with respect to any of the Company's
Subsidiaries.
(s) The Company has made available to or has delivered to NII
true and complete copies of all income Tax Returns of the Company and
its Subsidiaries or other material Tax Returns and any K-1's received
by the Company or any of its Subsidiaries reasonably requested by NII
in writing for Taxable periods ending after December 31, 1998
(including any available list of tax elections relating to items
reflected on such Tax Returns).
3.27 Conformity with Law; Litigation.
(a) The Company has not violated any law or regulation or any
order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over it (except where such violation would not have a
Material Adverse Effect on the Company).
(b) Except as set forth on Schedule 3.27, there are no claims,
actions, suits or proceedings, pending or, to the knowledge of the
Company, threatened against or involving the Company, at law or in
equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it which would have a Material
Adverse Effect on the Company, and no notice of any such claim, action,
suit or proceeding, whether pending or threatened, has been received.
There are no arbitration or mediation proceedings pending against the
Company or, to the knowledge of the Company, threatened which would
have a Material Adverse Effect on the Company. There are no judgments,
orders, injunctions, decrees, stipulations or awards (whether rendered
by a court or administrative agency or by arbitration) against the
Company or against any of its properties or businesses.
3.28 Relations with Governments. The Company has not made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for government office, nor has it otherwise taken any action that,
directly or indirectly, would cause the Company to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any law of similar effect.
3.29 Absence of Changes. Since December 31, 2000 and through the date
hereof, the Company has conducted its business in the ordinary course and,
except as contemplated herein or as set forth on Schedule 3.29, there has not
been:
28
(a) any Material Adverse Effect on the Company;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the properties or
business of the Company;
(c) any change in the authorized capital of the Company or in
its outstanding securities or any change in its ownership interests or
any grant of any options, warrants, calls, conversion rights or equity
commitments;
(d) any declaration or payment of any dividend or distribution
in respect of the capital stock, or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
Company;
(e) any increase in the compensation, bonus, sales commissions
or fee arrangements payable or to become payable by the Company to any
of its officers, directors, Stockholders, employees, consultants or
agents, except for ordinary and customary bonuses and salary increases
in accordance with past practice, nor has the Company entered into or
amended any Company Benefit Arrangement, Company Plan, employment,
severance or other agreement relating to compensation or fringe
benefits;
(f) any work interruptions or labor grievances involving, or
claims filed against the Company;
(g) any sale or transfer, or any agreement to sell or
transfer, other than in the ordinary course of business, any assets,
property or rights (including without limitation any Company
Intellectual Property) material to the business of the Company to any
Person, including without limitation the Stockholders and their
Affiliates;
(h) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company in excess of $250,000,
including without limitation any indebtedness or obligation of the
Stockholders and their affiliates, except for the adjustment of bills
in the course of good faith disputes with customers in a manner
consistent with past practice;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the
material assets, property or rights of the Company or requiring consent
of any party to the transfer and assignment of any such material
assets, property or rights;
(j) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of business of the Company;
(k) any waiver of any material rights of the Company;
(l) any breach, amendment or termination of any Material
Contract;
29
(m) any single capital expenditure or commitment by the
Company exceeding $250,000;
(n) any change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by the
Company or the revaluation by the Company of any of its assets, except
in accordance with GAAP;
(o) any creation or assumption by the Company of any mortgage,
pledge, security interest or lien or other encumbrance on any material
asset (other than Permitted Liens);
(p) any entry into, amendment of, relinquishment, termination
or non-renewal by the Company of any contract, lease transaction,
commitment or other right or obligation requiring aggregate payments by
the Company in excess of $250,000 that was not incurred in accordance
with the Company's annual operating plan, a true and correct copy of
which has been delivered to NII;
(q) except in connection with the Company's credit facility,
any loan by the Company to any Person or entity, incurring by the
Company, of any indebtedness for borrowed money, guaranteeing by the
Company of any indebtedness for borrowed money, issuance or sale of any
debt securities of the Company or guaranteeing of any debt securities
of others;
(r) the commencement or notice to the Company or, to the
knowledge of the Company, threat of commencement, of any lawsuit or
proceeding against, or investigation of, the Company or any of its
affairs;
(s) any discharge or satisfaction by the Company of any Lien
or Encumbrance or payment by the Company of any obligation or liability
other than the Company's current liabilities in the ordinary course of
business and Permitted Liens;
(t) any charitable contribution or pledge by the Company; and
(u) any investment in or incorporation of any Subsidiary; or
negotiation or agreement by the Company or any officer or employee
thereof to do any of the things described in the preceding clauses (a)
through (t) (other than negotiations with NII and FMTTM and its
representatives regarding the transactions contemplated by this
Agreement).
3.30 Inventory. The Company has no inventory, except for general office
supplies.
3.31 Disclosure. The Company has delivered or made available to NII and
FMTTM true and complete copies of each agreement, contract, commitment or other
document (or summaries thereof) that is referred to in the Schedules. All
written agreements, lists, Schedules, instruments, exhibits, documents,
certificates, reports, statements and other writings furnished pursuant hereto
or in connection with this Agreement or the transactions contemplated hereby,
are complete and accurate copies thereof. No representation or warranty by the
Company contained in this Agreement or in any certificate furnished or to be
furnished by the Company to NII and FMTTM in connection herewith or pursuant
hereto contains or will contain any untrue
30
statement of a material fact or omits or will omit to state any material fact
necessary in order to make any statement contained herein or therein not
misleading.
4. REPRESENTATIONS OF NII AND FMTTM
To induce the Company and the Stockholders to enter into this Agreement
and consummate the transactions contemplated hereby, NII and FMTTM, jointly and
severally, represent and warrant to the Company and the Stockholders as follows
(for purposes of this Agreement, the phrases "knowledge of the NII and FMTTM" or
the "NII's knowledge," or words of similar import, mean the knowledge of the
members of the Board of Directors of NII and officers of NII, including facts of
which the members of the Board of Directors of NII and officers of NII, in the
reasonably prudent exercise of their duties, should be aware):
4.1 Due Organization. NII is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and FMTTM
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of NII and FMTTM is duly authorized and
qualified to do business under all applicable laws, regulations, ordinances and
orders of public authorities to carry on its business in the places and in the
manner as now conducted, except where the failure to so qualify or be in good
standing would not have a Material Adverse Effect on NII or FMTTM. Schedule 4.1
hereto contains a list of all jurisdictions in which NII and FMTTM are
authorized or qualified to do business. NII and FMTTM have delivered to the
Company and the Stockholders true, complete and correct copies of each of their
Certificate of Incorporation and Bylaws (collectively, the "NII Charter
Documents"). Neither NII nor FMTTM is in violation of NII Charter Documents. NII
and FMTTM have made available the correct and complete corporate minute books,
original stock ledger and corporate seal to the Company. FMTTM is a direct,
wholly owned subsidiary of NII, and except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, FMTTM
has neither incurred any obligation or liability nor engaged in any business or
activity of any type or kind whatsoever or entered into any agreement or
arrangement with any Person.
4.2 Authorization; Validity of Obligations. The representatives of each
of NII and FMTTM executing this Agreement have all requisite corporate power and
authority to enter into and bind NII or FMTTM, as the case may be, to the terms
of this Agreement. Each of NII and FMTTM has the full legal right, power, and
corporate authority to enter into this Agreement and the transactions
contemplated hereby and to perform each of their obligations pursuant to the
terms of this Agreement. The execution and delivery of this Agreement by each of
NII and FMTTM and the performance by each of them of the transactions
contemplated herein have been duly and validly authorized by all necessary
corporate action. This Agreement is, and upon execution and delivery, the Escrow
Agreement and the Registration Rights Agreement will be, the legal, valid and
binding obligations of each of NII and FMTTM, enforceable against each of them
in accordance with its terms (subject to Bankruptcy Laws and Equitable
Principles).
4.3 No Conflicts. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof will not:
31
(a) conflict with, or result in a breach or violation of any
of the NII and FMTTM Charter Documents;
(b) conflict with, or result in a default (or would constitute
a default but for a requirement of notice or lapse of time or both)
under any document, agreement or other instrument to which NII or FMTTM
is a party, or result in the creation or imposition of any lien, charge
or encumbrance (other than Permitted Liens) on any of NII or FMTTM's
properties pursuant to (i) any law or regulation to which either NII or
FMTTM or any of their respective property is subject, or (ii) any
judgment, order or decree to which NII or FMTTM is bound or any of
their respective property is subject;
(c) result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization of NII or
FMTTM; or
(d) violate any law, order, judgment, rule, regulation, decree
or ordinance to which NII or FMTTM is subject, or by which NII or FMTTM
is bound, (including, without limitation, the HSR Act, together with
all rules and regulations promulgated thereunder); except, in the case
of paragraphs (b), (c) and (d), where such conflict, default, creation,
imposition, termination, impairment or violation would not have a
Material Adverse Effect on NII or FMTTM.
4.4 NII Common Stock. The NII Common Stock to be delivered to the
Stockholders pursuant to this Agreement at the Closing, upon exercise of the NII
Options, and upon payment of the Contingent Merger Consideration will be duly
authorized, validly issued shares of common stock, par value $.001 per share, of
NII, fully paid and nonassessable, and as of the Closing NII shall have reserved
shares of NII Common Stock for issuance pursuant to the NII Options and the
payment of the Contingent Merger Consideration on NII's books.
4.5 NII Capitalization.
(a) The authorized capital stock of NII consists of
150,000,000 shares of common stock, $.001 par value, of which
13,286,246 shares were issued and outstanding as of June 1, 2001, and
5,000,000 shares of preferred stock, par value $.001 per share, of
which 0 shares are issued and outstanding. The authorized capital stock
of FMTTM consists of 1,000 shares of common stock, $.01 par value, of
which 100 shares are issued and outstanding. All of the issued and
outstanding shares of the capital stock of NII and FMTTM have been duly
authorized and validly issued, and are fully paid and nonassessable.
None of such shares was issued in violation of any preemptive rights
created by or through FMTTM or NII. Except as set forth on Schedule
4.5, there are no stockholders agreements, voting agreements or voting
trusts with respect to, or any agreements with respect to the
registration of, any of the outstanding shares of the capital stock of
NII.
(b) As of June 1, 2001, NII had issued options to purchase
3,094,217 shares of NII Common Stock (the "NII Options"). FMTTM has no
issued options to purchase shares of its capital stock. Other than the
NII Options and except as set forth on Schedule 4.5, there is no
outstanding subscription, option, warrant, call, right, agreement or
commitment relating to the issuance, sale, delivery or transfer by any
Person (including any right of conversion or exchange
32
under any outstanding security or other instrument) of NII's capital
stock or FMTTM's capital stock or any other outstanding security of NII
or FMTTM convertible into capital stock of NII or FMTTM. Except as set
forth on Schedule 4.5, neither NII nor FMTTM has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any
of its equity securities or any interests therein or to pay any
dividend or make any distribution in respect thereof.
4.6 Required Governmental Filings and Consents. Except as set forth on
Schedule 4.6, the execution, delivery and performance of this Agreement by NII
and FMTTM, and the consummation of the transactions contemplated hereby and
thereby by each of them, will not require NII or FMTTM to obtain or make any
consent, approval, authorization or permit of, or filing with or notification
to, (a) any governmental or regulatory authority, domestic or foreign, except
for applicable requirements, if any, of the HSR Act, the DGCL, the Securities
Act, the Exchange Act, state securities or Blue Sky laws and the Bylaws of the
National Association of Securities Dealers, Inc., or (b) any other third party
pursuant to the terms and conditions of any written agreement or contract to
which NII, FMTTM or any of their respective Subsidiaries is a party; except, in
the case of clauses (a) and (b), where the failure to obtain or make such
consent, approval, authorization, permit, filing or notification would not have
a Material Adverse Effect on NII or FMTTM.
4.7 SEC Reports and Financial Statements. Each form, report, schedule,
registration statement and definitive proxy statement filed by NII with the SEC
prior to the date hereof (as such documents have been amended prior to the date
hereof, the "NII SEC Reports"), as of their respective dates, complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder. None of the NII SEC
Reports, as of the date on which such NII SEC Report was declared effective
pursuant to the Securities Act or the date on which such NII SEC Report was
filed pursuant to the Exchange Act, as applicable, contained or contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of NII and its Subsidiaries included in such reports comply
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP, consistently applied (except, in the case
of the unaudited interim financial statements, as permitted by Form 10-Q of the
SEC) and fairly present in all material respects (subject, in the case of the
unaudited interim financial statements, to normal, year-end audit adjustments)
the consolidated financial position of NII and its Subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended. Except as set forth in Schedule 4.7, since December 31,
2000, neither NII nor any of its Subsidiaries has incurred any liabilities or
obligations (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become due) of any nature,
except liabilities, obligations or contingencies (a) which are reflected on the
consolidated balance sheet of NII and its Subsidiaries as at December 31, 2000
(including the notes thereto) or (b) which (i) were incurred in the ordinary
course of business after December 31, 2000 and consistent with past practices,
or (ii) are disclosed in the NII SEC Reports. Since December 31, 1999, NII has
timely filed with the SEC all forms, reports and other documents required to be
filed prior to the date hereof, and no Subsidiary of NII has filed, or been
required to file, any form, report or other document with the SEC, in each case,
pursuant to the Securities Act, the Exchange Act or the rules and regulations
thereunder. Since December
33
31, 2000, except as described in the NII SEC Reports, there has been no change
in any of the significant accounting (including tax accounting) policies,
practices or procedures of NII or any Subsidiary of NII, except changes
resulting from changes in accounting pronouncements of Financial Accounting
Standards Boards or changes in applicable laws or rules or regulations
thereunder.
