SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
TRAVEL SERVICES INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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TRAVEL SERVICES INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 28, 1998
To the Stockholders of Travel Services International, Inc.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders
(the "Annual Meeting") of Travel Services International, Inc., a Delaware
corporation (the "Company"), will be held at 9:00 a.m., local time, on Tuesday,
July 28, 1998, at the Boca Raton Marriott at Boca Center, 5150 Town Center
Circle, Boca Raton, Florida 33486, for the following purposes:
(1) To elect two members to the Company's Board of Directors
to hold office until the Company's 2001 Annual Meeting or until their
successors are duly elected and qualified;
(2) To consider and vote upon a proposal to approve the
reincorporation of the Company from Delaware to Florida;
(3) To consider and vote upon a proposal to approve the
Company's Amended and Restated Long-Term Incentive Plan; and
(4) To transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on June 19, 1998
as the record date for determining those stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
SUZANNE B. BELL
Secretary
Delray Beach, Florida
July 6, 1998
THIS IS AN IMPORTANT MEETING AND ALL STOCKHOLDERS ARE ENCOURAGED TO ATTEND THE
MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON AT THE MEETING.
<PAGE>
1998 ANNUAL MEETING OF STOCKHOLDERS
OF
TRAVEL SERVICES INTERNATIONAL, INC.
PROXY STATEMENT
TIME, DATE AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Travel Services International, Inc., a Delaware
corporation (the "Company"), of proxies from the holders of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), for use at the 1998 Annual
Meeting of Stockholders of the Company to be held at 9:00 a.m., local time, on
Tuesday, July 28, 1998, at the Boca Raton Marriott at Boca Center, 5150 Town
Center Circle, Boca Raton, Florida 33486, and at any adjournments or
postponements thereof (the "Annual Meeting"), pursuant to the enclosed Notice of
Annual Meeting.
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to stockholders is July 6, 1998. The Company's
principal executive offices are located at 220 Congress Park Drive, Delray
Beach, Florida 33445, and its telephone number is (561) 266-0860.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any stockholder giving the proxy so desire. Stockholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Stockholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in doing so.
<PAGE>
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the Company's stockholders will consider and
vote upon the following matters:
(1) The election of two members to the Company's Board of
Directors to hold office until the Company's 2001 Annual Meeting or
until their successors are duly elected and qualified;
(2) A proposal to approve the reincorporation of the Company
from Delaware to Florida;
(3) A proposal to approve the Company's Amended and Restated
Long-Term Incentive Plan (the "Plan"); and
(4) The transaction of such other business as may properly
come before the Annual Meeting and any adjournments or postponements
thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth herein)
will be voted (a) for the election of the respective nominees for director named
below, and (b) in favor of all other proposals described in the Notice of Annual
Meeting. In the event a stockholder specifies a different choice by means of the
enclosed proxy, such shares will be voted in accordance with the
specification(s) so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on June 19, 1998
as the record date (the "Record Date") for determining stockholders of the
Company entitled to notice of and to vote at the Annual Meeting. The outstanding
securities of the Company consist of Restricted Voting Common Stock entitled to
four-tenths of a vote on each matter submitted to stockholders for approval at
the Annual Meeting ("Restricted Common Stock"), and non-restricted Common Stock
entitled to one vote on each matter submitted to stockholders for approval at
the Annual Meeting ("non-restricted Common Stock" and, together with the
Restricted Common Stock, the "Common Stock"). As of the Record Date, there were
11,135,528 shares of Common Stock issued and outstanding, all of which are
entitled to be voted at the Annual Meeting, and of which 2,484,501 shares were
shares of Restricted Voting Common Stock and 8,651,027 shares were
non-restricted Common Stock. Stockholders do not have the right to cumulate
their votes for directors.
The attendance, in person or by proxy, of stockholders holding of
record a number of shares entitling them to exercise a majority of the voting
power of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum. Directors will be elected by a
plurality of the votes cast by the shares of Common Stock represented in person
or by proxy at the Annual Meeting. The affirmative vote of stockholders holding
of record a number of shares entitling them to exercise a majority of the voting
power of the outstanding shares of Common Stock of the Company will be required
for approval of the proposal to reincorporate the Company from Delaware to
Florida. The affirmative vote of stockholders holding of record a number of
shares entitling them to exercise a majority of the voting power of the shares
of Common Stock represented in person or by
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<PAGE>
proxy at the Annual Meeting will be required for approval of (i) the proposal to
adopt the Plan, and (ii) any other matter that may be submitted to a vote of the
stockholders. If less than a majority of the voting power of the outstanding
shares entitled to vote are represented at the Annual Meeting, the holders of a
majority of the voting power of the shares so represented may adjourn the Annual
Meeting to another date, time or place, and notice need not be given of the new
date, time or place if the new date, time or place is announced at the meeting
before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof.
Pursuant to Delaware law, abstentions and broker non-votes are counted
as present for purposes of determining the presence of a quorum. Abstentions are
treated as present and entitled to vote and will be counted as votes cast at the
Annual Meeting, but will not be counted as votes cast for or against any given
matter. However, a broker non-vote on a matter is considered as not present and
not entitled to vote on that matter and thus is not counted as a vote cast or as
present in determining whether a matter has been approved. Accordingly, (i)
abstentions and broker non-votes will not have the same effect as a vote against
the election of any director, (ii) abstentions will have the same effect as a
vote against the proposal to approve the Plan, but broker non-votes will not
have such effect, and (iii) abstentions and broker non-votes will have the same
effect as a vote against the proposal to approve the reincorporation of the
Company from Delaware to Florida.
A list of stockholders entitled to vote at the Annual Meeting will be
available at the Company's principal executive offices, 220 Congress Park Drive,
Delray Beach, Florida 33445, for a period of ten days prior to the Annual
Meeting and at the Annual Meeting itself for examination by any stockholder.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of the Company as of June 19, 1998 by:
(i) each person known to beneficially own more than 5% of the outstanding shares
of Common Stock; (ii) each of the Company's directors; (iii) the Company's Chief
Executive Officer and the five other most highly compensated executive officers
whose total 1997 annualized salary and bonus was $100,000 or more (the Chief
Executive Officer and such other executive officers of the Company are sometimes
referred to herein as the "Named Executive Officers"); and (iv) all executive
officers and directors as a group. All persons listed have sole voting and
investment power with respect to their shares, unless otherwise indicated.
NAME AND ADDRESS PERCENTAGE
OF BENEFICIAL OWNER(1) SHARES OWNED
---------------------- ------ -----
Joseph V. Vittoria (2) 370,000 3.3%
Michael J. Moriarty (2) 64,583 *
Jill M. Vales (2) 55,333 *
Maryann Bastnagel (2) 28,500 *
Suzanne B. Bell (2)(3) 35,750 *
Robert G. Falcone (4) 250,000 2.2%
Wayne Heller (5) 908,334 8.2%
Imad Khalidi 500,000 4.5%
John W. Przywara 194,445 1.7%
Elan J. Blutinger (6)(7) 323,693 2.9%
D. Fraser Bullock (6) 241,328 2.2%
Tommaso Zanzotto (6) 10,242 *
J&W Heller Corp.(5) 908,334 8.2%
800 Ideas, Inc. (8) 902,778 8.1%
Greystones, Inc. (9) 1,083,334 9.7%
All Directors and Executive 2,994,708 26.6%
Officers as a Group
(15 persons) (10)
- ------------------
* Less than 1.0%
(1) Unless indicated otherwise, the address of the beneficial owners is, c/o
Travel Services International, Inc., 220 Congress Park Drive, Delray Beach,
Florida 33445.
(2) Includes the following shares which may be acquired upon the exercise of
options that will vest within 60 days following the date of this Proxy
Statement: 25,000 shares for Mr. Vittoria; 18,750 shares for Mr. Moriarty;
12,500 shares for Ms. Vales; 27,500 shares for Ms. Bastnagel; and 6,250
shares for Ms. Bell.
(3) Includes 5,000 shares owned by Ms. Bell's spouse.
(4) Includes 100,000 shares owned by Judith A. Falcone, his spouse.
(5) These shares are held of record by J&W Heller Corp., a corporation of which
Mr. Heller is a 50% stockholder. The remaining 50% of the ownership of J&W
Heller Corp. is held by Judy Heller, Mr. Heller's spouse.
(6) Includes 10,000 shares which may be acquired upon the exercise of vested
options.
(7) Excludes 39,000 shares held by trusts for the benefit of Mr. Blutinger's
minor children. Mr. Blutinger disclaims ownership, investment and voting
power of such shares.
(8) The shares are held of record by 800 Ideas, Inc., a corporation of which
Susan Parker is the sole stockholder. Effective June 9, 1998, Ms. Parker
resigned from her position as a member of the Company's Board of Directors.
(9) The stockholder's address is 124 Pine Street, Portland, Maine 04102. Alex
Cecil, the former owner of Auto Europe, is the sole voting stockholder of
Greystones, Inc.
(10) Includes 132,500 shares that may be acquired upon the exercise of vested
options or options that will vest within 60 days following the date of this
Proxy Statement.
4
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
ELECTION OF DIRECTORS; NOMINEES
The number of directors constituting the Board of Directors is
determined by the Board as provided in the Company's Bylaws. The size of the
Board is currently fixed at nine directors, of which there are currently eight
incumbent directors. The Board of Directors of the Company is divided into three
classes with each class of directors serving staggered three year terms or until
their successors are elected and qualified. At each annual meeting of
stockholders, directors will be elected by the holders of the Common Stock to
succeed those directors whose terms are expiring.
The current classes of the Board of Directors and their terms of office
are as follows:
CLASS DIRECTORS TERM EXPIRES IN:
----- --------- ----------------
I Elan J. Blutinger 1998
I D. Fraser Bullock 1998
I Tommaso Zanzotto 1998
II Imad Khalidi 1999
II John W. Przywara 1999
II Joseph V. Vittoria 1999
III Robert G. Falcone 2000
III Wayne Heller 2000
Messrs. Elan J. Blutinger, D. Fraser Bullock and Tommaso Zanzotto have
been nominated by the Company to be reelected as Class I directors at the Annual
Meeting, to hold office until the 2001 annual meeting, and proxies will be voted
for Messrs. Blutinger, Bullock and Zanzotto absent contrary instructions. Each
of the nominees for election as a director of the Company is a current member of
the Board of Directors.
The Board of Directors has no reason to believe that any of the
nominees will refuse or be unable to accept election; however, in the event that
a nominee is unwilling or unable to accept election or if any other unforeseen
contingencies should arise, each proxy that does not specifically direct
otherwise will be voted for the remaining nominees, if any, and for such other
person(s) as may be designated by the Board of Directors.
One vacancy currently exists on the Board of Directors for a Class III
director due to the resignation of Susan Parker, which was effective June 9,
1998. The Board has no current plans to fill the vacancy created by Ms. Parker's
resignation but may do so in the future when appropriate candidates are
identified. The Board has authority to fill the vacancy under applicable law and
the Company's Bylaws.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES AS DIRECTORS OF THE COMPANY.
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<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The following table sets forth information concerning the Company's
directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Joseph V. Vittoria (1) (3)............ 63 Chairman and Chief Executive Officer, Director
Michael J. Moriarty................... 51 President and Chief Operating Officer
Jill M. Vales......................... 40 Senior Vice President and Chief Financial Officer
Maryann Bastnagel..................... 41 Senior Vice President and Chief Information Officer
Suzanne B. Bell....................... 31 Senior Vice President, General Counsel and Secretary
Melville W. Robinson.................. 43 Vice President, Corporate Development
John C. DeLano........................ 38 Vice President, Operations
Spencer Frazier....................... 46 Vice President, Marketing
Robert G. Falcone..................... 56 CEO-Cruises Inc.; Director
Wayne Heller (3)...................... 41 CEO-Cruises Only; Director
Imad Khalidi.......................... 46 CEO-Auto Europe, Director
John W. Przywara...................... 46 CEO-D-FW Tours; Director
Elan J. Blutinger (2)................. 42 Director
D. Fraser Bullock (1) (3)............. 43 Director
Tommaso Zanzotto (1) (2).............. 55 Director
Leonard A. Potter..................... 36 Advisory Director
</TABLE>
- ------------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Acquisition Committee
JOSEPH V. VITTORIA became the Chairman and Chief Executive Officer and a
director of the Company in July 1997. From September 1987 to February 1997 Mr.
Vittoria was the Chairman and Chief Executive Officer of Avis, Inc., a
multinational auto rental company where he was employed for over 26 years. Mr.
Vittoria was responsible for the purchase of the Avis, Inc. by creating one of
the world's largest Employee Stock Ownership Plans in 1987. He was a founding
member of the World Travel and Tourism Council, a global organization of the
chief executive officers of companies engaged in all sectors of the travel and
tourism industry. He has been named travel executive of the year several times
by various travel media, including BUSINESS TRAVEL NEWS, TRAVEL WEEKLY, TRAVEL
AGENT TOUR AND TRAVEL NEWS-NORTH AMERICA. Mr. Vittoria serves on the Board of
Directors of Transmedia Europe, Transmedia Asia, Carey International, Inc.,
ResortQuest International, Inc., CD Radio, Inc. and various non-profit
associations.
MICHAEL J. MORIARTY became the President and Chief Operating Officer of the
Company in July 1997. Mr. Moriarty was the President and Chief Operating Officer
of Studio Plus Hotels, Inc., a national extended stay hotel company from July
1996 until its sale in 1997. From 1981 to July 1996, Mr. Moriarty held various
senior executive positions with the Marriott Company, a hotel company, including
Brand Vice President of Marriott International (1994-1996), Vice President of
Operations for the Residence Inn by Marriott Company (1989-1994), Vice President
Finance and Development of Residence Inn (1987-1989), Vice President of Finance
and Development for the Roy Rogers Restaurants Company, a subsidiary of the
Marriott Company, and Director of Finance and Business Analysis for Marriott
Hotels and Resorts.
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JILL M. VALES became Senior Vice President and Chief Financial Officer of
the Company in July 1997. From 1996 to 1997, Ms. Vales served as the Chief
Operating Officer of Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., a law firm.
From 1990 until 1996, Ms. Vales held various positions at Certified Vacations,
an affiliate of Alamo Rent-A-Car, including Senior Vice President of Operations
and Chief Financial Officer (1994-1996), Vice President of Finance and
Operations (1992-1994) and Senior Director of Finance and Operations and
Controller (1990-1992). From 1979 to 1990, Ms. Vales held various positions at
KPMG Peat Marwick, specializing in auditing travel companies. Ms. Vales is a
certified public accountant.
MARYANN BASTNAGEL became the Senior Vice President and Chief Information
Officer of the Company in July 1997. From 1989 to 1997, Ms. Bastnagel held
various positions with Marriott International, Inc. in information services and
technology, including Vice President of Business Technology, where she was
responsible for defining systems and technology strategy for the Marriott
Lodging Group. From 1990 to 1994, Ms. Bastnagel was Vice President of
Information Systems and a member of the Executive Committee for Residence Inn by
Marriott. From 1985 to 1989, she was a Senior Manager with Price Waterhouse
Management Consulting Services on large scale information systems development
projects. From 1981 to 1985, Ms. Bastnagel was a Senior Consultant with Booz,
Allen & Hamilton, Inc.
SUZANNE B. BELL became the Senior Vice President, General Counsel and
Secretary of the Company in July 1997. From July 1996 to July 1997, Ms. Bell was
an attorney at Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A. From
September 1991 to July 1996, she was an attorney at Morgan, Lewis & Bockius LLP.
Ms. Bell concentrated her law practice in the areas of mergers and acquisitions
and securities laws, representing both public and private companies.
MELVILLE W. ROBINSON became the Vice President, Corporate Development of
the Company in July 1997. From 1994 to July 1997, Mr. Robinson served as the
Chief Financial Officer of Cruises Only, one of the Founding Companies. From
1989 until 1993, Mr. Robinson was the President and Chief Financial Officer of
the Gale Group, a U.S. based consumer products manufacturing firm. From 1986 to
1989, Mr. Robinson was a Managing Director at PNC Merchant Banking Corp., where
he founded and managed the Growth Capital Group. From 1983 to 1986, Mr. Robinson
was the Chief Financial Officer of Drug Emporium Inc., a publicly-traded
discount drugstore chain.
JOHN C. DELANO became Vice President, Operations, of the Company in January
1998. Mr. DeLano spent nearly twenty years in the auto rental industry, and from
1991 to 1997 he served as Managing Director and National Operations Manager for
Avis Australia, where he coordinated the marketing, operations, human resources,
information technology, sales, fleet, accounting and field management functions.
In 1992, while under Mr. DeLano's supervision, Avis Australia was awarded the
prestigious Australian Quality Award (similar to the Malcolm Baldridge Award in
the U.S.) and the 1996 Australian Customer Service Award.
SPENCER FRAZIER became Vice President, Marketing, of the Company in April
1998. From 1996 to 1998, Mr. Frazier served as the President of Worldwide
Concepts, Inc., a consulting firm focused on the promotion of worldwide tourism.
From 1994 to 1996, he was the Executive Vice President of Kloster Cruise
Limited, overseeing marketing and sales for Royal Cruise Line and international
marketing for Norwegian Cruise Line. From August 1991 to July 1994, he was
President of Royal Viking Line.
ROBERT G. FALCONE became a director of the Company in July 1997. Mr.
Falcone has served as the Chairman and Chief Executive Officer of Cruises Inc.
since its founding in 1982. Mr. Falcone is a
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member of the National Association of Cruise Only Agencies ("NACOA"), the
Airline Reporting Corporation ("ARC"), the Travel Council of the World
(Environmental Group), the American Society of Travel Agents ("ASTA"), Cruise
Lines International Association ("CLIA") and is the co-founder of the Society of
Elite Agents, a trade association of leading cruise specialists ("SEA").
WAYNE HELLER became a director of the Company in July 1997. Mr. Heller has
served as the Chief Executive Officer of Cruises Only since its founding in 1985
and was previously employed with Norwegian Caribbean Cruise Lines from 1980 to
1984. Mr. Heller is a member of ASTA, NACOA and CLIA.
IMAD KHALIDI became a director of the Company in July 1997. Mr. Khalidi has
been President of Auto Europe since 1992. In 1990, he joined Auto Europe as
Executive Vice President of Marketing and Sales. From 1983 to 1990, Mr. Khalidi
served as an International Travel Trade Manager and an International Licensee
Manager with Europcar International S.A., an auto rental company in France. Mr.
Khalidi is a member of the Association of Retail Travel Agencies ("ARTA"), ASTA
and CLIA.
JOHN W. PRZYWARA became a director of the Company in July 1997. Mr.
Przywara has served as President of D-FW Tours since its founding in 1978. Mr.
Przywara is a member of the ARC, CLIA and IATAN.
ELAN J. BLUTINGER has been a director of the Company since October 1996.
Mr. Blutinger is a Managing Director of Alpine Consolidated LLC, a consolidator
of highly fragmented businesses. From 1987 to 1995, he was the Chief Executive
Officer of Shoppers Express, Inc., an electronic retailing service, which he
founded. From 1983 to 1986, Mr. Blutinger was the Chairman and Chief Executive
Officer of DSI, a wholesale distributor for the personal computer industry until
its acquisition in 1986 by Independent Distribution Incorporated. Mr. Blutinger
is also a director and co-founder of ResortQuest International, Inc.
