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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-25990
INTRAV, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 43-1323155
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7711 BONHOMME, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices)
(314) 727-0500
Registrant's telephone number, including area code
SECURITIES REGISTERED PURSUANT OF SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Title of class
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COMMON STOCK, PAR VALUE $.01 PER SHARE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and
Exchange Act of 1934 during the preceding 12 months (or for shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 29, 1999 was approximately $20.5 million.
The amount shown is based on the closing price of $16.75 per share of
Common Stock on the Nasdaq National Market on March 29, 1999.
As of March 29, 1999, there were 5,114,200 shares of the registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV of this Form 10-K incorporate by reference certain
information from the registrant's 1998 Annual Report to Shareholders.
Part III of this Form 10-K incorporates by reference certain information
from the registrant's Proxy Statement for its 1999 Annual Meeting of
Shareholders to be held on May 21, 1999.
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Unless the context otherwise indicates, all references in this document
to the "Company," "INTRAV," "we," "us," and "our," mean Intrav, Inc.
and INTRAV's wholly-owned subsidiaries. Statements in this document
which contain more than historical information may be considered
forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) which are subject to risks and
uncertainties. Forward looking statements involve risks and
uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. Potential risks and
uncertainties include such factors as unanticipated catastrophic events;
changes in program costs and fluctuations of currency exchange rates;
loss of key travel suppliers; ongoing access to the Concorde in the
United States; competition within the travel industry; loss of key
personnel; liability claims by travelers; loss of one or more of the
Company's ships; regulations relative to the operation of passenger
vessels and charters; Year 2000 risks; general economic conditions; and
other risks described from time to time in the Company's filings with
the Security and Exchange Commission. In addition, the forward-looking
statements assume the continued operation of our three ships consistent
with their recent capacities and cruise price levels, and the
commencement of operations of our M/S Clipper Odyssey in November 1999.
These forward-looking statements represent the Company's judgement as of
the date hereof.
PART I
Item 1. BUSINESS
INTRAV designs, markets and operates deluxe, escorted, worldwide travel
programs and cruises. We provide a diverse offering of programs
primarily to affluent, well-educated, mature individuals in the United
States who desire substantive travel experiences. Our small cruise ship
programs allow our travelers to visit secluded places of natural beauty
and cultural interest aboard our four owned and operated ships and
others that we charter. We also offer programs that use privately
chartered jet aircraft which allow our travelers to visit locations not
as conveniently or comfortably served by commercial airlines. Our 1998
programs included, for example, cruises in Antarctica, New Zealand and
Alaska, around-the-world trips by supersonic Concorde, tours of Africa
aboard a privately chartered and reconfigured L-1011 jet aircraft, and
river cruises in Europe and Russia. We reported total revenues of $126.0
million in 1998 and, from 1996 to 1998, our income before extraordinary
item has grown at a compound annual rate of 39.0% from $3.5 million to
$6.8 million.
Founded in 1959, INTRAV has 40 years of experience in designing
and operating high quality programs that offer distinctive attributes
for the discerning traveler who prefers an intimate and enriching travel
experience. In 1998, these programs generally ranged in price from
$2,000 to $58,000 per passenger. With our focus on small ships and
privately chartered jet programs, we seek to provide an attractive
alternative to big-ship cruises (ships that carry 400 or more
passengers) and other travel programs offered to the mass travel market
in the United States.
Our typical traveler is affluent and over the age of 55. U.S.
Census estimates show that the segment of the population between ages 55
and 74 is expected to grow from 41.0 million in 1998 to 48.0 million in
the year 2005, and to 73.1 million in 2020. According to the Travel
Industry Association of America, from 1993 to 1997 the number of
travelers in the United States age 55 and older increased 31% while the
overall number of travelers in the United States increased by only 19%
during the same period. Also, according to the Travel Industry
Association of America, domestic travel spending increased from $308.0
billion in 1992 to $408.2 billion in 1997. We believe that these
demographic, travel and spending trends support future travel growth in
our target market and opportunities to expand our program offerings in
the future.
In December 1996, we acquired Clipper Cruise Line, Inc. which
offered cruise programs in the United States, Central America and the
Caribbean Islands on its two small cruise ships, the M/V Nantucket
Clipper and the M/V Yorktown Clipper. The acquisition of Clipper
provided us with additional products and expertise in the small-ship
cruise market and expanded our distribution capabilities through
Clipper's travel agent network. Since the Clipper acquisition, we have
expanded our small-ship programs through the acquisition of two
additional small cruise ships, the M/S Clipper Adventurer, which began
operations in April 1998, and the M/S Clipper Odyssey, which we will
begin operating in November 1999.
COMPANY BACKGROUND
Throughout our history, INTRAV has been a leader in creating unique
tours for travelers. From inception until 1967, we operated a regional
group tour business. INTRAV was an early participant in the field of
comprehensive international air charter leisure holidays, launching a
back-to-back (multiple charters of the same tour) charter series of nine
Boeing 707 flights to Tokyo and Hong Kong in 1967. After the successful
operation to the Orient, we expanded the concept of back-to-back air
charter operations to South America, Africa, the South Pacific,
Scandinavia and Europe.
In 1971, we introduced our "air/sea cruise" travel concept. We
developed all-inclusive travel package tours, a combination of round-
trip charter flights plus a two-week cruise in the Mediterranean Sea.
In 1977, we again expanded the concept of back-to-back charter
operations when we operated a series of five Boeing 707 back-to-back
charter flights around the world.
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With deregulation of the airline industry in the late 1970s, we
converted all of our travel programs to scheduled air carriers utilizing
our strength in itinerary planning, customer base, strong financial
condition and high service reputation. We also adopted and further
developed the "river cruise" concept. These programs include cruising
on the inland waterways of Europe, Russia and China, including the
Danube River/Black Sea Cruise which we have offered since 1979.
In 1987, we developed the first "Around the World by Supersonic
Concorde" travel program. For this program, customers fly on a
chartered supersonic Concorde jet to various attractive locations while
circumnavigating the globe. Since 1987, we have operated 24 of these
tours, and are again offering three departures of this travel
opportunity in 1999.
On December 31,1996, INTRAV acquired Clipper Cruise Line, Inc.
("Clipper", which term also includes the INTRAV subsidiaries Clipper
Adventure Cruises, Inc., Republic Cruise Line, Inc., and Liberty Cruise
Line, Inc.) which is a leading designer, organizer, marketer and
operator of deluxe escorted domestic and international small-ship
cruises and tours. The acquisition of Clipper included its two cruise
ships, the Nantucket Clipper and the Yorktown Clipper.
In 1997, INTRAV, through its subsidiary Clipper Adventurer Ltd.,
acquired the 122-passenger Clipper Adventurer which began service in
1998. During 1998, INTRAV through its subsidiary Clipper Odyssey, Ltd.,
acquired a fourth ship, the 120-passenger Clipper Odyssey which we will
begin operating in November 1999.
OPERATING STRATEGIES
Our objective is to build shareholder value by providing
distinctive high-quality travel programs and cruises to our travelers.
To pursue this objective, we have developed the following operating
strategies:
* Focus on small-ship and private jet programs. By designing and
operating high quality and distinctive small-ship and private jet
programs, we offer travel experiences not readily available from
other providers. Through this focus, we seek to provide our
targeted travelers with a diverse selection of program offerings,
each representing a unique travel experience. We believe that some
travelers are attracted to the prestige of our travel programs-for
example, Around the World by Supersonic Concorde-while others are
most interested in the content of our programs-for example, a
small-ship cruise to Antarctica accompanied by expert lecturers
and guides.
* Reduction of big-ship cruise offerings. We have reduced and will
continue to reduce the number of big-ship cruises we offer. In
recent years, large cruise ships have continued to grow in size
and passenger capacity. The cruises on these ships have
increasingly focused on entertainment and on-board activities,
often including casinos and nightclubs, rather than the type of
experiential travel opportunities generally desired by our
travelers. As a result, we have reduced the number of big-ship
cruises we offer in order to focus on distinctive travel programs
such as small-ship cruises and private jet adventures. In
addition, our big-ship cruise business has become less profitable
as the industry has become more crowded, relied upon discounting
to attract passengers and focused on incremental opportunities to
capture travel revenues through on-board activities.
* Attention to customer satisfaction. Customer satisfaction and
first-class service have been and will continue to be critical to
our business. In order to maintain high customer satisfaction, our
programs include precisely executed itineraries that are unique
and culturally enriching, first-class transportation and
accommodations and highly trained travel and cruise directors,
expedition leaders and local hosts. Our customer satisfaction
focus begins in the detailed program development stage and
continues through to the conclusion of each program. We believe
this focus not only enhances our travelers' experience, but serves
as a marketing opportunity through positive "word of mouth"
endorsements by our travelers. As a result of our efforts, more
than one-third of our travelers in 1998 were repeat customers.
* Emphasis on efficient marketing efforts. We market our travel
programs through affinity groups, travel agents and directly to
potential travelers. This diversity of distribution channels
allows us to manage our promotional efforts to optimize the number
of travelers per marketing dollar expended. Our marketing efforts
are focused on direct-mail campaigns that effectively utilize
internal resources including brochure development, mailing list
management and targeted distribution. We access the member lists
of our affinity groups and travel agents to identify and target
individuals and groups of individuals that meet the demographic
makeup of our typical customer. In addition, we use our
demographic resources and market knowledge to develop and access
narrowly focused mailing lists, resulting in better response rates
from our direct marketing efforts.
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GROWTH STRATEGIES
In order to achieve future growth, we have adopted several
strategies that we believe will complement the identified demographic
trends in our targeted market segment. These strategies include:
* Developing and expanding program offerings. In order to attract
and accommodate future customers, we intend to expand the scope
and number of our travel program offerings. By continually
evaluating emerging trends through various means, including travel
industry relationships, in-house research and customer travel
questionnaires, we are able to develop and provide a diverse array
of programs for our customers. We continually strive to identify
opportunities that are created by infrastructure development in
specific geographic areas that were previously unavailable to our
travel customers. For example, the Main-Rhine-Danube Canal in
Europe opened in 1993 and allowed us to develop a range of new
itineraries.
* Expanding and maximizing utilization of distribution channels. We
intend to develop new travel customers by increasing targeted
marketing of our programs through an expanded and enhanced travel
agent network, selected affinity group relationships and to our
past traveler base. By carefully cultivating and expanding upon
our established travel agent relationships, we plan to distribute
additional travel programs through such channels. We will also
continue to introduce Clipper brand small-ship cruises to affinity
groups to which Clipper had not historically marketed. In many
cases, the Clipper product offerings replace lower-yielding,
lower-profit big-ship cruises with higher-yielding, higher-profit
small-ship cruises.
We recently began to market small-ship cruises and private jet
programs to companies offering travel to their employees and
others as incentives. We believe that the smaller size of our
private jet programs and small-ship cruises are conducive to
incentive travel because a client can fill an entire program or
cruise, allowing easy customization and coordination of deluxe
programs. In addition, we believe our emphasis on and reputation
for providing quality programs and service is attractive to
companies that wish to provide a first-class incentive program.
* Enhancing our brand name recognition. We plan to create and pursue
marketing initiatives to enhance our brand name recognition
throughout our distribution channels. Traditionally, the INTRAV
name was not aggressively advertised to the traveler as marketing
was primarily conducted under affinity group names. As our
distribution capabilities have expanded, we have begun marketing
the INTRAV brand name through targeted television advertisements
to selected geographic markets and through public relations
efforts in the consumer and trade press. We believe that our
efforts to create greater public awareness of our brand will
contribute positively to our overall marketing efforts and
generate franchise value for the INTRAV brand of travel programs.
* Pursuing acquisitions of additional ships and travel businesses.
We continually evaluate opportunities to acquire additional small
cruise ships that we believe can support future growth. We may
acquire one or more additional small cruise ships in order to
provide greater geographic coverage and additional programs for
our customers. We believe that owning our ships facilitates
quality assurance of the travel experience on a constant basis
while providing programming and strategic flexibility.
We also continue to identify and explore acquisitions of other
travel service businesses that offer a strategic fit. Future
acquisition candidates may be considered to the extent that they
increase the inventory of desired travel programs, expand the
potential traveler base or distribution channels and allow us to
leverage overhead expenses. At this time, we are not in
negotiations to acquire any additional ships or businesses.
PROGRAM DEVELOPMENT AND MANAGEMENT
In designing our programs, we coordinate the following activities:
choosing distinctive and attractive destinations; planning the day-to-
day itinerary; and determining which travel components will be included
in a certain travel program. We continually evaluate political climates
and consumer demand trends in the travel industry through comprehensive
research including direct observations, trade journals, travel brochures
and publications, attending trade shows, evaluating the results of our
traveler questionnaires, consulting with domestic and overseas suppliers
and through relationships with sponsoring associations. We utilize those
resources along with our employees' extensive travel experiences to
select destinations that will be attractive to our customers.
As destinations are selected, our program planning staff works
closely with experts to develop the itinerary for a specific
destination. We oversee all aspects of program operations, including
hotels, ships, trains, aircraft (for private charter programs) and other
services. Based on industry standards, location, value, availability and
past customer ratings, we negotiate with suppliers, including commercial
airlines and other commercial carriers, and then select hotels, ships,
trains, aircraft and other
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components of our travel programs. Once a travel program has been
developed, our program planning staff systematically visits each
proposed destination to ensure that all accommodations and services meet
our quality and design standards for each travel program. We believe
that our ability to make "bulk" purchases and commitments, as well as
our established industry position, results in favorable supplier
relationships leading to benefits in costs, quality and flexibility
which ultimately benefit our travelers.
One of our travel directors accompanies each tour in order to
provide incremental customer service and to ensure that the highest
possible level of service is maintained. In addition, on many programs
we provide educational and cultural enrichment lectures to provide a
traveler with insight on the places he or she visits. For many
destinations, we hire local hosts and the best available professional
guides to better connect the traveler to the destination. In certain
geographic areas, we employ destination managers to provide value-added
assistance based on the demands or opportunities presented by the
location of the program.
At the conclusion of each travel program, we generally distribute
a questionnaire to each of our travelers to solicit their input on the
quality of the program. We then review each completed questionnaire
looking for specific suggestions or areas of concern and consider such
input for the purpose of modifying existing programs and designing our
future programs. Results of questionnaire responses show that a majority
of our travelers rate their overall travel experience as "excellent,"
the highest rating possible.
PRODUCTS AND SERVICES
We operate in one business segment. Although we primarily manage our
operations on a trip-by-trip basis, for ease of presentation, we have
classified the trips based on the primary mode of transportation. The
primary modes of transportation consist of small ships, private jets and
other, including big ships.
* Small-Ship Adventures. Our small-ship adventures use small ships
and riverboats to explore historic and/or remote locations that
typically cannot be visited by big cruise ships. Small-ship
adventures feature an unregimented and leisurely ambience, single-
seating dining and highly personalized service. Our travel
directors accompany travelers on the small-ship adventures, seeing
to traveler needs as well as ensuring precise execution of
scheduled excursions and lectures by our expedition leaders and
on-board specialists. In 1999, our small-ship adventures include
55 itineraries and 172 departures and range in price from $1,200
to $17,000.
Most of the vessels used for our small-ship cruises carry fewer
than 160 passengers. We own and operate three small cruise ships,
the M/V Nantucket Clipper, the M/V Yorktown Clipper and the M/S
Clipper Adventurer. We recently purchased a fourth cruise ship,
the Oceanic Odyssey, which we will rename the M/S Clipper Odyssey
and which we will begin operating in November 1999. We also
charter small ships and vessels, including riverboats used to
cruise the waterways of Europe. The following table offers certain
information regarding our company-owned cruise ships:
<TABLE>
<CAPTION>
PASSENGER YEAR
SHIP COUNT REGISTRY BUILT LENGTH DRAFT CHARACTERISTICS
---- ----- -------- ----- ------ ----- ---------------
<S> <C> <C> <C> <C> <C> <C>
M/V Nantucket Clipper 100 U.S. 1984 207 feet 8 feet Certified for coastwise
international service.
M/V Yorktown Clipper 138 U.S. 1988 257 feet 8 feet Certified for coastwise
international service.
M/S Clipper Adventurer 122 Bahamas 1975<F1> 330 feet 16 feet Certified for international service
with ice strengthened hull.
M/S Clipper Odyssey<F2> 120 Bahamas 1989 338 feet 14 feet Certified for international service.
<FN>
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<F1> The M/S Clipper Adventurer underwent a complete restoration in
1998.
<F2> We have chartered the M/S Clipper Odyssey on a bareboat basis (i.e.,
without crew or provisioning), to its former owner until November 1, 1999.
</TABLE>
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Our two U.S. flag vessels, the M/V Nantucket Clipper and the M/V
Yorktown Clipper, have a competitive advantage in the United States
versus foreign flag vessels in that under U.S. law, U.S. flag ships may
embark and disembark passengers in U.S. ports without calling at any
foreign ports, while foreign ships may not. In addition, the shallow
drafts of our U.S. flag vessels allow us to offer certain cruises along
the East coast of the United States that are inaccessible to vessels
with drafts of more than eight feet regardless of their flag.
Our U.S. flag ships travel the historic waterways of North America and
the secluded islands, coves and beaches of the Caribbean Islands,
Central America and northern South America. From March through November,
a traveler can choose from 20 itineraries in North America, ranging from
five nights cruising the Sacramento River and Napa wine country to two
weeks along the Atlantic seaboard. Other areas visited include Alaska
and the Pacific Northwest, the Sea of Cortez, the Great Lakes, Maritime
Canada, New England, Chesapeake Bay and the Antebellum South. During the
winter months, we offer week-long cruises on the M/V Nantucket Clipper
and the M/V Yorktown Clipper through the U.S. and British Virgin Islands
and the West Indies. We also offer nine- to 12-day wildlife adventure
cruises with destinations to Costa Rica, Panama's Darien Jungle,
Venezuela's Orinoco River Delta and Trinidad.
Our 122-passenger M/S Clipper Adventurer, which began her inaugural
season in April 1998 with a series of cruises including the Iberian
Peninsula, coastal France and the Norwegian coast, offers the widest
range of destinations. The M/S Clipper Adventurer travels around Europe
from April to June, Greenland and the Arctic during July and August, the
eastern United States in September, South America in October and
November and Antarctica during the austral summer. With its ice-
strengthened hull, the M/S Clipper Adventurer is one of few passenger
vessels that offers in-depth expedition cruises to arctic destinations.
Commencing in November 1999, we plan to offer additional small-ship
adventures on the M/S Clipper Odyssey in the Orient, South Pacific,
Australia and New Zealand.
* Private Jet Adventures. Our private jet adventure programs provide
highly specialized, exclusive tours by which travelers board a
chartered Lockheed 1011 wide-body (reconfigured to accommodate 88
instead of the standard 362 travelers), a smaller chartered Boeing
737 (reconfigured to accommodate 44 instead of the standard 120
travelers) or a chartered supersonic Concorde jet. These tours
permit our travelers to visit multiple sites with convenience and
comfort "beyond first class." Our private jet programs include:
Around the World by Private Concorde, a 24-day program with stops
in Hawaii, New Zealand, Australia, China, Hong Kong, Kenya and
France which has sold out each of the 24 times it has been
operated since its introduction in 1987; On Safari in Africa by
Private Jet and the Legendary Blue Train, a three-week tour of
Africa which was introduced in 1997; Around the World by Private
Jet, a special golf tour allowing for play at eight of the world's
most prestigious golf courses; and Southern Europe from Biarritz
to the Bosporus, an 18-day program which enables travelers to
access locations in Europe in time frames that would not be
possible via commercially scheduled airlines. In 1999, our private
jet adventures include nine itineraries and 15 departures ranging
in price from $6,200 to $75,000.
* Other Travel Programs. Our other travel programs include
specialized tours to destinations in Africa, Europe, Asia and the
South Pacific. We limit participation per departure, use first-
class accommodations and offer tours of longer duration than many
other tour companies, permitting our travelers to experience a
more in-depth understanding of a visited locale.
Our On Safari with INTRAV programs in Africa provide up close
game-viewing opportunities, convenience and distinctive
accommodations. With an emphasis on comfort, travelers visit game
reserves and wildlife parks, including Namibia's Etosha National
Park, Botswana's Chobe National Park and Moremi Wildlife Reserve,
along with more traditional destinations such as Victoria Falls
and Mount Kenya Safari Club. In order to maximize comfort and
minimize lengthy minivan rides, participants spend nights at
exclusive lodges and tented camps and travel in light aircraft. We
have organized group travel to Africa since the 1960s, and use our
operational experience to create travel programs that we believe
are distinct from those offered by other travel providers. In
1999, we offer four On Safari with INTRAV programs with 39
departures ranging in price from $4,000 to $7,700.
Our INTRAV Adventure Edition programs include adventures in Asia
such as a 17-day Yangtze River program, a 16-day tour of India,
Thailand and Nepal or a 16-day adventure combining visits to Bali
and Vietnam with a cruise to Java and Singapore. In the South
Pacific, participants may take 18-day tours to Auckland,
Queenstown, Milford Sound and Christchurch, New Zealand,
Melbourne, Cairns and Sydney, Australia and Nandi, Fiji. We also
offer in 1999 a new, two-week tour of Australia and New Zealand,
including four days aboard a 44-passenger vessel that will explore
a portion of the 1,250-mile-long Great Barrier Reef. In 1999, we
are offering eight INTRAV Adventure Edition programs with 38
departures ranging in price from $5,700 to $10,500.
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Historically, we have offered big-ship cruises. However, we are
reducing the number of big-ship cruises we offer in order to concentrate
on our travel programs described above which we believe are more
profitable as well as more distinctive and attractive to our target
customer.
MARKETING AND SALES
We market our travel programs through affinity groups, travel
agents and directly to individual customers. Recently, we established an
effort to market our programs to the corporate incentive market. Our
affinity group relationships have been developed over our 40 years of
operations. Our travel agent network was initially developed through the
marketing of our Clipper small-ship cruises. As we seek to increase
distribution in these areas, we believe there is substantial opportunity
to expand cross-marketing of our programs and to further expand these
distinct distribution channels.
Our sales force operates in the United States and Canada to
solicit sponsorship of tours and cruises through affinity groups in the
alumni, educational, cultural and professional markets. Our marketing
representatives work closely with representatives from affinity groups
to design marketing efforts, primarily direct-mail, targeted to the
travel interests of their members. The affinity group market provides an
efficient means of identifying potential customers that fit our typical
customer profile. In turn, we provide affinity groups with organized and
efficient means of providing meaningful travel programs to their group
members. We have long-standing relationships in the affinity group
market and believe that we have established a reputation for providing
high-quality travel programs. We continually evaluate the results of our
marketing efforts with affinity groups to assess which groups are
generating an appropriate level of participation. We intend to continue
to focus on marketing to those affinity groups with the highest
response rates.
Our sales force solicits travel agents in the United States and
Canada on a targeted basis, contacting only those agents we believe have
clients that fit our customers' demographic profile and are likely to
purchase travel programs from us. As a result, we currently use less
than 15% of the travel agents in the United States to access the general
public. We believe our offerings are attractive to travel agents because
the pricing of our travel programs allows the travel agent to generate
more commission revenue per program booked than many alternative travel
products. In addition, because big-ship cruise prices include a smaller
fraction of the traveler's total vacation costs (due to the emphasis by
big-ship cruise lines on on-board sales) the "all-inclusive" prices
of our small-ship cruises enable agents to receive larger commissions.
Also, since the transportation, accommodations and amenities of our
travel programs are pre-packaged and meet our high quality standards,
the travel agent is not required to expend time coordinating logistics
to assure that his or her client will receive a quality experience.
Recently, we started marketing small-ship cruises and private jet
programs to companies seeking to arrange incentive based travel for
their employees and others whom the companies wish to reward. We believe
the smaller size of our travel programs offers companies the opportunity
to fill entire small-ship and private jet programs with their employees
and others. This provides a more intimate setting in which companies can
customize travel programs as incentive based rewards.
An important part of our marketing involves direct-mail
solicitation. We focus much of our direct-mail solicitation on former
travelers to whom we distribute large, inclusive, four-color catalogues
and smaller brochures targeted to the travelers' indicated interests.
WISDM, our proprietary internal database, helps us to access detailed
information concerning more than 200,000 past and potential travelers
for our direct-mail solicitation efforts. In addition to former
travelers, we also target members of select affinity groups and
customers of our travel agent network. Members of our sales force work
closely with affinity group administrative staff and travel agents to
design direct-mail campaigns based on the particular characteristics of
their members or customers. We also purchase and carefully screen third-
party vendor lists containing names of individuals with characteristics
closely matching those of past travelers for use in our direct-mail
solicitation efforts.
Our proprietary software and software licensed from third parties
allow us to avoid duplication of addresses and to standardize addresses
according to postal requirements to obtain savings on mailing costs. By
bar-coding the mailings and complying with other postal regulations, we
believe, based upon surveys we perform, that we have been able to
achieve efficiencies on low-cost, third-class bulk mailings. Marketing
materials are generally mailed nine to 15 months in advance of a
scheduled departure date. For 1998 programs, we increased our efforts to
better target our direct-mail solicitations in order to increase
response rates while decreasing the cost of direct-mail solicitation. As
a result, we mailed 20% fewer brochures and catalogs for our 1998
programs than we mailed for our 1997 programs while achieving increases
in gross profit in 1998.
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Our direct-mail, affinity group and travel agent solicitations are
supported by our 11-person sales force. The members of our sales force
have an average of more than eight years' experience with us. Our
marketing efforts are also supported by our personal service
representatives who are available to answer potential travelers'
specific questions about our programs.
COMPETITION
The travel industry is highly competitive. We believe that the
principal competitive factors in our target market are: (a) the
reputation of the program provider; (b) the uniqueness of the travel and
cruise programs offered; (c) the quality of the travel programs offered;
and (d) the customer's ultimate satisfaction. Although our industry is
highly fragmented, we have identified eight major direct competitors in
the tour operator market and nine principal competitors in the small-
ship cruise market. Our programs and cruises also compete against a wide
range of vacation alternatives, including big-ship cruises, destination
resorts and other travel programs. Certain competitors have greater
financial, marketing and sales resources than we do.
There can be no assurance that our present competitors or competitors
that choose to enter the marketplace in the future will not exert
significant competitive pressures on us.
EMPLOYEES
As of March 1, 1999, we employed 335 people. We believe that our
relations with our employees are good. None of our employees are covered
by collective bargaining agreements.
GOVERNMENT REGULATION
Our operations are affected by laws and regulations relating to
public aircraft charters, principally regulations issued by the U.S.
Department of Transportation. Among other requirements, such regulations
require us to file and receive approval of a charter prospectus and
other materials prior to our selling or offering to sell travel programs
which utilize chartered aircraft originating or terminating in the
United States. Such regulations also require us to maintain financial
protection for traveler advance payments for our chartered aircraft
programs originating or terminating in the United States. We have
established escrow arrangements to comply with these regulations. Under
these escrow arrangements, monies received from travelers are held in
escrow accounts until charter payments have been made.
U.S. law requires that we maintain financial protection for
passenger advance payments for our cruises embarking in U.S. ports. We
have established escrow arrangements and surety bonds to comply with
this law. Under these arrangements, monies received from passengers for
cruises are held in escrow accounts or protected by surety bonds until
the respective cruises have been completed.
As our ships operate in the territorial waters of the United
States, in the territorial waters of foreign nations and in
international waters, we are subject to various federal and state
regulations, international conventions and foreign laws which affect
the operations of our vessels.
Our ships, and the ships that we charter, are subject to
regulation by the governments of the nations in which they are
registered. Of our four ships, two are documented in the United States
and two are documented in the Commonwealth of the Bahamas. The
International Maritime Organization ("IMO") has adopted regulations
governing many aspects of the construction and operation of ships,
including the required safety equipment on ships, the safety and
training of seafarers and safety management at the operating company of
the ships. For example, the IMO has adopted safety standards as part of
the International Convention for the Safety of Life at Sea ("SOLAS").
SOLAS imposes enhanced vessel structural requirements designed to
improve passenger safety. We are subject to the IMO's regulation because
both the United States and the Bahamas recognize such regulations. All
four of our ships carry Passenger Ship Safety Certificates issued under
the provisions of SOLAS.
When any of our ships (or ships that we charter) are in another
nation's territorial waters, we are also subject to the regulations of
such nation. For example, our ships are subject to inspection by foreign
regulators to ensure compliance with safety and other regulations. Many
of the foreign nations that our ships visit have adopted the IMO
regulations.
The U.S. Coast Guard conducts both scheduled and unannounced
inspections to determine compliance with these regulations and has the
authority to delay or suspend cruises. The U.S. flag vessels must be
drydocked for an external hull inspection every
<PAGE>
<PAGE>
year. The Bahamian flag vessels must be dry docked every two years. The
Coast Guard is empowered to change the interval between inspections. In
addition, when in U.S. waters, our vessels are subject to compliance
with U.S. laws and regulations, including those related to the
environment, health and safety. For example, when in U.S. waters the
U.S. Centers for Disease Control and Prevention inspects our ships to
ensure that there have been no outbreaks of communicable disease and
that we have complied with applicable sanitation regulations.
American Bureau of Shipping, Lloyd's Register and Nippon Kaiji
Kyokai are independent organizations that set standards for the safety
and construction of ships for insurance and other purposes and classify
ships pursuant to those standards. Both the M/V Nantucket Clipper and
M/V Yorktown Clipper are classified +A1 Passenger Vessels+AMS by the
American Bureau of Shipping. They are certified for coastwise
international service by the U.S. Coast Guard. The M/S Clipper
Adventurer is classified A-1 ice class for unrestricted passenger
service by Lloyd's Register. The M/S Clipper Odyssey is classified for
full international voyage by Nippon Kaiji Kyokai.
We believe we are in material compliance with these laws and
regulations and do not believe that future compliance with such laws and
regulations will have a material adverse impact on our financial
condition or results of operations.
Item 2. PROPERTIES
Our headquarters and principal operations are located in St. Louis,
Missouri, where we lease approximately 39,000 square feet of office
space under leases expiring December 31, 2001. Each lease provides an
option to renew, at our discretion, for an additional five-year period.
Lease payments in 1998 totaled $680,000. The leases provide for annual
rentals of $725,000 in 1999, subject to certain adjustments for taxes,
insurance, operating expenses and utilities. We believe that our
facilities are adequate for our current needs and that suitable
additional space would be available as required.
Item 3. LEGAL PROCEEDINGS
The Company currently is not a party to any legal proceedings,
other than ordinary routine litigation incidental to its business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of its year ended December 31, 1998.
Item 4a. EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the Company's executive officers is
contained in Item 10 of Part III of this Report (General Instruction G)
and is incorporated herein by reference.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information required by this Item is set forth under the
caption "General Corporate Information" in the Company's 1998 Annual
Report to Shareholders and is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
The information required by this Item is set forth under the
caption "Five-Year Financial Highlights" in the Company's 1998 Annual
Report to Shareholders and is incorporated herein by reference.
<PAGE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is set forth under the
caption "Management's Discussion and Analysis" in the Company's 1998
Annual Report to Shareholders and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's principal interest rate risk is associated with its
long-term debt. The Company has a $30.0 million revolving credit
facility with a bank which expires on November 1, 2003. The Company may
select among various borrowing arrangements with varying maturities and
interest rates. At December 31, 1998, the annual interest rates on the
borrowings ranged from 6.6% to 6.9%. Assuming a hypothetical 1%
increase in the weighted-average interest rate during 1998, interest
expense would have increased $0.1 million.
The Company enters into non-U.S. currency commitments for the charter of
cruise ships and aircraft for its international travel programs. The
Company may enter into forward contracts to buy foreign currency at a
stated U.S. dollar amount to hedge against fluctuating currency values.
As of December 31, 1998, the Company had non-U.S. currency commitments
equivalent to $3.5 million, of which the Company has purchased forward
contracts with a U.S. dollar equivalency of $1.1 million. Management
believes the fluctuation of the unhedged commitments would not have a
material effect on the Company's cash flows or earnings.
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and the notes
thereto required by this Item are set forth in the Company's 1998 Annual
Report to Shareholders and are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Part III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information regarding directors and executive officers of
the Company is set forth under the headings "Proposal 1: Election of
Directors" and "Compliance with Section 16(a) of the Securities Exchange
Act of 1934" included in the Company's Proxy Statement for the 1999
Annual Meeting of Shareholders and is incorporated herein by reference.
The following information with respect to the executive officers of the
Company as of March 29, 1999, is included pursuant to Instruction 3 to
Item 401(b) of Regulation S-K.
The following table sets forth certain information regarding the
Company's executive officers, including their respective ages and
positions with the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Paul H. Duynhouwer 64 President, Chief Executive Officer and Director
Wayne L. Smith II 49 Executive Vice President, Chief Financial Officer
and Director
Richard J. Hefler 49 Senior Vice President-Marketing and Sales
Michael F. Doiron 41 Senior Vice President-Finance
</TABLE>
Paul H. Duynhouwer has served as President, Chief Executive
Officer and a Director of INTRAV since January 1997 and has worked in
the travel and cruise ship industries for over 39 years. He has served
as President of Clipper Cruise Line since 1989 and retains this position
in addition to his responsibilities at INTRAV. Prior to becoming
President of Clipper Cruise Line, Mr. Duynhouwer served as Executive
Vice President of Special Expeditions from December 1986 until August
1989. He was Senior Vice President of Clipper Cruise Line from June 1982
through November 1986.
<PAGE>
<PAGE>
Wayne L. Smith II has served as Executive Vice President, Chief
Financial Officer and a Director of INTRAV since September 1997. Mr.
Smith served as Chairman, President and Chief Executive Officer of
Bekins Distribution Services, Inc. from January 1993 through December
1997 and President of Windsor Real Estate and Windsor Capital from
October 1989 through September 1997. Prior to joining Windsor, Mr. Smith
was a Vice President of Citicorp from September 1980 through September
1989.
Richard J. Hefler has served as Senior Vice President-Marketing
and Sales of INTRAV since December 1997. Prior to December 1997, Mr.
Hefler served as INTRAV's Vice President of Marketing since September
1990. Prior to joining INTRAV, Mr. Hefler served as Director for North
America of the Victorian Tourist Commission of Australia and earlier as
Director of Marketing for the AARP Travel Service Division of Olson-
Travelworld.
Michael F. Doiron has served as Senior Vice President-Finance of
INTRAV since July 1998. Mr. Doiron has served as Senior Vice President
and Chief Financial Officer of Clipper Cruise Line since January 1997.
He was Vice President and Controller of Clipper from February 1990 to
January 1997, and was Controller from September 1986 to February 1990.
Mr. Doiron joined Clipper in 1984 as Accounting Manager. Prior to
joining Clipper, Mr. Doiron was an Audit Senior for Ernst & Young.
Item 11. EXECUTIVE COMPENSATION
The information contained in the Company's Proxy Statement for the
1999 Annual Meeting of Shareholders under the caption "Executive
Compensation" is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth under the
heading "Holdings of Principal Shareholder and Management" in the
Company's Proxy Statement for the 1999 Annual Meeting of Shareholders
and is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is set forth under the
heading "Compensation Committee Interlock and Insider Participation" in
the Company's Proxy Statement for the 1999 Annual Meeting of
Shareholders and is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON 8-K
The following is an index of the financial statements, schedules
and exhibits included in this Report or incorporated herein by
reference.
<TABLE>
<CAPTION>
(a) 1. Financial Statements: Page
----
<S> <C>
Consolidated Balance Sheets -- December 31, 1998 and December 31, 1997 <F*>
Consolidated Statements of Income -- For the year ended December 31, 1998,
1997 and 1996 <F*>
Consolidated Statements of Cash Flows -- For the year ended December 31, 1998,
1997 and 1996 <F*>
Consolidated Statements of Shareholders' Equity -- For the year ended December
31, 1998, 1997 and 1996 <F*>
Notes to Consolidated Financial Statements <F*>
<FN>
<F*> Incorporated in this Report by reference to the Company's
1998 Annual Report to Shareholders.
</TABLE>
2. Financial Statement Schedules:
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
<PAGE>
<PAGE>
3. Exhibits -- see the following Exhibit Index of this report.
The following exhibits listed in the Exhibit Index are filed with
this report:
3(i) (a) Restated Articles of Incorporation of the Registrant,
filed as Exhibit 3(i) to the Registrant's Registration
Statement on Form S-1 (No. 33-90444), is incorporated
herein by reference.
(b) Amendment to Restated Articles of Incorporation of
the Registrant.
3(ii) (a) Amended and Restated Bylaws of the Registrant, filed
as Exhibit 3(ii) to Registrant's Registration Statement
on Form S-1 (No. 33-90444), is incorporated herein by
reference.
(b) Amendment to Amended and Restated Bylaws of the
Registrant.
10(i) Amended and Restated Loan Agreement, dated October 30,
1998, between the Registrant and NationsBank, N.A, as
amended by that certain Amendment Number One to Loan
Agreement dated January 18, 1999.
10(ii) Agreement for Purchase and Sale of Stock by and among the
Registrant, Clipper Cruise Line, Inc., Republic Cruise
Line, Inc., Liberty Cruise Line, Inc., Clipper Adventure
Cruises, Inc., and Windsor Inc., dated November 13, 1996,
as amended by that certain First Amendment, dated
December 18, 1996, filed as Exhibit 10 to the
Registrant's Current Report on Form 8-K dated January 14,
1996, is incorporated herein by reference.
10(iii) Amended Incentive Stock Plan, filed as Exhibit
10(iii)(A)(5) to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997, is
incorporated herein by reference.<F*>
10(iv) Form of Option Agreement for Awards of Options under 1995
Incentive Stock Plan, filed as Exhibit 10(iii)(A)(6) to
Amendment No.1 to the Company's Registration Statement on
Form S-1 (No. 33-90444), is incorporated herein by
reference.<F*>
10(v) Second Form of Option Agreement for Awards of Options
under Amended Incentive Stock Plan.<F*>
10(vi) Deferred Compensation Agreement by and between Clipper
Cruise Line and Paul H. Duynhouwer, filed as Exhibit
10(iii)(A)(7) to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1997, is
incorporated herein by reference.<F*>
10(vii) First Amendment to Deferred Compensation Agreement
between Clipper Cruise Line and Paul H. Duynhouwer, filed
as Exhibit 10(iii)(A)(8) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997,
is incorporated herein by reference.<F*>
10(viii) Employment Agreement between the Registrant and Wayne L.
Smith II, filed as Exhibit 10(iii)(A)(9) to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997, is incorporated herein by
reference.<F*>
10(ix) Vessel Sale and Purchase Agreement, dated as of September
4, 1998, between Clipper Odyssey, Ltd. and Spice Islands
Cruises, Ltd., filed as an exhibit to the Registrant's
Current Report on Form 8-K, filed November 24, 1998, is
incorporated herein by reference.
13(i) Those portions of the Registrant's 1998 Annual Report
included in response to Items 5, 6, 7, 8 and 14(a)(1) of
this Form 10-K.
21(i) Subsidiaries of the Registrant.
23(i) Consent of Deloitte & Touche LLP.
27(i) Financial Data Schedule.
[FN]
______________
<F*> Management contract or compensatory plan or arrangement.
