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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
INTRAV, INC.
(Name of Registrant as Specified in Its Charter)
N/A
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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INTRAV [logo]
EXPLORING THE WORLD SINCE 1959
AUGUST 23, 1999
DEAR SHAREHOLDER:
I cordially invite you to attend a special meeting of the
shareholders of Intrav, Inc., a Missouri corporation, to be held at
10:00 a.m. Central Time on Thursday, September 2, 1999, at our
offices at 7711 Bonhomme Avenue, St. Louis, Missouri 63105. At this
meeting, shareholders of record on August 19, 1999 will vote on the
following proposals:
1. To approve and adopt a resolution which will amend Intrav's
Restated Articles of Incorporation to remove Article Eleven, which
currently restricts ownership of more than 24.9% of the outstanding
shares of Intrav common stock by non-U.S. citizens; and
2. To approve and adopt an Agreement and Plan of Merger, dated
as of July 16, 1999, by and among Intrav, Kuoni Reisen Holding AG, a
Swiss corporation incorporated in the Canton of Zurich, Switzerland,
Kuoni Holding Delaware, Inc., formerly known as Diamond Holding
Delaware, Inc., a Delaware corporation and wholly-owned subsidiary
of Kuoni, and Kuoni Acquisition Subsidiary Missouri, Inc., formerly
known as Diamond Acquisition Subsidiary Missouri, Inc., a Missouri
corporation and wholly-owned subsidiary of Kuoni Delaware and the
merger and the transactions contemplated thereby. The merger
agreement provides, among other things, that:
* Kuoni Acquisition Subsidiary will merge with and into Intrav;
* Intrav will continue as the surviving corporation and will
become a wholly-owned subsidiary of Kuoni Delaware; and
* each share of Intrav common stock issued and outstanding at
the effective time of the merger (other than shares held by
Kuoni, Kuoni Delaware, Kuoni Acquisition Subsidiary, Intrav, a
wholly-owned subsidiary of Intrav, or shareholders, if any,
who properly exercise their dissenters' rights under Missouri
law) will be converted into the right to receive $21.32 per
share in cash, without interest.
The adoption of the amendment to the Restated Articles of
Incorporation facilitates the orderly consummation of the merger
under the merger agreement. Pursuant to the General and Business
Corporation Law of Missouri, the affirmative vote of holders of a
majority of the outstanding shares of Intrav common stock is
necessary to adopt the amendment to the Restated Articles. An
affirmative vote of holders of at least two-thirds of the
outstanding shares of Intrav common stock is necessary to approve
the proposed merger, the merger agreement and the transactions
contemplated thereby.
For the reasons set forth in the attached proxy statement,
Intrav's board of directors has unanimously determined that the
amendment to the Restated Articles, the proposed merger, the merger
agreement and the transactions contemplated thereby are in the best
interests of Intrav and its shareholders and has approved the
amendment to the Restated Articles, the merger, the merger agreement
and the transactions contemplated thereby. Stifel, Nicolaus &
Company, Incorporated, financial advisor to Intrav's board of
directors, has rendered an opinion dated as of today to the effect
that, as of such date, the cash consideration of $21.32 per share
that Intrav's shareholders will receive in the merger is fair, from
a financial point of view, to such shareholders.
INTRAV'S BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
ADOPTION OF THE AMENDMENT TO THE RESTATED ARTICLES AND "FOR"
APPROVAL OF THE PROPOSED MERGER, THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
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Attached is a Notice of Special Meeting of Shareholders and a
Proxy Statement containing a description of the amendment to the
Restated Articles and a discussion of the background of, reasons for
and terms of the merger. Please read this material carefully.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. YOUR FAILURE
TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE AMENDMENT TO
THE RESTATED ARTICLES AND THE MERGER, THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY. If you attend the special
meeting, you may withdraw your proxy and vote in person if you wish.
Your vote is important regardless of the number of shares you own.
Sincerely,
/s/ Barney A. Ebsworth
Barney A. Ebsworth
Chairman of the Board and Secretary
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INTRAV [logo]
EXPLORING THE WORLD SINCE 1959
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 2, 1999
To Our Shareholders:
We are contacting you to notify you that a special meeting of
shareholders of Intrav, Inc., a Missouri corporation, will be held
on Thursday, September 2, 1999, at our offices at 7711 Bonhomme
Avenue, St. Louis, Missouri 63105 for the following purposes:
1. To approve and adopt a resolution which will amend Intrav's
Restated Articles of Incorporation to remove Article Eleven, which
currently restricts ownership of more than 24.9% of the outstanding
shares of Intrav common stock by non-U.S. citizens;
2. To approve and adopt an Agreement and Plan of Merger, dated
as of July 16, 1999, by and among Intrav, Kuoni Reisen Holding AG, a
Swiss corporation incorporated in the Canton of Zurich, Switzerland,
Kuoni Holding Delaware, Inc., formerly known as Diamond Holding
Delaware, Inc., a Delaware corporation and wholly-owned subsidiary
of Kuoni, and Kuoni Acquisition Subsidiary Missouri, Inc., formerly
known as Diamond Acquisition Subsidiary Missouri, Inc., a Missouri
corporation and wholly-owned subsidiary of Kuoni Delaware, and the
merger and the transactions contemplated thereby. The merger
agreement provides, among other things, that:
* Kuoni Acquisition Subsidiary will merge with and into Intrav;
* Intrav will continue as the surviving corporation and will
become a wholly-owned subsidiary of Kuoni Delaware; and
* each share of Intrav common stock issued and outstanding at
the effective time of the merger (other than shares held by
Kuoni, Kuoni Delaware, Kuoni Acquisition Subsidiary, Intrav, a
wholly-owned subsidiary of Intrav, or shareholders, if any,
who properly exercise their dissenters' rights under Missouri
law) will be converted into the right to receive $21.32 per
share in cash, without interest; and
3. To transact any other business that is properly brought
before the special meeting or any adjournment or postponement of the
special meeting.
The board of directors of Intrav fixed the close of business on
August 19, 1999 as the record date to determine the shareholders who
are entitled to notice of, and to vote at, the special meeting.
Please read carefully the accompanying proxy statement and the copy
of the merger agreement that is attached as Annex 1 to the proxy
statement. The proxy statement describes the amendment to the
Restated Articles, the merger agreement, the proposed merger and
certain other transactions entered into in connection with the
merger. The proxy statement and its appendices are deemed
incorporated by reference in and form a part of this Notice.
Shareholders who do not vote in favor of approving and adopting
the merger and the merger agreement and who otherwise comply with
the applicable procedures described in Section 351.455 of the
General and Business Corporation Law of Missouri will be entitled to
dissenters' rights as provided under that statute. We have
summarized for you, in the section of the proxy statement called
"Proposal Two--The Merger--Dissenters' Rights," the provisions of
Section 351.455. The entire text of Section 351.455 is attached to
the proxy statement as Annex 5.
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WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON,
PLEASE PROMPTLY COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. YOU MAY REVOKE YOUR PROXY IN THE MANNER
DESCRIBED IN THE PROXY STATEMENT AT ANY TIME BEFORE THE PROXY HAS
BEEN VOTED AT THE SPECIAL MEETING. IF YOU SIGN AND SEND IN YOUR
PROXY CARD AND DO NOT INDICATE HOW YOU WANT TO VOTE, YOUR PROXY WILL
BE COUNTED AS A VOTE "FOR" THE MATTERS CONSIDERED AT THE SPECIAL
MEETING. IF YOU FAIL TO RETURN THE PROXY CARD OR TO VOTE AT THE
SPECIAL MEETING, THE EFFECT WILL BE A VOTE "AGAINST" THE MATTERS
CONSIDERED AT THE SPECIAL MEETING.
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. IF
THE MERGER IS CONSUMMATED, WE WILL SEND YOU INSTRUCTIONS FOR
SURRENDERING YOUR CERTIFICATES.
By Order of the Board of Directors of Intrav, Inc.
/s/ Barney A. Ebsworth
Barney A. Ebsworth
Chairman of the Board and Secretary
August 23, 1999
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<PAGE>
INTRAV, INC.
7711 BONHOMME AVENUE
ST. LOUIS, MO 63105
------------------------
PROXY STATEMENT
------------------------
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 2, 1999
We are furnishing this proxy statement to the shareholders of
Intrav, Inc., a Missouri corporation, to solicit proxies for use at
a special meeting of shareholders scheduled for 10:00 a.m., Central
Time, on Thursday, September 2, 1999, at our offices at 7711
Bonhomme Avenue, St. Louis, Missouri 63105, and at any adjournment
or postponement of the special meeting.
We are mailing this proxy statement and the accompanying notice,
proxy card and letter on or about August 23, 1999, to shareholders
entitled to receive notice of, and to vote at, the special meeting.
At the special meeting, shareholders will be asked to consider
and vote:
1. To approve and adopt a resolution which will amend Intrav's
Restated Articles of Incorporation to remove Article Eleven, which
currently restricts ownership of more than 24.9% of the outstanding
shares of Intrav common stock by non-U.S. citizens; and
2. To approve and adopt an Agreement and Plan of Merger, dated
as of July 16, 1999, by and among Intrav, Kuoni Reisen Holding AG, a
Swiss corporation incorporated in the Canton of Zurich, Switzerland,
Kuoni Holding Delaware, Inc., formerly known as Diamond Holding
Delaware, Inc., a Delaware corporation and wholly-owned subsidiary
of Kuoni, and Kuoni Acquisition Subsidiary Missouri, Inc., formerly
known as Diamond Acquisition Subsidiary Missouri, Inc., a Missouri
corporation and wholly-owned subsidiary of Kuoni Delaware, and the
merger and the transactions contemplated thereby. The merger
agreement provides, among other things, that:
* Kuoni Acquisition Subsidiary will merge with and into Intrav;
* Intrav will continue as the surviving corporation and will
become a wholly-owned subsidiary of Kuoni Delaware; and
* each share of Intrav common stock issued and outstanding at
the effective time of the merger (other than shares held by
Kuoni, Kuoni Delaware, Kuoni Acquisition Subsidiary, Intrav, a
wholly-owned subsidiary of Intrav, or shareholders, if any,
who properly exercise their dissenters' rights under Missouri
law) will be converted into the right to receive $21.32 per
share in cash, without interest.
Shareholders who do not vote in favor of approving and adopting
the merger and the merger agreement and who otherwise comply with
the applicable procedures described in Sections 351.455 of the
General Business Corporation Law of Missouri will be entitled to
dissenters' rights under Section 351.455 of that statute. We have
summarized for you, in the section of the proxy statement called
"Proposal Two--The Merger--Dissenters' Rights," the provisions of
Sections 351.455. That summary includes a description of the
procedure that dissenting shareholders must follow to assert
dissenters' rights.
THE BOARD OF DIRECTORS OF INTRAV UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE RESTATED
ARTICLES AND THE PROPOSED MERGER, THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
All information in this proxy statement about Kuoni, Kuoni
Delaware and Kuoni Acquisition Subsidiary was supplied by Kuoni, and
Intrav did not independently verify it. Except as otherwise
indicated, Intrav supplied or prepared all other information in this
proxy statement.
Dated: August 23, 1999
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
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<S> <C>
Cautionary Statement Concerning Forward-Looking
Information............................................... 1
Questions and Answers About the Meeting, the Merger and the
Amendment to the Restated Articles of Incorporation....... 2
Summary..................................................... 4
The Companies........................................... 4
The Special Meeting..................................... 4
Record Date; Voting Power............................... 4
Vote Required........................................... 5
Voting by Intrav Directors and Executive Officers....... 5
Solicitation of Proxies................................. 5
Revocability of Proxies................................. 5
Proposal One-Amendment to Restated Articles of
Incorporation.......................................... 5
General................................................. 5
Board of Directors Recommendation to Shareholders....... 5
Proposal Two--The Merger................................ 5
General................................................. 5
Background of the Merger................................ 6
Board of Directors Recommendation to Shareholders....... 6
Our Reasons for the Merger.............................. 6
Merger Consideration.................................... 7
Fairness Opinion of Financial Advisor................... 7
Interests of Intrav's Directors and Executive Officers
in the Merger.......................................... 7
Intrav Projections...................................... 7
Effects of the Merger................................... 7
Accounting Treatment.................................... 7
Effective Time of Merger................................ 7
Material U.S. Federal Income Tax Consequences of the
Merger................................................. 8
Regulatory Matters...................................... 8
Dissenters' Rights...................................... 8
Stock Options........................................... 8
Conditions to the Merger................................ 8
Termination of the Merger Agreement; Termination Fees... 8
Advisory Committee...................................... 8
Majority Shareholder Agreement.......................... 8
Sale/Leaseback Arrangement.............................. 9
Summary of Selected Financial Data.......................... 10
The Special Meeting......................................... 11
Date, Time and Place.................................... 11
Purpose of Special Meeting.............................. 11
Record Date; Stock Entitled to Vote; Quorum............. 11
Vote Required........................................... 11
Voting by Intrav Directors and Executive Officers....... 12
Voting of Proxies....................................... 12
Revocability of Proxies................................. 12
Solicitation of Proxies................................. 13
Independent Auditors.................................... 13
Proposal One--Amendment to the Restated Articles of
Incorporation............................................. 13
Required Vote........................................... 13
Recommendation of the Board............................. 13
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Proposal Two--The Merger.................................... 14
Background of the Merger; History of Negotiations and
Relationship Between Intrav and Kuoni.................. 14
Recommendation of the Intrav Board; Intrav's Reason for
Merger................................................. 16
Benefits of the Merger to Intrav Directors and Executive
Officers............................................... 18
Intrav Projections...................................... 19
Effects of the Merger; Merger Consideration............. 21
Opinion of Stifel, Nicolaus & Company, Incorporated..... 22
Effective Time of the Merger............................ 27
Accounting Treatment.................................... 27
Certain U.S. Federal Income Tax Consequences............ 28
Regulatory Matters...................................... 28
Dissenters' Rights...................................... 28
Effect on Options Outstanding Under Intrav Stock Option
Plans.................................................. 29
The Merger Agreement........................................ 30
General................................................. 30
Merger Consideration.................................... 30
Exchange of Shares...................................... 30
Treatment of Stock Options.............................. 31
Representations And Warranties.......................... 31
Conditions to Closing................................... 33
Covenants............................................... 35
No Solicitation Covenant................................ 38
Termination and Termination Fees........................ 40
Additional Agreements................................... 42
Description of the Majority Shareholder Agreement........... 42
Description of Sale/Leaseback Arrangement................... 44
Disposition of U.S. Flag Vessels........................ 44
Description of Time Charter............................. 45
Description of Operating Agreement...................... 45
Disposition of U.S. Flag Vessels --Tax Matters.......... 46
Certain Information Regarding Intrav........................ 46
General................................................. 46
Operating Strategies.................................... 47
Growth Strategies....................................... 47
Program Development and Management...................... 48
Products and Services................................... 49
Marketing and Sales..................................... 50
Competition............................................. 51
Employees............................................... 52
Facilities.............................................. 52
Government Regulation................................... 52
Legal Proceedings....................................... 53
Description of Intrav's Securities.......................... 54
Market Price of and Dividends on the Common Stock and
Related Matters........................................ 54
High and Low Sale Prices of Stock of Intrav as of the
Date Preceding Public Announcement of Merger........... 54
Ownership By Principal Holders and Management........... 55
Description of Intrav's Securities...................... 55
Common Stock............................................ 55
Preferred Stock......................................... 56
Stock Options........................................... 56
Certain Anti-Takeover Matters........................... 56
Transfer Agent.......................................... 57
Selected Consolidated Financial Data........................ 58
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Management's Discussion and Analysis of Financial Condition
and Results of Operations of Intrav....................... 59
Overview................................................ 59
Results of Operations................................... 59
Six Months Ended June 30, 1999 Compared to Six Months
Ended June 30, 1998.................................... 59
Year Ended December 31, 1998 Compared to Year Ended
December 31, 1997...................................... 60
Year Ended December 31, 1997 Compared to Year Ended
December 31, 1996...................................... 61
Liquidity and Capital Resources......................... 62
Quarterly Results of Operations......................... 64
Foreign Currency Hedging Program........................ 64
Inflation............................................... 64
Year 2000 Compatibility................................. 65
Interest Rate and Currency Risks........................ 65
Recent Accounting Pronouncements........................ 66
Certain Information Regarding Kuoni......................... 66
Experts..................................................... 67
Shareholder Proposals....................................... 67
Other Matters............................................... 67
Where You Can Find More Information......................... 68
Index to Consolidated Financial Statements.................. F-1
Annexes
Annex 1 Agreement and Plan of Merger
Annex 2 Majority Shareholder Agreement
Annex 3 Duynhouwer Letter Agreement
Annex 4 Fairness Opinion of Stifel, Nicolaus & Company,
Incorporated
Annex 5 Section 351.455 Missouri General and Business
Corporation Law
Annex 6 Form of Proxy Card
</TABLE>
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CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION
This proxy statement contains certain forward-looking statements
based on our estimates and assumptions. Forward-looking statements
include information about the results of operations of Intrav and
the surviving corporation after the merger and statements regarding
our intent, belief, or current expectations, as well as the
assumptions on which we base such statements. These forward-looking
statements are not guarantees of future performance and these
statements involve known and unknown risks and uncertainties which
may cause the:
* actual results,
* financial condition,
* performance, or
* achievements
of Intrav or the surviving corporation to be different than the
future results, conditions, performance or achievements stated in,
or implied by, those forward-looking statements. For each of these
statements, Intrav claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
Do not rely on any forward-looking statements. Although we
believe that the expectations reflected in these forward-looking
statements are reasonable, we cannot assure you that the actual
results or developments we anticipate will be realized, or even if
realized, that they will have the expected effects on the business
or operations of Intrav. We assume no obligation to update any
forward-looking statements to reflect future events or developments.
In addition to other factors and matters contained in this
document, we believe the following factors could cause actual
results to differ materially from those discussed in the
forward-looking statements:
* unanticipated catastrophic events, such as war, international
terrorism, civil disturbances, political instability and
governmental activities that could reduce the demand for
travel programs,
* changes in travel program costs and currency fluctuations,
* interruptions in the supply of travel products and services,
including access to the supersonic Concorde,
* the extent, timing and overall effects of competition from
others in the travel industry, and
* the timing of, and regulatory and other conditions associated
with, the completion of the merger.
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QUESTIONS AND ANSWERS ABOUT THE MEETING, THE AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION AND THE MERGER
Q: WHAT WILL HAPPEN IN THE MERGER?
A: A subsidiary of Kuoni will merge with and
into Intrav. Intrav will continue as the
surviving corporation and will become a
wholly-owned subsidiary of Kuoni.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If you do not exercise your dissenters'
rights, you will receive $21.32 in cash,
without interest, for each share of Intrav
common stock you own. For example, if you
own 100 shares of Intrav common stock, upon
completion of the merger, you will receive
$2,132 in cash.
Q: WHY ARE INTRAV'S RESTATED ARTICLES OF
INCORPORATION BEING AMENDED?
A: Article Eleven of our Restated Articles of
Incorporation currently prohibits non-U.S.
citizens from owning more than 24.9% of our
outstanding common stock. Because Kuoni is
not a U.S. citizen and will become the
owner of more than 24.9% of the outstanding
shares of Intrav common stock as a result
of the merger, removing this 24.9%
restriction facilitates the orderly
completion of the merger.
Q: WHY IS THE INTRAV BOARD RECOMMENDING THAT I
VOTE FOR THE MERGER AGREEMENT?
A: The board of directors of Intrav believes
that the terms and conditions of the merger
agreement and the transactions contemplated
thereby are fair to and in the best
interests of Intrav and its shareholders.
To review the background and reasons for
the merger in greater detail, see pages 14
to 17.
Q: WHAT ARE THE ADVANTAGES AND DISADVANTAGES
OF THE MERGER TO ME?
A: You will receive an immediate cash payment
for your shares of Intrav common stock. You
will not have the opportunity to
participate in Intrav's future earnings and
growth, but you will not bear the risk of
any decrease in Intrav's value.
Q: WHAT RIGHTS DO I HAVE IF I OPPOSE THE
MERGER?
A: Under Missouri law, you are entitled to
dissenters' rights. If you do not vote in
favor of the merger and you properly elect
to exercise your dissenters' rights as
described under "Proposal Two--The
Merger--Dissenters' Rights" and in Annex 5,
you may receive in the merger the "fair
value" of your shares of Intrav common
stock. The fair value could be equal to,
less than or more than $21.32 per share. A
court will determine the fair value.
Q: WHAT DO I NEED TO DO NOW?
A: Please vote your shares as soon as possible
-------------------------------------------
so that your shares will be represented at
------------------------------------------
the special meeting. You may grant your
--------------------
proxy by signing your proxy card and
mailing it in the enclosed return envelope,
or you may vote in person at the special
meeting.
Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
A: Send in a later-dated, signed proxy card to
Intrav's Secretary before the special
meeting or attend the special meeting in
person, revoke your proxy, and vote your
shares.
<PAGE>
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY
MY BROKER, WILL MY BROKER VOTE MY SHARES
FOR ME?
A: Your broker will vote your shares only if
you provide instructions on how to vote.
Your broker will contact you regarding the
procedures necessary for him or her to vote
your shares. Please tell your broker how
you would like him or her to vote your
shares. If you do not tell your broker how
to vote, your shares will not be voted by
your broker, which will have the effect of
a vote against the transaction.
Q: WHO CAN VOTE AT THE SPECIAL MEETING?
A: Holders of shares of Intrav common stock at
the close of business on August 19, 1999
may vote at the special meeting.
2
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Q: HOW MANY VOTES ARE REQUIRED TO APPROVE AND
ADOPT THE AMENDMENT TO THE RESTATED
ARTICLES OF INCORPORATION?
A: Holders of a majority of the outstanding
shares of Intrav common stock must vote in
favor of the amendment to the Restated
Articles of Incorporation. The Revocable
Trust of Barney A. Ebsworth has agreed to
vote its shares in favor of the amendment
to the Restated Articles of Incorporation.
Because the trust owns 74.8% of the
outstanding shares of Intrav common stock,
its vote is sufficient to approve the
amendment to the Restated Articles of
Incorporation.
Q: HOW MANY VOTES ARE REQUIRED TO APPROVE AND
ADOPT THE MERGER AGREEMENT?
A: Holders of at least two-thirds of the
outstanding shares of Intrav common stock
must vote in favor of the merger agreement
in order for the merger to be consummated.
The Trust of Barney A. Ebsworth has agreed
to vote its shares in favor of the merger,
the merger agreement and the transactions
contemplated thereby. Because the trust
owns 74.8% of the outstanding shares of
Intrav common stock, its vote is sufficient
to approve the merger, the merger agreement
and the transactions contemplated thereby.
Q: WHAT ARE MY TAX CONSEQUENCES AS A RESULT OF
THE MERGER?
A: Your receipt of the merger consideration
will be taxable to you. You will recognize
a gain or loss in an amount equal to the
difference between the adjusted tax basis
of your shares and the amount of cash you
receive in the merger. As with any
transaction of this type, you should
consult your own tax advisor to understand
how the merger will affect you personally.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The special meeting will take place at
10:00 a.m. Central Time on Thursday,
September 2, 1999, at our offices at 7711
Bonhomme Avenue, St. Louis, Missouri 63105.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, we will
mail you written instructions explaining
how to obtain the merger consideration.
Please do not send in your stock
certificates with your proxy.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the matters
addressed in this proxy statement or if you
need additional copies of this proxy
statement, you should contact:
Intrav, Inc.
7711 Bonhomme Avenue
St. Louis, Missouri 63105
Attention: Vanessa M. Tegethoff
Telephone: (314) 727-0500, ext. 307
3
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SUMMARY
This summary, together with the preceding Questions and Answers
section, highlights selected information from this proxy statement
and does not contain all of the information that is important to
you. To understand the amendment to the Restated Articles of
Incorporation and the merger, the merger agreement and the
transactions contemplated thereby fully and for a more complete
description of the legal terms of the merger, the merger agreement
and the transactions contemplated thereby, you should carefully read
this entire document and the other documents to which we have
referred you and the annexes attached to this proxy statement. See
"Where You Can Find More Information" on page 68. We have included
page references parenthetically to direct you to a more complete
description of the topics presented in this summary. A copy of the
merger agreement is attached as Annex 1 to this proxy statement. We
encourage you to read the merger agreement in full, since it is the
legal document governing the transaction.
Throughout this proxy statement when we refer to the "merger,"
we mean the merger of an indirectly, wholly-owned subsidiary of
Kuoni with and into Intrav as described in the merger agreement.
From and after the consummation of the merger, Intrav will be a
wholly-owned subsidiary of Kuoni and will no longer be an
independently-owned entity.
THE COMPANIES (pages 46 and 66)
Intrav, Inc.
7711 Bonhomme Avenue
St. Louis, Mo. 63105
(314) 727-0500
We design, market and operate 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 travelers to visit secluded places of
natural beauty and cultural interest aboard our four owned and
operated ships and others we charter. We also offer programs that
use privately chartered jet aircraft which allow travelers to visit
locations not as conveniently or comfortably served by commercial
airlines. Our 1999 programs include, 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.
Kuoni Reisen Holding AG
Neue Hard 7
CH-8010 Zurich
Switzerland
+41 1-277-44 44
Kuoni Reisen Holding AG is based in Switzerland and is one of
Europe's largest travel groups. Kuoni arranges both volume and
premium vacations, organizes travel from overseas into Europe and owns
more than 150 retail travel stores in Switzerland and operates in the
business travel segment, primarily in Switzerland, Austria and Germany,
through its alliance with Business Travel International. Kuoni's long-haul
travel operations form the core of its leisure travel business outside
Switzerland and it has an established position in the scheduled long-haul
tour operating sectors in Switzerland, the United Kingdom, France, India
and Italy.
Kuoni Acquisition Subsidiary Missouri, Inc. is a wholly-owned
subsidiary of Kuoni Holding Delaware, Inc., which is in turn a
wholly-owned subsidiary of Kuoni. Kuoni Acquisition Subsidiary and
Kuoni Delaware were formed in anticipation of the merger and
currently have no operations.
THE SPECIAL MEETING (page 11)
The special meeting of Intrav shareholders will be held at our
offices at 7711 Bonhomme Avenue, St. Louis, Missouri, on Thursday,
September 2, 1999 at 10:00 a.m., Central Time. At the special
meeting, shareholders will consider and vote upon the amendment to
the Restated Articles of Incorporation and the merger, the merger
agreement and the transactions contemplated thereby.
RECORD DATE; VOTING POWER (page 11)
Holders of shares of Intrav common stock are entitled to receive
notice of, and vote at, the special meeting if they owned shares as
of the close of business on August 19, 1999, the record date for the
meeting.
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On the record date, there were 5,114,200 shares of Intrav common
stock entitled to vote at the special meeting. Holders of shares of
Intrav common stock will have one vote at the special meeting for
each share of Intrav common stock they owned on the record date.
VOTE REQUIRED (page 11)
The affirmative vote of the holders of a majority of the
outstanding shares of Intrav common stock is necessary to adopt the
amendment to the Restated Articles of Incorporation. The affirmative
vote of the holders of at least two-thirds of the outstanding shares
of Intrav common stock is necessary to approve and adopt the merger,
the merger agreement and the transactions contemplated thereby.
VOTING BY INTRAV DIRECTORS AND EXECUTIVE OFFICERS (page 12)
On the record date, The Revocable Trust of Barney A. Ebsworth
was entitled to vote 3,825,000 shares of Intrav common stock, or
74.8% of the outstanding shares of Intrav common stock. The
Revocable Trust of Barney A. Ebsworth has agreed to vote its shares
in favor of the amendment to the Restated Articles of Incorporation
and the merger, the merger agreement and the transactions
contemplated thereby. Accordingly, its vote is sufficient to approve
the amendment to the Restated Articles and merger, the merger
agreement and the transactions contemplated thereby. The other
directors and executive officers of Intrav have also indicated that
they intend to vote the shares of Intrav common stock owned by them
in favor of the amendment to the Restated Articles and in favor of
the merger, the merger agreement and the transactions contemplated
thereby.
SOLICITATION OF PROXIES (page 13)
Intrav will bear the cost of soliciting proxies from its
shareholders. Please do not send your share certificates with your
proxy.
REVOCABILITY OF PROXIES (page 12)
Shareholders of Intrav are being asked to sign and return to
Intrav the proxy card accompanying this proxy statement as soon as
possible. If you are unable to attend the special meeting, a proxy
card is attached for use at the special meeting. You are requested to
--------------------
sign and return the enclosed proxy card as promptly as possible,
- - ----------------------------------------------------------------
whether you plan to attend the meeting in person or not. You may
- - ----------------------------------------------------------------
revoke your proxy at any time prior to the meeting or, if you do
- - ----------------------------------------------------------------
attend the meeting, you may revoke your proxy at that time, if you
- - ------------------------------------------------------------------
wish.
- - -----
PROPOSAL ONE--AMENDMENT TO RESTATED ARTICLES OF INCORPORATION (page
13)
GENERAL
Article Eleven of our Restated Articles of Incorporation, as
amended restricts beneficial ownership of more than 24.9% of the
outstanding shares of Intrav common stock by non-U.S. citizens in
order to comply with the laws regulating the ownership and
operations of U.S. flag vessels. Because Kuoni is not a U.S. citizen
and will become the owner of more than 24.9% of the outstanding
shares of Intrav common stock as a result of the merger, the removal
of this restriction facilitates the orderly completion of the
merger. The board has adopted a resolution to remove Article Eleven
of the Restated Articles of Incorporation which, if adopted, will
allow non-U.S. citizens to own more than 25% of the outstanding
shares of Intrav common stock. Immediately before the merger, we
will transfer ownership of our U.S. flag vessels to a U.S. citizen
and enter into a time charter and operating agreement so that Intrav
can continue to offer its existing itineraries using these vessels.
BOARD OF DIRECTORS RECOMMENDATION TO SHAREHOLDERS (page 13)
The Intrav board of directors believes that the amendment to the
Restated Articles of Incorporation is in the best interests of
Intrav and its shareholders and unanimously recommends that you vote
for the amendment to the Restated Articles of Incorporation.
PROPOSAL TWO--THE MERGER (page 14)
GENERAL
On July 16, 1999, Kuoni, Kuoni Delaware, Kuoni Acquisition
Subsidiary and Intrav entered into the merger agreement. A copy of
the merger agreement is attached to this proxy statement as Annex 1.
We encourage you to read the merger
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agreement in full, since it is the legal document governing the
transaction. Pursuant to the merger agreement:
* Kuoni Acquisition Subsidiary will merge with and into Intrav;
* Intrav will continue as the surviving corporation and will become
a wholly-owned subsidiary of Kuoni Delaware; and
* Each common share of Intrav issued and outstanding at the
effective time of the merger (other than shares held by Kuoni,
Kuoni Delaware, Kuoni Acquisition Subsidiary, Intrav, a
wholly-owned subsidiary of Intrav, or shareholders, if any, who
properly exercise their dissenters' rights under Missouri law, as
described below) will convert into the right to receive $21.32 per
share in cash without interest. You will receive a letter
containing instructions for how to obtain the above-described cash
payment promptly following the effectiveness of the merger.
It is expected that Kuoni will pay approximately $114,280,544 to
the holders of shares of Intrav common stock and options to purchase
shares of Intrav common stock upon the consummation of the merger.
We are working diligently to complete the merger during the
third calendar quarter of 1999.
BACKGROUND OF THE MERGER (page 14)
Over the past few years, we have experienced decreasing
profitability in certain travel programs and increased competition
in the travel industry. In response to these industry trends, our
board realized that our future growth and success would require an
infusion of significant amounts of additional capital. In an effort
to achieve this goal, for various reasons, we attempted a secondary
public offering of our common stock earlier this year and
entertained the idea of having someone in the travel industry
acquire us. Although the secondary public offering was unsuccessful,
toward the end of March 1999 we were approached by Kuoni, a
potential acquiror. Senior management of Kuoni had conducted a
general market overview of the leisure travel market in the United
States with the objective of acquiring an entity suitable for Kuoni's
entry into the tour operation business in the United States. Kuoni has
in the past provided services to passengers on our tours in France,
Switzerland and elsewhere in Europe and, accordingly, was familiar
with us on an operational level. After extensive negotiations
between our management and representatives from Kuoni and upon
completion of due diligence, on July 16, 1999, we entered into the
merger agreement with Kuoni.
BOARD OF DIRECTORS RECOMMENDATION TO SHAREHOLDERS (page 16)
The Intrav board of directors has unanimously approved and
adopted the merger, the merger agreement and the transactions
contemplated thereby, and has determined that the merger is fair,
from a financial point of view to, and in the best interests of,
Intrav and its shareholders. The board recommends that you vote for
the approval of the merger, the merger agreement and the
transactions contemplated thereby.
OUR REASONS FOR THE MERGER (page 16)
The following are among the factors our board of directors
considered in approving the merger, the merger agreement and the
transactions contemplated thereby:
* The 29.2% premium of the merger consideration of $21.32 cash per
share over the closing price of $16.50 per share of Intrav's
common stock on July 16, 1999, as reported by Nasdaq immediately
before the announcement of the proposed merger. Similarly, since
our initial public offering in 1995, approximately 96.3% of the
trading volume of our common stock has been at prices less than
the $21.32 to be paid to shareholders in the merger;
* The board's knowledge of our business, operations, properties,
assets, financial condition and operating results. Specifically,
in order to achieve significant growth in the future in our
business and operations, Intrav would need significant amounts of
new capital, which the board believes could be financed on more
favorable terms by Kuoni than by Intrav as an independent
business;
* Intrav's operating results will continue to be subject to risks of
conditions or events outside our control, which ultimately could have
a material adverse effect upon our results of
6
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<PAGE>
operations or financial condition and could negatively affect our
future stock price;
* Barney A. Ebsworth, who beneficially owns 74.8% of the outstanding
shares of Intrav common stock, had advised the board of his
desire, at an appropriate time, to diversify the amount of his
personal wealth represented by his ownership of shares of Intrav
common stock. Accordingly, the board believes that Intrav's public
shareholders will benefit from his effecting such diversification
pursuant to the merger, which affords an orderly process in which
any control premium is shared with all shareholders and does not
disrupt our business or the trading market for our common stock;
* The attractiveness of a cash offer from Kuoni relative to
perceived opportunities and the feasibility of other possible
strategic alternatives to enhance long-term shareholder value,
including risks and uncertainties attendant to possible future
acquisitions; and
* The payment of the merger consideration will be funded by Kuoni
out of funds on hand or financing which is readily available to it
and, accordingly, the transaction is not subject to a financing
contingency.
MERGER CONSIDERATION (page 21)
Shareholders of Intrav will receive $21.32 in cash, without
interest, in exchange for each share of Intrav common stock.
FAIRNESS OPINION OF FINANCIAL ADVISOR (page 22)
In deciding to approve the merger, the merger agreement and the
transactions contemplated thereby, the Intrav board of directors
considered the opinion of its financial advisor, Stifel, Nicolaus &
Company, Incorporated, as to the fairness of the consideration to be
received by Intrav shareholders in the merger from a financial point
of view. This opinion is attached as Annex 4 to this proxy
statement. WE ENCOURAGE YOU TO READ STIFEL'S OPINION CAREFULLY.
INTERESTS OF INTRAV'S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER
(page 18)
Some of the members of our board of directors and executive
officers have certain interests in the merger that are different
from or in addition to the interests of shareholders of Intrav
generally. These additional interests relate to, among other things,
the effect of the merger on certain benefit arrangements to which
directors and executive officers are parties or under which they
have rights. These interests, to the extent material, are described
herein. Our board of directors was aware of these interests and
considered them, among other things, prior to approving the merger,
the merger agreement and the transactions contemplated thereby. You
should consider these interests in assessing the merger and the
recommendation of the Intrav board that Intrav common shareholders
vote to adopt the merger, the merger agreement and the transactions
contemplated thereby.
INTRAV PROJECTIONS (page 19)
In connection with Kuoni's review of our business and in the
course of the negotiations between us and Kuoni described herein, we
provided Kuoni and other interested parties with certain non-public
business and financial information. This information was also used
by Stifel, Nicolaus & Company, Incorporated in their preparation of
the fairness opinion.
EFFECTS OF THE MERGER (page 21)
As a result of the merger, Kuoni will acquire all of the equity
interest in Intrav. Therefore, following the merger, you will no
longer retain any equity interest in Intrav and you will not share
in Intrav's future earnings or growth or in the risks associated
with achieving such earnings and growth.
ACCOUNTING TREATMENT (page 27)
Kuoni will account for the merger as a "purchase" in accordance
with generally accepted accounting principles.
EFFECTIVE TIME OF MERGER (page 27)
The merger will become effective upon the filing of the articles
of merger with the Missouri Secretary of State or such later time as
is agreed upon by Kuoni and Intrav and specified in the articles of merger.
7
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (page
28)
Your receipt of the merger consideration will be taxable to you.
You will recognize a gain or loss in an amount equal to the
difference between the adjusted tax basis of your shares and the
amount of cash you receive in the merger.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS FOR A FULL
UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO YOU.
REGULATORY MATTERS (page 28)
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules promulgated thereunder by the Federal
Trade Commission, the merger may not be consummated until
notifications have been given and certain information has been
furnished to the FTC and the Antitrust Division of the Department of
Justice and specified waiting period requirements have been
satisfied. Kuoni and Barney A. Ebsworth have filed notification and
report forms under the HSR Act with the FTC and the DOJ. The FTC has
indicated that the waiting period has been terminated and that neither
it nor the DOJ will review the merger.
DISSENTERS' RIGHTS (page 28)
As a shareholder, under Missouri law, you may assert statutory
dissenters' rights of appraisal by complying with the requirements
of the General Business and Corporation Law of Missouri.
STOCK OPTIONS (page 29)
Prior to the effective time of the merger, each outstanding and
unexpired option to purchase shares of Intrav common stock issued
pursuant to the 1995 Stock Incentive Plan will be converted into the
right to receive for each share subject to such option an amount in
cash, subject to any applicable withholding tax, equal to the
difference between $21.32 and the per share exercise price of such
option.
CONDITIONS TO THE MERGER (page 33)
Consummation of the merger is subject to the satisfaction of
numerous conditions, including, among others: shareholder approval;
the fairness opinion of Stifel, Nicolaus & Company not being
withdrawn; and procurement of all consents, approvals and actions
of, filings with and notices to any governmental authority required
to consummate the merger, the merger agreement and the transactions
contemplated thereby.
TERMINATION OF THE MERGER AGREEMENT; TERMINATION FEES (page 40)
The merger agreement may be terminated at any time prior to the
effective time of the merger, whether before or after shareholder
approval by mutual written consent of Kuoni Delaware and us. In
addition, either party may terminate the agreement upon the
occurrence or non-occurrence of certain events. However, under
certain circumstances, Kuoni Delaware may be entitled to termination
fees of up to $8,000,000 from Intrav.
ADVISORY COMMITTEE (page 42)
After the merger, the surviving corporation will form an
advisory committee, and each of Intrav's current non-employee
directors, other than Barney A. Ebsworth, will be offered the
opportunity to serve as an advisory director for a two-year term.
Each advisory director will receive an annual fee of $12,000, a fee
of $600 for each advisory committee meeting attended and a $5,000
annual credit for traveling on the surviving corporation's travel
programs.
<PAGE>
MAJORITY SHAREHOLDER AGREEMENT (page 42)
In connection with the execution of the merger agreement, The
Revocable Trust of Barney A. Ebsworth, which currently holds 74.8%
of the outstanding shares of Intrav common stock, entered into an
agreement with Kuoni, Kuoni Delaware and Kuoni Acquisition
Subsidiary pursuant to which the Trust has agreed to vote its shares
of Intrav common stock in favor of the amendment to the Restated
Articles and the merger, the merger agreement and the transactions
contemplated thereby at any meeting called for such purpose. As a
result of such agreement, no additional votes of Intrav's common
stock will be required for the approval and adoption of the
amendment to the Restated Articles and the merger, the merger
agreement and the transactions contemplated thereby.
8
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<PAGE>
SALE/LEASEBACK ARRANGEMENT (page 44)
We will restructure the ownership and operation of our two U.S.
flag vessels so that they will continue to be owned and operated by
U.S. citizens following the merger. On July 16, 1999, Kuoni and
Kuoni Delaware entered into a letter agreement with Paul H. Duynhouwer,
the President and Chief Executive Officer of Intrav, pursuant to which
Mr. Duynhouwer agreed to make an equity investment and take an ownership
interest in one or more newly formed entities that will own the two U.S.
flag vessels and operate them so that non-U.S. citizens can beneficially
own more than 24.9% of the shares of Intrav common stock without violating
the laws applicable to the ownership and operation of U.S. flag vessels.
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SUMMARY OF SELECTED FINANCIAL DATA
We are providing the following selected consolidated financial
data for Intrav and its subsidiaries, as of the dates and for the
periods indicated, to aid you in your analysis of the financial
aspects of the merger. 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 for the three
years ended December 31, 1998 have been derived from, and should be
read in conjunction with, our consolidated financial statements,
which are included with this proxy statement. The following table
also sets forth consolidated financial data for the six months ended
June 30, 1999 and June 30, 1998, which have been derived from, and
should be read in conjunction with, our unaudited consolidated
financial statements included with this proxy statement. 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 should also read the
"Management's Discussion and Analysis of Financial Condition and
Results of Operations of Intrav" section which describes a number of
factors which have affected our financial results. See "Where You
Can Find More Information."
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(in thousands, except per share and performance ratios)
<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
Weighted average share used in
basic net income per share
calculation.................. 5,000 5,200 5,195 5,100 5,135
Diluted net income per share... $ 0.88 $ 0.80 $ 0.61<F1> $ 0.96 $ 1.29
Weighted average share 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%
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
--------------------
1998 1999
-------- --------
(in thousands, except
per share and
performance ratios)
<S> <C> <C>
CONSOLIDATED STATEMENT OF
INCOME DATA:
Revenues....................... $ 48,776 $ 52,571
Cost of operations............. 38,216 39,902
-------- --------
Gross profit............... 10,560 12,669
Selling, general and
administrative............... 6,852 8,099
Depreciation and
amortization................. 869 1,477
-------- --------
Operating income........... 2,839 3,093
Investment income.............. 438 342
Interest expense............... (263) (535)
-------- --------
Income before income taxes
and extraordinary item... 3,014 2,900
Provision for income taxes..... 1,085 1,044
-------- --------
Income before extraordinary
item......................... 1,929 1,856
Extraordinary item............. -- --
-------- --------
Net income..................... $ 1,929 $ 1,856
======== ========
Basic net income per share..... $ 0.38 $ 0.36
Weighted average share used in
basic net income per share
calculation.................. 5,101 5,117
Diluted net income per share... $ 0.37 $ 0.35
Weighted average share used in
diluted net income per share
calculation.................. 5,212 5,237
Dividends per common share..... $ 0.25 $ 0.25
PERFORMANCE RATIOS:
Gross profit margin on
revenues..................... 21.6% 24.1%
Operating income margin on
revenues..................... 5.8% 5.9%
Net income margin on
revenues..................... 4.0% 3.5%
<FN>
- - ---------
<F1>Includes extraordinary item. Basic and diluted net income per share before
extraordinary item was $0.68 in 1996.
</TABLE>
<TABLE>
<CAPTION>
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
<CAPTION>
JUNE 30,
---------------------
1998 1999
-------- --------
(in thousands)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Cash, cash equivalents,
restricted cash and
restricted marketable
securities................... $ 28,990 $ 13,180
Total assets................... 87,531 88,073
Total long-term debt........... 12,800 --
Shareholders' equity
(deficit).................... 6,936 7,315
</TABLE>
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THE SPECIAL MEETING
We are furnishing this proxy statement to shareholders of Intrav
as part of the solicitation of proxies from Intrav shareholders by
Intrav's board of directors for use at the special meeting.
DATE, TIME AND PLACE
We will hold the special meeting at our offices at 7711 Bonhomme
Avenue, St. Louis, Missouri, at 10:00 a.m., Central Time on
Thursday, September 2, 1999.
PURPOSE OF THE SPECIAL MEETING
At the special meeting, we are asking holders of common stock to
approve and adopt the amendment to Intrav's Restated Articles and
the merger, the merger agreement and the transactions contemplated
thereby. The Intrav board of directors:
* has determined that the amendment to the Restated Articles and
the merger, the merger agreement and the transactions
contemplated thereby are fair and in the best interests of
Intrav and its shareholders;
* has unanimously approved the amendment to the Restated
Articles and the merger, the merger agreement and the
transactions contemplated thereby; and
* unanimously recommends that holders of shares of Intrav common
stock vote for the adoption of the amendment to the Restated
Articles, the merger, the merger agreement and the
transactions contemplated thereby.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only record holders of shares of Intrav common stock at the
close of business on August 19, 1999, the record date, are entitled
to vote at the special meeting. On the record date, 5,114,200 shares
of Intrav common stock were issued and outstanding and held by
approximately 125 holders of record. Holders of record of shares of
Intrav common stock at the close of business on the record date are
entitled to one vote per share at the special meeting.
A quorum is present at the special meeting if holders of a
majority of the outstanding shares of Intrav common stock entitled
to vote are represented in person or by proxy. A quorum is necessary
to hold the special meeting. Any shares of Intrav common stock held
in treasury by Intrav or any of our subsidiaries or any shares that
are held by non-U.S. citizens and considered "excess shares" under
our Articles (because such non-U.S. citizens beneficially own more
than 24.9% of the outstanding shares of Intrav common stock) are not
considered to be outstanding for purposes of determining a quorum.
In the event that a quorum is not present at the special meeting, it
is expected that the meeting will be adjourned or postponed to
solicit additional proxies. However, if a new record date is set for
the adjourned meeting, then a new quorum will have to be
established.
Once a share of Intrav common stock is represented at the
special meeting, it will be counted for the purpose of determining a
quorum at the special meeting and any adjournment of the special
meeting unless the holder is present solely to object to the special
meeting.
VOTE REQUIRED
Each share of Intrav common stock outstanding on the record date
is entitled to one vote at the special meeting. The adoption of the
amendment to our Restated Articles requires the affirmative vote of
holders of a majority of the outstanding shares of Intrav common
stock. The adoption of the merger, the merger agreement and the
transactions contemplated thereby requires the affirmative vote of
the holders of at least two-thirds of the outstanding shares of
Intrav common stock. IF YOU ABSTAIN FROM VOTING OR DO NOT VOTE,
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EITHER IN PERSON OR BY PROXY, IT WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST THE AMENDMENT TO THE RESTATED ARTICLES AND THE MERGER, THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
VOTING BY INTRAV DIRECTORS AND EXECUTIVE OFFICERS
At the close of business on the record date, directors and
executive officers of Intrav were entitled to vote 3,893,000 shares
of Intrav common stock, or 76.12% of the shares outstanding on that
date.
On the record date, Barney A. Ebsworth beneficially owned
3,825,000 shares of Intrav common stock, or 74.8% of the shares of
Intrav common stock outstanding. Pursuant to a majority shareholder
agreement entered into as of July 16, 1999 by and among Kuoni, Kuoni
Delaware, Kuoni Acquisition Subsidiary, The Revocable Trust of
Barney A. Ebsworth, and Barney A. Ebsworth, individually, Mr.
Ebsworth has agreed to vote his beneficially owned shares in favor
of the amendment to our Restated Articles and in favor of the
merger, the merger agreement and the transactions contemplated
thereby. The other directors and executive officers of Intrav have
also indicated that they intend to vote the shares of Intrav common
stock owned by them in favor of the amendment to our Restated
Articles and in favor of the merger, the merger agreement and the
transactions contemplated thereby. Such votes will be sufficient for
approval of the amendment to our Restated Articles and the merger,
the merger agreement and the transactions contemplated thereby.
VOTING OF PROXIES
All shares of Intrav common stock represented by properly
submitted proxies received in time for the special meeting will be
voted at the special meeting in the manner specified by the holders.
Properly submitted proxies that do not contain voting instructions
will be voted for the adoption of the amendment to our Restated
Articles and the merger, the merger agreement and the transactions
contemplated thereby.
If you are a record holder of shares of Intrav common stock, in
order for your shares of Intrav common stock to be included in the
vote, you must vote your shares by one of the following means:
* in person; or
* by proxy by completing, signing and dating the enclosed proxy
and returning it in the enclosed postage-paid envelope. If you
hold your shares of Intrav common stock in street name, you
must follow the instructions provided by your broker in order
to vote your shares.
Shares of Intrav common stock represented at the special meeting
but not voting will be treated as present at the special meeting for
determining whether or not a quorum exists for the transaction of
all business. This includes shares of Intrav common stock for which
proxies have been received but for which the holders of shares have
abstained from voting.
Only shares of Intrav common stock voted for adoption and
approval of the amendment to our Restated Articles and the merger,
the merger agreement and the transactions contemplated thereby,
including properly submitted proxies that do not contain voting
instructions, will be counted as favorable votes. If an Intrav
shareholder abstains from voting or does not vote, either in person
or by proxy, it will effectively count as if that Intrav shareholder
had voted against adoption of the amendment to our Restated Articles
and the merger, the merger agreement and the transactions
contemplated thereby.