D. FRASER BULLOCK has been a director of the Company since October 1996.
Mr. Bullock is a Managing Director of Alpine Consolidated LLC, and was most
recently the President and Chief Operating Officer of VISA Interactive, a
wholly-owned subsidiary of VISA International from its inception in 1994 to
1996. In 1993, Mr. Bullock became the President and Chief Operating Officer of
U.S. Order, Inc., a provider of remote electronic transaction processing, until
it was acquired by VISA International in 1994. From 1991 to 1992, Mr. Bullock
was the Senior Vice President of U.S. Order, Inc. From 1986 to 1991, he was the
Chief Financial Officer and Executive Vice President of World Corp., Inc., a
holding company with various operating subsidiaries including World Airways,
Inc. Mr. Bullock was a founding partner of Bain Capital, a Manager of Bain and
Company, and a founder of MediVision, Inc., a consolidation of eye surgery
centers. Mr. Bullock is also a director and co-founder of ResortQuest
International, Inc.
TOMMASO ZANZOTTO became a director of the Company in July 1997. Mr.
Zanzotto is the President of Toscana Ville E Castelli, a real estate development
company which owns and operates residential and commercial properties in the
lodging and hotel industry. From 1994 to 1996, he was the Chairman and Chief
Executive Officer of Hilton International. From 1969 to 1993, Mr. Zanzotto held
various positions with American Express Travel Related Services including
President International, American Express Financial and Travel Services
(1990-1993); President, American Express Corporate Card Division (1987-1990);
President, American Express Travelers Cheques (Europe, Africa, Middle East). Mr.
Zanzotto is a member of the World Travel and Tourism Council, and a Governor of
the Transportation and Travel Committee of the World Economic Summit. Mr.
Zanzotto is also a director of Compass International Services Corporation.
8
<PAGE>
LEONARD A. POTTER served as a director of the Company from its formation
until May 1997. After the initial public offering in July 1997, he became an
Advisory Director to the Board. Mr. Potter is a co-founder and Managing Director
of Capstone Partners, LLC, a venture firm specializing in consolidation
transactions. Capstone Partners, LLC was a co-founder of Staffmark, Inc. and
ResortQuest International, Inc. Prior to forming Capstone Partners, LLC in April
1996, Mr. Potter was an attorney at Morgan, Lewis & Bockius LLP for more than
five years practicing in the areas of mergers and acquisitions and securities
law. While at Morgan, Lewis & Bockius he represented a number of public
companies in connection with their creation and subsequent implementation of
consolidation strategies similar to the Company's, including U.S. Office
Products, F.Y.I. Incorporated and Cotelligent Group.
BOARD OF DIRECTORS
The Board of Directors has established an Audit Committee, a
Compensation Committee and an Acquisition Committee, and may establish other
committees from time to time as the Board may determine.
Leonard A. Potter, the Company's Advisory Director, attends meetings of
the Board of Directors, consults with officers and directors of the Company and
provides guidance (but not direction) concerning management and operation of the
Company's business. The Advisory Director is not a director of the Company and
accordingly will not have a right to vote as a director.
The Audit Committee consists of three members, two of whom are
independent directors. The Audit Committee makes recommendations concerning the
engagement of independent public accountants, reviews with the independent
public accountants the plans and the results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, reviews recommendations
regarding the Company's accounting methods and the adequacy of its systems of
internal accounting controls, and reviews and approves financial press releases
and reports.
The Compensation Committee consists of two members, each of whom is a
"disinterested director," as defined in the rules promulgated by the Securities
and Exchange Commission pursuant to the Exchange Act, and an "outside director"
within the meaning of Section 162(m) of the Internal Revenue Code. The
Compensation Committee reviews and determines compensation for the Company's
executive officers, administers the Company's 1997 Long-Term Incentive Plan (the
"Incentive Plan") and makes recommendations to the Board of Directors with
respect to the Company's compensation policies.
The Acquisition Committee consists of three fixed members and one
floating member. The floating member changes based upon the business segment to
which an acquisition relates. The Acquisition Committee has the authority to
review and approve acquisitions with a purchase price of $10 million or less,
provided that if the acquisition relates to a new line of business for the
Company, then the acquisition must be reviewed and approved by the full Board of
Directors.
The Board of Directors does not have any other committees at this time,
although additional committees may be formed in the future. All officers serve
at the discretion of the Board of Directors, subject to the terms and conditions
of such officers' employment agreements with the Company.
During 1997, the Company's Board of Directors held three meetings and
took a number of other actions by written consent. During 1997, with the
exception of Imad Khalidi, each director attended at least 75 percent of the
aggregate of (i) the number of meetings of the Board of Directors held during
the
9
<PAGE>
period he served on the Board, and (ii) the number of meetings of committees
of the Board of Directors held during the period he served on such committees.
Mr. Khalidi attended two of the three Board of Directors meetings held during
1997. Mr. Khalidi does not serve on any committees of the Board of Directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and owners of more than 10% of the
Company's common stock to file reports of ownership on Form 3 and changes of
ownership on Form 4 or Form 5 with the Securities and Exchange Commission and
The Nasdaq Stock Market. Such persons are also required to furnish the Company
with a copy of all such forms filed.
Based solely on its review of copies of such reports or written
representations from or on behalf of certain reporting persons, the Company
believes that, during the year ended December 31, 1997, all Section 16(a) filing
requirements applicable to such persons were timely satisfied.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid to the
Company's Chief Executive Officer and the five other most highly compensated
executive officers whose total 1997 annualized salary and bonus was $100,000 or
more (the Chief Executive Officer and such other executive officers of the
Company are sometimes referred to herein as the "Named Executive Officers") with
respect to the year ended December 31, 1997:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ----------------
OTHER ANNUAL SECURITIES
COMPEN- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR (1) SALARY (2) BONUS SATION OPTIONS COMPENSATION
($) ($) ($) (#) ($)
- ----------------------------- ----------- ------------ ------------ --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph V. Vittoria 1997 84,615 86,000 -- 100,000 --
CEO
Michael J. Moriarty 1997 63,462 51,500 -- 75,000 6,104 (3)
President/COO
Jill M. Vales 1997 63,462 32,000 -- 50,000 24,000 (4)
Sr. VP/CFO
Maryann Bastnagel 1997 63,462 48,500 -- 110,000 8,172 (3)
Sr. VP/CIO
Suzanne B. Bell 1997 52,885 27,000 -- 25,000 --
Sr. VP/General Counsel
Imad Khalidi (5) 1997 293,231 295,000 -- -- --
VP European Operations
</TABLE>
- -------------------
(1) With the exception of Mr. Khalidi, each of the Named Executive Officers
commenced employment with the Company upon consummation of the initial
public offering (July 28, 1997). Mr. Khalidi served as President of Auto
Europe prior to the initial public offering. Commencing on July 28, 1997,
Mr. Khalidi served as CEO of Auto Europe and as a director and Vice
President, European Operations, of the Company.
(2) Annual salaries are as follows: $200,000 for Mr. Vittoria; $150,000 for
each of Mr. Moriarty, Ms. Vales and Ms. Bastnagel; and $125,000 for Ms.
Bell. Mr. Khalidi's 1997 salary and bonus include amounts paid by Auto
Europe prior to the initial public offering. After the offering, Mr.
Khalidi's annual salary is $140,000.
(3) Consists of relocation expenses paid during 1997.
(4) Consists of consulting fees paid prior to the consummation of the Company's
initial public offering.
(5) Effective March 1998, Mr. Khalidi no longer serves as Vice President,
European Operations, but continues in his capacities as CEO of Auto Europe
and as a director of the Company.
11
<PAGE>
The following table sets forth the stock options granted to the Named
Executive Officers during the year ended December 31, 1997:
<TABLE>
<CAPTION>
STOCK OPTION GRANTS AND EXERCISES
INDIVIDUAL GRANTS GRANT DATE
VALUE(1)
-------------------------------------------------------------- -------------------
NUMBER OF
SECURITIES %OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE PRESENT VALUE
NAME (#) FISCAL YEAR ($/SH) EXPIRATION DATE ($)
---------------------- -------------- -------------- -------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph V. Vittoria 100,000 10.4 14.00 7/28/07 821,000
Michael J. Moriarty 75,000 7.8 14.00 7/28/07 615,000
Jill M. Vales 50,000 5.2 14.00 7/28/07 410,000
Maryann Bastnagel 110,000 11.4 14.00 7/28/07 903,000
Suzanne B. Bell 25,000 2.6 14.00 7/28/07 205,000
Imad Khalidi -- -- -- -- --
</TABLE>
---------------
(1) Calculated using the Black-Scholes valuation method.
None of the Named Executive Officers exercised any stock options during
1997. All of the options disclosed in the table above vest at the rate of 25%
per year.
DIRECTOR COMPENSATION
Directors who are also employees of the Company or one of its
subsidiaries do not receive additional compensation for serving as directors.
Each director who is not an employee of the Company or one of its subsidiaries
receives a fee of $2,000 for attendance at each Board of Directors' meeting and
$1,000 for each committee meeting (unless held on the same day as a Board of
Directors' meeting). Directors are also reimbursed for out-of-pocket expenses
incurred in attending meetings of the Board of Directors or committees thereof
incurred in their capacity as directors.
The Company's 1997 Non-Employee Directors' Stock Plan (the "Directors'
Plan"), which was adopted by the Board of Directors and approved by the
Company's stockholders in 1997, provides for: (i) the automatic grant to each
non-employee director and Advisory Director (a "Participant") serving at the
commencement of the initial public offering of an option to purchase 10,000
shares; and thereafter (ii) the automatic grant to each Participant of an option
to purchase 10,000 shares upon such person's initial election as a director or
appointment as an Advisory Director. In addition, the Directors' Plan provides
for an automatic annual grant to each Participant of an option to purchase 5,000
shares at each annual meeting of stockholders following the Offering; provided,
however, that if the first annual meeting of stockholders following a person's
initial election as a non-employee director or appointment by the Board as an
Advisory Director is within three months of the date of such election or
appointment, such person will not be granted an option to purchase 5,000 shares
of Common Stock at such annual meeting. These options will have an exercise
price per share equal to the fair market value of a share at the date of grant.
Options granted under the Directors' Plan will expire at the earlier of 10 years
from the date of grant or one year after termination of service as a director or
advisor, and options will be immediately exercisable. In addition, the
Directors' Plan permits Participants to elect to receive, in lieu of cash
directors' fees, shares or credits representing "deferred shares" that may be
settled at future dates, as elected by the Participants. The number of shares or
deferred shares received will be equal to the number of shares which, at the
date the fees would otherwise be payable, will have an aggregate fair market
12
<PAGE>
value equal to the amount of such fees. The Company has reserved 100,000 shares
of Common Stock for use in connection with the Directors' Plan. Upon
consummation of the initial public offering, Messrs. Blutinger, Bullock,
Zanzotto and Potter each received options to purchase 10,000 shares.
EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS; COVENANTS-NOT-TO-COMPETE
The Company was incorporated in April 1996, however, the Company did not
conduct operations or generate revenue and did not pay any of its executive
officers compensation as employees until July 1997. During 1997, its most highly
compensated executive officers were Messrs. Vittoria, Moriarty and Khalidi and
Ms. Bastnagel, Ms. Vales and Ms. Bell. The Company granted Messrs. Vittoria and
Moriarty and Ms. Bastnagel, Ms. Vales and Ms. Bell options to purchase 100,000,
75,000, 110,000, 50,000 and 25,000 shares of Common Stock, respectively, at
$14.00 per share, the initial public offering price. These options will vest in
equal installments on each of the first four anniversaries of the initial
offering.
Mr. Vittoria has entered into an employment agreement with the Company
providing for an annual base salary of $200,000. Mr. Moriarty has entered into
an employment agreement with the Company providing for an annual base salary of
$150,000 plus in the first year a guaranteed minimum bonus of $75,000. Ms.
Vales, Mr. Khalidi, Ms. Bastnagel and Ms. Bell each have entered into an
employment agreement with the Company providing for an annual base salary of
$150,000, $140,000, $150,000 and $125,000, respectively. Each of these
agreements is for a term of three years. In addition, certain executive officers
of the Operating Companies, including Messrs. Falcone, Heller and Przywara,
members of the Board of Directors, have entered into employment agreements.
Effective July 28, 1997, Mr. Falcone's employment agreement is for a term of
five years; Mr. Heller's and Mr. Przywara's employment agreements are for a term
of three years (in each case, the "Initial Term"). Unless terminated or not
renewed by the Company or the employee, the term will continue thereafter on a
year-to-year basis on the same terms and conditions existing at the time of
renewal. Each employment agreement contains a covenant not to compete (the
"Covenant") with the Company for a period of two years immediately following
termination of employment or, in the case of a termination by the Company
without cause in the absence of a change in control, for a period of one year
following termination of employment. Under this Covenant, the executive officer
is prohibited from: (i) engaging in any travel service business in direct
competition with the Company within defined geographic areas in which the
Company or its subsidiaries does business; (ii) enticing a managerial employee
of the Company away from the Company; (iii) calling upon any person or entity
which is, or has been, within one year prior to the date of termination, a
customer of the Company; or (iv) calling upon a prospective acquisition
candidate which the employee knew was approached or analyzed by the Company, for
the purpose of acquiring the entity. The Covenant may be enforced by injunctions
or restraining orders and shall be construed in accordance with the changing
activities, business and location of the Company.
Each of these employment agreements provides that, in the event of a
termination of employment by the Company without cause during the Initial Term
the employee will be entitled to receive from the Company an amount equal to his
or her then current salary for the remainder of the Initial Term or for one
year, whichever is greater. In the event of a termination of employment without
cause after the Initial Term of the employment agreement, the employee will be
entitled to receive an amount equal to his or her then current salary for one
year. In either case, payment is due in one lump sum on the effective date of
termination. In the event of a change in control of the Company (as defined in
the agreement) during the Initial Term, if the employee is not given at least
five days' notice of such change in control and the successor's intent to be
bound by such employment agreement, the employee may elect to terminate his or
her employment and receive in one lump sum three times the amount he or she
would receive pursuant to a termination without cause during the Initial Term.
The employment
13
<PAGE>
agreements of Messrs. Falcone, Heller, Khalidi and Przywara also state, that in
the event of a termination without cause by the Company or a change in control,
the employee may elect to waive the right to receive severance compensation and,
in such event, the noncompetition provisions of the employment agreement will
not apply. In the event the employee is given at least five days' notice of such
change in control, the employee may elect to terminate his or her employment
agreement and receive in one lump sum two times the amount he or she would
receive pursuant to a termination without cause during the Initial Term. In such
an event, the noncompetition provisions of the employment agreement would apply
for two years from the effective date of termination.
Each agreement with respect to the acquisition of an Operating Company
also contains a similar covenant prohibiting sellers from competing with the
Company for a periods following the consummation of the respective acquisition.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each of
the Company's directors and executive officers. The indemnification agreements
require, among other things, that the Company indemnify its directors and
executive officers to the fullest extent permitted by law, and advance to the
directors and executive officers all related expenses, subject to reimbursement
if it is subsequently determined that indemnification is not permitted. The
Company must also indemnify and advance all expenses incurred by directors and
executive officers seeking to enforce their rights under the Company's
directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by provisions in the Charter and Bylaws, it provides greater assurance
to directors and executive officers that indemnification will be available,
because, as a contract, it cannot be modified unilaterally in the future by the
Board of Directors or by the stockholders to eliminate the rights it provides.
The Company expects that the indemnification agreements will be amended or
replaced, as appropriate, to conform to Florida law in the event that the
Company's reincorporation from Delaware to Florida is approved by the Company's
stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Tommaso Zanzotto and Elan
Blutinger. Mr. Zanzotto has never been an officer or employee of the Company or
its subsidiaries. Mr. Blutinger was an officer of the Company prior to the
Company's initial public offering. The Company was initially capitalized by
Alpine Consolidated, LLC, a consolidator of highly fragmented businesses, of
which Elan Blutinger is a Managing Director, and Capstone Partners, LLC. As a
result of a 5,444.45 for one stock split effective on May 14, 1997, the 300
shares of Common Stock initially issued by the Company to its founders,
including Alpine Consolidated, LLC, totaled 1,633,335 shares on the consummation
of the initial public offering. In addition, prior to consummation of the
initial public offering, TSGI Funding, LLC ("TSGI"), a Delaware limited
liability company, extended loans to the Company from time to time in amounts
equal to the legal, accounting and other transactional costs, expenses and
disbursements incurred by the Company in connection with the acquisitions of the
Founding Companies and the initial public offering. The member managers of TSGI
were Alpine Consolidated, LLC and Capstone Partners, LLC. All amounts loaned by
TSGI were repaid, without interest, by the Company on July 28, 1997, upon
consummation of the initial public offering. Such loans aggregated $950,000.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has the authority to determine the
compensation of the Company's executive officers and the executive officers of
the Company's subsidiaries, and to administer the Company's 1997 Long-Term
Incentive Plan (the "Incentive Plan"). The Compensation Committee was
constituted on August 11, 1997, and currently consists of two outside directors
who are not officers or employees of the Company. In general, the goals of the
Compensation Committee are to enable the Company to (1) recruit, develop and
retain highly motivated and qualified managers; (2) maximize financial
performance, balancing appropriately the short and long term goals of the
Company; and (3) align the interests of Company management with those of its
stockholders through the use of stock options and incentives tied to increases
in stockholder value.
During 1997, the executive officers were compensated pursuant to
employment agreements entered into in connection with the Company's initial
public offering and prior to the appointment of the Compensation Committee.
Accordingly, the Compensation Committee did not determine the 1997 salaries of
the executive officers.
In addition to compensation through base salaries, the Compensation
Committee has the authority to issue performance-based bonuses. Bonus payments
made in connection with performance in 1997 were made in cash. In the future,
such bonus payments may, in the discretion of the Compensation Committee, be
made in cash or stock options. The Compensation Committee is responsible for the
selection of the employees to whom options will be granted, the number of shares
subject to each such option and the terms and conditions of such options,
consistent with the Incentive Plan. The Compensation Committee seeks to use the
Incentive Plan as a means to motivate the Company's management and key
personnel. In addition to year-end performance bonuses, determinations of option
grants may be made during the year, either in connection with new acquisitions,
additional equity offerings by the Company, or the addition of new key
personnel, as appropriate in furtherance of the Company's objectives. Such
objectives may include recognition of past qualitative performance and
incentives to continue the growth and profits of the Company's business. To
facilitate the Compensation Committee's achievement of its goals, the committee
has engaged an outside consulting firm to evaluate the compensation structure
and make recommendations to the committee.
Section 162(m) of the Internal Revenue Code generally limits the tax
deduction to public companies for compensation over $1 million paid to a
corporation's chief executive officer and the four next most highly compensated
executive officers, except to the extent that any such excess compensation is
paid pursuant to a performance-based or stock option plan that has been approved
by stockholders. The Compensation Committee will study the potential impact of
Section 162(m) and will, to the extent it deems appropriate, take reasonable
steps to minimize or eliminate any potential impact of Section 162(m) on the
Company, while at the same time preserving the objective of providing
appropriate incentive awards. The Compensation Committee believes that there are
no current executive compensation programs or outstanding awards that would be
impacted by Section 162(m).
COMPENSATION COMMITTEE
ELAN J. BLUTINGER
TOMMASO ZANZOTTO
15
<PAGE>
PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return for the period from July 22, 1997 (the date on which the
Company's common stock commenced trading on the Nasdaq Stock Market) to December
31, 1997 (assuming reinvestment of dividends, if any) among the Company, the
Standard & Poor's 500 Index and the Russell 2000 Index. The Company does not
believe that it can reasonably identify a peer group or published industry or
line-of-business index for comparison to the Company. Therefore, the Russell
2000 Index has been used by the Company for comparison purposes because it
represents growth companies with market capitalizations similar to the Company.
