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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 2001
REGISTRATION NO. 333-58268
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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UNITED PARCEL SERVICE, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 4210 58-2480149
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
55 GLENLAKE PARKWAY, N.E.
ATLANTA, GA 30328
(404) 828-6000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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JOSEPH R. MODEROW, ESQ.
SENIOR VICE PRESIDENT AND SECRETARY
UNITED PARCEL SERVICE, INC.
55 GLENLAKE PARKWAY, N.E.
ATLANTA, GA 30328
(404) 828-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
BRUCE N. HAWTHORNE JOHN F. SEEGAL
KING & SPALDING ORRICK, HERRINGTON & SUTCLIFFE LLP
191 PEACHTREE STREET OLD FEDERAL RESERVE BANK BUILDING, 400 SANSOME STREET
ATLANTA, GEORGIA 30303 SAN FRANCISCO, CALIFORNIA 94111
TELEPHONE: (404) 572-4600 TELEPHONE: (415) 392-1122
TELECOPIER: (404) 572-5100 TELECOPIER: (415) 773-5759
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: Upon consummation of the merger described herein.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
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Class B Common Stock, $.01 par value....... 8,344,806 shares(1) n/a $449,837,166(2) $112,460(3)
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(1) Based on the maximum number of shares of UPS class B common stock, par value
$.01 per share, that UPS may be required to issue in the merger contemplated
in the Agreement and Plan of Merger, dated as of January 10, 2001, by and
among UPS, VND Merger Sub, Inc., a Delaware corporation and wholly owned
subsidiary of UPS, and Fritz Companies, Inc., a Delaware corporation,
calculated as the product of (1) 41,724,027, which is the sum of (a) the
36,800,125 outstanding shares of common stock, par value $.01 per share, of
Fritz as of March 21, 2001, (b) 3,458,902 shares of Fritz common stock
issuable upon the exercise of outstanding employee and director stock
options as of March 21, 2001, (c) an estimated 1,000,000 shares of Fritz
common stock issuable upon the exercise of employee or director stock
options to be granted prior to the date that the merger is expected to be
consummated and (d) an estimated 465,000 shares of Fritz common stock
issuable prior to the date that the merger is expected to be consummated
pursuant to Fritz employee benefit plans and (2) an exchange ratio of 0.2
shares of UPS class B common stock for each share of Fritz common stock.
(2) Estimated solely for the purpose of calculating the registration fee and
computed pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of
1933, as amended, based on the market value of the Fritz common stock to be
exchanged in the merger, as the product of $10.78125, the average of the
high and low sale prices of Fritz common stock on The Nasdaq National Market
on April 2, 2001 and 41,724,027, which is the sum of (a) the 36,800,125
outstanding shares of common stock of Fritz as of March 21, 2001, (b)
3,458,902 shares of Fritz common stock issuable upon the exercise of
outstanding employee and director stock options as of March 21, 2001, (c) an
estimated 1,000,000 shares of Fritz common stock issuable upon the exercise
of employee or director stock options to be granted prior to the date that
the merger is expected to be consummated and (d) an estimated 465,000 shares
of Fritz common stock issuable prior to the date that the merger is expected
to be consummated pursuant to Fritz employee benefit plans.
(3) Previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE AND MAY
BE CHANGED. UPS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION -- DATED APRIL 24, 2001
FRITZ CO. LOGO
Dear Stockholders,
You are cordially invited to attend a special meeting of stockholders of
Fritz Companies, Inc., which will be held at the Bank of America Building, 51st
Floor, 555 California Street, San Francisco, California, on May 23, 2001 at
10:30 A.M. local time. At the meeting, Fritz will ask you to approve and adopt
the agreement for a merger transaction that will result in the acquisition of
Fritz by United Parcel Service, Inc.
If we complete the merger, holders of Fritz common stock will receive 0.2
of a share of UPS Class B common stock for each share of Fritz common stock they
own. UPS Class B common stock is listed on the New York Stock Exchange under the
symbol "UPS." On April 23, 2001, the closing price of the Class B common stock
was $56.25 per share. This proxy statement/prospectus is a proxy statement of
Fritz and a prospectus of UPS.
We cannot complete the merger unless holders of shares of Fritz common
stock representing a majority of all the shares entitled to vote at the special
meeting vote to approve the merger and adopt the merger agreement. Only Fritz
stockholders who hold shares at the close of business on the record date will be
entitled to vote at the meeting. The record date is April 10, 2001.
YOU SHOULD CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS" BEGINNING ON
PAGE 11 OF THIS PROXY STATEMENT/PROSPECTUS BEFORE VOTING. PLEASE REVIEW THIS
ENTIRE PROXY STATEMENT/PROSPECTUS CAREFULLY.
AFTER CAREFUL CONSIDERATION, THE FRITZ BOARD OF DIRECTORS HAS ADOPTED THE
MERGER AGREEMENT AND DETERMINED THAT THE TRANSACTIONS CONTEMPLATED BY IT,
INCLUDING THE MERGER, ARE IN THE BEST INTERESTS OF FRITZ AND ITS STOCKHOLDERS.
THE FRITZ BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE MERGER AND ADOPTION OF THE MERGER AGREEMENT.
/s/ L.C. FRITZ
Lynn C. Fritz
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY. IF YOU DO NOT RETURN
YOUR PROXY, OR IF YOU DO NOT INSTRUCT YOUR BROKER ON HOW TO VOTE ANY SHARES OF
FRITZ COMMON STOCK HELD FOR YOU IN "STREET NAME," YOUR FRITZ COMMON STOCK WILL
NOT BE VOTED AT THE SPECIAL MEETING, AND THIS WILL HAVE THE SAME EFFECT AS
VOTING AGAINST THE MERGER.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the UPS common stock to be issued in
connection with the merger or passed upon the adequacy or accuracy of this proxy
statement/prospectus. Any representation to the contrary is a criminal offense.
The date of this proxy statement/prospectus is April 25, 2001, and it is
first being mailed to stockholders on or about April 25, 2001.
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VOTING ELECTRONICALLY OR BY TELEPHONE
Fritz stockholders of record may submit their proxies:
- through the Internet by visiting the web site established for that
purpose at http://www.proxyvote.com and following the instructions; or
- by telephone, in the United States, Canada or Puerto Rico, by calling the
toll-free number shown on the proxy card on a touch-tone phone and
following the recorded instructions.
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FRITZ CO. LOGO
FRITZ COMPANIES, INC.
706 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94103
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2001
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Fritz Companies, Inc. will hold a special meeting of its stockholders at
the Bank of America Building, 51st Floor, 555 California Street, San Francisco,
California, on Wednesday, May 23, 2001 at 10:30 a.m. local time, for the
following purposes:
(1) To consider and vote upon a proposal to approve the merger
agreement among UPS, Fritz and VND Merger Sub, Inc., a newly
formed, wholly owned subsidiary of UPS, and the transactions
contemplated by the merger agreement, including the merger.
(2) To transact any other business properly brought before the special
meeting or any adjournment or postponement thereof.
The board of directors is not currently aware of any other matters that
will come before the meeting. Only Fritz stockholders of record at the close of
business on April 10, 2001 are entitled to notice of, and to vote at, the
special meeting and any adjournments or postponements of the special meeting.
AFTER CAREFUL CONSIDERATION, THE FRITZ BOARD OF DIRECTORS HAS ADOPTED THE
MERGER AGREEMENT AND DETERMINED THAT THE TRANSACTIONS CONTEMPLATED BY IT,
INCLUDING THE MERGER, ARE IN THE BEST INTERESTS OF FRITZ AND ITS STOCKHOLDERS.
THE FRITZ BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE MERGER AND ADOPTION OF THE MERGER AGREEMENT.
We cannot complete the merger unless holders of shares of Fritz common
stock representing a majority of all the shares entitled to vote at the special
meeting vote to approve the merger agreement.
FOR MORE INFORMATION ABOUT THE MERGER AND THE OTHER MATTERS TO BE VOTED
UPON AT THE SPECIAL MEETING, PLEASE REVIEW THE PROXY STATEMENT/PROSPECTUS
DELIVERED WITH THIS NOTICE.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE THE
ENCLOSED PROXY CARD, AND SIGN, DATE AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE, OR USE THE TOLL-FREE NUMBER SHOWN ON THE PROXY CARD, OR
VISIT THE WEB SITE NOTED ON YOUR PROXY CARD TO VOTE ON THE INTERNET, SO THAT
YOUR SHARES WILL BE REPRESENTED. THE HOLDERS OF RECORD OF A MAJORITY OF THE
OUTSTANDING SHARES MUST BE PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE
SPECIAL MEETING IN ORDER TO HOLD THE SPECIAL MEETING.
By Order of the Board of Directors
/s/ J.H. RAYMOND
Jan H. Raymond
Executive Vice President, Secretary
and General Counsel
San Francisco, California
April 25, 2001
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TABLE OF CONTENTS
PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 3
General................................................... 3
The Companies............................................. 3
What You Will Receive in the Merger....................... 3
The Merger Agreement...................................... 3
Board of Directors and Management After the Merger........ 3
Material U.S. Federal Income Tax Consequences of the
Merger................................................. 4
Fritz Board of Directors Recommendation................... 4
Fairness Opinion of Morgan Stanley & Co. Incorporated..... 4
Interests of Fritz Directors and Executive Officers in the
Merger................................................. 4
The Special Meeting....................................... 4
Record Date; Voting Power................................. 4
Vote Required............................................. 4
Voting by Directors and Executive Officers................ 4
Stockholder Option Agreements............................. 5
Fritz Option Agreement.................................... 5
Rights Plan............................................... 5
Conditions to the Completion of the Merger................ 5
Termination of the Merger Agreement....................... 5
Stock Options............................................. 5
Regulatory Approvals...................................... 5
Litigation................................................ 6
Expenses.................................................. 6
Market Price Information.................................. 6
Dividend Information...................................... 6
SELECTED FINANCIAL DATA OF UPS.............................. 7
SELECTED FINANCIAL DATA OF FRITZ............................ 9
COMPARATIVE PER SHARE DATA.................................. 10
RISK FACTORS................................................ 11
The Value of the UPS Class B Common Stock You Receive in
the Merger May Fluctuate............................... 11
The Need for Governmental Approvals May Affect the Date of
Completion of the Merger or May Diminish the Benefits
of the Merger.......................................... 11
UPS and Fritz May Encounter Difficulties in Integrating
their Operations or UPS May Not Achieve All of the
Anticipated Benefits of the Merger..................... 11
Fritz Officers and Directors Have Interests in the Merger
that Differ from the Interests of other Fritz
Stockholders........................................... 12
Failure to Complete the Merger May Negatively Impact
Fritz's Stock Price, Future Business and Operations.... 12
If the Merger Is Not Completed, Antitakeover Measures
Implemented by Fritz May Result in Less Attractive
Future Offers.......................................... 13
THE SPECIAL MEETING......................................... 14
Date, Time and Place of the Special Meeting; Purpose...... 14
Record Date, Outstanding Shares and Required Vote......... 14
Voting and Revocation of Proxies.......................... 14
Solicitation of Proxies................................... 15
Stockholder Proposals for Fritz's Annual Meeting.......... 15
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PAGE
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INFORMATION ABOUT UPS AND FRITZ............................. 16
UPS....................................................... 16
Fritz..................................................... 16
THE MERGER.................................................. 17
Relationship with FedEx Corporation....................... 17
Background of the Merger.................................. 17
Reasons for the Merger.................................... 20
Recommendation of Fritz's Board of Directors.............. 22
Opinion of Morgan Stanley & Co. Incorporated.............. 22
Exchange Ratio Analysis................................... 24
Present Value of Research Analyst Price Targets........... 24
Present Value of Potential Future Stock Price............. 24
Analysis of Selected Precedent Transactions............... 24
Comparable Company Analysis............................... 25
Comparative Stock Price Performance....................... 25
Discounted Cash Flow Analysis............................. 26
Interests of Fritz Executive Officers and Directors in the
Merger................................................. 27
UPS Board of Directors.................................... 30
Structure of the Merger; Merger Consideration............. 30
Conversion of Shares; Procedures; Effective Time.......... 30
Material United States Federal Income Tax Consequences of
the Merger............................................. 31
Regulatory Approvals...................................... 32
Litigation................................................ 33
Accounting Treatment...................................... 34
Appraisal Rights.......................................... 34
Resale of UPS Class B Common Stock........................ 34
THE MERGER AGREEMENT........................................ 35
The Merger................................................ 35
Treatment of Stock Options................................ 36
Transfers................................................. 36
Lost, Stolen or Destroyed Certificates.................... 36
Representations And Warranties............................ 36
Covenants................................................. 37
Conditions to the Completion of the Merger................ 43
Termination............................................... 44
Amendment and Waiver...................................... 45
Fees and Expenses......................................... 45
STOCK OPTION AGREEMENT...................................... 46
General................................................... 46
Exercise of the Fritz Stock Option........................ 46
Exercise Price of the Option Shares....................... 46
Cash Exercise Notice...................................... 46
Listing and Registration Rights........................... 46
Repurchase Option......................................... 47
Maximum Amount Realizable by UPS.......................... 47
Termination of the Stock Option Agreement................. 47
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STOCKHOLDER OPTION AGREEMENTS............................... 49
General................................................... 49
Exercise of the Stockholder Stock Option.................. 49
Exercise Price of the Option Shares....................... 50
Voting of the Option Shares............................... 50
Termination of the Stockholder Option Agreements.......... 50
Amendments to the Stockholder Option Agreements........... 50
COMPARATIVE STOCK PRICES AND DIVIDENDS...................... 50
COMPARISON OF RIGHTS OF UPS AND FRITZ STOCKHOLDERS.......... 52
Authorized Capital Stock.................................. 52
Voting.................................................... 53
Number of Directors....................................... 53
Removal of Directors...................................... 53
Filling Vacancies on the Board of Directors............... 53
Calling a Special Meeting of the Stockholders............. 53
Action by Written Consent in Lieu of a Stockholders'
Meeting................................................ 53
Amendment to Certificate of Incorporation................. 54
Amendment of Bylaws....................................... 54
State Anti-takeover Statutes.............................. 54
Indemnification/Limitation of Liability................... 55
Rights Plan............................................... 56
DESCRIPTION OF UPS CAPITAL STOCK............................ 57
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF FRITZ....................................... 57
EXPERTS..................................................... 58
LEGAL MATTERS............................................... 59
WHERE YOU CAN FIND MORE INFORMATION......................... 59
ANNEX A The Merger Agreement................................ A-1
ANNEX B Company Option Agreement............................ B-1
ANNEX C Form of Stockholder Option Agreement................ C-1
ANNEX D Opinion of Morgan Stanley & Co. Incorporated........ D-1
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: ON WHAT AM I BEING ASKED TO VOTE?
A: You are being asked to vote to approve and
adopt the merger agreement entered into between UPS and Fritz and the
merger contemplated by the merger agreement. In the merger, VND Merger Sub,
Inc., a newly formed, wholly owned subsidiary of UPS, will be merged with
and into Fritz. After the merger is completed, Fritz, which will be the
company surviving the merger, will be a wholly owned subsidiary of UPS.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: In the merger, each share of Fritz common
stock will be exchanged for 0.2 of a share of UPS Class B common stock, a
number that is referred to in this document as the exchange ratio. No
fractional shares of UPS Class B common stock will be issued. You will
receive cash for any fractional shares of UPS Class B common stock to which
you would otherwise have been entitled as a result of the merger.
Q: WHY ARE UPS AND FRITZ PROPOSING THE MERGER?
A: Our companies are proposing the merger
because, among other reasons, we believe Fritz's international freight
forwarding and customs brokerage expertise and UPS' express carrier and
package delivery strengths will generate significant cross-selling
opportunities for the combined company. We believe the acquisition of Fritz
will enable UPS to further expand its full range of domestic and
international transportation, logistics and customs brokerage services.
Please read the more detailed description of our reasons for the merger
starting on page .
Q: DOES FRITZ'S BOARD OF DIRECTORS SUPPORT THE
MERGER?
A: Yes. Fritz's board of directors has unanimously
determined that the merger is advisable and fair to, and in the best
interests of, Fritz and its stockholders and recommends that Fritz
stockholders vote FOR adoption of the merger agreement and approval of the
merger.
Q: WHEN AND WHERE IS THE SPECIAL MEETING OF
STOCKHOLDERS?
A: The special meeting will take place on
Wednesday, May 23, 2001 at 10:30 a.m., local time, at the Bank of America
Building, 51st Floor, 555 California Street, San Francisco, California.
Q: WHO CAN VOTE AT THE FRITZ SPECIAL MEETING OF
STOCKHOLDERS?
A: You can vote at the Fritz special meeting if you
owned shares of Fritz common stock at the close of business on Tuesday,
April 10, 2001, a date that is referred to in this document as the record
date. As of the close of business on that day, 36,813,344 shares of Fritz
common stock were outstanding.
Q: WHAT VOTE IS REQUIRED TO ADOPT THE MERGER
AGREEMENT AND APPROVE THE MERGER?
A: Adoption of the merger agreement and
approval of the merger require the affirmative vote of the holders of a majority
of the shares of Fritz common stock outstanding on the record date.
Stockholders will have one vote for each share of Fritz common stock owned
by them.
Q: ARE UPS'S STOCKHOLDERS REQUIRED TO APPROVE
THE MERGER AGREEMENT AND THE MERGER?
A: No. UPS stockholders are not required to
approve the merger agreement or the merger.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the
information contained in this proxy statement/prospectus, please complete
and sign your proxy and return it in the enclosed return envelope as soon
as possible, so that your shares may be represented at the Fritz special
meeting. If you sign and send in your proxy and do not indicate how you
want to vote, your proxy will be counted as a vote in favor of adoption and
approval of the merger agreement and the merger.
If you are a stockholder of record or are a participant in a Fritz stock
plan, you may vote your shares via the Internet or by telephone by
following the instructions accompanying your proxy card.
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You may attend the Fritz special meeting and vote your shares in person
rather than by proxy.
Q: IF MY SHARES ARE HELD IN THE NAME OF A BANK,
BROKER OR OTHER FIDUCIARY, WILL THE BANK, BROKER OR OTHER FIDUCIARY VOTE MY
SHARES FOR ME?
A: If your shares are held in the name of a bank,
broker or other fiduciary, you should provide that person with instructions
on how to vote your shares or you should request a proxy from that person
to vote at the Fritz special meeting. If you do not provide your bank,
broker or other fiduciary with instructions on how to vote your shares,
your bank, broker or other fiduciary will not be permitted to vote your
shares at the Fritz special meeting. Please check the voting form that you
receive to see if you may vote via the Internet or by telephone.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY
SIGNED PROXY?
A: Yes. You can change your vote at any time
before your proxy is voted at the Fritz special meeting. You can do this in
one of several ways. You can send a written notice stating that you would
like to revoke your proxy, or you can complete and submit a new proxy. If
you choose either of these two methods, you must submit your notice of
revocation or your new proxy to Fritz at the address on the inside front
cover of this proxy statement/prospectus. In addition, you can attend the
Fritz special meeting and vote in person.
You may also revoke your proxy by calling the toll-free number on your
proxy card or by voting through the Internet by following the instructions
on your proxy card, even if you did not previously vote by either of these
methods. If you wish to change your vote and your shares are held in the
name of a bank, broker or other fiduciary whom you have directed to vote
your shares, you should instruct that person to change your vote.
Q: WHAT HAPPENS IF I DO NOT VOTE?
A: Since the affirmative vote of the holders of a
majority of the outstanding shares of Fritz common stock is required to
adopt the merger agreement and approve the merger, a failure to send in
your proxy or to vote at the special meeting or to instruct the bank,
broker or other fiduciary in whose name your shares may be held, will have
the same effect as a vote "against" the merger agreement and the merger.
Q: AM I ENTITLED TO APPRAISAL RIGHTS?
A: No. Fritz stockholders are not entitled to
appraisal rights in connection with the merger.
Q: SHOULD I SEND IN MY FRITZ STOCK CERTIFICATES AT
THIS TIME?
A: No. After we complete the merger, an
exchange agent to be appointed in connection with the merger will send you
written instructions for exchanging your Fritz stock certificates.
Q: WHEN DO YOU ANTICIPATE THAT THE MERGER WILL
BE COMPLETED?
A: We are working to complete the merger in the
second calendar quarter of 2001. We intend to complete the merger after the
Fritz special meeting and after we have obtained the regulatory approvals
necessary for the merger.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the merger or
if you need additional copies of this proxy statement/prospectus or the
enclosed proxy, you should contact:
Investor Relations
Fritz Companies, Inc.
706 Mission Street
San Francisco, California 94103
Telephone: (415) 538-0444
e-mail: investor.relations@fritz.com
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SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should read carefully this
entire proxy statement/prospectus and the other documents to which we have
referred you. See "Where You Can Find More Information" beginning on page 59.
For a description of any material differences between the rights of Fritz
stockholders and UPS stockholders, see "Comparison of Rights of UPS and Fritz
Stockholders" beginning on page 52. We have included page references
parenthetically to direct you to more complete descriptions of the topics
presented in this summary.
GENERAL
THE COMPANIES (PAGE 16)
UNITED PARCEL SERVICE, INC.
55 Glenlake Parkway, N.E.
Atlanta, Georgia 30328
(404) 828-6000
UPS is the world's largest express carrier, the world's largest package
delivery company and a leading global provider of specialized transportation and
logistics services. In 2000, UPS delivered an average of more than 13.6 million
pieces per day worldwide. Total revenue in 2000 was over $29.7 billion.
FRITZ COMPANIES, INC.
706 Mission Street
San Francisco, California 94103
(415) 538-0444
Fritz is a specialist in providing global logistics services and related
information services for importers and shippers worldwide. Fritz is primarily
engaged in providing logistics management, international air and ocean freight
forwarding, customs brokerage, and material management and distribution
services. Fritz delivers comprehensive supply chain solutions to its customers
worldwide by providing flexible door-to-door transportation and materials
management using sophisticated information systems. Fritz also provides
value-added services through logistics information as well as international and
domestic movement of goods customarily provided by traditional freight
forwarders. These services are designed to provide integrated global logistics
solutions for customers to streamline their operations, improve their inventory
management information and enhance their profitability and to provide customers
with more efficient and effective international transportation strategies. The
Fritz network is composed of highly trained professionals working in more than
400 locations in 120 countries.
WHAT YOU WILL RECEIVE IN THE MERGER (PAGE 30)
In the merger, each share of Fritz common stock will be exchanged for 0.2
of a share of UPS Class B common stock, a number that is referred to in this
document as the exchange ratio. No fractional shares of UPS Class B common stock
will be issued. You will receive cash for any fractional shares of UPS Class B
common stock to which you otherwise would have been entitled as a result of the
merger.
Because the exchange ratio is fixed and because the market price of the UPS
Class B common stock will fluctuate, the market value of the stock that you
receive when the merger is completed may be higher or lower than the market
value of the same number of shares today. In addition, the market value of the
shares that you receive in the merger may increase or decrease after the merger
is completed.
THE MERGER AGREEMENT (PAGE 35)
The merger agreement is attached as Annex A to this proxy
statement/prospectus. We encourage you to read the merger agreement carefully.
It is the principal document governing the merger.
BOARD OF DIRECTORS AND MANAGEMENT AFTER THE MERGER (PAGE 28)
The UPS board of directors will remain unchanged after the completion of
the merger. At the effective time of the merger, the members of the Fritz board
of directors will be replaced by the members of the Board of Directors of VND
Merger Sub, Inc., the wholly owned UPS subsidiary that is being merged into
Fritz.
UPS and Fritz expect that Lynn C. Fritz, the current Chairman and Chief
Executive Officer of Fritz, will be retained as a consultant to the combined
company. Current management of Fritz is expected to remain in place, with
oversight from UPS's Corporate Development Group.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGE 31)
The merger will generally be tax-free to holders of Fritz common stock for
United States federal income tax purposes, except in the case of U.S. holders
with respect to cash received for fractional shares of UPS Class B common stock.
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN
TAX ADVISOR FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO
YOU.
FRITZ BOARD OF DIRECTORS RECOMMENDATION (PAGE 22)
The Fritz board of directors has determined that the merger agreement and
the merger are advisable, fair to and in the best interests of Fritz and its
stockholders and unanimously recommends that Fritz stockholders vote FOR the
approval of the merger and adoption of the merger agreement. To review the
background of and reasons for the merger in greater detail, as well as the risks
related to the merger, see pages 11 through 13 and 17 through 22.
FAIRNESS OPINION OF MORGAN STANLEY & CO. INCORPORATED (PAGE 22)
In deciding to approve the merger agreement and the merger, the Fritz board
of directors considered the opinion of its financial advisor, Morgan Stanley &
Co. Incorporated, dated as of January 9, 2001, that based upon and subject to
the various considerations, limitations, and qualifications set forth in the
written opinion, the exchange ratio, as set forth in the merger agreement, was
fair, from a financial point of view, to the holders of Fritz common stock. The
opinion is attached as Annex D to this proxy statement/prospectus. We encourage
Fritz stockholders to read this opinion carefully in its entirety to understand
the procedures followed, assumptions made, matters considered and limitations of
the review undertaken.
INTERESTS OF FRITZ DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER (PAGE 27)
Fritz stockholders should note that Fritz directors and executive officers
have interests in the merger that are different from, or in addition to, the
interests of other Fritz stockholders. You should be aware of these interests
because they may conflict with yours. If we complete the merger, seven Fritz
executive officers will be entitled to severance payments, automatic vesting of
all unvested, outstanding stock options, shares of restricted stock and any
other similar securities owned by them as well as continued health coverage
after termination of their employment. The indemnification arrangements for
current Fritz directors and officers also will be continued, and UPS will
maintain directors' and officers' insurance for those current Fritz directors
and officers for at least six years following the merger.
THE SPECIAL MEETING (PAGE 14)
The special meeting of Fritz stockholders will be held at the Bank of
America Building, 51st Floor, 555 California Street, San Francisco, California,
at 10:30 a.m., local time, on Wednesday, May 23, 2001. At the Fritz special
meeting, the Fritz stockholders will be asked to approve the merger and adopt
the merger agreement.
RECORD DATE; VOTING POWER (PAGE 14)
Fritz stockholders are entitled to vote at the Fritz special meeting if
they owned shares of Fritz common stock as of the close of business on Tuesday,
April 10, 2001.
On the record date, there were 36,813,344 shares of Fritz common stock
outstanding. Fritz stockholders will have one vote for each share of Fritz
common stock that they owned on the Fritz record date.
VOTE REQUIRED (PAGE 14)
The affirmative vote of holders of shares of Fritz common stock
representing a majority of all the votes entitled to vote at the Fritz special
meeting is required to approve the merger and adopt the merger agreement. Fritz
will count properly executed proxies marked "Abstain" for purposes of
determining whether there is a quorum, but the shares represented by these
proxies will not be voted at the special meeting.
VOTING BY DIRECTORS AND EXECUTIVE OFFICERS (PAGE 14)
On the Fritz record date, directors and officers of Fritz and their
affiliates owned and were entitled to vote shares of Fritz common stock
representing
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approximately 37.2% of the aggregate voting power of Fritz common stock
outstanding on that date. The directors and executive officers of Fritz have
indicated that they intend to vote the Fritz common stock that they own for
approval of the merger and the adoption of the merger agreement.
STOCKHOLDER OPTION AGREEMENTS (PAGE 49)
Lynn C. Fritz and some of his affiliates have entered into stockholder
option agreements with UPS. These option agreements grant to UPS the right to
purchase all of the shares of Fritz common stock currently owned by Mr. Fritz
and these affiliates as well as any shares to be owned by them upon the exercise
of stock options. As of the record date, Mr. Fritz and these affiliates
beneficially owned a total of 13,471,787 shares of Fritz common stock, which
represented approximately 36.1% of the outstanding shares of Fritz common stock
on that date.
Pursuant to the option agreements, Mr. Fritz and his affiliates agreed to
vote all of the shares of Fritz common stock owned by them for the adoption of
the merger agreement and approval of the merger or otherwise as directed by UPS.
UPS may not exercise the options until the occurrence of specifically
defined extraordinary transactions (other than the merger) involving the sale or
disposition of a substantial percentage of the assets of Fritz and its
subsidiaries or of the combined voting power of Fritz and its subsidiaries.
A form of the stockholder option agreement is attached as Annex B to this
proxy statement/prospectus.
FRITZ OPTION AGREEMENT (PAGE 46)
Fritz has entered into an option agreement with UPS that grants to UPS the
right to purchase 3,707,609 shares of Fritz common stock. As of the date of the
option agreement and assuming the issuance of the shares subject to the option,
the number of shares of Fritz common stock purchasable by UPS from Fritz
represented 10.1% of the outstanding shares of Fritz common stock. The option
may be exercised by UPS if as a result of the termination of the merger
agreement, Fritz is required to pay to UPS a termination fee.
The form of the Fritz option agreement is attached as Annex C to this proxy
statement/prospectus.
RIGHTS PLAN (PAGE 56)
As required by the merger agreement, as of January 16, 2001, Fritz entered
into a stockholder rights agreement that is intended to restrict acquisitions of
Fritz common stock by any party (other than a person or group approved by the
Fritz board of directors) to no more than 15% of the then-outstanding shares of
Fritz common stock.
CONDITIONS TO THE COMPLETION OF THE MERGER (PAGE 43)
Fritz and UPS will complete the merger only if they satisfy or, in some
cases, waive, several conditions.
For a description of the conditions to the completion of the merger, see
"The Merger Agreement -- Conditions to the Completion of the Merger."
TERMINATION OF THE MERGER AGREEMENT (PAGE 44)
Fritz or UPS may terminate the merger agreement under various
circumstances. In addition, in specific circumstances, Fritz may be required to
pay to UPS a termination fee of $13.5 million. For a more complete discussion,
see "The Merger Agreement -- Termination."
STOCK OPTIONS (PAGE 36)
Upon the completion of the merger, each outstanding option to purchase
shares of Fritz common stock granted under Fritz's stock option plans will
become an option to purchase a number of shares of UPS Class A common stock
equal to the number of shares of Fritz common stock that were subject to the
option multiplied by 0.2, rounded down to the nearest whole number of shares of
UPS Class A common stock, at an exercise price equal to the current exercise
price divided by 0.2, rounded up to the nearest whole cent. Each of those
options then will be subject to the same terms and conditions as were in effect
immediately prior to the merger.
REGULATORY APPROVALS (PAGE 32)
Under the Hart-Scott-Rodino Act, the merger may not be completed until
notification and report forms have been given and information furnished to the
Federal Trade Commission and to the Antitrust Division of the U.S. Department of
Justice and the specified waiting period has been terminated or has
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expired. Early termination of the waiting period was granted on February 16,
2001.
The merger also is subject to the review of numerous foreign agencies,
generally for antitrust reasons. Most of these agencies, require a filing to be
made by Fritz and/or UPS before the effective date, but some of the filings are
not required to be made until after the effective date. The waiting periods with
respect to these filings vary.
LITIGATION (PAGE 33)
FedEx Corporation and Federal Express Corporation, a wholly owned
subsidiary of FedEx Corporation (collectively, "FedEx"), have filed a lawsuit in
a Tennessee court against Fritz, alleging that in the course of negotiating the
merger, Fritz breached or is threatening to breach its obligations to FedEx not
to disclose confidential information and trade secrets, and that the merger will
result in the disclosure to UPS of FedEx trade secrets or confidential
information. FedEx obtained without any notice to Fritz a temporary restraining
order prohibiting disclosure of confidential FedEx information. FedEx
subsequently filed an amended complaint asking the Court to block the merger
between UPS and Fritz. UPS was not originally a party to this Tennessee lawsuit,
but was later added by the Tennessee Court as a necessary party defendant. The
Court issued an order on February 23, 2001 continuing the temporary restraining
order but indicating that it would not block the proposed merger at that time.
The Court directed Fritz to develop and submit to the Court a separation plan to
protect the information that FedEx claims to be trade secrets after the merger
with UPS, which Fritz has done. On March 20, 2001, the Court indicated that it
would enter an order of temporary injunction requiring Fritz to implement some
aspects of the Fritz separation plan, leaving open other issues with respect to
the Fritz separation plan which the parties are to seek to resolve with a
Special Master appointed by the Court. The Special Master has issued a report
and recommendation to the Court, which has been placed under seal. The parties
will have an opportunity to file objections regarding the recommendation. Fritz
denies that it has acted improperly or has caused any damage to FedEx and
intends to vigorously defend the lawsuit. Fritz has also filed a counterclaim
alleging breach of contract by FedEx.
While the Tennessee suit between FedEx and Fritz was proceeding, UPS filed
a lawsuit in Georgia, joining FedEx and Fritz, seeking a judicial declaration
that completion of the merger will not require Fritz to violate its agreement
with FedEx. UPS has made clear that it does not seek or desire disclosure of any
FedEx trade secret material. FedEx has appeared in the Georgia action and has
moved to stay or dismiss the Georgia action. UPS intends to vigorously assert
its position that the claims of FedEx seeking to block the merger are without
merit.
For a more complete description of these lawsuits, see "The
Merger -- Litigation."
EXPENSES (PAGE 45)
Each of Fritz and UPS has agreed to pay its own costs and expenses incurred
in connection with the merger, except that UPS and Fritz have agreed to share
equally the costs of filing, printing and mailing the registration statement and
this proxy statement/prospectus (including SEC filing fees) and the filing fees
for the premerger notification and report forms under the Hart-Scott-Rodino Act.
MARKET PRICE INFORMATION (PAGE 50)
Shares of UPS Class B common stock are traded on the NYSE and shares of
Fritz common stock are traded on the Nasdaq National Market System. On January
9, 2001, the last full trading day before the public announcement of the merger
agreement, UPS Class B common stock closed at $61.00 per share and Fritz common
stock closed at $7.03 per share. On April 23, 2001, the most recent practicable
trading day before the date of this proxy statement/prospectus, UPS Class B
common stock closed at $56.25 per share and Fritz common stock closed at $10.98
per share.
DIVIDEND INFORMATION (PAGE 52)
The policy of UPS's board of directors is to declare dividends each year
out of current earnings. The declaration of future dividends is subject to the
discretion of the UPS board of directors in light of all relevant facts,
including earnings, general business conditions and working capital
requirements.
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SELECTED FINANCIAL DATA OF UPS
The following table sets forth selected financial information for UPS for
the periods indicated. The financial information is derived from UPS's audited
financial statements for each of the years in the five-year period ended
December 31, 2000. The following financial information should be read in
conjunction with the UPS Consolidated Financial Statements and the notes
thereto, Management's Discussion and Analysis of Results of Operations and
Financial Condition and other financial data appearing in the UPS Annual Report
on Form 10-K for the fiscal year ended December 31, 2000, which is incorporated
by reference herein.
YEAR ENDED DECEMBER 31,
--------------------------------------------------
2000 1999 1998 1997 1996
-------- ------- ------- ------- -------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
SELECTED INCOME STATEMENT DATA
Revenue:
U.S. domestic package..................... $ 24,002 $22,313 $20,650 $18,868 $18,881
International package..................... 4,166 3,730 3,399 3,067 3,074
Non-package............................... 1,603 1,009 739 523 413
-------- ------- ------- ------- -------
Total revenue..................... 29,771 27,052 24,788 22,458 22,368
Operating expenses:
Compensation and benefits................. 16,546 15,285 14,346 13,289 13,326
Other..................................... 8,713 7,862 7,439 7,526 7,092
-------- ------- ------- ------- -------
Total operating expenses.......... 25,259 23,147 21,785 20,815 20,418
Operating profit (loss):
U.S. domestic package..................... 3,929 3,506 2,815 1,623 2,150
International package..................... 274 232 29 (106) (302)
Non-package............................... 309 167 159 126 102
-------- ------- ------- ------- -------
Total operating profit............ 4,512 3,905 3,003 1,643 1,950
Other income (expense):
Investment income......................... 527 197 126 97 55
Interest expense.......................... (205) (228) (227) (187) (95)
Tax assessment............................ -- (1,786) -- -- --
-------- ------- ------- ------- -------
Income before income taxes................ 4,834 2,088 2,902 1,553 1,910
Income taxes.............................. 1,900 1,205 1,161 644 764
-------- ------- ------- ------- -------
Net income........................ $ 2,934 $ 883 $ 1,741 $ 909 $ 1,146
======== ======= ======= ======= =======
Per share amounts:(1)
Basic earnings per share.................. $ 2.54 $ 0.79 $ 1.59 $ 0.82 $ 1.03
Diluted earnings per share................ $ 2.50 $ 0.77 $ 1.57 $ 0.81 $ 1.01
Dividends declared per share.............. $ 0.68 $ 0.58 $ 0.43 $ 0.35 $ 0.34
Weighted Average Shares Outstanding:(1)
Basic..................................... 1,153 1,121 1,093 1,103 1,114
Diluted................................... 1,175 1,141 1,108 1,116 1,129
As Adjusted Net Income Data:
Net income before impact of non-recurring
items.................................. $ 2,795(2) $ 2,325(3) $ 1,741 $ 909 $ 1,146
As a percentage of revenue................ 9.4% 8.6% 7.0% 4.0% 5.1%
Basic earnings per share.................. $ 2.42 $ 2.07 $ 1.59 $ 0.82 $ 1.03
Diluted earnings per share................ $ 2.38 $ 2.04 $ 1.57 $ 0.81 $ 1.01
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AS OF DECEMBER 31,
-----------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
(IN MILLIONS)
SELECTED BALANCE SHEET DATA
Working capital.................................. $ 2,623 $ 5,994 $ 1,355 $ 734 $ 1,027
Long-term debt................................... 2,981 1,912 2,191 2,583 2,573
Total assets..................................... 21,662 23,028 17,067 15,912 14,954
Shareowners equity............................... 9,735 12,474 7,173 6,087 5,901
---------------
(1) Certain financial information for the years ended December 31, 1996, 1997
and 1998 has been retroactively restated to give effect to the November 1999
merger in which United Parcel Service of America, Inc. became a wholly owned
subsidiary of UPS.
(2) Excludes $139 million in net income related primarily to investment gains.
(3) Excludes a $1.442 billion tax assessment charge.
UPS FIRST QUARTER 2001 RESULTS
For the three months ended March 31, 2001, UPS revenues totaled $7.5
billion, up 4% compared to the $7.2 billion reported for the same period a year
earlier. Consolidated operating profits declined 11.5% during the period to $944
million. Adjusted net income totaled $582 million or $0.51 per diluted share,
down 8.9% compared to the $0.56 per diluted share reported the prior year. These
results do not include non-recurring items that occurred in both quarters. The
first quarter of 2001 included a one-time cumulative effect charge on adoption
of an accounting standard for derivatives, FAS133, which totaled $26 million
after tax, and the first quarter of 2000 included net one-time gains totaling
$139 million after tax. The first quarter of 2001 was one working day shorter
than the same period in 2000.
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SELECTED FINANCIAL DATA OF FRITZ
The following table sets forth selected financial information for Fritz for
the periods indicated. The financial information is derived from Fritz's audited
financial statements for each of the years in the five-year period ended May 31,
2000. The financial information for the nine months ended February 28, 2001 and
February 29, 2000 is derived from Fritz's unaudited financial statements. The
results of operations for the nine months ended February 28, 2001 are not
necessarily indicative of results to be expected for the full year. The
following financial information should be read in conjunction with the Fritz
Consolidated Financial Statements and the notes thereto, Management's Discussion
and Analysis of Results of Operations and Financial Condition and other
financial data appearing in the Fritz Annual Report on Form 10-K for the fiscal
year ended May 31, 2000, and the Fritz Quarterly Report on Form 10-Q for the
fiscal quarter ended February 28, 2001, which are incorporated by reference
herein.
