<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1999
REGISTRATION NO. 333-73101
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
INTRAV, INC.
(Exact name of registrant as specified in its charter)
------------------------------
MISSOURI 43-1323155
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
7711 BONHOMME AVENUE
ST. LOUIS, MISSOURI 63105-1961
(314) 727-0500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
WAYNE L. SMITH II
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
INTRAV, INC.
7711 BONHOMME AVENUE
ST. LOUIS, MISSOURI 63105-1961
(314) 727-0500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
Copies to:
THOMAS A. LITZ, ESQ. J. MARK KLAMER, ESQ.
THOMPSON COBURN LLP BRYAN CAVE LLP
ONE MERCANTILE CENTER ONE METROPOLITAN SQUARE
SUITE 3400 211 N. BROADWAY, SUITE 3600
ST. LOUIS, MISSOURI 63101 ST. LOUIS, MISSOURI 63102
TELEPHONE: (314) 552-6000 TELEPHONE: (314) 259-2000
FACSIMILE: (314) 552-7000 FACSIMILE: (314) 259-2020
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof pursuant to Rule 11(a)(1)
of this Form, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
<PAGE>
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 31, 1999
*******************************************************************************
* THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE *
* MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH *
* THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS *
* NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER *
* TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT *
* PERMITTED. *
*******************************************************************************
2,500,000 SHARES
INTRAV [logo]
EXPLORING THE WORLD SINCE 1959
COMMON STOCK
------------------
Intrav, Inc. is offering 500,000 shares and the selling shareholder is
offering 2,000,000 shares. INTRAV's common stock is quoted on the Nasdaq
National Market under the symbol "TRAV." On March 31, 1999, the last reported
sale price of INTRAV's common stock on the Nasdaq National Market was $16.875
per share.
------------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
---------------------
PRICE $ A SHARE
---------------------
<TABLE>
<CAPTION>
Per Share Total
------------- ----------
<S> <C> <C>
Public offering price................................... $ $
Underwriting discount................................... $ $
Proceeds, before expenses, to INTRAV.................... $ $
Proceeds, before expenses, to selling shareholder....... $ $
</TABLE>
INTRAV and the selling shareholder have granted the underwriters the right
to purchase up to an additional 375,000 shares of common stock to cover
over-allotments. The underwriters expect to deliver the shares to purchasers on
, 1999.
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
------------------------
A.G. EDWARDS & SONS, INC.
EVEREN SECURITIES, INC.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
PROSPECTUS DATED , 1999
<PAGE>
<PAGE>
[The front fold-out page following the cover page of the Prospectus will
include the language "INTRAV is a deluxe tour and cruise company, providing
a thoughtful, unhurried way to see places of great natural beauty and cultural
interest all over the globe." This page will show the captions "Small-Ship
Adventures," with a picture of one of INTRAV's ships, "Private Jet Adventures,"
with a picture of the Concorde aircraft privately chartered by INTRAV, and
"On Safari," with the picture of a locally guided African photo safari.
The back of the fold-out page and the inside front cover of the Prospectus will
include the language "A designer, marketer and operator of deluxe, escorted
domestic and international tour and cruise programs, INTRAV offers discerning
travelers a wide array of innovative adventures:" These pages will contain
pictures grouped with the following titles, overlaying a map of the world:
* "Domestic cruising along the waterways of the Americas," with pictures of
INTRAV's ship the M/V Nantucket Clipper, an historic fort visited on one
of INTRAV's travel programs and a view from the bow from one of INTRAV's
ships;
* "Yacht cruising in the Caribbean," with pictures of a beach visited on one
of INTRAV's travel programs and INTRAV's ship the M/V Nantucket Clipper.
* "Expedition cruising to Antarctica, the Arctic and the Amazon," with
pictures of INTRAV's travelers with penguins in Antarctica, INTRAV's
travelers on a locally guided Amazon river cruise and INTRAV's ship the
M/S Clipper Adventurer;
* "Cultural cruising along the legendary rivers of Europe," with pictures of
a museum visited on one of INTRAV's European travel programs, a river
cruise ship chartered by INTRAV and a European castle visited on one of
INTRAV's travel programs;
* "Wildlife safaris to the premier game reserves of Africa," with pictures
of giraffes in the wild, INTRAV's travelers on photo safari in Africa and
the lodging provided on one of INTRAV's trips to Africa;
* "Luxury cruising in New Zealand, Bali and the Far East," with pictures of
INTRAV's ship the M/S Clipper Odyssey, a Balinese dancer and the coast of
New Zealand; and
* "Private jet adventures to Europe, South America, Africa and around the
world," with pictures of a L-1011 chartered by INTRAV in one of its trips,
INTRAV travelers inside a chartered jet aircraft used in one of INTRAV's
travel programs, the Taj Mahal visited on one of INTRAV's travel programs
and Machu Picchu visited on one of INTRAV's travel programs.]
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary contains basic information about this offering. It
likely does not contain all the information that is important to you in making
a decision to purchase the common stock offered in this offering. For a more
complete understanding of this offering, we encourage you to read this entire
document and other documents to which we refer. 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.
INTRAV
OUR 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 (we consider
big ships to include 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 this 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.
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 travel programs. We seek to provide
our travelers with a diverse selection of program offerings, each
representing a unique travel experience, by designing and operating high
quality and distinctive small-ship and deluxe private jet adventures.
2
<PAGE>
<PAGE>
* Reduction of big-ship cruise offerings. We have reduced and will continue
to reduce the number of big-ship cruises we offer in order to focus on
more profitable small-ship and private jet programs that provide the type
of experiential travel desired by our travelers.
* Attention to customer satisfaction. Customer satisfaction and first-class
service have been and will continue to be critical to our business as we
seek to provide our travelers with a quality travel experience. We
believe this attention contributes to positive "word of mouth"
advertising and repeat business from our travelers.
* Emphasis on efficient marketing efforts. We continually seek ways to use
our resources, including direct mail capabilities, to efficiently and
cost-effectively market our travel programs through affinity groups,
travel agents and directly to potential travelers.
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
travel program offerings through our extensive industry experience and
relationships and our in-house research capabilities.
* Expanding and maximizing utilization of distribution channels. We intend
to develop new travel customers by increasing targeted marketing through
an expanded and enhanced travel agent network, selected affinity group
relationships, our past traveler base and a recent initiative in the
corporate incentive market.
* Enhancing our brand name recognition. We plan to create and pursue
marketing initiatives to enhance our brand name recognition and create
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 and travel service businesses that we believe can contribute to our
growth through customer, distribution channel and product expansion.
------------------------
Our principal executive offices are located at 7711 Bonhomme Avenue, St.
Louis, Missouri 63105, and our telephone number is (314) 727-0500.
3
<PAGE>
<PAGE>
THE OFFERING
The following information is based on 5,114,200 shares outstanding at March
31, 1999 and excludes 375,000 shares of common stock issuable upon exercise of
the over-allotment option. The over-allotment option is described in
"Underwriting." This information also excludes 750,000 shares reserved for
issuance under our stock option plan. Under the plan, options to purchase
522,000 shares were outstanding as of March 1, 1999. The weighted average
exercise price of these options was $11.17 per share.
<TABLE>
<S> <C>
Common Stock offered by INTRAV.......................... 500,000 shares
Common Stock offered by the Revocable Trust of Barney A.
Ebsworth.............................................. 2,000,000 shares
Common Stock to be outstanding after the offering....... 5,614,200 shares
Common Stock to be owned by the Revocable Trust of
Barney A. Ebsworth after the offering................. 1,825,000 shares
Use of proceeds......................................... We estimate that we will receive net proceeds
of $7.6 million from the offering. We intend
to use our net proceeds to repay outstanding
indebtedness and for general corporate purposes
including working capital. We will not receive
any of the proceeds from the sale of common
stock by the selling shareholder.
Dividend policy......................................... We intend to continue to pay regular quarterly
cash dividends at an annual rate of
approximately $0.50 per share, subject to our
financial condition and action by our board of
directors.
Nasdaq National Market symbol........................... TRAV
</TABLE>
4
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<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth our summary consolidated financial data.
Certain of the data presented here is derived from our consolidated financial
statements. The acquisition of Clipper Cruise Line in 1996 was accounted for in
a manner similar to the pooling-of-interests method and, accordingly, we have
restated all financial data for 1995 and 1994 to include the accounts and
results of operations of Clipper Cruise Line for all periods prior to the
acquisition. The consolidated financial data as of December 31, 1998 and for
the three years in the period then ended has been derived from our audited
consolidated financial statements included elsewhere in this prospectus. You
should read those financial statements and related notes thereto and the
selected consolidated financial data for a further explanation of the financial
data summarized here. You also should read the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section which
describes a number of factors which have affected our financial results. See
"Where You Can Find More Information" and "Incorporation of Certain Documents
by Reference."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
<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
Selling, general and administrative............... 15,587 15,135 16,924 15,353 15,587
Depreciation and amortization..................... 1,853 1,787 1,849 1,336 1,992
-------- -------- -------- -------- --------
Operating income.............................. 7,502 6,888 5,657 6,827 10,262
Investment income................................. 1,265 1,883 1,643 978 1,060
Interest expense.................................. (2,058) (2,370) (1,904) (85) (721)
-------- -------- -------- -------- --------
Income before income taxes and extraordinary
item........................................ 6,709 6,401 5,396 7,720 10,601
Provision for income taxes........................ 2,330 2,254 1,887 2,780 3,817
-------- -------- -------- -------- --------
Income before extraordinary item.............. 4,379 4,147 3,509 4,940 6,784
Extraordinary item................................ - - (344) - -
-------- -------- -------- -------- --------
Net income.................................... $ 4,379 $ 4,147 $ 3,165 $ 4,940 $ 6,784
======== ======== ======== ======== ========
Basic net income per share........................ $ 0.88 $ 0.80 $ 0.61<F1> $ 0.97 $ 1.32
Diluted net income per share...................... $ 0.88 $ 0.80 $ 0.61<F1> $ 0.96 $ 1.29
Weighted average shares used in basic net income
per share calculation........................... 5,000 5,200 5,195 5,100 5,135
Weighted average shares used in diluted net income
per share calculation........................... 5,000 5,200 5,195 5,127 5,252
Dividends per common share........................ $ 0.90 $ 0.25 $ 0.60 $ 0.50 $ 0.50
PERFORMANCE RATIOS:
Gross profit margin on revenues................... 22.9% 20.7% 19.4% 19.2% 22.1%
Operating income margin on revenues............... 6.9% 6.0% 4.5% 5.6% 8.1%
Net income margin on revenues..................... 4.0% 3.6% 2.5% 4.0% 5.4%
<PAGE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------
AS
ACTUAL ADJUSTED<F2>
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(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents, restricted cash and restricted
marketable securities....................................... $15,452 $15,452
Total assets................................................ 86,558 86,558
Total long-term debt........................................ 20,800 13,198
Shareholders' equity........................................ 10,602 18,204
<FN>
- --------
<F1> Includes extraordinary item. Basic and diluted net income per share before
extraordinary item was $0.68 in 1996.
<F2> As adjusted to give effect to the sale of the common stock offered hereby
by INTRAV at an assumed offering price of $16.875 per share, after
deducting underwriters' discounts and estimated offering expenses and the
application of proceeds therefrom (excluding the over-allotment option),
as if it had been consummated on December 31, 1998. See "Use of Proceeds"
and "Capitalization."
</TABLE>
5
<PAGE>
<PAGE>
RISK FACTORS
You should carefully consider the following risks, together with the other
information contained and incorporated by reference in this prospectus before
deciding to invest in shares of our common stock. The following risks relate
principally to our business and the industry in which we operate. The risks and
uncertainties classified below are not the only ones we face.
Certain statements in this section and elsewhere in this prospectus
constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, including, but not limited to, demand for our
travel programs and unforeseen natural or political events, that may cause our
actual results, performance or achievements to differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements.
UNANTICIPATED CATASTROPHIC EVENTS COULD REDUCE THE DEMAND FOR TRAVEL PROGRAMS
Because a large portion of our travel programs are conducted outside the
United States, we are subject to risks inherent in doing business
internationally. These risks include:
* war;
* international terrorism;
* civil disturbances;
* political instability;
* governmental activities; and
* deprivation of contract rights.
Periods of widespread international unrest may reduce demand for our travel
programs and could have a material adverse effect on our results of operations.
Examples of events which have adversely affected our operations include
terrorist activities in Egypt in 1993, the Gulf War in 1991 and the Chernobyl
disaster in 1986. Demand for our travel programs also may be adversely affected
by natural occurrences such as hurricanes, earthquakes, epidemics and flooding
in geographic regions in which we conduct our travel programs.
CHANGES IN PROGRAM COSTS AND FLUCTUATION OF CURRENCY EXCHANGE RATES COULD
ADVERSELY AFFECT OUR PROFITABILITY
Our program costs may increase between the time we set our program prices
and when we pay various suppliers. Also, a decline in the value of the U.S.
dollar during such period would effectively increase our costs. We typically
set our program prices nine to 18 months ahead of time. While we retain the
right to adjust our program pricing to recover such increased costs, there can
be no assurance that we will be able to recover the increased costs. While we
also at times purchase forward contracts to hedge against declines in the value
of the U.S. dollar, our efforts may not be successful. For a more complete
discussion of the risks of currency fluctuation, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Foreign Currency
Hedging Program."
WE ARE DEPENDENT ON TRAVEL SUPPLIERS
We currently rely on travel suppliers for access to certain distinctive
products and services that are not readily replaceable. If any of those travel
suppliers were to stop working with us, we would lose some of our ability to
distinguish our programs from our competitors' programs. For example, Air
France, the company from which we currently charter the Concorde, has recently
announced that it may take the Concorde out of service after 2007. Any decline
in the quality of travel products and services provided by our suppliers, or a
perception by travelers of such a decline, could adversely affect our
reputation. Our reputation in providing top quality travel programs is
important to our ability to market our products, and if our reputation is
harmed we may not be able to market our travel programs effectively.
6
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<PAGE>
WE CANNOT ENSURE ONGOING ACCESS TO THE CONCORDE IN THE UNITED STATES
We derive significant revenues and gross margins from our Concorde
programs. Our Concorde programs currently depart from and return to airports
located in the United States. Recently, the U.S. House of Representatives
approved a bill that, if enacted into law, would prohibit the Concorde from
flying into U.S. airports. A similar measure is currently pending in the U.S.
Senate. At this time, we cannot assess the likelihood that the pending
legislation will be enacted into law or, if enacted, when and how it would
affect our operations. In the event it is enacted, however, we believe that we
could continue to provide access to the Concorde through Canadian or other
international locations, which could be less desirable to our customers.
COMPETITION WITHIN THE TRAVEL INDUSTRY
The travel industry is highly competitive. We recognize eight major direct
competitors that compete with us in the tour operator segment and nine
principal competitors that compete with us in the small-ship cruise market. We
also compete against a wide range of vacation alternatives, including cruises,
destination resorts and other travel programs. Certain companies engaged in the
travel business have greater financial, marketing and sales resources than us.
Our present competitors or companies that choose to enter the marketplace in
the future may exert significant competitive pressures on us, and cause us to
lower prices which could lead to decreased profitability.
WE ARE HIGHLY DEPENDENT UPON CERTAIN KEY PERSONNEL WITH KNOWLEDGE OF AND
EXPERIENCE IN THE TRAVEL INDUSTRY
Developing successful travel programs requires personnel with knowledge of
and experience in the travel industry. Our success is dependent, in part, on
the efforts of certain of our key personnel, including Paul H. Duynhouwer, our
President and Chief Executive Officer, who has over 39 years of experience in
the travel industry. Although we have entered into employment agreements with
certain key employees, including Mr. Duynhouwer, events beyond our control
could result in our loss of their services. Replacing them with qualified
persons with equivalent experience and in-depth knowledge of the travel
industry may be difficult. Without such key personnel, we may not be able to
create attractive travel programs. We do not maintain key man insurance on any
of our employees.
WE ARE AT RISK OF BEING SUED BY TRAVELERS
Due to the nature of our business, we may be subject to liability claims
arising out of accidents or disasters involving aircraft or ships on which our
customers are traveling, including claims for serious personal injury or death.
We believe that we have adequate liability insurance for risks arising in the
normal course of our business. Although we have never experienced a liability
claim for which we did not have adequate insurance coverage, there can be no
assurance that our insurance coverage will be sufficient to cover one or more
large claims or that the applicable insurer will be solvent at the time of any
covered loss. Further, we may not be able to obtain insurance coverage at
acceptable levels and cost in the future. Successful assertion against us of
one or a series of large uninsured claims, or of one or a series of claims
exceeding any insurance coverage, could have a material adverse effect on our
results of operations or financial condition.
LOSS OF REVENUE WHILE CRUISE SHIPS ARE OUT OF SERVICE
From time to time our cruise ships may need to be taken out of service for
an extended period of time. The revenues lost during the time in which a ship
owned by us is out of service or the additional cost of providing a replacement
ship could have a material adverse effect on our results of operations or
financial condition. While we believe we have adequate insurance to cover
repairs to any of our cruise ships and we carry business interruption insurance
coverage, there can be no assurance that the coverage will be adequate or
available at reasonable rates in the future. In the event of a total loss of
one or more of our ships, our insurance would be insufficient to replace the
ship or to fully cover the impact of lost business.
7
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<PAGE>
OUR OPERATIONS ARE SUBJECT TO REGULATION OF PASSENGER VESSELS AND CHARTERS
Our operations are affected by laws and regulations of the United States
and certain foreign countries relating to the operation of passenger vessels
and public charters, including regulations issued by the U.S. Coast Guard,
Department of Transportation and Centers for Disease Control and Prevention. We
believe we are in material compliance with these laws and regulations and do
not believe that future compliance will have a material adverse impact on our
financial condition or results of operations. However, the penalties for
failing to comply with these laws and regulations could have a material adverse
effect on us, including, but not limited to, requiring that we delay or cancel
certain cruise departures or having our cruise ships impounded or seized. See
"Business--Government Regulation."
WE MAY BE ADVERSELY AFFECTED IF OUR YEAR 2000 REMEDIATION EFFORTS ARE NOT
SUCCESSFUL
We may be adversely affected if our Year 2000 remediation efforts are not
successful. We rely on computer systems, related software applications and
other control devices in operating and monitoring many aspects of our business,
including, but not limited to, our financial systems (such as general ledger
and accounts payable), billing and reservation systems, internal networks and
telecommunications equipment. We also rely directly and indirectly on the
internal and external systems of various independent business enterprises, such
as our suppliers, third party contractors and financial organizations, for
their accurate exchange with us of date related information and for their
continued operations. We have initiated a Year 2000 compliance program to
ensure that our computer systems and applications will function properly beyond
1999. We believe that we have allocated adequate resources for this purpose and
expect our Year 2000 compliance program to be successfully completed on a
timely basis. However, there is a possibility that the integration of the
program will not be successful.
We cannot be certain that we or third parties supporting our systems have
resolved or will resolve all Year 2000 issues in a timely manner. Failure by us
or any such third party to successfully address the relevant Year 2000 issues
could result in disruptions of our business and the incurrence of significant
expenses by us. Additionally, we could be affected by any disruption to third
parties with which we do business if they have not successfully addressed their
Year 2000 issues.
OUR REVENUES MAY SUFFER IF GENERAL ECONOMIC CONDITIONS WORSEN
Our revenues and earnings may be affected by economic events that impact
domestic and international travel. Certain economic factors, such as a rise in
fuel prices or other travel costs, excessive inflation and currency
fluctuations, could result in a temporary or longer-term overall decline in
demand for our travel programs. The occurrence of any of these events could
have a material adverse effect on our business, financial condition and results
of operations. In addition, demand for our travel programs may be significantly
affected by the general level of economic activity and employment in the United
States. Therefore, any significant economic downturn or recession in the United
States could have a material adverse effect on our business, financial
condition and results of operations.