4.8 Related Party Transactions. Except as set forth on Schedule 4.8, no
officer, director or 5% shareholder of NII or any of its Subsidiaries, or any
ancestor, sibling, descendant or spouse of any of such Persons, or any Person
with which any of such Persons is Affiliated (each an "NII Related Party") (i)
is Affiliated with any entity that furnished or sold, or furnishes or sells,
services or products that NII or any of its Subsidiaries furnishes or sells, or
(ii) is Affiliated with any entity that purchases from or sells or furnishes to,
NII or any of its Subsidiaries any good or services or (iii) has a beneficial
interest in any material contract to which NII or any of its Subsidiaries are
party; provided, however, that ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded corporation shall not be deemed an
"interest in any Person" for purposes of this Section 4.8. No officer or
director of NII has any material interest, either directly or indirectly, in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of NII or its Subsidiaries, including any interest in the Intellectual
Property of NII or its Subsidiaries, and except for rights under any NII
Employee Benefit Plan or as an employee of NII or any of its Subsidiaries. No
employee, stockholder, officer or director of NII, or their spouses or children,
is indebted to NII or any of its Subsidiaries nor is NII or any of its
Subsidiaries indebted to any of them (except for expense advancements and
reimbursements in the ordinary course of NII's business).
4.9 Conformity with Law; Relations with Governments; Litigation.
Neither NII nor any of its Subsidiaries have violated any law or regulation or
any order of any Governmental Authority having jurisdiction over it which would
have a Material Adverse Effect on NII or any of its Subsidiaries. Neither NII
nor any of its Subsidiaries has made, offered or agreed to offer anything of
value to any governmental official, political party or candidate for government
office, nor has it otherwise taken any action that would cause NII or any of its
Subsidiaries to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any law of similar effect. Except as set forth on Schedule 4.9,
there are no claims, actions, suits or proceedings, pending or, to the knowledge
of NII, threatened against or involving NII or any of its Subsidiaries, at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over it which would have a Material Adverse Effect on NII or
any of its Subsidiaries, and no notice of any such claim, action, suit or
proceeding, whether pending or threatened, has been received. There are no
arbitration or mediation proceedings pending against NII or any of its
Subsidiaries or, to the knowledge of NII, threatened which would have a Material
Adverse Effect on NII or any of its Subsidiaries. There are no material
judgments, orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency or by arbitration) against NII or
any of its Subsidiaries or against any of their respective properties or
businesses.
34
4.10 Absence of Changes. Except as set forth in Schedule 4.10, since
the date of the most recent NII SEC Report that has been filed with the SEC,
there has not occurred or arisen any event that, individually or in the
aggregate, has had or, insofar as can be reasonably foreseen, would have a
Material Adverse Effect on NII or any of its Subsidiaries.
4.11 Reliance. In entering into this Agreement, NII and FMTTM have
relied solely on representations made in this Agreement and any certificates and
documents required to be provided by the Company and the Stockholders pursuant
to this Agreement. NII and FMTTM have been represented by counsel and has had
sufficient opportunity to examine and understand the business and assets of the
Company.
4.12 Disclosure. NII has delivered or made available to the Company and
the Stockholders true and complete copies of each agreement, contract,
commitment or other document (or summaries thereof) that is referred to in the
Schedules. All written agreements, lists, Schedules, instruments, exhibits,
documents, certificates, reports, statements and other writings furnished
pursuant hereto or in connection with this Agreement or the transactions
contemplated hereby, are complete and accurate copies thereof. No representation
or warranty by NII or FMTTM contained in this Agreement or in any certificate
furnished or to be furnished by NII or FMTTM to the Company or the Stockholders
in connection herewith or pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary in order to make any statement contained herein or therein not
misleading.
5. COVENANTS
5.1 Tax Matters.
(a) The following provisions shall govern the allocation of
responsibility for certain Tax matters:
(i) NII shall prepare or cause to be prepared and
file or cause to be filed, within the time and in the manner
provided by law, all Pre-Closing Returns of the Company and
its Subsidiaries and all Straddle Returns of the Company and
its Subsidiaries. All such Pre-Closing Returns and Straddle
Returns shall be prepared in a manner consistent with prior
practice of the Company and its Subsidiaries, unless (1) there
is not substantial authority for a position based on prior
practice or (2) a change in practice could not reasonably be
expected to give rise to an indemnity obligation by the
Stockholders (determined without regard to the application of
Section 8.3(a) of this Agreement). Neither NII nor any NII
Affiliate may amend a Tax Return filed with respect to the
Company or any of its Subsidiaries for a Taxable Period
beginning prior to the Closing Date or make any Tax election
for such period if such amendment or election would give rise
to an indemnification obligation by the Stockholders
(determined without regard to the application of Section
8.3(a) of this Agreement), unless such amendment or election
is consented to by the Stockholders' Representative, which
consent shall not be unreasonably withheld. At the
Stockholders' expense, NII shall cause the Company or any of
its Subsidiaries to amend any Pre-Closing Return of the
Company or its Subsidiaries if (1) such amendment is
reasonably requested by the Stockholders' Representative; and
(2) the amendment is required to be made to make the Tax
Return for such Taxable Period consistent with
35
adjustments proposed by a Taxing Authority with respect to any
Taxable Period or portion thereof ending on or before the
Closing Date.
(ii) No later than thirty (30) days prior to filing
any Straddle Return or Pre-Closing Return relating to income
Taxes that is to be filed after the Closing Date (or, if the
Tax Return is due prior to such time, prior to filing and as
soon as possible following the Closing Date) and if the Tax
liability shown on any such Tax Return, as proposed to be
filed, exceeds the amount of Taxes included in the Closing
Date Tax Reserves in respect of such Tax Return, NII shall
provide the Stockholders' Representative with a copy of such
Tax Returns as proposed to be filed. If the Stockholders'
Representative reasonably objects within fifteen (15) days to
any item reported on any Tax Return described in the previous
sentence, NII and the Stockholders' Representative shall
proceed in good faith to resolve the matters in dispute;
provided that the Stockholders' Representative may only object
to a position on a Tax Return if (A) such position is not
consistent with the past practices of the Company and its
Subsidiaries or, if there has been no prior practice adopted
with respect to the item at issue, the reporting position
proposed by NII would not reasonably be expected to minimize
the aggregate anticipated Taxes of the Company and its
Affiliates for the current and future Taxable Periods of the
Company and its Affiliates (taking into account time value
concepts), (B) there is substantial authority for an
alternative position proposed by the Stockholders and (C) such
position would require indemnification by the Stockholders
under Section 8.1; and provided further that the pendency of a
dispute shall not prevent NII from filing the Tax Return at
issue in the time and manner required by law. If NII and the
Stockholders' Representative are unable to resolve the matters
in dispute within fifteen (15) days, such matters shall be
submitted to the Reviewing Accountants (as chosen pursuant to
Section 1.8(d)). If the Reviewing Accountants determine that
the objection of the Stockholders' Representative to a Tax
Return position was an objection that was both a permissible
objection under this Section 5.1(b)(ii) and a reasonable
objection, and if NII filed the Tax Return at issue and
included therein the position that was the subject of the
objection, the Stockholders shall have no indemnification
obligations with respect to Taxes resulting from the
objected-to position to the extent that those Taxes exceed the
Taxes that would have resulted if NII had included in such Tax
Return the alternative position proposed by the Stockholders'
Representative rather than the objected-to position. The fees
and expenses of the Reviewing Accountants with respect to the
resolution of such Tax matters shall be borne by the
non-prevailing party.
(iii) The parties to this Agreement shall (A)
cooperate fully, as reasonably requested, in connection with
the preparation and filing of Tax Returns pursuant to this
Section 5.1 and any audit, litigation or other proceeding with
respect to Taxes; (B) make available to each other, as
reasonably requested, all information, records or documents
with respect to Tax matters pertinent to the Company for all
periods ending prior to or including the Closing Date; and (C)
preserve information, records or documents relating to Tax
matters pertinent to the Company that is in their possession
or under their control until the expiration of any applicable
statute of limitations or extensions thereof and give any
other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if
the other party so requests, allow such other party to take
possession of such books and records; and (D) make employees
available on a mutually convenient basis to provide additional
information and explanation of any material provided
hereunder.
(b) Tax Contests.
36
(i) If any party receives written notice from any
Taxing Authority of a Tax Proceeding with respect to any Tax
which raises an issue (not previously the subject of a notice
to the other party pursuant to this Section 5.1(b)(i))
regarding a potential Tax liability for which the other party
may be liable to a Tax Authority or is otherwise obligated to
provide indemnification under this Agreement, such party shall
give written notice to the other party promptly, within thirty
(30) days thereof (or within such shorter time as may be
necessary to give the Indemnifying Party a reasonable
opportunity to respond to such notice); provided, however,
that the failure to give such notice shall not affect the
indemnification for Damages arising from such Tax Proceeding
under Article 8 of the Agreement.
(ii) Upon written notice to NII within thirty (30)
days after receipt of notification pursuant to Section
5.1(b)(i) above, the Stockholders' Representative shall have
the right, at the Stockholders' expense, to represent the
Company's and its Subsidiaries' interests in any Tax
Proceeding for a Pre-Closing Period with respect to issues for
which the Stockholders could reasonably be anticipated to have
an indemnity obligation for Damages arising from such Tax
Proceeding under Article 8 of the Agreement. The Stockholders'
Representative may employ counsel of its choice, so long as
that counsel is reasonably satisfactory to NII. The
Stockholders' Representative shall not take any position in
such a Tax Proceeding without NII's written consent, other
than a position reflected in the Tax Return for such period,
if the position could adversely affect the Tax liabilities of
NII or its Affiliates for Taxable Periods or portions thereof
beginning after the Closing Date; provided that the
Stockholders' Representative may take a position with respect
to an issue without NII's written consent in a case in which
(x) the issue is not addressed by or reflected in the relevant
Tax Return, (y) the position is not inconsistent with other
positions taken on such Tax Return, and (z) the position, if
accepted, would reasonably be expected to minimize aggregate
anticipated Taxes of the Company (and its Affiliates) for the
Taxable Period at issue and all future Taxable Periods (taking
into account time value concepts). The Stockholders'
Representative shall keep NII reasonably informed of any
material developments in such Tax Proceedings and shall
consult in good faith with NII with respect to the conduct of
such Tax Proceedings. Stockholders' Representative shall not
settle or otherwise terminate any Tax Proceeding described in
this Section 5.1(b)(ii) without the prior written consent of
NII, which consent shall not be unreasonably withheld.
(iii) If the Stockholders' Representative does not
assume the defense of any issue in a Tax Proceeding after
notice described in Section 5.1(b)(ii), NII may defend the
same in such manner as it deems appropriate without in any way
limiting NII's rights to indemnification. NII shall keep the
Stockholders' Representative reasonably informed of any
material developments in such Tax Proceedings and shall
consult in good faith with the Stockholders' Representative
with respect to the conduct of such Tax Proceedings. NII shall
not settle or otherwise terminate any Tax Proceeding described
in this Section 5.1(b)(iii) without the prior written consent
of the Stockholders' Representative, which consent shall not
be unreasonably withheld.
(iv) Upon written notice to NII within thirty (30)
days after receipt of notification pursuant to Section
5.1(b)(i) above, the Stockholders' Representative shall have
the right, at the Stockholders own expense, to join with NII
in the joint control of the conduct of any Tax Proceeding for
a Straddle Period solely with respect to issues for which the
Stockholders could reasonably be anticipated to have an
indemnity obligation to NII, and neither party shall
37
settle such Tax Proceeding without the prior written consent
of the other, which consent shall not be unreasonably
withheld.
(v) Except as otherwise provided in this Section 5.1,
NII shall control all Tax Proceedings relating to the Company
and its Subsidiaries and may defend or settle any such Tax
Proceeding in such manner as it may deem appropriate in its
sole and absolute discretion, without in any way limiting its
rights of indemnification for Damages arising from such Tax
Proceeding under Article 8 of the Agreement.
(vi) The provisions of this Section 5.1 and the
provisions of Section 8.4 hereof each apply by their terms,
but this Section 5.1 shall govern in the case of any conflict
between such provisions in all matters concerning Tax
Proceedings. The Company shall pay or cause to be paid all
Taxes reported as due on the Tax Returns prepared pursuant to
Section 5.1(a), subject to recoupment by Buyer Indemnified
Parties to the extent provided in Article 8 of this Agreement.
(vii) Any indemnity payments made to the
Stockholders, FMTTM, Company or NII pursuant to Article 8
shall constitute an adjustment of the consideration paid for
Tax purposes and shall be treated as such by such parties on
their Tax Returns to extent permitted by law.
5.2 Employee Benefit Plans. NII shall take any and all steps necessary
so that Company employees who become employees of NII or FMTTM as a result of
the transactions contemplated hereby (i) shall receive salary, benefits, and
levels of responsibility substantially comparable to similarly situated
employees of NII and FMTTM taking into account regional differences in
compensation, economic conditions, local laws and other regional variations, and
(ii) shall be entitled to participate in any generally available Benefit
Arrangement or Employee Benefit Plan, or program that is established, maintained
or sponsored by NII or FMTTM, on substantially comparable terms, where
practicable, as other similarly situated employees of NII and FMTTM, except that
(v) such Company employees shall be credited with their years of service with
the Company for the purposes of eligibility to participate, seniority, and
vesting in all such benefits, (w) the Company employees shall not be subject to
any exclusions for pre-existing conditions to the extent not prohibited by NII's
insurance carrier after making commercially reasonable efforts to obtain
releases from such exclusions and to the extent not subject to such exclusions
at the Company, (x) amounts paid by Company employees prior to the Merger
Effective Time under any medical plans of the Company shall be taken into
account in applying deductible, co-payment and out-of-pocket limits applicable
to such employees under NII's or FMTTM's medical or health insurance plans to
the extent practicable, (y) the Company employees shall be permitted to carry
over any vacation leave accrued as of the Closing Date under the Company's
vacation leave policy, and (z) NII or FMTTM shall take all actions necessary to
allow Company employees to spin-off their account balances under flexible
spending arrangements within the Company's Code Section 125 plan to a similar
plan maintained by NII or FMTTM if the Company's plan is terminated before the
end of its current plan year. No provisions of this Section 5.2 or other
Sections of this Agreement require NII or FMTTM to establish or maintain any
employee benefit plan, program or arrangement or payroll practice or prevent
their terminating any individual's employment.