<PAGE>
(b) Reports on Form 8-K during the quarter ended December 31, 1998:
The Registrant filed one Current Report on Form 8-K on November
24, 1998. In that Report, under Item 2, the Registrant disclosed that
on November 12, 1998, Clipper Odyssey, Ltd., a Bahamian corporation and
wholly-owned subsidiary of the Registrant ("Clipper Odyssey"), completed
the acquisition (the "Vessel Purchase") of the 120-passenger luxury
cruise ship Oceanic Odyssey (the "Vessel"), from Spice Islands Cruises
Ltd., a British Virgin Islands corporation ("Spice Islands"). The
Registrant also disclosed that the Registrant funded the purchase of the
Vessel through existing working capital and by borrowings under its
existing revolving credit agreement with NationsBank, N.A. In
connection with the Vessel purchase, on October 30, 1998, the Registrant
and NationsBank amended the revolving credit agreement to increase the
line of credit available to the Registrant from $20.0 million to $30.0
million. In addition, the Registrant disclosed that until November 1,
1999, Clipper Odyssey will charter the Vessel, on a bareboat basis
(i.e., without crew or provisioning), to Spice Islands. Spice Islands
prepaid the full charter hire of $1.7 million to the Registrant on the
closing date of the Vessel Purchase. The charter arrangement will
afford the Registrant lead time to design and market travel programs for
the Vessel while permitting Spice Islands to fulfill its preexisting
cruise obligations.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed below on its behalf by the undersigned, thereunto duly
authorized.
Intrav, Inc.
Date: March 31, 1999 By:/s/ Paul H. Duynhouwer
----------------------
Paul H. Duynhouwer
President, Chief Executive Officer
and Director
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
/s/ Paul H. Duynhouwer President, Chief Executive March 31, 1999
- --------------------------- Officer and Director
Paul H. Duynhouwer (Principal Executive Officer)
/s/ Wayne L. Smith II Executive Vice President, March 31, 1999
- --------------------------- Chief Financial Officer and Director
Wayne L. Smith II (Principal Financial and
Accounting Officer)
/s/ Barney A. Ebsworth Chairman of the Board of Directors March 31, 1999
- ---------------------------
Barney A. Ebsworth
/s/ William H. T. Bush Director March 31, 1999
- ---------------------------
William H.T. Bush
/s/ Robert H. Chapman Director March 31, 1999
- ---------------------------
Robert H. Chapman
/s/ John B. Biggs, Jr. Director March 31, 1999
- ---------------------------
John B. Biggs, Jr.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
3(i) (a) Restated Articles of Incorporation of the Registrant, filed as Exhibit 3(i)
to the Registrant's Registration Statement on Form S-1 (No. 33-90444), is
incorporated herein by reference.
(b) Amendment to Restated Articles of Incorporation of the Registrant.
3(ii) (a) Amended and Restated Bylaws of the Registrant, filed as Exhibit 3(ii) to
Registrant's Registration Statement on Form S-1 (No. 33-90444), is incorporated
herein by reference.
(b) Amendment to Amended and Restated Bylaws of the Registrant.
10(i) Amended and Restated Loan Agreement, dated October 30, 1998, between the
Registrant and NationsBank, N.A, as amended by that certain Amendment Number One
to Loan Agreement dated January 18, 1999.
10(ii) Agreement for Purchase and Sale of Stock by and among the Registrant, Clipper
Cruise Line, Inc., Republic Cruise Line, Inc., Liberty Cruise Line, Inc., Clipper
Adventure Cruises, Inc., and Windsor Inc., dated November 13, 1996, as amended by
that certain First Amendment, dated December 18, 1996, filed as Exhibit 10 to the
Registrant's Current Report on Form 8-K dated January 14, 1996, is incorporated
herein by reference.
10(iii) Amended Incentive Stock Plan, filed as Exhibit 10(iii)(A)(5) to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1997, is incorporated
herein by reference.<F*>
10(iv) Form of Option Agreement for Awards of Options under 1995 Incentive Stock Plan,
filed as Exhibit 10(iii)(A)(6) to Amendment No.1 to the Company's Registration
Statement on Form S-1 (No. 33-90444), is incorporated herein by reference.<F*>
10(v) Second Form of Option Agreement for Awards of Options under Amended Incentive
Stock Plan.<F*>
10(vi) Deferred Compensation Agreement by and between Clipper Cruise Line and Paul H.
Duynhouwer, filed as Exhibit 10(iii)(A)(7) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1997, is incorporated herein by
reference.<F*>
10(vii) First Amendment to Deferred Compensation Agreement between Clipper Cruise Line
and Paul H. Duynhouwer, filed as Exhibit 10(iii)(A)(8) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997, is incorporated herein
by reference.<F*>
10(viii) Employment Agreement between the Registrant and Wayne L. Smith II, filed as
Exhibit 10(iii)(A)(9) to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997, is incorporated herein by reference.<F*>
10(ix) Vessel Sale and Purchase Agreement, dated as of September 4, 1998, between
Clipper Odyssey, Ltd. and Spice Islands Cruises, Ltd., filed as an exhibit to
the Registrant's Current Report on Form 8-K, filed November 24, 1998, is
incorporated herein by reference.
13(i) Those portions of the Registrant's 1998 Annual Report included in response to
Items 5, 6, 7, 8 and 14(a)(1) of this Form 10-K.
21(i) Subsidiaries of the Registrant.
23(i) Consent of Deloitte & Touche LLP.
27(i) Financial Data Schedule.
<FN>
______________
<F*> Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE>
[EXHIBIT 3(i)(b)]
AMENDMENT OF ARTICLES OF INCORPORATION
(To be submitted in duplicate)
HONORABLE REBECCA MCDOWELL COOK
SECRETARY OF STATE
STATE OF MISSOURI
P.O. BOX 778
JEFFERSON CITY, MO 65102
Pursuant to the provisions of The General and Business Corporation
Law of Missouri, Intrav, Inc., a Missouri corporation (the
"Corporation"), hereby certifies the following:
1. The present name of the Corporation is Intrav, Inc.
The name under which it was originally organized was Intrav, Inc.
2. An amendment to the Corporation's Restated Articles of
Incorporation was adopted on March 23, 1999 at a Special Meeting
of the shareholders of the Corporation.
3. This amendment provides that the Corporation's Restated Articles
of Incorporation be, and hereby are, amended by adding the
following article as Article Eleven:
ARTICLE ELEVEN
--------------
(A) For purposes of this Article Eleven, the following terms
shall have the meanings specified below:
A person shall be deemed to be the "Beneficial Owner" of, or
to "Beneficially Own" shares of Common Stock to the extent that
such Person would be deemed to be the beneficial owner thereof
pursuant to Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as such rule
may be amended from time to time.
"Citizen" shall mean "citizen of the United States" as such
term is used in the Shipping Act of 1916, as amended from time to
time, including Section 2 thereof, 46 U.S.C. Section 802, and the
Merchant Marine Act of 1936, as amended from time to time.
"Fair Market Value" of a share of capital stock shall mean
the average Closing Price for such a share for each of the forty-
five (45) most recent days during which shares
<PAGE>
<PAGE>
of stock of such class or series shall have been traded preceding
the day on which notice of redemption shall have been given
pursuant to Paragraph (4) of Section E of Article Eleven;
provided, however, that if shares of stock of such class or series
are not traded on any securities exchange or in the over-the-
counter market, "Fair Market Value" shall be determined by the
Board of Directors in good faith; and provided, further, however,
that "Fair Market Value" as to any shareholder who purchases any
stock subject to redemption within one hundred twenty (120) days
prior to a Redemption Date shall not (unless otherwise determined
by the Board of Directors) exceed the purchase price paid for such
shares. "Closing Price" on any day means the reported closing
sales price or, in case no such sale takes place, the average of
the reported closing bid and asked price on the composite tape for
the New York Stock Exchange-listed stock, or, if stock of the
class or series in question is not quoted on such composite tape
on the New York Stock Exchange, or, if such stock is not listed on
such exchange, on the principal United States Securities Exchange
registered under the Act on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing
sales price or bid quotation for such stock on the Nasdaq National
Market or any system then in use, or, if no such prices or
quotations are available, the fair market value on the day in
question as determined by the Board of Directors in good faith.
"Non-Citizen" shall mean any Person other than a Citizen.
"Permitted Percentage" shall mean 24.9% of the shares of
Common Stock from time to time issued and outstanding.
"Person" shall mean an individual, partnership, corporation,
trust or other entity.
"Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the
corporation pursuant to Section E of Article 11.
"Redemption Securities" shall mean any debt or equity
securities of the corporation, any Subsidiary or any other
corporation, or any combination thereof, having such terms and
conditions as shall be approved by the Board of Directors and
which, together with any cash to be paid as part of the redemption
price, in the opinion of any investment banking, appraisal or
accounting firm selected by the Board of Directors (which may be a
firm which provides other investment banking, brokerage or other
services to the corporation), has a value, at the time notice of
redemption is given pursuant to Paragraph (4) of Section E of
Article Eleven, at least equal to the Fair Market Value of the
shares to be redeemed pursuant to Article Eleven (assuming, in the
case of Redemption Securities to be publicly traded, such
Redemption Securities were fully distributed and subject only to
normal trading activity).
B. It is the policy of the corporation that Non-Citizens should
Beneficially Own, individually or in the aggregate, no more than the
Permitted Percentage of the Common Stock. If at any time Non-Citizens,
individually or in the aggregate, become the Beneficial Owners of
- 2 -
<PAGE>
<PAGE>
more than the Permitted Percentage of the Common Stock, then the
corporation shall have the power to take the actions prescribed in
sections C, D, E and F of this Article Eleven. The provisions of this
Article Eleven are intended to assure that the corporation is in
compliance with the citizenship requirements of the Merchant Marine Act
of 1936, as amended, the Shipping Act of 1916, as amended (collectively,
the "Maritime Laws") and the regulations promulgated thereunder.
To the extent necessary to enable the corporation to submit
any proof of citizenship required by law or by contract with the United
States government (or any agency thereof), the corporation may require
the record holders and the Beneficial Owners of Common Stock to confirm
their citizenship status from time to time, and dividends payable with
respect to stock held by such record holder or owned by such Beneficial
owner may, in the discretion of the Board of Directors, be withheld
until confirmation of such citizenship status is received; and the stock
transfer records of the corporation shall be maintained in such manner
as to enable the percentage of Common Stock that is Beneficially Owned
by Non-Citizens and by Citizens to be confirmed. The Board of Directors
is authorized to take such other ministerial actions or make such
interpretation as it may deem necessary or advisable in order to
implement the policy set forth in this Section B of Article Eleven.
C. Any transfer, or attempted transfer, of any shares of Common
Stock, the effect of which would be to cause one or more Non-Citizens to
Beneficially Own Common Stock in excess of the Permitted Percentage,
shall be ineffective as against the corporation, and neither the
corporation nor its transfer agent shall register such transfer or
purported transfer on the stock transfer records of the corporation and
neither the corporation nor its transfer agent shall be required to
recognize the transferee or purported transferee thereof as a
shareholder of the corporation for any purpose whatsoever except to the
extent necessary to effect any remedy available to the corporation under
this Article Eleven. A citizenship certificate may be required from all
transferees (and from any recipient upon original issuance) of Common
Stock of the corporation and, if such transferee (or recipient) is
acting as a fiduciary or nominee for a Beneficial Owner, such Beneficial
Owner, and registration of transfer (or original issuance) shall be
denied upon refusal to furnish such certificate.
D. If on any date (including any record date) the number of
shares of Common Stock that is Beneficially Owned by Non-Citizens is in
excess of the Permitted Percentage (such shares herein referred to as
the "Excess Shares"), the corporation shall determine those shares
Beneficially Owned by Non-Citizens that constitute such Excess Shares.
The determination of those shares that constitute Excess Shares shall be
made by reference to the date or dates such shares were acquired by Non-
Citizens, starting with the most recent acquisition of shares of Common
Stock by a Non-Citizen and including, in reverse chronological order of
acquisition, all other acquisitions of shares of Common Stock by Non-
Citizens from and after the acquisition of those shares of Common Stock
by a Non-Citizen that first caused the Permitted Percentage to be
exceeded. The determination of the corporation as to those shares that
constitute the Excess Shares shall be conclusive. Shares deemed to
constitute such Excess Shares shall (so long as such excess exists) not
be accorded any voting rights and shall not be deemed to be outstanding
- 3 -
<PAGE>
<PAGE>
for purposes of determining the vote required on any matter properly
brought before the shareholders of the corporation for a vote thereon.
The corporation shall (so long as such excess exists) withhold the
payment of dividends and the sharing in any other distribution (upon
liquidation or otherwise) in respect of the Excess Shares. At such time
as the Permitted Percentage is no longer exceeded, full voting rights
shall be restored to any shares previously deemed to be Excess Shares
and any dividend or distribution with respect thereto that has been
withheld shall be due and paid solely to the record holders of such
shares at the time the Permitted Percentage is no longer exceeded.
E. Notwithstanding any other provision of these Articles, but
subject to the provisions of any resolution of the Board of Directors
creating any series of preferred stock or any other class of stock which
has a preference over Common Stock with regard to dividends or upon
liquidation, the Excess of Shares shall be subject to redemption at any
time by action of the Board of Directors. The terms and conditions of
such redemption shall be as follows:
(1) the redemption price of the shares to be redeemed
pursuant to this Article Eleven shall be equal to the Fair Market
Value of such shares or such other redemption price as required by
pertinent state or federal law pursuant to which the redemption is
required:
(2) the redemption price of such shares may be paid in
cash, Redemption Securities or any combination thereof;
(3) if fewer than all the Excess Shares are to be
redeemed, the shares to be redeemed shall be selected in such
manner as set forth in Section D of this Article Eleven or as
otherwise determined by the Board of Directors;
(4) at least thirty (30) days' written notice of the
Redemption Date shall be given to the record holders of the Excess
Shares selected to be redeemed (unless waived in writing by any
such holder) provided that the Redemption Date may be the date on
which written notice shall be given to record holders if the cash
or Redemption Securities necessary to effect the redemption shall
have been deposited in trust for the benefit of such record
holders and subject to immediate withdrawal by them upon surrender
of the stock certificates for the Excess Shares to be redeemed;
(5) from and after the Redemption Date or such earlier
date as mandated by pertinent state or federal law, any and all
rights of whatever nature, which may be held by the record holder
of Excess Shares selected for redemption (including without
limitation any rights to vote or participate in dividends declared
on stock of the same class or series as such shares), shall cease
and terminate and they shall thenceforth be entitled only to
receive the cash or Redemption Securities payable upon redemption;
and
(6) such other terms and conditions as the Board of
Directors shall determine.
- 4 -
<PAGE>
<PAGE>
F. In determining the citizenship of the Beneficial Owners or
their transferees of Common Stock, the corporation may rely on the stock
transfer records of the corporation and the citizenship certificates
given by Beneficial Owners or their transferees or any recipients (in
the case of original issuance) (in each case whether such certificates
have been given on their own behalf or on behalf of others) to prove the
citizenship of such Beneficial Owners, transferees or recipients of the
Common Stock. The determination of the citizenship of Beneficial Owners
and their transferees of the Common Stock may also be subject to proof
in such other way or ways as the corporation may deem reasonable. The
corporation may at any time require proof, in addition to the
citizenship certificates, of the Beneficial Owner or proposed transferee
of shares of Common Stock, and the payment of dividends may be withheld,
and any application for transfer of ownership on the stock transfer
records of the corporation may be refused, until such additional proof
is submitted.
G. Each provision of this Article Eleven is intended to be
severable from every other provision. If any one or more of the
provisions contained in this Article Eleven is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of
any other provision of this Article Eleven shall not be affected, and
this Article Eleven shall be construed as if the provisions held to be
invalid, illegal or unenforceable had never been contained therein.
H. The Board of Directors may, to the extent permitted by law,
from time to time establish, modify, amend or rescind, by By-Law or
otherwise, regulations and procedures not inconsistent with the express
provisions of this Article Eleven for determining whether any
acquisition of the corporation's capital stock would jeopardize the
corporation's ability to maintain such ownership by Citizens for the
orderly application, administration and implementation of this Article
Eleven. Such procedures and regulations shall be kept on file with the
Secretary of the corporation and with its Transfer Agent, if any, and
shall be made available for inspection by the public and, upon request,
shall be mailed to any holder of capital stock of the corporation.
I. All certificates evidencing ownership of capital stock of
the corporation which are delivered after the effective date of this
Article Eleven may bear a conspicuous legend describing the restriction
set forth in Article Eleven.
4. Of the 5,114,200 shares outstanding, 5,114,200 of such shares were
entitled to vote on such amendment.
The number of outstanding shares of any class entitled to vote
thereon as a class were as follows:
Class Number of Outstanding Shares
----- ----------------------------
Common Stock 5,114,200
- 5 -
<PAGE>
<PAGE>
5. The number of shares voted for and against the amendment was as
follows:
Class No. Voted For No. Voted Against No. Abstained
----- ------------- ----------------- -------------
Common Stock 4,272,933 0 5,570
6. If the amendment changed the number or par value of authorized
shares having a par value, the amount in dollars of authorized
shares having a par value as changed is:
N/A
If the amendment changed the number of authorized shares without
par value, the authorized number of shares without par value as
changed and the consideration proposed to be received for such
increased authorized shares without par value as are to be
presently issued are:
N/A
7. If the amendment provides for an exchange, reclassification or
cancellation of issued shares, or a reduction of the number of
authorized shares of any class below the number of issued shares
of that class, the following is a statement of the manner in which
such reduction shall be effected:
N/A
- 6 -
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned, Wayne L. Smith II, Executive
Vice President of Intrav, Inc., has executed this instrument on the 23rd
day of March, 1999.
PLACE CORPORATE SEAL HERE
(IF NO SEAL, STATE "NONE")
None
INTRAV, INC.
ATTEST:
/s/ Vanessa M. Tegethoff By:/s/ Wayne L. Smith II
- ------------------------------------ -----------------------------------
Vanessa M. Tegethoff, Wayne L. Smith II, Executive Vice
Assistant Secretary President
- 7 -
<PAGE>
<PAGE>
STATE OF MISSOURI )
) ss.
County OF ST. LOUIS )
I, Sherry G. Tittle, a Notary Public, do hereby certify that
on this 23rd day of March, 1999, personally appeared before me Wayne L.
Smith II and Vanessa M. Tegethoff who, being by me first duly sworn,
declared that they are the Executive Vice President and Assistant
Secretary, respectively, of Intrav, Inc., a Missouri corporation, that
they signed the foregoing document in such capacities and that the
statements therein contained are true.
NOTARIAL SEAL /s/ Sherry G. Tittle
------------------------------------------
Notary Public
My Commission Expires:
- 8 -
<PAGE>
[EXHIBIT 3(ii)(b)]
AMENDMENT TO THE AMENDED AND RESTATED BY-LAWS
OF INTRAV, INC.
The undersigned, being the duly appointed Assistant Secretary of
Intrav, Inc., a Missouri corporation, hereby certifies that, as of this
23rd day of March, 1999, the Amended and Restated By-Laws of Intrav,
Inc. were amended as follows:
1. Article III, Section 2 of the Amended and Restated Bylaws is
replaced in its entirety to read as follows:
2. Annual Meeting. The annual meeting of the
--------------
shareholders shall be held on the third Friday in May of each year at
the hour of 11:00 a.m., or at such other date and hour as shall be
determined by the Board of Directors and stated in the notice of the
meeting, for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. If the day fixed
for the annual meeting shall be a legal holiday in the State of
Missouri, such meeting shall be held on the next succeeding business
day. If the election of directors shall not be held on the day
designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to
be held at a special meeting of the shareholders as soon thereafter as
conveniently may be arranged.
2. The following article is added to the Amended and Restated
Bylaws as Article XV:
ARTICLE XV
----------
FOREIGN OWNERSHIP OF STOCK
--------------------------
(A) For purposes of this Article XV, the following terms shall
have the meanings specified below:
A person shall be deemed to be the "Beneficial Owner" of, or
to "Beneficially Own" shares of Common Stock to the extent that
such Person would be deemed to be the beneficial owner thereof
pursuant to Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as such rule
may be amended from time to time.
"Citizen" shall mean "citizen of the United States"as such
terms are used in the Shipping Act of 1916, as amended from time
to time, including Section 2 thereof, 46 U.S.C. Section 802, and
the Merchant Marine Act of 1936, as amended from time to time.
<PAGE>
<PAGE>
"Fair Market Value" of a share of capital stock shall mean
the average Closing Price for such a share for each of the forty-
five (45) most recent days during which shares of stock of such
class or series shall have been traded preceding the day on which
notice of redemption shall have been given pursuant to Paragraph
(4) of Section E of Article XV; provided, however, that if shares
of stock of such class or series are not traded on any securities
exchange or in the over-the-counter market, "Fair Market Value"
shall be determined by the Board of Directors in good faith; and
provided, further, however, that "Fair Market Value" as to any
shareholder who purchases any stock subject to redemption within
one hundred twenty (120) days prior to a Redemption Date shall not
(unless otherwise determined by the Board of Directors) exceed the
purchase price paid for such shares. "Closing Price" on any day
means the reported closing sales price or, in case no such sale
takes place, the average of the reported closing bid and asked
price on the composite tape for the New York Stock Exchange-listed
stock, or, if stock of the class or series in question is not
quoted on such composite tape on the New York Stock Exchange, or,
if such stock is not listed on such exchange, on the principal
United States Securities Exchange registered under the Act on
which such stock is listed, or, if such stock is not listed on any
such exchange, the highest closing sales price or bid quotation
for such stock on the Nasdaq National Market or any system then in
use, or, if no such prices or quotations are available, the fair
market value on the day in question as determined by the Board of
Directors in good faith.
"Non-Citizen" shall mean any Person other than a Citizen.
"Permitted Percentage" shall mean 24.9% of the shares of
Common Stock from time to time issued and outstanding.
"Person" shall mean an individual, partnership, corporation,
trust or other entity.
"Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the
corporation pursuant to Section E of Article XV.
"Redemption Securities" shall mean any debt or equity
securities of the corporation, any Subsidiary or any other
corporation, or any combination thereof, having such terms and
conditions as shall be approved by the Board of Directors and
which, together with any cash to be paid as part of the redemption
price, in the opinion of any investment banking, appraisal or
accounting firm selected by the Board of Directors (which may be a
firm which provides other investment banking, brokerage or other
services to the corporation), has a value, at the time notice of
redemption is given pursuant to Paragraph (4) of Section E of
Article XV, at least equal to the Fair Market Value of the shares
to be redeemed pursuant to Article XV (assuming, in the case of
Redemption Securities to be publicly traded, such Redemption
Securities were fully distributed and subject only to normal
trading activity).
B. It is the policy of the corporation that Non-Citizens should
Beneficially Own, individually or in the aggregate, no more than the
Permitted Percentage of the Common Stock. If
- 2 -
<PAGE>
<PAGE>
at any time Non-Citizens, individually or in the aggregate, become the
Beneficial Owners of more than the Permitted Percentage of the Common
Stock, then the corporation shall have the power to take the actions
prescribed in Sections C, D, E and F of this Article XV. The provisions
of this Article XV are intended to assure that the corporation is in
compliance with the citizenship requirements of the Merchant Marine Act
of 1936, as amended, the Shipping Act of 1916, as amended (collectively,
the "Maritime Laws") and the regulations promulgated thereunder.
To the extent necessary to enable the corporation to submit
any proof of citizenship required by law or by contract with the United
States government (or any agency thereof), the corporation may require
the record holders and the Beneficial Owners of Common Stock to confirm
their citizenship status from time to time, and dividends payable with
respect to stock held by such record holder or owned by such Beneficial
owner may, in the discretion of the Board of Directors, be withheld
until confirmation of such citizenship status is received; and the stock
transfer records of the corporation shall be maintained in such manner
as to enable the percentage of Common Stock that is Beneficially Owned
by Non-Citizens and by Citizens to be confirmed. The Board of Directors
is authorized to take such other ministerial actions or make such
interpretation as it may deem necessary or advisable in order to
implement the policy set forth in this Section B of Article XV.
C. Any transfer, or attempted transfer, of any shares of Common
Stock, the effect of which would be to cause one or more Non-Citizens to
Beneficially Own Common Stock in excess of the Permitted Percentage,
shall be ineffective as against the corporation, and neither the
corporation nor its transfer agent shall register such transfer or
purported transfer on the stock transfer records of the corporation and
neither the corporation nor its transfer agent shall be required to
recognize the transferee or purported transferee thereof as a
shareholder of the corporation for any purpose whatsoever except to the
extent necessary to effect any remedy available to the corporation under
this Article XV. A citizenship certificate may be required from all
transferees (and from any recipient upon original issuance) of Common
Stock of the corporation and, if such transferee (or recipient) is
acting as a fiduciary or nominee for a Beneficial Owner, such Beneficial
Owner, and registration of transfer (or original issuance) shall be
denied upon refusal to furnish such certificate.
D. If on any date (including any record date) the number of
shares of Common Stock that is Beneficially Owned by Non-Citizens is in
excess of the Permitted Percentage (such shares herein referred to as
the "Excess Shares"), the corporation shall determine those shares
Beneficially Owned by Non-Citizens that constitute such Excess Shares.
The determination of those shares that constitute Excess Shares shall be
made by reference to the date or dates such shares were acquired by Non-
Citizens, starting with the most recent acquisition of shares of Common
Stock by a Non-Citizen and including, in reverse chronological order of
acquisition, all other acquisitions of shares of Common Stock by Non-
Citizens from and after the acquisition of those shares of Common Stock
by a Non-Citizen that first caused the Permitted Percentage to be
exceeded. The determination of the corporation as to those shares that
constitute the Excess Shares shall be conclusive. Shares deemed to
constitute such Excess Shares shall (so long as such excess exists) not
be accorded any voting rights and shall not be deemed to be outstanding
- 3 -
<PAGE>
<PAGE>
for purposes of determining the vote required on any matter properly
brought before the shareholders of the corporation for a vote thereon.
The corporation shall (so long as such excess exists) withhold the
payment of dividends and the sharing in any other distribution (upon
liquidation or otherwise) in respect of the Excess Shares. At such time
as the Permitted Percentage is no longer exceeded, full voting rights
shall be restored to any shares previously deemed to be Excess Shares
and any dividend or distribution with respect thereto that has been
withheld shall be due and paid solely to the record holders of such
shares at the time the Permitted Percentage is no longer exceeded.
E. Notwithstanding any other provision of these Articles, but
subject to the provisions of any resolution of the Board of Directors
creating any series of preferred stock or any other class of stock which
has a preference over Common Stock with regard to dividends or upon
liquidation, the Excess of Shares shall be subject to redemption at any
time by action of the Board of Directors. The terms and conditions of
such redemption shall be as follows:
(1) the redemption price of the shares to be redeemed
pursuant to this Article XV shall be equal to the Fair Market
Value of such shares or such other redemption price as required by
pertinent state or federal law pursuant to which the redemption is
required:
(2) the redemption price of such shares may be paid in
cash, Redemption Securities or any combination thereof;
(3) if fewer than all the Excess Shares are to redeemed,
the shares to be redeemed shall be selected in such manner as set
forth in Section D of this Article XV or as otherwise determined
by the Board of Directors;
(4) at least thirty (30) days' written notice of the
Redemption Date shall be given to the record holders of the Excess
Shares selected to be redeemed (unless waived in writing by any
such holder) provided that the Redemption Date may be the date on
which written notice shall be given to record holders if the cash
or Redemption Securities necessary to effect the redemption shall
have been deposited in trust for the benefit of such record
holders and subject to immediate withdrawal by them upon surrender
of the stock certificates for the Excess Shares to be redeemed;
(5) from and after the Redemption Date or such earlier
date as mandated by pertinent state or federal law, any and all
rights of whatever nature, which may be held by the record holder
of Excess Shares selected for redemption (including without
limitation any rights to vote or participate in dividends declared
on stock of the same class or series as such shares), shall cease
and terminate and they shall thenceforth be entitled only to
receive the cash or Redemption Securities payable upon redemption;
and
(6) such other terms and conditions as the Board of
Directors shall determine.
- 4 -
<PAGE>
<PAGE>
F. In determining the citizenship of the Beneficial Owners or
their transferees of Common Stock, the corporation may rely on the stock
transfer records of the corporation and the citizenship certificates
given by Beneficial Owners or their transferees or any recipients (in
the case of original issuance) (in each case whether such certificates
have been given on their own behalf or on behalf of others) to prove the
citizenship of such Beneficial Owners, transferees or recipients of the
Common Stock. The determination of the citizenship of Beneficial Owners
and their transferees of the Common Stock may also be subject to proof
in such other way or ways as the corporation may deem reasonable. The
corporation may at any time require proof, in addition to the
citizenship certificates, of the Beneficial Owner or proposed transferee
of shares of Common Stock, and the payment of dividends may be withheld,
and any application for transfer of ownership on the stock transfer
records of the corporation may be refused, until such additional proof
is submitted.
G. Each provision of this Article XV is intended to be
severable from every other provision. If any one or more of the
provisions contained in this Article XV is held to be invalid, illegal
or unenforceable, the validity, legality or enforceability of any other
provision of this Article XV shall not be affected, and this Article XV
shall be construed as if the provisions held to be invalid, illegal or
unenforceable had never been contained therein.
H. The Board of Directors may, to the extent permitted by law,
from time to time establish, modify, amend or rescind, by By-Law or
otherwise, regulations and procedures not inconsistent with the express
provisions of this Article XV for determining whether any acquisition of
the corporation's capital stock would jeopardize the corporation's
ability to maintain such ownership by Citizens for the orderly
application, administration and implementation of this Article XV. Such
procedures and regulations shall be kept on file with the Secretary of
the corporation and with its Transfer Agent, if any, and shall be made
available for inspection by the public and, upon request, shall be
mailed to any holder of capital stock of the corporation.
I. All certificates evidencing ownership of capital stock of
the corporation which are delivered after the effective date of this
Article XV may bear a conspicuous legend describing the restriction set
forth in Article XV.
/s/ Vanessa M. Tegethoff
--------------------------------------------
Vanessa M. Tegethoff, Assistant Secretary
- 5 -
<PAGE>
[Exhibit 10(i)]
AMENDED AND RESTATED LOAN AGREEMENT
between
NATIONSBANK, N.A.
(successor by merger to The Boatmen's National Bank of St. Louis)
as "Lender"
and
INTRAV, INC.
as "Borrower"
Effective October 30, 1998
<PAGE>
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
This is Amendment and Restated Loan Agreement (this "Agreement")
is executed as of October 30, 1998, by and between INTRAV, INC, as
Borrower, and NATIONSBANK, N.A., as Lender.
The Boatmen's National Bank of St. Louis, to which Lender is
successor by merger, and Borrower are parties to a Loan Agreement
effective December 31, 1996, as amended by several subsequent amendments
thereto (the "Original Loan Agreement") and now desire to amend and
restate the Original Loan Agreement in its entirety.
Therefore, in consideration of the mutual agreements herein
and other sufficient consideration, the receipt of which is hereby
acknowledged, Borrower and Lender hereby amend and restate the Original
Loan Agreement to read in its entirety as follows:
1. Effective Date. This Agreement shall be effective October
30, 1998.
2. Definitions and Rules of Construction.
2.1. Listed Definitions. Capitalized terms defined in the
Glossary and Index of Defined Terms attached hereto as Exhibit 2.1
shall have such defined meanings wherever used in this Agreement
and the other Loan Documents.
2.2. Other Definitions. If a capitalized term used in this
Agreement is not defined in the Glossary and Index of Defined
Terms, it shall have such meaning as defined elsewhere herein, or
if not defined elsewhere herein, the meaning defined in the UCC.
2.3. References to Covered Persons. The words Covered Person, a
Covered Person, any Covered Person, each Covered Person and every
Covered Person refer to Borrower and each of its Subsidiaries
separately. The words Covered Persons refer to Borrower and its
Subsidiaries collectively.
2.4. Accounting Terms. Unless the context otherwise requires,
accounting terms herein that are not defined herein shall be
calculated under GAAP. All financial statements required
hereunder and financial measurements contemplated hereunder
respecting Borrower shall be presented and calculated for Borrower
and all of its Subsidiaries, if any, unless otherwise expressly
provided otherwise herein, on a consolidated basis in accordance
with GAAP.
2.5. Meaning of Satisfactory. Wherever herein a document or
matter is required to be satisfactory to Lender, unless expressly
stated otherwise such document must be satisfactory to Lender in
both form and substance, and unless expressly stated otherwise,
Lender shall have the absolute discretion to determine whether the
document or matter is satisfactory.
2.6. Computation of Time Periods. In the computation of periods
of time from a specified date to a later specified date, the word
from shall mean from and including and the words to and until
shall each mean to but excluding. Periods of days referred to in
this Agreement shall be counted in calendar days unless Business
Days are expressly prescribed, and references in this Agreement to
months and years shall be to calendar months and calendar years
unless otherwise specified.
1
<PAGE>
<PAGE>
2.7. General. Unless the context of this Agreement clearly
requires otherwise: (i) references to the plural include the
singular and vice versa; (ii) references to any Person include
such Person's successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Agreement; (iii)
references to one gender include all genders; (iv) including is
not limiting; (v) or has the inclusive meaning represented by the
phrase "and/or"; (vi) the words hereof, herein, hereby, hereunder
and similar terms in this Agreement refer to this Agreement as a
whole, including its Exhibits, and not to any particular provision
of this Agreement; (vii) the word Section or section and Page or
page refer to a section or page, respectively, and the word
Exhibit refers to an Exhibit to this Agreement unless it expressly
refers to something else; (viii) reference to any agreement
(including this Agreement), document or instrument means such
agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof and,
if applicable, the terms hereof; and (ix) general and specific
references to any Law means such Law as amended, modified,
codified or reenacted, in whole or in part, and in effect from
time to time. Section captions and the Table of Contents are for
convenience only and shall not affect the interpretation or
construction of this Agreement or the other Loan Documents.
3. Lender's Commitments.
3.1. Revolving Commitment.
3.1.1. Advances. Subject to the limitations in Section
3.1.2 and elsewhere herein, Lender commits to make available
from the Effective Date to the Maturity Date, a revolving
credit facility available as Advances made from time to time
as provided herein. Subject to the limitations in Section
3.1.2 and elsewhere herein, payments and prepayments that
are applied to reduce the Revolving Loan may be reborrowed.
The amount of the Revolving Commitment initially will be
$30,000,000, but will reduce automatically to a lesser
Dollar amount on certain dates as listed in the table below:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Effective Date of Reduction Reduction New Revolving Commitment
- ---------------------------------------------------------------------
<S> <C> <C>
December 31, 1999 $2,000,000 $28,000,000
- ---------------------------------------------------------------------
December 31, 2000 $5,000,000 $23,000,000
- ---------------------------------------------------------------------
December 31, 2001 $5,000,000 $18,000,000
- ---------------------------------------------------------------------
December 31, 2002 $3,000,000 $15,000,000
- ---------------------------------------------------------------------
</TABLE>
Borrower may also reduce the amount of the Revolving
Commitment in whole multiples of $1,000,000 at any time and
from time to time, but only if (i) Borrower gives Lender
written notice of Borrower's intention to make such
reduction at least one Business Day prior to the effective
date of the reduction, and (ii) Borrower makes on the
effective date of the reduction any payment on the Revolving
Loan required under Section 7.2 as a consequence of the
reduction and any amount that may be due to Lender under
Section 18.4. Any such reduction of the amount of the
Revolving Commitment, whether scheduled or voluntary, shall
be permanent.
3.1.2. Limitation on Advances. No Advance will be made
which would result in the Revolving Loan exceeding the
Maximum Available Amount and no Advance will be
2
<PAGE>
<PAGE>
made on or after the Maturity Date. Lender may, however, in
its absolute discretion make such Advances, but shall not be
deemed by doing so to have increased the Maximum Available
Amount and shall not be obligated to make any such Advances
thereafter. At any time that there is an Existing Default,
the Revolving Commitment may be canceled as provided in
Section 17.2. The "Maximum Available Amount" on any date
shall be a Dollar amount equal to (i) the amount of the
Revolving Commitment on such date, minus (ii) the Letter of
Credit Exposure (except to the extent that such Advance will
be used immediately to reimburse Lender for unreimbursed
draws on a Letter of Credit). No Advance will be made which
would result in the Revolving Loan exceeding $25,000,000
unless and until Lender has, or contemporaneously with the
Advance will have, a first priority Security Interest in the
vessel Oceanic Odyssey and all of her machinery and
equipment and a valid and effective assignment of all income
and proceeds thereof, subject to no other Security Interests
except those that will be fully discharged by appropriate
contemporaneous application of the proceeds of such Advance
in a manner satisfactory to Lender. No Advance will be made
which would cause the ratio of the Revolving Loan to the
from time to time most recently appraised value of the
Vessels in which Lender has a first priority Security
Interest to exceed 2/3.
3.1.3. Note. The obligation of Borrower to repay
Lender's Revolving Loan shall be evidenced by a promissory
note payable to the order of Lender in a maximum principal
amount equal to the amount of the Revolving Commitment and
otherwise satisfactory to Lender.
3.2. Letter of Credit Commitment. Lender commits to issue
standby letters of credit and commercial letters of credit
for the account of Borrower or any Subsidiary of Borrower
from time to time from the Effective Date to the Maturity
Date, but only in connection with transactions satisfactory
to Lender and only if the Letter of Credit Exposure for all
Letters of Credit will not as a result of such issuance
exceed $1,000,000. The expiration date of any Letter of
Credit will be a Business Day that is not more than one year
after its issuance date and is not later than the Maturity
Date; provided, however, that the expiration date for a
Letter of Credit may be later than the Maturity Date if
Borrower provides cash collateral satisfactory to Lender as
security for Borrower's obligation to reimburse Lender for
all draws thereunder. Borrower unconditionally and
irrevocably guaranties the reimbursement to Lender of, and
will cause to be reimbursed to Lender, all amounts drawn on
any Letter of Credit issued for the account of any
Subsidiary of Borrower.
4. Interest; Yield Protection.
4.1. Multiple Tranches Permitted. The Revolving Loan may have
multiple Tranches bearing differing interest rates as provided
herein, but no LIBOR Tranche may be less than $150,000.
4.2. Alternative Rates and Interest Periods. Each Tranche shall
bear interest at either the Alternate Base Rate or the LIBOR Based
Rate as designated by Borrower as provided herein. If Borrower
designates a Tranche to be a LIBOR Tranche, Borrower shall also
select an Interest Period for it. The Interest Period shall be
either one, two, three, or six months. If a Tranche is a LIBOR
Tranche, it shall bear interest at the LIBOR Based Rate throughout
the applicable Interest Period designated by Borrower as provided
herein. The "Alternate Base Rate" for any Tranche shall be the
Prime Rate (which will fluctuate as provided in Section 4.6). The
"LIBOR Based
3
<PAGE>
<PAGE>
Rate" for any Tranche shall be the Adjusted LIBO Rate plus the
applicable LIBOR Increment determined as provided in Section 4.3.
4.3. LIBOR Increments. The applicable LIBOR Increment shall be
determined initially as of the last day of the fiscal quarter of
Borrower ended before the Effective Date, and thereafter as of the
last day of each fiscal quarter of Borrower, in accordance with
the following table and based upon the ratio of Borrower's Funded
Debt to EBITDA as reflected in Borrower's Financial Statements for
the twelve months then ended:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
If the ratio of Borrower's Funded Debt to EBITDA is: The LIBOR Increment shall be:
- ------------------------------------------------------------------------------------------
<S> <C>
Equal to or greater than 2.00 but less than 3.00 2.00%
- ------------------------------------------------------------------------------------------
Equal to or greater than 1.00 but less than 2.00 1.75%
- ------------------------------------------------------------------------------------------
Less than 1.00 1.50%
- ------------------------------------------------------------------------------------------
</TABLE>
Any change in the LIBOR Increment shall become applicable on the
first day following the day when Borrower delivers to Lender its
Financial Statements for its fiscal quarter just ended as required
in Section 14.12.2. If Borrower does not deliver any such
quarterly Financial Statements to Lender within the period
required by Section 14.12.2, the highest possible LIBOR Increment
shall become applicable as of the last day of such period and
shall remain applicable until Borrower delivers such Financial
Statements to Lender.