REVOCABILITY OF PROXIES
Mailing the enclosed proxy card does not preclude an Intrav
shareholder from voting in person at the special meeting. An Intrav
shareholder may revoke a proxy at any time prior to the vote by:
* notifying the Secretary of Intrav in writing of the revocation
of the proxy;
* submitting a duly executed proxy to the Secretary of Intrav
bearing a later date; or
* appearing at the special meeting and voting in person.
Simply attending the special meeting, without voting at the
meeting, will not constitute revocation of a proxy.
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SOLICITATION OF PROXIES
We will bear the cost of soliciting proxies from our
shareholders. In addition to the solicitation by mail, our
directors, officers and employees may solicit proxies in person, by
telephone or by other electronic means. These persons will not be
paid for doing this. We will have brokerage houses and other
custodians, nominees and fiduciaries forward solicitation materials
to the beneficial owners of outstanding shares of Intrav common
stock on the record date. We will reimburse these persons for their
reasonable out-of-pocket expenses in doing so. YOU SHOULD NOT SEND
STOCK CERTIFICATES WITH YOUR PROXIES.
After completion of the merger, we will send you transmittal
documents for the surrender of your Intrav stock certificates.
INDEPENDENT AUDITORS
Representatives of Deloitte & Touche LLP, our independent
auditors, will be present at the special meeting, will have the
opportunity to make a statement at the special meeting, if they
desire to do so, and will be available to respond to appropriate
questions.
PROPOSAL ONE
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
Our board has adopted a resolution setting forth a proposed
amendment to Article Eleven of our Restated Articles of
Incorporation, which would remove that Article in order to allow
non-U.S. citizens to own more than 24.9% of the outstanding shares
of Intrav common stock. Article Eleven of our Restated Articles, as
amended, generally restricts non-U.S. citizens from beneficially
owning more than 24.9% of the outstanding shares of Intrav common
stock in order to comply with the laws regulating the ownership and
operation of U.S. flag vessels. Because Kuoni is not a U.S. citizen
and will effectively acquire more than 24.9% of Intrav common stock
as a result of the merger, removal of this restriction will provide
for orderly approval of the merger. We have amended our Amended and
Restated Bylaws to remove similar restrictions relating to foreign
ownership of shares of Intrav common stock.
The amendment of our Restated Articles and our Amended and
Restated Bylaws is a condition to consummation of the merger,
described in more detail under "Proposal Two--The Merger," below.
REQUIRED VOTE
Pursuant to Section 351.090 of the General and Business
Corporation Law of Missouri, approval of the amendment to our
Restated Articles of Incorporation requires the affirmative vote of
holders of a majority of the outstanding shares of Intrav common
stock. The Revocable Trust of Barney A. Ebsworth, which owns 74.8%
of the outstanding shares of Intrav's common stock, has agreed to
vote for approval of the proposed amendment to our Restated Articles
and, therefore, no additional votes will be required for its
approval.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THE AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION IS IN THE BEST INTERESTS OF
INTRAV AND ITS SHAREHOLDERS, AND ACCORDINGLY, UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" ADOPTION OF THE AMENDMENT.
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PROPOSAL TWO
THE MERGER
BACKGROUND OF THE MERGER; HISTORY OF NEGOTIATIONS AND RELATIONSHIP
BETWEEN INTRAV AND KUONI
Intrav was founded by Barney A. Ebsworth in 1959. For the past
40 years, our business strategy has been to design and operate high
quality programs that offer distinctive attributes for the
discerning traveler who prefers an intimate and enriching travel
experience. Historically, we have relied primarily upon marketing
our travel programs through affinity groups, such as professional
societies and associations and university alumni, and had derived a
large percentage of our revenues by offering programs on large
cruise ships. Over the past few years, however, we have experienced
decreasing profitability in our affinity group business as costs of
promotion increased. In addition, our big-ship cruise business has
become less profitable as the industry has become more crowded, and
has consequently relied upon discounting to attract passengers.
Our management developed and implemented strategies to respond
to these industry trends, including adding small cruise ship
capacity, increasing our private jet programs, expanding channels of
distribution to include selected travel agents, rationalizing our
affinity group marketing to enhance efficiencies and reducing our
big-ship cruise offerings. Pursuant to this strategy, we acquired
Clipper Cruise Line, Inc. in December 1996. Subsequently, we added
two 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.
As we were executing our business strategies, our management and
board of directors came to realize that continued growth would
require significant amounts of additional capital for acquisitions
of additional small cruise ships, as well as to fund acquisitions of
other travel businesses to support external growth initiatives which
management had identified. At the same time, our board realized that
accessing the additional capital required would be relatively
expensive because of the lack of stock market interest in
small-capitalization companies such as Intrav, compounded by the
limited public float of our common stock in view of Mr. Ebsworth's
beneficial ownership of approximately 74.8% of the outstanding
shares. In addition, Mr. Ebsworth had advised our board of directors
of his desire, at an appropriate time, to diversify the amount of
his personal wealth represented by his ownership of Intrav's common
stock.
In response to these developments, in the fall of 1998 our
management asked an investment banking firm to informally inquire
whether selected travel industry participants would possibly have an
interest in acquiring us. There were no serious indications of
interest reported by the investment banking firm in response to such
inquiries. Based upon that experience and other factors it
considered relevant, in early 1999 our board authorized us to pursue
the proposed secondary public offering of 2,500,000 shares of common
stock, of which 2,000,000 shares would be offered by The Revocable
Trust of Barney A. Ebsworth and 500,000 shares would be offered by
us. The offering was intended to improve our market valuation by
enhancing the liquidity of the trading market and broadening the
ownership of the stock by institutional investors. It was
anticipated that the offering, if successful, would lower our cost
of capital and reduce uncertainties arising from Mr. Ebsworth's
desire to diversify his holdings. However, after completion of the
marketing efforts for the offering in April 1999, the managing
underwriters advised us that investor interest was inadequate to
complete the financing at the size and price sought and thereafter
we withdrew the registration statement.
During March 1999, Kuoni, which is a large European tour
operator without a significant presence in the U.S. market,
undertook a general market overview of the U.S. tour operation
business with a view toward identifying possible businesses to
acquire to build its U.S. presence. Kuoni began by reviewing
publicly available information regarding U.S. companies and by
soliciting information from industry sources with whom Kuoni had
pre-existing relationships. Based upon such review, Kuoni identified
Intrav as a potential target company. Kuoni had provided services to
passengers on our tours in France, Switzerland and elsewhere in
Europe and, accordingly, was familiar with us on an operational
level.
Toward the end of March, an individual who was aware of Kuoni's
interest and who had known Mr. Ebsworth for several years called Mr.
Ebsworth to advise him that Kuoni was seeking to acquire a U.S. tour
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operator and to inquire whether we would have an interest in
discussing a possible transaction. Mr. Ebsworth responded that due
to the pending secondary offering it was not then possible for us to
pursue discussions. In early May, Peter Diethelm, executive vice
president of Kuoni's U.K. Strategic Business Unit, called Mr.
Ebsworth to discuss the parties' views as to a possible business
combination. Although no plans were made for a meeting, we followed
up the conversation by furnishing Mr. Diethelm copies of publicly
available information regarding us. In late May, Mr. Diethelm
suggested to Mr. Ebsworth that Intrav and Kuoni representatives
schedule a preliminary meeting on June 3rd to be followed by a
meeting with additional senior representatives of Kuoni on June 15th
if the preliminary meeting yielded a positive result. Mr. Ebsworth
accepted.
On June 3, 1999, Mr. Ebsworth, along with Messrs. Duynhower and
Wayne L. Smith II, met in St. Louis with Mr. Diethelm. The Intrav
representatives reviewed with Mr. Diethelm Intrav's "roadshow"
presentation used in connection with the proposed secondary
offering, and they discussed our operations and management and other
issues. On June 4th, Mr. Smith met briefly with Mr. Diethelm and
they executed a confidentiality agreement in customary form. Mr.
Smith then furnished Mr. Diethelm with our internal forecasts,
organizational chart and certain other information.
On June 10, 1999, Kuoni's board of directors met to consider
making a proposal for a possible business combination with Intrav.
Mr. Diethelm presented the information he had received from Intrav
and reported on the preliminary meeting. The board then authorized
Mr. Diethelm to proceed with negotiating a possible transaction.
On June 14, 1999, Messrs. Ebsworth, Duynhower and Smith met in
St. Louis with Mr. Diethelm and Mr. Hans Lerch, who was then chief
executive officer of Kuoni's Swiss Strategic Business Unit. They
discussed Kuoni's and our respective businesses, management depth,
ownership requirements for U.S. flag vessels and related issues.
During the conversation, Mr. Diethelm advised that Kuoni was
interested in acquiring us for approximately $21.00 per share in
cash for all outstanding equity interests. Mr. Ebsworth responded
that he was prepared to recommend that transaction to our board and
shareholders if Kuoni could complete its due diligence expeditiously
and a mutually acceptable definitive agreement could be negotiated.
The parties set a target date of July 18th for determining whether
an agreement could be reached on the indicated terms.
On June 24, 1999, our board held a special meeting for the
purpose of considering the recent developments with respect to the
interest expressed by Kuoni. Messrs. Ebsworth, Smith and Duynhower
reported on the discussions and their recommendation regarding the
process for determining whether a transaction could be negotiated
which the board would recommend to shareholders for approval. They
also reported on informal inquiries which management had received in
the preceding few months regarding possible business combinations
with two other third parties. The board considered that the
preliminary discussions with these third parties were unlikely to
develop into transactions as favorable to our shareholders as that
being proposed by Kuoni. Moreover, Kuoni had indicated that it would
not pursue a transaction in a competitive bidding context and
management had serious concerns about the potential negative impact
on us, and our relations with our employees and our customers if we
were to engage in multi-party negotiations. Accordingly, the board
authorized continued negotiations with Kuoni in accordance with the
process outlined by our executive officers. The board also engaged
Stifel, Nicolaus & Company, Incorporated to advise whether the
consideration which would be negotiated would be fair, from a
financial point of view, to our shareholders.
Beginning July 6, 1999, Max Katz, Kuoni's Chief Financial
Officer, Stephan Hitz, Kuoni's Head of Mergers and Acquisitions, and
Ian Coghlan, Deputy Managing Director Kuoni Travel Ltd., met with
our representatives and counsel, to undertake due diligence of our
company, and to negotiate a possible definitive agreement. The due
diligence review included on-site review of documents and financial
information regarding our company, as well as interviews of a
limited number of our key employees.
On July 8, 1999, counsel for Kuoni circulated a preliminary
draft of a merger agreement. We objected to various aspects of the
proposed agreement, including provisions relating to termination if
our board received a superior proposal that its counsel and
financial advisor concluded was required to be pursued under the
directors' fiduciary duties. The parties also intensively negotiated
the structure and terms of a
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transaction pursuant to which our ownership of the U.S. flag vessels
would be transferred to facilitate compliance with maritime laws,
while preserving their economic value to our business.
The negotiations continued during the week beginning July 12th.
Ultimately, the parties were able to conclude a transaction
structure relative to the U.S. flag vessels. In addition, the
parties negotiated an arrangement pursuant to which we could
terminate the merger agreement and pursue a superior proposal for a
business combination with a party other than Kuoni under specified
circumstances, upon the payment of an $8.0 million termination fee.
As part of the negotiated resolution and at Kuoni's request, Mr.
Ebsworth agreed to enter into the majority shareholder agreement
dated July 16, 1999 by and among Kuoni, Kuoni Delaware, Kuoni
Acquisition Subsidiary, The Revocable Trust of Barney A. Ebsworth
and Mr. Ebsworth individually. Mr. Ebsworth agreed, among other
things, to pay over to Kuoni any consideration above $21.32 per
share which otherwise would be receivable by Mr. Ebsworth if the
merger agreement were terminated in response to a superior
transaction proposal.
On July 16, 1999, our board held a special meeting to consider
the agreement and plan of merger and the transactions contemplated
thereby, which had been negotiated by the parties' representatives.
Our management reviewed the development of the transaction since the
preceding board meeting on June 24th. Stifel representatives
presented a financial analysis of the consideration to be received
by our shareholders in the merger. Stifel orally advised our board
that it was Stifel's opinion that the $21.32 per share cash
consideration payable in the merger was fair, from a financial point
of view, to our shareholders and that Stifel's written opinion to
that effect would be included in the proxy materials issued in
connection with a shareholders meeting held to vote on the merger.
Our counsel reviewed the terms of the transaction documents, as well
as the interests of individual directors in the transaction.
Thereafter, the board discussed the advisability of the proposed
merger, the merger agreement and the transactions contemplated
thereby. At the conclusion of the discussion, our board voted
unanimously to approve the merger, the merger agreement and the
transactions contemplated thereby and to recommend that our
shareholders vote for approval and adoption of the merger, the
merger agreement and the transactions contemplated thereby.
Kuoni representatives then were advised of our board's approval
and the merger agreement and related documentation were executed by
the parties after the close of trading on the Nasdaq National Market
on July 16th. Shortly thereafter Kuoni and we separately announced
the proposed merger.
RECOMMENDATION OF THE INTRAV BOARD; INTRAV'S REASONS FOR THE MERGER
Our board of directors has unanimously determined that the
merger is advisable and fair to and in the best interests of our
company and our shareholders and has approved and adopted the
merger, the merger agreement and the transactions contemplated
thereby. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER, THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
In reaching its determination that the merger is advisable and
fair to and in the best interests of our company and our
shareholders, the board considered a number of factors, which
included (but did not consist exclusively of) the following:
* The 29.2% premium of the merger consideration of $21.32 cash
per share over the closing price of $16.50 per share of
Intrav's common stock on July 16, 1999, as reported by Nasdaq
immediately before the announcement of the proposed merger.
Similarly, since our initial public offering in 1995,
approximately 96.3% of the trading volume of our common stock
has been at prices less than the $21.32 to be paid to
shareholders in the merger;
* The board's knowledge of our business, operations, properties,
assets, financial condition and operating results.
Specifically, in order to achieve significant future growth in
our business and operations, we would need significant amounts
of new capital, including the possible purchase of additional
small cruise ships, which the board believes could be financed
on more favorable terms by Kuoni than by us as an independent
business. In this regard, the board considered the lack of
positive market response to our proposed secondary offering
earlier this year and the likelihood that continuation of the
limited public float and the relatively small size of our
business would result in
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greater cost of capital to finance our growth than would be
the case as part of a much larger organization;
* Our operating results will continue to be subject to risks of
conditions or events outside our control, such as conflicts or
political instability in certain of our tour destinations, and
the possibility that certain modes of transportation on which
we rely, such as the supersonic Concorde, may not continue to
be available to us. These uncertainties ultimately could have
a material adverse effect upon our results of operations or
financial condition and could negatively affect our future
stock price;
* Mr. Ebsworth, who beneficially owns 74.8% of our outstanding
common stock, had advised the board of his desire, at an
appropriate time, to diversify the amount of his personal
wealth represented by his ownership of Intrav common stock.
Accordingly, the board believes that our public shareholders
will benefit from his effecting such diversification pursuant
to the merger, which affords an orderly process in which any
control premium over the market price at the time of
announcement is shared with all shareholders and does not
disrupt our business or the trading market for our common
stock;
* The attractiveness of a cash offer from Kuoni relative to
perceived opportunities and the feasibility of other possible
strategic alternatives to enhance long-term shareholder value,
including risks and uncertainties attendant to possible future
acquisitions;
* The payment of the merger consideration will be funded by
Kuoni out of funds on hand or financing which is readily
available to it and, accordingly, the transaction is not
subject to a financing contingency;
* The fact that our shareholders will receive cash in the
merger, which eliminates any uncertainties in valuing the
consideration to be received by our shareholders;
* The opinion of Stifel to the effect that, based upon and
subject to certain assumptions, matters considered and
limitations stated therein, the merger consideration to be
received by our shareholders is fair, from a financial point
of view, to such holders; and
* The board's view that the terms of the merger agreement, as
reviewed by the board with its legal and financial advisors,
are advisable and fair to and in the best interests of Intrav
and its shareholders with the flexibility, under certain
circumstances, to accept a proposal from a third party for a
business combination with us which the board determines to be
superior to the merger.
The board also considered the following negative factors
concerning the merger:
* The fact that our shareholders will receive cash in the
merger, which will not afford them the opportunity to
participate in any growth in the business of the combined
company; and
* The risk that the merger would not be completed in accordance
with its terms or at all, and the disruption of our business
if the merger is abandoned.
The board also recognized that members of our board and our
executive officers have interests in the merger that are different
from our other shareholders. See "--Benefits of the Merger to Intrav
Directors and Executive Officers."
The foregoing discussion of the information and factors
discussed by the board is not meant to be exhaustive but includes
all material factors considered by the board. In view of the
complexity and wide variety of information and factors considered,
both positive and negative, the board did not find it practical to
quantify, rank or otherwise attach any relative weight to the
various factors. In addition, the board did not reach any specific
conclusion with respect to each of the factors considered, or any
aspect of any particular factor, but conducted an overall analysis
of these factors, including thorough discussions with our management
and legal and financial advisors. As a result of its consideration
of the foregoing, the board determined that the merger, the merger
agreement and the transactions contemplated thereby are advisable
and fair to and in the best interests of us and our shareholders and
approved and adopted the merger, the merger agreement and the
transactions contemplated thereby.
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BENEFITS OF THE MERGER TO INTRAV DIRECTORS AND EXECUTIVE OFFICERS
When you consider our board of directors' recommendation to vote
for the merger, the merger agreement and the transactions
contemplated thereby, you should be aware of interests which some of
our directors and executive officers have in the merger that are
different from your and their interests as Intrav shareholders. Our
board was aware of these and other interests and specifically
considered them before approving and adopting the merger, the merger
agreement and the transactions contemplated thereby.
* TREATMENT OF STOCK OPTIONS. Under the terms of the merger
agreement, each holder of outstanding options, whether or not such
options are exercisable, will be entitled to receive an amount in
cash equal to the product of (1) the difference between $21.32 and
the exercise price per share of such options, and (2) the number of
shares of Intrav's common stock subject to such options. Our
directors and executive officers will receive this option
consideration as a result of the merger for all of their options.
The following table sets forth information as to the options
outstanding on August 19, 1999, for which cash payment will be
received upon consummation of the merger, and the proceeds expected
to be received upon termination of such options by our directors and
executive officers.
<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS HELD CASH PAYMENT
---- -------------------------- ----------------
<S> <C> <C>
Barney A. Ebsworth................. -- $ --
Paul H. Duynhouwer................. 260,000 3,038,200
Wayne L. Smith II.................. 100,000 982,000
Richard J. Hefler.................. 28,000 276,460
Michael F. Doiron.................. 8,000 60,060
John B. Biggs, Jr.................. -- --
William H. T. Bush................. -- --
Robert H. Chapman.................. -- --
</TABLE>
* ADVISORY COMMITTEE. Following the completion of the merger,
Kuoni and Kuoni Delaware will cause the surviving corporation to
form an advisory committee, and each of our current non-employee
directors other than Barney A. Ebsworth, will be offered the
opportunity to serve on the advisory committee of the surviving
corporation for a two-year term. In consideration for serving on the
advisory committee, each individual shall be entitled to receive an
annual fee of $12,000, a fee of $600 for each advisory committee
meeting attended and a $5,000 annual credit for traveling on the
surviving corporation's travel programs.
* DISPOSITION OF U.S. FLAG VESSELS AND TIME CHARTER. In order to
maintain the coastwise privileges of the two U.S. flag vessels and
provide Kuoni with the use of them, the merger agreement requires
that, immediately prior to the effective time of the merger, we sell
our U.S. flag vessels to such person or persons designated by Kuoni
Delaware who are qualified to own and operate them in the coastwise
trade. Because Paul H. Duynhouwer, Intrav's President and Chief
Executive Officer and an Intrav director, has experience in
operating the vessels, Kuoni Delaware has designated an entity
controlled by Mr. Duynhouwer to acquire the vessels.
Simultaneously with the execution of the merger agreement, Kuoni
and Kuoni Delaware entered into a letter agreement with Mr.
Duynhouwer, which outlines the proposed sale of the U.S. flag
vessels to an entity controlled by Mr. Duynhouwer. A copy of the
letter agreement is attached as Annex 3. The letter agreement
anticipates that we will sell the U.S. flag vessels to New World
Ships, LLC. New World Ships, LLC will be 75.1% owned by Mr.
Duynhouwer, and 24.9% owned by us or an affiliate. The total
purchase price for the two U.S. flag vessels will be approximately
$16.6 million, which represents the book value of the U.S. flag
vessels.
New World Ships, LLC will time charter the vessels back to us.
Pursuant to the time charter, we have the option to purchase the
U.S. flag vessels from New World Ships, LLC, subject to compliance
with applicable laws, at any time during the term of the time
charter. The purchase price would be the lesser of the vessels'
appraised fair market value and termination value, but in no event
will the purchase price be less than the amount of any then
outstanding debt incurred by New World Ships, LLC to finance its
purchase of the vessels.
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Pursuant to an operating agreement to be entered into
simultaneously with the time charter, New World Ship Management
Company, LLC, which will have the same ownership as New World Ships,
LLC, will operate the U.S. flag vessels on behalf of New World
Ships, LLC. In addition, it is anticipated that New World Ship
Management Company, LLC will enter into an agreement with us to
manage our two non-U.S. flag vessels. As a result, we will terminate
the employment of Mr. Duynhouwer and certain of our personnel who
currently manage and crew the vessels for us on the date of the sale
of the U.S. flag vessels. These personnel will be offered employment
by New World Ship Management Company, LLC, and continue to perform
for New World Ship Management Company, LLC substantially the same
duties and receive substantially the same salary and benefits as
currently performed for and received from us. We anticipate that we
will enter into a transitional services agreement with New World
Ship Management Company, LLC pursuant to which both parties will
provide administrative and operational services to the other during
a transition period following the merger.
Mr. Duynhouwer will invest approximately $300,000 and we (or an
affiliate) will invest approximately $100,000 in New World Ships,
LLC. New World Ships, LLC will borrow the difference between the
purchase price of the U.S. flag vessels and the equity contributions
made in it. Mr. Duynhouwer will receive, as salary, distributions,
or otherwise, the following amounts during each year following the
closing of the merger: year one - $400,000; year two - $300,000;
year three - $215,000; and as agreed upon thereafter. In addition,
Mr. Duynhouwer will continue to receive fringe benefits
substantially comparable to those he currently receives from us and
will be indemnified by New World Ships, LLC and Intrav with respect
to risks attendant upon the ownership and operation of the vessels.
* BUSH-O'DONNELL & CO. CONSULTING FEES. At the merger closing,
the surviving corporation will pay a consulting fee of $200,000 to
Bush-O'Donnell & Co. for advisory services rendered in connection
with the merger. William H. T. Bush, a director of Intrav, is
Chairman of the Board and a principal of Bush-O'Donnell & Co.
* DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE. The merger
agreement provides that Kuoni and Kuoni Delaware will indemnify and
hold harmless each of our present directors and officers, determined
as of the effective time, against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities incurred in connection with any claim,
action, suit, proceeding or investigation whether civil, criminal,
administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the effective time,
whether asserted or claimed prior to, at or after the effective
time, to the fullest extent that would have been permitted under
Missouri law and our articles of incorporation or bylaws in effect
on the date of the merger agreement to indemnify such person (and
Kuoni and the surviving corporation shall also advance expenses as
incurred to the fullest extent permitted under applicable law and
our articles of incorporation and our bylaws, provided that the
person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person
is not entitled to indemnification). In addition, the merger
agreement provides that Kuoni, Kuoni Delaware, or the surviving
corporation, to the extent available, will maintain in effect, for a
period of five years after the merger, directors' and officers'
liability insurance for the benefit of our directors and officers
who are currently covered under our directors' and officers'
liability insurance on terms not materially less favorable than the
existing insurance coverage; provided, however, Kuoni, Kuoni
Delaware or surviving corporation is not obligated to pay an annual
premium in excess of 150% of the last annual premium paid by us
prior to the date of the merger agreement.
* EMPLOYMENT AGREEMENT: Wayne L. Smith II and Barney A. Ebsworth
executed a memorandum dated September 18, 1997, which sets forth the
terms of Mr. Smith's employment with us. As set forth in the
memorandum, upon termination, Mr. Smith is entitled to receive a
$100,000 severance payment. Kuoni intends to terminate Mr. Smith's
employment by mutual agreement but no later than three months
following the consummation of the merger.
INTRAV PROJECTIONS
In connection with Kuoni's review of our business and in the
course of our negotiations we provided Kuoni with certain non-public
business and financial information. This information also was
provided to
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Stifel, Nicolaus & Company, Incorporated and was used by it in its
analysis of the fairness of the cash merger consideration to be
received by our shareholders. See "--Opinion of Stifel, Nicolaus &
Company, Incorporated."
The non-public information provided by us included certain
projections of our future operating performance. These projections
included, among other things, our Five Year Strategic Plan
(1999-2003), completed in May 1999, which set forth our strategies
and financial benchmarks by which we measure our level of success.
The projections included a five-year financial plan, including an
income statement, a statement of cash flows and a balance sheet. We
also provided Kuoni with the assumptions that we made in preparing
the projections. These assumptions included, among other things,
preliminary budget amounts based on detailed itineraries, the
addition of two new ships (one in 2001 and one in 2003) and
assumptions about interest expense, income taxes and average shares
outstanding.
The projections do not give effect to the merger or the
financing thereof. We do not, as a matter of course, publicly
disclose projections as to future revenues or earnings. The
projections were not prepared with a view to public disclosure and
are included in this proxy statement only because such information
was made available to Kuoni in connection with its due diligence
investigation of us and was considered by our board in connection
with approving the merger. Accordingly, it is expected that there
will be differences between actual and projected results, and actual
results may be materially different than those set forth below. The
projections were not prepared with a view to compliance with the
published guidelines of the Securities and Exchange Commission
regarding projections, nor were they prepared in accordance with the
guidelines established by the American Institute of Certified Public
Accountants for preparation and presentation of financial
projections. Moreover, our independent auditors have not examined,
compiled or performed any procedures with respect to the projections
nor have they expressed any opinion or any form of assurance on
their reasonableness, accuracy or achievability and assume no
responsibility for, and disclaim any association with, the
aforementioned projections. These forward-looking statements reflect
numerous assumptions made by our management. In addition, factors
such as industry performance, general business, economic,
regulatory, and market and financial conditions, all of which are
difficult to predict, may cause the projections or the underlying
assumptions to be inaccurate. Accordingly, there can be no assurance
that the projections will be realized, and actual results may be
materially more or less favorable than those contained in the
projections.
20
<PAGE>
<PAGE>
The inclusion of the projections herein should not be regarded
as an indication that our financial advisors considered or consider
the projections to be a reliable prediction of future events, and
the projections should not be relied upon as such. We do not intend
to update or otherwise revise the projections to reflect
circumstances existing after the date when made or to reflect the
occurrence of future events, even if any or all of the assumptions
underlying the projections are shown to be in error or to otherwise
have changed. Selected financial information from the Five Year
Strategic Plan (1999-2003) completed in May 1999 that we provided to
Kuoni and that Stifel, Nicolaus & Company, Incorporated analyzed in
giving its fairness opinion and our board reviewed in connection
with approving the merger are set forth below:
<TABLE>
SELECTED FINANCIAL INFORMATION - FIVE YEAR PLAN
<CAPTION>
YEARS ENDING DECEMBER 31,
---------------------------------------------------------
1997 1998 1999E 2000E
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
INCOME INFORMATION:
Revenues....................... $122,523 $125,997 $124,108 $149,626
Gross profit................... 23,516 27,841 32,670 35,750
Operating income<F1>........... 8,163 12,253 15,457 18,218
Depreciation and
amortization................. 1,337 1,993 2,884 3,000
Interest expense............... 85 721 1,135 700
Income before income taxes..... 7,720 10,601 12,023 14,990
Net income..................... 4,940 6,784 7,695 9,594
Diluted net income per share... 0.96 1.29 1.45 1.81
CONSOLIDATED STATEMENTS OF CASH
FLOWS INFORMATION:
Net cash provided by operating
activities................... $ 7,635 $ 7,509 $ 24,579 $ 14,285
Net cash used in investing
activities................... (9,174) (24,266) (3,700) (1,600)
Net cash provided by (used in)
financing activities......... 820 11,651 (16,860) (12,560)
CONSOLIDATED BALANCE SHEET
INFORMATION (AT PERIOD END):
Total current assets........... $ 25,321 $ 26,618 $ 20,637 $ 20,762
Property and equipment--net.... 26,198 54,655 55,471 54,071
Total assets................... 56,801 86,558 81,393 80,118
Total current liabilities...... 36,846 47,289 45,789 47,481
Long-term debt................. 7,450 20,800 15,000 5,000
Total shareholders' equity..... 5,517 10,602 12,737 19,770
<CAPTION>
YEARS ENDING DECEMBER 31,
------------------------------------------
2001E 2002E 2003E
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF
INCOME INFORMATION:
Revenues....................... $163,720 $179,561 $195,877
Gross profit................... 40,202 44,610 49,150
Operating income<F1>........... 21,894 25,503 29,220
Depreciation and
amortization................. 3,400 3,800 4,200
Interest expense............... 560 384 --
Income before income taxes..... 18,374 21,823 25,572
Net income..................... 11,759 13,966 16,366
Diluted net income per share... 2.22 2.64 3.09
CONSOLIDATED STATEMENTS OF CASH
FLOWS INFORMATION:
Net cash provided by operating
activities................... $ 16,936 $ 19,632 $ 22,524
Net cash used in investing
activities................... (21,600) (2,000) (22,000)
Net cash provided by (used in)
financing activities......... 3,440 (13,560) (2,560)
CONSOLIDATED BALANCE SHEET
INFORMATION (AT PERIOD END):
Total current assets........... $ 19,538 $ 23,609 $ 21,574
Property and equipment--net.... 72,271 70,471 88,271
Total assets................... 97,094 99,365 115,130
Total current liabilities...... 49,257 51,122 53,081
Long-term debt................. 11,000 -- --
Total shareholders' equity..... 28,970 40,376 54,182
<FN>
- - ---------
<F1> For external financial statement purposes, operating income is net of
depreciation and amortization expense.
</TABLE>
EFFECTS OF THE MERGER; MERGER CONSIDERATION
As a result of the merger:
* Kuoni will acquire all of the equity interest in Intrav and,
accordingly, you will no longer retain any equity interest in
us. As a result, you will share in neither our future earnings
and growth nor the risks associated with achieving such
earnings and growth following the merger;
* each share of Intrav common stock (other than shares held by
Kuoni, Kuoni Delaware, Kuoni Acquisition Subsidiary, Intrav, a
wholly-owned subsidiary of Intrav or shareholders, if any, who
properly exercise their dissenter's rights under Missouri law,
as described below) will be exchanged for a cash payment of
$21.32 per share, without interest; and
* each outstanding option will be exchanged for a cash payment
equal to the product of (1) the difference between $21.32 and
the exercise price per share of such option, and (2) the
number of shares of Intrav common stock subject to such
option.
21
<PAGE>
<PAGE>
The merger will have the effects provided under Missouri law.
Specifically, at the effective time of the merger:
* Kuoni Acquisition Subsidiary will merge into us, and the
separate existence of Kuoni Acquisition Subsidiary will cease;
* title to all real estate and other property owned by Kuoni
Acquisition Subsidiary and us will vest in the surviving
corporation without reversion or impairment;
* the surviving corporation will have all liabilities of Kuoni
Acquisition Subsidiary and us; and
* any proceeding pending against Kuoni Acquisition Subsidiary or
us may be continued as if the merger did not occur, or the
surviving corporation may be substituted in any proceeding for
Kuoni Acquisition Subsidiary.
The directors and officers of Kuoni Acquisition Subsidiary
immediately prior to the effective time of the merger will be the
directors and officers of the surviving corporation, respectively,
until the earlier of their death, resignation or removal or until
their respective successors are duly elected and qualified, as the
case may be. The articles of incorporation and bylaws of Kuoni
Acquisition Subsidiary in effect at the effective time of the merger
will be the articles and bylaws of the surviving corporation
(however, the articles will be amended and restated so that the name
of the surviving corporation is "Intrav, Inc.").
Kuoni will take steps to cease the listing of the shares of our
common stock on the Nasdaq National Market and Kuoni will file a
Form 15 to terminate the registration of our common stock under
Section 12(g) of the Securities Exchange Act of 1934, which will
become effective within 90 days thereafter unless withdrawn or
denied. Once the Form 15 is effective, we will no longer be required
to file periodic and other reports required under the Exchange Act
and the rules promulgated thereunder. Additionally, persons subject
to the insider trading rules of Section 16 of the Exchange Act or
the filing requirements of Section 13(d) of the Exchange Act will no
longer be subject to such rules or requirements.
OPINION OF STIFEL, NICOLAUS & COMPANY, INCORPORATED
Our board of directors retained Stifel, Nicolaus & Company,
Incorporated as its financial advisor in connection with the
agreement with Kuoni and to render a fairness opinion with respect
to the consideration to be received by our shareholders in the
merger. Our decision to engage Stifel was based upon Stifel's
qualifications, expertise and reputation.
On July 16, 1999, Stifel rendered its oral opinion to our board
of directors that, as of such date, the cash consideration of $21.32
per share was fair to holders of shares of Intrav common stock from
a financial point of view. Stifel subsequently delivered a written
opinion to the same effect dated July 16, 1999. Stifel has
subsequently confirmed its July 16, 1999 opinion by delivering to
our board of directors its written opinion, dated as of the date of
this proxy statement, that based upon and subject to the various
considerations set forth therein, the cash consideration of $21.32
per share is fair to holders of Intrav common stock from a financial
point of view. The non-withdrawal of the fairness opinion delivered
by Stifel is a condition to consummation of the merger.
You should consider the following when reading the discussion of
the Stifel opinion in this proxy statement:
* The following description of the Stifel opinion is qualified
by reference to the full opinion attached as Annex 4 to this
proxy statement. We urge you to read carefully the entire
Stifel opinion.
* Stifel's opinion does not constitute a recommendation to any
shareholder as to how such shareholder should vote at the
special meeting or as to any other matter.
* Stifel expressed no opinion as to the prices at which shares
of Intrav common stock will actually trade at any time.
* We did not authorize Stifel to solicit interest from other
parties regarding a possible business combination involving
us, and Stifel did not make any such solicitations.
22
<PAGE>
<PAGE>
* The Stifel opinion does not address the relative merits of the
merger and the other business factors considered by our board
nor does it address the advisability of the board's decision
to proceed with the merger.
Stifel is regularly engaged in the valuation of businesses and
their securities in connection with merger transactions and other
types of acquisitions, underwriting, selling and distributing
securities, private placements and valuations for estate, corporate
and other purposes. Stifel is familiar with Intrav, having provided
financial advisory services to us and our board of directors in the
past.
We paid Stifel a cash fee of $15,000 upon its engagement and an
additional $100,000 cash fee upon Stifel's delivery of its oral
fairness opinion. We agreed to pay Stifel $85,000 at the closing of
the merger, to reimburse Stifel for certain out-of-pocket expenses
and to indemnify Stifel, its affiliates and their respective
partners, directors, officers, agents, consultants, employees and
controlling persons against certain liabilities, including
liabilities under the federal securities laws. In the ordinary
course of its business, Stifel actively trades equity securities of
Intrav for its own account and for the accounts of its customers
and, accordingly, may at any time hold a long or short position in
such securities.
In connection with its July 16, 1999 oral opinion and written
opinion, Stifel, among other things:
* Reviewed the merger agreement.
* Reviewed publicly available financial statements and other
business and financial information regarding our company.
* Reviewed our internal financial statements and other financial
and operating data prepared by our management.
* Analyzed financial forecasts prepared by our management.
* Discussed our past and current operations and financial
condition and the prospects with management.
* Reviewed the historical stock prices and trading volumes of
Intrav common stock.
* Compared our financial performance with that of other
comparable, publicly traded companies.
* Reviewed the financial terms, to the extent publicly
available, of certain transactions involving comparable
publicly traded companies.
* Performed such other analyses and considered such other
factors as Stifel deemed appropriate for purposes of its
opinion.
Stifel also considered its assessment of general economic,
market and financial conditions and its experience in other
transactions, as well as its experience in securities valuations and
knowledge of the capital markets generally.
In rendering its opinion, Stifel relied upon and assumed the
accuracy and completeness of all of the financial and other
information that was provided to, or otherwise reviewed by, Stifel.
Stifel did not independently verify any of such information. With
respect to the financial projections supplied to it, Stifel assumed
that they were reasonably prepared on the basis reflecting the best
currently available estimates and judgments of our management, that
they would be realized in the amounts and time periods estimated and
that they provided a reasonable basis upon which Stifel could form
its opinion. Stifel also assumed that there were no material changes
in the assets, liabilities, financial condition, results of
operations, business or prospects of our company since the date of
the last financial statements made available to Stifel. Stifel did
not make or obtain any independent evaluation, appraisal or physical
inspection of our assets or liabilities and relied on advice of our
counsel as to all legal matters with respect to our company, the
merger agreement and the transactions and other matters contained or
contemplated therein. Stifel further assumed that we were not
subject to any factors that would delay, or impose any adverse
conditions upon, any necessary regulatory or governmental approval
and that all conditions to the merger will be satisfied and not
waived.
23
<PAGE>
<PAGE>
We do not, as a matter of course, publicly disclose projections
as to future earnings or revenues or estimates of the type furnished
to Stifel, and we do not prepare such forecasts and estimates with a
view toward public disclosure. We based these forecasts and
estimates on variables and assumptions that are inherently uncertain
and that may not be within the control of management. These
variables include, for example, industry performance, general
economic, regulatory, market and financial conditions. Accordingly,
actual results could vary materially from those set forth in our
projections.
In connection with its opinions, Stifel performed a variety of
financial analyses that are summarized below. This summary does not
purport to be a complete description of those analyses. Stifel
believes that its analyses and the summary set forth herein must be
considered as a whole and that selecting portions of such analyses
and the factors considered therein, without considering all factors
and analyses, could create an incomplete view of the analyses and
processes underlying its opinion. The preparation of a fairness
opinion is a complex process involving subjective judgments and is
not necessarily susceptible to partial analysis or summary
description. In its analyses, Stifel made numerous assumptions with
respect to industry performance, business and economic conditions
and other matters, many of which are beyond our reasonable control.
Any estimates contained in Stifel's analyses are not necessarily
indicative of actual future values or results, and actual future
values and results may be significantly more or less favorable than
suggested by such estimates. Estimates of values of companies do not
purport to be appraisals or necessarily reflect the actual prices at
which companies or their securities may be sold. No company or
transaction utilized in Stifel's analyses was identical to us or the
merger, respectively. Accordingly, such analyses are not based
solely on arithmetic calculations; rather, they involve complex
considerations and judgments concerning differences in financial and
operating characteristics of the relevant companies, the timing of
the relevant transactions, and prospective buyer interest, as well
as other factors that could affect the public trading values of the
company or companies to which they are being compared. Stifel did
not assign any of the analyses it performed a greater significance
than any other.
The following is a summary of the financial analyses performed
by Stifel in connection with providing its oral opinion on July 16,
1999 and written opinion, dated July 16, 1999. Stifel has updated
certain of its analyses and reviewed the assumptions on which such
analyses were based and the factors considered in connection with
the analyses in connection with its written opinion dated as of the
date of this Proxy Statement. In connection with this update, Stifel
did not use any analyses in addition to those described below.
Equity Market Performance. Stifel presented our board of
directors with an analysis of Intrav common stock performance as
background to a discussion of the merger with Kuoni. This analysis
consisted of a historical analysis of:
* Closing prices, trading volumes and price to earnings ratios
from May 18, 1995, the date of the our initial public
offering, to July 14, 1999.
* Our indexed price performance from May 18, 1995 to July 14,
1999 relative to Standard & Poor's industrial average of 500
stocks, the Russell 2000 and an index of comparable companies.
* Our price-to-latest-twelve-month earnings multiple from May
18, 1995, to July 14, 1999, relative to the S&P 500.
The index of comparable companies included:
* Ambassador International
* Amtran Inc.
* Global Vacation Group
* Travel Services International
* American Classic Voyages Co.
* Commodore Holdings Ltd.
* Carnival Corp.
* Royal Caribbean Cruises Ltd.
24
<PAGE>
<PAGE>
Stifel observed that the high closing price and the low closing
price for Intrav common stock from the time of our initial public
offering on May 18, 1995 to July 14, 1999 were $23.125 per share and
$5.75 per share, respectively. Stifel observed that from May 18,
1995 to July 14, 1999 approximately 96.3% of the shares traded were
at a price below $21.32 and approximately 87.8% of the shares traded
were at a price-to-latest-twelve-month earnings multiple of less
than 17.3x. From May 18, 1995 to July 14, 1999, Stifel noted that
the S&P 500 increased by 169%, the Russell 2000 increased 70%, the
comparable company index increased 133% and the price of our common
stock increased 46%. Stifel also observed that Intrav common stock
traded at an increasing discount to the S&P 500 on a price-to-
latest-twelve-month earnings multiple basis. On May 18, 1995,
Intrav common stock traded at approximately a 40% discount to
the S&P 500 versus July 14, 1999 when it was it traded at
approximately a 66% discount.
Analysis of Comparable Merger Transactions. Stifel analyzed
information relating to recent comparable merger transactions in the
travel and cruise industries. This analysis consisted of eight
transactions involving U.S.-based target companies that were
announced between January 1, 1996 and July 14, 1999. The
transactions in this group were:
* Intrav, Inc./Clipper Cruise Line, Inc.
* ByeByeNow.com/Integrated Marketing Professionals
* Travel Services International/Lifestyle Vacation Incentives
* Travel Services International/AHI International Corp.
* Airtours PLC/Vacation Express, LLC
* Ambassadors International, Inc./Destination, Inc.
* Aviation Industries Corp./Integrated Marketing Professionals
* Investor Group/Seacor Smit, Inc.
Stifel calculated the following ratios with respect to the
merger and the selected comparable merger transactions:
<TABLE>
<CAPTION>
SELECTED COMPARABLE MERGER TRANSACTIONS
----------------------------------------------
RATIOS INTRAV/KUONI MINIMUM MEDIAN MAXIMUM
------ ---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Deal price per share/
Last 12 months earnings per share....... 17.3x 5.7x 9.2x 14.1x
Transaction value/
Last 12 months revenue.................. 91.3% 6.3% 80.0% 238.1%
Transaction value/
Last 12 months EBITDA................... 8.5x 4.5x 7.7x 11.5x
Transaction value/
Last 12 months EBIT..................... 10.3 5.2x 10.9x 17.3x
</TABLE>
Stifel then applied the selected comparable merger transactions
multiples to us and determined a range of values on a per share
basis. This analysis resulted in a range of imputed values for
Intrav common stock of between $11.34 per share and $21.46 per share
based on the median multiples and ratios for the selected comparable
merger transactions. The following table provides an implied range
of per share values for Intrav based on the comparable merger
transaction multiples listed above.
<TABLE>
<CAPTION>
SELECTED COMPARABLE MERGER TRANSACTIONS
----------------------------------------------
RANGE OF VALUES INTRAV/KUONI MINIMUM MEDIAN MAXIMUM
--------------- ---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Deal price per share/
Last 12 months earnings per share....... $21.32 $ 7.05 $11.34 $17.27
Transaction value/
Last 12 months revenue.................. $21.32 $ 1.40 $17.79 $52.94
Transaction value/
Last 12 months EBITDA................... $21.32 $10.79 $18.50 $27.56
Transaction value/
Last 12 months EBIT..................... $21.32 $10.29 $21.46 $34.22
</TABLE>
25
<PAGE>
<PAGE>
Comparison of Selected Companies. Stifel reviewed and compared
our performance against the eight comparable companies listed above,
although Stifel excluded the earnings multiples for Carnival Corp.
and Royal Caribbean Cruises Ltd. due to their relative size. Stifel
applied a 23.6% control premium to the multiples of the remaining
comparable companies listed above. Stifel calculated the following
ratios with respect to the merger and the comparable company
analysis:
<TABLE>
<CAPTION>
SELECTED COMPARABLE COMPANIES
----------------------------------------------
RATIOS INTRAV/KUONI MINIMUM MEDIAN MAXIMUM
------ ---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Deal price per share/
Last 12 months earnings per share....... 17.3x 6.9x 11.9x 22.8x
Deal price per share/
1999 estimated earnings per share....... 14.7x 7.5x 16.5x 27.6x
Deal price per share/
2000 estimated earnings per share....... 11.8x 7.1x 10.1x 17.6x
Firm value/
Last 12 months revenue.................. 104.2% 38.4% 83.7% 198.0%
Firm value/
Last 12 months EBITDA................... 9.7x 1.1x 5.2x 16.3x
Firm value/
Last 12 months EBIT..................... 11.7x 1.3x 6.2x 10.3x
</TABLE>
Utilizing the range of multiples and ratios derived from the
comparable companies, Stifel calculated a range of imputed values
for one share of Intrav common stock. This analysis resulted in a
range of imputed values for Intrav common stock of between $16.14
per share and $29.65 per share based on the median multiples and
ratios for the comparable companies. The following table provides an
implied range of per share values for Intrav common stock based on
the selected comparable companies multiples listed above:
<TABLE>
<CAPTION>
SELECTED COMPARABLE COMPANIES
----------------------------------------------
RANGE OF VALUES INTRAV/KUONI MINIMUM MEDIAN MAXIMUM
--------------- ---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Deal price per share/
Last 12 months earnings per share....... $21.32 $10.52 $18.04 $34.68
Deal price per share/
1999 estimated earnings per share....... $21.32 $13.45 $29.65 $49.53
Deal price per share/
2000 estimated earnings per share....... $21.32 $15.87 $22.53 $39.30
Firm value/
Last 12 months revenue.................. $21.32 $11.30 $24.61 $58.23
Firm value/
Last 12 months EBITDA................... $21.32 $ 3.41 $16.60 $51.68
Firm value/
Last 12 months EBIT..................... $21.32 $ 3.30 $16.14 $26.92
</TABLE>
Discounted Cash Flow to Firm Analysis. Stifel used a discounted
cash flow analysis to estimate the net present value of the future
stream of "free cash flow to the firm" that we would generate. In
this analysis, Stifel assumed that we would perform in accordance
with management's estimates. Stifel calculated the sum of (1) the
estimated terminal values per share of Intrav common stock based on
assumed multiples to our projected 2003 EBITDA ranging from 6.0x to
10.0x, plus (2) the assumed 1999 through 2003 free cash flow to the
firm. Stifel then used assumed discount rates ranging from 17.5% to
21.5% to discount each item to a present value. This analysis
indicated an implied equity value reference range of $14.69 to
$26.66 per share of Intrav common stock. Stifel included the free
cash flow to the firm methodology in arriving at its opinion because
it is a widely used valuation methodology, but the results of the
methodology are highly dependent upon the numerous required
assumptions, including estimated earnings growth rates, dividend
payout rates, terminal values and discount rates.
Discounted Cash Flow To Shareholder Analysis. Also using a
discounted cash flow analysis, Stifel estimated the net present
value of the future stream of the "cash flows to the shareholders"
that we would generate. In this analysis, Stifel also assumed that
we would perform in accordance with management's
26
<PAGE>
<PAGE>
estimates. Stifel calculated the sum of (1) the estimated terminal
values per share of Intrav common stock based on assumed multiples
to our projected 2003 earnings per share ranging from 10.0x to
18.0x, plus (2) the assumed 1999 through 2003 stream of dividend
payments. Stifel then used assumed discount rates of between 17.5%
and 21.5% to discount each item to a present value. This discounted
cash flow analysis indicated an implied equity value reference range
of $13.11 per share to $26.40 per share per share of Intrav common
stock. As with the "free cash flow to the firm" analysis, Stifel
included the discounted cash flow to shareholders methodology in
arriving at its opinion because it is a widely used valuation
methodology, but the results of the methodology are highly dependent
upon the numerous required assumptions, including estimated earnings
growth rates, dividend payout rates, terminal values and discount
rates.
Analysis of Premium to Market Price for Selected Merger
Transactions. Stifel analyzed the premium paid to the then current
market price, one day prior to the date of announcement of the
selected transactions, and one week prior to the date of
announcement of the selected transactions, for 62 selected service
industry transactions, announced in the U.S. between January 1, 1998
and July 13, 1999, with transaction values between $50 million and
$200 million. Stifel calculated the following ratios with respect to
the merger and the selected merger transactions:
<TABLE>
<CAPTION>
SELECTED MERGER TRANSACTIONS
--------------------------------------------------------------
INTRAV/KUONI 25TH PERCENTILE MEDIAN 75TH PERCENTILE
---------------- ------------------- ---------- -------------------
<S> <C> <C> <C> <C>
Premium to stock price one day
prior to announcement........... 38.7% 9.0% 23.6% 35.4%
Premium to stock price one week
prior to announcement........... 29.2% 16.0% 25.3% 44.5%
</TABLE>
This analysis resulted in a range of imputed values for Intrav
common stock of between $19.00 per share and $20.67 per share based
on the median multiples for the selected merger transactions. The
following table provides the implied range of values for Intrav
common stock based on the comparable merger transaction premium to
market multiples listed above.