NINE MONTHS ENDED
YEAR ENDED MAY 31, ---------------------------
--------------------------------------------------------------- FEBRUARY 28, FEBRUARY 29,
2000 1999 1998 1997 1996 2001 2000
---------- ---------- ---------- ---------- ---------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SELECTED INCOME STATEMENT DATA
Revenue.......................... $1,612,691 $1,387,727 $1,300,083 $1,156,770 $1,043,858 $1,177,939 $1,200,196
Net Revenue...................... 619,340 577,977 558,265 509,371 457,568 447,011 459,859
Merger and related costs......... -- -- -- -- 14,555(a) -- --
Income from operations........... 32,527 25,051 25,813 2,858 38,659 12,179 25,784
Net income....................... 17,425 13,452 18,090 308 25,001 2,388 13,669
Net income per share -- basic.... .48 .37 .51 .01 .73 .07 .37
Net income per
share -- diluted............... .47 .37 .50 .01 .71 .06 .37
AS OF MAY 31, AS OF
----------------------------------------------- FEBRUARY 28,
2000 1999 1998 1997 1996 2001
------- ------- ------- ------- ------- ------------
SELECTED BALANCE SHEET DATA
Total assets................................................ 825,232 726,908 720,813 723,516 733,462 839,975
Long-term obligations, net of current portion............... 116,891 89,606 101,346 84,884 89,505 141,538
Stockholders' equity........................................ 274,355 264,082 250,328 234,695 230,747 272,390
---------------
(a) On May 30, 1995, Fritz completed its merger with Intertrans Corporation,
which was accounted as a pooling of interests. In 1996, Fritz recorded
additional merger and related costs of $14.6 million which were incurred in
association with the Intertrans merger.
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COMPARATIVE PER SHARE DATA
The following table sets forth selected historical and pro forma per share
data for UPS and historical and pro forma equivalent per share data for Fritz.
The data presented below should be read in conjunction with the historical
financial statements of UPS and Fritz that have been incorporated by reference
in this document. Data for Fritz, which utilizes a May 31 fiscal year end, is
presented for the 12 months ended November 30, 2000 to facilitate comparison
with UPS data. The Fritz pro forma equivalent per share data was calculated by
multiplying the UPS pro forma per share data by the exchange ratio of 0.2. The
pro forma combined per share data may not be indicative of the operating results
or financial position that would have occurred if the merger had been
consummated at the beginning of the period indicated, and may not be indicative
of future operating results or financial position.
FISCAL YEAR ENDED
DECEMBER 31, 2000
-------------------------
HISTORICAL PRO FORMA
---------- -----------
(UNAUDITED)
UPS HISTORICAL AND PRO FORMA
Net Income Per Share:
Basic..................................................... 2.54 2.53
Diluted................................................... 2.50 2.49
Cash Dividends Declared Per Share........................... .68 .68
Book Value Per Share........................................ 8.58 8.91
TWELVE MONTHS
ENDED NOVEMBER 30, 2000
--------------------------
HISTORICAL PRO FORMA
----------- -----------
(UNAUDITED) (UNAUDITED)
FRITZ HISTORICAL AND PRO FORMA
Net Income Per Share:
Basic..................................................... $ .37 $ .51
Diluted................................................... .37 .50
Cash Dividends Declared Per Share........................... 0 .14
Book Value Per Share........................................ $7.59 $1.78
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RISK FACTORS
In addition to the other information contained in or incorporated by
reference into this proxy statement/prospectus, you should carefully consider
the following risk factors in deciding whether to vote to adopt the merger
agreement and approve the merger.
THE VALUE OF THE UPS CLASS B COMMON STOCK YOU RECEIVE IN THE MERGER MAY
FLUCTUATE.
Upon completion of the merger, each share of Fritz common stock will be
automatically converted into the right to receive 0.2 of a share of UPS Class B
common stock. This exchange ratio is fixed and there will be no adjustment in
the event of fluctuations in the market price of either Fritz common stock or
UPS Class B common stock prior to the completion of the merger, and neither
party is permitted to "walk away" from the merger because of changes in either
party's stock price. As a result, the value of the shares you receive in the
merger will not be known at the time you vote on the merger but will depend on
the market price of UPS Class B common stock at the time of completion of the
merger. If the market price of UPS Class B common stock goes up or down, the
value of the shares you receive in the merger also will go up or down. The price
of UPS Class B common stock may vary due to changes in the business, operations
or prospects of UPS, market assessments of the merger, regulatory
considerations, general market and economic conditions or other factors. No
prediction can be made as to the market prices of either Fritz common stock or
UPS Class B common stock at any time.
THE NEED FOR GOVERNMENTAL APPROVALS MAY AFFECT THE DATE OF COMPLETION OF THE
MERGER OR MAY DIMINISH THE BENEFITS OF THE MERGER.
The merger is conditioned upon, among other things, the expiration or early
termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act (early termination was granted on February 16, 2001).
In addition, filings with, notifications to and authorizations and approvals of,
various governmental agencies in numerous other countries with respect to the
merger relating primarily to antitrust issues must be made and received prior to
the completion of the merger. Satisfying these regulatory requirements may
affect the date of completion of the merger. In addition, you should be aware
that, as in any large transaction, it is possible that, among other things,
restrictions on the combined operations of Fritz and UPS, including
divestitures, may be sought by governmental agencies as a condition to obtaining
the required regulatory approvals. Such restrictions on operations and
divestitures may diminish the benefits of the merger to UPS. Each of Fritz and
UPS has a "walk away" right if a governmental agency conditions its
authorization or approval upon a divestiture by UPS or the surviving corporation
in the merger or on any other action that reasonably would be expected to impair
UPS' ability to achieve in any material respect the overall benefits expected,
as of the date of the merger agreement, to be realized from the completion of
the merger.
UPS AND FRITZ MAY ENCOUNTER DIFFICULTIES IN INTEGRATING THEIR OPERATIONS OR UPS
MAY NOT ACHIEVE ALL OF THE ANTICIPATED BENEFITS OF THE MERGER.
The merger involves the integration of two companies that have previously
operated separately. The integration of UPS and Fritz will involve special risks
and challenges, including those relating to:
- the retention of Fritz customers,
- the retention and assimilation of Fritz employees,
- the integration of the operations and systems of the two companies, and
- the fulfillment of Fritz's obligations to third parties.
The success of the merger will depend, in part, on UPS' ability to realize
the anticipated cost savings and growth opportunities from integrating the
businesses of Fritz with those of its own. The realization of these benefits may
prove difficult. For example, some of Fritz's customers and strategic partners,
such as Fritz customers competitive with UPS, may determine that the merger is
detrimental to their relationships with Fritz and therefore may modify or
terminate their relationships with Fritz. In addition, for example, Fritz's
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obligations of confidentiality to third parties may delay or prevent full
integration of Fritz and UPS. Even if UPS is able to integrate the business
operations of Fritz successfully, there can be no assurance that this
integration will result in the realization of the full benefits that UPS
currently expects to result from this integration or that these benefits will be
achieved within the anticipated time frame.
FRITZ OFFICERS AND DIRECTORS HAVE INTERESTS IN THE MERGER THAT DIFFER FROM THE
INTERESTS OF OTHER FRITZ STOCKHOLDERS.
The directors and executive officers of Fritz have interests in the merger
that are different from, or are in addition to, yours. The interests of the
directors and executive officers include rights to:
- indemnification, by the surviving company in the merger, of the same type
as is currently provided pursuant to Fritz's certificate of incorporation
and bylaws and pursuant to employment and indemnification agreements to
which Fritz is a party; and
- continued coverage under directors' and officers' insurance for six years
after the completion of the merger.
In addition, the interests of the executive officers include rights to:
- automatic vesting of outstanding unvested stock options, restricted stock
and other securities granted under similar plans;
- severance payments; and
- continued group health coverage after termination of employment.
As a result of these interests, Fritz's directors and officers may be more
likely to vote in favor of the proposal relating to the merger than if they did
not hold these interests. In addition, Lynn C. Fritz has agreed to vote his
shares of Fritz common stock in favor of the merger. Fritz stockholders should
consider whether these interests may have influenced these directors and
officers to support or recommend the merger.
FAILURE TO COMPLETE THE MERGER MAY NEGATIVELY IMPACT FRITZ'S STOCK PRICE, FUTURE
BUSINESS AND OPERATIONS.
If the merger is not completed, Fritz may be subject to a number of
material risks, including:
- in specific circumstances, Fritz may be required to pay UPS a termination
fee of $13.5 million,
- if Fritz is required to pay UPS a termination fee, UPS will also be
entitled either to (i) exercise an option granted to UPS by Fritz to
purchase 3,707,609 shares of Fritz common stock or (ii) receive a cash
payment calculated based on the option exercise price and the price of
Fritz common stock; exercise by UPS of this option will result in a
decrease in the percentage of outstanding Fritz common stock currently
held by Fritz stockholders,
- in specific circumstances, options granted to UPS by stockholders of
Fritz to purchase an aggregate of 13,471,787 shares of Fritz common
stock, together with any additional shares acquired by those stockholders
before completion of the merger, may become exercisable and, if exercised
separately or in conjunction with the option granted to UPS by Fritz, may
depress Fritz's stock price and may make another business combination
involving Fritz more difficult,
- the price of Fritz common stock may decline to the extent that the
current price reflects a market assumption that the merger will be
completed and that the merger will be favorable to Fritz stockholders,
and
- the diversion of management attention from the day-to-day business of
Fritz and the disruption to its employees and its relationships with its
customers and suppliers during the period before completion of the merger
may adversely affect Fritz's business and operations.
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If the merger is terminated and Fritz's board of directors determines to
seek another merger or business combination, there can be no assurance that it
will be able to find a partner willing to pay an equivalent or more attractive
price than that which would be paid in the merger. In addition, while the merger
agreement is in effect, subject to exceptions described below under the captions
"Merger Agreement -- Covenants -- Fritz Stockholders' Meeting" and "Merger
Agreement -- Covenants -- Fritz Board Recommendations", Fritz is prohibited from
soliciting, initiating, encouraging or entering into specific extraordinary
transactions, such as a merger, sale of assets or other business combination,
with any third party.
THE PENDING LITIGATION BROUGHT BY FEDEX COULD RESULT IN THE MERGER BEING
PROHIBITED OR SUBJECT TO ADVERSE CONDITIONS.
FedEx Corporation and a wholly owned subsidiary of FedEx filed a lawsuit
against Fritz alleging that in the course of negotiating the merger, Fritz
breached confidentiality obligations under two agreements between Fritz and
FedEx. FedEx seeks unspecified damages and a temporary and permanent injunction
against Fritz's completion of the merger. The Court prohibited Fritz from
disclosing confidential FedEx information or otherwise breaching certain
provisions of the agreements, and directed Fritz to submit a plan to provide
protections against improper disclosure of FedEx confidential information, which
Fritz did. The Court also appointed a Special Master and requested that it
provide the Court with recommendations as to the implementation of such plan.
The Special Master has issued a report and recommendation to the Court, which
has been placed under seal. The parties will have an opportunity to file
objections regarding the recommendation. As of the date of this prospectus, the
Court has not rendered a decision. Although Fritz believes it has meritorious
defenses and intends to vigorously defend the lawsuit, there can be no assurance
that the Court will not ultimately issue an order enjoining or delaying the
consummation of the merger, or imposing conditions on the merger that could be
adverse to UPS and Fritz.
UPS has been joined as a party in this action and has filed a separate
lawsuit in another court against FedEx, joining Fritz and seeking a judicial
declaration that completion of the merger will not require Fritz to breach its
agreements with FedEx. UPS has made clear that it does not seek or desire
disclosure of any FedEx trade secret material. UPS intends to vigorously assert
its position that the claims of FedEx seeking to block the merger are without
merit. For a more detailed discussion of this litigation, please see "The
Merger -- Litigation."
IF THE MERGER IS NOT COMPLETED, ANTITAKEOVER MEASURES IMPLEMENTED BY FRITZ MAY
RESULT IN LESS ATTRACTIVE FUTURE OFFERS.
In connection with the execution of the merger agreement, Fritz implemented
a rights plan. The rights plan has the antitakeover effect of causing
substantial dilution to a person or group that attempts to acquire Fritz on
terms not approved by Fritz's board of directors. This antitakeover measure
could make Fritz less attractive to potential acquirors who otherwise might be
willing to pay a premium over the then-current market price of Fritz common
stock in an acquisition.
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THE SPECIAL MEETING
DATE, TIME AND PLACE OF THE SPECIAL MEETING; PURPOSE
This proxy statement/prospectus is being sent to you in connection with the
solicitation of proxies for use at the special meeting of Fritz stockholders and
at any adjournments or postponements of the special meeting. The special meeting
of the Fritz stockholders will be held on Wednesday, May 23, 2001, at 10:30
a.m., local time, at the Bank of America Building, 51st Floor, 555 California
Street, San Francisco, California. At the special meeting, Fritz stockholders
will consider and vote on a proposal to adopt the merger agreement and approve
the merger.
Fritz's board of directors has determined that the terms of the merger and
the merger agreement are advisable, fair to, and in the best interests of, Fritz
and its stockholders. Accordingly, Fritz's board of directors has approved the
merger agreement and the merger and recommends that you vote FOR adoption of the
merger agreement and approval of the merger.
Representatives of KPMG LLP, independent public accountants for Fritz, are
expected to be present at the special meeting and to be available to respond to
appropriate questions and will have an opportunity to make a statement if they
choose to do so.
RECORD DATE, OUTSTANDING SHARES AND REQUIRED VOTE
Only holders of record of Fritz common stock at the close of business on
April 10, 2001, which is referred to in this document as the record date, will
be entitled to receive notice of and vote at the Fritz special meeting. Each
share of Fritz common stock is entitled to one vote. As of the record date,
there were 36,813,344 shares of Fritz common stock outstanding.
Holders of not less than a majority of the outstanding shares of Fritz
common stock entitled to vote, present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Fritz special
meeting. The affirmative vote of the holders of a majority of the outstanding
shares of Fritz common stock entitled to vote is required to approve the merger.
As of the record date, Lynn C. Fritz and his wife beneficially owned and
were entitled to vote 13,471,787 shares of Fritz common stock (including
employee stock options to purchase 526,666 shares exercisable within 60 days),
constituting approximately 36.1% of the outstanding shares of Fritz common
stock. As of the record date, Mr. Fritz, Mrs. Fritz and the other executive
officers and directors of Fritz beneficially owned and were entitled to vote an
aggregate of 13,996,661 shares of Fritz common stock (including employee stock
options to purchase 792,172 shares exercisable within 60 days), constituting
approximately 37.2% of Fritz common stock.
Pursuant to stockholder option agreements that Mr. Fritz and Mrs. Fritz
each have entered into with UPS, the holders of record of the shares of Fritz
common stock beneficially owned by Mr. Fritz and Mrs. Fritz have agreed to vote
all of their shares of Fritz common stock in favor of adoption of the merger
agreement and approval of the merger, and have granted UPS a proxy to so vote
their shares of Fritz common stock.
VOTING AND REVOCATION OF PROXIES
Shares represented by a proxy will be voted at the special meeting as
specified in the proxy. Properly executed proxies that do not contain voting
instructions will be voted "FOR" adoption of the merger agreement and approval
of the merger.
Fritz will count properly executed proxies marked "Abstain" for purposes of
determining whether there is a quorum, but the shares represented by these
proxies will not be voted at the special meeting.
If your shares are held in an account at a brokerage firm or bank, you must
instruct it how to vote your shares. If an executed proxy is returned by a
broker or bank holding your shares that indicates that the broker or bank does
not have discretionary authority to vote on the adoption and approval of the
merger agreement, the shares will be considered present at the special meeting
for determining the presence of a quorum, but will
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not be considered to have been voted in favor of approval of the merger and
adoption of the merger agreement. As a result, such a proxy will have the same
effect as voting against adoption of the merger agreement and approval of the
merger. Your broker or bank will vote your shares only if you provide
instructions on how to vote by following the instructions provided to you by
your broker or bank.
Your grant of a proxy on the enclosed proxy card does not prevent you from
revoking your proxy. If you hold your shares in your own name you may revoke
your proxy at any time before its exercise at the special meeting by:
- giving written notice of revocation to the Secretary of Fritz;
- properly submitting a duly executed proxy bearing a later date; or
- voting in person at the special meeting.
You should address all written notices of revocation and other
communications with respect to revocation of proxies to Jan H. Raymond,
Secretary, Fritz Companies, Inc., 706 Mission Street, San Francisco, CA 94103.
If your shares are held in "street name", you should instruct your broker
how to vote your shares by following the directions provided by your broker.
SOLICITATION OF PROXIES
The Fritz Board of Directors is making this proxy solicitation. Fritz and
UPS have agreed to share the costs of preparing, assembling and mailing the
proxy materials, and soliciting proxies for and holding the special meeting. In
addition to solicitation by mail, the directors, officers and employees of Fritz
also may solicit proxies from stockholders by telephone, facsimile, telegram or
other electronic means or in person. Fritz will make arrangements with
brokerages and other custodians, nominees and fiduciaries to send the proxy
materials to the beneficial owners of Fritz common stock, and Fritz and UPS will
reimburse those brokerage houses and custodians for their reasonable expenses in
doing so.
You should not send in any stock certificates with your proxy card. A
transmittal letter with instructions for the surrender of stock certificates
will be mailed to you as soon as practicable after completion of the merger.
STOCKHOLDER PROPOSALS FOR FRITZ'S ANNUAL MEETING
Fritz will hold an annual meeting in 2001 only if the merger is not
completed. If the merger is not consummated and an annual meeting of the Fritz
stockholders is held in 2001, stockholder proposals for inclusion in proxy
materials for the 2001 annual meeting must have been received by Fritz no later
than April 20, 2001 in order to be considered for inclusion in the proxy
materials relating to that meeting. In addition, the proxy solicited by the
Fritz Board of Directors for the 2001 annual meeting of the Fritz stockholders
will confer discretionary authority to vote on any stockholder proposal
presented at that meeting, unless Fritz receives notice of the proposal no later
than July 8, 2001.
UPS expects to hold the next annual meeting of its stockholders on May 17,
2001.
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INFORMATION ABOUT UPS AND FRITZ
UPS
UPS is the world's largest express carrier, the world's largest package
delivery company and a leading global provider of specialized transportation and
logistics services. UPS was founded in 1907 as a private messenger and delivery
service in the Seattle, Washington area. Over the past 94 years, UPS has
expanded from a small regional parcel delivery service into a global company.
UPS delivers packages each business day for 1.8 million shipping customers to
six million consignees. In 2000, UPS delivered an average of more than 13.6
million pieces per day worldwide. Total revenue in 2000 was over $29.7 billion.
UPS focuses on the movement of goods, information and funds, and seeks to
position itself as the world's premier enabler of global commerce.
FRITZ
Fritz is a specialist in providing global logistics services and related
information services for importers and shippers worldwide. Fritz is primarily
engaged in providing logistics management, international air and ocean freight
forwarding, customs brokerage, and material management and distribution
services. Fritz delivers comprehensive supply chain solutions to its customers
worldwide by providing flexible door-to-door transportation and materials
management using sophisticated information systems. Fritz also provides
value-added services through logistics information as well as international and
domestic movement of goods customarily provided by traditional freight
forwarders. These services are designed to provide integrated global logistics
solutions for customers to streamline their operations, improve their inventory
management information and enhance their profitability and to provide customers
with more efficient and effective international transportation strategies. The
Fritz network is composed of highly trained professionals working in more than
400 locations in 120 countries.
Fritz was incorporated in Delaware in August 1988, and is a successor to a
company incorporated in California in 1933. At December 31, 2000, Fritz had
approximately 10,000 employees worldwide. Internationally, Fritz operates a
number of subsidiaries under the names "Fritz Transportation International,"
"Fritz Air Freight," "Fritz Starber," "Fritz Fliway," "Fritz Logistics," and
"Fritz Companies," among others. Unless the context otherwise requires,
references in this proxy statement/prospectus to Fritz include Fritz Companies,
Inc., its subsidiaries and its predecessor companies. Although Fritz's executive
office is located in the United States at 706 Mission Street, Suite 900, San
Francisco, California 94103, its network is global. Fritz has offices throughout
North America, Australia, New Zealand, South Africa, Asia, Europe, Latin
America, and the Middle East.
Additional information concerning Fritz and its subsidiaries is included in
documents Fritz has filed with the SEC, which are incorporated by reference in
this document. See "Where You Can Find More Information" beginning on page 59.
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THE MERGER
The following discussion describes the more important aspects of the merger
and the material terms of the merger agreement. This description is qualified in
its entirety by reference to the merger agreement. We encourage you to read
carefully the merger agreement in its entirety, a copy of which is attached as
Annex A.
RELATIONSHIP WITH FEDEX CORPORATION
A subsidiary of FedEx Corporation is Fritz's largest customs brokerage
customer. Fritz renders services to FedEx pursuant to a Customs Brokerage
Service Agreement, which covers three separate locations. The scheduled
termination dates for the three locations are September 2005, February 2006 and
September 2007, respectively. The agreement also provides for termination for
convenience with various restrictions. In addition, FedEx has the right to
terminate the Customs Brokerage Service Agreement if Fritz breaches the
agreement and does not cure the breach within a notice period, or if there is a
change of control of Fritz.
In connection with the review of strategic options available to Fritz
discussed below under the caption "Background of the Merger," Fritz and FedEx
engaged in a number of discussions during 2000 to explore the possibility of a
business combination between Fritz and FedEx. These discussions did not result
in agreement on price or any other terms.
From time to time, FedEx has expressed dissatisfaction to Fritz regarding
the quality of the services provided to FedEx under the Customs Brokerage
Service Agreement. On several occasions, FedEx indicated to Fritz that in view
of its dissatisfaction with the services provided by Fritz, it believed that
Fritz was in breach of the Customs Brokerage Service Agreement.
In view of the foregoing, the Board of Directors of Fritz placed a high
priority on preserving and enhancing Fritz's relationship with FedEx. This
objective was of particular importance in structuring the process for exploring
the strategic options available to Fritz which is discussed below under the
caption "Background of the Merger."
In late December 2000, FedEx indicated to Fritz that FedEx was exploring
the possibility of terminating its existing commercial relationship with Fritz
in the near term. At that time, representatives of FedEx and Fritz entered into
discussions regarding a purchase of certain Fritz assets by FedEx. These
discussions did not result in agreement on price or any other terms as reflected
in the public complaint filed in Court by FedEx.
For discussion of litigation initiated by FedEx after execution of the
Merger Agreement, as well as related negotiations, see "The
Merger -- Litigation."
BACKGROUND OF THE MERGER
In recent years, Fritz's board of directors has devoted significant
attention to the implications for Fritz of changes in the industries in which
Fritz operates, including, among others:
- the globalization of international trade,
- the increased complexity inherent in the transition from freight
forwarding and customs brokerage to integrated logistics,
- the increasing level of investment in technology, information systems,
distribution facilities and employee training required to remain
competitive with the increased complexity of Fritz's business,
- recent strategic transactions in Fritz's industry, and
- the advantages associated with economies of scale and industry
consolidation.
These considerations caused Fritz's board of directors to focus on the
different strategic options available to Fritz, including on whether, over the
long term, Fritz would be better positioned by combining with another company
that would offer it additional resources, diversification and scale.
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During 2000, representatives of Fritz engaged in discussions with a number
of transportation and logistics companies regarding the possibility of business
combination transactions. However, no agreements were reached.
On March 17, 2000, Fritz engaged Morgan Stanley & Co. Incorporated and
Clark Capital Corporation to provide financial advice and assistance in
connection with the possible transaction with FedEx. For a discussion of this
possible transaction with FedEx, see "-- Relationship with FedEx Corporation"
above. On September 6, 2000, this engagement was broadened to include financial
advice and assistance in connection with potential strategic transactions with
parties other than FedEx.
In early November 2000, a senior representative of UPS contacted
representatives of Morgan Stanley to ascertain Fritz's interest in a possible
strategic transaction. Thomas Delbrook, Vice President of Mergers and
Acquisitions, and David Abney of UPS contacted Lynn Fritz about Fritz's
willingness to engage in negotiations with UPS.
On November 10, 2000, Mr. Abney and Mr. Delbrook informed Mr. Fritz that
they had authority to acquire a freight forwarder and asked Mr. Fritz if Fritz
was interested in a strategic transaction. Mr. Fritz indicated that he was
receptive to engaging in discussions with UPS regarding a possible strategic
transaction. Thereafter, Mr. Fritz informally briefed individual directors, top
management, representatives of Morgan Stanley and Clark Capital, and Fritz's
outside counsel on these discussions. Mr. Fritz asked Graham Napier, President
and Chief Operating Officer of Fritz, to arrange for the preparation of a
confidentiality agreement and to work with Morgan Stanley, Clark Capital
Corporation and UPS to commence with preliminary due diligence investigations.
On November 14, 2000, representatives of Fritz, UPS and their financial
advisors held a conference call to discuss a possible business combination
between Fritz and UPS. During the call, the parties were introduced to the team
members of Fritz and UPS and they discussed UPS' interest in Fritz, the status
of the proposed confidentiality agreement, the anticipated due diligence process
and the timing and logistics of such a transaction.
On November 17, 2000, Fritz entered into a confidentiality agreement with
UPS.
On November 19, 2000, Fritz responded to an information request provided by
UPS.
On November 20, 2000, the information provided pursuant to the information
request was discussed preliminarily between representatives of UPS and Fritz.
On November 21, 2000, Fritz held a board meeting to consider UPS' interest
in a potential strategic transaction with Fritz. Representatives of Fritz's
financial advisors informed the board of the tentative schedule of meetings
between the parties. Mr. Fritz advised that there had been no discussions of
potential pricing of the transaction. Fritz's internal legal counsel informed
the board of the measures taken to maintain the confidentiality of these
discussions.
On November 21, 2000, Mr. Fritz met with Mr. Abney to discuss UPS'
continued interest in a combination with Fritz.
On November 22, 2000, the Fritz and UPS management teams further discussed
a schedule for an exchange of information.
On November 27, 2000, Fritz held a board meeting at which Mr. Fritz and
Fritz's financial advisors briefed the Fritz board on the discussions that had
been held thus far with UPS. Mr. Fritz indicated that top-level due diligence
would be performed at the offices of Fritz's financial advisors on November 28,
2000 and that additional exchanges of information and discussions would likely
take place during the balance of the week. Mr. Fritz informed the board that
following a review of the preliminary due diligence by UPS, UPS' board likely
would consider making an offer to acquire Fritz. Mr. Fritz expressed his
personal belief to the board that UPS would make an ideal strategic partner but
that Fritz should also continue to study proposed combinations with other
companies and continue to pursue its business plan as a stand-alone company. The
board discussed its interest in proceeding with UPS on a highly confidential
basis and in a manner that would
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avoid unnecessary disruption of Fritz's relationship with FedEx. The directors
agreed that management of Fritz's relationship with FedEx was of utmost
importance.
On November 29, 2000, Fritz held a board meeting at which Mr. Fritz and
Fritz's financial advisors provided the directors with a summary of the recent
preliminary due diligence session with UPS. The board discussed how best to
manage the discussions with UPS and communications with FedEx.
On December 7, 2000, Fritz held a board meeting to further update the board
members on the negotiations with UPS. Mr. Fritz described for the board UPS'
logistics strategy and how a combination with Fritz would complement that
strategy. Fritz's financial advisors discussed with the board issues relating to
FedEx's relationship with Fritz and the potential impact of any changes to that
relationship. Mr. Napier made a presentation to the board regarding Fritz's
business plan and the results it could reasonably be expected to achieve as an
independent entity. The board concluded by determining that it was in the best
interest of Fritz to continue its negotiations with UPS and management should
seek to negotiate a transaction with a view to a high likelihood of closing in
an expedited fashion.
On December 11, 2000, Mr. Fritz and Messrs. Abney and Delbrook of UPS
discussed possible exchange ratios and other transaction terms.
On December 19, 2000, Mr. Fritz, Morgan Stanley and Clark Capital reported
to the Fritz board on the status of UPS' due diligence review and UPS' high
level of interest in finalizing the transaction terms. The board directed
Fritz's outside counsel to begin drafting a merger agreement to be presented to
UPS in the event UPS' proposed transaction terms were deemed to be acceptable to
the board. Fritz's financial advisors discussed with the board other potential
alliances based upon contacts initiated by Fritz's financial advisors and the
issues associated with such alliances. The directors, after weighing the
information provided by Fritz's financial advisors and the risks to Fritz in
pursuing such potential alliances, instructed management to continue to pursue a
transaction with UPS.
On December 21, 2000, Fritz conducted negotiations with UPS regarding the
economic terms of a possible transaction. During those negotiations,
representatives of UPS indicated a willingness to proceed with a tax-free
stock-for-stock merger in which shares of UPS Class B common stock would be
exchanged for shares of Fritz common stock. At a meeting held later the same
day, the board and its financial and legal advisors discussed the possibility of
a combination with UPS in light of Fritz's discussions with UPS to date. The
board determined that it was in the best interests of Fritz to continue to
pursue the possibility of a business combination with UPS and that management,
together with Fritz's advisors, should negotiate with UPS with a view toward
maturing the transaction. Counsel to Fritz reviewed the provisions of the merger
agreement to be delivered to UPS by Fritz. Counsel to Fritz advised the board
that the terms of the agreements should be viewed as proposals by Fritz to UPS
that could be negotiated with UPS and approved by the board. The board
instructed management to continue its negotiations with UPS.
During the period of December 21, 2000 through January 7, 2001,
representatives of UPS pursued their due diligence investigations regarding
Fritz. On January 3, 2001, counsel to UPS furnished counsel to Fritz with a new
form of merger agreement. On January 3, 2001, representatives of UPS and Fritz
commenced negotiations of the terms of a merger agreement.
On January 5, 2001, Fritz held a board meeting at which Mr. Fritz and
Fritz's financial and legal advisors reviewed with the directors the status of
negotiations with UPS. Fritz management discussed with the board key elements of
UPS's due diligence activities and Fritz's due diligence review of UPS.
Following this discussion, outside counsel to Fritz reviewed the terms of the
proposed merger agreement and related stock option agreements, which had been
drafted and proposed by counsel to UPS, and Morgan Stanley discussed the
economic terms of the proposed transaction with the Fritz board. The directors
agreed that the form of agreement proposed by UPS was not satisfactory and
advised management as to the negotiating approach it should take with UPS. At
the conclusion of the discussion, the directors determined that it was in the
best interests of Fritz to continue to pursue a possible business combination
with UPS and that management, together with Fritz's advisors, should continue to
negotiate with UPS with a view towards maturing the
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transaction on satisfactory terms or terminating the discussions prior to
Fritz's announcement of quarterly earnings for its fiscal third quarter, which
was scheduled to occur on January 16, 2001.
Following this meeting, representatives of UPS and Fritz continued to
negotiate the transaction terms and the merger agreement and continued due
diligence investigations.
On January 8, 2001, Mr. Delbrook and Mr. Fritz held a telephone
conversation for the purpose of finalizing the exchange ratio. At the conclusion
of the telephone conversation Mr. Delbrook proposed and Mr. Fritz agreed to
recommend to the Fritz board an exchange ratio of 0.2 to 1.
On January 8, 2001, Fritz held a board meeting at which Mr. Fritz provided
an update on the discussions with UPS and preliminary results of UPS due
diligence of Fritz.
On January 9, 2001, the Fritz board held a telephonic meeting, which was
also attended by Fritz's financial and legal advisors. During this meeting,
legal counsel further reviewed the terms of the merger agreement, as revised,
and Morgan Stanley presented the board the financial analysis that it had
performed and delivered its opinion that, dated as of January 9, 2001, and
subject to various considerations, limitations and qualifications set forth in
the opinion, the exchange ratio pursuant to the merger agreement was fair from a
financial point of view to the holders of Fritz common stock. Fritz's board then
concluded its discussions of the merits of the transaction, approved the merger
agreement and the transactions contemplated by the merger agreement and agreed
to recommend the transaction to Fritz's stockholders.
Following this board meeting, the parties continued and then concluded
their negotiations and executed the merger agreement and related documents on
January 10, 2001. UPS and Fritz issued a joint press release announcing the
transaction on January 10, 2001.
REASONS FOR THE MERGER
Fritz's board of directors has determined that the terms of the merger and
the merger agreement are advisable, fair to, and in the best interests of, Fritz
and its stockholders. Accordingly, Fritz's board of directors has approved the
merger agreement and the completion of the merger and recommends that you vote
for adoption of the merger agreement and approval of the merger.
In reaching its decision, Fritz's board of directors identified several
potential benefits of the merger, the most important of which included:
- Fritz stockholders will become owners of UPS Class B common stock, which
is a liquid and widely followed stock,
- Fritz stockholders will have the opportunity to participate in the
potential for growth of the combined company after the merger,
- the acquisition of Fritz is expected to enable UPS to further expand its
full range of domestic and international transportation, logistics and
customs brokerage services,
- Fritz's international freight forwarding and customs brokerage expertise
and UPS' express carrier and package delivery strengths are expected to
generate significant cross-selling opportunities for the combined
company,
- UPS' sales and marketing strengths could be a significant advantage to
Fritz's business,
- the exchange ratio in the merger represented a premium of approximately
74% over the average closing price of Fritz common stock for the 30-day
trading period preceding January 10, 2001, the date of the signing of the
merger agreement, and
- combining with UPS will alleviate the potential negative effects on
Fritz's public stock price due to limited public float, and limited daily
trading volume, and be afforded substantially increased trading liquidity
for their investment.
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Fritz's board of directors consulted with Fritz's senior management, as
well as its legal and financial advisers, in reaching its decision to approve
the merger. Among the factors considered by Fritz's board of directors in its
deliberations were the following:
- historical information concerning UPS' and Fritz's respective financial
performance, results of operations, assets, liabilities, operations,
technology, management and competitive position, including public reports
covering the most recent fiscal year and fiscal quarter for each company
filed with the Securities and Exchange Commission,
- the complementary nature of the companies' services and possible
synergies from combining UPS and Fritz, and the benefits to Fritz's
customers created by the combination of the services offered by each
company,
- Fritz's management's view of the financial condition, results of
operations, assets, liabilities, businesses and prospects of UPS and
Fritz after giving effect to the merger,
- current market conditions and historical trading information with respect
to UPS Class B common stock and Fritz common stock,
- the terms and conditions of the merger agreement, including the expected
tax-free treatment to Fritz stockholders,
- the analyses prepared by Morgan Stanley and presented to Fritz's board of
directors and the written opinion of Morgan Stanley that, as of January
9, 2001 and based upon and subject to the various considerations,
limitations and qualifications set forth in the written opinion, the
exchange ratio, as set forth in the merger agreement, was fair, from a
financial point of view, to holders of Fritz common stock, as described
more fully beginning on page 22 and in the text of the fairness opinion
attached to this document as Annex D.
- UPS's track record and the strength of its management team,
- uncertainties and challenges facing Fritz as a standalone company,
including maintaining its relationships with FedEx and other large
customers, making additional large investments in technology,
strengthening the management team and accessing capital, and
- the terms of the merger agreement, including the ability of Fritz's board
of directors, prior to the earlier of March 11, 2001 and the date of the
special meeting of Fritz stockholders, to enter into discussions with
another party in response to an unsolicited superior offer to the merger
if Fritz's independent directors believed in good faith that such action
was required in order to comply with its fiduciary obligations, the fee
payable in the event that the merger agreement is terminated to enable
Fritz to enter an acquisition agreement with a third party advancing such
an offer, and the possible effect of such fee and the stockholder option
agreements between UPS and Lynn Fritz and his affiliates on the
likelihood that a third party would make such an offer.
Fritz's board of directors also identified and considered a variety of
potential negative factors in its deliberations concerning the merger,
including, but not limited to:
- the risk to Fritz stockholders that the value to be received in the
merger could decline due to the fixed exchange ratio,
- the loss of control over the future operations of Fritz following the
merger,
- the impact of the loss of Fritz's status as an independent company on
Fritz stockholders, employees and clients,
- the risk that the potential benefits sought in the merger might not be
fully realized, and
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- the possibility that the merger might not be consummated and the
potential adverse effects of the public announcement of the merger on
Fritz's:
- sales and operating results,
- ability to attract and retain key employees,
- overall competitive position, and
- relationship with FedEx.
After due consideration, Fritz's board of directors determined that Fritz
could avoid or mitigate some of these risks and that, overall, the risks
associated with the proposed merger were outweighed by the potential benefits of
the merger.
Fritz's board of directors does not intend the foregoing discussion of
information and factors to be exhaustive, but believes the discussion to include
all of the material factors that it considered. In view of the complexity and
wide variety of information and factors, both positive and negative, that it
considered, Fritz's board of directors did not find it practical to quantify or
otherwise assign relative or specific weights to the factors considered.
However, after taking into consideration all of the factors described above and
the advice of its outside counsel and financial advisor, Fritz's board of
directors concluded that the merger agreement and merger were advisable, fair
to, and in the best interests of, Fritz and its stockholders and that Fritz
should proceed with the merger.
RECOMMENDATION OF FRITZ'S BOARD OF DIRECTORS
Fritz's board of directors has determined that the terms of the merger and
the merger agreement are advisable, fair to, and in the best interests of, Fritz
and its stockholders. Accordingly, Fritz's board of directors has approved the
merger agreement and the merger and recommends that you vote "FOR" adoption of
the merger agreement and approval of the merger.
OPINION OF MORGAN STANLEY & CO. INCORPORATED
Fritz retained Morgan Stanley to provide it with various financial advisory
services, including providing a financial fairness opinion in connection with
the merger. The Fritz board of directors selected Morgan Stanley to act as
Fritz's financial advisor based on Morgan Stanley's qualifications, expertise,
reputation and its knowledge of the business and affairs of Fritz. At a
telephonic meeting of the Fritz board of directors on January 9, 2001, Morgan
Stanley rendered its oral opinion, subsequently confirmed in writing, that, as
of January 9, 2001, and based upon and subject to the various considerations,
limitations and qualifications set forth in the written opinion, the exchange
ratio pursuant to the merger agreement was fair from a financial point of view
to holders of shares of Fritz common stock.
THE FULL TEXT OF THE WRITTEN OPINION OF MORGAN STANLEY, DATED JANUARY 9,
2001 IS ATTACHED AS ANNEX D TO THIS PROXY STATEMENT/PROSPECTUS. IT SETS FORTH,
AMONG OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY MORGAN STANLEY IN
RENDERING ITS OPINION. WE URGE YOU TO READ THE OPINION CAREFULLY AND IN ITS
ENTIRETY.