4.4. Conversion of Loan. Borrower may (i) at any time convert an
Alternate Base Rate Tranche to a LIBOR Tranche, or (ii) at the end
of any Interest Period of a LIBOR Tranche, continue such LIBOR
Tranche as a LIBOR Tranche for an additional Interest Period or
convert the Tranche to an Alternate Base Rate Tranche. To cause
any conversion or continuation, Borrower shall give Lender, prior
to 11:00 a.m., St. Louis time, on the date when the conversion or
continuation is to be effective, or in the case of conversion to
or continuation of a LIBOR Tranche, two (2) Business Days prior to
the date the conversion or continuation is to be effective (in
either case, the "Conversion Date"), a written request (which may
be mailed, personally delivered or telecopied as provided in
Section 17.5) (a "Notice of Conversion/Continuation") (i)
specifying whether a conversion or continuation is requested, (ii)
in the case of a conversion, specifying whether the Tranche is to
be a LIBOR Tranche or Alternate Base Rate Tranche upon the
conversion, and (iv) in the case of conversion to or continuation
of a LIBOR Tranche, specifying the Interest Period therefor. If a
Notice of Conversion/Continuation is not made by 11:00 a.m. St.
Louis time on the second Business Day preceding the last day of
the Interest Period if the Tranche is a LIBOR Tranche, then
Borrower shall be deemed to have timely given a Notice of
Conversion/Continuation to Lender requesting to convert the
Tranche to an Alternate Base Rate Tranche. If the Loan is a LIBOR
Tranche, any conversion or continuation shall become effective
only on the day following the last day of the current Interest
Period.
4.5. Time of Accrual. Interest shall accrue on all principal
amounts outstanding from the date when first outstanding to the
date when no longer outstanding. Amounts shall be deemed
outstanding until payments are applied thereto as provided herein.
4.6. Computation. Interest shall be computed for the actual days
elapsed over a year deemed to consist of 360 days. Interest rates
that are based on the Prime Rate shall change simultaneously with
any change in the Prime Rate and such rates shall be effective for
the entire day on which such Prime Rate change becomes effective.
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4.7. Rate After Maturity. Borrower shall pay interest on the
Revolving Loan after its Maturity, and (at the option of Lender)
on the Revolving Loan and on the other Loan Obligations after the
occurrence of an Event of Default, at a rate per annum of 2% plus
the Prime Rate.
5. Fees.
5.1. Origination Fee. Borrower shall pay to Lender an
"Origination Fee" on the Effective Date of $47,500.
5.2. Commitment Fee. Borrower shall pay to Lender a "Commitment
Fee" calculated by applying the daily equivalent of the Commitment
Fee Rate to the Unused Revolving Commitment on each day during the
period from the Effective Date to the Maturity Date. The "Unused
Revolving Commitment" on any day shall be the amount of the
Revolving Commitment minus the sum of the Revolving Loan and the
Letter of Credit Exposure. The Commitment Fee shall be payable
quarterly in arrears, commencing on the first day of the first
calendar quarterly beginning after the Effective Date and
continuing on the first day of each calendar quarter thereafter
and on the Maturity Date. The applicable "Commitment Fee Rate"
shall be determined initially as of the last day of the fiscal
quarter of Borrower ended before the Effective Date, and
thereafter as of the last day of each fiscal quarter of Borrower,
in accordance with the following table and based upon the ratio of
Borrower's Funded Debt to EBITDA as reflected in Borrower's
Financial Statements for the twelve months then ended:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
If the ratio of Borrower's Funded Debt to EBITDA is: The Commitment Fee Rate shall be:
- ---------------------------------------------------------------------------------------------------
<S> <C>
Equal to or greater than 2.00 but less than 3.00 0.15%
- ---------------------------------------------------------------------------------------------------
Equal to or greater than 1.00 but less than 2.00 0.125%
- ---------------------------------------------------------------------------------------------------
Less than 1.00 0.10%
- ---------------------------------------------------------------------------------------------------
</TABLE>
Any change in the Commitment Fee Rate shall become applicable on
the first day following the day when Borrower delivers to Lender
its Financial Statements for its fiscal quarter just ended as
required in Section 14.12.2. If Borrower does not deliver any
such quarterly Financial Statements to Lender within the period
required by Section 14.12.2, the highest possible Commitment Fee
Rate shall become applicable as of the last day of such period and
shall remain applicable until Borrower delivers such Financial
Statements to Lender.
5.3. Letter of Credit Fees. Borrower shall pay to Lender a one-
time "Letter of Credit Fee" for each Letter of Credit issued by
Lender. The Letter of Credit Fee shall be an amount equal to 1.0%
per annum of the original face amount of each Letter of Credit and
is payable quarterly in arrears. Borrower shall also pay Lender's
other customary fees for amendment and renewal of a Letter of
Credit, for negotiation of drafts drawn under Letters of Credit,
and similar fees, all in accordance with Lender's normal practice
at the time.
6. Scheduled Payments.
6.1. Maturity Date. Borrower shall repay the Revolving Loan and
all unpaid accrued interest thereon on November 1, 2003.
6.2. Interest Payments Before Maturity Date. While a Tranche is
an Alternate Base Rate Tranche, Borrower shall pay interest
accrued thereon monthly in arrears, beginning on the first
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Business Day of the first calendar month following the Effective
Date, and continuing on the first day of each calendar month
thereafter until the Maturity Date. While a Tranche is a LIBOR
Tranche, Borrower shall, until the Maturity Date, pay interest
accrued thereon on the last day of the Interest Period therefor,
provided however, that if a LIBOR Tranche has a 180 day Interest
Period, Borrower shall pay accrued interest on such LIBOR Tranche
on the last day of each fiscal quarter in addition to the last day
of the Interest Period..
7. Prepayments.
7.1. Voluntary Prepayments. Subject to the requirements of
Section 7.2, Borrower shall not be entitled to make prepayments on
a Tranche if it is a LIBOR Tranche. If a Tranche is an Alternate
Base Rate Tranche, Borrower may wholly prepay it at any time and
may make partial prepayments thereon from time to time, without
penalty or premium, but only if (i) Borrower gives Lender written
notice (which may be mailed, personally delivered or telecopied as
provided in Section 22.1) of Borrower's intention to make such
prepayment at least one Business Day prior to tendering the
prepayment, (ii) the total amount of the prepayment is a whole
multiple of $150,000, and (iii) Borrower pays any accrued interest
on the amount prepaid at the time of such prepayment.
7.2. Mandatory Prepayments. If at any time the Revolving Loan
exceeds the Maximum Available Amount, whether as a result of
optional Advances by Lender as contemplated in Section 3.1.2, a
scheduled or voluntary reduction in the amount of the Revolving
Commitment or otherwise, Borrower shall on demand by Lender make a
prepayment in the amount of the excess and pay any amount that may
be due to Lender under Section 18.4. Each such prepayment will be
applied by Lender first to reduce pro rata all the Tranches of the
Revolving Loan that are Alternate Base Rate Tranches, and then to
reduce (in the order of the maturities of their respective
Interest Periods) the Tranches of the Revolving Loan that are
LIBOR Tranches.
8. Manner of Payments and Timing of Application of Payments.
8.1. Payment Requirement. Unless expressly provided to the
contrary elsewhere herein, Borrower shall make each payment on the
Loan Obligations to Lender as required under the Loan Documents at
the Lending Office. All such payments shall be made in Dollars on
the date when due, without deduction, set-off or counterclaim.
8.2. Application of Payments and Proceeds. All payments received
by Lender in immediately available funds at or before 12:00 noon,
St. Louis time, on a Business Day will be applied to the relevant
Loan Obligation on the same day. Such payments received on a day
that is not a Business Day or after 12:00 noon on a Business Day
will be applied to the relevant Loan Obligation on the next
Business Day. Except as expressly provided otherwise herein,
Lender may apply, and reverse and reapply, payments and proceeds
of the Collateral to the Loan Obligations in such order and manner
as Lender determines in its absolute discretion. Borrower hereby
irrevocably waives the right to direct the application of payments
and proceeds of the Collateral.
8.3. Returned Instruments. If a payment is made by check, draft
or other instrument and the check, draft or other instrument is
returned unpaid, the application of the payment to the Loan
Obligations will be reversed and will be treated as never having
been made.
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8.4. Compelled Return of Payments or Proceeds. If Lender is for
any reason compelled to surrender any payment or any proceeds of
the Collateral because such payment or the application of such
proceeds is for any reason invalidated, declared fraudulent, set
aside, or determined to be void or voidable as a preference, an
impermissible setoff, or a diversion of trust funds, then this
Agreement and the Loan Obligations to which such payment or
proceeds was applied or intended to be applied shall be revived as
if such application was never made; and Borrower shall be liable
to pay to Lender, and shall indemnify Lender for and hold Lender
harmless from any loss with respect to, the amount of such payment
or proceeds surrendered. This Section shall be effective
notwithstanding any contrary action Lender may take in reliance
upon its receipt of any such payment or proceeds. Any such
contrary action so taken by Lender shall be without prejudice to
Lender's rights under this Agreement and shall be deemed to have
been conditioned upon the application of such payment or proceeds
having become final and irrevocable. The provisions of this
Section shall survive termination of the Commitment and the
payment and satisfaction of all of the Loan Obligations.
8.5. Due Dates Not on Business Days. If any payment required
hereunder becomes due on a date that is not a Business Day, then
such due date shall be deemed automatically extended to the next
Business Day; provided, however, that if the next Business Day
would be in the next calendar month, such payment shall instead be
due on the immediately preceding Business Day.
8.6. Advances on Borrower's Request. Borrower may request an
Advance by submitting a request therefor to Lender as provided
herein. Every request for an Advance shall specify a date when
the Advance is requested to be made and shall be irrevocable. A
request for an Advance received by Lender on a day that is not a
Business Day or that is received by Lender after 11:00 a.m. (St.
Louis time) on a Business Day shall be treated as having been
received by Lender at 11:00 a.m. (St. Louis time) on the next
Business Day. Provided that all conditions precedent herein to a
requested Advance have been satisfied, Lender will make the amount
of such requested Advance available to Borrower on the applicable
Advance Date in immediately available funds in Dollars at the
Lending Office. Such funds will be deposited in a demand deposit
account of Borrower's at the Lending Office.
8.7. Lender's Right to Make Other Advances.
8.7.1. Payment of Loan Obligations. Lender shall have
the right to make Advances at any time and from time to time
to cause timely payment of any of the Loan Obligations.
Lender will give notice to Borrower after any such Advance
is made. Any such Advance will be an Alternate Base Rate
Tranche.
8.7.2. Payments to Other Creditors. If Lender is
obligated to reimburse or pay to any creditor of Borrower
any amount in order to (i) obtain a release of such
creditor's Security Interest in any of the Collateral, or
(ii) otherwise satisfy Borrower's obligations to such
creditor to the extent not irrevocably satisfied by the
initial Advance, then Lender may make Advances for that
purpose. Any such Advance will be an Alternate Base Rate
Tranche.
8.8. Letters of Credit. Borrower may request the issuance of a
Letter of Credit by submitting an issuance request to Lender and
executing the reimbursement agreement required under Section 11.1
no less than five Business Days prior to the requested issue date
for such Letter of Credit.
7
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8.9. Amount, Number, and Purpose Restrictions on Advances. No
Advance will be made unless it is a whole multiple of $150,000 and
not less than $150,000. On any one day, no more than one Advance
will be made. Advances will only be made for the purposes
permitted in Section 14.1.
8.10. Each Request for a Advance a Certification. Each submittal
by Borrower of a request for a Advance shall constitute a
certification by Borrower that (i) there is no Existing Default,
(ii) all representations and warranties of Borrower in this
Agreement are then true, with such exceptions as have been
disclosed to Lender in writing by Borrower, and will be true on
the Advance Date, as if then made, with such exceptions as have
been disclosed to Lender in writing by Borrower, except that with
respect to the representations and warranties made regarding
Financial Statements or financial data, such representations and
warranties shall be deemed made with respect to the most recent
Financial Statements and other financial data delivered by
Borrower to Lender, and (iii) all conditions herein and in the
other Loan Documents to the making of the requested Advance have
been satisfied.
8.11. Requirements for Every Request for an Advance. A request to
Lender for an Advance may be oral (in person or by telephone) or
in writing (mailed, personally delivered or telecopied as provided
in Section 22.1), shall be from a Borrowing Officer, and shall
specify the amount of the Advance to be made, the Advance Date,
which portion of the Advance is to be an Alternate Base Rate
Tranche and, if any, each portion of the Advance that is to be a
separate LIBOR Tranche and the Interest Period therefor. If a
request for an Advance does not fully meet the foregoing
requirements, Lender may reject it and not treat it as a request
for a Advance.
8.12. Requirements for Every Request for Issuance of a Letter of
Credit. Only a written request (which may be mailed, personally
delivered or telecopied as provided in Section 22.1) from a
Borrowing Officer to Lender, or an electronic initiation over an
online service provided by Lender, that specifies the amount,
requested issue date (which shall be a Business Day) and
beneficiary of the requested Letter of Credit and other
information necessary for its issuance shall be treated as an
issuance request for purposes hereof.
8.13. Exoneration of Lender. Lender shall not incur any liability
to Borrower for treating a request that meets the express
requirements of Section 8.11 or Section 8.12 as a request for an
Advance or a request for issuance of a Letter of Credit Request,
as applicable, if Lender believes in good faith that the Person
making the request is a Borrowing Officer. Lender shall not incur
any liability to Borrower for failing to treat any such request as
a request for and Advance or a request for issuance of a Letter of
Credit, as applicable, if Lender believes in good faith that the
Person making the request is not a Borrowing Officer.
9. Security and Guaranties. As security for payment and performance
of the Loan Obligations (including all Interest Hedge Obligations, if
any ever exist), Borrower shall execute and deliver to Lender, or cause
to be executed and delivered to Lender by the appropriate Person, the
following documents, each satisfactory to Lender:
9.1. Ship Mortgages. Ship mortgages, or amendments of existing
ship mortgages, satisfactory to Lender, each in the full amount of
the initial Revolving Commitment and (i) granting to Lender a
Security Interest in each of the vessels Nantucket Clipper,
Yorktown Clipper, and Clipper Adventurer, and (ii) assigning to
Lender all incometherefrom and proceeds thereof, which Security
Interests shall be subject only to Permitted Security Interests
that affect the foregoing.
8
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9.2. Security Agreements. Security agreements, or amendments of
existing security agreements, satisfactory to Lender and granting
to Lender a Security Interest under the UCC in all stock held by
Borrower of the Subsidiaries of Borrower and all of the Goods,
Equipment, Accounts, Inventory, Instruments, Documents, Chattel
Paper, General Intangibles and other personal property and
Fixtures of Borrower and all of its Subsidiaries, whether now
owned or hereafter acquired, and all proceeds thereof, subject
only to Permitted Security Interests that affect the foregoing.
9.3. Collateral Assignments. Collateral assignments, or
amendments of existing collateral assignments, satisfactory to
Lender and assigning to Lender (i) all of Borrower's rights under
its lease of 7711 Bonhomme, Clayton, Missouri, and (ii) the
trademarks, service marks and/or tradenames "INTRAV", "Adventure
Holidays", "Clipper Cruise Line", "Nantucket Clipper", "Yorktown
Clipper", "In the Spirit of Adventure", "Oceanic Odyssey" and
"Clipper Adventurer", each subject to no other Security Interests
except Permitted Security Interests that affect the foregoing.
9.4. Guaranties. Guaranties, or ratifications of existing
guaranties, satisfactory to Lender, by all of the domestic
Subsidiaries of Borrower under which they guaranty the timely and
full payment and performance of all of the Loan Obligations
As further security for payment and performance of the Loan Obligations,
Borrower hereby assigns to Lender and grants to Lender a Security
Interest in all of the rights of Borrower under the Acquisition
Agreement; provided, however, that if there is no Existing Default,
Borrower shall have the right to enforce such rights and collect any
proceeds therefrom. The foregoing assignment and grant of a Security
Interest shall automatically become void when all of the Loan
Obligations have been fully and irrevocably paid and performed, all
outstanding Letters of Credit have expired, and the Commitments have
terminated.
If the proceeds of any Advance will be used to pay some or all of the
purchase price for the vessel Oceanic Odyssey by Borrower or any
Subsidiary of Borrower, or any other sum due in connection therewith,
Borrower or such Subsidiary shall (contemporaneously with the
acquisition thereof) execute and deliver to Lender a ship mortgage
satisfactory to Lender in the full amount of the initial Revolving
Commitment and (i) granting to Lender a Security Interest in the vessel
Oceanic Odyssey and (ii) assigning to Lender all income therefrom and
proceeds thereof, which Security Interests shall be subject only to
Permitted Security Interests that affect the foregoing.
Lender may, either before or after an Event of Default, exchange, waive
or release the Security Interests in any of the Collateral, or in
Lender's absolute discretion permit Borrower to substitute any real or
personal property for any of the Collateral, without affecting the Loan
Obligations or Lender's right to take any other action with respect to
any other Collateral.
10. Conditions.
10.1. Conditions to Initial Advance. Lender will have no
obligation to fund any Advance that would result in the Revolving
Loan being greater than it was on the Effective Date unless:
10.1.1. Listed Documents and Other Items. Lender shall
have received on or before the Effective Date all of the
documents and other items listed or described in Exhibit
10.1.1, with each being satisfactory to Lender and (as
applicable) duly executed and (also as applicable) sealed,
attested, acknowledged, certified, or authenticated.
9
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10.1.2. Representations and Warranties. The
representations and warranties contained in the Loan
Documents shall be true and correct in all material respects
as of the time of such Advance and with the same force and
effect as if made at such time.
10.1.3. No Default. There shall be no Existing Default
and no Default or Event of Default will occur as a result of
the making of the Advance or Borrower's use of the proceeds
thereof.
10.1.4. Perfection of Security Interests. Every
Security Interest and assignment required to be granted or
made by Borrower as of the Effective Date under Section 9
shall have been perfected and shall be, except as to
applicable Permitted Security Interests or as otherwise
satisfactory to Lender, a first priority Security Interest.
10.1.5. Payment of Fees. Borrower shall have paid and
reimbursed to Lender all fees, costs and expenses that are
payable or reimbursable to Lender hereunder on or before the
date of the Advance.
10.1.6. Material Proceedings. There are no pending
Material Proceedings involving Borrower.
10.1.7. No Material Adverse Change. There shall not
have been any change since the date of the Initial Financial
Statements which has had or is reasonably likely to have a
Material Adverse Effect on Borrower.
10.1.8. Other Items. Lender shall have received such
other consents, approvals, opinions, certificates or
documents as it reasonably deems necessary.
10.2. Conditions to Subsequent Advances. Lender will have no
obligation to fund any Advance after the initial Advance unless:
10.2.1. Conditions to Initial Advances. All of the
conditions in Section 10.1 have been and remain satisfied.
10.2.2. Representations and Warranties. The
representations and warranties contained in the Loan
Documents shall be true and correct in all material respects
as of the time of such Advance and with the same force and
effect as if made at such time, with such exceptions as have
been disclosed to Lender in writing by Borrower as addenda
to the Disclosure Schedule and are satisfactory to Lender,
and except that with respect to the representations and
warranties made regarding financial data in Section 12.13,
such representations and warranties shall be deemed made
with respect to the most recent Financial Statements and
other financial data delivered by Borrower to Lender.
10.2.3. No Default. There shall be no Existing Default
and no Default or Event of Default will occur as a result of
the making of the Advance or Borrower's use of the proceeds
thereof.
10.2.4. No Material Adverse Change. Since the date of
the most recent prior Advance or issuance of a Letter of
Credit there shall not have been any change which has had or
is reasonably likely to have a Material Adverse Effect on
Borrower.
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11. Conditions to Issuance of Letters of Credit. No Letter of Credit
will be issued unless as of the time of such issuance:
11.1. Reimbursement Agreement. Borrower shall have executed and
delivered to Lender a reimbursement agreement satisfactory to
Lender under which Borrower undertakes to reimburse to Lender on
demand the amount of each draw on such Letter of Credit, together
with interest from the date of the draw at the highest rate that
is then accruing on any Tranche of the Revolving Loan.
11.2. No Prohibitions. No order, judgment or decree of any
Governmental Authority shall exist which purports by its terms to
enjoin or restrain Lender from issuing such Letter of Credit, and
no Law or request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over Lender
shall exist which prohibits, or requests that Lender refrain from,
the issuance of letters of credit generally or such Letter of
Credit in particular, or imposes upon Lender with respect to such
Letter of Credit any restriction or reserve or capital requirement
(for which Lender is not otherwise compensable by Borrower
hereunder).
11.3. Conditions to Initial Advances. All of the conditions in
Section 10.1 have been and remain satisfied.
11.4. Representations and Warranties. The representations and
warranties contained in the Loan Documents shall be true and
correct in all material respects as of the time of the issuance of
such Letter of Credit and with the same force and effect as if
made at such time, with such exceptions as have been disclosed to
Lender in writing by Borrower as addenda to the Disclosure
Schedule and are satisfactory to Lender, and except that with
respect to the representations and warranties made regarding
financial data in Section 12.13, such representations and
warranties shall be deemed made with respect to the most recent
Financial Statements and other financial data delivered by
Borrower to Lender.
11.5. No Default. There shall be no Existing Default and no
Default or Event of Default will occur as a result of the issuance
of the Letter of Credit or Borrower's use thereof.
11.6. No Material Adverse Change. Since the date of the most
recent prior Advance or issuance of a Letter of Credit there shall
not have been any change which has had or is reasonably likely to
have a Material Adverse Effect on Borrower.
11.7. Cash Collateral. If the requested expiration date of the
Letter of Credit will be later than the Maturity Date, Borrower
will have provided cash collateral to Lender as provided in
Section 3.2.
12. Representations and Warranties. Except as otherwise described in
the disclosure schedule that is attached hereto as Exhibit 12 (the
"Disclosure Schedule"), Borrower represents and warrants to Lender as
follows:
12.1. Organization and Existence. Each Covered Person is duly
organized and existing in good standing under the laws of the
state of its organization, is duly qualified to do business and is
in good standing in every state where the nature or extent of its
business or properties require it to be qualified to do business,
except where the failure to so qualify will not have a Material
Adverse Effect on such Covered Person. Each Covered Person has
the power and authority to own its properties and carry on its
business as now being conducted.
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12.2. Authorization. Each Covered Person is duly authorized to
execute and perform every Loan Document to which such Covered
Person is a party, and Borrower is duly authorized to borrow
hereunder, and this Agreement and the other Loan Documents have
been duly authorized by all requisite corporate action of each
Covered Person. No consent, approval or authorization of, or
declaration or filing with, any Governmental Authority, and no
consent of any other Person, is required in connection with
Borrower's execution, delivery or performance of this Agreement
and the other Loan Documents, except for those already duly
obtained.
12.3. Due Execution. Every Loan Document to which a Covered
Person is a party has been executed on behalf of such Covered
Person by a legally competent Person duly authorized to do so.
12.4. Enforceability of Obligations. Each of the Loan Documents
to which a Covered Person is a party constitutes the legal, valid
and binding obligation of such Covered Person, enforceable against
such Covered Person in accordance with its terms, except to the
extent that the enforceability thereof against such Covered Person
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally
or by equitable principles of general application.
12.5. Burdensome Obligations. No Covered Person is a party to or
bound by any Contract or is subject to any provision in the
Charter Documents of such Covered Person which would, if performed
by such Covered Person, result in a Default or Event of Default
either immediately or upon the elapsing of time.
12.6. Legal Restraints. The execution of any Loan Document by a
Covered Person will not violate or constitute a default under the
Charter Documents of such Covered Person, any Material Agreement
of such Covered Person, or any Material Law, and will not, except
as expressly contemplated or permitted in this Agreement, result
in any Security Interest being imposed on any of such Covered
Person's property. The performance by any Covered Person of its
obligations under any Loan Document to which it is a party will
not violate or constitute a default under the Charter Documents of
such Covered Person, any Material Agreement of such Covered
Person, or any Material Law, and will not, except as expressly
contemplated or permitted in this Agreement, result in any
Security Interest being imposed on any of such Covered Person's
property.
12.7. Labor Contracts and Disputes. There is no collective
bargaining agreement or other labor contract covering employees of
a Covered Person. No union or other labor organization is seeking
to organize, or to be recognized as, a collective bargaining unit
of employees of a Covered Person. There is no pending or, to
Borrower's knowledge, threatened, strike, work stoppage, material
unfair labor practice claim or other material labor dispute
against or affecting any Covered Person or its employees.
12.8. No Material Proceedings. There are no Material Proceedings
pending or, to the best knowledge of Borrower, threatened.
12.9. Material Licenses. All Material Licenses have been obtained
or exist for each Covered Person.
12.10. Compliance with Material Laws. Each Covered Person is in
compliance with all Material Laws. Without limiting the
generality of the foregoing:
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12.10.1. General Compliance with Environmental Laws. The
operations of every Covered Person comply in all material
respects with all applicable Environmental Laws.
12.10.2. General Compliance with Employment Laws. The
employee compensation practices of every Covered Person
comply in all material respects with all applicable
Employment Laws.
12.10.3. Proceedings. None of the operations of any
Covered Person are the subject of any judicial or
administrative complaint, order or proceeding alleging
the violation of any applicable Environmental Laws or
Employment Laws.
12.10.4. Investigations Regarding Hazardous Materials.
None of the operations of any Covered Person are the
subject of investigation by any Governmental Authority
regarding the improper transportation, storage, disposal,
generation or release into the environment of any
Hazardous Material, the results of which are reasonably
likely to have a Material Adverse Effect on such Covered
Person, or reduce materially the value of the Collateral.
12.10.5. Notices and Reports Regarding Hazardous
Materials. No notice or report under any Environmental
Law indicating a past or present spill or release into
the environment of any Hazardous Material has been filed
within the immediately preceding four fiscal years of
such Covered Person, or is required to be filed by any
Covered Person.
12.10.6. Environmental Notices and Permits. Borrower has
provided all notices and obtained all necessary
environmental permits and consents, if any, required in
order to perfect Lender's Security Interests in the
Collateral and to operate Borrower's business as
presently or proposed to be operated.
12.11. Other Names. No Covered Person has used any
name other than the full name which identifies such
Covered Person in this Agreement. The only trade name or
style under which a Covered Person sells Inventory or
creates Accounts, or to which instruments in payment of
Accounts are made payable, is the name which identifies
such Covered Person in this Agreement.
12.12. Solvency. Each Covered Person is Solvent.
12.13. Initial Financial Statements. The Financial Statements
of Borrower as of September 30, 1996, as delivered to Lender by
Borrower are complete and correct in all material respects, have
been prepared in accordance with GAAP, and fairly reflect the
financial condition, results of operations and cash flows of
Borrower as of the date and for the periods stated therein.
12.14. No Change in Condition. Since the date of the Initial
Financial Statements delivered to Lender, there has been no change
which is reasonably likely to have a Material Adverse Effect on
any Covered Person.
12.15. No Defaults. No Covered Person has breached or violated
or has defaulted under any Material Agreement, or has defaulted
with respect to any Material Obligation of such Covered Person.
There is no Existing Default.
12.16. Tax Liabilities; Governmental Charges. Each Covered
Person has filed or caused to be filed all tax reports and returns
required to be filed by it with any Governmental Authority,
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except where extensions have been properly obtained or where
failure to file is not reasonably likely to have a Material
Adverse Effect on such Covered Person. Each Covered Person has
paid or made adequate provision for payment of all Taxes of such
Covered Person, except Taxes which are being diligently contested
in good faith by appropriate proceedings and as to which such
Covered Person has established adequate reserves in conformity
with GAAP. No Security Interests for any such Taxes has been
filed and no claims are being asserted with respect to any such
Taxes which, if adversely determined, would have a Material
Adverse Effect on such Covered Person. The period during which
any assessments may be made by the IRS with respect to any federal
income tax return of any Covered Person filed more than three
years before the Execution Date has expired without waiver or
extension. There are no material unresolved issues concerning any
liability of a Covered Person for any Taxes which, if adversely
determined, would have a Material Adverse Effect on any Covered
Person.
12.17. Pension Benefit Plans. All Pension Benefit Plans
maintained by each Covered Person or an ERISA Affiliate of such
Covered Person, if any, qualify under Section 401 of the Code and
are in compliance with the provisions of ERISA except with respect
to events or occurrences which do not have and are not reasonably
likely to have a Material Adverse Effect on such Covered Person.
12.17.1. Prohibited Transactions. None of such Pension
Benefit Plans has participated in, engaged in or been a
party to any non-exempt prohibited transaction as defined
in ERISA or the Code, and no officer, director or
employee of a Covered Person or of an ERISA Affiliate of
such Covered Person has committed a breach of any of the
responsibilities or obligations imposed upon fiduciaries
by Title I of ERISA.
12.17.2. Claims. Other than normal claims for benefits,
there are no claims, pending or threatened, involving any
such Pension Benefit Plan by a current or former employee
(or beneficiary thereof) of such Covered Person or ERISA
Affiliate of such Covered Person, nor is there any
reasonable basis to anticipate any claims involving any
such Pension Benefit Plan which would likely be
successfully maintained against such Covered Person or
ERISA Affiliate of such Covered Person.
12.17.3. Reporting and Disclosure Requirements. There
are no violations of any reporting or disclosure
requirements with respect to any such Pension Benefit
Plan and none of such Pension Benefit Plans has violated
any applicable Law, including ERISA and the Code.
12.17.4. Accumulated Funding Deficiency. No such Pension
Benefit Plan which is a defined benefit plan or money
purchase plan has (i) incurred an accumulated funding
deficiency (within the meaning of Section 412(a) of the
Code), whether or not waived; (ii) been a Pension Benefit
Plan with respect to which a Reportable Event (to the
extent that the reporting of such events to the PBGC
within thirty days of the occurrence has not been waived)
has occurred and is continuing; or (iii) been a Pension
Benefit Plan with respect to which there exist conditions
or events which have occurred that present a significant
risk of termination of such Pension Benefit Plan by the
PBGC.
12.17.5. Multi-employer Plan. All Multi-employer Plans
to which any Covered Person contributes or is obligated
to contribute are listed in item 12.17.5 of the
Disclosure Schedule. No Covered Person or ERISA
Affiliate of such Covered Person has received notice that
any such Multi-employer Plan is in reorganization or has
been
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terminated within the meaning of Title IV of ERISA, and
no such Multi-employer Plan is reasonably expected to be
in reorganization or to be terminated within the meaning
of Title IV of ERISA.
12.18. Welfare Benefit Plans. No Covered Person or ERISA
Affiliate of a Covered Person maintains or participates in a
Welfare Benefit Plan that has a liability which, if enforced or
collected, would have a Material Adverse Effect on such Covered
Person. Each Covered Person and ERISA Affiliate of such Covered
Person has complied in all material respects with the applicable
requirements of Section 4980B of the Code pertaining to
continuation coverage as mandated by COBRA.
12.19. Retiree Benefits. No Covered Person or ERISA Affiliate
of such Covered Person has an obligation to provide any Person
with any medical, life insurance, or similar benefit following
such Person's retirement or termination of employment (or to such
Person's beneficiary subsequent to such Person's death) other than
(i) such benefits provided to Persons at such Person's sole
expense and (ii) obligations under COBRA.
12.20. Real Property. Borrower does not own any real property.
Item 12.20 of the Disclosure Schedule contains a correct and
complete list of all leases and subleases of real property by
Borrower, with Borrower identified for each as the lessee,
sublessee, lessor, or sublessor, as is the case, together with the
street addresses and a general description of the real property
involved and the names of the other parties to such leases and
subleases. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and
effect, and no default by any party to any such lease or sublease
exists.
12.21. State of Collateral and other Property. Each Covered
Person has good and marketable or merchantable title to all real
and personal property purported to be owned by it or reflected in
the Initial Financial Statements, except for personal property
sold in the ordinary course of business after the date of the
Initial Financial Statements. There are no Security Interests on
any of the property purported to be owned by any Covered Person,
including the Collateral, except Permitted Security Interests.
Without limiting the generality of the foregoing:
12.21.1. Accounts. With respect to each Account
scheduled, listed or referred to in reports submitted by
Borrower to Lender pursuant to the Loan Documents, except
as disclosed therein: (i) the Account arose from a bona
fide transaction completed in accordance with the terms
of any documents pertaining to such transaction; (ii) the
Account is not evidenced by a judgment and there is no
material dispute respecting it; (iii) the amount of the
Account as shown on Borrower's books and records and all
invoices and statements which may be delivered to Lender
with respect thereto are actually and absolutely owing to
Borrower and are not in any way contingent; (iv) there
are no set-offs, counterclaims or disputes known to
Borrower or asserted against Borrower with respect to the
Account and Borrower has not made any agreement with any
Account Debtor for any deduction therefrom except a
discount or allowance allowed by Borrower in the ordinary
course of its business for prompt payment; (v) there are
no facts, events or occurrences which in any way impair
the validity or enforcement of the Account or tend to
reduce the amount payable thereunder as shown on
Borrower's books and records and all invoices and
statements delivered to Lender with respect thereto; (vi)
the Account is assignable; (vii) the Account arose in the
ordinary course of Borrower's business; (viii) the
Account Debtor with respect to the Account has the
capacity to contract; (ix) the services furnished and/or
goods sold giving rise to the Account are not
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subject to any Security Interest except the first
priority, perfected Security Interest granted to Lender
and except the Permitted Security Interests; and (x)
there are no proceedings or actions which are threatened
or pending against the Account Debtor with respect to the
Account.
12.21.2. Equipment. With respect to the Borrower's
equipment: (i) Borrower has good and marketable title
thereto; (ii) none of such equipment is subject to any
Security Interests except for the first priority Security
Interest granted to Lender pursuant hereto and except for
Permitted Security Interests; and (iii) all such
equipment material to the conduct of Borrower's business
is in good operating condition and repair and is suitable
for the uses to which customarily put in the conduct of
Borrower's business.
12.21.3. Intellectual Property. (i) Item 12.21.3 of the
Disclosure Schedule contains a complete and correct list
of all of Borrower's Intellectual Property, (ii) Borrower
owns all right, title and interest in, under and to such
Intellectual Property, subject to no licenses or any
interest therein or other agreements relating thereto,
except for the applicable Collateral Assignment; (iii) no
Intellectual Property or grant of license by or to
Borrower is subject to any pending or, to Borrower's
knowledge, threatened challenge; (iv) to Borrower's
knowledge, Borrower has not committed any patent,
trademark, trade name, service mark or copyright
infringement, and the present conduct of Borrower's
business does not infringe any patents, trademarks, trade
name rights, service marks, copyrights, publication
rights, trade secrets or other proprietary rights of any
Person; and (v) there are no claims or demands of any
Person pertaining to, or any proceedings which are
pending or, to Borrower's knowledge, threatened, which
challenge Borrower's rights in respect of any proprietary
or confidential information or trade secrets used in the
conduct of Borrower's business.
12.21.4. Documents, Instruments and Chattel Paper. All
documents, instruments and chattel paper describing,
evidencing or constituting Collateral, and all signatures
and endorsements thereon, are complete, valid, and
genuine, and all goods evidenced by such documents,
instruments and chattel paper are owned by Borrower free
and clear of all Security Interests other than Permitted
Security Interests.
12.22. Chief Place of Business; Locations of Collateral. As of
the Execution Date,
12.22.1. the only chief executive office and the
principal places of business of Borrower are located at
the places listed and so identified in item 12.22.1 of
the Disclosure Schedule;
12.22.2. the books and records of Borrower, and all of
the Borrower's chattel paper and all records of Accounts,
are located only at the places listed and so identified
in item 12.22.2 of the Disclosure Schedule; and
12.22.3. all of the tangible Collateral (except the
Vessels) is located only at the places listed and so
identified in item 12.22.3 of the Disclosure Schedule.
12.23. Negative Pledges. No Covered Person is a party to or
bound by any Contract which prohibits the creation or existence of
any Security Interest upon or assignment or conveyance of any of
the Collateral.
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12.24. Security Documents.
12.24.1. Ship Mortgages. The Ship Mortgages are
effective to grant to Lender a legal, valid and
enforceable ship mortgage lien on the Vessels. Upon
proper filing and payment of applicable filing fees and
taxes, if any, Lender will have a fully perfected first
priority ship mortgage lien on the Vessels subject only
to Permitted Security Interests that exist on the
Execution Date and affect the Vessels.
12.24.2. Security Agreements. Each Security Agreement is
effective to grant to Lender an enforceable Security
Interest in all rights, title and interest of Borrower in
the Personal Property Collateral described therein. Upon
appropriate filing (as to all Personal Property
Collateral in which a Security Interest may be perfected
under the applicable state's UCC by filing a financing
statement) or Lender's taking possession (as to items of
the Personal Property Collateral of which a secured party
must take possession in order to perfect a Security
Interest under the applicable state's UCC), Lender will
have a fully perfected first priority Security Interest
in the Personal Property Collateral described in each
Security Agreement, subject only to Permitted Security
Interests that exist on the Execution Date and affect
such Personal Property Collateral.
12.24.3. Collateral Assignments. Each Collateral
Assignment is effective to assign to Lender all of
Borrower's rights, title and interest in and to the
tangible and intangible property described therein,
subject only to Permitted Security Interests that exist
on the Execution Date and affect such property.
12.25. Subsidiaries and Affiliates. Borrower has no Affiliates
who are not individuals and has no Subsidiaries other than those
listed in item 12.25 of the Disclosure Schedule.
12.26. Margin Stock. Borrower is not engaged and will not
engage, principally or as one of its important activities, in the
business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U), and
none of the proceeds of any Advance will be used to purchase or
carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for any
purpose which violates, or which would be inconsistent with, the
provisions of Regulation U or Regulation G. None of the
transactions contemplated by any Acquisition Documents will
violate Regulations G, T, U or X of the FRB.
12.27. Securities Matters. No proceeds of any Advance will be
used to acquire any security in any transaction which is subject
to Sections 13 and 14 of the Securities Exchange Act of 1934, as
amended.
12.28. Investment Company Act, Etc. Borrower is not an
investment company registered or required to be registered under
the Investment Company Act of 1940, as amended, or a company
controlled (within the meaning of such Investment Company Act) by
such an investment company or an affiliated person of, or promoter
or principal underwriter for, an investment company, as such terms
are defined in the Investment Company Act of 1940, as amended.
Borrower is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act or any other Law limiting or regulating its ability
to incur Indebtedness for money borrowed.
12.29. No Material Misstatements or Omissions. Neither the Loan
Documents, nor any of the Financial Statements nor any statement,
list, certificate or other information furnished or to
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be furnished by Borrower to Lender in connection with the Loan
Documents or any of the transactions contemplated thereby contains
or any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements therein not
misleading. Borrower has disclosed to Lender everything regarding
the business, operations, property, financial condition, or
business prospects of itself and every Covered Person that would
be reasonably expected to have a Material Adverse Effect on any
Covered Person.
