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[LOGO OF TRAVEL SERVICES INTERNATIONAL, INC.]
February 29, 2000
To Our Shareholders:
We are pleased to inform you that on February 21, 2000, Travel Services
International, Inc. (the "Company") entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Airtours plc, a corporation organized under the
laws of the England ("Airtours"), and Blue Sea Florida Acquisition Inc., an
indirect wholly-owned subsidiary of Airtours (the "Purchaser"), pursuant to
which the Purchaser has commenced a tender offer (the "Offer") to purchase all
of the outstanding shares of the Company's common stock, par value $0.01 per
share, and the associated common share purchase rights (and together with the
Common Stock, the "Shares"), for a cash price of $26.00 per Share. The Offer is
conditioned upon, among other things, there being validly tendered and not
withdrawn prior to the expiration of the Offer that number of Shares which,
together with any Shares held by Airtours and its affiliates, represents more
than half of the number of Shares outstanding on a fully diluted basis. The
Merger Agreement provides that as soon as practicable following the satisfaction
or waiver of the conditions set forth in the Merger Agreement, the Purchaser
will be merged (the "Merger") with and into the Company, and those Shares that
are not acquired in the Offer will be converted into the right to receive $26.00
per Share in cash.
YOUR BOARD OF DIRECTORS, AFTER RECEIVING THE UNANIMOUS RECOMMENDATION OF A
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS COMPRISED ENTIRELY OF INDEPENDENT
DIRECTORS (THE "SPECIAL COMMITTEE"), HAS APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, HAS
DETERMINED THAT THE TERMS OF THE MERGER AND THE OFFER ARE ADVISABLE, FAIR TO AND
IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS (OTHER THAN AIRTOURS AND ITS
AFFILIATES), AND RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
In arriving at their recommendations, the Special Committee and the Board
of Directors gave careful consideration to the factors described in the enclosed
Offer to Purchase, which is incorporated by reference in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9, each of which is being
filed today with the Securities and Exchange Commission. Among the factors
considered was the written opinion of Allen & Company Incorporated, the
Company's financial advisor, that subject to the assumptions, factors and
limitations set forth in the opinion, the $26.00 per Share in cash consideration
to be paid in the Offer and the Merger is fair to the Company's shareholders
(other than Airtours and its affiliates) from a financial point of view.
Additional information with respect to the Special Committee's and the Board's
recommendations and the background of the transaction is contained in the
enclosed Offer to Purchase.
In addition to the Offer to Purchase and the Schedule 14D-9, enclosed are
various related materials relating to the Offer, including a Letter of
Transmittal to be used for tendering Shares in the Offer if you are the record
holder of Shares. The Offer to Purchase and the related materials set forth the
terms and conditions for the Offer and provide instructions on how to tender
your Shares. If you need assistance with the tendering of your Shares, please
contact the information agent for the Offer, Morrow & Co., Inc., at its address
or telephone number appearing on the back cover of the Offer to Purchase. WE
URGE YOU TO READ AND CONSIDER THE ENCLOSED MATERIALS CAREFULLY BEFORE MAKING
YOUR DECISION WITH RESPECT TO TENDERING YOUR SHARES PURSUANT TO THE OFFER.
Very truly yours,
Joseph V. Vittoria
Chairman and Chief Executive Officer
220 Congress Park Drive o Delray Beach FL 33445 o Tel: 561.266.0860 o Fax:
561.266.0872
<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
------------------------
TRAVEL SERVICES INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
------------------------
TRAVEL SERVICES INTERNATIONAL, INC.
(NAME OF PERSON FILING STATEMENT)
------------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
894169101
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
JOSEPH V. VITTORIA
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
TRAVEL SERVICES INTERNATIONAL, INC.
220 CONGRESS PARK DRIVE
DELRAY BEACH, FLORIDA 33445-7289
(561) 266-0860
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
------------------------
Copies to:
<TABLE>
<S> <C>
JOHN M. REISS, ESQ. SUZANNE B. BELL, ESQ.
JORGE L. FREELAND, ESQ. SENIOR VICE PRESIDENT, GENERAL COUNSEL
WHITE & CASE LLP AND SECRETARY
1155 AVENUE OF THE AMERICAS TRAVEL SERVICES INTERNATIONAL, INC.
NEW YORK, NEW YORK 10036 220 CONGRESS PARK DRIVE
(212) 819-8200 DELRAY BEACH, FLORIDA 33445-7289
(561) 266-0860
</TABLE>
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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<PAGE>
ITEM 1. SUBJECT COMPANY INFORMATION
(a) The name of the subject company to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
relates is Travel Services International, Inc., a Florida corporation (together
with its subsidiaries, the "Company"). The address of the principal executive
offices of the Company is 220 Congress Park Drive, Delray Beach, Florida
33445-7289. The telephone number of the principal executive offices of the
Company is (561) 266-0860.
(b) The title of the class of equity securities to which this Schedule
14D-9 relates is common stock, par value $0.01 per share (the "Common Stock"),
including the associated common share purchase rights (the "Rights," and
together with the Common Stock, the "Shares"). As of February 25, 2000, there
were 14,022,974 Shares outstanding, of which 1,340,205 Shares were designated
restricted voting stock (the "Restricted Stock"). Pursuant to the Company's
Articles of Incorporation, the Restricted Stock automatically converted into
Common Stock upon the commencement of the Offer (as defined below).
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
(a) Subject Company Information. The name, address and telephone number of
the Company, which is the person filing this statement, are set forth in
Item 1(a) above.
(b) Identity and Background of Filing Persons. This Statement relates to a
tender offer by Blue Sea Florida Acquisition Inc., a Florida corporation (the
"Purchaser") and an indirect wholly-owned subsidiary of Airtours plc, a
corporation organized under the laws of England ("Airtours"), disclosed in a
Tender Offer Statement on Schedule TO (the "Schedule TO") dated February 29,
2000, to purchase all outstanding Shares at a price of $26.00 per Share, net to
the seller in cash, without interest (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated February 29,
2000 (the "Offer to Purchase"), a copy of which is attached as Exhibit
(a)(1) hereto, and the related Letter of Transmittal (the "Letter of
Transmittal"), a copy of which is attached as Exhibit (a)(2) hereto (which, as
may be amended from time to time, together constitute the "Offer"). Each of the
Offer to Purchase and the Letter of Transmittal are incorporated by reference
herein.
According to the Schedule TO, the business address of the Purchaser is c/o
North American Leisure Group, 130 Merton Street, Toronto, ON, M4S 1A4, Canada,
and the telephone number is 416-482-8707. The business address of Airtours is
Parkway One, Parkway Business Centre, 300 Princess Road, Manchester M14 7QU,
United Kingdom, and the telephone number is 44-161-232-6562.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
February 21, 2000 (the "Merger Agreement") by and among the Company, Airtours
and the Purchaser. The Merger Agreement provides that, among other things, as
promptly as practicable after the purchase of a majority of the outstanding
Shares pursuant to the Offer and the satisfaction or waiver, where appropriate,
of other conditions set forth in the Merger Agreement, the Purchaser will be
merged with and into the Company (the "Merger"), with the Company continuing as
the surviving corporation (the "Surviving Corporation"). A copy of the Merger
Agreement is attached hereto as Exhibit (e)(1).
ITEM 3. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates and certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Schedule 14f-1 (the "Information Statement") which is attached as Schedule II
hereto and is incorporated herein by reference. Except as described herein
(including in the Exhibits hereto and in Schedule II hereto), to the knowledge
of the Company, as of the date hereof there exists no material agreement,
arrangement or understanding and no actual or potential conflict of interest
between the Company or its affiliates and (i) the Company's executive officers,
directors or affiliates or (ii) the Purchaser or the Purchaser's executive
officers, directors or affiliates.
The Merger Agreement. A summary of the Merger Agreement is contained in
the Offer to Purchase, which has been filed with the Securities and Exchange
Commission (the "Commission") as an exhibit to the Schedule TO. A copy of the
Offer to Purchase is enclosed with this Schedule 14D-9 and is incorporated
herein by reference. The summary is not a complete description of the terms and
provisions of the Merger Agreement and is qualified in its entirety by reference
to the full text thereof which is incorporated herein by reference.
The Stock Voting and Tender Agreement. Airtours, the Purchaser and certain
shareholders, including certain of the Company's directors and members of its
senior management, have executed a Stock Voting and
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Tender Agreement, dated as of February 27, 2000, a copy of which is attached
hereto as Exhibit (e)(3). The Stock Voting and Tender Agreement provides that
such shareholders, holding approximately 13.4% of the outstanding or, if on a
fully diluted basis, 11.6%, Shares, agree to tender their Shares in the Offer
and vote in favor of the Merger.
Confidentiality Agreement. On January 11, 2000, the Company and Airtours
signed a Confidentiality Agreement (the "Confidentiality Agreement") providing
that, subject to the terms of the Confidentiality Agreement, Airtours and its
affiliates will keep confidential certain non-public information provided by the
Company. The foregoing description is qualified in its entirety by reference to
the Confidentiality Agreement, a copy of which is attached as Exhibit
(e)(4) hereto and is incorporated herein by reference.
Interests of Certain Persons in the Transaction. Certain members of the
Company's Board of Directors (the "Board") and management may be deemed to have
certain interests in the Merger that are in addition to their interest as
shareholders of the Company generally. The Board was aware of and discussed
these interests in connection with its consideration and approval of the Merger
Agreement. In considering the recommendation of the Board with respect to the
Offer and the Merger, the shareholders should be aware of the following
interests which may present actual or potential conflicts of interest:
(a) Option Awards. Pursuant to the Merger Agreement and by virtue of
the Merger, each outstanding option to acquire Shares under the Company's
stock option plans, whether or not then exercisable or vested, will be
canceled and converted into the right to receive an amount in cash, without
interest, equal to the product of (i) the total number of Shares subject to
such options and (ii) the excess, if any, of the Offer Price over the per
Share exercise price of such option (subject to applicable withholding
taxes). Holders of such options include executive officers, directors and
employees of the Company. The Company's stock option plans will be
terminated at the Effective Time (as defined below.)
(b) Indemnification. Pursuant to the Merger Agreement, the Surviving
Corporation, and any of its successors or assigns, must indemnify, defend
and hold harmless any person who was on February 21, 2000 or has been at
any time prior to the time that the Merger becomes effective in accordance
with applicable law (the "Effective Time") a director or officer (an
"Indemnified Party") of the Company or any of its subsidiaries against all
losses, claims, damages, liabilities, costs and expenses (including
reasonable attorney's fees and expenses), judgments, fines, and amounts
paid in settlement (provided that any such settlement is effected with the
written consent of Airtours or the Surviving Corporation, which consent
shall not be unreasonably withheld) in connection with any actual or
threatened action, suit, claim, proceeding or investigation (whether
arising before or after the Effective Time) (each a "Claim") to the extent
that any such Claim is based on, or arises out of, (i) the fact that such
person is or was a director or officer of the Company or any of its
subsidiaries or is or was serving at the request of the Company or any of
its subsidiaries as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (ii) the Merger
Agreement, or any of the transactions contemplated thereby, in each case to
the extent that any such Claim pertains to any matter of fact arising,
existing or occurring prior to or at the Effective Time, regardless of
whether such Claim is asserted or claimed prior to, at or after the
Effective Time, to the full extent permitted under applicable law or the
Company's Articles of Incorporation, By-Laws or indemnification agreements
in effect on February 21, 2000, including provisions relating to
advancement of expenses incurred in the defense of any action or suit.
Subject to certain limitations, all rights to indemnification and all
limitations on liability existing in favor of an Indemnified Party as
provided in the Company's Articles of Incorporation, By-Laws or
indemnification agreements as in effect as of February 21, 2000 shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto, for a period of six years from the date on which the
Merger becomes effective in accordance with applicable law. The Surviving
Corporation or any of its successors or assigns shall cause policies of
directors' and officers' liability insurance equivalent to the current
policies of the Company to be maintained for six years after the Effective
Time; provided, that the Surviving Corporation will not be required, in
order to maintain such policies, to pay an annual premium in excess of 200%
of the aggregate annual amounts currently paid by the Company to maintain
the existing policies; and provided further, that if equivalent coverage
cannot be so obtained, the Surviving Corporation or any of its successors
or assigns will only be required to obtain as much coverage as can be
obtained by paying an annual premium equal to 200% of such amount.
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<PAGE>
(c) Employee Benefits. Pursuant to the Merger Agreement, the
Purchaser has agreed, until December 31, 2000, to (i) ensure that all
employees and officers of the Company and its subsidiaries receive (A) the
salary or wage level and bonus opportunity at least equal to that in effect
immediately prior to February 21, 2000 and (B) benefits and other terms and
conditions of employment that are substantially comparable in the aggregate
to the benefits and terms and conditions received by such individuals
immediately prior to February 21, 2000 and (ii) maintain in effect all
severance and retention plans, practices and policies that are applicable
to employees and officers of the Company and its subsidiaries immediately
prior to February 21, 2000.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendations of the Special Committee of the Board of Directors and
the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY, AFTER RECEIVING THE UNANIMOUS
RECOMMENDATION OF THE SPECIAL COMMITTEE, (I) HAS APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
(II) HAS DETERMINED THAT THE OFFER AND THE MERGER ARE ADVISABLE, FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS (OTHER THAN THE PURCHASER AND
ITS AFFILIATES) AND (III) UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
A letter to the shareholders communicating the Board's recommendation and a
press release announcing the commencement of the Offer are filed herewith as
Exhibits (a)(3) and (a)(4), respectively, and are incorporated by reference
herein.
(b)(i) Background of the Offer; Contacts with Airtours
In January 1999, Joseph V. Vittoria, the Company's Chairman and Chief
Executive Officer, received an unsolicited telephone call from representatives
of Hoare Govett Limited ("Hoare Govett"), Airtours' stockbrokers, requesting a
meeting with the Company's management to discuss the Company's business plans,
growth strategy and the U.S. travel industry in general. Representatives of the
Company met with representatives of Hoare Govett on February 1, 1999. At this
meeting, representatives of Hoare Govett suggested that the Company should meet
with representatives of Airtours to consider the potential for a strategic
relationship. The parties scheduled a second meeting at the Company's
headquarters in Delray Beach, Florida to further explore the potential for a
partnership arrangement between the Company and Airtours.
During the follow-up meeting later in February 1999, representatives of the
Company outlined the Company's business plan and gave an overview of its
operations to representatives from Hoare Govett. Representatives of the Company
and representatives of Hoare Govett agreed to continue discussions concerning a
potential strategic relationship between the Company and Airtours.
On June 30, 1999, Mr. Vittoria met with David Crossland, the Chairman of
Airtours, at the offices of Hoare Govett in London. During that meeting, the
parties discussed the Company's business plan and growth strategy, including its
Internet-based business applications. The parties also discussed potential
alternatives for a strategic relationship between the Company and Airtours.
On July 19, 1999, Airtours' senior management met with the Company's senior
management in Delray Beach, Florida, to continue discussions regarding the
Company's business plan and results of operations.
In October 1999, representatives of Hoare Govett participated in a
conference call with representatives of senior management of the Company during
which they continued discussions regarding the Company's progress in
implementing its business plan and Internet growth strategy.
During November 1999, Mr. Vittoria and John Balson, the Company's President
and Chief Operating Officer received an unsolicited inquiry from a third party
regarding a potential transaction with the Company. The third party was a
financial investor seeking to conduct due diligence to determine whether it
would be willing to proceed with an investment in, or acquisition of, the
Company. The Company engaged in discussions with that party during November and
December 1999.
The Company's Board met on December 3, 1999, during which meeting senior
management updated the Board regarding discussions with Airtours and other third
parties, including the financial investor, interested in exploring strategic
relationships with the Company. At this meeting, the Board authorized the
Company to retain
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Allen & Company Incorporated ("Allen & Co.") to explore the possibility of
finding a desirable strategic partner for the Company and to retain White &
Case LLP as the Board's outside legal counsel for such process.
On December 8, 1999, representatives of Hoare Govett again visited the
Company's headquarters. During this meeting, the Company's senior management
made a formal presentation to representatives of Hoare Govett regarding the
Company's technology and Internet-based business applications. At this meeting,
the representatives of the Company and Hoare Govett further explored the
possibility of a strategic alliance between the Company and Airtours or an
acquisition of the Company by Airtours.
Pursuant to an engagement letter dated December 17, 1999, the Company
formally retained Allen & Co. as its exclusive financial advisor in connection
with any potential joint ventures, strategic partnerships, possible mergers,
disposition of assets or other financial arrangements between the Company and
third parties. Representatives of the Company and Allen & Co. held a series of
discussions from December 1999 through February 2000 to explore potential
options for the Company.
Throughout the latter part of December 1999, and the early part of January
2000, representatives of Allen & Co. contacted representatives of more than ten
companies identified in conjunction with the Company in order to determine the
potential interest of third parties to enter into strategic relationships with
the Company. Through this process, Allen & Co. was able to identify at least six
parties, including Airtours, who expressed interest in pursuing discussions
regarding potential strategic relationships with the Company.
As part of this process, on January 11, 2000, Airtours' senior management
and representatives of Deutsche Bank Securities Inc. ("Deutsche Bank"),
Airtours' U.S. financial advisors, met with the Company's senior management and
representatives of Allen & Co. at the Company's headquarters in Delray Beach,
Florida. At this meeting, the parties discussed the possibility of Airtours
acquiring the Company, and Airtours made preliminary indications of an interest
to acquire the Company. The Company also made a presentation regarding the
Company's technology and Internet-based business applications and Airtours
signed the Confidentiality Agreement with the Company. The Company entered into
confidentiality agreements with other third parties prior to and after this
date.
On January 14, 2000, Mr. Crossland, in a telephone call to Mr. Vittoria,
confirmed Airtours' preliminary interest to acquire the Company and expressed a
preliminary indication of the price that might be offered, subject to, among
other things, the completion by Airtours of satisfactory financial and legal due
diligence investigations. Shortly following that date, a representative of Allen
& Co. informed Deutsche Bank in a telephone call that that indicative price was
unlikely to be sufficient to secure the support of the Board of the Company for
an acquisition of the Company by Airtours and that the Company had also received
indications of interest from other parties.
During January 2000, Allen & Co. and the Company's senior management made
formal presentations to six interested parties regarding the Company's business,
growth strategy and valuation. During such time, four interested parties,
including Airtours, and their respective advisors, conducted due diligence
reviews at the Company's headquarters. The Company facilitated this process by
providing access to all relevant materials in a data room located at the
Company's headquarters.
On January 20, 2000, pursuant to an executed confidentiality agreement and
after performing due diligence on the Company, the third party financial buyer,
through its financial advisors, submitted a written offer to acquire
substantially all of the Company's outstanding Shares for cash. This written
offer contemplated a one-step merger transaction requiring the Company's senior
management to rollover a substantial portion of their Shares in order to obtain
recapitalization accounting treatment for the acquisition.
On January 22, 2000, Mr. Vittoria met with Mr. Crossland, and on January
23, 2000, Mr. Balson met with Mr. Crossland, in each case to discuss further the
business and operations of the Company.
On January 24, 2000, the Company's General Counsel telephoned the Board's
outside legal counsel to update counsel on the status of ongoing due diligence
reviews being conducted by interested parties at the Company's headquarters.
On January 26, 2000, by telephone conference, the Board held a special
meeting with its outside legal counsel and Allen & Co. to discuss the offers
submitted for the acquisition of the Company, and to formalize the process
through which Allen & Co. would continue to conduct discussions with other
parties that had expressed interest in acquiring the Company. The Board noted
that one of the offers, from the financial buyer, involved senior management's
participation. As a result, the Board determined to set up a special committee
comprised of independent directors to oversee the process of negotiations with
third parties identified by Allen & Co. as having an interest in exploring a
transaction with the Company (the "Special Committee"). At this meeting, the
Board
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designated the following non-employee directors with particular expertise in
corporate finance and leveraged buyouts, Messrs. Tommaso Zanzotto, Elan
Blutinger, Fraser Bullock and Leonard Potter (an advisory director), as members
of the Special Committee of the Board. Messrs. Bullock, Blutinger and Potter
fully disclosed, and the Board acknowledged, their financial interest in the
third party financial buyer that had made an offer to acquire the Company. Upon
discussion and analysis, the Board determined that the financial interest of
these directors would not impair their ability to properly carry out their
fiduciary duties. Representatives from Allen & Co. advised the Board of the
status of discussions with Airtours regarding its interest in acquiring the
Company. Allen & Co. also evaluated from a financial perspective the
January 20, 2000 offer from the third party financial buyer and advised the
Board that the offer did not reflect a market price for the acquisition of the
Company's Shares. Additionally, the Board noted the risks inherent in the offer,
namely it (i) required the Company's senior management to rollover a significant
number of their Shares under the offer; (ii) was conditioned on the transaction
qualifying for recapitalization accounting treatment; and (iii) was conditioned
on the third party obtaining financing.
On January 26, 2000, representatives of Deutsche Bank met with
representatives of Allen & Co. at the offices of Allen & Co. in New York City.
In this meeting Allen & Co. communicated that the Company had received
expressions of interest from other parties concerning a potential acquisition or
strategic alliance, and that it was proposed that a meeting of the Special
Committee would be held in early February, 2000 with a view to comparing offers.
It was also agreed that representatives of Airtours, Deutsche Bank and Airtours'
accounting and legal advisors could meet at the head office of the Company in
Delray Beach, Florida on January 27, 2000 to discuss arrangements for, and
commence, Airtours' due diligence investigations.
On January 27, 2000, the Company's senior management and representatives of
Allen & Co. met with representatives of Airtours and Deutsche Bank and Airtours'
accounting and legal advisors in Delray Beach, Florida and these parties
commenced their due diligence investigations.
On January 29, 2000, the Special Committee met and discussed the status of
negotiations with parties interested in pursuing further discussions regarding a
potential acquisition transaction with the Company. The Special Committee
authorized Allen & Co. to submit a bid procedures letter to parties they had
identified as potentially being interested in entering into an acquisition
transaction with the Company. The Special Committee set a deadline for the
submission of offers pursuant to such bid procedures letter of seven days from
the date of such letter.
On January 31, 2000, Allen & Co. submitted a letter to Airtours and three
other parties outlining the procedures for submitting a proposal for an
acquisition transaction with the Company. The letters provided a deadline for
submitting an acquisition proposal of February 7, 2000. Attached to each letter
was a draft merger agreement that contemplated an all-cash acquisition of the
Company through a first-step tender offer for all outstanding Shares followed by
a second-step merger in which all remaining shares would be converted into the
right to receive the same per Share consideration paid in the tender offer, a
draft Stock Voting and Tender Agreement and, as applicable, a draft Stock Voting
and Rollover Agreement.
During the following weeks, Airtours and its representatives and three
other third parties and their representatives continued their due diligence
review of the Company.
On February 7, 2000, Deutsche Bank submitted an acquisition proposal on
behalf of Airtours to Allen & Co. for all of the Company's outstanding Shares
for cash, without any financing conditions, at a price per share in excess of
the offer received from the financial buyer. Airtours also provided a Merger
Agreement marked to show changes from the draft submitted by the Board's legal
counsel. Also on February 7, 2000, another bidder submitted an acquisition
proposal to acquire the Shares for cash, or a combination of cash and stock,
subject to due diligence, at a lower price than the Airtours offer.
On February 8, 2000, representatives of Allen & Co. informed
representatives of Deutsche Bank and the other bidders that the Company had
received other indications of interest in the Company.
On February 10, 2000, representatives of the Company's senior management
met with representatives of Airtours' senior management and representatives of
another bidder in New York, New York. The Board's outside legal counsel
participated in telephone conferences with Airtours' outside legal counsel, to
discuss their proposed changes to the Merger Agreement.