MORGAN STANLEY'S OPINION IS DIRECTED TO THE FRITZ BOARD OF DIRECTORS AND
ADDRESSES ONLY THE FAIRNESS FROM A FINANCIAL POINT OF VIEW TO HOLDERS OF SHARES
OF FRITZ COMMON STOCK OF THE EXCHANGE RATIO PURSUANT TO THE MERGER AGREEMENT AS
OF THE DATE OF THE OPINION. YOU SHOULD NOTE THAT THE OPINION DOES NOT ADDRESS:
- ANY OTHER ASPECT OF THE MERGER;
- FRITZ'S UNDERLYING BUSINESS DECISIONS TO PURSUE THE MERGER; OR
- THE PRICE AT WHICH UPS SHARES WILL TRADE FOLLOWING THE MERGER OR ANY
OTHER TIME.
FURTHER, THE OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF
FRITZ COMMON STOCK AS TO HOW TO VOTE AT THE FRITZ STOCKHOLDERS MEETING HELD IN
CONNECTION WITH THE MERGER.
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THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET FORTH IN THIS DOCUMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE WRITTEN OPINION.
In connection with rendering its opinion, Morgan Stanley, among other
things:
- reviewed certain publicly available financial statements and other
information of Fritz and UPS, respectively;
- reviewed certain internal financial statements and other financial and
operating data concerning Fritz prepared by the management of Fritz;
- analyzed certain financial projections prepared by the management of
Fritz;
- reviewed certain financial projections for UPS contained in certain
publicly available securities analysts' research reports;
- discussed the past and current operations and financial condition and the
prospects of Fritz and UPS with senior executives of Fritz and UPS,
respectively;
- reviewed the reported prices and trading activity for Fritz common stock
and UPS Class B common stock, respectively;
- compared the financial performance of Fritz and UPS and the prices and
trading activity of Fritz common stock and UPS Class B common stock with
that of certain other comparable publicly traded companies and their
securities;
- reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
- participated in discussions and negotiations among representatives of
Fritz and UPS and their financial and legal advisors;
- reviewed the draft merger agreement and certain related documents; and
- performed such other analyses and considered such other factors as Morgan
Stanley deemed appropriate.
Morgan Stanley assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by it for the purposes of
its opinion. With respect to the financial projections, Morgan Stanley assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of Fritz.
Morgan Stanley was not provided with projections or forecasts of future
financial performance of UPS. Instead, for the purposes of this analysis, Morgan
Stanley relied with Fritz's consent on the estimates of certain publicly
available securities analysts' research reports. Morgan Stanley did not make any
independent valuation or appraisal of the assets or liabilities of Fritz, nor
was Morgan Stanley furnished with any such appraisals. In addition, Morgan
Stanley assumed that the merger will be consummated in accordance with the terms
set forth in the merger agreement.
Morgan Stanley's opinion is necessarily based on financial, economic,
market and other conditions as in effect on, and the information made available
to Morgan Stanley as of January 9, 2001. It should be understood that subsequent
developments or changes in such conditions may affect the opinion and Morgan
Stanley does not have any obligation to update, revise or reaffirm the opinion.
The following is a brief summary of the material financial analyses
performed by Morgan Stanley in connection with its oral opinion and the
preparation of its written opinion dated January 9, 2001. Some of these
summaries of financial analyses include information presented in tabular format.
In order to understand fully the financial analyses used by Morgan Stanley, the
tables must be read together with the text of each summary. The tables alone do
not constitute a complete description of the financial analyses.
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EXCHANGE RATIO ANALYSIS
Morgan Stanley reviewed the ratios of the closing prices of Fritz's common
stock and UPS's Class B common stock over various periods from November 10, 1999
to January 8, 2001. Morgan Stanley observed the following:
TRANSACTION
PERIOD AVERAGE EXCHANGE RATIO
PERIOD ENDED JANUARY 8, 2001 EXCHANGE RATIO PREMIUM
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Current (January 8, 2001).................. 0.118x 70%
Last 10 Trading Day Average................ 0.110 82
Last 1 Month Average....................... 0.112 79
Last 3 Month Average....................... 0.124 61
Last 6 Month Average....................... 0.185 8
Last 12 Month Average...................... 0.177 13
Since UPS IPO.............................. 0.173 15
In addition, Morgan Stanley reviewed the implied exchange ratio that
resulted when using Fritz's and UPS's per share value determined using present
value of publicly available securities research analysts' price targets
(described below).
IMPLIED EXCHANGE RATIO
----------------------
Analyst Price Targets Analysis........................... 0.112x
Morgan Stanley noted that the exchange ratio implied by the terms of the
merger agreement compared favorably to the period average exchange ratios and
the implied exchange ratio listed above.
PRESENT VALUE OF RESEARCH ANALYST PRICE TARGETS
Morgan Stanley calculated Fritz's and UPS's present value of research
analyst price targets by reviewing the 12-month price targets of selected
publicly available securities research analysts for Fritz common stock and UPS
Class B common stock and discounted those estimated prices to their present
values. The range for the present value of such price targets of Fritz, as of
January 8, 2001, was $6.25 to $8.04. The range for the present value of such
price targets for UPS, as of January 8, 2001, was $58.04 to $69.64.
PRESENT VALUE OF POTENTIAL FUTURE STOCK PRICE
Morgan Stanley calculated Fritz's present value of potential future stock
price by reviewing management's calendar year 2002 EPS estimate of Fritz
multiplied by a range of current (as of January 8, 2001) and peak historical
next twelve months price to earnings multiples and discounted those prices to
their present values. The range for the present value of potential future stock
price of Fritz, as of January 8, 2001, was $7.00 to $13.25.
ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS
Using publicly available information, Morgan Stanley reviewed the terms of
various announced, pending or completed industry transactions that were deemed
generally comparable to the merger. Morgan Stanley compared publicly available
financial and market statistics of precedent transactions to the merger. The
following table presents as of January 8, 2001, the representative ranges from
these transactions for each of the following ratios:
LOW MEDIAN HIGH
----- ------ -----
Price to NTM Estimated Earnings............................. 18.0x 20.0x 27.4x
Aggregate Value to LTM EBIT................................. 10.0 17.9 36.1
Aggregate Value to LTM EBITDA............................... 8.3 10.9 14.0
Based on an analysis of the corresponding estimated earnings, EBIT and
EBITDA for Fritz, which were based on estimates from Fritz management, Morgan
Stanley estimated per share transaction values for Fritz
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ranging from $7.50 to $13.00. Morgan Stanley noted that, as of January 8, 2001,
the value to be received per Fritz common share based on the exchange ratio of
0.2 shares of UPS Class B common stock per share of Fritz common stock was
$12.21.
No transaction utilized as a comparison in the precedent transactions
analysis is identical to the merger. In evaluating the precedent transactions,
Morgan Stanley made judgments and assumptions regarding industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Fritz, including the impact of
competition on Fritz and the industry in general, industry growth and the
absence of any material adverse change in the financial condition and prospects
of Fritz or the industry or in the financial markets in general. Mathematical
analysis (such as determining the median) is not in itself a meaningful method
of using comparable transaction data.
COMPARABLE COMPANY ANALYSIS
As part of its analysis, Morgan Stanley compared various financial
information of Fritz with publicly available information for various non-asset
and asset based logistics companies, including EGL, Inc., Expeditors
International of Washington, Inc., C.H. Robinson Worldwide, Inc., Hub Group,
Inc. and Landstar System, Inc.; United Parcel Service, Inc., TNT Post Group NV,
Atlas Air, Inc., FedEx Corporation, Ryder System, Inc., CNF Inc. and Airborne,
Inc. For this analysis, Morgan Stanley examined various financial ratios for
these comparable companies based on publicly available information.
The following table presents, as of January 8, 2001, the low, high and
median values for each of the following ratios with respect to all the logistics
companies for which Morgan Stanley reviewed financial ratios:
LOW MEDIAN HIGH
---- ------ -----
Share price to CY 2001 Estimated Earnings Per Share......... 8.1x 16.3x 31.0x
Share price to CY 2002 Estimated Earnings Per Share......... 7.0 13.7 26.3
Aggregate Value to LTM EBIT................................. 7.2 12.5 22.8
Aggregate Value to LTM EBITDA............................... 3.4 6.9 19.8
Based on an analysis of the comparable companies that Morgan Stanley
reviewed, and the corresponding information for Fritz, which was based on
estimates from Fritz management, Morgan Stanley estimated per share values for
Fritz ranging from $5.50 to $11.50. The midpoint of this range was multiplied by
estimated control premiums ranging from 30% to 50% to determine a transaction
value range of $11.00 to $12.75 per Fritz common share.
No company utilized in the comparable company analysis is identical to
Fritz. In evaluating the comparable companies, Morgan Stanley made judgments and
assumptions with regard to industry performance, general business, economic,
market and financial conditions and other matters, many of which are beyond the
control of Fritz, including the impact of competition on the business of Fritz
and the industry generally, industry growth and the absence of any material
adverse change in the financial condition and prospects of Fritz or the industry
or in the financial markets in general. Mathematical analysis, such as
determining the average or median, is not in itself a meaningful method of using
comparable company data.
COMPARATIVE STOCK PRICE PERFORMANCE
Morgan Stanley reviewed the recent stock price performance of Fritz and
compared this performance with that of stock indices comprised of non-asset
based logistics companies, asset based logistics companies and the S&P 500,
respectively. The non-asset based logistics index and the asset based logistics
index included the following companies:
Non-asset Based Logistics Index:
- EGL, Inc.
- Expeditors International of Washington, Inc.
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- C.H. Robinson Worldwide, Inc.
Asset Based Logistics Index:
- United Parcel Service, Inc.
- TNT Post Group NV
- Atlas Air, Inc.
- FedEx Corporation
- Ryder System, Inc.
- CNF Inc.
- Airborne, Inc.
The following table presents the market capitalization weighted changes in
value for these indices, as compared to the change in the stock price of Fritz
from January 5, 1998 to January 8, 2001:
PERCENTAGE CHANGE
-----------------
Fritz....................................................... (48)%
Non-asset Based Logistics Index............................. 148
Asset Based Logistics Index................................. 9
S&P 500..................................................... 33
DISCOUNTED CASH FLOW ANALYSIS
Morgan Stanley calculated Fritz's per share value using discounted cash
flow analysis. In this analysis, Morgan Stanley performed a management case
discounted cash flow analysis of Fritz based on certain financial projections
provided by the management of Fritz. Morgan Stanley also performed a
conservative case discounted cash flow analysis of Fritz based on guidance from
the management of Fritz. Morgan Stanley calculated unlevered free cash flow as
the after-tax operating earnings excluding any interest income and interest
expense plus depreciation and amortization, plus deferred taxes, plus or minus
net changes in non-cash working capital, minus capital expenditures. Morgan
Stanley calculated terminal year values by applying a range of perpetual growth
rates of 4.0% to 6.0% for Fritz. The cash flow streams and terminal values were
then discounted to present values using a discount rate of 11% (the average of a
range of appropriate discount rates of 10-12%) for Fritz. This analysis implied
a range of values for shares of Fritz common stock of $8.50 to $11.50 for the
management case and $4.50 to $6.25 for the conservative case.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, Morgan Stanley
believes that the summary provided and the analyses described above must be
considered as a whole and that selecting any portion of its analyses without
considering all analyses would create an incomplete view of the process
underlying its analyses and opinion. In addition, Morgan Stanley may have given
various analyses and factors more or less weight than other analyses and
factors, and Morgan Stanley may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting from
any particular analysis described above should not be taken to be Morgan
Stanley's view of the actual value of Fritz.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Fritz. Any estimates
contained in Morgan Stanley's analyses are not necessarily indicative of future
results or actual values, which may be significantly more or less favorable than
those suggested by these estimates. These analyses were prepared solely as a
part of Morgan Stanley's analysis of the fairness from a financial point of view
of the exchange ratio to the holders of shares of Fritz common stock pursuant to
the
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merger agreement and were conducted in connection with the delivery of the
Morgan Stanley opinion dated January 9, 2001 to the Fritz board of directors.
Morgan Stanley's analyses do not purport to be appraisals of value or to reflect
the prices at which Fritz might actually be sold or the price at which its
securities might actually trade. In addition, as described above, the Morgan
Stanley opinion was one of the many factors taken into consideration by the
Fritz board of directors in making its determination to approve the merger. The
exchange ratio and other terms of the merger agreement were determined through
arm's length negotiations between Fritz and UPS and were approved by the Fritz
board of directors. Morgan Stanley did not recommend any specific consideration
or exchange ratio to Fritz or that any specific consideration or exchange ratio
constituted the only appropriate consideration or exchange ratio for the merger.
Consequently, the Morgan Stanley analyses as described above should not be
viewed as determinative of the opinion of the Fritz board of directors with
respect to the value of Fritz or of whether the Fritz board of directors would
have been willing to agree to a different consideration or exchange ratio.
Morgan Stanley is an internationally recognized investment banking and
advisory firm. As part of its investment banking and financial advisory
business, Morgan Stanley is continuously involved in the valuation of businesses
and their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In the course of its trading brokerage and financing activities,
Morgan Stanley or its affiliates may, at any time, hold long or short positions
in, and buy and sell the debt or equity securities or senior loans of Fritz or
UPS for its account or the account of its customers. Morgan Stanley and its
affiliates have, in the past, provided financial advisory and/or financing
services to Fritz and UPS and have received fees for the rendering of these
services. Morgan Stanley may also provide investment banking services to UPS in
the future.
Under the engagement letter dated March 16, 2000, and as amended on
September 6, 2000, Morgan Stanley agreed to provide financial advisory services
in connection with the merger, and Fritz agreed to pay Morgan Stanley a
customary fee in connection therewith.
In addition, Fritz has agreed to reimburse Morgan Stanley for its expenses
incurred in connection with its engagement and to indemnify Morgan Stanley and
its affiliates, their respective directors, officers, agents and employees and
each person, if any, controlling Morgan Stanley or any of its affiliates against
various liabilities and expenses, including the fees of its legal counsel and
certain liabilities under the federal securities laws, related to or arising out
of Morgan Stanley's engagement.
INTERESTS OF FRITZ EXECUTIVE OFFICERS AND DIRECTORS IN THE MERGER
In considering the Fritz board of directors' recommendation that you vote
"FOR" adoption of the merger agreement and approval of the merger, you should
know that some of the Fritz directors and executive officers have interests in
the merger that are different from, or in addition to, their interests as
stockholders of Fritz generally. The Fritz board of directors was aware of these
interests and considered them, among other matters, in making its
recommendation.
Change of Control Agreements
Fritz has change of control agreements with each of Graham R.F. Napier,
Ronald F. Dutt, Jan H. Raymond, Eugene E. Wojciechowski, Janice J. Washburn,
Richard Gervais and John R. Skidmore. Consummation of the merger agreement will
constitute a change of control under these agreements. Each of the agreements
provides for a severance payment on termination of employment under the
circumstances provided in the agreements. Such circumstances include termination
by Fritz for any reason (other than cause or disability) or resignation by the
employee for "Good Reason" within the thirty-six month period following the
completion of the merger and a voluntary resignation by the executive officer
during the thirty day period after the first full fiscal year following the
change of control. Under the agreements, "Good Reason" means that the executive
officer has incurred a material reduction in his or her title, authority, status
or responsibility, has incurred one or more reductions in his or her total
compensation, or has been notified that his or her principal place of work will
be relocated by a distance of 75 miles or more.
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The severance benefit under these agreements is equal to 2.5 times the
executive officer's annual rate of base compensation in effect on the date of
the employment termination (or if greater, the effective date of the change of
control agreement) plus 2.5 times the target annual bonus for such executive
officer.
In addition to severance payments, upon the effective date of a change of
control each executive officer listed above will become fully vested in all of
his or her outstanding stock options, stock appreciation rights, restricted
stock, phantom stock or similar plans or agreements of Fritz. Additionally, if
any executive officer listed above is entitled to a severance payment, such
executive officer also will become fully vested in all awards heretofore or
hereafter granted to him or her under all stock options, stock appreciation
rights, restricted stock, phantom stock or similar plans or agreements,
regardless of any provisions in such plans or agreements that do not provide for
full vesting or for earlier expiration of the award. As of the record date, the
following executive officers held stock options subject to accelerated vesting
under the change of control agreements:
NUMBER OF OPTIONS
AS TO WHICH
VESTING
NAME AND POSITION WILL ACCELERATE
----------------- -----------------
Graham R. F. Napier
President and Chief Operating Officer..................... 356,806
Ronald F. Dutt
Executive Vice President and Chief Financial Officer...... 16,900
Jan H. Raymond
Executive Vice President, Secretary and General Counsel... 22,747
Eugene E. Wojciechowski
Senior Vice President and Chief Information Officer....... 30,041
Richard Gervais
Senior Vice President, North American Operations.......... 16,500
Janice J. Washburn
Vice President and Controller............................. 9,934
John R. Skidmore
Senior Vice President, Human Resources.................... 1,635
-------
Total............................................. 454,563
=======
Fritz will also pay for any group health continuation coverage that Fritz
is otherwise required to offer under the Consolidated Omnibus Budget
Reconciliation Act of 1986 for such executive officer.
Any payments or distributions made to or for the benefit of the above
executive officers under these change of control agreements will be reduced, if
necessary, to an amount that would result in no excise taxes being imposed under
Internal Revenue Code section 4999.
Board of Directors and Management of Fritz After the Merger
At the effective time of the merger, the members of the Fritz board of
directors will be replaced by the members of the Board of Directors of VND
Merger Sub, Inc., the wholly owned UPS subsidiary that is being merged into
Fritz.
UPS and Fritz expect that Lynn C. Fritz, the current Chairman and Chief
Executive Officer of Fritz, will be retained as a consultant to the combined
company. Current management of Fritz is expected to remain in place, with
oversight from UPS's Corporate Development Group.
Stock Options
Following the completion of the merger, UPS will assume the obligations and
rights of Fritz with respect to all outstanding options under Fritz's stock
option plans. As a result, any stock options previously granted
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with respect to Fritz common stock, including stock options granted to directors
and executive officers of Fritz, will be exercisable for UPS Class A common
stock on the same terms and conditions as under the Fritz plans, except that
- each such Fritz stock option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares
of UPS Class A common stock equal to the product of the number of shares
of Fritz common stock that were issuable upon exercise of such Fritz
stock option immediately prior to the effective time of the merger
multiplied by the exchange ratio, rounded down to the nearest whole
number of shares of UPS Class A common stock and
- the per share exercise price for UPS Class A common stock issuable upon
exercise of such Fritz stock option will be equal to the quotient
determined by dividing the exercise price per share of the Fritz common
stock at which such Fritz stock option was exercisable immediately prior
to the effective time of the merger by the exchange ratio, rounded up to
the nearest whole cent.
401(k) Plan
Under Fritz's 401(k) retirement plan, all employer match accounts will
become 100% vested upon termination of the plan following stockholder approval
of the merger. Of Fritz's executive officers who participate in the plan, five
are not currently fully vested in their employer match accounts. The aggregate
value of the acceleration of the match for these five executive officers is
approximately $22,085.
Indemnification Rights
UPS has agreed that for a period of at least six years after the merger,
all rights to indemnification by Fritz now existing in favor of present and
former directors, officers, employees and agents of Fritz and any of its
subsidiaries will survive. In addition, UPS has agreed that for a period of six
years after the merger, it will maintain directors' and officers' liability
insurance, if available, for the benefit of Fritz's directors and officers, to
provide insurance coverage that will reimburse the directors and officers of
Fritz with respect to claims against such directors and officers arising from
facts or events that occurred before the merger. The coverage and policy limits
will not be materially less favorable than the coverage provided by Fritz of the
date of the merger agreement, subject to the cost of the insurance not exceeding
200 percent of the amount expended by Fritz for similar insurance on the date of
the merger agreement. UPS will cause the corporation surviving the merger to
honor and perform the obligations of Fritz with respect to rights of
indemnification existing in favor of present and former directors, officers,
employees and agents of Fritz pursuant to indemnification agreements and
employment agreements in effect prior to the merger. From and after the
effective time of the merger agreement, UPS will unconditionally guarantee the
timely performance of all obligations of the surviving corporation of the merger
with respect to the continuing indemnification of Fritz's directors, officers,
employees and agents described in the merger agreement.
Tradami, Inc.
On July 17, 2000, the Projects Committee of the board of directors of Fritz
held a meeting at which Mr. Fritz presented a business opportunity relating to
the proposed creation of a new internet start-up, to be named Tradami, Inc.,
which would focus on logistics for the emerging business-to-business internet
exchanges and enterprise accounts. Mr. Fritz disclosed his conflict of interest
to the Projects Committee and did not participate in the discussions or
deliberations of the Projects Committee, except to describe the Tradami, Inc.
business concept. The Projects Committee determined that given the cash position
of Fritz, the capital needs of Tradami, Inc., the real risk that Tradami, Inc.
would never be successful and the diversion of resources, Fritz should not
commit cash to pursuing the corporate opportunity presented by the Tradami, Inc.
idea and should permit Mr. Fritz to pursue the opportunity independently. Mr.
Fritz volunteered that for no present cash investment, Fritz would be granted an
initial 10% ownership interest in Tradami, Inc. following Mr. Fritz's investment
of $500,000 for a 90% ownership interest in Tradami, Inc., with a continuing
right to maintain its 10% ownership level in the event that Fritz's cash
position would allow and the prospects of Tradami, Inc. would justify the
investment.
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On July 24, 2000, Fritz held a board meeting at which, based on the
recommendation of the Projects Committee, the board resolved that, except with
respect to the initial ten percent (10%) ownership interest in Tradami, Inc.,
with zero cash investment, and Fritz's continuing right to maintain that
percentage in future financings of Tradami, Inc., in the event Fritz's cash
position permits and the prospects of Fritz justify such an investment, Fritz
would waive the corporate opportunity regarding Tradami, Inc. The Fritz board
also resolved that Mr. Fritz be allowed to pursue this new venture consistent
with his duties to Fritz. Mr. Fritz did not participate in the board's
discussion of and approval of resolutions concerning Tradami, Inc.
On November 30, 2000, Fritz agreed to sell 100% of the common stock of FCI
Logistics Inc., a wholly owned subsidiary, to Tradami, Inc. Under terms of the
sales agreement, Tradami, Inc. paid $1,672,000 in cash. Fritz recognized a gain
of $532,000 on the sale.
Also on November 30, 2000, Fritz entered into a Services Agreement with
Tradami, Inc. whereby Fritz agreed to provide services at competitive prices to
customers of Tradami, Inc. In addition, under the Services Agreement, which has
a term of five years, both parties agreed to enter into a License Agreement and
a Co-Marketing Agreement by May 31, 2001. Under the proposed terms of the
License Agreement, Tradami, Inc. would develop and license e-commerce
technology, and Fritz would integrate its systems and operations with the
Tradami platform and maintain and upgrade its systems after integration work is
completed. Under the proposed terms of the Co-Marketing Agreement, Fritz and
Tradami, Inc. would jointly market their services to potential and existing
customers, and Fritz would provide Tradami, Inc. with competitive rates for its
services and use of Fritz's global freight capacities.
UPS BOARD OF DIRECTORS
The UPS board of directors will remain unchanged after the merger.
STRUCTURE OF THE MERGER; MERGER CONSIDERATION
The merger agreement provides that, after its approval by the Fritz
stockholders and the satisfaction or waiver of the other conditions to the
merger, VND Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary
of UPS, will merge with and into Fritz. The separate corporate existence of the
VND will cease and Fritz will continue as the surviving corporation and as a
wholly owned subsidiary of UPS.
In the merger, each share of Fritz common stock will be exchanged for 0.2
of a share of UPS Class B common stock, a number that is referred to in this
document as the exchange ratio. No fractional shares of UPS Class B common stock
will be issued. Instead, all fractional shares of UPS Class B common stock that
a holder of Fritz common stock otherwise would be entitled to receive will be
added together and, if a fractional share results from that summation, then that
holder will receive for that fractional share, an amount in cash equal to the
per share closing price of UPS Class B common stock quoted on the NYSE on the
date of the closing, multiplied by the fraction of a share of UPS Class B common
stock to which that holder otherwise would have been entitled.
We urge Fritz stockholders to obtain current market quotations for UPS
Class B common stock. The market price of UPS common stock is likely to
fluctuate between the date of this document and the date on which the merger is
completed and thereafter. Because the number of shares of UPS Class B common
stock to be received by Fritz stockholders in the merger is fixed and the market
price of UPS Class B common stock is subject to fluctuation, the value of the
shares of UPS Class B common stock that Fritz stockholders will receive in the
merger may increase or decrease prior to and after the merger.
CONVERSION OF SHARES; PROCEDURES; EFFECTIVE TIME
The conversion of each share of Fritz common stock into UPS Class B common
stock will occur automatically at the completion of the merger.
As soon as reasonably practicable after the completion of the merger, First
Union National Bank, the exchange agent, will send a transmittal letter to each
holder of record of Fritz common stock. The transmittal letter will contain
instructions on how to obtain shares of UPS Class B common stock, and, if
appropriate,
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cash in exchange for shares of Fritz common stock. FRITZ STOCKHOLDERS SHOULD NOT
SEND STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
Holders of certificates previously representing Fritz common stock will not
be paid dividends or other distributions declared or made with respect to shares
of UPS common stock into which their Fritz common stock has been converted with
a record date after the merger, and will not be paid cash for any fractional
shares of UPS Class B common stock, until their certificates are surrendered to
the exchange agent for exchange. After their certificates are surrendered, any
unpaid dividends and any cash for fractional shares will be paid without
interest.
None of UPS, the exchange agent or any other person will be liable to any
former Fritz stockholder for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion is a summary of the material anticipated U.S.
federal income tax consequences of the merger to a Fritz stockholder who holds
shares of Fritz common stock as a capital asset at the effective time of the
merger. The discussion is based on laws, regulations, rulings and decisions in
effect on the date hereof, all of which are subject to change (possibly with
retroactive effect) and to differing interpretations. This discussion does not
address all aspects of U.S. federal income taxation that may be relevant to
particular holders in light of their personal circumstances or to holders
subject to special treatment under the Internal Revenue Code, including, without
limitation, banks, tax-exempt organizations, insurance companies, dealers in
securities or foreign currency, traders in securities that elect to mark to
market, holders who received their Fritz common stock through the exercise of
employee stock options or otherwise as compensation, holders who are not U.S.
persons (as defined in Section 7701(a)(30) of the Internal Revenue Code) and
holders who hold Fritz common stock as part of a hedge, straddle or conversion
transaction. In addition, the discussion does not address any state, local or
foreign tax consequences of the merger.
Each holder of Fritz common stock is urged to consult its tax advisor with
respect to the particular tax consequences of the merger to such holder.
Tax Opinions
In the opinion of King & Spalding, counsel to UPS, subject to the
assumptions, limitations, qualifications and other considerations described
below under " -- Considerations with Respect to Opinions," the merger will be
treated as a "reorganization" for U.S. federal income tax purposes within the
meaning of Section 368(a) of the Internal Revenue Code.
The merger is conditioned upon counsel to UPS reaffirming their tax opinion
by delivering a closing tax opinion to UPS and Fritz at the effective time of
the merger. If UPS and Fritz are unable to obtain the closing tax opinion, UPS
and Fritz are permitted under the merger agreement to waive the receipt of the
closing tax opinion as a condition to the parties' obligation to consummate the
merger. As of the date of this document, neither UPS nor Fritz intends to waive
the receipt of the closing tax opinion as a condition to the consummation of the
merger. If UPS and Fritz fail to obtain the closing tax opinion and decide to
waive the condition to the consummation of the merger, they will resolicit the
vote of their stockholders to approve the merger agreement.
In accordance with the tax opinion regarding the treatment of the merger as
a "reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and subject to the assumptions, limitations, qualifications and other
considerations described below under "-- Considerations with Respect to
Opinions," the anticipated U.S. federal income tax consequences of the merger
can be summarized as follows: (1) no gain or loss will be recognized by UPS, the
subsidiary or Fritz as a result of the merger; (2) no gain or loss will be
recognized by the holders of Fritz common stock who exchange all of their shares
of Fritz common stock in the merger solely for shares of UPS Class B common
stock, except with respect to cash, if any, received in lieu of fractional
shares of UPS Class B common stock; (3) the tax basis of the shares of UPS Class
B common
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stock received by a holder of Fritz common stock will be the same as the tax
basis of the shares of Fritz common stock surrendered in exchange therefor
(reduced by any amount allocable to a fractional share of UPS Class B common
stock for which cash is received); (4) the holding period of the shares of UPS
Class B common stock received in the merger by a holder of Fritz common stock
(including a fractional share of UPS Class B common stock for which cash is
received) will include the holding period of the shares of Fritz common stock
surrendered in exchange therefor; and (5) cash received by a holder of Fritz
common stock in lieu of a fractional share of UPS Class B common stock will be
treated as received in exchange for the fractional share, and capital gain or
loss will be recognized by the holder in an amount equal to the difference
between the amount of cash received and the portion of the tax basis of the
holder's shares of Fritz common stock allocable to the fractional interest.
Considerations with Respect to Opinions
The tax opinion, the closing tax opinion and the foregoing summary of the
anticipated U.S. federal income tax consequences of the merger are based upon
and are subject to assumptions, limitations and qualifications, including
representations made by officers of Fritz, UPS and the subsidiary. If any of
these representations or assumptions is inconsistent with the actual facts, the
U.S. federal income tax consequences of the merger could be adversely affected.
In addition, no ruling from the Internal Revenue Service with respect to the tax
consequences of the merger has been, or will be, requested and the tax opinion
and closing tax opinion are not binding on the Internal Revenue Service or the
courts and do not preclude the Internal Revenue Service from adopting a contrary
position and a court sustaining the position.
REGULATORY APPROVALS
The merger is subject to antitrust laws of the U.S. and numerous foreign
jurisdictions.
UPS and Fritz each filed notification and report forms under the Hart-Scott
Rodino Act with the FTC and the Antitrust Division. Early termination of the
specified waiting period was granted on February 16, 2001.
The closing of the merger is conditioned on the receipt of the approval of
regulatory authorities in specific foreign jurisdictions, including each
approval that is required for the merger and the failure of which to obtain
would be reasonably likely to have a material adverse effect on the business,
operations, properties, condition (financial or otherwise), assets or
liabilities of Fritz or UPS or to prevent or materially delay the performance by
Fritz or UPS of any of their respective material obligations under the merger
agreement or the consummation of the merger or the other transactions
contemplated by the merger agreement. In addition, none of those approvals may
result in the imposition of a condition that
- would be reasonably likely to have a material adverse effect on the
business, operations, properties, condition (financial or otherwise),
assets or liabilities of Fritz or UPS or to prevent or materially delay
the performance by Fritz or UPS of any of their respective material
obligations under the merger agreement or the consummation of the merger
or the other transactions contemplated by the merger agreement or
- require UPS or the surviving corporation in the merger to make any
divestitures, including any divestiture of the assets of UPS or Fritz, or
to take any other action which would reasonably be expected to impair
UPS's ability to achieve in any material respect the overall benefits
expected, as of the date the merger agreement is executed, to be realized
from the consummation of the merger.
The merger also is subject to the review of numerous foreign agencies
generally for antitrust reasons. Most of these agencies require a filing to be
made by Fritz and/or UPS before the effective date, but some of the filings are
not required to be made until after the effective date. The waiting periods with
respect to these filings vary. We expect that the merger will not violate any
foreign antitrust laws and that all of the foreign antitrust regulatory
authorities whose approval we must seek will approve the merger.
The merger will not proceed in the absence of the requisite regulatory
approvals. At any time before or after the completion of the merger, the FTC or
the Antitrust Division could take any action under the antitrust laws as either
deems necessary or desirable in the public interest, including seeking to enjoin
the completion of
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the merger or seeking the divestiture of substantial assets of UPS or Fritz. UPS
and Fritz believe that the completion of the merger will not violate the
antitrust laws. There can be no assurance, however, that these regulatory
approvals will be obtained, and if the merger is approved, there can be no
assurance as to the date of any of these approvals. There can also be no
assurance that these approvals will not contain any adverse condition or
requirement which causes the parties to abandon the merger because the approval
fails to satisfy the conditions set forth in the merger agreement and described
in this document. See "The Merger Agreement -- Conditions to the Merger." There
can likewise be no assurance that the Antitrust Division will not challenge the
merger, or if a challenge is made, as to the outcome thereof.
LITIGATION
On February 5, 2001, FedEx Corporation and Federal Express Corporation, a
wholly owned subsidiary of FedEx Corporation (collectively, "FedEx"), filed a
complaint and request for injunctive relief in the Shelby County Tennessee State
Court against Fritz. The complaint alleges that in the course of negotiating the
merger, Fritz has breached or is threatening to breach its obligations not to
disclose confidential information and trade secrets under a mutual
non-disclosure agreement and a separate customs brokerage service agreement
between FedEx and Fritz. The FedEx complaint seeks unspecified damages and
injunctive relief. UPS was not initially named as a party to this lawsuit by
FedEx. On the day the complaint was filed, FedEx sought and obtained from the
Court, without prior notice to Fritz, a temporary restraining order prohibiting
Fritz from disclosing FedEx confidential information, or otherwise breaching
certain provisions of the mutual non-disclosure agreement or customs brokerage
service agreement.
On February 16, 2001, FedEx filed an amended complaint in the Tennessee
lawsuit adding claims that the proposed merger between Fritz and UPS inevitably
will result in the disclosure to UPS of FedEx trade secrets or confidential
information. While not attempting to include UPS as a party, the amended
complaint seeks a temporary and permanent injunction against Fritz's completion
of the merger. On February 20, 2001, the Court entered a brief order joining UPS
as a party defendant that is required for complete adjudication of the issues in
the Tennessee lawsuit. On February 20, 2001, the Court issued an order, later
entered as a written order on February 23, 2001, denying FedEx's motion for a
temporary injunction against the merger. The Court continued until March 7,
2001, and then with the consent of the parties further extended to March 20,
2001, the temporary restraining order entered February 5, 2001, prohibiting
disclosure of confidential FedEx information or otherwise breaching certain
provisions of the mutual non-disclosure agreement or customs brokerage service
agreement. The Court also directed Fritz to submit a plan to provide protections
against improper disclosure of FedEx confidential information (the "Fritz
Separation Plan"), which Fritz has done. While the temporary restraining order
has technically expired, the Court has announced that it wishes to enter an
order of temporary injunction requiring Fritz to implement certain portions of
the Fritz Separation Plan submitted by Fritz. The Court has further directed
that Fritz and FedEx resolve certain outstanding issues with respect to the
Fritz Separation Plan with the guidance of the Special Master appointed by the
Court. The Special Master has issued a report and recommendation to the Court,
which has been placed under seal. The parties will have an opportunity to file
objections regarding the recommendation.
Fritz believes it has meritorious defenses and intends to vigorously defend
the lawsuit filed by FedEx. On March 22, 2001, Fritz filed an answer and
counterclaim against FedEx alleging breach of contract and seeking damages and
other remedies under the customs brokerage service agreement.
On February 19, 2001, before UPS was added by the Court as a party in the
Tennessee litigation, UPS filed its own civil lawsuit in Superior Court of
Fulton County Georgia, joining FedEx and Fritz. In the Georgia suit, UPS seeks a
judicial declaration that completion of the merger will not require Fritz to
violate its contractual promises not to disclose or misuse confidential or trade
secret information belonging to FedEx. UPS has made clear that it does not seek
or desire disclosure of any FedEx trade secret material. On February 27, 2001,
FedEx appeared in the Georgia action and moved to stay or dismiss the Georgia
action. Fritz has not yet filed a responsive pleading in the Georgia action.
UPS intends to vigorously assert its position that the claims of FedEx
seeking to block the merger are without merit.
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ACCOUNTING TREATMENT
UPS intends to account for the merger under the purchase method of
accounting for business combinations. After the merger, the results of
operations of Fritz will be included in the consolidated financial statements of
UPS.
APPRAISAL RIGHTS
Under Delaware law, Fritz stockholders have no dissenters' or appraisal
rights in connection with the merger.
RESALE OF UPS CLASS B COMMON STOCK
The merger agreement requires Fritz to deliver to UPS, prior to the closing
of the transactions contemplated by the merger agreement, a letter identifying
all persons who may be, as of the date the merger is submitted for approval by
Fritz stockholders, an affiliate of Fritz. The merger agreement further requires
Fritz to use commercially reasonable efforts to cause each person who is
identified as an affiliate in that letter to deliver to UPS, on or prior to the
completion of the merger, an executed letter agreement to the effect that the
affiliate will not offer, sell or otherwise dispose of any of the shares of UPS
Class B common stock issued to that affiliate in the merger or otherwise owned
or acquired by that affiliate, in violation of the Securities Act.
All shares of UPS Class B common stock received by Fritz stockholders in
the merger will be freely transferable, except that the shares of UPS Class B
common stock received by persons who are deemed to be "affiliates" of Fritz
under the Securities Act at the time of Fritz's special stockholders' meeting
may resell those shares only in transactions permitted by Rule 145 under the
Securities Act or as otherwise permitted under the Securities Act. Persons who
may be affiliates of Fritz for those purposes generally include individuals or
entities that control, are controlled by, or are under common control with,
Fritz, and would not include stockholders who are not officers, directors or
principal stockholders of Fritz.
This proxy statement/prospectus does not cover resales of UPS Class B
common stock to be received by the stockholders of Fritz in the merger, and no
person is authorized to make any use of this proxy statement/prospectus in
connection with any such resale.
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THE MERGER AGREEMENT
The following is a summary of the material terms of the merger agreement
executed by Fritz, UPS and VND Merger Sub, Inc., a newly formed, wholly owned
subsidiary of UPS, on January 10, 2001. This summary is qualified in its
entirety by reference to the merger agreement, a copy of which is attached as
Annex A to this proxy statement/prospectus and is incorporated by reference into
this proxy statement/prospectus. We urge all stockholders are urged to read the
merger agreement in its entirety for a more complete description of the terms
and conditions of the merger.
THE MERGER
Structure of the Merger. At the effective time of the merger, VND will
merge with and into Fritz. Fritz will be the surviving corporation and become a
wholly owned subsidiary of UPS immediately after the merger. The merger is
intended to qualify as a tax-free reorganization under Section 368(a) of the
Internal Revenue Code.
Effective Time of the Merger. The closing of the merger will occur within
five business days after the satisfaction or waiver of the conditions described
below under "-- Conditions to the Completion of the Merger". The merger will
become effective upon the filing of a certificate of merger with the Delaware
Secretary of State or at the time Fritz and UPS agree to specify in the
certificate of merger. The filing of the certificate of merger will take place
at the time of the closing of the merger.
Merger Consideration. Each share of Fritz common stock that is outstanding
prior to the effective time (other than Fritz common stock already owned by UPS
or VND and Fritz common stock owned as treasury stock by Fritz) will, at the
effective time, be converted into the right to receive 0.2 shares of UPS Class B
common stock.
UPS will not issue fractional shares in the merger. All fractional shares
of UPS Class B common stock that a holder of Fritz common stock would otherwise
be entitled to receive as a result of the merger will be aggregated, and if a
fractional share results from that aggregation, that holder will be entitled to
receive for that fractional share, an amount in cash determined by multiplying
the per share closing price of UPS Class B common stock quoted on the NYSE on
the date of the closing by the fraction of a share of UPS Class B common stock
to which that holder would otherwise have been entitled.
The stockholder in whose name the certificates representing the UPS Class B
common stock are issued will be paid any dividends that have become payable with
respect to the UPS Class B common stock between the effective time and the time
of the surrender of the certificate(s) representing shares of Fritz common
stock, without interest. After the surrender, the stockholder will be paid any
dividend on such UPS Class B common stock that has a record date after the
effective time and before that surrender and a payment date after that
surrender. In that case, the dividend payments will be made on the payment dates
and without interest.