38
5.3 Cooperation.
(a) The parties hereto shall use their commercially reasonable
best efforts to close the Merger and the transactions contemplated
herein by June 12, 2001.
(b) The Company, the Stockholders and NII and FMTTM shall each
deliver or cause to be delivered to the other on the Closing Date, and
at such other times and places as shall be reasonably agreed to, such
instruments as the other may reasonably request for the purpose of
carrying out this Agreement. In connection therewith, if required, the
president or chief financial officer of the Company shall execute any
documentation reasonably required by NII and FMTTM's independent public
accountants (in connection with such accountant's audit of the Company)
or the Nasdaq National Market.
(c) The Stockholders and the Company shall cooperate and use
their reasonable efforts to cause the present officers, directors and
employees of the Company cooperate with NII and FMTTM on and after the
Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods prior to the Closing Date. NII and
FMTTM shall cooperate and use their reasonable efforts to cause the
present officers, directors and employees of NII and its Subsidiaries
cooperate with the Company and the Stockholders on and after the
Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods after the Closing Date.
(d) Each party hereto shall cooperate in obtaining all
consents and approvals required under this Agreement to effect the
transactions contemplated hereby.
5.4 Access to Information; Confidentiality; Public Disclosure. To
facilitate the Merger, the Company and NII and FMTTM shall provide the employees
and agents (the "Representatives") of the other party reasonable access to
information regarding operations, books and records, financial information, and
such other information as may be reasonably requested including permission to
confer with such party's independent accountants. NII and FMTTM agrees to abide
by the terms of the Confidentiality Agreement dated February 28, 2000, between
NII and FMTTM, the Company and the Stockholders (the "Confidentiality
Agreement"). Neither party will make any public disclosure or disclose
information to any third party (except to the Representatives of each party)
concerning the existence of or the matters set forth in this Agreement
(including, without limitation, with respect to the press release announcing the
execution and delivery of this Agreement) without the prior written consent of
the other party as to the timing, content and method of dissemination thereof;
provided that, the parties may, without the prior written consent of any of the
other parties, issue or make, directly or indirectly, any report, statement or
release required by Law (including without limitation filings with the
Securities and Exchange Commission), its fiduciary obligations or any listing
agreement or arrangement to which such Person is a party with a national
securities exchange or national market system if the other parties to this
Agreement are so notified as soon as possible in advance of such report,
statement or release and, to the extent practicable, given a reasonable
opportunity to review and comment on the report, statement or release.
39
5.5 Former Stockholder Payments. Prior to Closing, the Company shall
use commercially reasonable efforts to reach a preliminary agreement with
counsel to the former stockholders of Scheduled Airlines Traffic Offices, Inc.,
a Delaware corporation, (the "Former Stockholders") to make contingent payments
due to the Former Stockholders (the "Former Stockholder Payment"). The Company
shall deliver a true and correct copy of the preliminary agreement to NII at
Closing, such preliminary agreement to be in form reasonably acceptable to NII.
In connection with such preliminary agreement, the Company shall pay into escrow
(pursuant to an escrow agreement reasonably satisfactory to the Company and NII)
an aggregate amount equal to no more than $1,800,000 (the "Former Stockholder
Escrow"), which amount, after the Closing, shall be used to pay amounts due to
the Former Stockholders pursuant to a final settlement and release agreement,
which shall contain terms and conditions satisfactory to the Company, the
Surviving Corporation and the Stockholders' Representative and which shall
provide that any portion of the Former Stockholder Escrow not paid to Former
Stockholders after the resolution of all claims of Former Stockholders for
contingent payments shall be returned to the Surviving Corporation.
5.6 HSR. If applicable, upon execution of this Agreement, the
Stockholders and NII and FMTTM shall promptly file, or cause to be filed, with
the Department of Justice and the Federal Trade Commission the Notification and
Report Form required of such party by the HSR Act and the rules and regulations
of the Federal Trade Commission promulgated thereunder with respect to the
transactions contemplated hereby.
5.7 Appointment of Directors and Officers. Promptly following the
Closing, NII shall appoint Xxxxxxxx X. Xxxxx, the current Co-chairman and CEO of
the Company, to fill the currently vacant seat of the NII Board of Directors.
Also, promptly following the Closing, NII shall expand its Board of Directors by
one seat, and shall appoint a person designated at Closing by the Stockholders
to fill that seat. Unless removed in accordance with the NII Charter Documents,
such directors shall serve the remainder of their applicable terms.
5.8 Registration Rights and Trading Restrictions.
(a) NII and the Stockholders will enter into a Registration
Rights Agreement (the "Registration Rights Agreement") in form and
substance reasonably satisfactory to the parties.
(b) Notwithstanding the rights provided to the Stockholders in
the Registration Rights Agreement, the Stockholders shall not trade or
otherwise dispose of the NII Common Stock until the first anniversary
of the Closing Date; provided however that, the Stockholders may trade
or otherwise dispose of the NII Common Stock prior to the first
anniversary of the Closing Date in connection with (i) a Sale of NII
(upon the occurrence of which the restrictions of this Section 5.8(b)
shall terminate), (ii) if such Stockholder is not an individual, the
distribution of all or a portion of the shares of NII Common Stock held
by such Stockholder to such Stockholder's limited partners, members,
stockholders or other equity interest holders, any successor trustees,
or wholly owned subsidiaries; (iii) transfers to such Stockholder's
spouse, children, grandchildren, other immediate family, or other
lineal descendants or antecedents (or to a trust, limited partnership,
limited liability company or other entity formed for estate planning
purposes for the benefit of any of the foregoing individuals);
40
(iv) any transactions offered to NII stockholders generally; provided
further that, in the case of transfers pursuant to clauses (ii) or
(iii), the transferee of such shares of NII Common Stock shall be
entitled to the benefits, and subject to the restrictions set forth, in
this Section 5.8(b); and further provided that NII acknowledges that
after the Closing certain of the Stockholders intend to distribute all
or portions of the Initial Merger Consideration to certain Persons and
accordingly, upon the effectiveness of a registration statement as
contemplated in the Registration Rights Agreement, the Persons
identified on Exhibit 5.8(b) shall be permitted in the aggregate to
trade or otherwise dispose of sell up to 200,000 shares of the NII
Common Stock in the maximum amounts per Person identified on Exhibit
5.8(b), which Exhibit shall be attached prior to or at Closing.
5.9 Conversion of Options. As of the Closing, in substitution for each
Company Option, NII shall issue to each holder of Company Options granted under
the Company's Amended and Restated 1999 Stock Option Plan (the "Company Option
Plan") an option that does not satisfy the rules of Section 422 of the Code
(each an "NII Option") to purchase the number of shares of NII Common Stock
equal to the product of (i) the number of shares of Company Common Stock into
which the Company Option is exercisable, multiplied by (ii) 0.31397. Such NII
Option shall have an exercise price per share equal to the quotient of (x) the
exercise price per share for the Company Option, divided by (y) 0.31397. No NII
Option for fractional shares shall be issued pursuant to this Section 5.9. All
NII Options for fractional shares shall be rounded up to the next nearest whole
share. Each agreement for an NII Option shall vest and become exercisable on the
same date and in the same proportions as the respective Company Option, and
shall contain terms no less favorable than such Company Option, except that the
NII Options shall be treated as non-qualified options under the Code. Without
limiting the generality of the foregoing, NII represents and warrants that the
terms and conditions of the NII Option, as described herein, have been approved
by the Compensation Committee of NII's Board of Directors prior to the execution
of this Agreement.
5.10 Operation of the Business. Between the date of this Agreement and
the Closing, the Company will:
(a) conduct the business of the Company only in the ordinary
course of business consistent with past practice;
(b) use its commercially reasonable efforts to preserve intact
the current business organization of the Company, keep available the
services of the current officers, employees, and agents of the Company,
and maintain the relations and good will with customers, suppliers,
landlords, creditors, employees, agents, and others having business
relationships with the Company;
(c) perform all of its obligations under the Material
Contracts and perform in all material respects any other agreements
relating to or affecting the business of the Company;
(d) continue to pay its accounts payable in the ordinary
course of business and maintain the same aging of payables as regularly
maintained before the date of this Agreement, except as may be required
by applicable law or GAAP; and
41
(e) continue to timely pay its and its Subsidiaries' Taxes and
timely file all its and its Subsidiaries Tax Returns.
5.11 Negative Covenant. Except as otherwise expressly permitted by this
Agreement or in the ordinary course of business, between the date of this
Agreement and the Closing, the Company will not, without the prior consent of
NII, take any of the following actions:
(a) amend the Charter Documents of the Company;
(b) sell, consume or otherwise dispose of any assets of the
Company, except in the ordinary course of business consistent with past
practice;
(c) revalue any of the assets of the Company (tangible and
intangible) of every kind, including, without limitation, writing off
receivables or reserves, other than in the ordinary course of business
or as may be required by GAAP;
(d) fail to maintain any of the assets of the Company
(tangible and intangible) of every kind in substantially their current
state of repair, excepting normal wear and tear and accidental
casualty, or fail to replace, consistent with past practice,
inoperable, worn-out or obsolete or destroyed assets;
(e) enter into any contract or commitment of any kind
involving more than $500,000, except in the ordinary course of business
or in connection with the opening of a call center in Butte, Montana;
(f) enter into any contract that requires a payment to be made
by the Company upon a change of control of more than twenty-five (25%)
of equity interests in the Company;
(g) amend or terminate any Material Contract, except in the
ordinary course of business consistent with past practice;
(h) except in the ordinary course of business borrow or agree
to borrow any funds or mortgage, pledge or subject to Liens (other than
Permitted Liens) any of the Company's assets, tangible or intangible,
of any kind or assume or guarantee any obligation or liability for
borrowed money; provided that, the Company or its Subsidiaries may
borrow up to an aggregate of $800,000 in connection with the opening of
a call center in Butte, Montana without the prior consent of NII;
(i) redeem, purchase or otherwise acquire any shares of the
capital stock of the Company;
(j) issue any shares of capital stock of the Company or any
options, warrants or other securities convertible into capital stock of
the Company (other than issuances of shares of capital stock of the
Company upon the exercise of outstanding Company Options);
(k) declare any dividend on, or make any distribution with
respect to, the capital stock of the Company;
42
(l) fail to expend funds for capital expenditures or
commitments in accordance with the Company's capital expenditure plan;
(m) cancel any debts owed to the Company in excess of
$100,000, except for compromises of trade debt in the ordinary course
of business consistent with past practice;
(n) make any loans or advances to any Person except for
advances to employees for expenses incurred in the ordinary course of
business consistent with the policies of the Company and (y) trade
credit in the ordinary course of business;
(o) make any changes in the accounting methods, principles or
practices of the Company or make any Tax election (except as may be
required by applicable law or by GAAP);
(p) make any increase, except as consistent with past practice
or as otherwise contemplated by this Agreement or as required by
applicable law or the terms and conditions of any Employee Benefit Plan
or employment agreement, in the wages, salaries, compensation, pension
or other benefits payable to any employee;
(q) enter into any transaction with any Related Person other
than in the ordinary course of business consistent with past practice
and on terms no less favorable than could be negotiated on an arm's
length basis;
(r) acquire control or ownership of all or any part of any
other corporation, association, joint venture, partnership, business
trust or other business entity, or acquire control or ownership of all
or substantially all of the assets of any of the foregoing, or merge,
consolidate or otherwise combine with any other corporation or enter
into any agreement providing for any of the foregoing;
(s) adopt or amend any Benefit Plan or Benefit Arrangement,
except as may be required by applicable law;
(t) except as may be required by applicable law and with prior
written notice to NII, take any action or allow any action to be taken
that causes any representation contained in Section 3.26 (Taxes) to be
incorrect;
(u) settle or otherwise agree to any adjustment relating to
Taxes in an amount in excess of $5,000 or which could have an adverse
affect on the Company or NII for any Taxable Period or portion thereof
beginning on or after the Closing Date; or
(v) agree or commit to do any of the foregoing items (a)
through (u).
5.12 Operation of NII's Business. Between the date of this Agreement
and the Closing, NII will, and will cause its Subsidiaries to:
(a) conduct their respective business only in the ordinary
course of business consistent with past practice;
43
(b) use commercially reasonable efforts to preserve intact the
current business organization of NII and its Subsidiaries, keep
available the services of the current officers, employees, and agents
of NII and its Subsidiaries, and maintain the relations and good will
with customers, suppliers, landlords, creditors, employees, agents, and
others having business relationships with NII and its Subsidiaries; and
(c) perform all of its obligations under the NII material
contracts and perform in all material respects any other agreements
relating to or affecting the business of NII and its Subsidiaries;
5.13 NII and FMTTM Negative Covenants. Except as otherwise expressly
permitted by this Agreement or in the ordinary course of business, between the
date of this Agreement and the Closing, NII and FMTTM will not, and will cause
each of their Subsidiaries not to, take any of the following actions without the
prior consent of the Company:
(a) amend the Charter Documents of NII or FMTTM, except as
necessary to create a new position on the Board of Directors of NII;
(b) redeem, purchase or otherwise acquire any shares of the
capital stock of NII, or subdivide, reclassify, recapitalize, split,
combine or exchange any of its capital stock or other equity
securities;
(c) issue any shares of capital stock of NII or its
Subsidiaries or any options, warrants or other securities convertible
into capital stock of NII or its Subsidiaries (other than (x) issuances
of shares of NII Common Stock upon the exercise of outstanding NII
Options, and (y) issuances of shares or options pursuant to NII's Stock
Incentive Plan);
(d) acquire control or ownership of all or any part of any
other corporation, association, joint venture, partnership, business
trust or other business entity, or acquire control or ownership of all
or substantially all of the assets of any of the foregoing, or merge,
consolidate or otherwise combine with or sell all or substantially all
of the assets of NII or any of its Subsidiaries to any other
corporation or entity, or enter into any agreement providing for any of
the foregoing, such that the consummation of the transactions
contemplated by this Agreement would be materially hindered or delayed;
or
(e) agree or commit to do any of the foregoing items (a)
through (d).