During the week of February 14, 2000, representatives of Allen & Co.
continued their negotiations with Airtours and the other bidders; two of which
withdrew from the process. On February 16, 2000, Deutsche Bank on behalf of
Airtours confirmed to Allen & Co. its proposal and the Company's General Counsel
and the Board's
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outside legal counsel held a telephone meeting with Airtours' outside legal
counsel to negotiate the Merger Agreement. Also on February 16, the third party
financial buyer submitted a revised bid with a per Share price equal to the
price offered previously by Airtours. Along with the bid, the financial buyer
submitted comments to the merger agreement and accepted the two-step tender
offer and merger form of acquisition.
On February 17, 2000, a member of the Company's senior management met with
Mr. Crossland to further discuss the business and operations of the Company.
Later that day, the Special Committee met to discuss the Airtours offer, as well
as that of the remaining other bidder, and changes to the Merger Agreement
proposed by Airtours and the other bidder. The Board's legal and financial
representatives briefed the Special Committee on the competing bids, discussed
the status of negotiations with Airtours and the other bidder, and scheduled
meetings on February 20, 2000 in New York for the Special Committee and the
Board, where a successful bidder would be chosen or a decision not to sell the
Company would be made.
On February 18, 2000, Allen & Co. contacted representatives of both bidders
and informed each of them of the February 20, 2000 meetings of the Special
Committee and the Board and also that during such meetings a successful bidder
would be chosen or a decision not to sell the Company would be made. Later that
same day, Airtours submitted a revised acquisition proposal and Merger Agreement
providing for an acquisition of all outstanding Shares of the Company for $26.00
per Share in cash, the highest price offered by any of the bidders.
On the morning of February 20, 2000, the Special Committee met to discuss
Airtours' Offer and the other outstanding offer and alternatives. The Special
Committee considered three main alternatives for the Company: (i) to continue to
operate independently with no third party investment; (ii) to seek third party
capital investment in order to enhance the Company's technology and
Internet-based business applications; and (iii) to pursue third party interest
in an acquisition transaction with the Company. Following presentations by the
Board's financial and legal advisors, the Special Committee unanimously resolved
to recommend to the Board that the Board recommend the shareholders approve the
Merger Agreement, including the Offer and the Merger and accept the Offer and
tender their Shares pursuant to the Offer. After the Special Committee meeting
adjourned, the Board met to consider the Offer and the other potential
alternatives, including not to sell the Company. After presentations by the
Board's financial and legal advisors, including a presentation by Allen & Co.
and the oral delivery of their opinion that the Offer and Merger were fair to
the shareholders from a financial point of view, the Board unanimously resolved
to recommend that, subject to final negotiations on the Merger Agreement, the
shareholders accept the Offer and tender their Shares pursuant to the Offer, and
that the Company should enter into the Merger Agreement.
After the Board meeting, the legal representatives of the Company and
Airtours finalized the Merger Agreement, which was executed on February 21,
2000. On the same day the Company and Airtours each issued a press release
announcing the execution of the Merger Agreement.
On February 29, 2000, Airtours commenced the Offer.
(b)(ii) Reasons for the Recommendation by the Board of Directors
Special Committee. In evaluating the Merger Agreement, the Offer and the
Merger, the Special Committee relied upon their knowledge of the business,
financial condition and prospects of the Company as well as the advice of the
Board's financial and legal advisors. In determining that the Special Committee
would approve and recommend the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, to the full Board, the
Special Committee considered a number of factors, including the following:
(1) Financial and Business Projections. The Special Committee
considered the information with regard to the financial condition, results
of operations, competitive position, business and prospects of the Company,
as reflected in the Company's projections, current economic and market
conditions (including current conditions in the industry in which the
Company is engaged) and the break-up value of the Company.
(2) Market Price and Premium. The Special Committee considered the
historical market prices and recent trading activity of the Common Stock
with a particular emphasis on the relationship between the $26.00 per Share
amount and the trading history of the Common Stock. In particular, the
Special Committee noted that the $26.00 per Share amount represents a
premium of approximately 46.5% over the $17.75 per Share closing price on
the Nasdaq National Market on February 18, 2000, the last full trading day
before the Company announced the transaction and a premium of 112% over the
average closing price of the Shares for the three months during which such
securities traded prior to February 18, 2000.
7
<PAGE>
(3) Alternatives to the Merger. The Special Committee considered the
possible alternatives to the Offer and the Merger, including continuing to
operate the Company as an independent entity and the risks associated
therewith. The Special Committee discussed the significant capital
requirements of the Company's technology and Internet-based business
applications and the effect of such costs on the Company's financial
condition and stock price.
(4) Special Committee Formation and Arm's-Length Negotiations. The
Special Committee considered the fact that the Merger Agreement and the
transactions contemplated thereby were the product of arms-length
negotiations between the Purchaser and the Special Committee (and their
respective advisors), none of whose members were employed by or affiliated
with the Company (except in their capacities as directors) or would have
any equity interest in the Company following the Merger.
(5) Offer Price and Merger Consideration. The Special Committee
concluded, based on its negotiations with the Purchaser, that the Offer
Price represented the highest price that the Purchaser would be willing to
pay to acquire the Shares. This determination was the result of the Special
Committee's participation in the negotiations with the Purchaser, as well
as the advice of its advisors, in an attempt to obtain the highest possible
price.
(6) Fairness Opinion. The Special Committee considered the financial
presentation of Allen & Co. and Allen & Co.'s oral opinion delivered at the
February 20, 2000 meetings of the Special Committee and the Board,
confirmed in writing, that, as of the date of such opinion and based upon
and subject to the assumptions, factors and limitations set forth therein,
the per Share amount was fair, from a financial point of view, to the
Company's shareholders (other than the Purchaser). In arriving at its
opinion, Allen & Co. informed the Board that it (i) reviewed the terms and
conditions of the Offer, including the draft Merger Agreement and the draft
agreements ancillary thereto (none of which prior to the delivery of Allen
& Co.'s opinion had been executed by the parties); (ii) analyzed publicly
available historical business and financial information relating to the
Company, as presented in documents filed with the Commission;
(iii) reviewed certain financial, operating and budgetary data provided to
Allen & Co. by the Company relating to its business; (iv) conducted
discussions with certain members of the senior management of the Company
with respect to the financial condition, business, operations, strategic
objectives and prospects of the Company, as well as industry trends
prevailing in the Company's business; (v) reviewed and analyzed public
information, including certain stock market data and financial information
relating to selected public companies in lines of business which Allen &
Co. believed to be comparable to the Company's, as well as analysts'
reports and estimates for the Company; (vi) reviewed the trading history of
the Company's Common Stock, including its performance in comparison to
market indices and to selected companies in comparable businesses; (vii)
reviewed public financial and transaction information relating to business
combinations which Allen & Co. deemed to be comparable to the Merger;
(viii) considered premiums and multiples paid in recent transactions which
Allen & Co. deemed comparable to the Merger; and (ix) conducted such other
financial analyses and investigations as Allen & Co. deemed necessary or
appropriate for the purposes of the opinion expressed therein.
A copy of Allen & Co.'s written opinion setting forth the assumptions
made, matters considered and limitations on the review undertaken by Allen
& Co. is attached as Schedule I and Exhibit (e)(2) hereto. Shareholders are
urged to, and should, read the opinion of Allen & Co. carefully and in its
entirety (see "Schedule I--Opinion of Allen & Company Incorporated").
(7) Transaction Structure. The Special Committee evaluated the
benefits of the transaction being structured as an immediate cash tender
offer for all of the outstanding Shares, thereby enabling the public
shareholders of the Company the opportunity to obtain cash for all of their
Shares at the earliest possible time and the fact that the per Share
consideration to be paid in the Offer and the Merger is the same.
(8) Recent Discussions Regarding a Sale of the Company. The Special
Committee considered the discussions that the Company has had with
potential financial and other strategic acquirors regarding a possible sale
of the Company. The Special Committee noted the recent efforts of
management of the Company to find a potential purchaser who would be
interested in a transaction that would result in a premium to the
shareholders similar to that offered by the Airtours transaction, as well
as the results of Allen
8
<PAGE>
& Co.'s work on behalf of the Special Committee in identifying possible
alternative acquirors of the Company.
(9) Ability to Consider Alternative Transactions. The Special
Committee considered the terms of the Merger Agreement, including (A) the
provision providing that the Board may, in the exercise of its fiduciary
duties, furnish or provide access to information concerning the Company to,
and engage in discussions and negotiate with, third parties who make a bona
fide unsolicited written acquisition proposal which the Board reasonably
determines in good faith, after receiving advice from a nationally
recognized investment banking firm is (or could result in) a transaction
superior to the Offer and the Merger, and (B) the ability of the Board, in
the exercise of its fiduciary duties, to terminate the Merger Agreement on
three business days' notice in order to permit the Company to enter into an
alternative transaction with a third party. The Special Committee noted
that in the event it terminated the Merger Agreement to enter into a
superior transaction, it would pay a break-up fee of $13.5 million.
(10) No Financing Condition. The Special Committee considered the
fact that the obligations of Airtours and the Purchaser to consummate the
Offer and the Merger pursuant to the terms of the Merger Agreement are not
conditioned upon financing. The Special Committee was advised as to the
financial condition of Airtours and considered the risk that Airtours would
fail to consummate the Offer and the Merger to be less than the risk that
the other bidder would fail to consummate the transaction it proposed.
(11) Historical and Projected Financial Performance and Related Risk
and Uncertainties. The Special Committee considered the various financial
projections prepared by the Company's management. The Special Committee
noted that $26.00 per Share was above analysts' expected stock price for
the Company for the next twelve months.
(12) Possible Decline in Market Price of Common Stock. The Special
Committee considered that if a merger transaction with the Purchaser were
not negotiated and the Company remained as a publicly owned corporation, it
is possible that because of a decline in the market price of the Shares or
the stock market in general, the price that might be received by the
holders of the Shares in the open market or in a future transaction might
be less than the $26.00 per Share price to be received by shareholders in
connection with the Offer and the Merger.
(13) Regulatory Matters. The Special Committee considered the
regulatory approvals required to consummate the Merger, including antitrust
approvals and the prospects for receiving such approvals.
Board of Directors of the Company. In reaching its determination to
approve the Merger Agreement and the transactions contemplated thereby, the full
Board independently considered each of the factors enumerated in Section 4
(b)(ii) of this Schedule 14D-9 and considered and relied upon the conclusions
and unanimous recommendation of the Special Committee that the full Board
approve the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, and the considerations referred to above as
having been taken into account by the Special Committee, as well as the Board's
own familiarity with the Company's business, financial condition, results of
operations and prospects and the nature of the industry in which the Company
operates.
In light of the number and variety of factors that the Special Committee
and the Board considered in connection with their evaluation of the Offer and
the Merger, neither the Special Committee nor the Board found it practicable to
quantify or otherwise assign relative weights to the foregoing factors, and,
accordingly, neither the Special Committee nor the Board did so. In addition,
individual members of the Special Committee and the Board may have given
different weights to different factors. Rather, the Special Committee and the
Board viewed their positions and recommendations as being based on the totality
of the information presented to and considered by them.
THE BOARD OF DIRECTORS OF THE COMPANY, AFTER RECEIVING THE UNANIMOUS
RECOMMENDATION OF THE SPECIAL COMMITTEE, (I) HAS APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
(II) HAS DETERMINED THAT THE OFFER AND THE MERGER ARE ADVISABLE, FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS AND (III) UNANIMOUSLY
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
9
<PAGE>
(c) To the Company's knowledge after reasonable inquiry, Messrs. Robert G.
Falcone and Wayne Heller (including parties controlled by them), Imad Khalidi,
John W. Przywara, Elan J. Blutinger, D. Fraser Bullock, Tommaso Zanzotto, and
Leonard A. Potter, directors of the Company, currently intend to tender their
Shares pursuant to the Offer and have entered into a Stock Voting and Tender
Agreement, by and among Airtours, the Purchaser and the individuals named
therein, dated as of February 27, 2000, a copy of which is attached hereto as
Exhibit (e)(3). The Company believes that all of the Company's executive
officers and directors intend to tender their Shares pursuant to the Offer.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
Pursuant to the terms of an engagement letter, dated as of December 17,
1999, the Special Committee engaged Allen & Co. to act as its financial advisor
in connection with various possible transactions, including transactions
contemplated by the Merger Agreement. As part of its role as financial advisor,
Allen & Co. delivered a fairness opinion to the Board. Pursuant to the
engagement letter, Allen & Co. will receive from the Company an aggregate
financial advisory fee, upon the closing of the Merger, equal to $4.125 million
plus 0.75% of the aggregate purchase price in excess of $250 million (or
approximately $5.145 million, in the aggregate). The Company has also agreed to
reimburse Allen & Co. for reasonable out-of-pocket expenses, including, without
limitation, the reasonable fees and disbursements of its legal counsel, and to
indemnify Allen & Co. and related parties against certain liabilities, including
liabilities under the federal securities laws arising out of Allen & Co.'s
engagement.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any person or class of persons to make solicitations or
recommendations on its behalf with respect to the Offer.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
Except for the issuance of Shares pursuant to the Company's Non-Employee
Directors' Stock Plan (through which an aggregate of 1,400 Shares were
distributed equally to Messrs. Blutinger, Bullock, Potter and Zanzotto), to the
Company's knowledge, no transactions in the Shares have been effected during the
past 60 days by the Company or its executive officers, directors, affiliates or
subsidiaries.
ITEM 7. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS
(a) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by the Company in response to the Offer that relate
to a tender offer or other acquisition of the Company's securities by the
Company, any subsidiary of the Company or any other person.
(b) Except as indicated in Items 3 and 4 above, no negotiations are being
undertaken or are underway by the Company in response to the Offer which relate
to, or would result in, (i) an extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Company or any subsidiary of the
Company, (ii) a purchase, sale or transfer of a material amount of assets by the
Company or any subsidiary of the Company, or (iii) any material change in the
present dividend rate or policy, or indebtedness or capitalization of the
Company.
(c) Except as indicated in Items 3 and 4 above, there are no transactions,
Board resolutions, agreements in principle or signed contracts in response to
the Offer that relate to or would result in one or more of the matters referred
to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION
(a) The Information Statement attached as Schedule II to this Schedule
14D-9 is being furnished to the Company's shareholders in connection with the
designation by the Purchaser of persons to the Board other than at a meeting of
the Company's shareholders, and such information is incorporated by reference
herein.
(b) The Company is incorporated under the laws of the State of Florida. The
Florida Business Corporation Act (the "FBCA") contains certain provisions
relating to "affiliated transactions" which regulate, among other things,
certain business combinations, including mergers and consolidations, involving a
Florida corporation with any person who is the beneficial owner of more than 10
percent of the outstanding voting shares of such corporation (an "Interested
Shareholder"). Under Section 607.0901 of the FBCA (the "Affiliated Transactions
10
<PAGE>
Statute"), with certain exceptions, a corporation incorporated under the laws of
Florida shall not engage in such a transaction with an Interested Shareholder
unless the transaction is approved by the holders of two-thirds of the voting
shares other than the shares owned by the Interested Shareholder. Such
exceptions include: (a) transactions approved by a majority of the corporation's
directors who are not affiliated or associated with the Interested Shareholder;
(b) transactions where the Interested Shareholder is the beneficial owner of at
least 90 percent of the outstanding voting shares of the corporation (exclusive
of shares acquired directly from the corporation in a transaction not approved
by a majority of the disinterested directors); and (c) in transactions in which
the per share consideration to be received by the holders of voting shares of
the corporation is generally at least equal to the highest of: (1) the highest
per share price paid by the Interested Shareholder for the corporation's shares
during the two-year period immediately preceding the announcement date or in the
transaction in which the Interested Shareholder became an Interested
Shareholder; (2) the higher of the fair market value of the corporation's shares
on such announcement date or such determination date; or (3) a price based upon
a combination of the foregoing. At a meeting held on February 20, 2000, the
Board (none of the members of which are affiliated or associated with the
Purchaser or Airtours) unanimously approved the Merger Agreement, the Offer, the
Stock Voting and Tender Agreement and the Merger, and determined that the Merger
Agreement, the Offer and the Merger are fair to, and in the best interests of,
the shareholders of the Company.
The FBCA also contains provisions relating to acquisitions of control
shares, which is defined as shares that entitle a person to exercise more than
certain specified proportions of the voting power of a public corporation
incorporated under the laws of Florida (commencing with the acquisition of 20%
or more of the voting shares of such corporation). Section 607.0902 of the FBCA
(the "Control Share Acquisitions Statute") limits the voting rights of control
shares acquired in certain types of acquisitions (a "control-share acquisition")
unless the acquisition of the control shares has been approved by the board of
directors of such corporation, the voting rights for such shares are granted by
resolution approved at an annual or special meeting of shareholders, or certain
other statutory conditions have been met. At the meeting of the Board held on
February 20, 2000, the Board unanimously approved the Merger Agreement, the
Offer, the Stock Voting and Tender Agreement and the Merger.
The foregoing summary of Sections 607.0901 and 607.0902 of the FBCA does
not purport to be complete and is qualified in its entirety by reference to the
provisions of those sections.
(c) The Rights Agreement, dated as of January 28, 1999, by and between the
Company and American Stock Transfer & Trust Company (as amended on February 21,
2000, the "Rights Agreement"), provides that the Rights become exercisable upon
the earlier to occur of: (1) 10 days following a public announcement that a
person or group of affiliated or associated persons (with certain exceptions an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Shares; or (2) 10 business days (or such later date as may be
determined by action of the Board prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding Shares. Under such circumstances, if the
Rights become exercisable, each holder thereof would be entitled to purchase
from the Company one share of Common Stock of the Company at a price of $175.00
per share, subject to adjustment. If the Company is subsequently acquired, each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of shares
of common stock of the acquiror having a market value of two times the exercise
price of the Right. At the Board meeting on February 20, 2000, the Board took
action to render the Rights Agreement inapplicable to the Offer, the Stock
Voting and Tender Agreement and the Merger. In all other respects, however, the
Rights remain in full force and effect. Pursuant to the Merger Agreement, the
Company is prohibited from redeeming the Rights or amending the Rights
Agreement, other than as contemplated by the Merger Agreement.
11
<PAGE>
ITEM 9. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------------------------------
<C> <C> <S>
(a)(1) -- Offer to Purchase dated February 29, 2000 (incorporated herein by reference to Exhibit (a)(1) to the
Schedule TO).
(a)(2) -- Letter of Transmittal (incorporated herein by reference to Exhibit (a)(1)(B) to the Schedule TO).
(a)(3) -- Form of Letter to Shareholders of the Company dated February 29, 2000.
(a)(4) -- Press Release of the Company dated February 29, 2000 announcing the commencement of the Offer.
(e)(1) -- Agreement and Plan of Merger, dated as of February 21, 2000, between Travel Services International,
Inc., Airtours plc, and Blue Sea Florida Acquisition Inc.
(e)(2) -- Opinion of Allen & Company Incorporated to the Special Committee of the Board of Directors of the
Company, dated February 21, 2000 (included as Schedule I hereto).
(e)(3) -- Stock Voting and Tender Agreement, dated as of February 27, 2000, by and among Airtours plc, Blue Sea
Florida Acquisition Inc. and the Persons named therein.
(e)(4) -- Confidentiality Agreement, dated as of January 11, 2000, between Travel Services International, Inc.
and Airtours plc.
(g) -- Not applicable.
</TABLE>
12
<PAGE>
SIGNATURE
AFTER REASONABLE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I
CERTIFY THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND
CORRECT.
Date: February 29, 2000
TRAVEL SERVICES INTERNATIONAL, INC.
By: /s/ JOSEPH V. VITTORIA
---------------------------------
Name: Joseph V. Vittoria
Title: Chairman and Chief Executive
Officer
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------------
<C> <C> <S>
(a)(1) -- Offer to Purchase dated February 29, 2000 (incorporated herein by reference to Exhibit (a)(1) to
the Schedule TO).
(a)(2) -- Letter of Transmittal (incorporated herein by reference to Exhibit (a)(1)(B) to the Schedule TO).
(a)(3) -- Form of Letter to Shareholders of the Company dated February 29, 2000.
(a)(4) -- Press Release of the Company dated February 29, 2000 announcing the commencement of the Offer.
(e)(1) -- Agreement and Plan of Merger, dated as of February 21, 2000, between Travel Services International,
Inc., Airtours plc, and Blue Sea Florida Acquisition Inc.
(e)(2) -- Opinion of Allen & Company Incorporated to the Special Committee of the Board of Directors of the
Company, dated February 21, 2000 (included as Schedule I hereto).
(e)(3) -- Stock Voting and Tender Agreement, dated as of February 27, 2000, by and among Airtours plc, Blue
Sea Florida Acquisition Inc. and the Persons named therein.
(e)(4) -- Confidentiality Agreement, dated as of January 11, 2000, between Travel Services International, Inc.
and Airtours plc.
(g) -- Not applicable.
</TABLE>
14
<PAGE>
[LETTERHEAD OF ALLEN & COMPANY]
SCHEDULE I
February 21, 2000
Members of the Board of Directors
Travel Services International, Inc.
220 Congress Park Drive
Delray Beach, Florida 33445
To the Board of Directors:
We hereby confirm our oral opinion presentation as to the fairness, from a
financial point of view, of the Merger Consideration (as defined below) to the
common stockholders (the "Common Stockholders") of Travel Services
International, Inc. ("TSI"), that we presented to the Board of Directors of TSI
at its meeting on February 20, 2000. We understand that TSI, Airtours plc
("Parent") and Blue Sea Florida Acquisition Inc. ("Merger Sub") have entered
into an Agreement and Plan of Merger, dated February 21, 2000 (the "Merger
Agreement"), pursuant to which, among other things, (i) Parent shall cause
Merger Sub to make a tender offer (the "Offer") to purchase any and all shares
of TSI's outstanding common stock (the "TSI Common Stock") for a price of $26.00
per share net to the seller in cash and without interest (the "Merger
Consideration"), (ii) Merger Sub will be merged with and into TSI, with TSI as
the surviving corporation, and (iii) holders of options to purchase shares of
TSI Common stock will receive a cash amount equal to the excess of the Merger
Consideration over the exercise price for each share of TSI Common Stock subject
to such option whether or not then vested or exercisable (the "Transaction").
The terms and conditions of the Transaction are more fully set forth in the
Merger Agreement.
You have requested our opinion as of the date hereof as to the fairness,
from a financial point of view, of the Merger Consideration to the Common
Stockholders of TSI (our "Opinion").
Allen & Company Incorporated ("Allen"), as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. We
will receive a fee for rendering our Opinion pursuant to an engagement letter
with TSI dated December 17, 1999, and certain of Allen's executives and
employees own shares of TSI Common Stock. From time to time in the ordinary
course of its business as a broker-dealer, Allen may also hold positions and
trade securities of TSI and Parent.
In connection with our Opinion, we have:
(i) reviewed the terms and conditions of the Transaction, including the
draft Merger Agreement and the draft agreements ancillary thereto,
(none of which prior to the delivery of our Opinion has been executed
by the parties);
(ii) reviewed and analyzed publicly available historical business and
financial information relating to TSI, as presented in documents
filed with the Securities and Exchange Commission;
(iii) reviewed certain financial, operating and budgetary data provided to
us by TSI relating to its businesses;
(iv) conducted discussions with certain members of the senior management
of TSI with respect to the financial condition, business, operations,
strategic objectives and prospects of TSI, as well as industry trends
prevailing in TSI's business;
<PAGE>
(v) reviewed and analyzed public information, including certain stock
market data and financial information relating to selected public
companies in lines of business which we believe to be comparable to
TSI's, as well as analysts' reports and estimates for TSI;
(vi) reviewed the trading history of the TSI Common Stock, including its
performance in comparison to market indices and to selected companies
in comparable businesses;
(vii) reviewed public financial and transaction information relating to
business combinations we deemed to be comparable to the Transaction;
(viii) considered premiums, break-up fees and multiples paid in recent
transactions we deemed comparable to the Transaction; and
(ix) conducted such other financial analyses and investigations as we
deemed necessary or appropriate for the purposes of our Opinion.
In addition to our review of the specific information set forth above, we have
held discussions with management regarding general economic, monetary and market
conditions in the domestic and international travel and leisure industries
existing as of the date hereof as they may affect the business and prospects of
TSI.
