Travelzoo 2012 Annual Report Download - page 22

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Individual Non
-
U.S. Holders who are subject to U.S. federal income tax because they are present in the United States for 183 days or more
during the year in which the Effective Date occurs will be taxed on their gain (including gain from the sale of shares of our Common Stock and net
of applicable U.S. losses from sales or exchanges of other capital assets recognized during the year) at a flat rate of 30% or such lower rate as may
be specified by an applicable income tax treaty. Other Non
-
U.S. Holders subject to U.S. federal income tax with respect to gain recognized as a
result of receiving cash in connection with the Reverse/Forward Split generally will be taxed on such gain in the same manner as if they were U.S.
Holders and, in the case of foreign corporations, may be subject to an additional branch profits tax at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.
Reservation of Rights
We reserve the right to abandon the Reverse/Forward Split without further action by our stockholders at any time before the filing of the
necessary amendments to Travelzoo's Certificate of Incorporation with the Delaware Secretary of State, even if the Reverse/Forward Split has been
authorized by our stockholders at the Annual Meeting, and by voting in favor of the Reverse/Forward Split, you are expressly also authorizing us
to determine not to proceed with the Reverse/Forward Split if the Special Committee should so decide. The Special Committee is further authorized
to determine when to file the necessary amendments to Travelzoo's Certificate of Incorporation with the Delaware Secretary of State at any time on
or before the twelve
-
month anniversary of stockholder approval thereof, subject to (1) receipt by the Special Committee from Duff & Phelps, LLC
of an update of the Initial Fairness Opinion as of the date when (if ever) the Special Committee determines to file the amendments (in its updated
opinion, Duff & Phelps would be asked to confirm that, based upon the average closing price for the Company
’
s Common Stock for the 10 trading
days leading up to the Effective Date, the consideration to be paid to the Cashed
-
Out Stockholders would be fair, from a financial point of view, to
those holders), and (2) the Special Committee's consideration of the totality of the circumstances.
No Appraisal Rights
Stockholders do not have appraisal rights under Delaware state law or under Travelzoo's Certificate of Incorporation or bylaws in
connection with the Reverse/Forward Split.
Required Vote
Consummation of the Reverse/Forward Split is conditioned on the approval of stockholders of the Company holding both (1) a majority of
the issued and outstanding shares of Common Stock and (2) a majority of the issued and outstanding shares of Common Stock that are not held or
controlled, directly or indirectly, by directors or officers of the Company, including, without limitation, the shares held by Azzurro Capital Inc., our
principal stockholder. Abstentions will have the effect of a vote against the amendments to Travelzoo's Certificate of Incorporation to effect the
Reverse Split followed by the Forward Split. Broker non
-
votes will have the same effect as a vote against the Reverse/Forward Split.
Azzurro Capital Inc., whose beneficial owner is Ralph Bartel, a member of our Board, holds an aggregate of 7,230,538 shares of our Common
Stock, representing approximately 47.1% of the outstanding shares, as of June 27, 2013. Azzurro Capital Inc. has indicated that it intends to vote its
shares in favor of Proposal 1.
•
the Non
-
U.S. Holder is an individual who holds our Common Stock as a capital asset, is present in the U.S. for 183 days or more
during the taxable year in which the Effective Date occurs and meets certain other conditions;
•
the gain is effectively connected with the Non
-
U.S. Holder
’
s conduct of a trade or business in the U.S. (and, if certain income tax
treaties apply, is attributable to a Non
-
U.S. Holder
’
s permanent establishment in the U.S.); or
•
we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time within the
shorter of the five
-
year period ending on the Effective Date, or the period that the Non
-
U.S. Holder held the shares of our Common
Stock. We do not believe that we have been, currently are, or will become, a United States real property holding corporation.
16