EFFECTIVE CONTROL BY MR. EBSWORTH
After this offering, Barney A. Ebsworth, our founder and principal
shareholder, will continue to have effective voting control, including with
respect to the election of our directors. He will be able to prevent an
affirmative vote which would be necessary for a merger, sale of assets or
similar transaction involving us, irrespective of whether other shareholders
believe such a transaction to be in their best interests. After this offering,
Mr. Ebsworth will beneficially own approximately 32.5% of the outstanding
shares of common stock. Our articles of incorporation and by-laws do not
provide for cumulative voting in the election of directors.
8
<PAGE>
<PAGE>
USE OF PROCEEDS
We estimate that our net proceeds from the offering will be $7.6 million (or
$8.8 million if the underwriters exercise the over-allotment option in full). We
intend to use our net proceeds from the offering to repay outstanding
indebtedness under the terms of our credit facility with NationsBank, N.A.,
including borrowings incurred in connection with the purchase of the M/S
Clipper Odyssey, and for general corporate purposes. We will not receive any
proceeds from the sale of common stock by the selling shareholder. We used the
amounts borrowed under the credit facility to fund our operations, capital
expenditures, dividend payments, the renovation of our M/S Clipper Adventurer
cruise ship and the purchase of the M/S Clipper Odyssey. The credit facility
provides that we may select among various draw arrangements with varying
maturities and interest rates. The credit facility matures November 1, 2003. At
March 29, 1999, the outstanding borrowings under the credit facility were $12.0
million with a weighted average interest rate of 6.7%. The portion of the net
proceeds from the sale of the common stock which is not used to repay existing
obligations will be temporarily invested in bank accounts and short-term
investment-grade securities pending its use for the purposes described above.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock trades on the Nasdaq National Market under the symbol
"TRAV." The following table sets forth the reported high and low sales prices
of our common stock on the Nasdaq National Market and the quarterly dividends
paid per share for the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE
-------------------------- DIVIDENDS
HIGH LOW PER SHARE
----------- ----------- -------------
<S> <C> <C> <C>
Year Ended December 31, 1997:
First Quarter.......................................... $ 9.563 $ 7.250 $0.125
Second Quarter......................................... 9.375 7.000 0.125
Third Quarter.......................................... 12.250 8.625 0.125
Fourth Quarter......................................... 15.500 11.875 0.125
Year Ended December 31, 1998:
First Quarter.......................................... $15.500 $12.000 $0.125
Second Quarter......................................... 22.375 14.500 0.125
Third Quarter.......................................... 23.500 13.500 0.125
Fourth Quarter......................................... 19.750 14.000 0.125
Year Ending December 31, 1999:
First Quarter.......................................... $22.000 $15.750 $0.125
</TABLE>
On March 31, 1999, the last reported closing sales price for the common
stock on the Nasdaq National Market was $16.875 per share. As of March 1, 1999,
there were approximately 124 holders of record of INTRAV common stock.
9
<PAGE>
<PAGE>
DIVIDEND POLICY
We intend to continue our policy of declaring regular quarterly cash
dividends at an annual rate of $0.50 per share. The declaration of dividends
will be at the discretion of our board of directors and will depend upon our
earnings and financial condition and other factors as the board of directors
deems relevant. There is no requirement or assurance that we will pay future
dividends. We seek to retain an adequate portion of earnings to support our
operations and the growth of our business.
We have paid cash dividends on shares of our common stock for 15
consecutive quarters. On March 15, 1999, we paid a regular cash dividend of
$0.125 per share to shareholders of record on February 26, 1999.
CAPITALIZATION
The following table sets forth our consolidated capitalization at December
31, 1998, and as adjusted to give effect to the sale by us of 500,000 shares
of common stock at an assumed price of $16.875 per share, less underwriting
discounts and estimated offering expenses and the application of proceeds
therefrom. This table excludes 750,000 shares reserved for issuance under our
stock option plan. Under the plan, options to purchase 522,000 shares were
outstanding at March 1, 1999. The weighted average exercise price of these
options was $11.17 per share. On December 11, 1998, we announced a stock
repurchase program pursuant to which we intend, over time as market conditions
permit, to buy up to 300,000 shares of our common stock on the open market.
Prior to suspending the program in anticipation of this offering, we had
repurchased 41,200 shares during 1999.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------
ACTUAL AS ADJUSTED
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Note payable................................................ $ 5,500 $ 5,500
======== ========
Long-term debt.............................................. $ 20,800 $ 13,198
-------- --------
Shareholders' equity:
Preferred Stock, $0.01 par value; 5,000,000 shares
authorized; no shares outstanding..................... - -
Common Stock, $0.01 par value; 20,000,000 shares
authorized; 5,325,000 shares issued, and 5,825,000
shares issued, as adjusted............................ 53 58
Additional paid-in capital.............................. 22,694 30,291
Accumulated deficit..................................... (10,449) (10,449)
-------- --------
Total............................................... 12,298 19,900
-------- --------
Treasury stock-at cost: 169,550 shares.................. (1,696) (1,696)
-------- --------
Total shareholders' equity.......................... 10,602 18,204
-------- --------
Total capitalization............................ $ 31,402 $ 31,402
======== ========
</TABLE>
On December 31, 1996, we acquired all the outstanding common stock of
Clipper Cruise Line, Inc. from Windsor, Inc., a company controlled by Barney A.
Ebsworth. Pursuant to the purchase agreement, cash consideration of up to $3.0
million may be paid to the extent the cumulative net cruise revenues exceed
$70.0 million during the period January 1, 1997 through December 31, 2000.
Based upon our 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, we
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.
10
<PAGE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth our selected consolidated financial data.
The data presented here is derived from our consolidated financial statements.
The acquisition of Clipper Cruise Line in 1996 was accounted for in a manner
similar to the pooling-of-interests method and, accordingly, we have restated
all financial data for 1995 and 1994 to include the accounts and results of
operations for Clipper Cruise Line for all periods prior to the acquisition.
The consolidated financial data as of December 31, 1998 and for the three years
in the period then ended has been derived from our audited consolidated
financial statements included elsewhere in this prospectus. You should read
those financial statements and related notes thereto for a further explanation
of the financial data summarized here. You also should read the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
section which describes a number of factors which have affected our financial
results. See "Where You Can Find More Information" and "Incorporation of Certain
Documents by Reference."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
<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
Selling, general and administrative............... 15,587 15,135 16,924 15,353 15,587
Depreciation and amortization..................... 1,853 1,787 1,849 1,336 1,992
-------- -------- -------- -------- --------
Operating income.............................. 7,502 6,888 5,657 6,827 10,262
Investment income................................. 1,265 1,883 1,643 978 1,060
Interest expense.................................. (2,058) (2,370) (1,904) (85) (721)
-------- -------- -------- -------- --------
Income before income taxes and extraordinary
item........................................ 6,709 6,401 5,396 7,720 10,601
Provision for income taxes........................ 2,330 2,254 1,887 2,780 3,817
-------- -------- -------- -------- --------
Income before extraordinary item.............. 4,379 4,147 3,509 4,940 6,784
Extraordinary item................................ - - (344) - -
-------- -------- -------- -------- --------
Net income.................................... $ 4,379 $ 4,147 $ 3,165 $ 4,940 $ 6,784
======== ======== ======== ======== ========
Basic net income per share........................ $ 0.88 $ 0.80 $ 0.61<F1> $ 0.97 $ 1.32
Diluted net income per share...................... $ 0.88 $ 0.80 $ 0.61<F1> $ 0.96 $ 1.29
Weighted average shares used in basic net income
per share calculation........................... 5,000 5,200 5,195 5,100 5,135
Weighted average shares used in diluted net income
per share calculation........................... 5,000 5,200 5,195 5,127 5,252
Dividends per common share........................ $ 0.90 $ 0.25 $ 0.60 $ 0.50 $ 0.50
PERFORMANCE RATIOS:
Gross profit margin on revenues................... 22.9% 20.7% 19.4% 19.2% 22.1%
Operating income margin on revenues............... 6.9% 6.0% 4.5% 5.6% 8.1%
Net income margin on revenues..................... 4.0% 3.6% 2.5% 4.0% 5.4%
DECEMBER 31,
-------------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents, restricted cash and
restricted marketable securities................ $ 28,180 $ 31,224 $ 14,114 $ 15,416 $ 15,452
Total assets...................................... 62,285 68,966 52,594 56,801 86,558
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
<FN>
- --------
<F1> Includes extraordinary item. Basic and diluted net income per share before
extraordinary item was $0.68 in 1996.
</TABLE>
11
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
include 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 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
12
<PAGE>
<PAGE>
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.
13
<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 Cruise 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
14
<PAGE>
<PAGE>
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.
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 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. Prior to
suspending the program in anticipation of this offering, the Company had
repurchased 41,200 shares during 1999.
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
15
<PAGE>
<PAGE>
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 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.
QUARTERLY RESULTS OF OPERATIONS
The unaudited results of operations by quarter for 1997 and 1998 were as
follows:
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------
1997 1998
------------------------------------------------------- --------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30
------------ ----------- ------------ ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues..................... $27,174 $23,905 $36,423 $35,021 $26,719 $22,057
Gross profit................. 5,151 5,013 6,617 6,735 5,118 5,442
Operating income............. 1,100 1,024 2,207 2,495 1,392 1,447
Net income................... 792 801 1,600 1,747 985 943
<CAPTION>
QUARTER ENDED
--------------------------
1998
--------------------------
SEPT. 30 DEC. 31
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
Revenues..................... $41,269 $35,952
Gross profit................. 8,464 8,817
Operating income............. 3,687 3,735
Net income................... 2,475 2,381
</TABLE>
Our revenues tend to be higher in the third and fourth quarters because
we typically offer more small-ship cruises and private jet programs in these
quarters. This is a result of client demand for those programs which we
believe is driven by climate, crowd conditions and popularity of certain
destinations at particular times during the year.
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 Company's 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 reservation systems, internal
networks, telecommunications equipment and ship-board 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.
<PAGE>
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
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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 incur significant future 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
of 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 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.
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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 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.
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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 (we consider
big ships to include 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 this 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.
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
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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.
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
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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 assurances 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 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
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feature an unregimented and leisurely ambience, single-seat 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>
--------------
<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>
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
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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 $6,500 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 offer
eight INTRAV Adventure Edition programs with 38 departures ranging in
price from $5,700 to $10,500.
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
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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.
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.
24
<PAGE>
<PAGE>
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.
FACILITIES
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 will be available as required.
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 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
25
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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.
26
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, and their respective
ages and positions with the Company, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Barney A. Ebsworth 64 Chairman of the Board
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
John B. Biggs, Jr. 55 Director
William H.T. Bush 60 Director
Robert H. Chapman 53 Director
</TABLE>
Barney A. Ebsworth founded the business known as INTRAV in 1959. Prior to
October 1992, INTRAV's operations were conducted as a division of Windsor, Inc.
(a diversified real estate, travel and venture capital company founded by Mr.
Ebsworth), during which time Mr. Ebsworth served as Windsor's Chairman of the
Board and Chief Executive Officer. In October 1992, INTRAV was spun-off from
Windsor as a separate entity. After the spin-off, Mr. Ebsworth served as
INTRAV's Chairman of the Board and Chief Executive Officer until INTRAV's
initial public offering in May 1995, at which time he retired as the Chief
Executive Officer. He remains INTRAV's Chairman of the Board.
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.
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.
John B. Biggs, Jr. has served as a Director of INTRAV since November 1995.
Mr. Biggs was recently appointed Chairman and Chief Executive Officer of Union
Bank, N.A. Prior to February 1999, Mr. Biggs was Senior Vice President--Private
Bank, Bank of America (formerly NationsBank, N.A.) since April 1995, Senior
Vice President of Brown Group, Inc. from January 1994 through March 1995 and
President of Brown Shoe Company, a subsidiary of Brown Group, Inc. from
December 1990 through January 1994.
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<PAGE>
<PAGE>
William H.T. Bush has served as a Director of INTRAV since June 1995. He
has been Chairman of the Board of Bush, O'Donnell & Co. since 1986. Mr. Bush
also serves as a Director of Mississippi Valley Bancshares, Inc., RightChoice
Managed Care, Inc. and DT Industries, Inc.
Robert H. Chapman has served as a Director of the Company since May 1997.
Mr. Chapman has been Chairman and Chief Executive Officer of Barry-Wehmiller
Companies, Inc. since 1975. He also serves as a Director of Barry-Wehmiller
International and LaBarge, Inc.
Each director of INTRAV holds office until his successor has been duly
elected and qualified. The Company's Board of Directors is divided into three
classes, with three-year staggered terms. Messrs. Bush and Smith are Class I
directors, Messrs. Duynhouwer and Chapman are Class II directors and Messrs.
Ebsworth and Biggs are Class III directors. The terms of the Class I, Class II
and Class III directors expire in 1999, 2000 and 2001, respectively.
Officers of INTRAV are elected by the Board of Directors at each annual
meeting of the Board of Directors and serve at its discretion.
COMMITTEES OF THE BOARD
The Board of Directors has a standing Audit Committee and Compensation
Committee.
The members of the Audit Committee are Messrs. Biggs, Bush and Chapman. The
function of the Audit Committee is to: (i) assist in the selection of
independent auditors; (ii) direct and supervise investigations into matters
relating to audit functions; (iii) review with independent auditors the plans
and results of the audit engagement; (iv) review the degree of independence of
the auditors; (v) consider the range of audit and non-audit fees; and (vi)
review the adequacy of INTRAV's system of internal accounting controls.
The members of the Compensation Committee are Messrs. Biggs, Chapman and
Ebsworth. The function of the Compensation Committee is to review and approve
all elements of the total compensation program for the executive officers and
certain other officers and employees of INTRAV, including incentive, bonus and
stock option plans.
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<PAGE>
<PAGE>
HOLDINGS OF SELLING SHAREHOLDER AND MANAGEMENT
The table below sets forth certain information regarding beneficial
ownership of the shares of common stock as of March 29, 1999 and adjusted to
give effect to the offering by (a) each person known by us to be the beneficial
owner of more than 5% of INTRAV's outstanding common stock on that date, (b)
each current director of INTRAV, (c) each executive officer and director of
INTRAV, (d) the selling shareholder, and (e) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING AFTER THE OFFERING
----------------------------- -----------------------------
NUMBER SHARES TO NUMBER
NAME OF SHARES PERCENT<F1> BE SOLD OF SHARES PERCENT<F2>
---- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Barney A. Ebsworth
The Revocable Trust of Barney A.
Ebsworth, dated July 23, 1986,
as amended<F3>.................. 3,825,000 74.79% 2,000,000<F4> 1,825,000<F4> 32.51%
Paul H. Duynhouwer<F5>............ 136,000 2.61% - 306,000 5.21%
Wayne L. Smith II<F6>............. 20,400 <F*> - 100,400 1.76%
Richard J. Hefler<F7>............. 13,000 <F*> - 25,000 <F*>
Michael F. Doiron<F8>............. 1,000 <F*> - 5,000 <F*>
John B. Biggs, Jr................. 2,000 <F*> - 2,000 <F*>
William H.T. Bush................. 19,000 <F*> - 19,000 <F*>
Robert H. Chapman................. 600 <F*> - 600 <F*>
All executive officers and
directors as a group
(8 persons)..................... 4,017,000 76.69% 2,000,000 2,283,000 38.02%
<FN>
- -------
<F*> Less than one percent.
<F1> The percentage calculations of beneficial ownership prior to the offering
are based upon 5,114,200 shares of common stock outstanding at March 29,
1999 plus, with respect to the Revocable Trust of Barney A. Ebsworth and
Messrs. Duynhouwer, Smith, Hefler and Doiron, the number of shares subject
to options exercisable by each shareholder within 60 days of the date of
this prospectus.
<F2> The percentage calculations of beneficial ownership after the offering are
based upon 5,614,200 shares of common stock (including 5,114,200 shares
outstanding at March 29, 1999 and 500,000 shares to be sold by the
Company in the offering) plus, with respect to the Revocable Trust of
Barney A. Ebsworth and Messrs. Duynhouwer, Smith, Hefler and Doiron, the
number of shares subject to options exercisable by each shareholder within
60 days of the date of this prospectus. The percentage calculations do not
include up to 75,000 shares which may be sold by the Company if the
over-allotment option is exercised by the underwriters.
<F3> Mr. Ebsworth is the sole trustee of the Revocable Trust of Barney A.
Ebsworth and has sole voting and investment power with respect to the
shares shown. The address of the Revocable Trust of Barney A. Ebsworth is
7711 Bonhomme Avenue, St. Louis, Missouri 63105-1961.
<F4> Does not include up to 300,000 shares which may be sold by the Revocable
Trust of Barney A. Ebsworth if the over-allotment option is exercised by
the underwriters.
<F5> Includes 90,000 shares subject to presently exercisable stock options plus
an additional 170,000 shares subject to options that will become
exercisable upon consummation of the offering.
<F6> Includes 20,000 shares subject to presently exercisable stock options plus
an additional 80,000 shares subject to options that will become
exercisable upon consummation of the offering.
<F7> Includes 13,000 shares subject to presently exercisable stock options plus
an additional 12,000 shares subject to options that will become
exercisable upon consummation of the offering.
<F8> Includes 1,000 shares subject to presently exercisable stock options plus
an additional 4,000 shares subject to options that will become exercisable
upon consummation of the offering.
</TABLE>
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<PAGE>
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of (i) 20,000,000 shares of
common stock, par value $0.01 per share, and (ii) 5,000,000 shares of Preferred
Stock, par value $0.01 per share ("Preferred Stock"). Upon the consummation of
the offering, 5,614,200 shares of common stock (5,689,200 shares if the over-
allotment option is exercised in full) and no shares of Preferred Stock will be
outstanding.
COMMON STOCK
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of the shareholders, including the election of
directors. The holders of common stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor, subject to the payment of
any preferential dividends with respect to any Preferred Stock that from time
to time may be outstanding. In the event of liquidation, dissolution or winding
up of the Company, the holders of common stock are entitled to share ratably in
all assets remaining after payment of liabilities, subject to prior
distribution rights of the holders of each class of stock, if any, having
preference over the common stock. The holders of common stock have no
preemptive or conversion rights or other subscription rights, and there are no
redemptive or sinking fund provisions applicable to the common stock. All of
the outstanding shares of common stock are fully paid and nonassessable, and
all of the shares of common stock offered hereby, when issued, will be fully
paid and nonassessable.
In order to assure continued compliance after the offering with the federal
Merchants Marine Act of 1936, as amended, and applicable regulations thereunder
and the federal Shipping Act of 1916, as amended, and applicable regulations
thereunder, the Company has amended its Restated Articles of Incorporation and
Bylaws to add provisions designed to prevent persons who are not citizens of
the United States, as defined therein, from holding in the aggregate more than
24.9% of the outstanding shares of common stock. Pursuant to the amendments,
any transfer which would cause one or more non-U.S. citizens to beneficially
own more than the permitted percentage shall be ineffective as against the
Company, shall not be registered by the transfer agent, and the transferee will
not be recognized as a shareholder for any purpose, including the right to vote
or to receive dividends. The Company also has the right to redeem such shares
at fair market value, as defined in the Restated Articles and Bylaws, in cash
or in other securities. The Company has the right to require holders of its
common stock to confirm their citizenship from time to time for purposes of
ascertaining compliance with these provisions.
PREFERRED STOCK
The Board of Directors, without further action by the shareholders, is
authorized to issue up to 5,000,000 shares of Preferred Stock in one or more
series and to fix and determine as to any series any and all of the relative
rights and preferences of shares in such series, including, without limitation,
preferences, limitations or relative rights with respect to redemption rights,
conversion rights, voting rights, dividend rights conversion and exchange
privileges and preferences on liquidation.