Cancellation of Shares. All shares of Fritz common stock (other than Fritz
common stock already owned by UPS or VND and Fritz common stock owned as
treasury stock by Fritz), when converted, will no longer be outstanding and will
automatically be canceled and retired and will cease to exist, and each holder
of a certificate representing those shares will cease to have any rights with
respect thereto, except the right to receive UPS Class B common stock, cash for
fractional shares and any dividends or other distributions payable. Each share
of Fritz common stock held by Fritz as treasury stock or owned by UPS or VND
immediately prior to the effective time will be automatically canceled, and UPS
will not exchange those shares for any securities of UPS or any other
consideration.
Procedure for Surrender of Certificates. An exchange agent will be
appointed to handle the exchange of Fritz stock certificates for UPS stock
certificates and the payment of cash for fractional shares. Soon after the
closing of the merger, the exchange agent will send a letter of transmittal,
which is to be used to exchange Fritz stock certificates for UPS stock
certificates, to each former Fritz stockholder of record. The letter of
transmittal will contain instructions explaining the procedure for surrendering
Fritz stock certificates. Fritz stockholders who surrender their stock
certificates together with a properly completed letter of transmittal will
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receive stock certificates representing the shares of UPS Class B common stock
into which their shares of Fritz common stock have been converted in the merger.
TREATMENT OF STOCK OPTIONS
At the effective time of the merger, the right to purchase shares of Fritz
common stock pursuant to each outstanding option granted under the Fritz stock
option plans will become the right to purchase a number of shares of UPS Class A
common stock equal to the number of shares of Fritz common stock that were
subject to the option multiplied by 0.2, rounded down to the nearest whole
number of shares of UPS Class A common stock, at an exercise price equal to the
current exercise price divided by 0.2, rounded up to the nearest whole cent.
Each of those options will then be subject to the same terms and conditions as
were in effect immediately prior to the merger.
TRANSFERS
After the effective time, the stock transfer books of Fritz will be closed
and thereafter there will be no further registration of transfers of shares of
common stock on the records of Fritz. If, after the effective time, certificates
representing Fritz common stock are presented to the surviving corporation in
the merger, these certificates, when accompanied by proper documentation, will
be exchanged for UPS Class B common stock, cash and dividends or distributions
payable, as appropriate, in accordance with the merger agreement.
LOST, STOLEN OR DESTROYED CERTIFICATES
In the event any certificate representing Fritz common stock is lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
stockholder claiming that certificate to be lost, stolen or destroyed and, if
required by UPS or the surviving corporation, the posting by that stockholder of
a bond in a reasonable amount as UPS or the surviving corporation may direct as
an indemnity against any claim that may be made against it with respect to that
certificate, the exchange agent will issue in exchange for that lost, stolen or
destroyed certificate Class B common stock, cash and dividends payable which
that stockholder is entitled to receive pursuant to the merger agreement.
REPRESENTATIONS AND WARRANTIES
Mutual Representations and Warranties. The merger agreement contains
generally reciprocal representations and warranties made by each party to the
other. These generally reciprocal representations and warranties relate to:
- capitalization, organization and similar corporate matters;
- authorization, execution, delivery, performance and enforceability of the
merger agreement and related matters;
- absence of a breach of the certificate of incorporation, bylaws,
applicable laws or material agreements as a result of the merger;
- governmental consents, approvals, orders and authorizations required in
connection with the merger;
- filings with the SEC;
- financial statements;
- absence of specific changes and events;
- information provided for inclusion in this proxy statement/prospectus;
- compliance with applicable law;
- eligibility of the merger to qualify as a tax-free reorganization; and
- payment of fees to finders and financial advisors in connection with the
merger agreement.
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Additional Representations and Warranties of Fritz. Fritz has made
additional representations relating to:
- organization and standing of Fritz's subsidiaries;
- approval and recommendation of the merger by Fritz's Board of Directors;
- litigation;
- the filing of tax returns and other tax matters;
- title to and interest in tangible personal property and other assets;
- title to and interest in real property;
- compliance with environmental regulations;
- information with respect to officers and employees;
- change of control agreements and retirement and other employee plans and
matters relating to ERISA;
- labor matters;
- contracts and commitments;
- ownership of intellectual property;
- insurance policies;
- notes and accounts receivable;
- transactions with affiliates;
- customer and supplier relations;
- compliance with the Foreign Corrupt Practices Act and other similar laws;
- other merger discussions;
- antitakeover statutes; absence of dissenter's rights
- required vote by Fritz's stockholders in respect of the merger agreement
and the merger; and
- customs matters.
COVENANTS
Conduct of Fritz's Business Pending the Merger. Fritz has agreed that each
of Fritz and its subsidiaries between January 10, 2001 and the effective time
will (unless UPS otherwise approves, in writing) take or refrain from taking
certain actions, including agreements to:
- conduct its businesses in the ordinary course of business and in a manner
consistent with prior practice;
- use all commercially reasonable efforts to preserve its business
organization substantially intact, to keep available the services of its
current officers and employees and maintain its existing relations and
goodwill with customers, suppliers and other persons with which Fritz or
its subsidiaries have significant business relations;
- not declare or pay any dividends on or make other distributions (whether
in cash, stock or property) in respect of any of its capital stock,
except for dividends by a wholly owned subsidiary of Fritz to Fritz or to
another wholly owned subsidiary of Fritz;
- not execute or cause to be executed any transactions that may result in a
deemed dividend under the Internal Revenue Code;
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- not split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock;
- not repurchase or otherwise acquire any shares of its capital stock;
- not issue shares of its capital stock or any securities convertible into
any shares of its capital stock, other than pursuant to (1) the exercise
of Fritz stock options outstanding as of January 10, 2001 and other
employee contributions to Fritz benefit plans, (2) up to 1,000,000 shares
of Fritz common stock under new Fritz stock options granted at fair
market value and consistent with past practices under the Fritz 1992
Omnibus Equity Incentive Plan in the ordinary course, (3) new Fritz stock
options granted at fair market value and in the ordinary course
consistent with past practice to new employees, not to exceed in the
aggregate per month options to purchase 25,000 shares of Fritz common
stock or 10,000 shares of Fritz common stock to any individual, or (4)
the Fritz rights plan;
- not amend its certificate of incorporation (including any certificate of
designations attached thereto) or bylaws or other equivalent
organizational documents;
- not incur any indebtedness for borrowed money or guaranty any
indebtedness for borrowed money of another person, other than (1)
borrowings under existing lines of credit (or under any refinancing of
those existing lines) or (2) indebtedness owing to, or guaranties of
indebtedness owing to, Fritz;
- not make any loans or advances to any other person other than loans or
advances between Fritz and its subsidiaries and other than loans or
advances less than $100,000 made in the ordinary course of business
consistent with past practice;
- not merge or consolidate with any other entity in any transaction, or
sell any business or assets in a single transaction or series of
transactions in which the aggregate consideration is $1,000,000 or
greater;
- not sell, license, mortgage or otherwise encumber or subject to any lien
or otherwise dispose of any material properties or assets, other than in
the ordinary course of business consistent with past practice; and
- not commit or agree to take any of the actions described above as
negative covenants.
Access To Information; Confidentiality. From the signing of the merger
agreement to the closing of the merger, Fritz has agreed, and has agreed to
cause its representatives, to afford the representatives of UPS and VND
reasonable access at all reasonable times to the officers, employees, agents,
properties, offices and other facilities, books and records of Fritz and its
subsidiaries, and has agreed to furnish UPS and VND with all financial,
operating and other data and information as UPS and Sub, through their
representatives, may reasonably request. In complying with such reasonable
requests, Fritz will not provide information that would breach any
confidentiality obligations owed by Fritz to third parties. UPS has agreed to
remain subject to the terms of a confidentiality agreement with Fritz dated
November 10, 2000. The parties have agreed that no investigation pursuant to
this covenant will affect any representation or warranty in the merger agreement
of any party or any condition to the obligations of the parties. Fritz has
agreed to cooperate in UPS' determination and calculation of the tax basis of
Fritz's subsidiaries.
Notification of Certain Matters. Fritz has agreed to give prompt notice to
UPS, and UPS has agreed to give prompt notice to Fritz, of (1) the occurrence,
or nonoccurrence, of any event which would be likely to cause any representation
or warranty contained in the merger agreement to be untrue or inaccurate and (2)
any failure by that party (or Sub, in the case of UPS) to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it.
Fritz Stockholders' Meeting. Subject to its obligations in connection with
a tender or exchange offer pursuant to Rules 14d-9 and 14e-2 of the Securities
Exchange Act and its fiduciary duties, Fritz's Board of Directors has agreed to
recommend the approval of the merger and the merger agreement to Fritz's
stockholders. Subject to the requirements of Rules 14d-9 and 14e-2 of the
Securities Exchange Act, the fiduciary duties of Fritz's Board of Directors and
the termination of the merger agreement due to the failure to obtain the
approval of Fritz's stockholders, Fritz has agreed that those obligations will
not be affected by the
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commencement, public proposal, public disclosure or communication to Fritz of
any "acquisition proposal". An "acquisition proposal" is any bona fide proposal
or offer from any person relating to any direct or indirect acquisition or
purchase of 20% or more of the assets of Fritz and its subsidiaries, taken as a
whole, or 20% or more of the combined voting power of the shares of Fritz's
common stock, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 20% or more of the combined voting
power of the shares of Fritz's common stock, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Fritz or any of its subsidiaries in which the other party
thereto or its stockholders will own 20% or more of the combined voting power of
the parent entity resulting from any of those transactions, other than the
transactions contemplated by the merger agreement.
Fritz Board Recommendations. Except pursuant to disclosure obligations
under Rules 14d-9 and 14e-2 of the Securities Exchange Act, as required by
fiduciary obligations and in the case of termination of the merger agreement due
to the failure to obtain the approval of the Fritz's stockholders, neither
Fritz's Board of Directors nor any of its committees is permitted to:
- withdraw, or propose publicly to withdraw, in a manner adverse to UPS,
its approval or recommendation of the merger or the merger agreement;
- subject to the requirements of Rules 14d-9 and 14e-2 of the Securities
Exchange Act and its fiduciary duties, modify, or propose publicly to
modify in a manner adverse to UPS, its approval or recommendation;
- approve or recommend, or propose publicly to approve or recommend, any
acquisition proposal; or
- approve or recommend or propose to approve or recommend, or execute or
enter into any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar
agreement related to any acquisition proposal.
Notwithstanding the foregoing, before the earlier of March 11, 2001 and the
date of the special meeting of Fritz's stockholders, Fritz's Board of Directors
was permitted to modify or propose publicly to modify, in a manner adverse to
UPS, its approval or recommendation of the merger or the merger agreement in
response to a "superior proposal" as long as Fritz's Board of Directors:
- was not then in breach of its non-solicitation obligations under the
merger agreement,
- determined that action, based upon the written advice of independent
outside legal counsel, was required to comply with its fiduciary duties
to Fritz's stockholders under applicable law, and
- provided UPS with at least 72 hours advance written notice of its
decision to take that action.
A "superior proposal" is any proposal made by a third party relating to any
direct or indirect acquisition or purchase of all or substantially all of the
assets of Fritz and its subsidiaries, taken as a whole, or 100% of the combined
voting power of the shares of Fritz's common stock, or any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 100% or more of the combined voting power of the shares of Fritz's common
stock and otherwise on terms which Fritz's Board of Directors determines in its
good faith judgment (based upon the advice of a financial advisor of nationally
recognized reputation) -- taking into account the person making the proposal and
the legal, financial, regulatory and other aspects of the proposal deemed
appropriate by Fritz's Board of Directors -- is:
- more favorable from a financial point of view than the merger to Fritz's
stockholders taken as a whole,
- is reasonably capable of being completed, and
- for which financing, to the extent required, is then committed or is
capable of being obtained by that third party.
Indemnification. UPS has agreed to cause the surviving corporation and its
successors and assigns for at least six years after the effective time, to
indemnify and hold harmless each present and former director, officer, employee
and agent of Fritz and any of its subsidiaries in accordance with Fritz's
certificate of incorporation and bylaws and indemnification and employment
agreements to which Fritz and any of those
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persons are parties. UPS and Fritz have agreed that any claims for
indemnification will survive, whether or not those claims will have been finally
adjudicated or settled, as long as Fritz and UPS have received written notice
prior to the sixth anniversary of the effective time.
UPS has agreed to cause the surviving corporation and its successors and
assigns for a period of six years after the effective time, to maintain Fritz's
current directors' and officers' liability insurance policies or insurance
policies comparable thereto with respect to matters occurring prior to the
effective time. However, the surviving corporation and its successors and
assigns will not be obligated to pay annual premiums for that insurance in
excess of 200% of the current annual premiums paid by Fritz for the existing
coverage prior to the merger. If the annual premiums of that insurance coverage
exceed that amount, UPS will cause the surviving corporation and its successors
and assigns to provide coverage available for a cost equal to 200% of those
current annual premiums.
If the surviving corporation of the merger (1) consolidates with or merges
into any other person and the other person is the continuing or surviving
corporation or entity of that consolidation or merger or (2) transfers all or
substantially all of its properties and assets to any person, then proper
provision will be made so that the successors and assigns of the surviving
corporation of the merger will assume the obligations set forth with respect to
the continuing indemnification of Fritz's directors, officers, employees and
agents described in the merger agreement.
From and after the effective time, UPS will unconditionally guarantee the
timely performance of all obligations of the surviving corporation of the merger
with respect to the continuing indemnification of Fritz's directors, officers,
employees and agents described in the merger agreement.
Stockholder Litigation. Fritz has agreed to give UPS the opportunity to
participate in the defense or settlement of any stockholder litigation against
Fritz and its directors relating to the transactions contemplated by the merger
agreement or the merger. However, no settlement will be agreed without UPS's
consent, which consent will not be unreasonably withheld and, to the extent UPS
seeks Fritz's cooperation in the defense or settlement of litigation, UPS will
enter into an appropriate joint defense agreement with Fritz.
Acquisition Proposals. Fritz has agreed not to, and to cause its
subsidiaries and its representatives not to, directly or indirectly through
another person:
- solicit, initiate or encourage (including by way of furnishing
information) or otherwise take any action to facilitate, the making of
any proposal that constitutes an acquisition proposal, or
- participate in any discussions or negotiations regarding, any proposal
that constitutes, or may reasonably be expected to lead to, any
acquisition proposal.
If at any time prior to the earlier of March 11, 2001 and the date of the
special meeting of Fritz's stockholders, Fritz's Board of Directors, in exercise
of its fiduciary duties, had reasonably determined in good faith, based upon the
written advice of independent outside legal counsel, that it was required to do
so to comply with its fiduciary duties to Fritz's stockholders under applicable
law, Fritz's Board of Directors and its representatives had the ability, in
response to a superior proposal that did not result in a breach of the covenant
described above, and subject to providing contemporaneous notice of its decision
to take that action to UPS, to:
- furnish information with respect to Fritz and its subsidiaries to any
person making a superior proposal pursuant to a customary confidentiality
agreement, and
- participate in discussions or negotiations regarding the superior
proposal.
- In that instance, Fritz agreed to provide immediate oral and written
notice to UPS of:
- the receipt of the acquisition proposal or any inquiry which could
reasonably be expected to lead to an acquisition proposal,
- the material terms and conditions of the acquisition proposal or inquiry,
and
- the identity of the person or entity making the acquisition proposal or
inquiry.
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- Fritz further agreed to continue to keep UPS informed of the status and
details of the acquisition proposal or inquiry, as well as any related
discussions or negotiations permitted pursuant to the covenant described
above.
Further Assurances. Subject to the terms and conditions of the merger
agreement, each of Fritz, UPS and VND has agreed to use its commercially
reasonable efforts to:
- take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws to
consummate the merger and the other transactions contemplated by the
merger agreement as soon as practicable after January 10, 2001; and
- obtain and maintain all approvals, consents, waivers, registrations,
permits, authorizations, clearances and other confirmations required to
be obtained from any third party and/or any governmental entity that are
necessary, proper or advisable to consummate the merger and the
transactions contemplated by the merger agreement.
In furtherance and not in limitation of the foregoing, each of Fritz, UPS
and VND has agreed to make as promptly as practicable, to the extent it has not
already done so:
- an appropriate filing of a Notification and Report Form pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act with respect to the
transactions contemplated by the merger agreement (which filing was made
on January 18, 2001), and
- all necessary filings with other governmental entities relating to the
merger, and, in each case, to supply as promptly as practicable any
additional information and documentary material that may be requested
pursuant to law and to use its commercially reasonable efforts to cause
the expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act, which occurred on February
16, 2001, and the receipt of the approvals required by law as soon as
practicable.
Notwithstanding the foregoing, nothing in the covenant described above will
require, or be deemed to require, UPS to agree to or effect any divestiture
(including divestitures of assets of UPS or Fritz) or take any other action
which would reasonably be expected to impair UPS' ability to achieve in any
material respect the overall benefits expected, as of January 10, 2001, to be
realized from the consummation of the merger.
If any administrative or judicial action or proceeding, including any
proceeding by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by the merger agreement as violative of
any regulatory law, or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated or
enforced by a governmental entity which would make the merger or the
transactions contemplated by the merger agreement illegal or would otherwise
prohibit or materially impair or delay the consummation of the merger or the
transactions contemplated by the merger agreement, each of UPS and Fritz has
agreed to cooperate in all respects with each other and use its commercially
reasonable efforts to contest and resist any action or proceeding and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other action or order, whether temporary, preliminary or permanent, that is in
effect and that prohibits, prevents or restricts consummation of the merger or
the transactions contemplated by the merger agreement and to have that statute,
rule, regulation, executive order, decree, injunction or administrative order
repealed, rescinded or made inapplicable. Notwithstanding any provision of the
merger agreement to the contrary, neither UPS nor the surviving corporation will
be required under the terms of the merger agreement to dispose of or hold
separate all or any portion of the businesses or assets of UPS or any of its
subsidiaries or of Fritz or any of its subsidiaries to remedy or otherwise
address the concerns (whether or not formally expressed) of any governmental
entity under the Hart-Scott-Rodino Antitrust Improvements Act or any other
antitrust statute or regulation.
UPS has agreed:
- to take all actions necessary to ensure that no antitakeover statute or
similar statute or regulation is or becomes operative with respect to the
merger agreement, the merger, the option agreements to which UPS and each
of Fritz and specific stockholders of Fritz are parties or any other
transactions contemplated by the merger agreement, and
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- that if any antitakeover statute or similar statute or regulation of any
jurisdiction is or becomes operative with respect to the merger
agreement, the merger, the option agreements to which UPS and each of
Fritz and specific stockholders of Fritz are parties or any other
transaction contemplated by the merger agreement, take all actions
necessary to ensure that the merger agreement, the merger and any other
transactions contemplated by the merger agreement and those option
agreements may be consummated as promptly as practicable on the terms
contemplated by the merger agreement and those option agreements and
otherwise to minimize the effect of that statute or regulation on the
merger and the other transactions contemplated by the merger agreement.
NYSE Listing. UPS has agreed to use commercially reasonable efforts to
cause to be approved for listing on the NYSE, subject to official notice of
issuance, a sufficient number of shares of UPS Class B common stock to be issued
in the merger. In addition, if the merger is completed, Fritz common stock will
cease to be listed on the Nasdaq national market system and Fritz will cease to
file periodic reports required by the Securities and Exchange Act of 1934.
Tax Treatment. Each of Fritz and UPS has agreed to use reasonable efforts
to cause the merger to qualify as a "reorganization" under the provisions of
Section 368(a) of the Internal Revenue Code and to obtain an opinion from UPS'
legal counsel with respect to that qualification, including the execution of the
letters of representation containing representations that are customarily given
in similar merger transactions, updated as necessary. Fritz and UPS have agreed
to treat the UPS Class B common stock received in the merger by Fritz's
stockholders as property permitted to be received by Section 354 of the Internal
Revenue Code without the recognition of gain. Each of UPS and Fritz has agreed
to, and has agreed to cause its affiliates to, vigorously and in good faith
defend all challenges to the treatment of the reorganization as described in
this covenant. Each of UPS and Fritz has agreed that if it becomes aware of any
fact or circumstance that is reasonably likely to prevent the merger from
qualifying as a reorganization described in Section 368(a) of the Internal
Revenue Code, it will promptly notify the other party in writing.
Fritz has agreed not to waive any statute of limitations in respect of
taxes or to agree to any extension of time beyond 90 days with respect to a tax
assessment or deficiency without the consent of UPS.
Undertaking of UPS. Under the merger agreement, UPS will perform, or cause
to be performed, when due all obligations of VND under the merger agreement,
and, following the closing, of the surviving corporation.
Director Resignations. Fritz has agreed to cause to be delivered to UPS
resignations of all the directors of Fritz and its subsidiaries to be effective
upon the consummation of the merger. Fritz has further agreed to cause its
directors, prior to resignation, to appoint new directors nominated by UPS to
fill those vacancies.
Company Affiliates. Fritz has agreed to deliver to UPS a letter
identifying all persons who are, at the time the merger is submitted to a vote
of Fritz's stockholders, Fritz's affiliates for purposes of Rule 145 under the
Securities Act. Fritz has also agreed to use its commercially reasonable efforts
to cause each person who is identified as a possible affiliate in that letter to
deliver to UPS on or prior to the effective time an affiliate letter. UPS will
be entitled to place legends on any certificates of UPS Class B common stock
issued to possible affiliates to restrict transfer of those shares.
Purchase of Fritz Stock. Fritz has agreed not to prohibit UPS or any of
its affiliates from purchasing its shares of capital stock or entering into
option, lock-up, voting or proxy agreements or any other similar agreements with
respect to Fritz's capital stock at any time prior to the consummation of the
merger.
Rights Plan. Fritz has entered into a rights agreement, dated as of
January 16, 2001, between Fritz and Mellon Investor Services LLC, as rights
agent. For a description of the rights agreement, see "Comparison of Rights of
UPS and Fritz Stockholders -- Rights Plan" below.
Employee Matters. UPS and Fritz have agreed to take all commercially
reasonable action as is necessary, including action under the relevant Fritz
stock plan, to effect the provision regarding the treatment of stock options as
described above under "-- Treatment of Stock Options".
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CONDITIONS TO THE COMPLETION OF THE MERGER
Conditions to the Obligations of Each Party. The respective obligations of
UPS, VND and Fritz to effect the merger are subject to the satisfaction of the
following conditions, unless waived in writing by all parties:
- the approval and adoption of the merger agreement and the merger by the
affirmative vote of the holders of shares representing a majority of the
shares of Fritz common stock entitled to vote;
- receipt of all consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental entity and of parties to
contracts or other agreements to which any of Fritz or UPS (or their
respective subsidiaries) is a party, or by which either is bound, in each
case, as required in connection with the execution, delivery and
performance of the merger agreement, subject to specific materiality
exceptions and the absence of the imposition of specific conditions;
- the expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act and any other regulatory
law;
- the absence of any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect, making illegal, materially restricting or in any
way preventing or prohibiting the merger;
- the receipt by UPS and Fritz of the tax opinion from legal counsel to UPS
with respect to the qualification of the merger as a tax-free
reorganization;
- the authorization, subject to official notice of issuance, for listing on
the NYSE of the shares of UPS Class B common stock to be issued pursuant
to the merger agreement;
- the SEC having declared effective the registration statement relating to
the issuance of shares of UPS Class B common stock in the merger and the
absence of a stop order suspending the effectiveness of that registration
statement and of proceedings initiated or threatened by the SEC for that
purpose;
- the other party's representations and warranties, subject to specific
materiality exceptions, being true and correct as of January 10, 2001 and
as of the effective time and the receipt of officers' certificates to
that effect;
- the performance in all material respects by the other party of its
obligations under the merger agreement and the receipt of officers'
certificates to that effect; and
- the absence of any change, condition, event or development that has
resulted in, or would reasonably be expected to result in a material
adverse effect on the other party.
Additional Conditions to Obligations of UPS and VND to Effect the
Merger. The obligations of UPS and VND to effect the merger are further subject
to satisfaction or waiver at or prior to the effective time of the following
conditions:
- the receipt by UPS of an affiliate letter from each affiliate identified
in accordance with the merger agreement (with respect to which Fritz will
use its commercially reasonable efforts to obtain such letters from such
affiliates);
- the absence of a threatened or pending suit, investigation, action or
other proceeding against UPS, Fritz or any of Fritz's subsidiaries before
any governmental entity, subject to specific materiality exceptions; and
- the absence of any orders restricting Fritz or UPS from conducting its
business as now being conducted, subject to specific materiality
exceptions.
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TERMINATION
Termination. The merger agreement may be terminated and the merger may be
abandoned at any time prior to the effective time:
- by mutual written consent duly authorized by the Boards of Directors of
UPS and Fritz;
- by any of UPS, VND or Fritz if any court of competent jurisdiction or
other governmental entity has issued an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise
prohibiting the merger and that order, decree, ruling or other action has
become final and nonappealable; provided, however, that the party
terminating the merger agreement has used all commercially reasonable
efforts to have that order, decree, ruling or action vacated;
- by any of UPS, VND or Fritz if the merger has not been consummated on or
before November 30, 2001; provided, however, that the right to terminate
the merger agreement is not available to any party whose failure to
fulfill any obligation under the merger agreement has been the primary
cause of, or resulted in, the failure to consummate the merger on or
before that date;
- by UPS if Fritz's Board of Directors modifies or proposes publicly to
modify, in a manner adverse to UPS, its approval or recommendation of the
merger or the merger agreement in response to a superior proposal;
- by any of UPS, VND or Fritz, if the approval and adoption of the merger
agreement and the merger by the affirmative vote of the holders of shares
representing a majority of the shares of Fritz common stock entitled to
vote has not been obtained;
- by UPS or Sub, if (1) Fritz fails to satisfy the conditions to
obligations of UPS and VND to effect the merger and that failure has not
been waived by UPS and VND or (2) Fritz breaches any of the
representations and warranties made by it in the merger agreement,
subject to specific materiality exceptions, and that breach is not
capable of being cured, is not cured in all material respects within ten
days of written notification to Fritz from UPS, is not waived by UPS or
VND or is not subject to reasonable assurances from Fritz to be cured in
all material respects on or before the effective time; or
- by Fritz, if (1) UPS or VND fails to satisfy the conditions to
obligations of Fritz to effect the merger and that failure has not been
waived by Fritz or (2) UPS or VND breaches any of the representations and
warranties made by it in the merger agreement, subject to specific
materiality exceptions, and that breach is not capable of being cured, is
not cured in all material respects within ten days of written
notification to UPS from Fritz, is not waived by Fritz or is not subject
to reasonable assurances from UPS or VND to be cured in all material
respects on or before the effective time.
Notwithstanding anything else contained in the merger agreement, the right
to terminate the merger agreement is not available to any party that is in
material breach of its obligations under the merger agreement or whose failure
to fulfill its obligations or to comply with its covenants under the merger
agreement has been the cause of, or resulted in, the failure to satisfy any
condition to the obligations of the other party under the merger agreement.
Effect of Termination. Upon the termination of the merger agreement, the
merger agreement will have no further effect, except as specifically provided in
the merger agreement. There will be no liability on the part of any party upon
termination of the merger agreement, except as otherwise provided in the merger
agreement.
If UPS exercises its right to terminate the merger agreement because
Fritz's Board of Directors modifies or proposes publicly to modify, in a manner
adverse to UPS, its approval or recommendation of the merger or the merger
agreement in response to a superior proposal, Fritz has agreed to pay to UPS
$13.5 million, as liquidated damages and not as a penalty, to reimburse UPS for
its time, expense and lost opportunity costs of pursuing the merger, upon
entering into any agreement relating to that acquisition proposal.
If within nine months after termination of the merger agreement, Fritz
enters into any agreement relating to, or consummates, an acquisition proposal
with a person other than UPS or Sub, then immediately upon
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entering into that agreement, Fritz has agreed to pay to UPS upon demand $13.5
million, as liquidated damages and not as a penalty, to reimburse UPS for its
time, expense and lost opportunity costs of pursuing the merger. However, that
amount will not be payable if Fritz has already been obligated to make a payment
as described in the above paragraph or if Fritz has terminated the merger
agreement due to a breach by UPS or VND of any of its covenants or other
obligations under the merger agreement, subject to specific materiality
exceptions.
If Fritz fails promptly to pay to UPS owed liquidated damages, Fritz has
agreed to pay the costs and expenses (including reasonable legal fees and
expenses) in connection with any action, including the filing of any lawsuit or
other legal action, taken by UPS to collect payment, together with interest on
the amount of any unpaid fee or obligation at the publicly announced prime rate
of Citibank, N.A. in effect from time to time from the date the fee or
obligation was required to be paid.
AMENDMENT AND WAIVER
Amendments. The merger agreement may not be amended except by action taken
or authorized by the board of directors of each of the parties set forth in a
written instrument signed on behalf of each of the parties. However, after
approval of the merger by Fritz's stockholders, no amendment may be made without
the further approval of Fritz's stockholders if that further approval is
required by law or the rules of any relevant stock exchange or other trading
system.
Waiver. At any time prior to the effective time, any party, by action
taken by its board of directors, may:
- extend the time for the performance of any of the covenants, obligations
or other acts of any other party, or
- waive any inaccuracy of any representations or warranties or compliance
with any of the agreements, covenants or conditions of any other party or
with any conditions to its own obligations.
Any agreement on the part of a party to an extension or waiver will be
valid only if set forth in a written instrument signed on behalf of that party
by its duly authorized officer.
FEES AND EXPENSES
Subject to amounts owed with respect to liquidated damages triggered by the
termination of the merger agreement, each party has agreed to pay its own costs
and expenses incurred in connection with the merger agreement and the
transactions contemplated by the merger agreement, except that UPS and Fritz
have agreed to share the costs and expenses incurred in connection with the
filing, printing and mailing of the registration statement and this proxy
statement/prospectus (including SEC filing fees) and the filing fees for the
premerger notification and report forms under the Hart-Scott-Rodino Antitrust
Improvements Act.
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STOCK OPTION AGREEMENT
The following is a summary of the material terms of the stock option
agreement entered into by Fritz and UPS. This summary is qualified in its
entirety by reference to the stock option agreement, a copy of which is attached
as Annex B to this proxy statement/prospectus and is incorporated by reference
into this proxy statement/prospectus. All stockholders are urged to read the
stock option agreement in its entirety for a more complete description of the
terms and conditions of the Fritz stock option.
GENERAL
Concurrently with the execution of the merger agreement, UPS and Fritz
entered into a stock option agreement pursuant to which Fritz granted to UPS an
option to purchase 3,707,609 shares of Fritz common stock to be issued and
outstanding at the time of the purchase of those shares by UPS.
EXERCISE OF THE FRITZ STOCK OPTION
UPS may exercise the Fritz stock option only with respect to all of the
subject option shares at any time after a termination fee becomes payable to
UPS. The triggers of a termination fee are described above in "The Merger
Agreement -- Termination -- Effect of Termination". UPS may only exercise the
Fritz stock option if there are no governmental restraints prohibiting its
exercise and any necessary prior notification or approval of any governmental
entity has been made or obtained.
EXERCISE PRICE OF THE OPTION SHARES
The exercise price per option share equals the lower of:
- 0.2 multiplied by the average (rounded to the nearest 1/10,000) of the
volume weighted averages (rounded to the nearest 1/10,000) of the trading
prices of UPS Class B common stock on the New York Stock Exchange, as
reported by Bloomberg Financial Markets (or such other source as the
parties will agree in writing), for the ten trading days immediately
before the date UPS gives to Fritz notice of its intent to exercise the
Fritz stock option; and
- the average closing price per share of Fritz common stock for the ten
trading day period ending on the date that is two trading days prior to
the first date on which an acquisition proposal is publicly made or has
otherwise become publicly known or any person has publicly announced an
intention to make an acquisition proposal.
CASH EXERCISE NOTICE
If the Fritz stock option becomes exercisable, UPS may, as to all or a
portion of the subject option shares, elect to receive a cash payment. To the
extent UPS elects to receive a cash payment instead of option shares, UPS' right
to purchase those option shares will terminate. The cash to be paid to UPS would
be equal to the spread multiplied by the number of option shares subject to UPS'
election. The spread is the excess over the exercise price per option share of
the average closing price of UPS Class B common stock for the ten trading days
beginning on the twelfth trading day immediately before the Fritz stock option
closing date.
LISTING AND REGISTRATION RIGHTS
If the Fritz stock option becomes exercisable, Fritz will apply to list the
option shares on the Nasdaq National Market and will use its reasonable efforts
to have those shares listed as promptly as practicable. If UPS exercises the
Fritz stock option, it will have specific registration rights, subject to
certain restrictions, with respect to the option shares for a period of two
years. The registration rights allow UPS to require that Fritz use its
commercially reasonable efforts to register the option shares UPS purchases.
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REPURCHASE OPTION
Upon the request of UPS to Fritz to register the option shares purchased by
UPS, Fritz has the option, within ten trading days after receiving the request
to register those option shares, to purchase all or any part of the registrable
option shares for cash at the repurchase price. The repurchase price per share
equals the product of:
- the number of registrable option shares to be purchased by Fritz; and
- the per share average closing sale price of Fritz common stock on the
Nasdaq National Market for the 20 trading days immediately before the
date of the request to register the option shares by UPS.
MAXIMUM AMOUNT REALIZABLE BY UPS
The total profit, as defined below, that UPS is permitted to receive upon
exercise of the option will not exceed $22.5 million. If the total profit of UPS
would otherwise exceed this amount, UPS may, at its sole election:
- reduce the number of option shares subject to the Fritz stock option;
- deliver to Fritz for cancellation option shares previously purchased by
it;
- pay cash to Fritz; or
- accept any combination of the above,
- so that UPS' actually realized profit does not exceed $22.5 million after
taking into account these actions.
Total profit means the aggregate, before taxes, of the following:
- the amounts received by UPS as a result of a cash exercise election;
- the amounts received by UPS as a result of a repurchase election by
Fritz, less the aggregate exercise price paid by UPS for the registrable
option shares subject to the repurchase election;
- the amounts received by UPS from the sale of option shares to an
unaffiliated party, less the aggregate exercise price paid by UPS for
those option shares; and
- the cash amount actually received by UPS in payment of the termination
fee under the merger agreement, less any repayment described in the above
paragraph.
The stock option agreement also provides that UPS may not exercise the
Fritz stock option for a number of option shares that would, as of the date of
the exercise notice to Fritz, result in a notional total profit, as defined
below, that exceeds $22.5 million. For purposes of the stock option agreement,
the notional total profit with respect to the option shares for which UPS may
propose to exercise the Fritz stock option granted to it means the total profit
received by UPS determined as of the date UPS notifies Fritz of its intent to
exercise the Fritz stock option and assuming that the option shares, together
with all other option shares held by UPS and its affiliates as of that date,
were sold for cash at the closing market price on the Nasdaq National Market on
the preceding trading day.
TERMINATION OF THE STOCK OPTION AGREEMENT
The Fritz stock option terminates upon the earliest to occur of the
following:
- the completion of the merger;
- nine months after a termination fee becomes payable under the merger
agreement; and
- the termination of the merger agreement in circumstances which do not
require the payment of a termination fee; provided that, if a termination
fee becomes payable after that date, then the Fritz stock option becomes
effective again and continues in effect until the later of nine months
following the time
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a termination fee becomes payable and the expiration of the period in
which UPS has a right to receive a termination fee.
Even if the Fritz stock option is terminated, UPS will continue to have the
right to purchase option shares if it has exercised that right before the
termination of the Fritz stock option.
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STOCKHOLDER OPTION AGREEMENTS
The following is a summary of the material terms of the stockholder option
agreements entered into by UPS and each of Lynn C. Fritz, the Lynn C. Fritz 1999
Grantor Retained Annuity Trust, Tamara Fritz and the Tamara Fritz 1999 Grantor
Retained Annuity Trust. This summary is qualified in its entirety by reference
to the stockholder option agreements, the form of which is attached as Annex C
to this proxy statement/prospectus and is incorporated by reference into this
proxy statement/prospectus. All stockholders are urged to read the stockholder
option agreements in their entirety for a more complete description of the terms
and conditions of the stockholder stock options.
GENERAL
Concurrently with the execution of the merger agreement, UPS entered into a
stockholder option agreement with each of Lynn C. Fritz, the Lynn C. Fritz 1999
Grantor Retained Annuity Trust, Tamara Fritz and the Tamara Fritz 1999 Grantor
Retained Annuity Trust pursuant to which these stockholders granted to UPS
options to purchase all of the shares of Fritz common stock then held by them as
well as any shares of Fritz common stock that are held by them in the future as
a result of the exercise of any stock options. As of the record date, these
stockholders owned an aggregate of 13,471,787 shares of Fritz common stock.
EXERCISE OF THE STOCKHOLDER STOCK OPTION
UPS may exercise the stockholder stock options only with respect to all of
the subject option shares upon the occurrence of any of the following events:
- any person commences, or files a registration statement with respect to,
a tender offer or exchange offer that would result in that person owning
or controlling 20% or more of the then outstanding Fritz common stock;
- Fritz, without the prior written consent of UPS, authorizes, recommends,
proposes or enters into, or publicly announces any of those intentions
with respect to, an agreement with any person (other than UPS and any
subsidiary of UPS) to effect a business combination or joint venture
involving the acquisition by any person or group (other than UPS, any
subsidiary of UPS and any person or group that as of the date of the
stockholder option agreements beneficially owns or has the right to
acquire 15% or more of Fritz common stock) acquiring or having the right
to acquire beneficial ownership of 15% or more of the then outstanding
Fritz common stock or any group is formed which beneficially owns or has
the right to beneficially own 15% or more of the then outstanding Fritz
common stock;
- Fritz, without the prior written consent of UPS, authorizes, recommends,
proposes or enters into, or publicly announces any of those intentions
with respect to, an agreement with any person (other than UPS and any
subsidiary of UPS) to transfer 20% or more of the consolidated assets of
Fritz and its subsidiaries or 20% or more of the voting power of Fritz;
- Fritz, without the prior written consent of UPS, violates its
nonsolicitation covenants under the merger agreement as described above
in "The Merger Agreement -- Acquisition Proposals";
- any person or group (other than UPS, any subsidiary of UPS and any person
or group that as of the date of the stockholder option agreements
beneficially owns or has the right to acquire 15% or more of Fritz common
stock) acquires or has the right to acquire beneficial ownership of 15%
or more of the then outstanding Fritz common stock or any group is formed
which beneficially owns or has the right to beneficially own 15% or more
of the then outstanding Fritz common stock; and
- any person (other than UPS) makes an acquisition proposal to Fritz and
that acquisition proposal is publicly announced.
UPS may only exercise these stock options if there are no governmental
restraints prohibiting their exercise and any necessary prior notification or
approval of any governmental entity has been made or obtained.
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EXERCISE PRICE OF THE OPTION SHARES
The exercise price per option share equals 0.2 multiplied by the average
(rounded to the nearest 1/10,000) of the volume weighted averages (rounded to
the nearest 1/10,000) of the trading prices of UPS Class B common stock on the
New York Stock Exchange, as reported by Bloomberg Financial Markets (or such
other source as the parties will agree in writing), for the ten trading days
immediately before the date UPS gives to the applicable stockholder notice of
its intent to exercise the stockholder stock option. As additional
consideration, UPS will pay to the applicable stockholder any property or cash
amounts received by UPS in excess of the aggregate exercise price if UPS sells
or disposes of the option shares within the 6 month period following the closing
of those option shares.