<TABLE>
<CAPTION>
COMPARISON OF FIVE MONTH CUMULATIVE TOTAL RETURN*
AMONG TRAVEL SERVICES INTERNATIONAL, INC., THE STANDARD
& POOR'S 500 INDEX AND THE RUSSELL 2000 INDEX
7/24/97 7/97 8/97 9/97 10/97 11/97 12/97
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TRAVEL SERVICES
INTERNATIONAL, INC. $100 $146 $174 $148 $160 $154 $170
- ---------------------------------------------------------------------------------------------------------------------
STANDARD & POOR'S 500 $100 $108 $102 $107 $104 $109 $111
- ---------------------------------------------------------------------------------------------------------------------
RUSSELL 2000 $100 $105 $107 $115 $110 $109 $111
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*Assumes $100 invested on 7/24/97 in stock or on 6/30/97 in index -
including reinvestment of dividends. Fiscal year ending December 31.
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FORMATION, INITIAL PUBLIC OFFERING AND FOUNDING COMPANY ACQUISITIONS
The Company was formed in April 1996. The Company was initially
capitalized by Alpine Consolidated, LLC, a consolidator of highly fragmented
businesses, of which Elan Blutinger and D. Fraser Bullock, Directors of the
Company, are Managing Directors, and Capstone Partners, LLC, a venture firm
specializing in consolidation transactions, of which Leonard Potter, who is an
Advisory Director to the Board, is a Managing Director. As a result of a
5,444.45 for one stock split effective on May 14, 1997, the 300 shares of Common
Stock initially issued by the Company to its founders totaled 1,633,335 shares
on the consummation of the initial public offering.
Prior to consummation of the initial public offering, TSGI Funding, LLC
("TSGI"), a Delaware limited liability company, extended loans to Travel
Services International, Inc. from time to time an amount equal to the legal,
accounting and other transactional costs, expenses and disbursements incurred by
the Company in connection with the acquisitions of the Founding Companies and
the initial public offering. The member managers of TSGI were Alpine
Consolidated, LLC and Capstone Partners, LLC. All amounts loaned by TSGI to
Travel Services International, Inc. were repaid, without interest, by the
Company on July 28, 1997, upon consummation of the initial public offering. Such
loans aggregated $950,000.
The aggregate consideration paid by the Company in the acquisitions of
the Founding Companies consisted of approximately $29.1 million in cash and
3,422,225 shares of Common Stock. In addition, certain non-operating assets with
a net book value of approximately $2.2 million were excluded from the
Combinations and retained by certain stockholders of the Founding Companies. The
following table sets forth the consideration paid to each of the Founding
Companies.
COMPANY CASH SHARES
------- ---- ------
(IN THOUSANDS)
Auto Europe................... $5,000 1,083,334
Cruises Only.................. 9,211 908,334
Travel 800.................... 9,241 902,778
Cruises Inc................... 3,431 333,334
D-FW Tours.................... 2,215 194,445
----- -------
Total...................... $29,098 3,422,225
======= =========
The consideration paid for the Founding Companies was determined
through arm's-length negotiations between the Company and representatives of
each Founding Company. The cash portion includes working capital adjustments,
reimbursements of certain legal and accounting fees incurred by stockholders and
estimated reimbursements to certain stockholders for certain taxes that will be
incurred by them in connection with the Combinations. The factors considered by
the parties in determining the consideration paid included, among others, the
historical operating results, the net worth, the levels and type of indebtedness
and the future prospects of the Founding Companies. Each Founding Company was
represented by independent counsel in the negotiation of the terms and
conditions of the Combinations.
Pursuant to the agreements entered into in connection with the
acquisitions of the Founding Companies, the stockholders of the Founding
Companies agreed not to compete with the Company for three years, commencing on
the date of consummation of the Offering.
17
<PAGE>
Prior to the initial public offering, substantially all the
indebtedness of the Founding Companies was personally guaranteed by their
respective stockholders or by entities controlled by such stockholders. In
connection with the Combinations, the Company assumed all remaining payment
obligations of such indebtedness. Indebtedness assumed as of July 28, 1997
includes the following: (i) Auto Europe's mortgage note payable to Key Bank of
$1,181,000, bearing interest at prime plus 1%, payable in monthly principal
installments of $7,000, maturing in August 2002; (ii) Auto Europe's mortgage
note payable to U.S. Small Business Administration of $735,000, bearing interest
at 7.25%, payable in monthly principal and interest payments of $6,000, maturing
in October 2016; (iii) Cruises Only mortgage payable of $1,947,000 to Barnett
Bank, bearing interest at 7.8% with monthly payments of $17,000 through October
2000 and thereafter bearing interest at a rate equal to the five year treasury
yield plus 1.9% or prime, as selected by Cruises Only through maturity in
October 2005; (iv) Cruises Only note payable to Barnett Bank of $603,000,
bearing interest at 8.5% with monthly payments of $12,000, maturing in 2002; and
(v) Cruises Only note payable to Barnett Bank of $842,000, bearing interest at
prime minus .25% with monthly payments of $20,000, maturing in 2001.
Subsequently to the Combinations, the Company repaid the mortgage to
the Small Business Administration as required upon the change in ownership, and
Cruises Only's obligations to Barnett Bank were modified to include a fixed
interest rate of 7.2% and to pledge as collateral Company funds totaling $3
million.
In connection with the Combinations, as a consideration for their
interests in the Founding Companies, certain directors and holders of more than
5% of the outstanding shares of the Company, together with their spouses or
trusts for the benefit of their immediate family members, received cash and
shares of Common Stock of the Company as follows:
CASH SHARES
---- ------
Alex Cecil................... $5,000,000 1,083,334
Robert G. Falcone............ $3,431,000 300,000
Wayne Heller................. $9,211,000 908,334
Susan Parker................. $9,241,000 902,778
John Pryzwara................ $2,215,000 194,445
OTHER TRANSACTIONS
Since 1990, Cruises Inc. has leased office space from Pioneer Park I
Company ("Pioneer") pursuant to a lease dated August 9, 1990, as subsequently
amended and supplemented. One of the principals of Pioneer is Michael Falcone,
the brother of Robert Falcone. The rent paid by Cruises Inc. to Pioneer during
1997 was $201,000. The lease terminates on February 28, 2006.
Prior to the initial public offering, 800 Ideas, Inc., the predecessor
to Travel 800 and a company controlled by Susan Parker, a former director and a
greater than 5% stockholder of the Company, entered into a Custom Network
Service Arrangement ("CNSA") with Sprint Communications Company LP for long
distance telephone services. This contract was not transferred as part of the
Combinations, but was retained by 800 Ideas, Inc. Travel 800 continues to
utilize long distance telephone services under the CNSA and pays for its portion
of usage under the CNSA.
Jacqueline Duffort Cecil, the wife of Alex Cecil, a holder of more than
5% of the outstanding shares of the Company and the Chief Executive Officer of
Auto Europe prior to July 1997, loaned
18
<PAGE>
$300,000 to Auto Europe on December 31, 1995 and 1996 at an interest rate of
prime plus 1%. Auto Europe repaid this in February 1997.
During 1995, Auto Europe advanced $2.1 million to Alex Cecil who used
the advance to purchase an island off the coast of Maine. Subsequently he
contributed this island to Auto Europe in return for the cancellation of his
obligations on the advance. This island was not included in the assets of Auto
Europe acquired by the Company in July 1997.
Auto Europe has purchased computer equipment from The Seris II Group,
which is owned by Imad Khalidi, a director of the Company and Chief Executive
Officer of Auto Europe, and certain other employees of Auto Europe. Auto Europe
purchases the equipment at cost to The Seris II Group. Auto Europe purchased
$134,000 worth of computer supplies and equipment from The Seris II Group during
1997.
Prior to the initial public offering, Auto Europe extended a loan to
Imad Khalidi, a director of the Company and Chief Executive Officer of Auto
Europe. The indebtedness is evidenced by a note, the principal amount of which
is $326,000. The note bears interest at 6% and is payable on September 30, 1998.
19
<PAGE>
PROPOSAL TO APPROVE THE REINCORPORATION
OF THE COMPANY FROM DELAWARE TO FLORIDA
(PROPOSAL NO. 2)
INTRODUCTION
In April 1998, the Board of Directors approved a plan to change the
Company's state of incorporation from Delaware to Florida (the
"Reincorporation"). The Reincorporation will be effected by merging the Company
into a Florida corporation to be called TSI Florida, Inc. (or other similar name
based on availability at the time the Company incorporates such entity) ("TSI
Florida"), pursuant to an Agreement and Plan of Merger to be entered into
between the Company and TSI Florida (the "Merger Agreement"). A copy of the form
of Merger Agreement is set forth as Exhibit A to this Proxy Statement. At the
time of the Reincorporation, TSI Florida will be a wholly owned subsidiary of
the Company recently incorporated in Florida for purposes of effecting the
Reincorporation. Upon consummation of the Reincorporation, TSI Florida will
continue to exist as the surviving corporation of the merger and its name will
be changed to "Travel Services International, Inc." and it will register to
conduct business under the name "The Travel Company".
REASONS FOR THE REINCORPORATION
The principal reason for the Reincorporation is to reduce the Company's
expenses. Under the Delaware General Corporation Law (the "Delaware Act"), the
Company is currently required to pay Delaware an annual franchise tax of
approximately $150,000. By contrast, a corporation organized under the laws of
the State of Florida is currently required to pay an annual fee of $150, but is
not required to pay any franchise tax as required by Delaware. If the
Reincorporation is approved by the Company's stockholders and subsequently
effected, the Company will be required to pay a pro rata portion of the 1998
Delaware franchise tax based on the portion of the year during which the Company
was incorporated in Delaware.
While franchise tax savings is the principal reason for the proposed
Reincorporation, an additional reason for the Reincorporation is to conform the
Company's legal residence to its principal place of business. The Board of
Directors believes that having the Company's legal residence in Florida may have
certain advantages. For example, it could enable the Company to have a more
significant voice in the legislative process with respect to corporate and other
Florida laws directly affecting it. This opportunity can be important, as
corporations are substantially affected by changes in the legal and financial
environment in which they operate and by the variety of legislative and other
governmental actions which may be taken in response to such changes. In
addition, a corporation's state of incorporation is likely to be a litigation
forum from time to time, and litigation at a distance from the Company's
principal offices can result in significant inconveniences and added expense to
the Company.
With respect to matters of corporate law, the Board of Directors
believes that the Florida Business Corporation Act (the "Florida Act") will meet
the Company's business needs, and that the Delaware Act does not offer corporate
law advantages sufficient to warrant payment of the franchise tax burden that
results from maintaining a legal residence in Delaware. The Florida Act is a
comprehensive, modern and flexible statute based on the Revised Model Business
Corporation Act. It generally provides the flexibility in management of a
corporation and in the conduct of various business transactions that is
characteristic of the Delaware Act. See "Material Differences between Delaware
and Florida Corporate Laws."
20
<PAGE>
THE MERGER
The Reincorporation will be effected by a merger (the "Merger") of the
Company with and into TSI Florida, with TSI Florida being the surviving
corporation. The terms and conditions of the Merger are set forth in the form of
Merger Agreement included as Exhibit A to this Proxy Statement. The summary of
the terms and conditions of the Merger set forth below is qualified by reference
to the full text of the Merger Agreement. Upon consummation of the Merger, TSI
Florida will continue to exist and its name will be changed to Travel Services
International, Inc., and the Company will cease to exist. The Reincorporation
will change the legal domicile of the Company, but will not result in a change
in the principal offices, business, management, capitalization, assets or
liabilities of the Company. By operation of law, TSI Florida will succeed to all
of the assets and assume all of the liabilities of the Company. The Board of
Directors of TSI Florida will be comprised of the directors of the Company at
the time of the Merger, and the persons who are currently serving as executive
officers of the Company will continue to serve in the same capacities for TSI
Florida.
After the Merger, the rights of stockholders and the Company's
corporate affairs will be governed by the Florida Act and by the articles of
incorporation and bylaws of TSI Florida, instead of the Delaware Act and the
certificate of incorporation and bylaws of the Company. The material differences
are discussed below under "Material Differences between Delaware and Florida
Corporate Laws." A copy of the articles of incorporation of TSI Florida (the
"Florida Articles") is set forth as Exhibit B to this Proxy Statement. The
certificate of incorporation and bylaws of the Company and the proposed bylaws
of TSI Florida are available for inspection by stockholders of the Company at
the principal offices of the Company located at 220 Congress Park Drive, Delray
Beach, Florida 33445.
Upon the effectiveness of the Merger, each outstanding share of
Restricted Voting Common Stock will be automatically converted into one share of
the restricted voting common stock, par value $0.01 per share, of TSI Florida
(the "Florida Restricted Stock"), and each outstanding share of non-restricted
Common Stock will be automatically converted into one share of the
non-restricted common stock, par value $0.01 per share, of TSI Florida (the
"Florida non-restricted Stock" and together with the Florida Restricted Stock,
the "Florida Common Stock"). The number of shares to be designated as Florida
Restricted Stock in Article III of the Florida Articles will equal that number
of shares of Restricted Voting Common Stock that are outstanding as of the date
of the filing of the Florida Articles (which will be immediately prior to the
Merger). Further, the percentage (currently left blank) in Article III,
Paragraph 5 of the Florida Articles will be completed in such a manner to allow,
after December 31, 1999, TSI Florida to elect, by resolution of its Board of
Directors, to convert any outstanding shares of Florida Restricted Stock into
shares of Florida non-restricted Stock in the event that the aggregate number of
shares of (i) Florida Restricted Stock converted after the Merger and (ii)
Restricted Voting Common Stock converted prior to the Merger, equals or exceeds
80% of the original number of shares of Restricted Voting Common Stock issued by
the Company. This provision preserves the original conversion rights with
respect to the Restricted Voting Common Stock that were in existence prior to
the Reincorporation.
Each outstanding certificate representing shares of Common Stock will
continue to represent the same number of shares of Florida Common Stock and such
certificates will be deemed for all corporate purposes to evidence ownership of
shares of Florida Common Stock. IT WILL NOT BE NECESSARY FOR STOCKHOLDERS TO
EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF TSI
FLORIDA. The Florida Common Stock will continue to be listed on The Nasdaq Stock
Market, without interruption, and The Nasdaq Stock
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Market will consider the delivery of existing stock certificates of the Company
as constituting "good delivery" of shares of TSI Florida in stock transactions
effected after the Merger.
Following the Merger, the Company's compensation plans, including the
Plan described in Proposal No. 3 in this Proxy Statement, will be continued by
TSI Florida, and the options granted pursuant to such plans will automatically
be converted into options to purchase the same number of shares of Florida
Common Stock at the same exercise price and upon the same terms and conditions
as set forth in the options. The Company's other employee benefit plans and
arrangements will also be continued by TSI Florida upon the same terms and
conditions.
Consummation of the Merger is subject to the approval of the Company's
stockholders. The Merger is expected to become effective as soon as practicable
after stockholder approval is obtained and all other conditions to the Merger
have been satisfied, including the receipt of all consents, orders and approvals
necessary for consummation of the Merger and the listing of the shares of the
Florida Common Stock on The Nasdaq Stock Market. Prior to its effectiveness,
however, the Merger may be abandoned by the Board of Directors if, for any
reason, the Board of Directors determines that consummation of the Merger is no
longer advisable.
Appraisal rights are not available to stockholders of the Company with
respect to the proposed Merger.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
A holder of Common Stock will not recognize gain or loss in respect of
the Common Stock as a result of the Reincorporation. The basis in a share of TSI
Florida will be the same as the basis in the corresponding share of the Company
immediately prior to the Reincorporation. The holding period in a share of TSI
Florida will include the period during which the corresponding share of the
Company was held, provided the corresponding share was held as a capital asset
at the time of the Reincorporation.
In addition, neither the Company nor TSI Florida will recognize gain or
loss as a result of the Reincorporation, and TSI Florida generally will succeed,
without adjustment, to the tax attributes of the Company. Because the Company is
based in Florida, it is already qualified to transact business in Florida and
pays Florida corporate income tax. Accordingly, changing the state of
incorporation of the Company is not expected to affect the amount of corporate
income and other taxes payable, other than eliminating liability for the
Delaware franchise tax.
Although the Company does not anticipate that state or local income tax
consequences to stockholders will vary from the federal income tax consequences
described above, stockholders should consult their own tax advisors as to the
effect of the Reincorporation under applicable state and local tax laws.
DESCRIPTION OF CAPITAL STOCK AND VOTING RIGHTS
The following statements are brief summaries of certain provisions
relating to the capital stock of TSI Florida that will be contained in its
articles of incorporation. The provisions relating to the capital stock of TSI
Florida described below, including voting rights with respect thereto, shall be
substantially the same as the provisions relating to the capital stock of the
Company contained in its current certificate of incorporation. The summary below
is qualified in its entirety by reference to the full text of the articles of
incorporation of TSI Florida included as Exhibit B to this Proxy Statement.
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COMMON STOCK. Holders of Florida Restricted Stock will be entitled to
four-tenths of a vote per share on each matter that is submitted to shareholders
for approval and holders of the TSI Florida non-restricted Stock will be
entitled to one vote per share on each matter that is submitted to shareholders
for approval. Shareholders of TSI Florida will not have cumulative voting
rights.
Holders of Florida Common Stock are entitled to receive dividends and
other distributions when, as and if declared by the Board of Directors of TSI
Florida out of funds legally available therefor, subject to the preferential
rights of the holders of Shares of preferred stock, par value $.01 per share
(the "Preferred Stock"), if any, of TSI Florida.
Shareholders of TSI Florida will have no preemptive or other rights to
subscribe for additional shares of Florida Common Stock or other securities of
TSI Florida.
PREFERRED STOCK. TSI Florida will be authorized to issue up to
1,000,000 shares of Preferred Stock. Although TSI Florida has no present plans
to issue any shares of Preferred Stock, shares of Preferred Stock may be issued
from time to time in one or more classes or series with such designations,
powers, preferences, rights, qualifications, limitations and restrictions as may
be fixed by the Board of Directors. The Board of Directors, without obtaining
stockholder approval, could issue the Preferred Stock with voting and/or
conversion rights and thereby dilute the voting power and equity of the holders
of Florida Common Stock and adversely affect the market price of such stock. The
issuance of Preferred Stock could also be used as an anti-takeover measure by
TSI Florida without any further action by the shareholders.
MATERIAL DIFFERENCES BETWEEN DELAWARE AND FLORIDA CORPORATE LAWS
The material differences between the Florida Act and the articles of
incorporation and bylaws of TSI Florida on the one hand, and the Delaware Act
and the certificate of incorporation and bylaws of the Company on the other, are
summarized below.
LIABILITIES OF DIRECTORS. The Florida Act generally provides that a
director is not personally liable for monetary damages to the corporation or any
other person for any act or omission as a director unless the director breached
or failed to perform his duties as a director and such breach or failure (1)
constitutes a violation of criminal law, unless the director had reasonable
cause to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful, (2) constitutes a transaction from which the director
derived an improper personal benefit, (3) results in an unlawful distribution,
(4) in a derivative action or an action by a shareholder, constitutes conscious
disregard for the best interests of the corporation or willful misconduct or (5)
in a proceeding other than a derivative action or an action by a shareholder,
constitutes recklessness or an act or omission which was committed in bad faith
or with malicious purpose or in a manner exhibiting wanton and willful disregard
of human rights, safety or property. The Delaware Act provides that a
corporation's certificate of incorporation may contain a provision which
eliminates or limits the personal liability of a director to the corporation or
its stockholders for monetary damages for a breach of fiduciary duty as a
director, except for a breach which (a) constitutes a breach of the director's
duty of loyalty to the corporation or its stockholders, (b) constitutes an act
or omission not in good faith or which involves intentional misconduct or a
knowing violation of law, (c) results in an unlawful distribution or (d) relates
to a transaction from which the director derived an improper personal benefit.