<TABLE>
<CAPTION>
SELECTED MERGER TRANSACTIONS
--------------------------------------------------------------
INTRAV/KUONI 25TH PERCENTILE MEDIAN 75TH PERCENTILE
---------------- ------------------- ---------- -------------------
<S> <C> <C> <C> <C>
Premium to stock price one day
prior to announcement........... $21.32 $16.76 $19.00 $20.82
Premium to stock price one week
prior to announcement........... $21.32 $19.13 $20.67 $23.85
</TABLE>
As described above, Stifel's oral opinion was among the many
factors taken into consideration by our board of directors in making
its determination to approve the merger. Consequently, the analyses
described above should not be viewed as determinative of our board's
or our management's opinion with respect to the value of Intrav or a
combination of Intrav and Kuoni, or of whether our board of
directors or our management would have been willing to agree to a
different amount of consideration. We placed no limits on the scope
of the analysis performed, or opinion expressed, by Stifel.
EFFECTIVE TIME OF THE MERGER
The merger will become effective upon the filing of the articles
of merger with the Missouri Secretary of State or such later time as
we and Kuoni may agree and as specified in the articles of merger.
The filing of the articles of merger will occur as soon as
practicable, but no later than the fifth business day after the
satisfaction or waiver of the conditions to the completion of the
merger described in the merger agreement, unless we and Kuoni agree
to another date.
ACCOUNTING TREATMENT
Kuoni will account for the merger as a "purchase" in accordance
with generally accepted accounting principles. Consequently, the
aggregate consideration Kuoni pays in connection with the merger
will be allocated to our assets and liabilities based upon their
fair values and any excess will be treated as goodwill.
27
<PAGE>
<PAGE>
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income
tax considerations relevant to the merger that are generally
applicable to holders of Intrav common stock. This discussion is
based on currently existing provisions of the Internal Revenue Code
of 1986, as amended, existing and proposed Treasury Regulations
thereunder, published administrative rulings and court decisions,
all of which are subject to change or a change in interpretation.
Any such change, which may or may not be retroactive, could alter
the tax consequences to the holders of Intrav common stock as
described herein. Special tax consequences not described below may
be applicable to particular classes of taxpayers, including
financial institutions, broker-dealers, persons who are not citizens
or residents of the United States or who are foreign corporations,
foreign partnerships, tax exempt entities, traders in securities
that elect to mark-to-market, investors who hold their Intrav common
stock as part of a straddle or hedging or conversion transaction or
investors whose functional currency is not the U.S. dollar or
foreign estates or trusts as to the United States, and holders who
acquired their stock through the exercise of an employee stock
option or otherwise as compensation. You are urged to consult your
tax advisor regarding the federal, state, local and foreign tax
consequences of the merger.
Your receipt of the cash merger consideration in the merger will
be a taxable transaction for federal income tax purposes. Your gain
or loss per share of Intrav common stock will be equal to the
difference between the merger consideration and your adjusted basis
in that particular share of the Intrav common stock. Such gain or
loss generally will be a capital gain or loss, unless you hold the
Intrav common stock as inventory for sale in the ordinary course of
business. In the case of individuals, trusts, and estates, such
capital gain will be subject to a maximum federal income tax rate of
20% for shares of Intrav common stock held for more than 12 months
prior to the date of disposition.
You may be subject to backup withholding at the rate of 31% with
respect to cash merger consideration received pursuant to the
merger, unless you (a) are a corporation or come within certain
other exempt categories and, when required, demonstrate this fact or
(b) provide a correct taxpayer identification number, certify as to
no loss of exemption from backup withholding, and otherwise comply
with applicable requirements of the backup withholding rules. To
prevent the possibility of backup federal income tax withholding on
payments made with respect to shares of Intrav common stock pursuant
to the merger, you must provide the exchange agent for the merger
with your correct TIN by completing a Form W-9 or substitute Form
W-9. If you do not provide Intrav with your correct taxpayer
identification number, you may be subject to penalties imposed by
the Internal Revenue Service, as well as backup withholding. Any
amount withheld under these rules will be creditable against your
federal income tax liability. Intrav (or its agent) will report to
the holders of Intrav common stock and the IRS the amount of any
"reportable payments," as defined in Section 3406 of the Code, and
the amount of tax, if any, withheld with respect thereto.
REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
and related rules, certain transactions, including the merger, may
not be completed unless certain waiting period requirements have
been satisfied. On July 30, 1999, Kuoni and Barney A. Ebsworth each
filed a Notification and Report Form with the Antitrust Division of
the Department of Justice and the Federal Trade Commission. The
antitrust agencies have indicated that they have granted early
termination of the required waiting period under the Hart-Scott-Rodino
Act. However, at any time before or after the effective time of the
merger, the Antitrust Division, the Federal Trade Commission or others
could take action under the antitrust laws, including seeking to prevent
the merger, to rescind the merger or to conditionally approve the
merger upon the divestiture of substantial assets of Kuoni or
Intrav. A challenge to the merger on antitrust grounds may be made
and, if such a challenge is made, it may be successful.
DISSENTERS' RIGHTS
Under Section 351.455 of the General and Business Corporate Law
of Missouri, shareholders who do not wish to accept the merger
consideration to which they are entitled pursuant to the terms of
the merger agreement have the right to make written demand for
payment of the "fair value" of their shares. Section 351.455 is set
forth in its entirety as Annex 5 at the end of this proxy statement
and the following discussion,
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which is not a complete statement of Section 351.455, is qualified
in its entirety by reference to the full text thereof. Since the
right to demand payment of the fair value of shares of Intrav common
stock depends on strict compliance with Section 351.455, if you wish
to exercise that right you should review the text of Section 351.455
carefully. In addition, if you wish to exercise such right you
should consider consulting your attorney with respect to compliance
with these statutory procedures.
If you wish to object to the merger agreement and make written
demand for payment of the fair value of your shares you must mail or
deliver to us a written objection to the merger and the merger
agreement, which must be received by us prior to or at the special
meeting of the shareholders. In addition, the shares covered by such
demand for payment must not be voted in favor of the merger and the
merger agreement. A failure to vote will not affect your rights to
make written demand for payment of the fair value of your shares of
Intrav common stock, but a vote in favor of the merger and the
merger agreement, in person or by proxy, will constitute a waiver of
your right to make written demand for payment of the fair value of
your shares of Intrav's common stock and will void any previous
written objection. The mere filing of a proxy directing a vote
against the merger agreement, or a purported objection to the merger
agreement submitted on a proxy card, does not constitute, and will
not be treated by us as, a written objection within the meaning of
Section 351.455.
Within 20 days of the effective date of the merger, any
objecting shareholder must, in addition, make written demand on the
surviving corporation to the merger, which will be Intrav, for
payment of the fair value of his or her shares of common stock as of
the day prior to the date on which the shareholders vote to approve
the merger and the merger agreement. This demand must state the
number and class of the dissenting shares owned by the dissenting
shareholder. Any shareholder who fails to make this demand within
the 20-day period is conclusively presumed to have consented to the
merger and the merger agreement and shall be bound by its terms.
Intrav, as the surviving corporation, will promptly notify any
dissenting shareholder of the effective date of the merger.
If a dissenting shareholder and the surviving corporation agree
as to the fair value of his or her dissenting shares within 30 days
after the effective date of the merger, payment for such dissenting
shares will be made within 90 days after the effective date of the
merger upon the surrender of the certificates representing such
dissenting shares. If the dissenting shareholder and the surviving
corporation do not agree as to the fair value of such dissenting
shares within such 30 days, then, in order to preserve his or her
statutory rights, the dissenting shareholder must, within 60 days
after the expiration of the 30-day period, file a petition in a
court of competent jurisdiction within the county in which the
registered office of the surviving corporation is located (St. Louis
County, Missouri), asking for a finding and determination of the
fair value of such dissenting shares, and shall be entitled to
judgment against the surviving corporation for the amount of such
fair value as of the day prior to the date on which the vote was
taken approving the merger agreement, together with interest thereon
to the date of such judgment. That value may be more or less than
the $21.32 to be paid to Intrav's shareholders pursuant to the
merger agreement. By statute, the right of a dissenting shareholder
to be paid the fair value of his or her dissenting shares shall
cease if and when the merger is abandoned.
EFFECT ON OPTIONS OUTSTANDING UNDER INTRAV STOCK OPTION PLANS
Under the merger agreement, we have agreed to cause outstanding
options to become payable for cash, subject to any applicable
withholding tax, equal to the product of the difference between
$21.32 and the per share exercise price of such options and the
number of shares subject to such options. We have advised Kuoni that
there are outstanding options to purchase 515,000 shares of Intrav
common stock with an aggregate exercise price of such options being
$5,734,000.
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THE MERGER AGREEMENT
The following description summarizes the material provisions of
the merger agreement. You should carefully read the merger agreement
which is attached as Annex 1 to this proxy statement and
incorporated herein by reference.
GENERAL
Pursuant to the merger agreement, at the effective time of the
merger, Kuoni will acquire Intrav through the merger of Kuoni
Acquisition Subsidiary with and into Intrav. At the effective time
of the merger, Kuoni Acquisition Subsidiary will cease to exist, and
Intrav will be the surviving corporation and a wholly-owned
subsidiary of Kuoni.
MERGER CONSIDERATION
At the effective time of the merger, by virtue of the merger and
without any action on the part of any shareholder, each issued and
outstanding share of Intrav common stock will be converted into the
right to receive $21.32 in cash, without interest, except for shares
canceled as described below and shares as to which dissenters'
rights are exercised by a dissenting shareholder.
All Intrav common stock held as treasury shares will
automatically be canceled and retired at the effective time of the
merger and will cease to exist. No consideration will be delivered
in exchange for these shares. Each share of Intrav common stock
issued and outstanding immediately prior to the effective time of
the merger that is owned by Kuoni, Kuoni Delaware, Kuoni Acquisition
Subsidiary, Intrav or a subsidiary of Intrav will be canceled as of
the effective time of the merger, and no merger consideration will
be payable with respect to such shares.
As of the effective time of the merger, certificates
representing all Intrav common stock issued and outstanding
immediately prior to the effective time (except for shares as to
which dissenters' rights are exercised by a dissenting shareholder)
will cease to have any rights with respect to those shares, except
the right to receive the merger consideration in accordance with the
terms of the merger agreement.
As of the effective time of the merger, all shares of Kuoni
Acquisition Subsidiary issued and outstanding immediately prior to
the effective time of the merger will be converted into one share of
common stock of Intrav and will represent all of the issued and
outstanding shares of Intrav common stock after the merger.
No dissenting shareholder will be entitled to any portion of the
merger consideration or other distributions unless and until the
dissenting shareholder fails to exercise or otherwise effectively
withdraws or loses his or her rights to payment under Missouri law.
Shares of Intrav common stock as to which dissenters' rights have
been exercised will be treated in accordance with Section 351.455 of
The General and Business Corporation Law of Missouri. If any person,
who otherwise would be deemed a dissenting shareholder, fails to
properly exercise or effectively loses dissenters' rights with
respect to any shares of Intrav common stock, those shares will be
treated as though they had been converted as of the effective date
of the merger into the right to receive the merger consideration,
without interest.
EXCHANGE OF SHARES
Prior to the effective time of the merger, Kuoni will appoint an
exchange agent and will deposit with the exchange agent funds in an
amount sufficient to make the payments contemplated by the merger
agreement. Promptly after the effective time of the merger, Intrav,
as the surviving corporation, will send a letter to each person who
was an Intrav shareholder as of the date the merger became
effective. The letter will contain instructions on how to surrender
Intrav stock certificates to the exchange agent and receive the
merger consideration. Intrav shareholders have no right to any
interest on the cash payable upon the surrender of Intrav stock
certificates.
Any time following the sixth month after the effective time of
the merger, Intrav may require the exchange agent to deliver to it
any portion of the funds deposited by Kuoni with the exchange agent
not
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already disbursed to Intrav shareholders. In the event Intrav
requires the exchange agent to deliver such funds, Intrav
shareholders must thereafter look to Intrav, as the surviving
corporation, for payment of any merger consideration that may be
payable to them upon surrender of their stock certificates. Any such
shareholders will be deemed general creditors of Intrav, as the
surviving corporation, for such purpose.
Kuoni, Intrav, as the surviving corporation, and the exchange
agent will be entitled to withhold, from the merger consideration
payable to any Intrav shareholder, those amounts required to be
deducted under tax law. All amounts so withheld will be deemed to
have been paid to the applicable Intrav shareholder.
TREATMENT OF STOCK OPTIONS
Prior to the effective time of the merger, each outstanding and
unexpired option to purchase Intrav common stock issued pursuant to
its 1995 Incentive Stock Plan, including those which are not then
exercisable, will be converted into the right to receive for each
share subject to such option an amount in cash, subject to any
applicable withholding tax, equal to the difference between $21.32
and the per share exercise price of such option. At the effective
time of the merger, the Intrav options will be canceled. The payment
of these amounts will be made by the surviving corporation promptly
following the effective time of the merger, provided that Kuoni
verifies the options and the optionee delivers a written instrument
setting forth:
* his or her number of options, their respective issue dates and
exercise prices;
* certain representations by the optionee; and
* a confirmation of and consent to the conversion of the options
as provided in the merger agreement.
Intrav agrees, if necessary, to use its best efforts to cause
all outstanding options to be amended to provide for and give effect
to the transactions contemplated by the merger agreement.
REPRESENTATIONS AND WARRANTIES
In the merger agreement, Intrav makes representations and
warranties to Kuoni and Kuoni Delaware with respect to, among other
things:
* due organization and good standing of Intrav and its
subsidiaries;
* capitalization, ownership of subsidiaries and other
investments;
* corporate authorization;
* the vote required by the shareholders of Intrav in connection
with the merger agreement;
* the opinion of Stifel, Nicolaus & Company, Incorporated;
* governmental approvals;
* absence of any breach of organizational documents or material
agreements or applicable law as a result of the contemplated
transactions;
* required, third-party consents under material contracts or any
other obligation of Intrav or any of its subsidiaries;
* absence of the creation of any lien or encumbrance upon any
asset of Intrav or any of its subsidiaries as a result of the
contemplated transactions;
* accuracy of its filings with the Securities and Exchange
Commission and other regulatory entities;
* litigation, investigations or proceedings regarding violations
of law;
* accuracy of financial statements;
* the absence of specified changes or events;
* compliance with applicable law;
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* required licenses and permits;
* engagement of and payments to brokers, investment bankers,
finders and financial advisors in connection with the merger
agreement;
* material contracts;
* matters relating to compliance with the Employee Retirement
Income Security Act of 1974, as amended, and other employee
benefit matters;
* tax matters;
* absence of undisclosed liabilities;
* environmental matters affecting Intrav;
* intellectual property matters;
* owned and leased real property;
* corporate records;
* title to and condition of Intrav's personal property;
* absence of adverse actions against Intrav and its subsidiaries
or challenging the merger agreement;
* labor and employee relations matters;
* change of control agreements;
* insurance;
* satisfaction of Missouri takeover statutes;
* efforts to resolve any "Year 2000" computer problems;
* outstanding Intrav options;
* transactions with affiliates;
* absence of existing discussions by Intrav with any third party
relating to an alternative transaction;
* the accuracy of other information supplied by Intrav; and
* the preparation of this proxy statement.
In the merger agreement, Kuoni and Kuoni Delaware make
representations and warranties to Intrav with respect to, among
other things:
* due organization and good standing of Kuoni, Kuoni Delaware
and Kuoni Acquisition Subsidiary;
* corporate authorization;
* governmental approvals;
* absence of any breach of organizational documents or material
agreements or applicable law as a result of the contemplated
transactions;
* required, third-party consents under any material contracts or
any other obligation of Kuoni, Kuoni Delaware or Kuoni
Acquisition Subsidiary;
* absence of the creation of any lien or encumbrance upon any
asset of Kuoni, Kuoni Delaware or Kuoni Acquisition Subsidiary
as a result of the contemplated transactions;
* engagement of and payments to brokers, investment bankers,
finders and financial advisors in connection with the merger
agreement;
* the accuracy of information regarding Kuoni, Kuoni Delaware
and Kuoni Acquisition Subsidiary contained in this proxy
statement, and the preparation of this proxy statement; and
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* Kuoni's financial ability to pay the merger consideration.
CONDITIONS TO CLOSING
Intrav's, Kuoni's, Kuoni Delaware's and Kuoni Acquisition
Subsidiary's obligation to effect the merger is subject to the
satisfaction or waiver, on or prior to the closing date, of the
merger of the following customary closing conditions:
* the requisite approval by Intrav shareholders of the merger
agreement;
* no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction enacted, entered, promulgated,
or enforced by any court or other governmental authority being
in effect prohibiting or preventing the consummation of the
merger or the other transactions contemplated under the merger
agreement (Intrav and Kuoni being required to use their
reasonable best efforts to have any of the foregoing vacated,
dismissed or withdrawn by the effective time of the merger);
* the waiting period, including any extensions, applicable to
the consummation of the merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 having expired or been
terminated;
* all approvals under the applicable provisions of Section 721
of Title VII of the Defense Production Act of 1950, as
amended;
* the opinion of Stifel, Nicolaus & Company, Incorporated not
being withdrawn; and
* all consents, approvals and actions of, filings with and
notices to any governmental authority required to consummate
the merger and the other transactions contemplated by the
merger agreement having been obtained by final order (other
than those consents the failure of which to obtain, in Kuoni
Delaware's judgment, would not have a material adverse effect
on the surviving corporation).
In addition, Kuoni's and Kuoni Delaware's obligation to effect
the merger is subject to the satisfaction or waiver by them of the
following conditions:
* the representations and warranties of Intrav which are
modified by materiality or material adverse effect being true
and correct in all respects, and those not so modified by
materiality or material adverse effect being true and correct
in all material respects, as of the date of the merger
agreement and as of the closing date, except for such changes
not prohibited under the merger agreement; and none of
Intrav's representations and warranties being untrue or
incorrect, disregarding any materiality qualifications, to the
extent that such untrue or incorrect representations and
warranties when taken as a whole, have had or would have a
material adverse effect on Intrav; and the environmental
representations and warranties of Intrav being true and
correct in all material respects, without reference to any
knowledge qualifier contained in such environmental
representations and warranties;
* Intrav having, in all material respects, performed and
complied with all covenants and agreements and satisfied all
conditions required to be performed or complied with or
satisfied by it under the merger agreement at or prior to the
effective time of the merger;
* there having been no event that has or reasonably could be
expected to have a material adverse effect on Intrav;
* no action, investigation or proceeding having been instituted,
pending or threatened by any governmental authority, and there
not being instituted, pending or threatened any action or
proceeding by any other person, before any governmental
authority, which is reasonably likely to be determined
adversely to Kuoni, Kuoni Delaware or Kuoni Acquisition
Subsidiary:
* challenging or seeking to make illegal, delay materially
or restrain or prohibit the consummation of the merger or
seeking to obtain material damages or imposing any
material adverse conditions in connection therewith or
otherwise directly or indirectly relating to the
transactions contemplated by the merger;
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* seeking to restrain, prohibit or delay the exercise of
full rights of ownership or operation by Kuoni, Kuoni
Delaware or Kuoni Acquisition Subsidiary or their
affiliates of all or any portion of the business or assets
of Intrav and its subsidiaries, taken as a whole, or of
Kuoni, Kuoni Delaware or Kuoni Acquisition Subsidiary or
any of their affiliates to dispose of or hold separate all
or any material portion of the business or assets of
Intrav and its subsidiaries, taken as a whole, or of
Kuoni, Kuoni Delaware or Kuoni Acquisition Subsidiary or
any of their affiliates;
* seeking to impose or confirm material limitations on the
ability of Kuoni, Kuoni Delaware or Kuoni Acquisition
Subsidiary or any of their affiliates to exercise full
rights of ownership of the Intrav common stock;
* seeking to require divestiture by Kuoni, Kuoni Delaware or
Kuoni Acquisition Subsidiary or any of their affiliates of
shares of Intrav common stock; or
* that otherwise would reasonably be expected to have a
material adverse effect on Intrav;
* at the effective time of the merger, holders of no more than
200,000 shares of Intrav common stock having taken actions to
assert dissenters' rights under Missouri law;
* Intrav having obtained or made the consents, approvals,
waivers, authorizations or filings of or with any person
(other than those of a governmental authority) required in
connection with the merger under all agreements or instruments
to which it or any of its subsidiaries is a party, on terms
and conditions reasonably acceptable to Kuoni Delaware and
such consents and approvals being in full force and effect,
except those for which failure to obtain such consents and
approvals would not in the judgment of Kuoni Delaware have a
material adverse effect on the surviving corporation;
* Intrav having furnished Kuoni Delaware with:
* a certificate dated the closing date signed on its behalf
by its President or another duly authorized officer to the
effect that certain specified conditions regarding
accuracy of its representations and warranties and
performance of its obligations have been satisfied;
* certificates of good standing for Intrav and its
subsidiaries;
* duly adopted board and shareholder resolutions approving
the contemplated transactions;
* copies of charter documents and bylaws of Intrav and its
subsidiaries;
* certain noncompete and confidentiality agreements with
Barney A. Ebsworth, Chairman, and Paul H. Duynhouwer,
President and Chief Executive Officer, of Intrav;
* certain resignations;
* a list of shareholders of record;
* comfort letters from Intrav's accountants which are
customary for similar transactions;
* an opinion of Intrav's legal counsel; and
* such other documents and instruments as Kuoni Delaware
reasonably may request; and
* Intrav having transferred or otherwise disposed of its two
U.S. flag vessels to a person or persons as designated by, and
as directed by and on such terms and conditions as specified
by, Kuoni Delaware, and such U.S. flag vessels having been
registered in the name(s) of the new owner(s) with an
endorsement for the coastwise trade and all applicable
mortgages with respect to such U.S. flag vessels having been
recorded with the National Vessel Documentation Center; and
Intrav and the new owner(s) having entered into certain time
charters and operating agreements with respect to the U.S.
flag vessels and a transitional services agreement providing
for certain transition services with a person, in a form and
on terms and conditions as reasonably specified by Kuoni
Delaware.
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In addition, Intrav's obligation to effect the merger is subject
to the satisfaction or waiver of the following conditions:
* the representations and warranties of Kuoni and Kuoni Delaware
which are modified by materiality or material adverse effect
being true and correct in all respects, and those not so
modified by materiality or material adverse effect being true
and correct in all material respects, as of the date of the
merger agreement and as of the closing date, except for such
changes not prohibited under the merger agreement; and none of
the representations and warranties of Kuoni and Kuoni Delaware
being untrue or incorrect, disregarding any materiality
qualifications, to the extent that such untrue or incorrect
representations or warranties, when taken as a whole, have had
or would have a material adverse effect on Kuoni, Kuoni
Delaware and its subsidiaries;
* Kuoni and Kuoni Delaware having, in all material respects,
performed and complied with all covenants and agreements and
satisfied all conditions required to be performed or complied
with or satisfied by them under the merger agreement at or
prior to the effective time of the merger; and
* Kuoni Delaware having furnished Intrav with a certificate
dated the closing date signed on its behalf by an authorized
officer to the effect that certain specified conditions have
been satisfied.
COVENANTS
Conduct of Business. The merger agreement provides that, until
the merger is completed, Intrav will conduct its business in the
ordinary course and consistent with past practice. Intrav has agreed
to use its reasonable business efforts to:
* preserve its business organizations;
* retain the services of its officers, agents and employees; and
* maintain satisfactory existing business relationships.
During the interim period between signing the merger agreement and
the completion of the merger, Intrav has agreed that it will not
take certain actions without the prior written consent of Kuoni
Delaware or as expressly provided in the merger agreement. More
specifically, it has agreed not to:
* amend its organizational documents;
* issue, sell, dispose of or encumber any shares of capital
stock, options or warrants to acquire any shares of such
capital stock, except pursuant to the exercise of stock
options outstanding on July 16, 1999;
* declare or pay dividends or recapitalize or redeem capital
shares, except for a quarterly cash dividend not in excess of
$0.125 per share payable to shareholders of record on
September 30, 1999 to be paid on October 15, 1999;
* incur any indebtedness, except for debt set forth in certain
approved budgets;
* assume or guarantee any obligations of another person;
* make any capital expenditures or loans, advances or
investments in another person;
* acquire the stock or assets of, or merge or consolidate with,
any other person or business;
* voluntarily incur any material liability or obligation;
* sell, lease or encumber any material property or assets;
* increase any compensation or benefits payable, except for
changes that are required under certain material contracts and
increases in the ordinary course consistent with past practice
of the lesser of 15% of the current compensation or $10,000
per annum, or increase in any manner the compensation of any
director, except that Mr. Duynhouwer's annual salary will
increase by $15,194 as of August 1, 1999;
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* enter into, establish, amend, or make any material
interpretation with respect to, or terminate, any employment,
consulting or related arrangement or employee benefit plan or
arrangement;
* make certain elections with respect to taxes;
* compromise, settle, forgive, cancel, grant any waiver or
release relating to or otherwise adjust any debts, claims,
rights or litigation owed to or involving Intrav or its
subsidiaries, other than in the ordinary course of business
consistent with past practice, subject to certain limitations;
* enter into or amend any lease as to real property;
* take any action, or omit to take any action, which action or
omission would result in the breach of any of Intrav's
covenants, representations or warranties made in the merger
agreement or would have a material adverse effect on Intrav;
* enter into or amend certain material agreements;
* enter into, amend, modify, terminate or waive any rights under
any material contract, any material agreement or material
obligation that restricts in any material respect, its
activities or the activities of its subsidiaries, or any
agreement or obligation that restricts in any material respect
any other person;
* take any action with respect to indemnification of any person;
* change accounting practices or policies, except as required by
law or generally accepted accounting principles; or
* adopt a plan of liquidation, dissolution, merger,
consolidation, share exchange, restructuring, recapitalization
or other reorganization.
Notification of Certain Matters. Intrav is required to notify
Kuoni Delaware promptly if:
* Intrav receives any notice of, or other communication relating
to, a default or an event which, with notice or lapse of time
or both, would become a default under any material contract of
Intrav;
* Intrav receives any notice or other communication from any
third party alleging that the consent of such third party is
or may be required in connection with the transactions
contemplated by the merger agreement;
* Intrav receives any material notice or other communication
from any governmental authority in connection with the
transactions contemplated by the merger agreement;
* an event occurs which would have a material adverse effect on
Intrav;
* any litigation commences or is threatened involving or
affecting Intrav or any of its subsidiaries or affiliates, or
any of their respective properties or assets, or, to its
knowledge, any employee, agent, director or officer of Intrav
or any of its subsidiaries, in his or her capacity as such or
as a fiduciary under a benefit plan of Intrav, which, if
pending on the date of the merger agreement, would have been
required to have been disclosed or which relates to the
consummation of the merger or any material development occurs
in connection with any litigation previously disclosed by
Intrav; and
* any event occurs that would cause a breach by Intrav of any
provision of the merger agreement or a related agreement,
including any such breach that would occur if such event had
taken place on or prior to the date of the merger agreement.
Access to Information. Intrav has agreed, upon receipt of
reasonable notice, to give Kuoni Delaware, its lenders and their
respective authorized representatives, at all reasonable times, full
access to all of Intrav's offices and other facilities, to all
personnel and to all contracts, agreements, commitments, books and
records, and to furnish to Kuoni Delaware financial and operating
data and other information with respect to its business, assets,
liabilities, obligations and operations as Kuoni Delaware reasonably
requests and copies of material, reports or other documents filed
with the SEC or a securities exchange.
Shareholders' Meeting; Articles of Incorporation; Bylaws. Intrav
has agreed to hold a meeting of its shareholders to vote on an
amendment to its Restated Articles of Incorporation to allow for the
ownership
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of 25% or more of the outstanding shares of Intrav common stock by
non-U.S. citizens, as well as to approve the merger, the merger
agreement and the transactions contemplated thereby. Intrav's board
of directors will present and recommend to Intrav's shareholders
that they approve the merger and adopt the merger agreement and the
transactions contemplated thereby and will use reasonable best
efforts to obtain the adoption and approval by Intrav's shareholders
of the merger, the merger agreement and the transactions
contemplated thereby. The board of directors has unanimously
recommended approval of the merger, the merger agreement and the
transactions contemplated thereby. Intrav has amended its Amended
and Restated Bylaws to remove similar restrictions relating to
ownership of shares of Intrav common stock by non-U.S. citizens. In
addition, Intrav has amended its Bylaws, pursuant to terms of the
merger agreement, (1) to provide that, under the Restated Articles,
(a) the transactions taken pursuant to the majority shareholder
agreement do not cause Kuoni to be deemed a beneficial owner of
Intrav shares of common stock, and (b) the Intrav shares subject to
the option granted in the majority shareholder agreement shall be
deemed to be purchased by Kuoni on July 16, 1999 for purposes of
determining "excess shares" under Intrav's Restated Articles, and
(2) to eliminate the applicability of certain Missouri takeover
statutes to the merger.
Efforts; Cooperation. Subject to the terms and conditions
provided in the merger agreement, Intrav has agreed to cooperate and
use reasonable best efforts to take, or cause to be taken, all
things necessary, proper or advisable to consummate the merger as
promptly as practicable. Intrav has agreed to obtain all consents
needed to complete the merger and to make all filings necessary or
proper under applicable laws and regulations to consummate and make
effective the transactions contemplated by the merger agreement,
including cooperation in the preparation and filing of this proxy
statement, and any required filings under the Hart-Scott-Rodino Act.
Year 2000 Plan. Intrav is required to use all commercially
reasonable efforts to ensure that its "Year 2000" plan is completed
in a timely manner. Intrav must:
* allow Kuoni Delaware to monitor Intrav's Year 2000 compliance
issues and its Year 2000 plan;
* notify Kuoni Delaware if Intrav does not achieve, or if it
reasonably expects that it will not achieve, milestones and
objectives identified in its Year 2000 plan; and
* cooperate in good faith with Kuoni Delaware's efforts to cause
Intrav to be Year 2000 compliant.
Purchase of Intrav Common Shares. Subject to Article Eleven of
Intrav's Restated Articles of Incorporation which currently restrict
ownership of more than 24.9% of the outstanding shares of Intrav's
common stock by non-U.S. citizens, Intrav may not prohibit Kuoni
Delaware or any of its affiliates or associates from purchasing
shares of Intrav common stock or entering into option, lock-up,
voting or proxy agreements or any other similar agreements with
respect to shares of Intrav common stock at any time prior to the
consummation of the merger.
Takeover Statutes. Intrav agreed to take any action to eliminate
or minimize the effect of any Missouri takeover statute so that the
merger may be consummated as promptly as practicable.
Conversion of Options. Intrav, to the extent necessary, must
offer to modify each outstanding option to purchase shares of Intrav
common stock exercisable on or prior to the effective time of the
merger, and use its best efforts to cause each such option either to
be exercised prior to the effective time of the merger, or to be
canceled as of the effective time of the merger, in exchange for the
option consideration described in the merger agreement and this
proxy statement.
Disposition of U.S. Flag Vessels. Intrav has agreed to transfer
or otherwise dispose of its two U.S. flag vessels to a person or
persons as designated by, and as directed by and on such terms and
conditions as specified by, Kuoni Delaware, with such U.S. flag
vessels registered in the name(s) of the new owner(s) with an
endorsement for the coastwise trade and with all applicable
mortgages with respect to such U.S. flag vessels recorded with the
National Vessel Documentation Center. Intrav and the new owner(s)
will also enter into certain time charters and operating agreements
with respect to its vessels and a transitional services agreement
providing for certain transition services, in a form and on terms
and conditions as reasonably specified by Kuoni Delaware.
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Indemnification and Insurance. The merger agreement provides
that the articles of incorporation and bylaws of the surviving
corporation must contain similar provisions with respect to
indemnification and exculpation from liability set forth in the
Restated Articles of Incorporation and Amended and Restated Bylaws
of Intrav. Kuoni may not, and shall cause the surviving corporation
not to, amend, repeal or otherwise modify these provisions for a
period of five years from the effective time of the merger in any
manner that would materially and adversely affect the rights of
individuals who at the effective time of the merger were directors,
officers, employees or agents of Intrav, unless such modification is
required by law.
Kuoni has agreed to indemnify and hold each director and officer
of Intrav (determined as of the effective time of the merger)
harmless against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or
liabilities incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of or pertaining to matters existing
or occurring at or prior to the effective time of the merger,
whether asserted or claimed prior to, at or after such time, to the
fullest extent that Intrav would have been permitted under Missouri
law and Intrav's Restated Articles of Incorporation or Amended and
Restated Bylaws in effect on July 16, 1999 to indemnify such person.
The merger agreement also provides that for five years after the
effective time of the merger, and to the extent available, the
surviving corporation or Kuoni will maintain officers' and
directors' liability insurance with respect to those persons who
were covered by Intrav's directors' and officers' liability
insurance policy on terms and amounts no less favorable than those
in effect on the date of the merger agreement. Kuoni, however, is
not required to expend in any one year an amount in excess of 150%
of the annual premiums currently paid by Intrav for the insurance.
If Kuoni, the surviving corporation or any of its successors or
assigns (1) consolidates with or merges into any other corporation
or entity and is not the continuing or surviving corporation or
entity of such consolidation or merger, or (2) transfers all or
substantially all of its properties and assets to any person,
corporation or entity, then, and in each case, proper provisions
will be made so that the successors and assigns of Kuoni or the
surviving corporation, as the case may be, assume the
indemnification and insurance obligations set forth in the merger
agreement.
NO SOLICITATION COVENANT
Intrav has agreed (1) to immediately terminate any discussions
or negotiations with any parties with respect to a Takeover Proposal
(as described below) and (2) that neither Intrav nor any of its
officers, directors, employees, subsidiaries or advisors will,
directly or indirectly through another person:
* solicit, initiate or encourage or take any other action
designed to facilitate any Takeover Proposal; or
* participate in any discussions or negotiations regarding any
Takeover Proposal.
However, if prior to receipt of shareholder approval for the merger
Intrav receives a Takeover Proposal that was not solicited by Intrav
or its representatives or a breach of the no solicitation provision,
Intrav may:
* furnish information regarding Intrav to another person
(pursuant to a customary confidentiality agreement containing
customary standstill provisions as determined by Intrav after
consultation with its outside counsel); and
* participate in negotiations regarding such Takeover Proposal,
provided, however, that before taking either of the two actions
described above, Intrav's board of directors must reasonably
determine (1) in good faith, after receiving the written advice of
outside counsel and an independent financial advisor, that failing
to take such action could reasonably be expected to be a breach of
its fiduciary duties to Intrav's shareholders under applicable law
and (2) that the Takeover Proposal is a Superior Proposal (as
described below).
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The term "Takeover Proposal" means any inquiry, proposal or
offer relating to any direct or indirect acquisition or purchase of:
* 15% or more of the assets of Intrav or any of its subsidiaries
or 5% or more of any class of equity securities of Intrav or
any of its subsidiaries;
* any tender offer or exchange offer that could result in any
person owning 15% or more of any class of equity securities of
Intrav or any of its subsidiaries;
* any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or
similar transaction involving Intrav or any of its
subsidiaries (other than the merger with Kuoni described in
this proxy statement); or
* any other transaction reasonably expected to impede, interfere
with, prevent or materially delay the merger or which could
reasonably be expected to dilute materially the benefits to
Kuoni of the transactions contemplated by the merger
agreement.
The merger agreement requires Intrav to recommend to its
shareholders that they approve the merger agreement and the
transactions contemplated by the merger agreement. The Intrav board
and its committees are prohibited from:
* withdrawing or modifying, or proposing publicly to withdraw or
modify, the approval of the Intrav board or its recommendation
to its shareholders;
* approving or recommending, or proposing publicly to approve or
recommend, any Takeover Proposal; or
* causing Intrav to enter into any letter of intent, agreement
in principle, acquisition agreement or other agreement related
to any Takeover Proposal.
However, in response to a Superior Proposal (as described below),
which was not solicited by Intrav or did not otherwise result from a
breach of the no solicitation provisions of the merger agreement,
the Intrav board of directors may:
* withdraw or modify its approval of the merger and the merger
agreement;
* approve or recommend the Superior Proposal; or
* terminate the merger agreement;
but only
* at a time before receipt of shareholder approval of the merger
and after the tenth business day following Kuoni Delaware's
receipt of written notice advising Kuoni Delaware that the
Intrav board of directors has received a Superior Proposal,
specifying the material terms and conditions of such Superior
Proposal and identifying the person making the Superior
Proposal; and
* if Intrav's board of directors determines in good faith, after
receiving the written opinions of outside counsel and an
independent financial advisor, that it has received a Takeover
Proposal that constitutes a Superior Proposal and that failing
to take such action could reasonably be expected to be a
breach of its fiduciary duties to Intrav's shareholders under
applicable law.
The term "Superior Proposal" means any proposal made by a third
party to acquire, directly or indirectly, for consideration
consisting of cash and/or securities:
* 100% of the shares of Intrav common stock then outstanding; or
* all or substantially all the assets of Intrav
on terms that the Intrav board of directors determines in its good
faith judgment, based upon a written opinion of an independent
financial advisor, to be materially more favorable to Intrav's
shareholders than the merger and for which financing, to the extent
required, is then committed or which, in the good faith judgment of
the Intrav board of directors, is reasonably capable of being
obtained by the third party.
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In addition, Intrav is required to immediately advise Kuoni
Delaware of any request for information or of any Takeover Proposal,
the material terms and conditions of any such request or Takeover
Proposal and the identity of the person making such request or
Takeover Proposal. Intrav is required to keep Kuoni Delaware fully
informed of the status and details of any such request or Takeover
Proposal. Intrav has agreed to negotiate in good faith with Kuoni
Delaware if, after Intrav receives a Superior Proposal, Kuoni
Delaware desires to continue negotiations with Intrav with respect
to the merger.
The merger agreement does not prohibit Intrav from (1) taking
and disclosing to its shareholders a position consistent with its
obligations under the merger agreement with respect to a tender
offer required by law or (2) making any disclosure consistent with
its obligations under the merger agreement to its shareholders if,
in the good faith judgment of the board of directors, after receipt
of advice from outside counsel, failure to disclose would be
inconsistent with applicable law.
TERMINATION AND TERMINATION FEES
The merger agreement may be terminated at any time prior to the
effective time of the merger, whether before or after shareholder
approval:
* by mutual written consent of Kuoni Delaware and Intrav;
* by either Kuoni Delaware or Intrav:
* if the merger has not been completed by March 31, 2000;
provided, however, that either party may extend such date
to a date no later than June 30, 2000, if such party
determines that additional time is necessary in connection
with obtaining certain specified consents from
governmental authorities; and provided, further, that the
right to terminate the merger agreement will not be
available to any party whose failure to perform any of its
obligations under the merger agreement results in the
failure of the merger to be completed by such time;
* if the special meeting has concluded and the approval of
the shareholders of Intrav has not been obtained; or
* if any court of competent jurisdiction or other
governmental authority shall have issued an order, decree
or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the consummation of
the merger and such order, decree or ruling or other
action shall have become final and nonappealable;
* by Kuoni Delaware, if Intrav:
* breaches any of its representations modified by
materiality or material adverse effect;
* materially breaches any of its representations not
modified by materiality or material adverse effect; or
* breaches or fails to perform any material covenant or
agreement contained in the merger agreement about which
Kuoni Delaware notifies Intrav, if Intrav fails to cure or
otherwise resolve such breach or failure to perform to the
reasonable satisfaction of Kuoni Delaware within 20 days
after Intrav receives Kuoni Delaware's notice;
* by Intrav, if Kuoni Delaware:
* breaches any of its representations modified by
materiality or material adverse effect;
* materially breaches any of its representations not
modified by materiality or material adverse effect; or
* breaches or fails to perform any material covenant or
agreement contained in the merger agreement about which
Intrav notifies Kuoni Delaware, if Kuoni Delaware fails to
cure or otherwise resolve such breach or failure to
perform to the reasonable satisfaction of Intrav within 20
days after Kuoni Delaware receives Intrav's notice;
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* by Kuoni Delaware, if Intrav materially breaches the no
solicitation and shareholder recommendation provisions of the
merger agreement;
* by Kuoni Delaware, if Intrav's board of directors withdraws or
modifies in a manner adverse to Kuoni Delaware its approval or
recommendation of the merger, or fails to reconfirm its
recommendation within ten days of a request to do so, or if
Intrav's board of directors approves or recommends a Takeover
Proposal;
* by Kuoni Delaware, if Intrav's shareholders do not approve an
amendment to Intrav's Restated Articles of Incorporation, or
Intrav's board of directors does not amend Intrav's Amended and
Restated Bylaws, in each case to remove the restriction on foreign
ownership of shares of Intrav common stock; and
* by Intrav, if Intrav's board of directors exercises its
fiduciary duties in connection with a Superior Proposal in
accordance with the procedures set forth in the merger
agreement.
If either Intrav or Kuoni Delaware terminates the merger
agreement, the merger agreement will become void and have no effect,
without any liability or obligation on the part of Intrav, Kuoni,
Kuoni Delaware or Kuoni Acquisition Subsidiary, other than the
following provisions, which survive termination:
* the obligation of the parties to keep all non-public
information connected with the merger confidential and the
agreement among the parties to consult with each other before
issuing press releases or other public statements and to only
issue press releases or other public statements if required by
law or a national securities exchange;
* the agreement of the parties to each pay their own fees and
expenses (except in certain circumstances), and Intrav's
obligation to pay Kuoni Delaware a termination fee in certain
circumstances;
* the agreement of the parties that the merger agreement is to
be governed by Missouri law and any disputes arising out of
the merger agreement are to be heard in the United States
District Court for the Eastern District of Missouri or the
Circuit Court of St. Louis County, Missouri;
* Intrav's obligation to transfer or otherwise dispose of its
two non-U.S. flag vessels as directed by Kuoni Delaware and to
enter into certain time charter, operating and transition
services agreements;
* Intrav's obligation to:
* propose and recommend to its shareholders, and use
reasonable best efforts to obtain any necessary adoption
and approval by its shareholders, an amendment to its
Restated Articles of Incorporation; and
* amend its Amended and Restated Bylaws;
* in each case, in order to allow ownership by non-U.S. citizens
of more than 24.9% of the outstanding shares of Intrav common
stock; and
* the effects of termination as described under this
"Termination and Termination Fees" section.
If Kuoni Delaware terminates the merger agreement solely due to
a breach of any of Intrav's representations modified by materiality
or material adverse effect or Intrav materially breaches any of its
representations not modified by materiality or material adverse
effect, and such breach occurred in the ordinary course of Intrav's
business, then Intrav is obligated to pay to Kuoni Delaware, as
liquidated damages, a fee of $1,000,000.
Intrav is obligated to pay to Kuoni Delaware a termination fee
of $8,000,000 if the merger agreement is terminated:
* after a bona fide Takeover Proposal (or an announced intention
to make a Takeover Proposal) has been made known to Intrav,
its shareholders or announced publicly
* by Kuoni Delaware because the merger was not consummated
by March 31, 2000; or
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* by Intrav because the merger was not consummated prior to
the earlier of (i) June 30, 2000 or (ii) one additional
month following March 31, 2000 for each bona fide Takeover
Proposal received by Intrav;
* by either Kuoni Delaware or Intrav if Intrav's shareholders do
not approve the merger at a meeting duly convened to approve
the merger;
* by Intrav if Intrav's board of directors exercises its
fiduciary duties in connection with a Superior Proposal in
accordance with the procedures set forth in the merger
agreement;
* by Kuoni Delaware:
* if Intrav breaches any of its representations modified by
materiality or material adverse effect or materially
breaches any of its representations not modified by
materiality or material adverse effect (except if such
breach occurred in the ordinary course of Intrav's
business, in which case Intrav would be obligated to pay a
$1,000,000 fee, as described above);
* if Intrav breaches the no solicitation covenant;
* if Intrav's board of directors withdraws or modifies in a
manner adverse to Kuoni Delaware its approval or
recommendation of the merger, or failed to reconfirm its
recommendation within ten days of a request to do so, or
if Intrav's board of directors approves or recommends a
Takeover Proposal; or
* if Intrav's shareholders do not approve an amendment to
Intrav's Restated Articles of Incorporation by March 31,
2000, or Intrav's board of directors does not amend
Intrav's Amended and Restated Bylaws, in each case to
remove the restriction on foreign ownership of shares of
Intrav common stock; or
* by either Kuoni Delaware or Intrav if Stifel, Nicolaus &
Company, Incorporated withdraws its fairness opinion after
Intrav receives a bona fide Takeover Proposal.
ADDITIONAL AGREEMENTS
Advisory Committee. After the merger, the surviving corporation
will form an Advisory Committee, and each of Intrav's current
non-employee directors, other than Barney A. Ebsworth, will be
offered the opportunity to serve as an Advisory Director for a
two-year term. Each Advisory Director will receive an annual fee of
$12,000, a fee of $600 for each Advisory Committee meeting attended
and a $5,000 annual credit for traveling on the surviving
corporation's travel programs.
Expenses. All costs and expenses incurred in connection with the
merger, the merger agreement and the transactions contemplated
thereby will be paid by the party incurring those costs or expenses.
Amendment; Waiver. To the extent permitted by law, the merger
agreement may be amended by the parties at any time before or after
the approval of the merger agreement by the Intrav shareholders. The
failure of any party to the merger agreement to assert its rights
under the merger agreement or otherwise will not constitute a waiver
of these rights.
DESCRIPTION OF THE MAJORITY SHAREHOLDER AGREEMENT
The following description summarizes the material provisions of
the majority shareholder agreement. You should carefully read the
majority shareholder agreement which is attached as Annex 2 to this
proxy statement and incorporated herein by reference.
On July 16, 1999, Kuoni, Kuoni Delaware and Kuoni Acquisition
Subsidiary entered into a majority shareholder agreement with The
Revocable Trust of Barney A. Ebsworth, the majority shareholder of
Intrav, and Barney A. Ebsworth, individually. Under the majority
shareholder agreement, the majority shareholder granted Kuoni, Kuoni
Delaware and Kuoni Acquisition Subsidiary an irrevocable option to
purchase, for $21.32 per share, up to 24.9% of the total number of
shares of Intrav common stock outstanding on the date of exercise of
the option.
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The optionees may exercise the option, in whole or in part, at
any time if either of the following occurs:
* the majority shareholder fails to vote all of its shares of
Intrav common stock in favor of the merger and the merger
agreement in accordance with the terms of the majority
shareholder agreement; or
* a "Takeover Proposal" (as defined in the merger agreement; see
Annex 1 to this proxy statement) occurs prior to the
termination of the merger agreement.
Kuoni Delaware will send a notice to The Revocable Trust of
Barney A. Ebsworth if it wishes to exercise the option. If prior
notification to or approval of any governmental authority is
required in connection with the exercise of the option, Kuoni
Delaware will cooperate in the filing of the required notice or
application for approval and the obtaining of such approval. Kuoni
Delaware's purchase of shares of Intrav common stock from the
majority shareholder will close after receipt of such regulatory
approvals (and any mandatory waiting periods).
The option will terminate on the earlier of:
* six months following the termination of the merger agreement
in accordance with its terms, or
* the effective time of the merger.
However, if the merger agreement is terminated: (1) as a result of
Intrav's board of directors exercising certain rights under the
merger agreement, or (2) as a result of Intrav's financial advisor
withdrawing its fairness opinion, or (3) as a result of a material
breach of the merger agreement following receipt of a Takeover
Proposal, then the merger agreement will not be deemed to terminate
until the majority shareholder fulfills its obligations to
restructure the ownership of Intrav's two U.S. flag vessels, as
described below.
The majority shareholder agreed to vote all of its shares of
Intrav common stock in favor of deleting Article Eleven from
Intrav's Restated Articles of Incorporation and in favor of the
merger, the merger agreement and the transactions contemplated
thereby at any meeting of the shareholders of Intrav held for any
such purposes. Article Eleven of Intrav's Restated Articles of
Incorporation currently restricts non-U.S. citizens from owning more
than 24.9% of the total outstanding shares of Intrav's common stock.
If the merger agreement is terminated as a result of (1), (2) or (3)
of the preceding paragraph, the majority shareholder will as soon as
reasonably practical cause Intrav to restructure the ownership of
its U.S. flag ships to allow non-U.S. citizens to own more than
24.9% of the outstanding shares of Intrav common stock, as
reasonably requested by Kuoni, so long as such restructuring does
not have a material adverse effect on our shareholders.
The majority shareholder agreement contains customary
representations and warranties of the majority shareholder,
including:
* record and beneficial ownership of Intrav's common stock;
* capacity of the majority shareholder to enter into and perform
its obligations under the majority shareholder agreement;
* except for the filing under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and securities filings,
absence of any other required consents, permits or approvals
of any state or federal public body or authority for execution
of the agreement or consummation of the contemplated
transactions;
* absence of any conflict with or breach of any agreement to
which the majority shareholder is bound as a result of the
contemplated transactions; and
* absence of any liens or encumbrances on the shares owned by
the majority shareholder.