12.30. Filings. All registration statements, reports, proxy
statements and other documents, if any, required to be filed by
Borrower with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, have been filed, and such
filings are complete and accurate and contain no untrue statements
of material fact or omit to state any material facts required to
be stated therein or necessary in order to make the statements
therein not misleading.
12.31. Broker's Fees. No broker or finder is entitled to
compensation for services rendered with respect to the loan
transactions contemplated by this Agreement and the other Loan
Documents.
13. Survival of Representations. All representations and warranties
in Section 12, and all representations and warranties in any certificate
delivered by Borrower pursuant hereto, shall survive execution of each
of the Loan Documents and the making of every Advance, and may be relied
upon by Lender as being true and correct as of the date when made or
deemed made or reaffirmed until all of the Loan Obligations are fully
and irrevocably paid as contemplated in Section 8.3.
14. Affirmative Covenants. Borrower covenants and agrees that, so
long as any of the Commitments remains in effect or any of the Loan
Obligations are owing to Lender by Borrower, Borrower shall do, or cause
to be done, and shall cause each Covered Person to do, the following:
14.1. Use of Proceeds. All proceeds of the Loan shall be used
for permitted Investments, Capital Expenditures related to
Borrower's business (including acquisition of the vessels Clipper
Adventurer and Oceanic Odyssey), working capital and general
corporate purposes.
14.2. Corporate Existence. Each Covered Person shall maintain
its existence in good standing and shall maintain in good standing
its right to transact business in those states in which it is now
or hereafter doing business, except where the failure to so
qualify is not reasonably likely to have a Material Adverse Effect
on such Covered Person. Each Covered Person shall obtain and
maintain all Material Licenses for such Covered Person.
14.3. Maintenance of Property and Leases. Each Covered Person
shall maintain in good condition and working order, and repair and
replace as required, all buildings, equipment, machinery, fixtures
and other real and personal property whose useful economic life
has not elapsed and which is necessary for the ordinary conduct of
the business of such Covered Person. Each Covered Person shall
maintain in good standing and free of defaults all of its leases
of buildings, equipment, machinery, fixtures and other real and
personal property whose useful economic life has not elapsed and
which is necessary for the ordinary conduct of the business of
such Covered Person. Borrower shall not permit any of its
equipment or other property to become a fixture to real property
or an accession to other personal property unless Lender has a
valid, perfected and first priority Security Interest in such
real or personal property. Borrower shall not, without Lender's
prior written consent, alter or remove any identifying symbol or
number on its equipment.
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14.4. Insurance. Each Covered Person shall at all times keep
insured or cause to be kept insured, in insurance companies having
a rating of at least "A" by Best's Rating Service, all property
owned by it of a character usually insured by others carrying on
businesses similar to that of such Covered Person in such manner
and to such extent and covering such risks as such properties are
usually insured. Each Covered Person shall at all times carry
insurance, in insurance companies having a rating of at least "A"
by Best's Rating Service, against liability on account of damage
to persons or property (including product liability insurance and
insurance required under all applicable workers' compensation
laws) and covering all other liabilities common to such Covered
Person's business, in such manner and to such extent as such
coverage is usually carried by others conducting businesses
similar to that of such Covered Person. All policies of liability
insurance maintained hereunder shall name Lender as an additional
insured; all fire and casualty policies of insurance maintained
hereunder shall reflect Lender's interest therein as mortgagees
under a standard New York or Union mortgagee clause. Lender is
authorized, but not obligated, as the attorney-in-fact for
Borrower (i) if there is no Existing Default, with Borrower's
consent (which consent shall not be unreasonably withheld), and if
there is an Existing Default, without Borrower's consent, to
adjust and compromise proceeds payable under such policies of
insurance, (ii) to collect, receive and give receipts for such
proceeds in the name of Borrower, and (iii) to endorse Borrower's
name upon any instrument in payment thereof. Such power granted
to Lender shall be deemed coupled with an interest and shall be
irrevocable. All policies of insurance maintained hereunder shall
contain a clause providing that such policies may not be canceled,
reduced in coverage or otherwise modified without 30 days prior
written notice to Lender. Borrower shall upon request of Lender
at any time furnish to Lender updated evidence of insurance (in
the form required as a condition to Lender's lending hereunder)
for such insurance.
14.5. Payment of Taxes and Other Obligations. Each Covered
Person shall promptly pay and discharge or cause to be paid and
discharged, as and when due (including any extensions thereof),
all Taxes lawfully assessed or imposed upon it, and all Taxes
lawfully assessed upon any of the Collateral or its other
property, or upon the income or profits therefrom, and all claims
of materialmen, mechanics, carriers, warehousemen, landlords and
other like Persons for labor, materials, supplies, storage or
other items or services which if unpaid might be or become a
Security Interest or charge upon any of the Collateral or its
other property; provided, however, that a Covered Person may
diligently contest in good faith by appropriate proceedings the
validity of any such Taxes if Borrower has established adequate
reserves therefor in conformity with GAAP on the books of such
Covered Person, and no Security Interest, other than a Permitted
Security Interest, results from such non-payment.
14.6. Compliance With Laws. Each Covered Person shall comply
with all Material Laws. Without limiting the generality of the
foregoing:
14.6.1. Environmental Laws. Each Covered Person shall
comply and shall use commercially reasonable efforts to
ensure compliance by all tenants, subtenants and other
occupants of the Real Property Collateral, if any, with
all Environmental Laws whose violation has or is
reasonably likely to have a Material Adverse Affect on
Borrower or such Covered Person.
14.6.2. Pension Benefit Plans. Each Covered Person and
each ERISA Affiliate of such Covered Person shall at all
times make prompt payments or contributions to meet the
minimum funding standards under ERISA and the Code with
respect to any Pension Benefit Plan maintained by such
Covered Person or ERISA Affiliate of such Covered
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Person, and shall comply with all reporting and
disclosure requirements and all provisions of the Code
and ERISA applicable to any Pension Benefit Plan
maintained by such Covered Person or ERISA Affiliate of
such Covered Person if non-compliance therewith has or is
reasonably likely to have a Material Adverse Affect on
Borrower or such Covered Person.
14.6.3. Employment Laws. Each Covered Person shall
comply with all requirements of all Employment Laws
applicable to such Covered Person whose violation has or
is reasonably likely to have a Material Adverse Affect on
Borrower or such Covered Person.
14.7. Termination of Pension Benefit Plan. No Covered Person
or ERISA Affiliate of such Covered Person shall terminate or amend
any Pension Benefit Plan maintained by such Covered Person or
ERISA Affiliate of such Covered Person if such termination or
amendment would result in any liability to such Covered Person or
ERISA Affiliate of such Covered Person under ERISA or any increase
in current liability for the plan year for which such Covered
Person or ERISA Affiliate of such Covered Person is required to
provide security to such Pension Benefit Plan under the Code.
14.8. Notice to Lender of Material Events. Borrower shall,
promptly upon any Responsible Officer of Borrower obtaining
knowledge or notice thereof, give notice to Lender (together with
copies, if applicable) of (i) any breach of any of the covenants
in Section 14, 15, or 16; (ii) any Default or Event of Default;
(iii) the commencement of any Material Proceeding; and (iv) any
material loss of or material damage to any of the Collateral or
any material part of the other assets of a Covered Person or the
commencement of any proceeding for the condemnation or other
taking of any of the Collateral or any material part of the other
assets of a Covered Person, if Insurance/Condemnation Proceeds are
likely to be payable as a consequence of such loss, damage or
proceeding, or if such loss, damage or proceeding is reasonably
likely to have a Material Adverse Effect on such Covered Person.
In addition,
14.8.1. Borrower shall furnish to Lender from time to
time all information which Lender requests with respect
to the status of any Material Proceeding.
14.8.2. Borrower shall furnish to Lender from time to
time all information which Lender requests with respect
to any Pension Benefit Plan established by a Covered
Person or ERISA Affiliate of such Covered Person.
14.8.3. Borrower shall deliver notice to Lender of the
establishment of any Pension Benefit Plan by a Covered
Person or an ERISA Affiliate of such Covered Person.
14.8.4. Borrower shall promptly inform Lender of its
receipt of, and deliver to Lender a copy of, any
(i) notice that any violation of any Environmental Law or
Employment Law may have been committed or is about to be
committed by any Covered Person, (ii) notice that any
administrative or judicial complaint or order has been
filed or is about to be filed against any Covered Person
alleging violations of any Environmental Law or
Employment Law or requiring such Covered Person to take
any action in connection with the release of any
Hazardous Material into the environment, (iii) notice
from a Governmental Authority or private Person alleging
that a Covered Person may be liable or responsible for
costs associated with a response to or cleanup of a
release of Hazardous Material into the environment or any
damages caused thereby, (iv) notice that
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a Covered Person is subject to federal, state or local
investigation regarding the improper transportation,
storage, disposal, generation or release into the
environment of any Hazardous Material, or (v) notice that
any properties or assets of a Covered Person are subject
to a Security Interest in favor of any Governmental
Authority for any liability under any Environmental Law
or damages arising from or costs incurred by such
Governmental Authority in response to a release of
Hazardous Material into the environment.
14.8.5. Borrower shall deliver to Lender notice of the
following events promptly after they occur: (i) the
failure of any Covered Person or ERISA Affiliate of such
Covered Person to make any required installment or any
other required payment to any Pension Benefit Plan in
sufficient amount to comply with ERISA and the Code on or
before the due date for such installment or payment;
(ii) the occurrence of any Reportable Event, or a
prohibited transaction or accumulated funding deficiency
(as those terms are defined in ERISA), with respect to
any Pension Benefit Plan maintained or contributed to by
a Covered Person or ERISA Affiliate of such Covered
Person; (iii) receipt by a Covered Person or ERISA
Affiliate of such Covered Person of any notice from a
Multi-employer Plan regarding the imposition of
withdrawal liability; and (iv) receipt by a Covered
Person or ERISA Affiliate of such Covered Person of any
notice of the institution, or a Covered Person's
expectancy of the institution, of any proceeding or
receipt by such Covered Person or ERISA Affiliate of such
Covered Person of any notice of the taking, or such
Covered Person's expectancy of the taking, of any other
action which may result in the termination of any Pension
Benefit Plan maintained or contributed to by such Covered
Person or ERISA Affiliate of such Covered Person, or the
withdrawal or partial withdrawal by a Covered Person or
ERISA Affiliate of such Covered Person from any Pension
Benefit Plan, and the filing or receipt by a Covered
Person or ERISA Affiliate of such Covered Person of any
such notice and filing or receipt of all subsequent
reports or notices under ERISA with or from the IRS, the
PBGC, or the DOL relating to the same; and, in addition
to such notice, deliver to Lender a certificate of a
Responsible Officer of Borrower, setting forth details as
to such events and the action that the affected Covered
Person or ERISA Affiliate of such Covered Person proposes
to take with respect thereto. For purposes of this
Section, a Covered Person and any ERISA Affiliate of such
Covered Person shall be deemed to know all facts known by
the administrator of any Plan of which such Covered
Person or any ERISA Affiliate of such Covered Person is
the plan sponsor.
14.8.6. Borrower shall promptly deliver to Lender
notice of any default or event of default, or the
occurrence of any event which would with the passage of
time, giving of notice or otherwise, constitute a default
or event of default with respect to any of the Permitted
Indebtedness.
14.8.7. Borrower shall promptly deliver notice to
Lender of the assertion by the holder of any securities
of a Covered Person or any Indebtedness of a Covered
Person in an outstanding principal amount in excess of
$250,000 that a default exists with respect thereto or
that such Covered Person is not in compliance with the
terms thereof, or of the threat or commencement by such
holder of any enforcement action because of such asserted
default or noncompliance.
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14.8.8. Borrower shall, promptly after becoming aware
thereof, deliver notice to Lender of any pending or
threatened strike, work stoppage, material unfair labor
practice claim or other material labor dispute affecting
a Covered Person.
14.8.9. Borrower shall promptly deliver notice to
Lender of any change in the name, state of incorporation,
or form of organization of any Covered Person, or the
trade names or styles under which a Covered Person will
sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable,
at least 30 days prior to such change.
14.8.10. Borrower shall, promptly after becoming aware
thereof, deliver notice to Lender of any event that has
had or is reasonably likely to have a Material Adverse
Effect on any Covered Person.
14.8.11. Borrower shall, promptly after becoming aware
thereof, deliver notice to Lender of an actual, alleged,
or potential violation of any Material Law applicable to
a Covered Person or any of the Collateral or any material
part of other property of a Covered Person.
14.8.12. Borrower shall notify Lender promptly in
writing of any fact or condition of which Borrower is
aware which materially reduces the value of the
Collateral as a whole or reduces the value of any
material item of the Collateral, together with the amount
of such reduction. Borrower shall provide such
additional information to Lender regarding such fact,
condition or reduction as Lender may request from time to
time.
14.9. Borrowing Officer. Borrower's shall keep on file with
Lender at all times an appropriate instrument naming each
Borrowing Officer. Until a contrary designation is filed with
Lender, the officer who has executed this Agreement shall be
deemed to be a Borrowing Officer.
14.10. Maintenance of Security Interests of Security
Documents.
14.10.1. Preservation and Perfection of Security
Interests. Borrower shall promptly, upon the reasonable
request of Lender and at Borrower's expense, execute,
acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter file or
record in the appropriate governmental office, any
document or instrument supplementing or confirming the
Security Documents or otherwise deemed necessary by
Lender to create, preserve or perfect any Security
Interest purported to be created by the Security
Documents or to fully consummate the transactions
contemplated by the Loan Documents. The foregoing
actions by Borrower shall include (i) filing financing or
continuation statements, and amendments thereof, in form
and substance satisfactory to Lender; (ii) delivering to
Lender the original certificates of title for motor
vehicles, or applications therefor duly executed, with
Lender's Security Interest properly shown thereon; (iii)
delivering to Lender the originals of all instruments,
documents and chattel paper, and all other Collateral of
which Lender determines it should have physical
possession in order to perfect and protect Lender's
Security Interest therein, duly endorsed or assigned to
Lender without restriction; (iv) delivering to Lender
warehouse receipts covering any portion of the Collateral
located in warehouses and for which warehouse receipts
are issued; (v) transferring Inventory to warehouses
designated by Lender; (vi) delivering to Lender all
letters of credit on which Borrower is named
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beneficiary; (vii) placing a durable notice of the
existence of Lender's Security Interest, satisfactory to
Lender, upon such items of the Collateral as are
designated by Lender; and (viii) placing a notice of the
existence of Lender's Security Interest , acceptable to
Lender, upon those writings evidencing the Collateral and
the books and records of Borrower pertaining to the
Collateral, as designated by Lender.
14.10.2. Collateral Held Off Borrower's Premises. If at
any time any Personal Property Collateral is located on
any premises that are not owned by the owner of such
Personal Property Collateral, then Borrower shall obtain
written waivers, in form and substance satisfactory to
Lender, of all present and future Security Interests to
which the owner or lessor or any mortgagee of such
premises may be entitled to assert against the Personal
Property Collateral. If any Personal Property Collateral
is at any time in the possession or control of a
warehouseman, bailee or any of Borrower's agents, then
Borrower shall notify Lender thereof and shall notify
such Person of Lender's Security Interest in such
Personal Property Collateral and, upon Lender's request,
instruct such Person to hold all such Personal Property
Collateral for Lender's account subject to Lender's
instructions.
14.10.3. Compliance With Terms of Security Documents.
Borrower shall comply with all of the terms, conditions
and covenants in the Security Documents to which Borrower
is a party.
14.11. Accounting System. Each Covered Person shall maintain a
system of accounting established and administered in accordance
with GAAP. Without limiting the generality of the foregoing, each
Covered Person shall maintain a record of Accounts at its
principal place of business that itemize each Account of such
Covered Person and describe the names and addresses of the Account
Debtors on such Accounts, all relevant invoice numbers, invoice
dates, and shipping dates, and the due dates, collection
histories, and aging of such Accounts.
14.12. Financial Statements. Borrower shall deliver to
Lender:
14.12.1. Annual Financial Statements. Within 90 days
after the close of each fiscal year of Borrower, year-end
consolidated and consolidating Financial Statements of
Borrower and its Subsidiaries, containing an audit report
without qualification by an independent certified public
accounting firm selected by Borrower and satisfactory to
Lender, and in each case accompanied by (a) a Compliance
Certificate of the Chief Financial Officer of Borrower,
(b) a certificate of the independent certified public
accounting firm that examined such Financial Statements
to the effect that they have reviewed and are familiar
with this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or
condition which then constituted a Default or Event of
Default, except for those, if any, described in
reasonable detail in such certificate, (c) the management
letter and report on internal controls delivered by such
independent certified public accounting firm in
connection with their audit, and (d) if requested by
Lender, any summary prepared by such independent
certified public accounting firm of the adjustments
proposed by the members of its audit team.
14.12.2. Quarterly Financial Statements. Within 45 days
after the end of each fiscal quarter of Borrower,
unaudited consolidated and consolidating Financial
Statements of Borrower and its Subsidiaries for the
quarters not covered by the latest year-end
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Financial Statements, in each case in a form satisfactory
to Lender and accompanied by a Compliance Certificate of
the Chief Financial Officer of Borrower.
Each Compliance Certificate shall be in the form of
Exhibit 14.12, shall contain detailed calculations of the
financial measurements referred to in Section 16 for the
relevant periods, and shall contain statements by the
signing officer to the effect that, except as explained
in reasonable detail in such Compliance Certificate, (i)
the attached Financial Statements are complete and
correct in all material respects (subject, in the case of
Financial Statements other than annual, to normal year-
end audit adjustments) and have been prepared in
accordance with GAAP applied consistently throughout the
periods covered thereby and with prior periods (except as
disclosed therein), (ii) all of the representations and
warranties of Borrower contained in this Agreement and
other Loan Documents are true and correct as of the date
such certification is given as if made on such date, and
(iii) there is no Existing Default. If any Compliance
Certificate delivered to Lender discloses that a
representation or warranty is not true and correct, or
that a Default or Event of Default has occurred that has
not been waived in writing by Lender, such Compliance
Certificate shall state what action Borrower has taken or
proposes to take with respect thereto.
14.12.3. Additional. Upon the request of Lender, such
additional information about the business, operations,
revenues, financial condition, property, or business
prospects of Borrower as Lender may, from time to time,
reasonably request.
14.13. Annual Forecasts; Five Year Plans. Within the first 60
days of each fiscal year of Borrower, forecasted balance sheets,
statements of income and expense, and statements of cash flows for
Borrower as of the end of and for each quarter of such fiscal
year, in such reasonable detail as Lender may require; and within
the first 180 days of each fiscal year of Borrower, an updated
five-year forecast of balance sheets, statements of income and
expense, and statements of cash flows for Borrower as of the end
of and for each fiscal ended in such five year period.
14.14. Audits by Lender. Lender or Persons authorized by and
acting on behalf of Lender may at any time and from time to time
during normal business hours audit the books and records, and
inspect any of the property, of each Covered Person from time to
time upon reasonable notice to such Covered Person, and in the
course thereof may make copies or abstracts of such books and
records and discuss the affairs, finances and books and records of
such Covered Person with its accountants, officers and employees.
Each Covered Person shall cooperate with Lender and such Persons
in the conduct of such audits and shall deliver to Lender any
instrument necessary for Lender to obtain records from any service
bureau maintaining records for such Covered Person. If an Event
of Default has occurred that has not been waived by Lender,
Borrower shall reimburse Lender for all costs and expenses
actually incurred by it in conducting each audit.
14.15. Access to Officers and Auditors. Each Covered Person
shall permit any Lender and Persons authorized by Lender to
discuss the affairs, finances and accounts of such Covered Person
with its officers and independent auditors as often as Lender may
reasonably request, and such Covered Person shall direct such
officers and independent auditors to cooperate with Lender and
make full disclosure to Lender of those matters that they may deem
relevant to the continuing ability of Borrower timely to pay and
perform the Loan Obligations. Lender agrees that it will not
disclose to third Persons any information that it obtains about
Borrower or its operations or finances that are designated by
Borrower in writing as confidential or that Borrower has advised
Lender in writing constitutes non-public information. Lender may,
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however, disclose such information to all of their respective
officers, attorneys, auditors, accountants, bank examiners, agents
and representatives who have a need to know such information in
connection with the administration, interpretation or enforcement
of the Loan Documents or the lending and collection activity
contemplated therein or to the extent required by Law or a
Governmental Authority. Lender shall advise such persons that
such information is to be treated as confidential. Lender may
also disclose such information in any documents that it files in
any legal proceeding to pursue, enforce or preserve its rights
under the Loan Documents to the extent that Lender's counsel
advises in writing that such disclosure is reasonably necessary in
connection with such proceedings. Lender's non-disclosure
obligation shall not apply to any information that (i) is
disclosed to Lender by a third Person not affiliated with or
employed by Borrower who does not have a commensurate duty of non-
disclosure, or (ii) becomes publicly known other than as a result
of disclosure by Lender.
14.16. Appraisals. At any time, but not more often than once
each calendar year, Lender may have all or any part of the
Collateral appraised by an appraiser chosen solely by Lender. If
there is an Existing Default, Borrower shall pay or reimburse to
Lender all costs of the appraisal.
14.17. Further Assurances. Borrower shall execute and deliver,
or cause to be executed and delivered, to Lender such documents
and agreements, and shall take or cause to be taken such actions,
as Lender may from time to time request to carry out the terms and
conditions of this Agreement and the other Loan Documents.
15. Negative Covenants. Borrower covenants and agrees that, while any
of the Commitments remains in effect or any of the Loan Obligations are
owing to Lender by Borrower or any of the Letters of Credit are
outstanding, Borrower shall not, directly or indirectly, do any of the
following, or permit any Covered Person to do any of the following,
without the prior written consent of Lender:
15.1. Investments. Make any Investments in any other Person
except the following:
15.1.1. Investments in (i) interest-bearing United
States government obligations; (ii) certificates of
deposit issued by any Lender; (iii) certificates of
deposit issued by and time deposits with any commercial
bank chartered under the laws of the United States or any
state thereof having capital and surplus of not less than
$500,000,000; (iv) prime commercial paper rated A1 or
better by Standard and Poor's Corporation or Prime P1 or
better by Moody's Investor Service, Inc.; or (v)
agreements involving the sale to Borrower of United
States government securities and their guarantied
repurchase the next Business Day by a Qualified Financial
Institution.
15.1.2. The holding by Borrower of the outstanding
stock of Clipper Cruise Line, Inc., Republic Cruise Line,
Inc., Liberty Cruise Line, Inc., Clipper Adventure
Cruises, Inc., Clipper Adventurer Ltd., Clipper Odyssey,
Ltd. and Borrower's other Subsidiaries that are
Guarantors.
15.1.3. Accounts arising in the ordinary course of
business and payable in accordance with Borrower's
customary trade terms.
15.1.4. The purchase by Borrower of its common stock
in the open market pursuant to the plan therefor
heretofore adopted by the Board of Directors of Borrower.
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15.1.5. Other Investments, including but not limited
to acquiring stock or other equity interests, or interest
convertible into equity, of another Person, not exceeding
$1,000,000 in the aggregate.
15.2. Indebtedness. Create, incur, assume, or allow to exist
any Indebtedness of any kind or description, except the following:
15.2.1. Indebtedness to trade creditors incurred in
the ordinary course of business, to the extent that it is
not overdue past the original due date by more than 90
days.
15.2.2. The Loan Obligations.
15.2.3. Indebtedness secured by Permitted Security
Interests.
15.2.4. Indebtedness to the seller of the vessel
Oceanic Odyssey to the extent it does not exceed
$5,500,000 initially and is payable in full before
December 31, 1999.
15.3. Indirect Obligations. Create, incur, assume or allow to
exist any Indirect Obligations except a guaranty by Borrower of
the Indebtedness permitted in Section 15.2.4.
15.4. Security Interests. Create, incur, assume or allow to
exist any Security Interest upon all or any part of its property,
real or personal, now owned or hereafter acquired, except the
following:
15.4.1. Security Interests for taxes, assessments or
governmental charges not delinquent or being diligently
contested in good faith and by appropriate proceedings
and for which adequate book reserves in accordance with
GAAP are maintained.
15.4.2. Security Interests arising out of deposits in
connection with workers' compensation insurance,
unemployment insurance, old age pensions, or other social
security or retirement benefits legislation.
15.4.3. Deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of
money), leases, statutory obligations, surety and appeal
bonds, and other obligations of like nature arising in
the ordinary course of business.
15.4.4. Security Interests imposed by any Law, such as
mechanics', workmen's, materialmen's, landlords',
carriers', or other like Security Interests arising in
the ordinary course of business which secure payment of
obligations which are not past due or which are being
diligently contested in good faith by appropriate
proceedings and for which adequate book reserves in
accordance with GAAP are maintained.
15.4.5. Purchase money Security Interests securing
payment of the purchase price of capital assets acquired
by Borrower after the Execution Date in an amount not to
exceed $500,000 in the aggregate during any fiscal year
of Borrower and $1,500,000 in the aggregate.
15.4.6. Security Interests in favor of Lender.
15.4.7. Security Interests existing on the Execution
Date that are disclosed in item 12.21 of the Disclosure
Schedule and are satisfactory to Lender.
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15.5. Prepayments. Voluntarily prepay any Indebtedness other
than (a) the Loan Obligations in accordance with the terms of the
Loan Documents, and (b) trade payables in the ordinary course of
business.
15.6. Disposal of Assets. Sell, transfer, exchange, lease,
loan or otherwise dispose of any of its assets to any Person,
including other Covered Persons, except (a) sales of Inventory in
the ordinary course of business, (b) such sales, transfers,
exchanges, leases, loans or dispositions to or with Covered
Persons that are Guarantors, (c) payments under bareboat charters
to Covered Persons who are not Guarantors to the extent the
aggregate of such payments in any fiscal year to any one such
Covered Person do not exceed the expenses of such Covered Person
as accrued under GAAP, including depreciation, (d) transfers or
loans of funds to the applicable Covered Person to the extent
required to enable such Covered Person to pay the Indebtedness
permitted under Section 15.2.4 and interest accrued thereon, and
(e) transfers and loans of funds to a Covered Person that is not a
Guarantor to the extent such funds will be contemporaneously
expended for the refurbishing or rebuilding of a Vessel, including
deposits and prepayments in respect thereof, and such expenditures
are Capital Expenditures. Notwithstanding the foregoing, Borrower
may (i) if it acquires the vessel Oceanic Odyssey, immediately
lease or charter such vessel back to its seller for a term not to
exceed one year for a rental or charter fee satisfactory to
Lender, (ii) sell, transfer or otherwise dispose of obsolete or
unusable equipment, provided that if the aggregate fair market
value of all such equipment sold, transferred or otherwise
disposed of in a single transaction or related series of
transactions is greater than $500,000, then Borrower shall deliver
or cause to be delivered all of the net cash proceeds of any such
sale, transfer or other disposition to Lender as a prepayment of
the Revolving Loan and payment of interest accrued under Section
7.1, without regard to the minimum prepayment amount, notice
provisions or prohibition on prepayments of LIBOR Tranches in
Section 7.1. Each such prepayment will be applied by Lender first
to reduce pro rata all the Tranches of the Revolving Loan that are
Alternate Base Rate Tranches, and then to reduce (in the order of
the maturities of their respective Interest Periods) the Tranches
of the Revolving Loan that are LIBOR Tranches.
15.7. Transactions With Affiliates. Enter into or be a party
to any transaction or arrangement, including the purchase, sale or
exchange of property of any kind or the rendering of any service,
with any Affiliate, or make any loans or advances to any
Affiliate, except for the transactions contemplated in the
Acquisition Agreement. If there is no Existing Default, however,
Borrower may engage in the such transactions in the ordinary
course of business and pursuant to the reasonable requirements of
its business and on fair and reasonable terms substantially as
favorable to it as those which it could obtain in a comparable
arm's-length transaction with a non-Affiliate.
15.8. No Breach of Material Agreements. Breach, violate, or be
in default under any Material Agreement.
15.9. Conflicting Agreements. Enter into any agreement, that
would, if fully complied with by it, result in a Default or Event
of Default either immediately or upon the elapsing of time.
15.10. Fiscal Year. Change its fiscal year.
15.11. Transactions Having a Material Adverse Effect. Enter
into any transaction which at the time has or is reasonably likely
to have a Material Adverse Effect on Borrower.
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16. Financial Covenants.
16.1. Special Definitions. As used in this Section 16 and
elsewhere in this Agreement, the following capitalized terms have
the following meanings:
"EBITDA" means, for any period of calculation, an amount equal to
the sum of (i) net income, (ii) federal, state and local income
tax expense, (iii) interest expense, (iv) depreciation and
amortization expense, (v) losses on the sale or other disposition
of assets, and (vi) extraordinary losses, minus (a) gains on the
sale or other disposition of assets, and (b) extraordinary gains,
all as accrued in such period.
"Fixed Charges" means, for any period of calculation, an amount
equal to the sum of (i) interest expense accrued in such period,
(ii) federal, state and local income tax accrued in such period,
(iii) all principal payments on the Revolving Loan required to be
made as provided in Section 7.2, (iv) Capital Expenditures made
during such period (excluding Capital Expenditures that Borrower
is permitted to make under the proviso in Section 16.6 and (v)
dividends paid in such period.
"Funded Debt" means, at any date, the sum of, without duplication,
(i) the amount of all notes payable in one year or less, (ii) the
amount of the Indebtedness permitted under Section 15.2.4, (iii)
the principal of all Indebtedness for borrowed money, including
current maturities thereof, (iii) the unamortized capitalized
amount of all Capital Leases and (iv) the amount of all Surety
Obligations, all as of such date.
"Surety Obligations" means the original amount of all outstanding
standby and documentary letters of credit as to which Borrower is
the account party, the face amount of all banker's acceptances
with respect to which Borrower is obligated, and the original
amount of all bank guaranties, surety bonds and similar
instruments with respect to which Borrower is obligated.
"Tangible Assets" means, at any date, all assets as determined in
accordance with GAAP except: (a) deferred assets; (b) patents,
copyrights, trademarks, trade names, franchises, goodwill, and
other similar intangibles; (d) unamortized debt discount and
expense; and (e) fixed assets to the extent of any write-up in the
book value thereof resulting from a revaluation.
"Tangible Net Worth" means, at any date: (a) the book value (net
of depreciation, obsolescence, amortization, valuation and other
proper reserves determined in accordance with GAAP) at which
Tangible Assets would be shown on a balance sheet at such date
prepared in accordance with GAAP; less (b) the amount at which all
liabilities (including reserves for contingencies and other
potential liabilities) would be shown on such balance sheet in
accordance with GAAP.
16.2. Minimum Fixed Charge Coverage. The ratio of (i)
Borrower's EBITDA to (ii) Fixed Charges, calculated at the end of
each fiscal quarter of Borrower for the four fiscal quarters then
ended, shall not be less than 1.00 to 1.00.
16.3. Minimum Tangible Net Worth. Borrower's Tangible Net
Worth as of the end of each fiscal quarter of Borrower ended after
the Effective Date shall at no time be less than the lesser of (i)
$5,500,000 or (ii) an amount equal to $4,300,000 plus 25% of the
sum of all net income (but not any net loss) of Borrower for every
fiscal quarter ended after the Effective Date
16.4. Maximum Funded Debt to EBITDA Ratio. The ratio of
Borrower's Funded Debt as of the end of any fiscal quarter of
Borrower to Borrower's EBITDA for the four fiscal quarters then
ended shall not be greater than 3.00 to 1.00.
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16.5. Minimum EBITDA. Borrower's EBITDA for any four
consecutive fiscal quarters shall not be less than $10,000,000.
16.6. Capital Expenditures. Borrower shall not make Capital
Expenditures that in the aggregate exceed $3,500,000 in any one
fiscal year of Borrower; provided, however, that, in addition to
the Capital Expenditures permitted in the prior clause of this
sentence, (i) Borrower may make Capital Expenditures prior to
January 1, 1999, that total not more than $20,500,000 for
acquiring and refitting the vessel Clipper Adventurer, and (ii)
Borrower may make Capital Expenditures prior to January 1, 2000,
that total not more than $20,000,000 for acquiring and refitting
the vessel Oceanic Odyssey.
16.7. Capital Leases. Borrower shall not be obligated as
lessee under any Capital Leases except Capital Leases for capital
assets whose aggregate cost if purchased would not have exceeded
$3,000,000 in the aggregate.
17. Default.
17.1. Events of Default. Any one or more of the following
shall constitute an Event of Default:
17.1.1. Failure to Pay Principal or Interest. Failure
by Borrower to make any principal or interest payment on
the Revolving Loan when due under the Loan Documents.
17.1.2. Failure to Pay Other Amounts Owed to
Lender. Failure of Borrower to pay any of the Loan
Obligations (other than principal or interest on the
Revolving Loan) or any other amount owed to Lender within
five days after notice from Lender that the same is due.
17.1.3. Failure to Pay Amounts Owed to Other
Persons. Failure of Borrower to make any payments
aggregating $250,000 or more that are due on Indebtedness
of Borrower to any Persons other than Lender which
continue unwaived beyond any applicable grace periods
specified in the documents evidencing such Indebtedness.
17.1.4. Acceleration of Other Indebtedness. Any
Obligation of Borrower (other than the Loan Obligations)
for the payment of borrowed money in an amount over
$250,000 becomes or is declared to be due and payable or
required to be prepaid (other than by a regularly
scheduled payment or prepayment) prior to the original
maturity thereof as a consequence of a default with
respect thereto by Borrower.
17.1.5. Representations or Warranties. Any
representation or warranty made or deemed made by
Borrower to Lender under any of the Loan Documents is
discovered to have been false in any material respect
when made.
17.1.6. Certain Covenants. Failure of Borrower to
comply with the covenants in Section 14.8, 14.12, or
14.15.
17.1.7. Financial Covenants. Violation of any of the
covenants in Section 16.
17.1.8. Other Covenants. Failure of Borrower to comply
with any of the provisions of any of the Loan Documents
that are applicable to it (other than a failure which
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constitutes an Event of Default under any of Sections
17.1.1 through 17.1.6) which is not remedied or waived in
writing by Lender within 30 days after notice thereof
from Lender to Borrower.
17.1.9. Default Under Other Agreements. The occurrence
of any default or event of default under any agreement to
which Borrower is a party which continues unwaived beyond
any applicable grace period provided therein and either
(i) involves Obligations of Borrower greater than
$250,000 or (ii) has or is reasonably likely to have a
Material Adverse Effect on Borrower.
17.1.10. Bankruptcy; Insolvency; Etc. Borrower (i) fails
to pay, or admits in writing its inability to pay, its
debts generally as they become due, or otherwise becomes
insolvent (however evidenced); (ii) makes a general
assignment for the benefit of creditors; (iii) files a
petition in bankruptcy, is adjudicated insolvent or
bankrupt, petitions or applies to any tribunal for any
receiver or any trustee of Borrower or any substantial
part of its property; (iv) commences any proceeding
relating to Borrower under any reorganization,
arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; (v) has commenced against it
any such proceeding which remains undismissed for a
period of ninety days, or by any act indicates its
consent to, approval of, or acquiescence in any such
proceeding or the appointment of any receiver of or any
trustee for it or any substantial part of its property,
or allows any such receivership or trusteeship to
continue undischarged for a period of 90 days; or (vi)
takes any corporate action to authorize any of the
foregoing.
17.1.11. Judgments; Attachment; Etc. Any one or more
judgments or orders is entered against Borrower or any
attachment or other levy is made against the property of
Borrower, including but not limited to the Collateral,
with respect to a claim or claims involving in the
aggregate liabilities (not paid or fully covered by
insurance, less the amount of deductibles satisfactory to
Lender) greater than $250,000 becomes final and non-
appealable or if timely appealed is not fully bonded and
collection thereof stayed pending the appeal.
17.1.12. Pension Benefit Plan Termination, Etc. Any
termination by the PBGC of a Pension Benefit Plan created
or maintained by Borrower or an ERISA Affiliate of
Borrower (if any) or the appointment by the appropriate
United States District Court of a trustee to administer a
Pension Benefit Plan created or maintained by Borrower or
an ERISA Affiliate of Borrower (if any) or to liquidate
any Pension Benefit Plan created or maintained by
Borrower or an ERISA Affiliate of Borrower (if any); or
any event, which constitutes grounds either for the
termination of a Pension Benefit Plan created or
maintained by Borrower or an ERISA Affiliate of Borrower
(if any) by PBGC or for the appointment by the
appropriate United States District Court of a trustee to
administer or liquidate a Pension Benefit Plan created or
maintained by Borrower or an ERISA Affiliate of Borrower,
has occurred and is continuing for 30 days after Borrower
has notice of any such event; or any voluntary
termination of a Pension Benefit Plan created or
maintained by Borrower or an ERISA
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Affiliate of Borrower (if any) which is a defined benefit
pension plan as defined in Section 3(35) of ERISA while
such defined benefit pension plan has an accumulated
funding deficiency, unless Lender has been notified of
such intent to voluntarily terminate such plan and Lender
has given its consent and agreed that such event shall
not constitute an Event of Default; or the plan
administrator of a Pension Benefit Plan created of
maintained by Borrower or an ERISA Affiliate of Borrower
(if any) applies under Section 412(d) of the Code for a
waiver of the minimum funding standards of Section 412(1)
of the Code and Lender determines that the substantial
business hardship upon which the application for such
waiver is based could subject Borrower or any ERISA
Affiliate of Borrower to a liability in excess of
$250,000.
17.1.13. Liquidation or Dissolution. Borrower files a
certificate of dissolution under applicable state law or
is liquidated or dissolved, or has commenced against it
any action or proceeding for its liquidation or
dissolution, or takes any corporate action in furtherance
thereof.
17.1.14. Seizure of Assets. All or any material part of
the property of Borrower, including but not limited to
the Collateral, is nationalized, expropriated, seized or
otherwise appropriated, or custody or control of such
property or of Borrower is assumed by any Governmental
Authority, unless the same is being contested in good
faith by appropriate proceedings diligently pursued and a
stay of enforcement is in effect.
17.1.15. Racketeering Proceeding. There is filed against
Borrower any civil or criminal action, suit or proceeding
under any federal or state racketeering statute
(including, without limitation, the Racketeer Influenced
and Corrupt Organization Act of 1970), which action, suit
or proceeding is not dismissed within 120 days and could
result in the confiscation or forfeiture of any of the
Collateral or any material part of other property of
Borrower.
17.1.16. Loan Documents; Security Interests. Any Loan
Document ceases to be in full force and effect or any
Security Interest on any of the Collateral is not or
ceases to be (other than as a result of voluntary release
thereof by Lender) valid, perfected and prior to all
other Security Interests (other than relevant Permitted
Security Interests) or is terminated, revoked or declared
void or invalid.
17.1.17. Loss to Collateral. Any loss, theft, damage or
destruction of any of the Collateral occurs which is not
covered by insurance as required herein and has or is
reasonably likely to have a Material Adverse Effect on
Borrower.
17.1.18. Material Adverse Change. There occurs any event
which at the time or in a reasonably foreseeable time has
or is reasonably likely to have a Material Adverse Effect
on Borrower.
17.2. Rights and Remedies Upon an Event of Default.
17.2.1. Cancellation of Commitments. Upon the
occurrence of an Event of Default described in Section
17.1.10, the Commitments shall be deemed canceled without
presentment, demand or notice of any kind. Upon any
other Event of Default, and at any time thereafter,
Lender may cancel the Commitments. Such cancellation may
be without demand or notice of any kind, which Borrower
expressly waives.