The Company's certificate of incorporation currently includes such a provision.
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INDEMNIFICATION. Under both the Florida Act and the Delaware Act, a
corporation may generally indemnify its officers, directors, employees and
agents against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of any proceedings (other than derivative actions),
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in derivative actions, except
that indemnification may be made only for (1) expenses (including attorneys'
fees) and certain amounts paid in settlement, and (2) in the event the person
seeking indemnification has been adjudicated liable, amounts deemed proper, fair
and reasonable by the appropriate court upon application thereto. The Delaware
Act and the Florida Act both provide that to the extent that such persons have
been successful in defense of any proceeding, they must be indemnified by the
corporation against expenses actually and reasonably incurred in connection
therewith. Additionally, the Florida Act provides that, unless a corporation's
articles of incorporation provide otherwise, if a corporation does not so
indemnify such persons, they may seek, and a court may order, indemnification
under certain circumstances even if the board of directors or shareholders of
the corporation have determined that the persons are not entitled to
indemnification. The certificate of incorporation and bylaws of the Company and
the articles of incorporation and bylaws of TSI Florida generally provide that
directors and officers will be indemnified to the fullest extent permitted by
law.
The Company currently has indemnification agreements with each of its
directors and executive officers. These indemnification agreements will be
amended or replaced with similar indemnification agreements, as appropriate, to
conform the indemnification agreements to the provisions of the Florida Act.
DERIVATIVE ACTIONS. The Delaware Act provides that (1) a person may not
bring a derivative action unless the person was a stockholder of the corporation
at the time of the challenged transaction or unless the stock thereafter
devolved on such person by operation of law, (2) a complaint in a derivative
proceeding must allege with particularity the efforts made by a person, if any,
to obtain the desired action from the directors or comparable authority and the
reason for the failure to obtain such action or for not making the effort, (3) a
derivative proceeding may be settled or discontinued only with court approval
and (4) the court may dismiss a derivative proceeding if it finds that a
committee of independent directors have acted independently and in good faith
and have demonstrated a reasonable basis for its determination that the action
should be dismissed. The Florida Act provides for similar requirements, except
that (a) a complaint in a derivative proceeding must be verified and must allege
with particularity that a demand was made to obtain action by the board of
directors and that the demand was refused or ignored, (b) the court may dismiss
a derivative proceeding if the court finds that certain independent directors
(or a committee of independent persons appointed by such directors) have
determined in good faith after conducting a reasonable investigation that the
maintenance of the action is not in the best interests of the corporation and
(c) if an action was brought without reasonable cause, the court may require the
plaintiff to pay the corporation's reasonable expenses.
DISTRIBUTIONS AND REDEMPTIONS. A Florida corporation may make
distributions to shareholders as long as, after giving effect to such
distribution, (1) the corporation would be able to pay its debts as they become
due in the usual course of business, and (2) the corporation's total assets
would not be less than the sum of its total liabilities plus (unless the
articles of incorporation permit otherwise, which TSI Florida's articles of
incorporation do not) the amount that would be needed if the corporation were to
be dissolved at the time of the distribution to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution. Under the Florida Act, a corporation's redemption of
its own capital stock is deemed to be a distribution. A Delaware corporation
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may pay dividends out of surplus or, if there is no surplus, out of its net
profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year. A Delaware corporation is generally prohibited from
redeeming any of its capital stock if the redemption would result in an
impairment of the corporation's capital.
SHAREHOLDER INSPECTION OF BOOKS AND RECORDS. Under the Florida Act, a
shareholder is entitled to inspect and copy the articles of incorporation,
bylaws, certain board and shareholder resolutions, certain written
communications to shareholders, a list of the names and business addresses of
the corporation's directors and officers, and the corporation's most recent
annual report, during regular business hours if the shareholder gives at least
five business days' prior written demand to the corporation. In addition, a
shareholder of a Florida corporation is entitled to inspect and copy certain
other books and records of the corporation during regular business hours if the
shareholder gives at least five business days' prior written demand to the
corporation and (1) the shareholder's demand is made in good faith and for a
proper purpose, (2) the demand describes with particularity its purpose and
records to be inspected or copied and (3) the requested records are directly
connected with such purpose. The Florida Act also provides that a corporation
may deny certain demands for inspection if such demand was made for an improper
purpose or if the demanding shareholder has, within two years preceding such
demand, sold or offered for sale any list of shareholders of the corporation or
any other corporation, has aided or abetted any person in procuring a list of
shareholders for such purpose or has improperly used any information secured
through any prior examination of the records of the corporation or any other
corporation. The provisions of the Delaware Act governing the inspection and
copying of a corporation's books and records are generally less restrictive than
those of the Florida Act. Specifically, the Delaware Act permits any stockholder
the right, during usual business hours, to inspect and copy the corporation's
stock ledger, shareholders list and other books and records for any proper
purpose upon written demand under oath stating the purpose thereof.
DISSENTERS' OR APPRAISAL RIGHTS. A shareholder of a Florida
corporation, with certain exceptions, has the right to dissent from, and obtain
payment of the fair value of his shares in the event of (1) a merger or
consolidation to which the corporation is a party, (2) a sale or exchange of all
or substantially all of the corporation's property other than in the usual and
ordinary course of business, (3) the approval of a control share acquisition,
(4) a statutory share exchange to which the corporation is a party as the
corporation whose shares will be acquired, (5) an amendment to the articles of
incorporation if the shareholder is entitled to vote on the amendment and the
amendment would adversely affect the shareholder and (6) any corporate action
taken to the extent that the articles of incorporation provide for dissenters'
rights with respect to such action. The Florida Act provides that unless a
corporation's articles of incorporation provide otherwise, which TSI Florida's
articles of incorporation do not, a shareholder does not have dissenters' rights
with respect to a plan of merger, share exchange or proposed sale or exchange of
property if the corporation's shares are either registered on a national
securities exchange, designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. (the "NASD"), or held of record by 2,000 or more shareholders.
A stockholder of a Delaware corporation generally is entitled to
certain appraisal rights in the event that the corporation is a party to certain
mergers or consolidations to which the stockholder did not consent. A Delaware
corporation's certificate of incorporation may also provide that dissenters'
rights are available with respect to any amendment to the certificate of
incorporation or any sale of all or substantially all of the corporation's
assets. The Company's certificate of incorporation does not contain such a
provision. Similar (but not identical) to the Florida Act, dissenters' rights do
not apply to a stockholder of a Delaware corporation if his shares were (1)
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the NASD, or (2)
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held of record by more than 2,000 stockholders. Notwithstanding the foregoing,
however, under the Delaware Act, a stockholder does have dissenters' rights with
respect to such shares if the stockholder is required by the terms of the
agreement of merger or consolidation to accept anything for his shares other
than (a) shares of stock of the corporation surviving or resulting from the
merger or consolidation, (b) shares of stock of any other corporation which is
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the NASD or held of record
by more than 2,000 stockholders, (c) cash in lieu of fractional shares or (d)
any combination of the foregoing.
STAGGERED BOARD OF DIRECTORS. Both the Florida Act and the Delaware Act
permit a corporation to have a staggered board of directors divided into not
more than three classes. The certificate of incorporation of the Company and the
articles of incorporation of TSI Florida provide for a staggered board of
directors. The number of directors constituting the board of directors of the
Company and TSI Florida is determined by their respective boards of directors.
QUORUM FOR STOCKHOLDER MEETINGS. Under the Florida Act, unless
otherwise provided in a corporation's articles of incorporation, a majority of
shares entitled to vote on a matter constitutes a quorum at a meeting of
shareholders, but in no event may a quorum consist of less than one-third of the
shares entitled to vote on such matter. TSI Florida's articles of incorporation
do not include a provision altering the shareholder quorum requirement. The
Delaware Act is similar to the Florida Act, except that under the Delaware Act a
corporation's certificate of incorporation or bylaws may specify the number of
shares which constitutes a quorum at a meeting of stockholders, but in no event
may a quorum consist of less than one-third of the shares entitled to vote. The
Company's Bylaws provide that a quorum exists if a majority of the shares
entitled to vote is present at a meeting. Thus, the applicable quorum
requirements will not be changed by the Reincorporation.
STOCKHOLDER VOTING REQUIREMENTS. Under both the Florida Act and the
Delaware Act, directors are generally elected by a plurality of the votes cast
by the stockholders entitled to vote at a stockholders' meeting at which a
quorum is present, unless a greater number of affirmative votes is required by
the articles of incorporation (in the case of a Florida corporation) or the
certificate of incorporation or bylaws (in the case of Delaware corporation).
With respect to matters other than the election of directors, unless a greater
number of affirmative votes is required by the Florida Act or a Florida
corporation's articles of incorporation, if a quorum exists, action on any
matter generally is approved by the shareholders if the votes cast by the
holders of the shares represented at the meeting and entitled to vote on the
matter favoring the action exceed the votes cast opposing the action.
Accordingly, under the Florida Act, abstentions generally do not have the same
effect as a vote against a matter. Under the Delaware Act, unless otherwise
provided by the Delaware Act or a Delaware corporation's certificate of
incorporation or bylaws, if a quorum exists, action on a matter generally is
approved by the affirmative vote of a majority of the shares represented at a
meeting and entitled to vote on the matter. Accordingly, under the Delaware Act,
abstentions generally have the same effect as votes against a matter. Neither
the Company's certificate of incorporation nor its bylaws nor TSI Florida's
articles of incorporation contains a provision requiring a greater vote than
otherwise required by applicable law other than provisions requiring the
affirmative vote of at least 66 2/3% of the outstanding shares with respect to
actions relating to certain amendments to the Company's certificate of
incorporation or TSI Florida's articles of incorporation, as further described
below.
ACTION BY WRITTEN CONSENT OF STOCKHOLDERS. The Florida Act provides
that, unless otherwise provided in the articles of incorporation, actions which
would be required or permitted to be taken at an annual or special meeting of
shareholders may be taken by the written consent of the holders of shares
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constituting not less than the minimum number of shares that would be necessary
to take such action at a meeting of shareholders at which all shares entitled to
vote thereon were present and voted. The Delaware Act contains a similar
provision. The bylaws of the Company and TSI Florida permit action by written
consent of stockholders consistent with the foregoing provisions of the Delaware
Act and the Florida Act, respectively.
TREASURY STOCK. A Delaware corporation may reacquire its own issued and
outstanding capital stock, and such capital stock is deemed treasury stock which
is authorized and issued but not outstanding. A Florida corporation may also
reacquire its own issued and outstanding capital stock; however, such capital
stock is deemed stock authorized but not issued or outstanding.
BOARD VACANCIES. The Florida Act provides that a vacancy on the board
of directors generally may be filled by an affirmative vote of a majority of the
remaining directors or by the shareholders, unless the articles of incorporation
provide otherwise. TSI Florida's articles of incorporation provide that only the
board of directors (and not the shareholders) may fill a vacancy on the board
(except that those vacancies resulting from removal from office by a vote of the
shareholders may be filled by a vote of shareholders at the same meeting at
which such removal occurs). Under the Delaware Act, a vacancy on the board of
directors generally may be filled by a majority of the remaining directors or in
the manner specified in a corporation's certificate of incorporation or bylaws.
The Company's certificate of incorporation and bylaws provide that a vacancy on
the board may be filled by a majority of directors in office (except that those
vacancies resulting from removal from office by a vote of the stockholders may
be filled by a vote of stockholders at the same meeting at which such removal
occurs).
REMOVAL OF DIRECTORS. The Florida Act provides that shareholders may
remove one or more directors with or without cause unless the articles of
incorporation provide that directors may be removed only for cause. The Florida
Act further provides that a director generally may be removed only if the number
of votes cast to remove him exceed the number of votes cast not to remove him.
TSI Florida's articles of incorporation provide that a director may be removed
by the shareholders only for cause. The Delaware Act provides that, except with
respect to corporations with classified boards or cumulative voting, a director
may be removed, with or without cause, by the holders of the majority of the
shares entitled to vote at an election of directors. For a corporation with a
board of directors that is classified, stockholders may effect such removal only
for cause. The Company's certificate of incorporation provides for a classified
board of directors and provides that directors may be removed by the
stockholders only for cause. Such removal provisions in both TSI Florida's
articles of incorporation and the Company's certificate of incorporation may
have certain anti-takeover effects.
AMENDMENTS TO CHARTER. An amendment to a Florida corporation's articles
of incorporation must be approved by the corporation's shareholders, except that
certain immaterial amendments specified in the Florida Act may be made by the
board of directors. Unless a specific section of the Florida Act or a Florida
corporation's articles of incorporation require a greater vote, an amendment to
a Florida corporation's articles of incorporation generally must be approved by
a majority of the votes entitled to be cast on the amendment. TSI Florida's
articles of incorporation do not include any provision requiring greater than a
majority of votes to amend its articles of incorporation, except that (unless
approved by a majority of the full board of directors) the vote of at least 66
2/3% of the outstanding shares is required to approve amendments to the
provisions relating to: (1) the existence of a staggered board, (2) director
vacancies and removals and (3) the power of the board of directors to make,
alter and repeal the bylaws. A Delaware corporation's certificate of
incorporation generally may be amended only if approved by a majority of the
outstanding stock entitled to vote thereon, however, the Company's certificate
of
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incorporation has 66 2/3% approval requirements for such amendments to
provisions that are similar to TSI Florida's provisions which require 66 2/3%
approval.
SPECIAL MEETINGS OF STOCKHOLDERS. Special meetings of a Florida
corporation's shareholders may be called by its board of directors, by the
persons authorized to do so in its articles of incorporation or bylaws or by the
holders of not less than 10% of all votes entitled to be cast on any issue
proposed to be considered at the special meeting, unless a greater percentage
not to exceed 50% is required by the articles of incorporation. TSI Florida's
articles of incorporation contain a 50% requirement for the calling of special
meetings by the shareholders. TSI Florida's articles of incorporation also
provide that a special meeting may be called by the Chairman of the Board, or if
the Chairman is not present (or if there is none), by the President, by
resolution of a majority of the Board of Directors, or at the request in writing
of holders of shares having not less than 50% of all the votes entitled to vote
at such meeting. Special meetings of the stockholders of a Delaware corporation
may be called by the board of directors or by the persons authorized in the
corporation's certificate of incorporation or bylaws. The Company's bylaws
provide that a special meeting may be called by the Chairman of the Board or if
the Chairman is not present (or, if there is none), by the President and shall
be called by the President or Secretary at the request in writing of a majority
of the Board of Directors or at the request in writing of stockholders owning a
majority of the shares of capital stock of the Company entitled to vote at such
meeting.
AFFILIATED TRANSACTIONS. The Florida Act contains an affiliated
transactions statute which provides that certain transactions involving a
corporation and a shareholder owning 10% or more of the corporation's
outstanding voting shares (an "affiliated shareholder") must generally be
approved by the affirmative vote of the holders of two-thirds of the voting
shares other than those owned by the affiliated shareholder. The transactions
covered by the statute include, with certain exceptions, (1) mergers and
consolidations to which the corporation and the affiliated shareholder are
parties, (2) sales or other dispositions of substantial amounts of the
corporation's assets to the affiliated shareholder, (3) issuances by the
corporation of substantial amounts of its securities to the affiliated
shareholder, (4) the adoption of any plan for the liquidation or dissolution of
the corporation proposed by or pursuant to an arrangement with the affiliated
shareholder, (5) any reclassification of the corporation securities which has
the effect of substantially increasing the percentage of the outstanding voting
shares of the corporation beneficially owned by the affiliated shareholder and
(6) the receipt by the affiliated shareholder of certain loans or other
financial assistance from the corporation. These special shareholder approval
requirements do not apply in any of the following circumstances: (a) if the
transaction was approved by a majority of the corporation's disinterested
directors, (b) if the corporation did not have more than 300 shareholders of
record at any time during the preceding three years, (c) if the affiliated
shareholder has been the beneficial owner of at least 80% of the corporation's
outstanding voting shares for the past five years, (d) if the affiliated
shareholder is the beneficial owner of at least 90% of the corporation's
outstanding voting shares, exclusive of those acquired in a transaction not
approved by a majority of disinterested directors or (e) if the consideration
received by each shareholder in connection with the transaction satisfies the
"fair price" provisions of the statute. This statute applies to any Florida
corporation unless the original articles of incorporation or an amendment to the
articles of incorporation or bylaws contain a provision expressly electing not
to be governed by this statute. Such an amendment to the articles of
incorporation or bylaws must be approved by the affirmative vote of a majority
of disinterested shareholders and is not effective until 18 months after
approval. TSI Florida's articles of incorporation do not contain a provision
electing not to be governed by the statute and, accordingly, TSI Florida will be
governed by the statute.
The Delaware Act generally prohibits a stockholder owning 15% of more
of a Delaware corporation's outstanding voting stock (an "interested
stockholder") from engaging in certain business
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combinations involving the corporation during the three years after the date the
person became an interested stockholder unless, among other things, (1) prior to
such date, the board of directors approved either the business combination or
the transaction which resulted in the stockholder becoming an interested
stockholder, (2) upon the consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the stockholder owned at least
85% of the voting stock outstanding at the time the transaction commenced, (3)
on or subsequent to such date, the transaction is approved by the board of
directors and by the stockholders by a vote of two-thirds of the disinterested
outstanding voting stock, (4) the corporation's original certificate of
incorporation provides that the corporation shall not be governed by such
statute, (5) a majority of shares entitled to vote approve an amendment to the
corporation's certificate of incorporation or bylaws expressly electing not to
be governed by the statute (but such amendment will not be effective until one
year after it was adopted and will not apply to any business combination between
the corporation and any person who became an interested stockholder on or prior
to such adoption, (6) a stockholder becomes an interested stockholder
inadvertently and as soon as practicable divests itself of ownership of
sufficient shares so that the stockholder ceases to be an interested stockholder
or (7) the corporation does not have a class of voting stock that is (a) listed
on a national securities exchange, (b) authorized for quotation on an
inter-dealer quotation system of a national securities association, or (c) held
of record by more than 2,000 stockholders. The business combinations subject to
such restriction include, with certain exceptions, mergers, consolidations,
sales of assets and transactions benefiting the interested stockholder. The
Company's certificate of incorporation and bylaws do not contain provisions
electing not to be governed by this statute.
CONTROL SHARE ACQUISITIONS. The Florida Act also contains a control
share acquisition statute which provides that a person who acquires shares in an
issuing public corporation in excess of certain specified thresholds will
generally not have any voting rights with respect to such shares unless the
voting rights are approved by a majority of the shares entitled to vote,
excluding interested shares. This statute does not apply to acquisitions of
shares of a corporation if, prior to the pertinent acquisition of shares, the
acquisition is approved by the board of directors or the corporation's articles
of incorporation or bylaws provide that the corporation shall not be governed by
the statute. This statute also permits a corporation to adopt a provision in its
articles of incorporation or bylaws providing for the redemption by the
corporation of such acquired shares in certain circumstances. Unless otherwise
provided in the corporation's articles of incorporation or bylaws prior to the
pertinent acquisition of shares, in the event that such shares are accorded full
voting rights by the shareholders of the corporation and the acquiring
shareholder acquires a majority of the voting power of the corporation, all
shareholders who did not vote in favor of according voting rights to such
acquired shares are entitled to dissenters' rights to receive the fair value of
their shares as provided in the Florida Act. TSI Florida's articles of
incorporation and bylaws do not contain any provisions with respect to this
statute other than a provision in the bylaws allowing TSI Florida to redeem
control shares in its discretion as provided in the statute. Delaware does not
have any provision comparable to Florida's control share acquisition statute.