The majority shareholder agreement also contains customary
representations and warranties of Kuoni Delaware and Kuoni
Acquisition Subsidiary, including corporate authority and investment
representations.
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Each of the majority shareholder and Barney A. Ebsworth
covenanted not to:
* directly or indirectly, solicit in any manner proposals from
third parties that may lead to a Takeover Proposal.
Notwithstanding the foregoing, Mr. Ebsworth may vote as a
director of Intrav in connection with the board of directors
exercising certain rights under the merger agreement;
* directly or indirectly, transfer any shares of Intrav common
stock or any interest therein unless Intrav's board of
directors approves a Superior Proposal (as defined in the
merger agreement; see Annex 1 to this proxy statement)
following the exercise of certain rights under the merger
agreement and so long as Intrav has not breached the merger
agreement;
* except as contemplated by the majority shareholder agreement,
grant any proxies or powers of attorney, deposit any of the
shares of Intrav common stock into a voting trust or enter
into a voting agreement with respect to any of the shares of
Intrav common stock; or
* take any action that would make any representation or warranty
of the majority shareholder untrue or incorrect or which would
prevent the majority shareholder from performing its
obligations under the majority shareholder agreement or the
optionees from enjoying the benefits of the option.
The majority shareholder and Mr. Ebsworth must inform Kuoni
Delaware and Kuoni Acquisition Subsidiary promptly upon receipt of
any inquiry or proposal regarding any Takeover Proposal and provide
a summary of the details thereof.
If, during the time the option is exercisable, the majority
shareholder:
* transfers any of the shares of Intrav common stock (including
a transfer pursuant to a merger of Intrav with another
entity), or the majority shareholder or Intrav agrees to a
transaction that would result in such transfer of the shares
of Intrav common stock; and
* receives as consideration for such transfer of shares of
Intrav common stock an amount that exceeds $21.32 per share,
then the majority shareholder will hold such excess in trust for the
benefit of Kuoni Delaware and pay to Kuoni Delaware the excess
amount received. If the aggregate consideration received by Kuoni
Delaware does not consist of cash in an amount necessary to satisfy
the foregoing obligation, Kuoni Delaware may, at its discretion,
receive the excess amount in cash or, so long as the majority
shareholder would not suffer any adverse tax consequences, in any
non-cash consideration received in the transaction.
The majority shareholder also (i) waived any rights of appraisal
or rights to dissent from the merger that it may have and (ii)
agreed with, and covenanted to, Kuoni Delaware not to request that
Intrav register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of its
shares of Intrav common stock, unless such transfer is made in
compliance with the majority shareholder agreement.
DESCRIPTION OF SALE/LEASEBACK ARRANGEMENT
DISPOSITION OF U.S. FLAG VESSELS
Pursuant to U.S. federal law, Intrav's two U.S. flag vessels,
the M/V Yorktown Clipper and M/V Nantucket Clipper, must be owned by
U.S. citizens in order to carry passengers on U.S. domestic cruises.
A corporation generally is deemed to be a citizen if, among other
things, at least 75% of its shares are owned by U.S. citizens. Kuoni
is not a U.S. citizen, and as a result Kuoni Delaware is deemed not
to be a U.S. citizen.
In order to maintain the coastwise trade privileges of the two
U.S. flag vessels and provide the surviving corporation with the use
of them, the merger agreement requires that, immediately prior to
the effective time of the merger, Intrav sell its U.S. flag vessels
to such person or persons designated by Kuoni who are qualified to
own and operate them in the coastwise trade. In addition,
immediately prior to the effective time of the merger, Intrav is
required to enter into a time charter of the U.S. flag vessels, an
operating
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agreement with respect to Intrav's two non-U.S. flag vessels, and a
transitional services agreement providing for certain transition
services with respect to the U.S. flag vessels.
Simultaneously with the execution of the merger agreement, Kuoni
entered into a letter agreement with Paul H. Duynhouwer, Intrav's
President and Chief Executive Officer and an Intrav director, which
letter agreement outlines the proposed sale of the U.S. flag vessels
to entities controlled by Mr. Duynhouwer. The letter agreement is
attached as Annex 3 and anticipates that Intrav will sell the U.S.
flag vessels to New World Ships, LLC. New World Ships, LLC will be
75.1% owned by Mr. Duynhouwer, and 24.9% owned by Intrav or an
affiliate. The total purchase price for the two U.S. flag vessels
will be approximately $16.6 million, which represents the book value
of the U.S. flag vessels.
Mr. Duynhouwer will invest approximately $300,000 and Intrav (or
an affiliate) will invest approximately $100,000 in New World Ships,
LLC. New World Ships, LLC will borrow the difference between the
purchase price of the U.S. flag vessels and the equity contributions
made in it. Mr. Duynhouwer will receive, as salary, distributions,
or otherwise, the following amounts during each year following the
merger closing: year one--$400,000; year two--$300,000; year
three--$215,000; and as agreed upon thereafter. In addition, Mr.
Duynhouwer will continue to receive fringe benefits substantially
comparable to those he currently receives from Intrav and will be
indemnified by New World Ships, LLC and Intrav with respect to risks
attendant upon the ownership and operation of the vessels.
DESCRIPTION OF TIME CHARTER
Simultaneously with the sale and purchase of the vessels, New
World Ships, LLC will enter into a long-term time charter of the
U.S. flag vessels back to Intrav or one of Intrav's subsidiaries.
Pursuant to the time charter, New World Ships, LLC, as the owner of
the U.S. flag vessels, will control and be responsible for the
operation of the U.S. flag vessels, while Intrav will determine the
itineraries of the vessels. Intrav has the option to purchase the
U.S. flag vessels from New World Ships, LLC, subject to compliance
with applicable laws, at any time during the term of the time
charter. The purchase price would be the lesser of the vessels'
appraised fair market value and termination value, but in no event
will the purchase price be less than the amount of any then
outstanding debt incurred by New World Ships, LLC to finance its
purchase of the vessels.
The term of the time charter will be 30 years, unless the time
charter is terminated earlier due to loss or obsolescence of the
vessels. Intrav will pay charter hire to New World Ships, LLC in an
aggregate amount sufficient to pay debt service, operating expenses
and maintenance and repairs to the U.S. flag vessels plus an
economic return on the equity investment by New World Ships, LLC in
the vessels.
DESCRIPTION OF OPERATING AGREEMENT
Pursuant to an operating agreement to be entered into
simultaneously with the time charter, New World Ship Management
Company, LLC (which will have the same ownership as New World Ships,
LLC) will operate the U.S. flag vessels on behalf of New World
Ships, LLC. In addition, it is anticipated that New World Ship
Management Company, LLC will enter into an operating agreement with
Intrav to manage Intrav's two non-U.S. flag vessels. As a result,
the employment of Mr. Duynhouwer and certain of Intrav's personnel
who currently manage the vessels will be terminated by Intrav on the
date of the sale of the U.S. flag vessels. These personnel will be
offered employment by New World Ship Management Company, LLC, and
continue to perform for New World Ship Management Company, LLC
substantially the same duties and receive substantially the same
salary and benefits as currently performed for and received from
Intrav.
The term of the operating agreement will be the same as the term
of the time charter. As consideration for the operating agreement,
New World Ships, LLC will pay all of the operating expenses of New
World Ship Management Company, LLC in performing the operating
agreement plus an operating fee of $600 per day.
Each of Mr. Duynhouwer and Intrav will have the right to
terminate the time charter and operating arrangements on at least
six months' prior notice given at any time after the first
anniversary of the closing of the merger. In such an event, Intrav
would be obligated to find a buyer for Mr. Duynhouwer's interest in
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New World Ships, LLC and New World Ship Management Company, LLC that
ensures a full return of his investment. In addition, the operating
agreement would terminate upon Intrav's repurchase of the U.S. flag
vessels from New World Ships, LLC if such a purchase were
permissible under federal law.
DISPOSITION OF U.S. FLAG VESSELS--TAX MATTERS
The disposition of the U.S. flag vessels, operating agreements
and time charters, should be considered a financing transaction for
U.S. tax purposes, such that no gain or loss should be recognized on
the disposition of the U.S. flag vessels by Intrav. If interest is
paid pursuant to the disposition and time charters to a foreign
person who is also a related party then a withholding tax of 30%
would be required, as reduced by applicable treaty.
CERTAIN INFORMATION REGARDING INTRAV
GENERAL
We design, market and operate 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 1999 programs include, 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, we have 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.
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OPERATING STRATEGIES
Our objective is to build value by providing distinctive
high-quality travel programs and cruises to our travelers. To pursue
this objective, we have developed the following operating
strategies:
* Focus on small-ship and private jet programs. By designing and
operating high quality and distinctive small-ship and private jet
programs, we offer travel experiences not readily available from
other providers. Through this focus, we seek to provide our
targeted travelers with a diverse selection of program offerings,
each representing a unique travel experience. We believe that some
travelers are attracted to the prestige of our travel
programs--for example, Around the World by Supersonic
Concorde--while others are most interested in the content of our
programs--for example, a small-ship cruise to Antarctica
accompanied by expert lecturers and guides.
* Reduction of big-ship cruise offerings. We have reduced and will
continue to reduce the number of big-ship cruises we offer. In
recent years, large cruise ships have continued to grow in size
and passenger capacity. The cruises on these ships have
increasingly focused on entertainment and on-board activities,
often including casinos and nightclubs, rather than the type of
experiential travel opportunities generally desired by our
travelers. As a result, we have reduced the number of big-ship
cruises we offer in order to focus on distinctive travel programs
such as small-ship cruises and private jet adventures. In
addition, our big-ship cruise business has become less profitable
as the industry has become more crowded, relied upon discounting
to attract passengers and focused on incremental opportunities to
capture travel revenues through on-board activities.
* Attention to customer satisfaction. Customer satisfaction and
first-class service have been and will continue to be critical to
our business. In order to maintain high customer satisfaction, our
programs include precisely executed itineraries that are unique
and culturally enriching, first-class transportation and
accommodations and highly trained travel and cruise directors,
expedition leaders and local hosts. Our customer satisfaction
focus begins in the detailed program development stage and
continues through to the conclusion of each program. We believe
this focus not only enhances our travelers' experience, but serves
as a marketing opportunity through positive "word of mouth"
endorsements by our travelers. As a result of our efforts, more
than one-third of our travelers in 1998 were repeat customers.
* Emphasis on efficient marketing efforts. We market our travel
programs through affinity groups, travel agents and directly to
potential travelers. This diversity of distribution channels
allows us to manage our promotional efforts to optimize the number
of travelers per marketing dollar expended. Our marketing efforts
are focused on direct-mail campaigns that effectively utilize
internal resources including brochure development, mailing list
management and targeted distribution. We access the member lists
of our affinity groups and travel agents to identify and target
individuals and groups of individuals that meet the demographic
makeup of our typical customer. In addition, we use our
demographic resources and market knowledge to develop and access
narrowly focused mailing lists, resulting in better response rates
from our direct marketing efforts.
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
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network, selected affinity group relationships and to our past
traveler base. By carefully cultivating and expanding upon our
established travel agent relationships, we plan to distribute
additional travel programs through such channels. We will also
continue to introduce Clipper brand small-ship cruises to affinity
groups to which Clipper had not historically marketed. In many
cases, the Clipper product offerings replace lower-yielding,
lower-profit big-ship cruises with higher-yielding, higher-profit
small-ship cruises.
We recently began to market small-ship cruises and private jet
programs to companies offering travel to their employees and
others as incentives. We believe that the smaller size of our
private jet programs and small-ship cruises are conducive to
incentive travel because a client can fill an entire program or
cruise, allowing easy customization and coordination of deluxe
programs. In addition, we believe our emphasis on and reputation
for providing quality programs and service is attractive to
companies that wish to provide a first-class incentive program.
* Enhancing our brand name recognition. We plan to create and pursue
marketing initiatives to enhance our brand name recognition
throughout our distribution channels. Traditionally, the Intrav
name was not aggressively advertised to the traveler as marketing
was primarily conducted under affinity group names. As our
distribution capabilities have expanded, we have begun marketing
the Intrav brand name through targeted television advertisements
to selected geographic markets and through public relations
efforts in the consumer and trade press. We believe that our
efforts to create greater public awareness of our brand will
contribute positively to our overall marketing efforts and
generate franchise value for the Intrav brand of travel programs.
* Pursuing acquisitions of additional ships and travel businesses.
We continually evaluate opportunities to acquire additional small
cruise ships that we believe can support future growth. We may
acquire one or more additional small cruise ships in order to
provide greater geographic coverage and additional programs for
our customers. We believe that owning our ships facilitates
quality 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.
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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 place she or she visits. For
many destinations, we hire local hosts and the best available
professional guides to better connect the traveler to the
destination. In certain geographic areas, we employ destination
managers to provide value-added assistance based on the demands or
opportunities presented by the location of the program.
At the conclusion of each travel program, we generally
distribute a questionnaire to each of our travelers to solicit their
input on the quality of the program. We then review each completed
questionnaire looking for specific suggestions or areas of concern
and consider such input for the purpose of modifying existing
programs and designing our future programs. Results of questionnaire
responses show that a majority of our travelers rate their overall
travel experience as "excellent," the highest rating possible.
PRODUCTS AND SERVICES
We operate in one business segment. Although we primarily manage
our operations on a trip by trip basis, for ease of presentation, we
have classified the trips based on the primary mode of
transportation. The primary modes of transportation consist of small
ships, private jets and other, including big ships.
* Small-Ship Adventures. Our small-ship adventures use small ships
and riverboats to explore historic and/or remote locations that
typically cannot be visited by big cruise ships. Small-ship
adventures feature an unregimented and leisurely ambiance,
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 currently 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.
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. In connection with the merger, we
will be restructuring the ownership of two U.S. flag vessels, but
we will charter these vessels to be used in our travel programs.
See "Description of Sale/ Leaseback Arrangement."
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.
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Commencing in November 1999, we plan to offer additional
small-ship adventures on the M/S Clipper Odyssey in the Orient,
South Pacific, Australia and New Zealand.
* Private Jet Adventures. Our private jet adventure programs provide
highly specialized, exclusive tours by which travelers board a
chartered Lockheed 1011 wide-body (reconfigured to accommodate 88
instead of the standard 362 travelers), a smaller chartered Boeing
737 (reconfigured to accommodate 44 instead of the standard 120
travelers) or a chartered supersonic Concorde jet. These tours
permit our travelers to visit multiple sites with convenience and
comfort "beyond first class." Our private jet programs include:
Around the World by Private Concorde, a 24-day program with stops
in Hawaii, New Zealand, Australia, China, Hong Kong, Kenya and
France which has sold out each of the 24 times it has been
operated since its introduction in 1987; On Safari in Africa by
Private Jet and the Legendary Blue Train, a three-week tour of
Africa which was introduced in 1997; Around the World by Private
Jet, a special golf tour allowing for play at eight of the world's
most prestigious golf courses; and Southern Europe from Biarritz
to the Bosporus, an 18-day program which enables travelers to
access locations in Europe in time frames that would not be
possible via commercially scheduled airlines. In 1999, our private
jet adventures include nine itineraries and 15 departures ranging
in price from $6,500 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 mini-van 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
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direct-mail, targeted to the travel interests of their members. The
affinity group market provides an efficient means of identifying
potential customers that fit our typical customer profile. In turn,
we provide affinity groups with organized and efficient means of
providing meaningful travel programs to their group members. We have
long-standing relationships in the affinity group market and believe
that we have established a reputation for providing high-quality
travel programs. We continually evaluate the results of our
marketing efforts with affinity groups to assess which groups are
generating an appropriate level of participation. We intend to
continue to focus on marketing to those affinity groups with the
highest response rates.
Our sales force solicits travel agents in the United States and
Canada on a targeted basis, contacting only those agents we believe
have clients that fit our customers' demographic profile and are
likely to purchase travel programs from us. As a result, we
currently use less than 15% of the travel agents in the United
States to access the general public. We believe our offerings are
attractive to travel agents because the pricing of our travel
programs allows the travel agent to generate more commission revenue
per program booked than many alternative travel products. In
addition, because big-ship cruise prices include a smaller fraction
of the traveler's total vacation costs (due to the emphasis by
big-ship cruise lines on on-board sales) the "all-inclusive" prices
of our small-ship cruises enable agents to receive larger
commissions. Also, since the transportation, accommodations and
amenities of our travel programs are pre-packaged and meet our high
quality standards, the travel agent is not required to expend time
coordinating logistics to assure that his or her client will receive
a quality experience.
Recently, we started marketing small-ship cruises and private
jet programs to companies seeking to arrange incentive based travel
for their employees and others whom the companies wish to reward. We
believe the smaller size of our travel programs offers companies the
opportunity to fill entire small-ship and private jet programs with
their employees and others. This provides a more intimate setting in
which companies can customize travel programs as incentive based
rewards.
An important part of our marketing involves direct-mail
solicitation. We focus much of our direct-mail solicitation on
former travelers to whom we distribute large, inclusive, four-color
catalogues and smaller brochures targeted to the travelers'
indicated interests. WISDM, our proprietary internal database, helps
us to access detailed information concerning more than 200,000 past
and potential travelers for our direct-mail solicitation efforts. In
addition to former travelers, we also target members of select
affinity groups and customers of our travel agent network. Members
of our sales force work closely with affinity group administrative
staff and travel agents to design direct-mail campaigns based on the
particular characteristics of their members or customers. We also
purchase and carefully screen third-party vendor lists containing
names of individuals with characteristics closely matching those of
past travelers for use in our direct-mail solicitation efforts.
Our proprietary software and software licensed from third
parties allow us to avoid duplication of addresses and to
standardize addresses according to postal requirements to obtain
savings on mailing costs. By bar-coding the mailings and complying
with other postal regulations, we believe, based upon surveys we
perform, that we have been able to achieve efficiencies on low-cost,
third-class bulk mailings. Marketing materials are generally mailed
nine to 15 months in advance of a scheduled departure date. For 1998
programs, we increased our efforts to better target our direct-mail
solicitations in order to increase response rates while decreasing
the cost of direct-mail solicitation. As a result, we mailed 20%
fewer brochures and catalogs for our 1998 programs than we mailed
for our 1997 programs while achieving increases in gross profit in
1998.
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;
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(c) the quality of the travel programs offered; and
(d) the customer's ultimate satisfaction.
Although our industry is highly fragmented, we have identified
eight major direct competitors in the tour operator market and nine
principal competitors in the small-ship cruise market. Our programs
and cruises also compete against a wide range of vacation
alternatives, including big-ship cruises, destination resorts and
other travel programs. Certain competitors have greater financial,
marketing and sales resources than we do. There can be no assurance
that our present competitors or competitors that choose to enter the
marketplace in the future will not exert significant competitive
pressures on us.
EMPLOYEES
As of August 19, 1999, we employed approximately 350 people. We
believe that our relations with our employees are good. None of our
employees are covered by collective bargaining agreements.
FACILITIES
Our principal offices and 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 certain levels of financial protection for traveler
advance payments for our chartered aircraft programs originating or
terminating in the United States. We have established escrow
arrangements and letters of credit to comply with these regulations.
Under these arrangements, monies received from travelers are held in
escrow accounts until charter payments have been made or are secured
by letters of credit posted by us to the extent of the charter
contract amounts.
U.S. law requires that we maintain financial protection for
passenger advance payments for our cruises embarking in U.S. ports.
We have established a surety bond to comply with this law. Under
this arrangement, monies received from passengers for cruises
embarking in U.S. ports are protected by the surety bond 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.
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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 dry-docked 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 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.
LEGAL PROCEEDINGS
We are currently not a party to any legal proceeding, other than
ordinary routine litigation incidental to our business.
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DESCRIPTION OF INTRAV'S SECURITIES
MARKET PRICE OF AND DIVIDENDS ON THE COMMON STOCK AND RELATED
MATTERS
Intrav common stock trades on the Nasdaq National Market under
the symbol "TRAV." The following table sets forth the reported high
and low closing sales prices of shares of Intrav common stock on the
Nasdaq National Market and the quarterly dividends declared per
share for the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE
----------------------------- DIVIDENDS
FISCAL YEAR 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
Second Quarter..................................... 18.750 13.625 0.125
Third Quarter (through August 19, 1999)............ 20.500 15.250 0.125
</TABLE>
On August 19, 1999, the last reported closing sales price for
the common stock on the Nasdaq National Market was $20.125 per
share. As of August 19, 1999, there were approximately 125 holders
of record of shares of Intrav common stock.
HIGH AND LOW SALE PRICES OF STOCK OF INTRAV AS OF THE DATE PRECEDING
PUBLIC ANNOUNCEMENT OF MERGER
The following table sets forth the high and low prices per share
of our common stock on the Nasdaq National Market on July 16, 1999,
which was the last trading day before the announcement of the
proposed merger.
<TABLE>
<CAPTION>
PRICE RANGE
---------------------------
DATE HIGH LOW
---- ---------- ----------
<S> <C> <C>
July 16, 1999............................................... $17.00 $15.75
</TABLE>
54
<PAGE>
<PAGE>
OWNERSHIP BY PRINCIPAL HOLDERS AND MANAGEMENT
The table below sets forth, as of August 19, 1999, the
beneficial ownership of shares of Intrav common stock by (1) each
person known by us to be the beneficial owner of more than five
percent of our issued and outstanding common stock on that date, (2)
each of our current directors, (3) each executive officer named in
the Summary Compensation Table set forth in our proxy statement for
the 1999 annual meeting of shareholders, individually, and (4) all
executive officers and directors as a group. Upon consummation of
the merger, the persons listed below will no longer beneficially own
any shares of Intrav common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED<F1><F2> PERCENT OF CLASS<F2><F3>
--------------------------- -------------------------
<S> <C> <C>
Barney A. Ebsworth
The Revocable Trust of Barney A. Ebsworth,
Dated July 23, 1986, as amended<F4>........... 3,825,000 74.79%
Paul H. Duynhouwer<F5>............................. 136,000 2.61%
Wayne L. Smith II<F6>.............................. 20,400 <F*>
Richard J. Hefler<F7>.............................. 17,000 <F*>
Michael F. Doiron<F8>.............................. 1,000 <F*>
John B. Biggs, Jr.................................. 2,000 <F*>
William H.T. Bush.................................. 19,000 <F*>
Robert H. Chapman.................................. 600 <F*>
All executive officers and directors as a group
(8 persons)...................................... 4,021,000 76.70%
<FN>
- - -------
<F*> Less than one percent.
<F1> Each individual holder has sole voting and investment power with respect
to the shares listed beside his name.
<F2> If the proposed merger is consummated, certain options held by Messrs.
Duynhouwer, Smith, Hefler and Doiron and not reflected in the table will
become exercisable. As a result, based upon 5,114,200 shares of common
stock outstanding at August 19, 1999 the beneficial ownership of Messrs.
Duynhouwer, Smith, Hefler and Doiron will increase to 306,000 shares
(5.69%), 100,400 shares (1.9%), 25,000 shares and 5,000 shares
respectively; and (B) the beneficial ownership of all executive officers
and directors as a group will increase to 4,283,000 shares (77.81%). In
addition, Messrs. Hefler and Doiron currently hold other options which do
not become exercisable upon consummation of the merger but which, upon
vesting, would be exercisable for 3,000 shares each. Pursuant to the
merger agreement, Messrs. Hefler and Doiron will be entitled to exchange
these options for an amount in cash equal to the product of (y) the
difference between $21.32 and the exercise price per share of such
options, and (z) the number of shares of Intrav's common stock subject to
such options.
<F3> The percentage calculations of beneficial ownership are based upon
5,114,200 shares of common stock outstanding at August 19, 1999 plus, with
respect to Messrs. Duynhouwer, Smith, Hefler, and Doiron and all executive
officers and directors as a group, the number of shares subject to options
exercisable by each executive officer, director or the group on or prior
to October 18, 1999.
<F4> 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. The Revocable Trust
of Barney A. Ebsworth entered into the majority shareholder agreement
under which Kuoni, Kuoni Delaware and Kuoni Acquisition Subsidiary have
the right to purchase certain of its shares under specified circumstances.
See "Description of the Majority Shareholder Agreement."
<F5> Includes 90,000 shares subject to presently exercisable stock options.
<F6> Includes 20,000 shares subject to presently exercisable stock options.
<F7> Includes 17,000 shares subject to presently exercisable stock options.
<F8> Includes 1,000 shares subject to presently exercisable stock options.
</TABLE>
DESCRIPTION OF INTRAV'S SECURITIES
Our 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. As of the
effective date of the merger, it is expected that 5,114,200 shares
of common stock 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 our board of directors out of funds legally available
therefor, subject to the payment of any preferential dividends with
respect to any preferred
55
<PAGE>
<PAGE>
stock that from time to time may be outstanding. In the event of
liquidation, dissolution or winding up of our business, 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 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, in March of 1999, we amended our
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 will
be ineffective as against Intrav, will 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. We also have the right to redeem such shares at
fair market value, as defined in the Restated Articles and bylaws,
in cash or in other securities. We have the right to require holders
of our common stock to confirm their citizenship from time to time
for purposes of ascertaining compliance with these provisions.
As a condition to the consummation of the merger, we agreed to
(1) amend our Restated Articles of Incorporation and our Amended and
Restated Bylaws to allow Kuoni, a Swiss corporation, to own all of
Intrav's common stock (see "Proposal One--Amendment to the Restated
Articles of Incorporation"), and (2) restructure the ownership of
our two U.S. flag vessels such that Kuoni's ownership does not
violate the Merchants Marine Act of 1936 and the federal Shipping
Act of 1916 (see "Sale / Leaseback Arrangement").
We have paid cash dividends on shares of our common stock for 16
consecutive quarters. On July 29, 1999, we declared a regular cash
dividend of $0.125 per share payable on October 15, 1999 to
shareholders of record on September 30, 1999. Following the
consummation of the merger, Kuoni intends to cause us to discontinue
paying regularly quarterly dividends.
Preferred Stock
Our board of directors, without further action by our
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.
Stock Options
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.
CERTAIN ANTI-TAKEOVER MATTERS
Our 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.
56
<PAGE>
<PAGE>
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 quorum. Our bylaws provide that vacancies may be filled only by a
majority of the remaining directors.
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 Intrav 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 our 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, our 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 in us. The board of
directors does not currently intend to seek shareholder approval
prior to any issuance of preferred stock, unless otherwise required
by law.
We are 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 in us or for us to enter into certain business combinations
than if we were not subject to such sections. In connection with
approving the merger, the merger agreement and transactions
contemplated thereby, we amended our bylaws to except the proposed
merger from the control share acquisition statute.
Under our bylaws, shareholders are not permitted to call special
meetings of shareholders or to require the board or any officer of
ours 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 our board of
directors or otherwise bring a matter before our shareholders
without the board's consent, and thus reduce the vulnerability of an
unsolicited takeover proposal of us. These provisions are designed
to enable us to develop our business in a manner which will foster
our long-term growth, with the threat of a takeover not deemed by
the board to be in our best interests and our 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 our governance
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 our common stock is ChaseMellon
Shareholder Services, L.L.C.
57
<PAGE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth our selected consolidated
financial data for the five years ended December 31, 1998. The
selected consolidated financial data for the three years ended
December 31, 1998 have been derived from, and should be read in
conjunction with, our consolidated financial statements, which are
included with this proxy statement. The following table also sets
forth consolidated financial data for the six months ended June 30,
1999 and June 30, 1998, which have been derived from, and should be
read in conjunction with, our unaudited consolidated financial statements
included with this proxy statement. Such financial statements, in
the opinion of management of Intrav, include all adjustments, which
consist only of normal recurring accruals, necessary to present
fairly the financial information for such periods. Results of
operations for the six months ended June 30, 1999 are not
necessarily indicative of the results which may be expected for the
full year ending December 31, 1999. 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 of Intrav" section which describes a number of
factors which have affected our financial results. See "Where You
Can Find More Information."
It should be noted that 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.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------
1994 1995 1996 1997 1998
------------ ------------ ------------ ------------ ------------
(in thousands, except per share and performance ratios)
<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
Weighted average share used in
basic net income per share
calculation.................. 5,000 5,200 5,195 5,100 5,135
Diluted net income per share... $ 0.88 $ 0.80 $0.61<F1> $ 0.96 $ 1.29
Weighted average share 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>
SIX MONTHS
ENDED JUNE 30,
---------------------------
1998 1999
------------ ------------
(in thousands, except per
share and performance ratios)
<S> <C> <C>
CONSOLIDATED STATEMENT OF
INCOME DATA:
Revenues....................... $ 48,776 $ 52,571
Cost of operations............. 38,216 39,902
-------- --------
Gross profit............... 10,560 12,669
Selling, general and
administrative............... 6,852 8,099
Depreciation and
amortization................. 869 1,477
-------- --------
Operating income........... 2,839 3,093
Investment income.............. 438 342
Interest expense............... (263) (535)
-------- --------
Income before income taxes
and extraordinary item... 3,014 2,900
Provision for income taxes..... 1,085 1,044
-------- --------
Income before extraordinary
item......................... 1,929 1,856
Extraordinary item............. -- --
-------- --------
Net income..................... $ 1,929 $ 1,856
======== ========
Basic net income per share..... $ 0.38 $ 0.36
Weighted average share used in
basic net income per share
calculation.................. 5,101 5,117
Diluted net income per share... $ 0.37 $ 0.35
Weighted average share used in
diluted net income per share
calculation.................. 5,212 5,237
Dividends per common share..... $ 0.25 $ 0.25
PERFORMANCE RATIOS:
Gross profit margin on
revenues..................... 21.6% 24.1%
Operating income margin on
revenues..................... 5.8% 5.9%
Net income margin on
revenues..................... 4.0% 3.5%
<FN>
- - ---------
<F1>Includes extraordinary item. Basic and diluted net income per share before
extraordinary item was $0.68 in 1996.
</TABLE>
<TABLE>
<CAPTION>
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
<CAPTION>
JUNE 30,
---------------------------
1998 1999
------------ ------------
(in thousands)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Cash, cash equivalents,
restricted cash and
restricted marketable
securities................... $ 28,990 $ 13,180
Total assets................... 87,531 88,073
Total long-term debt........... 12,800 --
Shareholders' equity
(deficit).................... 6,936 7,315
</TABLE>
58
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF INTRAV
OVERVIEW
Our revenues include revenues from the sale of base travel
programs, as well as optional products and services, including
sightseeing, program extensions, airfare and medical and educational
seminars. Cost of operations includes the costs of airfare, ship,
hotel and other accommodations and services included in the base
programs and optional products and services. Also included are the
costs of creating and distributing promotional materials for each
program and promotional expenses, including commissions paid to
travel agents and others.
We operate in one business segment. Although we primarily manage
our operations on a trip by trip basis, for ease of presentation, we
have classified the trips based on the primary mode of
transportation. The primary modes of transportation consist of small
ships, private jets and other, including big ships.
Over the past few years, we have made efforts to improve our
financial margins. We have done this by reducing costs, primarily by
improving the efficiency of our direct mail programs, and by
replacing lower margin travel programs, such as big-ship cruises,
with higher margin travel programs, such as small-ship cruises and
private jet programs.
Revenues and costs are recognized as services are provided,
generally upon completion of a tour; however, revenues and costs for
certain significant or long duration tours are recognized on a
proportionate basis based on number of days traveled. In 1999 we
will be offering three private jet millennium trips which will
commence in December 1999 and end in January 2000. The revenues and
costs for these trips will be recognized on a proportionate basis.
RESULTS OF OPERATIONS
The following table summarizes certain consolidated statements
of income data expressed as a percentage of revenues for the periods
indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
-------------------------------------- ------------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of operations...................... 80.6 80.8 77.9 78.4 75.9
Gross profit....................... 19.4 19.2 22.1 21.6 24.1
Selling, general and administrative..... 13.4 12.5 12.4 14.0 15.4
Depreciation and amortization........... 1.5 1.1 1.6 1.8 2.8
Operating income................... 4.5 5.6 8.1 5.8 5.9
Investment income....................... 1.3 0.8 0.9 0.9 0.6
Interest expense........................ (1.5) (0.1) (0.6) (0.5) (1.0)
Income before income taxes and
extraordinary item............... 4.3 6.3 8.4 6.2 5.5
Provision for income taxes.............. 1.5 2.3 3.0 2.2 2.0
Income before extraordinary item... 2.8 4.0 5.4 4.0 3.5
Extraordinary item...................... (0.3) -- -- -- --
Net income......................... 2.5% 4.0% 5.4% 4.0% 3.5%
</TABLE>
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30,
1998
Revenues for the six months ended June 30, 1999 compared to the
first six months of 1998 increased $3.8 million, or 7.8%, from $48.8
million to $52.6 million. The average revenue per traveler increased
$843, from $4,501 in 1998 to $5,344 in 1999, due to a higher
percentage of revenues derived from private jet programs and
small-ship programs replacing certain big-ship programs.
59
<PAGE>
<PAGE>
Cost of operations for the six months ended June 30, 1999
compared to the corresponding period of 1998 increased $1.7 million,
or 4.4%, from $38.2 million to $39.9 million. This increase was
primarily attributable to a new private jet program and the
additional three months of operating activity of the M/S Clipper
Adventurer in the 1999 period. Cost of operations declined as a
percentage of revenues from 78.4% in 1998 to 75.9% in 1999 due
primarily to our reducing our lower yielding big-ship cruise
programs and increasing our higher margin small-ship and private jet
programs.
Gross profit for the six months ended June 30, 1999 compared to
the first six months of 1998 increased $2.1 million, or 20.0%, from
$10.6 million to $12.7 million. Gross profit as a percentage of
revenues increased from 21.6% in 1998 to 24.1% in 1999. The
increases in gross profit and gross profit margin for the six months
were attributable to our continued focus on higher margin travel
programs and the M/S Clipper Odyssey charter hire revenue.
Selling, general and administrative expenses for the six months
ended June 30, 1999 compared to the first six months of 1998
increased $1.2 million, or 18.2%, from $6.9 million to $8.1 million.
Selling, general and administrative expenses increased as a
percentage of revenues from 14.0% in 1998 to 15.4% in 1999. These
increases were primarily attributable to additional administrative
personnel associated with the M/S Clipper Adventurer and the planned
start-up of the M/S Clipper Odyssey, additional selling expenses
associated with special Millennium trips, and $0.2 million of
non-recurring transaction expenses relating to our attempted
secondary common stock offering in April 1999.
Depreciation and amortization for the six months ended June 30,
1999 compared to the first six months of 1998 increased $0.6
million, or 70.0%, from $0.9 million to $1.5 million. The increase
was primarily due to the depreciation of the M/S Clipper Adventurer
which began operations in April 1998 and the M/S Clipper Odyssey
which was acquired in November 1998. Depreciation and amortization
increased as a percentage of program revenues from 1.8% in 1998 to
2.8% in 1999.
Investment income for the six months ended June 30, 1999
compared to the first six months of 1998 decreased $96 thousand from
$438 thousand to $342 thousand. This decrease was due primarily to a
decrease in investable cash balances. We replaced certain escrowed
funds with a surety bond and letters of credit, and used those
previously escrowed funds to repay the outstanding borrowings under
our revolving credit facility. The average monthly balance of cash
and marketable securities decreased from $18.1 million in the first
six months of 1998 to $13.4 million in the first six months of 1999,
while the average interest rate was 4.8% in 1998 and 5.1% in 1999.
Interest expense incurred for the six months ended June 30, 1999
was $535 thousand, of which $426 thousand was attributable to our
bank revolving credit facility and $109 thousand was attributable to
the $5.5 million one-year promissory note to Spice Islands. In 1998,
we capitalized $270 thousand of interest expense incurred in the
first six months related to the conversion of the M/S Clipper
Adventurer, and expensed $263 thousand.
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 to 77.9% in 1998. Promotional expenses declined both
in aggregate and as a percentage of revenues due to our 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 our focus on higher
margin travel programs and increasing the number of travelers per
promotional dollar expended.
60
<PAGE>
<PAGE>
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 our $30.0 million revolving credit facility. The
borrowings were necessary as we completed the renovation of the M/S
Clipper Adventurer and completed the purchase of the M/S Clipper
Odyssey in November 1998.
Our 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 our 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 our 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, we experienced increases in the costs
of promoting our 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.
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 our acquisition of Clipper
Cruise Line as well as $0.3 million in contractual
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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. Our 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 Intrav 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.
Our 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 our interest expense, depreciation
expense, and selling, general and administrative expense relative to
changes in management compensation.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations, capital expenditures and dividend
payments through cash flows generated from operations and our bank
revolving credit facility. We receive 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
we use them to prepay certain program and promotional costs, with
the balance invested to generate investment income or used to repay
debt.
We generally recognize revenues as income upon the completion of
each tour or cruise. Deferred revenue, representing payments
received from travelers for tour and cruise departures that have not
been completed, was $53.2 million at June 30, 1999. Approximately
$21.7 million, or 40.9%, related to tour and cruise departures
scheduled to be completed by September 30, 1999, and $7.0 million or
13.2% related to specially promoted Millennium programs scheduled to
be completed by January 17, 2000. Deferred revenue 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 represented primarily
the deferred revenue collected for first quarter 1999 cruise
departures of the M/S Clipper Adventurer. There were no
corresponding first quarter 1998 departures as the M/S Clipper
Adventurer commenced service in April 1998. Of the deferred revenue
at December 31, 1998, 74.6%, or $22.3 million, related to tour
departures that were scheduled for completion by March 31, 1999.
Our revolving credit facility permits borrowings up to $32.5
million. The credit facility provides that we may select among
various borrowing arrangements with varying maturities and interest
rates. The maturity on the credit facility is November 1, 2003. We
had no borrowings and $9,192 in letters of credit outstanding under
this facility as of June 30, 1999. In connection with the purchase
of the M/S Clipper Odyssey in
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November 1998, we 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 operating activities for the six months
ended June 30, 1999 and 1998 was $24.2 million and $6.1 million,
respectively. Included in cash provided by operating activities for
the six months ended June 30, 1999 was $1.9 million from net income,
$2.8 million from restricted cash and $23.3 million from deferred
revenue, partially offset by $3.7 million used for prepaid expenses
and other assets, $0.8 million used to reduce accounts payable and
accrued expenses and $0.8 million used for other current assets. 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 changes in deferred revenue noted
above.
Net cash provided by (used in) investing activities for the six
months ended June 30, 1999 and 1998 was $3.2 million and ($11.0
million), respectively. Included in cash provided by investing
activities for the six months ended June 30, 1999 was $4.0 million
provided by proceeds from the sale of marketable securities, offset
by $0.8 million used in the purchase of property and equipment. 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 (used in) provided by financing activities for the six
months ended June 30, 1999 and 1998 was ($22.9 million) and $4.8
million, respectively. During the six months ended June 30, 1999, we
repaid $20.8 million of our borrowings under our revolving credit
facility with cash made available primarily by replacing certain
escrow requirements with a surety bond and letters of credit. 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 credit facility borrowings and $1.4 million of
cash proceeds from the issuance of 113,000 shares of common stock
from our treasury during the year ended December 31, 1998 in
satisfaction of stock options exercised by our past employees.
During the six months ended June 30, 1999, we paid dividends of
$1.3 million and repurchased 41,250 shares of common stock in the
open market, for an aggregate of $0.8 million. We paid dividends of
$3.2 million, $2.5 million and $2.6 million during 1996, 1997 and
1998, respectively. During 1997 and 1998, we 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, 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.
On December 31, 1996, we acquired all the outstanding common
stock of Clipper Cruise Line from Windsor, Inc., a company
controlled by Barney A. Ebsworth, our founder, Chairman of the Board
and majority shareholder. 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. The Stock
Purchase Agreement also included additional consideration of up to
$3.0 million to the extent the cumulative net cruise revenues (as
defined), of Clipper exceed $70.0 million for the period January 1,
1997 through December 31, 2000. During the second quarter of 1999,
net cruise revenues exceeded $73.0 million and, therefore, a
liability in the amount of $3.0 million due to Barney A. Ebsworth
payable in February, 2000 has been recorded in notes payable as of
June 30, 1999. Due to the common ownership and control of Mr.
Ebsworth over both Intrav and Clipper, the acquisition was accounted
for in a manner similar to the pooling-of-interests method and,
accordingly, the additional consideration of $3.0 million has been
charged directly against shareholders' equity as of June 30, 1999.
In connection with the acquisition of Clipper Cruise Line, we
entered into a $10.0 million revolving credit facility agreement. We
financed the acquisition primarily from our cash on hand, which had
the effect of significantly reducing cash and marketable securities
at December 31, 1996, and included a $3.0 million draw on our
revolving credit facility. In October 1998, we amended our revolving
credit facility to increase
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permitted borrowings to $30.0 million and to extend the maturity to
November 1, 2003, and in June 1999, we amended the facility to
increase permitted borrowings to $32.5 million, including up to
$17.5 million in letters of credit. The increases provided for the
additional funding necessary to complete the purchase of the M/S
Clipper Odyssey in November 1998, for the issuance of letters of
credit to replace certain escrow requirements during the six months
ended June 30, 1999 and for other capital expenditures.
In November 1998, we completed the purchase of the 120-passenger
luxury cruise ship Oceanic Odyssey from Spice Islands, a
non-affiliated third party for a purchase price of $16.0 million. We
made a cash payment of $10.5 million, funded by borrowings from our
revolving credit facility, and delivered our one-year promissory
note in the amount of $5.5 million at the time of closing. Cash flow
from operations together with draws against the revolving credit
facility will provide an additional $3.6 million for renovation of
the M/S Clipper Odyssey, for retirement of the $5.5 million one-year
note payable to the seller of the M/S Clipper Odyssey, for payment
of the $3.0 million note payable to Barney A. Ebsworth as additional
consideration for the acquisition of Clipper and for other capital
expenditures as needed.
In March 1999, we filed with the Securities and Exchange
Commission a registration statement for the proposed public offering
by us of 500,000 shares of common stock and by the Revocable Trust
of Barney A. Ebsworth of 2,000,000 shares of common stock (plus an
aggregate of up to 375,000 shares which may be sold pursuant to an
over-allotment option granted to the underwriters). We withdrew the
registration statement due to adverse market conditions.
QUARTERLY RESULTS OF OPERATIONS
The quarterly unaudited results of operations for 1997, 1998 and
the six months ended June 30, 1999 were as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------------------
1997 1998
----------------------------------------------- -----------------------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31
---------- --------- ---------- --------- ---------- --------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............. $27,174 $23,905 $36,423 $35,021 $26,719 $22,057 $41,269 $35,952
Gross profit......... 5,151 5,013 6,617 6,735 5,118 5,442 8,464 8,817
Operating income..... 1,100 1,024 2,207 2,495 1,392 1,447 3,687 3,735
Net income........... 792 801 1,600 1,747 985 943 2,475 2,381
<CAPTION>
QUARTER ENDED
----------------------
1999
----------------------
MARCH 31 JUNE 30
---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Revenues............. $25,874 $26,696
Gross profit......... 5,888 6,780
Operating income..... 1,225 1,868
Net income........... 666 1,191
</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 our travel programs necessitate the purchase of services
from suppliers located outside the United States and certain of our
payment obligations to suppliers are denominated in foreign
currencies. As a result, we are exposed to the risk of fluctuating
currency values. To protect the U.S. dollar value of our foreign
currency transactions, we sometimes enter into "forward contracts"
which are commitments to buy foreign currencies in the future at a
contracted rate. We use forward and option contracts solely to hedge
our 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 our suppliers have not had a material adverse effect
on our results of operations.
INFLATION
Inflation affects the costs incurred by us in our purchases of
program components from our suppliers and in certain portions of our
selling, general and administrative expenses. We have offset the
effects of inflation through price increases and by controlling our
expenses. Our ability to increase prices is limited by competitive
factors as well as the need to maintain acceptable pricing for the
markets in which we sell our programs. In management's opinion,
inflation has not had a significant impact on our operations during
the three years ended December 31,1998 or the six months ended June
30, 1999.
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YEAR 2000 COMPATIBILITY
We rely on computer systems, related software applications and
other control devices in operating and monitoring certain aspects of
our business, including but not limited to, our financial systems
(such as general ledger and accounts payable modules), billing and
reservations systems, internal networks, telecommunications
equipment and shipboard navigational systems and 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, customers and financial organizations for
their accurate exchange with us and use in general operations of
date related information.
We have initiated a Year 2000 compliance program. As part of our
compliance program, we have developed a plan to: (1) identify all
"business-critical" software that requires modification for the Year
2000 and complete an estimate of the time and other resources
required to complete software modifications; (2) 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; (3) institute a formal communication process to keep
our senior management and the Board of Directors apprised of
significant Year 2000 issues; and (4) develop a schedule for
completing necessary Year 2000 modifications in a timely manner. We
have completed the inventory and assessment phases and are in
progress with the remediation, testing and implementation phases of
our Year 2000 plan for "business-critical" infrastructure and
application software.
Our 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, we have progressed furthest
and are generally in the testing and implementation phase, notably
for our internally-developed passenger billing and reservation
system. Much of this application has been tested and implemented.
The remaining "business critical" modules are in the testing phase
and will be implemented during the third quarter of 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 in progress. We have completed
the inventory, assessment and detailed analysis phases of our Year
2000 plan for ship-based "business-critical" navigational and
operational equipment and systems. Management believes these
"business-critical" systems for our four ships were Year 2000
compliant as of June 30, 1999.
We believe that the final phases of our Year 2000 plan will be
completed in advance of December 31, 1999. We have not incurred and,
based upon the information available to us at this time, do not
expect to incur significant expenditures to address the Year 2000
issue. Our Year 2000 expenses, 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. Year 2000 expenses for the six
months ended June 30, 1999, totaled less than $0.1 million. Our
projected costs for the completion of our Year 2000 program are
expected to be less than $0.6 million. We do not believe that our
Year 2000 program has resulted in or will result in the postponement
of our other significant information technology projects.
As part of our Year 2000 program, we plan to complete a
contingency plan in 1999 which addresses the most reasonably likely
"business-critical" worst-case scenarios. However, we cannot be
certain that third parties supporting our systems or providing goods
and services to us 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 us or
any such third party to successfully address the relevant Year 2000
issues could result in disruptions to our business and the
incurrence of significant expenses by us. Additionally, we could be
adversely affected by any disruption to third parties with which we
do business if suppliers of goods and services to those third
parties have not successfully addressed their Year 2000 issues.
INTEREST RATE AND CURRENCY RISKS
Our principal interest rate risk is associated with our
long-term debt. We have a $32.5 million bank revolving credit
facility which expires on November 1, 2003. We may select among
various borrowing arrangements with varying maturities and interest
rates. During the first six months of 1999, the annual interest
rates on the borrowings ranged from 6.4% to 6.9%. Assuming a
hypothetical 1% increase in the weighted-average interest rate
during the first six months of 1999, interest expense would have
increased $63 thousand.
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We enter into non-U.S. currency commitments for the charter of
cruise ships and aircraft for our international travel programs. We
may enter into forward contracts to buy foreign currency at a stated
U.S. dollar amount to hedge against fluctuating currency values. As
of June 30, 1999, we had non-U.S. currency commitments equivalent to
$1.5 million, of which we have purchased forward contracts with a
U.S. dollar equivalency of $1.5 million. Therefore, our management
believes the fluctuations in currency values would not have a
material effect on our cash flows or earnings.
RECENT ACCOUNTING PRONOUNCEMENTS
During 1998, we 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), we are now
required to display other comprehensive income (loss), which
includes other changes in equity (deficit). SFAS 130 had no effect
on our financial statements for the years ended December 31, 1996,
1997 and 1998 and the six months ended June 30, 1999.
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 our consolidated financial
statements, believes we operate 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. We are
required to adopt this statement effective January 1, 2001. SFAS 133
will require us 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. We are currently evaluating when we will adopt this
standard and the impact of the standard on us. 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.
CERTAIN INFORMATION REGARDING KUONI
Based in Switzerland, Kuoni is one of Europe's largest travel
groups and has operations throughout Europe. Kuoni arranges both
volume and premium vacations, organizes travel from overseas into
Europe and owns more than 150 retail travel stores in Switzerland
and operates in the business travel segment, mainly in Switzerland,
Austria and Germany, through its alliance with Business Travel
International. Kuoni's long haul travel operations form the core of
its leisure travel business outside Switzerland and it has an
established position in the scheduled long-haul tour operating
sectors in Switzerland, the United Kingdom, France, India and Italy.
Kuoni is the largest travel group in Switzerland and has
significant market share in business travel in Germany and Austria.
The recent acquisition of one of India's largest operators of
package tours to foreign countries, and a recent joint venture in
Hong Kong has provided a platform for Kuoni to establish operations
in India and to expand further into the Asia Pacific region.
In Europe, Kuoni is a major incoming tour operator, making
accommodation and travel arrangements and organizing tours to fairs
and exhibitions for customers traveling to Europe, with tour
operators outside
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of Europe. The proposed merger will strengthen Kuoni's position in
the United States, where it currently has only an incoming sales
office in Atlanta.