We have assumed and relied upon the accuracy and completeness of the
financial and other information used by us in arriving at our Opinion without
independent verification and have further relied upon the assurances of
management of TSI that they are not aware of any facts that would make such
information inaccurate or misleading. With respect to the budgetary data of TSI,
we have relied upon the assurances of management of TSI that such data have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of TSI as to the future financial performance of
TSI. In arriving at our Opinion, we neither conducted a physical inspection of
the properties and facilities of TSI nor obtained any evaluations or appraisals
of the assets or liabilities of TSI. Our Opinion is necessarily based upon
market, economic and other conditions as they exist on, and can be evaluated as
of, the date of this letter.
Our Opinion as of the date hereof rendered herein does not constitute a
recommendation of the Transaction over any other alternative transaction which
may be available to TSI. The Opinion contained herein relates to the fairness
from a financial point of view of the Merger Consideration to the Common
Stockholders of TSI, and does not address any other aspect of the Transaction or
any related transaction, and does not constitute a recommendation that any
shareholder of TSI accept the Offer. We have prepared this Opinion at the
request and for the benefit of the Board of Directors of TSI, and we consent to
its inclusion in filings TSI may be required to make with the Securities and
Exchange Commission.
Based on the foregoing and subject to the qualifications stated herein, we
are of the Opinion that as of the date hereof the Merger Consideration is fair
to the Common Stockholders of TSI from a financial point of view.
Very truly yours,
Allen & Company Incorporated
By: /s/ ENRIQUE SENIOR
--------------------------
Enrique Senior
Managing Director
<PAGE>
SCHEDULE II
TRAVEL SERVICES INTERNATIONAL, INC.
220 CONGRESS PARK DRIVE
DELRAY BEACH, FLORIDA 33445-7289
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
GENERAL
This information statement is being mailed on or about February 29, 2000 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 to holders
of record of Shares. You are receiving this Information Statement in connection
with the possible election of persons designated by the Purchaser to a majority
of the seats on the Board other than at a meeting of the shareholders of the
Company. Such election would occur pursuant to the Merger Agreement, dated as of
February 21, 2000, among Airtours, the Purchaser and the Company. The Merger
Agreement is more fully described in Section 11 of the Offer to Purchase, which
is enclosed with the Schedule 14D-9, of which this Schedule II is a part.
Capitalized terms used and not defined in this Schedule II have the meanings
assigned to them in the Schedule 14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer for all
outstanding Shares of the Company at a price of $26.00 per Share, net to the
seller in cash, without interest, on February 29, 2000. The Offer currently is
scheduled to expire at 12:00 Midnight, New York City time, on March 27, 2000, at
which time, if the Offer is not extended and all conditions to the Offer have
been satisfied or waived, the Purchaser will be obligated to purchase all Shares
validly tendered pursuant to the Offer and not withdrawn.
If the Merger Agreement is terminated or if the Purchaser does not accept
Shares tendered for payment, then the Purchaser will not have any right to
designate directors for election to the Board.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and Rule 14f-1 promulgated
thereunder. You are urged to read this Information Statement carefully. You are
not, however, required to take any action.
THE PURCHASER DESIGNEES
Effective upon the acceptance for payment pursuant to the Offer of Shares,
the Purchaser shall be entitled to designate such number of directors on the
Board, rounded up to the next whole number, as will give the Purchaser,
representation on such Board equal to at least that number of directors which
equals the product of the total number of directors on the Board (giving effect
to the directors elected pursuant to this sentence) multiplied by a fraction,
the numerator of which shall be the number of Shares so accepted for payment and
paid for or otherwise acquired or owned by Airtours or the Purchaser and the
denominator of which shall be the number of Shares then issued and outstanding,
and the Company and its Board shall, at such time, use its reasonable efforts to
cause the Purchaser's designees to be appointed to the Company's Board. In no
event shall there be less than two Independent Directors (as defined in the
Merger Agreement) on the Company's Board. Subject to applicable law, the Company
shall take all action requested by Airtours which is reasonably necessary to
effect any such election. In furtherance thereof, the Company will increase the
size of the Company's Board, or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit the Purchaser's
designees to be elected to the Company's Board.
The Company's obligations to appoint the Purchaser's designees to the Board
shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all actions, as Section 14(f) and
Rule 14f-1 require, in order to fulfill its obligations under the Merger
Agreement. The Purchaser has supplied to the Company in writing information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
Following the election or appointment of the Purchaser's designees pursuant
to the Merger Agreement and prior to the Effective Time, any amendment of the
Merger Agreement or the Articles of Incorporation or By-Laws of the Company, any
termination of this Merger Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of the Purchaser or waiver of any of the Company's rights thereunder shall
require the concurrence of a majority of the Independent Directors.
<PAGE>
Pursuant to the provisions of the Merger Agreement described in the
Schedule 14D-9, the Purchaser may designate from among the persons identified
below the persons to be elected to the Board (the "Purchaser Designees"). It is
expected that the Purchaser Designees will assume office promptly upon the
acceptance for payment pursuant to the Offer of a number of Shares that
satisfies the Minimum Condition (as defined in the Merger Agreement) and that
they will thereafter constitute at least a majority of the Board. The Purchaser
has informed the Company that each of the Purchaser Designees has consented to
act as a director, if so designated.
Set forth in the table below are the name, business address and principal
occupation or employment and five year employment history for each of the
persons who may be designated by the Purchaser as a Purchaser Designee.
DIRECTOR DESIGNEES OF BLUE SEA FLORIDA ACQUISITION INC.
The following table sets forth the name, business address and present
principal occupation or employment, and material occupations, positions, offices
or employments for the past five years, of each person who may be appointed a
director of Travel Services International, Inc., once Blue Sea Florida
Acquisition Inc. has acquired a majority interest in the Shares. Unless
otherwise indicated, (a) each such person is a citizen of the United Kingdom and
(b) the business address of each such person, unless otherwise indicated, is c/o
Airtours plc, Parkway One, Parkway Business Centre, Manchester M14 7QU, United
Kingdom.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME AGE YEARS
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
David Crossland................................. 53 Chairman of Airtours plc since 1972; Director of
Carnival Corporation since 1996.
Timothy Russell Byrne........................... 40 Group Finance Director of Airtours plc since
December 1997; Group Financial Controller of
Airtours plc from 1993 to 1997.
James Scott Jennings............................ 42 Director and Vice President of Blue Sea Florida
Acquisition Inc. since formation; Director of
Corporate Development of Airtours plc since
November 1996; Director of Corporate Finance
of Rickitt Mitchell & Partners Limited from
1994 to 1996.
Michael Charles Lee............................. 52 Director of Airtours plc since 1993; Chairman of
the Aviation Division of Airtours since
October 1998; Chief Executive of Airtours
International Airways Limited from 1990 to
1998.
Peter Francis Rothwell.......................... 40 Director of Airtours plc since 1999; Chief
Executive of UK Leisure Group of Airtours
since May 1998; Managing Director of Airtours
Holdings Limited from 1995 to 1998.
Lars Thuesen(1)................................. 43 Director of Airtours plc since May 1998;
Chairman of European Leisure Group of Airtours
and Accommodation Division of Airtours since
November 1999; Chairman of UK Leisure Group
and West European Leisure Group of Airtours
from 1997 to 1999; Deputy Chief Executive
Officer and Chief Financial Officer of
Scandinavian Leisure Group of Airtours from
1994 to 1997.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME AGE YEARS
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Gregory Joseph McMahon.......................... 39 Group Company Secretary and Head of Legal
Services, Airtours, since September 1998;
Partner, Garretts from 1995 to 1998; Partner,
Addleshaw Sons & Latham from 1991 to 1995.
Christopher Alan Leigh Mottershead(2)........... 41 Director and President of Blue Sea Florida
Acquisition Inc. since formation; President
and Chief Executive Officer of North American
Leisure Group of Airtours since January 2000;
Director of Airtours Holidays Limited from
1994 to 1999; Managing Director of Airtours
Holidays Limited from May 1998 to December
1999.
Lorrie Lynn King(3)............................. 35 Director and Secretary of Blue Sea Florida
Acquisition Inc. since formation; Executive
Vice President, Strategic and Business
Development of North American Leisure Group of
Airtours since October 1999; Chief Financial
Officer of North American Leisure Group of
Airtours from 1998 to 1999; Partner, Arthur
Andersen, from 1997 to 1998, and Senior
Manager prior to that time.
</TABLE>
- ------------------
(1) Mr. Thuesen is a citizen of Denmark.
(2) Mr. Mottershead's business address is: c/o North American Leisure Group, 130
Merton Street, Toronto, Ontario M4S 1A4, Canada.
(3) Ms. King's business address is: c/o North American Leisure Group, 130 Merton
Street, Toronto, Ontario M4S 1A4, Canada. Ms. King is a citizen of Canada.
If necessary, Airtours may choose additional or other persons to serve in
such capacity, subject to the requirements of Rule 14f-1.
Based solely on the information set forth in the Offer to Purchase, none of
the foregoing individuals (i) is currently a director of, or holds any position
with, the Company, (ii) has a familial relationship with any directors or
executive officers of the Company, or (iii) to the best knowledge of Airtours,
beneficially owns any securities (or any rights to acquire such securities) of
the Company. The Company has been advised by Airtours that, to the best of
Airtours' knowledge, none of the designated individuals has been involved in any
transactions with the Company or any of its directors, officers or affiliates
which are required to be disclosed pursuant to the regulations of the
Commission, except to the extent disclosed herein.
II-3
<PAGE>
CERTAIN INFORMATION CONCERNING THE COMPANY
The Shares presently constitute the only class of voting securities of the
Company. Pursuant to its terms, the restricted Common Stock converted into
unrestricted Common Stock at the time at which the Offer was announced. The
holders of Common Stock are entitled to one vote per Share. As of February 25,
2000, there were 14,022,974 shares of Common Stock (including restricted common
stock) issued and outstanding and 2,139,659 Shares subject to outstanding stock
options under the Company's stock option plans. No shares of preferred stock
were issued and outstanding. Currently, the Board consists of nine members. The
Board is divided into three classes and each director serves a term of
three years or until his successor is duly elected and qualified or until his
earlier death, resignation or removal.
INFORMATION CONCERNING DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years, of each director and executive officer of the Company. Unless
otherwise indicated, each such person is a citizen of the United States and the
business address of each such person is c/o Travel Services International, Inc.,
220 Congress Park Drive, Delray Beach, Florida 33445-7289.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------ --- -----------------------------------------------------------
<S> <C> <C>
Joseph V. Vittoria (1)........ 64 Chairman and Chief Executive Officer, Director
John B. Balson................ 58 President and Chief Operating Officer, Director
Patrick Doyle................. 40 Senior Vice President and Chief Financial Officer
Suzanne B. Bell............... 33 Senior Vice President, General Counsel and Secretary
Timothy Coleman............... 54 Senior Vice President, Operations and Technology
John C. DeLano................ 40 Senior Vice President, Internet Operations
Melville W. Robinson.......... 44 Vice President, Corporate Development
George Del Pino............... 37 Vice President, Corporate Controller
Robert G. Falcone............. 58 President-Cruises Inc., Director
Wayne Heller.................. 43 President-Cruises Only, Director
Imad Khalidi.................. 49 President-Auto Europe, Director
John W. Przywara.............. 48 President-D-FW Tours, Director
Elan J. Blutinger (1)(2)...... 44 Director
D. Fraser Bullock (1)......... 44 Director
Tommaso Zanzotto (1)(2)(3).... 58 Director
Leonard A. Potter............. 38 Advisory Director
</TABLE>
- ------------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Citizen of Italy.
Joseph V. Vittoria became 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 Avis, Inc. by creating one of
the world's largest Employee Stock Ownership Plans in 1987. He is 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.
II-4
<PAGE>
John B. Balson became the President and Chief Operating Officer and a
director of the Company in April 1999. Mr. Balson has held senior executive
positions in major marketing services, technology and consumer products
companies. Most recently, from 1995 to 1998, Mr. Balson was the Chief Marketing
and Development Officer of Data Broadcasting, Inc. and, from 1991 to 1999, the
President and Chief Executive Officer of Sandhill Group. Prior to that, he was
President and Chief Operating Officer of two large worldwide advertising
agencies, Kenyon & Eckhardt and D'Arcy, McManus and Masius. Mr. Balson also
served as President of the Forshner Group, Cantel and Lears, Inc.
Patrick Doyle became Senior Vice President and Chief Financial Officer of
the Company in October 1999. Mr. Doyle served for the prior 10 years as Senior
Vice President and Chief Financial Officer of Effjohn North America, a
multi-national firm and subsidiary of Neptun Maritime, whose businesses included
the operation of two cruise lines. Mr. Doyle has significant experience in
financial planning and analysis, contract negotiations and reporting and
accounting systems. He is a certified public accountant and previously served as
a senior manager at KPMG.
Suzanne B. Bell became 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.
John C. DeLano became Senior Vice President, Operations, of the Company in
January 1998 and Senior Vice President, Internet Operations, in 1999.
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.
Timothy Coleman became Senior Vice President of Technology and Operations
of the Company in September 1999. Most of Mr. Coleman's career has been spent
with United Airlines and Westin Hotels and Resorts. At United Airlines, he was
responsible for the development and implementation of corporate strategies for
route planning, electronic distribution and loyalty marketing. At Westin, he was
responsible for worldwide reservations, global distribution systems, frequent
guest programs, travel industry marketing alliances, pricing, revenue management
and management and market research. Most recently, Mr. Coleman owned his own
consulting firm, working with several major hotel chains in e-commerce,
distribution, and revenue management.
Melville W. Robinson became 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.
George Del Pino became Corporate Controller of the Company in August 1997,
and was promoted to Vice President and Corporate Controller in July 1998. From
1996 to 1997, Mr. Del Pino served as Controller of G.L. Homes of Florida, one of
Florida's largest real estate developers/homebuilding companies. From 1992 to
1996, Mr. Del Pino held various positions at Certified Vacations, including
Senior Director of Product Development (1995-1996), Director of Corporate
Accounting and Controller (1993-1995), and Chief Financial Officer and Treasurer
of The Travel Difference (a subsidiary of Certified Vacations) (1992-1993). From
1985 to 1992, Mr. Del Pino held various positions at KPMG, specializing in
auditing travel companies. Mr. Del Pino is a certified public accountant.
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 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
II-5
<PAGE>
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. In
May 1999, Mr. Bullock became the Chief Operating Officer and Chief Financial
Officer of the Salt Lake Olympic Organizing Committee. He is also a Managing
Director of Alpine Consolidated LLC. Mr. Bullock served as 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. 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.
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 was 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.
COMMITTEES OF THE COMPANY BOARD; MEETINGS
The Board has established an Audit Committee and a Compensation Committee,
and may establish other committees from time to time as the Board may determine.
The Advisory Director attends meetings of the Board, 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.
II-6
<PAGE>
The Audit Committee consists of four members, three 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 with respect to the
Company's compensation policies.
The Board 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, subject to the terms and conditions of such officers'
employment agreements with the Company.
During 1999, the Company's Board held seven meetings and took a number of
other actions by written consent. During 1999, each director attended at least
75 percent of the aggregate of (i) the number of meetings of the Board held
during the period he served on the Board, and (ii) the number of meetings of
committees of the Board held during the period he served on such committees.
COMPENSATION OF DIRECTORS
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. Directors are also reimbursed for out-of-pocket expenses
incurred in attending meetings of the Board or committees thereof incurred in
their capacity as directors.
The Company's Non-Employee Directors' Stock Plan (the "Directors' Plan"),
which was adopted by the Board and approved by the Company's shareholders in
1997 and was amended in 1999, provides for: (i) the automatic grant to each
non-employee director and Advisory Director (referred to herein as a
"Participant" or "Non-Employee Director") serving at the commencement of the
initial public offering of an option to purchase 10,000 shares of Common Stock
or such other securities as may be substituted for such shares of Common Stock
of the Company as stipulated in the Directors' Plan; 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 shareholders; provided, however, that if the first annual meeting of
shareholders 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 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
value equal to the amount of such fees. The Company has reserved 200,000 Shares
for use in connection with the Directors' Plan. Messrs. Blutinger, Bullock,
Zanzotto and Potter each received options to purchase 10,000 shares upon
consummation of the initial public offering and 5,000 Shares following each of
the 1998 and 1999 Annual Meetings of Shareholders. In 1999, each Participant
elected to receive Shares in lieu of cash directors' fees.
II-7
<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 February 21, 2000 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 Company's other most highly compensated executive
officers whose total annualized salary and bonus in 1999 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. The Company is not aware of any beneficial owner of more than five
percent of the outstanding shares of Common Stock of the Company other than as
set forth in the following table.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER (1) SHARES PERCENTAGE OWNED
- ---------------------------------------------------------------------------------- --------- ----------------
<S> <C> <C>
Joseph V. Vittoria (2)............................................................ 527,500 3.7%
John B. Balson (2)................................................................ 86,000 *
Suzanne B. Bell (2)............................................................... 52,000 *
Timothy Coleman................................................................... -- --
George Del Pino (2)............................................................... 15,000 *
Melville W. Robinson (2).......................................................... 35,000 *
Robert G. Falcone (3)............................................................. 174,349 1.2
Wayne Heller (4).................................................................. 633,334 4.5
Imad Khalidi...................................................................... 350,000 2.5
John W. Przywara.................................................................. 209,445 1.5
Elan J. Blutinger (5)(6).......................................................... 314,293 2.2
Fraser Bullock (5)................................................................ 167,041 1.2
Tommaso Zanzotto (5).............................................................. 22,963 *
PAR Capital Management (7)........................................................ 1,616,000 11.6
Cumberland Associates LLC (8)..................................................... 1,272,800 9.1
All Directors and Executive Officers as a group (15 persons) (9).................. 2,644,175 18.5%
</TABLE>
- ------------------
* Less than 1%
(1) Unless indicated otherwise, the address of each beneficial owner is, c/o
Travel Services International, Inc., 220 Congress Park Drive, Delray Beach,
Florida 33445.
(2) Includes the following options that are currently exercisable or exercisable
within the next 60 days: 112,500 shares for Mr. Vittoria; 50,000 shares for
Mr. Balson; 22,500 shares for Ms. Bell; 15,000 shares for Mr. Del Pino; and
35,000 shares for Mr. Robinson.
(3) Includes 100,000 shares owned by Judith A. Falcone, Mr. Falcone's spouse,
and 30,000 shares held by Falcone Enterprises LP, a limited partnership of
which Mr. Falcone and his spouse are the only general partners.
(4) These shares are held of record by J&W Heller Corp., a corporation of which
Mr. Heller is a 50% shareholder. The remaining 50% of the ownership of J&W
Heller Corp. is held by Judy Heller, Mr. Heller's spouse.
(5) Includes 20,000 shares that may be acquired upon the exercise of exercisable
options. Also includes the following shares that are held in a deferred
stock account for the benefit of these directors, pursuant to the
(Footnotes continued on next page)
II-8
<PAGE>
(Footnotes continued from previous page)
Directors' Plan: 2,600 shares for Mr. Blutinger; 2,213 shares for
Mr. Bullock; and 2,963 shares for Mr. Zanzotto.
(6) Excludes 14,130 shares held by trusts for the benefit of Mr. Blutinger's
minor children. Mr. Blutinger disclaims ownership of such shares.
(7) The address of the shareholder is One Financial Center, Suite 1600, Boston,
Massachusetts 02111. Information is based solely on the Company's review of
the Schedule 13G dated January 14, 2000, as filed by the shareholder with
the Securities and Exchange Commission.
(8) The address of the shareholder is 1114 Avenue of the Americas, New York, New
York 10036. Information is based solely in the Company's review of the
Schedule 13G dated February 14, 2000, as filed by the shareholder with the
Securities and Exchange Commission.
(9) Includes 338,750 shares that may be acquired upon the exercise of options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act and regulations of the Commission thereunder
require the Company's officers and directors and persons who own more than ten
percent of the Company's Common Stock, as well as certain affiliates of such
persons, to file initial reports of ownership and changes in ownership with the
Commission. Officers, directors and persons owning more than ten percent of the
Company's Common Stock are additionally required to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it and written representations that no other
reports were required for those persons, the Company believes that all filing
requirements applicable to its officers, directors and owners of more than ten
percent of the Company's Common Stock have been made as required with respect to
fiscal year 1999.
II-9
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid to the Named
Executive Officers with respect to the years ended December 31, 1997, 1998 and
1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARD
----------------------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
SALARY(1) BONUS OTHER ANNUAL OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION (#) ($)
- ----------------------------------------------- ---- --------- ------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph V. Vittoria ............................ 1997 84,615 86,000 -- 100,000 --
CEO 1998 200,000 (2) -- 250,000 --
1999 200,000 -- -- 125,000 --
Timothy Coleman ............................... 1997 -- -- -- -- --
Sr. V.P. Operations 1998 -- -- -- -- --
and Technology (3) 1999 44,692 130,000 -- 65,000 42,366(4)
Suzanne B. Bell ............................... 1997 52,885 27,000 -- 25,000 --
Sr. VP/General Counsel 1998 125,000 71,100 -- 40,000 --
and Secretary 1999 125,000 -- -- -- --
George Del Pino ............................... 1997 38,462 20,000 -- 15,000 --
VP/Controller 1998 106,000 43,600 -- 30,000 --
1999 115,000 15,000 -- -- --
Melville W. Robinson .......................... 1997 52,885 27,000 -- 50,000 21,345(4)
VP/Corporate 1998 125,000 47,400 -- 40,000 --
Development 1999 125,000 -- -- -- --
Jill M. Vales ................................. 1997 63,462 32,000 -- 50,000 24,000(6)
Former Sr. VP/CFO(5) 1998 150,000 85,300 -- 30,000 --
1999 150,000 -- -- -- 131,435(7)
</TABLE>
- ------------------
(1) With the exception of Mr. Coleman who commenced employment with the Company
in September 1999, each of the Named Executive Officers commenced employment
with the Company upon the consummation of the initial public offering
(July 28, 1997). Annual salaries for 1997 were as follows: $200,000 for
Mr. Vittoria; $125,000 for Ms. Bell; $105,000 for Mr. Del Pino; $125,000 for
Mr. Robinson; and $150,000 for Ms. Vales.
(2) Mr. Vittoria chose to forego his bonus earned in 1998 in order to make funds
available for payments to other executives of the Company.
(3) Mr. Coleman joined the Company on September 1, 1999. Bonus paid in 1999
represents a signing bonus.
(4) Consists of relocation expenses paid during the year.
(5) Effective October 10, 1999, Ms. Vales resigned from her positions with the
Company.
(6) Consists of consulting fees paid in 1997 prior to the consummation of the
Company's initial public offering.
(7) Represents an accrual made at December 31, 1999 for severance payments,
including accrued vacation, to be made to Ms. Vales through September 29,
2000.
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<PAGE>
The following table sets forth the stock options granted to the Named
Executive Officers during the year ended December 31, 1999:
STOCK OPTION GRANTS
<TABLE>
<CAPTION>
INDIVIDUAL
GRANTS
--------------------------------------------------
NUMBER OF % OF TOTAL GRANT DATE
SECURITIES OPTIONS VALUE(1)
UNDERLYING GRANTED TO EXERCISE ----------
OPTIONS EMPLOYEES OR BASE GRANT DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT
NAME (#) YEAR ($/SH) DATE VALUE($)
- ------------------------------------------------------ ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Joseph V. Vittoria.................................... 125,000 15.5 12.75 7/18/09 934,000
Timothy Coleman....................................... 65,000 8.0 11.25 9/27/09 429,000
Suzanne B. Bell....................................... -- -- -- -- --
George Del Pino....................................... -- -- -- -- --
Melville W. Robinson.................................. -- -- -- -- --
Jill M. Vales......................................... -- -- -- -- --
</TABLE>
- ------------------
(1) Calculated using the Black-Scholes valuation method.
Each of the options set forth in the table above will vest in equal
installments on each of the first through fourth anniversaries of the grant
date.