CERTAIN ANTI-TAKEOVER MATTERS
The Company's Restated Articles provide that the Board of Directors shall
be divided into three classes, with classes to be as nearly equal in number as
possible, and that one class shall be elected each year and serve for a
three-year term. The Bylaws provide that the number of directors shall be
fixed, from time to time, by resolutions adopted by the Board of Directors but
shall not be less than three nor more than nine persons. The classification of
directors will have the effect of making it more difficult for shareholders to
change the composition of the Board of Directors. As a result, at least two
annual meetings of shareholders may be required for the shareholders to change
a majority of the directors.
The Restated Articles do not permit cumulative voting in the election of
directors. Accordingly, the holders of a majority of the then outstanding
voting power can elect all of the directors of the class then being elected at
that meeting of shareholders.
Missouri law provides that, unless a corporation's articles of
incorporation or bylaws provide otherwise, all vacancies on a corporation's
board of directors, including any vacancies resulting from an increase in the
number of directors, may be filled by a majority of the remaining directors
even if that number is less than a
30
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<PAGE>
quorum. The Company's Bylaws provide that vacancies may be filled only by a
majority of the remaining directors.
As a result of the restrictions on stock ownership by non-U.S. citizens
contained in the Company's Restated Articles and Bylaws, it is effectively
impossible for a non-U.S. citizen to takeover the Company.
Upon the consummation of the offering, there will be 5,000,000 authorized
and unissued shares of Preferred Stock. The ability of the Board of Directors
to fix the terms, rights and preferences of one or more series of Preferred
Stock may enable the Board of Directors to render more difficult or to
discourage an attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest or otherwise. Also, if in the due exercise of its
fiduciary obligations, the Board of Directors were to determine that a takeover
proposal is not in the Company's best interests, the Board of Directors could
cause shares of Preferred Stock to be issued without shareholder approval in
one or more private offerings or other transactions that might dilute the
voting or other rights of the proposed acquirer or insurgent shareholder or
shareholder group or create a substantial voting block in institutional or
other hands that might undertake to support the position of the incumbent Board
of Directors. In this regard, the Company's Restated Articles grant the Board
of Directors broad power to establish the rights and preferences of authorized
and unissued Preferred Stock. The issuance of shares of Preferred Stock
pursuant to the Board of Director's authority described above could decrease
the amount of earnings and assets available for distribution to holders of
common stock and adversely affect the rights and powers, including voting
rights, of such holders and may have the effect of delaying, deferring or
preventing a change in control of the Company. The Board of Directors does not
currently intend to seek shareholder approval prior to any issuance of
Preferred Stock, unless otherwise required by law.
The Company is subject to the control share acquisition and the business
combination sections of The General and Business Corporation Law of Missouri,
which generally make it more difficult without the approval of the Board of
Directors for there to be a change in control of the Company or for the Company
to enter into certain business combinations than if the Company were not
subject to such sections.
Under the Company's Bylaws, shareholders are not permitted to call special
meetings of shareholders or to require the Board or any officer of the Company
to call a special meeting of shareholders. A special meeting of shareholders
may be called only on the direction of the Chairman of the Board or a majority
of the members of the Board of Directors. As required by Missouri law and the
Bylaws, any action by written consent of shareholders in lieu of a meeting must
be unanimous.
These provisions are designed in part to make it more difficult and
time-consuming to obtain majority control of the Board of Directors of INTRAV
or otherwise bring a matter before shareholders without the Board's consent,
and thus reduce the vulnerability of the Company to an unsolicited takeover
proposal. These provisions are designed to enable the Company to develop its
business in a manner which will foster its long-term growth, with the threat of
a takeover not deemed by the Board to be in the best interests of the Company
and its shareholders and the potential disruption entailed by such a threat
reduced to the extent practicable. On the other hand, these provisions may have
an adverse effect on the ability of shareholders to influence the governance of
the Company and the possibility of shareholders receiving a premium above
market price for their securities from a potential acquirer who is not approved
by management.
TRANSFER AGENT
The Transfer Agent for the common stock is ChaseMellon Shareholder
Services, L.L.C.
31
<PAGE>
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
After this offering, we will have 5,614,200 shares of common stock
outstanding (assuming no exercise of the underwriters' over-allotment option or
options outstanding under our stock option plans) and freely tradable without
restriction or limitation under the Securities Act of 1933, except for shares
purchased or beneficially owned by "affiliates" of the Company as that term is
defined in Rule 144 under the Securities Act of 1933 (which sales would be
subject to certain limitations and restrictions described below). Of these
shares, 1,893,000 shares of common stock may be sold in the public market,
subject to the volume and other limitations of Rule 144 promulgated under the
Securities Act of 1933. The selling shareholder (who will hold 1,825,000 shares
after the offering), has agreed not to sell or otherwise dispose of any of its
shares for a period of one year after the date of this prospectus, without the
prior written consent of A.G. Edwards & Sons, Inc. Our directors and executive
officers and INTRAV have agreed not to sell or otherwise dispose of any shares
for a period of 180 days after the date of this prospectus, without the prior
written consent of A.G. Edwards & Sons, Inc. The restriction on us is subject
to exceptions for the issuance of shares pursuant to our existing stock plans
and as payment for acquisitions.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least one
year (including the holding period of any prior owner except an affiliate) is
entitled to sell in "brokers' transactions" or to market makers, within any
three-month period a number of shares that does not exceed the greater of (i)
1.0% of the number of shares of common stock then outstanding (approximately
56,142 shares immediately after this offering) or (ii) the average weekly
trading volume in the common stock during the four calendar weeks preceding the
required filing of a Form 144 with respect to such sale. Sales under Rule 144
are subject to the availability of current public information about us. Under
Rule 144(k), a person who is not deemed to have been an affiliate of us at any
time during the 90 days preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least two years, is entitled to sell such
shares without having to comply with the manner of sale, public information,
volume limitation or notice filing provisions of Rule 144.
We have filed registration statements on Form S-8 registering an aggregate
of 750,000 shares of common stock subject to outstanding stock options and
common stock issuable pursuant to our stock option plans and employee stock
purchase plan. If not otherwise subject to a lock-up agreement, shares
purchased pursuant to these plans generally would be available for resale in
the public market. After this offering we will have outstanding options to
purchase an aggregate of 522,000 shares of common stock, of which options to
purchase 464,000 shares will be exercisable within 60 days of the closing of
this offering.
UNDERWRITING
The underwriters named below, acting through their representatives, A.G.
Edwards & Sons, Inc., EVEREN Securities, Inc. and Stifel, Nicolaus & Company,
Incorporated, have severally agreed, subject to the terms and conditions of the
underwriting agreement between the underwriters and INTRAV and the selling
shareholder, to purchase from INTRAV and the selling shareholder the respective
number of shares of common stock set forth opposite their name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- ------------ ---------------
<S> <C>
A.G. Edwards & Sons, Inc..................................
EVEREN Securities, Inc....................................
Stifel, Nicolaus & Company, Incorporated..................
-----------
Total................................................. 2,500,000
===========
</TABLE>
32
<PAGE>
<PAGE>
The underwriting agreement provides that the obligations of the
underwriters are subject to certain conditions precedent and that the
underwriters will purchase all such shares of the common stock if any of such
shares are purchased. The underwriters are obligated to take and pay for all of
the shares of common stock offered by this prospectus (other than those covered
by the over-allotment option described below) if any are taken.
The representatives of the underwriters have advised INTRAV and the selling
shareholder that the underwriters propose initially to offer such shares of
common stock to the public at the public offering price set forth on the cover
page of this prospectus and to certain dealers at such price less a concession
not in excess of $ per share. The underwriters may allow, and such
dealers may re-allow, a concession not in excess of $ per share to
certain other dealers. After the shares of common stock are released for sale
to the public, the offering price and other selling terms may be changed by the
underwriters.
INTRAV and the selling shareholder have granted to the underwriters an
option, exercisable for 30 days after the date of this prospectus, to purchase
up to an aggregate 375,000 additional shares of common stock at the public
offering price, less the underwriting discounts and commissions, set forth on
the cover page of this prospectus. The underwriters may exercise such option
solely to cover over-allotments, if any, made in connection with the sale of
shares of common stock that the underwriters have agreed to purchase. To the
extent that the underwriters exercise such option, each of the underwriters
will become obligated, subject to certain conditions, to purchase approximately
the same percentage of such additional shares as the number set forth next to
such underwriter's name in the preceding table bears to the total number of
shares in such table, and INTRAV and the selling shareholder will be obligated,
pursuant to the option, to sell such shares to the underwriters.
The price of the shares of common stock purchased by the underwriters will
be the public offering price set forth on the cover page of this prospectus
less the following underwriting discounts, to be provided by INTRAV and the
selling shareholder:
<TABLE>
<CAPTION>
TOTAL WITHOUT TOTAL WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
------------- ------------------ ------------------
<S> <C> <C> <C>
By INTRAV............................................ $ $ $
By selling shareholder............................... $ $ $
</TABLE>
INTRAV expects to incur expenses of approximately $350,000 in connection
with this offering.
INTRAV and its directors and officers (other than the selling shareholder)
have agreed, for a period of 180 days after the date of this prospectus, not to
issue, sell, offer to sell, transfer, grant any third party the right to
purchase or otherwise dispose of any shares of common stock or any securities
convertible into common stock without the prior written consent of A.G. Edwards
& Sons, Inc. This 180-day period is known as the lock-up period. INTRAV's
agreement does not include shares of common stock or other securities issued
pursuant to employee stock option plans, employee stock purchase plans, or
common stock or other securities issued pursuant to options or other securities
outstanding on the date of this prospectus. However, INTRAV has agreed that
employee stock options issued during the lock-up period may not be exercised
prior to the expiration of the lock-up period. A.G. Edwards & Sons, Inc. may,
without notice and in its sole discretion, allow INTRAV and the directors and
officers to dispose of common stock or other securities prior to the expiration
of such 180-day period. There are, however, no agreements between A.G. Edwards
& Sons, Inc. and INTRAV and the directors and officers that would allow them to
do so.
In addition, the selling shareholder has agreed that it will not sell,
offer to sell, transfer, grant any third party the right to purchase or
otherwise dispose of any shares of common stock or other securities convertible
into common stock for a period of one year after the date of this prospectus,
without the prior written consent of A.G. Edwards & Sons, Inc. A.G. Edwards &
Sons, Inc. may, without notice and in its sole discretion, allow the selling
shareholder to dispose of common stock or other securities prior to the
expiration of such one year period. There are, however, no agreements between
A.G. Edwards & Sons, Inc. and the selling shareholder that would allow it to do
so.
The underwriters have informed the Company that they do not intend to
confirm sales to any accounts over which they exercise discretionary authority.
33
<PAGE>
<PAGE>
The underwriters have advised INTRAV that in connection with this offering,
certain persons participating in this offering may engage in transactions that
may have the effect of stabilizing, maintaining or otherwise affecting the
market price of the common stock at a level above that which might otherwise
prevail in the open market. These transactions may include stabilizing bids,
syndicate covering transactions and the imposition of penalty bids. A
"stabilizing bid" is a bid for or the purchase of common stock on behalf of the
underwriters for the purpose of preventing or retarding a decline in the market
price of the common stock. A "syndicate covering transaction" is the bid for or
the purchase of the common stock on behalf of the underwriters to reduce a
short position incurred by the underwriters in connection with this offering. A
"penalty bid" is an arrangement permitting the representatives to reclaim the
selling concession otherwise accruing to an underwriter or syndicate member in
connection with the offering if the common stock originally sold by such
underwriter or syndicate member is purchased by the representatives in a
syndicate covering transaction and has therefore not been effectively placed by
such underwriter or syndicate member. The representatives have advised INTRAV
that such transactions may be effected on the Nasdaq National Market or
otherwise and, if commenced, may be discontinued at any time.
INTRAV and the selling shareholder have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act.
VALIDITY OF SECURITIES
Certain legal matters in connection with the common stock offered hereby
are being passed upon for the Company and the selling shareholder by Thompson
Coburn LLP, St. Louis, Missouri. Certain legal matters will be passed upon for
the underwriters by Bryan Cave LLP, St. Louis, Missouri.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998 included in this prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report herein and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's annual report on Form 10-K for the year ended December 31,
1998, which has been filed by the Company with the Securities and Commission
(File No. 0-25990) is incorporated herein by reference.
Any statement contained in a document incorporated hereby reference shall
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
The Company will provide without charge to each person to whom this
prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits to such documents which are not specifically incorporated by
reference in such documents). Written requests for such copies should be
directed to Wayne L. Smith II, Executive Vice President and Chief Financial
Officer, Intrav, Inc., 7711 Bonhomme Avenue, St. Louis, Missouri 63105.
Telephone requests may be directed to (314) 727-0500.
34
<PAGE>
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a Registration Statement on Form S-2
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Act. This prospectus does not contain
all of the information set forth in such Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission. Reference is made to such Registration Statement and to the
exhibits relating thereto for further information with respect to the Company.
Any statements contained herein concerning the provisions of any document filed
as an exhibit to the Registration Statement or otherwise filed with the
Commission or incorporated by reference herein are not necessarily complete,
and, in each instance, reference is made to the copy of such document so filed
for a more complete description of the matter involved. Each such statement is
qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy statements and other
information with the Commission. The Company's reports, proxy statements and
other information can be inspected and copied at the following public reference
facilities maintained by the Commission: 450 Fifth Street, N.W., Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material may also be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, at prescribed rates. Information on the operation
of the Public Reference Section may be obtained by calling the Commission at
1-800-SEC-0330. The Commission maintains an Internet web site that contains
reports, proxy and information statements and other information regarding
issuers who file electronically with the Commission, including the registration
statement of which this prospectus is a part, including the exhibits and any
schedules thereto. The address of that site is http://www.sec.gov.
35
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Independent Auditors' Report F-2
Consolidated Balance Sheets as of December 31, 1997 and 1998 F-3
Consolidated Statements of Income for the Years Ended
December 31, 1996, 1997 and 1998 F-4
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1996, 1997 and 1998 F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1997 and 1998 F-6
Notes to Consolidated Financial Statements F-7
</TABLE>
F-1
<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.
/s/ Deloitte & Touche LLP
St. Louis, Missouri
February 9, 1999
F-2
<PAGE>
<PAGE>
<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
<CAPTION>
DECEMBER 31,
----------------------------------
1997 1998
ASSETS --------------- ---------------
<S> <C> <C>
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 shares 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>
F-3
<PAGE>
<PAGE>
<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except share and per share data)
<CAPTION>
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>
F-4
<PAGE>
<PAGE>
<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Amounts in thousands except share data)
<CAPTION>
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 29,400 shares of
common stock for treasury (487) (487)
Issuance of 113,000 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>
F-5
<PAGE>
<PAGE>
<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<CAPTION>
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>
F-6
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
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., Liberty Cruise Line, Inc., Clipper
Adventurer, Ltd., and Clipper Odyssey, Ltd. 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
F-7
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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).
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
F-8
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
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
F-9
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
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.
F-10
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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>
F-11
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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>
F-12
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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>
F-13
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
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% 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.
F-14
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES PRICE 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>
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>
F-15
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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,
-----------------------------------------------------
1996 1997 1998
ANNUAL DATA --------------- --------------- ---------------
<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.
F-16
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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>
F-17
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The results of operations by quarter for 1997 and 1998 were as follows
(amounts in thousands except per share data):
<TABLE>
<CAPTION>
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
======== ======== ======== ======== ========
<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>
F-18
<PAGE>
<PAGE>
[The inside back cover of the Prospectus will include the title "INTRAV --
Exploring the World Since 1959," set within a picture of the world. The
background of this page will contain titles of various travel programs
offered by INTRAV.]
<PAGE>
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
YOU MAY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON STOCK
MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE
OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER
WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.
-------------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 2
Risk Factors............................ 6
Use of Proceeds......................... 9
Price Range of Common Stock and
Dividends............................. 9
Dividend Policy......................... 10
Capitalization.......................... 10
Selected Consolidated Financial Data.... 11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 12
Business................................ 19
Management.............................. 27
Holdings of Selling Shareholder and
Management............................ 29
Description of Capital Stock............ 30
Shares Eligible For Future Sale......... 32
Underwriting............................ 32
Validity of Securities.................. 34
Experts................................. 34
Incorporation of Certain Documents by
Reference............................. 34
Where You Can Find More Information..... 35
Index to Consolidated Financial
Statements............................ F-1
</TABLE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2,500,000 SHARES
INTRAV [logo]
EXPLORING THE WORLD SINCE 1959
COMMON STOCK
--------------
PROSPECTUS
--------------
A.G. EDWARDS & SONS, INC.
EVEREN SECURITIES, INC.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
, 1999
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
- ----------------------------------------------------
It is expected that the following expenses, all of which will be paid by
the Company, will be incurred in connection with the registration and
distribution of the securities being offered (all such amounts are estimates
except the Securities and Exchange Commission filing fee, NASD filing fee and
Nasdaq National Market additional listing fee):
<TABLE>
<S> <C>
Commission registration fee................................. $ 15,186
NASD registration fee....................................... 5,963
Nasdaq National Market additional listing fee............... 11,500
Blue Sky fees and expenses.................................. 2,500
Accounting fees and expenses................................ 40,000
Legal fees and expenses..................................... 120,000
Printing and engraving expenses............................. 90,000
Miscellaneous expenses...................................... 64,851
--------
Total................................................... $350,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers
- --------------------------------------------------
Pursuant to Mo. Rev. Stat. Sec. 351.355 a company incorporated under the
laws of the State of Missouri may indemnify its directors and officers against
expenses, including attorneys' fees, judgments, fines, and amounts paid in
settlement actually and reasonably incurred as a result of civil, criminal,
administrative or investigative proceedings threatened or pending against such
parties (other than such actions by or in the right of the corporation) if the
officer or director acted in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interest of the Company
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his or her conduct was unlawful. With respect to actions by or in
the right of the corporation, the corporation may indemnify directors and
officers against expenses, including attorneys' fees and amounts paid in
settlement actually and reasonably incurred in connection with the defense or
settlement of the action or suit, if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interest of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct, unless and only to the
extent that the court in which such action is brought determines the person is
entitled to indemnification.
Section 357.355 allows a corporation to adopt provisions in its articles of
incorporation or bylaws or to enter into agreements (which bylaws or agreements
have been adopted by the shareholders) which provide for indemnity of the
corporation's officers and directors based on a lower standard of conduct,
except for knowingly fraudulent conduct, deliberately dishonest conduct or
willful misconduct.
In addition, under Missouri law, the Company may purchase and maintain
insurance on behalf of its officers and directors for any liability incurred by
such parties in connection with their status as an officer or director of the
Company, regardless of whether the Company would have the power under Missouri
law to indemnify its officers or directors against such liability.
Article Ten of the Company's Restated Articles of Incorporation provides
that the Company shall indemnify its officers and directors in all actions,
whether derivative, nonderivative, criminal, administrative or investigative,
if such party's conduct is not finally adjudged to be knowingly fraudulent,
deliberately dishonest or willful misconduct. The Company also maintains
directors' and officers' liability insurance which protects each director or
officer from liability for actions taken in their capacity as directors or
officers.
II-1
<PAGE>
<PAGE>
Section 7 of the Underwriting Agreement also provides for indemnification
by the underwriters of the Company's officers and directors for certain
liabilities under the Securities Act.
Item 16. Exhibits
- -----------------
a. Exhibits. See Exhibit Index.
--------
b. 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.
Item 17. Undertakings
- ---------------------
(1) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(2) The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed a new Registration Statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-2 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Clayton, State of
Missouri, on March 31, 1999.
INTRAV, INC.
By: /s/ WAYNE L. SMITH II
--------------------------------
Wayne L. Smith II
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
<F*> 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
Wayne L. Smith II Director
Principal Financial and Accounting Officer
<F*> Chairman of the Board March 31, 1999
-------------------------------------------
Barney A. Ebsworth
<F*> Director March 31, 1999
-------------------------------------------
John B. Biggs, Jr.
<F*> Director March 31, 1999
-------------------------------------------
William H.T. Bush
<F*> Director March 31, 1999
-------------------------------------------
Robert H. Chapman
<FN>
- -------
<F*>By: /s/ WAYNE L. SMITH II
-----------------------------------
Wayne L. Smith II,
Attorney-in-fact
</TABLE>
II-3
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
1.1 Form of Underwriting Agreement.<F*>
3.1.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.