VOTING OF THE OPTION SHARES
Each stockholder has appointed UPS as its proxy to vote the option shares.
With respect to the merger proposal, UPS will vote the option shares in favor of
the merger agreement and the merger or, if UPS does not so vote, then the
holders of those options shares will, upon the request of UPS, vote them in
favor of the merger agreement and the merger. With respect to other issues
brought before the stockholders of Fritz, UPS will vote the option shares or the
holders of the option shares will, upon the request of UPS, vote them as
directed by UPS.
TERMINATION OF THE STOCKHOLDER OPTION AGREEMENTS
The stockholder stock options terminate upon the earlier to occur of the
following:
UPS' written notice of termination to the holder of the option shares; and
the termination of the merger agreement in accordance with its terms, except
that, if
- any of the events that trigger the exercise of the stockholder stock
options occur;
- Fritz's Board of Directors modifies or proposes publicly to modify, in a
manner adverse to UPS, its approval or recommendation of the merger or
the merger agreement in response to a superior proposal; or
- Fritz materially breaches any of its covenants or other obligations under
the merger agreement and that breach is not capable of being cured, is
not cured in all material respects within ten days of written
notification to Fritz from UPS, is not waived by UPS or VND or is not
subject to reasonable assurances from Fritz to be cured in all material
respects on or before the effective time,
then the stockholder stock options will continue in effect for an additional
nine months after that date.
AMENDMENTS TO THE STOCKHOLDER OPTION AGREEMENTS
On April 9, 2001, the stockholders and UPS entered into amendments to
modify the stockholder option agreements. The amendments permit the transfer of
shares of Fritz common stock among the stockholders while causing those
transferred shares to continue to be subject to the same terms and conditions as
set forth in the stockholder option agreements.
COMPARATIVE STOCK PRICES AND DIVIDENDS
The following table sets forth for the fiscal quarters indicated the high
and low sales prices per share of UPS Class B common stock as reported on the
New York Stock Exchange, and for Fritz common stock as reported on the Nasdaq
National Market. On January 9, 2001, the last full trading day before UPS and
Fritz signed the merger agreement and announced the proposed merger, Fritz
common stock closed at $7.03 per share, and UPS Class B common stock closed at
$61.00 per share. On April 23, 2001, the most recent practicable date before the
date of this document, Fritz common stock closed at $10.98 per share and UPS
Class B common stock closed at $56.25 per share. The market price of UPS Class B
common stock will fluctuate between the date of this document and the date on
which the merger is completed and thereafter. Because the number of shares of
UPS Class B common stock to be received by Fritz stockholders in the merger is
fixed and the market price of UPS Class B common stock is subject to
fluctuation, the value of the shares of UPS Class B common stock that Fritz
stockholders will receive in the merger may increase or
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decrease before and after the merger. You are urged to obtain current market
quotations for UPS Class B common stock and Fritz common stock. UPS Class B
common stock is listed on the New York Stock Exchange under the symbol "UPS."
Fritz common stock is listed on the Nasdaq National Market under the symbol
"FRTZ." As of April 10, 2001, the record date for determining holders of Fritz
common stock entitled to notice of and to vote at the special meeting, there
were approximately 465 holders of record of Fritz common stock.
FRITZ
----------------
PERIOD HIGH LOW
------ ------- ------
FISCAL YEAR 1999
First Quarter............................................. $13.563 $7.625
Second Quarter............................................ 10.000 6.063
Third Quarter............................................. 12.063 7.438
Fourth Quarter............................................ 11.813 6.875
FISCAL YEAR 2000
First Quarter............................................. 12.375 9.375
Second Quarter............................................ 11.500 9.500
Third Quarter............................................. 11.000 8.375
Fourth Quarter............................................ 11.063 7.875
FISCAL YEAR 2001
First Quarter............................................. 15.750 9.438
Second Quarter............................................ 14.875 6.063
Third Quarter............................................. 12.188 5.563
Fourth Quarter (through April 16)......................... 11.563 10.063
The following is a summary of UPS stock price activity after its initial
public offering on November 10, 1999.
UPS
---------------
HIGH LOW
------ ------
1999
November 10 -- December 31................................ $76.94 $61.00
FISCAL YEAR 2000
First Quarter............................................. 69.75 49.50
Second Quarter............................................ 66.94 55.00
Third Quarter............................................. 61.50 51.88
Fourth Quarter............................................ 64.31 51.25
FISCAL YEAR 2001
First Quarter............................................. 62.50 54.57
Second Quarter (through April 16)......................... 56.66 52.00
Before November 10, 1999, UPS common stock was not listed on a securities
exchange and was not sold in the organized over-the-counter markets. Before
November 10, 1999, UPS would notify its shareowners periodically of its
willingness to purchase a limited number of shares at specified prices
determined by the Board of Directors. In determining the share price, the Board
would consider a variety of factors, including past and current earnings,
earnings estimates, the ratio of UPS common stock to debt of UPS, other factors
affecting the business and long-range prospects of UPS, and general economic
conditions, as well as opinions furnished from time to time by investment
counselors acting as independent appraisers.
The prices at which UPS published notices of its willingness to purchase
shares from January 1, 1999 to November 9, 1999 are as follows:
DATE PRICE
---- ------
January 1 to February 17, 1999.............................. $20.00
February 18 to May 19, 1999................................. $21.50
May 20 to August 18, 1999................................... $23.50
August 19 to November 9, 1999............................... $25.50
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On November 10, 1999, UPS Class B common shares began trading on the New
York Stock Exchange.
The policy of UPS's board of directors is to declare dividends each year
out of current earnings. The declaration of future dividends is subject to the
discretion of the UPS board of directors in light of all relevant facts,
including earnings, general business conditions and working capital
requirements. UPS declared dividends of $0.68 per share in 2000. In the merger
agreement, Fritz agreed that, until the merger is completed or the merger
agreement is terminated, Fritz will not declare or pay any dividends or
distributions on its capital stock, except for dividends by a wholly owned
subsidiary of Fritz to Fritz or to another wholly owned subsidiary of Fritz.
COMPARISON OF RIGHTS OF UPS AND FRITZ STOCKHOLDERS
The rights of UPS and Fritz stockholders are currently governed by the
Delaware General Corporation Law, and the respective certificates of
incorporation and by-laws of UPS and Fritz. Upon completion of the merger, the
rights of Fritz stockholders, who then become stockholders of UPS, will be
governed by the Delaware General Corporation Law and by UPS's certificate of
incorporation and by-laws. The following description summarizes the material
differences that may affect the rights of stockholders of UPS and Fritz but does
not purport to be a complete statement of all those differences, or a complete
description of the specific provisions referred to in this summary. The
identification of specific differences is not intended to indicate that other
equally or more significant differences do not exist. Stockholders should read
carefully the relevant provisions of the Delaware General Corporation Law, UPS's
certificate of incorporation and by-laws and Fritz's certificate of
incorporation and by-laws.
UPS FRITZ
--- -----
AUTHORIZED CAPITAL STOCK
UPS is authorized to issue a total of Fritz is authorized to issue a total of
10,400,000,000 shares of capital stock, of 61,000,000 shares of capital stock, of which
which: 60,000,000 are shares of common stock and
1,000,000 are shares of preferred stock, par
- 1,533,333,333 are shares of class A-1 value $.01 per share. The preferred stock
common stock, par value $.01 per share, consists of 150,000 shares of Junior
Participating Preferred Stock, none of which
- 1,533,333,333 are shares of class A-2 is currently outstanding, and 850,000 shares
common stock, par value $.01 per share, authorized for designation into series.
- 1,533,333,334 are shares of class A-3 Fritz preferred stock may be issued from time
common stock, par value $.01 per share, to time in one or more series. The Fritz
board of directors has the authority to
- 5,600,000,000 are shares of Class B common establish from time to time the number of
stock, and shares in each series and to fix the
designations, rights, powers and preferences
- 200,000,000 are shares of preferred stock, of the shares of each series, and the
par value $.01 per share. qualifications, limitations or restrictions
of the shares of each series.
The UPS board of directors has the authority
to issue shares of preferred stock from time
to time on terms that it may determine, to
divide preferred stock into one or more
classes or series, and to fix the
designations, voting powers, preferences and
relative participating, optional or other
special rights of each class or series, and
the qualifications, limitations or
restrictions of each class or series, to the
fullest extent permitted by Delaware law. The
issuance of preferred stock could have the
effect of decreasing the market price of UPS
common stock, impeding or delaying a possible
takeover and adversely affecting the voting
and other rights of the holders of common
stock.
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UPS FRITZ
--- -----
VOTING
Each share of UPS class B common stock Each share of Fritz common stock entitles its
entitles its holder to one vote. holder to one vote.
Each share of UPS class A common stock Fritz's certificate of incorporation does not
entitles its holder to 10 votes. provide for cumulative voting in the election
of directors.
UPS' certificate of incorporation does not
provide for cumulative voting in the election
of directors.
Any stockholder or group of stockholders who
beneficially own more than 25% of the total
voting power of the outstanding shares of UPS
capital stock (except for any UPS employee
benefit plans) may cast only 1/100th of a
vote with respect to each share in excess of
25% of the total voting power.
NUMBER OF DIRECTORS
The UPS board of directors currently consists The Fritz board of directors currently
of 13 directors, elected annually. consists of 5 directors, elected annually.
REMOVAL OF DIRECTORS
UPS directors may be removed, with or without Fritz directors may be removed, with or
cause, by the affirmative vote of a majority without cause, by the affirmative vote of the
in interest of the holders of record of holders of not less than a majority of the
voting stock at a special meeting of the outstanding capital stock entitled to vote
stockholders called for the purpose. generally in the election of directors,
voting together as a single class.
FILLING VACANCIES ON THE BOARD OF DIRECTORS
Any vacancy in the UPS board of directors may Any vacancy in the Fritz board of directors
be filled by the directors then in office or may be filled by the affirmative vote of a
by the stockholders at the next annual majority of the remaining directors then in
meeting or any special meeting called for the office, even though less than a quorum, or by
purpose and at which a quorum is present. the stockholders.
CALLING A SPECIAL MEETING OF THE STOCKHOLDERS
A special meeting of UPS stockholders may be A special meeting of Fritz stockholders may
called by the chairman of the board or by the be called by the chairman of the board, the
board of directors or by any committee of the chief executive officer or the board of
board directors. UPS stockholders may not directors, or at the request in writing of
call a special meeting of stockholders. stockholders owning not less than 10% of the
voting power of outstanding capital stock.
ACTION BY WRITTEN CONSENT IN LIEU OF A
STOCKHOLDERS' MEETING
UPS stockholders may not act by written Any action that can be taken at a meeting of
consent in lieu of a meeting. the Fritz stockholders may also be taken by
written consent of stockholders holding at
least the number of votes that would be
necessary to authorize or take such action at
a meeting at which all the shares entitled to
vote were present and voted.
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UPS FRITZ
--- -----
AMENDMENT TO CERTIFICATE OF INCORPORATION
Generally, amendments to the UPS certificate
of incorporation require the approval of the
holders of a majority of the votes entitled
to be cast by the holders of each class of
common stock, voting together as a single
class.
Any amendment that would adversely affect the
rights or powers of any class of common stock
also requires the approval of the holders of
a majority of the votes entitled to be cast
by that class, voting separately as a single
class. Amendments increasing the number of
authorized shares of any class or classes of
UPS stock, or authorizing securities
convertible into, or rights to purchase,
acquire or receive, shares of any class or
classes of UPS stock, require the approval of
the holders of a majority of the votes
entitled to be cast by the holders of each
class of common stock, voting together as a
single class, and do not require a class
vote.
The approval of holders of 80% of the voting incorporation require the affirmative vote of
power of all outstanding shares of UPS stock holders of a majority of the outstanding
entitled to vote generally in the election of shares entitled to vote.
directors, voting together as a single class,
is required to amend the provisions of the
UPS certificate of incorporation relating to
(1) the prohibition of stockholder action by
written consent, (2) the calling of special
meetings of stockholders and (3) the
restrictions on the voting power of holders
of more than 25% of the voting power of UPS.
AMENDMENT OF BYLAWS
The UPS bylaws may be amended by the board of The Fritz bylaws may be amended by the board
directors or by the affirmative vote of of directors or by the vote of a majority of
holders of a majority of the outstanding a quorum present at a meeting of
shares of UPS capital stock. stockholders.
STATE ANTI-TAKEOVER STATUTES
Section 203 of the Delaware General See the description in this summary under
Corporation Law imposes restrictions which, "UPS" for a description of the provisions of
under certain circumstances, may make it more the state anti- takeover statute under
difficult for an "interested stockholder", as Section 203 of the Delaware General
defined in Section 203, to effect various Corporation Law. Neither the bylaws nor the
business combinations with the corporation certificate of incorporation of Fritz
for a three year period from the time such contains a provision excluding Fritz from the
person becomes an interested stockholder. restrictions imposed by Section 203.
Under Section 203, a corporation's bylaws or
certificate of incorporation may exclude a
corporation from the restrictions imposed by
the Section. Neither the bylaws nor the
certificate of incorporation of UPS contains
such a provision.
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INDEMNIFICATION/LIMITATION OF LIABILITY
Under Delaware law, a corporation may indemnify any person made a party or
threatened to be made a party to any type of proceeding because he or she is or
was an officer, director, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or other entity, against expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with such proceeding if:
- he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation
and
- in the case of a criminal proceeding, he or she had no reasonable cause
to believe that his or her conduct was unlawful.
However, no indemnification is permitted if the person is adjudged to be
liable to the corporation, unless the Court of Chancery or the court in which
the action was brought determines that the person is entitled to indemnity.
Prior to indemnifying an individual, a determination must be made that such
person has met the applicable standard of conduct. Such determination shall be
made, with respect to a person who is a director or officer at the time of such
determination, by:
- a majority vote of the directors who are not parties to such proceeding,
even though less than a quorum;
- by a committee of such directors designated by majority vote of such
directors, even though less than a quorum;
- if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion; or
- by the stockholders.
Under Delaware law, a corporation may advance expenses incurred in such
proceeding to directors and officers as long as any director or officer
receiving an advance undertakes to repay the amounts advanced if it is
ultimately determined that such director or officer was not entitled to be
indemnified.
The UPS bylaws provide that UPS will indemnify its directors and officers
to the fullest extent authorized by the Delaware General Corporation Law,
subject to limited exceptions. UPS is also expressly authorized to carry
directors' and officers' insurance providing indemnification for directors,
officers and certain employees for some liabilities.
The Delaware General Corporation Law authorizes corporations to limit or
eliminate the personal liability of directors to corporations and their
stockholders for monetary damages for breaches of directors' fiduciary duties,
except for any liability:
- for breach of duty of loyalty,
- for acts or omissions not in good faith or involving intentional
misconduct or knowing violation of law,
- under Section 174 of the Delaware General Corporation Law (relating to
unlawful payments of dividends or unlawful purchases or redemptions of
stock), or
- for transactions from which the director derived an improper personal
benefit.
The UPS certificate of incorporation includes a provision that eliminates
the personal liability of directors for monetary damages for breach of fiduciary
duties, subject to the exceptions under the Delaware General Corporation Law.
These limitation of liability and indemnification provisions may discourage
stockholders from bringing a lawsuit against directors for breach of their
fiduciary duty. These provisions may also have the effect of affected to the
extent UPS pays the costs of settlement and damage awards against directors and
officers pursuant to these indemnification provisions.
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The Fritz bylaws authorize indemnification of Fritz officers and directors
to the fullest extent permitted by Delaware law. Fritz is also expressly
authorized to carry directors' and officers' insurance providing indemnification
for directors, officers and certain employees for some liabilities.
The Fritz certificate of incorporation includes a provision that eliminates
the personal liability of directors for monetary damages for breach of fiduciary
duties to the fullest extent permitted by Delaware law.
RIGHTS PLAN
UPS
UPS has not adopted a rights plan.
Fritz
As required by the merger agreement, Fritz has entered into a rights
agreement, dated as of January 16, 2001, between Fritz and Mellon Investor
Services LLC, as rights agent, and the Fritz board has authorized and declared a
dividend of one preferred share purchase right for each share of Fritz common
stock outstanding on January 29, 2001.
The preferred share purchase rights are exercisable only if a person or
group (other than specific persons including Lynn C. Fritz and his family and
affiliates) acquires beneficial ownership of 15% or more of Fritz common stock
or commences, or announces an intention to make, a tender or exchange offer upon
the completion of which that person or group would beneficially own 15% or more
of Fritz common stock. When it becomes exercisable, each right initially
entitles the holder of the right to purchase one one-thousandth of a share of
Fritz Junior Participating Preferred Stock. Further, upon acquisition by a
person or group of 15% or more of Fritz common stock, each right entitles the
holder of the right to purchase shares of Fritz common stock having a value
equal to two times the purchase price under the right. In specific
circumstances, each rights also entitles the holder of the right to purchase
shares of common stock of an acquiring company.
The effect of the exercise of the rights is to cause substantial dilution
to a person or group (other than a person or group approved by the Fritz board)
that attempts to acquire 15% or more of the voting power of Fritz common stock
without conditioning the acquisition on a substantial number of rights being
acquired or the redemption by the Fritz board of the rights.
The rights will expire at the earlier of the completion of the merger and
the close of business on February 1, 2010, unless earlier redeemed by Fritz. The
rights agreement does not apply to the transactions contemplated by the merger
agreement.
For a more complete description of the rights agreement, see Fritz's Form
8-A filed with the SEC on January 19, 2001.
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DESCRIPTION OF UPS CAPITAL STOCK
Set forth below is a description of UPS capital stock. The following
statements are brief summaries of, and are subject to the provisions of, the
certificate of incorporation and by-laws of UPS and the relevant provisions of
Delaware law.
UPS currently is authorized to issue up to 10,200,000,000 shares of common
stock, par value $.01 per share, which shares are divided into Class A-1 common
stock, Class A-2 common stock, Class A-3 common stock and Class B common stock.
UPS is also authorized to issue up to 200,000,000 shares of preferred stock, par
value $.01 per share, in series. UPS has not issued any of this preferred stock.
If preferred stock is issued, UPS's board of directors may fix the designation,
relative rights, preferences and limitations of the shares of each series.
Generally, all shares of UPS common stock have the same relative rights,
preferences and limitations, except as follows:
- Class A-1 common stock, Class A-2 common stock, Class A-3 common stock
have 10 votes per share and Class B common stock has 1 vote per share;
- Class A-1 common stock, Class A-2 common stock and Class A-3 common stock
may be reclassified as a single class of common stock; and
- Shares of Class A-1 common stock, Class A-2 common stock and Class A-3
common stock may be converted at any time by the holder into an equal
number of shares of Class B common stock and, if transferred to certain
transferees, are automatically converted into shares of Class B common
stock immediately upon transfer.
Dividends may be paid on UPS common stock out of funds legally available
for dividends, when and if declared by UPS's board of directors, provided that,
in the case of a distribution of UPS common stock, each class of common stock
receives a distribution of only shares of the same class of common stock. For
example, only shares of Class A-1 common stock may be paid or distributed with
respect to Class A-1 common stock.
Holders of UPS common stock are entitled to share ratably in any dividends
and in any assets available for distribution on liquidation, dissolution or
winding-up, subject, if preferred stock of UPS is then outstanding, to any
preferential rights of such preferred stock. The UPS common stock is not
redeemable, has no subscription rights and does not entitle the holder to any
preemptive rights.
First Union National Bank is the transfer agent and registrar for UPS
common stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF FRITZ
The following table sets forth certain information regarding the beneficial
ownership of common stock of Fritz as of April 16, 2001 as to (1) each person
who is known by Fritz to own beneficially more than 5% of the outstanding shares
of common stock, (2) each director of Fritz, (3) the Chief Executive Officer and
four other most highly compensated executive officers of Fritz and its
subsidiaries during the last fiscal year and (4) all directors and executive
officers of Fritz as a group.
The address of Lynn C. Fritz and Tamara Fritz is 706 Mission Street, San
Francisco, California 94103. Mr. Fritz may be deemed to be a "control person,"
of Fritz within the meaning of the rules and regulations of the Securities and
Exchange Commission by reason of his stock ownership and positions with Fritz.
The address of the directors and executive officers is the address of Fritz. The
address of Westport Asset Management is 253 Riverside Avenue, Westport,
Connecticut 06880, and the address of State of Wisconsin Investment Board is
P.O. Box 7842, Madison, Wisconsin 53707.
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Except as otherwise noted, and dependent on applicable community property
laws, to our knowledge, the persons named in this table have sole voting and
investing power with respect to all of the shares of common stock held by them.
SHARES BENEFICIALLY OWNED
--------------------------
PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER TOTAL
------------------------------------ ------------ ----------
Lynn C. Fritz and Tamara Fritz(1)........................... 13,471,787 36.1%
Westport Asset Management, Inc.............................. 2,445,724 6.7%
State of Wisconsin Investment Board......................... 2,109,600 5.7%
Ronald Dutt(2).............................................. 11,451 *
Jan H. Raymond(3)........................................... 96,327 0.3%
Eugene Wojciechowski(4)..................................... 80,275 0.2%
Graham R.F. Napier(5)....................................... 101,955 0.3%
James Gilleran.............................................. 12,427 *
Preston Martin.............................................. 15,927 *
Paul S. Otellini............................................ 4,588 *
William J. Razzouk.......................................... 5,988 *
All directors and executive officers as a group (16
persons)(6)............................................... 13,996,661 37.2%
---------------
* Less than 1/10 of 1%
(1) Includes (a) Lynn Fritz's employee stock options, exercisable within 60 days
of April 16, 2001, to purchase 526,666 shares; and (b) 1,334,000 shares for
which Tamara Fritz is the record owner.
(2) Includes employee stock options, exercisable within 60 days of April 16,
2001, to purchase 8,600 shares.
(3) Includes employee stock options, exercisable within 60 days of April 16,
2001, to purchase 54,353 shares.
(4) Includes employee stock options, exercisable within 60 days of April 16,
2001, to purchase 48,759 shares.
(5) Includes employee stock options, exercisable within 60 days of April 16,
2001, to purchase 79,166 shares.
(6) Includes 792,172 shares which the directors and executive officers have the
option to purchase within 60 days of April 16, 2001.
EXPERTS
The financial statements of Fritz as of May 31, 2000 and 1999, and for each
of the years in the three-year period ended May 31, 2000, have been incorporated
by reference herein and in the registration statement in reliance upon the audit
reports of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. With respect to the unaudited interim financial information for
the periods ended February 28, 2001, November 30, 2000 and August 31, 2000,
incorporated by reference herein, the independent certified public accountants
have reported that they applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
reports included in Fritz's quarterly reports on Form 10-Q for the quarters
ended February 28, 2001, November 30, 2000 and August 31, 2000, and incorporated
by reference herein, each state that they did not audit and they do not express
an opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of section 11 of the Securities Act of 1933
for their reports on the unaudited interim financial information because each of
those reports is not a "report" or a "part" of the registration statement
prepared or certified by the accountants within the meaning of sections 7 and 11
of the Act.
The consolidated financial statements incorporated in this proxy
statement/prospectus by reference from UPS's Annual Report on Form 10-K for the
year ended December 31, 2000, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated by reference in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
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LEGAL MATTERS
The validity of the shares of UPS Class B common stock to be issued
pursuant to the terms of the merger agreement will be passed upon for UPS by
King & Spalding. Legal matters in connection with the federal income tax
consequences of the merger will also be passed upon by King & Spalding.
WHERE YOU CAN FIND MORE INFORMATION
Fritz and UPS file annual, quarterly and special reports, proxy statements
and other information with the SEC under the Exchange Act. You may read and copy
this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may obtain information on the operations of the Public Reference Room
by calling the SEC at 1-800-SEC-0300. You may also obtain copies of this
information by mail from the Public Reference Section of the SEC, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like Fritz and
UPS, who file electronically with the SEC. The address of that site is
http://www.sec.gov. Fritz's address on the world wide web is
http://www.fritz.com and UPS's address is http://www.ups.com. The information on
our web sites is not a part of this proxy statement/prospectus.
You may also inspect reports, proxy statements and other information about
Fritz and UPS at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
The SEC allows Fritz and UPS to "incorporate by reference" information into
this proxy statement/ prospectus. This means that the companies may disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be a part of this proxy statement/prospectus, except for any information that
is superseded by information that is included directly in this proxy
statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents
listed below that Fritz and UPS have previously filed with the SEC. They contain
important information about our companies and their financial condition.
FRITZ FILINGS PERIOD OR DATE FILED
------------- --------------------
Annual Report on Form 10-K................... Year ended May 31, 2000
Quarterly Reports on Form 10-Q............... Quarters ended February 28, 2001, November
30, 2000 and August 31, 2000
Current Reports on Form 8-K.................. Filed on February 13, 2001 and March 5, 2001
The description of the rights agreement,
contained in Form 8-K filed pursuant to
Section 12 of the Exchange Act, including any
amendment or report filed with the SEC for
the purpose of updating this description..... Filed on January 22, 2001
The description of Fritz common stock set
forth in the registration statement on Form
8-A filed pursuant to Section 12 of the
Exchange Act, including any amendment or
report filed with the SEC for the purpose of
updating this description.................... Filed on August 17, 1992
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UPS FILINGS PERIOD OR DATE FILED
----------- --------------------
Annual Report on Form 10-K................... Year ended December 31, 2000
The description of UPS class B common stock
set forth in the registration statement on
Form 8-A filed pursuant to Section 12 of the
Exchange Act, including any amendment or
report filed with the SEC for the purpose of
updating this description.................... Filed on November 4, 1999
Fritz and UPS incorporate by reference additional documents that either
company may file with the SEC between the date of this proxy
statement/prospectus and the date of the special meeting of Fritz stockholders.
These documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
Fritz has supplied all information contained or incorporated by referenced
in this proxy statement/ prospectus relating to Fritz, as well as all pro forma
financial information, and UPS has supplied all such information related to UPS.
You can obtain any of the documents incorporated by reference in this proxy
statement/prospectus through Fritz or UPS, as the case may be, or from the SEC
through the SEC's Internet world wide web site at the address described above.
Documents incorporated by reference are available from the companies without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this proxy
statement/prospectus. You can obtain documents incorporated by reference in this
proxy statement/prospectus by requesting them in writing or by telephone from
the appropriate company at the following addresses:
FRITZ UPS
Investor Relations Investor Relations
Fritz Companies, Inc. United Parcel Service,
706 Mission Street Inc.
San Francisco, California 94103 55 Glenlake Parkway, N.E.
Telephone: (415) 538-0444 Atlanta, Georgia 30328
Telephone: (404) 828-6000
We have not authorized anyone to give any information or make any
representation about the merger of our companies that is different from, or in
addition to, that contained in this proxy statement/prospectus or in any of the
materials that we have incorporated into this proxy statement/prospectus.
Therefore, if anyone does give you information of this sort, you should not rely
on it. If you are in a jurisdiction where offers to exchange or sell, or
solicitations of offers to exchange or purchase, the securities offered by this
proxy statement/prospectus or the solicitation of proxies is unlawful, or if you
are a person to whom it is unlawful to direct these types of activities, then
the offer presented in this proxy statement/prospectus does not extend to you.
The information contained in this proxy statement/prospectus speaks only as of
the date of this proxy statement/prospectus unless the information specifically
indicates that another date applies.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UNITED PARCEL SERVICE, INC.
VND MERGER SUB, INC.
AND
FRITZ COMPANIES, INC.
DATED AS OF JANUARY 10, 2001
A-1
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TABLE OF CONTENTS
PAGE
----
Article I DEFINITIONS......................................................... A-6
Article II THE MERGER.......................................................... A-11
Section 2.1. The Merger...................................................... A-11
Section 2.2. Effective Time; Closing......................................... A-12
Section 2.3. Effect of the Merger............................................ A-12
Section 2.4. Conversion of Capital Stock..................................... A-12
Section 2.5. Stock Options................................................... A-12
Section 2.6. Exchange of Certificates........................................ A-13
Section 2.7. Dividends....................................................... A-14
Section 2.8. No Liability.................................................... A-14
Section 2.9. Lost Certificates............................................... A-14
Section 2.10. Withholding Rights............................................. A-14
Section 2.11. Shares held by the Company Affiliates.......................... A-14
Section 2.12. Closing of Company Transfer Books.............................. A-14
Section 2.13. Tax-Free Reorganization........................................ A-15
Article III THE SURVIVING CORPORATION......................................... A-15
Section 3.1. Certificate of Incorporation.................................... A-15
Section 3.2. Bylaws.......................................................... A-15
Section 3.3. Directors and Officers.......................................... A-15
Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... A-15
Section 4.1. Organization and Standing....................................... A-15
Section 4.2. Authority for Agreement......................................... A-15
Section 4.3. Capitalization.................................................. A-16
Section 4.4. Subsidiaries.................................................... A-17
Section 4.5. No Conflict..................................................... A-17
Section 4.6. Required Filings and Consents................................... A-17
Section 4.7. Compliance...................................................... A-18
Section 4.8. Litigation...................................................... A-18
Section 4.9. Company Reports; Financial Statements........................... A-18
Section 4.10. Absence of Certain Changes or Events........................... A-18
Section 4.11. Taxes.......................................................... A-19
Section 4.12. Title to Personal Property..................................... A-20
Section 4.13. Real Property.................................................. A-21
Section 4.14. Environmental Compliance and Disclosure........................ A-21
Section 4.15. Officers and Employees......................................... A-22
Section 4.16. Employee Benefit Plans......................................... A-22
Section 4.17. Labor Relations................................................ A-24
Section 4.18. Contracts and Commitments...................................... A-26
Section 4.19. Information Supplied........................................... A-26
Section 4.20. Intellectual Property.......................................... A-27
Section 4.21. Insurance Policies............................................. A-28
Section 4.22. Notes and Accounts Receivable.................................. A-28
Section 4.23. Transactions with Affiliates................................... A-28
Section 4.24. Customer and Supplier Relations................................ A-28
Section 4.25. Certain Practices.............................................. A-28
A-2
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Section 4.26. No Existing Discussions........................................ A-29
Section 4.27. Merger......................................................... A-29
Section 4.28. Antitakeover Statutes; Absence of Dissenters' Rights........... A-29
Section 4.29. Brokers........................................................ A-29
Section 4.30. Vote Required.................................................. A-29
Section 4.31. Customs Matters................................................ A-29
Article V REPRESENTATIONS AND WARRANTIES OF BUYERS AND PARENTS................ A-31
Section 5.1. Organization and Standing....................................... A-31
Section 5.2. Authority for Agreement......................................... A-31
Section 5.3. No Conflict..................................................... A-31
Section 5.4. Required Filings and Consents................................... A-31
Section 5.5. Capitalization.................................................. A-32
Section 5.6. Parent Reports; Parent Financial Statements..................... A-32
Section 5.7. Absence of Certain Changes or Events............................ A-32
Section 5.8. Information Supplied............................................ A-32
Section 5.9. No Violation of Law............................................. A-33
Section 5.10. Merger......................................................... A-33
Section 5.11. Certificate of Incorporation and Bylaws........................ A-33
Section 5.12. Ownership of Buyer; No Prior Activities........................ A-33
Section 5.13. Ownership Interest in the Company.............................. A-33
Section 5.14. Brokers and Finders............................................ A-33
Article VI COVENANTS.......................................................... A-33
Section 6.1. Conduct of the Business Pending the Merger...................... A-33
Section 6.2. Access to Information; Confidentiality.......................... A-35
Section 6.3. Notification of Certain Matters................................. A-35
Section 6.4. Company Stockholders' Meeting................................... A-35
Section 6.5. Board Recommendations........................................... A-35
Section 6.6. Stockholder Litigation.......................................... A-36
Section 6.7. Indemnification................................................. A-36
Section 6.8. Public Announcements............................................ A-37
Section 6.9. Acquisition Proposals........................................... A-37
Section 6.10. Proxy Statement/Prospectus..................................... A-37
Section 6.11. Further Assurances............................................. A-38
Section 6.12. NYSE Listing................................................... A-39
Section 6.13. Tax Treatment.................................................. A-39
Section 6.14. Undertakings of Parent......................................... A-39
Section 6.15. Director Resignations.......................................... A-40
Section 6.16. Company Affiliates............................................. A-40
Section 6.17. Purchase of Company Stock...................................... A-40
Section 6.18. Rights Plan.................................................... A-40
Section 6.19. Employee Matters............................................... A-40
Section 6.20. Customer Visits................................................ A-41
Section 6.21. Insurance...................................................... A-41
Article VII CONDITIONS........................................................ A-42
Section 7.1. Conditions to the Obligation of Each Party...................... A-42
Section 7.2. Conditions to Obligations of Parent and Buyer to Effect the A-43
Merger....................................................................
Section 7.3. Conditions to Obligations of Company to Effect the Merger....... A-43
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PAGE
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Article VIII TERMINATION, AMENDMENT AND WAIVER................................ A-44
Section 8.1. Termination..................................................... A-44
Section 8.2. Effect of Termination........................................... A-45
Section 8.3. Amendments...................................................... A-45
Section 8.4. Waiver.......................................................... A-45
Article IX GENERAL PROVISIONS................................................. A-46
Section 9.1. No Third Party Beneficiaries.................................... A-46
Section 9.2. Entire Agreement................................................ A-46
Section 9.3. Succession and Assignment....................................... A-46
Section 9.4. Counterparts.................................................... A-46
Section 9.5. Headings........................................................ A-46
Section 9.6. Governing Law................................................... A-46
Section 9.7. Severability.................................................... A-46
Section 9.8. Specific Performance............................................ A-46
Section 9.9. Construction.................................................... A-46
Section 9.10. Non-Survival of Representations and Warranties and A-46
Agreements................................................................
Section 9.11. Fees and Expenses.............................................. A-47
Section 9.12. Notices........................................................ A-47
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January
10, 2001, by and among United Parcel Service, Inc., a Delaware corporation (the
"Parent"), VND Merger Sub, Inc., a Delaware corporation (the "Buyer") and wholly
owned subsidiary of the Parent, and Fritz Companies, Inc., a Delaware
corporation (the "Company").
WITNESSETH:
WHEREAS, the parties to this Agreement desire to effect the acquisition of
the Company by the Parent;
WHEREAS, in furtherance of the foregoing, upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), the Buyer will merge with and into the Company
(the "Merger") in accordance with the provisions of the DGCL, with the Company
as the surviving corporation;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to the Parent entering into this Agreement,
the Company has entered into an option agreement with the Parent (the "Company
Option Agreement"), dated as of the date hereof, pursuant to which, among other
things, the Company has granted an option in favor of the Parent with respect to
shares of common stock of the Company, par value $.01 per share (the "Company
Common Stock"), subject to the terms and conditions contained therein;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to the Parent entering into this Agreement,
each of Lynn C. Fritz the Lynn C. Fritz 1999 Grantor Retained Annuity Trust,
Tamara Fritz and the Tamara Fritz 1999 Grantor Retained Annuity Trust has
entered into a separate option agreement with the Parent (collectively with the
Company Option Agreement, the "Option Agreements"), dated as of the date hereof,
pursuant to which, among other things, each such individual or trust has granted
an option in favor of Parent with respect to shares of Company Common Stock
beneficially owned by such individual or trust and has agreed to vote such
shares in favor of this Agreement and the Merger, subject to the terms and
conditions contained therein;
WHEREAS, the Board of Directors of the Company has unanimously determined
that the Merger, this Agreement and the Option Agreements are advisable, fair
to, and in the best interests of, the Company and the holders of the Company
Common Stock (the "Company Stockholders");
WHEREAS, the Board of Directors of the Parent and the Buyer have each
approved this Agreement, the Merger and the transactions contemplated herein,
upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has unanimously approved
this Agreement, the Merger and the transactions contemplated herein, which
approval was based in part on the opinion of Morgan Stanley & Co. Incorporated
(the "Independent Advisor"), independent financial advisor to the Board of
Directors of the Company, that, as of the date of such opinion and based on the
assumptions, qualifications and limitations contained therein, the Exchange
Ratio (as defined below) is fair, from a financial point of view, to the Company
Stockholders;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, as amended (the "Code"); and
WHEREAS, the Board of Directors of the Company has unanimously resolved to
recommend adoption of the Merger Agreement to the Company Stockholders and has
determined that the Merger, this Agreement and the Option Agreements are fair to
the Company Stockholders and to recommend that the Company Stockholders approve
the Merger, this Agreement and the transactions contemplated herein;
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
set forth in this Section.
(a) "10-K" shall mean the Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 2000.
(b) "Acquisition Agreement" shall mean any letter of intent, agreement
in principle, merger agreement, acquisition agreement, option agreement or
other similar agreement related to any Acquisition Proposal.
(c) "Acquisition Proposal" shall mean any bona fide proposal or offer
from any Person relating to any direct or indirect acquisition or purchase
of 20% or more of the assets of the Company and the Subsidiaries (as
defined below), taken as a whole, or 20% or more of the combined voting
power of the shares of Company Common Stock, any tender offer or exchange
offer that if consummated would result in any Person beneficially owning
20% or more of the combined voting power of the shares of Company Common
Stock, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any Subsidiary in which the other party thereto or its
stockholders will own 20% or more of the combined voting power of the
parent entity resulting from any such transaction, other than the
transactions contemplated by this Agreement.
(d) "ADA" shall mean the Americans with Disabilities Act.
(e) "ADEA" shall mean the Age Discrimination in Employment Act.
(f) "Affiliate" of a party shall mean an "affiliate" of such party as
that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (as defined below) (including at a minimum, all those
Persons subject to the reporting requirements of Rule 16(a) under the
Exchange Act (as defined below).
(g) "Affiliates Letter" shall mean a written statement in the form of
Exhibit A delivered by each Person identified pursuant to Section 6.16 as
an Affiliate of the Company for purposes of Rule 145 under the Securities
Act.
(h) "Agreement" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(i) "Applicable Benefit Laws" means ERISA (as defined below), the Code
and all other applicable laws, regulations, orders or other legislative,
administrative or judicial promulgations, including those of a jurisdiction
outside the United States of America.
(j) "Buyer" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(k) "CERCLA" shall mean the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(l) "Certificate" shall mean each certificate representing a share or
shares of Company Common Stock.
(m) "Certificate of Merger" shall mean the certificate of merger filed
with the Secretary of State of the State of Delaware by the parties hereto
in connection with the Merger.
(n) "Closing" shall mean the date on which the Merger becomes
effective.
(o) "Code" shall have the meaning set forth in the Recitals of this
Agreement.
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(p) "Company" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(q) "Company Benefit Plans" shall mean each Employee Benefit Plan (as
defined below) sponsored or maintained or required to be sponsored or
maintained at any time by the Company or any Subsidiary or to which the
Company or any Subsidiary makes or has made, or has or has had an
obligation to make, contributions at any time.
(r) "Company Bylaws" shall mean the bylaws of the Company.
(s) "Company Certificate of Incorporation" shall mean the Company's
certificate of incorporation, including any certificates of designations
attached thereto.