Kuoni's stock is traded on the Zurich Stock Exchange. Kuoni's
market capitalization at December 31, 1998 was approximately CHF 1,744
million (approximately US$1,266 million, based upon an exchange rate of
one U.S. Dollar for 1.378 Swiss Francs, the exchange rate used in Kuoni's
1998 Annual Report). Kuoni's market capitalization at August 18, 1999 was
approximately CHF 1,899 million (approximately US$1,250 million, based
upon an exchange rate of one U.S. Dollar for 1.519 Swiss Francs, the
exchange rate reported as the Interbank rate on August 18, 1999 at 5:00 p.m.
Swiss time). At December 31, 1998, Kuoni had cash and cash equivalents and
securities of approximately CHF 599 million (approximately US$435 million,
based upon an exchange rate of one U.S. Dollar for 1.378 Swiss Francs, the
exchange rate used in Kuoni's 1998 Annual Report). At June 30, 1999, Kuoni
had cash and cash equivalents and securities of approximately CHF 619 million
(approximately US$399, based upon an exchange rate of one U.S. Dollar for
1.553 Swiss Francs, the exchange rate used in Kuoni's 1999 Half Year Report).
Kuoni's principal business offices are located at Neue Hard 7,
CH-8010 Zurich, Switzerland.
EXPERTS
The consolidated financial statements of Intrav as of December
31, 1998 and 1997 and for each of the three years in the period
ended December 31, 1998 included in this proxy statement, 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.
SHAREHOLDER PROPOSALS
We will hold a 2000 Annual Meeting of Shareholders only if the
merger is not completed before the time of such meeting. If such a
meeting is held, proposals of shareholders intending to be present
at Intrav's 2000 Annual Meeting of Shareholders must be received by
us at our principal executive offices no later than December 17,
1999, in order to be considered for inclusion in the proxy statement
and proxy card for that meeting. Any such proposals are subject to
the requirements of the proxy rules adopted under the Securities
Exchange Act of 1934, as amended. Shareholder proposals which do not
appear in the proxy materials may be considered at the 2000 Annual
Meeting only if notice of the proposal is received by us prior to
March 1, 2000.
OTHER MATTERS
As of the date of this document, our board of directors knows of
no matters that will be presented for consideration at the special
meeting other than as described in this document.
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance with those
requirements file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other
information that we file with the Securities and Exchange Commission
at the Commission's public reference rooms at the following
locations:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. Seven World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street, Suite 1400
Washington, D.C. 20549 New York, NY 10048 Chicago, IL 60661-2511
</TABLE>
Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. These filings with the
Commission are also available to the public from commercial document
retrieval services and at the Internet world wide web site
maintained by the Commission at "http://www.sec.gov." Reports, proxy
statements and other information concerning Intrav are also
available for inspection at the offices of The Nasdaq Stock Market,
which is located at 1735 K Street, N.W., Washington, D.C. 20006.
You should not send in your Intrav certificates until you
receive the transmittal materials from the exchange agent. If you
have further questions about your share certificates or the exchange
of your Intrav stock for the merger consideration, you should call
the exchange agent.
You should rely only on the information contained in or included
in this proxy statement. We have not authorized anyone to provide
you with information that is different from what is contained in or
included in this proxy statement. This proxy statement is dated
August 23, 1999. You should not assume that the information
contained in this document is accurate as of any date other than
that date, and the mailing of this document to you does not create
any implication to the contrary. This proxy statement does not
constitute a solicitation of a proxy in any jurisdiction where, or
to or from any person to whom, it is unlawful to make such proxy
solicitation in such jurisdiction.
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<TABLE>
INTRAV, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<CAPTION>
PAGE
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<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
Consolidated Balance Sheet as of June 30, 1999
(Unaudited)................................................ F-19
Consolidated Statements of Income for the Six-Month Periods
Ended June 30, 1998 and 1999 (Unaudited)................... F-20
Consolidated Statements of Cash Flows for the Six-Month
Periods Ended June 30, 1998 and 1999 (Unaudited)........... F-21
Notes to Unaudited Consolidated Financial Statements........ F-22
</TABLE>
F-1
<PAGE>
<PAGE>
[Deloitte & Touche LLP Letterhead]
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
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 ("RCL"),
Inc., Liberty Cruise Line, Inc. ("LCL"), Clipper Adventurer, Ltd
("CAL")., and Clipper Odyssey, Ltd ("COL"). All significant
intercompany accounts and transactions have been eliminated.
REVENUE RECOGNITION - Revenues are recognized as services are
provided, generally upon completion of a tour; however, revenues
for certain significant or long duration tours are recognized on
a proportionate basis based on number of days traveled. Deferred
revenue consists of amounts received for tours which have not yet
been completed.
PROMOTION AND PROGRAM COSTS - The Company expenses promotion
costs as incurred, except for direct-response advertising.
Direct-response advertising and program costs are deferred until
the revenue from the related program is recognized. Promotion
expenses were $19,075, $19,767, and $17,501 for 1996, 1997 and
1998, respectively.
CURRENCY HEDGES - The Company may enter into contracts to buy
foreign currencies in the future to protect the U.S. dollar value
of certain foreign currency transactions. Except in the
infrequent instance
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>
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 draw 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>
The pro forma compensation effects of this calculation were not
material and therefore have not been disclosed for the year ended
December 31, 1996.
F-15
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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>
<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Amounts in thousands except share data)
<CAPTION>
JUNE 30, 1999
---------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 5,374
Restricted cash............................................ 7,806
Restricted marketable securities........................... -
Prepaid program costs...................................... 11,665
Other current assets....................................... 3,637
-----------
Total current assets...................................... 28,482
Property and equipment - net................................ 54,035
Prepaid promotion costs..................................... 5,160
Other assets................................................ 396
-----------
Total..................................................... $ 88,073
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 4,564
Accrued expenses........................................... 6,676
Notes payable.............................................. 8,500
Deferred revenue........................................... 53,151
-----------
Total current liabilities................................. 72,891
-----------
Deferred income taxes....................................... 7,867
-----------
Long-term debt.............................................. -
-----------
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 -
5,114,200 shares.......................................... 53
Additional paid-in capital................................. 22,694
Accumulated deficit........................................ (12,912)
-----------
Total..................................................... 9,835
Treasury stock - at cost; 210,800 shares of common stock... (2,520)
-----------
Total shareholders' equity................................ 7,315
-----------
Total..................................................... $ 88,073
===========
See accompanying notes to consolidated financial statements.
</TABLE>
F-19
<PAGE>
<PAGE>
<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands except per share data)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------------------
1998 1999
--------------- ---------------
<S> <C> <C>
Revenues.................................................... $ 48,776 $ 52,571
Costs of operations......................................... 38,216 39,902
----------- -----------
Gross profit................................................ 10,560 12,669
Selling, general and administrative......................... 6,852 8,099
Depreciation and amortization............................... 869 1,477
----------- -----------
Operating income............................................ 2,839 3,093
Investment income........................................... 438 342
Interest expense............................................ (263) (535)
----------- -----------
Income before provision for income taxes.................... 3,014 2,900
Provision for income taxes.................................. 1,085 1,044
----------- -----------
Net income.................................................. $ 1,929 $ 1,856
=========== ===========
Basic earnings per share of common stock.................... $ 0.38 $ 0.36
----------- -----------
Weighted average number of common shares outstanding...... 5,101 5,117
=========== ===========
Diluted earnings per share of common stock.................. $ 0.37 $ 0.35
=========== ===========
Weighted average number of common shares outstanding...... 5,212 5,237
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
F-20
<PAGE>
<PAGE>
<TABLE>
INTRAV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------------------
1998 1999
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 1,929 $ 1,856
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 879 1,477
Changes in assets and liabilities which provided (used)
cash:
Restricted cash....................................... (13,641) 2,776
Prepaid expenses and other assets..................... (6,504) (3,650)
Other current assets.................................. (567) (819)
Accounts payable and accrued expenses................. (333) (753)
Deferred revenue...................................... 24,295 23,315
----------- -----------
Net cash provided by operating activities............. 6,058 24,202
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (10,953) (795)
Proceeds from sales of marketable securities.............. 2,500 4,025
Purchases of marketable securities........................ (2,555) -
----------- -----------
Net cash provided by (used in) investing activities... (11,008) 3,230
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (payments) of long-term debt................. 5,350 (20,800)
Purchase of common stock for treasury..................... - (824)
Proceeds from sale of treasury stock...................... 766 -
Dividends paid............................................ (1,277) (1,279)
----------- -----------
Net cash (used in) provided by financing activities... 4,839 (22,903)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (111) 4,529
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 5,951 845
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 5,840 $ 5,374
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
F-21
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data)
DESCRIPTION OF BUSINESS
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 Stock Purchase Agreement in connection with the 1996 acquisition
of Clipper from Windsor, Inc., a company controlled by Barney A.
Ebsworth, the Company's founder, Chairman of the Board and majority
shareholder, included additional consideration of up to $3,000 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. During the second quarter of 1999, net cruise
revenues exceeded $73,000, and therefore, a promissory note in the
amount of $3,000 due to Barney A. Ebsworth payable in February 2000
has been recorded in notes payable as of June 30, 1999. Due to the
common ownership and control of Mr. Ebsworth over both INTRAV and
Clipper, the acquisition was accounted for in a manner similar to
the pooling-of-interests method and, accordingly, the additional
consideration of $3,000 has been charged directly against
shareholders' equity as of June 30, 1999.
On July 16, 1999, the Company, Kuoni Reisen Holding AG ("Kuoni"),
Kuoni Holding Delaware, Inc. (formerly known as Diamond Holding
Delaware, Inc.), a wholly-owned subsidiary of Kuoni ("Kuoni
Holding"), and Kuoni Acquisition Subsidiary Missouri, Inc. (formerly
known as Diamond Acquisition Subsidiary Missouri, Inc.), a
wholly-owned subsidiary of Kuoni Holding ("Kuoni Acquisition
Subsidiary") entered into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which Kuoni will acquire control of,
and the entire equity interest in, the Company and replace the Board
of Directors of the Company. INTRAV will be acquired by Kuoni
through the merger of Kuoni Acquisition Subsidiary with and into the
Company. As a result of the merger, each INTRAV common share issued
and outstanding when the merger becomes effective will be converted
into the right to receive $21.32 in cash. Additionally, INTRAV has
agreed to cause outstanding options to become payable for cash,
equal to the difference between $21.32 and the per share exercise
prices of such options. The aggregate purchase price for all of the
equity will be approximately $115,000.
Pursuant to U.S. federal law, INTRAV'S two U.S. flag vessels (the
M/V Yorktown Clipper and M/V Nantucket Clipper) must be owned by
U.S. citizens in order to carry passengers on domestic cruises. A
corporation is deemed to be a citizen if, among other things, at
least 75% of its shares are owned by U.S. citizens. Kuoni is not a
U.S. citizen, and as a result Kuoni Holding is deemed not to be a
U.S. citizen.
In order to maintain the coastwise trade privileges of the two U.S.
flag vessels and provide Kuoni with the use of them, the Merger
Agreement requires that, immediately prior to the effective time of
the merger,
F-22
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INTRAV sell or otherwise dispose of its U.S. flag vessels to such
person or persons designated by Kuoni who are qualified to own and
operate them in the coastwise trade. In addition, immediately prior
to the effective time of the merger, INTRAV is required to enter
into a time charter of the U.S. flag vessels, an operating agreement
with respect to INTRAV's two non-U.S. flag vessels, and a
transitional services agreement providing for certain transition
services with the acquiror of the U.S. flag vessels.
Simultaneously with the execution of the Merger Agreement, Kuoni
entered into a letter agreement with Paul H. Duynhouwer, INTRAV's
President and Chief Executive Officer and an INTRAV director, which
letter agreement outlines the proposed sale of the U.S. flag vessels
to entities controlled by Mr. Duynhouwer. The letter agreement
anticipates that INTRAV will sell the U.S. flag vessels to New World
Ships, LLC. New World Ships, LLC will be 75.1% owned by Mr.
Duynhouwer, and 24.9% owned by INTRAV or an affiliate. The total
purchase price for the two U.S. flag vessels will be approximately
$16,600 which represents the book value of the U.S. flag vessels.
Kuoni, founded in 1906 in Zurich, Switzerland, is one of Europe's
largest travel companies with subsidiaries in 11 European countries,
the Far East, India and the United States. A substantial part of the
business volume is generated in the home country which makes Kuoni a
market leader of the travel industry in Switzerland.
The Board of Directors of INTRAV unanimously approved the Merger
Agreement, and received an opinion from its financial adviser,
Stifel, Nicolaus & Company, Incorporated, that the consideration to
be received by INTRAV's shareholders in the merger is fair to the
INTRAV shareholders from a financial point of view. The transaction
is subject to the approval of INTRAV's shareholders, the expiration
of the waiting period under the applicable antitrust laws and other
customary conditions.
Mr. Ebsworth, who currently owns approximately 74.8% of INTRAV's
outstanding common stock, agreed to vote his shares in favor of
approval of the merger. It is expected that the merger will be
completed on or about September 30, 1999.
ACCOUNTING POLICIES
INTERIM ADJUSTMENTS - The unaudited financial statements included
herein have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations. However, in the opinion of management of
the Company, the financial statements include all adjustments, which
consist only of normal recurring accruals, necessary to present
fairly the financial information for such periods. These financial
statements should be read in conjunction with the audited financial
statements for the year ended December 31, 1998 contained elsewhere
in this proxy statement. Results of operations for the six months
ended June 30, 1999 are not necessarily indicative of the results
which may be expected for the full year ending December 31, 1999.
F-23
<PAGE>
<PAGE>
INTRAV, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
EARNINGS PER SHARE OF STOCK - Basic earnings per share of stock is
computed using the weighted average number of common shares
outstanding during the applicable period. Diluted earnings per share
of stock is computed using the weighted average number of common
shares outstanding and common stock equivalents (outstanding stock
options). 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>
SIX MONTHS ENDED
JUNE 30,
-------------------------------
1998 1999
------------ ------------
<S> <C> <C>
Weighted average number of common
shares outstanding (Basic EPS)............. 5,101 5,117
Stock option equivalents..................... 111 120
-------- --------
Weighted average number of common shares and
equivalents outstanding (Diluted (EPS)..... 5,212 5,237
======== ========
</TABLE>
Stock option equivalents included in the diluted earnings per share
calculation were determined using the treasury stock method. Under
the treasury stock method and Statement of Financial Accounting
Standards No. 128 ("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.
LONG-TERM DEBT
The Company has amended its revolving credit facility agreement with
NationsBank, N.A., to increase available borrowings from $30,000 to
$32,500 effective as of June 15, 1999 and allows for up to $17,500
in Letters of Credit. This agreement expires on November 1, 2003.
The agreement includes provisions for periodic reductions of the
available amount from $30,500 beginning December 31, 1999 to $17,500
at December 31, 2002. The Company had no borrowings and $9,192 in
Letters of Credit outstanding under this facility as of June 30,
1999.
DIVIDEND DECLARATION
On July 29, 1999, the Company declared a dividend of $0.125 per
share, for shareholders of record on September 30, 1999, to be paid
October 15, 1999. On May 3, 1999, the Company declared a regular
quarterly dividend of $0.125 per share, for shareholders of record
on May 28, 1999, paid on June 15, 1999.
On August 3, 1998, the Company declared a regular quarterly dividend
of $0.125 per share, for shareholders of record on August 31, 1998,
paid on September 15, 1998. On May 1, 1998, the Company declared a
regular quarterly dividend of $0.125 per share, for shareholders of
record on May 29, 1998, paid on June 15, 1998.
F-24
<PAGE>
<PAGE>
ANNEX 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
KUONI REISEN HOLDING AG,
DIAMOND HOLDING DELAWARE, INC.,
DIAMOND ACQUISITION SUBSIDIARY MISSOURI, INC.
AND
INTRAV, INC.
Dated as of
July 16, 1999
<PAGE>
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - TERMS OF THE MERGER............................. 1
1.1 The Merger......................................... 1
1.2 Effective Time..................................... 1
1.3 Merger Consideration............................... 2
1.4 Shareholders' Rights upon Merger................... 2
1.5 Dissenting Shares.................................. 2
1.6 Surrender and Exchange of Shares................... 2
1.7 Options and Warrants............................... 3
1.8 Articles of Incorporation.......................... 4
1.9 By-Laws............................................ 4
1.10 Other Effects of Merger............................ 4
1.11 Further Adjustments................................ 4
1.12 Additional Actions................................. 4
ARTICLE II - REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS OF TARGET....................................... 5
2.1 Organization and Good Standing..................... 5
2.2 Capitalization..................................... 5
2.3 Subsidiaries....................................... 6
2.4 Authorization; Binding Agreement................... 6
2.5 Governmental Approvals............................. 7
2.6 No Violations...................................... 7
2.7 Securities Filings and Litigation.................. 8
2.8 Target Financial Statements........................ 8
2.9 Absence of Certain Changes or Events............... 9
2.10 Compliance with Laws............................... 9
2.11 Permits............................................ 9
2.12 Finders and Investment Bankers..................... 9
2.13 Contracts.......................................... 10
2.14 Employee Benefit Plans............................. 10
2.15 Taxes and Tax Returns.............................. 11
2.16 Liabilities........................................ 13
2.17 Environmental Matters.............................. 13
2.18 Intellectual Property.............................. 13
2.19 Real Estate........................................ 14
2.20 Corporate Records.................................. 14
2.21 Title to and Condition of Personal Property........ 14
2.22 No Adverse Actions................................. 15
2.23 Labor Matters...................................... 15
2.24 Change of Control Agreements....................... 15
2.25 Insurance.......................................... 16
2.26 Information Supplied............................... 16
2.27 Takeover Statutes.................................. 16
2.28 Year 2000.......................................... 16
2.29 Target Options..................................... 17
2.30 Transactions with Affiliates....................... 17
2.31 No Existing Discussions............................ 17
2.32 Disclosure......................................... 17
ARTICLE III - REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS OF PARENT AND ACQUIROR.......................... 17
3.1 Organization and Good Standing..................... 17
3.2 Authorization; Binding Agreement................... 18
3.3 Governmental Approvals............................. 18
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<PAGE>
3.4 No Violations...................................... 18
3.5 Finders and Investment Bankers..................... 19
3.6 Information Supplied............................... 19
3.7 Financial Ability.................................. 19
ARTICLE IV - ADDITIONAL COVENANTS OF TARGET................. 19
4.1 Conduct of Business of Target and Target
Subsidiaries....................................... 19
4.2 Notification of Certain Matters.................... 21
4.3 Access and Information............................. 21
4.4 Shareholder Approval; Proxy Statement; Shareholder
Lists.............................................. 22
4.5 Reasonable Business Efforts........................ 23
4.6 Public Announcements............................... 23
4.7 Compliance......................................... 23
4.8 Benefit Plans...................................... 23
4.9 No Solicitation of Takeover Proposal............... 23
4.10 Securities and Shareholder Materials............... 25
4.11 Resignations....................................... 25
4.12 Noncompete and Confidentiality Agreements.......... 25
4.13 Comfort Letters.................................... 25
4.14 Takeover Statutes.................................. 26
4.15 Year 2000 Plan..................................... 26
4.16 Purchase of Target Common Stock.................... 26
4.17 Conversion of Options.............................. 26
4.18 Disposition of U.S. Flagged Vessels; Non-U.S.
Flagged Vessels.................................... 26
4.19 Amendments to Articles of Incorporation and
By-Laws............................................ 26
ARTICLE V - ADDITIONAL COVENANTS OF PARENT AND ACQUIROR..... 27
5.1 Public Announcements............................... 27
5.2 Compliance......................................... 27
5.3 Proxy Statement.................................... 27
5.4 Indemnification and Insurance...................... 28
5.5 Advisory Committee................................. 29
ARTICLE VI - CONDITIONS..................................... 29
6.1 Conditions to Each Party's Obligations.......... 29
6.1.1 Shareholder Approval............................ 29
6.1.2 No Injunction or Action......................... 29
6.1.3 HSR Act......................................... 29
6.1.4 Exon-Florio Amendment........................... 29
6.1.5 Opinion of Financial Advisor.................... 29
6.1.6 Governmental Approvals.......................... 29
6.2 Conditions to Obligations of Target............. 30
6.2.1 Acquiror Representations and Warranties......... 30
6.2.2 Performance by Parent and Acquiror.............. 30
6.2.3 Certificate..................................... 30
6.3 Conditions to Obligations of Acquiror........... 30
6.3.1 Target Representations and Warranties........... 30
6.3.2 Performance by Target........................... 30
6.3.3 No Material Adverse Change...................... 30
6.3.4 No Pending Action............................... 31
6.3.5 Dissenting Shares............................... 31
6.3.6 Required Consents............................... 31
6.3.7 Certificates and Other Deliveries............... 31
6.3.8 Opinion of Target Counsel....................... 31
6.3.9 Comfort Letters................................. 32
6.3.10 Vessels......................................... 32
6.3.11 Environmental Representations and Warranties.... 32
<PAGE>
<PAGE>
ARTICLE VII - TERMINATION AND ABANDONMENT................... 32
7.1 Termination......................................... 32
7.2 Termination Fees and Rights......................... 33
7.3 Procedure Upon Termination.......................... 34
ARTICLE VIII - MISCELLANEOUS................................ 34
8.1 Confidentiality.................................... 34
8.2 Amendment and Modification......................... 34
8.3 Waiver of Compliance; Consents..................... 34
8.4 Survival of Representations and Warranties......... 35
8.5 Notices............................................ 35
8.6 Binding Effect; Assignment......................... 36
8.7 Expenses........................................... 36
8.8 Governing Law...................................... 36
8.9 Counterparts....................................... 36
8.10 Interpretation..................................... 36
8.11 Entire Agreement................................... 36
8.12 Severability....................................... 36
8.13 Specific Performance............................... 37
8.14 Third Parties...................................... 37
8.15 Schedules.......................................... 37
</TABLE>
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<TABLE>
LIST OF SCHEDULES
<CAPTION>
SCHEDULE DESCRIPTION
- - -------- -----------
<S> <C>
2.2(a) Rights, Subscriptions, Warrants, Options, etc., with Respect to Stock
2.2(b) Restrictions with Respect to Stock
2.3(a) Target Ownership Interests
2.3(b) Claims as to Capital Stock and Other Interests Held
2.3(c) Rights with respect to Target Subsidiary Securities
2.5 Regulatory Consents
2.6 Target Required Approvals
2.7 Target Litigation
2.9 Target Subsequent Events
2.10 Compliance with Laws
2.13 Target Material Contracts
2.14 Target Employee Benefit Plans
2.15 Target Tax Matters
2.16 Target Liabilities
2.17 Target Environmental Matters
2.18(a)(1) Target Intellectual Property
2.18(a)(2) Target Intellectual Property Exceptions
2.18(b) Computer Software Program Exceptions
2.19(b) Target Leased Real Property
2.20 Target Records Off Premises
2.22 Target Adverse Actions
2.23 Target Labor Matters
2.24 Target Change of Control Agreements
2.30 Target Affiliate Transactions
4.12 Form of Noncompete and Confidentiality Agreements
6.3.8 Opinion of Counsel to Target
<CAPTION>
LIST OF EXHIBITS
----------------
EXHIBIT DESCRIPTION
- - ------- -----------
<S> <C>
4.18(a) Form of Charter Agreement
6.3.10 Letter Agreement
</TABLE>
<PAGE>
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<TABLE>
GLOSSARY OF DEFINED TERMS
<CAPTION>
PAGE WHERE
TERM DEFINED
- - ---- ----------
<S> <C>
Acquiror.................................................... 1
Acquiror Ancillary Agreements............................... 18
Acquiror Material Adverse Effect............................ 18
Acquiror Material Contract.................................. 19
Acquiror Modified Representation............................ 30
Acquiror Nonmodified Representation......................... 30
Acquisition Agreement....................................... 24
Acquisition Subsidiary...................................... 1
affiliate................................................... 36
Agreement................................................... 1
Articles Amendment.......................................... 27
associate................................................... 36
Benefit Plan................................................ 10
Certificate of Merger....................................... 1
Certificates................................................ 2
Claim Notice................................................ 14
Closing..................................................... 1
Closing Date................................................ 1
Code........................................................ 3
Consent..................................................... 7
Costs....................................................... 28
Dissenting Shares........................................... 2
Effective Time.............................................. 1
Enforceability Exceptions................................... 6
Environmental Laws.......................................... 13
ERISA....................................................... 10
Event....................................................... 9
Exchange Agent.............................................. 2
Exon-Florio Amendment....................................... 7
Final Order................................................. 29
Governmental Authority...................................... 7
HSR Act..................................................... 7
Indemnified Parties......................................... 28
Intellectual Property....................................... 13
IRS......................................................... 11
Law......................................................... 7
Letter of Transmittal....................................... 2
Litigation.................................................. 8
Majority Shareholder........................................ 1
Majority Shareholder Agreement.............................. 1
Merger...................................................... 1
Merger Consideration........................................ 2
Missouri Code............................................... 1
Multi-employer Plan......................................... 10
NASD........................................................ 7
Noncompete and Confidentiality Agreements................... 25
Option Consideration........................................ 4
Options..................................................... 3
Parent...................................................... 1
person...................................................... 36
Proxy Statement............................................. 22
Representatives............................................. 24
<PAGE>
<PAGE>
Resignations................................................ 25
SEC......................................................... 8
Securities Act.............................................. 5
Securities Exchange Act..................................... 5
shareholder................................................. 36
Shareholders' Meeting....................................... 22
Subsidiary.................................................. 5
Superior Proposal........................................... 25
Surviving Corporation....................................... 1
Surviving Corporation Common Stock.......................... 2
Surviving Corporation Material Adverse Effect............... 29
Takeover Proposal........................................... 24
Takeover Statute............................................ 16
Target...................................................... 1
Target Ancillary Agreements................................. 6
Target Approved Budget...................................... 9
Target Common Stock......................................... 1
Target Financial Statements................................. 8
Target Material Adverse Effect.............................. 5
Target Material Contract.................................... 10
Target Minority Entity...................................... 6
Target Modified Representation.............................. 30
Target Nonmodified Representation........................... 30
Target Permits.............................................. 9
Target Real Property Leases................................. 14
Target Securities Filings................................... 8
Target Shareholders' Approval............................... 6
Target Shares............................................... 1
Target Subsidiaries......................................... 5
Tax......................................................... 11
Tax Return.................................................. 11
Termination Fee............................................. 33
Year 2000 Compliant......................................... 17
Year 2000 Plan.............................................. 17
Year 2000 Problem........................................... 16
</TABLE>
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of July 16, 1999, by and among KUONI REISEN HOLDING
AG, a Swiss corporation incorporated in the Canton of Zurich,
Switzerland ("Parent"), DIAMOND HOLDING DELAWARE, INC., a Delaware
corporation ("Acquiror"), DIAMOND ACQUISITION SUBSIDIARY MISSOURI,
INC., a Missouri corporation and wholly owned subsidiary of Acquiror
("Acquisition Subsidiary") and INTRAV, INC., a Missouri corporation
("Target").
RECITALS
A. The respective Boards of Directors of Target, Parent,
Acquisition Subsidiary and Acquiror have approved the merger (the
"Merger") of Acquisition Subsidiary with and into Target in
accordance with the laws of the State of Missouri and the provisions
of this Agreement.
B. Target, Acquisition Subsidiary, Acquiror, and Parent desire
to make certain representations, warranties and agreements in
connection with, and establish various conditions precedent to, the
Merger.
C. Concurrently with the execution and delivery of this
Agreement, Acquiror is entering into an agreement (the "Majority
Shareholder Agreement") with the majority shareholder of Target (the
"Majority Shareholder") whereby, among other things, the Majority
Shareholder will grant an option to Acquiror to purchase certain
shares of Target Common Stock (as hereinafter defined) held by the
Majority Shareholder and the Majority Shareholder will agree to vote
(or grant Acquiror a proxy to vote) such shares in favor of the
Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter
set forth, the parties hereto agree as follows:
ARTICLE I
TERMS OF THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, the Merger shall be consummated in accordance with
The General and Business Corporation Law of Missouri (the "Missouri
Code"). At the Effective Time (as defined in Section 1.2, below),
upon the terms and subject to the conditions of this Agreement,
Acquisition Subsidiary shall be merged with and into Target in
accordance with the Missouri Code and the separate existence of
Acquisition Subsidiary shall thereupon cease, and Target, as the
surviving corporation in the Merger (the "Surviving Corporation"),
shall continue its corporate existence under the laws of the State
of Missouri as a subsidiary of Acquiror. Acquiror shall prepare and
Target shall execute articles of merger (the "Certificate of
Merger") in order to comply in all respects with the requirements of
the Missouri Code and with the provisions of this Agreement.
1.2 EFFECTIVE TIME. The Merger shall become effective at the
time of the filing of the Certificate of Merger with the Secretary
of Stateof the State of Missouri in accordance with the applicable
provisions of the Missouri Code or at such later time as may be
specified in the Certificate of Merger. The Certificate of Merger
shall be filed as soon as practicable after all of the conditions
set forth in this Agreement have been satisfied or waived by the
party or parties entitled to the benefit of the same. Acquiror,
after consultation with Target, shall determine the time of such
filing (which in no event shall be more than five (5) business days
after all of the conditions set forth in this Agreement have been
satisfied or waived by the party or the parties entitled to the
benefit of the conditions) and the place where the closing of the
Merger (the "Closing") shall occur. The time when the Merger shall
become effective is herein referred to as the "Effective Time" and
the date on which the Effective Time occurs is herein referred to as
the "Closing Date."
1.3 MERGER CONSIDERATION.
(a) Subject to the provisions of this Agreement and any
applicable backup or other withholding requirements, each of the
issued and outstanding shares ("Target Shares") of common stock, par
value $0.01 per share, of Target ("Target Common Stock") (other than
shares canceled pursuant to Section 1.3(b) and Dissenting Shares (as
hereinafter defined), if any) as of the Effective Time shall by
virtue of the Merger and without any action on part of the holder
thereof, be converted into the right to receive, and there shall be
<PAGE>
<PAGE>
paid as hereinafter provided, in exchange for each of the Target
Shares, $21.32 (the "Merger Consideration"), payable to the holder
thereof, in cash, without interest thereon, upon the surrender of
the certificate formerly representing such Target Share in the
manner provided in Section 1.6.
(b) Each share of Target Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by Parent,
Acquiror or Acquisition Subsidiary and each share of Target Common
Stock held in the treasury of Target or by a wholly owned subsidiary
of Target shall be canceled as of the Effective Time and no Merger
Consideration shall be payable with respect thereto. From and after
the Effective Time, there shall be no further transfers on the stock
transfer books of Target of any of the Target Shares outstanding
prior to the Effective Time. If, after the Effective Time,
Certificates (as hereinafter defined) are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Merger
Consideration provided for in, and in accordance with the procedures
set forth in, this Agreement.
(c) Subject to the provisions of this Agreement, at the
Effective Time, the shares of Acquisition Subsidiary common stock
outstanding immediately prior to the Merger shall be converted, by
virtue of the Merger and without any action on the part of the
holder thereof, into one validly issued, fully paid and
nonassessable share of the common stock of the Surviving Corporation
(the "Surviving Corporation Common Stock"), which share of the
Surviving Corporation Common Stock shall constitute all of the
issued and outstanding capital stock of the Surviving Corporation.
1.4 SHAREHOLDERS' RIGHTS UPON MERGER. Upon consummation of the
Merger, the certificates which theretofore represented Target Shares
(other than Dissenting Shares) (the "Certificates") shall cease to
represent any rights with respect thereto, and, subject to
applicable Law (as hereinafter defined) and this Agreement, the
Certificates shall only represent the right to receive the Merger
Consideration.
1.5 DISSENTING SHARES. (a) Notwithstanding anything in this
Agreement to the contrary, Target Shares which are issued and
outstanding immediately prior to the Effective Time and which are
held by holders of Target Common Stock who have demanded and
exercised any dissenters' rights in the manner provided under the
Missouri Code, if applicable and, as of the Effective Time, have
neither effectively withdrawn nor lost their rights to payment under
the Missouri Code (the "Dissenting Shares"), shall not be converted
into or be exchangeable for the right to receive the Merger
Consideration, unless and until such holder shall have failed to
exercise or shall have effectively withdrawn or lost such holder's
right to payment under the Missouri Code. If such holder shall have
so failed to exercise or shall have effectively withdrawn or lost
such right, such holder's Shares shall thereupon be deemed to have
been converted into and to have become exchangeable for, at the
Effective Time, the right to receive the Merger Consideration
provided for in this Agreement, without any interest thereon.
(b) Target shall give Acquiror (i) prompt notice of any demands
for appraisal and payment pursuant to Section 351.455 of the
Missouri Code received by Target, withdrawals of such demands, and
any other instruments served pursuant to the Missouri Code, and
received by Target and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
and payment under the Missouri Code. Target shall not, except with
the prior written consent of Acquiror or as otherwise required by
applicable law, make any payment with respect to any such demands
for appraisal and payment or offer to settle or settle any such
demands.
1.6 SURRENDER AND EXCHANGE OF SHARES.
(a) Prior to the Effective Time, Acquiror shall designate
ChaseMellon Shareholder Services, L.L.C. or such other bank or trust
company as it may designate to act as exchange agent in the Merger
(the "Exchange Agent"). Parent shall cause Acquiror to deposit with
the Exchange Agent the funds as necessary to make the payments
contemplated herein on a timely basis. Promptly after the Effective
Time, the Surviving Corporation shall cause to be mailed to each
holder of Target Shares a form of letter of transmittal (the "Letter
of Transmittal") and instructions for use in effecting the surrender
of the Certificates pursuant to such Letter of Transmittal. After
the Effective Time, each holder of Target Shares (other than
Dissenting Shares) shall surrender and deliver the Certificates to
the Exchange Agent together with a duly completed and executed
Letter of Transmittal and any other required documents. Upon such
surrender and delivery, the holder shall be entitled to receive in
exchange therefor the Merger
2
<PAGE>
<PAGE>
Consideration, and such Certificates shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If payment is to be made to a person
other than the person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate
so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall
pay any transfer or other taxes required by reason of the payment to
a person other than the registered holder of the Certificate
surrendered or establish to the reasonable satisfaction of the
Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of
this Section 1.6 and exchanged, each outstanding Certificate after
the Effective Time (other than Certificates representing Dissenting
Shares) shall be deemed for all purposes only to evidence the right
to receive the Merger Consideration, without any interest thereon.
(b) At any time following the sixth (6th) month after the
Effective Time, the Surviving Corporation shall be entitled to
require the Exchange Agent to deliver to it any portion of the funds
which had been made available to the Exchange Agent and not
disbursed to holders of shares of Target Common Stock (including,
without limitation, all interest and other income received by the
Exchange Agent in respect of all amounts of funds made available to
it), and thereafter each such holder shall be entitled to look only
to the Surviving Corporation (subject to abandoned property, escheat
and other similar laws), and only as general creditors thereof, with
respect to any Merger Consideration that may be payable upon due
surrender of the Certificates held by such holder. If any
Certificates representing shares of Target Common Stock shall not
have been surrendered immediately prior to such date on which the
Merger Consideration in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as
hereinafter defined), any such cash, shares, dividends or
distributions payable in respect of such Certificate shall, to the
extent permitted by applicable Law, become the property of the
Surviving Corporation, free and clear of all claims or interest of
any person previously entitled thereto. Notwithstanding the
foregoing, none of the Surviving Corporation, Acquiror, Acquisition
Subsidiary or the Exchange Agent shall be liable to any holder of a
share of Target Common Stock for any Merger Consideration delivered
in respect of such share of Target Common Stock to a public official
pursuant to any abandoned property, escheat or other similar Law.
(c) At the Effective Time, the stock transfer books of Target
shall be closed and thereafter there shall be no further
registration of transfers of shares of Target Common Stock on the
records of Target. Except for Parent, Acquiror and Acquisition
Subsidiary, the holders of shares of Target Common Stock outstanding
immediately prior to the Effective Time shall cease to have any
rights, from and after the Effective Time, with respect to such
shares of Target Common Stock except as otherwise provided herein or
by applicable Law, and all cash paid pursuant to this Article I upon
the surrender or exchange of Certificates shall be deemed to have
been paid in full satisfaction of all rights pertaining to the
shares of Target Common Stock theretofore represented by such
Certificate.
(d) Parent, Acquiror, Acquisition Subsidiary, the Surviving
Corporation and the Exchange Agent, as the case may be, shall be
entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of shares
of Target Common Stock and Options (as hereinafter defined) such
amounts that Parent, Acquiror, Acquisition Subsidiary, the Surviving
Corporation or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), the rules and
regulations promulgated thereunder or any provision of state, local
or foreign tax Law. To the extent that amounts are so withheld by
Parent, Acquiror, Acquisition Subsidiary, the Surviving Corporation
or the Exchange Agent, such amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the
shares of Target Common Stock and Options in respect of which such
deduction and withholding was made by Acquiror, Acquisition
Subsidiary, the Surviving Corporation or the Exchange Agent.
1.7 OPTIONS AND WARRANTS.
(a) Prior to the Effective Time, Target shall cause each
outstanding and unexpired option or warrant to purchase Shares
described in Schedule 2.2 (an "Option" and, collectively, the
"Options"), to be converted into the right to receive from the
Surviving Corporation an amount of cash equal to the product of (i)
the number of Shares subject to the Option and (ii) the excess, if
any, of the Merger Consideration over the
3
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<PAGE>
exercise price per Share of such Option (the "Option Consideration")),
as contemplated by Section 4.17. Prior to the Effective Time, Target
shall cause each Option to be converted as described herein, and shall
take all steps necessary to give written notice to each holder of an
Option that: (i) all Options shall be canceled effective as of the
Effective Time; and (ii) the Option Consideration for such Options
held by each holder shall be payable as described in Section 1.7(b).
The Board of Directors of Target or any committee thereof responsible
for the administration of any plans under which Options have been
granted shall take any and all action necessary to effectuate matters
described in this Section 1.7 and Section 4.17 on or before the Effective
Time.
(b) The Option Consideration shall be payable by the Surviving
Corporation to each holder of Options promptly following the
Effective Time, only after (i) verification by the Acquiror and the
Surviving Corporation of the ownership and terms of the particular
Option by reference to the Surviving Corporation's records, and (ii)
delivery of a written instrument duly executed by the holder of the
applicable Option, in a form provided by Target and acceptable to
Acquiror and setting forth (x) the aggregate number of Options owned
by that person and their respective issue dates and exercise prices,
(y) a representation by the person that he or she is the owner of
all Options described pursuant to clause (x) and that none of those
Options has expired or ceased to be exercisable and (z) a
confirmation of, and consent to, the cancellation and/or conversion
of all Options held by such person effective as of the Effective
Time, as contemplated by this Section 1.7 and Section 4.17.
(c) Any amounts payable pursuant to this Section 1.7 shall be
subject to any required withholding of taxes and shall be paid
without interest.
1.8 ARTICLES OF INCORPORATION. At and after the Effective Time,
the Articles of Incorporation of the Surviving Corporation shall be
amended and restated in their entirety to read as the Articles of
Incorporation of the Acquisition Subsidiary in effect at the
Effective Time except that Article First shall be amended to read as
follows: "The name of the corporation is Intrav, Inc." (subject to
any subsequent amendment).
1.9 BY-LAWS. At and after the Effective Time, the By-Laws of
Acquisition Subsidiary in effect at the Effective Time shall be the
By-Laws of the Surviving Corporation (subject to any subsequent
amendment).
1.10 OTHER EFFECTS OF MERGER. The directors and officers of
Acquisition Subsidiary at the Effective Time shall be the initial
directors and officers of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are
duly elected or appointed and qualify in the manner provided in the
Articles of Incorporation and By-Laws of the Surviving Corporation,
or as otherwise provided by Law. The Merger shall have all further
effects as specified in the applicable provisions of the Missouri
Code.
1.11 FURTHER ADJUSTMENTS. If, at any time the Target Shares are
changed into a different number of shares or a different class by
reason of any reclassification, recapitalization, split-up,
combination, exchange or readjustment of Target's capital stock or
if a dividend thereon is declared with a record date prior to the
termination of this Agreement, or if the representations in Section
2.2 of the Merger Agreement are or become untrue, then the merger
consideration provisions of this Agreement shall be appropriately
adjusted.
1.12 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights,
properties or assets of Acquisition Subsidiary or Target or
otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of Acquisition Subsidiary or
Target, as the case may be, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on
behalf of Acquisition Subsidiary or Target, as the case may be, all
such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
4
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<PAGE>
ARTICLE II
REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF TARGET
Target represents, warrants and/or covenants to and with Parent
and Acquiror as follows:
2.1 ORGANIZATION AND GOOD STANDING. Target and each of its
Subsidiaries (as defined below) (the "Target Subsidiaries") is a
corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization and has all
requisite corporate, limited liability company or partnership power
and authority to own, lease and operate its properties and to carry
on its business as now being conducted. Target and each of Target
Subsidiaries is duly qualified and in good standing to do business
in each jurisdiction in which the character of the property owned,
leased or operated by it or the nature of the business conducted by
it makes such qualification necessary, except where the failure to
be so duly qualified and in good standing would not have a Target
Material Adverse Effect (as defined below). For purposes of this
Agreement, "Target Material Adverse Effect" shall mean a material
adverse effect on (i) the business, assets, condition (financial or
otherwise), properties, liabilities, prospects or the results of
operations of Target and Target Subsidiaries taken as a whole, (ii)
the ability of Target to perform its obligations set forth in this
Agreement and the Target Ancillary Agreements (as hereinafter
defined), or (iii) the ability to timely consummate the transactions
contemplated by this Agreement and the Target Ancillary Agreements.
Target has delivered to Acquiror a complete and accurate list of the
jurisdictions of incorporation or organization and qualification of
Target and Target Subsidiaries. Target has heretofore delivered to
Acquiror accurate and complete copies of the Certificates or
Articles of Incorporation and By-Laws, or equivalent governing
instruments, as currently in effect, of Target and each of the
Target Subsidiaries. "Subsidiary" means, with respect to any person,
any affiliate controlled by such person directly, or indirectly
through one or more intermediaries, and shall include, without
limitation, any corporation, partnership, joint venture, limited
liability company, trust, estate or other organization or entity, of
which (or in which) 50% or more of: (i) the issued and outstanding
shares of capital stock having ordinary voting power to elect a
majority of the board of directors or others performing similar
functions with respect thereto of such corporation or other
organization (irrespective of whether at the time shares of capital
stock or other interests of any other class or classes of such
corporation shall or might have voting power upon the occurrence of
any contingency); (ii) the interest in the capital or profits of
such partnership, joint venture, limited liability company or other
organization or entity; or (iii) the beneficial interest in such
trust or estate; is at the time, directly or indirectly, owned or
controlled by such person, by such person and one or more of its
other subsidiaries or by one or more of such person's other
subsidiaries.
2.2 CAPITALIZATION. As of the date hereof, the authorized
capital stock of Target consists of 20,000,000 shares of Target
Common Stock and 5,000,000 shares of preferred stock. As of the
opening of business on the date hereof, (a) 5,114,200 shares of
Target Common Stock were issued and outstanding, (b) 210,800 shares
of Target Common Stock were issued and held in the treasury of
Target, and (c) Options to purchase 515,000 shares of Target Common
Stock were issued and outstanding with an aggregate exercise price
of such Options being $5,734,000. No other capital stock of Target
is issued or outstanding. All issued and outstanding shares of the
Target Common Stock are duly authorized, validly issued, fully paid
and non-assessable and were issued free of preemptive rights and in
compliance with applicable corporate and securities Laws (as
hereinafter defined). Except as set forth on Schedule 2.2(a)
attached hereto, as of the date of this Agreement there are no
outstanding rights, reservations of shares, subscriptions, warrants,
puts, calls, unsatisfied preemptive rights, options or other
agreements of any kind relating to any of the capital stock or any
other security of Target, and there is no authorized or outstanding
security of any kind convertible into or exchangeable for any such
capital stock or other security. There are no restrictions upon the
transfer of or otherwise pertaining to the securities (including,
but not limited to, the ability to pay dividends thereon) or
retained earnings of Target and the Target Subsidiaries or the
ownership thereof other than those, if any, described on Schedule
2.2(b) attached hereto or those imposed generally by federal
Merchant Marine Act of 1936, as amended, the federal Shipping Act of
1916, as amended, the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Securities Exchange Act"), applicable state or foreign
securities Laws or applicable corporate Law.
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2.3 SUBSIDIARIES. Schedule 2.3(a) attached hereto sets forth the
name and percentages of outstanding capital stock or other interest
held, directly or indirectly, by Target and other persons, with
respect to Target's Subsidiaries or other persons in which Target or
a Target Subsidiary holds, directly or indirectly, any capital stock
or other interest (a "Target Minority Entity"). Except as set forth
on Schedule 2.3(b) attached hereto, all of the capital stock and
other interests so held by Target are owned by it or a Target
Subsidiary as indicated on said Schedule 2.3(a), free and clear of
any claim, lien, encumbrance, security interest or agreement with
respect thereto. All of the outstanding shares of capital stock in
each of the Target Subsidiaries are duly authorized, validly issued,
fully paid and non-assessable and were issued free of preemptive
rights and in compliance with applicable Laws. Except as set forth
on Schedule 2.3(c) attached hereto, there are no irrevocable
proxies, voting agreements or similar obligations with respect to
such capital stock of the Target Subsidiaries or a Target Minority
Entity held by Target or any of the Target Subsidiaries and no
equity securities or other interests of any of the Target
Subsidiaries are or may become required to be issued or purchased by
reason of any options, warrants, rights to subscribe to, puts,
calls, reservation of shares or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any Target
Subsidiary, and there are no contracts, commitments, understandings
or arrangements by which any Target Subsidiary is bound to issue
additional shares of its capital stock, or options, warrants or
rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such
shares.
2.4 AUTHORIZATION; BINDING AGREEMENT. (a) Target has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the other
agreements and documents referred to herein and to be executed in
connection herewith to which Target is or will be a party or a
signatory, (the "Target Ancillary Agreements") and the consummation
of the transactions contemplated hereby and thereby including, but
not limited to, the Merger have been duly and validly authorized by
Target's Board of Directors and no other corporate proceedings on
the part of Target or any Target Subsidiary are necessary to
authorize the execution and delivery of this Agreement and the
Target Ancillary Agreements or to consummate the transactions
contemplated hereby or thereby (other than the adoption of this
Agreement by the shareholders of Target in accordance with the
Missouri Code and the Articles of Incorporation and By-Laws of
Target (the "Target Shareholders' Approval")). This Agreement has
been duly and validly executed and delivered by Target and
constitutes, and upon execution and delivery thereof as contemplated
by this Agreement, the Target Ancillary Agreements will constitute,
the legal, valid and binding agreements of Target, enforceable
against Target in accordance with its and their respective terms,
except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
principles of equity regarding the availability of remedies
("Enforceability Exceptions").
(b) At a meeting duly called and held on July 16, 1999, the
Board of Directors of Target, after consideration of various factors
it deemed relevant, including without limitation: (A) the long-term
as well as the short-term interests of Target, and (B) the interests
of the shareholders, long-term as well as short-term, including the
possibility that those interests may be best served by the continued
independence of Target, unanimously (i) determined that this
Agreement and the other transactions contemplated hereby, including
the Merger, are fair to and in the best interests of Target and the
holders of Target Shares, (ii) approved, authorized and adopted this
Agreement, the Target Ancillary Agreements, the Merger and the other
transactions contemplated hereby and thereby, and (iii) resolved to
recommend approval and adoption of this Agreement and the Merger and
the other transactions contemplated hereby and thereby by the
holders of Target Shares.
(c) Target's Board of Directors has received from Target's
financial advisor, Stifel, Nicolaus & Company, Incorporated, a
written opinion addressed to it for inclusion in the Proxy Statement
(as hereinafter defined) to the effect that the Merger Consideration
is fair to the holders of the Target Shares (other than Acquiror and
its affiliates) from a financial point of view. An accurate and
complete copy of such opinion has been provided to Acquiror.
(d) The affirmative vote of the holders of at least two-thirds
of the outstanding Target Shares is required to adopt this Agreement
and the Merger and the other transactions contemplated hereby and
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thereby. No other vote of the holders of Target Common Stock or any
other capital stock of Target is required by Law or the Articles of
Incorporation or By-Laws of Target or otherwise in order for Target
to consummate the Merger and the transactions contemplated hereby
and by the Target Ancillary Agreements.
(e) Pursuant to Article 11.H of the Articles of Incorporation of
Target, the Board of Directors of Target has either amended its
By-Laws or otherwise set forth rules and regulations which (i)
interpret Article 11 to provide that an agreement to vote by the
Majority Shareholder, which is entered into in conjunction with
Target's execution and delivery of this Agreement, does not
constitute "Beneficial Ownership" by Parent, Acquiror or Acquisition
Subsidiary in Target for purposes of such Article 11 and (ii)
confirm that for purposes of calculating "Excess Shares," that the
date of Acquiror's agreement with the Majority Shareholder shall be
deemed to be the acquisition date of the shares of Target Common
Stock subject to the option in favor of Acquiror.