3.1.b Amendment to Restated Articles of Incorporation of the
Registrant, filed as Exhibit 3(i)(b) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998, is
incorporated herein by reference.
3.2.a Amended and Restated Bylaws of the Registrant, filed as
Exhibit 3(ii) to the Registrant's Registration Statement on
Form S-1 (No. 33-90444), is incorporated herein by
reference.
3.2.b Amendment to Restated Bylaws of the Registrant, filed as
Exhibit 3(ii)(b) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998, is incorporated herein
by reference.
5.1 Opinion of Thompson Coburn, as to the validity of the
issuance of the common stock.<F*>
10.1 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.
10.2 Amended and Restated Loan Agreement, dated October 30, 1998,
between the Registrant and Nations Bank, N.A., as amended by
that certain Amendment Number One to Loan Agreement, dated
January 18, 1999, filed as Exhibit 10(i) to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998,
is incorporated herein by reference.
10.3 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.
10.4.a 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 Registrant's Registration Statement
on Form S-1 (No. 33-90444), is incorporated herein by
reference.
10.4.b Second Form of Option Agreement for Awards of Options under
Amended Incentive Stock Plan, filed as Exhibit 10(v) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by reference.
10.5 Deferred Compensation Agreement by and between Clipper
Cruise Line, Inc. and Paul H. Duynhouwer, dated December 23,
1996, filed as Exhibit 10(iii)(A)(7) to the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1996, is incorporated herein by reference.
10.6 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.
II-4
<PAGE>
<PAGE>
<CAPTION>
EXHIBIT INDEX (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
10.7 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.
10.8 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.
23.1 Consent of Thompson Coburn LLP (included in Exhibit
5.1).<F*>
23.2 Consent of Deloitte & Touche LLP.<F*>
24.1 Power of Attorney.<F**>
27.1 Financial Data Schedule.<F**>
<FN>
- -------
<F*> Filed herewith.
<F**> Previously filed.
</TABLE>
II-5
<PAGE>
2,500,000 SHARES<F*>
COMMON STOCK
($.01 PAR VALUE)
UNDERWRITING AGREEMENT
April ___, 1999
A.G. EDWARDS & SONS, INC.
EVEREN SECURITIES, INC.
STIFEL, NICOLAUS & COMPANY, INCORPORATED
As Representatives of the Several Underwriters
c/o A.G. Edwards & Sons, Inc.
One North Jefferson Avenue
St. Louis, Missouri 63103
Ladies and Gentlemen:
The undersigned, Intrav, Inc., a Missouri corporation (the
"Company"), and the Revocable Trust of Barney A. Ebsworth, dated July
23, 1986, as amended, (the "Selling Shareholder"), hereby address you as
the representatives (the "Representatives") of each of the persons,
firms and corporations listed on Schedule I hereto (collectively, the
"Underwriters") and hereby confirm their agreement with the several
Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and
sell to the Underwriters 500,000 shares of its Common Stock, par value
$.01 per share, and the Selling Shareholder proposes to sell to the
Underwriters 2,000,000 shares of the Company's Common Stock, par value
$.01 per share (such 2,500,000 shares of Common Stock are herein
collectively referred to as the "Firm Shares"). Solely for the purpose
of covering over-allotments in the sale of the Firm Shares, the Company
and the Selling Shareholder further propose to grant the Underwriters
the right to purchase up to an additional 375,000 shares of Common Stock
(the "Option Shares"), as provided in Section 3 of this Agreement. The
Firm Shares and the Option Shares are herein sometimes referred to as
the "Shares" and are more fully described in the Prospectus hereinafter
defined.
[FN]
- ----------------------
<F*> The Company and the Selling Shareholder have granted the
Underwriters the option to purchase an aggregate of 375,000 additional
shares of Common Stock to cover over-allotments, if any.
<PAGE>
<PAGE>
2. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis
of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees
and the Selling Shareholder agrees, severally and not jointly, to sell
to the Underwriters, and each such Underwriter agrees, severally and not
jointly, (a) to purchase from the Company and from the Selling
Shareholder, pro rata, at a purchase price of $ per share, the number
of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto and (b) to purchase from the Company and the Selling
Shareholder any additional number of Option Shares which such
Underwriter may become obligated to purchase pursuant to Section 3
hereof.
The Company and the Selling Shareholder will deliver definitive
certificates for the Firm Shares at the office of A.G. Edwards & Sons,
Inc., One North Jefferson Avenue, St. Louis, Missouri 63103 ("Edwards'
Office"), or such other place as you and the Company may mutually agree
upon (the "Place of Closing"), for the accounts of the several
Underwriters against payment to the Company and the Selling Shareholder
of the purchase price for the Firm Shares sold by them to the several
Underwriters by wire transfer of immediately available funds to a bank
account designated by the Company and the Selling Shareholder for their
respective portion of the purchase price, at 10:00 a.m., St. Louis time,
on ____________ ___, 1999, or at such other time and date not later than
five full business days thereafter as you and the Company may agree,
such time and date of payment and delivery being herein called the
"Closing Date."
The certificates for the Firm Shares so to be delivered will be
made available to you for inspection at Edwards' Office (or such other
place as you and the Company may mutually agree upon) at least one full
business day prior to the Closing Date and will be in such names and
denominations as you may request at least forty-eight hours prior to the
Closing Date.
It is understood that an Underwriter, individually, may (but shall
not be obligated to) make payment on behalf of the other Underwriters
whose funds shall not have been received prior to the Closing Date for
Shares to be purchased by such Underwriter. Any such payment by an
Underwriter shall not relieve the other Underwriters of any of their
obligations hereunder.
It is understood that the Underwriters propose to offer the Shares
to the public upon the terms and conditions set forth in the
Registration Statement hereinafter defined.
3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES. The
Company and the Selling Shareholder hereby grant options to the
Underwriters to purchase from them on a pro rata basis up to 75,000 and
300,000 Option Shares, respectively, on the same terms and conditions as
2
<PAGE>
<PAGE>
the Firm Shares; provided, however, that such options may be exercised
only for the purpose of covering any over-allotments which may be made
by them in the sale of the Firm Shares. No Option Shares shall be sold
or delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered.
The options are exercisable on behalf of the several Underwriters
by you, as Representatives, at any time, and from time to time, before
the expiration of 30 days from the date of the Prospectus (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next day
thereunder when The Nasdaq National Market is open for trading), for the
purchase of all or part of the Option Shares covered thereby, by notice
given by you to the Company and the Selling Shareholder in the manner
provided in Section 13 hereof, setting forth the number of Option Shares
as to which the Underwriters are exercising the options, and the date of
delivery of said Option Shares, which date shall not be more than five
business days after such notice unless otherwise agreed to by the
parties. You may terminate the options at any time, as to any
unexercised portion thereof, by giving written notice to the Company and
the Selling Shareholder to such effect.
You, as Representatives, shall make such allocation of the Option
Shares among the Underwriters as may be required to eliminate purchases
of fractional Shares.
Delivery of the Option Shares with respect to which the options
shall have been exercised shall be made to or upon your order at
Edwards' Office (or at such other place as you and the Company may
mutually agree upon), against payment by you of the per share purchase
price to the Company and the Selling Shareholder by wire transfer of
immediately available funds to a bank account designated by the Company
and the Selling Shareholder, respectively. Such payment and delivery
shall be made at 10:00 a.m., St. Louis time, on the date designated in
the notice given by you as above provided for (which may be the same as
the Closing Date), unless some other date and time are agreed upon,
which date and time of payment and delivery are called the "Option
Closing Date." The certificates for the Option Shares so to be
delivered will be made available to you for inspection at Edwards'
Office at least one full business day prior to the Option Closing Date
and will be in such names and denominations as you may request at least
forty-eight hours prior to the Option Closing Date. On the Option
Closing Date, the Company and the Selling Shareholder shall provide the
Underwriters such representations, warranties, agreements, opinions,
letters, certificates and covenants with respect to the Option Shares as
are required to be delivered on the Closing Date with respect to the
Firm Shares.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
AND THE SELLING SHAREHOLDER. (a) The Company and the Selling
Shareholder represent and warrant to and agree with each Underwriter
that:
3
<PAGE>
<PAGE>
(i) A registration statement (Registration No. 333-
73101) on Form S-2 with respect to the Shares, including a
preliminary prospectus, and such amendments to such registration
statement as may have been required to the date of this Agreement,
has been carefully prepared by the Company pursuant to and in
conformity with the requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and the rules and regulations thereunder
(the "1933 Act Rules and Regulations") of the Securities and
Exchange Commission (the "SEC") and has been filed with the SEC
under the 1933 Act. The Company meets the requirements for use of
Form S-2 under the 1933 Act. Copies of such registration
statement, including any amendments thereto, each related
preliminary prospectus (meeting the requirements of Rule 430 or
430A of the 1933 Act Rules and Regulations) contained therein, and
the exhibits and financial statements thereto have heretofore been
delivered by the Company to you. If such registration statement
has not become effective under the 1933 Act, a further amendment
to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to
become effective will be filed promptly by the Company with the
SEC. If such registration statement has become effective under
the 1933 Act, a final prospectus containing information permitted
to be omitted at the time of effectiveness by Rule 430A of the
1933 Act Rules and Regulations will be filed promptly by the
Company with the SEC in accordance with Rule 424(b) of the 1933
Act Rules and Regulations. The term "Registration Statement" as
used herein means the registration statement as amended at the
time it becomes effective under the 1933 Act (the "Effective
Date"), including financial statements, all exhibits and all
documents incorporated by reference therein pursuant to Item 12 of
Form S-2 under the 1933 Act and, if applicable, the information
deemed to be included by Rule 430A of the 1933 Act Rules and
Regulations. If it is contemplated, at the time this Agreement is
executed, that a post-effective amendment to such registration
statement will be filed and must be declared effective before the
offering of Shares may commence, the term "Registration Statement"
as used herein means the registration statement as amended by said
post-effective amendment. If an abbreviated registration
statement is prepared and filed with the SEC in accordance with
Rule 462(b) under the 1933 Act (an "Abbreviated Registration
Statement"), the term "Registration Statement" as used in this
Agreement includes the Abbreviated Registration Statement. The
term "Prospectus" as used herein means (i) the prospectus as first
filed with the SEC pursuant to Rule 424(b) of the 1933 Act Rules
and Regulations, or (ii) if no such filing is required, the form
of final prospectus included in the Registration Statement at the
Effective Date or (iii) if a Term Sheet or Abbreviated Term Sheet
(as such terms are defined in Rules 434(b) and 434(c),
respectively, of the 1933 Act Rules and Regulations) is filed with
the SEC pursuant to Rule 424(b)(7) of the 1933 Act Rules and
Regulations, the Term Sheet or Abbreviated Term Sheet and the last
Preliminary Prospectus filed with the SEC prior to the time the
Registration Statement became effective, taken together,
including, in each case, the documents incorporated by
4
<PAGE>
<PAGE>
reference therein pursuant to Item 12 of Form S-2 under the 1933
Act. The term "Preliminary Prospectus" as used herein shall mean
a preliminary prospectus as contemplated by Rule 430 or 430A of
the 1933 Act Rules and Regulations included at any time in the
Registration Statement. For purposes of this Agreement, the words
"amend," "amendment," "amended," "supplement" or "supplemented"
with respect to the Registration Statement or the Prospectus shall
mean amendments or supplements to the Registration Statement or
the Prospectus, as the case may be as well as documents filed
after the date of this Agreement and prior to the completion of
the distribution of the Shares and incorporated by reference
therein as described above.
(ii) Neither the SEC nor any state or other jurisdiction
or other regulatory body has issued, and neither is, to the
knowledge of the Company, threatening to issue, any stop order
under the 1933 Act or other order suspending the effectiveness of
the Registration Statement (as amended or supplemented) or
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus or suspending the qualification or registration of
the Shares for offering or sale in any jurisdiction nor instituted
or, to the knowledge of the Company, threatened to institute
proceedings for any such purpose. Each Preliminary Prospectus at
its date of issue, the Registration Statement and the Prospectus
and any amendments or supplements thereto contain or will contain,
as the case may be, all statements which are required to be stated
therein by, and in all material respects conform or will conform,
as the case may be, to the requirements of, the 1933 Act and the
1933 Act Rules and Regulations. Neither the Registration
Statement nor any amendment thereto, as of the applicable
effective date, contains or will contain, as the case may be, any
untrue statement of a material fact or omits or will omit to state
any material fact required to be stated therein or necessary to
make the statements therein, not misleading, and neither any
Preliminary Prospectus, the Prospectus nor any supplement thereto
contains or will contain, as the case may be, any untrue statement
of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the
Company makes no representation or warranty as to information
contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon,
and in conformity with, written information furnished to the
Company relating to the Underwriters by or on behalf of the
Underwriters expressly for use in the preparation thereof (as
provided in Section 14 hereof). There is no contract or document
required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. The
documents incorporated by reference in the Prospectus pursuant to
Item 12 of Form S-2 under the 1933 Act, at the time they were
filed with the SEC, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act"),
5
<PAGE>
<PAGE>
and the rules and regulations adopted by the SEC thereunder (the
"1934 Act Rules and Regulations").
(iii) This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally
binding obligation of the Company enforceable against the Company
in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and by general principles of
equity and except to the extent the enforceability of the
indemnification and contribution provisions hereof and thereof may
be limited by public policy provisions as expressed in the 1933
Act as construed by courts of competent jurisdiction
(collectively, the "Exceptions").
(iv) The Company and its subsidiaries have been duly
organized and are validly existing as corporations in good
standing under the laws of the states or other jurisdictions in
which they are incorporated, with full power and authority
(corporate and other) to own, lease and operate their properties
and conduct their businesses as described in the Prospectus and,
with respect to the Company, to execute and deliver, and perform
the Company's obligations under, this Agreement; the Company and
its subsidiaries are duly qualified to do business as foreign
corporations in good standing in each state or other jurisdiction
in which their ownership or leasing of property or conduct of
business legally requires such qualification, except where the
failure to be so qualified, individually or in the aggregate,
would not have a Material Adverse Effect. The term "Material
Adverse Effect" as used herein means any material adverse effect
on the condition (financial or other), net worth, business,
affairs, management, prospects, results of operations or cash flow
of the Company and its subsidiaries, taken as a whole.
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the
Prospectus and, since the respective dates as of which information
is given in the Prospectus, there has not been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting
the general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth in the
Prospectus.
6
<PAGE>
<PAGE>
(vi) The issuance and sale of the Shares and the
execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions herein
contemplated, will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any properties or assets of the
Company or any of its subsidiaries under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which
any of the properties or assets of the Company or any of its
subsidiaries is subject, except to such extent as, individually or
in the aggregate, does not have a Material Adverse Effect, nor
will such action result in any violation of the provisions of the
Company's articles of incorporation or bylaws, [each as currently
in effect], or any statute, rule, regulation, treaty, convention
or other law, or any order or judgment, of any court or
governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or
body is required for the execution, delivery and performance of
this Agreement, the issuance and sale of the Shares or the
consummation of the transactions contemplated hereby, except such
as have been, or will be prior to the Closing Date, obtained under
the 1933 Act or as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") and such consents,
approvals, authorizations, registrations or qualifications as may
be required under state securities or blue sky laws in connection
with the purchase and distribution of the Shares by the
Underwriters.
(vii) The Company has duly and validly authorized capital
stock as set forth in the Prospectus; all outstanding shares of
Common Stock of the Company and the Shares conform, or when issued
will conform, to the description thereof in the Prospectus and
have been, or, when issued and paid for in the manner described
herein will be, duly authorized, validly issued, fully paid and
non-assessable; and the issuance of the Shares to be purchased
from the Company hereunder is not subject to preemptive or other
similar rights, or, except as disclosed in the Prospectus, any
restriction upon the voting or transfer thereof pursuant to
applicable law or the Company's articles of incorporation, by-
laws, each as currently in effect, or governing documents or any
agreement to which the Company or any of its subsidiaries is a
party or by which any of them may be bound. All corporate action
required to be taken by the Company for the authorization,
issuance and sale of the Shares has been duly and validly taken.
Except as disclosed in the Prospectus, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or rights related to or entitling
any person to purchase or otherwise to acquire any shares of, or
any security convertible into or exchangeable or exercisable for,
the capital stock of, or other ownership interest in, the Company.
The
7
<PAGE>
<PAGE>
outstanding shares of capital stock of the Company's subsidiaries
have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company free and clear of any
mortgage, pledge, lien, encumbrance, charge or adverse claim and
are not the subject of any agreement or understanding with any
person and were not issued in violation of any preemptive or
similar rights; and there are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities,
commitments of sale or instruments related to or entitling any
person to purchase or otherwise acquire any shares of, or any
security convertible into or exchangeable or exercisable for, the
capital stock of, or other ownership interest in any of the
subsidiaries.
(viii) The statements set forth in the Prospectus under
the captions "Risk Factors," "Business," "Description of Capital
Stock," "Shares Eligible for Future Sale," and the statements
describing the Shares and this Agreement, insofar as they purport
to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair.
(ix) Each of the Company and its subsidiaries is in
possession of and is operating in compliance with all franchises,
grants, authorizations, licenses, certificates, permits,
easements, consents, orders and approvals ("Permits") from all
state, federal, foreign and other regulatory authorities, and has
satisfied the requirements imposed by regulatory bodies,
administrative agencies or other governmental bodies, agencies or
officials, that are required for the Company and its subsidiaries
lawfully to own, lease and operate their properties and conduct
their businesses as described in the Prospectus, and, each of the
Company and its subsidiaries is conducting its business in
compliance with all of the laws, rules and regulations of each
jurisdiction in which it conducts its business, in each case with
such exceptions, individually or in the aggregate, as would not
have a Material Adverse Effect; each of the Company and its
subsidiaries has filed all notices, reports, documents or other
information ("Notices") required to be filed under applicable
laws, rules and regulations, in each case, with such exceptions,
individually or in the aggregate, as would not have a Material
Adverse Effect; and, except as otherwise specifically described in
the Prospectus, neither the Company nor any of its subsidiaries
has received any notification from any court or governmental body,
authority or agency, relating to the revocation or modification of
any such Permit or, to the effect that any additional
authorization, approval, order, consent, license, certificate,
permit, registration or qualification ("Approvals") from such
regulatory authority is needed to be obtained by any of them, in
any case where it could be reasonably expected that obtaining such
Approvals or the failure to obtain such Approvals, individually or
in the aggregate, would have a Material Adverse Effect.
8
<PAGE>
<PAGE>
(x) The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax
returns and paid all taxes shown as due thereon; all such tax
returns are complete and correct in all material respects; all tax
liabilities are adequately provided for on the books of the
Company and its subsidiaries (except to such extent as would not
have a Material Adverse Effect); the Company and its subsidiaries
have made all necessary payroll tax payments and are current and
up-to-date; and the Company and its subsidiaries have no knowledge
of any tax proceeding or action pending or threatened against the
Company or its subsidiaries which, individually or in the
aggregate, might reasonably be expected to have a Material Adverse
Effect.
(xi) Except as described in the Prospectus, the Company
and its subsidiaries own or possess, or can acquire on reasonable
terms, adequate patents, patent licenses, trademarks, service
marks and trade names necessary to conduct the business now
operated by them, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any
patents, patent licenses, trademarks, service marks or trade names
which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
(xii) The Company and its subsidiaries have good and
marketable title in fee simple to all items of real property and
good and marketable title to all personal property owned by them,
in each case free and clear of all liens, encumbrances,
restrictions and defects except such as are described in the
Prospectus, described or referenced in exhibits to the
Registration Statement, or do not materially affect the value of
such property and do not materially interfere with the use made
and proposed to be made of such property; and any property held
under lease or sublease by the Company or any of its subsidiaries
is held under valid, subsisting and enforceable leases or
subleases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and neither the
Company nor any of its subsidiaries has any notice or knowledge of
any material claim of any sort which has been, or may be, asserted
by anyone adverse to the Company's or any of its subsidiaries
rights as lessee or sublessee under any lease or sublease
described above, or affecting or questioning the Company's or any
of its subsidiaries' rights to the continued possession of the
leased or subleased premises under any such lease or sublease in
conflict with the terms thereof.