5.14 Notification.
(a) Between the date of this Agreement and the Closing, the
Company will promptly notify NII in writing if the Company becomes
aware of any fact or condition that causes or constitutes a breach of
any of the Company's representations and warranties made as of the date
of this Agreement, or if the Company becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or
constitute a breach, or inaccuracy in, any such representation or
warranty had such representation or warranty been made as of the time
of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Schedules if such Schedule
were dated the date of the occurrence or discovery of any such fact or
condition, the
44
Company will promptly deliver to NII a supplement to the Schedule
specifying such change. NII shall have the right to review each
supplement to the Schedule and to determine, in NII's sole discretion,
whether to accept the supplement to the Schedule or to terminate this
Agreement pursuant to Section 10.1. Such supplement shall be deemed to
amend the applicable Schedule hereto, but shall not be effective for
the purposes of satisfying the conditions to Closing under Section 6.1.
(b) During the same period, the Company will promptly notify
NII of the occurrence of any breach of any covenant of the Company in
this Article 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Article 6 impossible or unlikely.
(c) Between the date of this Agreement and the Closing, NII
and FMTTM will promptly notify the Company in writing if NII or FMTTM
becomes aware of any fact or condition that causes or constitutes a
breach of any of NII's or FMTTM's representations and warranties made
as of the date of this Agreement, or if NII or FMTTM becomes aware of
the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach, or inaccuracy in, any such
representation or warranty had such representation or warranty been
made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Schedules if such Schedule were dated the date of the occurrence or
discovery of any such fact or condition, NII and FMTTM will promptly
deliver to the Company and the Stockholders' Representative a
supplement to the Schedule specifying such change. The Company shall
have the right to review each supplement to the Schedule and to
determine, in NII's sole discretion, whether to accept the supplement
to the Schedule or to terminate this Agreement pursuant to Section
10.1. Such supplement shall be deemed to amend the applicable Schedule
hereto, but shall not be effective for the purposes of meeting the
Company's obligations under Section 7.1. During the same period, NII
and FMTTM will promptly notify the Company of the occurrence of any
breach of any covenant of NII and FMTTM in this Article 5 or of the
occurrence of any event that may make the satisfaction of the
conditions in Article 7 impossible or unlikely.
5.15 Nasdaq Listing; Form S-8. NII agrees to authorize for listing on
Nasdaq the shares of NII Common Stock issuable, and those required to be
reserved for issuance, in connection with the Merger, upon official notice of
issuance. To the extent necessary to register such shares under the Securities
Act, NII agrees to file a registration statement on Form S-8 (for persons
eligible therefor) for the shares of NII Common Stock issuable with respect to
assumed and converted Company Options within thirty (30) days after the Merger
Effective Time, or as soon thereafter as the securities laws permit.
5.16 Blue Sky Laws. NII shall use its commercially reasonable efforts
to obtain prior to the Merger Effective Time all approvals or permits required
to carry out the transactions contemplated hereby under applicable state
securities laws and regulations in connection with the issuance of shares of NII
Common Stock in the Merger and as contemplated by this Agreement; provided,
however, that with respect to such qualifications neither NII nor the Company
shall be required to register or qualify as a foreign corporation or to take any
action which would subject it to general service of process or taxation in any
jurisdiction where any such entity is not now so subject.
45
5.17 Directors and Officers Insurance.
(a) From and after the Merger Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the present and
former officers and directors of the Company and its Subsidiaries (the
"Indemnified Officers/Directors") against all losses, expenses
(including attorneys fees), claims, damages, liabilities or amounts
("Losses") that are paid in settlement (provided that such settlement
has been approved by NII, such approval not to be unreasonably
withheld) of, or otherwise in connection with, any claim, action, suit,
proceeding or investigation, based in whole or in part on the fact that
such person is or was a director or officer of the Company and arising
out of actions or omissions occurring at or prior to the Merger
Effective Time (including, without limitation, the transactions
contemplated hereby), in each case, to the full extent permitted under
the DGCL and the Company's Charter Documents (to the extent permitted
by applicable law), and under any agreements as in effect on the date
of this Agreement (including rights to reimbursement or advancement of
expenses and exculpation from liability).
(b) The Surviving Corporation shall keep in effect provisions
in its articles of incorporation and bylaws providing for exculpation
of director liability and its indemnification of the Indemnified
Officers/Directors to the fullest extent permitted under the DGCL,
which provisions shall not be amended except as required by applicable
law or except to make changes permitted by law that would enlarge the
right of indemnification of the Indemnified Officers/Directors;
provided, however, that the certificate of incorporation, bylaws and
any indemnification agreements shall not provide for exculpation of
director liability and indemnification of the Indemnified
Officers/Directors for Claims under the Agreement which are
conclusively determined to be satisfied by the Escrow Shares (though
until such time that such Claim is conclusively determined, advancement
of expenses by the Surviving Corporation will be required to the extent
required under the Charter Documents and indemnification agreements).
The Surviving Corporation shall keep in effect and comply with the
terms and conditions of the indemnification agreements between the
Company and each of its directors in effect as of the date of this
Agreement.
(c) For a period of three (3) years after the Closing Date,
the Surviving Corporation shall maintain in effect the current policies
of directors' and officers' liability insurance maintained by the
Company, or policies providing substantially the same coverage,
covering persons who are currently covered by the Company's officers'
and directors' liability insurance policies with respect to actions or
omissions occurring at or prior to the Merger Effective Time, to the
extent that such policies are available; provided, however, that
policies of at least the same coverage containing terms and conditions
which are no less advantageous to the insureds may be substituted
therefor, but, in no event shall the Surviving Corporation be required
to spend more than an amount per year equal to 150% of the current
annual premiums paid by the Company for such insurance.
(d) The provisions of this Section 5.17 shall survive the
consummation of the Merger and expressly are intended to benefit each
of the Indemnified Officers/Directors.
5.18 Stockholders Representations and Warranties. To induce NII and
FMTTM to enter into this Agreement and consummate the transactions contemplated
hereby, each
46
Stockholder (solely with respect to itself) represents and warrants to NII and
FMTTM as follows (for purposes of this Agreement, the phrases "knowledge of the
Stockholder" or the "Stockholder's knowledge," or words of similar import, mean
the actual knowledge of such Stockholder):
(a) Such Stockholder is duly organized, validly existing and
is in good standing under the laws of the jurisdiction of its
incorporation, formation or organization and is duly authorized and
qualified to do business under all applicable laws, regulations,
ordinances and orders of public authorities to own, operate and lease
its properties and to carry on its business in the places and in the
manner as now conducted. Such Stockholder is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which it does
business and/or owns or leases property, except where the failure to so
qualify or be in good standing would not have a Material Adverse Effect
on such Stockholder.
(b) Such Stockholder has the full legal right, corporate or
trust power and authority to enter into this Agreement and the
transactions contemplated hereby and to perform its obligations
pursuant to the terms of this Agreement. The execution and delivery of
this Agreement by such Stockholder and the performance by such
Stockholder of the transactions contemplated herein have been duly and
validly authorized has been duly and validly authorized by all
necessary corporate or trust action. This Agreement is a legal, valid
and binding obligation of the such Stockholder, enforceable against
such Stockholder in accordance with its terms, subject to Bankruptcy
Laws and Equitable Principles.
(c) The execution, delivery and performance of this Agreement
and the other documents contemplated hereby and the consummation of the
transactions contemplated hereby and the fulfillment of the terms
hereof: (i) shall not result in a violation (x) under any law,
judgment, decree, order, rule, regulation, permit or other legal
requirement of any Governmental Authority, applicable to such
Stockholder or (y) of the certificate of incorporation or bylaws (or,
if such Stockholder is not a corporation, such Stockholder's similar
organizational documents); and (ii) shall not result in the creation or
imposition of any Lien (other than Permitted Liens) upon the Surviving
Corporation in favor of any Person, except, in the case of clause
(i)(x), where such violation would not have a Material Adverse Effect
on such Stockholder.
(d) Except as set forth on Schedule 5.18(d), such Stockholder
is not party to or bound by any options, calls, warrants, agreements,
arrangements or preemptive rights or commitments of any character
relating to any Company Common Stock. At the Closing, such Stockholder
will have good title to all of the capital stock of the Company owned
by it free and clear of any Liens (other than Permitted Liens).
(e) Such Stockholder does not have any plan or intention to
dispose of or otherwise transfer any of the NII Common Stock to be
received in the Merger to NII in redemption of such stock, or to any
person related to NII (as defined in Section 1.368-1(e)(3) of the
Treasury Regulations), either directly or through any transaction,
agreement or arrangement with any Person.
(f) Except as set forth on Schedule 5.18(f), the execution,
delivery and performance of this Agreement by such Stockholder and the
consummation of the transactions
47
contemplated hereby and thereby by such Stockholder, will not require
such Stockholder to obtain or make (as the case may be) any consent,
approval, authorization or permit of, or filing with or notification to
any Governmental Authority except for (a) applicable requirements, if
any, of the HSR Act, the DGCL, the Securities Act, the Exchange Act,
state securities or Blue Sky laws and the Bylaws of the National
Association of Securities Dealers, Inc., or (b) where the failure to
obtain such consents, approvals, authorization or permits, or to make
such filings or notifications (other than under proviso (a) of this
exception), would not prevent or delay consummation of the Merger or
otherwise prevent such Stockholder from performing its or their
obligations under this Agreement.
(g) Each such Stockholder (i) understands that the NII Common
Stock will not be registered under the Securities Act, or under any
applicable state securities law, prior to the Closing Date, but is
subject to the Registration Rights Agreement that NII and FMTTM and the
Stockholders will enter into at Closing, (ii) understands that, except
as set forth in Section 5.8, the NII Common Stock will be subject to a
restriction on transfer until the first anniversary of the Closing
Date, (iii) is acquiring an interest in the NII Common Stock solely for
his, her or its own account for investment purposes, and not with a
view to a distribution thereof, except as provided in Section 5.8, (iv)
is a sophisticated investor with knowledge and experience in business
and financial matters and shall not sell or otherwise transfer such
shares except when such sale or transfer is made in compliance with the
Securities Act and all applicable state securities laws and (e) has
received certain information concerning NII and FMTTM and has had the
opportunity to obtain additional information as desired in order to
evaluate the merits and the risks inherent in holding the NII Common
Stock.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF NII AND FMTTM
The obligation of NII and FMTTM to effect the Merger is subject to the
satisfaction or waiver, at or before the Closing Date, of the following
conditions and deliveries:
6.1 Representations and Warranties; Performance of Obligations. All of
the representations and warranties of the Stockholders and the Company contained
in or made pursuant to this Agreement shall be true, correct and complete in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date (except
for representations and warranties made as of a particular date, which shall be
true, correct and complete on and as of such date); all of the terms, covenants,
agreements and conditions of this Agreement to be complied with, performed or
satisfied by the Company and the Stockholders on or before the Closing Date
shall have been duly complied with, performed or satisfied in all material
respects; and certificates to the foregoing effects dated the Closing Date and
signed on behalf of the Company, in the case of representations, warranties,
covenants and agreements of the Company, and by the Stockholders, in the case of
representations, warranties, covenants and agreements of the Stockholders, shall
have been delivered to NII and FMTTM.
6.2 No Litigation. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision preventing the
consummation of the Merger by NII or FMTTM on substantially the same term and
conferring on NII and FMTTM substantially the same rights
48
and benefits as contemplated herein, shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending.
6.3 No Material Adverse Effect. From the date hereof through the
Closing Date, the Company shall not have suffered a Material Adverse Effect and
NII and FMTTM shall have received a certificate signed on behalf of the Company
dated the Closing Date to such effect.
6.4 Indebtedness. As of immediately prior to the Closing, the
Indebtedness of the Company shall not exceed $12,785,530 and the Indebtedness of
the Company not including outstanding letters of credit shall not exceed
$11,530,000, and NII shall have received pay-off letters from the holders of the
Indebtedness stating the amount necessary to pay-off such Indebtedness as of the
Closing.
6.5 Consents and Approvals. The Company shall have delivered to NII and
FMTTM copies of all Required Third Party Consents, all of which shall have been
obtained, and evidence that all required filings and notices to Governmental
Authorities or other third parties have been made.
6.6 [Reserved]
6.7 Lender Approval. NII and FMTTM shall have received approval for the
consummation of the transactions contemplated herein from its lenders.
6.8 Charter Documents. NII and FMTTM shall have received (a) a copy of
the Certificate of Incorporation of the Company certified by an appropriate
authority in the state of its incorporation and (b) a copy of the Bylaws of the
Company certified by the Secretary of the Company, as the case may be.