OTHER CONSTITUENCIES. The Florida Act provides that directors of a
Florida corporation, in discharging their duties to the corporation, may, in
addition to considering the effects of any corporate action on the shareholders
and the corporation, consider the social, economic, legal or other effects of
the corporate action on employees, suppliers and customers of the corporation or
its subsidiaries and the communities in which the corporation and its
subsidiaries and the communities in which the corporation and its subsidiaries
operate. Delaware does not have a comparable statutory provision.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL
TO APPROVE THE REINCORPORATION OF THE COMPANY FROM DELAWARE TO FLORIDA.
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<PAGE>
PROPOSAL TO ADOPT AN AMENDED AND RESTATED
LONG-TERM INCENTIVE PLAN
(PROPOSAL NO. 3)
GENERAL
On May 9, 1997, the Board of Directors of the Company adopted the 1997
Long-Term Incentive Plan (the "Incentive Plan"). The Incentive Plan was also
approved by the stockholders of the Company on May 9, 1997. Individual awards
under the Incentive Plan may take the form of one or more of: (i) either
incentive stock options ("ISO's") or non-qualified stock options ("NQSOs"); (ii)
stock appreciation rights ("SARSs"); (iii) restricted or deferred stock; (iv)
dividend equivalents; and (v) other awards not otherwise provided for, the value
of which is based in whole or in part upon the value of the Common Stock. Such
awards, together with any other right or interest granted to a participant under
the Incentive Plan, are termed "Awards." Awards may be granted to officers and
employees of the Company or any of its subsidiaries, including any director who
is also an employee, consultants and independent contractors of the Company or
any of its subsidiaries. The Compensation Committee of the Board of Directors
administers the Incentive Plan and generally selects the individuals who will
receive Awards and the terms and conditions of those Awards.
Under the Incentive Plan, as originally adopted, the maximum number of
common shares that could be subject to outstanding Awards, determined
immediately after the grant of any Award, could not exceed the greater of
900,000 shares or 12% of the aggregate number of shares of Common Stock
outstanding. On April 27, 1998, the Compensation Committee of the Company's
Board of Directors authorized an increase in the total number of shares that may
be subject to Awards to 15% of the aggregate number of shares of Common Stock
outstanding. The Compensation Committee believes that such increase is necessary
to have sufficient shares available for Awards as the Company continues to grow
through acquisitions and internally. As of June 19, 1998, 1,260,579 shares were
available for Awards under the Plan, of which Awards for 1,167,663 shares had
been granted. Shares of Common Stock which are attributable to Awards which have
expired, terminated or been canceled or forfeited are available for issuance or
use in connection with future awards.
At the same time, the Compensation Committee further authorized the
following amendments: (i) increasing the maximum annual per-participant
limitation under the Incentive Plan for Awards that may be settled by delivery
of shares, from 100,000 shares of Common Stock to a maximum of 250,000 shares of
Common Stock, and (ii) including share price appreciation as a criteria which
the Compensation Committee can use to establish performance objectives for
performance-based Awards under the Incentive Plan. There have been no other
modifications to the Incentive Plan. All of these amendments, including the
increase in the number of shares available for Awards under the Plan, are
subject to stockholder approval. The Incentive Plan, as so amended, is referred
to as the Amended and Restated Long-Term Incentive Plan or the "Plan."
Stockholder approval of the Plan is required (i) for purposes of
compliance with certain exclusions from the limitations of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") (which can limit the
deductibility of compensation expense over $1.0 million with respect to
compensation of certain top executives in certain circumstances), (ii) in order
for the Plan to be eligible under the "plan lender" exemption from the margin
requirements of Regulation G promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and (iii) by the rules of the Nasdaq
Stock Market.
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<PAGE>
The price at which the Company's options are granted under the Plan is
equal to or in excess of the fair market value of the stock at the date of
grant. Generally, options granted under the Plan may remain outstanding and
vested options may be exercised at any time up to three months after the person
to whom such options were granted is no longer employed or retained by the
Company. Options granted under the Plan have maximum terms of not more than 10
years.
AWARDS GRANTED UNDER THE PLAN
During 1997, 922,250 non-qualified stock options were granted under the
Plan at exercise prices between $14 and $24 with a weighted average exercise
price of $15.12. At December 31, 1997, all of the options granted remained
outstanding as none were exercised or cancelled during the year. The weighted
average remaining contractual life of the outstanding options is nine years and
seven months. Substantially all of the options outstanding under the Plan vest
at the rate of 25% per year. In addition, an aggregate of 10,500 shares of
restricted stock have been awarded under the Plan to two individuals. None of
such shares of restricted stock have vested as of the date of this Proxy
Statement. No Awards other than options and restricted stock have been granted
under the Plan.
The Compensation Committee of the Board of Directors has granted an
additional option to Mr. Vittoria of 100,000 shares, effective July 1, 1998. The
vesting of these options will occur over four years and may be accelerated based
upon thresholds of $50, $75 and $100 for the share price of the Common Stock. In
addition, based upon availability of shares under the Plan and achievement of
thresholds for the price of the Common Stock of $50 and $75, additional option
grants of 150,000 shares and 200,000 shares, respectively, are expected to be
issued to Mr. Vittoria. All options will be granted with exercise prices equal
to the fair market value at the time of grant.
The Company's management believes that Awards granted under the Plan
will be awarded primarily to those persons who possess a capacity to contribute
significantly to the successful performance of the Company, including its
subsidiaries. Because persons to whom discretionary grants of Awards are to be
made are to be determined from time to time by the Compensation Committee or the
Board in their discretion, it is impossible at this time to indicate the precise
number, name or position of persons who will hereafter receive such Awards or
the number of shares for which Awards will be granted.
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<PAGE>
<TABLE>
<CAPTION>
The table below indicates, as of June 19, 1998, with respect to Awards
granted under the Incentive Plan (i) the number of options held by the persons
and groups indicated, and (ii) the value of such options as of such date (using
the closing price per share of Common Stock on June 19, 1998 of $34.00, as
reported on the Nasdaq Stock Market):
VALUE OF OPTIONS AT
JUNE 19, 1998 (1)
EXERCISABLE (E)
OPTION GRANTEES NUMBER OF OPTIONS UNEXERCISABLE (U)
- ------------------------------------------------- ------------------------- ------------------------
<S> <C> <C>
Joseph V. Vittoria 100,000 $500,000 (E)
Chairman and Chief Executive Officer $1,500,000 (U)
Michael J. Moriarty 75,000 $375,000 (E)
President and Chief Operating Officer $1,125,000 (U)
Jill M. Vales 50,000 $250,000 (E)
Senior Vice President and Chief Financial $750,000 (U)
Officer
Maryann Bastnagel 110,000 $550,000 (E)
Senior Vice President and Chief $1,650,000 (U)
Information Officer
Suzanne B. Bell 25,000 $125,000 (E)
Senior Vice President, General Counsel and $375,000 (U)
Secretary
Imad Khalidi 0 $0 (E)
CEO-Auto Europe $0 (U)
All current executive officers as a 560,000 $2,050,000 (E)
group (9 persons) $7,162,500 (U)
All current directors who are not executive 0 $0 (E)
officers as a group (7 persons) $0 (U)
All employees as a group, other than executive 628,847 $1,960,740 (E)
officers (366 persons) $7,399,160 (U)
</TABLE>
- ----------
(1) For purposes of this table, the value of each option equals the amount,
if any, by which the closing market price of a share of Common Stock on
June 19, 1998 ($34.00) exceeds the option's exercise price. The value is
determined without regard to whether the option is currently exercisable
or not.
DESCRIPTION OF PLAN
Set forth below is a brief description of the material terms of the
Plan. Reference is made to the complete text of the Plan attached as Exhibit C
and the description contained herein is qualified in its entirety by such
reference.
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<PAGE>
The Plan authorizes the grant of options to purchase shares of the
Company's Common Stock and grants of certain other awards relating to Common
Stock, to employees, employee-directors and consultants of the Company and any
subsidiary corporation. In addition to options, stock appreciation rights
("SARs"), including limited SARs, restricted stock, deferred stock, Common Stock
granted as a bonus or in lieu of other awards, and other stock-based awards may
be granted under the Plan (collectively "Awards"). The Plan is neither subject
to the provisions of the Employee Retirement Income Security Act of 1974, as
amended, nor qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code").
ELIGIBILITY. Executive officers and other key employees of the Company
and its subsidiaries, including any director or officer who is also an employee,
and persons who provide consulting or other services to the Company or its
subsidiaries, are eligible to be granted Awards under the Plan. In addition,
persons who have been offered employment by the Company or its subsidiaries, and
persons employed by an entity that the Compensation Committee of the Board (the
"Committee") expects to become a subsidiary of the Company are eligible to be
granted Awards under the Plan. No member of the Committee may receive Awards
under the Plan. The Company estimates that, currently, approximately 500
individuals are eligible to receive Awards under the Plan.
PURPOSE. The purpose of the Plan is to advance the interests of the
Company and its stockholders by providing a means to attract, retain, and reward
eligible employees and consultants of the Company and its subsidiaries and to
enable such persons to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interests between such persons
and the Company's stockholders.
ADMINISTRATION. The Board has designated the Committee or such other
committee as may be designated by the Board to administer the Plan provided,
however, that, to the extent necessary to comply with Rule 16b-3 (as promulgated
by the SEC under Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act")), the Committee will consist of two or more directors, each of
whom is a "non-employee director" within the meaning of Rule 16b-3. Subject to
the express provisions of the Plan, the Committee has full authority, among
other things, (i) to select participants to whom Awards will be granted, and
(ii) to determine the type and number of Awards to be granted to each
participant, the number of shares of Stock to which an Award will relate, and
all other terms and conditions of Awards and matters relating to Awards
(including forfeiture conditions and terms of any mandatory or elective
deferral). In addition, the Committee may prescribe the form of Award
agreements, adopt rules and regulations under the Plan, interpret the Plan and
Award agreements, and make all other decisions under the Plan.
LIMITATION ON AWARDS. The number of shares of Common Stock that may be
subject to outstanding Awards granted under the Plan, determined immediately
after the grant of any Award, may not exceed 15% of the total number of shares
of outstanding Common Stock on the date of the grant. Subject to the adjustment
due to certain events (see "Changes in Common Stock" below), the number of
shares that may be delivered on upon the exercise of ISOs (as defined in
"Options" below) may not exceed 100,000 shares, and the number of shares that
may be delivered as restricted stock and deferred stock may not exceed 100,000
shares. In addition, subject to adjustment as noted above, (i) Awards relating
to no more than 250,000 shares of Common Stock may be granted to any one
individual in any calendar year, and (ii) with respect to Awards that may be
settled in cash (in whole or in part), no participant may be paid during any
calendar year cash amounts relating to such Awards that exceed the greater of
the fair market value of 250,000 shares of Common Stock at the date of grant or
the date of settlement of Award.
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<PAGE>
OPTIONS. Options granted under the Plan are either incentive stock
options ("ISOs") intended to meet the requirements of Section 422 of the Code,
or Non-Qualified Stock Options ("NQSOs"), which are not intended to meet such
requirements. ISOs may be subject to certain special tax treatment (see "Federal
Income Tax Consequences" below). The terms of each option are determined by the
Committee, not inconsistent with the terms of the Plan, and are set forth in a
grant certificate or agreement which evidences the grant of an option. In
general, options are subject to the following terms and conditions:
/bullet/ With respect to a grant of ISOs and NQSOs, the exercise price
of such option is determined by the Committee in its discretion at the time of
the grant, provided, however, the exercise price of such options must not be
less than the fair market value of the Common Stock on the date of grant.
/bullet/ The time or times at which an option shall become exercisable
are determined by the Committee.
/bullet/ The Committee will determine the option term. Options are
generally exercisable for a period of three months following a participant's
termination of employment, but only to the extent such options were exercisable
as of the date of such termination. If, however, the Committee determines that
such termination is for cause, then all outstanding options will immediately
terminate.
/bullet/ Options that are ISOs will be subject to such additional terms
as may be necessary in order to qualify as ISOs.
/bullet/ The Committee will determine the methods by which the exercise
price for an option may be paid or deemed to be paid, the form of such payment,
including, without limitation, cash, stock, other Awards or awards granted under
other Company plans or other property (including notes or other contractual
obligations of participants to make payment on a deferred basis, such as through
"cashless exercise" arrangements, to the extent permitted by applicable law),
and the methods by which stock will be delivered or deemed to be delivered to
participants.
OTHER AWARDS. The following briefly describes the general terms of other
types of Awards that may be granted under the Plan:
/bullet/ SARS. SARs entitle the participant to receive the excess of
the fair market value of a share on the date of exercise or other specified date
over the grant price of the SAR. The grant price of an SAR is determined by the
Committee; such prices generally may not be less than 100% of the fair market
value of the stock at the date of grant. The maximum term, methods of exercise
and settlement and other terms of SARs will be determined by the Committee. In
addition, "Limited SARs" may also be granted, which are exercisable only in the
event of a "change in control", on such terms as the Committee may determine.
/bullet/ RESTRICTED STOCK. Restricted stock is an Award of shares which
may not be transferred and which may be forfeited in the event of certain
terminations of employment prior to the end of a restriction period. The
restriction period is established by the Committee. Such an Award would entitle
the participant to all of the rights of a stockholder of the issuer, including
the right to vote the shares and the right to receive any dividends thereon,
unless otherwise determined by the Committee.
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<PAGE>
/bullet/ DEFERRED STOCK. An Award of deferred stock confers upon a
participant the right to receive shares at the end of a specified deferral
period, subject to possible forfeiture of the Award in the event of certain
terminations of employment prior to the end of a specified restriction period
(which need not be the same as the deferral period). Deferred stock Awards carry
no voting or dividend rights or other rights associated with stock ownership,
although dividend equivalents may be granted to provide for payments equivalent
to dividends.
/bullet/ OTHER STOCK-BASED AWARDS, BONUS STOCK, AND AWARDS IN LIEU OF
CASH OBLIGATIONS. The Plan authorizes the Committee to grant Awards that are
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to Common Stock. The Committee determines the
terms and conditions of such Awards, including consideration to be paid to
exercise Awards in the nature of purchase rights, the period during which Awards
will be outstanding, and forfeiture conditions and restrictions on Awards. In
addition, the Committee is authorized to grant shares as a bonus free of
restrictions, or to grant shares or other Awards in lieu of issuer obligations
to pay cash or deliver other property under other plans or compensatory
arrangements, subject to such terms as the Committee may specify.
FAIR MARKET VALUE. For purposes of the Plan, fair market value means,
generally, the fair market value of stock, Awards, or other property determined
by such methods or procedures as are established from time to time by the
Committee, provided that (i) if the Common Stock is listed on a national
securities exchange or quoted in an interdealer quotation system, the fair
market value of the stock on a given date will be based upon the last sales
price or, if unavailable, the average of the closing bid and asked prices per
share of the stock on such date (or, if there was no trading or quotation in the
Stock on such date, on the next preceding date on which there was trading or
quotation) as reported in the Wall Street Journal (or other reporting service
approved by the Committee), (ii) the fair market value of Common Stock subject
to options granted effective upon commencement of an initial public offering of
the Common Stock is the initial public offering price of the shares so issued
and sold in the initial public offering, as set forth in the first final
prospectus used in such offering (the provisions of clause (i) notwithstanding),
and (iii) the fair market value of Common Stock prior to the date of the initial
public offering will be as determined by the Board.
CHANGE IN CONTROL. The Committee may, in its sole discretion, grant
Awards which provide that all conditions and restrictions relating to the
continued performance of services or the achievement of performance objectives
with respect to the exercisability or full enjoyment of an Award immediately
lapse upon a "change in control" (as such term may be defined by the Committee
in its sole discretion).
NON-TRANSFERABILITY. Awards granted under the Plan are generally
nontransferable, except by will or the laws of descent and distribution or to a
beneficiary in the event of a participant's death and, if the Award carries a
right to exercise, such right may be exercised only by the participant or his
guardian or legal representative. Notwithstanding the foregoing, the Committee
may, in its discretion, authorize all or a portion of the Award (other than an
ISO) to be granted to a participant to be on terms which permit transfer by such
participant to (i) the spouse, children or grandchildren of such participant
("Immediate Family Members"), (ii) a trust or trusts for exclusive benefit of
such Immediate Family Members, or (iii) a partnership in which such Immediate
Family Members are the only partners, provided that (x) there may be no
consideration for any such transfer, (y) the Award agreement pursuant to which
such Awards are granted must be approved by the Committee and must expressly
provide for such transferability and (z) subsequent transfers of transferred
Awards shall be prohibited except those occurring by laws of descent and
distribution. Following transfer, any such
35
<PAGE>
Awards shall generally continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer.
WITHHOLDING TAXES. The Company may withhold from any remuneration
otherwise payable to a participant, or require as a condition to delivery of any
shares of Common Stock pursuant to an Award that the participant remit to the
Company, an amount sufficient to satisfy any applicable tax withholding
requirements. The Committee may permit any withholding obligation to be
satisfied through the withholding of shares that would otherwise be issued in
connection with a grant or Award, or delivery of previously acquired shares of
Common Stock.
CHANGES IN COMMON STOCK. The Committee is authorized to adjust the
number and kind of shares (i) available under the Plan, (ii) subject to the
annual per-person limitation under the Plan, and (iii) subject to outstanding
Awards (including adjustments to exercise prices of options and other affected
terms of Awards) in the event that a dividend or other distribution (whether in
cash, Common Stock, or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off, combination, repurchase,
or share exchange, or other similar corporate transaction or event affects the
Common Stock such that an adjustment is appropriate in order to prevent dilution
or enlargement of the rights of participants under the Plan. The Committee is
also authorized to adjust performance conditions and other terms of Awards in
response to these kinds of events or to changes in applicable laws, regulations,
or accounting principles.
AMENDMENTS TO THE PLAN AND OUTSTANDING AWARDS. The Board may amend or
terminate the Plan or the Committee's authority to grant Awards without the
consent of stockholders or participants, except stockholder approval must be
obtained if required by law or regulation or under the rules of any stock
exchange or automated quotation system on which the Common Stock is then listed
or quoted, and the Board may, in its discretion, seek stockholder approval in
any circumstance in which it deems such approval advisable. In a similar manner,
the Committee may waive any conditions or rights under, or amend or terminate,
any Award previously granted and any Award agreement. In either case, however,
no amendment or termination of the Plan or an Award may materially impair the
rights of a participant under an outstanding Award without the consent of such
participant.
OTHER PLAN PROVISIONS. No participant will have any rights of a
stockholder with respect to any shares of Common Stock covered by an option
until such participant has exercised the option, paid the option exercise price
and been issued such shares. The grant of an Award under the Plan shall not be
construed as conferring upon any participant a right to remain in the employ of
the Company or restrict the right of the Company to terminate the employee.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general description of the federal income tax
consequences of options granted under the Plan. It does not purport to be
complete. In particular, this general description does not discuss the
applicability of the income tax laws of any state or foreign country. The
following tax analysis is intended to summarize certain relevant income tax
consequences of the Plans in effect as of the date of this Proxy Statement.
Legislation may be enacted and regulations may be issued in the future which
create different tax consequences. In view of the individual nature of tax
consequences, individuals are urged to consult their own tax advisors regarding
the application of the tax laws to their particular situations.
