Travelzoo 2012 Annual Report Download - page 11

APPROVAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK
SPLIT FOLLOWED BY A FORWARD STOCK SPLIT (PROPOSAL 1)
Summary
The Board of Directors has authorized, based on the prior recommendation of a special committee of the Board comprised of independent
directors (the "Special Committee"), and recommends for your approval, amendments to Travelzoo's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), to effect a reverse/forward split of Travelzoo's Common Stock. If approved by stockholders, the Certificate of
Incorporation would be amended to reclassify the Common Stock by combining the outstanding shares of the Common Stock into a lesser number
of shares at the ratio of 1
- for - 25 (the "Reverse Split"). Immediately after the effectiveness of the Reverse Split, the Certificate of Incorporation
would be further amended to reclassify the Common Stock by subdividing the outstanding shares of the Common Stock into a greater number of
outstanding shares at the ratio of 25 - for - 1 (the "Forward Split"). As permitted by Delaware law, each holder of fewer than 25 shares of Common
Stock prior to the Reverse Split (also referred to as a "Cashed - Out Stockholder") will not receive fractional shares in the Reverse Split, but in lieu of
such fractional share interests shall be entitled to receive a cash payment as described below (we refer to the Reverse Split, the Forward Split and
these cash payments, collectively, as the "Reverse/Forward Split"). However, if a stockholder holds 25 or more shares of Common Stock at the
effective time of the Reverse Split, any fractional share resulting from the Reverse Split will not be cashed out and the total number of shares held
by such holder will not change as a result of the Reverse/Forward Split.
If approved by the stockholders, the Reverse/Forward Split will become effective on such date as may be determined by the Special
Committee of the Board of Directors upon the filing and effectiveness of the necessary amendments to Travelzoo's Certificate of Incorporation
with the Secretary of State of the State of Delaware (which we refer to as the "Effective Date"). Even if approved by stockholders, the Special
Committee retains the authority to abandon the Reverse/Forward Split for any reason at any time prior to the Effective Date. The form of the
proposed amendment to Travelzoo's Certificate of Incorporation necessary to effect the Reverse Split is attached to this proxy statement as
Appendix A and the form of the proposed amendment to Travelzoo's Certificate of Incorporation necessary to effect the Forward Split immediately
after the Reverse Split is attached hereto as Appendix B .
If our stockholders approve this proposal at the Annual Meeting and the Reverse/Forward Split is completed, Travelzoo will arrange for the
disposition of fractional share interests of stockholders who hold fewer than 25 shares immediately prior to the Reverse Split by having the
Company's transfer agent aggregate such fractional share interests and sell the shares of Common Stock resulting from such aggregation (the
"Aggregated Shares") in open market transactions following the effectiveness of the Forward Split. The Company's transfer agent will pay to each
registered stockholder who holds fewer than 25 shares of Common Stock immediately prior to the Reverse Split an amount, for each share of
Common Stock held immediately prior to the Reverse Split, equal to the greater of (1) the average per - share price received in the sale of the
Aggregated Shares and (2) the average per - share closing price of the Common Stock on the Nasdaq Global Select Market for the ten (10)
consecutive trading days ending on the last trading day prior to the Effective Date (the "Cash - Out Payment").
Travelzoo believes that the Reverse/Forward Split will result in significantly reduced stockholder record keeping administration and mailing
expenses while providing holders of fewer than 25 shares with an efficient, cost - effective way to cash out their investment.
As a result of the Reverse/Forward Split, if you own less than 25 shares immediately prior to the Reverse Split, you will receive cash for
those shares, and if you own 25 shares or more immediately prior to the Reverse Split, you will retain those shares after the Reverse/Forward
Split.
Effect on Stockholders
If approved by the stockholders at the Annual Meeting and implemented by the Special Committee, the Reverse/Forward Split will affect
Travelzoo stockholders as follows:
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