6.9 Closing Financial Condition. As of the Closing Date the financial
condition of the Company shall be as stated in a certificate (the "Closing
Financial Certificate") signed on behalf of the Company and by the Stockholders,
certifying the aggregate amount of the Company's Indebtedness.
6.10 Former Stockholder Payments. NII and FMTTM shall have received a
copy of the preliminary agreement between the Company and the Former
Stockholders contemplated under Section 5.5 and evidence satisfactory to NII
that the Former Stockholder Escrow has been funded with $1,800,000 pursuant to
an escrow agreement as contemplated in Section 5.5.
6.11 FIRPTA Compliance. The Stockholders shall have delivered to NII
and FMTTM a properly executed statement in a form reasonably acceptable to NII
and FMTTM for purposes of satisfying NII and FMTTM's obligations under Treas.
Reg.ss.1.1445-2.
6.12 Option Notice and Consent. At least three days shall have passed
since the date that the Company delivered notice to the holders of Company
Options that the Company's option plan would be terminated as of the Closing and
NII Options would be issued to such holders in place of such Company Options
pursuant to the terms of Section 5.9 and the Company shall have
49
received the consent of each such optionholder to the termination of the
Company's option plan and the transactions contemplated in Section 5.9.
6.13 Employment Agreement. The person identified on Exhibit 6.13 shall
have executed and delivered to NII an employment agreement on terms and
conditions satisfactory to NII and such employment agreement shall be in full
force and effect.
6.14 Registration Rights Agreement. The Stockholders and NII shall have
entered into the Registration Rights Agreement.
6.15 Management Bonus. General Electric Pension Trust and Ambassadors
International, Inc. shall have deposited into the Company funds in the amount of
$1,500,000 plus applicable payroll taxes, which funds shall be used by the
Surviving Corporation to make payments under the Company's management
participant bonus plan.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS AND THE
COMPANY
The obligation of the Stockholders and the Company to effect the Merger
are subject to the satisfaction or waiver, at or before the Closing Date, of the
following conditions and deliveries:
7.1 Representations and Warranties; Performance of Obligations. All of
the representations and warranties of NII and FMTTM contained in or made
pursuant to this Agreement shall be true, correct and complete in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except for
representations and warranties made as of a particular date, which shall be
true, correct and complete on and as of such date); all of the terms, covenants,
agreements and conditions of this Agreement to be complied with, performed or
satisfied by NII or FMTTM on or before the Closing Date shall have been duly
complied with, performed or satisfied in all material respects; and a
certificate to the foregoing effects dated the Closing Date and signed by the
President or any Vice President of NII and of FMTTM shall have been delivered to
the Company and the Stockholders.
7.2 No Litigation. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision preventing the
consummation of the Merger by NII or FMTTM on substantially the same term and
conferring on NII and FMTTM substantially the same rights and benefits as
contemplated herein, shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending.
7.3 No Material Adverse Effect. From the date hereof through the
Closing Date, neither NII nor FMTTM shall have suffered a Material Adverse
Effect and the Company shall have received a certificate signed on behalf of NII
and FMTTM dated the Closing Date to such effect.
50
7.4 Consents and Approvals. Except for the approval or consent by ARC
(which the parties agree shall be sought after Closing), all necessary consents
of, and filings with, any governmental authority or agency or third party
relating to the consummation by NII and FMTTM of the transactions contemplated
herein, shall have been obtained and made. Any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated, and no action by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby shall be pending.
7.5 Former Stockholder Payments. NII and FMTTM shall have received a
copy of the preliminary agreement between the Company and the Former
Stockholders contemplated under Section 5.5 and evidence satisfactory to NII
that the Former Stockholder Escrow has been funded with $1,800,000 pursuant to
an escrow agreement as contemplated in Section 5.5.
7.6 Charter Documents. The Company and the Stockholders shall have
received (a) a copy of the Certificate of Incorporation of each of NII and FMTTM
certified by an appropriate authority in the state of its incorporation and (b)
a copy of the Bylaws of each of NII and FMTTM certified by the Secretary of the
Company, as the case may be.
7.7 [Reserved]
7.8 Lender Approval. The Company and the Stockholders shall have
confirmation that the Company's lender, Bank of America, N.A., has approved the
consummation of the transactions contemplated herein.
7.9 Registration Rights Agreement. The Stockholders and NII shall have
entered into the Registration Rights Agreement.
8. INDEMNIFICATION
8.1 General Indemnification by the Stockholders.
(a) After the Merger Effective Time, the Stockholders,
severally, but not jointly, and only to the extent of the Merger
Consideration each Stockholder receives in this transaction and with
respect to each Claim pro rata in accordance with each Stockholder's
stock ownership immediately prior to the Merger Effective Time,
covenant and agree to indemnify, defend, protect and hold harmless NII,
FMTTM and their respective officers, directors, employees,
stockholders, heirs, successors, assigns, affiliates and
representatives (individually, an "Buyer Indemnified Party" and
collectively, "Buyer Indemnified Parties") from, against and in respect
of: all liabilities, losses, claims, damages, Taxes, punitive damages,
causes of action, lawsuits, administrative proceedings (including
informal proceedings), investigations, audits, demands, assessments,
adjustments, judgments, settlement payments, deficiencies, penalties,
fines, interest (including interest from the date of such damages) and
costs and expenses (including without limitation reasonable attorneys'
fees and disbursements of every kind, nature and description)
(collectively, "Damages") suffered, sustained, incurred or paid by the
Buyer Indemnified Parties in connection with, resulting from or arising
out of, directly or indirectly:
51
(i) any breach of or inaccuracy in any representation
or warranty of the Company set forth in Article 3 of this
Agreement or any Schedule or certificate, delivered by or on
behalf of the Company pursuant to this Agreement;
(ii) with respect to any covenant or agreement under
this Agreement, the nonfulfillment of any such covenant or
agreement by the Company prior to the Closing Date; and
(iii) any Former Stockholder Payments paid after the
Closing in excess of the amount funded into the Former
Stockholder Escrow.
(b) After the Merger Effective Time, each Stockholder
covenants and agrees to indemnify, defend and hold harmless the Buyer
Indemnified Parties from and against and in respect of:
(i) any breach of or inaccuracy in any representation
or warranty of such Stockholder set forth in Section 5.18 of
this Agreement or in any Schedule or certificate, delivered by
or on behalf of such Stockholder pursuant to this Agreement;
or
(ii) any nonfulfillment of any covenant or agreement
by such Stockholder under this Agreement.
8.2 Indemnification by NII and FMTTM. After the Merger Effective Time,
NII and FMTTM, jointly and severally, covenant and agree to indemnify, defend,
protect and hold harmless the Stockholders, and their respective and their
respective officers, directors, employees, stockholders, heirs, successors,
assigns, affiliates and representatives (individually, a "Seller Indemnified
Party" and collectively, "Seller Indemnified Parties") from, against and in
respect of all Damages suffered, sustained, incurred or paid by the Seller
Indemnified Parties in connection with, resulting from or arising out of,
directly or indirectly:
(a) any breach of or inaccuracy in any representation or
warranty of NII and FMTTM set forth in this Agreement or any Schedule
or certificate, delivered by or on behalf of NII and FMTTM pursuant to
this Agreement; and
(b) any nonfulfillment of any covenant or agreement by NII or
FMTTM under this Agreement.
8.3 Limitation and Expiration. Notwithstanding the above or any
provision contained herein to the contrary:
(a) there shall be no liability for indemnification under
Section 8.1 or Section 8.2 unless and until and solely to the extent
that the aggregate amount of Damages exceeds $450,000, respectively
(the "Indemnification Deductible"), provided, however, that the
Indemnification Deductible shall not apply to Claims under Section
8.1(a)(iii) and Claims under Section 8.1(a)(iii) shall not be included
in determining the application of the Indemnification Deductible to any
other Claims;
52
(b) the aggregate amount of the Stockholders' liability for
all Claims hereunder shall be limited to the Escrow Amount as the sole
and exclusive remedy of the Buyer Indemnified Parties for the
Stockholders' indemnity obligations hereunder; provided, however, only
with respect to Claims arising out of (i) the indemnification provided
in Section 8.1(a)(i) with respect to any breaches of or inaccuracies in
any of the representations and warranties made in Sections 3.4 (Capital
Stock of the Company), 3.25 (Employee Benefit Plans), 3.26 (Taxes),
5.18(d) (ownership of Company Capital Stock) or (ii) the
indemnification provided in Section 8.1(a)(iii) (Former Stockholder
Payments) (collectively (i) and (ii) being the "Excluded Sections"),
and to the extent that the Escrow Amount is fully depleted or the
escrow period has expired and the indemnity obligations of the
Stockholders shall not have expired hereunder, then NII shall be
entitled to make Claims under only the Excluded Sections directly
against the Stockholders (severally and not jointly, in accordance with
each Stockholders pro rata ownership of Company Common Stock
immediately prior to the Merger); provided further that, with respect
to Claims arising out of the Excluded Sections, the aggregate liability
of each Stockholder for Claims made directly against such Stockholder
shall not exceed the amount of the Merger Consideration delivered to
such Stockholder under this Agreement (including such Stockholders' pro
rata allocable share of the Escrow Amount);
(c) the maximum aggregate amount of NII's and FMTTM's
liability under this Agreement to the Seller Indemnified Parties shall
not exceed the amount of the Merger Consideration delivered to the
Stockholders under this Agreement; provided however that NII's
liability to each Stockholder (including their respective heirs,
successors, assigns, affiliates and representatives) shall not exceed
the Merger Consideration delivered to such Stockholder under this
Agreement;
(d) for purposes of Section 8.3(b) and (c), the value of the
NII Common Stock shall equal $12.25 per share;
(e) the indemnification obligations of the Stockholders, NII
and FMTTM under this Article 8, shall terminate as follows:
(i) (A) except as to representations, warranties, and
covenants specified in clause (i)(B) of this Section 8.3(c),
eighteen months after the Closing Date; and
(B) with respect to representations and
warranties contained in Sections 3.4 (Capital Stock
of the Company), 3.25 (Employee Benefit Plans), 3.26
(Taxes) and 5.18(d), and the indemnification set
forth in Section 8.1(a)(iii) on the earlier to occur
of (A) on the date that is one (1) month after the
expiration of the respective applicable federal or
state statute of limitation (including extensions
thereof), and (B) five (5) years after the Closing
Date; and
(ii) if an Indemnified Party delivers to an
Indemnifying Party, before the expiration or the period
specified in Section 8.3(d)(i), a Claim Notice or a notice
described in Section 5.1(b)(i), then such indemnification
obligation shall continue, but only for purposes of the
resolution of the matter covered by the Claim Notice or notice
described in Section 5.1(b)(i); and
53
(f) Notwithstanding anything in this Agreement to the contrary
and subject to the conditions of this Section 8.3(f), for purposes of
determining whether an indemnification Claim under this Article 8 has
occurred by reason of a breach of or inaccuracy in a representation or
warranty, any phrases indicating "materiality" or "Material Adverse
Effect" contained in such representation or warranty (each a
"Materiality Qualifier") shall be respected. However, notwithstanding
that because of the existence of a Materiality Qualifier in a
representation or warranty there has been no a breach of or inaccuracy
in such representation or warranty, if a Buyer Indemnified Party or
Seller Indemnified Party suffers or incurs any Damages because of an
event or circumstance that would have been a breach of or an inaccuracy
in such representation or warranty had such representation or warranty
not contained a Materiality Qualifier, the amount of such Damages shall
nevertheless count against the Indemnification Deductible applicable to
such parties' aggregate Claims. Nothing in this Section 8.3(f) shall
create any additional indemnification obligation of any Indemnifying
Party beyond the obligations set forth in Sections 8.3(a) through (e)
that is not otherwise collectible pursuant to this Article 8.
8.4 Indemnification Procedures. All claims or demands for
indemnification under this Article 8 ("Claims") other than any claim made by a
Tax Authority relating to Taxes (which shall be asserted and resolved in
accordance with Section 5.1(b)) shall be asserted and resolved as follows:
(a) In the event that either any Seller Indemnified Party or
any Buyer Indemnified Party (each an "Indemnified Party") has a Claim
against any party obligated to provide indemnification pursuant to
Section 8.1 or 8.2 hereof (an "Indemnifying Party") which does not
involve a Claim being asserted against or sought to be collected by a
third party, the Indemnified Party shall with reasonable promptness
notify the Indemnifying Party of such Claim, specifying the nature of
such Claim and the amount or the estimated amount thereof to the extent
then feasible (the "Claim Notice"). If the Indemnifying Party does not
notify the Indemnified Party within twenty-one (21) days after the date
of delivery of the Claim Notice that it disputes such Claim, with a
reasonably detailed statement of the basis of such position (the
"Dispute Notice"), the amount of such Claim shall be conclusively
deemed a liability of the Indemnifying Party hereunder. In case a
Dispute Notice is delivered to an Indemnified Party in accordance with
this Section 8.4(a), the parties shall submit the dispute to binding
arbitration pursuant to Section 8.7.
(b) In the event that any Claim for which the Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted
against an Indemnified Party by a third party (a "Third-Party Claim"),
the Indemnified Party shall deliver a Claim Notice to the Indemnifying
Party. The Indemnifying Party shall have twenty-one (21) days from date
of delivery of the Claim Notice to notify the Indemnified Party (A)
whether the Indemnifying Party disputes liability to the Indemnified
Party hereunder with respect to the Third-Party Claim, and, if so, the
basis for such a dispute, and (B) if such party does not dispute
liability, whether or not the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend against the
Third-Party Claim, provided that the Indemnified Party is hereby
authorized (but not obligated) to file any motion, answer or other
pleading and to take any other action which the Indemnified Party shall
deem necessary or appropriate to protect the Indemnified Party's
interests.