36
<PAGE>
OPTIONS. There are no federal income tax consequences to participants
or the Company upon the grant of an option under the Plan. Generally, upon the
exercise of an NQSO, a participant will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the Common Stock at
the time of exercise over the exercise price of the option, and the Company
generally will be entitled to a corresponding federal income tax deduction. Upon
the sale of shares acquired by exercise of an option, the participant generally
will realize a capital gain or loss, but the Company is not entitled to any tax
deduction in connection with such sale. At present, capital gain on the sale of
property held for over 18 months is taxable at a maximum rate of 20%, capital
gain on the sale of property held for over one year but not for over 18 months
is taxable at a maximum rate of 28%, and capital gain on the sale of a property
held for one year or less is taxable at ordinary income rates.
Participants will not be subject to federal income taxation upon the
exercise of ISOs granted under the Plans, and the Company will not be entitled
to a federal income tax deduction by reason of such exercise. However, the
amount by which the fair market value of the shares at the time of exercise
exceeds the exercise price is a tax adjustment item for purposes of calculating
the participant's alternative minimum taxable income. A sale of shares acquired
by exercise of an ISO that does not occur within one year after the exercise or
within two years after the date of grant generally will result in the
recognition of capital gain or loss in the amount of the difference between the
amount realized on the sale and the exercise price, and the Company will not be
entitled to any tax deduction in connection with such sale.
If such sale occurs within one year from the date of exercise of the
ISO or within two years from the date of the ISO grant (a "disqualifying
disposition"), the participant generally will recognize ordinary compensation
income equal to the lesser of (i) the excess of the fair market value of the
shares on the date of exercise of the options over the exercise price, or (ii)
the excess of the amount realized on the sale of the shares over the exercise
price. In the case of a disqualifying disposition where a loss, if sustained,
would not be recognized (i.e., a gift), the participant will recognize ordinary
income equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price. Any amount realized on a disqualifying
disposition in excess of the amount treated as ordinary compensation income (or
any loss realized) will be a capital gain (or loss). The Company generally will
be entitled to a tax deduction on a disqualifying disposition corresponding to
the ordinary compensation income recognized by the participant.
If a participant were to pay the exercise price of either an NQSO or an
ISO by surrender of shares, the participant would not realize additional gain or
loss because of the surrender, but (i) the number of new shares received equal
to the number of shares surrendered will retain the existing tax basis and
holding period of the surrendered shares; (ii) if the option so exercised is an
NQSO, the amount of both the ordinary compensation income to be recognized by
the participant and the deduction to be taken by the Company will be equal to
the fair market value of the additional shares received (less any cash paid upon
such exercise), and the participant's tax basis in these additional shares will
be equal to their fair market value; (iii) if the option so exercised is an ISO,
the additional shares received will have a tax basis of zero unless cash was
paid to complete such exercise, in which case the participant's tax basis in the
additional shares received will be equal to the cash paid by the participant
upon such exercise; and (iv) the participant's holding period for the additional
shares received will begin on the day after the date of exercise for capital
gain purposes (regardless of the type of option being exercised) and will begin
upon the date of transfer of the additional shares to the participant for
purposes of the ISO period requirements. If, in exercising an ISO, a participant
were to surrender shares received upon exercise of an ISO before the applicable
incentive stock option holding
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<PAGE>
period for such shares has been satisfied, the surrender of such shares will be
treated as a disqualifying disposition, and the rules governing such
dispositions, as described above, will apply to determine the amount of the
participant's income and the Company's deduction.
TAX CONSEQUENCES OF OTHER AWARDS. With respect to Awards other than
options, the tax consequences are as follows: The tax treatment of SARs
generally is the same as that of NQSOs (with the participant treated as paying
no exercise price). With respect to Awards that may be settled either in cash or
Common Stock or other property that is not restricted as to transferability or
not subject to a substantial risk of forfeiture, the participant must generally
recognize ordinary income equal to the cash or the fair market value of stock or
other property actually received. The Company will be entitled to a deduction
for the same amount. With respect to Awards involving Common Stock or other
property that is restricted as to transferability and subject to a substantial
risk of forfeiture, the participant must generally recognize ordinary income
equal to the fair market value of the shares or other property received at the
first time the shares or other property become transferable or not subject to a
substantial risk of forfeiture, whichever occurs earlier. The Company will be
entitled to a deduction in an amount equal to the ordinary income recognized by
the participant. A participant may elect to be taxed at the time of receipt of
shares or other property rather than upon lapse of restrictions on
transferability or the substantial risk of forfeiture by making an "83(b)
election" within 30 days of receipt, but if the participant subsequently
forfeits such shares or property he would not be entitled to any tax deduction,
including as a capital loss, for the value of the shares or property on which he
previously paid tax.
IMPORTANCE OF CONSULTING TAX ADVISER. The information set forth above
is a summary only and does not purport to be complete. In addition, the
information is based upon current federal income tax rules and therefore is
subject to change when those rules change. Moreover, because the tax
consequences to any optionee may depend on his or her particular situation, each
optionee should consult his or her tax adviser as to the Federal, state, local
and other tax consequences of the grant or exercise of an option or the
disposition of Common Stock acquired on exercise of an option.
SECURITIES ACT REGISTRATION; RESTRICTIONS ON RESALE
The Company has registered 1,650,000 shares of Common Stock available
for issuance under the Plan pursuant to a Registration Statement on Form S-8
filed with the Securities and Exchange Commission.
The federal securities laws prohibit sales of shares of Common Stock by
persons who possess material, non-public, adverse information about the Company.
Therefore, shares acquired under the Plan should not be resold by a participant
or other person who possesses such information. The Company from time to time
notifies employees who may have access to material, non-public information that
such persons should refrain from transactions involving Company stock for a
specified period. During such a period, a participant may be required to not
sell Common Stock or otherwise engage in transactions under the Plan, even if he
or she does not in fact possess material, non-public information regarding the
Company.
In addition, affiliates (as such term is defined in Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act")) may resell the shares
acquired by them to the public only pursuant to Rule 144 or other applicable
exemptions from the registration requirements of the Securities Act, or pursuant
to a registration statement under the Securities Act (if any). Compliance with
Rule 144 for an affiliate's resales requires, among other things, that, at the
time of any offer or sale, certain information
38
<PAGE>
regarding the Company be on file with the SEC and up to date; that the
affiliate's shares be sold only through a broker or to a market maker; that the
amount of sales by the affiliate in any three-month period under Rule 144 be
limited as prescribed in the Rule; and that sales in excess of certain minimum
amounts be reported through the filing of a Form 144 with the SEC. Because
shares acquired under the Plan will generally not be considered to be
"restricted securities" for purposes of Rule 144, the one-year holding period
imposed by Rule 144(d) will generally not apply to resales of shares acquired
under the Plan.
Directors and officers of the Company are also subject to potential
short-swing profits liability under Section 16(b) of the Exchange Act with
respect to purchases and sales of shares of Common Stock. The Company intends
that grants of Awards under the Plans will be exempt from Section 16(b) by
virtue of Rule 16b-3 under the Exchange Act, and an exercise of an Award at a
time that the exercise price is not greater than the fair market value of Common
Stock will be exempt under Rule 16b-6(b). Under current SEC rules, sales of
shares in the open market will in most cases not be exempt, although the grant
and exercise of an option under the Plan in most cases will be exempt.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDED AND
RESTATED LONG-TERM INCENTIVE PLAN.
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP, independent public accountants, served
as the Company's independent public accountants for the calendar year ended
December 31, 1997. The Board of Directors, on the recommendation of the
Company's Audit Committee, has selected Arthur Andersen LLP as the Company's
independent public accountants for the 1998 calendar year. One or more
representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting. Such representatives will have the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions from stockholders.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 of the Securities and Exchange Commission
promulgated under the Securities and Exchange Act of 1934, as amended, a
stockholder intending to present a proposal to be included in the Company's
proxy statement for the Company's 1999 Annual Meeting of Stockholders must
deliver a proposal in writing to the Company's principal executive offices no
later then February 28, 1999.
AVAILABILITY OF FORM 10-K ANNUAL REPORT
A copy of the Company's Annual Report, including its report on Form
10-K for the year ended December 31, 1997, as filed with the Securities and
Exchange Commission, is being mailed to stockholders simultaneously with this
Proxy Statement.
By Order of the Board of Directors,
JOSEPH V. VITTORIA
Chairman of the Board and
Chief Executive Officer
Delray Beach, Florida
July 6, 1998
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EXHIBIT A
FORM OF
AGREEMENT AND PLAN OF MERGER
THIS PLAN AND AGREEMENT OF MERGER, dated as of __________, 1998 (the
"Agreement"), is entered into between TSI FLORIDA, INC., a Florida corporation
("FLORIDA"), and TRAVEL SERVICES INTERNATIONAL, INC., a Delaware corporation
("DELAWARE").
A. DELAWARE has an aggregate authorized capital of 51,000,000 shares
of capital stock, consisting of (i) 50,000,000 shares of common stock, $0.01 par
value (the "Delaware Common Stock") of which 2,484,501 shares have been
designated as Restricted Voting Common Stock (the "Delaware Restricted Common
Stock") and 47,515,499 remain undesignated (the "Delaware Non-restricted Common
Stock"), and (ii) 1,000,000 shares of preferred stock, par value $0.01 per share
(the "Delaware Preferred Stock").
B. FLORIDA has an aggregate authorized capital of 51,000,000 shares
of capital stock, consisting of (i) 50,000,000 shares of common stock, $0.01 par
value (the "Florida Common Stock") of which ________ shares have been designated
as Restricted Voting Common Stock (the "Florida Restricted Common Stock") and
47,515,499 remain undesignated (the "Florida Non-restricted Common Stock"), and
(ii) 1,000,000 shares of preferred stock, par value $0.01 per share (the
"Florida Preferred Stock").
C. The respective Boards of Directors of FLORIDA and DELAWARE believe
that it is in the best interests of FLORIDA and DELAWARE and their respective
shareholders to merge DELAWARE with and into FLORIDA under and pursuant to the
provisions of this Agreement, the Delaware General Corporation Law and the
Florida Business Corporation Act.
AGREEMENT
In consideration of the Recitals and of the mutual agreements contained
in this Agreement, the parties hereto agree as set forth below.
1. MERGER. DELAWARE shall be merged with and into FLORIDA
(the "Merger").
2. EFFECTIVE DATE. The Merger shall become effective immediately upon
the later of the filing of this Agreement or a certificate of merger with the
Secretary of State of Delaware in accordance with the Delaware General
Corporation Law and the filing of articles of merger with the Secretary of State
of Florida in accordance with the Florida Business Corporation Act (the
"Articles of Merger"). The time of such effectiveness is hereinafter called the
"Effective Date."
3. SURVIVING CORPORATION. FLORIDA shall be the surviving corporation
of the Merger and shall continue to be governed by the laws of the State of
Florida. On the Effective Date, the separate corporate existence of DELAWARE
shall cease.
4. ARTICLES OF INCORPORATION. The Articles of Incorporation of
FLORIDA as it exists on the Effective Date shall be the Articles of
Incorporation of FLORIDA following the Effective Date, unless and until the same
shall thereafter be amended or repealed in accordance with the laws of
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the State of Florida; provided, however, that pursuant to and upon the filing of
the Articles of Merger the name of FLORIDA shall be changed to "Travel Services
International, Inc."
5. BYLAWS. The Bylaws of FLORIDA as they exist on the Effective Date
shall be the Bylaws of FLORIDA following the Effective Date, unless and until
the same shall be amended or repealed in accordance with the provisions thereof
and the laws of the State of Florida.
6. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of
Directors and the officers of DELAWARE immediately prior to the Effective Date
shall be the members of the Board of Directors and the officers of FLORIDA
following the Effective Date, and such persons shall serve in such offices for
the terms provided by law or in Florida's Articles of Incorporation and Bylaws,
or until their respective successors are elected and qualified.
7. RETIREMENT OF OUTSTANDING FLORIDA STOCK. Upon the Effective Date,
each of the 100 shares of the FLORIDA Common Stock presently issued and
outstanding shall be retired, and no shares of FLORIDA Common Stock or other
securities of FLORIDA shall be issued in respect thereof.
8. CONVERSION OF OUTSTANDING DELAWARE STOCK. Upon the Effective Date,
each issued and outstanding share of Delaware Restricted Common Stock and all
rights in respect thereof shall be converted into one fully-paid and
nonassessable share of Florida Restricted Common Stock, and each certificate
representing shares of Delaware Restricted Common Stock shall for all purposes
be deemed to evidence the ownership of the same number of shares of Florida
Restricted Common Stock as are set forth in such certificate. After the
Effective Date, each holder of an outstanding certificate representing shares of
Delaware Restricted Common Stock may, at such shareholder's option, surrender
the same to FLORIDA's registrar and transfer agent for cancellation, and each
such holder shall be entitled to receive in exchange therefor a certificate
evidencing the ownership of the same number of shares of Florida Restricted
Common Stock as are represented by the DELAWARE certificate surrendered to
FLORIDA's registrar and transfer agent.
Upon the Effective Date, each issued and outstanding share of Delaware
Non-restricted Common Stock and all rights in respect thereof shall be converted
into one fully-paid and nonassessable share of Florida Non-restricted Common
Stock, and each certificate representing shares of Delaware Non-restricted
Common Stock shall for all purposes be deemed to evidence the ownership of the
same number of shares of Florida Non-restricted Common Stock as are set forth in
such certificate. After the Effective Date, each holder of an outstanding
certificate representing shares of Delaware Non-restricted Common Stock may, at
such shareholder's option, surrender the same to FLORIDA's registrar and
transfer agent for cancellation, and each such holder shall be entitled to
receive in exchange therefor a certificate evidencing the ownership of the same
number of shares of Florida Non-restricted Common Stock as are represented by
the DELAWARE certificate surrendered to FLORIDA's registrar and transfer agent.
9. CONDITIONS TO CONSUMMATION OF THE MERGER. Consummation of the
Merger is subject to the satisfaction prior to the Effective Date of the
following conditions: (a) This Agreement and the Merger shall have been adopted
and approved by the affirmative vote of the holders of a majority of the votes
represented by the shares of Delaware Common Stock outstanding on the record
date fixed for determining the shareholders of DELAWARE entitled to vote
thereon; (b) DELAWARE and FLORIDA shall have received all consents, orders and
approvals and satisfaction of all other requirements prescribed by law that are
necessary for the consummation of the Merger; and
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(c) The Nasdaq Stock Market shall have authorized the listing, upon official
notice of issuance, of the shares of Florida Common Stock to be issued or
delivered in connection with the Merger and such authorization shall be in full
force and effect on such date.
10. STOCK OPTIONS. Upon the Effective Date, each stock option and
other right to subscribe for or purchase shares of Delaware Common Stock shall
be converted into a stock option or other right to subscribe for or purchase the
same number of shares of Florida Common Stock and each certificate, agreement,
note or other document representing such stock option or other right to
subscribe for or purchase shares of Delaware Common Stock shall for all purposes
be deemed to evidence the ownership of a stock option or other right to
subscribe for or purchase shares of Florida Common Stock.
11. RIGHTS AND LIABILITIES OF FLORIDA. At and after the Effective
Date, and all in the manner of and as more fully set forth in Section 607.1106
of the Florida Business Corporation Act and Section 259 of the Delaware General
Corporation Law, the title to all real estate and other property, or any
interest therein, owned by each of DELAWARE and FLORIDA shall be vested in
FLORIDA without reversion or impairment; FLORIDA shall succeed to and possess,
without further act or deed, all estates, rights, privileges, powers and
franchises, both public and private, and all of the property, real, personal and
mixed, of each of DELAWARE and FLORIDA without reversion or impairment; FLORIDA
shall thenceforth be responsible and liable for all the liabilities and
obligations of each of DELAWARE and FLORIDA; any claim existing or action or
proceeding pending by or against DELAWARE or FLORIDA may be continued as if the
Merger did not occur or FLORIDA may be substituted for DELAWARE in the
proceeding; neither the rights of creditors nor any liens upon the property of
DELAWARE or FLORIDA shall be impaired by the Merger, and FLORIDA shall indemnify
and hold harmless the officers and directors of each of the parties hereto
against all such debts, liabilities and duties and against all claims and
demands arising out of the Merger.
12. TERMINATION. This Agreement may be terminated and abandoned by
action of the respective Board of Directors of DELAWARE or FLORIDA at any time
prior to the Effective Date, whether before or after approval by the
shareholders of either or both of the parties hereto.
13. AMENDMENT. The Boards of Directors of the parties hereto may
amend this Agreement at any time prior to the Effective Date; provided, that an
amendment made subsequent to the approval of this Agreement by the shareholders
of either of the parties hereto shall not: (a) change the amount or kind of
shares, securities, cash, property or rights to be received in exchange for or
on conversion of all or any of the shares of the parties hereto, (b) change any
term of the Articles of Incorporation of FLORIDA or (c) change any other terms
or conditions of this Agreement if such change would adversely affect the
holders of any capital stock of either party hereto.
14. INSPECTION OF AGREEMENT. Executed copies of this Agreement will
be on file at the principal place of business of FLORIDA at 220 Congress Park
Drive, Delray Beach, Florida 33445. A copy of this Agreement shall be furnished
by FLORIDA, on request and without cost, to any shareholder of either DELAWARE
or FLORIDA.
15. GOVERNING LAW. This Agreement shall in all respects be
construed, interpreted and enforced in accordance with and governed by the laws
of the State of Florida.
16. SERVICE OF PROCESS. On and after the Effective Date, FLORIDA
agrees that it may be served with process in Delaware in any proceeding for
enforcement of any obligation of DELAWARE or FLORIDA arising from the Merger.
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17. DESIGNATION OF DELAWARE SECRETARY OF STATE AS AGENT FOR SERVICE
OF PROCESS. On and after the Effective Date, FLORIDA irrevocably appoints the
Secretary of State of Delaware as its agent to accept service of process in any
suit or other proceeding to enforce the rights of any shareholders of DELAWARE
or FLORIDA arising from the Merger. The Delaware Secretary of State is requested
to mail a copy of any such process to FLORIDA at 220 Congress Park Drive, Delray
Beach, Florida 33445, Attention: President.
18. REMEDIES. Any rights and remedies belonging to DELAWARE or
FLORIDA and arising in connection with the actions contemplated by this
Agreement shall be pursued solely against DELAWARE or FLORIDA, and not against
their respective officers, directors or employees. In the event that any
officer, director or employee of DELAWARE or FLORIDA becomes involved in any
capacity in any action, proceeding or investigation in connection with the
Merger or this Agreement, DELAWARE and/or FLORIDA may advance to such person(s)
all reasonable legal and other expenses incurred in connection therewith and
shall also indemnify such person(s) against any losses, claims, damages or
liabilities to which such person(s) may become subject in connection with the
Merger or this Agreement, except to the extent that such indemnification is
prohibited by law.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement and Plan of Merger to be executed on its behalf by its officers duly
authorized, all as of the date first above written.
TSI FLORIDA, INC., a Florida corporation
By:
------------------------------------
Name:
---------------------------------
Title:
--------------------------------
TRAVEL SERVICES INTERNATIONAL,
INC., a Delaware corporation
By:
------------------------------------
Name:
---------------------------------
Title:
--------------------------------
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EXHIBIT B
FORM OF
ARTICLES OF INCORPORATION
OF
TSI FLORIDA, INC.
ARTICLE I- NAME
The name of the Corporation is TSI FLORIDA, INC. (hereinafter called
the "Corporation").
ARTICLE II - PURPOSES; DURATION
The purpose for which the Corporation is organized is to engage in the
transaction of any lawful business for which corporations may be incorporated
under the laws of the State of Florida. The Corporation shall exist perpetually
unless sooner dissolved according to law.