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or registration, declaration or filing
with or other action by ("Consent") any nation or government, any
state or other political subdivision thereof, any person, authority
or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government including,
without limitation, any governmental or regulatory authority,
agency, department, board, commission or instrumentality, any court,
tribunal or arbitrator and any self-regulatory organization
("Governmental Authority") on the part of Target or any of the
Target Subsidiaries is required in connection with any change of
control of Target or any of the Target Subsidiaries, including,
without limitation, any acquisition of Target Common Stock by
Acquiror or any of its affiliates or associates, or the execution or
delivery by Target of this Agreement and the Target Ancillary
Agreements or the consummation by Target of the transactions
contemplated hereby or thereby, other than (i) the filing of the
Certificate of Merger with the Secretary of the State of Missouri in
accordance with the Missouri Code, (ii) filings with the SEC, state
securities laws administrators and the National Association of
Securities Dealers, Inc. (the "NASD"), (iii) Consents from or with
Governmental Authorities set forth on Schedule 2.5 attached hereto,
(iv) filings under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), (v) filings under the applicable
provisions of Section 721 of Title VII of the Defense Production Act
of 1950, as amended, 50 U.S.C. App. 2170 (the "Exon-Florio
Amendment"), (vi) Consents described in Section 2.11 below, and
(vii) those Consents that, if they were not obtained or made, do not
or would not have a Target Material Adverse Effect.
2.6 NO VIOLATIONS. The execution and delivery of this Agreement
and the Target Ancillary Agreements, the consummation of the
transactions contemplated hereby and thereby and compliance by
Target with any of the provisions hereof or thereof and any change
of control of Target or any of the Target Subsidiaries, including,
without limitation, any acquisition of Target Common Stock by
Acquiror or any of its affiliates or associates, will not (i)
conflict with or result in any breach of any provision of the
Certificate and/or Articles of Incorporation or By-Laws or other
governing instruments of Target or any of the Target Subsidiaries,
(ii) except as set forth on Schedule 2.6 attached hereto, require
any Consent under or result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration or augment the performance required) under any of the
terms, conditions or provisions of any Target Material Contract (as
hereinafter defined) or other obligation to which Target or any
Target Subsidiary is a party or by which any of them or any of their
properties or assets may be bound, (iii) result in the creation or
imposition of any lien or encumbrance of any kind upon any of the
assets of Target or any Target Subsidiary, or (iv) subject to
obtaining the Consents from Governmental Authorities referred to in
Section 2.5, above, contravene any applicable provision of any
constitution, treaty, statute, law, code, rule, regulation, tariff,
ordinance, policy, permit or order of any Governmental Authority or
other matters having the force of law including, but not limited to,
any orders, decisions, injunctions, judgments, awards and decrees of
or agreements with any court, tribunal, arbitrator, mediator or
other Governmental Authority ("Law") currently in effect to which
Target or any Target Subsidiary or its or any of their respective
assets or properties are subject, except in the case of clauses
(ii), (iii) and (iv), above, for any deviations from the foregoing
which do not or would not have a Target Material Adverse Effect.
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2.7 SECURITIES FILINGS AND LITIGATION.Target has made available
to Acquiror true and complete copies of (i) its Annual Reports on
Form 10-K, as amended, for the years ended December 31, 1996, 1997
and 1998, as filed with the Securities and Exchange Commission (the
"SEC"), (ii) the proxy statements relating to all of the meetings of
shareholders (whether annual or special) of Target and the Target
Subsidiaries since January 1, 1996, as filed with the SEC, and (iii)
all other reports, statements, schedules, registration statements
and other filings or documents and amendments thereto (including,
without limitation, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as amended) filed by Target with the SEC since
January 1, 1996. The reports, statements, schedules, registration
statements, and other filings and documents set forth in clauses (i)
through (iii), above, and those subsequently provided or required to
be provided pursuant to this Section, are referred to collectively
herein as the "Target Securities Filings."
Target and the Target Subsidiaries have filed with the SEC all
Target Securities Filings required to be filed therewith on or prior
to the date of this Agreement and, as of the Closing, Target and the
Target Subsidiaries shall have filed with the SEC all Target
Securities Filings required to be filed on or prior thereto. As of
their respective dates, or as of the date of the last amendment
thereof, if amended after filing, none of the Target Securities
Filings (including all schedules thereto and disclosure documents
incorporated by reference therein), contained or, as to Target
Securities Filings subsequent to the date hereof, will contain any
untrue statement of a material fact or omitted or, as to Target
Securities Filings subsequent to the date hereof, will omit to state
a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. Except for Target's proxy statement
for its 1999 Annual Meeting of Shareholders which was not timely
filed, each of the Target Securities Filings at the time of filing
or as of the date of the last amendment thereof, if amended after
filing, complied or, as to Target Securities Filings subsequent to
the date hereof, will comply in all material respects with the
Securities Exchange Act or the Securities Act, as applicable. Except
as set forth in Schedule 2.7 attached hereto, there is no action,
cause of action, claim, demand, suit, proceeding, citation, summons,
subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, by or before any
court, tribunal, arbitrator, mediator or other Governmental
Authority ("Litigation") pending or, to the knowledge of Target,
threatened against Target, any Target Subsidiary or any Target
Minority Entity, or any officer, director, employee or agent
thereof, in his or her capacity as such, or as a fiduciary with
respect to any Benefit Plan (as hereinafter defined) of Target, or
otherwise relating, in a manner that could have a Target Material
Adverse Effect, to Target, any Target Subsidiary, any Target
Minority Entity or the securities of any of them, or any properties
or rights of Target, any of the Target Subsidiaries or any Target
Minority Entity or any Benefit Plan. No event has occurred as a
consequence of which Target would be required to file a Current
Report on Form 8-K pursuant to the requirements of the Securities
Exchange Act as to which such a report has not been timely filed
with the SEC. Any reports, statements, schedules, registration
statements and other filings and documents and amendments thereto
(including, without limitation, Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended) filed by Target with the SEC after the date hereof shall be
provided to Acquiror no later than the date of such filing.
2.8 TARGET FINANCIAL STATEMENTS. The audited consolidated and
unaudited interim consolidated financial statements of Target and
the Target Subsidiaries included in the Target Securities Filings
and, as prepared by Target, the unaudited interim consolidated
financial statements of Target and the Target Subsidiaries as of and
for the months ended January 31, 1999, February 28, 1999, March 31,
1999, April 30, 1999, and May 31, 1999 (the "Target Financial
Statements") have been provided to Acquiror. Except as noted
therein, the Target Financial Statements were or, as to those Target
Financial Statements provided or required to be provided subsequent
to the date hereof pursuant to this Section, will be, prepared in
accordance with generally accepted accounting principles applicable
to the businesses of Target and the Target Subsidiaries consistently
applied in accordance with past accounting practices, except as
otherwise described therein, and fairly present (including, but not
limited to, the inclusion of all adjustments with respect to interim
periods which are necessary to present fairly the consolidated
financial condition or the consolidated results of operations of
Target and the Target Subsidiaries except as may be indicated
therein or in the notes thereto, subject to normal year-end
adjustments in the ordinary course with respect to certain items
immaterial in amount or effect and the exclusion of footnote
disclosure in interim Target Financial Statements) the consolidated
financial condition and the consolidated results of operations of
Target and the Target
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Subsidiaries as of the dates and for the periods indicated. Except
as reflected in the Target Financial Statements, as of their
respective dates, neither Target nor any Target Subsidiary had any
debts, obligations, guaranties of obligations of others or
liabilities (contingent or otherwise) that would be required in
accordance with generally accepted accounting principles to be
disclosed in the Target Financial Statements. Any financial
statements prepared with respect to Target or a Target Subsidiary
subsequent to the date hereof promptly shall be provided to Acquiror
and shall constitute Target Financial Statements for purposes
hereof.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS.Except as set forth in
the Target Securities Filings made available by Target to Acquiror
prior to the date of this Agreement or in Schedule 2.9 attached
hereto, since December 31, 1998, through the date of this Agreement,
there has not been: (i) any event, occurrence, fact, condition,
change, development or effect ("Event") that has had or could
reasonably be expected to have a Target Material Adverse Effect;
(ii) any declaration, payment or setting aside for payment of any
dividend (except to Target or a Target Subsidiary wholly owned by
Target) or other distribution or any redemption, purchase or other
acquisition of any shares of capital stock or securities of or
interest in Target or any Target Subsidiary; (iii) any return of any
capital or other distribution of assets to shareholders of Target or
any Target Subsidiary (except to Target or a Target Subsidiary
wholly owned by Target); (iv) other than in the ordinary course of
business and consistent with the budget of Target dated July 13,
1999, a copy of which budget has been delivered to Acquiror (the
"Target Approved Budget"), any investment of a capital nature by the
purchase of any property or assets by Target or any Target
Subsidiary; (v) any acquisition (by merger, consolidation,
acquisition of stock or assets or otherwise) of any person or
business; (vi) any sale, disposition, pledge, mortgage or other
transfer of assets or properties of Target or any Target Subsidiary
other than in the ordinary course of business consistent with past
practice or having a net book value in excess of $50,000
individually or $500,000 in the aggregate; (vii) any action or
agreement or undertaking by Target or any Target Subsidiary to take
any action that, if taken or done on or after the date hereof, would
result in a breach of Section 4.1, below; (viii) any change in
accounting methods or practices or any change in depreciation or
amortization policies or rates of or applicable to Target or any
Target Subsidiary; (ix) any employment, severance or consulting
agreement entered into by Target or any Target Subsidiary with any
shareholder, officer, director, agent, employee or consultant of
Target or any Target Subsidiary or any amendment or modification to,
or termination of, any current employment, severance or consulting
agreement to which Target or any Target Subsidiary is a party or by
which it is bound; (x) any forgiveness, cancellation, compromise,
settlement, waiver or release of any debts, claims, rights or
Litigation; (xi) any agreement, authorization or commitment to take,
whether in writing or otherwise, any action which, if taken prior to
the date hereof, would have made any representation or warranty of
Target in this Agreement untrue or incorrect in any material
respect; or (xii) any failure by Target or any Target Subsidiary to
conduct its business in the ordinary course consistent with past
practice.
2.10 COMPLIANCE WITH LAWS. Other than as may be set forth on
Schedule 2.10, the business of Target and each Target Subsidiary has
been operated in compliance with all Laws applicable thereto,
including without limitation all standards and regulations issued by
the International Maritime Organization and The Federal Maritime
Commission, except for any instances of non-compliance which do not
and would not have a Target Material Adverse Effect.
2.11 PERMITS. (i) Target and the Target Subsidiaries have all
permits, certificates, licenses, approvals, tariffs and other
authorizations required in connection with the operation of their
respective businesses (collectively, "Target Permits"), (ii) neither
Target nor any Target Subsidiary is in violation of any Target
Permit, and (iii) no proceedings are pending or, to the knowledge of
Target, threatened, to revoke or limit any Target Permit, except, in
the case of those which do not and would not have a Target Material
Adverse Effect.
2.12 FINDERS AND INVESTMENT BANKERS. Neither Target nor any of
the Target Subsidiaries nor any of their officers or directors or
other affiliates has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in
connection with the acquisition of Target Common Stock by Acquiror
or any of its affiliates or associates, the Merger, the Target
Ancillary Agreements or the transactions contemplated hereby or
thereby, other than (i) pursuant to the agreement for financial
advisory services with Stifel, Nicolaus & Co., Incorporated, an
accurate and complete copy of which has been
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provided to Acquiror, and (ii) a $200,000 consulting fee payable to
Bush-O'Donnell & Co. upon consummation of the Merger.
2.13 CONTRACTS. Schedule 2.13 attached hereto sets forth a
complete and accurate list of all material notes, bonds, mortgages,
indentures, contracts, leases, licenses, agreements, understandings,
arrangements, commitments, instruments, bids or proposals to which
Target or any Target Subsidiary is a party or is subject ("Target
Material Contract") . For purposes of this Section 2.13, a note,
bond, mortgage, indenture, contract, lease, license, agreement,
understanding, arrangement, commitment, instrument, bid or proposal
shall be considered material if (i) it is with an affiliate or
associate of Target or of a Target Subsidiary or with a Target
Minority Entity, (ii) it is required to be described in or filed as
an exhibit to any document filed under the Securities Act or the
Securities Exchange Act by an issuer subject thereto, (iii) the
financial obligation of Target or a Target Subsidiary thereunder or
applicable to the assets or properties of Target or a Target
Subsidiary could exceed $500,000, except for air charter agreements,
hotel agreements and cruise agreements which were undertaken by
Target or a Target Subsidiary in the ordinary course of business,
(iv) it provides for recurring monthly revenues to Target or a
Target Subsidiary in excess of $100,000 and such revenues would
arise otherwise than in the ordinary course of business, (v) it
includes any exclusivity or non-competition restrictions applicable
to Target or a Target Subsidiary, (vi) it is for the purchase or
sale of any assets or services otherwise than in the ordinary course
of business, or (vii) it is a collective bargaining or similar
agreement or an agreement relating to which employees of Target or
any of the Target Subsidiaries are represented by a union in their
employment relationship with Target and any of the Target
Subsidiaries. Target has made available to Acquiror true and
accurate copies of all Target Material Contracts. Target Material
Contracts are valid and binding and are in full force and effect and
enforceable in accordance with their respective terms (assuming the
other parties thereto are bound, as to which Target has no basis to
believe otherwise), subject to the Enforceability Exceptions. Since
May 1995, any and all transactions between or involving Target or a
Target Subsidiary and an affiliate or associate (other than Target
or a Target Subsidiary listed on Schedule 2.3(a)) thereof were
entered into in the ordinary course of business and are upon fair
and reasonable terms not materially less favorable than Target or
such Target Subsidiary could obtain or become entitled to in an
arm's-length transaction with a person that is not an affiliate or
an associate. Except as set forth in Schedule 2.6 attached hereto,
(i) no Consent of any person is needed in order that each such
Target Material Contract shall continue in full force and effect in
accordance with its terms without penalty, acceleration or rights of
early termination by reason of any change of control of Target or
any of the Target Subsidiaries, including, without limitation, any
acquisition of Target Common Stock by Acquiror or any of its
affiliates or associates, or the execution, delivery or performance
of this Agreement and the Target Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby, and
(ii) neither Target nor any Target Subsidiary is in violation or
breach of or default under any such Target Material Contract, nor to
Target's knowledge is any other party to any such Target Material
Contract in violation or breach of or default under any such Target
Material Contract.
2.14 EMPLOYEE BENEFIT PLANS. (a) Except as set forth in Schedule
2.14 attached hereto, there are no Benefit Plans (as defined below)
maintained or contributed to by Target or a Target Subsidiary under
which Target, a Target Subsidiary or the Surviving Corporation could
incur any liability. A "Benefit Plan" shall include (i) an employee
benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, together with all
regulations thereunder ("ERISA"), even if, because of some other
provision of ERISA, such plan is not subject to any or all of
ERISA's provisions, and (ii) whether or not described in the
preceding clause, (a) any pension, profit sharing, stock bonus,
deferred or supplemental compensation, retirement, thrift, stock
purchase, stock appreciation or stock option plan, or any other
compensation, welfare, fringe benefit or retirement plan, program,
policy, course of conduct, understanding or arrangement of any kind
whatsoever, whether formal or informal, oral or written, providing
for benefits for or the welfare of any or all of the current or
former employees or agents of Target or a Target Subsidiary or their
beneficiaries or dependents, (b) a multi-employer plan as defined in
Section 3(37) of ERISA (a "Multi-employer Plan"), or (c) a multiple
employer plan as defined in Section 413 of the Code.
(b) With respect to each Benefit Plan (where applicable): Target
has made available to Acquiror complete and accurate copies of (i)
all plan and trust texts and agreements, insurance contracts and
other funding arrangements; (ii) annual reports on the Form 5500
series for the last three (3) years; (iii) financial
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statements and/or annual and periodic accountings of plan assets for
the last three (3) years; (iv) the most recent determination letter
received from the Internal Revenue Service ("IRS"); (v) actuarial
valuations for the last three (3) years; and (vi) the most recent
summary plan description as defined in ERISA.
(c) With respect to each Benefit Plan while maintained or
contributed to by Target or a Target Subsidiary: (i) if intended to
qualify under Code Section 401(a) or 403(a), such Benefit Plan has
received a favorable determination letter from the IRS that it so
qualifies, and its trust is exempt from taxation under Code Section
501(a) and nothing has since occurred to cause the loss of the
Benefit Plan's qualification; (ii) except for payment of benefits
made in the ordinary course of the plan administration, no event has
occurred and there exists no circumstance under which Target, a
Target Subsidiary or the Surviving Corporation could incur material
liability under ERISA, the Code or otherwise; (iii) no accumulated
funding deficiency as defined in Code Section 412 has occurred or
exists; (iv) no material non-exempt prohibited transaction as
defined under ERISA and the Code has occurred; (v) no reportable
event as defined in Section 4043 of ERISA has occurred; (vi) all
contributions and premiums due have fully been made and paid on a
timely basis; and (vii) except as set forth on Schedule 2.14
attached hereto, all contributions made or required to be made under
any Benefit Plan meet the requirements for deductibility under the
Code, and all contributions accrued prior to the Effective Time
which have not been made have been properly recorded on the Target
Financial Statements.
(d) No Benefit Plan of Target or a Target Subsidiary is a
defined benefit pension plan subject to Title IV of ERISA or Section
412 of the Code. Each of such Benefit Plans has been maintained in
compliance with its terms and all applicable Law, except where the
failure to do so would not result in a Target Material Adverse
Effect or a Surviving Corporation Material Adverse Effect (as
hereinafter defined). Neither Target nor any of the Target
Subsidiaries contributes to, or has any outstanding liability with
respect to, any Multi-employer Plan.
(e) With respect to each Benefit Plan which is a welfare plan
(as defined in ERISA Section 3(1)): (i) any liability for medical or
death benefits with respect to current or former employees beyond
their termination of employment is set forth in the Target Financial
Statements (or footnotes thereto) to the extent required to be so
set forth by applicable accounting principles; (ii) there are no
reserves, assets, surplus or prepaid premiums under any such plan;
(iii) except as set forth in Schedule 2.14 attached hereto, no term
or provision of any such plan prohibits the amendment or termination
thereof; and (iv) Target and the Target Subsidiaries have complied
with Code Section 4980B, except for any deviations from the
foregoing which do not and would not have a Target Material Adverse
Effect or a Surviving Corporation Material Adverse Effect (as
hereinafter defined).
(f) Except as set forth in Schedule 2.14 attached hereto, the
consummation of the Merger or the other transactions contemplated by
this Agreement or the Target Ancillary Agreements or any change of
control of Target or any of the Target Subsidiaries, including,
without limitation, any acquisition of Target Common Stock by
Acquiror or any of its affiliates or associates, will not, either
alone or in conjunction with another Event: (i) entitle any
individual to severance pay, or (ii) accelerate the time of payment
or vesting of benefits or increase the amount of compensation or
benefits due to any individual.
2.15 TAXES AND TAX RETURNS. (a) Except as disclosed in Schedule
2.15 attached hereto, Target and each of the Target Subsidiaries has
timely filed, or caused to be timely filed, all federal, state,
local and foreign income, gross receipts, sales, use, property,
production, payroll, franchise, withholding, employment, social
security, license, excise, transfer, gains, and other tax returns or
reports required to be filed by it (any of the foregoing being
referred to herein as a "Tax Return"), and each such Tax Return is
true, correct and complete in all material respects. Target and each
of the Target Subsidiaries has paid, collected or withheld, or
caused to be paid, collected or withheld, all taxes and governmental
charges, assessments and contributions of any nature whatsoever
including, but not limited to, any related penalties, interest and
liabilities (any of the foregoing being referred to herein as a
"Tax"), required to be paid, collected or withheld, other than such
Taxes for which adequate reserves in the Target Financial Statements
have been established or which are being contested in good faith and
have been disclosed in writing to Acquiror prior to the date of this
Agreement. Except as set forth in Schedule 2.15 attached hereto,
there are no claims or assessments pending against Target or any
Target Subsidiary for any alleged deficiency in any Tax, and
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Target does not know of any threatened Tax claims or assessments
against Target or any Target Subsidiary (other than those for which
adequate reserves in the Target Financial Statements have been
established or which are being contested in good faith and have been
disclosed in writing to Acquiror prior to the date of this
Agreement). Except as set forth in Schedule 2.15 attached hereto,
neither Target nor any Target Subsidiary has made an election under
Section 338 of the Code or has taken any action that would result in
any Tax liability of Target or any Target Subsidiary as a result of
a deemed election within the meaning of Section 338 of the Code.
Except as set forth in Schedule 2.15 attached hereto, neither Target
nor any Target Subsidiary has any waivers or extensions of any
applicable statute of limitations to assess any Taxes. Except as set
forth in Schedule 2.15 attached hereto, there are no outstanding
requests by Target or a Target Subsidiary for any extension of time
within which to file any Tax Return or within which to pay any Taxes
shown to be due on any Tax Return. Except as set forth on Schedule
2.15 attached hereto, no taxing authority is conducting or has
notified or, to the knowledge of Target, has threatened Target or
any Target Subsidiary that it intends to conduct, an audit of any
prior Tax period of Target or any of its past or present
subsidiaries. Except as disclosed in Schedule 2.15 attached hereto,
neither Target nor any Target Subsidiary has ever been an "S"
corporation under the Code.
(b) Neither Target nor any Target Subsidiary is a party to any
Tax sharing agreements or similar arrangements with respect to or
involving Target or a Target Subsidiary.
(c) Neither Target nor any Target Subsidiary has made or become
obligated to make, or will, as a result of the transactions
contemplated by this Agreement, make or become obligated to make,
any "excess parachute payment" as defined in Section 280G of the
Code.
(d) Neither Target nor any Target Subsidiary is or has been a
United States real property holding company (as defined in Section
897(c)(2) of the Code) during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(e) Except as disclosed on Schedule 2.15, neither Target nor any
Target Subsidiary is a person other than a United States person
within the meaning of the Code.
(f) None of the assets of Target or of any Target Subsidiary is
property which Target or any Target Subsidiary is required to treat
as being owned by any other person pursuant to the so-called "safe
harbor lease" provisions of former Section 168(f)(8) of the Code.
(g) Target and each Target Subsidiary have disclosed on their
federal income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income tax
liability within the meaning of Section 6662(d) of the Code.
(h) There are no liens for Taxes on the assets of Target or any
Target Subsidiary except for statutory liens for current Taxes not
yet due and payable.
(i) All elections with respect to Taxes affecting Target and the
Target Subsidiaries are set forth in Schedule 2.15 attached hereto
or, with respect to elections made on or before December 31, 1998,
are reflected in the Tax Returns of Target filed and provided to
Acquiror prior to the date of this Agreement. Neither Target nor any
Target Subsidiary: (i) has made or will make a deemed dividend
election under former Treas. Reg. Sec. 1.1502-32(f)(2) or a consent
dividend election under Section 565 of the Code; (ii) has consented
at any time under Section 341(f)(l) of the Code to have the
provisions of Section 341(f)(2) of the Code apply to any disposition
of the assets of Target or any Target Subsidiary; (iii) has agreed,
or is required, to make any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise; (iv)
has made an express election, or is required, to treat any asset of
Target or any Target Subsidiary as owned by another person for
federal income tax purposes or as tax-exempt bond financed property
or tax-exempt use property within the meaning of Section 168 of the
Code; or (v) has made any of the foregoing elections or is required
to apply any of the foregoing rules under any comparable state,
foreign or local income Tax provision.
(j) Except as set forth on Schedule 2.15, Target and the Target
Subsidiaries are not and have never been includable corporations in
an affiliated group of corporations, within the meaning of Section
1504 of the Code, other than in the affiliated group of which Target
is the common parent corporation.
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(k) Except as set forth in Schedule 2.15 attached hereto, the
consolidated net operating losses, net capital losses, foreign tax
credits, investment and other tax credits set forth in the Target
Financial Statements are not subject to any limitations under
Section 382, Section 383 or the Treasury regulations (whether
temporary, proposed or final) under Section 1502 of the Code.
(l) Except as set forth in Schedule 2.15 attached hereto,
neither Target nor any Target Subsidiary is a partner or member in
or subject to any joint venture, partnership, limited liability
company or other arrangement or contract that is or could be treated
as a partnership for federal income tax purposes.
2.16 LIABILITIES. From December 31, 1998, through the date of
this Agreement, except as expressly disclosed in the Target
Securities Filings or in Target's monthly financial statements
through June 30, 1999 made available by Target to Acquiror prior to
the date of this Agreement or in Schedule 2.16 attached hereto,
Target and the Target Subsidiaries do not have any direct or
indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, fixed or unfixed, choate or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise, whether or not of a kind required by
generally accepted accounting principles to be set forth in a
financial statement other than those incurred in the ordinary course
of business and in an amount not in excess of $50,000 individually
or $250,000 in the aggregate. Except as set forth on Schedule 2.16
attached hereto or reflected in the Target Securities Filings made
available by Target to Acquiror prior to the date of this Agreement,
as of the date of this Agreement, neither Target nor the Target
Subsidiaries have any (i) obligations in respect of borrowed money,
(ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) obligations which would be required by
generally accepted accounting principles to be classified as
"capital leases," (iv) obligations to pay the deferred purchase
price of property or services, except trade accounts payable arising
in the ordinary course of business and payable not more than twelve
(12) months from the date of incurrence, and (v) any guaranties of
any obligations of any other person.
2.17 ENVIRONMENTAL MATTERS. As of the date of this Agreement, to
the best knowledge of Target, (i) Target and the Target Subsidiaries
are in compliance in all material respects with all applicable
Environmental Laws (as hereinafter defined), (ii) there is no civil,
criminal or administrative judgment, action, suit, demand, claim,
hearing, notice of violation, investigation, proceeding, notice or
demand letter pending or, to the knowledge of Target, threatened
against Target, a Target Subsidiary or any of their properties
pursuant to Environmental Laws, and (iii) there are no past or
present Events which reasonably may be expected to prevent
compliance with, or which have given rise to or will give rise to
material liability on the part of Target or a Target Subsidiary
under, Environmental Laws. As used herein the term "Environmental
Laws" shall mean Laws relating to pollution, chemical usage, waste
or emission control, the management, generation, presence or
disposal of asbestos, hazardous or toxic wastes or substances, the
protection or remediation of the environment, environmental
activity, product stewardship or public health and safety. In
particular, without limiting the generality of the foregoing, except
as set forth on Schedule 2.17 attached hereto, neither Target nor
any of the Target 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.
2.18 INTELLECTUAL PROPERTY. (a) For purposes of this Agreement,
"Intellectual Property" shall mean all U.S. and foreign patents,
trademarks, service marks, trade names, copyrights, franchises and
similar rights of or used by Target or a Target Subsidiary, all
applications for any of the foregoing and all permits, grants and
licenses or other rights running to or from Target or any of the
Target Subsidiaries relating to any of the foregoing and any and all
goodwill associated therewith. Target or one of the Target
Subsidiaries owns, or is licensed to, or otherwise has, the full and
exclusive rights to use all right, title and interest in, to and
under any and all Intellectual Property identified on Schedule
2.18(a)(1) and any and all goodwill associated therewith. Except as
set forth on Schedule 2.18(a)(2), Target or one of the Target
Subsidiaries owns, or is licensed to use, or otherwise has, legally
enforceable rights to all of the Intellectual Property currently
used or proposed to be used in, and necessary for the conduct of the
business of Target and the Target Subsidiaries as presently or
proposed to be conducted. The rights of Target and the Target
Subsidiaries in the Intellectual Property are, subject to the rights
of any licensor thereof, free and clear of any liens or other
encumbrances and restrictions and Target and the Target Subsidiaries
have not received, as of the date of
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this Agreement, notice of any adversely-held Intellectual Property
of any other person, or notice of any charge or claim of any person
relating to such Intellectual Property or any process or
confidential information of Target or any Target Subsidiary ("Claim
Notice") and do not know of any basis for any such charge or claim.
Target, the Target Subsidiaries and their respective predecessors,
if any, have not conducted business at any time during the period
beginning five (5) years prior to the date hereof under any
corporate, trade or fictitious names other than their current
corporate names. Target shall promptly notify, and shall cause the
Target Subsidiaries to promptly notify, Acquiror of any Claim Notice
received by Target or a Target Subsidiary after the date of this
Agreement. The business of each of Target and the Target
Subsidiaries, presently conducted, does not conflict with and, to
the knowledge of Target, has not been alleged to conflict with any
patents, trademarks, trade names, service marks, copyrights or other
intellectual property rights of others. The execution and delivery
of this Agreement, the Target Ancillary Agreements, the consummation
of the transactions contemplated hereby and thereby and any change
of control of Target or any of the Target Subsidiaries, including,
without limitation, any acquisition of Target Common Stock by
Acquiror or any of its affiliates or associates, will not result in
the loss or impairment of any of the Intellectual Property rights or
Target's or any Target Subsidiaries' right to use any of the
licensed Intellectual Property rights. To the knowledge of Target,
there are no third parties using any of the Intellectual Property
rights material to the business of Target or any Target Subsidiaries
as presently conducted.
(b) Without limiting the generality of paragraph (a) above,
except as disclosed in Schedule 2.18(b), each of Target and the
Target Subsidiaries owns, or possesses valid rights to, all computer
software programs that are material to the conduct of the business
of the Target and Target Subsidiaries. To Target's knowledge, there
are no infringement suits, actions or proceedings pending or
threatened against Target or any Target Subsidiary with respect to
any software owned or licensed by Target or any Target Subsidiary.
2.19 REAL ESTATE. (a) Neither Target nor any of the Target
Subsidiaries owns or has any agreement or other right to acquire any
real property as of the date of this Agreement.
(b) Schedule 2.19(b) attached hereto sets forth a true, correct
and complete schedule as of the date of this Agreement of all
material leases, subleases, easements, rights-of-way, licenses or
other agreements under which Target or any of the Target
Subsidiaries uses or occupies, or has the right to use or occupy,
now or in the future, any real property or improvements thereon (the
"Target Real Property Leases"), and the same constitute the only
leases necessary in connection with the conduct of business by
Target and any of the Target Subsidiaries as currently conducted.
Each of Target and the Target Subsidiaries enjoys quiet possession
under all leases to which it is a party as lessee, and all of such
leases are valid, subsisting, and in full force and effect. Except
as set forth in Schedule 2.19(b), upon a any change of control of
Target or the Target Subsidiaries, including, without limitation,
any acquisition of Target Common Stock by Acquiror or any of its
affiliates or associates, or the execution or delivery of this
Agreement and the Target Ancillary Agreements or the consummation of
the Merger or the transactions contemplated hereby or thereby, all
such Target Real Property Leases shall continue in full force and
effect in accordance with their terms, without penalty, acceleration
or rights of early termination. Except for the matters listed on
said Schedule 2.19(b), Target or a Target Subsidiary, as indicated
thereon, holds the leasehold estate under or other interest in each
Target Real Property Lease free and clear of all liens, encumbrances
and other rights of occupancy other than statutory landlords or
mechanics' liens which have not been executed upon.
2.20 CORPORATE RECORDS. The respective corporate record books of
or relating to Target and each of the Target Subsidiaries have been
made available to Acquiror by Target and contain materially accurate
and complete records of (i) all corporate actions of the respective
shareholders and directors (and committees thereof) of Target and
the Target Subsidiaries, (ii) the Certificate and/or Articles of
Incorporation, By-Laws and/or other governing instruments, as
amended, of Target and the Target Subsidiaries, and (iii) the
issuance and transfer of stock of Target and the Target
Subsidiaries. Except as set forth on Schedule 2.20 attached hereto,
neither Target nor any Target Subsidiary has any of its material
records or information recorded, stored, maintained or held off the
premises of Target and the Target Subsidiaries.
2.21 TITLE TO AND CONDITION OF PERSONAL PROPERTY. Target and
each of the Target Subsidiaries have good and marketable title to,
or a valid leasehold interest in, all material items of any personal
property reflected
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in the Target Financial Statements dated December 31, 1998, or
currently used in the operation of their respective businesses, and
such property or leasehold interests are free and clear of all
liens, claims, charges, security interests, options, or other title
defects or encumbrances, except for property disposed of in the
ordinary course since the date thereof consistent with the
provisions of Section 2.9, above, and such exceptions to title and
liens, claims, charges, security interests, options, title defects
or encumbrances which do not and would not have a Target Material
Adverse Effect or interfere with the use and enjoyment of such
property and interests. As of the date of this Agreement, all such
personal property is in good operating condition and repair
(ordinary wear and tear excepted), is suitable for the use to which
the same is customarily put by Target or any Target Subsidiary, is,
to the knowledge of Target, free from inherent or latent
manufacturing defects, and is free from all other material defects
and is of a quality and quantity presently usable in the ordinary
course of the operation of the business of Target and the Target
Subsidiaries.
2.22 NO ADVERSE ACTIONS. Except as set forth on Schedule 2.22
attached hereto, there is no existing, pending or, to the knowledge
of Target, threatened termination, cancellation, limitation,
modification or change in the business relationship of Target or any
of the Target Subsidiaries, with any supplier, customer or other
person except as are immaterial individually and in the aggregate
and are in the ordinary course of business. None of Target, any
Target Subsidiary or, to the knowledge of Target, any director,
officer, agent, employee or other person acting on behalf of any of
the foregoing has used any corporate funds for unlawful
contributions, payments, gifts, entertainment or other unlawful
expenses relating to political activity, or made any direct or
indirect unlawful payments to governmental or regulatory officials
or others.
2.23 LABOR MATTERS. Except as set forth on Schedule 2.13
attached hereto, neither Target nor any of the Target Subsidiaries
has any obligations, contingent or otherwise, under any employment,
severance or consulting agreement, collective bargaining agreement
or other contract with a labor union or other labor or employee
group. To the knowledge of Target, as of the date of this Agreement,
there are no efforts presently being made or threatened by or on
behalf of any labor union with respect to the unionizing of
employees of Target or any Target Subsidiary. As of the date of this
Agreement, there is no unfair labor practice complaint against
Target or any Target Subsidiary pending or, to the knowledge of
Target, threatened before the National Labor Relations Board or
comparable agency; there is no labor strike, dispute, slowdown or
stoppage pending or, to the knowledge of Target, threatened against
or involving Target or any Target Subsidiary; no representation
question exists respecting the employees of Target or any Target
Subsidiary; no grievance or internal or informal complaint exists,
no arbitration proceeding arising out of or under any collective
bargaining agreement is pending and no claim therefor has been
asserted; no collective bargaining agreement is currently being
negotiated by Target or any Target Subsidiary; and neither Target
nor any Target Subsidiary is experiencing any work stoppage, strike,
slowdown or other labor difficulty. Except as set forth on Schedule
2.23, as of the date of this Agreement, there has not been, and to
the knowledge of Target there will not be, any material adverse
change in relations with employees or agents of Target or any Target
Subsidiary as a result of any announcement or consummation of the
transactions contemplated by this Agreement or the Target Ancillary
Agreements or any change of control of Target or the Target
Subsidiaries, including, without limitation, any acquisition of
Target Common Stock by Acquiror or any of its affiliates or
associates. Target shall promptly notify, and shall cause the Target
Subsidiaries to promptly notify, Acquiror upon knowledge by Target
or a Target Subsidiary of the occurrence after the date hereof of
any matter referenced in this Section.
2.24 CHANGE OF CONTROL AGREEMENTS. Except as set forth in
Schedule 2.24, neither the execution and delivery of this Agreement
or the Target Ancillary Agreements nor the consummation of the
Merger or the other transactions contemplated hereby or thereby, nor
any change of control of Target or the Target Subsidiaries,
including without limitation, any acquisition of Target Common Stock
by Acquiror or any of its affiliates or associates will (either
alone or in conjunction with any other Event) result in, cause the
accelerated vesting or delivery of, or increase the amount of value
of, any payment or benefit to any director, officer or employee of
Target or any Target Subsidiary. Except as set forth in Schedule
2.24, without limiting the generality of the foregoing, (x) no
amount paid or payable by Target in connection with the Merger or
the other transactions contemplated by this Agreement or the Target
Ancillary Agreements, including accelerated vesting of options,
(either solely as a result thereof or as a result of such
transactions
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in conjunction with any other event) will be an "excess parachute
payment" within the meaning of Section 280G of the Code and (y)
there are no agreements or arrangements on behalf of any officer,
director or employee providing for payment or other benefits to such
person contingent upon the execution of this Agreement or the Target
Ancillary Agreements or the transactions contemplated hereby or
thereby or a transaction involving a change of control of Target or
the Target Subsidiaries, including, without limitation, any
acquisition of Target Common Stock by Acquiror or any of its
affiliates or associates.
2.25 INSURANCE. Target and each of the Target Subsidiaries has
obtained and maintains in full force and effect insurance with
responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including fire
and other risks insured against by extended coverage, public
liability insurance and insurance against claims for personal injury
or death or property damage occurring in connection with the
activities of Target or the Target Subsidiaries or any properties
owned, occupied or controlled by them, as is customary. Within the
past five years, neither Target nor any of the Target Subsidiaries
has received notice of default under, or intended cancellation or
nonrenewal of, any policies of insurance. Neither Target nor any
Target Subsidiary has been refused any insurance for coverage by an
insurance carrier to which it has applied for insurance.
2.26 INFORMATION SUPPLIED. The Proxy Statement (as hereinafter
defined) to be mailed to the holders of Target Common Stock in
connection with the Shareholders' Meeting (as hereinafter defined)
to be called to consider the Merger at the date such document is
first published, sent or delivered to the holders of Target Common
Stock or at any time prior to or during the pendency of the
Shareholders' Meeting, will not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made,
not misleading. The Proxy Statement and any related schedules or
other filings made with the SEC, as contemplated hereby, will comply
as to form and substance in all material respects with the
requirements of the Securities Exchange Act and the applicable rules
and regulations of the SEC thereunder and other applicable Laws.
Notwithstanding the foregoing, no representation or warranty is made
by Target with respect to statements made or incorporated by
reference therein based on information relating solely to Acquiror
or Acquisition Subsidiary supplied by Acquiror or Acquisition
Subsidiary in writing expressly for inclusion or incorporation by
reference in the foregoing document.
2.27 TAKEOVER STATUTES. No "business combination," "fair price,"
"moratorium," "control share acquisition" or other similar
antitakeover statute or regulation enacted under state or federal
laws in the United States (each a "Takeover Statute"), including,
without limitation, Sections 351.407 and 351.459 of the Missouri
Code (inasmuch as Target has approved the transactions contemplated
by this Agreement, the Majority Shareholder Agreement and the Target
Ancillary Agreements for purposes of Section 351.459 of the Missouri
Code and has taken all other requisite corporate action under the
Takeover Statutes), applicable to Target or any of the Target
Subsidiaries is applicable to the Merger, this Agreement, the Target
Ancillary Agreements or the other transactions contemplated hereby
or thereby or any change of control of Target or the Target
Subsidiaries, including, without limitation, any acquisition of
Target Common Stock by Acquiror or any of its affiliates or
associates.
2.28 YEAR 2000. (a) Target has initiated a review and assessment
of the Year 2000 Problem (as hereinafter defined), has developed a
plan for addressing the Year 2000 Problem on a timely basis and is
implementing such plan on a timely basis. Except as would not
reasonably be expected to have a Target Material Adverse Effect, to
the best knowledge of Target after due inquiry, none of the assets
or equipment owned or utilized by Target or any of the Target
Subsidiaries will fail to perform because of, or due in any way to,
a Year 2000 Problem. To the best knowledge of Target based on
responses to written inquiries made by Target or otherwise based on
information brought specifically to the attention of Target, no
vendor, supplier or customer of Target or any of the Target
Subsidiaries is reasonably expected to experience a Year 2000
Problem that, individually or in the aggregate, could constitute a
Target Material Adverse Effect. The term "Year 2000 Problem" means
the inability of any hardware, software or process to recognize or
correctly calculate dates on and after January 1, 2000, or the
failure of computer systems, products or services to perform any of
their intended functions in a proper manner in connection with data
containing any date on or after January 1, 2000.
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(b) Target has made available to Acquiror Target's plan to
address the Year 2000 Problem (the "Year 2000 Plan"). To Target's
knowledge, the Year 2000 Plan will enable Target and the Target
Subsidiaries to be Year 2000 Compliant (as hereinafter defined) in a
timely manner except as to matters which are not reasonably likely
to result in a Target Material Adverse Effect and the aggregate cost
for Target and Target Subsidiaries to become Year 2000 Compliant is
estimated to be less than $600,000. "Year 2000 Compliant" means that
(a) the products, services, or other item(s) at issue accurately
process, provide and/or receive date/time data (including
calculating, comparing, and sequencing), within, from, into, and
between centuries (including the twentieth and twenty-first
centuries and the years 1999 and 2000), including leap year
calculations, and (b) neither performance nor the functionality nor
the supply of the products, services, and other items at issue will
be affected by dates/times prior to, on, after, or spanning January
1, 2000. The design of the products, services, and other items at
issue to ensure compliance with the foregoing warranties and
representations includes proper date/time data century recognition
and recognition of 1999 and 2000, calculations that accommodate same
century and multicentury formulae and date/time values before, on,
after, and spanning January 1, 2000, and date/time data interface
values that reflect the century, 1999 and 2000.
2.29 TARGET OPTIONS. Upon the consummation of the Merger, each
of Target's outstanding Options to acquire shares of Target Common
Stock shall, pursuant to their terms as amended as contemplated
hereby, become converted into the right to receive an amount in cash
equal to the Option Consideration, as contemplated by Section 1.7.
2.30 TRANSACTION WITH AFFILIATES. Except as set forth in
Schedule 2.30 (other than compensation and benefits received in the
ordinary course of business as an employee or director of Target or
the Target Subsidiaries), no director, officer or any other
affiliate or associate of Target or any of the Target Subsidiaries
or any entity in which, to the knowledge of Target, any such
director, officer or other affiliate or associate, owns any
beneficial interest (other than a publicly held corporation whose
stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is
beneficially owned by such persons), (A) has any interest in: (i)
any contract, arrangement or understanding with, or relating to the
business or operations of Target or any of the Target Subsidiaries;
(ii) any loan, arrangement, understanding, agreement or contract for
or relating to indebtedness of Target or any of the Target
Subsidiaries, or (ii) any property (real, personal or mixed),
tangible or intangible, used or currently intended to be used in,
the business or operations of Target or any of the Target
Subsidiaries or (B) is an obligor under any notes receivable of
Target or any of the Target Subsidiaries.
2.31 NO EXISTING DISCUSSIONS. As of the date hereof, Target is
not engaged, directly or indirectly, in any negotiations or
discussions with any other party with respect to a Takeover Proposal
(as hereinafter defined).
2.32 DISCLOSURE. All information and documents provided prior to
the date of this Agreement, and all information and documents
subsequently provided, to Acquiror or its representatives or lenders
by or on behalf of Target in connection with the transactions
contemplated by this Agreement are or contain, or will be or will
contain as to subsequently provided information or documents, true,
accurate and complete information in all material respects with
respect to the subject matter thereof and are, or will be as to
subsequently provided information or documents, reasonably
responsive to any specific request made by or on behalf of Acquiror
or its representatives or lenders.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND
CERTAIN COVENANTS OF PARENT AND ACQUIROR
Parent and Acquiror jointly and severally represent, warrant
and/or covenant to and with Target as follows:
3.1 ORGANIZATION AND GOOD STANDING. Parent is a corporation duly
organized and validly existing under the laws of the Canton of
Zurich, Switzerland. Acquiror is a corporation duly organized and
validly existing under the laws of the State of Delaware.
Acquisition Subsidiary is a corporation duly organized and validly
existing under the laws of the State of Missouri. Each of Parent,
Acquiror and Acquisition Subsidiary has all
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requisite corporate power and authority to own, lease and operate
its properties and to carry on its businesses as now being
conducted, except where the failure to have such power and authority
would not have an Acquiror Material Adverse Effect (as hereinafter
defined). Each of Parent, Acquiror and Acquisition Subsidiary is
duly qualified and in good standing to do business in each
jurisdiction in which the character of the property owned, leased or
operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so duly
qualified and in good standing would not have an Acquiror Material
Adverse Effect. For purposes of this Agreement, "Acquiror Material
Adverse Effect" shall mean a material adverse effect on (i) the
business, assets, condition (financial or otherwise), properties,
liabilities, prospects or the results of operations of Parent,
Acquiror and its subsidiaries (including Acquisition Subsidiary)
taken as a whole, (ii) the ability of Parent and Acquiror to perform
their obligations set forth in this Agreement and the Acquiror
Ancillary Agreements (as hereinafter defined), or (iii) the ability
to timely consummate the transactions contemplated by this Agreement
and the Acquiror Ancillary Agreements.
3.2 AUTHORIZATION; BINDING AGREEMENT.Parent, Acquiror and
Acquisition Subsidiary have all requisite corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of
this Agreement and the other agreements and documents referred to
herein and to be executed in connection herewith to which Parent,
Acquiror or Acquisition Subsidiary is or will be a party or a
signatory (the "Acquiror Ancillary Agreements") and the consummation
of the transactions contemplated hereby and thereby including, but
not limited to, the Merger have been duly and validly authorized by
the respective Boards of Directors of Parent, Acquiror and
Acquisition Subsidiary, as appropriate, and no other corporate
proceedings on the part of Parent, Acquiror or Acquisition
Subsidiary are necessary to authorize the execution and delivery of
this Agreement and the Acquiror Ancillary Agreements or to
consummate the transactions contemplated hereby or thereby. This
Agreement has been duly and validly executed and delivered by each
of Parent, Acquiror and Acquisition Subsidiary and constitutes, and
upon execution and delivery thereof as contemplated by this
Agreement, the Acquiror Ancillary Agreements will constitute, the
legal, valid and binding agreements of Parent, Acquiror and
Acquisition Subsidiary, enforceable against each of Parent, Acquiror
and Acquisition Subsidiary in accordance with its and their
respective terms, subject to the Enforceability Exceptions.
3.3 GOVERNMENTAL APPROVALS. No Consent from or with any Governmental
Authority on the part of Parent, Acquiror or Acquisition Subsidiary
is required in connection with the execution or delivery by Parent,
Acquiror and Acquisition Subsidiary of this Agreement and the
Acquiror Ancillary Agreements or the consummation by Parent,
Acquiror and Acquisition Subsidiary of the transactions contemplated
hereby or thereby other than (i) filings with the SEC, state
securities laws administrators and the NASD and filing and
recordation of appropriate Merger documents as required by the
Missouri Code, (ii) Consents from or with Governmental Authorities,
(iii) filings under the HSR Act, (iv) filings under the Exon-Florio
Amendment, and (v) those Consents that, if they were not obtained or
made, do not or would not have an Acquiror Material Adverse Effect.
3.4 NO VIOLATIONS. The execution and delivery of this Agreement
and the Acquiror Ancillary Agreements, the consummation of the
transactions contemplated hereby and thereby and compliance by
Parent, Acquiror and Acquisition Subsidiary with any of the
provisions hereof or thereof will not (i) conflict with or result in
any breach of any provision of the Certificate and/or Articles of
Incorporation or By-Laws or other governing instruments of Parent,
Acquiror or Acquisition Subsidiary, (ii) require any Consent under
or result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration or augment
the performance required) under any of the terms, conditions or
provisions of any Acquiror Material Contract (as hereinafter
defined) or other obligation to which Parent, Acquiror or
Acquisition Subsidiary is a party or by which any of them or any of
their properties or assets may be bound, (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon
any of the assets of Parent, Acquiror or Acquisition Subsidiary, or
(iv) subject to obtaining the Consents from Governmental Authorities
referred to in Section 3.3, above, contravene any Law currently in
effect to which Parent, Acquiror or Acquisition Subsidiary or its or
any of their respective assets or properties are subject, except in
the case of clauses (ii), (iii) and (iv), above, for any deviations
from the foregoing which do not or would not have an Acquiror
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Material Adverse Effect. An "Acquiror Material Contract" is any
material note, bond, mortgage, indenture, contract, lease, license,
agreement, understanding, instrument, bid or proposal the breach of
which would result in an Acquiror Material Adverse Effect.
3.5 FINDERS AND INVESTMENT BANKERS. Neither Acquiror nor any of
its officers or directors has employed any broker or finder or
otherwise incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated
hereby.
3.6 INFORMATION SUPPLIED. None of the information relating
solely to Acquiror or Acquisition Subsidiary supplied or to be
supplied by Acquiror or Acquisition Subsidiary in writing expressly
for inclusion or incorporation by reference in the Proxy Statement
(as hereinafter defined) will, at the date such document is first
published, sent or delivered to holders of Target Common Stock or,
at any time during the pendency of the Shareholders' Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the
foregoing, no representation or warranty is made by the Acquiror or
Acquisition Subsidiary with respect to statements made or
incorporated by reference therein based on information supplied by
Target for inclusion or incorporation by reference in the foregoing
document.