(t) "Company Common Stock" shall have the meaning set forth in the
Recitals of this Agreement.
(u) "Company Disclosure Letter" shall mean the Company Disclosure
Letter delivered by the Company to the Parent concurrently with the
execution of this Agreement. The Company Disclosure Letter shall include
specific references to each provision of this Agreement to which
information contained in the Company Disclosure Letter is intended to
apply.
(v) "Company Financial Statements" shall mean all of the financial
statements included in the Company Reports (as defined below).
(w) "Company Licensed Software" shall mean all third party software
(other than Company Proprietary Software or standard, off-the-shelf third
party personal computer or server-based products such as word processing,
accounting, spreadsheet programs, or so forth) used by the Company and the
Subsidiaries.
(x) "Company Material Adverse Effect" shall mean, with respect to the
Company, any change, event, circumstance or effect shall have occurred
that, when taken together with all other adverse changes, events,
circumstances or effects that have occurred is or is reasonably likely to
(i) be materially adverse to the business, operations, properties,
condition (financial or otherwise), assets or liabilities (including
contingent liabilities) of the Company and the Subsidiaries taken as a
whole or (ii) prevent or materially delay the performance by the Company of
any of its material obligations under this Agreement or the consummation of
the Merger or the other transactions contemplated herein; provided,
however, that the following shall be excluded from the definition of
"Company Material Adverse Effect" and from any determination as to whether
a Company Material Adverse Effect has occurred: changes, events,
circumstances or effects (A) relating to the economy or securities markets
in general, (B) relating to the industries in which the Company operates in
general and not uniquely to the Company, (C) relating to changes or
disruptions in the business of the Company resulting from the announcement
of the execution of this Agreement and the proposed consummation of the
transactions contemplated by this Agreement or (D) resulting from the
public announcement of the Company's second quarter financial results.
(y) "Company Preferred Stock" shall mean shares of preferred stock of
the Company.
(z) "Company Proprietary Software" shall mean all software owned by
the Company and the Subsidiaries.
(aa) "Company Option Agreement" shall have the meaning set forth in
the Recitals of this Agreement.
(bb) "Company Reports" shall mean all forms, reports, statements and
all other documents required to be filed by the Company with the SEC (as
defined below) from June 1, 1997.
(cc) "Company Software" shall mean the Company Licensed Software
together with the Company Proprietary Software.
(dd) "Company Stock" shall mean the Company Common Stock together with
the Company Preferred Stock.
(ee) "Company Stockholders" shall have the meaning set forth in the
Recitals of this Agreement.
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(ff) "Company Stock Option" shall mean each outstanding option to
purchase shares of Company Common Stock, other than the options granted
pursuant to the Option Agreements.
(gg) "Company Stock Plan" shall mean any stock option plan or
restricted stock plan of the Company, whether established or assumed by the
Company in connection with an acquisition.
(hh) "Confidentiality Agreement" shall mean the confidentiality
agreement with the Company, dated November 10, 2000.
(ii) "Customer Inventory" shall mean the materials, products or other
substances held by the Company or any Subsidiary for the account of a
customer of the Company or any Subsidiary.
(jj) "D&O Insurance" shall mean the Company's current directors' and
officers' liability insurance policies.
(kk) "DGCL" shall have the meaning set forth in the Recitals of this
Agreement.
(ll) "Effective Time" is the time the Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware, or at such
other time as the parties hereto agree shall be specified in such
Certificate of Merger.
(mm) "Employee/Consulting Agreements" shall mean any contracts,
consulting agreements, termination or severance agreements, change of
control agreements or any other agreements respecting the terms and
conditions of employment or of an independent contract relationship in
respect to any officer, employee or former employee, consultant or
independent contractor.
(nn) "Employee Benefit Plan" shall mean with respect to any Person
each plan, fund, program, agreement, arrangement or scheme, including, but
not limited to each plan, fund, program, agreement, arrangement or scheme
maintained or required to be maintained under the laws of a jurisdiction
outside the United States of America (other than a plan, fund, program,
agreement, arrangement or scheme maintained solely to comply with
applicable workers' compensation or similar laws), in each case, that is at
any time sponsored or maintained or required to be sponsored or maintained
by such Person or to which such Person makes or has made, or has or has had
an obligation to make, contributions providing for employee benefits or for
the remuneration, direct or indirect, of the employees, former employees,
directors, officers, consultants, independent contractors, contingent
workers or leased employees of such Person or the dependents of any of them
(whether written or oral), including each deferred compensation, bonus,
incentive compensation, pension, retirement, stock purchase, stock option
and other equity compensation plan, "welfare" plan (within the meaning of
Section 3(1) of the ERISA, determined without regard to whether such plan
is subject to ERISA); each "pension" plan (within the meaning of Section
3(2) of ERISA, determined without regard to whether such plan is subject to
ERISA); each severance plan or agreement, health, vacation, summer hours,
supplemental unemployment benefit, hospitalization insurance, medical,
dental, legal and each other employee benefit plan, fund, program,
agreement or arrangement.
(oo) "Environmental Laws" shall mean local, state and federal laws and
regulations relating to protection of the environment, pollution control,
product registration and hazardous materials (including asbestos, PCB's and
petroleum infractions thereof).
(pp) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(qq) "ERISA Affiliate" shall mean any Person (whether incorporated or
unincorporated), that together with the Company or any Subsidiary would be
deemed a "single employer" within the meaning of Section 414 of the Code.
(rr) "ERISA Affiliate Plan" shall mean each Employee Benefit Plan
sponsored or maintained or required to be sponsored or maintained at any
time by an ERISA Affiliate or to which such ERISA Affiliate makes or has
made, or has or has had an obligation to make, contributions at any time.
(ss) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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(tt) "Exchange Agent" shall mean a commercial bank or trust company
reasonably designated by the Parent.
(uu) "Exchange Ratio" shall mean 0.2.
(vv) "FLSA" shall mean the Fair Labor Standards Act.
(ww) "FMLA" shall mean the Family and Medical Leave Act.
(xx) "Form S-4" shall mean the Registration Statement on Form S-4 to
be filed with the SEC by the Parent under the Securities Act in connection
with the issuance of the Parent Class B Common Stock in the Merger.
(yy) "FTC" shall mean the Federal Trade Commission.
(zz) "GAAP" shall mean generally accepted accounting principles in the
United States.
(aaa) "Governmental Entity" shall mean any United States federal,
state or local or any foreign government or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
(bbb) "Hazardous Materials" shall mean any waste, pollutant, hazardous
substance, toxic, ignitable, reactive or corrosive substance, hazardous
waste, special waste, industrial substance, by-product, process
intermediate product or waste, petroleum or petroleum-derived substance or
waste, chemical liquids or solids, liquid or gaseous products, or any
constituent of any such substance or waste, the use, handling or disposal
of which by the Company is governed by or subject to any applicable Law,
rule or regulation of any Governmental Entity.
(ccc) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(ddd) "Indemnified Parties" shall mean each present and former
director, officer, employee and agent of the Company or any Subsidiary with
rights to indemnification by the Company now existing as provided in the
Company Certificate of Incorporation or the Company Bylaws, in each case as
in effect on the date of this Agreement, or pursuant to any other
agreements in effect on the date hereof, copies of which have been provided
to the Parent.
(eee) "Independent Advisor" shall have the meaning set forth in the
Recitals of this Agreement.
(fff) "Intellectual Property" shall mean all copyrights, trade names,
trademarks, trade secrets, service marks or patents (or application
therefor) which are used by the Company and the Subsidiaries or as to which
the Company or any Subsidiary claim an ownership interest or as to which
the Company or any Subsidiary is a licensee or licensor.
(ggg) "Labor Laws" shall mean ERISA, the Immigration Reform and
Control Act of 1986, the National Labor Relations Act, the Civil Rights
Acts of 1866 and 1964, the Equal Pay Act, ADEA, ADA, FMLA, WARN, the
Occupational Safety and Health Act, the Davis-Bacon Act, the Walsh-Healy
Act, the Service Contract Act, Executive Order 11246, FLSA and the
Rehabilitation Act of 1973 and all regulations under such acts.
(hhh) "Law" shall mean any United States federal, state or local or
any foreign statute, law, rule, regulation, ordinance, code, order,
judgment, decree or any other requirement or rule of law.
(iii) "Litigation" shall mean claims, suits, actions, investigations,
indictments or information, or administrative, arbitration or other
proceedings.
(jjj) "Merger" shall have the meaning set forth in the Recitals of
this Agreement.
(kkk) "Necessary Approval" shall have the meaning set forth in Section
6.11(a).
(lll) "NLRB" shall mean the United States National Labor Relations
Board.
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(mmm) "NYSE" shall mean the New York Stock Exchange.
(nnn) "Option Agreements" shall have the meaning set forth in the
Recitals of this Agreement.
(ooo) "OSHA" shall mean the Occupational Safety and Health
Administration.
(ppp) "Parent" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(qqq) "Parent Charter Documents" shall have the meaning set forth in
Section 5.11.
(rrr) "Parent Class A Common Stock" shall mean the Class A common
stock of the Parent, par value $.01 per share.
(sss) "Parent Class B Common Stock" shall mean the Class B common
stock of the Parent, par value $.01 per share.
(ttt) "Parent Disclosure Letter" shall mean the Parent Disclosure
Letter delivered by the Parent to the Company concurrently with the
execution of this Agreement.
(uuu) "Parent Financial Statements" shall mean all of the financial
statements included in the Parent Reports (as defined below).
(vvv) "Parent Material Adverse Effect" shall mean, with respect to the
Parent, any change, event, circumstance or effect shall have occurred or
been threatened that, when taken together with all other adverse changes,
events, circumstances or effects that have occurred or been threatened, is
or is reasonably likely to (i) be materially adverse to the business,
operations, properties, condition (financial or otherwise), assets or
liabilities (including contingent liabilities) of the Parent and its
subsidiaries taken as a whole or (ii) prevent or materially delay the
performance by the Parent of any of its obligations under this Agreement or
the consummation of the Merger or the other transactions contemplated
herein; provided, however, that the following shall be excluded from the
definition of "Parent Material Adverse Effect" and from any determination
as to whether a Parent Material Adverse Effect has occurred: changes,
events, circumstances or effects (A) relating to the economy or securities
markets in general, (B) relating to the industries in which the Parent
operates in general and not uniquely to the Parent or (C) relating to
changes or disruptions in the business of the Parent resulting from the
announcement of the execution of this Agreement and the proposed
consummation of the transactions contemplated by this Agreement.
(www) "Parent Reports" shall mean all forms, reports, statements and
all other documents required to be filed by the Parent with the SEC since
November 10, 1999.
(xxx) "Person" shall mean any individual, corporation, partnership
(general or limited), limited liability company, limited liability
partnership, trust, joint venture, joint-stock company, syndicate,
association, entity, unincorporated organization or government or any
political subdivision, agency or instrumentality thereof.
(yyy) "Proxy Statement/Prospectus" shall have the meaning set forth in
Section 6.10.
(zzz) "Regulatory Law" means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended,
and all other Federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to regulate mergers, acquisitions
or other business combinations.
(aaaa) "Representatives" shall mean officers, directors, employees,
auditors, attorneys, financial advisors, lenders and other agents.
(bbbb) "Required Vote" shall have the meaning set forth in Section
4.30.
(cccc) "Rights Plan" shall mean the Rights Agreement between the
Company and a rights agent mutually agreeable to the parties to be entered
into in accordance with Section 6.18.
(dddd) "SEC" shall mean the Securities and Exchange Commission.
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(eeee) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(ffff) "Stockholders' Meeting" shall mean the meeting of the Company
Stockholders to be called to consider the Merger.
(gggg) "Subsidiary" shall mean any corporation, partnership, joint
venture or other legal entity of which the Company (either directly or
through or together with any other Subsidiary of the Company), beneficially
or of record owns, directly or indirectly, 50% or more of the capital stock
or other equity interests.
(hhhh) "Superior Proposal" shall mean any proposal made by a third
party (i) relating to any direct or indirect acquisition or purchase of all
or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole, or 100% of the combined voting power of the shares of
Company Common Stock, or any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 100% or more of
the combined voting power of the shares of Company Common Stock and (ii)
otherwise on terms which the Board of Directors of Company determines in
its good faith judgment (based upon the advice of a financial advisor of
nationally recognized reputation), taking into account the Person making
the proposal and the legal, financial, regulatory and other aspects of the
proposal deemed appropriate by the Board of Directors of the Company, (x)
is more favorable from a financial point of view than the Merger to the
Company Stockholders taken as a whole, (y) is reasonably capable of being
completed and (z) for which financing, to the extent required, is then
committed or is capable of being obtained by such third party.
(iiii) "Surviving Corporation" shall mean the corporation surviving
the Merger.
(jjjj) "Tax" (and, with correlative meaning, "Taxes") means any
federal, state, local or foreign income, gross receipts, property, sales,
use, license, excise, franchise, value-added tax, unclaimed property,
employment, payroll, premium, custom, withholding, duty, alternative or
added minimum, ad valorem, transfer or excise tax, or any other tax of any
kind whatsoever, together with any interest or penalty or addition thereto,
whether disputed or not, imposed by any Governmental Entity.
(kkkk) "Tax Opinion" shall mean a written opinion of King & Spalding,
counsel to the Parent, addressed and reasonably acceptable to the Parent
and the Company (the "Tax Opinion"), to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code and that the exchange in the Merger of Parent Class B Common Stock for
Company Common Stock will not give rise to gain or loss to the Company
Stockholders with respect to such exchange (except to the extent of any
cash paid in lieu of fractional shares).
(llll) "Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules) with respect to any Tax jurisdiction, including any information
return, claim for refund, amended return or declaration of estimated Tax.
(mmmm) "Termination Fee" shall mean $13,500,000.
(nnnn) "WARN" shall mean the United States Worker Adjustment and
Retraining Notification Act.
ARTICLE II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the DGCL, at the Effective Time, the
Buyer shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of the Buyer shall cease and the Company shall
continue as the Surviving Corporation. The corporate existence of the Company,
with all its purposes, rights, privileges, franchises, powers and objects, shall
continue unaffected and unimpaired by the Merger and, as the Surviving
Corporation, it shall be governed by the laws of the State of Delaware.
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Section 2.2. Effective Time; Closing. As promptly as practicable (and in
any event within five business days) after the satisfaction or waiver of the
conditions set forth in Article VII hereof, the parties hereto shall cause the
Merger to be consummated by filing the Certificate of Merger with the Secretary
of State of the State of Delaware and by making all other filings or recordings
required under the DGCL in connection with the Merger, in such form as is
required by, and executed in accordance with the relevant provisions of, the
DGCL. The Merger shall become effective at the Effective Time. The Closing shall
be held at 10:00 a.m., local time, at the offices of King & Spalding, located at
191 Peachtree Street, Atlanta, Georgia 30303-1763, or at such other time and
location as the parties hereto shall otherwise agree.
Section 2.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and the Buyer shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and the Buyer shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
Section 2.4. Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the Parent, the Buyer, the
Company or the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled
pursuant to Section 2.4(b)) shall be canceled and shall by virtue of the
Merger and without any action on the part of the holder thereof be
converted automatically into the right to receive a number of shares of
Parent Class B Common Stock calculated in accordance with the Exchange
Ratio upon the surrender of the Certificate representing such share in the
manner set forth in Section 2.6. All such shares of Company Common Stock,
when so converted, shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
Certificate representing such shares shall cease to have any rights with
respect thereto, except the right to receive that number of shares of
Parent Class B Common Stock into which such shares of Company Common Stock
have been converted, cash in lieu of fractional shares as provided in
Section 2.6(c) and any dividends or other distributions payable pursuant to
Section 2.7.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by the Parent or the
Buyer and each share of Company Common Stock that is owned by the Company
as treasury stock shall be canceled and retired and cease to exist and no
payment or distribution shall be made with respect thereto.
(c) Each share of common stock, par value $.01 per share, of the Buyer
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving
Corporation and shall constitute the only outstanding shares of capital
stock of the Surviving Corporation.
(d) If after the date hereof and prior to the Effective Time, the
Parent shall have declared a stock split (including a reverse split) of
Parent Class B Common Stock or a dividend payable in Parent Class B Common
Stock or effected any recapitalization or reclassification of its common
stock or any other similar transaction, then the Exchange Ratio shall be
appropriately adjusted to reflect such stock split, dividend,
recapitalization, reclassification or similar transaction.
Section 2.5. Stock Options. At the Effective Date, each Company Stock
Option shall be assumed by the Parent in such manner that it is converted into
an option to purchase shares of Parent Class A Common Stock, as provided below.
Following the Effective Time, each Company Stock Option shall continue to have,
and be subject to, the same terms and conditions set forth in the relevant
Company Stock Plan and applicable award agreement immediately prior to the
Effective Time; except that (i) each such Company Stock Option will be
exercisable (or will become exercisable in accordance with its terms) for that
number of whole shares of Parent Class A Common Stock equal to the product of
the number of shares of Company Common Stock that were issuable upon exercise of
such the Company Stock Option immediately prior to the Effective Time multiplied
by the Exchange Ratio, rounded down to the nearest whole number of Shares of
Parent Class A
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Common Stock and (ii) the per share exercise price for Parent Class A Common
Stock issuable upon exercise of such Company Stock Option will be equal to the
quotient determined by dividing the exercise price per share of the Company
Common Stock at which such Company Stock Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent.
Section 2.6. Exchange of Certificates.
(a) Prior to the Effective Time, the Parent shall appoint the Exchange
Agent for the purpose of exchanging Certificates. At or prior to the
Effective Time, the Parent shall deposit with the Exchange Agent, for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article II through the Exchange Agent, certificates
representing Parent Class B Common Stock issuable pursuant to Section 2.4
in exchange for outstanding shares of Company Common Stock. The Parent
agrees to make available to the Exchange Agent from time to time as needed,
cash sufficient to pay cash in lieu of fractional shares pursuant to
Section 2.6(c) and any dividends or other distributions payable pursuant to
Section 2.7.
(b) As soon as reasonably practicable after the Effective Time, the
Parent and the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of one or more Certificates (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent accompanied by a properly executed
letter of transmittal and shall be in such form and have such other
provisions as the Parent may reasonably specify), and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for
certificates representing shares of Parent Class B Common Stock. Upon the
surrender to the Exchange Agent of one or more Certificates for
cancellation, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Exchange Agent,
the holder will be entitled to receive certificates representing that
number of whole shares of Parent Class B Common Stock to be issued in
respect of the aggregate number of such shares of Company Common Stock
previously represented by the Certificates surrendered based upon the
Exchange Ratio and cash in an amount equal to that which the holder is
entitled to receive pursuant to Section 2.6(c) or Section 2.7. No interest
will be paid or will accrue on cash payable pursuant to Section 2.6(c) or
2.7.
(c) No certificate or scrip representing fractional shares of Parent
Class B Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the
owner thereof to vote or to any rights as a stockholder of the Parent. All
fractional shares of Parent Class B Common Stock that a holder of Company
Common Stock would otherwise be entitled to receive as a result of the
Merger shall be aggregated and if a fractional share results from such
aggregation, such holder shall be entitled to receive, in lieu thereof, an
amount in cash determined by multiplying (i) the per share closing price of
Parent Class B Common Stock quoted on the NYSE on the date of the Closing
by (ii) the fraction of a share of Parent Class B Common Stock to which
such holder would otherwise have been entitled. The Parent shall timely
make available to the Exchange Agent any cash necessary to make payments in
lieu of fractional shares as aforesaid. No such cash in lieu of fractional
shares of Parent Class B Common Stock shall be paid to any holder of
Company Common Stock until Certificates are surrendered and exchanged in
accordance with Section 2.6(a).
(d) If a certificate for Parent Class B Common Stock is to be sent to
a Person other than the Person in whose name the Certificates for shares of
Company Common Stock surrendered for exchange are registered, it shall be a
condition of the exchange that the Person requesting such exchange shall
pay to the Exchange Agent any transfer or other taxes required by reason of
the delivery of such Certificate to a Person other than the registered
holder of the Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
(e) The cash paid and shares of Parent Class B Common Stock issued
upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid and issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
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Section 2.7. Dividends. No dividends or other distributions that are
declared or made after the Effective Time with respect to Parent Class B Common
Stock payable to holders of record thereof after the Effective Time shall be
paid to a Company Stockholder entitled to receive certificates representing
Parent Class B Common Stock until such stockholder has properly surrendered such
stockholder's Certificates. Upon such surrender, there shall be paid to the
stockholder in whose name the certificates representing such Parent Class B
Common Stock shall be issued any dividends which shall have become payable with
respect to such Parent Class B Common Stock between the Effective Time and the
time of such surrender, without interest. After such surrender, there shall also
be paid to the stockholder in whose name the certificates representing such
Parent Class B Common Stock shall be issued any dividend on such Parent Class B
Common Stock that shall have a record date subsequent to the Effective Time and
prior to such surrender and a payment date after such surrender; provided that
such dividend payments shall be made on such payment dates. In no event shall
the stockholder entitled to receive such dividends be entitled to receive
interest on such dividends.
Section 2.8. No Liability. None of the Parent, Buyer, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Parent Class B Common Stock, any dividends or distributions with
respect thereto or any cash in lieu of fractional shares of applicable Parent
Class B Common Stock, in each case delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to six months after the Effective Time (or
immediately prior to such earlier date on which any Parent Class B Common Stock,
any dividends or distributions payable to the holder of such Certificate or any
cash payable in lieu of fractional shares of Parent Class B Common Stock
pursuant to this Article II, would otherwise escheat to or become the property
of any Governmental Entity), any such Parent Class B Common Stock, dividends or
distributions in respect thereof or such cash shall, to the extent permitted by
applicable law, be delivered to the Parent, upon demand, and any holders of
Company Common Stock who have not theretofore complied with the provisions of
this Article II shall thereafter look only to the Parent for satisfaction of
their claims for such Parent Class B Common Stock, dividends or distributions in
respect thereof or such cash.
Section 2.9. Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the Parent Class B Common Stock to be issued pursuant to Section 2.4
with respect to the shares of Company Common Stock formerly represented thereby,
any cash in lieu of fractional shares of Parent Common Stock, and unpaid
dividends and distributions on shares of Parent Class B Common Stock deliverable
in respect thereof, pursuant to this Agreement.
Section 2.10. Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any Company Stockholder such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code and 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 the Surviving Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Company Stockholder in
respect of which such deduction and withholding was made by the Surviving
Corporation.
Section 2.11. Shares held by the Company Affiliates. Anything to the
contrary in this Agreement notwithstanding, no shares of Parent Class B Common
Stock (or certificates therefor) shall be issued in exchange for any certificate
to any Person who may be an "affiliate" of the Company (identified pursuant to
Section 6.16) until the Person shall have delivered to Parent and the Company a
duly executed letter as contemplated by Section 6.16.
Section 2.12. Closing of Company Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
Company Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall, when
accompanied by proper documentation, be exchanged for Parent Class B Common
Stock in the manner provided in this
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Article II, any cash in lieu of fractional shares payable pursuant to Section
2.6(c) and any dividends or distributions payable pursuant to Section 2.7.
Section 2.13. Tax-Free Reorganization. The Merger is intended to be a
reorganization within the meaning of Section 368(a) of the Code, and this
Agreement is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368(a) of the Code and for the purpose of
qualifying as a tax-free transaction for federal income tax purposes. The
parties hereto will agree to report the Merger as a tax-free reorganization
under the provisions of Section 368(a) of the Code. None of the parties hereto
will take or cause to be taken any action which would prevent the transactions
contemplated by this Agreement from qualifying as a reorganization under Section
368(a) of the Code.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1. Certificate of Incorporation. The Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law or such Certificate of Incorporation.
Section 3.2. Bylaws. The Bylaws of the Company as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law, the Certificate of Incorporation of the Surviving
Corporation or such Bylaws.
Section 3.3. Directors and Officers. From and after the Effective Time,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of the Buyer at the Effective Time shall be
the directors of the Surviving Corporation, and (ii) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company Disclosure Letter delivered by the
Company to the Parent prior to the execution of this Agreement, the Company
represents and warrants to each of the other parties hereto as follows:
Section 4.1. Organization and Standing. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has full corporate power and authority
and all necessary governmental approvals to own, lease and operate its
properties and assets and to conduct its business as presently conducted and
(iii) is duly qualified or licensed to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary except where failure to be so qualified or
licensed would not, individually or in the aggregate, have a Company Material
Adverse Effect. The Company has furnished or made available to the Parent true
and complete copies of the Company Certificate of Incorporation and the Company
Bylaws, each as amended to date. Such Company Certificate of Incorporation and
Company Bylaws are in full force and effect, and the Company is not in violation
of any provision therein.
Section 4.2. Authority for Agreement.
(a) The Company has all necessary power and authority to execute and
deliver this Agreement and the Company Option Agreement and, subject to
obtaining the Required Approval, to consummate the Merger and the other
transactions contemplated by this Agreement and the Company Option
Agreement. The execution, delivery and performance by the Company of this
Agreement and the Company
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Option Agreement, and the consummation by the Company of the Merger and the
other transactions contemplated by this Agreement and the Company Option
Agreement, have been duly authorized by all necessary corporate action
(including the unanimous approval of the Board of Directors of the Company)
and no other corporate proceedings on the part of the Company are necessary
to authorize this Agreement or the Company Option Agreement or to
consummate the Merger or the other transactions contemplated herein or
therein (other than, with respect to the Merger, the approval and adoption
of this Agreement by the Required Vote and the filing and recordation of
appropriate merger documents as required by the DGCL). Each of this
Agreement and the Company Option Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by the Parent and the Buyer, constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms.
(b) At a meeting duly called and held on January 9, 2001, the Board of
Directors of the Company unanimously (i) determined that this Agreement,
the Option Agreements and the transactions contemplated herein and therein,
including the Merger, are advisable, fair to and in the best interests of
the Company and the Company Stockholders, (ii) approved, authorized and
adopted this Agreement, the Option Agreement, the Merger and the other
transactions contemplated herein and therein and (iii) recommended approval
and adoption of this Agreement and the Merger by the Company Stockholders.
(c) The Independent Advisor has delivered to the Board of Directors of
the Company its written opinion, dated as of the date of this Agreement,
that, as of such date and based on the assumptions, qualifications and
limitations contained therein, the Exchange Ratio is fair, from a financial
point of view, to the Company Stockholders. A copy of such opinion has been
provided to the Parent. The Board of Directors of the Company has received
as of the date hereof from the Independent Advisor consent to the inclusion
of its name in any documents to be delivered to the Company Stockholders in
connection with the transactions contemplated by this Agreement.
Section 4.3. Capitalization. The authorized capital stock of the Company
consists of 60,000,000 shares of Company Common Stock and 1,000,000 shares of
Company Preferred Stock. As of the date hereof, (i) 36,708,991 Company Common
Stock, all of which are validly issued, fully paid and nonassessable and free of
preemptive rights, (ii) 87,100 of Company Common Stock are held in the treasury
of the Company and (iii) 3,555,397 Company Stock Options are outstanding
pursuant to the Company Stock Plans, each such option entitling the holder
thereof to purchase one share of Company Common Stock, and 5,903,542 shares of
Company Common Stock are authorized and reserved for future issuance pursuant to
the exercise of such Company Stock Options and (iv) no shares of Company
Preferred Stock are issued and outstanding. The Company Disclosure Letter sets
forth a true and complete list of the outstanding Company Stock Options with the
exercise prices and periods of exercisability. Except as set forth above or in
the Company Disclosure Letter, there are no options, warrants, convertible
securities, subscriptions, stock appreciation rights, phantom stock plans or
stock equivalents or other rights, agreements, arrangements or commitments
(contingent or otherwise) of any character issued or authorized by the Company
relating to the issued or unissued capital stock of the Company or obligating
the Company to issue or sell any shares of capital stock of, or options,
warrants, convertible securities, subscriptions or other equity interests in,
the Company. All shares of capital stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in the Company Disclosure Letter, there are
no outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of Company Stock or to pay any dividend or make any
other distribution in respect thereof or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
Person. As of the date hereof, there are no voting trusts or other agreements or
understandings to which the Company is a party with respect to the voting of
stock of the Company.
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Section 4.4. Subsidiaries.
(a) The Company Disclosure Letter sets forth the name and state or
jurisdiction of incorporation of each Subsidiary. Each of the Subsidiaries
(i) is a corporation or other business entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
government approvals to own, lease and operate its properties and assets
and to conduct its business as presently conducted and (iii) is duly
qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary except where failure to be so
qualified or licensed would not, individually or in the aggregate, have a
Company Material Adverse Effect. The Company has furnished or made
available to the Parent true and complete copies of the certificate of
incorporation, bylaws or comparable organizational documents of each
Subsidiary, each as amended to date. Such organizational documents are in
full force and effect, and no Subsidiary is in violation of any provision
therein.
(b) Except as set forth in the Company Disclosure Letter, the Company
or its Subsidiaries own beneficially and of record all of the issued and
outstanding capital stock or other securities of each Subsidiary and does
not own an equity interest in any other corporation, partnership or entity,
other than in the Subsidiaries. Each outstanding share of capital stock or
other securities of each Subsidiary is duly authorized, validly issued,
fully paid and nonassessable and each such share or other equity interest
owned by the Company or another Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Company's or such other
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever.
Section 4.5. No Conflict. The execution and delivery of this Agreement
and the Company Option Agreement by the Company do not, and the performance of
this Agreement and the Company Option Agreement by the Company and the
consummation of the Merger (subject to the adoption of this Agreement by the
Required Vote) and the other transactions contemplated by this Agreement and the
Company Option Agreement will not, (i) conflict with or violate the Company
Certificate of Incorporation or Company Bylaws or equivalent organizational
documents of any of the Subsidiaries, (ii) subject to Section 4.6, conflict with
or violate any Law applicable to the Company or any of the Subsidiaries or by
which any property or asset of the Company or any of the Subsidiaries is bound
or affected, or (iii) result in a breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, give
to others any right of termination, amendment, acceleration or cancellation of,
result in triggering any payment or other obligations, or result in the creation
of a lien or other encumbrance on any property or asset of the Company or any of
the Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries or any property or asset of any of them is
bound or affected, except in the case of clauses (ii) and (iii) above for any
such conflicts, violations, breaches, defaults or other occurrences which could
not, individually or in the aggregate, have a Company Material Adverse Effect.
Section 4.6. Required Filings and Consents. The execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, or
state securities laws or "blue sky" laws and filing and recordation of
appropriate merger documents as required by the DGCL, (ii) for those required by
the HSR Act, (iii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
reasonably be expected to prevent or materially delay consummation of the Merger
or otherwise prevent or materially delay the Company from performing its
material obligations under this Agreement, and would not otherwise reasonably be
expected to have individually or in the aggregate, a Company Material Adverse
Effect and (iv) for those which have heretofore been obtained by the Company.
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Section 4.7. Compliance. Except as disclosed in the Company Reports filed
by the Company with the SEC prior to the date of this Agreement, the businesses
of the Company and the Subsidiaries are not being conducted in violation of any
law, ordinance, regulation, judgment, order, decree, writ, injunction, license
or permit of any Governmental Entity, except for violations which have not had,
and would not reasonably be expected to have, individually or in the aggregate a
Company Material Adverse Effect. No investigation or review by any Governmental
Entity with respect to the Company or any Subsidiary is pending or, to the
knowledge of the Company threatened, nor has any Governmental Entity indicated
to the Company or any Subsidiary an intention to conduct the same in each case
other than those the outcome of which have not had, and would not reasonably be
expected to have, either individually or in the aggregate, a Company Material
Adverse Effect.
Section 4.8. Litigation. Except as set forth in the Company Disclosure
Letter, there is no claim, suit, action, proceeding or investigation pending,
or, to the knowledge of the Company, threatened, against or affecting the
Company or any Subsidiary which, either individually or in the aggregate, has
had, or would be reasonably expected to have, a Company Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator, outstanding against the Company or any Subsidiary, either
individually or in the aggregate, which has had, or would be reasonably expected
to have, a Company Material Adverse Effect.
Section 4.9. Company Reports; Financial Statements.
(a) The Company has filed all Company Reports, each of which has
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or
the Exchange Act, and the rules and regulations promulgated thereunder,
each as in effect on the date so filed. None of the Company Reports
(including, but not limited to, any financial statements or schedules
included or incorporated by reference therein) contained when filed any
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) All of the Company Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of the
Company and the Subsidiaries at the respective dates thereof and the
consolidated results of its operations and changes in cash flows for the
periods indicated except that the unaudited interim financial statements
are subject to normal recurring year-end adjustments consistent with past
practices and not material in amount.
(c) There are no liabilities of the Company or any of the Subsidiaries
of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, that are material to the Company and the
Subsidiaries, taken as a whole, other than (i) liabilities disclosed or
provided for in the consolidated balance sheet of the Company and the
Subsidiaries at May 31, 2000, including the notes thereto, (ii) liabilities
disclosed in the Company Reports, (iii) liabilities incurred on behalf of
the Company under this Agreement and the contemplated Merger, and (iv)
liabilities incurred in the ordinary course of business consistent with
past practice since May 31, 2000, none of which in the case of clause (iv)
are, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect.
(d) The Company has heretofore furnished or made available to the
Parent a complete and correct copy of any amendments or modifications,
which have not yet been filed with the SEC, to agreements, documents or
other instruments which previously had been filed by the Company with the
SEC as exhibits to the Company Reports pursuant to the Securities Act and
the rules and regulations promulgated thereunder or the Exchange Act and
the rules and regulations promulgated thereunder.
Section 4.10. Absence of Certain Changes or Events. Except for any
Subsidiary liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, since May 31, 2000, the Company and its
Subsidiaries have conducted their business only in the ordinary course or as
disclosed in any Company Reports, and there has not been (i) any change or event
having, or that would reasonably be expected to have,
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a Company Material Adverse Effect, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, (iii) any split,
combination or reclassification of any of the Company's capital stock or any
substitution for shares of the Company's capital stock, except for issuances of
Company Common Stock upon the exercise of options awarded prior to the date
hereof in accordance with the Company Stock Plans, (iv) except as set forth in
the Company Disclosure Letter (a) any granting by the Company or any Subsidiary,
to any current or former director, executive officer or other key employee of
the Company or any Subsidiary of any increase in compensation, bonus or other
benefits, except for increases in the ordinary course of business or as was
required under any employment agreements in effect as of the date of the most
recent audited financial statements included in the Company Reports filed and
publicly available prior to the date of this Agreement which have been disclosed
to Parent in the manner described in Section 4.15, (b) any granting by the
Company or any Subsidiary, to any such current or former director, executive
officer or key employee of any increase in severance or termination pay or (c)
any entry by the Company or any Subsidiary, into, or any amendment of, any
employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director, executive
officer or key employee, (v) except insofar as may have been disclosed in the
Company Reports or required by a change in GAAP, any change in accounting
methods, principles or practices by the Company or any Subsidiary, materially
affecting its assets, liabilities or business or (vi) except insofar as may have
been disclosed in the Company Reports, any tax election that individually or in
the aggregate would reasonably be expected to have a Company Material Adverse
Effect.
Section 4.11. Taxes.
(a) Each of the Company and the Subsidiaries has filed all material
Tax Returns that it was required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by any of the Company
and the Subsidiaries (whether or not shown on any Tax Return) have been
paid, except where the failure to pay such Taxes does not exceed, in the
aggregate, $250,000. None of the Company and the Subsidiaries currently is
the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction where
the Company or any Subsidiary does not file Tax Returns that it is or may
be subject to taxation in that jurisdiction. There are no security
interests on any of the assets of any of the Company and the Subsidiaries
that arose in connection with any failure (or alleged failure) to pay any
Tax.
(b) Each of the Company and the Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
stockholder or other third party, except where the failure to pay such
Taxes does not exceed, in the aggregate, $50,000.
(c) There is no audit, dispute or claim concerning any Tax liability
of any of the Company or the Subsidiaries either (i) claimed or raised by
any authority in writing or (ii) as to which any of the directors, officers
and employees responsible for Tax matters of the Company and the
Subsidiaries has knowledge based upon personal contact with any agent of
such authority. The Company Disclosure Letter lists all United States
domestic income, franchise, sales, use, business license, and personal
property Tax Returns filed with respect to any of the Company and the
Subsidiaries for the current taxable periods, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently are
the subject of audit. The Company and the Subsidiaries have provided to the
Parent access to correct and complete copies of all income Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by any of the Company and the Subsidiaries since the taxable year
ended May 31, 1998 with respect to federal and state income Tax Returns,
since the taxable year ended May 31, 1996 with respect to federal income
Tax notice of deficiencies, since the taxable year ended May 31, 1995 with
respect to federal income Tax audit reports and since the taxable year
ended May 31, 1996 with respect to federal income Tax closing documents.
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(d) None of the Company and the Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency that remains in effect.
(e) None of the Company and the Subsidiaries has filed a consent under
Section 341(f) of the Code concerning collapsible corporations. None of the
Company and the Subsidiaries has made any payments, is obligated to make
any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Sections 280G and 162(m) of the Code. None of the Company
and the Subsidiaries has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A) (ii) of the Code. Each
of the Company and the Subsidiaries has disclosed on its federal income Tax
Returns all information necessary to avoid the imposition of a penalty for
substantial understatement of federal income Tax within the meaning of
Section 6662 of the Code. None of the Company and the Subsidiaries is a
party to any Tax allocation or sharing agreement (other than by and between
the Company and the Subsidiaries). None of the Company and the Subsidiaries
(A) has been a member of an affiliated group filing a consolidated federal
income Tax Return (other than a group the common parent of which was the
Company) or (B) has knowledge of any liability for the Taxes of any Person
(other than any of the Company and the Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or otherwise.
(f) The Company Disclosure Letter sets forth the following information
with respect to each of the Company and the Subsidiaries as of the most
recent practicable date: (i) the amount of any excess loss account; (ii)
the amount of any net operating loss, net capital loss, unused investment
or other credit, unused foreign tax, or excess charitable contribution
allocable to the Company or the Subsidiaries; and (iii) the amount of any
deferred gain or loss allocable to the Company or the Subsidiaries arising
out of any deferred intercompany transaction.
(g) The unpaid Taxes of the Company and the Subsidiaries did not, as
of August 31, 2000, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the balance sheet
(disregarding any notes thereto) included in the Company's unaudited
interim financial statements as of and for the three months ended August
31, 2000 included in the Form 10-Q as filed with the SEC.
Section 4.12. Title to Personal Property. Except as set forth in the 10-K
or in the Company Disclosure Letter, the Company and each of the Subsidiaries
have good and marketable title to, or a valid leasehold interest in, all of
their tangible personal properties and assets reflected in the 10-K or acquired
after May 31, 2000 (other than assets disposed of since May 31, 2000 in the
ordinary course of business consistent with past practice), in each case free
and clear of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and encumbrances of any nature whatsoever, except for (i) liens,
encumbrances or restrictions which secure indebtedness and which are properly
reflected in the 10-K; (ii) liens for Taxes accrued but not yet payable; (iii)
liens arising as a matter of law in the ordinary course of business with respect
to obligations incurred after May 31, 2000, provided that the obligations
secured by such liens are not delinquent; and (iv) such other liens,
encumbrances and restrictions, if any, as individually or in the aggregate are
not reasonably likely to have a Company Material Adverse Effect. The Company and
the Subsidiaries either own, or have valid leasehold interests in, all tangible
personal properties and assets used by them in the conduct of their business,
except where the absence of such ownership or leasehold interest could not
individually or in the aggregate have a Company Material Adverse Effect. Each of
the Company and the Subsidiaries has on hand the items of Customer Inventory it
is required to have on hand pursuant to the terms and conditions of the
applicable agreement between the Company and its customers subject to immaterial
shrinkage. Neither the Company nor any of the Subsidiaries has any legal
obligation, absolute or contingent, to any other Person to sell or otherwise
dispose of any of its tangible personal properties or assets with an individual
value of $500,000 or an aggregate value in excess of $1,000,000.