17.2.2. Acceleration. Upon the occurrence of an Event
of Default described in Section 17.1.10, all of the
outstanding Loan Obligations shall automatically become
immediately due
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and payable. Upon any other Event of Default, and at any
time thereafter, Lender may declare all of the
outstanding Loan Obligations immediately due and payable.
Such acceleration in either case may be without
presentment, demand or notice of any kind, which Borrower
expressly waives.
17.2.3. Right of Set-off. Upon the occurrence of any
Event of Default and at any time and from time to time
thereafter, Lender is hereby authorized, without notice
to Borrower (any such notice being expressly waived by
Borrower), to set off and apply against the Loan
Obligations any and all deposits (general or special,
time or demand, provisional or final) at any time held,
or any other Indebtedness at any time owing by Lender to
or for the credit or the account of Borrower,
irrespective of whether or not Lender has made any demand
under the Loan Documents and although such Loan
Obligations may be unmatured. The rights of Lender under
this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off)
which Lender may otherwise have.
17.2.4. Notice to Account Debtors. Upon the occurrence
of any Event of Default and at any time and from time to
time thereafter, Lender may, without prior notice to
Borrower, notify any or all Account Debtors that the
Accounts have been assigned to Lender and that Lender has
a Security Interest therein , and Lender may direct, or
Borrower, at Lender's request, shall direct, any or all
Account Debtors to make all payments upon the Accounts
directly to Lender .
17.2.5. Entry Upon Premises and Access to
Information. Upon the occurrence of any Event of Default
and acceleration of the Loan Obligations as provided
herein, and at any time and from time to time thereafter,
Lender may (i) enter any premises leased or owned by
Borrower where any Personal Property Collateral is
located (or is believed to be located) without any
obligation to pay rent to Borrower, or any other place or
places where Personal Property Collateral is believed to
be located, (ii) render Collateral usable or saleable,
(iii) move movable Personal Property Collateral to the
premises of Lender or any agent of Lender for such time
as Lender may desire in order effectively to collect or
liquidate such Personal Property Collateral; (iv) take
possession of, and make copies and abstracts of,
Borrower's original books and records, obtain access to
Borrower's data processing equipment, computer hardware
and software relating to any of the Collateral and,
subject to any proprietary rights of third Persons, use
all of the foregoing and the information contained
therein in any manner Lender deems appropriate in
connection with the exercise of Lender's rights; and (v)
notify postal authorities to change the address for
delivery of Borrower's mail to an address designated by
Lender and to receive, open and process all mail
addressed to Borrower.
17.2.6. Borrower's Obligations. Upon the occurrence of
an Event of Default and acceleration of the Loan
Obligations as provided herein, Borrower shall, if Lender
so requests, assemble all movable Personal Property
Collateral and make it available to Lender at a place or
places to be designated by Lender in its discretion.
17.2.7. Exercise of Rights as Secured Party. Upon an
Event of Default and acceleration of the Loan Obligations
as provided herein, and at any time and from time to time
thereafter:
17.2.7.1. Lender may exercise any or all of its
rights under the Ship Mortgages;
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17.2.7.2. Lender may exercise any or all of its
rights under the Collateral Assignments;
17.2.7.3. Lender may exercise any or all of its
rights under the Security Agreement;.
17.2.7.4. Lender may exercise any or all of its
rights under the other Security Documents, if any;
17.2.7.5. Lender may exercise any or all of its
rights as a secured party under the UCC and any other
applicable Law; and
17.2.7.6. Lender may sell or otherwise dispose of
any or all of the Collateral at public or private sale
in a commercially reasonable manner, for cash or
credit, and after giving any notice as may be required
by any applicable Law. Lender may postpone any such
sale from time to time by announcement at the time and
place of sale stated in the notice of sale or by
announcement at any adjourned sale without being
required to give a new notice of sale, all as Lender
deems advisable. Lender may become the purchaser at
any such sale if permissible under applicable Law, and
Lender may, in lieu of actual payment of the purchase
price, offset the amount thereof against Borrower's
Loan Obligations owing to Lender, and Borrower agrees
that Lender has no obligation to preserve rights to
Collateral against prior parties or to marshal any
Collateral for the benefit of any Person.
In connection with the advertising for sale,
selling, or otherwise realizing upon any of the
Collateral securing the obligations of Borrower to
Lender, Lender may use and is hereby granted a license
to use, without charge or liability to Lender
therefor, any of Borrower's labels, trade names,
trademarks, trade secrets, service marks, patents,
patent applications, licenses, certificates of
authority, advertising materials, or any of Borrower's
other properties or interests in properties of similar
nature, to the extent that such use thereof is not
prohibited by agreements under which Borrower has
rights therein, and all of Borrower's rights under
license, franchise and similar agreements shall inure
to Lender's benefit.
17.2.8. Miscellaneous. Upon the occurrence of an Event
of Default and at any time thereafter, Lender may
exercise any other rights and remedies available to
Lender under the Loan Documents or otherwise available to
Lender at law or in equity.
17.3. Application of Funds. Any funds received by Lender with
respect to the Loan Obligations after acceleration of the Loan
Obligations as provided herein, including proceeds of Collateral,
shall be applied as follows: (i) first, to reimburse Lender for
any amounts due to Lender under Section 21.7; (ii) second, to
reimburse to Lender all unreimbursed costs and expenses paid or
incurred by Lender that are payable or reimbursable by Borrower
hereunder; (iii) third, to reimburse to Lender all unreimbursed
costs and expenses paid or incurred by Lender (including costs and
expenses incurred by Lender as Lender that are not reimbursable as
provided in the preceding clause) that are payable or reimbursable
by Borrower hereunder; (iv) fourth, to payment of accrued and
unpaid fees due under the Loan Documents and all other amounts due
under the Loan Documents (other than the Revolving Loan and
interest accrued
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thereon); (v) fifth, to payment of interest accrued on the
Revolving Loan and to all Interest Hedge Obligations (if any), pro
rata; (vi) sixth, to payment of the Revolving Loan and all
remaining Interest Hedge Obligations (if any), pro rata; and
(vii) seventh, to payment of the other Loan Obligations. Any
amounts remaining after the application of funds and proceeds as
provided in this Section shall be paid to Borrower, or to such
other Persons as are legally entitled thereto.
17.4. Limitation of Liability; Waiver. Lender shall not be
liable to Borrower as a result of any commercially reasonable
possession, repossession, collection or sale by Lender of
Collateral; and Borrower hereby waives all rights of redemption
from any such sale and the benefit of all valuation, appraisal and
exemption laws. If Lender seeks to take possession of any of the
Collateral by replevin or other court process after an Event of
Default, Borrower hereby irrevocably waives (i) the posting of any
bonds, surety and security relating thereto required by any
statute, court rule or otherwise as an incident to such
possession, (ii) any demand for possession of the Collateral prior
to the commencement of any suit or action to recover possession
thereof, (iii) any requirement that Lender retain possession and
not dispose of any Collateral until after trial or final judgment,
and (iv) to the extent permitted by applicable law, all rights to
notice and hearing prior to the exercise by Lender of its right to
repossess the Collateral without judicial process or to replevy,
attach or levy upon the Collateral without notice or hearing.
Lender shall not have any obligation to preserve rights to the
Collateral or to marshall any Collateral for the benefit of any
Person.
17.5. Notice. Any notice of intended action required to be
given by either Lender (including notice of a public or private
sale of Collateral), if given as provided in Section 22.1 at least
10 days prior to such proposed action, shall be effective and
constitute reasonable and fair notice to Borrower.
18. Changes in Circumstances.
18.1. Compensation for Increased Costs and Reduced Returns;
Capital Adequacy.
18.1.1. Increased Costs or Reduced Returns to Lender.
If, after the date hereof, the adoption of any applicable
Law or any change in any applicable Law or any change in
the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or
administration thereof, or compliance by Lender (or the
Lending Office) with any request or directive (whether or
not having the force of law) of any such Governmental
Authority:
18.1.1.1. subjects Lender (or the Lending Office)
to any Tax with respect to any LIBOR Tranche or its
obligation to make any Advance that will be a LIBOR
Tranche, or change the basis of taxation of any
amounts payable to Lender (or the Lending Office)
under this Agreement in respect of any LIBOR Tranche
(other than Taxes imposed on the overall net income of
Lender by the jurisdiction in which Lender has its
principal office or the Lending Office);
18.1.1.2. imposes, modifies, or deems applicable
any reserve, special deposit, assessment, compulsory
loan or similar requirement (other than the Reserve
Requirement) relating to any extensions of credit or
other assets of, or any deposits with or other
liabilities or commitments of, Lender (or the Lending
Office), including the Commitments of Lender
hereunder; or
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18.1.1.3. imposes on Lender (or the Lending
Office), or the London interbank market, any other
condition affecting this Agreement, the Commitments or
any of the Loan Obligations;
and the result of any of the foregoing is to increase
the cost to Lender (or the Lending Office) of making,
converting into, continuing, or maintaining any
Tranches or to reduce any sum received or receivable
by Lender (or the Lending Office) under this Agreement
or any of the other Loan Documents with respect to a
Trance, then Borrower shall pay to Lender on demand
such amount or amounts as will compensate Lender for
such increased cost or reduction. If Lender requests
compensation by Borrower under this Section Borrower
may, by notice to Lender, suspend the obligation of
Lender to make Advances that will become, or continue,
Tranches of the type with respect to which such
compensation is requested, or to convert Tranches of
any other type into Tranches of such type, until the
event or condition giving rise to such request ceases
to be in effect (in which case the provisions of
Section 18.5 shall be applicable); provided, however,
that such suspension shall not affect the right of
Lender to receive the compensation so requested.
18.1.2. Capital Adequacy. If at any time after the date
hereof Lender determines that the adoption of any
applicable Law regarding capital adequacy or any change
therein or in the interpretation or administration
thereof by any governmental authority, charged with the
interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental
Authority, has or would have the effect of reducing the
rate of return on the capital of Lender or any
corporation controlling Lender as a consequence of
Lender's obligations hereunder to a level below that
which Lender or such corporation could have achieved but
for such adoption, change, request, or directive (taking
into consideration its policies with respect to capital
adequacy), then from time to time upon demand Borrower
shall pay to Lender such additional amount or amounts as
will compensate Lender for such reduction.
18.1.3. Notice to Borrower. Lender shall promptly
notify Borrower of any event of which it has knowledge,
occurring after the date hereof, which will entitle
Lender to compensation pursuant to this Section 18.1 and
will designate a different Lending Office if such
designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of
Lender, be otherwise disadvantageous to it. If Lender
claims compensation under this Section, Lender will
furnish to Borrower a statement stating the additional
amount or amounts to be paid to it hereunder, which shall
be conclusive in the absence of manifest error. In
determining such amount, Lender may use any reasonable
averaging and attribution methods.
18.2. Limitations on LIBOR Tranches. If on or prior to the
first day of any Interest Period for any LIBOR Tranche:
18.2.1. Lender determines (which determination shall
be conclusive) that by reason of circumstances affecting
the relevant market, adequate and reasonable means do not
exist for ascertaining the LIBO Rate for such Interest
Period; or
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18.2.2. Lender determines (which determination shall
be conclusive) that the LIBO Rate will not adequately and
fairly reflect the cost to Lender of funding LIBOR
Tranches for such Interest Period;
then Lender will give Borrower prompt notice thereof, and
while such condition remains in effect, Lender will have
no obligation to make additional Advances that will be
LIBOR Tranches, to continue LIBOR Tranches, or to convert
Alternate Base Rate Tranches into LIBOR Tranches.
18.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for Lender or the
Lending Office to make Advances that will be LIBOR Tranches or
maintain LIBOR Tranches hereunder, then Lender shall promptly
notify Borrower thereof and Lender's obligation to do so or to
convert Alternate Base Rate Tranches into LIBOR Tranches shall be
suspended until such time as Lender may again do so, and Lender's
outstanding LIBOR Tranches shall be converted into Alternate Base
Rate Tranches in accordance with Section 18.5.
18.4. Compensation. Upon the request of Lender, Borrower shall
pay to Lender such amount or amounts as will be sufficient (in the
reasonable determination of Lender) to compensate it for any loss,
cost, or expense (including loss of anticipated profits) incurred
by it as a result of:
18.4.1. any payment, prepayment, or conversion of a
LIBOR Tranche for any reason (including, without
limitation, the acceleration of the Revolving Loan
pursuant to the terms hereof) on a date other than the
last day of the Interest Period for such LIBOR Tranche;
or
18.4.2. any failure by Borrower for any reason (other
than pursuant to Section 18.2 or 18.3) to take an Advance
that is requested to be a LIBOR Tranche or to convert,
continue, or prepay a LIBOR Tranche on the date therefor
specified in the relevant request for an Advance or
notice of prepayment, continuation, or conversion under
this Agreement.
If Lender claims compensation under this Section 18.4,
Lender shall furnish a certificate to Borrower that
states the amount to be paid to it hereunder and includes
a description in reasonable detail of the method used by
Lender in calculating such amount. Borrower shall have
the burden of proving that the amount of any such
compensation calculated by Lender is not correct. Any
compensation payable by Borrower to Lender under this
Section shall be payable without regard to whether Lender
has funded any Advance or LIBOR Tranche through the
purchase of deposits in an amount or of a maturity
corresponding to the deposits used as a reference in
determining the LIBO Rate as provided herein.
18.5. Treatment of Affected Tranches. If the obligation of
Lender to make an Advance that will be a LIBOR Tranche or to
continue any LIBOR Tranche or to convert any Alternate Base Rate
Tranche into a LIBOR Tranche shall be suspended pursuant to
Section 18.2 or 18.3, each such Tranche shall be automatically and
immediately converted into an Alternate Base Rate Tranche on the
last day of its Interest Period (or, in the case of a conversion
required by Section 18.3, on such earlier date as Lender may
specify to Borrower). Unless and until Lender gives notice as
provided below that the circumstances specified in Section 18.2 or
18.3 that gave rise to such conversion no longer exist:
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18.5.1. to the extent that such Tranches have been so
converted, all payments and prepayments of principal that
would otherwise be applied to such Tranches shall
continue to be made and applied as provided for herein;
and
18.5.2. all Advances by Lender that would otherwise
become LIBOR Tranches and all LIBOR Tranches that would
otherwise be continued by Lender as LIBOR Tranches shall
become or be continued instead as Alternate Base Rate
Tranches, and all Alternate Base Rate Tranches that would
otherwise be converted into LIBOR Tranches shall be
converted instead into (or shall remain as) Alternate
Base Rate Tranches.
Lender shall give prompt notice to Borrower if and when
the circumstances specified in Section 18.2 or 18.3 that
gave rise to the conversion of such Tranches pursuant to
this Section 18.5 no longer exist.
19. Taxes.
19.1. Gross-Up. All payments by Borrower to or for the account
of Lender hereunder or under any other Loan Document shall be made
free and clear of and without deduction for all present or future
Taxes, excluding franchise Taxes and Taxes imposed on Lender's net
income, by the jurisdiction under the Laws of which Lender is
organized or the Lending Office is located or any political
subdivision thereof. If Borrower is required by Law to deduct any
Taxes from or in respect of any sum payable under this Agreement
or any other Loan Document to Lender, (i) the sum payable shall be
increased as necessary so that after making all required
deductions (including deductions applicable to additional sums
payable under this Section) Lender receives an amount equal to the
sum it would have received had no such deductions been made, (ii)
Borrower shall make such deductions, (iii) Borrower shall pay the
full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Law, and (iv) Borrower
shall furnish to Lender, at its address referred to herein, the
original or a certified copy of a receipt evidencing payment
thereof. In addition, Borrower agrees to pay any and all present
or future Impositions. "Impositions" include stamp or documentary
taxes and any other excise or property taxes or charges or similar
levies which arise from the Loan Obligations, any payment made
under this Agreement or any other Loan Document or from the
execution or delivery of, or otherwise with respect to, the Loan
Obligations, this Agreement or any other Loan Document. Borrower
agrees to indemnify Lender for the full amount of all Impositions
and Taxes, excluding franchise Taxes and Taxes imposed on Lender's
net income, (including any such Taxes or Impositions imposed or
asserted by any jurisdiction on amounts payable under this
Section) paid by Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto.
Within thirty days after the date of any payment of Taxes,
Borrower shall furnish Lender the original or a certified copy of
a receipt evidencing such payment.
19.2. Lender's Undertaking. If Borrower is required to pay
additional amounts to or for the account of Lender pursuant to
Section 19.1, then Lender will use reasonable efforts to change
the jurisdiction of the Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if
such change, in the judgment of Lender, is not otherwise
disadvantageous to Lender.
20. Usury Limitations. Notwithstanding any provisions to the contrary
in Section 4 or elsewhere in any of the Loan Documents, Borrower shall
not be obligated to pay interest at a rate which exceeds the maximum
rate permitted by Law. If, but for this Section 20, Borrower would be
deemed obligated to pay interest at a rate which exceeds the maximum
rate permitted by Law, or if any of the Loan Obligations is
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paid or becomes payable before its originally scheduled Maturity and as
a result Borrower has paid or would be obligated to pay interest at such
an excessive rate, then (i) Borrower shall not be obligated to pay
interest to the extent it exceeds the interest that would be payable at
the maximum rate permitted by Law; (ii) if the outstanding Loan
Obligations have not been accelerated as provided in Section 17.2.2, any
such excess interest that has been paid by Borrower shall be refunded;
(iii) if the outstanding Loan Obligations have been accelerated as
provided in Section 17.2.2, any such excess that has been paid by
Borrower shall be applied to the Loan Obligations as provided in Section
17.3; and (iv) the effective rate of interest shall be deemed
automatically reduced to the maximum rate permitted by Law.
21. General.
21.1. Lender's Right to Cure. Lender may from time to time, in
its absolute discretion, for Borrower's account and at Borrower's
expense, pay any amount or do any act required of Borrower under
the Loan Documents or requested by Lender to preserve, protect,
maintain or enforce the Loan Obligations, the Collateral or
Lender's Security Interests therein, and which Borrower fails to
pay or do, including payment of any judgment against Borrower,
insurance premium, Taxes or assessments, warehouse charge,
finishing or processing charge, landlord's claim, and any other
Security Interest upon or with respect to the Collateral. All
payments that Lender makes pursuant to this Section and all out-
of-pocket costs and expenses that Lender pays or incurs in
connection with any action taken by them hereunder shall be a part
of the Loan Obligations, the repayment of which shall be secured
by the Collateral. Any payment made or other action taken by
Lender pursuant to this Section shall be without prejudice to any
right to assert an Event of Default hereunder and to pursue
Lender's other rights and remedies with respect thereto.
21.2. Rights Not Exclusive. Every right granted to Lender
hereunder or under any other Loan Document or allowed to them at
law or in equity shall be deemed cumulative and may be exercised
from time to time.
21.3. Survival of Agreements. All covenants and agreements
made herein and in the other Loan Documents shall survive the
execution and delivery of this Agreement, the Note and other Loan
Documents and the making of every Advance. All agreements,
obligations and liabilities of Borrower under the Loan Documents
concerning the payment of money to Lender, including Borrower's
obligations under Sections 21.6 and 21.7, but excluding the
obligation to repay the Revolving Loan and interest accrued
thereon, shall survive the repayment in full of the Revolving Loan
and interest accrued thereon, the return of the Note to Borrower,
and the termination or cancellation of the Commitments.
21.4. Sale of Participations. Lender may sell participations
to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement provided that the
terms of sale satisfy the following requirements:
21.4.1. Lender's obligations under this Agreement
shall remain unchanged.
21.4.2. Lender shall remain solely responsible to the
other parties hereto for the performance of such
obligations.
21.4.3. Lender shall remain the holder of the Note for
the purpose of this Agreement.
21.4.4. Borrower and Lender shall continue to deal
solely and directly with each other in connection with
Lender's rights and obligations under this Agreement and
with
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regard to Advances and payments to be made under this
Agreement. Participation agreements between Lender and
its participants may, however, provide that Lender will
obtain the approval of such participant prior to Lender
agreeing to any amendment or waiver of any provisions of
this Agreement which would (i) extend the maturity of the
Note, (ii) reduce the interest rate on the Revolving
Loan, (iii) increase any of the Commitments of Lender, or
(iv) release all or any substantial part of the
Collateral other than in accordance with the terms of the
Loan Documents.
The sale of any such participations which require
Borrower to file a registration statement with the SEC or
under the securities laws of any state shall not be
permitted.
21.5. Assignments to Affiliates. Lender may assign all or any
portion of its interest in the Revolving Loan to its Affiliates
without the acceptance or consent of Lender or Borrower, and may
assign all or any portion of its interest in the Revolving Loan to
the Federal Reserve Bank without acceptance or approval of
Borrower.
21.6. Payment of Expenses. Borrower agrees to pay or reimburse
to Lender all of Lender's out-of-pocket costs incurred in
connection with Lender's due diligence review before execution of
the Loan Documents; the negotiation and preparation of the
commitment letters and the Loan Documents; the perfection of any
Lender's Security Interest in any Collateral; the interpretation
of any of the Loan Documents; the enforcement of Lender's rights
and remedies under the Loan Documents after a Default or Event of
Default; any amendment of or supplementation to any of the Loan
Documents; and any waiver, consent or forbearance with respect to
any Default or Event of Default. Borrower further agrees to pay
or reimburse to Lender all of Lender's out-of-pocket costs
incurred in connection with the enforcement of Lender's rights and
remedies under the Loan Documents after a Default or Event of
Default. Out-of-pocket costs may include but are not limited to
the following, to the extent they are actually paid or incurred:
title insurance fees and premiums; the cost of searches for
Security Interests existing against Borrower; recording and filing
fees; fees for all required appraisals; environmental consultant
fees; litigation costs; and all attorneys' and paralegals'
expenses and reasonable fees. Attorneys' and paralegals' expenses
may include but are not limited to filing charges; telephone, data
transmission, facsimile and other communication costs; courier and
other delivery charges; and photocopying charges. Litigation
costs may include but are not limited to filing fees, deposition
costs, expert witness fees, expenses of service of process, and
other such costs paid or incurred in any administrative,
arbitration, or court proceedings involving Lender and Borrower,
including proceedings under the Federal Bankruptcy Code. All
costs which Borrower is obligated to pay or reimburse to Lender
are Loan Obligations payable to Lender, secured by the Collateral,
and are payable on Lender's demand.
21.7. General Indemnity.
21.7.1. Borrower shall indemnify and hold harmless Lender
and its directors, officers, employees, agents, and
representatives (the "Indemnified Parties") for, from and
against, and promptly reimburse the Indemnified Parties
for, any and all claims, damages, liabilities, losses,
costs and expenses (including reasonable attorneys' fees
and expenses and amounts paid in settlement) incurred,
paid or sustained by the Indemnified Parties in
connection with, arising out of, based upon or otherwise
involving or resulting from any threatened, pending or
completed action, suit, investigation or other proceeding
by, against or otherwise involving the Indemnified
Parties and in any way dealing with,
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relating to or otherwise involving this Agreement, any of
the other Loan Documents, or any transaction contemplated
hereby or thereby, except to the extent that they arise
from the gross negligence, bad faith or willful
misconduct of any of the Indemnified Parties. Borrower
shall indemnify and hold harmless the Indemnified Parties
for, from and against, and promptly reimburse the
Indemnified Parties for, any and all claims, damages,
liabilities, losses, costs and expenses (including
reasonable attorneys' and consultant fees and expenses,
investigation and laboratory fees, removal, remedial,
response and corrective action costs, and amounts paid in
settlement) incurred, paid or sustained by the
Indemnified Parties as a result of the manufacture,
storage, transportation, release or disposal of any
Hazardous Material on, from, over or affecting any of the
Collateral or any of the assets, properties, or
operations of Borrower or any predecessor in interest,
directly or indirectly, except to the extent that they
arise from the gross negligence, bad faith or willful
misconduct of any of the Indemnified Parties.
21.7.2. The obligations of Borrower under this Section
21.7 shall survive the termination or cancellation of the
Commitments, the payment and satisfaction of all of the
Loan Obligations, and the release of the Collateral.
21.7.3. To the extent that any of the indemnities
required from Borrower under this Section are
unenforceable because they violate any Law or public
policy, Borrower shall pay the maximum amount which it is
permitted to pay under applicable Law.
21.8. Loan Records. The date and amount of all Advances and
payments of amounts due from Borrower under the Loan Documents
will be recorded in the records that Lender normally maintains for
such types of transactions. The failure to record, or any error
in recording, any of the foregoing shall not, however, affect the
obligation of Borrower to repay the Revolving Loan and other
amounts payable under the Loan Documents. Borrower shall have the
burden of proving that Lender's records are not correct. Borrower
agrees that Lender's books and records showing the Loan
Obligations and the transactions pursuant to this Agreement shall
be admissible in any action or proceeding arising therefrom, and
shall constitute prima facie proof thereof, irrespective of
whether any Loan Obligation is also evidenced by a promissory note
or other instrument. Any statement that Lender provides to
Borrower of Advances, payments, and other transactions pursuant to
this Agreement shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reversals and
reapplications of payments as provided in Section 8.4 and
corrections of errors discovered by Lender), unless Borrower
notifies Lender in writing to the contrary within 30 days after
such statement is rendered. In the event a timely written notice
of objections is given by Borrower, only the items to which
exception is expressly made will be considered to be disputed by
Borrower.
21.9. Other Security and Guaranties. Lender may, without
notice or demand and without affecting Borrower's obligations
hereunder, from time to time: (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or
any part of the Loan Obligations and exchange, enforce and release
such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Loan
Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Security Interest in
any other collateral as security for the payment of all or any
part of the Loan Obligations, or any other Person in any way
obligated to pay all or any part of the Loan Obligations.
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22. Miscellaneous.
22.1. Notices. All notices, consents, requests and demands to
or upon the respective parties hereto shall be in writing, and
shall be deemed to have been given or made when delivered in
person to those Persons listed on the signature pages hereof or
two days after being deposited in the United States mail, postage
prepaid, or, in the case of telegraphic notice, or the overnight
courier services, when delivered to the telegraph company or
overnight courier service, or in the case of telex or telecopy
notice, when sent, verification received, in each case addressed
as set forth on the signature pages hereof, or such other address
as either party may designate by notice to the other in accordance
with the terms of this paragraph. No notice given to or demand
made on Borrower by any Lender in any instance shall entitle
Borrower to notice or demand in any other instance.
22.2. Amendments, Waivers and Consents. Unless otherwise
provided herein, no amendment to or waiver of any provision of
this Agreement, or of any of the other Loan Documents, nor consent
to any departure by Borrower herefrom or therefrom, shall be
effective unless it is in writing and signed by authorized
officers of Borrower and Lender. No notice to or demand on
Borrower in any case shall entitle Borrower to any other or
further notice or demand in similar or other circumstances. No
failure by any Lender to exercise, and no delay by any Lender in
exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise by Lender of any right, remedy, power or privilege
hereunder preclude any other exercise thereof, or the exercise of
any other right, remedy, power or privilege. Each and every right
granted to Lender hereunder or under any other Loan Document or
other document delivered hereunder or in connection with this
Agreement or allowed to them at law or in equity shall be deemed
cumulative and may be exercised from time to time.
22.3. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and all future
holders of the Note and their respective successors and assigns,
except that Borrower may not assign, delegate or transfer any of
its rights or obligations under this Agreement without the prior
written consent of Lender. With respect to Borrower's successors
and assigns, such successors and assigns shall include any
receiver, trustee or debtor-in-possession of or for Borrower.
22.4. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or lack of authorization
without invalidating the remaining provisions hereof or affecting
the validity, enforceability or legality of such provision in any
other jurisdiction unless the ineffectiveness of such provision
would result in such a material change as to cause completion of
the transactions contemplated hereby to be unreasonable.
22.5. Counterparts. This Agreement may be executed by the
parties hereto on any number of separate counterparts, and all
such counterparts taken together shall constitute one and the same
instrument. It shall not be necessary in making proof of this
Agreement to produce or account for more than one counterpart
signed by the party to be charged.
22.6. Governing Law; No Third Party Rights. This Agreement,
the other Loan Documents and the Note and the rights and
obligations of the parties hereunder and thereunder shall be
governed by and construed and interpreted in accordance with the
internal laws of the State of Missouri applicable to contracts
made and to be performed wholly within such state, without regard
to choice or conflict of laws provisions; except that the
provisions of the Loan Documents pertaining to the creation or
perfection of Security Interests or the enforcement of the rights
of
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Lender in Collateral located in states other than Missouri, if
any, and other related matters subject to the law of such states,
shall be governed by the laws of such States. This Agreement is
solely for the benefit of the parties hereto and their respective
successors and assigns, and no other Person shall have any right,
benefit, priority or interest under, or because of the existence
of, this Agreement.
22.7. Counterpart Facsimile Execution. For purposes of this
Agreement, a document (or signature page thereto) signed and
transmitted by facsimile machine or telecopier is to be treated as
an original document. The signature of any Person thereon, for
purposes hereof, is to be considered as an original signature, and
the document transmitted is to be considered to have the same
binding effect as an original signature on an original document.
At the request of any party hereto, any facsimile or telecopy
document is to be re-executed in original form by the Persons who
executed the facsimile or telecopy document. No party hereto may
raise the use of a facsimile machine or telecopier or the fact
that any signature was transmitted through the use of a facsimile
or telecopier machine as a defense to the enforcement of this
Agreement or any amendment or other document executed in
compliance with this Section.
22.8. No Other Agreements. There are no other agreements
between Lender and Borrower, oral or written, concerning the
subject matter of the Loan Documents, and all prior agreements
concerning the same subject matter, including the Commitment
Letter, are merged into the Loan Documents and thereby
extinguished.
22.9. Incorporation By Reference. All of the terms of the
other Loan Documents are incorporated in and made a part of this
Agreement by this reference.
22.10. Negotiated Transaction. Borrower and Lender represent
one to the other that in the negotiation and drafting of this
Agreement they have been represented by and have relied upon the
advice of counsel of their choice. Borrower and Lender affirm
that their counsel have both had substantial roles in the drafting
and negotiation of this Agreement and, therefore, this Agreement
shall be deemed drafted by both Borrower and Lender, and the rule
of construction to the effect that any ambiguities are to be
resolved against the drafter shall not be employed in the
interpretation of this Agreement.
22.11. Mandatory Arbitration. Any controversy or claim between
or among the parties hereto including but not limited to those
arising out of or relating to this instrument or any other
document evidencing or securing the loan transaction herein
involved, or any related agreements or instruments, including any
claim based on or arising from an alleged tort, shall be
determined by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state law),
as promulgated from time to time by the Rules Of Practice And
Procedure for The Arbitration Of Commercial Disputes of Judicial
Arbitration and Mediation Services, Inc., predecessor in interest
to Endispute, Inc., doing business as "J.A.M.S./ENDISPUTE" and the
"special rules" set forth below. In the event of any
inconsistency, the special rules shall control. judgment upon any
arbitration award may be entered in any court having jurisdiction.
Any party to such document may bring an action, including a
summary or expedited proceeding, to compel arbitration of any
controversy or claim to which this agreement applies in any court
having jurisdiction over such action.
22.11.1. Special Rules. The arbitration shall be
conducted in the City or County of St. Louis, Missouri
and administered by J.A.M.S./ENDISPUTE who will appoint
an arbitrator; if J.A.M.S./ENDISPUTE is unable or legally
precluded from administering
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the arbitration, then the American Arbitration
Association will serve. All arbitration hearings will be
commenced within ninety (90) calendar days of the demand
for arbitration; further, the arbitrator shall only, upon
a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional
sixty (60) calendar days.
22.11.2. Reservation Of Rights. Nothing in this
agreement shall be deemed to (i) limit the applicability
of any otherwise applicable statutes of limitation or
repose and any waivers contained in this note; or (ii) be
a waiver by Lender of the protection afforded to it by 12
U.S.C. SEC. 91 or any substantially equivalent state law;
or (iii) limit the right of Lender (a) to exercise self
help remedies such as (but not limited to) setoff, or (b)
to foreclose against any real or personal property
collateral, or (c) to obtain from a court provisional or
ancillary remedies such as (but not limited to)
injunctive relief or the appointment of a receiver.
Lender may exercise such self help rights, foreclose upon
such property, or obtain such provisional or ancillary
remedies before, during or after the pendency of any
arbitration proceeding brought pursuant to this note. At
Lender's option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following:
the exercise of a power of sale under the deed of trust
or mortgage, or by judicial sale under the deed of trust
or mortgage, or by judicial foreclosure. Neither the
exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional
or ancillary remedies shall constitute a waiver of the
right of any party, including the claimant in any such
action, to arbitrate the merits of the controversy or
claim occasioning resort to such remedies. No provision
in the Loan Documents regarding submission to
jurisdiction and/or venue in any court is intended or
shall be construed to be in derogation of the provisions
in any Loan Document for arbitration of any controversy
or claim.
23. Choice of Forum. WITHOUT INTENDING TO ALTER OR LIMIT THE
PROVISIONS OF SECTION 22.11, SUBJECT ONLY TO THE EXCEPTION IN THE NEXT
SENTENCE, BORROWER AND LENDER HEREBY AGREE TO THE EXCLUSIVE JURISDICTION
OF THE FEDERAL COURTS OF THE EASTERN DISTRICT OF MISSOURI, AND THE STATE
COURTS OF MISSOURI LOCATED IN ST. LOUIS COUNTY OR THE CITY OF ST. LOUIS,
MISSOURI, AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS
WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY
DISPUTE CONCERNING THE RELATIONSHIP BETWEEN LENDER AND BORROWER OR THE
CONDUCT OF ANY OF THEM IN CONNECTION WITH THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
NOTWITHSTANDING THE FOREGOING: (1) LENDER SHALL HAVE THE RIGHT TO BRING
ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN ANY COURTS
OF ANY OTHER JURISDICTION LENDER DEEMS NECESSARY OR APPROPRIATE IN ORDER
TO REALIZE ON THE COLLATERAL, REAL ESTATE OR OTHER SECURITY FOR THE LOAN
OBLIGATIONS, AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY
APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
24. Service of Process. BORROWER HEREBY WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO BORROWER AT ITS ADDRESS SET FORTH ON THE SIGNATURE PAGES
HEREOF, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5)
DAYS AFTER THE SAME SHALL
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HAVE BEEN SO DEPOSITED IN THE U.S. MAILS CERTIFIED OR REGISTERED.
NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
25. Jury Trial. BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR (2) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM IN RESPECT OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. BORROWER AND LENDER AGREE AND CONSENT
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
26. Statutory Notice. The following notice is given pursuant to
Section 432.045 of the Missouri Revised Statutes; nothing contained in
such notice shall be deemed to limit or modify the terms of the Loan
Documents:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO
EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE
CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by appropriate duly authorized officers as of the date first
above written.
INTRAV, INC. NATIONSBANK, N.A.
by its Executive Vice President and by its Senior Vice President
Chief Financial Officer
/s/ Wayne L. Smith, II /s/ Keith M. Schmelder
----------------------------------- -----------------------------------
Wayne L. Smith, II Keith M. Schmelder
Notice Address: Notice Address:
7711 Bonhomme Avenue 800 Market Street
St. Louis, MO 63105 St. Louis, MO 63101
Attn: Keith M. Schmelder
FAX # 314-727-2533 Mail Code M01-800-12-01
TEL # 314-727-0500
FAX # 314-466-7783
TEL # 314-466-6642
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EXHIBIT 2.1
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GLOSSARY AND INDEX OF DEFINED TERMS
"Account Debtor": the obligor on any Account.
"Account": as to any Person, the right of such Person to payment for
goods sold or leased or for services rendered by such Person.
"Adjusted LIBO Rate": for any LIBO Tranche for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Lender to be equal to the quotient
obtained by dividing (a) the LIBO Rate for such LIBO Tranche for such
Interest Period by (b) the result of subtracting from one the Reserve
Requirement for such LIBO Tranche for such Interest Period expressed as
a decimal.
"Advance Date": the date when an Advance is requested by Borrower to be
made as provided herein, or in the case of the initial Advance, the date
when such Advance is made.
"Advance": an advance to Borrower under the Revolving Commitment.
"Affiliate": with respect to any Person, (a) any other Person who is a
partner, director, officer or stockholder of such Person; and (b) any
other Person which, directly or indirectly, is in control of, is
controlled by or is under common control with such Person, and any
partner, director, officer or stockholder of such other Person
described. For purposes of this Agreement, control of a Person by
another Person shall be deemed to exist if such other Person has the
power, directly or indirectly, either to (i) vote twenty percent (20%)
or more of the securities having the power to vote in an election of
directors of such Person, or (ii) direct the management of such Person,
whether by contract or otherwise and whether alone or in combination
with others.
"Alternate Base Rate Tranche": a Tranche on which interest accrues at
the Alternate Base Rate.
"Alternate Base Rate" is defined in Section 4.2.
"Acquisition Agreement": the Agreement for Purchase and Sale of Stock by
and among Intrav, Inc., Clipper Cruise Line, Inc., Republic Cruise Line,
Inc., Liberty Cruise Line, Inc. Clipper Adventure Cruises, Inc., and
Windsor, Inc. date November 13, 1996.
"Assigned Collateral": any tangible or intangible property of Borrower,
now owned or hereafter acquired, other than the Real Property
Collateral, the Real Property Leased Collateral and the Personal
Property Collateral in which Lender holds or will hold a Security
Interest under a Collateral Assignment to secure payment or performance
of any of the Loan Obligations as required or contemplated under Section
9.3, and all proceeds thereof.
"Borrowing Officer": each officer of Borrower who is authorized to
submit a request for an Advance or the issuance of a Letter of Credit.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required to close under the
laws of either the United States or the States of Missouri.
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"Capital Expenditure": an expenditure for an asset that must be
depreciated or amortized under GAAP, for goodwill, or for any asset that
under GAAP must be treated as a capital asset, including payments under
Capital Leases. An expenditure for purposes of this definition includes
any deferred or seller financed portion of the purchase price of an
asset and the original capitalized amount of a Capital Lease.
"Capital Lease": any lease that has been or should be capitalized under
GAAP.
"Charter Documents": the articles or certificate of incorporation and
bylaws of a corporation; the certificate of limited partnership and
partnership agreement of a limited partnership; the partnership
agreement of a general partnership; the articles of organization of a
limited liability company; or the indenture of a trust.
"Clipper Acquisition Contingency": the aggregate amount, if any, that
Borrower is required to pay to Windsor, Inc. or to its order or assigns
under that certain Promissory Note of Borrower dated December 31, 1996,
payable to the order of Windsor, Inc. in a principal amount not to
exceed $3,000,000, as the same may from time to time be amended,
modified, extended or renewed.
"Code": the Internal Revenue Code of 1986 and all regulations thereunder
of the IRS.
"Collateral Assignment": any of the collateral assignments required or
contemplated under Section 9.3 to be executed and delivered to Lender.
"Collateral": all of the Real Property Leased Collateral, Personal
Property Collateral, Assigned Collateral and other property in which
Lender has a Security Interest to secure payment or performance of the
Loan Obligations.
"Commitments": the Revolving Commitment and the Letter of Credit
Commitment.
"Contract": any contract, note, bond, indenture, deed, mortgage, deed of
trust, security agreement, pledge, hypothecation agreement, assignment,
or other agreement or undertaking, or any security.
"Conversion Date" is defined in Section 4.4.