(xiii) The Company, directly or indirectly, holds good
and marketable title to each of the vessels owned by them, free
and clear from all liens, encumbrances, restrictions and defects,
other than those described in the Prospectus, described or
9
<PAGE>
<PAGE>
referenced in exhibits to the Registration Statement, and maritime
liens in the ordinary course of business.
(xiv) The Company is in compliance with all material
standards and regulations applicable to its vessels, including
without limitation all material, standards and regulations issued
by the International Maritime Organization and The Federal
Maritime Commission.
(xv) Except as described in the Prospectus, there is no
factual basis for any action, suit or other proceeding involving
the Company or any of its subsidiaries or any of their material
assets for any failure of the Company or any of its subsidiaries,
or any predecessor thereof, to comply with any requirements of
federal, state or local regulation relating to air, water, solid
waste management, hazardous or toxic substances, or the protection
of health or the environment. Except as described in the
Prospectus, none of the property owned or leased by the Company or
any of its subsidiaries is, to the best knowledge of the Company,
contaminated with any waste or hazardous substances, and neither
the Company nor any of its subsidiaries may be deemed an "owner or
operator" of a "facility" or "vessel" which owns, possesses,
transports, generates or disposes of a "hazardous substance" as
those terms are defined in Section 9601 of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq.
------
(xvi) No labor disturbance exists with the employees of
the Company or any of its subsidiaries or is imminent which,
individually or in the aggregate, would have a Material Adverse
Effect. None of the employees of the Company or any of its
subsidiaries is represented by a union and, to the best knowledge
of the Company and its subsidiaries, no union organizing
activities are taking place. Neither the Company nor any of its
subsidiaries has violated any federal, state or local law or
foreign law relating to discrimination in hiring, promotion or pay
of employees, nor any applicable wage or hour laws, or the rules
and regulations thereunder, or analogous foreign laws and
regulations, which might reasonably be expected to, individually
or in the aggregate, result in a Material Adverse Effect.
(xvii) The Company and its subsidiaries are in
compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company and its subsidiaries
would have any liability; the Company and its subsidiaries have
not incurred and do not expect to incur liability under (i) Title
IV of ERISA with respect to
10
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<PAGE>
termination of, or withdrawal from, any "pension plan" or (ii)
Section 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the
Company or any of its subsidiaries would have any liability that
is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects, and nothing has occurred,
whether by action or by failure to act, which would cause the loss
of such qualification.
(xviii) The Company and its subsidiaries maintain
insurance of the types and in the amounts generally deemed
adequate for its business, including, but not limited to,
directors' and officers' insurance, insurance covering real and
personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, all of which
insurance is in full force and effect. Neither the Company nor
any of its subsidiaries has been refused any insurance coverage
sought or applied for, and the Company has no reason to believe
that it and its subsidiaries will not be able to renew their
existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect.
(xix) Neither the Company nor any of its subsidiaries is,
or with the giving of notice or lapse of time or both would be, in
default or violation with respect to its articles of incorporation
or by-laws, each as currently in effect. Neither the Company nor
any of its subsidiaries is, or with the giving of notice or lapse
of time or both would be, in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
properties or assets of the Company or any of its subsidiaries is
subject, or in violation of any statutes, laws, ordinances or
governmental rules or regulations or any orders or decrees to
which it is subject, including, without limitation, Section 13 of
the 1934 Act, which default or violation, individually or in the
aggregate, would have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries has, at any time during the
past five years, (A) made any unlawful contributions to any
candidate for any political office, or failed fully to disclose
any contribution in violation of law, or (B) made any payment to
any state, federal or foreign government official, or other person
charged with similar public or quasi-public duty (other than
payment required or permitted by applicable law).
(xx) Other than as set forth in the Prospectus, there
are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a
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party or of which any property of the Company or any of its
subsidiaries is the subject that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect or which would materially
and adversely affect the consummation of the transactions
contemplated hereby or which is required to be disclosed in the
Prospectus; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated.
(xxi) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be a "holding company,"
or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company,"
as such terms are defined in the Public Utility Holding Company
Act of 1935, as amended (the "1935 Act").
(xxii) The Company is not and, after giving effect to
the offering and sale of the Shares, will not be an "investment
company" or an entity "controlled" by an "investment company," as
such terms are defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
(xxiii) To the best of the Company's knowledge, Deloitte
& Touche, LLP, the accounting firm which has certified the
financial statements filed with or incorporated by reference in
and as a part of the Registration Statement, is an independent
public accounting firm within the meaning of the 1933 Act and the
1933 Act Rules and Regulations. The Company and each of its
subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that: (1) transactions
are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (3) access to assets is permitted only
in accordance with management's general or specific authorization;
and (4) the recorded accounts for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect thereto. The consolidated financial statements
of the Company, including the notes thereto, filed with (or
incorporated by reference) and as a part of the Registration
Statement or Prospectus, are accurate in all material respects and
present fairly the financial condition of the Company and its
subsidiaries as of the respective dates thereof and the
consolidated results of operations and changes in financial
position and consolidated statements of cash flow for the
respective periods covered thereby, all in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods involved except as otherwise
disclosed therein. All adjustments necessary for a fair
presentation of results for such periods have been made. The
selected financial data included or incorporated by reference in
the Registration Statement and
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Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited
financial statements from which such data was derived. Any
operating or other statistical data included or incorporated by
reference in the Registration Statement and Prospectus comply in
all material respects with the 1933 Act and the 1933 Act Rules and
Regulations and present fairly the information shown therein.
(xxiv) Except as disclosed in the Prospectus, no holder
of any security of the Company has any right to require
registration of shares of Common Stock or any other security of
the Company because of the filing of the Registration Statement or
the consummation of the transactions contemplated hereby and,
except as disclosed in the Prospectus, no person has the right to
require registration under the 1933 Act of any shares of Common
Stock or other securities of the Company. No person has the
right, contractual or otherwise, to cause the Company to permit
such person to underwrite the sale of any of the Shares. Except
for this Agreement, there are no contracts, agreements or
understandings between the Company or any of its subsidiaries and
any person that would give rise to a valid claim against the
Company, its subsidiaries or any Underwriter for a brokerage
commission, finder's fee or like payment in connection with the
issuance, purchase and sale of the Shares.
(xxv) The Company has not distributed and, prior to the
later to occur of (i) the Closing Date or the Option Closing Date,
if any, and (ii) completion of the distribution of the Shares,
will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration
Statement, the Preliminary Prospectus or the Prospectus.
(xxvi) The Company has not taken and will not take,
directly or indirectly, any action in violation of Regulation M
under the 1934 Act Rules and Regulations or designed to or which
might reasonably be expected to cause or result in stabilization
or manipulation of the price of the Company's Common Stock, and
the Company is not aware of any such action taken or to be taken
by affiliates of the Company.
(b) The Selling Shareholder represents and warrants to and
agrees with each Underwriter and the Company that:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by it of this Agreement,
and the Custody Agreement and Power of Attorney (as defined
herein) and the sale and delivery of the Shares to be sold by such
Selling Shareholder hereunder and thereunder have been given and
are in full force and effect on the date hereof and will be in
full force and effect on the Closing Date (and, if
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applicable, the Option Closing Date). This Agreement and the
Custody Agreement and Power of Attorney have been duly authorized,
executed and delivered by or on behalf of such Selling Shareholder
and are the valid and legally binding obligations of such Selling
Shareholder enforceable in accordance with their terms except as
enforceability may be limited by the Exceptions.
(ii) Such Selling Shareholder has, and on the Closing
Date (and, if applicable, the Option Closing Date) will have good,
valid and marketable title to the Shares to be sold by such
Selling Shareholder, free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security interests
whatsoever, including any restriction on transfer other than
pursuant to this Agreement and the Custody Agreement and Power of
Attorney referred to herein, and now has, and on the Closing Date
(and, if applicable, the Option Closing Date), will have, full
right, power and authority, and any approval required by law, to
enter into this Agreement and the Custody Agreement and Power of
Attorney and to sell, assign, transfer and deliver the Shares to
be sold by such Selling Shareholder hereunder.
(iii) Upon delivery of and payment for such Shares
hereunder, the several Underwriters will acquire good, valid and
marketable title to such Shares to be sold by such Selling
Shareholder hereunder, free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security interests
whatsoever.
(iv) The execution, delivery and performance of this
Agreement and the Custody Agreement and Power of Attorney by such
Selling Shareholder, and the consummation by such Selling
Shareholder of the transactions contemplated herein and therein
will not conflict with or result in a breach or violation of any
the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any of the properties or assets of such Selling
Shareholder under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Shareholder is a party or by which it is bound or to which any of
the properties or assets of such Selling Shareholder is subject
(or any certificate or articles of incorporation or bylaws,
partnership agreement, trust document or articles of association
of such Selling Shareholder, as applicable), or any order or
decree, or statute, law, ordinance, rule or regulation applicable
to such Selling Shareholder of any court or of any governmental
agency, authority or body having jurisdiction over such Selling
Shareholder or its properties or assets.
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(v) Such Selling Shareholder does not have any
knowledge or any reason to believe that the Registration Statement
or the Prospectus (or any amendment or supplement thereto)
contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading. The representations
and warranties of such Selling Shareholder in the Custody
Agreement and Power of Attorney are, and on the Closing Date and
any Option Closing Date will be, true and correct.
(vi) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to or which
might be reasonably expected to cause or result in stabilization
or manipulation of the price of the Common Stock, and such Selling
Shareholder is not aware of any such action taken or to be taken
by affiliates of such Selling Shareholder.
(vii) When the Registration Statement becomes effective
and at all times subsequent thereto until distribution of the
Shares is completed, such information in the Registration
Statement and Prospectus and any amendments or supplements thereto
as specifically relates to such Selling Shareholder will not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(viii) Certificates in negotiable form representing all
of the Shares to be sold by such Selling Shareholder hereunder
have been placed in the custody of ____________ (the "Custodian")
under a Custody Agreement and Power of Attorney (the "Custody
Agreement and Power of Attorney"), duly executed and delivered by
such Selling Shareholder, with the Custodian having the authority
to deliver the Shares to be sold by such Selling Shareholder
hereunder, and such Selling Shareholder has duly executed and
delivered the Custody Agreement and Power of Attorney appointing
____________ and ____________ as such Selling Shareholder's agents
and attorneys-in-fact (the "Attorneys-in-Fact") with the
Attorneys-in-Fact having authority to execute and deliver this
Agreement on behalf of such Selling Shareholder, to determine the
purchase price to be paid by the Underwriters to the Selling
Shareholder as provided in Section 2, to authorize the delivery of
the Shares to be sold by it hereunder and otherwise to act on
behalf of such Selling Shareholder in connection with the
transactions contemplated by this Agreement and such Custody
Agreement.
(ix) The Shares represented by the certificates held in
custody for such Selling Shareholder under the Custody Agreement
and Power of Attorney are subject to the interests of the
Underwriters hereunder, and the arrangements made by such Selling
Shareholder for such custody, and the appointment by such Selling
Shareholder of the
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Custodian and of the Attorneys-in-Fact under the Custody Agreement
and Power of Attorney, are, except as specifically provided
therein, irrevocable.
(x) The obligations of such Selling Shareholder
hereunder and under the Custody Agreement and Power of Attorney
shall not be terminated by any Selling Shareholder or operation of
law, whether by the death or incapacity of any individual Selling
Shareholder or, in the case of an estate or trust, by the death or
incapacity of any executor or trustee or the termination of such
estate or trust, or, in the case of a partnership, corporation or
other entity, upon any dissolution, winding up, distribution of
assets or other event affecting the legal existence of such
Selling Shareholder, or by the occurrence of any other event; and
if such Selling Shareholder or any such executor or trustee should
die or become incapacitated, or if any such estate or trust should
be terminated, or if any such partnership, corporation or other
entity should dissolve, wind up or distribute assets or any other
event affecting the legal existence of such Selling Shareholder
should occur, or if any other such event should occur before the
delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of such Selling
Shareholder in accordance with the terms and conditions of this
Agreement and of the Custody Agreement; and actions taken by the
Custodian or by the Attorneys-in-Fact pursuant to the Custody
Agreement and Power of Attorney shall be as valid as if such
death, incapacity, termination, dissolution, winding up,
distribution of assets or other event had not occurred, regardless
of whether or not the Custodian or Attorneys-in-Fact, or any of
them, shall have received notice of such death, incapacity,
termination, dissolution, winding up, distribution of assets or
other event.
(xi) Such Selling Shareholder is not prompted to sell
shares of Common Stock by any information concerning the Company
or any of its subsidiaries which is not included in the
Registration Statement.
(c) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby; and any certificate signed by or on behalf of
the Selling Shareholder as such and delivered to you or to counsel for
the Underwriters shall be deemed a representation and warranty by the
Selling Shareholder to each Underwriter as to the matters covered
thereby.
5. ADDITIONAL COVENANTS. The Company and, where expressly
indicated, the Selling Shareholder, covenant and agree with the several
Underwriters that:
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(a) The Company will timely transmit copies of the
Prospectus, and any amendments or supplements thereto, or a Term Sheet
or Abbreviated Term Sheet, as applicable, to the SEC for filing pursuant
to Rule 424(b) of the 1933 Act Rules and Regulations.
(b) The Company will deliver to each of the Representatives,
and to counsel for the Underwriters (i) three signed copies of the
Registration Statement as originally filed, including copies of exhibits
thereto (other than any exhibits incorporated by reference therein), of
any amendments and supplements to the Registration Statement (including
all documents incorporated by reference therein) and (ii) a signed copy
of each consent and certificate included or incorporated by reference
in, or filed as an exhibit to, the Registration Statement as so amended
or supplemented; the Company will deliver to the Underwriters through
the Representatives as soon as practicable after the date of this
Agreement as many copies of the Prospectus (including all documents
incorporated by reference therein) as the Representatives may reasonably
request for the purposes contemplated by the 1933 Act; if the
Registration Statement is not effective under the 1933 Act, the Company
will use its best efforts to cause the Registration Statement to become
effective as promptly as possible, and it will notify you, promptly
after it shall receive notice thereof, of the time when the Registration
Statement has become effective; the Company will promptly advise the
Representatives of any request of the SEC for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, and of the issuance by the SEC or any state or
other jurisdiction or other regulatory body of any stop order under the
1933 Act or other order suspending the effectiveness of the Registration
Statement (as amended or supplemented) or preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending the
qualification or registration of the Shares for offering or sale in any
jurisdiction, and of the institution or threat of any proceedings
therefor, of which the Company shall have received notice or otherwise
have knowledge prior to the completion of the distribution of the
Shares; and the Company will use its best efforts to prevent the
issuance of any such stop order or other order and, if issued, to secure
the prompt removal thereof.
(c) The Company will not file any amendment or supplement to
the Registration Statement, the Prospectus (or any other prospectus
relating to the Shares filed pursuant to Rule 424(b) of the 1933 Act
Rules and Regulations that differs from the Prospectus as filed pursuant
to such Rule 424(b)) and will not file any document under the 1934 Act
before the completion of the distribution of the Shares by the
Underwriters if the document would be deemed to be incorporated by
reference into the Registration Statement or the Prospectus, of which
the Underwriters shall not previously have been advised and furnished
with a copy or to which the Underwriters shall have reasonably objected
or which is not in compliance with the 1933 Act Rules and Regulations;
and the Company will promptly notify you after it shall have received
notice thereof of the time when any amendment to the Registration
Statement becomes effective or when any supplement to the Prospectus has
been filed.
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(d) During the period when a prospectus relating to any of
the Shares is required to be delivered under the 1933 Act by any
Underwriter or dealer, the Company will comply, at its own expense, with
all requirements imposed by the 1933 Act and the 1933 Act Rules and
Regulations, as now and hereafter amended, and by the rules and
regulations of the SEC thereunder, as from time to time in force, so far
as necessary to permit the continuance of sales of or dealing in the
Shares during such period in accordance with the provisions hereof and
as contemplated by the Prospectus.
(e) If, during the period when a prospectus relating to any
of the Shares is required to be delivered under the 1933 Act by any
Underwriter or dealer, (i) any event relating to or affecting the
Company or of which the Company shall be advised in writing by the
Representatives shall occur as a result of which, in the opinion of the
Company or the Representatives, the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or (ii) it shall be necessary to amend or supplement the
Registration Statement or the Prospectus to comply with the 1933 Act,
the 1933 Act Rules and Regulations, the 1934 Act or the 1934 Act Rules
and Regulations, the Company will forthwith at its expense prepare and
file with the SEC, and furnish to the Representatives a reasonable
number of copies of, such amendment or supplement or other filing that
will correct such statement or omission or effect such compliance;
provided, however, that should such event relate solely to the
activities of any of the Underwriters, then the Underwriters will assume
the expense of preparing and furnishing copies of any such amendment or
supplement.
(f) During the period when a prospectus relating to any of
the Shares is required to be delivered under the 1933 Act by any
Underwriter or dealer, the Company will furnish such proper information
as may be lawfully required and otherwise cooperate in qualifying the
Shares for offer and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may reasonably designate and will
file and make in each year such statements or reports as are or may be
reasonably required by the laws of such jurisdictions; provided,
however, that the Company shall not be required to qualify as a foreign
corporation or shall be required to qualify as a dealer in securities or
to file a general consent to service of process under the laws of any
jurisdiction.
(g) In accordance with Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Rules and Regulations, the Company will make
generally available to its security holders and to holders of the
Shares, as soon as practicable, an earning statement (which need not be
audited) in reasonable detail covering the 12 months beginning not later
than the first day of the month next
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succeeding the month in which occurred the effective date (within the
meaning of Rule 158) of the Registration Statement.
(h) During the period when a prospectus relating to any of
the Shares is required by law to be delivered by any Underwriter or
dealer, the Company will file promptly all documents required to be
filed with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
1934 Act. The Company will furnish to its security holders annual
reports containing financial statements audited by independent public
accountants and quarterly reports containing financial statements and
financial information which may be unaudited. The Company will, for a
period of five years from the Closing Date, deliver to the Underwriters
at their principal executive offices a reasonable number of copies of
annual reports, quarterly reports, current reports and copies of all
other documents, reports and information furnished by the Company to its
shareholders or filed with any securities exchange or market pursuant to
the requirements of such exchange or market or with the SEC pursuant to
the 1933 Act or the 1934 Act. The Company will deliver to the
Underwriters similar reports with respect to any significant
subsidiaries, as that term is defined in the 1933 Act Rules and
Regulations, which are not consolidated in the Company's financial
statements. Any report, document or other information required to be
furnished under this paragraph (h) shall be furnished as soon as
practicable after such report, document or information becomes
available.
(i) During the period beginning from the date of this
Agreement and continuing to and including the earlier of (i) the
termination of trading restrictions on the Shares, as determined by the
Underwriters, and (ii) 180 days after the Closing Date, the Company will
not, without the prior written consent of the Representatives, offer for
sale, sell or enter into any agreement to sell, or otherwise dispose of,
any equity securities of the Company, except for the Shares and the
shares of Common Stock issued to the Company's pursuant to the exercise
of options outstanding on the date hereof under the Company's employee
stock option plan.
(j) The Company will apply the proceeds from the sale of the
Shares as set forth in the description under "Use of Proceeds" in the
Prospectus, which description complies in all respects with the
requirements of Item 504 of Regulation S-K.
(k) The Company will promptly provide you with copies of all
correspondence to and from, and all documents issued to and by, the SEC
in connection with the registration of the Shares under the 1933 Act or
relating to any documents incorporated by reference into the
Registration Statement or the Prospectus.