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Section 4.13. Real Property. Except as set forth in the 10-K or in the
Company Disclosure Letter, the Company and the Subsidiaries have good and
marketable title to, or a valid leasehold interest in, all of their real
properties reflected in the 10-K or acquired after May 31, 2000, in each case
free and clear of all title defects, liens, encumbrances and restrictions,
except for (i) liens, encumbrances or restrictions which secure indebtedness and
which are properly reflected in the 10-K; (ii) liens for Taxes accrued but not
yet payable; (iii) liens arising as a matter of law in the ordinary course of
business with respect to obligations incurred after May 31, 2000, provided that
the obligations secured by such liens are not delinquent; and (iv) such other
title defects, liens, encumbrances and restrictions, if any, as individually or
in the aggregate are not reasonably likely to have a Company Material Adverse
Effect. The Company Disclosure Letter sets forth a true, correct and complete
list of all real property owned by the Company or a Subsidiary at any time
during the past three years and a true and correct list of all real property
leased by each of the Company and the Subsidiaries identifying with respect to
each lease of such real property the date of, the parties to, and any
amendments, modifications, extensions or other supplements to such lease. Each
of the real properties owned by the Company or any Subsidiary as of the date
hereof or leased by the Company or any of its Subsidiaries and in either case
listed in the Company Disclosure Letter, and each building and improvement
located thereon, is, and has at all times been, in compliance with all
applicable federal, state and local laws, rules, regulations, ordinances and
statutes, including those relating to zoning, building, land use, health and
safety, fire, air sanitation and noise control except as would not have a
material impact on the Company's ability to maintain its operations at such real
property. The improvements on the real properties owned by the Company as of the
date hereof or leased by the Company and in either case listed in the Company
Disclosure Letter are adequate and suitable for the purposes for which they are
presently being used. Since January 1, 2000, neither the Company nor any
Subsidiary has sent or received any written notice of any material default under
any of the leases of real property to which it is party. Neither the Company nor
any Subsidiary has breached or is in default in any material respect under any
covenant, agreement, term or condition of or contained in any material lease of
real property to which it is a party and there has not occurred any event that
with the lapse of time or the giving of notice or both would constitute such a
default or breach.
Section 4.14. Environmental Compliance and Disclosure. Except as set
forth in the Company Disclosure Letter,
(a) each of the Company and the Subsidiaries possesses, and is in
compliance in all material respects with, all material permits, licenses
and government authorizations and has filed all notices that are required
under Environmental Laws applicable to the Company and the Subsidiaries,
and each of the Company and the Subsidiaries is in material compliance with
all applicable limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained
in those laws or contained in any Law, regulation, code, plan, order,
decree, judgment, notice, permit or demand letter issued, entered,
promulgated or approved thereunder;
(b) neither the Company nor any Subsidiary has received notice of
actual or threatened liability under CERCLA or any similar state or local
statute or ordinance from any governmental agency or any third party and,
to the knowledge of the Company, there are no facts or circumstances which
could reasonably be expected to form the basis for the assertion of any
claim against the Company or any Subsidiary under any Environmental Laws
including CERCLA or any similar local, state or foreign Law with respect to
any on-site or off-site location;
(c) neither the Company nor any Subsidiary has entered into or agreed
to, or does it contemplate entering into any consent decree or order, and
neither the Company nor any Subsidiary is subject to any judgment, decree
or judicial or administrative order relating to compliance with, or the
cleanup of Hazardous Materials under, any applicable Environmental Laws;
(d) neither the Company nor any Subsidiary has been subject to any
administrative or judicial proceeding pursuant to and, to the knowledge of
the Company, neither the Company nor any Subsidiary has been alleged to be
in violation of applicable Environmental Laws or regulations either now or
any time during the past five years;
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(e) neither the Company nor any Subsidiary has received notice that it
is subject to any claim, obligation, liability, loss, damage or expense of
whatever kind or nature, contingent or otherwise, incurred or imposed or
based upon any provision of any Environmental Law and arising out of any
act or omission of the Company or any Subsidiary, its employees, agents or
representatives or, to the knowledge of the Company, arising out of the
ownership, use, control or operation by the Company or any Subsidiary of
any plant, facility, site, area or property (including any plant, facility,
site, area or property currently or previously owned or leased by the
Company or any Subsidiary) from which any Hazardous Materials were released
into the environment (the term "release" meaning any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment, and the term
"environment" meaning any surface or ground water, drinking water supply,
soil, surface or subsurface strata or medium, or the ambient air);
(f) the Company has heretofore provided the Parent with true, correct
and complete copies of all files of the Company and the Subsidiaries
relating to environmental matters (or an opportunity to review such files)
that have arisen in the last five years;
(g) neither the Company nor any Subsidiary has paid any fines,
penalties or assessments within the last five years with respect to
environmental matters;
(h) to the knowledge of the Company, none of the owned or leased real
property, improvements and equipment of the Company and the Subsidiaries
contain any asbestos, PCBs, underground storage tanks, open or closed pits,
sumps or other containers on or under any such real property, improvements
or equipment; and
(i) none of the Company and the Subsidiaries has imported,
manufactured, stored, used, operated, transported, treated or disposed of
any Hazardous Materials other than in compliance with all Environmental
Laws.
Section 4.15. Officers and Employees. The Company Disclosure Letter
contains a true and complete list of all of the (a) executive officers the
Company and the Subsidiaries and (b) all other key employees of the Company and
the Subsidiaries with annual salary for calendar year 2000 in excess of
$200,000, and with respect to individuals identified in clause (b), specifying,
by individual, their position, current annual base salary, bonus plans and for
U.S. employees only, Company Benefit Plans in which they are currently eligible
to participate. Except as set forth in the Company Disclosure Letter, none of
the Company and the Subsidiaries is a party to or bound by any
Employee/Consulting Agreement. The Company has provided to the Parent true,
correct and complete copies of each such Employee/Consulting Agreement. The
Company has provided the Parent with true, correct and complete copies of each
written consent by an officer, employee or former employee, consultant or
independent contractor to background checks or drug testing by the Company or
any Subsidiary and any arbitration agreements or confidentiality agreements
between the Company or any Subsidiary and an officer, employee, or former
employee, consultant or independent contractor of the Company or any Subsidiary.
None of the Company and the Subsidiaries has received a claim from any
Governmental Entity to the effect that the Company or any Subsidiary has
improperly classified as an independent contractor any person named in the
Company Disclosure Letter. None of the Company and the Subsidiaries has made any
written, or to the knowledge of the Company, oral commitments to any such
officers, employees or former employees, consultants or independent contractors
with respect to compensation, promotion, retention, termination, severance or
similar matters in connection with the transactions contemplated by this
Agreement or otherwise.
Section 4.16. Employee Benefit Plans.
(a) The Company Disclosure Letter contains a true and complete list of
each Company Benefit Plan sponsored, maintained or contributed to by the
Company or any Subsidiary within the last six calendar years. Each Company
Benefit Plan currently in effect is identified as a "current plan" on the
Company Disclosure Letter and any special tax status enjoyed by such plan
is noted on the Company Disclosure Letter.
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(b) With respect to each Company Benefit Plan identified on the
Company Disclosure Letter, the Company has heretofore delivered or made
available to the Parent true and complete copies of (i) the plan documents
and any amendments thereto (or if the plan is not written, a written
description thereof), (ii) any related trust or other funding vehicle,
(iii) annual reports required to be filed with any Governmental Entity with
respect to such plan, (iv) actuarial reports, (v) funding and financial
information returns and statements, (vi) all contracts with any parties
providing services or insurance to such plan, (vii) copies of material
correspondence with all Governmental Entities, (viii) plan summaries or
summary plan descriptions, (ix) summary annual reports, (x) booklets and
personnel manuals, (xi) any other reports or summaries required under
Applicable Benefit Laws, each of the documents described in (i) through
(xi) only to the extent effective in or with respect to the last six years
of the date hereof, (xii) the most recent determination letter received
from the Internal Revenue Service with respect to each such plan intended
to qualify under Section 401 of the Code, and (xiii) such other
documentation with respect to any Company Benefit Plan as is reasonably
requested by the Parent, including all professional opinions (whether or
nor internally prepared) and all material internal memoranda regarding any
compliance issues identified by Parent.
(c) The Company and the Subsidiaries have maintained all employee data
necessary to administer each Company Benefit Plan, including data required
to be maintained under Sections 107 and 209 of ERISA, and such data is true
and correct and is maintained in a usable form.
(d) No Company Benefit Plan or ERISA Affiliate Plan is or was subject
to Title IV of ERISA or Section 412 of the Code, nor is any Company Benefit
Plan or ERISA Affiliate Plan a "multiemployer pension plan", as defined in
Section 3(37) of ERISA, or subject to Section 302 of ERISA. Neither the
Company, any Subsidiary, an ERISA Affiliate nor a predecessor in interest
of any of them has or has had an obligation to make contributions or
reimburse another employer, either directly or indirectly, including
through indemnification or otherwise, for making contributions to a plan
that is or was subject to Title IV of ERISA. Neither the Company nor any
Subsidiary has incurred, and no facts exist which reasonably could be
expected to result in, liability to the Company or any Subsidiary as a
result of a termination, withdrawal or funding waiver with respect to any
ERISA Affiliate Plan or Company Benefit Plan.
(e) Each Company Benefit Plan has been established, registered,
qualified, invested, operated and administered in all respects in
accordance with its terms in compliance with all Applicable Benefit Laws
and in accordance with all understandings, written or oral, between the
Company and each Subsidiary and their respective current or former
employees, directors, officers, consultants, independent contractors,
contingent workers or leased employees, as applicable. None of the Company
and the Subsidiaries has incurred, and no facts exist which reasonably
could be expected to result in any liability to the Company or any
Subsidiary with respect to any Company Benefit Plan or any ERISA Affiliate
Plan, including any liability, tax, penalty or fee under ERISA, the Code or
any Applicable Benefit Law (other than to pay premiums, contributions or
benefits in the ordinary course).
(f) All obligations to pay premiums, contributions or benefits under
each Company Benefit Plan have been satisfied, and there are no outstanding
defaults or violations by any party to any Company Benefit Plan. No taxes,
penalties or fees are owed by any Company Benefit Plan.
(g) No fact or circumstance exists that could adversely affect the
tax-exempt status of a Company Benefit Plan that is intended to be
tax-exempt. Further, each Company Benefit Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code and the trusts maintained
thereunder that are intended to be exempt from taxation under Section
501(a) of the Code has received a favorable determination or other letter
indicating that it is so qualified, or is otherwise within the remedial
amendment period under Section 401(b) of the Code and revenue rulings,
procedures, announcements or notices of the Internal Revenue Service.
(h) The assets of each Company Benefit Plan are reported at their fair
market value on the financial statements of each such plan.
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(i) No Company Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
current or former employees, directors, officers, consultants, independent
contractors, contingent workers or leased employees (or any of their
dependents, spouses or beneficiaries) of the Company or any Subsidiary or
any predecessor in interest of such Company or Subsidiary for periods
extending beyond their retirement or other termination of service, other
than continuation coverage mandated by any Applicable Benefit Law and only
to the extent required under such law.
(j) All contributions or premiums required to be made by the Company
or any Subsidiary under the terms of each Company Benefit Plan or by
Applicable Benefit Laws have been made in a timely fashion in accordance
with Applicable Benefit Laws and the terms of the Company Benefit Plan.
Contributions or premiums will be paid by the Company or a Subsidiary for
the period up to the Closing even though not otherwise required to be made
until a later date.
(k) No insurance policy or any other contract or agreement affecting
any Company Benefit Plan requires or permits a retroactive increase in
premiums or payments due thereunder.
(l) There have been no improper withdrawals, applications or transfers
of assets from any Company Benefit Plan or the trusts or other funding
media relating thereto, and neither the Company, any Subsidiary nor any of
their agents has been in breach of any fiduciary obligation with respect to
the administration of any Company Benefit Plan or the trusts or other
funding media relating thereto.
(m) The Company or a Subsidiary has the right under the terms of each
Company Benefit Plan and under Applicable Benefit Law to amend, revise,
merge or terminate such plan (or its participation in such plan) or
transfer the assets of such plan to another arrangement, plan or fund at
any time exclusively by action of the Company or such Subsidiary, and no
additional contributions would be required to properly effect such
termination.
(n) Except as disclosed in the Company Disclosure Letter, the
execution, delivery and performance of, and consummation of the
transactions contemplated by, this Agreement will not (i) entitle any
current or former employee, director, officer, consultant, independent
contractors, contingent worker or leased employee (or any of their
dependents, spouses or beneficiaries) of the Company or any Subsidiary to
severance pay, unemployment compensation or any other payment, (ii)
accelerate the time of payment or vesting or (iii) increase the amount of
compensation due any such individual.
(o) None of the Company and the Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate the Company or any Subsidiary to make
any payments that will not be deductible for federal income tax purposes by
reason of Section 280G of the Code.
(p) There are no pending, anticipated or to knowledge of the Company,
threatened claims, investigations, examinations, audits or other
proceedings or actions against or involving any Company Benefit Plan, by
any current or former employee, director, officer, consultant, independent
contractors, contingent worker or leased employee (or any of their
dependents, spouses or beneficiaries) of the Company or any Subsidiary or
any predecessor in interest covered under such Company Benefit Plan, by any
Governmental Entities or otherwise involving any such Company Benefit Plan
(other than routine claims for benefits) and to the knowledge of the
Company after due inquiry, there exists no state of facts which after
notice or lapse of time or both reasonably could be expected to give rise
to any such claim, investigation, examination, audit or other proceeding or
to affect the registration of any Company Benefit Plan required to be
registered.
Section 4.17. Labor Relations. Except as set forth in the Company
Disclosure Letter, with respect to the three (3) year period ending on the date
hereof:
(a) the employees of the Company and the Subsidiaries have not been,
and currently are not, represented by a labor organization or group which
was either certified or voluntarily recognized by any labor relations
board, including the NLRB or certified or voluntarily recognized by any
other Governmental Entity;
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(b) neither the Company nor any Subsidiary has been, or is, a
signatory to a collective bargaining agreement with any trade union, labor
organization or group;
(c) no representation election petition or application for
certification has been filed by employees of the Company or any Subsidiary
or is pending with the NLRB or any other Governmental Entity and no union
organizing campaign or other attempt to organize or establish a labor
union, employee organization or labor organization or group involving
employees of the Company or any Subsidiary has occurred, is in progress or,
to the knowledge of the Company, is threatened;
(d) neither the Company nor any Subsidiary has engaged in any unfair
labor practice and neither the Company nor any Subsidiary is aware of any
pending or threatened labor board proceeding of any kind, including any
such proceeding against the Company, any Subsidiary or any trade union,
labor union, employee organization or labor organization representing the
employees of the Company or any Subsidiary;
(e) no grievance or arbitration demand or proceeding, whether or not
filed pursuant to a collective bargaining agreement, has been filed or is
pending, or, to the knowledge of the Company, threatened, against the
Company or any Subsidiary;
(f) no labor dispute, walk out, strike, slowdown, hand billing,
picketing, work stoppage (sympathetic or otherwise), or other "concerted
action" involving the employees of the Company or any Subsidiary has
occurred, is in progress or, to the knowledge of the Company, has been
threatened;
(g) no breach of contract and/or denial of fair representation claim
has been filed or is pending or, to the knowledge of the Company,
threatened against the Company, any Subsidiary and/or any trade union,
labor union, employee organization or labor organization representing the
employees of the Company or any Subsidiary;
(h) no claim, complaint, charge or investigation for unpaid wages,
bonuses, commissions, employment withholding taxes, penalties, overtime or
other compensation, benefits, child labor or record keeping violations is
pending or, to the knowledge of the Company, threatened under the FLSA,
Davis-Bacon Act, Walsh-Healey Act, or Service Contract Act or any other
federal, state, local, provincial or foreign law, regulation or ordinance;
(i) no discrimination and/or retaliation claim, complaint, charge or
investigation is pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary under the 1866 or 1964 Civil Rights
Acts, the Equal Pay Act, the ADEA, the ADA, the FMLA, the FLSA, ERISA or
any other federal law or comparable state fair employment practices act or
foreign law, including any provincial law regulating discrimination in the
workplace;
(j) if the Company or any Subsidiary is a federal or state contractor
obligated to develop and maintain an affirmative action plan, no
discrimination claim, show cause notice, conciliation proceeding, sanction
or debarment proceeding has been, to the knowledge of the Company,
threatened or is pending with the Office of Federal Contract Compliance
Programs or any other federal agency or any comparable state or foreign
agency or court and no desk audit or on-site review is in progress;
(k) no citation has been issued by OSHA against the Company or any
Subsidiary and no notice of contest, claim, complaint, charge,
investigation or other administrative enforcement proceeding involving the
Company is pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary under OSHA or before any provincial or
federal occupational health and safety ministry or department pursuant to
any other applicable law relating to occupational safety and health;
(l) no workers' compensation or retaliation claim, complaint, charge
or investigation the liability for which, individually, is reasonably
expected to exceed $75,000 is pending against the Company or any Subsidiary
and the aggregate liability under all other pending workers' compensation
or retaliation claims, complaints, charges or investigations would not have
a Material Adverse Effect;
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(m) no investigation or citation of the Company or any Subsidiary has
occurred and no enforcement proceeding has been initiated or is pending or,
to the knowledge of the Company, threatened under federal or foreign
immigration law;
(n) neither the Company nor any Subsidiary has taken any action that
would constitute a "mass layoff", "mass termination" or "plant closing"
within the meaning of WARN or otherwise trigger notice requirements or
liability under any federal, local, state or foreign plant closing notice
or collective dismissal law;
(o) no wrongful discharge, retaliation, libel, slander or other claim,
complaint, charge or investigation that arises out of the employment
relationship between the Company or any Subsidiary and its respective
employees is pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary under any applicable law;
(p) each of the Company and the Subsidiaries has maintained and
currently maintains adequate insurance as required by applicable law with
respect to workers' compensation claims and unemployment benefits claims;
(q) each of the Company and the Subsidiaries is in compliance with all
applicable laws, regulations and orders and all contracts or collective
bargaining agreements governing or concerning labor relations, union and
collective bargaining, conditions of employment, employment discrimination
and harassment, wages, hours or occupations safety and health, including
the Labor Laws;
(r) neither the Company nor any Subsidiary is liable for any
liabilities, judgments, decrees, orders, arrearage of wages or taxes, fines
or penalties for failure to comply with any of the Labor Laws;
(s) the Company has provided the Parent with a copy of the policy of
each of the Company and the Subsidiaries for providing leaves of absence
under the FMLA; and
(t) each of the Company and the Subsidiaries has paid or accrued all
current assessments under workers' compensation legislation, and neither
the Company nor any Subsidiary has been subject to any special or penalty
assessment under such legislation which has not been paid.
Section 4.18. Contracts and Commitments. Except as set forth in the
Company Disclosure Letter or disclosed in the Company Reports, neither the
Company nor any Subsidiary is a party to, or is bound or affected by, or
receives benefits under any (a) contracts of employment providing for total
annual base salary in excess of $200,000; (b) contracts or agreements containing
covenants limiting the freedom of the Company, or any Subsidiary, to engage in
any line of business or to compete with any entity; (c) any joint venture,
partnership or similar agreement; (d) exchange traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract, or any other
interest rate or foreign currency protection contract; (e) agreement providing
for aggregate payments to any director, officer or consultant of the Company or
any Subsidiary in any calendar year in excess of $200,000; (f) any agreement
providing rights of indemnification in favor of any Indemnified Party; or (g)
other contract or agreement or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by the Company with the SEC as of the
date of this Agreement. Neither the Company nor any Subsidiary is in breach or
default under any such contracts, agreements, instruments or arrangements, which
default or breach has had or would reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse Effect, and there
has not occurred any event that with the lapse of time or the giving of notice
or both would constitute such a default.
Section 4.19. Information Supplied.
(a) None of the information supplied or to be supplied by the Company
for inclusion or incorporation by reference in (A) the Form S-4 to be filed
with the SEC by the Parent in connection with the issuance of the Parent
Class B Common Stock in the Merger will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (B)
the Proxy Statement/Prospectus included in the Form S-4 related to the
Stockholders' Meeting and the Parent Class B Common Stock to be issued in
the Merger will, on the date it is first mailed to the
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Company Stockholders or at the time of the Stockholders' 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
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act.
(b) Notwithstanding the foregoing provisions of this Section 4.19, no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Form S-4 or the Proxy
Statement/Prospectus based on information supplied by the Parent or Buyer
for inclusion or incorporation by reference therein.
Section 4.20. Intellectual Property.
(a) The Company Disclosure Letter sets forth a true and correct list
of all Intellectual Property that is the subject of registration or of an
application for a registration and the jurisdictions where each is
registered (if any). The Company and the Subsidiaries have good and
marketable title to or possesses adequate licenses or other valid rights to
use such Intellectual Property, free and clear of all Liens and has paid
all maintenance fees, renewals or expenses related to such Intellectual
Property that the Company owns. Neither the use of such Intellectual
Property nor the present conduct of the Company and the Subsidiaries
misappropriates, infringes upon or conflicts with any copyright, trade
name, trade secret or trademark rights of any third party or, to the
knowledge of the Company, any patent or any other intellectual property
rights of any third party. No party has filed a claim, or, to the knowledge
of the Company, threatened to file a claim, against the Company or any
Subsidiary alleging that it has violated, infringed on or otherwise
improperly used the intellectual property rights of such party and neither
the Company nor any Subsidiary has violated or infringed any trademark,
trade name, service mark, service name, copyright or trade secret held by
others, or, to the knowledge of the Company, violated or infringed any
patent.
(b) The Company Disclosure Schedule sets forth a true and complete
list of: (i) all Company Proprietary Software; and (ii) all Company
Licensed Software constituting the Company's Global Business System, or any
other Company Licensed Software material to the operations of the Company
as presently conducted.
(c) The Company and the Subsidiaries have all right, title and
interest in and to all intellectual property rights in the Company
Proprietary Software. The Company and the Subsidiaries have developed the
Company Proprietary Software through their own efforts, as described in
Section 4.20(e), and for their own account, and the Company Proprietary
Software is free and clear of all Liens. The use of the Company Licensed
Software and the use of the Company Proprietary Software does not breach
any terms of any license or other contract between the Company or any
Subsidiary and any third party. Each of the Company and the Subsidiaries is
in compliance with the terms and conditions of all license agreements in
favor of the Company and the Subsidiaries relating to the Company Licensed
Software.
(d) The Company Proprietary Software does not infringe any copyright
or trade secret right of any third party or, to the knowledge of the
Company, any patent or other intellectual property rights of the any third
party.
(e) The Company Proprietary Software was: (i) developed by the
employees of the Company and the Subsidiaries working within the scope of
their employment at the time of such development; (ii) developed by agents,
consultants, contractors or others who have executed appropriate
instruments of assignment in favor of the Company or a Subsidiary as
assignee that have conveyed to the Company or such Subsidiary ownership of
all of its intellectual property rights in the Company Proprietary
Software; or (iii) acquired by the Company or a Subsidiary in connection
with acquisitions in which the Company or such Subsidiary obtained
appropriate representations, warranties and indemnities from the
transferring party relating to the title to such Company Proprietary
Software. Neither the Company nor any Subsidiary has received notice from
any third party claiming any right, title or interest in the Company
Proprietary Software.
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(f) Neither the Company nor any Subsidiary has granted rights in
Company Software to any third party.
Section 4.21. Insurance Policies. The Company and the Subsidiaries
maintain insurance with reputable insurers for the business and assets of the
Company and the Subsidiaries against all risks normally insured against, and in
amounts normally carried, by corporations of similar size engaged in similar
lines of business and such coverage is sufficient. The Company and each
Subsidiary maintain all insurance with respect to the inventory of each customer
in the possession of the Company or a Subsidiary which insurance is required
pursuant to any contract, agreement or other arrangement with such customer to
be maintained. All insurance policies and bonds with respect to the business and
assets of the Company and the Subsidiaries are in full force and effect and will
be maintained by the Company and the Subsidiaries in full force and effect as
they apply to any matter, action or event relating to the Company and the
Subsidiaries occurring through the Closing Date and neither the Company nor any
Subsidiary has reached or exceeded its policy limits for any insurance policies
in effect at any time during the past five years.
Section 4.22. Notes and Accounts Receivable.
(a) Except as disclosed in the Company Disclosure Letter, there are no
notes receivable for amounts in excess of $500 of the Company or any
Subsidiary owing by any director, officer, stockholder or employee of the
Company or any Subsidiary.
(b) Except as disclosed in the Company Disclosure Letter, all material
accounts receivable of the Company and any Subsidiary are current or
covered by reserves for uncollectability which the Company believes to be
adequate, and there are no material disputes regarding the collectibility
of any such accounts receivable that would reasonably be expected to have a
Company Material Adverse Effect.
Section 4.23. Transactions with Affiliates. Except as set forth in the
Company Disclosure Letter (other than compensation and benefits received in the
ordinary course of business as an employee or director of the Company or the
Subsidiaries), no director, officer or other "affiliate" or "associate" (as such
terms are defined in Rule 12b-2 under the Exchange Act) of the Company or any
Subsidiary or any entity in which, to the knowledge of the Company, 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 any such Persons), has any interest in:
(i) any contract, arrangement or understanding with, or relating to the business
or operations of the Company or any Subsidiary; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or any Subsidiary; or (iii) any property (real, personal or mixed),
tangible, or intangible, used or currently intended to be used in, the business
or operations of the Company or any Subsidiary.
Section 4.24. Customer and Supplier Relations. Since May 31, 2000, no
customer of the Company or any Subsidiary has canceled, terminated, or made any
threat to cancel or otherwise terminate its contract, or in writing to decrease
its usage of the Company's or any Subsidiary's services or products that would
result in a Company Material Adverse Effect. Neither the Company nor any
Subsidiary has received any notice, and the Company has no knowledge, to the
effect that any current customer or supplier may terminate or materially alter
its business relations with the Company or any Subsidiary, either as a result of
the transactions contemplated herein or otherwise that would result in a Company
Material Adverse Effect.
Section 4.25. Certain Practices. Other than actions taken that do not
violate the Foreign Corrupt Practices Act or any other applicable laws, none of
the Company, the Subsidiaries and any Representative of the Company or any
Subsidiary has offered or given, and the Company has no knowledge of any Person
that has offered or given on its behalf, anything of value to: (i) any official
of a Governmental Entity, any political party or official thereof, or any
candidate for political office; (ii) any customer or member of a government; or
(iii) any other Person, in any such case while knowing or having reason to know
that all or a portion of such money or thing of value may be offered, given or
promised, directly or indirectly, to any customer, member of the government or
candidate for political office for the purpose of the following: (x) influencing
any action or decision of such Person, in such Person's official capacity,
including a decision to fail to perform such Person's
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official function; (y) inducing such Person to use such Person's influence with
any government or instrumentality thereof to affect or influence any act or
decision of such government or instrumentality to assist the Company or any
Subsidiary in obtaining or retaining business for, or with, or directing
business to, any Person; or (z) where such payment would constitute a bribe,
kickback or illegal or improper payment to assist the Company or any Subsidiary
in obtaining or retaining business for, or with, or directing business to, any
Person. The Company represents and warrants that neither the Company nor any of
its Subsidiaries has, within the last five years, taken any actions that would
violate United States Laws against cooperation with unsanctioned foreign
boycotts, including 15 C.F.R. sec. 760 and 26 U.S.C. sec. 999. The Company
further represents and warrants that the Company and its Subsidiaries are in
compliance in all material respects with all Laws of the United States that
require the reporting of requests to cooperate with unsanctioned foreign
boycotts. The Company represents and warrants that neither the Company nor any
of its Subsidiaries has, within the last five years, taken any actions that
would violate Laws of the United States regarding the exporting of goods and
technology, including the licensing, use, resale, reexport, or deemed export of
such goods and technology. The Company further represents and warrants that the
Company and its Subsidiaries are in compliance in all material respects with all
Laws of the United States regarding the importing of goods into the customs
territory of the United States, whether as a licensed customs broker or as the
importer of record. The Company represents and warrants that neither the Company
nor any of its Subsidiaries has, within the last five years, taken any actions
that would violate Laws of the United States regarding United States embargoes
of Afghanistan, Angola, Cuba, Iran, Iraq, Libya, North Korea, Serbia, and Sudan.
The Company further represents and warrants that neither the Company nor any of
its Subsidiaries owns, in whole or in part, manages, operates, uses, or benefits
from property in Cuba that was nationalized by the Cuban Government after
January 1, 1959.
Section 4.26. No Existing Discussions. As of the date hereof, the Company
is not engaged, directly or indirectly, in any negotiation, discussion or
exchange of information with any other party with respect to or in contemplation
of an Acquisition Proposal.
Section 4.27. Merger. Neither the Company nor any Subsidiary has taken
any action or failed to take any action which action or failure to take action
would jeopardize the Merger as a reorganization within the meaning of Section
368(a) of the Code.
Section 4.28. Antitakeover Statutes; Absence of Dissenters' Rights. Each
of the Company and the Board of Directors of the Company has taken all action
required to be taken by it to exempt this Agreement and the Option Agreements
and the transactions contemplated hereby and thereby from, and this Agreement
and the Option Agreements and the transactions contemplated hereby and thereby
are exempt from the requirements of, any "moratorium", "control share", "fair
price", "affiliate transaction", "business combination" or other antitakeover
laws and regulations of any state, including the provisions of Section 203 of
the DGCL. No holder of any capital stock of the Company or any other securities
of the Company is entitled to any dissenters' rights, appraisal rights or
similar rights by virtue of this Agreement, the Merger or any of the other
transactions contemplated hereby (including those contemplated by the Option
Agreements).
Section 4.29. Brokers. No broker, finder or investment banker (other than
the Independent Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company Disclosure Letter includes a complete and
correct copy of all agreements between the Company and the Independent Advisor
pursuant to which such firm would be entitled to any payment relating to this
Agreement, the Merger or the other transactions contemplated by this Agreement.
Section 4.30. Vote Required. The affirmative vote of the holders of
shares representing a majority of the shares of Company Common Stock entitled to
vote on the approval and adoption of this Agreement and the Merger (the
"Required Vote") is the only vote or approval of the holders of any class or
series of capital stock of the Company necessary to adopt this Agreement and to
approve the transactions contemplated hereby.
Section 4.31. Customs Matters. The Company and its Subsidiaries are
licensed to conduct the businesses currently conducted by them. The Company and
the Subsidiaries possess all valid permits, licenses
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and authorizations from Government Entities (the "Permits") required to conduct
their businesses in accordance with 19 U.S.C. sec. 1641 and 19 C.F.R. sec. 111.
All such Permits are currently in full force and effect and no
misrepresentations were made by the Company or the Subsidiaries of any material
fact in obtaining such licenses. No administrative or judicial proceedings have
been instituted or, to the Company's knowledge, threatened or are contemplated
seeking the suspension, termination, modification, revocation, alteration or
amendment of any such Permits or to declare any of them invalid in any respect.
The Company and each of its Subsidiaries are in material compliance with all
applicable laws and regulations enforced by the United States Customs Service
governing the operation of the business of the Company and the Subsidiaries,
including those contained in 19 C.F.R. sec. 111. In particular, the Company and
its Subsidiaries maintain records of customs transactions in accordance with 19
C.F.R. sec.sec. 111.21 and 111.23. The officers of the Company that are licensed
under 19 U.S.C. sec. 1641(b) exercise responsible supervision and control over
the transaction of customs business by the Company as required by 19 C.F.R.
sec. 111.28. The Company has submitted a list of employees to the Customs
authority in each port in which it conducts customs business, as required by 19
C.F.R. sec. 111.28(b), and has complied with all applicable reporting
requirements. The Company exercises reasonable due diligence in making financial
settlements, answering correspondence, and in preparing and assisting in the
preparation and filing of records relating to its business as those activities
are described in 19 C.F.R. sec. 111.29. Neither the Company nor any of its
Subsidiaries is engaged in any activities that could result in the cancellation,
suspension, or revocation of its licenses or permits, or the imposition of a
material monetary penalty, including:
(a) filing documents that contain false information, as prohibited by
19 C.F.R. sec. 111.32;
(b) the procurement of information from government sources to which
access is not granted by proper authority, as prohibited by 19 C.F.R.
sec. 111.33;
(c) the exertion of undue influence on any representative of the
Department of Treasury by threat, false accusation, or offer of special
inducement, gift, or anything of value, as prohibited by 19 C.F.R.
sec. 111.34;
(d) demanding or accepting from an attorney fees in excess of an
amount commensurate with the time, effort and skill expended by the Company
in performing its services, as prohibited by 19 C.F.R. sec. 111.35;
(e) an improper relationship with an unlicensed person, as prohibited
by 19 C.F.R. sec. 111.36;
(f) the use of any Permits or the Company name by persons, other than
employees authorized to act on behalf of the Company, in the solicitation,
promotion or performance of any customs business, as prohibited by 19
C.F.R. sec. 111.37;
(g) the knowing use of false or misleading representations to procure
employment in any customs matter, as prohibited by 19 C.F.R. sec. 111.38;
(h) the withholding of information from a client regarding any customs
transaction to which that client is entitled, as prohibited by 19 C.F.R.
sec. 111.39;
(i) the suggestion to a client or potential client of an illegal plan
for evasion of any duty, tax, or other debt or obligation owing to the U.S.
government, as prohibited by 19 C.F.R. sec. 111.39;
(j) the endorsement or acceptance, without the authority of the
client, of any U.S. Government draft, check or warrant drawn to the order
of the client, as prohibited by 19 C.F.R. sec. 111.41;
(k) relations with persons, other than bona fide importers or
exporters for whom the Company is conducting customs business, who are
notoriously disreputable or whose licenses are under suspension, cancelled
with prejudice, or revoked, as prohibited by 19 C.F.R. sec. 111.42;
(l) the conviction of any officer of a felony or misdemeanor that
arose out of the conduct of the business of the Company, or involved
larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent
concealment, embezzlement, fraudulent conversion, or misappropriation of
funds, as prohibited by 19 C.F.R. sec. 111.53;
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(m) employment of any person who has been convicted of a felony
without written approval of that employment from the appropriate Assistant
Commissioner of the Customs Service, as prohibited by 19 C.F.R.
sec. 111.53; or
(n) counseling any person to violate the Customs Service laws or
regulations, as prohibited by 19 C.F.R. sec. 111.53.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Except as disclosed in the Parent Disclosure Letter delivered by the Parent
to the Company prior to the execution of this Agreement, each of the Parent and
the Buyer represents and warrants to the Company as follows:
Section 5.1. Organization and Standing. Such Person (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate its properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
Section 5.2. Authority for Agreement. Such Person has all necessary
corporate power and authority to execute and deliver this Agreement and the
Option Agreements, to perform its obligations hereunder and to consummate the
Merger and the other transactions contemplated by this Agreement and the Option
Agreements. The execution, delivery and performance by such Person of this
Agreement and the Option Agreements, and the consummation by each such Person of
the Merger and the other transactions contemplated by this Agreement and the
Option Agreements, have been duly authorized by all necessary corporate action
and no other corporate proceedings on the part of such Person are necessary to
authorize this Agreement or the Option Agreements or to consummate the Merger or
the other transactions contemplated by this Agreement and the Option Agreements
(other than, with respect to the Merger, the filing and recordation of
appropriate merger documents as required by the DGCL). Each of this Agreement
and the Option Agreements has been duly executed and delivered by such Person
and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of such Person
enforceable against such Person in accordance with its terms.
Section 5.3. No Conflict. The execution and delivery of this Agreement
and the Option Agreements by such Person do not, and the performance of this
Agreement and the Option Agreements by such Person and the consummation of the
Merger and the other transactions contemplated by this Agreement and the Option
Agreements will not, (i) conflict with or violate the certificate of
incorporation or bylaws of such Person, (ii) subject to Section 5.4, conflict
with or violate any Law applicable to such Person or by which any property or
asset of such Person is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of such Person pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such Person is a party or
by which such Person or any property or asset of either of them is bound or
affected, except in the case of clauses (ii) and (iii) for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, prevent or materially delay the performance by
such Person of its respective obligations under this Agreement or the Option
Agreements or the consummation of the Merger or the other transactions
contemplated by this Agreement and the Option Agreements.
Section 5.4. Required Filings and Consents. The execution and delivery of
this Agreement by such Person do not, and the performance of this Agreement by
such Person will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable
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requirements, if any, of the Securities Act, Exchange Act, state securities laws
or "blue sky" laws and filing and recordation of appropriate merger documents as
required by the DGCL, (ii) for those required by the HSR Act, (iii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, reasonably be expected to prevent
or materially delay consummation of the Merger or otherwise prevent or
materially delay such Person from performing its material obligations under this
Agreement and (iv) for those which have heretofore been obtained by such Person.
Section 5.5. Capitalization. As of the date hereof, the authorized
capital stock of the Parent consists of 4,600,000,000 shares of Parent Class A
Common Stock and 5,600,000,000 shares of Parent Class B Common Stock and
200,000,000 shares of Parent preferred stock. All of the shares of Parent Class
B Common Stock to be issued in exchange for Company Common Stock at the
Effective Time in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth in the Parent Disclosure Letter, free of preemptive rights. As of the
close of business on December 31, 2000, (i) 935,873,745 shares of Parent Class A
Common Stock were duly authorized, validly issued and outstanding, fully paid
and nonassessable; (ii) 198,819,384 shares of Parent Class B Common Stock were
duly authorized, validly issued and outstanding, fully paid and nonassessable;
(iii) no shares of preferred stock of the Parent were issued and outstanding;
(iv) no shares of Parent Class A Common Stock, Parent Class B Common Stock or
Parent preferred stock were held in the Parent's treasury; and (v) 29,314,802
shares of Parent Class A Common Stock were reserved for issuance upon exercise
of employee stock options under the Parent's stock option plans. Except as set
forth in the Parent Reports, there are no outstanding options, warrants or
rights to purchase or acquire from the Parent any capital stock of the Parent,
and there are no convertible securities or other contracts, commitments,
agreements, understandings, arrangements or restrictions by which the Parent is
bound to issue any additional shares of its capital stock or other equity
securities.
Section 5.6. Parent Reports; Parent Financial Statements.
(a) The Parent has filed all Parent Reports, each of which has
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or
the Exchange Act, and the rules and regulations promulgated thereunder,
each as in effect on the date so filed. None of the Parent Reports
(including, but not limited to, any financial statements or schedules
included or incorporated by reference therein) contained when filed any
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) All of the Parent Financial Statements, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of the
Parent and its subsidiaries at the respective date thereof and the
consolidated results of its operations and changes in cash flows for the
periods indicated except that the unaudited interim financial statements
are subject to normal recurring year-end adjustments consistent with past
practices and not material in amount.