There were no stock options exercised by the Named Executive Officers
during the year ended December 31, 1999.
LONG-TERM INCENTIVE PLAN
In May 1997, the Board and the Company's shareholders approved the
Long-Term Incentive Plan, which was amended and restated effective July 28, 1998
and again amended and restated effective September 28, 1999 (as amended and
restated, the "Incentive Plan"). The purpose of the Incentive Plan is to provide
officers, employees, directors who are also employees, consultants and
independent contractors of the Company or any of its subsidiaries, with
additional incentives by increasing their ownership interests in the Company.
Individual awards under the Incentive Plan may take the form of one or more of:
(i) either incentive stock options or non-qualified stock options; (ii) stock
appreciation rights; (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. The
Compensation Committee of the Board administers the Incentive Plan and generally
selects the individuals who will receive awards and the terms and conditions of
those awards. The number of Shares available for use in connection with the
Incentive Plan may not exceed 18% of the aggregate number of shares of Common
Stock outstanding prior to the date of grant.
As of December 31, 1999, 2,513,175 Shares were reserved for issuance in
connection with the Incentive Plan, of which 2,028,737 Shares had been granted
and were outstanding. Shares which are attributable to awards that have expired,
terminated or been canceled or forfeited are available for issuance or use in
connection with future awards. All options, except for certain premium-priced
options granted to the Chief Executive Officer, have been granted with exercise
prices equal to the fair market value at the time of grant. In December 1998,
the Compensation Committee of the Board granted Mr. Vittoria "premium-priced"
options to purchase 150,000 Shares at an exercise price of $50, which price was
in excess of the fair market value of the Common Stock on the grant date. The
vesting of these options will occur over four years, subject to acceleration
based upon thresholds of $50, $75 and $100 for the share price of the Common
Stock.
The Incentive Plan will remain in effect until terminated by the Board. The
Incentive Plan may be amended by the Board without the consent of the
shareholders of the Company, except that any amendment, although effective when
made, will be subject to shareholder approval if required by any Federal or
state law or regulation or by the rules of any stock exchange or automated
quotation system on which the Common Stock may then be listed or quoted.
II-11
<PAGE>
401(K) PLAN
The Company established a 401(k) Plan effective July 1, 1998. Similar plans
existing at certain operating companies were either suspended or rolled into the
Company's 401(k) Plan. All employees of the Company, meeting certain minimum
eligibility requirements, are eligible to participate in the 401(k) Plan. The
401(k) Plan provides that each participant may contribute up to 20% of his or
her pre-tax gross compensation (but not greater than a statutorily prescribed
annual limit). The percentage elected by certain highly compensated participants
may be required to be lower. The 401(k) Plan permits, but does not require,
additional contributions to the 401(k) Plan by the Company. All amounts
contributed by employee participants in conformance with the 401(k) Plan
requirements and earnings on such contributions are fully vested at all times.
For the year ended December 31, 1999, the Company accrued an aggregate matching
contribution to the 401(k) Plan of $450,000, based on a match of 25% of employee
contributions, up to a maximum of 6% of compensation. The Board will determine
on an annual basis whether a matching contribution will be made and, if so, at
what level of contribution.
EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS; COVENANTS-NOT-TO-COMPETE
During 1999, the Company's most highly compensated executive officers were
Messrs. Vittoria, Coleman, Del Pino, Robinson and Ms. Bell.
Mr. Vittoria has entered into an employment agreement with the Company
providing for an annual base salary of $200,000. Mr. Coleman, Mr. Del Pino,
Mr. Robinson and Ms. Bell each have entered into an employment agreement with
the Company providing for an annual base salary of $140,000, $125,000, $125,000
and $125,000, respectively. Each of these agreements is for a term of three
years, commencing July 28, 1997 for Mr. Vittoria, Mr. Del Pino, Mr. Robinson and
Ms. Bell, and September 1, 1999 for Mr. Coleman. In addition, certain executive
officers of the operating companies, including Messrs. Falcone, Heller, Khalidi
and Przywara, members of the Board, have entered into employment agreements
effective July 28, 1997. Mr. Falcone's employment agreement is for a term of
five years; Mr. Heller's, Mr. Khalidi'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 the 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 agreement with respect to
the acquisition by the Company of an Operating Company also contains a similar
covenant prohibiting sellers from competing with the Company for periods
following the consummation of the respective acquisition.
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. With the exception of Mr. Coleman's agreement which does not
contain such provisions, the agreements also provide that in the event of a
change in control of the Company (as defined in the agreements) 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 agreements of
Messrs. Falcone, Heller, Khalidi and Przywara also state, that in the event of a
II-12
<PAGE>
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.
Effective April 12, 1999, the Company appointed John B. Balson to the
positions of President and Chief Operating Officer. On April 28, 1999, Maryann
Bastnagel resigned from her position as Senior Vice President and Chief
Information Officer of the Company. Pursuant to a separation agreement with the
Company, Ms. Bastnagel received a $75,000 severance payment, representing six
months salary, in addition to payment of all accrued vacation time. On
October 10, 1999, Ms. Vales resigned from her position as Senior Vice President
and Chief Financial Officer of the Company. Pursuant to a separation agreement
with the Company, Ms. Vales will receive $150,000, payable in installments
through September 29, 2000. Ms. Vales also received payment of accrued vacation
time and will be reimbursed for COBRA payments through September 29, 2000.
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 Incentive Plan. The Committee
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 shareholders through the use of stock options and
incentives tied to increases in shareholder value.
Our executive compensation strategy has been for executives to receive a
salary at a level somewhat below industry averages, while being eligible for
bonuses based on performance and stock option grants. We believe that lower base
salary levels in combination with performance based bonuses provide our
executives the potential to earn in excess of competitive industry compensation
if subjective and/or objective performance goals for our company are achieved.
During 1999, the executive officers were compensated pursuant to employment
agreements the terms of which were based upon such considerations, as well as
market considerations and the skills and background of the individuals. Factors
relating to motivation and retention were also considered.
In addition to compensation through base salaries, the Compensation
Committee has the authority to issue performance-based bonuses. Bonuses are
determined in accordance with our Incentive Bonus Plan and are tied to
performance-based targets, including earnings per share, operating income,
individual performance and contributions to the Company. There were no
performance bonuses paid to executives for 1999.
The Compensation Committee is also responsible for the approval of the
grant of stock options to employees, 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, employees 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, among other things, recognition of past qualitative performance,
incentives to continue the growth and profits of the Company's business and
incentives to accept employment opportunities with the Company.
To facilitate the Compensation Committee's achievement of its goals, during
1999 the Committee 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
II-13
<PAGE>
performance-based or stock option plan that has been approved by shareholders.
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
II-14
<PAGE>
EXHIBIT 99.(A)(4)
TRAVEL SERVICES INTERNATIONAL, INC. ANNOUNCES
COMMENCEMENT OF TENDER OFFER
DELRAY BEACH, FLORIDA, February 29, 2000 - Travel Services
International, Inc. (NASDAQ: TRVL) announced today the commencement of the
tender offer by Blue Sea Florida Acquisition Inc. to purchase for $26.00 per
share in cash all of the outstanding shares of Travel Services International's
common stock. The tender offer is being made pursuant to definitive tender offer
materials that will be distributed to the Company's shareholders and filed with
the Securities and Exchange Commission.
The tender offer is expected to remain open until March 27, 2000,
unless extended, and will be followed by a merger under which those shares not
tendered will be converted into the right to receive the same $26.00 per share
in cash. The closing of the tender offer is conditioned on the tender of a
sufficient number of shares to give Blue Sea Florida Acquisition Inc. ownership
of at least a majority of the fully diluted outstanding shares of the Company
after giving effect to the repurchase of shares by the Company in the offer.
Travel Services International is a leading specialized distributor of
travel products including cruise vacations, vacation packages, domestic and
international airline tickets and European auto rentals, and is a leading
provider of travel services, such as electronic hotel reservation services,
specialized hotel programs and services and incentive travel programs. The
Company provides its services to both travel agents and travelers, offering a
unique combination of specialized expertise, the ability to compare options from
multiple travel providers and competitive prices. More information about the
Company can be found at www.mytravelco.com.
CERTAIN STATEMENTS MADE IN THIS RELEASE ARE FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND ARE SUBJECT TO A NUMBER OF
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS AND PERFORMANCE TO
DIFFER MATERIALLY FROM ANY EXPECTED FUTURE RESULTS OR PERFORMANCE, EXPRESSED OR
IMPLIED, BY THE FORWARD-LOOKING STATEMENTS. TRAVEL SERVICES INTERNATIONAL
ASSUMES NO RESPONSIBILITY TO UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF
AN OFFER TO SELL SHARES OF THE COMPANY. BLUE SEAS ACQUISITION INC. HAS FILED A
TENDER OFFER STATEMENT WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND THE
COMPANY HAS FILED A SOLICITATION/RECOMMENDATION STATEMENT WITH RESPECT TO THE
OFFER. THE TENDER OFFER STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED
LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SOLICITATION/
RECOMMENDATION STATEMENT CONTAIN IMPORTANT
<PAGE>
Exhibit 99.(A)(4)
Page 2
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER. THE OFFER TO PURCHASE, THE RELATED LETTER OF
TRANSMITTAL AND CERTAIN OTHER OFFER DOCUMENTS, AS WELL AS THE
SOLICITATION/RECOMMENDATION STATEMENT, WILL BE MADE AVAILABLE TO ALL
SHAREHOLDERS OF THE COMPANY, AT NO EXPENSE TO THEM. THE TENDER OFFER STATEMENT
(INCLUDING THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND ALL
OTHER OFFER DOCUMENTS FILED WITH THE COMMISSION) AND THE
SOLICITATION/RECOMMENDATION STATEMENT ARE ALSO AVAILABLE AT NO CHARGE AT THE
COMMISSION'S WEBSITE AT WWW.SEC.GOV.
<PAGE>
Execution Copy
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AIRTOURS plc,
BLUE SEA FLORIDA ACQUISITION INC.
AND
TRAVEL SERVICES INTERNATIONAL, INC.
Dated as of February 21, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I THE OFFER......................................................2
1.01 The Offer........................................................2
1.02 Company Actions..................................................3
1.03 Composition of the Board of Directors............................5
ARTICLE II THE MERGER AND RELATED MATTERS.................................6
2.01 The Merger.......................................................6
2.02 Closing..........................................................6
2.03 Effective Time...................................................6
2.04 Effect of Merger.................................................6
2.05 Directors and Officers of the Surviving Corporation..............6
2.06 Conversion of Stock..............................................7
2.07 Dissenting Stock.................................................7
2.08 Surrender of Certificates........................................8
2.09 Payment..........................................................8
2.10 No Further Rights of Transfers...................................9
2.11 Stock Option and Other Plans.....................................9
2.12 Articles of Incorporation of the Surviving Corporation..........10
2.13 By-Laws of the Surviving Corporation............................10
ARTICLE III REPRESENTATIONS AND WARRANTIES................................10
3.01 Representations and Warranties of the Company...................10
(a) Due Organization, Good Standing and Corporate Power.......10
(b) Authorization and Validity of Agreement...................11
(c) Capitalization............................................11
(d) Consents and Approvals; No Violations.....................12
(e) Company Reports and Financial Statements..................13
(f) Absence of Certain Changes................................13
(g) Compliance with Laws......................................13
(h) Litigation................................................14
(i) Employee Benefit Plans....................................14
(j) Taxes.....................................................15
(k) Intellectual Properties...................................16
(l) Proxy Statement and Schedule 14D-9........................16
(m) Broker's or Finder's Fee..................................16
(n) Environmental Laws and Regulations........................17
(o) State Takeover Statutes ..................................18
(p) Opinion of Financial Advisor..............................18
(i)
<PAGE>
Page
----
(q) Rights Agreement..........................................18
3.02 Representations and Warranties of Parent and Purchaser..........19
(a) Due Organization; Good Standing and Corporate Power.......19
(b) Authorization and Validity of Agreement...................19
(c) Consents and Approvals; No Violations.....................20
(d) Broker's or Finder's Fee..................................20
(e) Parent Not an Affiliated Shareholder......................20
(f) Financing.................................................20
ARTICLE IV TRANSACTIONS PRIOR TO EFFECTIVE DATE..........................21
4.01 Access to Information Concerning Properties and Records.........21
4.02 Confidentiality.................................................21
4.03 Conduct of the Business of the Company Pending the Effective
Date............................................................21
4.04 Proxy Statement.................................................22
4.05 Shareholder Approval............................................23
4.06 Reasonable Efforts..............................................23
4.07 No Solicitation of Other Offers.................................24
4.08 Notification....................................................26
4.09 HSR Act.........................................................26
4.10 Employee Benefits...............................................26
4.11 Indemnification of Directors and Officers of the Company........27
ARTICLE V CONDITIONS PRECEDENT TO MERGER................................28
5.01 Conditions Precedent to Obligations of Parent, Purchaser and
the Company.....................................................28
(a) Approval of Company's Shareholders........................29
(b) HSR Act...................................................29
(c) Injunction................................................29
(d) Statutes..................................................29
(e) Payment for Common Stock..................................29
ARTICLE VI TERMINATION AND ABANDONMENT...................................29
6.01 Termination.....................................................29
6.02 Effect of Termination...........................................31
ARTICLE VII MISCELLANEOUS.................................................31
7.01 Fees and Expenses...............................................31
7.02 Representations and Warranties..................................32
7.03 Extension; Waiver...............................................32
7.04 Public Announcements............................................32
7.05 Notices.........................................................32
7.06 Entire Agreement................................................34
7.07 Binding Effect; Benefit; Assignment.............................34
7.08 Governing Law And Venue; Waiver Of Jury Trial...................34
7.09 Amendment and Modification......................................35
(ii)
<PAGE>
7.10 Further Actions.................................................35
7.11 Headings........................................................35
7.12 Counterparts....................................................35
7.13 Severability....................................................35
7.14 Certain Definitions.............................................35
7.15 Transfer Taxes..................................................36
EXHIBIT A Voting and Tender Agreement...................................A
(iii)
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of February 21, 2000 (this
"Agreement"), by and among AIRTOURS plc, a corporation organized under the laws
of the United Kingdom ("Parent"), BLUE SEA FLORIDA ACQUISITION INC., a Florida
corporation and an indirect wholly-owned subsidiary of Parent ("Purchaser"), and
TRAVEL SERVICES INTERNATIONAL, INC., a Florida corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have approved the acquisition of the Company by Purchaser on the
terms and conditions set forth herein;
WHEREAS, in contemplation thereof Parent will cause Purchaser to
make a tender offer (as it may be amended from time to time as permitted under
this Agreement, the "Offer") to purchase all the issued and outstanding shares
of common stock, $0.01 par value, of the Company ("Common Stock") and the
associated common share purchase rights (the "Rights", and together with the
Common Stock, the "Shares") issued pursuant to the Shareholders Rights
Agreement, dated as of January 28, 1999, by and between the Company and American
Stock Transfer & Trust Company (as amended from time to time, the "Rights
Agreement"), subject to the terms and conditions of this Agreement, at a price
of $26 per Share, net to the seller in cash, without interest thereon (such
price, or any such higher price per Share as may be paid to any holder of Shares
in the Offer, being referred to herein as the "Offer Price");
WHEREAS, to complete such acquisition, the respective Boards of
Directors of Parent, Purchaser and the Company have approved and adopted this
Agreement, and have determined advisable, the merger of Purchaser with and into
the Company, with the Company being the surviving corporation (the "Merger"),
pursuant to and subject to the terms and conditions of this Agreement;
WHEREAS, the Board of Directors of the Company, based on the
unanimous recommendation of the Special Committee of the Board of Directors of
the Company (the "Special Committee"), has, in light of and subject to the terms
and conditions set forth herein: (i) determined that (A) the consideration to be
paid for each Share held by the shareholders in the Merger is fair to such
shareholders of the Company, and (B) the Merger is otherwise in the best
interests of the Company and its shareholders, and (ii) resolved to approve and
adopt this Agreement and the transactions contemplated hereby and to recommend
approval and adoption by the shareholders of the Company of this Agreement;
WHEREAS, certain shareholders of the Company have indicated their
intention to execute and deliver a Voting and Tender Agreement, in the form
attached hereto as Exhibit A (the "Voting and Tender Agreement"), pursuant to
which, subject to the terms and conditions contained therein, such shareholders
shall tender all Shares owned by them into the Offer and vote their shares of
Common Stock in favor of the transactions contemplated by this Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE OFFER
1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VI hereof and so long as none of the events set forth in
Annex A hereto (the "Tender Offer Conditions") shall have occurred and are
continuing, as promptly as practicable, but in no event later than the seventh
Business Day after the date of this Agreement, Parent shall cause Purchaser to,
and Purchaser shall, commence (within the meaning of Rule 14d-2 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the
Offer. The obligations of Purchaser to accept for payment and to pay for any
Shares tendered shall be subject only to the Tender Offer Conditions, any of
which may be waived by Purchaser; provided, that the Minimum Condition (as
defined in Annex A hereto) may not be waived by Purchaser without the prior
written consent of the Company. Purchaser expressly reserves the right to modify
the terms of the Offer; provided, that without the consent of the Company,
Purchaser shall not (i) reduce the number of Shares sought to be purchased in
the Offer, (ii) reduce the Offer Price, (iii) add to the Tender Offer
Conditions, (iv) modify the Tender Offer Conditions or any other term or
condition of the Offer in a manner that is adverse to the holders of Common
Stock, (v) change the form of consideration payable in the Offer or (vi) except
as provided in the last two sentences of this subsection (a) or as required by
law, extend the Offer beyond any scheduled expiration date. Purchaser covenants
and agrees that, subject to the terms and conditions of this Agreement,
including, but not limited to, the Tender Offer Conditions and the last sentence
of this Section 1.01(a), unless the Company otherwise consents in writing it
will accept for payment and pay for the Shares as soon as it is permitted to do
so under applicable law (but in any event, in the case of accepting for payment,
within one Business Day after the Offer terminates). Purchaser agrees that if it
is unable to consummate the Offer on the initial scheduled expiration date due
to the failure of the Tender Offer Conditions set forth in Annex A to be
satisfied or waived, Purchaser shall, unless this Agreement has been terminated
in accordance with its terms, extend the Offer and set a subsequent scheduled
expiration date, and shall continue to so extend the Offer and set subsequent
scheduled expiration dates, until the termination of this Agreement in
accordance with its terms; provided, that any such extended expiration date
shall not be later than the earlier of (x) ten Business Days following the
previously scheduled expiration date and (y) the date on which Purchaser
reasonably believes that all Tender Offer Conditions will be satisfied or
waived. Notwithstanding anything in this subsection (a) to the contrary,
Purchaser may extend the Offer, without the Company's consent, on one or more
occasions, for any reason, up to a maximum of three Business Days in the
aggregate, notwithstanding the prior satisfaction of the Tender Offer Conditions
so long as Purchaser irrevocably waives the continued satisfaction of any of the
Tender Offer Conditions.
-2-
<PAGE>
(b) As soon as practicable on the date that the Offer is commenced,
Parent and Purchaser, together with such other Persons as shall be required to
be included as parties to such filings, shall file, with the Securities and
Exchange Commission (the "Commission") a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule TO") with
respect to the Offer. The Schedule TO shall contain (included as an exhibit) or
shall incorporate by reference an offer to purchase (the "Offer to Purchase")
and a form of the related letter of transmittal (the "Letter of Transmittal"),
as well as all other information and exhibits required by law (which Schedule
TO, Offer to Purchase, Letter of Transmittal and such other information and
exhibits, together with any supplements or amendments thereto, are referred to
herein collectively as the "Offer Documents"). The Company and its counsel shall
be given the opportunity to review and comment upon the Offer Documents prior to
their filing with the Commission. The Offer Documents will comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the Commission and the date first published, sent or
given to the Company's shareholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Purchaser with respect to any information
supplied by the Company or its officers, directors or affiliates in writing for
inclusion in the Offer Documents or any amendment or supplement thereto. If, at
any time prior to the expiration or termination of the Offer, any event occurs
that should be described in an amendment or supplement to the Offer Documents,
Parent and Purchaser will, and Parent will cause Purchaser to, file and
disseminate, as required, an amendment or supplement which complies in all
material respects with the Exchange Act and the rules and regulations thereunder
and any other applicable laws. Prior to its filing with the Commission, the
amendment or supplement shall be delivered to the Company and its counsel and
the Company and its counsel shall be given the opportunity to comment thereon.
The written information supplied or to be supplied by Parent and Purchaser for
inclusion in the Proxy Statement and the Schedule 14D-9 (as defined in Section
1.02 hereof) of the Company will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they are made, not
misleading. Each of Parent and Purchaser agrees to provide the Company and its
counsel with copies of any written comments Parent and Purchaser or their
counsel may receive from the Commission or its staff with respect to the Offer
Documents promptly after the receipt of such comments and shall provide the
Company and its counsel an opportunity to participate, including by way of
discussions with the Commission or its staff, in the response of Parent and
Purchaser to such comments.
(c) Parent shall provide or cause to be provided to Purchaser on a
timely basis the funds necessary to accept for payment, and pay for any Shares
that Purchaser becomes obligated to accept for payment, and pay for, pursuant to
the Offer.
1.02 Company Actions.
(a) The Company hereby approves of and consents to the Offer
and the Merger and represents that:
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(I) its Board of Directors, based on the unanimous recommendation of
the Special Committee (at a meeting duly called and held) has (i) determined
that each of the Agreement, Offer and the Merger is fair to, and in the best
interest of, the holders of Shares, (ii) approved this Agreement, the Offer, the
Merger and the Voting and Tender Agreement and approved and adopted this
Agreement, and the transactions contemplated hereby, in accordance with the
provisions of the Florida Business Corporation Act (the "FBCA"), (iii) taken the
actions contemplated by Section 3.01(q) of this Agreement, and (iv) recommended
the acceptance of the Offer and the approval and adoption of this Agreement and
the Merger by the shareholders of the Company; provided, however, that such
recommendation may be withdrawn, modified or amended as provided in Section
4.07; and (II) Allen & Company Incorporated has delivered to the Board of
Directors of the Company its opinion that the consideration to be received by
the holders of Common Stock (other than Parent and Purchaser) pursuant to the
Offer and the Merger is fair to the holders of Common Stock from a financial
point of view, subject to the assumptions and qualifications contained in such
opinion.
(b) The Company shall file with the Commission, as soon as
practicable after the commencement of the Offer, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing the recommendations referred to in
subsection 1.02(a) hereof and shall disseminate the Schedule 14D-9 as required
by Rule 14d-9 under the Exchange Act, and shall mail, or cause to be mailed,
such Schedule 14D-9 to the shareholders of the Company, to the extent
practicable, at the same time the Offer Documents are first mailed to the
shareholders of the Company, together with such Offer Documents; provided,
however, that nothing contained in this Agreement shall restrict the Board of
Directors of the Company from withdrawing, modifying or amending such
recommendation or other action in accordance with Section 4.07. Parent and
Purchaser and their counsel shall be given the opportunity to review and comment
on the Schedule 14D-9 prior to its filing with the Commission. The Schedule
14D-9 will comply in all material respects with the provisions of applicable
federal securities laws and, on the date filed with the Commission and on the
date first published, sent or given to the Company's shareholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Purchaser or their officers, directors or
affiliates in writing for inclusion in the Schedule 14D-9. If at any time prior
to the expiration or termination of the Offer, any event occurs which should be
described in an amendment or supplement to the Schedule 14D-9 or any amendment
or supplement thereto, the Company will file and disseminate, as required, an
amendment or supplement which complies in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. Prior to its filing with the Commission, the amendment or supplement shall
be delivered to Parent and its counsel and Parent and its counsel shall be given
an opportunity to comment thereon. The written information supplied or to be
supplied by the Company for inclusion in the Offer Documents will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made, in light of the circumstances
under which they are made, not misleading. The Company agrees to provide Parent
and its counsel with any comments the Company or its counsel may receive from
the Commission or its staff
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with respect to the Schedule 14D-9 promptly after the receipt of such comments
and shall provide Parent and its counsel an opportunity to participate,
including by way of discussions with the Commission or its staff, in the
response of the Company to such comments.