54
(i) In the event that the Indemnifying Party notifies
the Indemnified Party that the Indemnifying Party does not
dispute the Indemnifying Party's obligation to indemnify with
respect to the Third-Party Claim, the Indemnifying Party shall
defend the Indemnified Party against such Third-Party Claim by
appropriate proceedings, provided that, unless the Indemnified
Party otherwise agrees in writing, which shall not be
unreasonably withheld, the Indemnifying Party may not settle
any Third-Party Claim (in whole or in part) if such settlement
does not include a complete and unconditional release of the
Indemnified Party. If the Indemnified Party desires to
participate in any such defense or settlement the Indemnified
Party may do so at its sole cost and expense. If the
Indemnifying Party elects not to defend the Indemnified Party
against a Third-Party Claim, whether by failure of such party
to give the Indemnified Party timely notice as provided herein
or otherwise, then the Indemnified Party, without waiving any
rights against such party, may settle or defend against such
Third-Party Claim in the Indemnified Party's sole discretion
and the Indemnified Party shall be entitled to recover from
the Indemnifying Party the amount of any settlement or
judgment and, on an ongoing basis, all indemnifiable costs and
expenses of the Indemnified Party with respect thereto,
including interest from the date such costs and expenses were
incurred.
(ii) If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given in writing
to the Indemnifying Party, any Third-Party Claim seeks
material prospective relief which could have a Material
Adverse Effect on any Indemnified Party or the Company or any
of its Subsidiaries, the Indemnified Party shall have the
right at its sole cost and expense to control or assume (as
the case may be) the defense of any such Third-Party Claim and
the amount of any judgment or settlement and the reasonable
costs and expenses of defense shall be included as part of the
indemnification obligations of the Indemnifying Party
hereunder. If the Indemnified Party elects to exercise such
right, the Indemnifying Party shall have the right to
participate in, but not control, the defense of such
Third-Party Claim at the sole cost and expense of the
Indemnifying Party.
(c) Nothing herein shall be deemed to prevent the Indemnified
Party from making a Claim, and an Indemnified Party may make a Claim
hereunder, for potential or contingent Damages provided the Claim
Notice sets forth the specific basis for any such potential or
contingent claim or demand to the extent then feasible and the
Indemnified Party has reasonable grounds to believe that such Claim may
be made.
(d) Subject to the provisions of Section 8.3, the Indemnified
Party's failure to give reasonably prompt notice as required by this
Section 8.4 of any actual, threatened or possible claim or demand which
may give rise to a right of indemnification hereunder shall not relieve
the Indemnifying Party of any liability which the Indemnifying Party
may have to the Indemnified Party unless the failure to give such
notice materially and adversely prejudiced the Indemnifying Party or
the Indemnifying Party's ability to properly defend (or mitigate
Damages in connection with) such claim.
(e) The parties will make appropriate adjustments for any Tax
benefits, Tax detriments or insurance proceeds in determining the
amount of any indemnification obligation under this Article 8. Upon
making any payment to an Indemnified Party for Damages hereunder, the
Indemnifying Party shall be subrogated, to the extent of such payment,
to any rights which
55
the Indemnified Party may have against third parties with respect to
the subject matter of such Damages.
8.5 Survival; Effect of Knowledge. The representations and warranties
of the Company and the Stockholders will survive the Closing and will remain in
effect until, and will expire upon, the termination of the indemnification
obligations as provided in Section 8.3. The representations of NII and FMTTM
will survive the Closing and will remain in effect until, and will expire upon,
the termination of the indemnification obligations as provided in Section 8.3.
All covenants of the parties that are to be performed after Closing shall
continue in effect and expire in accordance with their respective terms
Notwithstanding any provision contained herein to the contrary, no Indemnified
Party shall be entitled to indemnification hereunder with respect to a breach by
an Indemnifying Party of any representations and warranties hereunder that such
Indemnified Party had actual knowledge of on the date hereof, where such actual
knowledge was acquired because the events, circumstances and consequences
thereof were clear on its face from materials actually provided to or obtained
by the Indemnified Party prior to Closing.
8.6 Exclusive Remedies. The parties hereto acknowledge and agree that
the indemnities and remedies provided in this Article 8 shall be the sole and
exclusive remedies of the parties hereto, their Affiliates, successors and
assigns with respect to any and all Claims for Damages sustained or incurred by
any of them arising out of this Agreement and the transactions contemplated
hereby and the parties shall not be entitled to a rescission of this Agreement
or any further indemnification rights or claims of any nature whatsoever in
respect thereof, all of which the parties hereto hereby waive.
8.7 Waiver of Claims. If the Closing occurs and effective at the Merger
Effective Time, each of the Stockholders hereby waives and relinquishes any
right of contribution or other similar right against the Company arising out of
the Company's representations, warranties, covenants and agreements contained
herein, other than Claims arising directly or indirectly as a result of the
operation of the Company or its Subsidiary after the Closing. The Stockholders
agree that any Claims of the NII and FMTTM Indemnified Parties and their
respective officers, directors, employees and agents hereunder, whether for
indemnification or otherwise, may be asserted against the Stockholders without
the need for any Claim against or joinder of the Company.
8.8 Right of Set-Off.
(a) The Buyer Indemnified Parties shall set off any amount to
which any Buyer Indemnified Party may be entitled under this Article 8
against the Escrow Amount.
(b) Upon notice to the Stockholders' Representative specifying
in reasonable detail the basis for such set-off, NII and FMTTM may give
notice to the Stockholders' Representative that any Buyer Indemnified
Party has an unresolved Claim under this Article 8 that may be set off
against the Escrow Amount, in which case the amount of such unresolved
Claim shall be retained in the Escrow Amount until the final
determination of such Claim.
(c) The Contingent Merger Consideration shall not be subject
to set-off Claims pursuant to this Article 8.
56
8.9 Arbitration
(a) Claims submitted to arbitration under this Section 8.9
("Arbitrated Disputes") shall be resolved by binding arbitration
administered by the AAA provided in this Agreement, shall be conducted
in accordance with the Commercial Arbitration Rules of the AAA, as such
rules may be amended from time to time (the "Rules"). The hearing
locale shall be Arlington, Virginia. A single, neutral arbitrator, the
("Arbitrator") shall be appointed by the AAA, within five (5) days
after an Arbitrated Dispute is submitted for arbitration under this
Section 8.9 to preside over the arbitration and resolve the Arbitrated
Dispute. The Arbitrator shall be selected from the AAA's Commercial
Panel, and shall have expertise in the interpretation of commercial
contracts and in the travel industry. The parties shall have three (3)
days to object in writing to the appointment of the Arbitrator, the
sole basis for such objection being an actual conflict of interest. The
AAA, in its sole discretion, shall determine within three (3) days the
validity of any objection to the appointment of the Arbitrator based on
an actual conflict of interest.
(b) The Arbitrator's decision (the "Decision") shall be
binding and the prevailing party may enforce the Decision in any court
of competent jurisdiction.
(c) The parties shall use their commercially reasonable best
efforts to cooperate with each other in causing the arbitration to be
held in as efficient and expeditious a manner as practicable, including
but not limited to, providing such documents and making available such
of their personnel as the Arbitrator may request, so that the Decision
may be reached timely.
(d) The authority of the Arbitrator shall be limited to
deciding liability for, and the proper amount of, a Claim, and the
Arbitrator shall have no authority to award punitive damages. The
Arbitrator shall have such powers and establish such procedures as are
provided for in the Rules, so long as such powers and procedures are
consistent with this Section 8.9 and are necessary to resolve the
Arbitrated Dispute within the time periods specified in this Agreement.
Notwithstanding the above, the Arbitrator shall award attorney's fees
and cost to the prevailing party. The Arbitrator shall render a
Decision within thirty (30) days after being appoint to serve as
Arbitrator, unless the parties otherwise agree in writing or the
Arbitrator makes a finding that a party has carried the burden of
showing good cause for a longer period, such as need to obtain
necessary documentation and other reasonable discovery.
9. SOLICITATION; CONFIDENTIALITY
9.1 Prohibited Activities. Each of Stuart Mill and Xxxxx Investment
Limited Partnership will not, for a period of one (1) year following the Closing
Date, for any reason whatsoever, directly or indirectly, for itself or on behalf
of or in conjunction with any other Person or business of whatever nature:
(a) call upon any Person who is, at that time, an employee of
any of NII or its Affiliates (including the Surviving Corporation)
travel, for the purpose or with the intent of enticing such employee
away from or out of the employ of the Business;
57
(b) will not, in any capacity, engage in the development,
manufacturing, marketing and transfer, whether by sale or license, of
software for travel businesses (the "Business"), within one hundred
(100) miles of anywhere where the NII or the Surviving Corporation
conducts Business (the "Territory"); or
(c) call upon any Person who is, at that time, or that has
been, within one year prior to that time, a customer of the Business
within the Territory for the purpose of soliciting or selling products
or services in competition with the Business within the Territory.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Stuart Mill or Xxxxx Investment Limited Partnership from acquiring
as an investment of less than five percent (5%) of the capital stock of a
competing business whose stock is traded on a national securities exchange or
over- the-counter. For purposes of this Article 9, the references to "NII" shall
mean Navigant International, Inc., together with its Subsidiaries and
affiliates.
9.2 Confidentiality. Each Stockholder recognizes that by reason of such
Stockholder's ownership of the Company such Stockholder has acquired
confidential information and trade secrets concerning the operation of the
Company, the use or disclosure of which could cause the Company or its
affiliates or Subsidiaries substantial loss and damages that could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, each Stockholder covenants and agrees with the Company and NII that
such Stockholder will not at any time, except in performance of the
Stockholder's obligations to the Company or with the prior written consent of
the Company pursuant to authority granted by a resolution of the board or
director of the Company, directly or indirectly, disclose any secret or
confidential information that such Stockholder may learn or has learned by
reason of such Stockholder's ownership of the Company, or use any such
information in a manner detrimental to the interests of the Company or NII,
unless (i) such information becomes known to the public generally through no
fault of any Stockholder and such Stockholder has no knowledge of a release by
any other Stockholder, (ii) disclosure is required by law or the order of any
governmental authority under color of law, or (iii) such Stockholder reasonably
believes that such disclosure is required in connection with the defense of a
lawsuit against such Stockholder, provided that prior to disclosing any
information pursuant to clause (ii) or (iii) above, such Stockholder shall give
prior written notice thereof to NII and provide NII with the opportunity to
contest such disclosure and shall cooperate with efforts to prevent such
disclosure. The term "confidential information" includes, without limitation,
information not previously disclosed to the public or to the trade by the
Company's or NII management with respect to the Company's or NII, or any of
their affiliates' or Subsidiaries', products, facilities, and methods, trade
secrets and other intellectual property, software, source code, systems,
procedures, manuals, confidential reports, product price lists, customer lists,
financial information (including the revenues, costs, or profits associated with
any of the Company's products), business plans, prospects, or opportunities but
shall exclude any information already in the public domain.
9.3 Damages. Because of the difficulty of measuring economic losses to
NII as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to NII for which it would
have no other adequate remedy, each Stockholder agrees that the foregoing
covenant may be enforced by NII in the event of breach by the Stockholder, by
injunctions and restraining orders.
58
9.4 Reasonable Restraint. The parties agree that the foregoing
covenants in this Article 9 impose a reasonable restraint on the Stockholders in
light of the activities and business of NII on the date of the execution of this
Agreement, assuming the completion of the transactions contemplated hereby, and
the current plans of NII; but it is also the intent of NII and the Stockholders
that such covenants be construed and enforced in accordance with the changing
activities and business of NII throughout the term of this covenant.
9.5 Severability; Reformation. The covenants in this Article 9 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
9.6 Independent Covenant. All of the covenants in this Article 9 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against NII and FMTTM, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by NII and FMTTM of such covenants.
The parties expressly acknowledge that the terms and conditions of this Article
9 are independent of the terms and conditions of any other agreements including,
but not limited to, any employment agreements entered into in connection with
this Agreement. The covenants contained in Article 9 shall not be affected by
any breach of any other provision hereof by any party hereto and shall have no
effect if the transactions contemplated by this Agreement are not consummated.
9.7 Materiality. The Company and the Stockholders hereby agree that the
covenants set forth in this Article 9 are a material and substantial part of the
transactions contemplated by this Agreement, supported by adequate
consideration.
10. GENERAL
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(a) by mutual consent of NII, the Company and the
Stockholders;
(b) by the Company, on the one hand, or by NII, on the other
hand, if the Closing shall not have occurred on or before June 27,
2001, because of the failure of a closing condition or otherwise;
provided that the right to terminate this Agreement under this Section
10.01(b) shall not be available to either party whose
misrepresentation, breach of warranty or failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur on or before such date;
(c) by the Company, on the one hand, or by NII, on the other
hand, if there is or has been a material breach, failure to fulfill or
default on the part of the other party (with the Stockholders deemed to
be a single party for this purpose) of any of the representations and
warranties contained herein or in the due and timely performance and
satisfaction of any of the
59
covenants, agreements or conditions contained herein, and the curing of
such default shall not have been made within fifteen (15) days after
the date of such default;
(d) by NII if the Company shall have suffered a Material
Adverse Effect;
(e) by the Company if NII or FMTTM shall have suffered a
Material Adverse Effect; or
(f) by the Company, on the one hand, or by NII, on the other
hand, if there shall be a final nonappealable order of a federal or
state court in effect preventing consummation of the transactions
contemplated by this Agreement; or there shall be any action taken, or
any statute, rule regulation or order enacted, promulgated or issued or
deemed applicable to the transactions contemplated hereby by any
Governmental Authority which would make the consummation of the
transactions contemplated by this Agreement illegal.