(l) Prior to the Closing Date (and, if applicable, the Option
Closing Date), the Company will furnish to you, as soon as they have
been prepared, copies of any unaudited
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interim consolidated financial statements of the Company and its
subsidiaries for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(m) Except as required by law and upon providing you with
prior written notice, prior to the Closing Date (and, if applicable, the
Option Closing Date) neither the Company nor the Selling Shareholder
will issue any press releases or other communications directly or
indirectly and will hold no press conferences with respect to the
Company or any of its subsidiaries, the financial condition, results of
operations, business, properties, assets or liabilities of the Company
or any of its subsidiaries, or the offering of the Shares, without your
prior written consent.
(n) The Company will use its best efforts to obtain approval
for, and maintain the quotation of the Shares on, The Nasdaq National
Market.
(o) The Company and its [executive] officers and directors
and each holder of 5% of shares of Common Stock or securities
convertible into or exercisable or exchangeable for, shares of Common
Stock (other than the Selling Shareholder) will furnish to you on or
prior to the date of this Agreement, letters in form and substance
satisfactory to counsel for the Underwriters, pursuant to which the
Company and its [executive] officers and directors and each holder of 5%
of shares of Common Stock or securities convertible into or exercisable
or exchangeable for, shares of Common Stock (other than the Selling
Shareholder), shall agree not to directly or indirectly, offer for sale,
contract to sell, sell, distribute, grant any option, right or warrant
to purchase, pledge, hypothecate or otherwise dispose of any shares of
Common Stock, any securities convertible into, or exercisable or
exchangeable for, Common Stock or any other rights to acquire such
shares, for a period of 180 days from the Effective Date, without the
prior written consent of A.G. Edwards & Sons, Inc., except for the
Shares sold hereunder and except for sales of shares of Common Stock to
the Company's employees pursuant to the exercise of options outstanding
on the date hereof under the Company's stock option plan.
(p) The Company and its subsidiaries will maintain and keep
accurate books and records reflecting their assets and maintain internal
accounting controls which provide reasonable assurance that (1)
transactions are executed in accordance with management's authorization,
(2) transactions are recorded as necessary to permit the preparation of
the Company's consolidated financial statements and to maintain
accountability for the assets of the Company and its subsidiaries, (3)
access to the assets of the Company and its subsidiaries is permitted
only in accordance with management's authorization, and (4) the recorded
accounts of the assets of the Company and its subsidiaries are compared
with existing assets at reasonable intervals.
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(q) If the Company elects to rely on Rule 462(b) under the
1933 Act, the Company shall both file an Abbreviated Registration
Statement with the SEC in compliance with Rule 462(b) and pay the
applicable fees in accordance with Rule 111 of the 1933 Act by the
earlier of (i) 9:00 p.m., St. Louis time, on the date of this Agreement,
and (ii) the time that confirmations are given or sent, as specified by
Rule 462(b)(2).
(r) If at any time during the 90-day period after the
Registration Statement becomes effective, any rumor, publication or
event relating to or affecting the Company shall occur as a result of
which in your opinion the market price of the common stock has been or
is likely to be materially affected, regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus, except where otherwise required by law, the Company will,
after written notice from you advising the Company to the effect set
forth above, forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(s) The Selling Shareholder agrees with the several
Underwriters as follows:
(i) Such Selling Shareholder will cooperate to the
extent necessary to cause the Registration Statement or any post-
effective amendment thereto to become effective at the earliest
possible time.
(ii) Such Selling Shareholder will pay all Federal and
other taxes, if any, on the transfer or sale of the Shares being
sold by the Selling Shareholder to the Underwriters.
(iii) Such Selling Shareholder will do or perform all
things required to be done or performed by the Selling Shareholder
prior to the Closing Date or any Option Closing Date, as the case
may be, to satisfy all conditions precedent to the delivery of the
Shares pursuant to this Agreement.
(iv) Such Selling Shareholder will furnish to you on or
prior to the date of this Agreement, a letter in form and
substance satisfactory to counsel for the Underwriters, pursuant
to which such Selling Shareholder shall agree not to directly or
indirectly, offer for sale, contract to sell, sell, distribute,
grant any option, right or warrant to purchase, pledge,
hypothecate or otherwise dispose of any shares of Common Stock,
any securities convertible into, or exercisable or exchangeable
for, Common Stock or any other rights to acquire such shares, for
a period of one year from the Effective Date, without the prior
written consent of A.G. Edwards & Sons, Inc., except for the
Shares sold hereunder.
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(v) Except as stated in this Agreement and in the
Preliminary Prospectus and the Prospectus, such Selling
Shareholder has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of
the Shares.
(vi) Such Selling Shareholder will advise you promptly,
and if requested by you, will confirm such advice in writing,
within the period of time referred to in Section 5(d) hereof, of
any change in the Company's condition (financial or other), net
worth, business, affairs, management, prospects, results of
operations or cash flow or of any change in information relating
to such Selling Shareholder or the Company or any new information
relating to the Company or relating to any matter stated in the
Prospectus or any amendment or supplement thereto which comes to
the attention of such Selling Shareholder that suggests that any
statement made in the Registration Statement or the Prospectus (as
then amended or supplemented, if amended or supplemented) is or
may be untrue in any material respect or that the Registration
Statement or Prospectus (as then amended or supplemented, if
amended or supplemented) omits or may omit to state a material
fact or a fact necessary to be stated therein in order to make the
statements therein not misleading in any material respect, or of
the necessity to amend or supplement the Prospectus (as then
amended or supplemented, if amended or supplemented) in order to
comply with the 1933 Act or any other law.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase and pay for the Shares, as
provided herein, shall be subject to the accuracy, as of the date hereof
and as of the Closing Date (and, if applicable, the Option Closing
Date), of the representations and warranties of the Company and the
Selling Shareholder contained herein, to the performance by the Company
and the Selling Shareholder of their covenants and obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective not later than 1:00 p.m.,
St. Louis time, on the date hereof, or, with your consent, at a later
date and time, not later than 1:00 p.m., St. Louis time, on the first
business day following the date hereof, or at such later date and time
as may be approved by the Representatives; if the Company has elected to
rely on Rule 462(b) under the 1933 Act, the Abbreviated Registration
Statement shall have become effective not later than the earlier of
(x) 10:00 p.m. St. Louis time, on the date hereof, or (y) at such later
date and time as may be approved by the Representatives. All filings
required by Rule 424 and Rule 430A of the 1933 Act Rules and Regulations
shall have been made. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceeding for that purpose shall have been initiated or,
to the knowledge of the Company or any
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Underwriter, threatened or contemplated by the SEC, and any request of
the SEC for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to the reasonable satisfaction of the Underwriters.
(b) No Underwriter shall have advised the Company on or prior
to the Closing Date (and, if applicable, the Option Closing Date), that
the Registration Statement or Prospectus or any amendment or supplement
thereto contains an untrue statement of fact which, in the opinion of
counsel to the Underwriters, is material, or omits to state a fact
which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(c) On the Closing Date (and, if applicable, the Option
Closing Date), you shall have received the opinion of Thompson Coburn
LLP, counsel for the Company, addressed to you and dated the Closing
Date (and, if applicable, the Option Closing Date), to the effect that:
(i) The Registration Statement and all post-effective
amendments thereto and the Abbreviated Registration Statement, if
any, have become effective under the 1933 Act; any required filing
of the Prospectus or any supplement thereto pursuant to Rule
424(b) or otherwise has been made in the manner and within the
time period required thereby; and, to the knowledge of such
counsel after due inquiry, no stop or other order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending
or contemplated under the 1933 Act or under the securities laws of
any jurisdiction.
(ii) The Registration Statement and the Prospectus, and
each amendment or supplement thereto (including any document
incorporated by reference into the Prospectus), as of their
respective effective or issue date, comply as to form and appear
on their face to be appropriately responsive in all material
respects to the requirements of Form S-2 under the 1933 Act and
the applicable 1933 Act Rules and Regulations (except that such
counsel need express no opinion as to the financial statements or
other financial and statistical data included or incorporated by
reference in the Registration Statement); the Company is eligible
to register the Shares on Form S-2; and, as of the date they were
filed with the SEC, the documents incorporated by reference in the
Prospectus appear on their face to comply as to form and be
appropriately responsive in all material respects with the
requirements of the 1934 Act and the applicable 1934 Act Rules and
Regulations (except that such counsel need express no opinion as
to the financial statements or other financial or statistical data
incorporated by reference in the Registration Statement).
(iii) The descriptions in the Registration Statement and
Prospectus of statutes, laws, ordinances, rules, regulations,
legal or governmental proceedings, contracts and
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other documents are accurate in all material respects and fairly
present the information required to be shown under the 1933 Act
and the 1933 Act Rules and Regulations.
(iv) This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally
binding obligation of the Company enforceable against the Company
in accordance with its terms, except as enforceability may be
limited by the Exceptions and except to the extent the
enforceability of the indemnification and contribution provisions
of Section 7 of the Agreement may be limited by public policy
considerations as expressed in the 1933 Act and state securities
law as construed by courts of competent jurisdiction.
(v) The Company and its U.S. subsidiaries have been
duly and are validly existing as corporations in good standing
under the laws of the states or other jurisdictions in which they
are incorporated, with full power and authority (corporate and
other) to own, lease and operate their properties and conduct
their businesses as described in the Prospectus and, with respect
to the Company, to execute and deliver, and perform the Company's
obligations under, this Agreement; the Company and its U.S.
subsidiaries are duly qualified to do business as foreign
corporations in good standing in each state or other jurisdiction
in which their ownership or leasing of property or conduct of
business legally requires such qualification, except where the
failure to be so qualified, individually or in the aggregate,
would not have a Material Adverse Effect.
(vi) To the best of such counsel's knowledge, and after
due inquiry, the entities listed on Schedule II are the only
subsidiaries, direct or indirect, of the Company. The Company
owns, directly or indirectly through other subsidiaries, the
percentage indicated on Schedule II of the outstanding shares of
capital stock or other securities evidencing equity ownership of
such subsidiaries, and all such securities have been duly
authorized and validly issued, are fully paid and non-assessable
and, to the knowledge of such counsel, are owned by the Company
free and clear of any mortgage, pledge, lien, encumbrance, charge
or adverse claim (except for pledges on those shares to
NationsBank, N.A.) and are not the subject of any agreement or
understanding with any person, and were not issued in violation of
any preemptive or similar rights; and, to the knowledge of such
counsel, except as disclosed in the Prospectus, there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale, or instruments
related to or entitling any person to purchase or otherwise
acquire any shares of, or any security convertible into or
exercisable or exchangeable for, any such shares of capital stock
or other ownership interest of any of such subsidiaries.
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(vii) The issuance and sale of the Shares and the
execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions herein
contemplated, will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any properties or assets of the
Company or any of its U.S. subsidiaries under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel after due inquiry to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
properties or assets of the Company or any of its subsidiaries is
subject, except to such extent as, individually or in the
aggregate, does not have a Material Adverse Effect, nor will such
action result in any violation of the provisions of the Company's
articles of incorporation or bylaws or any statute, rule,
regulation or other law (which statute, rule, regulation or other
law would, in the experience of counsel who regularly represent
persons such as the Company, be recognized as applicable to the
Company and its subsidiaries or any of their properties), or any
order or judgment known to such counsel after due inquiry, of any
court or governmental agency or body having jurisdiction over the
Company or any of its U.S. subsidiaries or any of their
properties.
(viii) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required in connection with the execution,
delivery and performance of this Agreement, and the issuance and
sale of the Shares or the consummation of the transactions
contemplated hereby, except such as may be required under the 1933
Act or the 1933 Act Rules and Regulations and have been obtained,
or as may be required by the NASD or under state securities or
blue sky laws in connection with the purchase and distribution of
the Shares by the Underwriters. Each of the Company and its U.S.
subsidiaries has filed all Notices pursuant to, and has obtained
all Approvals required to be obtained under, and has otherwise
complied with all requirements of, all applicable laws and
regulations in connection with the issuance and sale of the
Shares, in each case with such exceptions, individually or in the
aggregate, as would not affect the validity of the Shares, their
issuance or the transactions contemplated hereby or have a
Material Adverse Effect; and no such Notices or Approvals are
required to be filed or obtained by the Company or any of its
subsidiaries in connection with the execution, delivery and
performance of this Agreement, the issuance and sale of the Shares
or the transactions contemplated hereby, in each case with such
exceptions, individually or in the aggregate, as would not affect
the validity of the Shares, their issuance or the transactions
contemplated hereby or have a Material Adverse Effect, except such
as may be required under the 1933 Act or the 1933 Act Rules and
Regulations and have been obtained, or as may be required by the
NASD or under state
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securities or blue sky laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(ix) To the knowledge of such counsel after due
inquiry and other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company
or any of its U.S. subsidiaries is a party or of which any
property of the Company or any of its U.S. subsidiaries is the
subject that, if determined adversely to the Company or any of its
U.S. subsidiaries, would individually or in the aggregate have a
material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations
of the Company and its subsidiaries taken as a whole; and, to the
knowledge of such counsel after due inquiry, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others.
(x) The Company has duly and validly authorized capital
stock as set forth under the caption "Capitalization" in the
Prospectus; all outstanding shares of Common Stock of the Company
and the Shares conform, or when issued will conform, as to legal
matters to the description thereof in the Prospectus and have been
duly authorized, validly issued, fully paid and non-assessable;
and the Shares to be sold by the Company have been duly authorized
and, when delivered and paid for in accordance with this
Agreement, will be validly issued, fully paid and non-assessable.
All corporate action required to be taken by the Company for the
authorization, issue and sale of the Shares has been duly and
validly taken. The Shares are duly authorized for trading,
subject to official notice of issuance and evidence of
satisfactory distribution, on The Nasdaq National Market. The
form of specimen certificate representing the Shares filed as an
exhibit to the Registration Statement is in valid and sufficient
form. The issuance of the Shares to be purchased from the Company
hereunder is not subject to preemptive or other similar rights,
or, except as otherwise disclosed in the Prospectus, any
restriction upon the voting or transfer thereof pursuant to
applicable law or the articles of incorporation, bylaws or
governing documents of the Company or any agreement to which the
Company or any of its subsidiaries is a party or by which any of
them may be bound; and, to such counsel's knowledge, except as
described in the Prospectus, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or rights related to or entitling
any person to purchase or otherwise acquire any shares of, or any
security convertible into or exercisable or exchangeable for, the
capital stock of, or other ownership interest in, the Company.
(xi) To the knowledge of such counsel after due inquiry,
except those of which the failure to hold would not have a
Material Adverse Effect the Company and each of its subsidiaries
hold all licenses, certificates, permits and approvals from all
state, federal and other regulatory authorities, and have
satisfied in all material respects the
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requirements imposed by regulatory bodies, administrative agencies
or other governmental bodies, agencies or officials, that are
required for the Company and its subsidiaries lawfully to own,
lease and operate its properties and conduct its business as
described in the Prospectus, and, to the knowledge of such counsel
after due inquiry, each of the Company and its subsidiaries is
conducting its business in compliance in all material respects
with all of the laws, rules and regulations of each jurisdiction
in which it conducts its business.
(xii) The statements made in the Prospectus under the
captions "Risk Factors," "Business," "Description of Capital
Stock" and "Shares Eligible for Future Sale," Item 15 of Part II
of the Registration Statement, and in the Company's Annual Report
on Form 10-K of the year ended December 31, 1998 under Item I,
"Business," Item 2, "Properties," Item 11, "Executive
Compensation" and Item 13, "Certain Relationships and Related
Transactions," to the extent that they constitute summaries of
documents referred to therein or matters of law or legal
conclusions, have been reviewed by such counsel and are accurate
summaries and fairly present the information disclosed therein.
(xiii) Neither the Company nor any of its subsidiaries
is, or with the giving of notice or lapse of time or both would
be, in default or violation with respect to its articles of
incorporation or by-laws. To the knowledge of such counsel after
due inquiry, neither the Company nor any of its subsidiaries is,
or with the giving of notice or lapse of time or both would be, in
default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or assets
of the Company or any of its subsidiaries is subject, or in
violation of any statutes, laws, ordinances or governmental rules
or regulations or any orders or decrees to which it is subject,
including, without limitation, Section 13 of the 1934 Act, and
neither the Company nor any of its subsidiaries has failed to
obtain any other license, permit, franchise, easement, consent, or
other governmental authorization necessary to the ownership,
leasing and operation of its properties or to the conduct of its
business, which default, violation or failure, individually or in
the aggregate, would have a Material Adverse Effect.
(xiv) To the knowledge of such counsel after due inquiry,
(A) there are no material (individually, or in the aggregate)
legal, governmental or regulatory proceedings pending or
threatened to which the Company or any of its subsidiaries is a
party or of which the business or properties of the Company or any
of its subsidiaries is the subject which are not disclosed in the
Registration Statement and Prospectus; (B) there are no contracts
or documents of a character required to be described in the
Registration
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Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which are not described or filed as
required; and (C) there are no statutes, ordinances, laws, rules
or regulations required to be described in the Registration
Statement or Prospectus which are not described as required.
(xv) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be a "holding company,"
or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company,"
as such terms are defined in the 1935 Act.
(xvi) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment
company" or an entity "controlled" by an "investment company," as
such terms are defined in the 1940 Act.
(xvii) All the shares of capital stock of the Company
issued subsequent to January 1, 1996 were issued and sold in
compliance with the registration requirements or (or exemptions
therefrom) all applicable federal and state securities laws.
(xviii) To the knowledge of such counsel after due
inquiry and except as disclosed in the Prospectus, no holder of
any security of the Company has any right to require registration
of shares of Common Stock or any other security of the Company
because of the filing of the Registration Statement or the
consummation of the transactions contemplated hereby and, except
as disclosed in the Prospectus, no person has the right to require
registration under the 1933 Act of any shares of Common Stock or
other securities of the Company.
Such counsel shall confirm that during the preparation of the
Registration Statement and Prospectus, such counsel participated in
conferences with the Representatives and their counsel and with officers
and representatives of the Company and its independent accountants, at
which conferences the contents of the Registration Statement and the
Prospectus (including all documents filed under the 1934 Act and deemed
incorporated by reference therein) were discussed, reviewed and revised.
On the basis of the information which was developed in the course
thereof, considered in light of such counsel's understanding of
applicable law and the experience gained by such counsel through their
practice thereunder, without such counsel assuming responsibility for
the accuracy and completeness of such statements except to the extent
expressly provided above, such counsel shall confirm that nothing came
to their attention that would lead them to believe that either the
Registration Statement (including any document filed under the 1934 Act
and deemed incorporated by reference therein), as of the Effective Date,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
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which they were made, not misleading, or the Prospectus or any amendment
or supplement thereto (including any document filed under the 1934 Act
and deemed incorporated by reference therein) as of its respective issue
date and as of the Closing Date, or, if applicable, the Option Closing
Date, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (other than the
financial statements or other financial and statistical data as to which
such counsel need express no view).
In rendering the foregoing opinion, such counsel may rely, (1) as
to matters involving laws of any jurisdiction other than Missouri or the
United States, upon opinions addressed to the Underwriters of other
counsel satisfactory to them and Bryan Cave LLP, including the opinion
of Bahamian counsel with respect to the Bahamian subsidiaries of the
Company, and (2) as to all matters of fact, upon certificates and
written statements of the executive officers of, and accountants for,
the Company, provided, in either case, that such counsel shall state in
their opinion that they and the Underwriters are justified in relying
thereon.
(d) On the Closing Date (and, if applicable, the Option
Closing Date), you shall have received the opinion of Bahamian counsel
to the Company, addressed to you and dated the Closing Date (and, if
applicable, the Option Closing Date), to the effect that:
(i) Each of the Company's Bahamian subsidiaries has
been duly incorporated and is validly existing under the laws of
its respective jurisdiction of incorporation, with full corporate
power and authority to own, lease and operate their properties and
conduct their business as described in the Prospectus; the
Company's Bahamian subsidiaries are duly qualified, licensed or
authorized in each other jurisdiction where it is required to be
so qualified, licensed or authorized to conduct its business as
described in the Prospectus, except where the failure to be so
qualified would not have a Material Adverse Effect.