(c) In connection with the Offer, the Company will promptly furnish
Purchaser with mailing labels, security position listings and any available
listing or computer list containing the names and addresses of the record
holders of the Common Stock as of the most recent practicable date and shall
furnish Purchaser with such additional information (including, but not limited
to, updated lists of holders of Common Stock and their addresses, mailing labels
and lists of security positions) and such other assistance as Purchaser or its
agents may reasonably request in communicating the Offer to the Company's
shareholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent, Purchaser and their
respective affiliates, associates, agents, and advisors, shall keep confidential
and use the information contained in any such labels, listings and files only in
connection with the Offer and the Merger and, if this Agreement shall be
terminated, will deliver to the Company all copies of such information then in
their possession.
1.03 Composition of the Board of Directors. Promptly upon the
acceptance for payment of, and payment by Purchaser in accordance with the Offer
for, any Shares, and from time to time thereafter as Shares are acquired by
Purchaser, Purchaser shall be entitled to designate such number of directors on
the Board of Directors of the Company, rounded up to the next whole number, as
will give Purchaser, subject to compliance with Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, representation on such Board of
Directors equal to at least that number of directors which equals the product of
the total number of directors on the Board of Directors (giving effect to the
directors elected pursuant to this sentence) multiplied by a fraction, the
numerator of which shall be the number of Shares so accepted for payment and
paid for or otherwise acquired or owned by Parent or Purchaser and the
denominator of which shall be the number of shares of Common Stock then issued
and outstanding, and the Company and its Board of Directors shall, at such time,
use its reasonable efforts to cause Purchaser's designees to be appointed to the
Company's Board of Directors. In no event shall there be less than two
Independent Directors (as hereinafter defined) on the Company's Board of
Directors. Subject to applicable law, the Company shall take all action
requested by Parent which is reasonably necessary to effect any such election,
including mailing to its shareholders an information statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9, so long as Purchaser shall have provided to the
Company on a timely basis all information required to be included in an
information statement with respect to Purchaser's designees. In furtherance
thereof, the Company will increase the size of the Company's Board of Directors,
or use its reasonable efforts to secure the resignation of directors, or both,
as is necessary to permit Purchaser's designees to be elected to the Company's
Board of Directors. Following the election of any Purchaser's designees pursuant
to this Section 1.03 and prior to the Effective Time, any amendment of this
Agreement or the Articles of Incorporation or By-Laws of the Company, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of
Purchaser or waiver of any of the Company's rights hereunder shall
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require the concurrence of a majority of the directors of the Company then in
office who neither are Parent nor Purchaser's designees nor are employees of the
Company or any of its Subsidiaries (the "Independent Directors"). The
Independent Directors shall have the authority to retain such counsel and other
advisors at the expense of the Company as are reasonably appropriate to the
exercise of their duties in connection with this Agreement. In addition, the
Independent Directors shall have the authority to institute any action, on
behalf of the Company, to enforce performance of this Agreement.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.01 The Merger. On the terms and subject to the conditions of this
Agreement and in accordance with the applicable provisions of the FBCA, at the
Effective Time (as defined below), Purchaser shall be merged with and into the
Company and the separate corporate existence of Purchaser shall cease, and the
Company shall continue as the surviving corporation under the laws of the State
of Florida under the name of "Travel Services International, Inc." (the
"Surviving Corporation").
2.02 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of White & Case LLP, at 200 South Biscayne Boulevard,
Miami, Florida, at 10:00 a.m., local time, on a date to be specified by the
parties hereto, which shall be no later than the second Business Day after
satisfaction or waiver of all the conditions set forth in Article V hereof,
unless another date or place is agreed to in writing by the parties hereto.
2.03 Effective Time. As soon as practicable on or after the Closing,
Purchaser and the Company will cause articles of merger (the "Articles of
Merger") to be filed with the Department of State of the State of Florida in the
manner required by Section 607.1105 of the FBCA, and the parties shall take such
other and further actions as may be required by law to make the Merger
effective. The Merger shall become effective at the time when the Articles of
Merger have been duly filed with the Department of State of the State of
Florida. The time the Merger becomes effective in accordance with applicable law
is referred to as the "Effective Time" and the date on which the Merger become
effective in accordance with applicable law is referred to as the Effective
Date.
2.04 Effect of Merger. From and after the Effective Time, the Merger
shall have the effects set forth in Section 607.1106 of the FBCA.
2.05 Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Purchaser immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the Articles of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
shareholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time shall,
subject to the applicable provisions of the Articles of Incorporation and
By-Laws of the Surviving Corporation, be the officers of the
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Surviving Corporation until their respective successors shall be duly elected or
appointed and qualified.
2.06 Conversion of Stock. At the Effective Time:
(a) Each Share then issued and outstanding (other than (i) any
Shares then held by Purchaser or Parent, all of which shall be cancelled and
none of which shall receive any payment with respect thereto and (ii) Shares
held by Dissenting Shareholders (as defined in Section 2.07 hereof) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into and represent the right to receive an amount in cash, without
interest, equal to the price paid for each Share pursuant to the Offer (the
"Merger Consideration") upon surrender, in the manner provided in Section 2.08
hereof, of the certificate that formerly evidenced such Share; and
(b) Each share of common stock, par value $.01 per share, of
Purchaser then issued and outstanding shall, by virtue of the Merger and without
any action on the part of the holder thereof, become one fully paid and
nonassessable share of common stock, $.01 par value, of the Surviving
Corporation.
2.07 Dissenting Stock. Notwithstanding anything in this Agreement to
the contrary (including, without limitation, Section 2.06 hereof) but only to
the extent required by the FBCA, Shares that are issued and outstanding
immediately prior to the Effective Time and are held by holders of Shares who
comply with all the provisions of the FBCA concerning the right of holders of
Common Stock to dissent from the Merger and require an appraisal of their shares
of Common Stock (the "Dissenting Shareholders") shall not be converted into the
right to receive the Merger Consideration but shall become the right to receive
such consideration as may be determined to be due such Dissenting Shareholder
pursuant to Section 607.1320 of the FBCA; provided, that (i) if any Dissenting
Shareholder shall subsequently deliver a written withdrawal of his or her demand
for appraisal (with the written approval of the Surviving Corporation, to the
extent permitted by the FBCA), or (ii) if any Dissenting Shareholder fails to
establish and perfect, or shall have effectively withdrawn or lost, his or her
entitlement to appraisal rights as provided by applicable law or (iii) to the
extent permitted by the FBCA, if within the time period prescribed by the FBCA
neither any Dissenting Shareholder nor the Surviving Corporation has filed a
petition demanding a determination of the value of the shares of common stock
outstanding at the Effective Time and held by Dissenting Shareholders, in
accordance with applicable law, then such Dissenting Shareholder or
Shareholders, as the case may be, shall forfeit the right to appraisal of such
shares and such shares shall thereupon be deemed to have been converted into the
right to receive, as of the Effective Time, the Merger Consideration, without
interest. The Company shall give Parent and Purchaser (A) notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
related instruments received by the Company and (B) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal. The
Company will not voluntarily make any payment with respect to any demands for
appraisal and will not, except with the prior written consent of Parent, settle
or offer to settle any demand.
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<PAGE>
2.08 Surrender of Certificates.
(a) Concurrently with or prior to the Effective Time, Parent shall
designate a bank or trust company located in the United States and reasonably
acceptable to the Company to act as paying agent (the "Paying Agent") for
purposes of making the cash payments contemplated by Section 2.06(a). As soon as
practicable after the Effective Time, Parent shall or shall cause the Paying
Agent to mail and/or make available to each holder of a certificate theretofore
evidencing shares of Common Stock a notice and letter of transmittal advising
such holder of the effectiveness of the Merger and the procedure for
surrendering to the Paying Agent such certificate or certificates which
immediately prior to the Effective Time represented outstanding Common Stock
(the "Certificates") in exchange for the Merger Consideration deliverable in
respect thereof pursuant to this Article II. Upon the surrender for cancellation
to the Paying Agent of such Certificates, together with a letter of transmittal,
duly executed and completed in accordance with the instructions thereon, and any
other items specified by the letter of transmittal, the Paying Agent shall
promptly pay to the Person (as defined in Section 7.14 hereof) entitled thereto
the Merger Consideration deliverable in respect thereof. Until so surrendered,
each Certificate shall be deemed, for all corporate purposes, to evidence only
the right to receive upon such surrender the Merger Consideration deliverable in
respect thereof to which such Person is entitled pursuant to this Article II. No
interest shall be paid or accrued in respect of such cash payments.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Paying Agent any transfer or other
taxes payable by reason of the foregoing or establish to the satisfaction of the
Paying Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article II;
provided, that, the Person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as it may direct or otherwise indemnify the Surviving
Corporation in a manner satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the Certificate claimed to
have been lost, stolen or destroyed.
2.09 Payment. Concurrently with or immediately prior to the
Effective Time, Parent shall cause Purchaser to, and Purchaser shall, deposit in
trust with the Paying Agent cash in United States dollars in an aggregate amount
equal to the aggregate Merger Consideration to which holders of shares of Common
Stock upon consummation of the Merger are entitled (such amount being
hereinafter referred to as the "Payment Fund"). The Payment Fund shall be
invested by the Paying Agent as directed by Parent in direct obligations of the
United States,
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obligations for which the full faith and credit of the United States is pledged
to provide for the payment of principal and interest, commercial paper rated of
the highest quality by Moody's Investors Services, Inc. or Standard & Poor's
Ratings Group or certificates of deposit, bank repurchase agreements or bankers'
acceptances of a commercial bank having at least $1,000,000,000 in assets
(collectively the "Permitted Investments") or in money market funds which are
invested in Permitted Investments, and any net earnings with respect thereto
shall be paid to Parent as and when requested by Parent. The Paying Agent shall,
pursuant to irrevocable instructions, make the payments referred to in Section
2.06 hereof out of the Payment Fund. The Payment Fund shall not be used for any
other purpose except as otherwise agreed to by Parent. Promptly following the
date which is six months after the Effective Time, the Paying Agent shall return
to the Surviving Corporation all cash, certificates and other instruments in its
possession that constitute any portion of the Payment Fund, and the Paying
Agent's duties shall terminate. Thereafter, each holder of a Certificate may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration, without interest, but shall have no greater
rights against the Surviving Corporation or Purchaser than may be accorded to
general creditors of the Surviving Corporation or Parent under applicable law.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to a holder of shares of Common Stock for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
2.10 No Further Rights of Transfers. At and after the Effective
Time, each holder of a Certificate shall cease to have any rights as a
shareholder of the Company, except for, in the case of a holder of a Certificate
(other than shares to be canceled pursuant to Section 2.06(a) hereof, and other
than shares held by Dissenting Shareholders) the right to surrender his or her
Certificate in exchange for payment of the Merger Consideration, or in the case
of a Dissenting Shareholder, to perfect his or her right to receive payment for
his or her shares pursuant to the FBCA if such holder has validly perfected and
not withdrawn his or her right to receive payment for his or her shares, and no
transfer of Shares shall be made on the stock transfer books of the Surviving
Corporation. Certificates presented to the Surviving Corporation after the
Effective Time shall be canceled and exchanged for cash as provided in this
Article II. At the close of business on the day of the Effective Time the stock
ledger of the Company with respect to Common Stock shall be closed.
2.11 Stock Option and Other Plans. Prior to the Effective Time, the
Board of Directors of the Company (or, if appropriate, any committee thereof)
shall adopt appropriate resolutions and use its reasonable efforts to take all
other actions necessary to provide for the cancellation, effective at the
Effective Time, of all the outstanding stock options to purchase Common Stock
(the "Options") heretofore granted under any stock option plan of the Company
(the "Stock Plans"). Immediately prior to the Effective Time, the Company shall
use its reasonable efforts to ensure that each Option, whether or not then
vested or exercisable, shall no longer be exercisable for the purchase of shares
of Common Stock but shall entitle each holder thereof, in cancellation and
settlement therefor, to payments in cash (subject to any applicable withholding
taxes, the "Cash Payment"), at the Effective Time, equal to the product of (x)
the total number of shares of Common Stock subject to such Option whether or not
then vested or exercisable and (y) the excess of the Merger Consideration over
the exercise price per share of
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Common Stock subject to such Option, each such Cash Payment to be paid to each
holder of an outstanding Option at the Effective Time. As provided herein, the
Company shall use its reasonable efforts to ensure that the Stock Plans shall
terminate as of the Effective Time and the provisions of any Employee Benefit
Plan (as defined in Section 3.01(i)) providing for the issuance or grant of
shares of the capital stock of the Company shall be deleted as of the Effective
Time. The Company will take all reasonable steps to ensure that neither the
Company nor any of its Subsidiaries is or will be bound by any Options, other
options, warrants, rights or agreements which would entitle any Person, other
than Parent or its affiliates, to own or purchase any capital stock of the
Surviving Corporation or any of its subsidiaries. The Company will use its
reasonable efforts to obtain any necessary consents to ensure that after the
Effective Time, the only rights of the holders of Options to purchase shares of
Common Stock in respect of such Options will be to receive the Cash Payment in
cancellation and settlement thereof.
2.12 Articles of Incorporation of the Surviving Corporation. The
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter duly amended as provided by law and such Articles
of Incorporation, provided, that, such Articles of Incorporation shall at all
times be in accordance with the provisions of Section 4.11 hereof.
2.13 By-Laws of the Surviving Corporation. The By-Laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation until thereafter duly amended as provided
by law and such By-Laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. The Company
hereby represents and warrants to Parent and Purchaser that, except as disclosed
in the Commission Filings or (subject to the proviso below) the disclosure
letter delivered by the Company to the Parent and Purchaser upon execution of
this Agreement (the "Company Disclosure Letter"), provided that items disclosed
in one section of the Company Disclosure Letter shall be deemed disclosed on
each other section of the Company Disclosure Letter to the extent that such
matter would reasonably be expected to be pertinent to such other section in
light of the disclosure made on the first section:
(a) Due Organization, Good Standing and Corporate Power. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
each such corporation has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
such failure to be so qualified or licensed and in good standing would not, and
would not be reasonably likely to, have a Material Adverse Effect. As used in
this Agreement, "Material Adverse Effect" means any material adverse effect on
the business,
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results of operation or financial condition of the Company and its Subsidiaries,
taken as a whole, but shall not include any changes, events, effects or
circumstances (i) arising in connection with the consideration, announcement or
performance of the transactions contemplated by this Agreement, (ii) affecting
the economy generally or affecting generally any industry in which the Company
or any of its Subsidiaries operates, or (iii) affecting the securities markets
generally.
(b) Authorization and Validity of Agreement. The Company has the
corporate power and authority to execute and deliver this Agreement and, subject
to obtaining shareholder approval as required by Section 607.1103 of the FBCA,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by its Board of Directors and no other
corporate action on the part of the Company is necessary to authorize the
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby (other than (i) any
required approval by the Company's shareholders in connection with the
consummation of the Merger, (ii) the filing and recordation of appropriate
merger documents as required by the FBCA and (iii) the other items set forth in
Section 3.01(d)). This Agreement has been duly executed and delivered by the
Company and, subject to obtaining shareholder approval and assuming the due and
valid authorization, execution and delivery hereof by Parent and Purchaser, is a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
(c) Capitalization. (i) The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, 1,900,331 shares of which are
designated as restricted voting stock, and 1,000,000 shares of preferred stock.
As of February 17, 2000, (1) 13,985,086 shares of Common Stock were issued and
outstanding, of which 1,340,205 shares were designated restricted voting stock,
(2) 2,717,315 shares of Common Stock were reserved for issuance pursuant to
outstanding Options granted under the Stock Plans, (3) no shares of preferred
stock were issued and outstanding, and (4) no shares of Common Stock and no
shares of preferred stock were held, in the aggregate, by the Company's
Subsidiaries. All issued and outstanding shares of Common Stock have been duly
authorized, validly issued and are fully paid and nonassessable and are not
subject to, nor were they issued in violation of, any preemptive rights. Except
as set forth in Section 3.01(c) there are not as of the date hereof, and at the
Effective Time there will not be, any outstanding or authorized shares of
capital stock of the Company, options, warrants, rights, subscriptions, claims
of any character, agreements, rights of redemption, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to Common
Stock or any other shares of capital stock of the Company, pursuant to which the
Company is or may become obligated to issue shares of Common Stock, any other
shares of its capital stock or any securities convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of the capital stock
of the Company.
(ii) The Company Disclosure Letter lists all of the Company's
Subsidiaries. All of the outstanding shares of capital stock or other equity
interests of each of the Company's Subsidiaries have been duly authorized and
validly issued, are fully paid and
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nonassessable, are not subject to, nor were they issued in violation of, any
preemptive rights, and are owned, of record and beneficially, by the Company or
one of its direct or indirect wholly owned Subsidiaries, and except for liens
held by Bank of America in connection with the Existing Credit Facility (as
defined in Section 4.03(b)), free and clear of all liens, encumbrances, options
or claims whatsoever. No shares of capital stock of any of the Company's
Subsidiaries are reserved for issuance and there are no outstanding or
authorized options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, rights of redemption, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to the
capital stock of any Subsidiary, pursuant to which such Subsidiary is or may
become obligated to issue any shares of capital stock of such Subsidiary or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of such Subsidiary. Except for restrictions under
applicable law, there are no restrictions of any kind which prevent the payment
of dividends by any of the Company's Subsidiaries to the Company. The Company
does not own, directly or indirectly, any capital stock, equity or ownership
interest in any Person (other than the Subsidiaries listed on the Disclosure
Schedule) that has any material assets or liabilities and neither the Company
nor any of its Subsidiaries is subject to any obligation or requirement to
provide material funds for or to make any material investment (in the form of a
loan or capital contribution) to or in any Person.
(d) Consents and Approvals; No Violations. In the event (i) the
filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), are made and any applicable waiting period
thereunder has been terminated or has expired, (ii) the requirements of the
Exchange Act relating to the Proxy Statement and the Offer, the Securities Act
and the various "blue sky laws" are met, (iii) the filing of the Articles of
Merger and other appropriate merger documents, if any, as required by the FBCA
are properly made, (iv) any required approval by the Company's shareholders in
connection with the consummation of the Merger is received, and (v) filings with
the Nasdaq National Market are properly made, the execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not: (1) violate any provision of the Articles of
Incorporation or By-Laws of the Company or the comparable governing documents of
any of its Subsidiaries, in each case, as amended; (2) violate any law, statute,
ordinance, rule, regulation, order or decree of any court or of any governmental
or regulatory body, agency or authority applicable to the Company or any of its
Subsidiaries or by which any of their respective properties or assets may be
bound; (3) require on the part of the Company any filing with, or permit,
consent or approval of, or the giving of any notice to, any governmental or
regulatory body, agency or authority; or (4) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation,
payment or acceleration) under, or result in the creation of any lien, security
interest, charge or encumbrance (each an "Encumbrance") upon any of the
properties or assets of the Company or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by
which it or any of their respective properties or assets are bound except, in
the case of clauses (2), (3) and (4) above, for any such filing, permit,
consent, approval, the failure to obtain or make which, and except for any
breach,
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violation or Encumbrance which, would not have and would not be reasonably
likely to have a Material Adverse Effect on the Company or would not prevent or
materially delay, and would not be reasonably likely to prevent or materially
delay, the consummation of the transactions contemplated by this Agreement.
(e) Company Reports and Financial Statements. Since January 1, 1998,
the Company has filed all forms, reports, schedules and documents, with the
Commission required to be filed by it pursuant to the federal securities laws
and the Commission rules and regulations thereunder (as such reports have been
amended since the date of their filing, collectively, the "Commission Filings").
Except to the extent amended or superseded by a subsequent filing with the
Commission made prior to the date hereof, as of their respective dates, the
Commission Filings (a) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the Commission thereunder.
None of the Company's Subsidiaries is required to file any forms, reports,
schedules or other documents with the Commission under the Exchange Act or the
Securities Act. The financial statements of the Company included in the
Commission Filings (collectively, the "Financial Statements"), complied, as of
the respective dates of filing with the Commission, in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles ("GAAP") (as in effect from time to
time) applied on a consistent basis in all material respects, (except as may be
indicated therein or in the notes or schedules thereto and except, in the case
of unaudited interim statements, as may be permitted under the Exchange Act or
the Securities Act) and fairly present, in all material respects, the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the results of their operations and changes in cash
flows for the periods then ended (subject, in the case of the unaudited
financial statements, to the absence of notes and normal recurring year-end
audit adjustments).
(f) Absence of Certain Changes. Except as otherwise contemplated by
this Agreement, since December 31, 1999, (i) the Company and its Subsidiaries
have, in all material respects, conducted their respective businesses only in
the ordinary course, (ii) neither the Company nor any of its Subsidiaries has
taken any of the actions restricted by Sections 4.03(b)(i), (ii), (iii), (iv),
(v), (viii), (ix), (xi), (xii) and (xiv) or (c), and (iii) the Company and its
Subsidiaries have not suffered any change constituting a Material Adverse Effect
or that would be reasonably likely to have a Material Adverse Effect.
(g) Compliance with Laws. The Company and its Subsidiaries are in
compliance with all applicable laws, regulations, orders, judgments and decrees
(other than with respect to taxes, Environmental Laws, employee benefits and
federal securities laws, which are the subject of specific representations
contained in this Agreement) except where the failure to so comply would not
have, and would not reasonably be expected to have, a Material Adverse Effect on
the Company and would not, and would not be reasonably likely to, prevent or
materially delay consummation of the transactions contemplated by this Agreement
and no
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written notice or claim has been received by the Company or to the Company's
knowledge, has been filed, commenced or, threatened against the Company alleging
or investigating any violation or potential violation of any of the foregoing,
except alleged violations that individually or in the aggregate, would not have,
and would not be reasonably likely to have a Material Adverse Effect. All
licenses, permits and approvals required under such laws, rules and regulations
are in full force and effect except where the failure to be in full force and
effect would not have, and would not be reasonably likely to have, a Material
Adverse Effect.
(h) Litigation. There is no action, suit, proceeding at law or in
equity, or any arbitration or any administrative or other proceeding by or
before (or to the knowledge of the Company any investigation by) any
governmental or other instrumentality or agency, pending against the Company or
any of its Subsidiaries, or any of their properties or rights which would have,
or would reasonably be expected to have, a Material Adverse Effect on the
Company or would, or would be reasonably likely to, prevent or materially delay
consummation of the transactions contemplated by this Agreement. Neither the
Company nor any of its Subsidiaries (nor any of their respective assets) is
subject to any judgment, order, decree or settlement agreement entered in any
lawsuit, proceeding or investigation which would, or would be reasonably likely
to, have a Material Adverse Effect on the Company or would, or would be
reasonably likely to, prevent or materially delay consummation of the
transactions contemplated by this Agreement.