10.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 10.1, this Agreement shall forthwith become void,
and there shall be no liability or obligation on the part of any party hereto or
its officers, directors or stockholders. Notwithstanding the foregoing sentence,
(i) the provisions of this Article 10 and the confidentiality provisions of
Section 5.4 shall remain in full force and effect and survive any termination of
this Agreement, (ii) NII shall remain liable for its willful or intentional
breach of this Agreement prior to termination of this Agreement and (iii) the
Company shall remain liable for its or any Stockholder's willful or intentional
breach of this Agreement prior to termination of this Agreement.
10.3 Successors and Assigns. This Agreement and the rights of the
parties hereunder may not be assigned without the prior written consent of the
other parties and shall be binding upon and shall inure to the benefit of the
parties hereto, the successors of NII and FMTTM, and the heirs and legal
representatives of the Stockholders.
10.4 Entire Agreement; Amendment; Waiver. This Agreement and the
Confidentiality Agreement set forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. Each of the
Schedules and Exhibits to this Agreement is incorporated herein by this
reference and expressly made a part hereof. Any and all previous agreements and
understandings between or among the parties regarding the subject matter hereof,
whether written or oral, are superseded by this Agreement. This Agreement shall
not be amended or modified except by a written instrument duly executed by each
of the parties hereto. Any extension or waiver by any party of any provision
hereto shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, which
counterparts may be sent by telefax (with originals to follow), each of which
when executed and delivered shall be deemed to be an original, and all of which
counterparts taken together shall constitute but one and the same instrument.
10.6 Brokers and Agents. The Company and the Stockholders (as a group)
and NII and FMTTM each represents and warrants to the other that it has not
employed any broker or
60
agent in connection with the transactions contemplated by this Agreement and
agrees to indemnify the other against all losses, damages or expenses relating
to or arising out of claims for fees or commission of any broker or agent
employed or alleged to have been employed by such party.
10.7 Expenses. NII and FMTTM have paid and will pay the fees, expenses
and disbursements of NII and FMTTM and its agents, representatives, accountants
and counsel incurred in connection with the subject matter of this Agreement.
The Company has paid and will pay the fees, expenses and disbursements of the
Company, the Stockholders and each of their agents, representatives, financial
advisers, accountants and counsel incurred in connection with the subject matter
of this Agreement.
10.8 Specific Performance; Remedies. Each party hereto acknowledges
that the other parties will be irreparably harmed and that there will be no
adequate remedy at law for any violation by any of them of any of the covenants
or agreements contained in this Agreement, including without limitation, the
confidentiality obligations set forth in Section 5.6 and the noncompetition
provisions set forth in Article 9. It is accordingly agreed that, in addition to
any other remedies which may be available upon the breach of any such covenants
or agreements, each party hereto shall have the right to obtain injunctive
relief to restrain a breach or threatened breach of, or otherwise to obtain
specific performance of, the other parties, covenants and agreements contained
in this Agreement.
10.9 Notices. Any notice, request, claim, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
telefax (with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
If to NII and FMTTM to:
Navigant International, Inc.
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx, Chief Executive Officer
Attention: Xxxxxx X. Over, Jr., General Counsel
Facsimile: (000) 000-0000
with a required copy (which shall not constitute notice) to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
If to the Stockholders to:
Stockholders' Representative
61
c/o Stuart Mill Capital, LLC
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Facsimile: 000-000-0000
with a required copy (which shall not constitute notice) to:
Xxxx Xxxxxxx
0000 Xxxxxx Xxxxxxxxx, 00xx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: 000-000-0000
or to such other address as the Person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
10.10 Governing Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of Delaware without regard
to its principles of conflicts of laws.
10.11 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstances is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such Person or circumstances in any other jurisdiction, shall
not be affected thereby, and to this end the provisions of this Agreement shall
be severable. The preceding sentence is in addition to and not in place of the
severability provisions in Section 9.5.
10.12 Absence of Third Party Beneficiary Rights. Except for the
agreements set forth in Section 5.7 and Article 8 above, no provision of this
Agreement is intended, nor will any provision be interpreted, to provide or to
create any third party beneficiary rights or any other rights of any kind in any
client, customer, Affiliate, Stockholder, employee or partner of any party
hereto or any other Person or entity; except that former directors and officers
of the Company shall be third party beneficiaries of the agreements continued in
Section 5.17.
10.13 Mutual Drafting. This Agreement is the mutual product of the
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
10.14 Further Representations. Each party to this Agreement
acknowledges and represents that it has been represented by its own legal
counsel in connection with the transactions contemplated by this Agreement, with
the opportunity to seek advice as to its legal rights from such counsel. Each
party further represents that it is being independently advised as
62
to the tax consequences of the transactions contemplated by this Agreement and
is not relying on any representation or statements made by the other party as to
such tax consequences.
10.15 Definitions. For purposes of this Agreement, the following terms
have the meanings set forth below:
"AAA" means the American Arbitration Association, or any successor
body.
"Accounts Receivable" has the meaning set forth in Section 3.13.
"Adjusted EBITDA" means the amount equal to the sum of (i) the
Company's net income from operations for the Trailing Period, plus (ii) the
Company's interest, taxes, depreciation and amortization for the Trailing
Period, plus (iii) the management fee of Eight Hundred Thousand Dollars
($800,000) paid to certain stockholders of the Company during the Trailing
Period.
"Affiliate" or "Affiliated" shall mean, with respect to a Person, any
other Person that, directly or indirectly, through one or more intermediaries,
is controlled by, or is under common control with such Person.
"Arbitrated Disputes" has the meaning set forth in Section 8.9(a).
"Arbitrator" has the meaning set forth in Section 8.9(a).
"ARC" means the Airlines Reporting Company.
"Bankruptcy Laws and Equitable Principles" means laws, now or
hereinafter in effect, relating to (i) bankruptcy, insolvency, reorganization,
relief of debtors, fraudulent transfer and similar laws affecting the rights of
creditors generally, and (ii) specific performance, injunctive relief and other
equitable principles and remedies.
"Benefit Arrangement" means any benefit arrangement, obligation,
custom, or practice, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, agents, or independent contractors, other than any
obligation, arrangement, custom, plan, program, policy or practice that (i) is
an Employee Benefit Plan or (ii) is maintained or contributed to by, or entered
into with Company or any Subsidiary, with respect to employees (or former
employees) employed outside the United States to the extent that the
contributions thereto or benefits provided thereunder are mandated by the laws
of the applicable foreign jurisdiction, including, without limitation,
employment agreements, severance agreements, executive compensation
arrangements, incentive programs or arrangements, sick leave, vacation pay,
severance pay policies, plant closing benefits, salary continuation for
disability, consulting, or other compensation arrangements, workers'
compensation, retirement, deferred compensation, bonus, stock option or
purchase, hospitalization, medical insurance, life insurance, tuition
reimbursement or scholarship programs, any plans subject to Section 125 of the
Code, and any plans providing benefits or payments in the event of a change of
control, change in ownership, or sale of a substantial portion (including all or
substantially all) of the assets of any business or portion thereof, in each
case with respect to any present or former employees, directors, or agents.
63
Benefit Arrangement excludes any incentive compensation program the expense of
which is borne solely by one or more Stockholders.
"Business" has the meaning set forth in Section 9.1(b).
"Buyer Indemnified Party" has the meaning set forth in Section 8.1(a).
"CDSC's" has the meaning set forth in Section 3.25(f).
"Certificate" has the meaning set forth in Section 1.11(b).
"Charter Documents" has the meaning set forth in Section 3.1.
"Claim Notice" has the meaning set forth in Section 8.4(a).
"Claims" has the meaning set forth in Section 8.4.
"Closing" has the meaning set forth in Article 2.
"Closing Date" has the meaning set forth in Article 2.
"Closing Date Tax Reserves" means the current liability accruals for
Taxes (excluding reserves for deferred Taxes established to reflect timing
differences between book and Tax income) with respect to the Company and its
Subsidiaries reflected on the Interim Balance Sheet adjusted for amounts accrued
in the ordinary course of business for the period beginning on the Interim
Balance Sheet Date and up to and including the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Software" means software generally available off-the-shelf
for sale to the general public.
"Company Benefit Arrangement" means any Benefit Arrangement sponsored
or maintained by the Company or with respect to which the Company has or may
have any liability (whether actual, contingent, with respect to any of its
assets or otherwise) as of the Closing Date, in each case with respect to any
present or former directors, employees, or agents of the Company.
"Company Capital Stock" has the meaning set forth in Section 1.8.
"Company Financial Statements" has the meaning set forth in Section
3.9.
"Company Hazardous Materials Activities" has the meaning set forth in
Section 3.23(b).
"Company Intellectual Property" has the meaning set forth in Section
3.18(d).
"Company Options" has the meaning set forth in Section 3.4(b).
64
"Company Plan" means, as of the Closing Date, any Employee Benefit Plan
for which the Company is the "plan sponsor" (as defined in Section 3(16)(B) of
ERISA) or any Employee Benefit Plan currently or formerly maintained by the
Company or to which the Company or any of its Subsidiaries is obligated to make
payments, in each case with respect to any present or former employees of the
Company.
"Confidentiality Agreement" has the meaning set forth in Section 5.4.
"Contingent Merger Consideration" has the meaning set forth in Section
1.8(a).
"Contingent Payment Notice" has the meaning set forth in Section
1.8(d).
"Copyright" means any United States or foreign copyright (registered or
unregistered) owned by the Company, including any application for a United
States or foreign copyright registration made by the Company.
"CRS" means Computer Reservation Systems.
"Damages" has the meaning set forth in Section 8.1(a).
"Decision" has the meaning set forth in Section 8.9(b).
"Dispute Notice" has the meaning set forth in Section 8.4(a).
"EBITDA" means earnings before interest, taxes, depreciation and
amortization.
"Employee Benefit Plan" has the meaning given in Section 3(3) of ERISA,
but shall not include any obligation, arrangement, custom, plan, program, policy
or practice that is maintained or contributed to by, or entered into with
Company or any Subsidiary, with respect to employees (or former employees)
employed outside the United States to the extent that the contributions thereto
or benefits provided thereunder are mandated by the laws of the applicable
foreign jurisdiction.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations and rules promulgated thereunder, or any successor
law.
"ERISA Affiliate" means any Person that, together with the Company,
would be or was at any time treated as a single employer under Section 414 of
the Code or Section 4001 of ERISA and any general partnership of which the
Company is or has been a general partner.
"Escrow Agent" has the meaning set forth in Section 1.10.
"Escrow Agreement" has the meaning set forth in Section 1.10.
"Escrow Amount" has the meaning set forth in Section 1.10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
including all rules and regulations promulgated thereunder, or any successor
law.
65
"Foreign Benefit Plan or Arrangement" means a Benefit Arrangement or
Employee Benefit Plan maintained, contributed to, or entered into with respect
to employees (or former employees) employed outside the United States, together
with any such plans, programs, or arrangements mandated by the laws of the
applicable foreign jurisdictions.
"Former Stockholders" has the meaning set forth in Section 5.5
"Former Stockholder Payment" has the meaning set forth in Section 5.5.
"Former Stockholder Escrow" has the meaning set forth in Section 5.5.
"GAAP" means United States generally accepted accounting principles.
"Government Bid" shall mean any written quotations, bids or proposals
that, if accepted, would bind any Person to perform the resultant Government
Contract to furnish products or services to (A) any Governmental Authority, (B)
any prime contractor of any Governmental Authority, or (C) any subcontractor, at
any tier level, to any contract described in clauses (A) or (B) above.
"Government Contract" shall mean a written, mutually binding legal
relationship with (A) any Governmental Authority, (B) any prime contractor of
any Governmental Authority, or (C) any subcontractor, at any tier level, to any
contract described in clauses (A) or (B) above which obligates any Person to
furnish products or services to a Governmental Authority.
"Governmental Authority" means any federal, state, municipal, foreign
or other governmental or quasi-governmental department, authority, commission,
board, court, bureau, administrative agency, body or instrumentality, including
without limitation the U.S. Government and any and all agencies, commissions,
branches, instrumentalities and departments thereof.
"Hazardous Material" means any substance that has been designated by
any Governmental Authority or by applicable federal, state, local or other
applicable law to be radioactive, toxic, hazardous or otherwise a danger to
health or the environment, including, without limitation, PCBs, asbestos,
petroleum, urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to
the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies properly and safely maintained.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, including all rules and regulations promulgated thereunder, or
any successor law.
"Indemnification Deductible" has the meaning set forth in Section
8.3(a).
"Indemnified Party or Parties" has the meaning set forth in Section
8.4(a).
"Indemnifying Party" has the meaning set forth in Section 8.4(a).
66
"Initial Merger Consideration" has the meaning set forth in Section
1.8(a).
"Interim Balance Sheet" has the meaning set forth in Section 3.9.
"Interim Balance Sheet Date" has the meaning set forth in Section 3.9.
"Interim Financials" has the meaning set forth in Section 3.9.
"IRS" means the United States Internal Revenue Service.
"Lease(s)" has the meaning set forth in Section 3.16(b).
"Lien" means any mortgage, security interest, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge, preference, priority or other security agreement, option, warrant,
attachment, right of first refusal, preemptive, conversion, put, call or other
claim or right, restriction on transfer (other than restrictions imposed by
federal and state securities laws), or preferential arrangement of any kind or
nature whatsoever (including any restriction on the transfer of any assets, any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Xxxx" means all right, title and interest in and to any United States
or foreign trademarks, service marks and trade names used by the Company in the
operation of their business, including any registration or application for
registration of any trademarks and services marks in the PTO or the equivalent
thereof in any state of the United States or in any foreign country, as well as
any unregistered marks used by the Company, and any trade dress (including
logos, designs, company names, business names, fictitious names and other
business identifiers) used by the Company in the United States or any foreign
country.