"Default": any of the events listed in Section 17.1 of this Agreement,
without giving effect to any requirement for the giving of notice, for
the lapse of time, or both, or for the happening of any other condition,
event or act.
"Disclosure Schedule": the Disclosure Schedule of Borrower attached
hereto as Exhibit 12.
"DOL": the United States Department of Labor.
"Dollars": and the sign "$", lawful money of the United States.
"EBITDA" is defined in Section 16.1.
"Effective Date": the date when this Agreement is effective as provided
in Section 1.
"Employment Law": ERISA, the Occupational Safety and Health Act, the
Fair Labor Standards Act, or any other Law pertaining to the terms or
conditions of labor or safety in the workplace or discrimination or
sexual harassment in the workplace.
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"Encumbrance": as to any item of real or personal property, any
easement, right-of-way, license, condition, or restrictive covenant, or
zoning or similar restriction, that is not a Security Interest but is
enforceable by any Person other than the record owner of such property.
"Environmental Law": the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act,
the Clean Water Act, the Clean Air Act, or any other Law pertaining to
environmental quality or remediation of Hazardous Material.
"EPA": the United States Environmental Protection Agency.
"ERISA Affiliate": as to any Person, any trade or business (irrespective
of whether incorporated) which is a member of a group of which such
Person is a member and thereafter treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code or applicable Treasury
Regulations.
"ERISA": the Employee Retirement Income Security Act of 1974.
"Event of Default": any of the events listed in Section 17.1 of this
Agreement as to which any requirement for the giving of notice, for the
lapse of time, or both, or for the happening of any further condition,
event or act has been satisfied.
"Execution Date": the date when this Agreement has been executed.
"Existing Default": a Default which has occurred and is continuing, or
an Event of Default which has occurred, and which has not been waived in
writing by Lender.
"Financial Statements": financial statements of Borrower that are
furnished to Lender as required in Section 14.12 of this Agreement.
"Fixed Charges" is defined in Section 16.1.
"FRB": the Board of Governors of the Federal Reserve System and any
successor thereto or to the functions thereof.
"Funded Debt" is defined in Section 16.1.
"GAAP": those generally accepted accounting principles set forth in
Statements of the Financial Accounting Standards Board and in Opinions
of the Accounting Principles Board of the American Institute of
Certified Public Accountants or which have other substantial
authoritative support in the United States and are applicable in the
circumstances, as applied on a consistent basis.
"Governmental Authority": the federal government of the United States;
the government of any foreign country that is recognized by the United
States or is a member of the United Nations; any state of the United
States; any local government or municipality within the territory or
under the jurisdiction of any of the foregoing; any department, agency,
division, or instrumentality of any of the foregoing; and any court,
arbitrator, or board of arbitrators whose orders or judgements are
enforceable by or within the territory of any of the foregoing.
"Hazardous Material": any hazardous, radioactive, toxic, solid or
special waste, material, substance or constituent thereof, or any other
such substance (as defined under any applicable law or regulation),
including asbestos. "Hazardous Material" does not include materials or
products containing hazardous constituents which are not considered to
be waste under the applicable Environmental Law or which are
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considered to be waste but are transported, handled or disposed of in
accordance with the applicable Environmental Law, and does not include
asbestos which is not friable.
"Indebtedness": as to any Person at any particular date, any contractual
obligation enforceable against such Person (i) to repay borrowed money;
(ii) to pay the deferred purchase price of property or services; (iii)
to make payments or reimbursements with respect to bank acceptances or
to a factor; (iv) to make payments or reimbursements with respect to
letters of credit whether or not there have been drawings thereunder;
(v) with respect to which there is any Security Interest in any property
of such Person; (vi) to make any payment or contribution to a Multi-
Employer Plan; (vii) that is evidenced by a note, bond, debenture or
similar instrument; (viii) under any conditional sale agreement or title
retention agreement; or (ix) to pay interest or fees with respect to any
of the foregoing.
"Indemnified Parties" is defined in Section 21.7.1.
"Indirect Obligation": as to any Person, (a) any guaranty by such Person
of any Obligation of another Person; (b) any Security Interest in any
property of such Person that secures any Obligation of another Person,
(c) any enforceable contractual requirement that such Person
(i) purchase an Obligation of another Person or any property that is
security for such Obligation, (ii) advance or contribute funds to
another Person for the payment of an Obligation of such other Person or
to maintain the working capital, net worth or solvency of such other
Person as required in any documents evidencing an Obligation of such
other Person, (iii) purchase property, securities or services from
another Person for the purpose of assuring the beneficiary of any
Obligation of such other Person that such other Person has the ability
to timely pay or discharge such Obligation, (iv) grant a Security
Interest in any property of such Person to secure any Obligation of
another Person, or (v) otherwise assure or hold harmless the beneficiary
of any Obligation of another Person against loss in respect thereof; and
(d) any other contractual requirement enforceable against such Person
that has the same substantive effect as any of the foregoing. The term
"Indirect Obligation" does not, however, include the indorsement by a
Person of instruments for deposit or collection in the ordinary course
of business or the liability of a general partner of a partnership for
Obligations of such partnership. The amount of any Indirect Obligation
of a Person shall be deemed to be the stated or determinable amount of
the Obligation in respect of which such Indirect Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Initial Financial Statements": the financial statements of Borrower
referred to in Section 12.13.
"Insurance/Condemnation Proceeds": insurance proceeds payable as a
consequence of damage to or destruction of any of the Collateral and
proceeds payable as a consequence of condemnation or sale in lieu of
condemnation of any of the Collateral.
"Intellectual Property": as to any Person, any domestic or foreign
patents or patent applications of such Person, any inventions made or
owned by such Person upon which either domestic or foreign patent
applications have not yet been filed, any domestic or foreign trade
names or trademarks of such Person, any domestic or foreign trademark
registrations or applications filed by such Person, any domestic or
foreign service marks of such Person, any domestic or foreign service
mark registrations and applications by such Person, any domestic or
foreign copyrights of such Person, and any domestic or foreign copyright
registrations or applications by such Person.
"Interest Hedge Obligation": any obligations of Borrower to Lender under
an agreement or agreements between Borrower and Lender, whenever entered
into, under which the exposure of Borrower to fluctuations in interest
rates is effectively limited, whether in the form of one or more
interest rate cap, collar, or corridor agreements, interest rate swaps,
or the like, or options therefor.
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"Interest Period": the period during which a particular Adjusted LIBOR
Rate applies to a Tranche of the Revolving Loan, as selected by Borrower
as provided in Section 4.2.
"Inventory": goods owned and held by a Person for sale, lease or resale
or furnished or to be furnished under contracts for services, and raw
materials, goods in process, materials, component parts and supplies
used or consumed, or held for use or consumption in such Person's
business.
"Investment": (a) a loan or advance of money or property to a Person,
(b) stock or other equity interest in a Person, (c) a debt instrument
issued by a Person, whether or not convertible to stock or other equity
interest in such Person, or (d) any other interest in or rights with
respect to a Person which include, in whole or in part, a right to
share, with or without conditions or restrictions, some or all of the
revenues or net income of such Person.
"IRS": the Internal Revenue Service.
"Law": any statute, rule, regulation, order, judgment, award or decree
of any Governmental Authority.
"Lender": NationsBank, N.A.
"Lending Office": the office of Lender at 800 Market Street, St. Louis,
Missouri, 63101, or such other address as Lender may designate from time
to time by notice to Borrower in accordance with the terms of Section
22.1.
"Letter of Credit Commitment": the commitment of Lender to issue letters
of credit as provided in Section 3.2.
"Letter of Credit Exposure": the undrawn amount of all outstanding
Letters of Credit issued by Lender under the Letter of Credit Commitment
plus all unreimbursed amounts drawn on such Letters of Credit.
"Letter of Credit Fee" is defined in Section 5.3.
"LIBO Rate": the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%), as determined by Lender appearing, in the case of
a LIBOR Tranche denominated in Dollars, on Dow Jones Markets Page 3750
(or any successor page) as the London interbank offered rate for
deposits in Dollars, at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate for a
LIBOR Tranche denominated in dollars is not available, the term "LIBO
Rate" shall mean, for any LIBOR Tranche for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page,
the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
"LIBOR Tranche": a Tranche on which interest accrues at the Adjusted
LIBO Rate.
"Loan Documents": this Agreement, the Note, the Security Documents and
all other agreements, certificates, documents, instruments and other
writings executed in connection herewith.
"Loan Obligations": all of Borrower's Indebtedness owing to Lender under
the Loan Documents, whether as principal, interest, fees or otherwise,
all reimbursement obligations of Borrower to Lender with respect
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to the Letter of Credit Exposure, all other obligations and liabilities
of Borrower to Lender under the Loan Documents and all Interest Hedge
Obligations (in each case including all extensions, renewals,
modifications, rearrangements, restructures, replacements and
refinancings of the foregoing, whether or not the same involve
modifications to interest rates or other payment terms), whether now
existing or hereafter created, absolute or contingent, direct or
indirect, joint or several, secured or unsecured, due or not due,
contractual or tortious, liquidated or unliquidated, arising by
operation of law or otherwise, including but not limited to the
obligation of Borrower to repay future advances by Lender, whether or
not made pursuant to commitment and whether or not presently
contemplated by Borrower and Lender in the Loan Documents.
"Material Adverse Effect": as to any Person and with respect to any
event or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, investigation or
proceeding), a material adverse effect on the business, operations,
revenues, financial condition, property, or business prospects of such
Person taken as a whole, or the value of the Collateral, or the ability
of such Person to timely pay or perform such Person's Obligations
generally, or in the case of Borrower specifically, the ability of
Borrower to pay or perform any of Borrower's Obligations to Lender.
"Material Agreement": as to any Person, any Contract to which such
Person is a party or by which such Person is bound which, if violated or
breached, would have a Material Adverse Effect on such Person.
"Material Law": any Law whose violation by a Person would have a
Material Adverse Effect on such Person.
"Material License": (i) as to any Person, any license, permit or consent
from a Governmental Authority or other Person and any registration and
filing with a Governmental Authority or other Person which if not
obtained, held or made would have a Material Adverse Effect on Borrower,
and (ii) as to any Person who is a party to this Agreement or any of the
other Loan Documents, any license, permit or consent from a Governmental
Authority or other Person and any registration or filing with a
Governmental Authority or other Person that is necessary for the
execution or performance by such party, or the validity or
enforceability against such party, of this Agreement or such other Loan
Document.
"Material Obligation": as to any Person, an Obligation of such Person
which if not fully and timely paid or performed would have a Material
Adverse Effect on such Person.
"Material Proceeding": any litigation, investigation or other proceeding
by or before any Governmental Authority (i) which involves any of the
Loan Documents or any of the transactions contemplated thereby, or
involves a Covered Person as a party or any property of Covered Person,
and would have a Material Adverse Effect on a Covered Person if
adversely determined, (ii) in which there has been issued an injunction,
writ, temporary restraining order or any other order of any nature which
purports to restrain or enjoin the making of any Advance, the
consummation of any other transaction contemplated by the Loan
Documents, or the enforceability of any provision of any of the Loan
Documents, (iii) which involves the actual or alleged breach or
violation by a Covered Person of, or default by a Covered Person under,
any Material Agreement, or (iv) which involves the actual or alleged
violation by a Covered Person of any Material Law.
"Maturity Date": the date specified in Section 6.1.
"Maturity": as to any Indebtedness, the time when it becomes payable in
full, whether at a regularly scheduled time, because of acceleration or
otherwise.
"Maximum Available Amount" is defined in Section 3.1.2.
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"Multi-employer Plan": a Pension Benefit Plan which is a multi-employer
plan as defined in Section 4001(a)(3) of ERISA.
"Note": The Note executed and delivered to Lender as required in Section
3.1.3.
"Notice of Conversion/Continuation" is defined in Section 4.4.
"Obligation": as to any Person, any Indebtedness of such Person, any
guaranty by such Person of any Indebtedness of another Person, and any
contractual requirement enforceable against such Person that does not
constitute Indebtedness of such Person or a guaranty by such Person but
which would involve the expenditure of money by such Person if complied
with or enforced.
"Operating Lease": any lease that is not a Capital Lease.
"Origination Fee" is defined in Section 5.1.
"PBGC": the Pension Benefit Guaranty Corporation.
"Pension Benefit Plan": any pension or profit-sharing plan which is
covered by Title I of ERISA and all other benefit plans and in respect
of which a Person or a Commonly Controlled Entity of such Person as an
"employer" as defined in Section 3(5) of ERISA.
"Permitted Indebtedness": Indebtedness that Borrower is permitted under
Section 15.2 to incur, assume, or allow to exist.
"Permitted Security Interests": Security Interests that Borrower is
permitted under Section 15.4 to create, incur, assume, or allow to
exist.
"Person": any individual, partnership, corporation, trust,
unincorporated association, joint venture, limited liability company,
limited liability partnership, Governmental Authority, or other
organization in any form that has the legal capacity to sue or be sued.
If the context so implies or requires, the term Person includes
Borrower.
"Personal Property Collateral": all of the Goods, Equipment, Accounts,
Inventory, Instruments, Documents, Chattel Paper, General Intangibles,
and other personal property and Fixtures of Borrower, whether now owned
or hereafter acquired, in which Lender holds or will hold a Security
Interest under the Security Agreement to secure the payment or
performance of any of the Loan Obligations as required or contemplated
in Section 9.2, and all proceeds thereof.
"Prime Rate": the per annum interest rate designated from time to time
by Lender as its "prime rate", which is a reference rate and does not
necessarily represent the lowest or best rate charged to any customer of
Lender.
"Real Property Lease Collateral": all leases of real property under
which Borrower is a tenant or lessee and which are assigned or will be
assigned to Lender to secure the payment or performance of any of the
Loan Obligations as required or contemplated under Section 9.3 and all
income therefrom and proceeds thereof.
"Regulation D", "Regulation G", and Regulation U": respectively,
Regulation D issued by the FRB, Regulation G issued by the FRB, and
Regulation U issued by the FRB.
"Reportable Event": a reportable event as defined in Title IV of ERISA
or the regulations thereunder.
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"Responsible Officer": as to any Person that is not an individual,
partnership or trust, the Chairman of the Board of Directors, the
President, the chief executive officer, the chief operating officer, the
chief financial officer, the Treasurer, any Assistant to the Treasurer,
or any Vice President in charge of a principal business unit; as to any
partnership, any individual who is a general partner thereof or any
individual who has general management or administrative authority over
all or any principal unit of the partnership's business; and as to any
trust, any individual who is a trustee.
"Revolving Commitment": the commitment of Lender as stated in Section
3.1.1 to make Advances.
"Revolving Loan": the from time to time outstanding principal balance of
all the Advances.
"Security Agreement": any security agreement required or contemplated
under Section 9.2 to be executed and delivered to Lender, and all
amendments, restatements, and replacements thereof.
"Security Documents": all of the documents required or contemplated to
be executed and delivered to Lender under Section 9, and any similar
documents at any time executed and delivered to Lender, by Borrower or
any other Person to secure payment or performance of any of the Loan
Obligations, and all amendments, restatements, and replacements thereof.
"Security Interest": as to any item of tangible or intangible property,
any interest therein or right with respect thereto that secures an
Obligation or Indirect Obligation, whether such interest or right is
created under a Contract, or by operation of law or statute (such as but
not limited to a statutory lien for work or materials), or as a result
of a judgment, or which arises under any form of preferential or title
retention agreement or arrangement (including a conditional sale
agreement or a lease) that has substantially the same economic effect as
any of the foregoing.
"Ship Mortgage": any ship mortgage required or contemplated under
Section 9.1 to be executed and delivered to Lender.
"Ship Mortgage Act": 46 U.S.C. Chap. 313, as amended.
"Solvent": as to any Person, such Person not being "insolvent" within
the meaning of Section 101(32) of the Bankruptcy Code, Section 2 of the
Uniform Fraudulent Transfer Act (the "UFTA") or Section 428.014 of the
Missouri Revised Statutes, (ii) such Person not having unreasonably
small capital, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA or Section 428.024 of the Missouri Revised
Statutes, and (iii) such Person not being unable to pay such Person's
debts as they become due within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA or Section 428.024 of the
Missouri Revised Statutes.
"Subsidiary": as to any Person, a corporation with respect to which more
than 50% of the outstanding shares of stock of each class having
ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) is at the time owned by such Person
or by one or more Subsidiaries of such Person.
"Surety Obligations" is defined in Section 16.1.
"Tangible Assets" is defined in Section 16.1.
"Tangible Net Worth" is defined in Section 16.1.
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"Tax": as to any Person, any tax, assessment, fee, or other charge
levied by a Governmental Authority on the income or property of such
Person, including any interest or penalties thereon, and which is
payable by such Person.
"this Agreement": this document (including every document that is stated
herein to be an appendix, exhibit or schedule hereto, whether or not
physically attached to this document).
"Tranche": any portion of a Loan, or an entire Loan if applicable, on
which interest accrues at a particular rate as selected by Borrower as
provided herein.
"UCC": the Uniform Commercial Code as in effect from time to time in the
State of Missouri or such other similar statute as in effect from time
to time in Missouri or any other appropriate jurisdiction.
"United States": when used in a geographical sense, all the states of
the United States of America and the District of Columbia; and when used
in a legal jurisdictional sense, the government of the country that is
the United States of America.
"Unused Revolving Commitment" is defined in Section 5.2.
"Vessels": the vessels in which Lender is to have a Security Interest
under the Ship Mortgages as provided in Section 9.
"Welfare Benefit Plan": any plan described by Section 3(1) of ERISA.
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<TABLE>
TABLE OF CONTENTS
<S> <C>
1. Effective Date.. . . . . . . . . . . . . . . . . . . . .1
2. Definitions and Rules of Construction. . . . . . . . . .1
2.1. Listed Definitions. . . . . . . . . . . . . . . . .1
2.2. Other Definitions.. . . . . . . . . . . . . . . . .1
2.3. References to Covered Persons.. . . . . . . . . . .1
2.4. Accounting Terms. . . . . . . . . . . . . . . . . .1
2.5. Meaning of Satisfactory.. . . . . . . . . . . . . .1
2.6. Computation of Time Periods.. . . . . . . . . . . .1
2.7. General.. . . . . . . . . . . . . . . . . . . . . .2
3. Lender's Commitments.. . . . . . . . . . . . . . . . . .2
3.1. Revolving Commitment. . . . . . . . . . . . . . . .2
3.1.1. Advances.. . . . . . . . . . . . . . . . .2
3.1.2. Limitation on Advances.. . . . . . . . . .2
3.1.3. Note.. . . . . . . . . . . . . . . . . . .3
3.2. Letter of Credit Commitment . . . . . . . . . .3
4. Interest; Yield Protection.. . . . . . . . . . . . . . .3
4.1. Multiple Tranches Permitted.. . . . . . . . . . . .3
4.2. Alternative Rates and Interest Periods. . . . . . .3
4.3. LIBOR Increments. . . . . . . . . . . . . . . . . .4
4.4. Conversion of Loan. . . . . . . . . . . . . . . . .4
4.5. Time of Accrual.. . . . . . . . . . . . . . . . . .4
4.6. Computation.. . . . . . . . . . . . . . . . . . . .4
4.7. Rate After Maturity.. . . . . . . . . . . . . . . .5
5. Fees.. . . . . . . . . . . . . . . . . . . . . . . . . .5
5.1. Origination Fee.. . . . . . . . . . . . . . . . . .5
5.2. Commitment Fee. . . . . . . . . . . . . . . . . . .5
5.3. Letter of Credit Fees.. . . . . . . . . . . . . . .5
6. Scheduled Payments.. . . . . . . . . . . . . . . . . . .5
6.1. Maturity Date.. . . . . . . . . . . . . . . . . . .5
6.2. Interest Payments Before Maturity Date. . . . . . .5
7. Prepayments. . . . . . . . . . . . . . . . . . . . . . .6
7.1. Voluntary Prepayments.. . . . . . . . . . . . . . .6
7.2. Mandatory Prepayments.. . . . . . . . . . . . . . .6
8. Manner of Payments and Timing of Application of
Payments . . . . . . . . . . . . . . . . . . . . . . .6
8.1. Payment Requirement. . . . . . . . . . . . . . . .6
8.2. Application of Payments and Proceeds . . . . . . .6
8.3. Returned Instruments . . . . . . . . . . . . . . .6
8.4. Compelled Return of Payments or Proceeds . . . . .7
8.5. Due Dates Not on Business Days . . . . . . . . . .7
8.6. Advances on Borrower's Request . . . . . . . . . .7
8.7. Lender's Right to Make Other Advances. . . . . . .7
8.7.1. Payment of Loan Obligations . . . . . . .7
8.7.2. Payments to Other Creditors . . . . . . .7
8.8. Letters of Credit. . . . . . . . . . . . . . . . .7
8.9. Amount, Number, and Purpose Restrictions on
Advances . . . . . . . . . . . . . . . . . . . .8
8.10. Each Request for a Advance a Certification . . . .8
8.11. Requirements for Every Request for an Advance. . .8
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8.12. Requirements for Every Request for Issuance of
a Letter of Credit . . . . . . . . . . . . . . .8
8.13. Exoneration of Lender. . . . . . . . . . . . . . .8
9. Security and Guaranties. . . . . . . . . . . . . . . . .8
9.1. Ship Mortgages. . . . . . . . . . . . . . . . . . .8
9.2. Security Agreements.. . . . . . . . . . . . . . . .9
9.3. Collateral Assignments. . . . . . . . . . . . . . .9
9.4. Guaranties. . . . . . . . . . . . . . . . . . . . .9
10. Conditions.. . . . . . . . . . . . . . . . . . . . . . .9
10.1. Conditions to Initial Advance. . . . . . .9
10.1.1. Listed Documents and Other Items.. . . . .9
10.1.2. Representations and Warranties.. . . . . 10
10.1.3. No Default.. . . . . . . . . . . . . . . 10
10.1.4. Perfection of Security Interests.. . . . 10
10.1.5. Payment of Fees. . . . . . . . . . . . . 10
10.1.6. Material Proceedings.. . . . . . . . . . 10
10.1.7. No Material Adverse Change.. . . . . . . 10
10.1.8. Other Items. . . . . . . . . . . . . . . 10
10.2. Conditions to Subsequent Advances. . . . 10
10.2.1. Conditions to Initial Advances.. . . . . 10
10.2.2. Representations and Warranties.. . . . . 10
10.2.3. No Default.. . . . . . . . . . . . . . . 10
10.2.4. No Material Adverse Change.. . . . . . . 10
11. Conditions to Issuance of Letters of Credit. . . . . . 11
11.1. Reimbursement Agreement. . . . . . . . . . . . . 11
11.2. No Prohibitions. . . . . . . . . . . . . . . . . 11
11.3. Conditions to Initial Advances . . . . . . . . . 11
11.4. Representations and Warranties . . . . . . . . . 11
11.5. No Default . . . . . . . . . . . . . . . . . . . 11
11.6. No Material Adverse Change . . . . . . . . . . . 11
11.7. Cash Collateral. . . . . . . . . . . . . . . . . 11
12. Representations and Warranties.. . . . . . . . . . . . 11
12.1. Organization and Existence . . . . . . . . . . . 11
12.2. Authorization. . . . . . . . . . . . . . . . . . 12
12.3. Due Execution. . . . . . . . . . . . . . . . . . 12
12.4. Enforceability of Obligations. . . . . . . . . . 12
12.5. Burdensome Obligations . . . . . . . . . . . . . 12
12.6. Legal Restraints . . . . . . . . . . . . . . . . 12
12.7. Labor Contracts and Disputes. . . . . . . . . . 12
12.8. No Material Proceedings . . . . . . . . . . . . 12
12.9. Material Licenses. . . . . . . . . . . . . . . . 12
12.10.Compliance with Material Laws. . . . . . . . . . 12
12.10.1. General Compliance with Environmental
Laws. . . . . . . . . . . . . . . . . .13
12.10.2. General Compliance with Employment Laws .13
12.10.3. Proceedings. . . . . . . . . . . . . . . 13
12.10.4. Investigations Regarding Hazardous
Materials . . . . . . . . . . . . . . .13
12.10.5. Notices and Reports Regarding Hazardous
Materials . . . . . . . . . . . . . . .13
12.10.6. Environmental Notices and Permits. . . . 13
12.11. Other Names . . . . . . . . . . . . . . . . . . 13
12.12. Solvency. . . . . . . . . . . . . . . . . . . . 13
12.13. Initial Financial Statements. . . . . . . . . . 13
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12.14. No Change in Condition. . . . . . . . . . . . . 13
12.15. No Defaults . . . . . . . . . . . . . . . . . . 13
12.16. Tax Liabilities; Governmental Charges . . . . . 14
12.17. Pension Benefit Plans . . . . . . . . . . . . . 14
12.17.1. Prohibited Transactions. . . . . . . . . 14
12.17.2. Claims.. . . . . . . . . . . . . . . . . 14
12.17.3. Reporting and Disclosure Requirements. . 14
12.17.4. Accumulated Funding Deficiency.. . . . . 14
12.17.5. Multi-employer Plan. . . . . . . . . . . 14
12.18. Welfare Benefit Plans . . . . . . . . . . . . . 15
12.19. Retiree Benefits. . . . . . . . . . . . . . . . 15
12.20. Real Property . . . . . . . . . . . . . . . . . 15
12.21. State of Collateral and other Property. . . . . 15
12.21.1. Accounts.. . . . . . . . . . . . . . . . 15
12.21.2. Equipment. . . . . . . . . . . . . . . . 16
12.21.3. Intellectual Property. . . . . . . . . . 16
12.21.4. Documents, Instruments and Chattel Paper.16
12.22. Chief Place of Business; Locations of
Collateral. . . . . . . . . . . . . . . .. . .16
12.23. Negative Pledges . . . . . . . . . . . . . . . .16
12.24. Security Documents . . . . . . . . . . . . . . .17
12.24.1. Ship Mortgages . . . . . . . . . . . . . 17
12.24.2. Security Agreements. . . . . . . . . . . 17
12.24.3. Collateral Assignments.. . . . . . . . . 17
12.25. Subsidiaries and Affiliates . . . . . . . . . . 17
12.26. Margin Stock. . . . . . . . . . . . . . . . . . 17
12.27. Securities Matters. . . . . . . . . . . . . . . 17
12.28. Investment Company Act, Etc.. . . . . . . . . . 17
12.29. No Material Misstatements or Omissions. . . . . 17
12.30. Filings . . . . . . . . . . . . . . . . . . . . 18
12.31. Broker's Fees . . . . . . . . . . . . . . . . . 18
13. Survival of Representations. . . . . . . . . . . . . . 18
14. Affirmative Covenants. . . . . . . . . . . . . . . . . 18
14.1. Use of Proceeds . . . . . . . . . . . . . . . . 18
14.2. Corporate Existence . . . . . . . . . . . . . . 18
14.3. Maintenance of Property and Leases. . . . . . . 18
14.4. Insurance . . . . . . . . . . . . . . . . . . . 19
14.5. Payment of Taxes and Other Obligations. . . . . 19
14.6. Compliance With Laws. . . . . . . . . . . . . . 19
14.6.1. Environmental Laws . . . . . . . . . . . 19
14.6.2. Pension Benefit Plans. . . . . . . . . . 19
14.6.3. Employment Laws. . . . . . . . . . . . . 20
14.7. Termination of Pension Benefit Plan . . . . . . 20
14.8. Notice to Lender of Material Events . . . . . . 20
14.9. Borrowing Officer . . . . . . . . . . . . . . . 22
14.10. Maintenance of Security Interests of Security
Documents. . . . . . . . . . . . . . . . 22
14.10.1. Preservation and Perfection of Security
Interests. . . . . . . . . . . . . . . 22
14.10.2. Collateral Held Off Borrower's Premises. 23
14.10.3. Compliance With Terms of Security
Documents. . . . . . . . . . . . . . . 23
14.11. Accounting System . . . . . . . . . . . . . . . 23
14.12. Financial Statements. Borrower shall deliver to
Lender: . . . . . . . . . . . . . . . . . . . 23
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14.12.1. Annual Financial Statements. . . . . . . 23
14.12.2. Quarterly Financial Statements.. . . . . 23
14.12.3. Additional.. . . . . . . . . . . . . . . 24
14.13. Annual Forecasts; Five Year Plans . . . . . . . 24
14.14. Audits by Lender. . . . . . . . . . . . . . . . 24
14.15. Access to Officers and Auditors . . . . . . . . 24
14.16. Appraisals. . . . . . . . . . . . . . . . . . . 25
14.17. Further Assurances. . . . . . . . . . . . . . . 25
15. Negative Covenants . . . . . . . . . . . . . . . . . . 25
15.1. Investments . . . . . . . . . . . . . . . . . . 25
15.2. Indebtedness. . . . . . . . . . . . . . . . . . 26
15.3. Indirect Obligations. . . . . . . . . . . . . . 26
15.4. Security Interests. . . . . . . . . . . . . . . 26
15.5. Prepayments . . . . . . . . . . . . . . . . . . 26
15.6. Disposal of Assets. . . . . . . . . . . . . . . 27
15.7. Transactions With Affiliates. . . . . . . . . . 27
15.8. No Breach of Material Agreements. . . . . . . . 27
15.9. Conflicting Agreements. . . . . . . . . . . . . 27
15.10. Fiscal Year . . . . . . . . . . . . . . . . . . 27
15.11. Transactions Having a Material Adverse Effect . 27
16. Financial Covenants. . . . . . . . . . . . . . . . . . 27
16.1. Special Definitions . . . . . . . . . . . . . . 27
16.2. Minimum Fixed Charge Coverage . . . . . . . . . 28
16.3. Minimum Tangible Net Worth. . . . . . . . . . . 28
16.4. Maximum Funded Debt to EBITDA Ratio . . . . . . 28
16.5. Minimum EBITDA. . . . . . . . . . . . . . . . . 28
16.6. Capital Expenditures. . . . . . . . . . . . . . 29
16.7. Capital Leases. . . . . . . . . . . . . . . . . 29
17. Default. . . . . . . . . . . . . . . . . . . . . . . . 29
17.1. Events of Default. . . . . . . . . . . . 29
17.1.1. Failure to Pay Principal or Interest . . 29
17.1.2. Failure to Pay Other Amounts Owed to
Lender . . . . . . . . . . . . . . . . 29
17.1.3. Failure to Pay Amounts Owed to Other
Persons. . . . . . . . . . . . . . . . 29
17.1.4. Acceleration of Other Indebtedness.. . . 29
17.1.5. Representations or Warranties. . . . . . 29
17.1.6. Certain Covenants. . . . . . . . . . . . 29
17.1.7. Financial Covenants. . . . . . . . . . . 29
17.1.8. Other Covenants. . . . . . . . . . . . . 29
17.1.9. Default Under Other Agreements.. . . . . 30
17.1.10. Bankruptcy; Insolvency; Etc. . . . . . . 30
17.1.11. Judgments; Attachment; Etc.. . . . . . . 30
17.1.12. Pension Benefit Plan Termination, Etc. . 30
17.1.13. Liquidation or Dissolution.. . . . . . . 31
17.1.14. Seizure of Assets. . . . . . . . . . . . 31
17.1.15. Racketeering Proceeding. . . . . . . . . 31
17.1.16. Loan Documents; Security Interests.. . . 31
17.1.17. Loss to Collateral.. . . . . . . . . . . 31
17.1.18. Material Adverse Change. . . . . . . . . 31
17.2. Rights and Remedies Upon an Event of
Default. . . . . . . . . . . . . . . . 31
17.2.1. Cancellation of Commitments. . . . . . . 31
iv
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<PAGE>
17.2.2. Acceleration.. . . . . . . . . . . . . . 31
17.2.3. Right of Set-off.. . . . . . . . . . . . 32
17.2.4. Notice to Account Debtors. . . . . . . . 32
17.2.5. Entry Upon Premises and Access to
Information. . . . . . . . . . . . . . 32
17.2.6. Borrower's Obligations.. . . . . . . . . 32
17.2.7. Exercise of Rights as Secured Party. . . 32
17.2.8. Miscellaneous. . . . . . . . . . . . . . 33
17.3. Application of Funds . . . . . . . . . . . . . . 33
17.4. Limitation of Liability; Waiver. . . . . . . . . 34
17.5. Notice . . . . . . . . . . . . . . . . . . . . . 34
18. Changes in Circumstances.. . . . . . . . . . . . . . . 34
18.1. Compensation for Increased Costs and Reduced
Returns; Capital Adequacy. . . . . . . . . . . 34
18.1.1. Increased Costs or Reduced Returns to
Lender . . . . . . . . . . . . . . . . 34
18.1.2. Capital Adequacy.. . . . . . . . . . . . 35
18.1.3. Notice to Borrower.. . . . . . . . . . . 35
18.2. Limitations on LIBOR Tranches. . . . . . . . . . 35
18.3. Illegality . . . . . . . . . . . . . . . . . . . 36
18.4. Compensation . . . . . . . . . . . . . . . . . . 36
18.5. Treatment of Affected Tranches . . . . . . . . . 36
19. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 37
19.1. Gross-Up . . . . . . . . . . . . . . . . . . . . 37
19.2. Lender's Undertaking . . . . . . . . . . . . . . 37
20. Usury Limitations. . . . . . . . . . . . . . . . . . . 37
21. General. . . . . . . . . . . . . . . . . . . . . . . . 38
21.1. Lender's Right to Cure . . . . . . . . . . . . . 38
21.2. Rights Not Exclusive . . . . . . . . . . . . . . 38
21.3. Survival of Agreements . . . . . . . . . . . . . 38
21.4. Sale of Participations . . . . . . . . . . . . . 38
21.5. Assignments to Affiliates. . . . . . . . . . . . 39
21.6. Payment of Expenses. . . . . . . . . . . . . . . 39
21.7. General Indemnity. . . . . . . . . . . . . . . . 39
21.7.1. . . . . . . . . . . . . . . . . . . . . . 39
21.7.3. . . . . . . . . . . . . . . . . . . . . . 40
21.8. Loan Records.. . . . . . . . . . . . . . . . . . 40
21.9. Other Security and Guaranties. . . . . . . . . . 40
22. Miscellaneous. . . . . . . . . . . . . . . . . . . . . 40
22.1. Notices. . . . . . . . . . . . . . . . . . . . . 40
22.2. Amendments, Waivers and Consents.. . . . . . . . 41
22.3. Successors and Assigns.. . . . . . . . . . . . . 41
22.4. Severability.. . . . . . . . . . . . . . . . . . 41
22.5. Counterparts.. . . . . . . . . . . . . . . . . . 41
22.6. Governing Law; No Third Party Rights . . . . . . 41
22.7. Counterpart Facsimile Execution. . . . . . . . . 42
22.8. No Other Agreements. . . . . . . . . . . . . . . 42
22.9. Incorporation By Reference.. . . . . . . . . . . 42
22.10.Negotiated Transaction.. . . . . . . . . . . . . 42
22.11.Mandatory Arbitration. . . . . . . . . . . . . . 42
22.11.1. Special Rules. . . . . . . . . . . . . . 42
22.11.2. Reservation Of Rights. . . . . . . . . . 43
23. Choice of Forum. . . . . . . . . . . . . . . . . . . . 43
v
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<PAGE>
24. Service of Process.. . . . . . . . . . . . . . . . . . 43
25. Jury Trial.. . . . . . . . . . . . . . . . . . . . . . 44
26. Statutory Notice.. . . . . . . . . . . . . . . . . . . 44
vi
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<PAGE>
[EXHIBIT 10(i)]
AMENDMENT NUMBER ONE
TO
LOAN AGREEMENT
EFFECTIVE OCTOBER 30, 1998
BY AND BETWEEN
NATIONSBANK, N.A.
AND
INTRAV, INC.
In consideration of their mutual agreements herein and for other
sufficient consideration, the receipt of which is hereby acknowledged,
INTRAV, INC. ("Borrower") and NATIONSBANK, N.A. ("Lender") agree as
follows:
1. DEFINITIONS; SECTION REFERENCES. The term "Original Loan
Agreement" means the Loan Agreement effective October 30, 1998, between
Borrower and Lender. The term "this Amendment" means this Amendment.
The term Loan Agreement means the Original Loan Agreement as amended by
this Amendment. Capitalized terms used and not otherwise defined herein
have the meanings defined in the Loan Agreement.
2. EFFECTIVE DATE OF THIS AMENDMENT. This Amendment will be
effective as of January 18, 1999.
3. AMENDMENTS TO ORIGINAL LOAN AGREEMENT. The Original Loan
Agreement is amended as follows:
3.1. LETTER OF CREDIT COMMITMENT. The amount of the Letter of
Credit Commitment stated in Section 3.2 of the Original Loan
Agreement is changed from $1,000,000 to $2,500,000.
3.2. DEFINITION OF FUNDED DEBT. The definition of "Funded Debt"
in Section 16.1 is changed to read in its entirety as
follows:
"'Funded Debt' means, at any date, the sum of, without
duplication, (i) the amount of all notes payable in one year or
less, (ii) the amount of the Indebtedness permitted under Section
15.2.4, (iii) the principal of all Indebtedness for borrowed
money, including current maturities thereof, (iii) the unamortized
capitalized amount of all Capital Leases and (iv) the amount of
all Surety Obligations (other than Letters of Credit that are
provided as security with respect to other types of Surety
Obligations), all as of such date."
4. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants to Lender that (i) execution of this Amendment
has been duly authorized by all requisite action of Borrower; (ii) no
consents are necessary from any third parties for Borrower's execution,
delivery or performance of this Amendment, (iii) this Amendment and the
Loan Agreement as amended hereby constitute the legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with
their terms, except to the extent that the enforceability thereof
against Borrower may be limited by bankruptcy, insolvency or other laws
affecting the enforceability of creditors rights generally or by equity
principles of general application, (iv) all of the representations and
warranties contained in Section 12 of the Original Loan Agreement are
true and correct in all material respects with the same force and effect
as if made on and as of the effective date of this Amendment, (v) there
is no Existing Default, and (vi) no Default or Event or Default will
occur immediately or with the passage of time or giving of notice as a
consequence of this Amendment becoming effective.
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<PAGE>
5. EFFECT OF AMENDMENT. The execution, delivery and effectiveness of
this Amendment shall not operate as a waiver of any right, power or
remedy of Lender under the Loan Agreement or any of the other Loan
Documents, nor constitute a waiver of any provision of the Loan
Agreement, any of the other Loan Documents or any Existing Default, nor
act as a release or subordination of the Security Interests of Lender
under the Security Documents. Each reference in the Loan Agreement to
"the Agreement", "hereunder", "hereof", "herein", or words of like
import, shall be read as referring to the Loan Agreement as amended
hereby.
6. REAFFIRMATION. Borrower hereby acknowledges and confirms that (i)
except as expressly amended hereby the Original Loan Agreement and other
Loan Documents remain in full force and effect, (ii) Borrower has no
defenses to its obligations under the Loan Agreement and the other Loan
Documents, (iii) the Security Interests of Lender under the Security
Documents continue in full force and effect and have the same priority
as before this Amendment, and (iv) Borrower has no claim against Lender
arising from or in connection with the Loan Agreement or the other Loan
Documents.
7. COUNTERPARTS. This Amendment may be executed by the parties
hereto on any number of separate counterparts, and all such counterparts
taken together shall constitute one and the same instrument. It shall
not be necessary in making proof of this Amendment to produce or account
for more than one counterpart signed by the party to be charged.