(i) Employee Benefit Plans. Section 3.01(i) of the Company
Disclosure Letter contains a true and complete list of any material bonus,
incentive compensation, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock appreciation
rights, phantom stock, cafeteria, life insurance, health, accident, disability,
or other insurance, severance, separation or other employee benefit plan, or
policy, including, but not limited to, any "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), contributed to, maintained or sponsored by the Company or
any of its Subsidiaries, or with respect to which the Company or any of its
Subsidiaries has any liability or potential liability, and under which any
employee or former employee, or director or independent agent or independent
contractor of the Company or any of its Subsidiaries or any beneficiary thereof
is covered, is eligible for coverage or has benefits (each, an "Employee Benefit
Plan"). Except to the extent that any breach of the representations set forth in
this sentence, individually or in the aggregate, would not have, and would not
reasonably be expected to have, a Material Adverse Effect on the Company: (i)
each Employee Benefit Plan is in compliance with applicable law and has at all
times been administered and operated in all respects in accordance with its
terms; (ii) each Employee Benefit Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), has received a favorable determination letter regarding
its tax-qualified status, from the Internal Revenue Service and, to the
knowledge of the Company , no event has occurred and no condition exists which
would result in the revocation of any such determination, (iii) no Employee
Benefit Plan is subject to Section 412 of the Code or Section 302 of ERISA or
covered by Title IV of ERISA; (iv) neither the Company or any Person, who is, or
at any time within the six-year period ending on the date hereof was, a member
of a controlled group (within the meaning of Section 412(n)(6) of the Code) that
includes, or at any time within the six-year period ending on the date hereof
included, the Company or any
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Subsidiary or any predecessor of the foregoing, has incurred, and no
circumstances exist pursuant to which they would reasonably expect to incur, any
unsatisfied liability under (A) Title IV of ERISA, (B) Chapter 43 of the Code or
(C) Section 502(i) or (l) of ERISA; (v) except as described in Section 3.01(i)
of the Company Disclosure Letter, no benefit under any Employee Benefit Plan,
including, without limitation, any severance or parachute payment plan or
agreement, will be established or become accelerated, vested or payable by
reason of any transaction contemplated under this Agreement; (vi) no tax has
been incurred under Section 511 of the Code with respect to any Employee Benefit
Plan (or trust or other funding vehicle pursuant thereto); (vii) no Employee
Benefit Plan provides welfare benefit coverage beyond the termination of an
employee's employment, except as required by Part 6 of Subtitle B of Title I of
ERISA or Section 4980B of the Code ("COBRA") or any State laws requiring
continuation of benefits coverage following termination of employment; (viii) no
liability, claim, action or litigation, has been made, commenced or, to the
Company's knowledge, threatened with respect to any Employee Benefit Plan (other
than routine claims for benefits payable in the ordinary course, and appeals of
denied such claims); and (ix) all contributions to Employee Benefit Plans that
were required to be made on or before the date hereof under such Employee
Benefit Plans have been made, and all benefits accrued under any unfunded
Employee Benefit Plan that is a deferred compensation plan or pension plan
within the meaning of Section 3(2) of ERISA have been paid, accrued or otherwise
adequately reserved in accordance with GAAP, all of which accruals under such
unfunded Employee Benefit Plans are as disclosed in Section 3.01(i) of the
Company Disclosure Letter.
(j) Taxes. (a) Except to the extent that the failure to do so would
not have, and would not be reasonably expected to have, a Material Adverse
Effect on the Company, each of the Company and its Subsidiaries has properly
filed or caused to be properly filed all federal, state, local and foreign tax
returns and tax reports which are required to be filed by, or with respect to,
each of the Company and its Subsidiaries on or prior to the Effective Date
(taking into account any extension of time to file granted to or on behalf of
the Company or such Subsidiary) (collectively, the "Returns"). Except to the
extent that the failure to be would not have, and would not be reasonably
expected to have, a Material Adverse Effect on the Company, all such Returns are
true, correct and complete. Except to the extent that the failure to do so would
not, and would not be reasonably likely to, have a Material Adverse Effect on
the Company, all federal, state, local and foreign income, profits, franchise,
gross receipts, payroll, sales, employment, use, property, withholding, excise
and other taxes, duties or assessments of any nature whatsoever (together with
all interest, penalties and additions imposed with respect to such amounts)
("Taxes") due and payable by the Company including all amounts shown to be due
on any Return have been properly paid or fully provided for on the books and
records of the Company in accordance with GAAP, and except to the extent that
the following would not have, and would not reasonably be expected to have, a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole:
(i) there are no written waivers in effect of the applicable statutory period of
limitation for Taxes of the Company for any taxable period, (ii) no deficiency
assessment or proposed adjustment with respect to any tax liability of the
Company for any taxable period is pending or, to the knowledge of the Company,
threatened, (iii) there are no outstanding requests by the Company or any of its
Subsidiaries for any ruling of the U.S. Internal Revenue Service ("IRS"); (iv)
there are no liens for Taxes (other than for current Taxes not yet
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due and payable for which adequate reserves have been established in accordance
with GAAP) on the assets of the Company or any of its Subsidiaries; (v) neither
the Company nor any of its Subsidiaries is a party to or bound by any agreement
providing for the allocation or sharing of Taxes with any entity which is not,
either directly or indirectly, a Subsidiary of the Company; and (vi) neither the
Company nor any of its Subsidiaries has been a member of any "affiliated group"
(as defined in section 1504(a) of the Code) or has any liability for Taxes of
any Person other than the Company or any Subsidiary as a transferee or
successor, by Contract, or otherwise.
(k) Intellectual Properties. Except as would not have, and would not
reasonably be expected to have, a Material Adverse Effect on the Company , the
Company and its Subsidiaries own free and clear of all liens or have valid,
binding and enforceable rights to use all U.S. and foreign patents, trademarks,
trade names, service marks, service names, domain names, URLs, copyrights,
registrations and applications therefor and licenses or other rights in respect
thereof, computer technology (including all computer hardware, software,
databases, systems and embedded chips, (collectively, "Computer Technology"))
trade secrets, proprietary information, inventions, know-how, processes and
procedures ("Intellectual Property") necessary to carry on the business of the
Company or its Subsidiaries, without any known conflict with the rights of
others. To the knowledge of the Company, the conduct of the business of the
Company and its Subsidiaries, and the use by them of the Intellectual Property,
do not infringe any rights of any Person that would have, or would reasonably be
expected to have, a Material Adverse Effect on the Company and neither the
Company nor any of its Subsidiaries has received any notice in writing from any
other person pertaining to or challenging the right of the Company or any of its
Subsidiaries to own or use any Intellectual Property, except with respect to
rights the loss of which, individually or in the aggregate, would not have, and
would not reasonably be likely to have, a Material Adverse Effect on the
Company.
(l) Proxy Statement and Schedule 14D-9. The definitive proxy
statement and related materials, if any (or any amendment thereof or supplement
thereto), to be furnished to the holders of Common Stock in connection with the
Merger pursuant to Section 4.04 hereof (the "Proxy Statement") will comply in
all material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. If at any time prior to the Effective
Time any event occurs which should be described in an amendment or supplement to
the Proxy Statement, the Company will file and disseminate, as required, an
amendment or supplement which complies in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. Prior to its filing with the Commission, the amendment or supplement shall
be delivered to Parent and its counsel. None of the information supplied by the
Company in writing for inclusion in the Proxy Statement, will, at the date such
information is mailed to the Company's shareholders, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein in order to make the statements made therein, in light of the
circumstance under which they are made, not misleading.
(m) Broker's or Finder's Fee. Except for Allen & Company
Incorporated (whose fees and expenses will be paid by the Company in accordance
with the Company's agreement with such firm, a copy of which has been delivered
to Parent), no agent, broker, Person or firm acting on behalf of the Company is,
or will be, entitled to any broker's, financial advisor's, finder's fees or
similar fee from any of the parties hereto, or from any Person
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controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
(n) Environmental Laws and Regulations. Except as would not,
and would not reasonably be likely to, have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole:
(i) Hazardous Materials have not been generated, used,
treated or stored on any Company Property by the Company, except for
quantities used or stored at such Company Property in compliance
with Environmental Laws and required in connection with the normal
operations and maintenance of such Company Property.
(ii) Hazardous Materials have not been Released or
disposed of on any Company Property by the Company, except for
quantities released or disposed of on such Company Property in
compliance with Environmental Laws and required in connection with
the normal operation and maintenance of such Company Property.
(iii) The Company and its Subsidiaries are in compliance
with Environmental Laws and the requirements of permits issued under
such Environmental Laws with respect to any Company Property.
(iv) There are no pending or, to the knowledge of the
Company, threatened Environmental Claims against the Company, any of
its Subsidiaries or, any Company Property.
(v) To the best knowledge of the Company, there are no
underground storage tanks located on any Company Property.
As used in this Section 3.01(n), the following terms shall have the
meanings set forth below:
(i) "Company Property" means any real property and
improvements owned, leased (as lessee or lessor), operated or
occupied by the Company or any of its Subsidiaries at any time.
(ii) "Hazardous Materials" means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that
is friable, urea formaldehyde foam insulation, polychlorinated
biphenyls, and radon gas; and (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous substances," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," or words of similar import, under
any applicable Environmental Law and (c) any other substance
prohibited or regulated pursuant to the provisions of any
Environmental Law.
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(iii) "Environmental Law" means any federal, state or
local statute, law, rule, regulation, ordinance, code, policy or
rule of common law in effect and in each case as amended as of
the Effective Date, and any judicial or administrative
interpretation thereof as of the Effective Date, including any
judicial or administrative order, consent decree or judgment,
relating to the environment, health, safety or Hazardous
Materials, including the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C.ss.
9601 et seq.; the Resource Conservation and Recovery Act, as
amended, 42 U.S.C.ss. 6901 et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C.ss. 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C.ss. 2601 et seq.; the Clean Air
Act, 42 U.S.C.ss.7401 et seq.; the Occupational Safety and Health
Act, 29 U.S.C.ss. 651 et seq.; the Safe Drinking Water Act, 42
U.S.C.ss. 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C.ss.
2701 et seq.; and their state and local counterparts and
equivalents.
(iv) "Environmental Claims" means administrative,
regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of non-compliance or violation,
investigations or proceedings relating in any way to any
Environmental Law or any permit issued under any such Law (hereafter
"Claims"), including (a) Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental
Law, and (b) Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment.
(v) "Release" means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying,
seeping, placing and the like, into or upon any land or water or
air, or otherwise entering into the environment.
(o) State Takeover Statutes . Assuming the accuracy of the
representations of the Purchaser contained in Section 3.02(e) of this Agreement,
the Board of Directors of the Company has approved the Offer, the Merger, the
Voting and Tender Agreement and this Agreement and Sections 607.0901 and
607.0902 of the FBCA are inapplicable to the Offer, the Merger, this Agreement,
the Voting and Tender Agreement and the other transactions contemplated by this
Agreement and the Voting and Tender Agreement. In the event the Special Meeting
is required to approve the Merger and the adoption of this Agreement, the
approval of the holders of a majority of the outstanding shares of Common Stock
is the only vote required to approve the Merger and the adoption of this
Agreement.
(p) Opinion of Financial Advisor. The Company has received the
opinion of Allen & Company Incorporated, to the effect that, as of the date of
this Agreement, the consideration to be received in the Offer and the Merger by
the Company's shareholders (other than Purchaser and Parent) is fair to the
Company's shareholders from a financial point of view and a copy of such opinion
has been, or will be, delivered to Parent and Purchaser.
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(q) Rights Agreement. The Board of Directors of the Company has
taken all necessary action to authorize, and the Company has taken, or will take
promptly, and notwithstanding any other provision of this Agreement will
continue to take promptly, all necessary action to (i) render the Rights
Agreement inapplicable with respect to the Offer, the Voting and Tender
Agreement and the Merger and (ii) ensure that (A) neither Purchaser nor any of
its Affiliates (as defined in the Rights Agreement) or Associates (as defined in
the Rights Agreement) is considered to be an Acquiring Person (as defined in the
Rights Agreement) and (B) provisions of the Rights Agreement, including the
occurrence of a Distribution Date (as defined in the Rights Agreement), are not
and shall not be triggered by reason of the announcement or consummation of the
Offer, the Voting and Tender Agreement or the Merger.
(r) Material Contracts. There exists no default on the part of the
Company or any of its Subsidiaries under any material contract or agreement to
which the Company or any of its Subsidiaries is a party, except for such default
which would not, and would be reasonably likely not to, have a Material Adverse
Effect on the Company.
3.02 Representations and Warranties of Parent and Purchaser.
Each of Parent and Purchaser represents and warrants to the Company as
follows:
(a) Due Organization; Good Standing and Corporate Power. Each of
Parent and Purchaser is a corporation duly organized, validly existing and, to
the extent applicable, in good standing under the laws of its jurisdiction of
incorporation. Each of Parent and Purchaser has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted except where the failure to have such power and
authority, individually or in the aggregate, would not prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
Purchaser was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement, has engaged in no other business activities and
has conducted its operations only as contemplated hereby. Purchaser has
previously delivered to the Company correct and complete copies of the articles
of incorporation and by-laws (or other comparable charter or organizational
documents) of Purchaser.
(b) Authorization and Validity of Agreement. Each of Parent and
Purchaser has the corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Purchaser, and the consummation by each of them of
the transactions contemplated hereby, have been duly authorized by the Board of
Directors of Parent and the Board of Directors and sole shareholder of
Purchaser. No other corporate action on the part of either Parent or Purchaser
is necessary to authorize the execution, delivery and performance of this
Agreement by each of Parent and Purchaser and the consummation by each of them
of the transactions contemplated hereby (other than, in the case of Purchaser,
the filing and recordation of appropriate merger documents as required by the
FBCA). This Agreement has been duly executed and delivered by Parent and
Purchaser and is a valid and binding obligation of each of Parent and Purchaser,
enforceable against each of Parent and Purchaser in accordance with its terms,
except that such enforcement may be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, and general equitable principles.
(c) Consents and Approvals; No Violations. In the event (i) the
filings required under the HSR Act are made and any applicable waiting period
thereunder has been terminated or has expired, (ii) the requirements of the
Exchange Act relating to the Proxy Statement and the Offer and the various "blue
sky laws" are met, and (iii) the filing of the Articles of Merger and other
appropriate merger documents, if any, as required by the FBCA, the execution and
delivery of this Agreement by Parent and Purchaser and the consummation by
Parent and Purchaser of the transactions contemplated hereby will not: (1)
violate any provision of the charter documents of Parent or the Articles of
Incorporation or By-Laws of Purchaser; (2) violate any statute, ordinance, rule,
regulation, order or decree of any court or of any governmental or regulatory
body, agency or authority applicable to Parent or Purchaser or by which either
of their respective properties or assets may be bound; (3) require any filing
with, or permit, consent or approval of, or the giving of any notice to any
governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any
Encumbrance upon any of the properties or assets of Parent or Purchaser or any
of their subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement, lease or
other instrument or obligation to which Parent or Purchaser or any of their
subsidiaries is a party, or by which they or their respective properties or
assets may be bound except, in the cases of clauses (2), (3) and (4) above, for
any such filing, permit, consent, approval, the failure to obtain or make which,
and except for any breach, violation or Encumbrance which, would not prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
(d) Broker's or Finder's Fee. Except for Deutsche Bank Securities
Inc. (whose fees and expenses as financial advisor to Parent and Purchaser will
be paid by Parent or Purchaser), no agent, broker, Person or firm acting on
behalf of Parent or Purchaser is, or will be, entitled to any fee, commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
(e) Parent Not an Affiliated Shareholder. As of the date hereof, (i)
neither Parent nor any of its affiliates is, with respect to the Company, an
"interested shareholder" as such term is defined in Section 607.0901 of the FBCA
and (ii) Parent and its subsidiaries collectively hold directly or indirectly
less than 1% of the outstanding voting shares of the Company.
(f) Financing. Parent will provide, or cause to be provided, to
Purchaser sufficient funds to consummate the Offer and the Merger in accordance
with this Agreement and to make all other necessary payments of fees and
expenses required to be paid by Parent and Purchaser to consummate the
transactions contemplated hereby.
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ARTICLE IV
TRANSACTIONS PRIOR TO EFFECTIVE DATE
4.01 Access to Information Concerning Properties and Records. (a)
During the period commencing on the date hereof and ending on the Effective
Date, the Company shall, and shall cause each of its Subsidiaries to, upon
reasonable notice, afford Parent, Purchaser, and their officers, employees,
counsel, accountants, consultants and other authorized representatives,
reasonable access during normal business hours to the properties, books,
contracts, commitments and records of the Company and its Subsidiaries. The
Company shall, and shall cause each of its Subsidiaries to, furnish promptly to
Parent and Purchaser (a) a copy of each report, schedule, registration statement
and other document filed by it or any of its Subsidiaries during such period
pursuant to the requirements of Federal or state securities laws and (b) all
other information concerning its or its Subsidiaries' business, properties and
personnel as Purchaser may reasonably request.
4.02 Confidentiality. Unless otherwise required by law or regulation
(including stock exchange rules) and until the Appointment Date, information
obtained by Parent and Purchaser and their respective officers, employees,
counsel, accountants, consultants and other authorized representatives pursuant
to Section 4.01 hereof shall be subject to the provisions of the Confidentiality
Agreement between the Company and Parent dated January 11, 2000 (the
"Confidentiality Agreement").
4.03 Conduct of the Business of the Company Pending the Effective
Date. The Company agrees that, except as permitted, required or contemplated by,
or otherwise described in this Agreement or otherwise consented to or approved
by Parent in writing (which consent or approval shall not be unreasonably
withheld, conditioned or delayed), during the period commencing on the date
hereof and ending on the earlier of (x) the date of termination of this
Agreement in accordance with Article VI hereof and (y) the time the designees of
Parent have been elected to, and shall constitute a majority of, the Board of
Directors of the Company pursuant to Section 1.03 hereof (the "Appointment
Date"):
(a) the Company and each of its Subsidiaries will conduct their
respective operations only according to their ordinary course of business
consistent with past practice, or current plans, and will use their commercially
reasonable efforts to preserve in all material respects their business
organizations, keep available the services of their officers and key employees
and maintain their existing relationships with material customers, suppliers,
distributors, licensors, clients and others having business relationships with
them;
(b) except as permitted, required or contemplated by this Agreement,
neither the Company nor any of its Subsidiaries shall: (i) make any change in or
amendment to its Articles of Incorporation or By-Laws (or comparable governing
documents); (ii) authorize for issuance, issue, sell or deliver (or agree or
commit to issue, sell or deliver), whether pursuant to the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase or
otherwise, any shares of its capital stock (other than in connection with the
exercise of Options outstanding on the date hereof); (iii) sell or pledge or
agree to sell or pledge any stock owned by
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it in any of its Subsidiaries or any other entity in which it has an equity
interest; (iv) acquire (by merger, consolidation, or acquisition of stock or
assets or otherwise) any material corporation, partnership or other business or
division thereof; (v) except in the ordinary course of business and except to
the extent required under existing employee and director benefit plans,
agreements or arrangements as in effect on the date of this Agreement, (a)
increase the compensation or fringe benefits of any of its directors, officers
or employees, (b) grant any severance or termination pay not currently required
to be paid under existing severance plans, (c) enter into any employment,
consulting or severance agreement or arrangement with any present or former
director, officer or employee of the Company or any of its Subsidiaries, or (d)
establish, adopt, enter into or amend or terminate any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees; (vi) except in the ordinary course of
business, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose
of, encumber or subject to any lien, any material assets or incur or modify any
indebtedness for borrowed money (other than indebtedness incurred under the
Amended and Restated Credit Agreement, dated as of July 30, 1999, between the
Company and Bank of America (the "Existing Credit Facility")); (vii) make any
material tax election or settle or compromise any material tax liability; (viii)
except as required by applicable law or generally accepted accounting
principles, make any change in its method of accounting; (ix) adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries not constituting an inactive Subsidiary (other than the
Merger); (x) make any material loans, advances or capital contributions to, or
investment in, any other Person other than to any Subsidiary of the Company;
(xi) declare, set aside or pay any dividends on, or make or cause to be made any
other distributions in respect of, any of its capital stock or other equity
securities or any interest in any Person other than dividends and distributions
by a direct or indirect Subsidiary of the Company to its parent; (xii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; (xiii) enter into any agreement providing for
the acceleration of payment or performance or other consequences as a result of
the transactions contemplated hereby or any other change of control of the
Company except to the extent permitted under Section 4.07; (xiv) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
Subsidiary or any rights, warrants or options to acquire any such shares or
other securities; (xv) enter into any contract or commitment with respect to
capital expenditures (individually or in the aggregate) in an amount in excess
of $2 million over the aggregate budgeted amount for all capital expenditures of
the Company and its Subsidiaries taken as a whole, (xvi) other than in the
ordinary course of business, cancel, amend or modify, in any material respect,
any material contract or agreement to which the Company or any of its
Subsidiaries is a party or enter into any material contract, or (xvii) agree, in
writing or otherwise, to take any of the foregoing actions.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to purchase or acquire, or offer to purchase or acquire, any shares
of capital stock of the Company.
4.04 Proxy Statement. If shareholder approval of the Merger is
required by law, as promptly as practicable after the purchase of shares of
Common Stock pursuant to the
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Offer, the Company will prepare and file a preliminary Proxy Statement with the
Commission and will use its reasonable efforts to respond to the comments of the
Commission in connection therewith and to furnish all information required to
prepare the definitive Proxy Statement (including, without limitation, financial
statements and supporting schedules and certificates and reports of independent
public accountants). Purchaser and the Company will cooperate with each other in
connection with the preparation of the Proxy Statement. Without limiting the
generality of the foregoing, Parent and Purchaser will furnish to the Company
the information relating to it required by the Exchange Act to be set forth in
the Proxy Statement. Promptly after the purchase of shares of Common Stock
pursuant to the Offer, if required by the FBCA to consummate the Merger, the
Company will cause the definitive Proxy Statement to be mailed to the
shareholders of the Company and, if necessary, after the definitive Proxy
Statement shall have been so mailed, promptly circulate amended, supplemental or
supplemented proxy material and, if required in connection therewith, resolicit
proxies.
4.05 Shareholder Approval.
(a) Promptly after the purchase of shares of Common Stock pursuant
to the Offer, if required by the FBCA to consummate the Merger, the Company,
acting through its Board of Directors, shall, in accordance with applicable law,
duly call, convene and hold a special meeting of the holders of Common Stock
(the "Special Meeting") for the purpose of voting upon this Agreement and the
Merger and the Company agrees that this Agreement and the Merger shall be
submitted at such special meeting. The Company shall use its reasonable efforts
to solicit from its shareholders proxies, and, subject always to the fiduciary
obligations of the Company's directors under applicable law as determined in
good faith by them after consulting with outside counsel, shall take all other
action necessary and advisable, to secure the vote of shareholders required by
applicable law to obtain the approval for this Agreement and the Merger. Subject
to the fiduciary obligations of the Company's directors under applicable law as
determined in good faith by them after consulting with outside counsel, the
Company agrees that it will include in the Proxy Statement the recommendation of
its Board of Directors that holders of Common Stock approve and adopt this
Agreement and approve the Merger. Parent and Purchaser will cause all shares of
Common Stock owned by them and their affiliates to be voted in favor of the
Merger.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 80% of the outstanding Company Common Stock pursuant to the
Offer, the Company agrees, at the request of Purchaser, subject to Article V, to
take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition, without a
meeting of the Company's shareholders, in accordance with Section 607.1104 of
the FBCA.
4.06 Reasonable Efforts. (a) Subject to the terms and conditions
provided herein, each of the Company and Parent and Purchaser shall, and the
Company shall cause each of its Subsidiaries to, cooperate and use their
respective commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, their
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respective reasonable efforts to obtain, prior to the Effective Date, all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company and
its Subsidiaries as are necessary for consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Offer and
the Merger.
(b) Prior to the Closing, each party shall promptly consult with the
other parties hereto with respect to and, subject to such confidentiality
agreements as may be reasonably necessary or requested, will provide any
necessary information with respect to and provide the other (or its counsel)
copies of, all filings made by such party with any governmental authority or any
other information supplied by such party to a governmental authority in
connection with this Agreement and the transactions contemplated by this
Agreement. Each party hereto shall promptly inform the other of any
communication from any governmental authority regarding any of the transactions
contemplated by this Agreement unless otherwise prohibited by law. If any party
hereto or affiliate thereof receives a request for additional information or
documentary material from any such governmental authority with respect to the
transactions contemplated by this Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. To the extent that transfers of permits are required as a
result of execution of this Agreement or consummation of the transactions
contemplated hereby, the Company shall use its commercially reasonable efforts
to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this Agreement shall
be deemed to require Parent, Purchaser or the Company to defend against any
litigation brought by any governmental authority seeking to prevent the
consummation of the transactions contemplated hereby.