3.7 FINANCIAL ABILITY. Sufficient funds and binding credit
arrangements are available to Parent and Acquiror as of the date
hereof, and will be available at and after the Effective Time, to
pay the Merger Consideration and any other amounts payable by Parent
or Acquiror hereunder at and after the Closing.
ARTICLE IV
ADDITIONAL COVENANTS OF TARGET
Target represents, covenants and agrees as follows:
4.1 CONDUCT OF BUSINESS OF TARGET AND TARGET SUBSIDIARIES.
Except as expressly contemplated by this Agreement, during the
period from the date of this Agreement to the Effective Time, Target
shall conduct, and it shall cause the Target Subsidiaries to
conduct, its or their respective businesses in the ordinary course
and consistent with past practice, subject to the limitations
contained in this Agreement, and Target shall, and it shall cause
the Target Subsidiaries to, use its or their respective reasonable
business efforts to preserve intact its or their respective business
organizations, to keep available the services of its officers,
agents and employees and to maintain satisfactory relationships with
all persons with whom any of them does business. Without limiting
the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, after the date of this Agreement and
prior to the Effective Time, neither Target nor any Target
Subsidiary will, without the prior written consent of Acquiror:
(i) amend or propose to amend its Certificate or Articles of
Incorporation or By-Laws (or comparable governing instruments)
in any material respect;
(ii) authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant, sell, pledge or dispose
of any shares of, or any options, warrants, commitments,
subscriptions or rights of any kind to acquire or sell any
shares of, the capital stock or other securities of Target or
any Target Subsidiary including, but not limited to, any
securities convertible into or exchangeable for shares of stock
of any class of Target or any Target Subsidiary, except for the
issuance of shares of Target Common Stock pursuant to the
exercise of stock options or warrants outstanding on the date of
this Agreement in accordance with their present terms;
(iii) split, combine or reclassify any shares of its capital
stock or declare, pay or set aside any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than
dividends or distributions to Target or a Target Subsidiary
wholly owned by Target, or directly or indirectly redeem,
purchase or otherwise acquire or offer to acquire any shares of
its capital stock or other securities, provided that Target may
declare a quarterly dividend not in excess of $0.125 per Target
Share payable to shareholders of record on September 30, 1999 to
be paid on October 15, 1999 and such other quarterly dividends
as Acquiror agrees to in writing;
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(iv) (a) except for debt (including, but not limited to,
obligations in respect of capital leases) not in excess of the
amounts set forth in the Target Approved Budget, create, incur
or assume any short-term debt, long-term debt or obligations in
respect of capital leases; (b) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly,
indirectly, contingently or otherwise) for the obligations of
any person, except for obligations permitted by this Agreement
of any wholly-owned Target Subsidiary in the ordinary course of
business consistent with past practice; (c) make any capital
expenditures or make any loans, advances or capital
contributions to, or investments in, any other person (other
than customary advances to employees made in the ordinary course
of business consistent with past practice), provided that Target
will continue to make capital expenditures, maintain, upgrade
and expand its facilities and those of the Target Subsidiaries
and otherwise operate in accordance with the Target Approved
Budget; (d) acquire the stock or assets of, or merge or
consolidate with, any other person or business; or (e)
voluntarily incur any material liability or obligation
(absolute, accrued, contingent or otherwise);
(v) sell, transfer, mortgage, pledge or otherwise dispose
of, or encumber, or agree to sell, transfer, mortgage, pledge or
otherwise dispose of or encumber, any material assets or
properties, real, personal or mixed;
(vi) increase in any manner the compensation of any of its
officers, agents or employees other than any increases required
pursuant to the Target Material Contracts in accordance with
their terms in effect on the date of this Agreement and
increases in the ordinary course of business consistent with
past practice not in excess on an individual basis of the lesser
of 15% of the current compensation of such individual or $10,000
per annum (except that the annual salary of Paul H. Duynhouwer,
Target's President and Chief Executive, will increase by $15,194
as of August 1, 1999 pursuant to existing arrangements) or
increase in any manner the compensation of any director;
(vii) except as required by ERISA and only after reasonable
prior consultation with Acquiror, enter into, establish, amend,
make non-routine or material interpretations or determinations
with respect to, or terminate any employment, consulting,
retention, change in control, collective bargaining, bonus or
other incentive compensation, profit sharing, health or other
welfare, stock option, stock purchase, restricted stock, or
other equity, pension, retirement, vacation, severance, deferred
compensation or other compensation or benefit plan, policy,
agreement, trust, fund or arrangement with, for or in respect
of, any shareholder, officer, director, other employee, agent,
consultant, affiliate or associate;
(viii) make any elections with respect to Taxes that are
inconsistent with the prior elections reflected in the Target
Financial Statements as of and to the period ended December 31,
1998;
(ix) compromise, settle, forgive, cancel, grant any waiver
or release relating to or otherwise adjust any debts, claims,
rights or Litigation, except routine debts, claims, rights or
Litigation in the ordinary course of business consistent with
past practice, involving only a payment not in excess of $25,000
individually or $250,000 when aggregated with all such payments
by Target and the Target Subsidiaries combined;
(x) take any action or omit to take any action, which action
or omission, if taken prior to, on or after the date hereof,
would result in a breach of any of the covenants,
representations or warranties of Target set forth in this
Agreement or would have a Target Material Adverse Effect;
(xi) enter into any lease or other agreement, or amend any
lease or other agreement, with respect to real property;
(xii) subject to clause (xiii) below, enter into or amend
any agreement or transaction (a) pursuant to which the aggregate
financial obligation of Target or a Target Subsidiary or the
value of the services to be provided could exceed $2,000,000
individually, and (b) which is not terminable upon no more than
30 days' notice by Target or the Target Subsidiary involved
without penalty in excess of $2,000,000 individually;
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(xiii) enter into, amend, modify, terminate or waive any
rights under (a) any Target Material Contract; or (b) any
material agreement or other material obligation that restricts,
in any material respect, the activities of Target or a Target
Subsidiary; or (c) any agreement or obligation that restricts in
any material respect any other person;
(xiv) take any action with respect to the indemnification of
any person;
(xv) change any accounting practices or policies or
depreciation or amortization rates, except as required by
generally accepted accounting principles or Laws or as agreed to
or requested by Target's auditors after consultation with
Acquiror's auditors;
(xvi) adopt a plan of liquidation, dissolution, merger,
consolidation, share exchange, restructuring, recapitalization,
or other reorganization; or
(xvii) resolve, agree, commit or arrange to do any of the
foregoing.
Furthermore, Target covenants, represents and warrants that from
and after the date hereof, unless Acquiror shall otherwise expressly
consent in writing, Target shall, and Target shall cause each Target
Subsidiary to, use its or their reasonable business efforts to:
(A) keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it or
them;
(B) pay all accounts payable and other obligations, when
they become due and payable, in the ordinary course of business
consistent with past practice and with the provisions of this
Agreement, except if the same are contested in good faith, and,
in the case of the failure to pay any material accounts payable
or other obligations which are contested in good faith, only
after consultation with Acquiror; and
(C) comply in all material respects with all Laws applicable
to it or any of them or their respective properties, assets or
businesses and maintain in full force and effect all Target
Permits necessary for, or otherwise material to, such
businesses.
4.2 NOTIFICATION OF CERTAIN MATTERS. Target shall give prompt
notice to Acquiror if any of the following occur after the date of
this Agreement: (i) any notice of, or other communication relating
to, a default or Event which, with notice or lapse of time or both,
would become a default under any Target Material Contract; (ii)
receipt of any notice or other communication from any third party
alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement;
(iii) receipt of any material notice or other communication from any
Governmental Authority (including, but not limited to, the NASD or
any other securities exchange) in connection with the transactions
contemplated by this Agreement; (iv) the occurrence of an Event
which would have a Target Material Adverse Effect; (v) the
commencement or threat of any Litigation involving or affecting
Target or any Target Subsidiary or any affiliate, or any of their
respective properties or assets, or, to its knowledge, any employee,
agent, director or officer of Target or any Target Subsidiary, in
his or her capacity as such or as a fiduciary under a Benefit Plan
of Target, which, if pending on the date hereof, would have been
required to have been disclosed in or pursuant to this Agreement or
which relates to the consummation of the Merger or any material
development in connection with any Litigation disclosed by Target in
or pursuant to this Agreement or the Target Securities Filings; and
(vi) the occurrence of any Event that would cause a breach by Target
of any provision of this Agreement or a Target Ancillary Agreement,
including such a breach that would occur if such Event had taken
place on or prior to the date of this Agreement.
4.3 ACCESS AND INFORMATION. Between the date of this Agreement
and the Effective Time, each of Target and the Target Subsidiaries,
upon reasonable notice, will give, and shall direct its accountants
and legal counsel to give, Acquiror, its lenders and their
respective authorized representatives (including, without
limitation, financial advisors, accountants and legal counsel) at
all reasonable times full access to all offices and other
facilities, to all personnel and to all contracts, agreements,
commitments, books and records (including, but not limited to, Tax
Returns) of or pertaining to Target and the Target Subsidiaries,
will permit the foregoing to make such inspections as they may
reasonably require and will cause its officers and employees
promptly to furnish Acquiror with (a) such financial and operating
data and other
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information with respect to the business, assets, liabilities,
obligations and operations of Target and the Target Subsidiaries as
Acquiror may from time to time reasonably request including, but not
limited to, data and information required for inclusion in any of
Acquiror's filings with the SEC, and (b) a copy of each material
report, schedule and other document filed or received by Target or
any Target Subsidiary pursuant to the requirements of applicable
securities Laws, the NASD or other securities exchange.
4.4 SHAREHOLDER APPROVAL; PROXY STATEMENT; SHAREHOLDER LISTS.
(a) As soon as practicable, Target will in accordance with
applicable Law, its Articles of Incorporation and its By-Laws take
all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders (the "Shareholders' Meeting")) for the
purpose of adopting this Agreement and the Merger and the other
transactions contemplated hereby and for such other purposes as may
be necessary or desirable in connection with effectuating the
transactions contemplated hereby. Except as otherwise contemplated
in this Agreement, the Board of Directors of Target (i) will take
all steps necessary to present and recommend to the shareholders of
Target that they adopt this Agreement and approve the transactions
contemplated hereby, and (ii) will use its reasonable best efforts
to obtain any necessary adoption and approval by Target's
shareholders of this Agreement and the Merger and the other
transactions contemplated hereby, including, without limitation,
voting the Target Shares held by such Directors for such adoption
and approval.
(b) Acquiror and Target will as promptly as practicable
following the execution of this Agreement jointly prepare, and
Target shall file, a proxy statement on an appropriate schedule or
other form for distribution to holders of Target Shares in advance
of the Shareholders' Meeting and such other schedules and other
filings as may be necessary or appropriate (collectively, together
with any amendments or supplements thereto, the "Proxy Statement")
with the SEC and will use its reasonable best efforts to respond to
the comments of the SEC and to cause the Proxy Statement to be
mailed to the holders of Target Shares at the earliest practical
time. Target shall furnish all information concerning it and the
holders of its capital stock as Acquiror may reasonably request in
connection with such actions. Target will notify Acquiror promptly
of the receipt of the comments of the SEC, if any, and of any
request by the SEC for amendments or supplements to the Proxy
Statement or for additional information with respect thereto, and
will supply Acquiror with copies of all correspondence between
Target or its representatives, on the one hand, and the SEC or
members of its staff, on the other hand, with respect to the Proxy
Statement or the Merger or this Agreement, the Target Ancillary
Agreements or the other transactions contemplated hereby or thereby.
If (A) at any time prior to the Shareholders' Meeting, any event
should occur relating to Target or any of the Target Subsidiaries
which should be set forth in an amendment of, or a supplement to,
the Proxy Statement, Target will promptly inform Acquiror and (B) if
at any time prior to the Shareholders' Meeting, any event should
occur relating to Parent, Acquiror or Acquisition Subsidiary or any
of their respective associates or affiliates, or relating to the
plans of any such persons for Target after the Effective Time that
should be set forth in an amendment of, or a supplement to, the
Proxy Statement, Acquiror will promptly inform Target and in the
case of (A) or (B) Target and Acquiror shall file and, if required,
mail such amendment or supplement to holders of Target Shares;
provided, prior to such filing or mailing, Target and Acquiror shall
consult with each other with respect to such amendment or supplement
and shall incorporate the other's comments thereon. Target will not
distribute or file the Proxy Statement, or any amendment thereof or
supplement thereto, to which Acquiror reasonably objects.
(c) Target hereby consents to the inclusion in the Proxy
Statement of the recommendation of the Board of Directors of Target
described in Section 2.4, subject to any modification, amendment or
withdrawal thereof permitted hereby, and represents that its
financial adviser has, subject to the terms of their engagement
letter with Target and the Board of Directors of Target, consented
to the inclusion of references to their opinion in the Proxy
Statement. To the extent reasonably practicable, Target and its
counsel shall permit Acquiror and its counsel to participate in all
communications with the SEC and its staff, including any meetings
and telephone conferences, relating to the Proxy Statement, the
Merger or this Agreement or the other transactions contemplated
hereby.
(d) Target shall promptly upon the request by Acquiror, or shall
cause its transfer agent to promptly, furnish Acquiror and
Acquisition Subsidiary with mailing labels containing the names and
addresses of all
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record holders of shares of Target Common Stock and with security
position listings of shares of Target Common Stock held in stock
depositories, each as of the most recent practicable date, together
with all other available listings and computer files containing
names, addresses and security position listings of record holders
and beneficial owners of shares of Target Common Stock. Target shall
furnish Acquiror and Acquisition Subsidiary with such additional
information, including, without limitation, updated listings and
computer files of the holders of Target Common Stock, mailing labels
and security position listings, and such other assistance as
Acquiror or their agents may reasonably request.
4.5 REASONABLE BUSINESS EFFORTS. Subject to the terms and
conditions herein provided, Target agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the Merger
and the other transactions contemplated by this Agreement and the
Target Ancillary Agreements, including, without limitation, any
acquisition of Target Common Stock by Acquiror or any of its
affiliates or associates, including, but not limited to (i)
obtaining the Consent of others to this Agreement, the Target
Ancillary Agreements and the transactions contemplated hereby and
thereby, including, without limitation, any acquisition of Target
Common Stock by Acquiror or any of its affiliates or associates,
(ii) the defending of any Litigation against Target or any Target
Subsidiary challenging this Agreement, the Target Ancillary
Agreements or the consummation of the transactions contemplated
hereby or thereby, including, without limitation, any acquisition of
Target Common Stock by Acquiror or any of its affiliates or
associates, (iii) obtaining all Consents from Governmental
Authorities required for the consummation of the Merger and the
transactions contemplated hereby or thereby, including, without
limitation, any acquisition of Target Common Stock by Acquiror or
any of its affiliates or associates, (iv) timely making all
necessary filings under the HSR Act, and (v) timely making all
necessary filings under the Exon-Florio Amendment. Upon the terms
and subject to the conditions hereof, Target agrees to use its
reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary to satisfy the
other conditions of the Closing set forth herein. Target will
consult with counsel for Acquiror as to, and will permit such
counsel to participate in, at Acquiror's expense, any Litigation
referred to in clause (ii) above brought against or involving Target
or any Target Subsidiary.
4.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, Target shall not, and shall cause its affiliates not to,
without the written consent of Acquiror (which consent shall not be
unreasonably withheld or delayed), make any announcement or other
disclosure relating to this Agreement, the terms hereof, the Merger
or negotiations with respect thereto, except to their legal,
accounting and financial advisers engaged in connection with the
Merger, unless otherwise required by Law or pursuant to any
applicable listing agreement with, or rules of, the NASD or other
securities exchange; provided, that Target shall give Acquiror
notice a reasonable time prior to any such disclosure required by
Law or otherwise, as referred to above, and shall cooperate with and
consult with Acquiror regarding the contents of any such disclosure.
4.7 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby and by the Target Ancillary Agreements, Target
shall comply in all material respects with the applicable provisions
of the Securities Exchange Act and shall comply, and/or cause the
Target Subsidiaries to comply or to be in compliance, in all
material respects, with all other applicable Laws.
4.8 BENEFIT PLANS. Between the date of this Agreement and
through the Effective Time, no discretionary award or grant under
any Benefit Plan of Target or a Target Subsidiary shall be made
without the prior written consent of Acquiror; nor shall Target or a
Target Subsidiary take any action or permit any action to be taken
to accelerate the vesting of any warrants or options previously
granted pursuant to any such Benefit Plan, other than pursuant to
the existing terms of outstanding employee stock options which, as
originally granted, contain acceleration provisions. Neither Target
nor any Target Subsidiary shall make any amendment to any Benefit
Plan, any awards thereunder or the terms of any security convertible
into or exchangeable for capital stock without the prior written
consent of Acquiror.
4.9 NO SOLICITATION OF TAKEOVER PROPOSAL. (a) Target shall, and
shall direct and cause its officers, directors, employees,
representatives and agents to, immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to a
Takeover Proposal (as hereinafter defined). Target shall not, nor
shall it permit any of the Target Subsidiaries to, nor shall it
authorize or permit any of its officers,
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directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any
of the Target Subsidiaries (collectively the "Representatives") of
Target and the Target Subsidiaries) to, directly or indirectly, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed or reasonably likely
to facilitate, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Takeover
Proposal, or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any
time prior to receipt of the Target Shareholders' Approval, the
Target's Board of Directors reasonably determines in good faith,
after receipt of written advice from outside counsel and an
independent financial advisor of nationally recognized reputation,
that failing to take such action could reasonably be expected to be
a breach of its fiduciary duties to Target's shareholders under
applicable Law, Target may, in response to a Takeover Proposal made
after the date of this Agreement which was not solicited by Target
or its Representatives and which did not otherwise result from a
breach of this Section 4.9, and which is reasonably likely to lead
to a Superior Proposal (as hereinafter defined), and subject to
compliance with Section 4.9(c) (x) furnish information with respect
to Target to any person pursuant to a customary confidentiality
agreement including customary standstill provisions (as determined
by Target after consultation with its outside counsel) and (y)
participate in negotiations regarding such Takeover Proposal.
Without limiting the generality of the foregoing, it is understood
that any violation of the restrictions set forth in the previous two
sentences by any Representative of Target or any of the Target
Subsidiaries, including, without limitation, any investment banker,
financial advisor, attorney, accountant or other representative
retained by Target or any of the Target Subsidiaries, whether or not
acting on behalf of Target or any of the Target Subsidiaries, shall
be deemed to be a breach of this Section 4.9 by Target. For all
purposes of this Agreement, "Takeover Proposal" means any inquiry,
proposal or offer relating to any direct or indirect acquisition or
purchase, in one transaction or a series of related transactions, of
15% or more of the assets of Target or any of the Target
Subsidiaries or 5% or more of any class of equity securities of
Target or any of the Target Subsidiaries, any tender offer or
exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of
Target or any Target Subsidiary, any merger, consolidation, share
exchange, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Target or any Target
Subsidiary, other than the transactions contemplated by this
Agreement, the Majority Shareholder Agreement or the Target
Ancillary Agreements, or any other transaction the consummation of
which could reasonably be expected to impede, interfere with,
prevent or materially delay the Merger or which could reasonably be
expected to dilute materially the benefits to Acquiror of the
transactions contemplated by this Agreement.
(b) The Board of Directors of Target shall promptly recommend to
the shareholders of Target that they adopt this Agreement and
approve the transactions contemplated hereby, and except as set
forth in this Section 4.9, neither the Board of Directors of Target
nor any committee thereof shall (i) withdraw or modify, or propose
publicly to withdraw or modify, the approval or recommendation by
such Board of Directors or such committee of the Merger or this
Agreement, (ii) approve or recommend, or propose publicly to approve
or recommend, any Takeover Proposal or (iii) cause Target to enter
into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal. Notwithstanding the
foregoing, if at any time prior to receipt of Target Shareholders'
Approval the Board of Directors of Target determines in good faith,
after receipt of written opinions from outside counsel and an
independent financial advisor of nationally recognized reputation,
that it has received a Takeover Proposal that constitutes a Superior
Proposal which did not result from a breach of this Section 4.9 and
that failure to do one of the following could reasonably be expected
to be a breach of its fiduciary duties to Target's shareholders
under applicable Law, the Board of Directors of Target may (subject
to this and the following sentences), after paying to Acquiror the
Termination Fee (as hereinafter defined), (x) withdraw or modify its
approval or recommendation of the Merger and this Agreement, (y)
approve or recommend the Superior Proposal (as defined below), or
(z) or terminate this Agreement (and concurrently with or after such
termination, if it so chooses, cause Target to enter into any
Acquisition Agreement with respect to the Superior Proposal), but in
each of the cases set forth in clause (x), (y) or (z), only at a
time prior to receipt of the Target Shareholders' Approval and only
at a time that is after the tenth business day following Acquiror's
receipt of written notice advising Acquiror that the Board of
Directors of Target has received a Superior Proposal, specifying the
material terms and
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conditions of such Superior Proposal and identifying the person
making such Superior Proposal. Any such withdrawal or modification
of the recommendation of the Merger and this Agreement, the Majority
Shareholder Agreement or the Target Ancillary Agreements and the
transactions contemplated hereby and thereby shall not change the
approval of the Board of Directors of Target for purposes of causing
Section 351.459 of the Missouri Code or any other Takeover Statute
to be inapplicable to the Merger and this Agreement, the Majority
Shareholder Agreement or the Target Ancillary Agreements and the
transactions contemplated hereby and thereby. For all purposes of
this Agreement, a "Superior Proposal" means any bona fide proposal
made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, 100% of the
Target Shares then outstanding (whether pursuant to a tender or
exchange offer, merger, consolidation, share exchange, or other
business combination) or all or substantially all the assets of
Target and otherwise on terms which the Board of Directors of Target
determines in its good faith judgment (based on a written opinion of
an independent financial advisor of nationally recognized
reputation) to be materially more favorable to Target and its
shareholders than the Merger (taking into account any changes to the
financial and other contractual terms of this Agreement proposed by
Acquiror in response to such proposal and all other relevant
financial and strategic considerations, including the timing of the
consummation of such transactions) and for which financing, to the
extent required, is then committed or which, in the good faith
judgment of the Board of Directors of Target, is reasonably capable
of being financed by such third party.
(c) In addition to the obligations of Target set forth in
paragraphs (a) and (b) of this Section 4.9, Target shall immediately
advise Acquiror orally and in writing of any request for information
or of any Takeover Proposal, the material terms and conditions of
such request or Takeover Proposal and the identity of the person
making such request or Takeover Proposal. Target will keep Acquiror
fully informed of the status and details (including amendments or
proposed amendments) of any such request or Takeover Proposal. If,
after Target receives a Superior Proposal, Acquiror desires to
continue negotiations with Target with respect to the Merger, Target
agrees to negotiate in good faith with Acquiror.
(d) Nothing contained in this Section 4.9 shall prohibit Target
from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Securities
Exchange Act or from making any disclosure to Target's shareholders
if, in the good faith judgment of the Board of Directors of Target,
after consultation with outside counsel, failure so to disclose
would be inconsistent with its fiduciary duties to Target's
shareholders under applicable Law; provided, however, neither Target
nor its Board of Directors nor any committee thereof shall, except
as permitted by Section 4.9(b), withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to the
Merger or this Agreement or approve or recommend, or propose
publicly to approve or recommend, a Takeover Proposal.
4.10 SECURITIES AND SHAREHOLDER MATERIALS. Each of Target and
the Target Subsidiaries shall send to Acquiror a copy of all
material public reports and materials as and when it sends the same
to its shareholders, the SEC, the NASD or any other securities
commission, exchange or market.
4.11 RESIGNATIONS. Target shall cause the officers and/or
directors of Target and the Target Subsidiaries as Acquiror may
request to voluntarily resign their positions as such prior to and
as of the Effective Time. The instruments effecting such
resignations are herein referred to as the "Resignations.") Target
shall cause such directors, prior to their resignation, to appoint
new directors nominated by Acquiror to fill such vacancies.
4.12 NONCOMPETE AND CONFIDENTIALITY AGREEMENTS. At or prior to
closing, Barney A. Ebsworth and Paul H. Duynhouwer shall duly
execute noncompete and confidentiality agreements in substantially
the form attached hereto as Schedule 4.12 (the "Noncompete and
Confidentiality Agreements.").
4.13 COMFORT LETTERS. Upon the request of Acquiror, Target shall
use reasonable business efforts to provide to Acquiror prior to the
Effective Time "comfort letters" from the independent certified
public accountants for Target dated as of the date of the Proxy
Statement and the Closing Date, addressed to the Board of Directors
of each of Target and Acquiror, covering such matters as Acquiror
shall reasonably request with respect to facts concerning the
financial condition and results of operations of Target and the
Target Subsidiaries and customary for such certified public
accountants to deliver in connection with a transaction similar to
the Merger.
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4.14 TAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the Merger or this Agreement or the Target Ancillary
Agreements or the transactions contemplated hereby or thereby or the
execution, delivery or performance of any other agreement to
acquire, or any other acquisition of, Target Common Stock by
Acquiror or any of its affiliates or associates, Target and the
members of its Board of Directors will grant such approvals, and
will take such other actions as are necessary so that the Merger,
this Agreement, the Majority Shareholder Agreement, the Target
Ancillary Agreements and the other transactions contemplated hereby
or thereby or the execution, delivery or performance of any other
agreement to acquire, or any other acquisition of, Target Common
Stock by Acquiror or any of its affiliates or associates may be
consummated as promptly as practicable on the terms contemplated
hereby and will otherwise act to eliminate or minimize the effects
of any Takeover Statute on the Merger, this Agreement, the Target
Ancillary Agreements and any of the transactions contemplated hereby
or thereby or the execution, delivery or performance of any other
agreement to acquire, or any other acquisition of, Target Common
Stock by Acquiror or any of its affiliates or associates.
4.15 YEAR 2000 PLAN. Target shall use all commercially
reasonable efforts to ensure that the Year 2000 Plan shall be
completed in a timely manner. Target shall (i) allow Acquiror to
monitor Target's Year 2000 compliance issues and Year 2000 Plan,
(ii) provide prompt notice to Acquiror if Target does not achieve,
or reasonably expects it shall not achieve, milestones and
objectives identified in the Year 2000 Plan and (iii) cooperate in
good faith with Acquiror's efforts to cause Target to be Year 2000
Compliant.
4.16 PURCHASE OF TARGET COMMON STOCK. Subject to the existing
provisions of Target's Articles of Incorporation and By-Laws, Target
shall in no way prohibit Acquiror or any of its affiliates or
associates from purchasing shares of Target Common Stock or entering
into option, lock-up, voting or proxy agreements or any other
similar agreements with respect to Target Common Stock at any time
prior to the consummation of the Merger.
4.17 CONVERSION OF OPTIONS. Target shall offer to modify, and
shall obtain such modification to, each outstanding Option to cause
each such Option either to be exercised prior to the Effective Time,
or to be canceled as of the Effective Time in exchange for the
Option Consideration, as contemplated by Section 1.7(b). Target
shall effect the foregoing after reasonable consultation with
Acquiror pursuant to written agreements in form and substance
reasonably satisfactory to Acquiror, including, without limitation,
in a form consistent with Section 1.7(b) hereof.
4.18 DISPOSITION OF U.S. FLAGGED VESSELS; NON-U.S. FLAGGED
VESSELS. Immediately prior to the Effective Time, Target will sell,
transfer, assign, contribute or otherwise dispose of its two U.S.
flagged vessels, or the shares of the Target Subsidiaries owning
such vessels, to such person or persons as designated by Acquiror
and as directed by and on such terms and conditions as specified by
Acquiror, and such U.S. flagged vessels shall be registered in the
name(s) of the new owner(s) with an endorsement for the coastwise
trade and all applicable mortgages with respect to such U.S. flagged
vessels shall be recorded with the National Vessel Documentation
Center. Immediately prior to the Effective Time, Target shall enter
into (i) a time charter of such U.S. flagged vessels in
substantially the form attached hereto as Exhibit 4.18(a) or on such
other terms and conditions as specified by Acquiror, (ii) an
operating agreement with respect to Target's two non-U.S. flagged
vessels in a form and on such terms and conditions as specified by
Acquiror; and (iii) a transitional services agreement providing for
certain transition services with a person or persons as designated
by Acquiror in a form and on terms and conditions as reasonably
specified by Acquiror. If, after Target receives a Takeover Proposal
it takes any of the actions described in Section 4.9(a) or (b), at
Acquiror's request, Target shall restructure the ownership of
Target's U.S. flagged vessels to allow the ownership of more than
25% of the Target Shares by a non-U.S. citizen as reasonably
requested by Acquiror. Such restructuring shall be accomplished in a
manner that does not materially and adversely affect the interests
of Target.
4.19 AMENDMENTS TO ARTICLES OF INCORPORATION AND BY-LAWS. (a)
Notwithstanding anything to the contrary herein, including but not
limited to anything in Section 4.9 hereof, as soon as practicable,
Target will in accordance with applicable Law, its Articles of
Incorporation and its By-Laws take all steps necessary to duly call,
give notice of, convene and hold a meeting of its shareholders
(which meeting may be, but need not be, the Shareholders' Meeting)
for the purpose of considering and voting upon a proposal to approve
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and adopt a resolution which will amend Target's Articles of
Incorporation to remove the additions to the Articles of
Incorporation approved at a meeting of Target's shareholders held on
March 23, 1999 (including but not limited to the new Article Eleven
to Target's Articles of Incorporation), which additions restricted
ownership of more than 24.9% of the outstanding Target Shares by
non-United States Citizens (the "Articles Amendment"). The Board of
Directors of Target (i) will take all steps necessary to present and
recommend to the shareholders of Target that they adopt the Articles
Amendment at such meeting and (ii) will use its reasonable best
efforts to obtain any necessary adoption and approval by Target's
shareholders at such meeting of the Articles Amendment.
(b) Acquiror and Target will as promptly as practicable
following the execution of this Agreement jointly prepare, and
Target shall file, a proxy statement on an appropriate schedule or
other form for distribution to holders of Target Shares in advance
of the shareholders' meeting referred to in Section 4.19(a) and such
other schedules and other filings as may be necessary or appropriate
(which may be the Proxy Statement) with the SEC and will use its
reasonable best efforts to respond to the comments of the SEC and to
cause such proxy statement to be mailed to the holders of Target
Shares at the earliest practical time. Target shall furnish all
information concerning it and the holders of its capital stock as
Acquiror may reasonably request in connection with such actions.
Target will notify Acquiror promptly of the receipt of the comments
of the SEC, if any, and of any request by the SEC for amendments or
supplements to such proxy statement or for additional information
with respect thereto, and will supply Acquiror with copies of all
correspondence between Target or its Representatives, on the one
hand, and the SEC or members of its staff, on the other hand, with
respect to such proxy statement. If at any time prior to such
shareholders' meeting, any event should occur relating to Target or
any of the Target Subsidiaries which should be set forth in an
amendment of, or a supplement to, such proxy statement, Target will
promptly inform Acquiror and Target shall file and, if required,
mail such amendment or supplement to holders of Target Shares;
provided, prior to such filing or mailing, Target shall consult with
Acquiror with respect to such amendment or supplement and shall
incorporate Acquiror's comments thereon, unless Target reasonably
objects thereto. Target will not distribute or file such proxy
statement, or any amendment thereof or supplement thereto, to which
Acquiror reasonably objects.
(c) The Board of Directors of Target shall recommend to Target's
shareholders that they approve and adopt the Articles Amendment.
(d) Target's Board of Directors shall, as soon as practicable,
amend Target's By-Laws to remove therefrom Article XV of such
By-Laws (relating to foreign ownership of Target Shares).
ARTICLE V
ADDITIONAL COVENANTS OF PARENT AND ACQUIROR
Parent and Acquiror jointly and severally covenant and agree as
follows:
5.1 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, Parent and Acquiror shall not, and shall cause their
affiliates not to, without the written consent of Target, make any
announcement or other disclosure relating to this Agreement, the
terms hereof, the Merger or negotiations with respect thereto,
except to their legal, accounting and financial advisers engaged in
connection with the Merger, unless otherwise required by Law or
pursuant to any applicable listing agreement with, or rules and
regulations of, the NASD or other securities exchange; provided,
that Parent and Acquiror shall give Target notice a reasonable time
prior to any such disclosure required by Law or otherwise, as
referred to above, and shall cooperate with and consult with Target
regarding the contents of any such disclosure
5.2 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Parent and Acquiror shall comply in all
material respects with the applicable provisions of the Securities
Exchange Act and shall comply, and/or cause Acquisition Subsidiary
to comply or to be in compliance, in all material respects, with all
other applicable Laws applicable thereto.
5.3 PROXY STATEMENT. Parent and Acquiror shall cooperate with
Target with respect to the preparation of the Proxy Statement as set
forth in Section 4.4 (and the proxy statement, if different than the
Proxy Statement, as set forth in Section 4.19) and shall provide
Target with such information concerning Parent,
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Acquiror and Acquisition Subsidiary as shall be required to be
included therein. Parent and Acquiror shall vote, or cause to be
voted, in favor of the Merger, this Agreement and the Articles
Amendment all shares of Target Common Stock directly or indirectly
beneficially owned by them.
5.4 INDEMNIFICATION AND INSURANCE. (a) The Articles of
Incorporation and By-Laws of the Surviving Corporation shall contain
provisions with respect to indemnification and exculpation similar
to those set forth in the Articles of Incorporation and By-Laws of
Target, which provisions Acquiror shall not and shall cause the
Surviving Corporation not to amend, repeal or otherwise modify for a
period of five (5) years from the Effective Time in any manner that
would materially and adversely affect the rights thereunder of
individuals who at the Effective Time were directors, officers,
employees or agents of Target, unless such amendment, repeal or
other modification is required by applicable Law.
(b) From and after the Effective Time, Parent and Acquiror agree
that they will indemnify and hold harmless each present director and
officer of Target (when acting in such capacity) determined as of
the Effective Time (the "Indemnified Parties"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding or
investigation whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or
occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest
extent that Target would have been permitted under the Missouri Code
and its Articles of Incorporation or By-Laws in effect on the date
of this Agreement to indemnify such person (and Parent and Acquiror
shall also advance expenses as incurred to the fullest extent
permitted under applicable Law and the Articles of Incorporation and
the By-Laws of Target, provided that the person to whom expenses are
advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification).
(c) Any Indemnified Party wishing to claim indemnification under
paragraph (b) of this Section 5.4, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify
Acquiror thereof in writing, but the failure to so notify shall not
relieve Acquiror of any liability it may have to such Indemnified
Party if such failure does not materially prejudice Acquiror. In the
event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Acquiror
or the Surviving Corporation shall have the right to assume the
defense thereof, and Acquiror shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Acquiror or the
Surviving Corporation elects not to assume such defense, or if there
are any issues which raise material conflicts of interest between
Acquiror or the Surviving Corporation and the Indemnified Parties,
the Indemnified Parties may retain counsel reasonably satisfactory
to Acquiror, and Acquiror or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified
Parties; provided, however, that Acquiror shall be obligated
pursuant to this paragraph (c) to pay for only one firm or counsel
for all Indemnified Parties and, as applicable, for local counsel,
and provided, however, the costs of more than one firm or counsel
shall be paid if the Indemnified Parties cannot be represented by
one firm or counsel because of a conflict of interest, (ii) the
Indemnified Parties will cooperate in the defense of any such
matter, and (iii) Acquiror shall not be liable for any settlement
effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed).
(d) For a period of five (5) years after the Effective Time and
to the extent available, Parent, Acquiror or the Surviving
Corporation shall maintain in effect policies of directors' and
officers' liability insurance covering those persons who are
currently covered by Target's directors' and officers' liability
insurance policy on terms (including the amounts of coverage and the
amounts of deductibles, if any) that are no less favorable to them
in any material respect than the terms now applicable to them under
Target's current insurance policies; provided that the Surviving
Corporation shall not be required to pay an annual premium for such
insurance in excess of 150% of the last annual premium paid prior to
the date hereof, but in such case shall purchase as much coverage as
possible for such amount.
(e) If Parent, Acquiror or the Surviving Corporation or any of
their successors or assigns (i) shall consolidate with or merge into
any other corporation or entity and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or
(ii) shall transfer all or substantially all of its
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properties and assets to any individual, corporation or other
entity, then and in each case, proper provisions shall be made so
that the successors and assigns of Acquiror or the Surviving
Corporation, as the case may be, shall assume all of the obligations
set forth in this Section 5.4; provided, that the failure to make
such provisions shall not affect the validity of any such
consolidation, merger or transfer.
(f) The provisions of this Section 5.4 are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and representatives.
5.5 ADVISORY COMMITTEE. Following the Closing, Parent and
Acquiror shall cause the Surviving Corporation to form an Advisory
Committee, and each of Target's current non-employee directors other
than Barney A. Ebsworth shall be offered the opportunity to serve as
an Advisory Director for a two-year term commencing on the Closing
Date. In consideration for serving as an Advisory Director, each
such individual shall be entitled to receive an annual fee of
$12,000, a fee of $600 for each Advisory Committee meeting attended
and a $5,000 annual credit for traveling on the Surviving
Corporation's travel programs. The Advisory Committee shall meet
from time to time, in St. Louis, Missouri or such other place, as
reasonably agreed to by the committee members and the Surviving
Corporation.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the
following conditions:
6.1.1 SHAREHOLDER APPROVAL. This Agreement and the Merger
and the other transactions contemplated hereby shall have been
duly adopted at or prior to the Effective Time by the requisite
vote of the shareholders of Target in accordance with the
Articles of Incorporation and By-Laws of Target, the Missouri
Code and the Securities Exchange Act.
6.1.2 NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, executive order, stay, decree, judgment or
injunction shall have been enacted, entered, promulgated or
enforced by any court or other Governmental Authority, which
prohibits or prevents the consummation of the Merger or the
other transactions contemplated hereby and which has not been
vacated, dismissed or withdrawn by the Effective Time. Target
and Acquiror shall use their reasonable best efforts to have any
of the foregoing vacated, dismissed or withdrawn by the
Effective Time.
6.1.3 HSR ACT. Any waiting period applicable to the Merger
under the HSR Act shall have expired or earlier termination
thereof shall have been granted and no action shall have been
instituted by either the United States Department of Justice or
the Federal Trade Commission to prevent the consummation of the
transactions contemplated by this Agreement or to modify or
amend such transactions in any material manner, or if any such
action shall have been instituted, it shall have been withdrawn
or a final judgment shall have been entered against such
Department or Commission, as the case may be.
6.1.4 EXON-FLORIO AMENDMENT. All approvals under the
Exon-Florio Amendment necessary to permit the consummation of
the transactions contemplated by this Agreement shall have been
obtained.
6.1.5 OPINION OF FINANCIAL ADVISOR. The fairness opinion
referenced in Section 2.4(c) above shall not have been withdrawn
at or prior to the Effective Time.
6.1.6 GOVERNMENTAL APPROVALS. All Consents, other than
Consents the failure of which to be obtained or made, in the
judgment of Acquiror, would not have a material adverse effect
on the business, assets, condition (financial or otherwise),
properties, liabilities, prospects or the result of operations
of the Surviving Corporation and its subsidiaries taken as a
whole ("Surviving Corporation Material Adverse Effect"), of any
Governmental Authority required for the consummation of the
Merger and the transactions contemplated by this Agreement shall
have been obtained by Final Order (as hereinafter defined). The
term "Final Order" with respect to any Consent of a Governmental
Authority shall mean an action by the appropriate Governmental
Authority as to which: (i) no request
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for stay by such Governmental Authority of the action is
pending, no such stay is in effect, and, if any deadline for
filing any such request is designated by statute or regulation,
it has passed; (ii) no petition for rehearing or reconsideration
of the action is pending before such Governmental Authority, and
no appeal or comparable administrative remedy is pending before
such Governmental Authority, and the time for filing any such
petition, appeal or administrative remedy has passed; (iii) such
Governmental Authority does not have the action under
reconsideration on its own motion and the time for such
reconsideration has passed; and (iv) no appeal to a court, or
request for stay by a court, of the Governmental Authority
action is pending or in effect, and if any deadline for filing
any such appeal or request is designated by statute or rule, it
has passed. The condition contained in this Subsection 6.1.6 may
be waived by Acquiror, in its sole judgment.
6.2 CONDITIONS TO OBLIGATIONS OF TARGET. The obligation of
Target to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Time of the following additional
conditions, any one or more of which may be waived by Target:
6.2.1 ACQUIROR REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Parent and Acquiror contained
in this Agreement that are modified by materiality or Acquiror
Material Adverse Effect ("Acquiror Modified Representation")
shall be true and correct in all respects and those that are not
so modified ("Acquiror Nonmodified Representation") shall be
true and correct in all material respects, on the date hereof
and, except for changes not prohibited by this Agreement, as of
the Effective Time as if made at the Effective Time.
Furthermore, none of the representations or warranties of
Acquiror contained in this Agreement, disregarding any
qualifications therein or in this Section 6.2.1 regarding
materiality or Acquiror Material Adverse Effect, shall be untrue
or incorrect to the extent that such untrue or incorrect
representations or warranties, when taken together as a whole,
have had or would have an Acquiror Material Adverse Effect.
6.2.2 PERFORMANCE BY PARENT AND ACQUIROR. Parent and
Acquiror shall have performed and complied with all of the
covenants and agreements in all material respects and satisfied
in all material respects all of the conditions required by this
Agreement to be performed or complied with or satisfied by
Parent and Acquiror at or prior to the Effective Time.
6.2.3 CERTIFICATE. Acquiror shall have delivered to Target a
certificate executed on its behalf by its President or another
authorized officer to the effect that the conditions set forth
in Subsections 6.2.1 and 6.2.2, above, have been satisfied.
6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND ACQUIROR. The
obligations of Parent and Acquiror to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the
following additional conditions, any one or more of which may be
waived by Parent and Acquiror:
6.3.1 TARGET REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Target contained in this
Agreement that are modified by materiality or Target Material
Adverse Effect ("Target Modified Representation") shall be true
and correct in all respects, and those that are not so modified
("Target Nonmodified Representation") shall be true and correct
in all material respects, on the date hereof and, except for
changes not prohibited by this Agreement, as of the Effective
Time as if made at the Effective Time. Furthermore, none of the
representations or warranties of Target contained in this
Agreement, disregarding any qualifications therein or in this
Section 6.3.1 regarding materiality or Target Material Adverse
Effect, shall be untrue or incorrect to the extent that such
untrue or incorrect representations or warranties, when taken
together as a whole, have had or would have a Target Material
Adverse Effect.
6.3.2 PERFORMANCE BY TARGET. Target shall have performed and
complied with all the covenants and agreements in all material
respects and satisfied in all material respects all the
conditions required by this Agreement to be performed or
complied with or satisfied by Target at or prior to the
Effective Time.
6.3.3 NO MATERIAL ADVERSE CHANGE.There shall have not
occurred after the date hereof any Event that has or reasonably
could be expected to have a Target Material Adverse Effect.
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6.3.4 NO PENDING ACTION. There shall not be instituted,
pending or threatened any action, investigation or proceeding by
any Governmental Authority, and there shall not be instituted,
pending or threatened any action or proceeding by any other
person, domestic or foreign, before any Governmental Authority,
which is reasonably likely to be determined adversely to Parent,
Acquiror or Acquisition Subsidiary, (A) challenging or seeking
to make illegal, to delay materially or otherwise, directly or
indirectly, to restrain or prohibit the consummation of the
Merger, seeking to obtain material damages or imposing any
material adverse conditions in connection therewith or
otherwise, directly or indirectly relating to the transactions
contemplated by the Merger, (B) seeking to restrain, prohibit or
delay the exercise of full rights of ownership or operation by
Parent, Acquiror or Acquisition Subsidiary or their affiliates
of all or any portion of the business or assets of Target and
the Target Subsidiaries, taken as a whole, or of Parent,
Acquiror or Acquisition Subsidiary or any of their affiliates,
or to compel Acquiror or Acquisition Subsidiary or any of their
affiliates to dispose of or hold separate all or any material
portion of the business or assets of Target and the Target
Subsidiaries, taken as a whole, or of Parent, Acquiror or
Acquisition Subsidiary or any of their affiliates, (C) seeking
to impose or confirm material limitations on the ability of
Parent, Acquiror or Acquisition Subsidiary or any of their
affiliates to exercise full rights of the ownership of the
shares of Target Common Stock, including, without limitation,
the right to vote the shares of Target Common Stock acquired or
owned by Parent, Acquiror or Acquisition Subsidiary or any of
their affiliates on all matters properly presented to the
holders of Target Common Stock, (D) seeking to require
divestiture by Parent, Acquiror or Acquisition Subsidiary or any
of their affiliates of the shares of Target Common Stock, or (E)
that otherwise would reasonably be expected to have a Target
Material Adverse Effect.
6.3.5 DISSENTING SHARES. At the Effective Time, Dissenting
Shares shall not exceed 200,000 Target Shares.
6.3.6 REQUIRED CONSENTS. All required Consents of any person
(other than a Governmental Authority) to the Merger or the
transactions contemplated hereby shall have been obtained or
made on terms and conditions reasonably acceptable to Acquiror
and be in full force and effect, except for those the failure of
which to obtain or be made, in the judgment of Acquiror, would
not have a Surviving Corporation Material Adverse Effect.
6.3.7 CERTIFICATES AND OTHER DELIVERIES. Target shall have
delivered, or caused to be delivered, to Acquiror (i) a
certificate executed on its behalf by its President or another
duly authorized officer to the effect that the conditions set
forth in Subsections 6.1.1, 6.1.4, 6.1.5, 6.3.1, 6.3.2, 6.3.3,
6.3.4, 6.3.5 and 6.3.6, above, have been satisfied; (ii) a
certificate of good standing or of legal existence, as
applicable, from the Secretary of State of each state or
comparable authority in other jurisdictions in which Target and
the Target Subsidiaries are incorporated or qualified to do
business stating that each is a validly existing corporation in
good standing or of legal existence, as applicable; (iii) duly
adopted resolutions of the Board of Directors and shareholders
of Target approving the execution, delivery and performance of
this Agreement, the Target Ancillary Agreements and the
instruments contemplated hereby and thereby, certified by the
Secretary or Assistant Secretary of Target; (iv) a true and
complete copy of the Articles or Certificate of Incorporation or
comparable governing instruments, as amended, of Target and each
of the Target Subsidiaries certified by the Secretary of State
of the state of incorporation or comparable authority in other
jurisdictions, and a true and complete copy of the By-Laws or
comparable governing instruments, as amended, of Target and each
of the Target Subsidiaries certified by the Secretary thereof;
(v) the duly executed Noncompete and Confidentiality Agreements;
(vi) the duly executed Resignations on terms and conditions
reasonably acceptable to Acquiror; (vii) a list of the
shareholders of Target entitled to vote on the adoption of this
Agreement and an undertaking from Target's transfer agent to
deliver a list of the shareholders of Target as of the Effective
Time as soon thereafter as it is available, each such list to be
certified by the transfer agent of Target; and (viii) such other
documents and instruments as Acquiror reasonably may request.
6.3.8 OPINION OF TARGET COUNSEL. Acquiror shall have
received the opinion of Thompson Coburn LLP, counsel to Target,
in form and substance reasonably satisfactory to Acquiror,
covering the matters set forth in Schedule 6.3.8 attached
hereto.
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6.3.9 COMFORT LETTERS. Acquiror shall have received "comfort
letters" from the independent certified public accountants for
Target dated as of the date of the Proxy Statement and the
Closing Date, addressed to the Board of Directors of each of
Target and Acquiror, covering such matters as Acquiror shall
reasonably request with respect to facts concerning the
financial condition and results of operations of Target and the
Target Subsidiaries and customary for such certified public
accountants to deliver in connection with a transaction similar
to the Merger.
6.3.10 VESSELS. Target shall have taken all of the actions
and completed all of the transactions contemplated by Section
4.18 and Paul H. Duynhouwer, President and Chief Executive
Officer of Target, shall have taken such actions, undertaken
such obligations and entered into such agreements as are
advisable or necessary to facilitate the transactions
contemplated by Section 4.18 hereof and the ownership and
operation of Target's U.S. flagged vessels and the operation of
Target's non-U.S. flagged vessels, upon terms and conditions
reasonably satisfactory to Acquiror, in accordance with terms of
the agreement attached hereto as Exhibit 6.3.10 (the agreement
attached hereto as Exhibit 6.3.10 may be amended, modified or
supplemented from time to time by a written agreement between
Paul H. Duynhouwer and Acquiror).