8. COUNTERPART FACSIMILE EXECUTION. This Amendment, or a signature
page thereto intended to be attached to a copy of this Amendment, signed
and transmitted by facsimile machine or telecopier shall be deemed and
treated as an original document. The signature of any person thereon,
for purposes hereof, is to be considered as an original signature, and
the document transmitted is to be considered to have the same binding
effect as an original signature on an original document. At the request
of any party hereto, any facsimile or telecopy document is to be re-
executed in original form by the Persons who executed the facsimile or
telecopy document. No party hereto may raise the use of a facsimile
machine or telecopier or the fact that any signature was transmitted
through the use of a facsimile or telecopier machine as a defense to the
enforcement of this Amendment.
9. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Amendment and the
rights and obligations of the parties hereunder shall be governed by and
construed and interpreted in accordance with the internal laws of the
State of Missouri applicable to contracts made and to be performed
wholly within such state, without regard to choice or conflict of laws
provisions.
10. INCORPORATION BY REFERENCE. Lender and Borrower hereby agree that
all of the terms of the Loan Documents are incorporated in and made a
part of this Amendment by this reference.
11. STATUTORY NOTICE. The following notice is given pursuant to
Section 432.045 of the Missouri Revised Statutes; nothing contained in
such notice will be deemed to limit or modify the terms of the Loan
Documents or this Amendment:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO
EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE
CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT.
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<PAGE>
12. STATUTORY NOTICE--INSURANCE. The following notice is given
pursuant to Section 427.120 of the Missouri Revised Statutes; is deemed
incorporated into the Loan Agreement, and nothing contained in such
notice shall be deemed to limit or modify the terms of the Loan
Documents.
UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY
YOUR AGREEMENT WITH US, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE
TO PROTECT OUR INTERESTS IN YOUR COLLATERAL. THIS INSURANCE MAY,
BUT NEED NOT, PROTECT YOUR INTERESTS. THE COVERAGE THAT WE
PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT IS
MADE AGAINST YOU IN CONNECTION WITH THE COLLATERAL. YOU MAY LATER
CANCEL ANY INSURANCE PURCHASED BY US, BUT ONLY AFTER PROVIDING
EVIDENCE THAT YOU HAVE OBTAINED INSURANCE AS REQUIRED BY OUR
AGREEMENT. IF WE PURCHASE INSURANCE FOR THE COLLATERAL, YOU WILL
BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING THE
INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES WE MAY IMPOSE IN
CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE
EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE.
THE COSTS OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING
BALANCE OR OBLIGATION. THE COSTS OF THE INSURANCE MAY BE MORE
THAN THE COST OF INSURANCE YOU MAY BE ABLE TO OBTAIN ON YOUR OWN.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by appropriate duly authorized officers as of the effective
date first above written.
INTRAV, INC. NATIONSBANK, N.A.
by its Executive Vice President by its Senior Vice President
and Chief Financial Officer
/s/ Wayne L. Smith II /s/ Keith M. Schmelder
- ------------------------------- -------------------------------
Wayne L. Smith II Keith M. Schmelder
Notice Address: Notice Address:
7711 Bonhomme Avenue 800 Market Street
St. Louis, MO 63105 St. Louis, MO 63101
FAX # 314-727-2533 FAX # 314-466-7783
TEL # 314-727-0500 TEL # 314-466-6642
3
</TABLE>
<PAGE>
INTRAV, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made this ____ day of ______________, ____, by
and between INTRAV, Inc. (the "Company") and ____________________________
("You" or "Your").
RECITALS:
---------
A. You are an employee of the Company.
B. The Company wishes to enter into this Stock Option Agreement
to secure for the Company the benefits of the incentive inherent in
common stock ownership by a key employee of the Company who is largely
responsible for the Company's future growth and continued financial
success, and to afford You the opportunity to obtain or increase a
proprietary interest in the Company and, thereby, to have an opportunity
to share in its success.
C. The granted option shall be a non-qualified stock option,
which does not satisfy the requirements of Section 422 of the Internal
Revenue Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions. When used in this Agreement, the following
terms shall have the following meanings:
(a) "Agreement" shall mean this Stock Option Agreement.
(b) "Discharge" shall mean Termination of Employment other
than a Termination of Employment resulting solely from Your
initiative without undue influence or coercion on You caused by
the Company.
(c) "Discharge for Aggravated Cause" shall mean a
Discharge (i) because You commit a dishonest or illegal act that
causes harm to the Company, (ii) because You intentionally subvert
the best interest of the Company, or (iii) because of gross
negligence by You in the performance of the duties reasonably
assigned to You of the type You were performing at the time this
Agreement was executed.
(d) "Expiration Date" is defined in Paragraph 3.
<PAGE>
<PAGE>
(e) "Fair Market Value" shall mean the price per share of
the common stock of the Company prevailing on a national
securities exchange which is registered under the Securities
Exchange Act of 1934; or, if the security is not traded on such a
national securities exchange, the mean between the current bid and
asked prices, as determined by the Company in good faith, for the
security quoted by persons independent of the Company and any of
its affiliates; and in the case there is no generally recognized
market for the security, the fair market value as determined in
good faith by the Company.
(f) "Grant Date" shall mean the date of this Agreement.
(g) "Option Price" shall mean $_______ per share.
(h) "Optioned Shares" is defined in Paragraph 2.
(i) "Purchase Agreement" shall mean a stock purchase
agreement in substantially the form of Exhibit A to this
Agreement.
(j) "Termination of Employment" shall mean termination of
the employment relationship between You and the Company.
2. Grant of Option. Subject to and upon the terms and
conditions of the INTRAV, Inc. 1995 Incentive Stock Plan, and the terms
and conditions set forth in this Agreement, the Company hereby grants to
You an option to purchase up to ______ shares of the Company's common
stock (the "Optioned Shares") from time to time during the option term
at the Option Price.
3. Option Term. This option shall completely expire at the
close of business of the tenth anniversary of the Grant Date (the
"Expiration Date"), unless sooner terminated in accordance with
Paragraph 7. In no event shall any option be exercisable at any time
after its Expiration Date.
4. Option Nontransferable. This option shall be neither
transferable nor assignable by You other than by will or by the laws of
descent and distribution, and may be exercised during Your lifetime only
by You.
5. Exercise Period. Twenty percent of Your Optioned Shares
shall first become exercisable on the first anniversary of the Grant
Date, and an additional twenty percent of the Optioned Shares shall
first become exercisable on each subsequent anniversary of the Grant
Date, provided You are employed continuously by the Company from the
Grant Date to such anniversary, as illustrated by the following
schedule:
2
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<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
EARLIEST PERCENTAGE OF OPTIONED SHARES
EXERCISE DATE THAT MAY BE EXERCISED
- ---------------------------------------------------------------------------
<S> <C>
First Anniversary 20%
of the Grant Date
- ---------------------------------------------------------------------------
Second Anniversary 40%
of the Grant Date
- ---------------------------------------------------------------------------
Third Anniversary 60%
of the Grant Date
- ---------------------------------------------------------------------------
Fourth Anniversary 80%
of the Grant Date
- ---------------------------------------------------------------------------
Fifth Anniversary 100%
of the Grant Date
- ---------------------------------------------------------------------------
</TABLE>
Subject to the provisions of this Agreement, within the specified
term applicable to each of the Optioned Shares, You may purchase any or
all of the Optioned Shares that have become exercisable as described
above or in Paragraph 6 at any time or from time to time. In no event
may You purchase any Optioned Shares before the earliest exercise date
applicable to such shares.
6. Accelerated Dates of Exercise. The dates of exercise
specified in Paragraph 5 shall accelerate should one of the following
provisions become applicable.
(a) Should you die while this option is outstanding, the
executors or administrators of your estate or your heirs or
legatees (as the case may be) shall have the right to exercise
this option for the entire number of shares specified in Paragraph
2. Such right shall lapse and this option shall cease to be
exercisable upon the earlier of (i) the first anniversary of the
-------
date of your death or (ii) the Expiration Date applicable to each
of such shares. From time to time, in a form acceptable to the
Company, you may designate any person or persons (concurrently,
contingently or successively) to whom the stock option shall be
transferred in the event that you shall die before you fully
exercise the stock option. A beneficiary designation form shall
be effective only when the form is signed by you and filed in
writing with the Company while you are alive, and shall cancel all
beneficiary designation forms that you have previously signed and
filed.
3
<PAGE>
(b) Should you become permanently disabled, such that you
are unable to perform the material duties of your employment with
the Company, and cease by reason thereof to render periodic
services to the Company at any time during the option term, then
you shall have the right for a period of twelve months (commencing
with the date of such cessation of service status) to purchase the
entire number of shares specified in Paragraph 2; provided,
however, that in no event shall this option be exercisable at any
time after the Expiration Date applicable to each of such shares.
Upon the expiration of the limited period of exercisability or (if
earlier) upon such Expiration Date, this option shall terminate
and cease to be exercisable.
7. Forfeiture of Options. If You incur a Termination of
Employment for any reason other than death or permanent disability (as
defined in Paragraph 6) before the Fifth Anniversary of the Grant Date,
You will forfeit the Optioned Shares that are not yet exercisable on the
date of Your Termination of Employment.
Should You incur a Termination of Employment because of a
Discharge for Aggravated Cause at any time during the option term, You
will forfeit all the Optioned Shares that have not been exercised before
Your Termination of Employment, including Optioned Shares that had
become exercisable pursuant to Paragraph 5.
8. Exercise after Termination of Employment. You may at any
time within one year after Your Termination of Employment exercise
options granted under this Agreement to the extent such options were
exercisable by You on the date of Your Termination of Employment and
were not forfeited in accordance with Paragraph 7. You shall have no
further rights under this Agreement after the expiration of such one
year period, or after the Expiration Date, whichever is earlier.
9. Adjustment in Optioned Shares.
(a) In the event any change is made to the common stock of
the Company issuable under this Agreement by reason of any stock
split, stock dividend, combination of shares, or other change
affecting the outstanding common stock as a class without receipt
of consideration, then appropriate adjustments will be made to (i)
the total number of Optioned Shares and (ii) the Option Price
payable per share in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
(b) If the Company is the surviving entity in any merger
or other business combination, then this option, if outstanding
under this Agreement immediately after such merger or other
business combination, shall be appropriately adjusted to apply and
pertain to the number and class of securities which would be
issuable to You in the consummation of such merger or
4
<PAGE>
<PAGE>
business combination if the option were exercised immediately
prior to such merger or business combination, and appropriate
adjustments shall be made to the Option Price payable per share,
provided the aggregate Option Price payable hereunder shall remain
the same.
(c) If the Company is not the surviving entity in a merger
or other business combination, then with respect to the balance of
the Optioned Shares not yet purchased by You, You shall have the
right to receive on the effective date of the merger or other
business combination in exchange for the right to purchase the
Optioned Shares (i) the difference in cash between the Option
Price of said shares and the fair market value of the
consideration per share of common stock of the Company paid as a
result of the merger or combination, if You had the right to
acquire such shares on the effective date under Paragraph 5 or
Paragraph 6 above, and (ii) with respect to shares which You do
not have the right to acquire on the effective date under
Paragraph 5 or Paragraph 6 above, Your right to purchase those
shares shall terminate on the effective date of the merger or
combination.
10. Privilege of Stock Ownership. As holder of this option, You
shall not have any of the rights of a shareholder with respect to the
Optioned Shares until You have exercised the option and paid the Option
Price.
11. Manner of Exercising Option.
(a) In order to exercise this option with respect to all
or any part of the Optioned Shares for which this option is at the
time exercisable, You (or in the case of exercise after Your
death, Your executor, administrator, heir or legatee, as the case
may be) must take the following actions:
(i) Execute and deliver to the Secretary of the
Company a Purchase Agreement; and
(ii) Pay the aggregate Option Price for the purchased
shares in one or more of the following alternative forms:
(A) full payment, in cash or cash equivalents;
or
(B) full payment in shares of common stock of
the Company, by delivering shares that You already own
having a Fair Market Value equal to the Option Price;
or
(C) full payment in a combination of shares of
common stock of the Company valued at Fair Market
Value and cash or cash equivalents, equal in aggregate
to the Option Price; or
5
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<PAGE>
(D) any other form which the Company may in
its discretion approve at the time of exercise of this
option; and
(iii) Furnish to the Company appropriate documentation
that the person or persons exercising the option, if other
than You, have the right to exercise this option.
(b) Options shall be deemed to have been exercised with
respect to the number of Optioned Shares specified in the Purchase
Agreement at such time as the executed Purchase Agreement for such
shares shall have been delivered to the Company. Payment of the
Option Price shall immediately become due and shall accompany the
Purchase Agreement. The Fair Market Value of shares tendered in
payment of the Option Price shall be determined as of such date.
As soon thereafter as practical, the Company shall mail or deliver
to You or to the other person or persons exercising this option a
certificate or certificates representing the shares so purchased
and paid for.
12. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of
Optioned Shares upon such exercise shall be subject to compliance
by the Company and You with all applicable requirements of law
relating thereto.
(b) In connection with the exercise of this option, You
shall execute and deliver to the Company such representations in
writing as may be requested by the Company in order for it to
comply with the applicable requirements of federal and state
securities laws.
13. Successors and Assigns. Except to the extent otherwise
provided in Paragraph 4, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, Your successors, administrators,
heirs, legal representatives and assigns and the successors and assigns
of the Company.
14. No Employment or Service Contract. Except to the extent the
terms of any employment or service contract between the Company and You
may expressly provide otherwise, no provision of this Agreement shall be
construed so as to grant You any right to remain as an employee of the
Company or its parent or subsidiary corporations, if any, for any period
of specific duration.
15. Notices. Any and all notices referred to or relating to
this Agreement shall be furnished in writing and delivered in person or
sent by registered mail to the representative parties at the addresses
following their signatures to this Agreement or at an address given in a
notice that complies with the terms of this Paragraph. A copy
6
<PAGE>
<PAGE>
of all notices shall be sent to the Company at INTRAV, Inc., 7711
Bonhomme Avenue, St. Louis, MO 63105.
16. Withholding. If You acquire Optioned Shares, the Company
shall not deliver or otherwise make such shares available to You until
You pay to the Company in cash (or any other form acceptable to the
Company) the amount necessary to enable the Company to remit to the
appropriate government entity or entities on Your behalf the amount
required to be withheld from Your wages with respect to such
transaction.
If, after a reasonable period of time after You exercise this
option, You have failed to remit to the Company the amount necessary to
enable the Company to remit to the appropriate government entity or
entities on Your behalf the amount required to be withheld from Your
wages with respect to such transaction, You hereby authorize, and
explicitly grant a power of attorney, to the Company to sell on Your
behalf such number of the Option Shares as is necessary for the Company
to obtain such amount.
17. Construction. This Agreement and the option evidenced
hereby are in all respects limited by and subject to the express terms
and provisions of this Agreement. All decisions of the Company with
respect to any question or issue arising under this Agreement shall be
conclusive and binding on all persons having an interest in this option.
18. Governing Law. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State
of Missouri.
19. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
7
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate on its behalf by its duly authorized officer and
You have also executed this Agreement in duplicate, all as of the day
and year indicated above.
COMPANY
By: _______________________________
Wayne L. Smith II
Executive Vice President &
Chief Financial Officer
Name: _____________________________
Address: __________________________
____________________________________
8
<PAGE>
<PAGE>
EXHIBIT A
STOCK PURCHASE AGREEMENT
This Agreement is made as of this _____ day of ________________,
_____, by and among INTRAV, Inc. (the "Company") and ___________________
("You or "Your"), the holder of a stock option under the Stock Option
Agreement ("Option Agreement") and ______________________, Your spouse.
I. EXERCISE OF OPTION
1.1 Exercise. You hereby purchase ___________ shares of common
stock of the Company ("Purchased Shares") pursuant to that certain
option ("Option") granted to You on __________________ ("Grant Date")
under the Option Agreement to purchase up to __________ shares of the
Company's common stock (the "Optioned Shares") at an option price
determined pursuant to Paragraph 1(g) of the Option Agreement.
1.2 Payment. Concurrently with the delivery of this Agreement
to the Secretary of the Company, You shall pay the aggregate Option
Price for the Purchased Shares in accordance with the provisions of the
Option Agreement and shall deliver whatever additional documents may be
required by the Option Agreement as a condition for exercise.
II. MISCELLANEOUS PROVISIONS
2.1 Power of Attorney. Your spouse hereby appoints You his or
her true and lawful attorney in fact, for him or her and in his or her
name, place and stead, and for his or her use and benefit, to agree to
any amendment or modification of this Agreement and to execute such
further instruments and take such further actions as may reasonably be
necessary to carry out the intent of this Agreement. Your spouse
further gives and grants unto You as his or her attorney in fact full
power and authority to do and perform every act necessary and proper to
be done in the exercise of any of the foregoing powers as fully as he or
she might or could do if personally present, with full power of
substitution and revocation, hereby ratifying and confirming all that
You shall lawfully do and cause to be done by virtue of this power of
attorney.
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first indicated above.
COMPANY
By: ______________________________
Title: ___________________________
Address: _________________________
___________________________________
___________________________________
You:_______________________________
Address: _________________________
___________________________________
___________________________________
Your Spouse:________________________
Address: __________________________
____________________________________
10
<PAGE>
<PAGE>
INTRAV, INC.
STOCK OPTION AGREEMENT
DATED ________________ WITH ___________________ (THE "AGREEMENT")
BENEFICIARY DESIGNATION
I hereby direct that the stock option granted under the Agreement,
to the extent not fully exercised at the time of my death, shall be
transferred upon my death to ______________________________________________,
if living, or otherwise to _________________________________________________
___________________________________________________________________________.
____________________________________
Date
STATE OF __________________
__________ OF ______________
Subscribed and sworn to before me this _____ day of _______________,
_____.
____________________________________
Notary Public
My Commission Expires:
_________________________
11
<PAGE>
1998 INTRAV, INC.
ANNUAL REPORT
<TABLE>
FIVE-YEAR FINANCIAL HIGHLIGHTS
<CAPTION>
(Amounts in thousands except per share data and percentages)
YEAR ENDED DECEMBER 31,
1994 <F1> 1995 <F1> 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenues $108,876 $114,845 $126,081 $122,523 $125,997
Cost of operations 83,934 91,035 101,651 99,007 98,156
- ------------------------------------------------------------------------------------------------------------------------------
Gross profit 24,942 23,810 24,430 23,516 27,841
Operating income 7,502 6,888 5,657 6,827 10,262
Net income 4,379 4,147 3,165 4,940 6,784
Basic earnings per common share 0.88 0.80 0.61 0.97 1.32
Diluted earnings per common share 0.88 0.80 0.61 0.96 1.29
Dividends per common share 0.90 0.25 0.60 0.50 0.50
CONSOLIDATED BALANCE SHEET DATA (AT YEAR END):
Cash, cash equivalents and marketable securities $ 28,180 $ 31,224 $ 14,114 $ 15,416 $ 15,452
Total current assets 37,280 41,495 26,323 25,321 26,618
Total assets 62,285 68,966 52,594 56,801 86,558
Total current liabilities 46,557 47,730 39,738 36,846 47,289
Total long-term debt 11,019 10,317 3,000 7,450 20,800
Shareholders' equity (deficit) (265) 4,970 3,781 5,517 10,602
PERFORMANCE RATIOS:
Gross margin on revenues 22.9% 20.7% 19.4% 19.2% 22.1%
Operating margin on revenues 6.9% 6.0% 4.5% 5.6% 8.1%
Net income on revenues 4.0% 3.6% 2.5% 4.0% 5.4%
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> All financial data for 1994 and 1995 has been restated to include
the accounts and results of operations of Clipper Cruise Line, Inc.,
which was acquired by the Company in 1996 and accounted for in a manner
similar to the pooling-of-interests method.
</TABLE>
INTRAV (NASDAQ symbol: TRAV) is a St. Louis-based designer,
marketer and operator of deluxe, escorted, worldwide travel programs and
cruises. The Company provides a diverse offering of programs primarily
to affluent, well-educated, mature individuals in the United States who
desire substantive travel experiences. Our 1998 programs included
cruises in Antarctica, New Zealand and Alaska, around-the-world trips by
supersonic Concorde, tours of Africa aboard a privately chartered jet
aircraft, and river cruises in Europe and Russia.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview
- -------------------------------------------------------------------------------
Our revenues include revenues from the sale of base travel
programs, as well as optional products and services, including
sightseeing, program extensions, airfare and medical and educational
seminars. Cost of operations includes the costs of airfare, ship, hotel
and other accommodations and services included in the base programs and
optional products and services. Also included are the costs of creating
and distributing promotional materials for each program and promotional
expenses, including commissions paid to travel agents and others.
We operate in one business segment. Although we primarily manage
our operations on a trip-by-trip basis, for ease of presentation, we
have classified the trips based on the primary mode of transportation.
The primary modes of transportation consist of small ships, private jets
and other, including big ships.
Over the past few years, we have made efforts to improve our
financial margins. We have done this by reducing costs, primarily by
improving the efficiency of our direct mail programs, and by replacing
lower margin travel programs, such as big-ship cruises, with higher
margin travel programs, such as small-ship cruises and private jet
programs.
Revenues and costs are recognized as services are provided,
generally upon completion of a tour; however, revenues and costs for
certain significant or long duration tours are recognized on a
proportionate basis based on number of days traveled. In 1999 we will
be offering three private jet millennium trips which will commence in
December 1999 and end in January 2000. The revenues and costs for these
trips will be recognized on a proportionate basis.
Results of Operations
- -------------------------------------------------------------------------------
The following table summarizes certain consolidated statements of
income data expressed as a percentage of revenues for the periods
indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1997 1998
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues 100.0% 100.0% 100.0%
Cost of operations 80.6 80.8 77.9
- -------------------------------------------------------------------------------
Gross profit 19.4 19.2 22.1
Selling, general and administrative 13.4 12.5 12.4
Depreciation and amortization 1.5 1.1 1.6
- -------------------------------------------------------------------------------
Operating income 4.5 5.6 8.1
Investment income 1.3 0.8 0.9
Interest expense (1.5) (0.1) (0.6)
- -------------------------------------------------------------------------------
Income before income taxes
and extraordinary item 4.3 6.3 8.4
Provision for income taxes 1.5 2.3 3.0
- -------------------------------------------------------------------------------
Income before
extraordinary item 2.8 4.0 5.4
Extraordinary item (0.3) - -
- -------------------------------------------------------------------------------
Net income 2.5% 4.0% 5.4%
===============================================================================
</TABLE>
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
- -------------------------------------------------------------------------------
Revenues increased $3.5 million, or 2.8%, from $122.5 million for
the year ended December 31, 1997 to $126.0 million in 1998. The
increase was primarily due to the increases in revenues from small-ship
and private jet travel programs, which were largely offset
<PAGE>
<PAGE>
by decreases in revenue from big-ship cruise programs. The average
revenue per traveler increased from $4,879 in 1997 to $5,066 in 1998 for
the same reasons.
Cost of operations decreased $0.9 million, or 0.9%, from $99.0
million for the year ended December 31 1997 to $98.2 million in 1998.
Cost of operations decreased as a percentage of revenues from 80.8% in
1997 to 77.9% in 1998. Promotional expenses declined both in aggregate
and as a percentage of revenues due to the Company's focus on more
effective promotional expenditures.
Gross profit increased $4.3 million, or 18.4%, from $23.5 million
for the year ended December 31, 1997 to $27.8 million in 1998. Gross
profit as a percentage of revenues increased from 19.2% in 1997 to 22.1%
in 1998. The increase in gross profit and gross profit margin for the
year was attributable to the Company's focus on higher-margin travel
programs and increasing the number of travelers per promotional dollar
expended.
Selling, general and administrative expenses increased $0.2
million, or 1.5%, from $15.4 million for the year ended December 31,
1997 to $15.6 million in 1998. The increase was primarily due to the
cost of additional administrative personnel necessary for the
commencement of the M/S Clipper Adventurer operations in April 1998.
This increase was partially offset by the increased use of stock options
as part of the incentive compensation program for key employees.
Overall, selling, general and administrative expenses decreased as a
percentage of revenues from 12.5% in 1997 to 12.4% in 1998.
Depreciation and amortization increased $0.7 million, or 49.1%,
from $1.3 million for the year ended December 31, 1997 to $2.0 million
in 1998. Depreciation and amortization increased as a percentage of
revenues from 1.1% in 1997 to 1.6% in 1998. This increase was primarily
related to depreciation on the M/S Clipper Adventurer which commenced
operations in April 1998 and to two months' depreciation on the M/S
Clipper Odyssey which was acquired in November 1998.
Investment income increased $0.1 million, or 8.4%, from $1.0
million for the year ended December 31, 1997 to $1.1 million for the
year ended December 31, 1998. This increase was attributable to the
increase in the average monthly balance of investable cash generated
from advance deposits relating to the M/S Clipper Adventurer. The
average interest rate was 5.9% in 1998 and 5.8% in 1997. The average
monthly balance of cash and marketable securities during the period
increased from $17.0 million in 1997 to $18.1 million in 1998.
Interest expense increased $0.6 million, or 748.2%, from $0.1
million for the year ended December 31, 1997 to $0.7 million in 1998.
Interest increased as a percentage of revenues from 0.1% in 1997 to 0.6%
in 1998. The increase was primarily due to the amounts paid on
borrowings under the Company's $30.0 million revolving credit facility.
The borrowings were necessary as the Company completed the renovation of
the M/S Clipper Adventurer and completed the purchase of the M/S Clipper
Odyssey in November 1998.
The Company's effective income tax rate remained consistent at
36.0% in 1997 and 1998.
Net income increased $1.8 million, or 37.3%, from $4.9 million for
the year ended December 31, 1997 to $6.8 million in 1998. Net income as
a percentage of revenues increased from 4.0% in 1997 to 5.4% in 1998.
The increase in net income for this period was attributable primarily to
the Company's focus on higher margin travel programs while decreasing
promotional expenditures per traveler.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
- -------------------------------------------------------------------------------
Revenues decreased $3.6 million, or 2.9%, from $126.1 million for
the year ended December 31, 1996 to $122.5 million in 1997. The
decrease was due to 2,220 fewer travelers, a decrease of 8.1%, from
27,334 travelers in 1996 to 25,114 in 1997. The decrease in travelers
was partially offset by an increase in the average revenue per traveler
of $266, from $4,613 in 1996 to $4,879 in 1997. The reduction in
travelers on the Company's big-ship cruises accounted for most of the
decrease in revenue. However, because the big-ship cruises are lower-
priced trips relative to other travel programs, average revenue per
traveler actually increased.
Cost of operations decreased $2.6 million, or 2.6%, from $101.7
million for the year ended December 31, 1996 to $99.0 million in 1997.
The decrease in 1997 was primarily due to the decrease in revenues in
1997 compared to 1996. While the overall cost of operations decreased
in 1997, the Company experienced increases in the costs of promoting its
programs compared to the prior year. Promotional expenses were $19.8
million in 1997 and $19.1 million in 1996. The increase in promotional
expenses in 1997 was primarily attributable to increased postage and
commission expenses compared to 1996.
<PAGE>
<PAGE>
Gross profit decreased $0.9 million, or 3.7%, from $24.4 million
for the year ended December 31, 1996 to $23.5 million in 1997. Gross
profit as a percentage of revenues decreased from 19.4% in 1996 to 19.2%
in 1997. The decrease in 1997 was due to the decreased revenue and
higher promotional expenses as a percent of revenues.
Selling, general and administrative expenses decreased $1.6
million, or 9.3%, from $16.9 million for the year ended December 31,
1996 to $15.4 million in 1997. Selling, general and administrative
expenses decreased as a percentage of revenues from 13.4% in 1996 to
12.5% in 1997. The 1996 amount included approximately $1.0 million paid
to a key employee of Clipper Cruise Line pursuant to an existing
employment agreement prior to the Company's acquisition of Clipper
Cruise Line, as well as $0.3 million in contractual severance expenses
relating to a departed executive. Contractual severance expenses
relating to departed executives totaled $0.4 million in 1997.
Depreciation and amortization decreased $0.5 million, or 27.7%,
from $1.8 million for the year ended December 31, 1996 to $1.3 million
in 1997. Depreciation and amortization decreased as a percentage of
revenues from 1.5% in 1996 to 1.1% in 1997. The reduction in 1997 was
attributable to a change in the estimated useful lives of the M/V
Nantucket Clipper and M/V Yorktown Clipper. Prior to 1997, both ships
were depreciated over a period of 25 years commencing on the dates
placed in service, which were in 1984 and 1988, respectively. Supported
by updated appraisals obtained at the time of the Clipper Cruse Line
acquisition, management determined that the remaining estimated useful
life of each ship as of January 1, 1997 was 30 years. The net book
value of each ship as of January 1, 1997 is being depreciated on a
straight-line basis based on such schedule.
Investment income decreased $0.7 million, or 40.5%, from $1.6
million for the year ended December 31, 1996 to $1.0 million in 1997.
The reduced level of investment income in 1997 was due to decreased
levels of investable cash due to the use of approximately $9.9 million
to acquire Clipper Cruise Line and $10.9 million to pay off Clipper
Cruise Line's ship mortgages. The Company's average monthly balance of
cash and marketable securities was $17.0 million in 1997 and $29.3
million in 1996, earning 5.8% and 5.6% rates of return, respectively.
Interest expense decreased $1.8 million, or 95.5%, from $1.9
million for the year ended December 31, 1996 to $0.1 million in 1997.
Interest expense consisted of amounts paid by the Company on the U.S.
Government Guaranteed Financing Bonds relating to the cruise ships,
other outstanding loan balances and amounts outstanding under the
revolving credit facility. The reduced level of interest expense in
1997 was due to the payoff of the U.S. Government Bonds and other
outstanding loans.
The Company's effective income tax rate was 36.0% in 1997 which
compares to an effective income tax rate of 35.0% in 1996. The
exclusion of nontaxable interest income and effects of state taxes are
the primary factors for the effective tax rate to differ from the
statutory federal income tax rate.
Net income increased $1.8 million, or 56.1%, from $3.2 million for
the year ended December 31, 1996 to $4.9 million in 1997. Net income as
a percentage of revenues increased from 2.5% in 1996 to 4.0% in 1997.
The increase in net income was primarily attributable to a reduction in
the Company's interest expense, depreciation expense, and selling,
general and administrative expense relative to changes in management
compensation.
Liquidity and Capital Resources
- -------------------------------------------------------------------------------
The Company has funded its operations, capital expenditures and
dividend payments through cash flows generated from operations and its
revolving credit facility. The Company receives advance payments and
deposits prior to travel departures, which are recorded as deferred
revenue. Advance payments are a significant source of operating cash
flow and are used by the Company to prepay certain program and
promotional costs, with the balance invested to generate investment
income or used to repay debt.
Deferred revenue, representing payments received from travelers
for tour departures that have not been completed, increased $3.0
million, or 11.2%, from $26.8 million at December 31, 1997 to $29.8
million at December 31, 1998. This increase represents primarily the
deferred revenue collected for first quarter 1999 cruise departures of
the M/S Clipper Adventurer. There were no corresponding first quarter
1998 departures as the M/S Clipper Adventurer commenced service in April
1998. Of the deferred revenue at December 31, 1998, 74.6%, or $22.3
million, relates to tour departures that are scheduled for completion by
March 31, 1999.
<PAGE>
<PAGE>
The Company's revolving credit facility permits borrowings up to
$30.0 million. The credit facility provides that the Company may select
among various borrowing arrangements with varying maturities and interest
rates. The maturity on the credit facility is November 1, 2003.
Borrowings under this credit facility were $20.8 million as of December
31, 1998. At March 29, 1999, outstanding borrowings under the credit
facility were $12.0 million as the Company had repaid $8.8 million of
its borrowings with cash made available primarily by replacing certain
escrow requirements with a surety bond. The borrowings had a weighted
average interest rate of 6.7% as of March 29, 1999. In connection with
the purchase of the M/S Clipper Odyssey in November 1998, the Company
delivered to the seller a $5.5 million one-year promissory note. This
note bears interest at the rate of 4.0% per annum.
Net cash provided by operations was $1.8 million, $7.6 million and
$7.5 million in 1996, 1997 and 1998, respectively, reflecting net income
and the changes in current asset and liability accounts for the years
indicated, including the change in deferred revenue noted above.
Net cash used in investing activities increased $15.1 million,
from $9.2 million in 1997 to $24.3 million in 1998. The increase in
investing activities in 1998 was primarily the result of investment in
the M/S Clipper Adventurer and the purchase of the M/S Clipper Odyssey.
The capital expenditures on property and equipment of $10.0 million and
$25.0 million in 1997 and 1998, respectively, primarily represent
continued investment in Company-owned small ships.
Net cash provided by financing activities increased from $0.8
million in 1997 to $11.7 million in 1998. The increase in cash provided
by financing activities was primarily the result of a $13.4 million net
increase in revolving line of credit borrowings and $1.4 million of cash
proceeds from the issuance of 113,000 shares of common stock from its
treasury during the year ended December 31, 1998 in satisfaction of
stock options exercised by past Company employees.
The Company paid dividends of $3.2 million, $2.5 million and $2.6
million during 1996, 1997 and 1998, respectively. During 1997 and 1998,
the Company repurchased 96,750 shares and 29,400 shares of common stock,
respectively, in the open market for an aggregate of $0.8 million and
$0.5 million, respectively. On December 11, 1998, the Company announced
a stock repurchase program pursuant to which it intends, over time as
market conditions permit, to buy up to 300,000 shares of its common
stock on the open market. The Company has repurchased 41,200 shares
during 1999.
In March 1999, the Company filed with the Securities and Exchange
Commission a registration statement for the proposed public offering by
the Company of 500,000 shares of common stock and by the Revocable Trust
of Barney A. Ebsworth of 2,000,000 shares of common stock (plus an
aggregate of up to 375,000 shares which may be sold pursuant to an over-
allotment option granted to the underwriters). The Company intends to
use the net proceeds from the proposed public offering to repay
outstanding indebtedness under the terms of the Company's revolving
credit facility, including borrowings incurred in connection with the
purchase of the M/S Clipper Odyssey, and for general corporate purposes.
The Company will not receive any proceeds from the sale of shares by the
selling shareholder.
On December 31, 1996, the Company acquired all the outstanding
common stock of Clipper Cruise Line from Windsor, Inc., a company
controlled by Barney A. Ebsworth, the Company's founder, Chairman of the
Board and majority shareholder. Due to the common ownership and control
of Mr. Ebsworth over both the Company and Clipper Cruise Line, the
acquisition was accounted for in a manner similar to the pooling-of-
interests method and, accordingly, all financial data has been restated
to include the accounts and results of operations of Clipper Cruise Line
for all periods prior to the acquisition. The Stock Purchase Agreement
included an initial payment of approximately $9.9 million and the
assumption of indebtedness of $5.5 million owed by Clipper Cruise Line
to Windsor, with an additional $0.2 million paid on March 14, 1997.
Additional cash consideration of up to $3.0 million may be paid to the
extent the cumulative net cruise revenues of Clipper Cruise Line exceed
$70.0 million for the period January 1, 1997 through December 31, 2000.
Based upon the Company's current operations, we expect to reach this
$70.0 million threshold in 1999, and thus the $3.0 million payment would
become payable on February 28, 2000. When such amount is reasonably
likely to become payable, the Company will record a liability of $3.0
million and a corresponding reduction in retained earnings (or increase
in accumulated deficit, if applicable), which will reduce shareholders'
equity.
In connection with the acquisition of Clipper Cruise Line, the
Company entered into a $10.0 million revolving credit facility
agreement. The Company financed the acquisition primarily from its cash
on hand, which had the effect of significantly reducing cash and
marketable securities at December 31, 1996, and included a $3.0 million
draw on its revolving credit facility. In October 1998, the Company
amended its revolving credit facility to increase permitted borrowings
to $30.0 million and to extend the maturity to November 1, 2003. The
increase provided for the additional funding necessary to complete the
purchase of the M/S
<PAGE>
<PAGE>
Clipper Odyssey in November 1998, and for other capital expenditures.
Cash flow from operations together with draws against the revolving
credit facility will provide for up to $2.0 million for renovation of
the M/S Clipper Odyssey, for the retirement of the $5.5 million one-year
note payable to the seller of the M/S Clipper Odyssey and for other
capital expenditures as needed. As of March 29, 1999, the Company had
outstanding borrowings of $12.0 million with a weighted average interest
rate of 6.7% under its revolving credit facility.
Foreign Currency Hedging Program
- -------------------------------------------------------------------------------
Many of the Company's travel programs necessitate the purchase of
services from suppliers located outside the United States and certain of
its payment obligations to suppliers are denominated in foreign
currencies. As a result, the Company is exposed to the risk of
fluctuating currency values. To protect the U.S. dollar value of its
foreign currency transactions, the Company may enter into "forward
contracts" which are commitments to buy foreign currencies in the future
at a contracted rate. The Company uses forward and option contracts
solely to hedge its foreign currency exposure and does not speculate for
future profits. Fluctuations in the value of the U.S. dollar in
relation to the currency of its suppliers have not had a material
adverse effect on the Company's results of operations.
Inflation
- -------------------------------------------------------------------------------
Inflation affects the costs incurred by the Company in its
purchases of program components from its suppliers and in certain
portions of its selling, general and administrative expenses. The
Company has offset the effects of inflation through price increases and
by controlling its expenses. The Company's ability to increase prices
is limited by competitive factors as well as the need to maintain
acceptable pricing for the markets in which it sells its programs. In
management's opinion, inflation has not had a significant impact on the
operations during the three years ended December 31, 1998.
Year 2000 Compatibility
- -------------------------------------------------------------------------------
The Company relies on computer systems, related software
applications and other control devices in operating and monitoring
certain aspects of its business, including but not limited to, its
financial systems (such as general ledger and accounts payable modules),
billing and reservations systems, internal networks, telecommunications
equipment and shipboard navigational systems and equipment. The Company
also relies, directly and indirectly, on the internal and external
systems of various independent business enterprises, such as its
suppliers, third-party contractors, customers and financial
organizations for their accurate exchange with the Company and use in
general operations of date related information.
The Company has initiated a Year 2000 compliance program. As part
of its compliance program, the Company has developed a plan to: (i)
identify all "business-critical" software that requires modification for
the Year 2000 and complete an estimate of the time and other resources
required to complete software modifications; (ii) receive written or
oral confirmation from its "business-critical" vendors that the services
or equipment supplied by such vendors is or will be Year 2000 compliant;
(iii) institute a formal communication process to keep senior management
and the Board of Directors of the Company apprised of significant Year
2000 issues; and (iv) develop a schedule for completing necessary Year
2000 modifications in a timely manner. The Company is underway with the
inventory and assessment phases of its Year 2000 plan for "business-
critical" infrastructure and application software.
The Company's plan has been implemented through various phases,
depending upon the functional area and the internal or external nature
of the system involved. For internal systems, the Company has
progressed furthest and is generally in the system conversion and
testing phase, notably for its internally-developed passenger billing
and reservation system. This application should be ready for user
testing by mid-1999. A substantial portion of the other office-based
software and hardware is believed to be Year 2000 compliant based upon
vendor representations, with systems testing yet to be completed. The
Company has also substantially completed the inventory, assessment and
detailed analysis phases of its Year 2000 plan for ship-based "business-
critical" navigational and operational equipment and systems. These
"business-critical" systems for the Company's four ships should be Year
2000 compliant by June 30, 1999.