4.07 No Solicitation of Other Offers.
(a) The Company will notify Parent and Purchaser promptly, and in
any event within one Business Day following the date of receipt thereof by the
Company (or if received, or requested or initiated or continued with someone
other than the Company when knowledge thereof is actually obtained by the
Company), if, on or after the date of this Agreement, any proposals are received
by, any information is requested from, or any negotiations or discussions are
sought to be initiated or continued with the Company or any of its officers,
directors, employees, investment bankers, attorneys, accountants or other
agents, in each case in connection with any Acquisition Proposal (as hereinafter
defined) or the possibility or consideration of making an Acquisition Proposal
("Acquisition Proposal Interest") indicating, in connection with such notice,
the name of the Person making such Acquisition Proposal or indicating such
Acquisition Proposal Interest and the material terms and conditions of any
proposals or offers. Subject to Sections 4.07(b), (c) and (d), the Company
agrees that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal or Acquisition Proposal Interest. The
Company agrees that it shall keep Parent and Purchaser informed, on a current
basis, of the status and material terms of any Acquisition Proposal or
Acquisition Proposal Interest.
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"Acquisition Proposal" shall mean any proposal or offer from any
Person or group relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company or any of its Subsidiaries or of all
or any portion of any class of equity securities of the Company or any of its
Subsidiaries, any tender offer or exchange offer that if consummated would
result in any Person beneficially owning all or any portion of any class of
equity securities of the Company or any of its Subsidiaries, any merger,
consolidation, business combination, recapitalization, liquidation or
dissolution involving the Company or any of its Subsidiaries or any transaction
or series of transactions having similar economic effect, other than the
transactions contemplated by this Agreement.
(b) Except as provided in Section 4.07(c), the Company, from the
date of this Agreement until the earlier of the termination of this Agreement
and the Effective Time, will not, nor shall it authorize or permit its officers,
directors, employees, to (and the Company will use commercially reasonable
efforts to ensure that such persons and the Company's investment bankers,
attorneys, accountants and other agents do not), directly or indirectly (i)
initiate, solicit or knowingly encourage, or knowingly take any action to
facilitate the making of, any offer or proposal which constitutes or is
reasonably likely to lead to any Acquisition Proposal, (ii) enter into any
agreement with respect to any Acquisition Proposal, or (iii) in the event of an
unsolicited Acquisition Proposal for the Company, engage in negotiations or
discussions with, or provide any information or data to, any Person (other than
Parent, any of its affiliates or representatives) relating to any Acquisition
Proposal; provided, however that nothing contained in this Section 4.07 shall
prohibit the Company or the Board of Directors from (A) taking and disclosing to
the Company's shareholders its position with respect to an offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, (B)
making such disclosure to the Company's shareholders as the Board of Directors
determines in good faith, after receipt of advice from outside legal counsel, is
required under applicable law or (C) otherwise complying with their fiduciary
duties to shareholders.
(c) Notwithstanding the foregoing, the Company may furnish
information concerning its business, properties or assets to any Person pursuant
to a confidentiality agreement with terms no less favorable to the Company than
those contained in the Confidentiality Agreement (as from time to time amended
or waived) and may negotiate and participate in discussions and negotiations
with such Person concerning an Acquisition Proposal if (x) such entity or group
has on an unsolicited basis submitted a bona fide written proposal to the
Company relating to any such transaction which the Board of Directors determines
in good faith, after receiving advice from a nationally recognized investment
banking firm, is (or could result in) a transaction superior to the Offer and
the Merger and (y) in the good faith opinion of the Board of Directors, after
consultation with outside legal counsel, providing such information or access or
engaging in such discussions or negotiations is in the best interests of the
Company and its shareholders and failure to provide such information or access
or engage in such discussion or negotiations is inconsistent with the exercise
of the fiduciary duties of the Board under applicable law (an Acquisition
Proposal which satisfies clauses (x) (without regard to the phrase in
parentheses) and (y) being referred to herein as a "Superior Proposal"). The
Company shall promptly, and in any event within one Business Day following
receipt of a Superior Proposal, notify Parent of the receipt thereof. The
Company shall promptly provide to Parent any material
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non-public information regarding the Company provided to any other party which
was not previously provided to Parent.
(d) Except as set forth herein, neither the Board of Directors nor
any committee thereof permitted by law to do so shall (i) withdraw or modify, or
propose (publicly or to a third party) to withdraw or modify, in any manner
adverse to Parent or Purchaser, the approval or recommendation by such Board of
Directors or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend or propose (publicly or to a third party) to approve or
recommend, any Acquisition Proposal or (iii) enter into any acquisition
agreement with respect to, or any other agreement which would approve, adopt or
effect, any Acquisition Proposal (other than a confidentiality agreement as
contemplated by Section 4.07(c)). Notwithstanding the foregoing, the Board of
Directors may (I) withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger to the extent where not to do so would be
inconsistent with the Board's fiduciary duties under applicable law and (II)
approve or recommend a Superior Proposal, or enter into an acquisition agreement
with respect to, or any other agreement which would approve, adopt or effect, a
Superior Proposal, in the case of either clause (I) or (II), at any time after
the third business day following the Company's delivery to Parent of written
notice advising Parent that the Board of Directors intends to enter into an
agreement with respect to a Superior Proposal.
4.08 Notification. The Company shall give prompt notice to Parent
and Parent shall give prompt notice to the Company, of (a) the occurrence (or
non-occurrence) of any event the occurrence (or non-occurrence) of which would,
or would reasonably be expected to, cause either (i) any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate in
any material respect at any time from the date hereof to the Effective Time or
(ii) any condition set forth in Annex A to be unsatisfied in any material
respect at any time from the date hereof to the date Purchaser purchases Shares
pursuant to the Offer (except to the extent any such condition refers to a
specific date) and (b) any material failure of the Company, Purchaser or Parent,
as the case may be, or any officer, director, employee or agent thereof, to
comply with any covenant, condition or agreement to be complied with, satisfied
or performed by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.08 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice or the representations
and warranties of the parties or the conditions to the obligations of the
parties hereto.
4.09 HSR Act. The Company and Purchaser shall, as soon as
practicable and in any event within five business days from the date of this
Agreement, file Notification and Report Forms under the HSR Act with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") and shall use their best efforts to respond
as promptly as practicable to all inquiries received from the FTC or the
Antitrust Division, including without limitation a request for additional
information or documentation.
4.10 Employee Benefits.
(a) Until December 31, 2000, Purchaser and its affiliates shall
ensure that all employees and officers of the Company and its Subsidiaries
receive (i) the salary or wage level
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and bonus opportunity, to the extent applicable, at least equal to that in
effect immediately prior to the date hereof, and (ii) benefits and other terms
and conditions of employment that are substantially comparable in the aggregate
to the benefits and terms and conditions received by such individuals
immediately prior to the date hereof. Subject to the preceding sentence, nothing
contained in this Agreement shall require Purchaser and its affiliates to
provide comparable awards of equity-based compensation. Notwithstanding the
foregoing, following the Effective Time, the Purchaser may terminate the
employment of any employee (subject, for any such termination prior to January
1, 2001, to the payment of severance benefits payable to the employee in
connection with such termination under any plan, practice or policy of the
Company or any of its Subsidiaries and full payment and satisfaction of the
employee's rights under any employment agreement). Until December 31, 2000,
Purchaser and its affiliates shall keep in effect all severance and retention
plans, practices and policies that are applicable to employees and officers of
the Company and its Subsidiaries immediately prior to the date hereof.
(b) Following the Effective Time, each employee benefit plan or
policy, including without limitation, vacation, floating holiday, sickness, paid
time off, retirement, severance and welfare plans sponsored by Purchaser or its
affiliates shall credit, for purposes of eligibility to participate and vesting
but not benefit accrual, all continuous service immediately prior to the
Effective Time of employees and officers of the Company and its Subsidiaries
with the Company and its Subsidiaries and their respective predecessors.
4.11 Indemnification of Directors and Officers of the Company.
(a) From and after the Effective Time, the Surviving Corporation
shall indemnify, defend and hold harmless any person who is now, or has been at
any time prior to the date hereof, or who becomes prior to the Effective Time,
an officer or director (the "Indemnified Party") of the Company or any of its
Subsidiaries against all losses, claims, damages, liabilities, costs and
expenses (including reasonable attorney's fees and expenses), judgments, fines,
losses, and amounts paid in settlement (provided that any such settlement is
effected with the written consent of Parent or the Surviving Corporation, which
consent shall not be unreasonably withheld) in connection with any actual or
threatened action, suit, claim, proceeding or investigation (whether arising
before or after the Effective Time) (each a "Claim") to the extent that any such
Claim is based on, or arises out of, (i) the fact that such person is or was a
director or officer of the Company or any of its Subsidiaries or is or was
serving at the request of the Company or any of its Subsidiaries as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise, or (ii) this Agreement, or any of the transactions contemplated
hereby, in each case to the extent that any such Claim pertains to any matter or
fact arising, existing, or occurring prior to or at the Effective Time,
regardless of whether such Claim is asserted or claimed prior to, at or after
the Effective Time, to the full extent permitted under applicable law or the
Company's Articles of Incorporation, By-Laws or indemnification agreements in
effect at the date hereof, including provisions relating to advancement of
expenses incurred in the defense of any action or suit. Without limiting the
foregoing, in the event any Indemnified Party becomes involved in any capacity
in any Claim, then from and after the Effective Date, the Surviving Corporation
shall periodically advance to such Indemnified Party its reasonable legal and
other expenses (including the cost of any investigation and preparation incurred
in connection therewith), subject to the provision by such Indemnified Party of
an
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undertaking to reimburse the amounts so advanced in the event of a final
non-appealable determination by a court of competent jurisdiction that such
Indemnified Party is not entitled thereto.
(b) All rights to indemnification and all limitations on liability
existing in favor of an Indemnified Party as provided in the Company's Articles
of Incorporation, By-Laws or indemnification agreements as in effect as of the
date hereof shall survive the Merger and shall continue in full force and
effect, without any amendment thereto, for a period of six years from the
Effective Date to the extent such rights are consistent with applicable law;
provided, that in the event any claim or claims are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims; provided,
further, that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under Florida
law, the Company's Article of Incorporation or By-Laws or such agreements, as
the case may be, shall be made by independent legal counsel selected by the
Indemnified Party and reasonably acceptable to the Surviving Corporation; and
provided, further, that nothing in this Section 4.11 shall impair any rights or
obligations of any present or former directors or officers of the Company.
(c) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the surviving corporation or entity of such consolidation or merger
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary to
effectuate the purposes of this Section 4.11, proper provision shall be made so
that the successors and assigns of the Surviving Corporation, as the case may
be, assume the obligations set forth in this Section 4.11 and none of the
actions described in the foregoing clauses (i) or (ii) shall be taken until such
provision is made.
(d) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect, without any lapses
in coverage, policies of directors' and officers' liability insurance (or a
"tail" policy), for the benefit of those persons who are covered by the
Company's directors' and officers' liability insurance policies as of the date
hereof, providing coverage with respect to matters occurring prior to the
Effective Time that is at least equal to the coverage provided under the
Company's current directors' and officers' liability insurance policies (copies
of which have heretofore been delivered to Parent), to the extent that such
liability insurance can be maintained at an annual cost to the Surviving
Corporation of not greater than 200 percent of the premium for the current
Company directors' and officers' liability insurance, provided that if such
insurance (or "tail" policy) cannot be so maintained at such cost, the Surviving
Corporation shall maintain as much of such insurance as can be so maintained at
a cost equal to 200 percent of the current annual premiums of the Company for
such insurance.
(e) This Section 4.11 is intended to be for the benefit of, and
shall be enforceable by, the Indemnified Parties, their heirs and personal
representatives, and shall be binding on Parent and the Surviving Corporation
and their successors and assigns.
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ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.01 Conditions Precedent to Obligations of Parent, Purchaser and
the Company. The respective obligations of Parent and Purchaser, on the one
hand, and the Company, on the other hand, to effect the Merger are subject to
the satisfaction at or prior to the Effective Time of each of the following
conditions, any and all of which may be waived in whole or in part by,
respectively, the Company, on the one hand, and Parent, on the other hand, to
the extent permitted by applicable law:
(a) Approval of Company's Shareholders. To the extent required by
applicable law, this Agreement and the Merger shall have been approved and
adopted by holders of a majority of the outstanding shares of the Common Stock
of the Company entitled to vote in accordance with applicable law (if required
by applicable law) and the Company's Articles of Incorporation and By-Laws;
(b) HSR Act. Any applicable waiting period (and any extension
thereof) under the HSR Act applicable to the Merger shall have expired or been
terminated;
(c) Injunction. No preliminary or permanent injunction or other
order shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the consummation of the Merger and the
transactions contemplated by this Agreement and which is in effect at the
Effective Time; provided, however, that, in the case of a decree, injunction or
other order, any party asserting this condition shall have used its reasonable
efforts to prevent the entry of any such decree, injunction or other order and
to appeal as promptly as possible any decree, injunction or other order that may
be entered;
(d) Statutes. No statute, rule, regulation, executive order, decree
or order of any kind shall have been enacted, entered, promulgated or enforced
by any United States or United Kingdom court or governmental authority which
prohibits the consummation of the Merger; and
(e) Payment for Common Stock. Purchaser shall have accepted for
payment and paid for the Shares validly tendered and not withdrawn pursuant to
the Offer; provided, that the foregoing shall not be a condition to Purchaser's
obligation to consummate the Merger if Purchaser's failure to purchase any
Shares violates the terms of the Offer.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the Company's
shareholders:
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(a) by mutual written consent of the Company, on the one hand,
and of Parent, on the other hand;
(b) by either Parent, on the one hand, or the Company, on the other
hand, if any governmental or regulatory agency shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, shares of
Common Stock pursuant to the Offer or the Merger and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by Parent, on the one hand, or the Company, on the other hand,
if Purchaser has not purchased all shares of Common Stock tendered pursuant to
the Offer within 90 days after commencement of the Offer (the "Outside Date"),
unless such purchase shall not have occurred because of a material breach of any
representation, warranty, obligation, covenant or agreement set forth in this
Agreement on the part of the party seeking to terminate this Agreement;
(d) by Parent if the Offer is terminated or expires in accordance
with its terms without Purchaser having purchased any Common Stock thereunder
due to an occurrence which would result in a failure to satisfy any of the
conditions set forth on Annex A hereto, unless any such failure shall have been
caused by or resulted from the material breach by Purchaser or Parent of any
representation, warranty, obligation, covenant or agreement contained in this
Agreement;
(e) by Parent, if, prior to the purchase of shares of Common Stock
in the Offer, the representations and warranties of the Company set forth in
this Agreement which are not qualified by "Material Adverse Effect" shall not be
true and correct and the fact, matter or circumstance giving rise to such
untruth or incorrectness would have, or would reasonably likely to have a
Material Adverse Effect, and the representations and warranties that are
qualified by "Material Adverse Effect" shall not be true in any respect, at any
time after the date hereof (except for those representations and warranties that
address matters only as of a particular date or only with respect to a specific
period of time which need only be true and accurate as of such date or with
respect to such period), or the Company shall have breached or failed to perform
or comply in any material respect with any obligation, agreement or covenant
required by this Agreement to be performed or complied with by it, and, with
respect to any such breach or failure to perform that is reasonably capable of
being remedied within the time periods set forth below, the breach or failure to
perform is not remedied prior to the earlier of (x) 10 days after Parent or
Purchaser has furnished the Company with written notice of such breach or
failure to perform or (y) two business days prior to the date on which the Offer
expires; provided, however, that Parent shall not be entitled to terminate this
Agreement pursuant to this Section 6.01(e) if it or Purchaser is in material
breach of its representations and warranties, covenants or other obligations
under this Agreement;
(f) by the Company to allow the Company to enter into an agreement
in accordance with Section 4.07(d) with respect to a Superior Proposal which the
Board of Directors has determined is more favorable to the shareholders of the
Company than the transactions contemplated hereby; provided, however, that the
Company shall have complied in
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all material respects with Section 4.07, including the notice provision, and
that it makes simultaneous payment of the Termination Fee;
(g) by Purchaser, if the Board of Directors of the Company or any
committee thereof, shall have (i) withdrawn, modified or changed in a manner
adverse to Parent or Purchaser its approval or recommendation of the Offer, the
Merger or this Agreement or (ii) approved, taken a neutral position with respect
to, or recommended to the shareholders of the Company any alternative
Acquisition Proposal;
(h) by the Company, if prior to purchase of shares in the Offer
there shall have been a breach or failure to perform on the part of Purchaser or
Parent of any of its representations, warranties, covenants or agreements
contained in this Agreement and such breach or failure to perform has a material
adverse effect on the ability of Purchaser or Parent to consummate the Offer or
the Merger, and, with respect to any such breach or failure to perform that is
reasonably capable of being remedied within the time periods set forth below,
the breach or failure to perform is not remedied prior to the earlier of (x) 10
days after the Company has furnished Parent with written notice of such breach
or failure to perform or (y) two business days prior to the date on which the
Offer expires unless such failure shall have been caused by the failure of the
Company to satisfy the conditions set forth in paragraph (c) or (d) of Annex A;
(i) by the Company, if Purchaser shall have (i) failed to commence
the Offer within seven Business Days following the date of this Agreement, or
(ii) terminated the Offer or the Offer shall have expired without Purchaser
having purchased any Shares thereunder unless such failure shall have been
caused by the failure of the Company to satisfy the conditions set forth in
paragraph (c) or (d) of Annex A.
6.02 Effect of Termination. (a) In the event of the termination of
this Agreement pursuant to Section 6.01 hereof by Purchaser, on the one hand, or
the Company, on the other hand, written notice thereof shall forthwith be given
to the other party or parties specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall become void and have no
effect, and there shall be no liability hereunder on the part of Parent,
Purchaser or the Company, except (i) as set forth in Sections 4.02, 7.01 and
this Section 6.02 hereof, which shall survive any termination of this Agreement,
and (ii) nothing in this Section 6.02 shall relieve any party to this Agreement
of liability for breach of this Agreement.
(b) If the Company shall have terminated this Agreement pursuant to
Section 6.01(f), then the Company shall pay simultaneously with such termination
a fee (the "Termination Fee") of $13.5 million which amount shall be payable by
wire transfer to such account as Parent may designate in writing to the Company.
(c) If the Purchaser shall have terminated this Agreement pursuant
to Section 6.01(g), then the Company shall pay within two Business Days
following such termination to Parent the Termination Fee which shall be payable
by wire transfer to such account as Parent may designate in writing to the
Company.
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ARTICLE VII
MISCELLANEOUS
7.01 Fees and Expenses. Except as otherwise provided in Section
6.02, all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
7.02 Representations and Warranties. The respective representations
and warranties of the Company, on the one hand, and Purchaser, on the other
hand, contained herein or in any certificates or other documents delivered prior
to or at the Closing Date shall not be deemed waived or otherwise affected by
any investigation made by any party. Each and every such representation and
warranty shall expire with, and be terminated and extinguished by, the Effective
Time and thereafter none of the Company or Purchaser shall be under any
liability whatsoever with respect to any such representation or warranty. This
Section 7.02 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Effective Time.
7.03 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company or Purchaser, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
7.04 Public Announcements. The Company, on the one hand, and
Purchaser, on the other hand, agree to consult promptly with each other prior to
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated hereby, and shall not issue any such press
release or make any such public statement prior to such consultation and review
by the other party of a copy of such release or statement. To the extent, if
any, that the Confidentiality Agreement is inconsistent with this Section 7.04,
the Confidentiality Agreement is hereby amended.
7.05 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
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<PAGE>
(a) if to the Company, to it at:
Travel Services International, Inc.
220 Congress Park Drive
Delray Beach, FL 33445
Telecopier: (561) 266-6186
Attention: Suzanne Bell, Esq.
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Telecopier: (212) 354-8113
Attention: John M. Reiss, Esq.
Jorge L. Freeland, Esq.
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<PAGE>
(b) if to Purchaser or Parent, to it at:
Airtours plc
Parkway One, Parkway Business Centre
300 Princess Road
Manchester M 147QU
United Kingdom
Telecopier: 011-44-161-232-6562
Attention: James Jennings, Esq.
Greg McMahon
with copies to:
Morgan Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Telecopier: (212) 309-6273
Attention: John Whitehead, Esq.
and
Addleshaw Booth & Co.
100 Barbirolli Square
Manchester M2 3AB England
Telecopier: 011-44-161-934-6060
Attention: Paul Devitt
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
7.06 Entire Agreement. This Agreement and the annex, schedules and
other documents referred to herein or delivered pursuant hereto, collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto.
7.07 Binding Effect; Benefit; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and, with respect to
the provisions of Sections 4.10 or 4.11 hereof, shall inure to the benefit of
the Persons benefiting from the provisions thereof who are intended to be third
party beneficiaries thereof, and, in each such case, their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
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<PAGE>
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties. Except as
specified in the previous sentence, nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the parties hereto or
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
7.08 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN, AND IN ALL RESPECT
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS
OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS TO BE PERFORMED WHOLLY IN SUCH
STATE. The parties hereby irrevocably submit to the jurisdiction of the federal
courts of the United States of America located in the State of Florida and the
state courts of the State of Florida, solely in respect of the interpretation
and enforcement of the provisions of this Agreement and in respect of the
transactions contemplated hereby and hereby waive, and agree not to assert, as a
defense in any action, suit or proceeding for the interpretation or enforcement
hereof, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the venue
thereof may not be appropriate or that this Agreement may not be enforced in or
by such courts, and the parties irrevocably agree that all claims with respect
to such action or proceeding shall be heard and determined in such a court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 7.05, or in such other manner as
may be permitted by law, shall be valid and sufficient service thereof.
(b) IN ANY CIVIL ACTION, COUNTERCLAIM OR PROCEEDING, WHETHER AT LAW
OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR RELATES TO THIS AGREEMENT, AND
ANY AND ALL TRANSACTIONS CONTEMPLATED HEREUNDER, THE PERFORMANCE HEREOF, OR THE
RELATIONSHIP CREATED HEREBY, WHETHER SOUNDING IN CONTRACT, TORT, STRICT
LIABILITY OR OTHERWISE, TRIAL WILL BE TO A COURT OF COMPETENT JURISDICTION AND
NOT TO A JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO OF THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. NEITHER PARTY HAS MADE OR
RELIED UPON ANY ORAL REPRESENTATIONS TO OR BY ANY OTHER PARTY REGARDING THE
ENFORCEABILITY OF THIS PROVISION. EACH PARTY HAS READ AND UNDERSTANDS THE EFFECT
OF THIS JURY WAIVER PROVISION.
7.09 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Effective Time (notwithstanding any
shareholder approval), by action taken by the respective Boards of Directors of
Purchaser and the Company or by the respective officers authorized by such
Boards of Directors; provided, however, that after any such shareholder
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<PAGE>
approval, no amendment shall be made which by law requires further approval by
such shareholders without such further approval.
7.10 Further Actions. Each of the parties hereto agrees that,
subject to its legal obligations, it will use its best efforts to fulfill all
conditions precedent specified herein, to the extent that such conditions are
within its control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
7.11 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
7.12 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
7.13 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
7.14 Certain Definitions.
(a) "Business Day" shall mean any day, other than a Saturday, Sunday
or a day on which banks located in New York, New York shall be authorized or
required by law to close.
(b) "Knowledge" Defined. When any representation or warranty
contained in this Agreement or in the Company Disclosure Letter is expressly
qualified by the knowledge of the Company, such knowledge shall mean the
actual knowledge of Messrs. Joseph Vittoria and John Balson.
(c) "Person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, a limited liability company, an
unincorporated organization, a group and a government or other department or
agency thereof.
(d) "Subsidiary" with respect to the Company, shall mean and include
(x) any partnership of which the Company or any Subsidiary is a general partner
or (y) any other entity in which the Company or any of its Subsidiaries owns or
has the power to vote 50% or more of the equity interests in such entity having
general voting power to participate in the election of the governing body of
such entity.