(ii) The execution, delivery and performance by the
Company of this Agreement, the issuance and sale of the Shares,
and the consummation of the transactions contemplated hereby will
not violate, conflict with or constitute a breach of any of the
terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default),
or require consent under, or result in the imposition of a lien or
encumbrance on any properties of the Company's Bahamian
subsidiaries, or an acceleration of indebtedness pursuant to (i)
any bond, debenture, note, indenture, mortgage, deed of trust or
other agreement or instrument known to such counsel after due
inquiry to which any of the Company's Bahamian subsidiaries is a
party or by which any of them or their property is or may be
bound, (ii) any statute, rule or regulation known to such counsel
to be applicable to any of the Company's Bahamian
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subsidiaries or any of their assets or properties, or (iii) any
judgment, order or decree of any Bahamian court or governmental
agency or authority having jurisdiction over any of the Company's
Bahamian subsidiaries or their assets or properties. No consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, any Bahamian court or
governmental agency, body or administrative agency is required for
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
(iii) No action has been taken and no Bahamian statute,
rule or regulation or order has been enacted, adopted or issued by
any Bahamian governmental agency that prevents the issuance of the
Shares; no injunction, restraining order or order of any nature by
a Bahamian court of competent jurisdiction has been issued that
prevents the issuance and sale of the Shares and to the best
knowledge of such counsel, no action, suit or proceeding is
pending against or affecting or threatened against, any of the
Company's Bahamian subsidiaries before any court or arbitrator or
any governmental body, agency or official which, if adversely
determined, would prohibit, interfere with or adversely affect the
issuance or marketability of the Shares or in any manner draw into
question the validity of this Agreement and the Shares or have a
Material Adverse Effect.
(iv)
Each of the Company's Bahamian subsidiaries holds
all licenses, certificates, permits and approvals from all state,
federal, foreign and other regulatory authorities, and have
satisfied in all material respects the requirements imposed by
regulatory bodies, administrative agencies or other governmental
bodies, agencies or officials, that are required for the Company's
Bahamian subsidiaries lawfully to own, lease and operate their
properties and conduct their businesses as described in the
Prospectus, and, each of the Company's Bahamian subsidiaries is
conducting its business in compliance in all material respects
with all of the laws, rules and regulations of each jurisdiction
in which it conducts its business (including, without limitation,
insurance and insurance holding company laws, rules and
regulations); each of the Company's Bahamian subsidiaries has
filed all Notices required to be filed under applicable laws,
rules and regulations, including, without limitation, the
insurance laws and regulations of the jurisdictions which are
applicable to it, in each case, with such exceptions as would not
have a Material Adverse Effect; and, except as otherwise
specifically described in the Prospectus, none of the Company's
subsidiaries has received any notification from any court or
governmental body, authority or agency, including without
limitation, any insurance regulatory authority, to the effect that
any additional Approvals from such regulatory authority is needed
to be obtained by any of them, in any case where it could be
reasonably expected that obtaining such Approvals or the failure
to obtain such Approvals would have a Material Adverse Effect.
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(v) As of the Closing Date and as of the date of each
Prospectus, all of the outstanding shares of capital stock of each
of the Company's Bahamian subsidiaries have been duly and validly
authorized and issued and are fully paid and non-assessable and,
except as otherwise set forth in the Prospectus, all outstanding
shares of capital stock of the Company's Bahamian subsidiaries are
owned by the Company either directly or through wholly owned
subsidiaries and all such shares so held by the Company are held
free and clear of any security interest, claim, lien, limitation
on voting rights or encumbrances.
The opinions of such counsel described in this paragraph shall be
rendered to you at the request of the Company and shall so state
therein. Such opinions may contain customary recitals, conditions and
qualifications.
(e) On the Closing Date (and, if applicable, the Option
Closing Date), you shall have received the opinion of Thompson Coburn
LLP, counsel to the Selling Shareholder, addressed to you and dated the
Closing Date (and, if applicable, the Option Closing Date), to the
effect that:
(i) The Custody Agreement and Power of Attorney has
been duly executed and delivered by the Selling Shareholder and
constitutes a legal, valid and binding agreement of such Selling
Shareholder enforceable in accordance with its terms.
(ii) This Agreement has been duly authorized, executed
and delivered on behalf of the Selling Shareholder, and is a
legal, valid and binding obligation of the Selling Shareholder.
The execution and delivery of this Agreement and the Custody
Agreement and Power of Attorney by such Selling Shareholder, the
consummation by such Selling Shareholder of the transactions
contemplated herein and therein and the fulfillment by such
Selling Shareholder of the terms hereof and thereof will not
result in a breach or violation of any terms or provisions of, or
constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the
properties or assets of such Selling Shareholder under any bond,
debenture, note or other evidence of indebtedness or any
indenture, mortgage, deed of trust, sale and leaseback
arrangement, joint venture or any other agreement or instrument to
which any such Selling Shareholder is a party, or by which it is
bound or to which any of the properties or assets of any such
Selling Shareholder is subject (or any certificate or articles of
incorporation or bylaws, partnership agreement, trust document or
articles of association of any such Selling Shareholder, as
applicable), or any order or decree, or statute, law, ordinance,
rule or regulation applicable (which statute, law, ordinance, rule
or regulation would, in the experience of counsel who regularly
represent persons such as the Company, be recognized as applicable
to the Selling Shareholder or any of its
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properties) to any such Selling Shareholder of any court or of any
governmental agency, authority or body having jurisdiction over
any such Selling Shareholder or its properties.
(iii) The Selling Shareholder has full legal right, power
and authority, and any approval required by law (other than as
required by the 1933 Act, the NASD and state securities and Blue
Sky Laws) to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder.
(iv) No consent, approval, authorization or order of any
court, or governmental agency or body is required for consummation
of the transactions contemplated by this Agreement in connection
with the Shares to be sold by the Selling Shareholder hereunder
except such as may be required under the 1933 Act or the 1933 Act
Rules and Regulations or as may be required by the NASD or under
state securities laws.
(v) The Selling Shareholder has good, valid and
marketable title to the Shares being sold by such Selling
Shareholder hereunder, free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security interests
whatsoever, including any restriction on transfer other than
pursuant to this Agreement and the Custody Agreement and Power of
Attorney, and upon payment therefor by the Underwriters will
transfer to the Underwriters good, valid and marketable title to
the Shares being sold by such Selling Shareholder on the Closing
Date (and, if applicable, the Option Closing Date), free and clear
of all liens, mortgages, pledges, encumbrances, claims, equities
and security interests whatsoever, including any restriction or
transfer other than pursuant to this Agreement and the Custody
Agreement and Power of Attorney.
In rendering the foregoing opinion, such counsel may rely, (1) as
to matters involving laws of any jurisdiction other than Missouri or the
United States, upon opinions addressed to the Underwriters of other
counsel satisfactory to them and Bryan Cave LLP, and (2) as to all
matters of fact, upon certificates and written statements of the Selling
Shareholder, provided, in either case, that such counsel shall state in
their opinion that they and the Underwriters are justified in relying
thereon.
(f) You shall have received on the Closing Date (and, if
applicable, the Option Closing Date), from Bryan Cave LLP, counsel to
the Underwriters, such opinion or opinions, dated the Closing Date (and,
if applicable, the Option Closing Date) with respect to such matters as
you may reasonably require; and the Company and Selling Shareholder
shall have furnished to such counsel such documents as they reasonably
request for the purposes of enabling them to review or pass on the
matters referred to in this Section 6 and in order to evidence the
accuracy, completeness and satisfaction of the representations,
warranties and conditions herein contained.
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(g) You shall have received at or prior to the Closing Date
from Bryan Cave LLP a memorandum or memoranda, in form and substance
satisfactory to you, with respect to the qualification for offering and
sale by the Underwriters of the Shares under state securities or Blue
Sky laws of such jurisdictions as the Underwriters may have designated
to the Company.
(h) On the business day immediately preceding the date of
this Agreement and on the Closing Date (and, if applicable, the Option
Closing Date), you shall have received from Deloitte & Touche LLP, a
letter or letters, dated the date of this Agreement and the Closing Date
(and, if applicable, the Option Closing Date), respectively, in form and
substance satisfactory to you, confirming that they are independent
public accountants with respect to the Company within the meaning of the
1933 Act and the published Rules and Regulations, and stating to the
effect set forth in Schedule III hereto.
(i) Except as contemplated in the Prospectus, (i) neither the
Company nor any of its subsidiaries shall have sustained since the date
of the latest audited financial statements included or incorporated by
reference in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree; and (ii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries shall have incurred any
liability or obligation, direct or contingent, or entered into any
transactions, and there shall not have been any change in the capital
stock or short-term or long-term debt of the Company and its
subsidiaries or any change, or any development involving or which might
reasonably be expected to involve a prospective change in the condition
(financial or other), net worth, business, affairs, management,
prospects, results of operations or cash flow of the Company or its
subsidiaries, the effect of which, in any such case described in clause
(i) or (ii), is in your judgment so material or adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered on such Closing Date (and, if
applicable, the Option Closing Date) on the terms and in the manner
contemplated in the Prospectus.
(j) There shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the American Stock Exchange
or The Nasdaq National Market or the establishing on such exchanges or
market by the SEC or by such exchanges or markets of minimum or maximum
prices which are not in force and effect on the date hereof; (ii) a
suspension or material limitation in trading in the Company's securities
on The Nasdaq National Market or the establishing on such market by the
SEC or by such market of minimum or maximum prices which are not in
force and effect on the date hereof; (iii) a general moratorium on
commercial banking activities declared by either federal or any state
authorities; (iv) the outbreak or escalation of hostilities involving
the United States or the declaration by the United States of a national
emergency or war, which in your
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judgment makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares in the manner contemplated
in the Prospectus; or (v) any calamity or crisis, change in national,
international or world affairs, act of God, change in the international
or domestic markets, or change in the existing financial, political or
economic conditions in the United States or elsewhere, which in your
judgment makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares in the manner contemplated
in the Prospectus.
(k) You shall have received certificates, dated the Closing
Date (and, if applicable, the Option Closing Date) and signed by the
President and the Chief Financial Officer of the Company, in their
capacities as such, stating that:
(i) the condition set forth in Section 6(a) has been
fully satisfied;
(ii) they have carefully examined the Registration
Statement and the Prospectus as amended or supplemented and all
documents incorporated by reference therein and nothing has come
to their attention that would lead them to believe that either the
Registration Statement or the Prospectus, or any amendment or
supplement thereto or any documents incorporated by reference
therein as of their respective effective, issue or filing dates,
contained, and the Prospectus as amended or supplemented and all
documents incorporated by reference therein and when read together
with the documents incorporated by reference therein, at such
Closing Date, contains any untrue statement of a material fact, or
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iii) since the Effective Date, there has occurred no
event required to be set forth in an amendment or supplement to
the Registration Statement or the Prospectus which has not been so
set forth and there has been no document required to be filed
under the 1934 Act and the 1934 Act Rules and Regulations that
upon such filing would be deemed to be incorporated by reference
into the Prospectus that has not been so filed;
(iv) all representations and warranties made herein by
the Company are true and correct at such Closing Date, with the
same effect as if made on and as of such Closing Date, and all
agreements herein to be performed or complied with by the Company
on or prior to such Closing Date have been duly performed and
complied with by the Company;
(v) neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial
statements included or incorporated by reference in the
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Prospectus any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree;
(vi) except as disclosed in the Prospectus, subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, neither the Company nor
any of its subsidiaries has incurred any liabilities or
obligations, direct or contingent, other than in the ordinary
course of business, or entered into any transactions not in the
ordinary course of business, which in either case are material to
the Company or such subsidiary; and there has not been any change
in the capital stock or material increase in the short-term debt
or long-term debt of the Company or any of its subsidiaries or any
material adverse change or any development involving or which may
reasonably be expected to involve a prospective material adverse
change, in the condition (financial or other), net worth,
business, affairs, management, prospects, results of operations or
cash flow of the Company and its subsidiaries taken as a whole;
and there has been no dividend or distribution of any kind, paid
or made by the Company on any class of its capital stock;
(vii) there has not been any change or decrease specified
in paragraph 5(a) of the letter or letters delivered to the
Underwriters referred to in Section 6(g) above, except those
changes and decreases that are disclosed therein; and
(viii) covering such other matters as you may
reasonably request.
(l) You shall have received certificates, dated the Closing
Date (and, if applicable, the Option Closing Date) signed by the Selling
Shareholder, stating that (i) all representations and warranties made
herein by such Selling Shareholder are true and correct at such Closing
Date, with the same effect as if made on and as of such Closing Date,
and all agreements herein to be performed or complied with by such
Selling Shareholder on or prior to such Closing Date have been duly
performed or complied with by such Selling Shareholder and (ii) covering
such other matters as you may reasonably request.
(m) The Company and the Selling Shareholder shall not have
failed, refused, or been unable, at or prior to the Closing Date (and,
if applicable, the Option Closing Date) to have performed any agreement
on their part to be performed or any of the conditions herein contained
and required to be performed or satisfied by them at or prior to such
Closing Date.
(n) The Company and the Selling Shareholder shall have
furnished to you at the Closing Date (and, if applicable, the Option
Closing Date) such further information, opinions, certificates, letters
and documents as you may have reasonably requested.
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(o) The Shares shall have been approved for trading upon
official notice of issuance on The Nasdaq National Market.
(p) You shall have received duly and validly executed letter
agreements referred to in Section 5(o) hereof.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are satisfactory in
form and substance to you and to Bryan Cave LLP, counsel for the several
Underwriters. The Company and the Selling Shareholder will furnish you
with such signed and conformed copies of such opinions, certificates,
letters and documents as you may request.
If any of the conditions specified above in this Section 6 shall
not have been satisfied at or prior to the Closing Date (and, if
applicable, the Option Closing Date) or waived by you in writing, this
Agreement may be terminated by you on notice to the Company and the
Selling Shareholder.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and the
Selling Shareholder jointly and severally will indemnify and hold
harmless each Underwriter, and each person who controls each Underwriter
within the meaning of the 1933 Act and 1934 Act, for and against any
losses, damages or liabilities, joint or several, to which such
Underwriter, or such person who controls an Underwriter within the
meaning of the 1933 Act and 1934 Act, may become subject, under the
1933 Act or otherwise, insofar as such losses, damages or liabilities
(or actions or claims in respect thereof) arise out of or are based upon
(i) an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus or any other prospectus relating to the Shares, or any
amendment or supplement thereto, or in any blue sky application or
other document executed by the Company or based on any information
furnished in writing by the Company, filed in any state or other
jurisdiction in order to qualify any or all of the Shares under the
securities laws thereof (the "Blue Sky Application"), or (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter and each person who
controls such Underwriter within the meaning of the 1933 Act and 1934
Act for any legal or other expenses incurred by such Underwriter or such
person who controls such Underwriter within the meaning of the 1933 Act
or 1934 Act in connection with investigating, preparing, pursuing or
defending against or appearing as a third party witness in connection
with any such loss, damage, liability or action or claim, including,
without limitation, any investigation or proceeding by any governmental
agency or body, commenced or threatened, including the reasonable fees
and expenses of counsel to the indemnified party, as such expenses are
incurred (including such losses, damages, liabilities or
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expenses to the extent of the aggregate amount paid in settlement of any
such action or claim, provided that (subject to Section 7(d) hereof) any
such settlement is effected with the written consent of the Company);
provided, however, that the Company and the Selling Shareholder shall
not be liable in any such case to the extent, but only to the extent,
that any such loss, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement,
the Prospectus or any other prospectus relating to the Shares, or any
such amendment or supplement, in reliance upon and in conformity with
written information relating to the Underwriter furnished to the Company
by you or by any Underwriter through you, expressly for use in the
preparation thereof (as provided in Section 14 hereof) and provided
further, that the liability of the Selling Shareholder pursuant to this
Section 7(a) shall not exceed the product of the number of Shares sold
by such Selling Shareholder and the public offering price per share of
the Shares set forth in the Prospectus.
(b) The Selling Shareholder will indemnify and hold harmless
each Underwriter and each person who controls each Underwriter within
the meaning of the 1933 Act and 1934 Act for and against any losses,
damages or liabilities to which the Company may become subject, under
the 1933 Act or otherwise, insofar as such losses, damages or
liabilities (or actions or claims in respect thereof) arise out of or
are based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus or any other prospectus relating to the
Shares, or any amendment or supplement thereto, or any Blue Sky
Application, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus, the
Registration Statement, the Prospectus or any other prospectus relating
to the Shares, or any such amendment or supplement, or any Blue Sky
Application, in reliance upon and in conformity with written information
furnished to the Company or any Underwriter by such Selling Shareholder
specifically for use in the preparation thereof, and will reimburse each
Underwriter or person who controls such Underwriter within the meaning
of the 1933 Act and 1934 Act for any legal or other expenses incurred by
such Underwriter or such person who controls such Underwriter within the
meaning of the 1933 Act and 1934 Act, in connection with investigating,
preparing, pursuing or defending against or appearing as a third party
witness in connection with any such loss, damage, liability or action or
claim, including, without limitation, any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to the indemnified party, as
such expenses are incurred (including such losses, damages, liabilities
or expenses to the extent of the aggregate amount paid in settlement of
any such action or claim, provided that (subject to Section 7(d) hereof)
any such settlement is effected with the written consent of such Selling
Shareholder).
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(c) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company, each of its directors and each
of it officers who have signed the Registration Statement and the
Selling Shareholder for and against any losses, damages or liabilities
to which the Company may become subject, under the 1933 Act or
otherwise, insofar as such losses, damages or liabilities (or actions or
claims in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement, the Prospectus
or any other prospectus relating to the Shares, or any amendment or
supplement thereto, or any Blue Sky Application, or arise out of are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus, the
Registration Statement, the Prospectus or any other prospectus relating
to the Shares, or any such amendment or supplement, or any Blue Sky
Application, in reliance upon and in conformity with written information
relating to the Underwriter furnished to the Company by you or by any
Underwriter through you, expressly for use in the preparation thereof
(as provided in Section 14 hereof), and will reimburse the Company, each
of its directors and each of it officers who have signed the
Registration Statement or such Selling Shareholder for any legal or
other expenses incurred by the Company, each or its directors and each
of its officers who have signed the Registration Statement, or such
Selling Shareholder, as the case may be, in connection with
investigating or defending any such action or claim as such expenses are
incurred (including such losses, damages, liabilities or expenses to the
extent of the aggregate amount paid in settlement of any such action or
claim, provided that (subject to Section 7(d) hereof) any such
settlement is effected with the written consent of the Underwriters).