ARTICLE III - CAPITAL STOCK
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 51,000,000 shares of stock,
consisting of (i) 1,000,000 shares, designated as preferred stock, par value of
One Cent ($.01) per share (the "Preferred Stock"), and (ii) 50,000,000 shares,
designated as common stock, par value of One Cent ($.01) per share (the "Common
Stock"), _______ shares of which Common Stock is designated as restricted voting
common stock (the "Restricted Voting Common Stock"), subject to paragraph 5 of
this Article III.
A statement of the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, in respect of each class of
stock of the Corporation, is as follows:
PREFERRED STOCK. The Preferred Stock may be issued from time to time by
the Board of Directors as shares of one or more classes or series. Subject to
the provisions of these Articles of Incorporation and the limitations prescribed
by law, the Board of Directors is expressly authorized by adopting resolutions
to issue, fix or change the number of shares constituting any series or class
of, and to provide for or change the voting powers, designations, preferences
and relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof, including dividend rights (and whether
dividends are cumulative), dividend rates, terms of redemption (including
sinking fund provisions), a redemption price or prices, conversion rights and
liquidation preferences of, the shares constituting any class or series of the
Preferred Stock, without any further action or vote by the shareholders.
COMMON STOCK; RESTRICTED VOTING COMMON STOCK.
1. RIGHTS OF COMMON STOCK AND RESTRICTED VOTING COMMON STOCK. Except as
to differences in voting power as expressly provided in this Article III or as
otherwise required under the Florida Business Corporation Act, all shares of
Common Stock and Restricted Voting Common Stock shall have identical rights and
limitations, and the Common Stock and Restricted Voting Common Stock shall
otherwise be deemed for all purposes to constitute one class of stock of the
Corporation, including, without limitation, with respect to rights to receive
and share in dividends and other distributions by the Corporation.
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2. DIVIDENDS. Subject to the preferred rights of the holders of shares
of any class or series of Preferred Stock as provided by the Board of Directors
with respect to any such class or series of Preferred Stock, the holders of the
Common Stock and Restricted Voting Common Stock shall be entitled to receive, as
and when declared by the Board of Directors out of the funds of Corporation
legally available therefor, such dividends (payable in cash, stock or otherwise)
as the Board of Directors may from time to time determine, payable to
shareholders of record on such date or dates as shall be fixed for such purpose
by the Board of Directors in accordance with the Florida Business Corporation
Act. All dividends on Common Stock shall be paid pari passu with dividends on
Restricted Voting Common Stock.
3. LIQUIDATION. In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, after the distribution
or payment to the holders of shares of any class or series of Preferred Stock as
provided by the Board of Directors with respect to any such class or series of
Preferred Stock, the remaining assets of the Corporation available for
distribution to shareholders shall be distributed among and paid to the holders
of Common Stock and Restricted Voting Common Stock ratably in proportion to the
number of shares of Common Stock and Restricted Voting Common Stock held by them
respectively.
4. VOTING RIGHTS. Except as otherwise required by law, each holder of
shares of Common Stock shall be entitled to one vote for each share of Common
Stock standing in such holder's name on the books of the Corporation. Except as
otherwise required by law, each holder of shares of Restricted Voting Common
Stock shall be entitled to four-tenths of a vote for each share of Restricted
Voting Common Stock standing in such holder's name on the books of the
Corporation. The holders of Common Stock and Restricted Voting Common Stock
shall vote as a single class on all matters subject to a vote of such shares,
and the holders of shares of Restricted Voting Common Stock shall have no right
to vote separately as a class, except as specifically required otherwise by the
Florida Business Corporation Act.
5. CONVERSION OF THE RESTRICTED VOTING COMMON STOCK. Each share of
Restricted Voting Common Stock will automatically convert into Common Stock on a
share for share basis (a) in the event of any transfer or other disposition of
such share of Restricted Voting Common Stock by the holder thereof (other than a
disposition which is a distribution by a holder to its partners or beneficial
owners or a transfer to a related party of such holder (as defined in Section
267, 707, 318, and/or 4946 of the Internal Revenue Code of 1986), (b) in the
event any person acquires beneficial ownership of 15% or more of the outstanding
shares of Common Stock of the Corporation, (c) in the event any person offers to
acquire 15% or more of the outstanding shares of Common Stock of the
Corporation, or (d) in the event that such a conversion is approved by a
majority of the aggregate number of votes which may be voted by the holders of
outstanding shares of Common Stock and Restricted Voting Common Stock entitled
to vote to approve such conversion. After December 31, 1999, the Corporation may
elect, by resolution of the Board of Directors, to convert any outstanding
shares of Restricted Voting Common Stock into shares of Common Stock in the
event ___% or more of the aggregate number of shares of Restricted Voting Common
Stock first issued by the Corporation have been converted into shares of Common
Stock. Upon such time, after the first issuance of shares of Restricted Voting
Common Stock, as all outstanding shares of Restricted Voting Common Stock shall
have been converted into shares of Common Stock or shall otherwise cease to be
outstanding, (i) the Corporation shall cease to have any authorized shares of
Restricted Voting Common Stock (but such occurrence shall in no event reduce or
change the aggregate total number of shares of the Corporation's authorized
Common Stock) and (ii) the Board of Directors may amend these Articles of
Incorporation as permitted under the Florida Business Corporation Act to delete
references and provisions relating to the Restricted Voting Common Stock.
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6. CALL OF SPECIAL MEETING OF SHAREHOLDERS. Except as otherwise
required by law, special meetings of shareholders of the Corporation may be
called only by (i) the Board pursuant to a resolution approved by a majority of
the entire Board, (ii) the Company's Chairman of the Board or, if the Chairman
is not present (or if there is no Chairman), by the Company's President or (iii)
the holders of not less than fifty (50) percent of all the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting, but
only if such holders first deliver to the Corporation's secretary one or more
written demands (which shall be signed and dated) describing the purpose or
purposes for which the special meeting is to be held, in accordance with all
requirements of applicable law.
ARTICLE IV - BOARD OF DIRECTORS
1. BOARD OF DIRECTORS. The Corporation's Board of Directors shall be
classified with respect to the time for which they shall severally hold office
into three classes, Class I, Class II and Class III, as nearly equal in number
as possible. The Class I Directors shall be elected to hold office for an
initial term expiring at the 2001 annual meeting of shareholders, the Class II
Directors shall be elected to hold office for an initial term expiring at the
1999 annual meeting of shareholders, and the Class III Directors shall be
elected to hold office for an initial term expiring at the 2000 annual meeting
of shareholders, with the members of each class of directors to hold office
until their successors have been duly elected and qualified. At each annual
meeting of shareholders, the successors to the class of directors whose term
expires at that meeting shall be elected to hold office for a term expiring at
the annual meeting of shareholders held in the third year following the year of
their election and until their successors have been duly elected and qualified.
No director or class of directors may be removed from office by a vote of the
shareholders at any time except for cause.
2. VACANCIES. Any vacancy on the Board of Directors resulting from
death, retirement, resignation, disqualification or removal from office or other
cause, as well as any vacancy resulting from an increase in the number of
directors which occurs between annual meetings of the shareholders at which
directors are elected, shall be filled only by a majority vote of the remaining
directors then in office, though less than a quorum, except that those vacancies
resulting from removal from office by a vote of the shareholders may be filled
by a vote of the shareholders at the same meeting at which such removal occurs.
The directors chosen to fill vacancies shall hold office for a term expiring at
the end of the next annual meeting of shareholders at which the term of the
class to which they have been elected expires. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Notwithstanding the foregoing, whenever the holders of one or more
classes or series of Preferred Stock shall have the right, voting separately as
a class or series, to elect directors, the election, term of office, filling of
vacancies, removal and other features of such directorships shall be governed by
the terms of the resolution or resolutions adopted by the Board of Directors
pursuant to Article III applicable thereto, and each director so elected shall
not be subject to the provisions of this Article IV unless otherwise provided
therein.
3. POWER TO MAKE, ALTER AND REPEAL BYLAWS. In furtherance and not in
limitation of the powers conferred by statute, the Board of Directors is
expressly authorized to make, alter and repeal the Bylaws of the Corporation.
4. AMENDMENT AND REPEAL OF ARTICLE IV. Notwithstanding any provision of
these Articles of Incorporation and of the Bylaws, and notwithstanding the fact
that a lesser percentage may be permitted by Florida law, unless such action has
been approved by a majority vote of the full Board of
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Directors, the affirmative vote of sixty-six and two-thirds percent (66 2/3%) of
the outstanding shares of the Corporation's capital stock entitled to vote
thereon, voting together as a single class, shall be required to amend or repeal
any provisions of this Article IV or to adopt any provision inconsistent with
this Article IV. In the event such action has been previously approved by a
majority vote of the full Board of Directors, the affirmative vote of a majority
of the outstanding shares entitled to vote thereon shall be sufficient to amend
or repeal any provision of this Article IV or adopt any provision inconsistent
with this Article IV.
ARTICLE V - INITIAL REGISTERED AGENT; CORPORATION ADDRESS
The street address of the initial registered office of the Corporation
is 1201 Hays Street, Tallahassee, Florida 32301. The name of the initial
registered agent of the Corporation at that address is Corporation Service
Company. The current mailing address of the principal place of business of the
Corporation is 220 Congress Park Drive, Suite 300, Delray Beach, Florida 33445.
ARTICLE VI - INCORPORATOR
The name and address of the incorporator of the Corporation is Suzanne
B. Bell, 220 Congress Park Drive, Suite 300, Delray Beach, Florida 33445.
ARTICLE VII - LIMITATION ON DIRECTOR LIABILITY
A director shall not be personally liable to the Corporation or the
holders of shares of capital stock or any other person for monetary damages for
any statement, vote, decision, act or failure to act, for which such liability
is precluded or otherwise eliminated under Section 607.0831 or otherwise under
the Florida Business Corporation Act. If the Florida Business Corporation Act is
hereafter amended to authorize the further or broader elimination or limitation
of the personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Florida Business Corporation Act, as so amended. No repeal or modification
of this Article VII shall adversely affect any right of or protection afforded
to a director of the Corporation existing immediately prior to such repeal or
modification.
ARTICLE VIII - INDEMNIFICATION
The Corporation shall indemnify and may advance expenses to, and may
purchase and maintain insurance on behalf of, its officers and directors to the
fullest extent permitted by law as now or hereafter in effect. Without limiting
the generality of the foregoing, the Bylaws may provide for indemnification and
advancement of expenses to officers, directors, employees and agents on such
terms and conditions as the Board may from time to time deem appropriate or
advisable.
IN WITNESS WHEREOF, the incorporator has executed these Articles of
Incorporation of TSI FLORIDA, INC. this __________ day of ______________, 1998.
------------------------------
Suzanne B. Bell, Incorporator
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CONSENT OF REGISTERED AGENT
OF
TSI FLORIDA, INC.
The undersigned, Corporation Service Company, whose business address is
1201 Hays Street, Tallahassee, Florida 32301, hereby accepts appointment as the
initial registered agent of TSI FLORIDA, INC., a Florida corporation, and
accepts the obligations provided for in Section 607.0505, Florida Statutes.
CORPORATION SERVICE COMPANY
Registered Agent
By:
-----------------------------------
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EXHIBIT C
TRAVEL SERVICES INTERNATIONAL, INC.
AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of the Amended and Restated Long Term Incentive
Plan (the "Plan") of Travel Services International, Inc., a Delaware corporation
(the "Company"), is to advance the interests of the Company and its stockholders
by providing a means to attract, retain and reward executive officers, employee
directors and other key employees and consultants of and service providers to
the Company and its subsidiaries (including consultants and others providing
services of substantial value) and to enable such persons to acquire or increase
a proprietary interest in the Company, thereby promoting a closer identity of
interests between such persons and the Company's stockholders.
2. DEFINITIONS. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents and Other
Stock-Based Awards are set forth in Section 6 of the Plan. Such awards, together
with any other right or interest granted to a Participant under the Plan, are
termed "Awards." For purposes of the Plan, the following additional terms shall
be defined as set forth below:
(a) "Award Agreement" means any written agreement, contract,
notice or other instrument or document evidencing an Award.
(b) "Beneficiary" shall mean the person, persons, trust or
trusts which have been designated by a Participant in his or her most recent
written beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time. References to any provision of the Code shall be deemed to
include regulations thereunder and successor provisions and regulations thereto.
(e) "Committee" means the Compensation Committee of the Board,
or such other Board committee as may be designated by the Board to administer
the Plan; PROVIDED, HOWEVER, that, to the extent necessary to comply with Rule
16b-3, the Committee shall consist of two or more directors, each of whom is a
"non-employee director" within the meaning of Rule 16b-3.
(f) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time. References to any provision of the Exchange Act
shall be deemed to include rules thereunder and successor provisions and rules
thereto.
(g) "Fair Market Value" means, with respect to Stock, Awards,
or other property, the fair market value of such Stock, Awards, or other
property determined by such methods or procedures as shall be established from
time to time by the Committee, PROVIDED, HOWEVER, that (i) if the Stock is
listed on a national securities exchange or quoted in an interdealer quotation
system, the Fair Market Value of such Stock on a given date shall be based upon
the last sales price or, if unavailable, the average of the closing bid and
asked prices per share of the Stock on such date (or, if there was no
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trading or quotation in the Stock on such date, on the next preceding date on
which there was trading or quotation) as reported in the WALL STREET JOURNAL (or
other reporting service approved by the Committee), (ii) the "Fair Market Value"
of Stock subject to Options granted effective upon commencement of the Initial
Public Offering shall be the Initial Public Offering price of the shares so
issued and sold in the Initial Public Offering, as set forth in the first final
prospectus used in such offering (the provisions of clause (i) notwithstanding)
and (iii) the "Fair Market Value" of Stock prior to the date of the Initial
Public Offering shall be as determined by the Board of Directors.
(h) "Initial Public Offering" shall mean an initial public
offering of shares of Stock in a firm commitment underwriting registered with
the Securities and Exchange Commission in compliance with the provisions of the
Securities Act of 1933, as amended.
(i) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(j) "Participant" means a person who, at a time when eligible
under Section 5 hereof, has been granted an Award under the Plan.
(k) "Rule 16b-3" means Rule 16b-3, as from time to time in
effect and applicable to the Plan and Participants, promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange Act.
(l) "Stock" means the Common Stock, $.01 par value, of the
Company and such other securities as may be substituted for Stock or such other
securities pursuant to Section 4.
3. ADMINISTRATION
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered
by the Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
(i) to select persons to whom Awards may be granted;
(ii) to determine the type or types of Awards to be
granted to each such person;
(iii) to determine the number of Awards to be
granted, the number of shares of Stock to which an Award will
relate, the terms and conditions of any Award granted under
the Plan (including, but not limited to, any exercise price,
grant price or purchase price, any restriction or condition,
any schedule for lapse of restrictions or conditions relating
to transferability or forfeiture, vesting, exercisability or
settlement of an Award, and waivers or accelerations thereof,
performance conditions relating to an Award (including
performance conditions relating to Awards not intended to be
governed by Section 7(f) and waivers and modifications
thereof), based in each case on such considerations as the
Committee shall determine), and all other matters to be
determined in connection with an Award;
(iv) to determine whether, to what extent and under
what circumstances an Award may be settled, or the exercise
price of an Award may be paid, in cash, Stock,
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other Awards, or other property, or an Award may be cancelled,
forfeited, or surrendered;
(v) to determine whether, to what extent and under
what circumstances cash, Stock, other Awards or other property
payable with respect to an Award will be deferred either
automatically, at the election of the Committee or at the
election of the Participant;
(vi) to prescribe the form of each Award Agreement,
which need not be identical for each Participant;
(vii) to adopt, amend, suspend, waive and rescind
such rules and regulations and appoint such agents as the
Committee may deem necessary or advisable to administer the
Plan;
(viii) to correct any defect or supply any omission
or reconcile any inconsistency in the Plan and to construe and
interpret the Plan and any Award, rules and regulations, Award
Agreement or other instrument hereunder; and
(ix) to make all other decisions and determinations
as may be required under the terms of the Plan or as the
Committee may deem necessary or advisable for the
administration of the Plan.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. Unless
authority is specifically reserved to the Board under the terms of the Plan, the
Company's Certificate of Incorporation or Bylaws, or applicable law, the
Committee shall have sole discretion in exercising authority under the Plan. Any
action of the Committee with respect to the Plan shall be final, conclusive and
binding on all persons, including the Company, subsidiaries of the Company,
Participants, any person claiming any rights under the Plan from or through any
Participant and stockholders, except to the extent the Committee may
subsequently modify, or take further action not consistent with, its prior
action. If not specified in the Plan, the time at which the Committee must or
may make any determination shall be determined by the Committee, and any such
determination may thereafter by modified by the Committee (subject to Section
8(e)). The express grant of any specific power to the Committee, and the taking
of any action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Company or any subsidiary of the Company the authority, subject to such
terms as the Committee shall determine, to perform administrative functions and,
with respect to Participants not subject to Section 16 of the Exchange Act, to
perform such other functions as the Committee may determine, to the extent
permitted under Rule 16b-3, if applicable, and other applicable law.
(c) LIMITATION OF LIABILITY. Each member of the Committee
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him by any officer or other employee of the Company or
any subsidiary, the Company's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
its behalf shall, to the extent permitted by law, be
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fully indemnified and protected by the Company with respect to any such action,
determination or interpretation.
4. STOCK SUBJECT TO PLAN.
(a) AMOUNT OF STOCK RESERVED. The total amount of Stock that
may be subject to outstanding awards, determined immediately after the grant of
any Award, shall not exceed 15% of the total number of shares of Stock
outstanding at the time of such grant. Notwithstanding the foregoing, the number
of shares that may be delivered upon the exercise of ISOs shall not exceed
100,000, subject in each case to adjustment as provided in Section 4(c), and the
number of shares that may be delivered as Restricted Stock and Deferred Stock
(other than pursuant to an Award granted under Section 7(f)) shall not in the
aggregate exceed 100,000, PROVIDED, HOWEVER, that shares subject to ISOs,
Restricted Stock or Deferred Stock Awards shall not be deemed delivered if such
Awards are forfeited, expire or otherwise terminate without delivery of shares
to the Participant. If an Award valued by reference to Stock may only be settled
in cash, the number of shares to which such Award relates shall be deemed to be
Stock subject to such Award for purposes of this Section 4(a). Any shares of
Stock delivered pursuant to an Award may consist, in whole or in part, of
authorized and unissued shares, treasury shares or shares acquired in the market
for a Participant's Account.
(b) ANNUAL PER-PARTICIPANT LIMITATIONS. During any calendar
year, no Participant may be granted Awards that may be settled by delivery of
more than 250,000 shares of Stock, subject to adjustment as provided in Section
4(c). In addition, with respect to Awards that may be settled in cash (in whole
or in part), no Participant may be paid during any calendar year cash amounts
relating to such Awards that exceed the greater of the Fair Market Value of the
number of shares of Stock set forth in the preceding sentence at the date of
grant or the date of settlement of Award. This provision sets forth two separate
limitations, so that Awards that may be settled solely by delivery of Stock will
not operate to reduce the amount of cash-only Awards, and vice versa;
nevertheless, Awards that may be settled in Stock or cash must not exceed either
limitation.