7.15 Transfer Taxes. All stamp, transfer, documentary, sales, use,
registration and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the transactions
contemplated hereby (collectively, the "Transfer Taxes") shall be paid by
Purchaser, and Purchaser shall, at its own expense, procure any stock transfer
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<PAGE>
stamps required by, and properly file on a timely basis all necessary tax
returns and other documentation with respect to, any Transfer Tax and provide to
the Company evidence of payment of all Transfer Taxes.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, each of Parent, Purchaser and the Company have caused
this Agreement and Plan of Merger to be executed by their respective officers
thereunto duly authorized, all as of the date first above written.
AIRTOURS plc
By /s/ James S. Jennings
--------------------------------------
Name: James S. Jennings
Title: Director of Corporate Development
BLUE SEA FLORIDA ACQUISITION INC.
By /s/ James S. Jennings
--------------------------------------
Name: James S. Jennings
Title: Vice President
TRAVEL SERVICES INTERNATIONAL, INC.
By /s/ Suzanne B. Bell
--------------------------------------
Name: Suzanne B. Bell
Title: Senior Vice President, General
Counsel and Secretary
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<PAGE>
ANNEX A
-------
The capitalized terms used in this Annex A shall have the meanings
set forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex A is
appended.
- --------------------------------------------------------------------------------
Notwithstanding any other provision of the Offer, and in addition to
(and not in limitation of) Purchaser's right to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, pay for any Shares validly tendered pursuant to the
Offer and may postpone the acceptance of and, subject to the restrictions
referred to above, payment for, Shares tendered pursuant to the Offer, (i) if
any applicable waiting period under the HSR Act shall not have expired or been
terminated or (ii) there shall not have been validly tendered and not properly
withdrawn prior to the expiration of the Offer that number of Shares
representing more than 50% of all Shares outstanding (calculated on a fully
diluted basis, which shall mean, as of any date, the number of Shares that are
actually issued and outstanding plus the number of Shares that the Company is
required to issue pursuant to obligations outstanding under convertible
securities, Options and otherwise on the date of purchase) (the "Minimum
Condition"). Additionally and without limiting the foregoing, notwithstanding
any other provision of the Offer but only in accordance with the provisions of
Section 1.01(a) of the Merger Agreement, Purchaser shall not be required to
accept for payment or, subject to the restrictions referred to above, pay for
any Shares, and may terminate or amend the Offer and may postpone the acceptance
of, subject to the restrictions referred to above, payment for Shares, if at any
time on or after the date of the Merger Agreement and at or before the time of
payment for any such Shares (whether or not any Shares have theretofore been
accepted for payment or paid for pursuant to the Offer) any of the following
events shall occur:
(a) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction enacted, entered, enforced,
promulgated, amended, issued, or
<PAGE>
Annex A
Page 2
applied by, any legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or foreign, other
than the routine application of the waiting period provisions of the HSR Act to
the Offer or to the Merger, which is in effect and would, or would be reasonably
likely to: (i) make illegal or otherwise directly or indirectly prohibit the
Offer or the Merger, (ii) prohibit or materially limit the ownership or
operation by Parent or Purchaser of all or any material portion of the business
or assets of the Company and its Subsidiaries taken as a whole or of Parent or
to compel Purchaser or Parent to dispose of or hold separately all or any
material portion of the business or assets of Parent, the Company and their
respective Subsidiaries, in each case taken as a whole, or seeking to impose any
material limitation on the ability of Purchaser to conduct its business or own
such assets, (iii) impose material limitations on the ability of Purchaser or
render the Purchaser unable, to accept, pay for or purchase some or all of the
Shares pursuant to the Offer and the Merger, or (iv) seek to impose material
limitation on the ability of Purchaser or Parent effectively to exercise rights
of ownership of the shares of Common Stock, including, without limitation, the
right to vote any shares of Common Stock acquired or owned by Purchaser on all
matters properly presented to the Company's shareholders, or require divestiture
by Purchaser of any shares of Common Stock;
(b) there shall be threatened in writing or pending any suit, action
or proceeding by any United States or United Kingdom governmental authority
against the Purchaser, Parent, the Company or any Subsidiary of the Company that
is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a) above;
(c) any of the representations or warranties made by the Company in
the Merger Agreement that are qualified by Material Adverse Effect shall be
untrue or incorrect, or any such representation and warranty that is not so
qualified shall be untrue or incorrect to the extent that such inaccuracy would,
in each case as of the date of the final scheduled expiration of the Offer
result in a Material Adverse Effect, except (i) for changes specifically
permitted by this Agreement and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and
correct, as of such date;
(d) the Company shall have failed in a material respect to perform
or to comply with any agreement or covenant of the Company to be performed or
complied with by it under this Agreement and, with respect to any such breach or
failure to perform that is reasonably capable of being remedied within the time
periods set forth below, the breach or failure to perform is not remedied prior
to the earlier of (x) 10 days after the Purchaser has furnished the Company with
written notice of such breach or failure to perform or (y) two business days
prior to the date on which the Offer expires;
(e) the Merger Agreement shall have been terminated in accordance
with its terms; or
(f) since the date of this Agreement, there shall have occurred any
change (or any development that would be reasonably likely to result in any
change) that constitutes a Material Adverse Effect on the Company;
<PAGE>
Annex A
Page 3
(g) the Board of Directors of the Company or any committee thereof
shall have withdrawn, modified or changed in a manner adverse to Parent or the
Purchaser its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Acquisition Proposal or the Company
shall have entered into any acquisition agreement with respect to, or any other
agreement that would approve, adopt or effect, any Superior Proposal in
accordance with Section 4.07(d) of this Agreement; or
(h) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the London Stock Exchange, the
New York Stock Exchange, the American Stock Exchange or the NASDAQ Stock Market
for a period in excess of 24 hours (excluding suspensions or limitations
resulting solely from physical damage or interference with such exchanges not
related to market conditions), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or the United
Kingdom (whether or not mandatory), (iii) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States or the United Kingdom that constitutes a Company
Material Adverse Effect or materially adversely affects or delays the
consummation of the Offer, or (iv) any material limitation (whether or not
mandatory) by any United States or United Kingdom governmental authority on the
extension of credit generally by banks or other financial institutions;
which, in the good faith judgment of Purchaser, in any such case, and
regardless of the circumstances giving rise to such condition, make it
inadvisable to proceed with the Offer and/or with such acceptance or payment or
payments for shares of Common Stock.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and, subject to the provisions of the Agreement may be asserted by Parent or
Purchaser regardless of the circumstances giving rise to such condition and may
be waived by Parent or Purchaser in whole or in part. The failure by Purchaser
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any right, and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
<PAGE>
EXECUTION COPY
==============================================================================
STOCK VOTING AND TENDER AGREEMENT
BY AND AMONG
AIRTOURS plc,
BLUE SEA FLORIDA ACQUISITION INC.
AND
THE INDIVIDUALS NAMED HEREIN
Dated as of February 27, 2000
==============================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. Tender of Shares.......................................................1
2. Provisions Concerning the Securities...................................2
(a) Agreement to Vote the Securities.................................2
(b) Grant of Proxy...................................................2
(c) Other Proxies Revoked............................................3
3. Representations and Warranties of each Shareholder.....................3
(a) Authority, etc...................................................3
(b) Ownership of Securities..........................................3
(c) No Conflicts.....................................................3
(d) No Finder's Fees.................................................3
(e) No Encumbrances..................................................4
(f) Reliance by Parent and Purchaser.................................4
4. Representations and Warranties of Parent and Purchaser.................4
(a) Due Organization, etc............................................4
(b) No Conflicts.....................................................4
(c) Investment Intent................................................4
5. Covenants of each Shareholder..........................................5
(a) Restriction on Transfer, Proxies and Non-Interference............5
(b) Stop Transfer; Changes in Subject Shares.........................5
6. Fiduciary Duties.......................................................5
7. Certain Other Agreements...............................................5
8. Miscellaneous..........................................................6
(a) Further Assurances...............................................6
(b) Entire Agreement.................................................6
(c) Assignment.......................................................6
(d) Amendments, Waivers, Etc.........................................6
(e) Notices..........................................................6
(f) Severability.....................................................7
<PAGE>
(g) Specific Performance.............................................8
(h) Remedies Cumulative..............................................8
(i) No Waiver........................................................8
(j) No Third Party Beneficiaries.....................................8
(k) Governing Law....................................................8
(l) Submission to Jurisdiction; Waiver of Jury Trial.................8
(m) Descriptive Headings.............................................9
(n) Counterparts.....................................................9
9. Termination............................................................9
<PAGE>
STOCK VOTING AND TENDER AGREEMENT
STOCK VOTING AND TENDER AGREEMENT (this "Agreement") dated as of
February 27, 2000, by and among Airtours plc, a corporation organized under the
laws of the United Kingdon ("Parent"), Blue Sea Florida Acquisition Inc., a
Florida corporation and an indirect wholly-owned subsidiary of Parent (the
"Purchaser"), and the individuals listed on Schedule I hereto (each a
"Shareholder," and collectively, the "Shareholders").
WHEREAS, prior to entering into this Agreement, Parent, Purchaser
and Travel Services International, Inc., a Florida corporation (the "Company"),
entered into an Agreement and Plan of Merger, dated as of February 21, 2000 (the
"Merger Agreement"), pursuant to which the Purchaser (i) will make a tender
offer for all of the outstanding shares of common stock of the Company and the
associated common stock purchase rights (the "Rights") issued pursuant to the
Shareholders Rights Agreement, dated as of January 28, 1999, by and between the
Company and American Stock Transfer & Trust Company (as amended on February 21,
2000, the "Rights Agreement"), subject to the terms and conditions of the Merger
Agreement (such offer as it may be amended from time to time as permitted under
the Merger Agreement, the "Offer"), and (ii) the Purchaser will be merged with
and into the Company (the "Merger");
WHEREAS, each Shareholder has agreed that such Shareholder shall
tender all Shares beneficially owned by such Shareholder in the Offer as set
forth herein; and
WHEREAS, terms defined in the Merger Agreement shall, unless this
Agreement or the context requires otherwise, have the same meanings in this
Agreement as in the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Tender of Shares.
(a) Each Shareholder hereby agrees to validly tender (and not to
withdraw) pursuant to and in accordance with the terms of the Offer (provided
that the Offer is not amended in a manner prohibited by the Merger Agreement),
in a timely manner for acceptance by Purchaser in the Offer, all shares of
Common Stock and the associated Rights (collectively, the "Shares") owned by
such Shareholder as of the date hereof and any Shares hereafter acquired (all
securities owned as of the date hereof and all securities hereinafter acquired,
the "Securities"). Each Shareholder hereby acknowledges and agrees that the
Purchaser's obligation to accept for payment and pay for the Shares in the
Offer, including the Securities, is subject to the terms and conditions of the
Offer.
(b) Each Shareholder hereby agrees to permit the Purchaser to
publish and disclose in the Offer Documents (and any other press release or
announcement which may be issued in accordance with the terms of the Merger
Agreement) and, if approval of the
<PAGE>
shareholders of the Company is required under applicable law, the Proxy
Statement (including all documents and schedules filed with the SEC) his
identity and intent in the Securities and the nature of his commitments,
arrangements and understandings under this Agreement.
2. Provisions Concerning the Securities.
(a) Agreement to Vote the Securities. Each Shareholder hereby agrees
that during the period commencing on the date hereof and continuing until the
Effective Time (such period, the "Voting Period"), at any meeting of the holders
of any class or classes of the capital stock of the Company, however called, or
in connection with any written consent of the holders of any class or classes of
the capital stock of the Company, such Shareholder shall vote (or cause to be
voted) the Securities (i) in favor of the Merger, and the approval of the terms
of the Merger Agreement and each of the other transactions contemplated by the
Merger Agreement and this Agreement and any actions required or desirable in
furtherance thereof, (ii) against any action, transaction or agreement that
would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or this Agreement, and (iii) except as otherwise agreed to in writing
in advance by Purchaser, against the following actions (other than the Merger
and the transactions contemplated by the Merger Agreement): (A) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries; (B) a
sale, lease or transfer of a material amount of assets of the Company or any of
its subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company or any of its subsidiaries; (C) (I) any change in a
majority of the Persons who constitute the board of directors of the Company;
(II) any change in the present capitalization of the Company or any amendment of
the Company's Articles of Incorporation or By-laws; (III) any other material
change in the Company's corporate structure or business; or (IV) any other
action involving the Company or any of its subsidiaries which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger or any of the transactions contemplated
by this Agreement or the Merger Agreement. Each Shareholder hereby agrees that
such Shareholder shall not enter into any agreement or understanding with any
Person the effect of which would be to violate the provisions and agreements
contained in this Section 2.
(b) Grant of Proxy. Each Shareholder hereby appoints Purchaser and
any designee of Purchaser, each of them individually, such Shareholder's proxy
and attorney-in-fact pursuant to the provisions of Section 607.0722 of the
Florida Business Corporation Act, with full power of substitution and
resubstitution, to vote or act by written consent during the Voting Period with
respect to the Securities in accordance with paragraph (a) of this Section. This
proxy is given to secure the performance of the duties of each Shareholder under
this Agreement. Each Shareholder affirms that this proxy is coupled with an
interest and shall be irrevocable. Each Shareholder shall take such further
action or execute such other instruments as may be necessary or desirable to
effectuate the intent of this proxy. THE AUTHORITY GRANTED HEREUNDER (THE
"PROXY") SHALL BE IRREVOCABLE UNTIL THE EARLIER OF (X) THE EFFECTIVE TIME AND
(Y) THE DATE ON WHICH THIS AGREEMENT IS TERMINATED AND DEEMED TO BE COUPLED WITH
AN INTEREST SUFFICIENT IN
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<PAGE>
LAW AS REQUIRED BY SECTION 607.0722 OF THE FLORIDA BUSINESS CORPORATION ACT.
(c) Other Proxies Revoked. Each Shareholder represents and warrants
that any proxies heretofore given in respect of such Shareholder's Securities
are not irrevocable, and that all such proxies have been or are hereby revoked.
3. Representations and Warranties of each Shareholder. Each
Shareholder hereby severally, and not jointly, represents and warrants to Parent
and Purchaser (as to such Shareholder) as follows:
(a) Authority, etc. Such Shareholder has all necessary power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by such Shareholder
have been duly authorized by all necessary action on the part of such
Shareholder and, assuming the due authorization, execution and delivery by
Parent and Purchaser, constitutes a legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms.
(b) Ownership of Securities. Such Shareholder is the beneficial
owner of the Securities listed beside such Shareholder's name on Schedule I
attached hereto. Such Shareholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Sections 1 and 2 hereof,
sole power of disposition, sole power of conversion, sole power to agree to all
of the matters set forth in this Agreement, in each case with respect to all of
the Securities, with no limitations, qualifications or restrictions on such
rights, subject only to applicable securities laws and the terms of this
Agreement.
(c) No Conflicts. (i) No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by such Shareholder,
the consummation by such Shareholder of the transactions contemplated hereby or
compliance by such Shareholder with any of the provisions hereof shall (A)
conflict with or result in any breach of any applicable documents to which such
Shareholder is a party, (B) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
such Shareholder is a party or by which such Shareholder or any of such
Shareholder's properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
such Shareholder or any of such Shareholder's properties or assets.
(d) No Finder's Fees. Except as disclosed pursuant to the Merger
Agreement, no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the
-3-
<PAGE>
transactions contemplated hereby based upon arrangements made by or on behalf of
such Shareholder.
(e) No Encumbrances. The Securities listed beside such Shareholder's
name on Schedule I attached hereto and the certificates representing such
Securities are now, and at all times during the term hereof will be, held by
such Shareholder, or by a nominee or custodian for the benefit of such
Shareholder, free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies arising
hereunder. The transfer by such Shareholder of such Securities to Purchaser
hereunder shall pass to and unconditionally vest in Purchaser good and valid
title to all the Securities, free and clear of all claims, liens, restrictions,
security interests, pledges, limitations and encumbrances whatsoever, other than
any such encumbrances created by Purchaser.
(f) Reliance by Parent and Purchaser. Such Shareholder understands
and acknowledges that Parent and Purchaser have entered into the Merger
Agreement in reliance upon such Shareholder's execution and delivery of this
Agreement.
4. Representations and Warranties of Parent and Purchaser. Parent
and Purchaser hereby represent and warrant to each Shareholder as follows:
(a) Due Organization, etc. Parent and Purchaser are companies duly
organized and validly existing under the laws of the jurisdiction of their
incorporation or organization. Parent and Purchaser have all necessary power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by Parent and
Purchaser have been duly authorized by all necessary action on the part of
Parent and Purchaser and, assuming its due authorization, execution and delivery
by each Shareholder, constitutes a legal, valid and binding obligation of Parent
and Purchaser, enforceable against Parent and Purchaser in accordance with its
terms.
(b) No Conflicts. Except as set forth in the Merger Agreement (i) no
filing with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by Parent or Purchaser and the consummation by Parent or Purchaser of
the transactions contemplated hereby and (ii) none of the execution and delivery
of this Agreement by Parent or Purchaser, the consummation by Parent or
Purchaser of the transactions contemplated hereby shall (A) conflict with or
result in any breach of the organizational documents of Parent or Purchaser, (B)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which Parent or Purchaser is a party or
by which Parent or Purchaser or any of its properties or assets may be bound, or
(C) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to Parent or Purchaser or any of its properties or
assets.
-4-
<PAGE>
(c) Investment Intent. The purchase of the Securities from each
Shareholder pursuant to this Agreement is for the account of Parent and
Purchaser for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
5. Covenants of each Shareholder. Each Shareholder covenants and
agrees as follows:
(a) Restriction on Transfer, Proxies and Non-Interference. Such
Shareholder shall not (i) directly or indirectly, offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of the Securities or any interest
therein; (ii) except as contemplated by this Agreement, grant any proxies or
powers of attorney, deposit any of the Securities into a voting trust or enter
into a voting agreement with respect to any of the Securities; or (iii) take any
action that would make any representation or warranty of such Shareholder
contained herein untrue or incorrect or have the effect of preventing or
disabling or delaying such Shareholder from performing such Shareholder's
obligations under this Agreement.
(b) Stop Transfer; Changes in Subject Shares. Such Shareholder
agrees with, and covenants to, Parent and Purchaser that such Shareholder shall
not request that the Company register the transfer (book-entry or otherwise) of
any certificate or uncertificated interest representing any of the Securities,
unless such transfer is made in compliance with this Agreement. In the event of
a stock dividend or distribution, or any change in any class of capital stock of
the Company by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Securities" shall be
deemed to refer to and include the Securities as well as all such stock
dividends and distributions and any shares into which or for which any or all of
the Securities may be changed or exchanged. Such Shareholder shall be entitled
to receive any cash dividend paid by the Company in respect of the Securities
during the term of this Agreement until the Effective Time.
6. Fiduciary Duties. Notwithstanding anything in this Agreement to
the contrary, the covenants and agreements set forth herein shall not prevent
the Shareholder or any of such Shareholder's designees serving on the Company's
Board of Directors or as any officer or employee of the Company from taking any
action while acting in the capacity of a director, officer or employee of the
Company in satisfying his fiduciary duties.
7. Certain Other Agreements. Each of the Shareholders agrees that it
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal Interest. Such Shareholder agrees that it will not,
directly or indirectly: initiate, solicit or encourage, or take any action to
facilitate the making of, any offer or proposal which constitutes or is
reasonably likely to lead to any Acquisition Proposal.
-5-
<PAGE>
8. Miscellaneous.
(a) Further Assurances. From time to time, at any other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
(b) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understanding, both written and oral,
between the parties with respect to the subject matter hereof.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party, provided
that Parent and Purchaser may assign and transfer, at its sole discretion, its
rights and obligations hereunder to any of their affiliates.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by all of the
relevant parties hereto, provided that Schedule I attached hereto may be
supplemented by Parent or Purchaser by adding the name and other relevant
information concerning any shareholder of the Company who agrees to be bound by
the terms of this Agreement without the agreement of any other party hereto, and
thereafter such added shareholder shall be treated as a "Shareholder" for all
purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Shareholders: At the address set forth beside each
Shareholders name listed on Schedule I attached hereto
with copies to:
Travel Services International, Inc.
220 Congress Park Drive
Delray Beach, Florida 33445
Telecopier: (561) 266-6186
Attention: Suzanne Bell, Esq.
-6-
<PAGE>
and:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036-2787
Telecopier: (212) 354-8113
Attention: John M. Reiss, Esq.
Jorge L. Freeland, Esq.
If to Parent or Purchaser:
Airtours plc
Parkway One, Parkway Business Centre
300 Princess Road
Manchester, M 147 QU
United Kingdom
Telecopier: 011 44 161 232 0066
Attention: James Jennings, Esq.
Greg McMahon
with copies to:
Morgan Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Telecopier: (212) 309-6273
Attention: John Whitehead, Esq.
and:
Addleshaw Booth & Co.
100 Barbirolli Square
Manchester M2 3AB
United Kingdon
Telecopier: 011-441-619-346-060
Attention: Paul Devitt
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under
-7-
<PAGE>
applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any Person who or which
is not a party hereto.
(k) Governing Law. This Agreement, and the legal relations between
the parties hereto, shall be governed and construed in accordance with the laws
of the State of Florida, applicable to agreements executed and to be performed
solely within such State.
(l) Submission to Jurisdiction; Waiver of Jury Trial. Each of the
parties hereby submit to the jurisdiction of the Federal Courts of the United
States located in the State of Florida and the state courts of the State of
Florida for purposes of all legal proceedings which may arise hereunder or under
any of the other documents entered into in connection herewith. Each of the
parties irrevocably waives, to the fullest extent permitted by law, any
objection which it may have or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Each of the
parties hereby consents to process being served in any such proceeding by the
mailing of a copy thereof by registered or certified mail, postage prepaid, to
their respective addresses specified in Section 7(e) or in any other manner
permitted by law. EACH OF THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
-8-
<PAGE>
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER DOCUMENTS ENTERED INTO IN
CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OF ANY PARTY.
(m) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
9. Termination. This Agreement shall terminate, and neither Parent,
Purchaser nor any Shareholder shall have any rights or obligations hereunder and
this Agreement shall become null and void and have no effect upon the
termination of the Merger Agreement in accordance with its terms, except nothing
in this Section 9 shall relieve any party of liability for breach of this
Agreement.
* * * *
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<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and each Shareholder have
caused this Stock Voting and Tender Agreement to be duly executed as of the day
and year first above written.
AIRTOURS plc
By:
--------------------------------------
Name:
Title:
BLUE SEA FLORIDA ACQUISITION INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Amount and Class of
Securities
Name of Shareholder Owned Options Held Notice Address
- ------------------- ----------------------- ------------ --------------
<S> <C> <C> <C>
Robert G. Falcone 44,349 0 c/o Suzanne Bell
Falcone Enterprises, LP 30,000 0 General Counsel
Judith Falcone 100,000 0 220 Congress Park
Drive
Delray Beach, FL
33445
J&W Heller Corp. 633,334 0 c/o Suzanne Bell
General Counsel
220 Congress Park
Drive
Delray Beach, FL
33445
Imad Khalidi 350,000 0 c/o Suzanne Bell
General Counsel
220 Congress Park
Drive
Delray Beach, FL
33445
John W. Przywara 209,445 0 c/o Suzanne Bell
General Counsel
220 Congress Park
Drive
Delray Beach, FL
</TABLE>
<PAGE>
Page 2
<TABLE>
<CAPTION>
Amount and Class of
Securities Beneficially
Name of Shareholder Owned Options Held Notice Address
- ------------------- ----------------------- ------------ --------------
<S> <C> <C> <C>
33445
Elan J. Blutinger 291,693 20,000 c/o Suzanne Bell
General Counsel
220 Congress Park
Drive
Delray Beach, FL
33445
D. Fraser Bullock 144,828 20,000 c/o Suzanne Bell
General Counsel
220 Congress Park
Drive
Delray Beach, FL
33445
Tommaso Zanzotto 0 20,000 c/o Suzanne Bell
General Counsel
220 Congress Park
Drive
Delray Beach, FL
33445
Leonard A. Potter 68,408 20,000 c/o Suzanne Bell
General Counsel
220 Congress Park
Drive
Delray Beach, FL
</TABLE>