(d) Promptly after receipt by an indemnified party under
Section 7(a), 7(b) or 7(c) hereof of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against an indemnifying party under Section 7(a), 7(b) or
7(c) hereof, notify each such indemnifying party in writing of the
commencement thereof, but the failure so to notify such indemnifying
party shall not relieve such indemnifying party from any liability
except to the extent that it has been prejudiced in any material respect
by such failure or from any liability that it may have to any such
indemnified party otherwise than under Section 7(a), 7(b) or 7(c)
hereof. In case any such action shall be brought against any such
indemnified party and it shall notify each indemnifying party of the
commencement thereof, each such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party under Section 7(a), 7(b) or 7(c) hereof
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the
consent of such indemnified party, be counsel to such indemnifying
party), and, after notice from such indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified
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party under Section 7(a), 7(b) or 7(c) hereof for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred
by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. The indemnified party shall
have the right to employ its own counsel in any such action, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such
indemnified party at the expense of the indemnifying party has been
authorized by the indemnifying party, (ii) the indemnified party shall
have been advised by such counsel that there may be a conflict of
interest between the indemnifying party and the indemnified party in the
conduct of the defense, or certain aspects of the defense, of such
action (in which case the indemnifying party shall not have the right to
direct the defense of such action with respect to those matters or
aspects of the defense on which a conflict exists or may exist on behalf
of the indemnified party) or (iii) the indemnifying party shall not in
fact have employed counsel reasonably satisfactory to such indemnified
party to assume the defense of such action, in any of which events such
fees and expenses to the extent applicable shall be borne, and shall be
paid as incurred, by the indemnifying party. If at any time such
indemnified party shall have requested such indemnifying party under
Section 7(a), 7(b) or 7(c) hereof to reimburse such indemnified party
for fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by Section
7(a), 7(b) or 7(c) hereof effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of such request for reimbursement, (ii) such
indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into
and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request for reimbursement
prior to the date of such settlement. No such indemnifying party shall,
without the written consent of such indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of
which indemnification or contribution may be sought hereunder (whether
or not such indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (A)
includes an unconditional release of such indemnified party from all
liability arising out of such action or claim and (B) does not include a
statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any such indemnified party. In no event shall
such indemnifying parties be liable for the fees and expenses of more
than one counsel, including any local counsel, for all such indemnified
parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(e) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to indemnify or hold harmless an
indemnified party under Section 7(a), 7(b) or 7(c) hereof in respect of
any losses, damages or liabilities (or actions or claims in respect
thereof) referred to therein, then each indemnifying party under Section
7(a), 7(b) or 7(c) hereof shall contribute to the amount paid or payable
by such indemnified party as a result of such losses,
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damages or liabilities (or actions or claims in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Shareholder, on the one hand, and the
Underwriters, on the other hand, from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law or if the indemnified party failed to
give the notice required under Section 7(d) hereof and such indemnifying
party was prejudiced in a material respect by such failure, then each
such indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault, as
applicable, of the Company and the Selling Shareholder, on the one hand,
and the Underwriters, on the other hand, in connection with the
statements or omissions that resulted in such losses, damages or
liabilities (or actions or claims in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received
by, as applicable, the Company and the Selling Shareholder, on the one
hand, and the Underwriters, on the other hand, shall be deemed to be in
the same proportion as the total net proceeds from such offering (before
deducting expenses) received by the Company and the Selling Shareholder
bear to the total underwriting discounts and commissions received by the
Underwriters. The relative fault, as applicable, of the Company or the
Selling Shareholder, on the one hand, and the Underwriters, on the other
hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Shareholder, on the
one hand, or the Underwriters, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Selling
Shareholder and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(e) were determined
by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to above in
this Section 7(e). The amount paid or payable by such an indemnified
party as a result of the losses, damages or liabilities (or actions or
claims in respect thereof) referred to above in this Section 7(e) shall
be deemed to include any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(e),
no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten by
it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters in this Section
7(e) to contribute are several in proportion to their respective
underwriting obligations with respect to the Shares and not joint.
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(f) The obligations of the Company and the Selling
Shareholder under this Section 7 shall be in addition to any liability
that the Company and the Selling Shareholder may otherwise have and
shall extend, upon the same terms and conditions, to each officer,
director, employee, agent or other representative and to each person, if
any, who controls any Underwriter within the meaning of the 1933 Act;
and the obligations of the Underwriters under this Section 7 shall be in
addition to any liability that the respective Underwriters may otherwise
have and shall extend, upon the same terms and conditions, to each
officer and director of the Company who signed the Registration
Statement and to each person, if any, who controls the Company within
the meaning of the 1933 Act and 1934 Act and to each person, if any, who
controls the Selling Shareholder within the meaning of the 1933 Act and
1934 Act.
(g) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof, including,
without limitation, the provisions of this Section 7, and are fully
informed regarding such provisions. They further acknowledge that the
provisions of this Section 7 fairly allocate the risks in light of the
ability of the parties to investigate the Company and its business in
order to assure that adequate disclosure is made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, and any
supplement or amendment thereof, as required by the 1933 Act.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. The
respective representations, warranties, agreements and statements of the
Company and the Selling Shareholder and the Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain operative and in full force and
effect regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or any
controlling person of any Underwriter, the Company or any of its
officers, directors or any controlling persons, or the Selling
Shareholder, and shall survive delivery of and payment for the Shares
hereunder.
9. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter
shall default in its obligation to purchase the Shares which it has
agreed to purchase hereunder, you may in your discretion arrange for you
or another party or other parties to purchase such Shares on the terms
contained herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Shares, then the
Company and the Selling Shareholder shall be entitled to a further
period of thirty-six hours within which to procure another party or
parties reasonably satisfactory to you to purchase such Shares on such
terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Shareholder that you have so arranged
for the purchase of such Shares, or the Company and the Selling
Shareholder notify you that they have so arranged for the purchase of
such Shares, you or the Company and the Selling Shareholder shall have
the right to postpone the Closing Date for a period of not more
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than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Company agrees to file promptly
any amendments to the Registration Statement or the Prospectus which in
your opinion may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any persons substituted under this
Section 9 with like effect as if such person had originally been a party
to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters made
by you and the Company and the Selling Shareholder as provided in
subsection (a) above, the aggregate number of Shares which remains
unpurchased does not exceed one eleventh of the total Shares to be sold
on the Closing Date, then the Company and the Selling Shareholder shall
have the right to require each non-defaulting Underwriter to purchase
the Shares which such Underwriter agreed to purchase hereunder and, in
addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Shares which such Underwriter agreed
to purchase hereunder) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters made
by you and the Company and the Selling Shareholder as provided in
subsection (a) above, the number of Shares which remains unpurchased
exceeds one-eleventh of the total Shares to be sold on the Closing Date,
or if the Company and the Selling Shareholder shall not exercise the
right described in subsection (b) above to require the non-defaulting
Underwriters to purchase Shares of the defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Option
Closing Date, the obligations of the Underwriters to purchase and of the
Company and the Selling Shareholder to sell the Option Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company and the Selling Shareholder except for the
expenses to be borne by the Company and the Underwriters as provided in
Section 11 hereof and the indemnity and contribution agreements in
Section 7 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. EFFECTIVE DATE AND TERMINATION. (a) This Agreement shall
become effective at 1:00 p.m., St. Louis time, on the first business day
following the effective date of the Registration Statement, or at such
earlier time after the effective date of the Registration Statement as
you in your discretion shall first release the Shares for offering to
the public; provided, however, that the provisions of Sections 7 and 11
shall at all times be effective. For the purposes of this Section
10(a), the Shares shall be deemed to have been released to the public
upon release by you of the publication of a newspaper advertisement
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relating to the Shares or upon release of telegrams, facsimile
transmissions or letters offering the Shares for sale to securities
dealers, whichever shall first occur.
(b) This Agreement may be terminated by you at any time
before it becomes effective in accordance with Section 10(a) by notice
to the Company and the Selling Shareholder; provided, however, that the
provisions of this Section 10 and of Sections 7 and Section 11 hereof
shall at all times be effective. In the event of any termination of this
Agreement pursuant to Section 9 or this Section 10(b) hereof, the
Company and the Selling Shareholder shall not then be under any
liability to any Underwriter except as provided in Section 7 or Section
11 hereof.
(c) This Agreement may be terminated by you at any time at or
prior to the Closing Date by notice to the Company and the Selling
Shareholder if any condition specified in Section 6 hereof shall not
have been satisfied on or prior to the Closing Date. Any such
termination shall be without liability of any party to any other party
except as provided in Sections 7 and 11 hereof.
(d) This Agreement also may be terminated by you, by notice
to the Company and the Selling Shareholder, as to any obligation of the
Underwriters to purchase the Option Shares, if any condition specified
in Section 6 hereof shall not have been satisfied at or prior to the
Option Closing Date or as provided in Section 9 of this Agreement.
If you terminate this Agreement as provided in Section 10(b),
10(c) or 10(d), you shall notify the Company and the Selling Shareholder
by telephone or telegram, confirmed by letter.
11. COSTS AND EXPENSES. The Company, whether or not the
transactions contemplated hereby are consummated or this Agreement is
prevented from becoming effective under Section 10 hereof or is
terminated, will bear and pay the costs and expenses incident to the
registration of the Shares and public offering thereof, including,
without limitation, (a) all expenses (including stock transfer taxes)
incurred in connection with the delivery to the several Underwriters of
the Shares, the filing fees of the SEC, the fees and expenses of the
Company's counsel and accountants and the fees and expenses of counsel
for the Company and the Selling Shareholder, (b) the preparation,
printing, filing, delivery and shipping of the Registration Statement,
each Preliminary Prospectus, the Prospectus and any amendments or
supplements thereto (except as otherwise expressly provided in Section
5(e) hereof) and the printing, delivery and shipping of this Agreement
and other underwriting documents, including the Agreement Among
Underwriters, the Selected Dealer Agreement, Underwriters'
Questionnaires and Powers of Attorney and Blue Sky Memoranda, and any
instruments or documents related to any of the foregoing, (c) the
furnishing of copies of such documents (except as otherwise expressly
provided in Section 5(e) hereof) to the Underwriters, (d) the
registration or qualification of the Shares for offering and sale under
the securities laws of the various states and
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other jurisdictions, including the fees and disbursements of counsel to
the Underwriters (not to exceed $5,000) relating to such registration or
qualification and in connection with preparing any Blue Sky Memoranda or
related analysis, (e) the filing fees of the NASD (if any) and
disbursements of counsel to the Underwriters relating to any review of
the offering by the NASD, (f) all printing and engraving costs related
to preparation of the certificates for the Shares, including transfer
agent and registrar fees, (g) all fees and expenses relating to the
authorization of the Shares for trading on The Nasdaq National Market,
(h) all travel expenses, including air fare and accommodation expenses,
of representatives of the Company in connection with the offering of the
Shares, (i) all of the other costs and expenses incident to the
performance by the Company of the registration and offering of the
Shares; (j) the Selling Shareholder's pro rata share of the fees and
expenses of the Attorneys-in-Fact and the Custodian, and (k) all
expenses (including stock transfer taxes) incident to the sale and
delivery of the Shares to be sold by such Selling Shareholder to the
Underwriters hereunder, provided, that the Selling Shareholder, whether
or not the transactions contemplated hereby are consummated or this
Agreement is prevented from becoming effective under Section 10 hereof
or is terminated, will pay or cause to be paid all costs and expenses
incident to the performance of such Selling Shareholder's obligations
hereunder which are not otherwise specifically provided for in this
Section, and provided further, however, that the Underwriters will bear
and pay the fees and expenses of the Underwriter's counsel (other than
as specifically set forth above), the Underwriters; out-of-pocket
expenses, and any advertising costs and expenses incurred by the
Underwriters incident to the public offering of the Shares.
If this Agreement is terminated by you in accordance with the
provisions of Section 10(c) shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the fees and disbursements of
counsel to the Underwriters.
12. NOTICES. All notices or communications hereunder, except
as herein otherwise specifically provided, shall be in writing and if
sent to the Underwriters shall be mailed, delivered, sent by facsimile
transmission, or telegraphed and confirmed c/o A.G. Edwards & Sons, Inc.
at One North Jefferson Avenue, St. Louis, Missouri 63103, Attention:
Syndicate, facsimile number (314) 955-5515, with a copy to A.G. Edwards
& Sons, Inc., Attention: Roger H. Brown, Managing Director, facsimile
number (314) 955-7387, or if sent to the Company shall be mailed,
delivered, sent by facsimile transmission, or telegraphed and confirmed
to the Company at INTRAV, INC., 7711 Bonhomme Avenue, St. Louis,
Missouri 63105, Attention: Wayne L. Smith II, facsimile number (314)
727-2533, or if sent to the Selling Shareholder shall be mailed,
delivered, sent by facsimile transmission or telegraphed and confirmed
to such Selling Shareholder, 7711 Bonhomme Avenue, St. Louis, Missouri
63105, Attention: Barney A. Ebsworth, facsimile number (314) 727-2533.
Notice to any Underwriter pursuant to Section 7 shall be mailed,
delivered, sent by facsimile transmission, or telegraphed and confirmed
to such Underwriter's address as it appears in the Underwriters'
Questionnaire furnished in connection
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with the offering of the Shares or as otherwise furnished to the Company
and the Selling Shareholder.
13. INFORMATION FURNISHED BY UNDERWRITERS. The statements
set forth in the statements in the first, third, ninth and tenth
paragraphs under the caption "Underwriting" in the Prospectus constitute
the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Section 4(a)(ii) and
Section 7 hereof.
14. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company, the Selling
Shareholder and, to the extent provided in Sections 7 and 8, the
officers and directors of the Company and each person who controls the
Company, any Selling Shareholder or any Underwriter and their respective
heirs, executors, administrators, successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be
construed to give any person, other than the parties hereto and, to the
extent provided in Sections 7, the executive officers and directors of
the Company, corporation or other entity any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit
of the parties hereto and their respective successors and assigns and
said controlling persons and said officers and directors, and for the
benefit of no other person, corporation or other entity. No purchaser
of any of the Shares from any Underwriter shall be construed a successor
or assign by reason merely of such purchase.
In all dealings hereunder, you shall act on behalf of each of the
several Underwriters, and the parties hereto shall be entitled to act
and rely upon any statement, request, notice or agreement on behalf of
the Underwriters, made or given by you jointly or by A.G. Edwards &
Sons, Inc. on behalf of you as the representatives, as if the same shall
have been made or given in writing by the Underwriters; and in all
dealings with the Selling Shareholder hereunder, you and the Company
shall be entitled to act and rely upon any statement, request, notice or
agreement on behalf of such Selling Shareholder made or given by any or
all of the Attorneys-in-Fact for such Selling Shareholder.
15. COUNTERPARTS. This Agreement may be executed by any one
or more of the parties hereto in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
16. PRONOUNS. Whenever a pronoun of any gender or number is
used herein, it shall, where appropriate, be deemed to include any other
gender and number.
17. TIME OF ESSENCE. Time shall be of the essence of this
Agreement.
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18. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri, without
giving effect to the choice of law or conflict of laws principles
thereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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If the foregoing is in accordance with your understanding, please
so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among the Company, the
Selling Shareholder and the Underwriters.
INTRAV, INC.
By: ____________________________
Title: ________________________
The Revocable Trust of Barney A. Ebsworth
By: ____________________________
Barney A. Ebsworth
Accepted in St. Louis,
Missouri as of the date
first above written, on
behalf of ourselves and each
of the several Underwriters
named in Schedule I hereto.
A.G. EDWARDS & SONS, INC.
EVEREN SECURITIES, INC.
STIFEL, NICOLAUS & COMPANY, INCORPORATED
As Representatives of the Several
Underwriters named on Schedule I hereto
By: A.G. EDWARDS & SONS, INC.
By: ________________________
Title: ______________________
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SCHEDULE I
Name Number of Shares
- ---- ----------------
A.G. Edwards & Sons, Inc.
EVEREN Securities, Inc.
Stifel, Nicolaus & Company, Incorporated
- ----------------------------------
Total 2,500,000
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SCHEDULE II
Subsidiaries
The Company owns 100% of the outstanding capital stock of the
following entities:
Clipper Cruise Line, Inc.
Republic Cruise Line, Inc.
Liberty Cruise Line, Inc.
Clipper Adventurer Ltd.
Clipper Odyssey, Ltd.
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SCHEDULE III
Pursuant to Section 6(g) of the Underwriting Agreement, Deloitte &
Touche shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
1933 Act and the applicable Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma financial
information examined) by them and included or incorporated by reference
in the Prospectus or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act and the applicable Rules and Regulations with respect to
registration statements on Form S-2; and, if applicable, they have made
a review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited consolidated
interim financial statements, selected financial data, pro forma
financial information, prospective financial statements and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been furnished to the
Representatives of the Underwriters (the "Representatives").
(iii) On the basis of limited procedures, not constituting
an audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, performing the procedures specified by
the AICPA for a review of interim financial information as discussed in
SAS No. 71, Interim Financial Information, on the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries since
the date of the latest audited financial statements included in the
Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) any material modifications should be made to the
unaudited statements of consolidated income, statements of
consolidated financial position and statements of
consolidated cash flows included or incorporated by
reference in the Prospectus for them to be in conformity
with generally accepted accounting principles, or the
unaudited statements of consolidated income, statements of
consolidated financial position and statements of
consolidated cash flows included
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in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the related published Rules and Regulations
thereunder.
(B) any other unaudited income statement data and
balance sheet items included or incorporated by reference in
the Prospectus do not agree with the corresponding items in
the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially
consistent with the basis for the corresponding amounts in
the audited consolidated financial statements included or
incorporated by reference in the Prospectus.
(C) the unaudited financial statements which were
not included or incorporated by reference in the Prospectus
but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items
included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements
included or incorporated by reference in the Prospectus.
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference
in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder
or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those
statements.
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any
changes in the consolidated capital stock or any increase in
the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated working
capital, net current assets or net assets, or any changes in
any other items specified by the Representatives, in each
case as compared with amounts shown in the latest balance
sheet included or incorporated by reference in the
Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter.
(F) for the period from the date of the latest
financial statements included or incorporated by reference
in the Prospectus to the specified date referred to in
Clause (E) there were any decreases in consolidated net
revenues or
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operating profit or the total or per share amounts of
consolidated net income or any changes in any other items
specified by the Representatives, in each case as compared
with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for changes, decreases
or increases which the Prospectus discloses have occurred or
may occur or which are described in such letter.
(iv) In addition to the audit referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraph (iii) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records
of the Company and its subsidiaries for the periods covered by their
reports and any interim or other periods since the latest period covered
by their reports, which appear or are incorporated by reference in the
Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and have
found them to be in agreement.
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EXHIBIT-5.1
-----------
[LETTERHEAD OF THOMPSON COBURN LLP]
March 31, 1999
Intrav, Inc.
7711 Bonhomme Avenue
St. Louis, MO 63105-1961
Re: Public Offering pursuant to Registration Statement On Form S-2
(File No. 333-73101)
--------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Intrav, Inc. (the "Company"), in connection
with the registration under the Securities Act of 1933, as amended (the
"Act"), of 2,875,000 shares ("Shares") of the common stock of the
Company, $.01 par value per share, of which 500,000 Shares are being
issued by the Company, 2,000,000 Shares are being sold by the Revocable
Trust of Barney A. Ebsworth (the "Selling Shareholder"), and 75,000 and
300,000 Shares may be sold by the Company and the Selling Shareholder,
respectively, solely to cover over-allotments in connection with the
offering. The Shares are proposed to be sold on the terms and
conditions to be set forth in the form of underwriting agreement by and
among the Company, the Selling Shareholder, A.G. Edwards & Sons, Inc.,
EVEREN Securities, Inc. and Stifel, Nicolaus & Company, Incorporated, as
representatives of the several underwriters named therein (the
"Underwriting Agreement"), filed as Exhibit No. 1 to the captioned
registration statement. In connection with this opinion, we have
examined such corporate records, certificates and other documents as we
have considered necessary or appropriate for the purposes of this
opinion. In such examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as
originals, and the conformity of the originals of all documents
submitted to us as copies.
Based on such examination, we are of the opinion that:
1. The Company has been duly incorporated and is in good standing under
the laws of the State of Missouri.
2. When the registration statement (the "Registration Statement") on
Form S-2 (File No. 333-73101) relating to the Shares has become
effective under the Act and the sale of the Shares has been
consummated pursuant to the Underwriting Agreement, the Shares will
be duly authorized, validly issued, fully paid and non-assessable.
We hereby consent to be named in the Registration Statement, and in the
Prospectus that constitutes a part thereof, as the attorneys who will
pass upon the validity of the Shares, and to the filing of this opinion
as an exhibit to this Registration Statement.
Very truly yours,
/s/ Thompson Coburn LLP
Thompson Coburn LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 1 to Registration Statement No.
333-73101 of Intrav, Inc. of our report dated February 9, 1999 appearing
in the Prospectus, which is part of such Registration Statement, and to the
reference to us under the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
St. Louis, Missouri
March 29, 1999