The Company believes that the final phases of its Year 2000 plan
will be completed in advance of December 31, 1999. The Company has not
incurred and, based upon the information available to the Company at
this time, does not expect to
<PAGE>
<PAGE>
incur significant expenditures to address the Year 2000 issue. Year
2000 expenses to the Company, consisting primarily of personnel time,
the accelerated replacement of systems and software, and outside
consultation have totaled less than $0.2 million for the three years
ended December 31, 1998. Projected costs to the Company for the
completion of its Year 2000 program are expected to be less than $0.6
million. The Company does not believe that its Year 2000 program has
resulted in or will result in the postponement of its other significant
information technology projects.
As part of its Year 2000 program, the Company plans to complete a
contingency plan in 1999 which addresses the most reasonably likely
"business-critical" worst-case scenarios. However, the Company cannot
be certain that third parties supporting the Company's systems or
providing goods and services to the Company have resolved or will
resolve all Year 2000 issues in a timely manner. There can be no
assurance that third parties will achieve timely Year 2000 compliance.
Failure by the Company or any such third party to successfully address
the relevant Year 2000 issues could result in disruptions to the
Company's business and the incurrence of significant expenses by the
Company. Additionally, the Company could be adversely affected by any
disruption to third parties with which the Company does business if
suppliers of goods and services to those third parties have not
successfully addressed their Year 2000 issues.
Interest Rate and Currency Risks
- -------------------------------------------------------------------------------
The Company's principal interest rate risk is associated with its
long-term debt. The Company has a $30.0 million revolving credit
facility with a bank which expires on November 1, 2003. The Company may
select among various borrowing arrangements with varying maturities and
interest rates. At December 31, 1998, the annual interest rates on the
borrowings ranged from 6.6% to 6.9%. Assuming a hypothetical 1%
increase in the weighted-average interest rate during 1998, interest
expense would have increased $0.1 million.
The Company enters into non-U.S. currency commitments for the
charter of cruise ships and aircraft for its international travel
programs. The Company may enter into forward contracts to buy foreign
currency at a stated U.S. dollar amount to hedge against fluctuating
currency values. As of December 31, 1998, the Company had non-U.S.
currency commitments equivalent to $3.5 million, of which the Company
has purchased forward contracts with a U.S. dollar equivalency of $1.1
million. Management believes the fluctuation of the unhedged
commitments would not have a material effect on the Company's cash flows
or earnings.
Recent Accounting Pronouncements
- -------------------------------------------------------------------------------
During 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), Reporting Comprehensive Income, and
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
Disclosures about Segments of an Enterprise and Related Information.
SFAS 130 established standards for reporting and display of
comprehensive income in a full set of financial statements. In addition
to displaying an amount for net income (loss), the Company is now
required to display other comprehensive income (loss), which includes
other changes in equity (deficit). SFAS 130 had no effect on the
Company's financial statements for the years ended December 31, 1996,
1997 and 1998.
SFAS 131 established standards for the way that public business
enterprises report information about operating segments in annual
financial statements and also established standards for related
disclosures about products and services, geographic areas, and major
customers. Management has considered the requirements of SFAS 131 and,
as reflected in note 12 to the Company's consolidated financial
statements, believes the Company operates in one business segment.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
Accounting for Derivative Instruments and Hedging Activities. This
statement established accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. The Company is required to adopt
this statement effective January 1, 2000. SFAS 133 will require the
Company to record all derivatives on the balance sheet at fair value.
Changes in derivative fair value will either be recognized in earnings
as offsets to the changes in fair value of related hedged assets,
liabilities and firm commitments or, for forecasted transactions,
deferred and recorded as a component of other stockholders' equity until
the hedged transactions occur and are recognized in earnings. The
ineffective portion of a hedging derivative's change in fair value will
be recognized in earnings immediately. The Company is currently
evaluating when it will adopt this standard and the impact of
<PAGE>
<PAGE>
the standard on the Company. The impact of SFAS No. 133 will depend on
a variety of factors, including the future level of hedging activity,
the types of hedging instruments used and the effectiveness of such
instruments.
Safe Harbor Statement
- -------------------------------------------------------------------------------
Statements in this "Management's Discussion and Analysis" which
contain more than historical information may be considered forward-
looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) which are subject to risks and
uncertainties.
Forward-looking statements involve certain risks and uncertainties
that could cause actual results to differ materially from those in the
forward-looking statements. Potential risks and uncertainties include
such factors as unanticipated catastrophic events; changes in program
costs and fluctuations of currency exchange rates; loss of key travel
suppliers; ongoing access to the Concorde in the United States; competition
within the travel industry; loss of key personnel; liability claims
by travelers; loss of one or more of the Company's ships; regulations
relative to the operation of passenger vessels and charters; Year 2000
risks; general economic conditions; and other risks described from time
to time in the Company's filings with the Securities and Exchange
Commission. In addition, the forward-looking statements assume the
continued operation of our three ships consistent with their recent
capacities and cruise price levels, and the commencement of operations
of the M/S Clipper Odyssey in November 1999. These forward-looking
statements represent the Company's judgment as of the date hereof.
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
(Amounts in thousands except share and per share data)
YEAR ENDED DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998
<S> <C> <C> <C>
Revenues $ 126,081 $ 122,523 $ 125,997
Cost of operations 101,651 99,007 98,156
- ----------------------------------------------------------------------------------------------------------------------------------
Gross profit 24,430 23,516 27,841
Selling, general and administrative 16,924 15,353 15,587
Depreciation and amortization 1,849 1,336 1,992
- ----------------------------------------------------------------------------------------------------------------------------------
Operating income 5,657 6,827 10,262
Investment income 1,643 978 1,060
Interest expense (including related party expenses of $813 in 1996) (1,904) (85) (721)
- ----------------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes and extraordinary item 5,396 7,720 10,601
Provision for income taxes (Note 6) 1,887 2,780 3,817
- ----------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 3,509 4,940 6,784
Extraordinary item - loss related to early extinguishment
of debt (net of tax benefit of $194) (Note 9) (344) - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 3,165 $ 4,940 $ 6,784
==================================================================================================================================
Basic earnings per share of common stock (Note 11):
Income before extraordinary item $ 0.68 $ 0.97 $ 1.32
Extraordinary item (0.07) - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.61 $ 0.97 $ 1.32
==================================================================================================================================
Weighted average number of common shares outstanding 5,195,000 5,100,186 5,134,642
==================================================================================================================================
Diluted earnings per share of common stock (Note 11):
Income before extraordinary item $ 0.68 $ 0.96 $ 1.29
Extraordinary item (0.07) - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.61 $ 0.96 $ 1.29
==================================================================================================================================
Weighted average number of common shares outstanding 5,195,000 5,127,250 5,252,482
==================================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Amounts in thousands except share data)
DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------
1997 1998
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 5,951 $ 845
Restricted cash (Note 3) 4,720 10,582
Restricted marketable securities (Notes 3 and 8) 4,745 4,025
Prepaid program costs 7,182 8,348
Other current assets 2,723 2,818
- ------------------------------------------------------------------------------------------------------------------
Total current assets 25,321 26,618
Property and equipment - net (Note 4) 26,198 54,655
Prepaid promotion costs 5,155 4,961
Other assets 127 324
- ------------------------------------------------------------------------------------------------------------------
Total $ 56,801 $ 86,558
==================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,455 $ 5,347
Accrued expenses 6,553 6,606
Note payable (Note 4) - 5,500
Deferred revenue 26,838 29,836
Total current liabilities 36,846 47,289
Deferred income taxes (Note 6) 6,988 7,867
Long-term debt (Note 9) 7,450 20,800
- ------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized,
issued and outstanding - none - -
Common stock, $0.01 par value; 20,000,000 shares authorized,
issued - 5,325,000 shares; outstanding - 5,071,850 shares in 1997
and 5,155,450 in 1998 53 53
Additional paid-in capital 22,229 22,694
Accumulated deficit (14,661) (10,449)
- ------------------------------------------------------------------------------------------------------------------
Total 7,621 12,298
Treasury stock - at cost; 253,150 and 169,550 shares of common stock
in 1997 and 1998 (2,104) (1,696)
Total shareholders' equity 5,517 10,602
- ------------------------------------------------------------------------------------------------------------------
Total $ 56,801 $ 86,558
==================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(Amounts in thousands)
YEAR ENDED DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,165 $ 4,940 $ 6,784
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,849 1,336 1,992
Deferred income taxes (415) (1,195) 1,366
Changes in assets and liabilities which provided (used) cash:
Restricted cash 366 (2,803) (5,862)
Prepaid expenses and other assets (1,864) 6,160 (1,346)
Other current assets 209 269 (368)
Accounts payable and accrued expenses 1,378 1,186 1,945
Deferred revenue (2,880) (2,258) 2,998
Net cash provided by operating activities 1,808 7,635 7,509
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,120) (9,965) (25,015)
Proceeds from sales of marketable securities 28,200 5,781 7,631
Purchases of marketable securities (17,093) (4,990) (6,882)
Net cash provided by (used in) investing activities 9,987 (9,174) (24,266)
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (payments) of long-term debt (8,019) 4,450 13,350
Purchase of common stock for treasury (1,404) (838) (487)
Proceeds from sale of treasury stock - 180 1,360
Dividends paid (3,182) (2,546) (2,572)
Payment to Windsor, Inc., for acquisition of Clipper (9,726) - -
Net cash received from (paid to) Windsor, Inc. 5,029 (426) -
Net cash (used in) provided by financing activities (17,302) 820 11,651
- ----------------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (5,508) (719) (5,106)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 12,178 6,670 5,951
- ----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 6,670 $ 5,951 $ 845
==================================================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for taxes $ 1,582 $ 4,350 $ 3,215
Cash paid for interest 1,847 298 901
Noncash contribution of capital 10,249 - -
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
(Amounts in thousands except share data)
COMMON STOCK
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF ADDITIONAL TOTAL
SHARES PAID-IN ACCUMULATED TREASURY SHAREHOLDERS'
ISSUED AMOUNT CAPITAL DEFICIT STOCK EQUITY
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1996 5,325,000 $ 53 $12,016 $ (7,099) $ - $ 4,970
Contributed capital (Note 1) - - 10,249 - - 10,249
Acquisition of Clipper Cruise Line (Note 1) - - - (9,939) - (9,939)
Net income - - - 3,165 - 3,165
Dividends paid to Intrav, Inc., shareholders - - - (2,596) - (2,596)
Dividends paid to Windsor, Inc. - - - (586) - (586)
Other - - (78) - - (78)
Purchase of 173,400 shares of common
stock for treasury - - - - (1,404) (1,404)
- ---------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31,1996 5,325,000 53 22,187 (17,055) (1,404) 3,781
Net income - - - 4,940 - 4,940
Cash dividends paid to shareholders - - - (2,546) - (2,546)
Purchase of 96,750 shares of common stock
for treasury - - - - (838) (838)
Issuance of 17,000 shares of treasury stock
related to exercise of stock options - - 42 - 138 180
- ---------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1997 5,325,000 53 22,229 (14,661) (2,104) 5,517
Net income - - - 6,784 - 6,784
Cash dividends paid to shareholders - - - (2,572) - (2,572)
Purchase of 96,750 shares of common stock
for treasury - - - - (487) (487)
Issuance of 17,000 shares of treasury stock
related to exercise of stock options - - 465 - 895 1,360
- ---------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1998 5,325,000 $ 53 $22,694 $(10,449) $(1,696) $10,602
=====================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
1. Description of Business and Basis of Presentation
- ------------------------------------------------------------------------------
Intrav, Inc. ("INTRAV" or the "Company") designs, markets and
operates deluxe, escorted, worldwide travel programs and cruises. The
Company provides a diverse offering of programs primarily to affluent,
well-educated, mature individuals in the United States who desire
substantive travel experiences. Its small cruise ship programs allow
its travelers to visit secluded places of natural beauty and cultural
interest aboard four Company owned and operated ships and others that it
charters. The Company also offers programs that use privately chartered
jet aircraft which allow its travelers to visit locations not as
conveniently or comfortably served by commercial airlines.
In December 1996, the Company acquired Clipper Cruise Line, Inc.
("Clipper") which offered cruise programs in the United States, Central
America and the Caribbean Islands on its two small cruise ships, the M/V
Nantucket Clipper and the M/V Yorktown Clipper. The acquisition of
Clipper provided the Company with additional products and expertise in
the small-ship cruise market and expanded its distribution capabilities
through Clipper's travel agent network. Since the Clipper acquisition,
the Company has expanded its small-ship programs through the acquisition
of two additional small cruise ships, the M/S Clipper Adventurer, which
began operations in April 1998, and the M/S Clipper Odyssey, which it
will begin operating in November 1999.
The acquisition of Clipper in 1996 from Windsor, Inc., a company
controlled by Barney A. Ebsworth, the Company's founder, Chairman of the
Board and majority shareholder, included a Stock Purchase Agreement with
an initial payment of approximately $9,900 and the assumption of
indebtedness of $5,500 owed by Clipper to Windsor, with an additional
$213 paid to Windsor during 1997. Additional consideration of up to
$3,000 may be paid to the extent the cumulative net cruise revenues (as
defined), of Clipper exceed $70,000 in the period January 1, 1997
through December 31, 2000. Net cruise revenues, (as defined), were
$54,491 through December 31, 1998. Due to the common ownership and
control of Mr. Ebsworth over both INTRAV and Clipper, the acquisition
has been accounted for in a manner similar to the pooling-of-interests
method and, accordingly, all financial data has been restated to include
the accounts and results of operations of Clipper for all periods prior
to the acquisition.
2. Summary of Significant Accounting Policies
- ------------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION -- The consolidated financial
statements of the Company include the accounts of INTRAV and its wholly-
owned subsidiaries Clipper, Republic Cruise Line, Inc. ("RCL"), Liberty
Cruise Line, Inc. ("LCL"), Clipper Adventurer, Ltd. ("CAL"), and Clipper
Odyssey, Ltd. ("COL"). All significant intercompany accounts and
transactions have been eliminated.
REVENUE RECOGNITION -- Revenues are recognized as services are
provided, generally upon completion of a tour; however, revenues for
certain significant or long duration tours are recognized on a
proportionate basis based on number of days traveled. Deferred revenue
consists of amounts received for tours which have not yet been
completed.
PROMOTION AND PROGRAM COSTS -- The Company expenses promotion
costs as incurred, except for direct-response advertising. Direct-
response advertising and program costs are deferred until the revenue
from the related program is recognized. Promotion expenses were
$19,075, $19,767, and $17,501 for 1996, 1997 and 1998, respectively.
CURRENCY HEDGES -- The Company may enter into contracts to buy
foreign currencies in the future to protect the U.S. dollar value of
certain foreign currency transactions. Except in the infrequent
instance of cancellation of non-U.S. currency cost commitments, the
Company's practices relating to these contracts do not expose the
Company to currency risk from exchange rate movements because the gains
and losses on them offset losses and gains on the cost commitments being
hedged. Gains and losses on currency forward contracts are deferred and
recognized in the same period as the hedged transactions (see Note 7).
<PAGE>
<PAGE>
CASH EQUIVALENTS -- For purposes of reporting cash flows, the
Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
MARKETABLE SECURITIES -- The Company's marketable securities,
including restricted amounts, have been classified as available-for-
sale. Available-for-sale securities are carried at fair value, with the
unrealized holding gains and losses, net of taxes, reported as a
separate component of shareholders' equity.
PROPERTY, AMORTIZATION AND DEPRECIATION -- Property and equipment
is recorded at cost. Amortization and depreciation is computed using
accelerated and straight-line methods over the estimated useful lives of
the individual assets. Capitalized software costs are amortized over 3
to 8 years, office furniture and equipment is depreciated over 5 to 7
years and leasehold improvements are amortized over the life of the
related lease. The cruise ships are depreciated over 25 years prior to
1997, over 30 years beginning in 1997 and cruise ship equipment over 5
to 7 years. Effective January 1, 1997, the Company changed its
estimates of the useful lives of the M/V Nantucket Clipper and M/V
Yorktown Clipper. As a result of the appraisals of the Clipper ships,
which were performed in connection with INTRAV's acquisition of Clipper,
the Company determined that 30 years better reflects the estimated
periods during which such assets will remain in service. The effect of
the change in the estimated useful lives of the ships was to reduce
depreciation expense for the year ended December 31, 1997 by
approximately $623. Net income for the same period increased, by
approximately $400. The increase in net income represented an $.08
increase in both basic and diluted earnings per share of common stock in
1997.
INCOME TAXES -- Deferred income taxes reflect the tax consequences
on future years of differences between tax and financial reporting
amounts. Under this method, deferred tax assets and liabilities are
determined based on temporary differences between the financial
statement and tax bases of assets and liabilities by applying enacted
tax rates applicable to future years in which the differences are
expected to reverse.
Prior to the acquisition discussed in Note 1, Clipper's results of
operations were included in the consolidated U.S. Corporate income tax
return of Windsor. Prior to the acquisition, Clipper's provision for
income taxes had been computed as if it filed an annual return on a
separate company basis. Clipper is included in the consolidated return
of INTRAV for the years ended December 31, 1997 and 1998.
USE OF MANAGEMENT ESTIMATES -- The preparation of financial
statements in conformity with generally accepted accounting principles
requires that management make certain estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements. The reported amounts of revenues and expenses during the
reporting period may also be affected by the estimates and assumptions
management is required to make. Actual results may differ from those
estimates.
STOCK-BASED COMPENSATION PLANS -- Effective January 1, 1996, the
Company adopted the disclosure requirements of Statement of Financial
Accounting Standards No. 123 ("SFAS 123"), Accounting for Stock-Based
Compensation. The new standard defines a fair value method of
accounting for stock options and similar equity instruments. Under the
fair value method, compensation cost is measured at the grant date based
on the fair value of the award and is recognized over the service
period, which is usually the vesting period. Pursuant to the new
standard, companies are encouraged, but not required, to adopt the fair
value method of accounting for employee stock-based transactions.
Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25 ("APB
25"), Accounting for Stock Issued to Employees, but are required to
disclose pro forma net income and, if presented, earnings per share as
if the company had applied the new method of accounting. The Company
has adopted the disclosure requirements of SFAS 123 in fiscal year 1996
but will continue to recognize and measure compensation for its
restricted stock and stock option plans in accordance with the existing
provisions of APB 25.
RECENT ACCOUNTING PRONOUNCEMENTS -- During 1998, the Company
adopted Statement of Financial Accounting Standards No. 130 ("SFAS
130"), Reporting Comprehensive Income, and Statement of Financial
Accounting Standards No. 131 ("SFAS 131"), Disclosures about Segments of
an Enterprise and Related Information.
SFAS 130 established standards for reporting and display of
comprehensive income in a full set of financial statements. In addition
to displaying an amount for net income (loss), the Company is now
required to display other comprehensive income (loss), which includes
other changes in equity (deficit). SFAS 130 had no effect on the
Company's financial statements for the years ending December 31, 1996,
1997 and 1998.
<PAGE>
<PAGE>
SFAS 131 established standards for the way that public business
enterprises report information about operating segments in annual
financial statements and also established standards for related
disclosures about products and services, geographic areas, and major
customers. Management has considered the requirements of SFAS 131 and,
as discussed in Note 12, believes the Company operates in one business
segment.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
Accounting for Derivative Instruments and Hedging Activities. This
statement established accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. The Company is required to adopt
this statement effective January 1, 2000. SFAS 133 will require the
Company to record all derivatives on the balance sheet at fair value.
Changes in derivative fair value will either be recognized in earnings
as offsets to the changes in fair value of related hedged assets,
liabilities and firm commitments or, for forecasted transactions,
deferred and recorded as a component of other stockholders' equity until
the hedged transactions occur and are recognized in earnings. The
ineffective portion of a hedging derivative's change in fair value will
be recognized in earnings immediately. The Company is currently
evaluating when it will adopt this standard and the impact of the
standard on the Company. The impact of SFAS No. 133 will depend on a
variety of factors, including the future level of hedging activity, the
types of hedging instruments used and the effectiveness of such
instruments.
RECLASSIFICATIONS -- Certain reclassifications have been made to
1996 and 1997 to conform to the 1998 presentation.
3. Restricted Cash and Marketable Securities
- ------------------------------------------------------------------------------
U.S. law requires the Company to maintain financial protection for
passenger advance payments for Company-operated cruises and chartered
flights embarking from the U.S. The Company has established escrow
arrangements to comply with the law. Under the arrangements, monies
received from passengers for cruises and chartered flights are held in
escrow accounts until the respective cruises have been completed or
charter payments have been made. At December 31, 1997 and 1998, cash
equivalents and marketable securities amounting to $9,465 and $14,607,
respectively, were held in escrow.
On February 2, 1999, the Company replaced certain cash escrow
requirements, related to passenger advance payments for cruises on the
Company's U.S. flag ships -- M/V Nantucket Clipper and M/V Yorktown
Clipper, with a surety bond. The Federal Maritime Commission
established the current surety bond level at $6,000 in order to satisfy
its requirements of evidence of the Company's financial responsibility
in lieu of the escrow arrangement. The surety bond required a $1,500
standby letter of credit as collateral.
4. Property and Equipment
- ------------------------------------------------------------------------------
Property and equipment at December 31, 1997 and 1998 consist of
the following:
<TABLE>
<CAPTION>
1997 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Cruise ships $ 28,356 $ 65,603
Computer hardware and software 5,187 6,104
Office furniture and equipment 1,638 1,698
Cruise ship equipment 469 475
Leasehold improvements 107 121
Warehouse facilities 48 51
Construction in progress 7,816 -
- ------------------------------------------------------------------------------
Total property and equipment 43,621 74,052
Less accumulated depreciation (17,423) (19,397)
- ------------------------------------------------------------------------------
Property and equipment - net $ 26,198 $ 54,655
==============================================================================
</TABLE>
CRUISE SHIPS -- On September 4, 1998, the Company entered into a
purchase agreement with Spice Islands Cruises Ltd., ("Spice Islands") to
purchase the 120-passenger luxury cruise ship Oceanic Odyssey for a
purchase price of $16,000. The Company made a cash payment of $10,500
and delivered its one-year promissory note in the amount of $5,500 at
the time of closing.
<PAGE>
<PAGE>
Following the vessel purchase, the Company chartered the vessel,
on a bareboat basis (i.e., without crew or provisioning), to Spice
Islands for a period commencing on the closing date of the purchase,
November 12, 1998, and ending November 1, 1999. The charter hire fee of
$1,700 was received at the time of closing and is being recognized on a
straight-line basis over the life of the charter agreement. The charter
arrangement will afford the Company lead time to design and market
travel programs for the vessel while permitting Spice Islands to fulfill
its preexisting cruise obligations.
In 1997, the Company purchased the cruise ship, M/S Clipper
Adventurer, and renovated it during 1997 and 1998 with expenditures of
$20,200. The cruise ship was placed in service in early April 1998.
Capitalized interest relating to the refurbishment of the M/S Clipper
Adventurer for the years ended December 31, 1997 and 1998 was $108 and
$378, respectively.
5. Operating Leases
- ------------------------------------------------------------------------------
The Company leases various office facilities and equipment under
noncancellable operating leases. At December 31, 1998, future minimum
payments under these leases with initial or remaining terms of one year
or more were:
<TABLE>
<CAPTION>
OFFICE
SPACE OTHER TOTAL
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
1999 $ 725 $199 $ 924
2000 739 138 877
2001 752 94 846
2002 - 24 24
2003 - 10 10
- ------------------------------------------------------------------------------
Total $2,216 $465 $2,681
==============================================================================
</TABLE>
Windsor Management Corporation, as agent for Windsor Real Estate,
Inc., an affiliated entity, was the lessor of the office space through
July 1997. Rent paid to the related party was $702 and $457 for 1996
and 1997, respectively. During 1997, the office building was sold to an
unrelated third party.
Rental expense for the years ended December 31, 1996, 1997 and
1998 was $866, $1,061 and $883, respectively.
6. Income Taxes
- ------------------------------------------------------------------------------
Provisions for income taxes consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1997 1998
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 2,174 $ 3,754 $2,301
State 128 221 150
Deferred:
Federal (393) (1,129) 1,283
State (22) (66) 83
- ------------------------------------------------------------------------------
Total $ 1,887 $ 2,780 $3,817
==============================================================================
</TABLE>
<PAGE>
<PAGE>
Factors causing the effective tax rate to differ from the
statutory federal income tax rate were:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1997 1998
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 34.0% 34.0% 33.8%
Nontaxable
interest income (0.1) - -
State and local income
taxes, net of U.S.
federal income tax
benefit 1.1 2.0 2.2
- ------------------------------------------------------------------------------
Effective rate 35.0% 36.0% 36.0%
==============================================================================
</TABLE>
The Company's current and noncurrent deferred taxes included in
the balance sheets as of December 31, 1997 and 1998 consisted of the
following deferred tax assets and liabilities:
<TABLE>
<CAPTION>
1997
DEFERRED DEFERRED NET
TAX TAX LIABILITY
ASSETS LIABILITIES (ASSET)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Property and equipment $ 6 $5,259 $5,253
Promotional costs - 1,735 1,735
Accruals 416 134 (282)
Deferred compensation 434 - (434)
- --------------------------------------------------------------------------------------
Total $ 856 $7,128 $6,272
======================================================================================
Current deferred taxes $ 850 $ 134 $ (716)
Noncurrent deferred taxes 6 6,994 6,988
- --------------------------------------------------------------------------------------
Total $ 856 $7,128 $6,272
======================================================================================
<CAPTION>
1998
DEFERRED DEFERRED NET
TAX TAX LIABILITY
ASSETS LIABILITIES (ASSET)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Property and equipment $ 6 $6,187 $6,181
Promotional costs - 1,686 1,686
Accruals 327 98 (229)
- --------------------------------------------------------------------------------------
Total $ 333 $7,971 $7,638
======================================================================================
Current deferred taxes $ 327 $ 98 $ (229)
Noncurrent deferred taxes 6 7,873 7,867
- --------------------------------------------------------------------------------------
Total $ 333 $7,971 $7,638
======================================================================================
</TABLE>
<PAGE>
<PAGE>
7. Commitments and Contingencies
- ------------------------------------------------------------------------------
CHARTER AGREEMENTS -- As of December 31, 1998, the Company has
agreements to charter cruise ships and aircraft for its group travel
programs in 1999 and 2000 amounting to $6,828. Commitments generally
may be canceled with penalties from 10 percent to 100 percent.
PROFIT SHARING PLAN -- Effective January 1, 1998, all assets of
the Clipper profit sharing plan were merged into the INTRAV Plan. In
addition, the INTRAV Plan was renamed the INTRAV-Clipper 401(k) Plan.
The plan covers substantially all employees. The Company may match a
percentage of the employees' before-tax contributions and may also make
a non-matching contribution. An employee is not required to make
before-tax contributions in order to receive a company non-matching
contribution. Company contributions, which are subject to the
discretion of the Board of Directors, amounted to approximately $372,
$242 and $210 in 1996, 1997 and 1998, respectively.
STANDBY LETTERS OF CREDIT -- As of December 31, 1998, the Company
had standby letters of credit in place totaling approximately $545. On
January 26, 1999, the Company issued a $1,500 standby letter of credit
to collateralize its surety bond obligation required by the Federal
Maritime Commission (see Note 3). The Company expects that none of its
standby letters of credit will be drawn on.
CURRENCY CONTRACTS -- The Company has utilized foreign currency
forward contracts to hedge against fluctuations in the costs of the
currencies used for its international travel programs. At December 31,
1998, the Company had contracts to purchase $1,065 (U.S. equivalents) of
non-U.S. currencies for 1999 program operations.
LITIGATION -- The Company and its subsidiaries are involved in
legal proceedings, claims and litigation arising in the ordinary course
of business. While the results of such litigation cannot be predicted,
management believes, based upon advice of legal counsel, that the
ultimate outcome of such litigation will not have a material adverse
effect on the consolidated financial statements of the Company and its
subsidiaries.
8. Marketable Securities
- ------------------------------------------------------------------------------
At December 31, 1997 and 1998, the Company's investments in
marketable securities (including restricted amounts) are classified as
available-for-sale and include the following:
<TABLE>
<CAPTION>
FAIR VALUE
1997 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury and agency
securities $4,745 $4,025
==============================================================================
</TABLE>
The contractual maturities of debt securities as of December 31, 1998
are as follows:
<TABLE>
<CAPTION>
FAIR VALUE
- ------------------------------------------------------------------------------
<S> <C>
One to five years $4,025
==============================================================================
</TABLE>
The gross realized and unrealized gains and losses are immaterial.
For the purposes of determining gross realized gains and losses, the
cost of securities sold is based upon specific identification.
9. Long-Term Debt
- ------------------------------------------------------------------------------
In December 1996, the Company prepaid $10,518 to retire the
outstanding principal of both series of United States Government
Guaranteed Financing Bonds related to certain cruise ships. As required
under the bond agreements, the Company paid an additional $416
prepayment premium for the early retirement of the bonds. Accordingly,
the Company recorded an extraordinary loss of $538 ($344 net of taxes)
consisting of the prepayment premium and the write-off of deferred
financing costs related to the early extinguishment of the debt.
The Company has a $30,000 revolving credit facility agreement with
NationsBank, N.A., which expires on November 1, 2003. The agreement
includes provisions for periodic reductions of the available amount to
$15,000. In addition, the Company may select among various borrowing
arrangements with varying maturities and interest rates. At December
31, 1998, the interest rates on the borrowings ranged from 6.6% to 6.9%.
The Company has pledged its personal property, including the cruise
ships, as collateral and must comply with certain financial covenants,
under the terms of the agreement. The Company had outstanding
borrowings of $7,450 and $20,800 at December 31, 1997 and 1998,
respectively.
<PAGE>
<PAGE>
On January 18, 1999, the Company amended the revolving credit
facility agreement to increase the allowable letter of credit commitment
from $1,000 to $2,500.
As of February 3, 1999, the Company had repaid $7,800 of its
borrowings under the revolving credit facility with cash made available
by replacing certain escrow requirements with a surety bond (see Note
3). As a result of the repayment, the Company reduced outstanding
borrowings to $13,000.
10. Incentive Stock Plan
- ------------------------------------------------------------------------------
On April 21, 1995, the Company's shareholders adopted the 1995
Incentive Stock Plan (the "Plan"); whereby, incentive stock options,
nonqualifying stock options, restricted stock and stock appreciation
rights may be granted to officers, key employees and outside directors
to purchase a specified number of shares of common stock at a price not
less than the fair market value at the date of grant and for a term not
to exceed 10 years. During 1997, the Plan was amended to increase the
maximum number of shares available for issuance thereunder to 750,000.
Each such option, except for 100,000 stock options granted to a key
employee, vests over a five-year period with 20% vesting each year. The
aforementioned 100,000 stock options granted to the key employee vested
50% on December 31, 1998 and the remaining 50% will vest on December 31,
1999 subject to continuation of employment. In addition, in 1998, the
key employee received a deferred compensation payment of $1,451 related
to a previous deferred compensation agreement. Of the 522,000
outstanding options, 464,000 options will vest immediately upon a change
of control, as defined.
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
PRICE AVERAGE
SHARES RANGE PRICE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding, January 1, 1996 300,000 $10.50 $10.50
Granted 200,000 $7.66-$8.50 $ 8.08
- --------------------------------------------------------------------------------------------
Outstanding, December 31, 1996 500,000 $7.38-$10.25 $ 9.53
Granted 475,000 $7.38-$13.25 $10.11
Canceled (390,000) $7.66-$10.50 $ 9.26
Exercised (17,000) $10.50 $10.50
- --------------------------------------------------------------------------------------------
Outstanding, December 31, 1997 568,000 $7.38-$10.50 $10.42
Granted 67,000 $13.00-$14.75 $14.51
Exercised (113,000) $7.375-$10.50 $ 9.39
- --------------------------------------------------------------------------------------------
Outstanding, December 31, 1998 522,000 $7.375-$14.75 $11.17
Exercisable at:
December 31, 1997 81,000 $10.50 $10.50
December 31, 1998 97,000 $10.50-$13.25 $12.55
============================================================================================
</TABLE>
<PAGE>
<PAGE>
The Company has adopted the disclosure-only provisions of SFAS
123. Accordingly, no compensation cost has been recognized for the
stock option plan. Had compensation cost for the Company's stock option
plan been determined based on the fair value at the grant dates for
awards consistent with the provisions of SFAS 123, the Company's net
income and net income per share would have been reduced to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Net income - as reported $4,940 $6,784
==============================================================================
Net income - pro forma $4,766 $6,602
==============================================================================
Net income per common share -
as reported:
Basic $ 0.97 $ 1.32
==============================================================================
Diluted $ 0.96 $ 1.29
==============================================================================
Net income per common share -
pro forma:
Basic $ 0.93 $ 1.29
==============================================================================
Diluted $ 0.93 $ 1.26
==============================================================================
</TABLE>
The pro forma compensation effects of this calculation were not
material and therefore have not been disclosed for the year ended
December 31, 1996.
The Company has estimated the fair values of its option grants
since 1995 by using the binomial options pricing model with the
following assumptions:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1997 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected life (years) 10 10 10
Risk-free interest rate 6.50% 5.62% 5.31%
Volatility 37.50% 28.01% 19.23%
Dividend yield 4.76% 3.78% 4.48%
</TABLE>
11. Earnings Per Share
- -------------------------------------------------------------------------------
Weighted average shares of common stock and common stock
equivalents used in the calculation of basic and diluted earnings per
share are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
ANNUAL DATA 1996 1997 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average number
of common shares
outstanding (Basic EPS) 5,195,000 5,100,186 5,134,642
Stock option equivalents - 27,064 117,840
- --------------------------------------------------------------------------------------------
Weighted average number
of common shares and
equivalents outstanding
(Diluted EPS) 5,195,000 5,127,250 5,252,482
============================================================================================
</TABLE>
Stock option equivalents included in the Diluted EPS calculation
were determined using the treasury stock method. Under the treasury
stock method and SFAS 128, outstanding stock options are dilutive when
the average market price of the Company's common stock exceeds the
option price during a period. In addition, proceeds from the assumed
exercise of dilutive options along with the related tax benefit are
assumed to be used to repurchase common shares at the average market
price of such stock during the period.
<PAGE>
<PAGE>
12. Enterprise Wide Disclosure
- ------------------------------------------------------------------------------
The Company operates in one business segment. Although the
Company primarily manages its operations on a trip by trip basis, for
ease of presentation, the Company has classified the trips based on the
primary mode of transportation. The primary modes of transportation
consist of small ships, private jets, big ships and other.
The Company considers small ship cruises those programs which
primarily use vessels that carry less than 400 passengers. Private jet
charters are those programs the focus of which is privately chartered
jet aircraft. "Other" represents various programs which do not fall
under the aforementioned categories, such as land based programs and
other miscellaneous revenues.
The Company derives substantially all of its revenues from
domestic customers.
The following table presents, for the periods indicated, the
Company's revenue by mode of transportation.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1997 1998
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small ships $ 54,068 $ 55,891 $ 71,149
Private jets 17,396 16,667 20,537
Big ships 34,822 31,113 22,487
Other 19,795 18,852 11,824
- --------------------------------------------------------------------------------------
Total $126,081 $122,523 $125,997
======================================================================================
</TABLE>
13. Quarterly Results of Operations (Unaudited)
- ------------------------------------------------------------------
The results of operations by quarter for 1997 and 1998 were as
follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
QUARTER ENDED
1997
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $27,174 $23,905 $36,423 $35,021 $122,523
Cost of
operations 22,023 18,892 29,806 28,286 99,007
- ------------------------------------------------------------------------------------------------
Gross profit $ 5,151 $ 5,013 $ 6,617 $ 6,735 $ 23,516
Net income $ 792 $ 801 $ 1,600 $ 1,747 $ 4,940
Basic net
income
per share $ 0.15 $ 0.16 $ 0.32 $ 0.34 $ 0.97
Diluted net
income
per share $ 0.15 $ 0.16 $ 0.31 $ 0.34 $ 0.96
================================================================================================
<PAGE>
<PAGE>
<CAPTION>
QUARTER ENDED
1998
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $26,719 $22,057 $41,269 $35,952 $125,997
Cost of
operations 21,601 16,615 32,805 27,135 98,156
- ------------------------------------------------------------------------------------------------
Gross profit $ 5,118 $ 5,442 $ 8,464 $ 8,817 $ 27,841
Net income $ 985 $ 943 $ 2,475 $ 2,381 $ 6,784
Basic net
income
per share $ 0.19 $ 0.18 $ 0.48 $ 0.46 $ 1.32
Diluted net
income
per share $ 0.19 $ 0.18 $ 0.47 $ 0.45 $ 1.29
================================================================================================
</TABLE>
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders Intrav, Inc.
We have audited the accompanying consolidated balance sheets of
Intrav, Inc. and subsidiaries as of December 31, 1997 and 1998, and the
related consolidated statements of income, shareholders' equity, and
cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Intrav, Inc.
and subsidiaries at December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the three years in the
period ended December 31, 1998 in conformity with generally accepted
accounting principles.
St. Louis, Missouri
February 9, 1999
<PAGE>
<PAGE>
STOCK LISTING
The common shares of Intrav, Inc., are traded on the Nasdaq National
Market under the trading symbol "TRAV." As of March 1, 1999, there
were approximately 124 holders of record of the Company's common stock.
<TABLE>
MARKET PRICE RANGE
<CAPTION>
1997 1998
- ------------------------------------------------------------------------------------------------
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C>
First Quarter $ 9 9/16 $ 7 1/4 $15 1/2 $12
Second Quarter 9 3/8 7 22 3/8 14 1/2
Third Quarter 12 1/4 8 5/8 23 1/2 13 1/2
Fourth Quarter 15 1/2 11 7/8 19 3/4 14
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
DIVIDENDS PAID PER SHARE
(to Intrav, Inc. shareholders)
<CAPTION>
1997 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
First Quarter $0.125 $0.125
Second Quarter 0.125 0.125
Third Quarter 0.125 0.125
Fourth Quarter 0.125 0.125
- ------------------------------------------------------------------------------------------------
Year $0.50 $0.50
================================================================================================
</TABLE>
<PAGE>
EXHIBIT 21(i)
INTRAV, INC.
SUBSIDIARIES AS OF MARCH 29, 1999
Subsidiary Jurisdiction of Organization
- ---------- ----------------------------
Clipper Cruise Line, Inc. Delaware
Republic Cruise Line, Inc. Delaware
Liberty Cruise Line, Inc. Delaware
Clipper Adventurer, Ltd. Bahamas
Clipper Odyssey, Ltd. Bahamas
<PAGE>
[EXHIBIT 23(i)]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 333-05361 of Intrav, Inc. on Form S-8 of our report dated February
9, 1999 appearing in this Form 10-K of Intrav, Inc. for the year ended
December 31, 1998.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
St. Louis, Missouri
March 29, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 11,427
<SECURITIES> 4,025
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,618
<PP&E> 74,052
<DEPRECIATION> 19,397
<TOTAL-ASSETS> 86,558
<CURRENT-LIABILITIES> 47,289
<BONDS> 0
<COMMON> 53
0
0
<OTHER-SE> 10,549
<TOTAL-LIABILITY-AND-EQUITY> 86,558
<SALES> 125,997
<TOTAL-REVENUES> 127,057
<CGS> 98,156
<TOTAL-COSTS> 98,156
<OTHER-EXPENSES> 17,579
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 721
<INCOME-PRETAX> 10,621
<INCOME-TAX> 3,817
<INCOME-CONTINUING> 6,784
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,784
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.29
</TABLE>