"Material Adverse Effect" shall mean, with respect to a Person, any
fact, event, change, development, circumstance or effect that is individually or
in the aggregate with other facts, events, changes, developments, circumstances
or effects (i) materially adverse to the business, condition (financial or
otherwise), results of operations, assets, liabilities or properties of such
Person and its Subsidiaries, taken as a whole, or (ii) in the event such Person
is a party to this Agreement, would materially impair or delay the ability of
such Person to perform its obligations hereunder or under the agreements
contemplated hereby (including, without limitation, the consummation of the
Merger); provided that, a Material Adverse Effect shall not include (w) changes
in general economic conditions adversely affecting the travel industry
generally, (x) changes in the travel industry, (y) any fact, event, change,
development, circumstance or effect that is primarily caused by the pendency of
this Agreement or Merger or the transactions contemplated hereby or thereby
(including, without limitation, liabilities incurred in connection with this
Agreement, the Merger or the transactions contemplated hereby), or (z) with
respect to NII or FMTTM, in and of itself (A) any change in the trading prices
of NII Common Stock or (B) the announcement or consummation of a sale of NII.
"Material Contracts" has the meaning set forth in Section 3.20(b).
67
"Materiality Qualifier" has the meaning set forth in Section 8.3.
"Merger Consideration" has the meaning set forth in Section 1.8(a).
"Merger Effective Time" has the meaning set forth in Section 1.2.
"Multiemployer Plan" means any Employee Benefit Plan described in
Section 3(37) of ERISA.
"NII Charter Documents" has the meaning set forth in Section 4.1.
"NII Common Stock" means the common stock of NII, par value $.01.
"NII Contingent Stock Value" has the meaning set forth in Section
1.8(a).
"NII Options" has the meaning set forth in Section 4.5(b).
"Patent" means any United States or foreign patent to which the Company
has title, as well as any application for a United States or foreign patent made
by the Company.
"Permit" has the meaning set forth in Section 3.14.
"Permitted Liens" means (i) Liens for Taxes not yet due and payable or
which are being contested in good faith, (ii) mechanics, warehousemen and
materialmen Liens not usual in nature or amount, incurred in the ordinary course
of business that have not attached to property of the Company, (iii) Liens
consisting of zoning or planning restrictions, easements, or permits that
restrict or limit the use of real property but that do not materially detract
from the value of, or materially impair the use of, such property by the Company
in the operation of its business, and (iv) pledges and deposits made in the
ordinary course of business.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Personal Property" has the meaning set forth in Section 3.17.
"Pre-Closing Period" means any Taxable Period ending on or before the
Closing Date.
"Pre-Closing Return" means a Tax Return for a Taxable Period ending on
or before the Closing Date.
"Preferred Vendors" has the meaning set forth in Section 3.20(a).
"Preferred Vendor Agreement" has the meaning set forth in Section
3.20(a).
"PTO" means the United States Patent and Trademark Office.
"Qualified Plan" means any Employee Benefit Plan that meets, purports
to meet, or is intended to meet the requirements of Section 401(a) of the Code.
68
"Real Property" means all interests in real property including, without
limitation, leaseholds and subleaseholds, purchase options, easements, licenses,
rights to access, rights-of-way and all buildings and other improvements
thereon, used by the Company, together with any additions thereto or
replacements thereof.
"Registration Rights Agreement" has the meaning set forth in Section
5.8(a).
"Related Party" has the meaning set forth in Section 3.15.
"Required Third Party Consents" means the consents set forth in
Schedule 10.15.
"RFP Contract Air Volume" means the dollar value of air sales under the
applicable RFP contract(s).
"Reviewing Accountants" has the meaning set forth in Section 1.8(d).
"Rules" has the meaning set forth in Section 8.9(a).
"Sale of NII" shall be deemed to occur if (i) there shall be
consummated (x) any consolidation or merger of NII in which NII is not the
continuing or surviving corporation or pursuant to which shares of the capital
stock would be converted into cash, securities or other property, other than a
merger of NII in which the holders of the capital stock immediately prior to the
merger hold greater than 50% of the voting power of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of NII, or (ii) the stockholders of NII shall
approve any plan or proposal for liquidation or dissolution of NII, or (iii) any
person (as such term is used in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
more than 50% of NII's outstanding capital stock.
"Schedules" has the meaning set forth in Section 1.14.
"Securities Act" means the Securities Act of 1933, as amended,
including all rules and regulations promulgated thereunder, or any successor
law.
"Seller Indemnified Party" has the meaning set forth in Section 8.2.
"Stockholders' Representative" has the meaning set forth in Section
1.13.
"Significant Customers" has the meaning set forth in Section 3.20(a).
"Software" means all software used by the Company in its front-office,
mid-office and back office operations, but excluding Commercial Software.
"Subsidiary" means any corporation, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
69
trustees thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a partnership, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control the managing
director or general partner of such partnership, association or other business
entity.
"Straddle Period" means a Taxable Period beginning on or before and
ending after the Closing Date.
"Straddle Return" means a Tax Return for a Straddle Period.
"Tax" (including with correlative meaning the terms "Taxes" and
"Taxable") means all foreign, federal, state, local and other income, gross
receipts, sales, use, ad valorem, value-added, intangible, unitary, withholding,
transfer, franchise, license, payroll, employment, estimated, excise,
environmental, stamp, occupation, premium, property, prohibited transactions,
windfall or excess profits, customs, duties or other taxes, levies, fees,
assessments or charges of any kind whatsoever imposed by a Taxing Authority,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto.
"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of the United States federal, state or local
jurisdiction or any foreign jurisdiction, having jurisdiction with respect to
any Tax.
"Tax Proceeding" means any action, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, investigative, or
informal) relating to Taxes or Tax Returns.
"Taxable Period" shall mean any taxable year or any other period that
is treated as a taxable year or separate reporting period with respect to which
any Tax may be imposed under any applicable statute, rule or regulation.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, estimate, or declaration of estimated
tax relating to or required to be filed with any governmental authority in
connection with the determination, assessment, collection or payment of any Tax
and any amendment thereof.
"Territory" has the meaning set forth in Section 9.1(b).
"Third Party Consents" has the meaning set forth in Section 3.20(e).
"Third Party Intellectual Property" has the meaning set forth in
Section 3.18(d).
"Trailing Period" has the meaning set forth in Section 3.8(a).
70
"Welfare Plan" means any Employee Benefit Plan described in Section
3(1) of ERISA.
"Year-End Financials" has the meaning set forth in Section 3.9.
71
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NAVIGANT INTERNATIONAL, INC.
By: _________________________________
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
FMTTM ACQUISITION CORPORATION
By: _________________________________
Xxxxxx X. Xxxxxxxx
Vice President, Treasurer and Secretary
SATO TRAVEL HOLDING CO., INC.
By: ________________________________
Xxxxxxxx X. Xxxxx
Co-Chairman and CEO
GENERAL ELECTRIC PENSION TRUST
By: ________________________________
Name: ________________________________
Title: ________________________________
STUART MILL, LLC
By: ________________________________
Name: ________________________________
Title: ________________________________
[signatures continued on following page]
AMBASSADORS INTERNATIONAL, INC.
By: ________________________________
Name: ________________________________
Title: ________________________________
XXXXX INVESTMENT LIMITED
PARTNERSHIP
By: ________________________________
Name: Xxxxxxxx X. Xxxxx
Title: ________________________________
EXHIBIT A
Stockholders
General Electric Pension Trust
Stuart Mill, LLC
Ambassadors International, Inc.
Xxxxx Investment Limited Partnership
EXHIBIT 1.2
Certificate of Merger
CERTIFICATE OF MERGER
OF
SATO TRAVEL HOLDING CO., INC.
AND
FMTTM ACQUISITION CORPORATION
It is hereby certified that:
1. The constituent business corporations participating in the
merger herein certified are:
(i) SATO Travel Holding Co., Inc., which is incorporated
under the laws of the State of Delaware;
and
(ii) FMTTM Acquisition Corporation, which is incorporated
under the laws of the State of Delaware.
2. An Agreement and Plan of Merger has been approved, adopted,
certified, executed and acknowledged by each of the aforesaid
constituent corporations in accordance with the provisions of
subsection (c) of Section 251 of the General Corporation Law of the
State of Delaware.
3. The surviving corporation in the merger herein certified is
SATO Travel Holding Co., Inc., which will continue its existence as
said surviving corporation under its present name upon the effective
date of said merger pursuant to the provisions of the General
Corporation Law of the State of Delaware.
4. The Certificate of Incorporation of SATO Travel Holding
Co., Inc., is hereby amended and restated by reason of merger in
accordance with the provisions of the General Corporation Law of the
State of Delaware and said Amended and Restated Certificate of
Incorporation attached hereto as Exhibit A.
5. The executed Agreement and Plan of Merger between the
aforesaid constituent corporations is on file at an office of the
aforesaid surviving corporation, the address of which is as follows:
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
6. A copy of the aforesaid Agreement and Plan of Merger will
be furnished by the aforesaid surviving corporation, on request, and
without cost, to any stockholder of each of the aforesaid constituent
corporations.
7. The merger shall be effective upon the filing of this
Certificate of Merger.
SATO TRAVEL HOLDING CO., INC.
By: __________________________
Name:
Title:
EXHIBIT A
---------
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SATO TRAVEL HOLDING CO., INC.
The undersigned, being the President of SATO Travel Holding Co., Inc.
(the "Corporation"), acting pursuant to the authority given by the Board of
Directors of the Corporation and Sections 242 and 245 of the Delaware General
Corporation Law, hereby adopts this Amendment and Restated Certificate of
Incorporation and certifies as follows:
1. The name of the Corporation is SATO Travel Holding Co., Inc. The
original date of filing with the Delaware Secretary of State was September 23,
1998.
2. This Amended and Restated Certificate of Incorporation restates and
integrates into a single instrument the Certificate of Incorporation of the
Corporation and adopts further amendments to the Corporation's Certificate of
Incorporation as approved by the Board of Directors and Shareholders of the
Corporation.
3. The Certificate of Incorporation of the Corporation is hereby
amended and restated to read as follows:
1. The name of the Corporation is: SATO Travel Holding Co,
Inc.
2. The address of the Corporation's registered office in the
State of Delaware is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000 in the City of
Wilmington, County of New Castle. The name of the Corporation's
registered agent is the Corporation Service Company.
3. The nature of the business or purpose to be conducted or
promoted is to engage in any lawful activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock that the Corporation
shall have authority to issue is One Thousand (1,000), all of which
shall be common stock of one class, par value of one cent ($.01) per
share, amounting in the aggregate to par value of ($10.00).
5. The Corporation shall be managed by or under the direction
of the Board of Directors which shall exercise all powers conferred
under the laws of Delaware. The Board of Directors shall have all
powers necessary or appropriate for the administration of the affairs
of the
Corporation and may perform all acts in furtherance thereof as are not
forbidden to the directors by law, this Certificate of Incorporation,
or the bylaws.
The manner of election or appointment of directors shall be
provided in the bylaws. Elections of directors of the Corporation need
not be by written ballot unless the bylaws so provide. The number of
directors shall be set in the manner provided in the bylaws, but in no
event shall there be fewer than one (1) director.
6. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to
adopt the bylaws of the Corporation and to amend or repeal any
provision thereof except a provision adopted by the stockholders and
declared as part of such adoption to be amendable or repealable only by
the stockholders.
7. Meetings of stockholders may be held within or without the
State of Delaware, as the bylaws may provide. The books of the
Corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may
be designated from time to time by the Board of Directors or in the
bylaws of the Corporation.
8. The Corporation shall exist perpetually.
9. The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by the General
Corporation Law of Delaware, as the same exists or may hereafter be
amended. No amendment or repeal of this paragraph shall apply to or
have any effect on the liability or alleged liability of any director
of the Corporation for or with respect to any act or omission on the
part of such director occurring prior to such amendment or repeal.
10. The private property, whether real or personal, of
directors and officers of the Corporation shall not be subject to the
payment of corporate debts to any extent whatsoever.
11. The Corporation shall indemnify its directors, officers,
employees and agents to the fullest extent permitted by the General
Corporation Law of Delaware, as the same exists or may hereafter be
amended.
12. The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned authorized officer of SATO Travel
Holding Co., Inc. hereby executes and delivers this Amended and Restated
Certificate of Incorporation on this __ day of June, 2001, and affirms under the
penalties of perjury that this instrument is the act and deed of the Corporation
and that the facts stated herein are true.
SATO TRAVEL HOLDING CO., INC.
By:______________________________
Name:
Title:
EXHIBIT 1.5
Directors of Surviving Corporation
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Over, Jr.
EXHIBIT 1.6
Officers of Surviving Corporation
Xxxxxxxx X. Xxxxx
Co-Chairman, President and CEO
Xxxxxxx X. Xxxxxx
Vice President and General Counsel
Xxxxxx X. Xxxx
Vice President and Chief Financial Officer
Xxxxxxx X. Xxxxx
Vice President, Strategic Relations
Xxxxxx X. XxXxxx
Vice President, Military & Government Operations
Xxxxxx X. Xxxxxx, Xx.
Vice President and Chief Information Officer
Xxxx X. Xxxxxxxxx
Vice President, Commercial Operations
Xxxx X. Xxxx
Vice President, Contracts and Proposals
Xxxxxxx X. Xxxxxxxx
Vice President
Xxxxxx X. Over, Jr.
Vice President
Xxxx X. Xxxxxxx
Vice President
Xxxx X. Xxxxxx
Treasurer
Xxxxxxx X. Xxxxxxx
Corporate Secretary
EXHIBIT 6.13
Employment Agreement
Xxxxxxxx X. Xxxxx
SCHEDULE 10.15
Required Third Party Consents
None