6.3.11 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. The
environmental representations and warranties of Target contained
in Section 2.17 shall be true and correct in all material
respects, without reference to any knowledge qualifier contained
therein, as of the Effective Time as if made at the Effective
Time.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
shareholders of Target described herein, only:
(a) by mutual written consent of Acquiror and Target;
(b) by either Acquiror or Target if:
(i) the Merger shall not have been consummated on or prior
to March 31, 2000; provided, however, that if Target or Acquiror
determines that additional time is necessary in connection with
obtaining a Consent with respect to the HSR Act from any
Governmental Authority or satisfying any related waiting period,
such date may be extended by Target or Acquiror from time to
time by written notice to the other party to a date no later
than June 30, 2000; and provided further, however, that the
right to terminate this Agreement pursuant to this Section
7.1(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in
the failure of the Merger to be consummated by such time;
(ii) the approval of holders of Target Common Stock required
by Section 6.1.1 shall not have been obtained at a meeting duly
convened therefor or at any adjournment or postponement thereof;
(iii) any court of competent jurisdiction or other
Governmental Authority shall have issued an order, decree or
ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the consummation of the
Merger and such order, decree or ruling or other action shall
have become final and nonappealable;
(c) by Acquiror, if (i) there are any breaches of any Target
Modified Representation or there are any material breaches of any
Target Nonmodified Representation, or (ii) Target shall have
breached or failed to perform, notwithstanding satisfaction or due
waiver of all conditions thereto, any of its material covenants or
agreements contained herein as to which notice specifying such
breach or failure has been given to Target promptly after the
discovery thereof and Target has failed to cure or otherwise resolve
the same to the reasonable satisfaction of Acquiror within twenty
(20) days after receipt of such notice (without limiting the
foregoing or any other covenants or agreements that may be deemed
material, it is agreed that a breach of Section 4.1(iii) shall be
deemed a breach of a material covenant or agreement);
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(d) by Acquiror, if Section 4.9 shall be breached by Target in
any material respect, including, without limitation, by failing to
promptly notify Acquiror as required thereunder;
(e) by Acquiror, if (i) the Board of Directors of Target or any
committee thereof shall have withdrawn or modified in a manner
adverse to Acquiror its approval or recommendation of the Merger and
this Agreement, or failed to reconfirm its recommendation within ten
(10) days after a written request to do so, or approved or
recommended any Takeover Proposal or (ii) the Board of Directors of
Target or any committee thereof shall have resolved to take any of
the foregoing actions;
(f) by Acquiror, if (i) holders of Target Common Stock do not
approve the Articles Amendment at a meeting duly convened therefor
or at any adjournment or postponement thereof prior to March 31,
2000, or (ii) if the Board of Directors of Target do not amend
Target's By-Laws pursuant to Section 4.19(d);
(g) by Target, if (i) there are any breaches of any Acquiror
Modified Representation or there are any material breaches of any
Acquiror Nonmodified Representation, or (ii) Acquiror shall have
breached or failed to perform, notwithstanding satisfaction or due
waiver of all conditions thereto, any of its material covenants or
agreements contained herein as to which notice specifying such
breach or failure has been given to Acquiror promptly after the
discovery thereof and Acquiror has failed to cure or otherwise
resolve the same to the reasonable satisfaction of Target within
twenty (20) days after receipt of such notice; and
(h) by Target, in accordance with Section 4.9(b), provided that
it has complied with all provisions thereof, including the notice
provisions therein, and that it complies with applicable
requirements relating to the payment (including the timing of any
payment) of the Termination Fee (as hereinafter defined).
The party desiring to terminate this Agreement pursuant to the
preceding paragraphs (b), (c), (d), (e), (f), (g) or (h), shall give
written notice of such termination to the other party in accordance
with Section 8.5 below.
7.2 TERMINATION FEES AND RIGHTS. (a) In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this
Article VII, this Agreement (other than as set forth in this Section
7.2, Section 4.18, Section 4.19, Section 7.3, Section 8.1, Section
8.7 and Section 8.8) shall become void and of no effect with no
liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal or financial advisers
or other representatives); provided, however, that no such
termination shall relieve any party hereto from any liability for
breach of this Agreement.
(b) In the event that this Agreement is terminated by Acquiror
pursuant to Section 7.1(c) solely due to a breach of a Target
Modified Representation or a material breach of a Target Nonmodified
Represenation and the circumstances resulting in such breach
occurred in the ordinary course of Target's business consistent with
past practice, then Target shall promptly, but in no event later
than two days after the date of such termination, pay Acquiror, as
liquidated damages, a fee equal to $1 million. The amount payable in
this Section 7.2(b) shall not be payable if the Termination Fee is
payable pursuant to Section 7.2(c).
(c) In the event that (A) a bona fide Takeover Proposal shall
have been made known to Target or any of the Target Subsidiaries or
has been made directly to holders of Target Common Stock generally
or any person shall have publicly announced an intention (whether or
not conditional) to make a bona fide Takeover Proposal and such
Takeover Proposal or announced intention shall not have been
withdrawn and thereafter this Agreement is terminated by Target
pursuant to Section 7.1(b)(i), or by Acquiror pursuant to Section
7.1(b)(i) after a date occuring the earlier of (1) June 30, 2000 or
(2) one additional month following March 31, 2000 for each bona fide
Takeover Proposal received by Target, or (B) this Agreement is
terminated by (x) either Target or Acquiror pursuant to Section
7.1(b)(ii), (y) Target pursuant to Section 7.1(h) or (z) by Acquiror
pursuant to Sections 7.1(c) (if not otherwise covered by Section
7.2(b)), 7.1(d), 7.1(e), or 7.1(f), or (C) the condition in Section
6.1.5 is not satisfied after Target's receipt of a bona fide
Takeover Proposal and this Agreement is duly terminated by either
party, then Target shall promptly, but in no event later than two
days after the date of such termination, pay Acquiror a fee equal to
$8 million (the "Termination Fee"), payable by wire transfer of same
day funds.
(d) Target acknowledges that the agreements contained in this
Section 7.2 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Acquiror would
not enter
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into this Agreement; accordingly, if Target fails to promptly pay
any amount due pursuant to this Section 7.2, and in order to obtain
such payment, Acquiror commences a suit which results in a judgment
against Target for the Termination Fee set forth in Section 7.2(c)
or for any amount set forth in Section 7.2(b), Target shall also pay
to Acquiror its costs and expenses (including attorneys' fees) in
connection with such suit, together with interest on the amount of
the Termination Fee or the amount due and owing pursuant to Section
7.2(b) at the prime rate of Bank of America, N.A. in effect on the
date such payment was required to be made.
7.3 PROCEDURE UPON TERMINATION. In the event of termination
pursuant to this Article VII, this Agreement shall terminate and the
Merger shall be abandoned without further action by Target or
Acquiror, provided that the agreements contained in Sections 4.18,
4.19, 7.2, 7.3, 8.1, 8.7 and 8.8 hereof shall remain in full force
and effect. If this Agreement is terminated as provided herein, each
party shall use its reasonable best efforts to redeliver all
documents, work papers and other material (including any copies
thereof) of any other party relating to the transactions
contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same. Nothing contained in this
Agreement shall relieve any party from any liability for any
inaccuracy, misrepresentation or breach of this Agreement prior to
termination.
ARTICLE VIII
MISCELLANEOUS
8.1 CONFIDENTIALITY. Unless (i) otherwise expressly provided in
this Agreement, (ii) required by applicable Law or any listing
agreement with, or the rules and regulations of, any applicable
securities exchange or the NASD, (iii) necessary to secure any
required Consents as to which the other party has been advised, or
(iv) consented to in writing by Acquiror and Target, this Agreement
and any information or documents furnished in connection herewith
shall be kept strictly confidential by Target and the Target
Subsidiaries, Acquiror and Acquisition Subsidiary and their
respective officers, directors, employees and agents. Prior to any
disclosure pursuant to the preceding sentence, the party intending
to make such disclosure shall consult with the other party regarding
the nature and extent of the disclosure. Nothing contained herein
shall preclude disclosures to the extent necessary to comply with
accounting, SEC and other disclosure obligations imposed by
applicable Law. In connection with any filing with the SEC under the
Securities Exchange Act, Target or Acquiror, after consultation with
the other party, may include any information required to be included
therein with respect to the Merger. Acquiror and Target shall
cooperate with the other and provide such information and documents
as may be required in connection with any such filings. In the event
the Merger is not consummated, Acquiror and Target shall return to
the other all documents furnished by the other and will hold in
absolute confidence all information obtained from the other party
except to the extent (i) such party is required to disclose such
information by Law or such disclosure is necessary or desirable in
connection with the pursuit or defense of a claim, (ii) such
information was known by such party prior to such disclosure or was
thereafter developed or obtained by such party independent of such
disclosure, (iii) such party received such information on a
non-confidential basis from a source, other than the other party,
which is not known by such party to be bound by a confidentiality
obligation with respect thereto or (iv) such information becomes
generally available to the public or is otherwise no longer
confidential. Prior to any disclosure of information pursuant to the
exception in clause (i) of the preceding sentence, the party
intending to disclose the same shall so notify the party which
provided the same in order that such party may seek a protective
order or other appropriate remedy should it choose to do so.
8.2 AMENDMENT AND MODIFICATION. To the extent permitted by
applicable Law, this Agreement may be amended, modified or
supplemented only by a written agreement among Target, Parent,
Acquiror and Acquisition Subsidiary, whether before or after
approval of the Merger and this Agreement by the holders of Target
Common Stock and the holders of the common stock of Acquisition
Subsidiary.
8.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of Target on the
one hand, or Acquiror on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by
Acquiror on the one hand, or Target on the other hand, only by a
written instrument signed by the party granting such waiver, but
such waiver or failure to insist upon strict compliance with such
obligation, covenant,
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agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set
forth in this Section 8.3.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of Target and Parent and Acquiror
contained herein or in any certificates or other documents delivered
prior to or at the Closing shall survive the execution and delivery
of this Agreement, notwithstanding any investigation made or
information obtained by the other party, but shall terminate at the
Effective Time.
8.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when
delivered in person, by facsimile, receipt confirmed, or on the next
business day when sent by overnight courier or on the second
succeeding business day when sent by registered or certified mail
(postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Target, to:
Intrav, Inc.
7711 Bonhomme Avenue
St. Louis, Missouri 63105
Attention: Chief Executive Officer
with a copy to:
Thompson Coburn LLP
One Mercantile Center
St. Louis, MO 63101
Attention: Thomas A. Litz
Telecopy: 314-552-7000
and
(ii) if to Parent, Acquiror or Acquisition Subsidiary, to:
Kuoni Reisen Holding AG
Neue Hard 7
CH-8010 Zurich
Switzerland
Attention: Chief Executive Officer
with copies to:
Kuoni Reisen Holding AG
Kuoni House
Dorking
Surrey U.K. RH5 4AZ
Attention: Peter Diethelm
and
Kuoni Reisen Holding AG
Neue Hard 7
CH-8010 Zurich
Switzerland
Attention: Stephan Hitz
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and
Bryan Cave LLP
211 N. Broadway, Suite 3600
St. Louis, MO 63102
Attention: James L. Nouss, Jr.
Telecopy: 314-259-2020
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
prior to the Effective Time without the prior written consent of the
other party hereto, except that Acquisition Subsidiary may assign to
Acquiror or any other Subsidiary of Acquiror any and all rights,
interests and obligations of Acquisition Subsidiary under this
Agreement.
8.7 EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs or expenses.
8.8 GOVERNING LAW. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by
and in accordance with the internal laws of, the State of Missouri
(without regard for its choice of law rules). Any and all disputes
which may arise out of this Agreement will be heard and determined
before the United States District Court for the Eastern District of
Missouri or the Circuit Court of St. Louis County, Missouri. The
parties hereto acknowledge that such courts have the jurisdiction to
interpret and enforce the provisions of this Agreement and the
parties waive any and all objections that they may have as to
jurisdiction or venue in the above courts, including, but not
limited to, any defense of forum non conveniens, and irrevocably
agree to be bound by any non-appealable final judgment rendered
thereby.
8.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.10 INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement. No rule of
construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's
role in drafting this Agreement. As used in this Agreement, (i) the
term "person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust,
an association, an unincorporated organization, a Governmental
Authority and any other entity; (ii) the terms "affiliate" and
"associate" shall have the same meanings as set forth in Rule 12b-2
under the Securities Exchange Act; and (iii) the term "shareholder"
of any specified person shall mean any holder of capital stock or
other equity interest in such person.
8.11 ENTIRE AGREEMENT. This Agreement and the other agreements,
documents or instruments referred to herein or executed in
connection herewith including, but not limited to, the Schedules
attached hereto, which Schedules are incorporated herein by
reference, and the Confidentiality Agreement between Parent and
Target dated June 15, 1999, embody the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings, other than
those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and the understandings between the
parties with respect to such subject matter.
8.12 SEVERABILITY. In case any provision in this Agreement or in
any of the other agreements, documents or instruments referred to
herein shall be held invalid, illegal or unenforceable in any
jurisdiction, such provision shall be modified or deleted, as to the
jurisdiction involved, only to the extent necessary to render the
same valid, legal and enforceable, and the validity, legality and
enforceability of the remaining provisions hereof or thereof shall
not in any way be affected or impaired thereby nor shall the
validity, legality or enforceability of such provision be affected
thereby in any other jurisdiction.
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8.13 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, the
parties further agree that each party shall be entitled to an
injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other right or remedy to
which such party may be entitled under this Agreement, at law or in
equity.
8.14 THIRD PARTIES. Nothing contained in this Agreement or in
any instrument or document executed by any party in connection with
the transactions contemplated hereby shall create any rights in, or
be deemed to have been executed for the benefit of, any person that
is not a party hereto or thereto, or, a successor or permitted
assign of such a party, provided that the Indemnified Parties shall
be entitled to the benefits of Section 5.4 and the members of the
Advisory Committee shall be entitled to the benefits of Section 5.5
hereof.
8.15 SCHEDULES. The Schedules in this Agreement shall be
arranged in separate parts corresponding to the numbered and
lettered sections, and the disclosure in any numbered or lettered
part shall be deemed to relate to and to qualify only the particular
representation or warranty set forth in the corresponding numbered
or lettered section, and not any other representation or warranty
(unless an express and specific reference to any other Schedule
which clearly identifies the particular item being referred is set
forth therein).
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IN WITNESS WHEREOF, Parent, Acquiror, Acquisition Subsidiary and
Target have caused this Agreement to be signed and delivered by their
respective duly authorized officers as of the date first above written.
KUONI REISEN HOLDING AG
By: /s/ Peter Diethelm
----------------------------
Name: Peter Diethelm
--------------------------
Title: Executive Vice President
--------------------------
By: /s/ Stephan Hitz
----------------------------
Name: Stephan Hitz
--------------------------
Title: Direktor
-------------------------
DIAMOND HOLDING DELAWARE, INC.
By: /s/ Peter Diethelm
----------------------------
Name: Peter Diethelm
--------------------------
Title: Chief Executive Officer
-------------------------
DIAMOND ACQUISITION
SUBSIDIARY MISSOURI, INC.
By: /s/ Peter Diethelm
----------------------------
Name: Peter Diethelm
--------------------------
Title: Chief Executive Officer
-------------------------
INTRAV, INC.
By: /s/ Paul Duynhouwer
----------------------------
Name: Paul Duynhouwer
--------------------------
Title: President and Chief
Executive Officer
-------------------------
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ANNEX 2
MAJORITY SHAREHOLDER AGREEMENT
THIS MAJORITY SHAREHOLDER AGREEMENT (this "Agreement") is made
and entered into as of July 16, 1999, by and among Kuoni Reisen
Holding AG, a Swiss corporation incorporated in the Canton of
Zurich, Switzerland ("Parent"), Diamond Holding Delaware, Inc., a
Delaware corporation and wholly-owned subsidiary of Parent
("Acquiror"), Diamond Acquisition Subsidiary Missouri, Inc., a
Missouri corporation and wholly-owned subsidiary of Acquiror
("Acquisition Subsidiary"), and The Revocable Trust of Barney A.
Ebsworth, dated July 23, 1986, as amended (the "Majority
Shareholder") and Barney A. Ebsworth.
RECITALS
A. Concurrently with the execution and delivery of this
Agreement, Parent, Acquiror, Acquisition Subsidiary and Intrav,
Inc., a Missouri corporation ("Target"), are entering into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to
which Acquisition Subsidiary will be merged with and into Target
(the "Merger").
B. The Majority Shareholder owns, of record and beneficially,
3,825,000 shares of common stock, par value $0.01 per share, of
Target (the "Majority Shares").
C. As an inducement to Parent, Acquiror and Acquisition
Subsidiary to enter into the Merger Agreement, the Majority
Shareholder has agreed to grant the Option (as hereinafter defined),
to vote all of the Majority Shares in favor of the Merger, to delete
Article 11 of the Articles of Incorporation of Target necessary to
consummate the Merger, and to undertake the other obligations and
covenants described in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter
set forth, the parties hereto agree as follows:
1. OPTION.
(a) Grant of Option. The Majority Shareholder hereby grants
to Parent, Acquiror and Acquisition Subsidiary (the "Optionees")
an irrevocable option (the "Option") to purchase a certain
number of the Majority Shares as determined in accordance with
the following sentence (the "Option Shares"), in the manner and
at the purchase price set forth below. The number of Option
Shares shall be the maximum number of shares of common stock of
Target ("Target Common Stock") that could be acquired by
Acquiror and/or Acquisition Subsidiary and not constitute
"Excess Shares" (as defined in Article 11 of Target's Articles
of Incorporation).
(b) Exercise of Option. The Option may be exercised, in
whole or in part, at any time, or from time to time, after the
occurrence of either of the following events: (i) the Majority
Shareholder fails to vote or cause to be voted all of the
Majority Shares in favor of the Merger and the Merger Agreement
pursuant to Section 5 hereof; or (ii) there occurs a Takeover
Proposal (as defined in the Merger Agreement) prior to the
termination of the Merger Agreement. If Acquiror or Acquisition
Subsidiary wishes to exercise the Option, Acquiror or
Acquisition Subsidiary shall send a written notice to the
Majority Shareholder specifying a date (not less than five nor
more than sixty days from the date such notice is given, which
date shall be postponed as appropriate to obtain any necessary
consents or approvals or to allow termination of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act") waiting period) for the closing of such purchase (the
"Option Closing"). Such Option Closing shall take place at 10:00
A.M., local time, on the date specified in such notice at the
offices of Bryan Cave LLP, 211 North Broadway, Suite 3600, St.
Louis, Missouri 63102, or at such other place and time as the
parties may mutually agree. If the Option is exercised, the
representations and warranties of the Majority Shareholder set
forth in Section 2 below shall survive the Option Closing.
(c) Purchase Price. At the Option Closing, the Majority
Shareholder will deliver to Acquiror or Acquisition Subsidiary a
certificate or certificates representing the Option Shares being
purchased. Acquiror or Acquisition Subsidiary will purchase such
shares from the Majority Shareholder by
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delivering as consideration therefor, $21.32 per share, in cash
in immediately available funds (the "Purchase Price").
(d) HSR Filing. Acquiror or Acquisition Subsidiary and the
Majority Shareholder agree to file with the Federal Trade
Commission and the Antitrust Division of the United States
Department of Justice all required pre-merger notification and
report forms and other documents and exhibits required to be
filed under the HSR Act to permit the purchase contemplated by
this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE MAJORITY SHAREHOLDER.
The Majority Shareholder hereby represents and warrants to Acquiror
and Acquisition Subsidiary as follows:
(a) Ownership of Shares. The Majority Shareholder is the
record and beneficial owner of the Majority Shares and such
shares constitute all of the shares of Target Common Stock owned
by the Majority Shareholder. The Majority Shareholder has sole
voting power and sole power to issue instructions with respect
to the matters set forth in Sections 1 and 5 hereof, sole power
of disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters
set forth in this Agreement, in each case with respect to all of
the Majority Shares, with no limitations, qualifications or
restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Power; Binding Agreement. The Majority Shareholder has
the legal capacity, power and authority to enter into and
perform all of its obligations under this Agreement. The
execution, delivery and performance of this Agreement by the
Majority Shareholder will not violate any other agreement to
which he is a party including, without limitation, any voting
agreement, stockholders agreement or voting trust. This
Agreement has been duly and validly executed and delivered by
the Majority Shareholder and constitutes a valid and binding
agreement of the Majority Shareholder, enforceable against him
in accordance with its terms. There is no beneficiary or holder
of a voting trust certificate or other interest of any trust of
which the Majority Shareholder is trustee whose consent is
required for the execution and delivery of this Agreement or the
consummation by the Majority Shareholder of the transactions
contemplated hereby.
(c) No Conflict. Except for filings and approvals under the
HSR Act, the antitrust laws or the securities laws, if
applicable, (A) no filing with, and no permit, authorization,
consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by
the Majority Shareholder and the consummation by the Majority
Shareholder of the transactions contemplated hereby and (B) none
of the execution and delivery of this Agreement by the Majority
Shareholder, the consummation by the Majority Shareholder of the
transactions contemplated hereby or compliance by the Majority
Shareholder with any of the provisions hereof shall result in a
violation or breach of, or constitute (with or without notice of
lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification
or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or
other instrument or obligation of any kind to which the Majority
Shareholder is a party or by which such order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable
to the Majority Shareholder or any of its properties or assets.
(d) No Finder's Fees. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with
the transactions contemplated hereby based upon arrangements
made by or on behalf of the Majority Shareholder.
(e) No Encumbrances. The Majority Shares and the
certificates representing such shares are now, and at all times
during the term hereof will be, held by the Majority
Shareholder, or by a nominee or custodian for the benefit of the
Majority Shareholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances arising hereunder.
3. REPRESENTATIONS OF ACQUIROR OR ACQUISITION SUBSIDIARY. Each
of Acquiror and Acquisition Subsidiary represents and warrants to
the Majority Shareholder that: (i) such entity is a corporation duly
organized,
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validly existing and in good standing under the laws of the
jurisdiction of its incorporation with full corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder; (ii) the execution and delivery of this
Agreement by such entity and the performance by it of its
obligations hereunder have been duly authorized by all necessary
corporate action on the part of such entity; (iii) this Agreement
constitutes the legal, valid and binding obligation of such entity
enforceable against such entity in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency and
other similar laws affecting creditors' rights generally or by
general principles of equity; and (iv) any shares of Target Common
Stock acquired upon exercise of the Option will not be acquired by
such entity with a view to the public distribution thereof and will
not be transferred except pursuant to a transaction which complies
with the Securities Act of 1933, as amended, and applicable state
securities laws.
4. COVENANTS OF THE MAJORITY SHAREHOLDER. The Majority
Shareholder covenants and agrees as follows:
(a) No Solicitation. During the term of this Agreement,
neither the Majority Shareholder nor Barney A. Ebsworth shall
(and shall not permit their representatives to), directly or
indirectly, initiate, solicit (including by way of furnishing
information), encourage or respond to or take any other action
knowingly to facilitate, any inquiries or the making of any
proposal by any person or entity (other than Acquiror or
Acquisition Subsidiary or any of their affiliates) with respect
to Target that constitutes or reasonably may be expected to lead
to, a Takeover Proposal, or enter into or maintain or continue
discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain any Takeover
Proposal, or agree to or endorse any Takeover Proposal, or
authorize or permit any person or entity acting on behalf of the
Majority Shareholder to do any of the foregoing. The foregoing
shall not prevent Barney A. Ebsworth from voting as a Director
of Target in connection with Target's exercising its rights
under Section 4.9 of the Merger Agreement. If Barney A. Ebsworth
or the Majority Shareholder receives any inquiry or proposal
regarding any Takeover Proposal, they shall promptly inform
Acquiror and Acquisition Subsidiary of that inquiry or proposal
and the details thereof.
(b) Restriction on Transfer, Proxies and Non-Interference.
During the term of this Agreement, the Majority Shareholder
shall not (and shall not permit its representatives to): (i)
directly or indirectly, offer for sale, sell, transfer, tender,
pledge, encumber, assign or otherwise dispose of, or enter into
any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, any or
all of the Majority Shares or any interest therein, provided,
however, that the Majority Shareholder may sell, transfer,
tender or otherwise dispose of the Majority Shares pursuant to a
Superior Proposal approved by the Board of Directors of Target
following Target's exercise of its rights pursuant to Section
4.9(b) of the Merger Agreement so long as Target has not
breached Section 4.9 of the Merger Agreement; (ii) except as
contemplated by this Agreement, grant any proxies or powers of
attorney, deposit any of the Majority Shares into a voting trust
or enter into a voting agreement with respect to any of the
Majority Shares; or (iii) take any action that would make any
representation or warranty of the Majority Shareholder contained
herein untrue or incorrect or have the effect of preventing or
disabling the Majority Shareholder from performing its
obligations under this Agreement or the Optionees from enjoying
the benefits of the Option.
(c) Waiver of Appraisal Rights. The Majority Shareholder
hereby irrevocably waives any rights of appraisal or rights to
dissent from the Merger that he may have.
(d) Stop Transfer. The Majority Shareholder agrees with, and
covenants to, Acquiror and Acquisition Subsidiary that he shall
not request that Target register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest
representing any of the Majority Shares, unless such transfer is
made in compliance with this Agreement.
(e) Profits Upon Sale of Majority Shares. During such time
as the Option is exercisable, if the Majority Shareholder shall
sell, transfer, tender or otherwise dispose of any of the
Majority Shares (including without limitation pursuant to a
merger of Target with another entity), or if the Majority
Shareholder or Target shall agree to a transaction that would
result in such sale, transfer, tender or other disposition of
the Majority Shares, and the Majority Shareholder receives in
consideration for such sale, transfer, tender or other
disposition of Majority Shares an amount that exceeds the
Purchase
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Price, then the Majority Shareholder shall promptly, but in no
event later than two days after the date that the Majority
Shareholder receives such consideration, pay to Acquiror the
aggregate amount received by the Majority Shareholder in excess
of the Purchase Price. If the aggregate consideration received
by Acquiror does not consist of cash in an amount necessary to
satisfy the foregoing obligation, the Optionees shall, at their
discretion, have the right to receive such amount in cash or,
provided that the Majority Shareholder would not suffer any
adverse tax consequences, in any non-cash consideration received
in the transaction.
5. APPROVAL OF MERGER; SALE/LEASEBACK. The Majority Shareholder
agrees that during the term of this Agreement, it will vote or cause
to be voted all the Majority Shares in favor of the Merger and the
Merger Agreement and in favor of deleting Article 11 of the Target
Articles of Incorporation (and the documents and transactions
related thereto) at any meeting of the shareholders of Target held
for any such purposes. If the Merger Agreement is terminated as a
result of the Target exercising its rights under Section 4.9 of the
Merger Agreement, or as a result of the failure of the condition in
Section 6.1.5 of the Merger Agreement or a material breach of the
Merger Agreement following the receipt by the Target of a Takeover
Proposal, the Majority Shareholder shall as soon as reasonably
practicable cause Target to restructure the ownership of Target's
U.S. flagged ships to allow the ownership of more than 25% of the
Target Shares by a non-U.S. citizen. Such restructuring shall be
accomplished in a manner that does not materially and adversely
affect the interests of Target.
6. FURTHER ASSURANCE AND ADJUSTMENTS. The Majority Shareholder
and Barney A. Ebsworth shall, upon the reasonable request of
Acquiror or Acquisition Subsidiary, execute and deliver any
additional documents necessary or desirable to effect any of the
terms and provisions of this Agreement. If at any time the Majority
Shares are changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up,
combination, exchange or readjustment of Target's capital stock or
if a dividend thereon is declared with a record date prior to the
termination of this Agreement, or if the representations in Section
2.2 of the Merger Agreement are or become untrue, then the
provisions of this Agreement shall be appropriately adjusted.
7. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, the
parties further agree that each party shall be entitled to an
injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other right or remedy to
which such party may be entitled under this Agreement, at law or in
equity.
8. TERM. This Agreement shall commence on the date hereof and
the Option shall end, and this Agreement shall terminate, on the
earlier of (i) six (6) months following the termination of Merger
Agreement in accordance with its terms or (ii) the Effective Time
(as defined in the Merger Agreement); provided, however, if the
Merger Agreement is terminated as a result of the Target exercising
its rights under Section 4.9 of the Merger Agreement, or as a result
of the failure of the condition in Section 6.1.5 of the Merger
Agreement or a material breach of the Merger Agreement following the
receipt by the Target of a Takeover Proposal, that for purposes of
this Agreement, the Merger Agreement shall not be deemed to have
been terminated until the Majority Shareholder shall have fulfilled
all of its obligations under Section 5 hereof.
9. BINDING AGREEMENT. All authority and rights herein conferred
or agreed to be conferred by the Majority Shareholder or Barney A.
Ebsworth shall survive the death or incapacity of Barney A. Ebsworth
or the termination or liquidation of the Majority Shareholder. This
Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, personal representatives,
successors and assigns.
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10. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when
delivered in person, by facsimile, receipt confirmed, or on the next
business day when sent by overnight courier or on the second
succeeding business day when sent by registered or certified mail
(postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to the Majority Shareholder or to Barney A. Ebsworth,
to: The Revocable Trust of Barney A. Ebsworth, dated
July 23, 1986, as amended
7711 Bonhomme Avenue
St. Louis, Missouri
63105-1961
with a copy to:
Thompson Coburn LLP
One Mercantile Center
St. Louis, MO 63101
Attention: Thomas A. Litz
Telecopy: 314-552-7000
and
(ii) if to Acquiror or Acquisition Subsidiary, to:
Kuoni Reisen Holding AG
Neue Hard 7
CH-8010 Zurich
Switzerland
Attention: Chief Executive Officer
with copies to:
Kuoni Reisen Holding AG
Kuoni House
Dorking
Surrey U.K. RH5 4AZ
Attention: Peter Diethelm
and
Kuoni Reisen Holding AG
Neue Hard 7
CH-8010 Zurich
Switzerland
Attention: Stephan Hitz
and
Bryan Cave LLP
211 N. Broadway, Suite 3600
St. Louis, MO 63102
Attention: James L. Nouss, Jr.
Telecopy: 314-259-2020
11. GOVERNING LAW. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by
and in accordance with the internal laws of, the State of Missouri
(without regard for its choice of law rules). Any and all disputes
which may arise out of this Agreement will be heard and determined
before the United States District Court for the Eastern District of
Missouri or the Circuit Court of St. Louis County, Missouri. The
parties hereto acknowledge that such courts have the jurisdiction to
interpret and enforce the provisions of this Agreement and the
parties waive any and all
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objections that they may have as to jurisdiction or venue in the
above courts, including, but not limited to, any defense of forum
non conveniens, and irrevocably agree to be bound by any
non-appealable final judgment rendered thereby.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13. SEVERABILITY. In case any provision in this Agreement or in
any of the other agreements, documents or instruments referred to
herein shall be held invalid, illegal or unenforceable in any
jurisdiction, such provision shall be modified or deleted, as to the
jurisdiction involved, only to the extent necessary to render the
same valid, legal and enforceable, and the validity, legality and
enforceability of the remaining provisions hereof or thereof shall
not in any way be affected or impaired thereby nor shall the
validity, legality or enforceability of such provision be affected
thereby in any other jurisdiction.
14. ENTIRE AGREEMENT. This Agreement and the other agreements,
documents or instruments referred to herein or executed in
connection herewith embody the entire agreement and understanding of
the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly
set forth or referred to herein. This Agreement supersedes all prior
agreements and the understandings between the parties with respect
to such subject matter.
15. AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement
executed by the parties hereto.
16. NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder,
and any custom or practice of the parties at variance with the terms
hereof shall not constitute a waiver by such party of its right to
exercise any such or other right, power or remedy or to demand such
compliance.
17. DESCRIPTIVE HEADINGS. The descriptive headings used herein
are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this
Agreement.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, Acquiror, Acquisition Subsidiary and the
Majority Shareholder have caused this Agreement to be duly executed
and delivered as of the date first above written.
KUONI REISEN HOLDING AG
By: /s/ Peter Diethelm
-----------------------------
Name: Peter Diethelm
---------------------------
Title: Executive Vice President
---------------------------
By: /s/ Stephan Hitz
-----------------------------
Name: Stephan Hitz
---------------------------
Title: Direktor
--------------------------
DIAMOND HOLDING DELAWARE, INC.
By: /s/ Peter Diethelm
-----------------------------
Name: Peter Diethelm
---------------------------
Title: Chief Executive Officer
--------------------------
DIAMOND ACQUISITION
SUBSIDIARY MISSOURI, INC.
By: /s/ Peter Diethelm
-----------------------------
Name: Peter Diethelm
---------------------------
Title: Chief Executive Officer
--------------------------
THE REVOCABLE TRUST OF
BARNEY A. EBSWORTH, DATED
JULY 23, 1986, AS AMENDED
/s/ Barney A. Ebsworth
--------------------------------
By: Barney A. Ebsworth,
sole trustee
/s/ Barney A. Ebsworth
--------------------------------
Barney A. Ebsworth, individually
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ANNEX 3
July 16, 1999
Mr. Paul H. Duynhouwer
c/o Intrav, Inc.
7711 Bonhomme Avenue
St. Louis, Missouri 63105-1961
Re: Certain actions with respect to Newco A and Newco B
Dear Paul,
This letter sets forth an agreement between you, Kuoni Reisen
Holding AG, a Swiss corporation incorporated in the Canon of Zurich,
Switzerland ("Parent") and Diamond Holdings Delaware, Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent
("Diamond"). This letter agreement is being entered into
concurrently with and as an inducement to the execution of that
certain Agreement and Plan of Merger dated as of July 16, 1999 (the
"Merger Agreement") by Intrav, Inc., a Missouri corporation
("Sapphire"), Parent, Diamond and Diamond Acquisition Subsidiary
Missouri, Inc., a Missouri corporation and wholly-owned subsidiary
of Diamond ("Acquisition Subsidiary").
As you know, because Parent is not a U.S. citizen eligible to
own vessels for operating in the U.S. coastwise trade, prior to the
consummation of the acquisition, Sapphire must restructure the
ownership and operation of its two U.S. flagged vessels so that they
will continue to be owned and operated by U.S. citizens following
the merger. It may also be advisable from an economic perspective
for the operator of Sapphire's two non-U.S. flagged vessels to be
the same as the operator of the two U.S. flagged vessels. Because of
the breadth and depth of your experience in the ownership and
operation of Sapphire's vessels as Sapphire's President and Chief
Executive Officer and your nearly 40 years of experience in the
travel and cruise ship industries, it is a logical solution for you
to remain involved with ongoing ownership and operation of
Sapphire's vessels.
Below we will describe the currently expected structure of the
ownership and operation of the vessels, and refer to certain
proposed agreements regarding such structure. It may be advisable to
change such proposed structure prior to the consummation of the
merger. But whatever the exact structure, the nature of your
involvement in the ownership and operation of the vessels currently
owned by Sapphire, and the provision of transitional consulting
services, would have the following characteristics:
1. You would invest $300,000 and receive a 15% return on such
investment each year.
2. You will have ownership interests in and will manage the
entities that own and operate the two U.S. flagged vessels and that
operate the two non-U.S. flagged vessels.
3. One of these entities managed by you shall be responsible for
providing transitional consulting services to Sapphire following
closing under a transitional services agreement.
4. The aggregate amounts received by you, whether as the return
on your investment described above, as compensation for your
management of or services for the companies that own and operate the
vessels, as distributions on your ownership interests in those
companies, or otherwise, would be structured to ensure that you
receive not less than the following amounts during each of the first
three years following the closing: year one--$400,000; year
two--$300,000; year three--$215,000.
5. On six months' notice given at any time after one year
following the closing, you would have the right to terminate your
ownership interests in, and your management of, the companies that
own and operate the vessels, and to transfer your ownership
interests to a purchaser who would preserve the eligibility of the
vessels for operation in the U.S. coastwise trade. The transaction
documents would be
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structured to ensure that you recovered your initial investment in
such a sale. No termination fee would be payable by you upon such
termination.
6. At the same time, we would have the right, on six months'
notice given at any time after one year following the closing, to
designate a purchaser of your ownership interests in the companies
that own and operate the vessels, who would preserve the eligibility
of the vessels for operation in the U.S. coastwise trade and to whom
you would be required to sell your ownership interests. The
transaction documents would be structured to ensure that you
recovered your initial investment in such a sale. No termination fee
would be payable by us upon such ownership changes.
7. We expect that you would require the companies owning and
operating the vessels to provide you with fringe benefits
substantially comparable to those that you are currently receiving
as the President and Chief Executive Officer of Sapphire.
8. You will be indemnified with respect to risks attendant upon
the ownership and operation of the vessels.
We currently expect that the restructuring of the ownership and
operation of the two U.S. flagged vessels owned by Sapphire would
take the form of the following:
a) Immediately prior to closing, Sapphire will sell the two U.S.
flagged vessels for book value to a new entity ("Newco A"), of which
you would own 75.1% of the equity interest and Sapphire or an
affiliate would own 24.9%, or to two new entities wholly owned by
Newco A (the "Purchasers"). The Purchasers would borrow the
difference between the purchase price of the vessels and the equity
contributions.
b) Each Purchaser would time charter its vessel to Sapphire or
an entity wholly owned by Sapphire (the "Time Charterer") under a
long-term Time Charter in substantially the form set forth as
Exhibit 4.18(a) to the Merger Agreement.
c) In order to fulfill its obligations to the Time Charterer
under the Time Charter, each Purchaser would enter into an Operating
Agreement with another new entity ("Newco B") in substantially the
form set forth as Exhibit A to the Time Charter. You would own 75.1%
of the equity interest of Newco B and Sapphire or an affiliate would
own 24.9%.
d) Newco B may also enter into contracts with Sapphire or
entities wholly owned by Sapphire for the operation of the two
non-U.S. flagged vessels.
e) Newco B would enter into a transitional services contract
with Sapphire on terms and conditions to be mutually agreed upon by
the parties.
By execution and delivery of this letter agreement, you hereby
agree to take the actions reasonably necessary to facilitate and
complete the transactions contemplated in paragraphs a) through e)
above or such other transactions as we reasonably may determine to
be advisable regarding the ownership and operation of the vessels in
conformance with applicable law, and that have the economic
characteristics for you described in paragraphs 1 through 8 above.
This letter agreement is contingent upon the consummation of the
acquisition contemplated by the Merger Agreement, and does not
obligate us to consummate the Merger Agreement, or to waive any
conditions to our obligations therein.
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If the foregoing is acceptable, please indicate your agreement
by countersigning this letter in the space provided below and
returning one fully executed original to the above address.
Very truly yours,
DIAMOND HOLDINGS DELAWARE,
INC.
By /s/ Peter Diethelm
-----------------------------
Name: Peter Diethelm
---------------------------
Title: Chief Executive Officer
--------------------------
KUONI REISEN HOLDING AG
By /s/ Peter Diethelm
-----------------------------
Name: Peter Diethelm
---------------------------
Title: Executive Vice President
-----------------------------
and /s/ Stephan Hitz
----------------------------
Name: Stephan Hitz
---------------------------
Title: Direktor
--------------------------
Agreed and accepted this 16th day of July, 1999.
/s/ Paul H. Duynhouwer
- - ------------------------------
Paul H. Duynhouwer
3
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[Stifel, Nicolaus letterhead]
ANNEX 4
August 23, 1999
Board of Directors
INTRAV, Inc
7711 Bonhomme Avenue
St. Louis, MO 63105
Members of the Board:
You have requested our opinion as to the fairness from a
financial point of view of the $21.32 per share cash consideration
to be paid for each share of INTRAV, Inc. ("INTRAV" or the
"Company") common stock pursuant to the terms of the Agreement and
Plan of Merger, dated as of July 16, 1999 (the "Agreement"), by and
among Kuoni Reisen Holding AG, Diamond Holding Delaware, Inc.,
Diamond Acquisition Subsidiary Missouri, Inc. and INTRAV.
Stifel, Nicolaus & Company, Incorporated ("Stifel"), as part of
its investment banking services, is regularly engaged in the
independent valuation of businesses and securities in connection
with mergers, acquisitions, underwritings, sales and distributions
of listed and unlisted securities, private placements and valuations
for estate, corporate and other purposes. We are familiar with
INTRAV and have completed our financial analysis of this
transaction. In the ordinary course of its business, Stifel actively
trades the common stock of INTRAV for its own account and for the
accounts of its customers and, accordingly, may at any time hold a
long or short position in such securities.
In rendering our opinion, we have reviewed, among other things:
(i) the drafts of the Agreement as executed on July 16, 1999;
(ii) certain publicly available financial statements and other
business and financial information of the Company including 10-Ks
for the 4 years ended December 31, 1998, and the 10-Q for the
quarter ended June 30, 1999;
(iii) reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared by the
management of the Company;
(iv) analyzed certain financial forecasts for the Company
prepared by the management of INTRAV;
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Board of Directors
INTRAV, Inc
August 23, 1999
Page 2
(v) discussed the past and current operations and financial
condition and the prospects of the Company with senior executives of
the Company;
(vi) reviewed the historical stock prices and trading volumes of
the common stock of the Company;
(vii) compared the financial performance of the Company with
that of certain other companies that are comparable to the Company
and have publicly-traded securities;
(viii) reviewed the financial terms, to the extent publicly
available, of certain transactions involving comparable publicly
traded companies; and
(ix) performed such other analyses and considered such other
factors as we have deemed appropriate.
We also took into account our assessment of general economic,
market and financial conditions and our experience in other
transactions, as well as our experience in securities valuations and
our knowledge of the capital markets generally.
In arriving at our opinion, we were not authorized to solicit,
and did not solicit, interest from any party with respect to an
acquisition, business combination or other transaction, involving
the Company.
In rendering our opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all of the
financial and other information that was provided to us or that was
otherwise reviewed by us and have not assumed any responsibility for
independently verifying any of such information. With respect to the
financial forecasts supplied to us, we have assumed that they were
reasonably prepared on the basis reflecting the best currently
available estimates and judgments of the management of INTRAV as to
the future operating and financial performance of INTRAV, that they
would be realized in the amounts and time periods estimated and that
they provided a reasonable basis upon which we could form our
opinion. We also assumed that there were no material changes in the
assets, liabilities, financial condition, results of operations,
business or prospects of INTRAV since the date of the last financial
statements made available to us. We did not make or obtain any
independent evaluation, appraisal or physical inspection of INTRAV's
assets or liabilities. We relied on advice of INTRAV's counsel and
accountants as to all legal and accounting matters with respect to
INTRAV, the Agreement and the transactions and other matters
contained or contemplated therein. We have assumed, with your
consent, that there are no factors that would delay or subject to
any adverse conditions any necessary regulatory or governmental
approval and that all conditions to the merger will be satisfied and
not waived.
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Board of Directors
INTRAV, Inc
August 23, 1999
Page 3
Our opinion is necessarily based on economic, market, financial
and other conditions as they exist on, and on the information made
available to us as of, the date of this letter. Our opinion is
directed to the Board of Directors of INTRAV for its information and
assistance in connection with its consideration of the financial
terms of the merger and does not constitute a recommendation to any
shareholder as to how such shareholder should vote on the proposed
transaction, nor have we expressed any opinion as to the prices at
which any securities of INTRAV might trade in the future. Except as
required by applicable law, including without limitation federal
securities laws, our opinion may not be published or otherwise used
or referred to, nor shall any public reference to Stifel be made,
without our prior written consent. Stifel has consented to the use
of our opinion in the Proxy Statement relating to the proposed
merger and to the reference to our firm name under the caption
"Proposal Two--The Merger--Opinion of Stifel, Nicolaus & Company,
Incorporated" in such Proxy Statement.
We have acted as financial advisor to the Board of Directors of
the Company in connection with this Transaction and will receive a
fee for our services, including a fee contingent upon the completion
of the Transaction. In the past, Stifel, Nicolaus & Company,
Incorporated has provided financial advisory services to the Company
and has received fees for the rendering of these services.
Based upon the foregoing and such other factors as we deem
relevant, we are of the opinion, as of the date hereof, that the
cash consideration to be paid for each share of INTRAV common stock
pursuant to the Agreement is fair to the holders of INTRAV common
stock from a financial point of view.
Very truly yours,
/s/ Stifel, Nicolaus & Company, Incorporated
STIFEL, NICOLAUS & COMPANY, INCORPORATED
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ANNEX 5
SECTION 351.455 MISSOURI
GENERAL AND BUSINESS CORPORATION LAW
351.455 Shareholder who objects to merger may demand value of
shares, when.--
1. If a shareholder of a corporation which is a party to a
merger or consolidation shall file with such corporation, prior to
or at the meeting of shareholders at which the plan of merger or
consolidation is submitted to a vote, a written objection to such
plan of merger or consolidation, and shall not vote in favor
thereof, and such shareholder, within twenty days after the merger
or consolidation is effected, shall make written demand on the
surviving or new corporation for payment of the fair value of his
shares as of the day prior to the date on which the vote was taken
approving the merger or consolidation, the surviving or new
corporation shall pay to such shareholder, upon surrender of his
certificate or certificates representing said shares, the fair value
thereof. Such demand shall state the number and class of the shares
owned by such dissenting shareholder. Any shareholder failing to
make demand within the twenty day period shall be conclusively
presumed to have consented to the merger or consolidation and shall
be bound by the terms thereof.
2. If within thirty days after the date on which such merger or
consolidation was effected the value of such shares is agreed upon
between the dissenting shareholder and the surviving or new
corporation, payment therefor shall be made within ninety days after
the date on which such merger or consolidation was effected, upon
the surrender of his certificate or certificates representing said
shares. Upon payment of the agreed value the dissenting shareholder
shall cease to have any interest in such shares or in the
corporation.
3. If within such period of thirty days the shareholder and the
surviving or new corporation do not so agree, then the dissenting
shareholder may, within sixty days after the expiration of the
thirty day period, file a petition in any court of competent
jurisdiction within the county in which the registered office of the
surviving or new corporation is situated, asking for a finding and
determination of the fair value of such shares, and shall be
entitled to judgment against the surviving or new corporation for
the amount of such fair value as of the day prior to the date on
which such vote was taken approving such merger or consolidation,
together with interest thereon to the date of such judgment. The
judgment shall be payable only upon and simultaneously with the
surrender to the surviving or new corporation of the certificate or
certificates representing said shares. Upon the payment of the
judgment, the dissenting shareholder shall cease to have any
interest in such shares, or in the surviving or new corporation.
Such shares may be held and disposed of by the surviving or new
corporation as it may see fit. Unless the dissenting shareholder
shall file such petition within the time herein limited, such
shareholder and all persons claiming under him shall be conclusively
presumed to have approved and ratified the merger or consolidation,
and shall be bound by the terms thereof.
4. The right of a dissenting shareholder to be paid the fair
value of his shares as herein provided shall cease if and when the
corporation shall abandon the merger or consolidation.
(L. 1943 p. 410 Section 71)
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PROXY
INTRAV, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS - SEPTEMBER 2, 1999
The undersigned, revoking all previous proxies, hereby appoints
William H.T. Bush, Michael F. Doiron and Vanessa M. Tegethoff, or
any of them, as Proxy or Proxies of the undersigned, each with the
power to appoint his substitute, to vote as designated on the
reverse hereof, all of the shares of common stock of Intrav, Inc.
held of record by the undersigned on August 19, 1999, at the Special
Meeting of Shareholders to be held at 10:00 a.m., Central Time on
September 2, 1999 at our offices at 7711 Bonhomme Avenue, St. Louis,
Missouri 63105, and at any adjournment thereof.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE.)
PROPOSAL 1. Approval of a resolution which would amend Intrav's
Restated Articles of Incorporation to remove Article Eleven, which
currently restricts ownership of more than 24.9% of the outstanding
shares of Intrav common stock by non-U.S. citizens, as more fully
set out in the accompanying Proxy Statement.
/ /FOR / /AGAINST / /ABSTAIN (Instructions: Mark an "X" in
the appropriate box.)
PROPOSAL 2. Approval of the Agreement and Plan of Merger, dated as
of July 16, 1999, by and among Intrav, Kuoni Reisen Holding AG,
Kuoni Holding Delaware, Inc. and Kuoni Acquisition Subsidiary, Inc.,
and the merger and the transactions contemplated thereby.
/ /FOR / /AGAINST / /ABSTAIN (Instructions: Mark an "X" in
the appropriate box.)
In their sole discretion, the Proxies are authorized to vote upon
such other business as may properly come before the special meeting
or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED IN THE SPACES
PROVIDED THEREFOR OR, IF NO SUCH SPECIFICATION IS
MADE, IT WILL BE VOTED FOR THE AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION AND FOR THE
APPROVAL OF THE MERGER, THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF INTRAV, INC.
SIGN HERE___________________________________________________________
(Please sign exactly as name appears hereon)
SIGN HERE___________________________________________________________
(Executors, administrators, trustees, etc., should so indicate when
signing)
Dated_______________________________________________________________
August 23, 1999
Dear Intrav, Inc. Shareholder:
You are invited to attend the Special Meeting of Shareholders of
Intrav, Inc. The meeting will be held on Thursday, September 2,
1999, at 10:00 a.m., local time at our offices at 7711 Bonhomme
Avenue, St. Louis, Missouri 63105.
If you cannot personally attend the meeting, please vote your
preference on the proxy card attached above and return it promptly.
Your participation in Intrav, Inc.'s business, whether in person or
by proxy, is an important part of the Corporation's governance.
I look forward to and appreciate your participation in this
Special Meeting of Shareholders.
Very truly yours,
/s/ Barney A. Ebsworth
Barney A. Ebsworth
Chairman of the Board and
Secretary