(c) ADJUSTMENTS. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Stock or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase or
exchange of Stock or other securities, liquidation, dissolution, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number and kind of shares
of Stock reserved and available for Awards under Section 4(a), including shares
reserved for the ISOs and Restricted and Deferred Stock, (ii) the number and
kind of shares of Stock specified in the Annual Per-Participant Limitations
under Section 4(b), (iii) the number and kind of shares of outstanding
Restricted Stock or other outstanding Award in connection with which shares have
been issued, (iv) the number and kind of shares that may be issued in respect of
other outstanding Awards and (v) the exercise price, grant price or purchase
price relating to any Award (or, if deemed appropriate, the Committee may make
provision for a cash payment with respect to any outstanding Award). In
addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, events described in the
preceding sentence) affecting the Company or any subsidiary or the financial
statements of the Company or any subsidiary, or in response to changes in
applicable laws, regulations, or accounting principles. The foregoing
notwithstanding, no adjustments shall be authorized under this Section 4(c) with
respect to ISOs or SARs in tandem therewith to the extent that such authority
would cause the Plan to fail to comply with Section 422(b)(1) of the Code, and
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no such adjustment shall be authorized with respect to Options, SARs or other
Awards subject to Section 7(f) to the extent that such authority would cause
such Awards to fail to qualify as "qualified performance-based compensation"
under Section 162(m)(4)(C) of the Code.
5. ELIGIBILITY. Executive officers and other key employees of the
Company and its subsidiaries, including any director or officer who is also such
an employee, and persons who provide consulting or other services to the Company
deemed by the Committee to be of substantial value to the Company, are eligible
to be granted Awards under the Plan. In addition, a person who has been offered
employment by the Company or its subsidiaries is eligible to be granted an Award
under the Plan, provided that such Award shall be cancelled if such person fails
to commence such employment, and no payment of value may be made in connection
with such Award until such person has commenced such employment. The foregoing
notwithstanding, no member of the Committee shall be eligible to be granted
Awards under the Plan.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions
set forth in this Section 6. In addition, the Committee may impose on any Award
or the exercise thereof such additional terms and conditions, not inconsistent
with the provisions of the Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of employment
or service of the Participant. Except as provided in Section 6(f), 6(h), or
7(a), or to the extent required to comply with requirements of the Delaware
General Corporation Law that lawful consideration be paid for Stock, only
services may be required as consideration for the grant (but not the exercise)
of any Award.
(b) OPTIONS. The Committee is authorized to grant Options
(including "reload" options automatically granted to offset specified exercises
of Options) on the following terms and conditions ("Options"):
(i) EXERCISE PRICE. The exercise price per share of
Stock purchasable under an Option shall be determined by the
Committee; PROVIDED, HOWEVER, that, except as provided in
Section 7(a), such exercise price shall be not less than the
Fair Market Value of a share on the date of grant of such
Option.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall
determine the time or times at which an Option may be
exercised in whole or in part, the methods by which such
exercise price may be paid or deemed to be paid, the form of
such payment, including, without limitation, cash, Stock,
other Awards or awards granted under other Company plans or
other property (including notes or other contractual
obligations of Participants to make payment on a deferred
basis, such as through "cashless exercise" arrangements, to
the extent permitted by applicable law), and the methods by
which Stock will be delivered or deemed to be delivered to
Participants.
(iii) ISOS. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions of
Section 422 of the Code, including but not limited to the
requirement that no ISO shall be granted more than ten years
after the effective date of the Plan. Anything in the Plan to
the contrary notwithstanding, no term of the Plan relating to
ISOs shall be interpreted, amended, or altered, nor shall any
discretion or authority granted under the Plan be exercised,
so as to disqualify either the Plan or any ISO under Section
422 of the Code, unless requested by the affected Participant.
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(iv) TERMINATION OF EMPLOYMENT. Unless otherwise
determined by the Committee, upon termination of a
Participant's employment with the Company and its
subsidiaries, such Participant may exercise any Options during
the three-month period following such termination of
employment, but only to the extent such Option was exercisable
immediately prior to such termination of employment.
Notwithstanding the foregoing, if the Committee determines
that such termination is for cause, all Options held by the
Participant shall terminate as of the termination of
employment.
(c) STOCK APPRECIATION RIGHTS. The Committee is authorized to
grant SARs on the following terms and conditions ("SARs"):
(i) RIGHT TO PAYMENT. An SAR shall confer on the
Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of
one share of Stock on the date of exercise (or, if the
Committee shall so determine in the case of any such right
other than one related to an ISO, the Fair Market Value of one
share at any time during a specified period before or after
the date of exercise), over (B) the grant price of the SAR as
determined by the Committee as of the date of grant of the
SAR, which, except as provided in Section 7(a), shall be not
less than the Fair Market Value of one share of Stock on the
date of grant.
(ii) OTHER TERMS. The Committee shall determine the
time or times at which an SAR may be exercised in whole or in
part, the method of exercise, method of settlement, form of
consideration payable in settlement, method by which Stock
will be delivered or deemed to be delivered to Participants,
whether or not an SAR shall be in tandem with any other Award,
and any other terms and conditions of any SAR. Limited SARs
that may only be exercised upon the occurrence of a Change in
Control may be granted on such terms, not inconsistent with
this Section 6(c), as the Committee may determine. Limited
SARs may be either freestanding or in tandem with other
Awards.
(d) RESTRICTED STOCK. The Committee is authorized to grant
Restricted Stock on the following terms and conditions ("Restricted Stock"):
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be
subject to such restrictions on transferability and other
restrictions, if any, as the Committee may impose, which
restrictions may lapse separately or in combination at such
times, under such circumstances, in such installments, or
otherwise, as the Committee may determine. Except to the
extent restricted under the terms of the Plan and any Award
Agreement relating to the Restricted Stock, a Participant
granted Restricted Stock shall have all of the rights of a
stockholder including, without limitation, the right to vote
Restricted Stock or the right to receive dividends thereon.
(ii) FORFEITURE. Except as otherwise determined by
the Committee, upon termination of employment or service (as
determined under criteria established by the Committee) during
the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited and
reacquired by the Company; PROVIDED, HOWEVER, that the
Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of
termination resulting from specified causes.
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(iii) CERTIFICATES FOR STOCK. Restricted Stock
granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the
Participant, such certificates may bear an appropriate legend
referring to the terms, conditions, and restrictions
applicable to such Restricted Stock, the Company may retain
physical possession of the certificate, and the Participant
shall have delivered a stock power to the Company, endorsed in
blank, relating to the Restricted Stock.
(iv) DIVIDENDS. Dividends paid on Restricted Stock
shall be either paid at the dividend payment date in cash or
in shares of unrestricted Stock having a Fair Market Value
equal to the amount of such dividends, or the payment of such
dividends shall be deferred and/or the amount or value thereof
automatically reinvested in additional Restricted Stock, other
Awards, or other investment vehicles, as the Committee shall
determine or permit the Participant to elect. Stock
distributed in connection with a Stock split or Stock
dividend, and other property distributed as a dividend, shall
be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which such
Stock or other property has been distributed, unless otherwise
determined by the Committee.
(e) DEFERRED STOCK. The Committee is authorized to grant
Deferred Stock subject to the following terms and conditions ("Deferred Stock"):
(i) AWARD AND RESTRICTIONS. Delivery of Stock will
occur upon expiration of the deferral period specified for an
Award of Deferred Stock by the Committee (or, if permitted by
the Committee, as elected by the Participant). In addition,
Deferred Stock shall be subject to such restrictions as the
Committee may impose, if any, which restrictions may lapse at
the expiration of the deferral period or at earlier specified
times, separately or in combination, in installments or
otherwise, as the Committee may determine.
(ii) FORFEITURE. Except as otherwise determined by
the Committee, upon termination of employment or service (as
determined under criteria established by the Committee) during
the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award
Agreement evidencing the Deferred Stock), all Deferred Stock
that is at that time subject to such forfeiture conditions
shall be forfeited; PROVIDED, HOWEVER, that the Committee may
provide, by rule or regulation or in any Award Agreement, or
may determine in any individual case, that restrictions or
forfeiture conditions relating to Deferred Stock will be
waived in whole or in part in the event of termination
resulting from specified causes.
(f) BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The
Committee is authorized to grant Stock as a bonus, or to grant Stock or other
Awards in lieu of Company obligations to pay cash under other plans or
compensatory arrangements. Stock or Awards granted hereunder shall be subject to
such other terms as shall be determined by the Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents entitling the Participant to receive cash, Stock, other
Awards or other property equal in value to dividends paid with respect to a
specified number of shares of Stock ("Dividend Equivalents"). Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award.
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The Committee may provide that Dividend Equivalents shall be paid
or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.
(h) OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant such other Awards that may
be denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified subsidiaries ("Other Stock Based Awards"). The
Committee shall determine the terms and conditions of such Awards. Stock issued
pursuant to an Award in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards, or other property, as the Committee shall determine. Cash awards,
as an element of or supplement to any other Award under the Plan, may be granted
pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS.
Awards granted under the Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with or in substitution for
any other Award granted under the Plan or any award granted under any other plan
of the Company, any subsidiary or any business entity to be acquired by the
Company or a subsidiary, or any other right of a Participant to receive payment
from the Company or any subsidiary. Awards granted in addition to or in tandem
with other Awards or awards may be granted either as of the same time as or a
different time from the grant of such other Awards or awards.
(b) TERM OF AWARDS. The term of each Award shall be for such
period as may be determined by the Committee; PROVIDED, HOWEVER, that in no
event shall the term of any ISO or an SAR granted in tandem therewith exceed a
period of ten years from the date of its grant (or such shorter period as may be
applicable under Section 422 of the Code).
(c) FORM OF PAYMENT UNDER AWARDS. Subject to the terms of the
Plan and any applicable Award Agreement, payments to be made by the Company or a
subsidiary upon the grant, exercise or settlement of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single payment
or transfer, in installments or on a deferred basis. Such payments may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments denominated
in Stock.
(d) LOAN PROVISIONS. With the consent of the Committee, and
subject at all times to, and only to the extent, if any, permitted under and in
accordance with, laws and regulations and other binding obligations or
provisions applicable to the Company, the Company may make, guarantee or arrange
for a loan or loans to a Participant with respect to the exercise of any Option
or other payment in connection with any Award, including the payment by a
Participant of any or all federal, state or local income or other taxes due in
connection with any Award. Subject to such limitations, the Committee
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shall have full authority to decide whether to make a loan or loans hereunder
and to determine the amount, terms and provisions of any such loan or loans,
including the interest rate to be charged in respect of any such loan or loans,
whether the loan or loans are to be with or without recourse against the
borrower, the terms on which the loan is to be repaid and conditions, if any,
under which the loan or loans may be forgiven.
(e) PERFORMANCE-BASED AWARDS. The Committee may, in its
discretion, designate any Award the exercisability or settlement of which is
subject to the achievement of performance conditions as a performance-based
Award subject to this Section 7(e), in order to qualify such Award as "qualified
performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder. The performance objectives for an Award subject to this
Section 7(e) shall consist of one or more business criteria and a targeted level
or levels of performance with respect to such criteria, as specified by the
Committee but subject to this Section 7(e). Performance objectives shall be
objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of
the Code. Business criteria used by the Committee in establishing performance
objectives for Awards subject to this Section 7(e) shall be selected exclusively
from among the following:
(1) Annual return on capital;
(2) Annual earnings per share or share price
appreciation;
(3) Annual cash flow provided by operations;
(4) Changes in annual revenues; and/or
(5) Strategic business criteria, consisting of
one or more objectives based on meeting
specified revenue, market penetration,
geographic business expansion goals, cost
targets, and goals relating to acquisitions
or divestitures.
The levels of performance required with respect to such business criteria may be
expressed in absolute or relative levels. Achievement of performance objectives
with respect to such Awards shall be measured over a period of not less than one
year nor more than five years, as the Committee may specify. Performance
objectives may differ for such Awards to different Participants. The Committee
shall specify the weighting to be given to each performance objective for
purposes of determining the final amount payable with respect to any such Award.
The Committee may, in its discretion, reduce the amount of a payout otherwise to
be made in connection with an Award subject to this Section 7(e), but may not
exercise discretion to increase such amount, and the Committee may consider
other performance criteria in exercising such discretion. All determinations by
the Committee as to the achievement of performance objectives shall be in
writing. The Committee may not delegate any responsibility with respect to an
Award subject to this Section 7(e).
(f) ACCELERATION UPON A CHANGE OF CONTROL. Pursuant to the
terms of an individual Award Agreement, the Committee, may in its sole
discretion, grant Awards which provide for adjustment (as determined by the
Committee, in its sole discretion) in the event of a "change of control" (as
such term may be defined by the Committee, in its sole discretion).
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8. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LAWS AND OBLIGATIONS. The Company shall
not be obligated to issue or deliver Stock in connection with any Award or take
any other action under the Plan in a transaction subject to the registration
requirements of the Securities Act of 1933, as amended, or any other federal or
state securities law, any requirement under any listing agreement between the
Company and any national securities exchange or automated quotation system or
any other law, regulation or contractual obligation of the Company until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. Certificates representing shares of
Stock issued under the Plan will be subject to such stop-transfer orders and
other restrictions as may be applicable under such laws, regulations and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon.
(b) LIMITATIONS ON TRANSFERABILITY. Awards and other rights
under the Plan will not be transferable by a Participant except by will or the
laws of descent and distribution or to a Beneficiary in the event of the
Participant's death, and, if exercisable, shall be exercisable during the
lifetime of a Participant only by such Participant or his guardian or legal
representative. Notwithstanding the foregoing, the Committee may, in its
discretion, authorize all or a portion of the Award (other than an ISO) to be
granted to a Participant to be on terms which permit transfer by such
Participant to (i) the spouse, children or grandchildren of such Participant
("Immediate Family Members"), (ii) a trust or trusts for exclusive benefit of
such Immediate Family Members, or (iii) a partnership in which such Immediate
Family Members are the only partners, provided that (x) there may be no
consideration for any such transfer, (y) the Award agreement pursuant to which
such Awards are granted must be approved by the Committee and must expressly
provide for transferability in a manner consistent with this Section, and (z)
subsequent transfers of transferred Awards shall be prohibited except those
occurring by laws of descent and distribution. Following transfer, any such
Awards shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for purposes of the
Plan, the term Participant shall be deemed to refer to the transferee. The
events of termination of employment set forth in Section 6 hereof shall continue
to be applied with respect to the original Participant, following which the
options shall be exercisable by the transferee only to the extent and for the
periods specified in Section 6. Awards and other rights under the Plan may not
be pledged, mortgaged, hypothecated or otherwise encumbered, and shall not be
subject to the claims of creditors.
(c) NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Neither the
Plan nor any action taken hereunder shall be construed as giving any employee or
other person the right to be retained in the employ or service of the Company or
any of its subsidiaries, nor shall it interfere in any way with the right of the
Company or any of its subsidiaries to terminate any employee's employment or
other person's service at any time.
(d) TAXES. The Company and any subsidiary is authorized to
withhold from any Award granted or to be settled, any delivery of Stock in
connection with an Award, any other payment relating to an Award or any payroll
or other payment to a Participant amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and
to take such other action as the Committee may deem advisable to enable the
Company and Participants to satisfy obligations for the payment of withholding
taxes and other tax obligations relating to any Award. This authority shall
include authority to withhold or receive Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant's tax
obligations.
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(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend,
alter, suspend, discontinue or terminate the Plan or the Committee's authority
to grant Awards under the Plan without the consent of stockholders or
Participants, except that any such action shall be subject to the approval of
the Company's stockholders at or before the next annual meeting of stockholders
for which the record date is after such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Stock may then be
listed or quoted, and the Board may otherwise, in its discretion, determine to
submit other such changes to the Plan to stockholders for approval; PROVIDED,
HOWEVER, that, without the consent of an affected Participant, no such action
may materially impair the rights of such Participant under any Award theretofore
granted to him. The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue, or terminate, any Award theretofore granted
and any Award Agreement relating thereto; PROVIDED, HOWEVER, that, without the
consent of an affected Participant, no such action may materially impair the
rights of such Participant under such Award.
(f) NO RIGHTS TO AWARDS; NO STOCKHOLDER RIGHTS. No Participant
or employee shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants and
employees. No Award shall confer on any Participant any of the rights of a
stockholder of the Company unless and until Stock is duly issued or transferred
and delivered to the Participant in accordance with the terms of the Award or,
in the case of an Option, the Option is duly exercised.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant
pursuant to an Award, nothing contained in the Plan or any Award shall give any
such Participant any rights that are greater than those of a general creditor of
the Company; PROVIDED, HOWEVER, that the Committee may authorize the creation of
trusts or make other arrangements to meet the Company's obligations under the
Plan to deliver cash, Stock, other Awards, or other property pursuant to any
Award, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other compensatory arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
(i) NO FRACTIONAL SHARES. No fractional shares of Stock shall
be issued or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards, or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
(j) COMPLIANCE WITH CODE SECTION 162(M). It is the intent of
the Company that employee Options, SARs and other Awards designated as Awards
subject to Section 7(e) shall constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m). Accordingly, if any
provision of the Plan or any Award Agreement relating to such an Award does not
comply or is inconsistent with the requirements of Code Section 162(m), such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements, and no provision shall be deemed to confer upon
the Committee or any other person discretion to increase the amount of
compensation otherwise payable in connection with any such Award upon attainment
of the performance objectives.
C-11
<PAGE>
(k) GOVERNING LAW. The validity, construction and effect of
the Plan, any rules and regulations relating to the Plan and any Award Agreement
shall be determined in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of laws, and applicable federal
law.
(l) EFFECTIVE DATE; PLAN TERMINATION. The Travel Services
International Long-Term Incentive Plan initially shall became effective as of
May 9, 1997. As amended and restated hereby, the Plan shall become effective as
of April 29, 1998, the date of its adoption by the Board, subject to stockholder
approval, and shall continue in effect until terminated by the Board.
C-12
<PAGE>
TRAVEL SERVICES INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, a stockholder of TRAVEL SERVICES INTERNATIONAL, INC.,
a Delaware corporation (the "Company"), hereby appoints Joseph V. Vittoria and
Suzanne B. Bell, and each of them, as proxies for the undersigned, each with
full power of substitution, and hereby authorizes them to represent and to vote,
as designated below, all of the shares of Common Stock of the Company that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Boca Raton Marriott of Boca Center, 5150 Town Center
Circle, Boca Raton, Florida 33486, on July 28, 1998 at 9:00 a.m., local time,
and at any adjournments or postponements thereof.
The Board of Directors unanimously recommends a vote FOR the election
of all the director nominees listed in proposal 1 and FOR the approval of each
of proposals 2 and 3.
1. ELECTION OF DIRECTORS
NOMINEES: ELAN J. BLUTINGER D. FRASER BULLOCK TOMMASO ZANZOTTO
VOTE FOR all nominees listed, WITHHOLD AUTHORITY TO
except authority to vote VOTE for all nominees
withheld for the following
nominees (if any)__________.
2. Vote for the proposal to approve the reincorporation of the Company from
Delaware to Florida.
VOTE FOR VOTE AGAINST ABSTAIN
3. Vote for the proposal to approve the Amended and Restated Long-Term Incentive
Plan.
VOTE FOR VOTE AGAINST ABSTAIN
4. Upon such other matters as may properly come before such Annual Meeting
or any adjournments or postponements thereof. In their discretion, the
proxies are authorized to vote upon such other business as may properly
come before the Annual Meeting and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ALL OF THE PROPOSALS.
(SEE REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
The undersigned hereby acknowledges receipt of (1) the Notice of Annual
Meeting for the 1998 Annual Meeting and related Proxy Statement, and (2) the
Company's 1997 Annual Report to Stockholders.
Dated: _____________________ , 1998
----------------------------------
(Signature)
----------------------------------
(Signature, if held jointly)
IMPORTANT: Please sign exactly as your name appears hereon and mail it
promptly even though you now plan to attend the meeting. When signing
as attorney, executor, administrator, trustee or guardian, please give
full title as such. When shares are held by joint tenants, both should
sign. If a corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENVELOPE
PROVIDED. NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