Section 5.7. Absence of Certain Changes or Events. Except as disclosed in
the Parent Disclosure Letter and the Parent Reports and except for the
transactions contemplated by this Agreement, since September 30, 2000, there has
not been (i) any change in the business, financial condition or results of
operations of the Parent and its subsidiaries which has or would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, or (ii) any split, combination or reclassification of any of the
Parent's outstanding capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of the Parent's outstanding capital stock.
Section 5.8. Information Supplied.
(a) None of the information supplied or to be supplied by the Parent
for inclusion in the Form S-4 will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the
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statements therein not misleading. The Form S-4 will comply as to form in
all material respects with the requirements of the Securities Act.
(b) Notwithstanding the foregoing provisions of this Section 5.8, no
representation or warranty is made by the Parent or Buyer with respect to
statements made or incorporated by reference in the Form S-4 based on
information supplied by the Company for inclusion or incorporation by
reference therein.
Section 5.9. No Violation of Law. Except as set forth in the Parent
Reports, the business and operations of the Parent and its subsidiaries have
been conducted in compliance with all applicable Laws, except where the failure
to be in compliance does not have and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. Except as
set forth in the Parent Reports or in the Parent Disclosure Letter, (i) neither
the Parent nor any subsidiary of the Parent has been charged with or, to the
knowledge of the Parent, is now under investigation with respect to, a violation
of any applicable Law that has or would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, and (ii) the
Parent has filed all reports required to be filed with any governmental entity
or other regulatory body on or before the date hereof, except where the failure
to do so does not and would not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect.
Section 5.10. Merger. Neither the Parent nor any of its subsidiaries has
taken any action or failed to take any action which action or failure to take
action would jeopardize the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
Section 5.11. Certificate of Incorporation and Bylaws. Parent has
heretofore made available to the Company a complete and correct copy of its
Restated Certificate of Incorporation and Bylaws as amended to date (the "Parent
Charter Documents"). Such Parent Charter Documents are in full force and effect.
Parent is not in violation of any of the provisions of Parent Charter Documents,
except for violations of Parent Charter Documents which do not and are not
reasonably likely to have a Parent Material Adverse Effect.
Section 5.12. Ownership of Buyer; No Prior Activities.
(a) Buyer was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) Except for obligations or liabilities incurred by Buyer in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Buyer has not
incurred, directly or indirectly, through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business activities of any
type or kind whatsoever or entered into any agreements or arrangements with
any Person.
Section 5.13. Ownership Interest in the Company. Other than by reason of
this Agreement or the transactions contemplated hereby, neither Parent nor any
of its Affiliates is, or has been for the previous three years, an "interested
stockholder" of the Company, as that term is defined in Section 203 of the DGCL.
Section 5.14. Brokers and Finders. No broker, finder or investment banker
(other than Salomon Smith Barney Inc.) is entitled to any brokerage, finder's or
other fee or commission payable by such Person in connection with this
Agreement, the Merger or the other transactions contemplated by this Agreement
based upon arrangements made by or on behalf of such Person.
ARTICLE VI
COVENANTS
Section 6.1. Conduct of the Business Pending the Merger.
(a) The Company covenants and agrees that between the date of this
Agreement and the Effective Time, unless the Parent shall otherwise agree
in writing (and except as expressly contemplated, permitted or required by
this Agreement), (i) the business of the Company and the Subsidiaries shall
be conducted
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only in, and the Company and the Subsidiaries shall not take any action
except in, the ordinary course of business and in a manner consistent with
prior practice, (ii) the Company and the Subsidiaries shall use all
commercially reasonable efforts to preserve substantially intact their
business organizations, to keep available the services of their current
officers and employees and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other Persons
with which the Company or the Subsidiaries has significant business
relations, and (iii) the Company will comply in all material respects with
all applicable Laws and regulations wherever its business is conducted,
including the timely filing of all reports, forms or other documents with
the SEC required pursuant to the Securities Act or the Exchange Act.
(b) Except as set forth in the Company Disclosure Letter, the Company
covenants and agrees that between the date of this Agreement and the
Effective Time, the Company shall not, nor shall the Company permit any of
the Subsidiaries to, (i) declare or pay any dividends on or make other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, except for dividends by a wholly owned Subsidiary of the
Company to the Company or another wholly owned Subsidiary of the Company;
(ii) execute or cause to be executed any transactions that may result in a
deemed dividend under the Code; (iii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock; (iv) repurchase or otherwise acquire any shares of its
capital stock; (v) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into any such shares of its capital stock, or any
rights, warrants or options to acquire any such shares or convertible
securities or any stock appreciation rights, phantom stock plans or stock
equivalents, other than the issuance of shares of Company Common Stock
pursuant to (A) the exercise of Company Stock Options outstanding as of the
date of this Agreement, (B) employee deferrals, after tax contributions and
matching contributions under the Fritz Companies, Inc. Salary Investment
and Retirement Plan or the Fritz Companies, Inc. Employee Stock Purchase
Plan as in effect on the date hereof, (C) new Company Stock Options granted
at fair market value and consistent with past practices under the Fritz
Companies, Inc. 1992 Omnibus Equity Incentive Plan in the ordinary course,
which shall not exceed in the aggregate options to purchase 1,000,000
shares of Company Common Stock, (D) new Company Stock Options granted at
fair market value and in the ordinary course consistent with past practices
to new employees, which shall not exceed in the aggregate per month options
to purchase 25,000 shares of Company Common Stock or 10,000 shares to any
individual, or (E) the Rights Plan; (vi) take any action that would make
the Company's representations and warranties set forth in Article III not
true and correct in all material respects; (vii) take any action that
would, or could reasonably be expected to, result in any of the conditions
set forth in Article VII not being satisfied; (viii) amend its certificate
of incorporation (including any certificate of designations attached
thereto) or bylaws or other equivalent organizational documents; (ix) incur
any indebtedness for borrowed money or guaranty any such indebtedness of
another Person, other than (A) borrowings under existing lines of credit
(or under any refinancing of such existing lines) or (B) indebtedness owing
to, or guaranties of indebtedness owing to, the Company; (x) make any loans
or advances to any other Person other than loans or advances between the
Company and any Subsidiary and other than loans or advances less than
$100,000 made in the ordinary course of business consistent with past
practice; (xi) merge or consolidate with any other entity in any
transaction, or sell any business or assets in a single transaction or
series of transactions in which the aggregate consideration is $1,000,000
or greater; (xii) change its accounting policies except as required by
GAAP; (xiii) make any change in employment terms for any of its directors
or officers; (xiv) alter, amend or create any obligations with respect to
compensation, severance, benefits, change of control payments or any other
payments to employees, directors or Affiliates of the Company or the
Subsidiaries, other than with respect to alterations or amendments made
with respect to non-officers and non-directors in the ordinary course of
business consistent with past practice or as expressly contemplated by this
Agreement or consented to in writing by the Parent; (xv) make any change to
the Company Benefit Plans, except those changes required by applicable
Laws; (xvi) sell, license, mortgage or otherwise encumber or subject to any
lien or otherwise dispose of any
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material properties or assets, other than in the ordinary course of
business consistent with past practice; or (xvii) commit or agree to take
any of the actions described in this Section 6.1(b).
Section 6.2. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the Representatives of the Company to, afford the
Representatives of the Parent and the Buyer, upon reasonable notice,
reasonable access at all reasonable times to the officers, employees,
agents, properties, offices and other facilities, books and records,
including Tax Returns of the Company and the Subsidiaries, and shall
furnish the Parent and the Buyer with all financial, operating and other
data and information as the Parent or the Buyer, through its
Representatives, may reasonably request. The Parent will remain subject to
the terms of the Confidentiality Agreement.
(b) No investigation pursuant to this Section 6.2 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(c) The Company shall cooperate in Parent's determination and
calculation of Subsidiaries' tax basis.
Section 6.3. Notification of Certain Matters. The Company shall give
prompt notice to the Parent, and the Parent shall give prompt notice to the
Company, of (i) the occurrence, or nonoccurrence, of any event which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate and (ii) any failure by such party (or the Buyer, in the
case of the Parent) to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.3 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice. If any event or matter arises after the date of this Agreement which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in the Company Disclosure Letter or which is necessary
to correct any information in the Company Disclosure Letter which has been
rendered inaccurate thereby, then the Company shall promptly supplement, or
amend, and deliver to the Parent the Company Disclosure Letter which it has
delivered pursuant to this Agreement.
Section 6.4. Company Stockholders' Meeting. The Company shall, as
promptly as practicable following the execution of this Agreement, duly call,
give notice of, convene and hold the Stockholders' Meeting for the purpose of
obtaining the Required Vote with respect to the Merger and this Agreement, shall
use its reasonable best efforts to solicit the approval of this Agreement by the
Required Vote (regardless of whether the Board of Directors of the Company
modifies its recommendation of the Merger and this Agreement) and, subject to
Section 6.5, the Board of Directors of the Company shall recommend the approval
of this Agreement by the Company Stockholders. Without limiting the generality
of the foregoing but subject to its rights pursuant to Sections 6.5 and 8.1(e),
the Company agrees that its obligations pursuant to the first sentence of this
Section 6.4 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any Acquisition Proposal.
Section 6.5. Board Recommendations.
(a) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw, or propose publicly to withdraw, in a manner
adverse to the Parent, the approval or recommendation of such Board of
Directors or such committee of the Merger or this Agreement, (ii) subject
to Section 6.5(b) , modify, or propose publicly to modify in a manner
adverse to the Parent, the approval or recommendation of such Board of
Directors or such committee of the Merger or this Agreement, (iii) approve
or recommend, or propose publicly to approve or recommend, any Acquisition
Proposal or (iv) approve or recommend or propose to approve or recommend,
or execute or enter into any Acquisition Agreement related to any
Acquisition Proposal. Notwithstanding the foregoing, if, prior to the date
that is the earlier of the 60th day following the date of execution of this
Agreement and the date of the Stockholders' Meeting, in response to a
Superior Proposal that did not result from a breach of Section 6.9, the
Board of Directors of the Company, in exercise of its fiduciary duties,
reasonably determines in good faith, based upon the written advice of
independent outside legal counsel, that the
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Board of Directors of the Company is required to do so to comply with its
fiduciary duties to the Company Stockholders under applicable Law, the
Board of Directors of the Company may, after providing the Parent with at
least 72 hours advance written notice of its decision to take such action,
modify or propose publicly to modify, in a manner adverse to the Parent,
the approval or recommendation of the Merger or this Agreement by the Board
of Directors of the Company.
(b) Nothing contained in this Section 6.5 or any other provision
hereof shall prohibit the Company or the Board of Directors of the Company
from (A) taking and disclosing to the Company Stockholders pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act a position with
respect to a tender or exchange offer by a third party, which is consistent
with its obligations hereunder or (B) making such disclosure to the Company
Stockholders as, in the reasonable good faith judgment of the Board of
Directors of the Company, after receiving advice from independent outside
legal counsel, is consistent with its obligations hereunder and is required
by applicable law; provided, that the Company may not, except as provided
by this Section 6.5, modify, or propose publicly to modify, in a manner
adverse to the Parent, the approval or recommendation of such Board of
Directors of the Merger or this Agreement or approve or recommend an
Acquisition Proposal, or propose publicly to approve or recommend an
Acquisition Proposal.
Section 6.6. Stockholder Litigation. The Company shall give the Parent
the opportunity to participate in the defense or settlement of any stockholder
Litigation against the Company and its directors relating to the transactions
contemplated by this Agreement or the Merger; provided, however, that no such
settlement shall be agreed to without the Parent's consent, which consent will
not be unreasonably withheld; and, provided, further, that to the extent Parent
seeks Company's cooperation in the defense or settlement of such Litigation,
Parent shall enter into an appropriate joint defense agreement with the Company.
Section 6.7. Indemnification.
(a) It is understood and agreed that all rights to indemnification by
the Company now existing in favor of the Indemnified Parties shall survive
the Merger and the Parent shall (i) cause the Surviving Corporation to
continue in full force and effect for a period of at least six years from
the Effective Time and (ii) perform, or cause the Surviving Corporation to
perform, in a timely manner, the Surviving Corporation's obligation with
respect thereto. The Parent and the Buyer agree that any claims for
indemnification hereunder as to which they have received written notice
prior to the sixth anniversary of the Effective Time shall survive, whether
or not such claims shall have been finally adjudicated or settled.
(b) The Parent shall cause the Surviving Corporation to, and the
Surviving Corporation shall, maintain in effect for six years from the
Effective Time, if available, the D&O Insurance (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be
required to expend pursuant to this Section 6.7(b) more than an amount per
year equal to two hundred percent (200%) of current annual premiums paid by
the Company for such insurance. In the event that, but for the proviso to
the immediately preceding sentence, the Surviving Corporation would be
required to expend more than two hundred percent (200%) of current annual
premiums, the Surviving Corporation shall obtain the maximum amount of such
insurance obtainable by payment of annual premiums equal to two hundred
percent (200%) of current annual premiums. If the Surviving Corporation
elects to reduce the amount of insurance coverage pursuant to the preceding
sentence, it will furnish to the officers and directors currently covered
by such D&O Insurance reasonable notice of such reduction in coverage and
shall, to the extent additional coverage is available, afford such Persons
the opportunity to pay such additional premiums as may be necessary to
maintain the existing level of D&O Insurance coverage. Parent shall cause
the Surviving Corporation to honor and perform the obligations of the
Company with respect to rights of indemnification existing in favor of the
Indemnified Parties pursuant to indemnification agreements and employment
agreements with the Company's directors and officers existing on or before
the Effective Time and which are set forth on the Company Disclosure
Schedule.
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(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any Person, then, and in each such case, proper provision shall
be made so that the successors and assigns of the Surviving Corporation
shall assume the obligations set forth in this Section 6.7.
(d) From and after the Effective Time, Parent shall unconditionally
guarantee the timely performance of all obligations of the Surviving
Corporation under this Section 6.7.
(e) The provisions of this Section 6.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 6.8. Public Announcements. The Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the Merger and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by Law or any listing agreement with a
national securities exchange or trading system to which the Parent or the
Company is a party.
Section 6.9. Acquisition Proposals. The Company shall not, nor shall it
authorize or permit any of the Subsidiaries or Representatives of the Company
to, directly or indirectly through another Person, (a) solicit, initiate or
encourage (including by way of furnishing information) or otherwise take any
action to facilitate, the making of any proposal that constitutes an Acquisition
Proposal or (b) participate in any discussions or negotiations regarding, any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that if, at any time prior to the date
that is the earlier of the 60th day following the date of execution of this
Agreement and the date of the Stockholders' Meeting, the Board of Directors of
the Company, in exercise of its fiduciary duties, reasonably determines in good
faith, based upon the written advice of independent outside legal counsel, that
the Board of Directors of the Company is required to do so to comply with its
fiduciary duties to the Company Stockholders under applicable Law, the Board of
Directors of the Company and its Representatives may, in response to a Superior
Proposal that did not result in a breach of this Section 6.9, and subject to
providing contemporaneous notice of its decision to take such action to the
Parent, (i) furnish information with respect to the Company and the Subsidiaries
to any Person making a Superior Proposal pursuant to a customary confidentiality
agreement and (ii) participate in discussions or negotiations regarding such
Superior Proposal. The Company shall provide immediate oral and written notice
to the Parent of (a) the receipt of any such Acquisition Proposal or any inquiry
which could reasonably be expected to lead to any Acquisition Proposal, (b) the
material terms and conditions of such Acquisition Proposal or inquiry, and (c)
the identity of such Person or entity making any such Acquisition Proposal or
inquiry. The Company shall continue to keep the Parent informed of the status
and details of any such Acquisition Proposal or inquiry, as well as any related
discussions or negotiations permitted under this Section 6.9.
Section 6.10. Proxy Statement/Prospectus. As promptly as practicable
following the date hereof, the Parent and the Company shall jointly prepare and
file with the SEC preliminary proxy materials and any amendments or supplements
thereof which shall constitute the proxy statement/prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Proxy
Statement/Prospectus") and the Parent shall prepare and file with the SEC the
Form S-4 and take any action required to be taken under applicable state
securities laws with respect to the issuance of Parent Class B Common Stock in
the Merger in which the Proxy Statement/Prospectus will be included as a
prospectus. The Form S-4 and the Proxy Statement/Prospectus shall comply as to
form in all material respects with the applicable provisions of the Securities
Act and the Exchange Act. Each of the Parent and the Company shall use all
reasonable efforts to have the Form S-4 declared effective under the Securities
Act as promptly as practicable after filing it with the SEC and to keep the Form
S-4 effective as long as is necessary to consummate the Merger. The Parties
shall promptly provide copies, consult with each other and prepare written
responses with respect to any written comments received from the SEC with
respect to the Form S-4 and the Proxy Statement/Prospectus and promptly advise
the other party of any oral comments received from the SEC. The Parent agrees
that none of the information supplied or to be supplied by the Parent for
inclusion or incorporation by reference in the
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Proxy Statement/Prospectus and each amendment or supplement thereto, at the time
of mailing thereof and at the time of the Stockholders' Meeting, will contain an
untrue statement of a material fact or 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. The Company agrees
that none of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement/Prospectus and
each amendment or supplement thereto, at the time of mailing thereof and at the
time of the Stockholders' Meeting, will contain an untrue statement of a
material fact or 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. For purposes of the foregoing, it is
understood and agreed that information concerning or related to the Parent will
be deemed to have been supplied by the Parent and information concerning or
related to the Company and the Stockholders' Meeting shall be deemed to have
been supplied by the Company.
Section 6.11. Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each party
hereto will use its commercially reasonable efforts to (i) take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate the
Merger and the other transactions contemplated by this Agreement as soon as
practicable after the date hereof and (ii) obtain and maintain all
approvals, consents, waivers, registrations, permits, authorizations,
clearances and other confirmations required to be obtained from any third
party and/or any Governmental Entity that are necessary, proper or
advisable to consummate the Merger and the transactions contemplated hereby
(each a "Necessary Approval"). In furtherance and not in limitation of the
foregoing, each party hereto agrees to make as promptly as practicable, to
the extent it has not already done so, (i) an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby (which filing shall be made in any event
within five Business Days of the date hereof), and (ii) all necessary
filings with other Governmental Entities relating to the Merger, and, in
each case, to supply as promptly as practicable any additional information
and documentary material that may be requested pursuant to the such laws
and to use its commercially reasonable efforts to cause the expiration or
termination of the applicable waiting periods under the HSR Act and the
receipt of Necessary Approvals under such other laws as soon as
practicable. Notwithstanding the foregoing, nothing in this Section 6.11
shall require, or be deemed to require, the Parent to agree to or effect
any divestiture (including divestitures of assets of the Parent or the
Company) or take any other action which would reasonably be expected to
impair the Parent's ability to achieve in any material respect the overall
benefits expected, as of the date hereof, to be realized from the
consummation of the Merger.
(b) Each of the Parent and the Company shall, in connection with the
efforts referenced in Section 6.11(a) to obtain all Necessary Approvals,
use its commercially reasonable efforts to (i) cooperate in all respects
with each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any
proceeding initiated by a private party, (ii) promptly inform the other
party of any communication received by such party from, or given by such
party to, the FTC or any other Governmental Entity and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communications given
by it to the FTC or any such other Governmental Entity or, in connection
with any proceeding by a private party, with any other Person.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.11(a) and 6.11(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party,
is instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law (as
hereinafter defined), or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated
or enforced by a Governmental Entity which would make the Merger or the
transactions contemplated hereby illegal or would otherwise prohibit or
materially impair or delay the consummation of the Merger
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or the transactions contemplated hereby, each of the Parent and the Company
shall cooperate in all respects with each other and use its respective
commercially reasonable efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other action or order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the Merger or the transactions contemplated by
this Agreement and to have such statute, rule, regulation, executive order,
decree, injunction or administrative order repealed, rescinded or made
inapplicable. Notwithstanding any provision of this Agreement to the
contrary, neither the Parent nor the Surviving Corporation shall be
required under the terms of this Agreement to dispose of or hold separate
all or any portion of the businesses or assets of the Parent or any of its
subsidiaries or of the Company or any Subsidiary in order to remedy or
otherwise address the concerns (whether or not formally expressed) of any
Governmental Entity under the HSR Act or any other antitrust statute or
regulation.
(d) In connection with, and without limiting the foregoing, the
Company shall (i) take all actions necessary to ensure that no antitakeover
statute or similar statute or regulation is or becomes operative with
respect to this Agreement, the Merger, the Option Agreements or any other
transactions contemplated by this Agreement and (ii) if any antitakeover
statute or similar statute or regulation of any jurisdiction is or becomes
operative with respect to this Agreement, the Merger, the Option Agreements
or any other transaction contemplated by this Agreement, take all actions
necessary to ensure that this Agreement, the Merger and any other
transactions contemplated by this Agreement and the Option Agreements may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and the Option Agreements and otherwise to minimize the effect of
such statute or regulation on the Merger and the other transactions
contemplated by this Agreement.
(e) Each party hereto agrees to consider efficient integration of
business operations. Each party hereto further agrees to cooperate with
each other in connection with efficiently integrating the business
operations.
Section 6.12. NYSE Listing. The Parent will use commercially reasonable
efforts to cause to be approved for listing on the NYSE, subject to official
notice of issuance, a sufficient number of shares of Parent Class B Common Stock
to be issued in the Merger.
Section 6.13. Tax Treatment.
(a) Each of the Parent and the Company and their respective
subsidiaries shall use reasonable efforts to cause the Merger to qualify as
a "reorganization" under the provisions of Section 368(a) of the Code and
to obtain the opinion of counsel referred to in Section 7.1(f), including
the execution of the letters of representation containing representations
that are customarily given in similar merger transactions, updated as
necessary. The Company and the Parent (and their subsidiaries) shall treat
the Parent Class B Common Stock received in the Merger by Company
Stockholders as property permitted to be received by Section 354 of the
Code without the recognition of gain. Each of the Company and the Parent
covenants and agrees to, and agrees to cause its affiliates to, vigorously
and in good faith defend all challenges to the treatment of the
reorganization as described in this Section 6.13. Each of the Company and
the Parent agrees that if it becomes aware of any such fact or circumstance
that is reasonably likely to prevent the Merger from qualifying as a
reorganization described in Section 368(a) of the Code, it will promptly
notify the other party in writing.
(b) The Parent, in its sole discretion, may make an election under
Section 338 of the Code, in which case the Company will cooperate in
facilitating such election, and shall grant all consents, waivers and
authorizations necessary to effect such election by the Parent.
(c) The Company and the Subsidiaries will not waive any statute of
limitations in respect of Taxes or agree to any extension of time beyond 90
days with respect to a Tax assessment or deficiency without the consent of
the Parent.
Section 6.14. Undertakings of Parent. The Parent shall perform, or cause
to be performed, when due all obligations of the Buyer and, following the
Closing, the Surviving Corporation, under this Agreement.
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Section 6.15. Director Resignations. The Company shall cause to be
delivered to the Parent resignations of all the directors of the Company and the
Subsidiaries to be effective upon the consummation of the Merger. The Company
shall cause such directors, prior to resignation, to appoint new directors
nominated by the Parent to fill such vacancies.
Section 6.16. Company Affiliates. The Company shall deliver to the Parent
a letter identifying all Persons who are, at the time the Merger is submitted to
a vote of the stockholders of the Company, Affiliates of the Company for
purposes of Rule 145 under the Securities Act. The Company shall use its
commercially reasonable efforts to cause each Person who is identified as a
possible Affiliate in such letter to deliver to the Parent on or prior to the
Effective Time an Affiliate Letter. The Parent shall be entitled to place
legends on any certificates of Parent Class B Common Stock issued to such
possible Affiliates to restrict transfer of such shares.
Section 6.17. Purchase of Company Stock. The Company shall in no way
prohibit the Parent or any of its affiliates from purchasing shares of Company
Stock or entering into option, lock-up, voting or proxy agreements or any other
similar agreements with respect to Company Stock at any time prior to the
consummation of the Merger.
Section 6.18. Rights Plan. The Board of Directors of the Company shall as
promptly as practicable, and in any event prior to 5:00 p.m., California time,
on the third Business Day following the date hereof, adopt the Rights Plan
providing that a Person will become an "Acquiring Person" (as such term is
defined in the Rights Plan) if they become the "Beneficial Owner" (as such term
is defined in the Rights Plan) of at least 15% of Company Common Stock and shall
approve the appropriate resolutions so that (i) neither the Parent nor the Buyer
will become an Acquiring Person as a result of the consummation of the
transactions contemplated herein or in the Option Agreements or the Merger, (ii)
no "Stock Acquisition Date" or "Distribution Date" (as such terms are defined in
the Rights Plan) will occur as a result of this Agreement, the Option Agreements
or the Merger or the consummation of the transactions contemplated herein or in
the Option Agreements and (iii) all outstanding rights to purchase issued and
outstanding Company Common Stock under the Rights Plan will expire at the
Effective Time.
Section 6.19. Employee Matters.
(a) The Company shall (i) take all commercially reasonably actions
necessary to correct any compliance deficiencies identified to the Company
by the Parent with respect to any Company Employee Benefit Plan in a manner
reasonably satisfactory to the Parent and provide evidence reasonably
satisfactory to the Parent of such corrections; (ii) take all appropriate
corporate action to cease, effective upon Closing, all benefit accruals
under and terminate the Fritz Companies, Inc. Salary Investment and
Retirement Plan; (iii) take all appropriate corporate action to terminate,
effective prior to the Closing, the Fritz Companies, Inc. Employee Stock
Purchase Plan ("Company Employee Stock Purchase Plan") and all outstanding
options under such plan; and (iv) take all appropriate action to prevent
any adjustment of stock options under any Company Stock Plan or under the
Company Employee Stock Purchase Plan in anticipation of the transactions
contemplated by this Agreement (other than as expressly described in this
Agreement).
(b) The Company will provide to the Parent as promptly as practicable
after the date hereof (and in any event, for individuals employed in the
United States within 30 days hereof and for all other individuals within 45
days hereof) a true and complete list of all of the (a) officers, (b)
employees (whether full-time, part-time or otherwise) and (c) consultants
or independent contractors of each of the Company and the Subsidiaries, in
each case, specifying, by individual, their position, annual salary, hourly
wages, consulting or other independent contractor fees, date of birth, date
of hire, social security number, home address, work location, length of
service, hours of service, tax withholding history for the current calendar
year, other amounts paid, benefits provided and any other information
reasonably requested by the Parent, together with an appropriate notation
next to the name of any officer or other employee on such list who is
subject to any written employment agreement or any other written term sheet
or other document describing the terms and/or conditions of employment of
such employee or of
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the rendering of services by such consultant or independent contractor and
any other information reasonably requested by the Parent.
(c) The Parent and the Company shall take such action as is necessary,
including action under the relevant Company Stock Plan, to effect the
provisions of Section 2.5 hereof.
(d) The Parent shall (i) provide those employees of the Company who
become employees of the Parent (or a business unit of the Parent) 401(k) ,
medical, group life insurance and accidental death and dismemberment
benefits on such terms and conditions as are substantially similar and not
substantially less favorable in the aggregate to similarly situated
employees of the business unit of the Parent which employs such employees
and (ii) recognize prior service with the Company for such employees for
the purpose of eligibility to participate in the vacation and other paid
time off, flexible benefits (including medical, dental, life insurance and
disability) and 401(k) benefit plans provided to similarly situated
employees of such business unit.
(e) The Company will provide to the Parent as promptly as practicable
after the date hereof (and in any event within 30 days hereof) a true and
complete list of each employee who as of the date hereof is eligible to
request FMLA leave and the amount of FMLA leave utilized by each such
employee during the current leave year; each employee who prior to the date
hereof has requested FMLA leave to commence on or after the date hereof ,
his or her job title and description, salary and benefits; a description of
the leave requested; and a copy of all notices provided to such employee
regarding that leave.
(f) The Company will provide to the Parent as promptly as practicable
after the date hereof (and in any event within 14 days hereof) a true and
complete list of any information that would have been disclosed in the
Company Disclosure Letter if the representations in Section 4.17 (h) , (i)
, (k) , (l) and (o) had been drafted so as to request information with
respect to any matter that "has been filed or is pending or threatened"
within the United States during 1999 and 2000.
(g) The Company will provide to the Parent as promptly as practicable
after the date hereof (and in any event within 45 days thereof) (i) a
complete listing on a country by country basis of each Company Benefit Plan
that provides benefits to employees, former employees, directors, officers,
consultants, independent contractors, contingent workers or leased
employees of the Company or any Subsidiary (or the dependents of any of
them) whose principal workplace is outside the United States ("Foreign
Employees"), (ii) with respect to each plan described in (i), the
information described in Section 4.16(b) of this Agreement and (iii) with
respect to each workplace or operation of the Company or a Subsidiary that
is located outside the United States (a "Foreign Workplace"), updated
disclosures under Section 4.17 regarding such Foreign Workplace, any
Foreign Employee or the dependents of such Foreign Employee. The Company
shall take all appropriate corporate actions necessary to provide the
information requested in (i) -- (iii) above, shall correct any compliance
or funding deficiencies identified to the Company by Parent with respect to
any Company Benefit Plan that provides benefits to Foreign Employees or
their dependents and shall provide evidence of such corrections reasonably
satisfactory to Parent before the Closing.
Section 6.20. Customer Visits. Between the date hereof and the Closing,
and subject to such reasonable limitations as the Company shall deem reasonable
and necessary, the Company shall permit, and shall cause each Subsidiary to
permit, the Parent to discuss and meet, and shall cooperate in such discussions
and meetings, with any customer of the Company and the Subsidiaries that the
Parent so requests. A senior executive of the Company, reasonably satisfactory
to the Parent, shall accompany the Parent's representative to such meetings and
shall participate with the Parent's representative in any such discussions.
Furthermore, the Company shall cooperate with the Parent in the preparation of a
presentation to such customers with respect to the Merger.
Section 6.21. Insurance. The Company shall use its commercially
reasonable efforts to purchase and maintain the insurance specified in Schedule
6.21 of the Company Disclosure Schedule from a nationally
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recognized carrier to insure against the potential liability set forth on
Schedule 6.21 of the Company Disclosure Schedule.
ARTICLE VII
CONDITIONS
Section 7.1. Conditions to the Obligation of Each Party. The respective
obligations of the Parent, the Buyer and the Company to effect the Merger are
subject to the satisfaction of the following conditions, unless waived in
writing by all parties:
(a) This Agreement and the Merger shall have been approved and adopted
by the Required Vote.
(b) All consents, authorizations, orders and approvals of (or filings
or registrations with) any Governmental Entity required in connection with
the execution, delivery and performance of this Agreement, the failure to
obtain which would prevent the consummation of the Merger or have,
individually or in the aggregate, a Company Material Adverse Effect or
Parent Material Adverse Effect, shall have been obtained without the
imposition of any condition (i) having, individually or in the aggregate, a
Company Material Adverse Effect or Parent Material Adverse Effect or (ii)
requiring the Parent or the Surviving Corporation to effect, or agree to
effect, any divestiture (including divestitures of assets of the Parent or
the Company) or to take any other action which would reasonably be expected
to impair the Parent's ability to achieve in any material respect the
overall benefits expected, as of the date hereof, to be realized from the
consummation of the Merger.
(c) All authorizations, consents, waivers and approvals from parties
to contracts or other agreements to which any of the Company or the Parent
(or their respective subsidiaries) is a party, or by which either is bound,
as may be required to be obtained by them in connection with the
performance of this Agreement, the failure to obtain which would prevent
the consummation of the Merger or have, individually or in the aggregate, a
Company Material Adverse Effect or Parent Material Adverse Effect, shall
have been obtained without the imposition of any condition (i) having,
individually or in the aggregate, a Company Material Adverse Effect or
Parent Material Adverse Effect or (ii) requiring the Parent or the
Surviving Corporation to effect, or agree to effect, any divestiture
(including divestitures of assets of the Parent or the Company) or to take
any other action which would reasonably be expected to impair the Parent's
ability to achieve in any material respect the overall benefits expected,
as of the date hereof, to be realized from the consummation of the Merger.
(d) Early termination shall have been granted or applicable waiting
periods shall have expired under the HSR Act and any other Regulatory Law
that imposes such waiting period.
(e) No Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making illegal, materially
restricting or in any way preventing or prohibiting the Merger.
(f) The Parent and the Company each shall have obtained the Tax
Opinion.
(g) The shares of Parent Class B Common Stock to be issued pursuant to
this Agreement shall have been authorized for listing on the NYSE, subject
to official notice of issuance.
(h) The Form S-4 shall have been declared effective by the SEC under
the Securities Act and no stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
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Section 7.2. Conditions to Obligations of Parent and Buyer to Effect the
Merger. The obligations of the Parent and the Buyer to effect the Merger are
further subject to satisfaction or waiver at or prior to the Effective Time of
the following conditions:
(a) (i) The representations and warranties of the Company in this
Agreement that are qualified by Company Material Adverse Effect shall be
true and correct as so qualified in all respects as of the date of this
Agreement and as of the Effective Time, and (ii) the representations and
warranties of the Company in this Agreement that are not qualified by
Company Material Adverse Effect shall be true and correct in all respects
as of the date of this Agreement and as of the Effective Time, except in
the case of this clause (ii), where the failure of such representations and
warranties to be so true and correct would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) The Company shall have performed in all material respects all
covenants and agreements required to be performed by it under this
Agreement at or prior to the Closing.
(c) The Company shall furnish the Parent with a certificate of its
appropriate officers as to compliance with the conditions set forth in
Sections 7.2(a) and (b).
(d) The Parent shall have received an Affiliate Letter from each
Affiliate in accordance with Section 6.16.
(e) No suit, investigation, action or other proceeding shall be
overtly threatened or pending against the Parent, the Company or any
Subsidiary before any Governmental Entity which (i) would result in the
restraint or prohibition of any such party, or the obtaining of damages or
other relief from any such party, in connection with this Agreement or the
consummation of the transactions contemplated hereby or thereby which would
in any such case, individually or in the aggregate, have a Parent Material
Adverse Effect or a Company Material Adverse Effect, or (ii) any orders
restricting the Company or any Subsidiary or the Parent from conducting its
business as now being conducted which, individually or in the aggregate,
would have a Company Material Adverse Effect or a Parent Material Adverse
Effect.
(f) There shall not have occurred any change, condition, event or
development that has resulted in a Company Material Adverse Effect.
Section 7.3. Conditions to Obligations of Company to Effect the
Merger. The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) (i) The representations and warranties of the Parent and the Buyer
in this Agreement that are qualified by Parent Material Adverse Effect
shall be true and correct as so qualified in all respects as of the date of
this Agreement and as of the Effective Time, and (ii) the representations
and warranties of the Parent and the Buyer in this Agreement that are not
qualified by Parent Material Adverse Effect shall be true and correct in
all respects as of the date of this Agreement and as of the Effective Time,
except in the case of this clause (ii), where the failure of such
representations and warranties to be so true and correct would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b) The Parent and the Buyer each shall have performed in all material
respects all covenants and agreements required to be performed by them
under this Agreement at or prior to the Closing.
(c) The Parent shall furnish the Company with a certificate of its
appropriate officers as to compliance with the conditions set forth in
Sections 7.3(a) and (b).
(d) There shall not have occurred any change, condition, event or
development that has resulted in, or would reasonably be expected to result
in, a Parent Material Adverse Effect.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by the Company
Stockholders:
(a) By mutual written consent duly authorized by the Boards of
Directors of the Parent and the Company;
(b) By any of the Parent, the Buyer or the Company if any court of
competent jurisdiction or other Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable; provided
however, that the party terminating this Agreement pursuant to this Section
8.1(b) shall have used all commercially reasonable efforts to have such
order, decree, ruling or action vacated;
(c) By any of the Parent, the Buyer or the Company if the Merger shall
not have been consummated on or before November 30, 2001; provided,
however, that the right to terminate this Agreement under this Section
8.1(c) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the primary cause of, or resulted
in, the failure to consummate the Merger on or before such date;
(d) By the Parent if the Board of Directors of the Company takes any
of the actions set forth in the second sentence of Section 6.5(a);
(e) By any of the Company, the Parent or the Buyer, if the approval of
the Company Stockholders required for consummation of the Merger shall not
have been obtained by reason of the failure to obtain the Required Vote at
the Stockholders' Meeting or at any adjournment or postponement thereof;
(f) By the Parent or the Buyer, if (i) any of the conditions set forth
in Section 7.2 shall have become incapable of fulfillment and shall not
have been waived by the Parent and the Buyer, (ii) the Company shall breach
in any material respect any of its covenants or other obligations hereunder
or (iii) the Company shall breach (A) the representations or warranties
hereunder that are qualified by Company Material Adverse Effect or (B) the
representations and warranties hereunder that are not qualified by Company
Material Adverse Effect where, for purposes of this clause (B), such
breach, individually or in the aggregate, has a Company Material Adverse
Effect. The foregoing notwithstanding, if in the case of clauses (ii) or
(iii), the breach giving rise to the right of termination is capable of
being cured, neither Parent nor Buyer shall exercise its right of
termination with respect to such breach unless within ten days after
written notice of such breach to the Company from the Parent, such breach
shall not have been cured in all material respects or waived by the Parent
or the Buyer and the Company shall not have provided reasonable assurance
to the Parent and the Buyer that such breach will be cured in all material
respects on or before the Effective Time; or
(g) By the Company, if (i) any of the conditions set forth in Section
7.3 shall have become incapable of fulfillment and shall not have been
waived by the Company, (ii) the Parent or the Buyer shall breach in any
material respect any of its covenants or other obligations hereunder or
(iii) the Parent or the Buyer shall breach (A) the representations or
warranties hereunder that are qualified by Parent Material Adverse Effect
or (B) the representations and warranties hereunder that are not qualified
by Parent Material Adverse Effect where, for purposes of this clause (B),
such breach, individually or in the aggregate, has a Parent Material
Adverse Effect. The foregoing notwithstanding, if in the case of clauses
(ii) or (iii), the breach giving rise to the right of termination is
capable of being cured, the Company shall not exercise its right of
termination with respect to such breach unless within ten days after
written notice of such breach to the Parent from the Company, such breach
shall not have been cured in all material respects or waived by the Company
and the Parent or the Buyer, as the case may be, shall not
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have provided reasonable assurance to the Company that such breach will be
cured in all material respects on or before the Effective Time.
Notwithstanding anything else contained in this Agreement, the right to
terminate this Agreement under this Section 8.1 shall not be available to any
party that (i) is in material breach of its obligations hereunder or (ii) whose
failure to fulfill its obligations or to comply with its covenants under this
Agreement has been the cause of, or resulted in, the failure to satisfy any
condition to the obligations of either party hereunder.
Section 8.2. Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 8.1 hereof, this Agreement shall forthwith be terminated and have
no further effect except as specifically provided herein and in Section
9.10 and, except as provided in this Section 8.2 and in Section 9.11, there
shall be no liability on the part of any party hereto, provided that
nothing herein shall relieve any party from liability for any willful
breach hereof.
(b) If the Parent exercises its right to terminate this Agreement
under Section 8.1(d), the Company shall pay to the Parent the Termination
Fee, payable in same-day funds, as liquidated damages and not as a penalty
to reimburse the Parent for its time, expense and lost opportunity costs of
pursuing the Merger, upon entering into any agreement relating to such
Acquisition Proposal.
(c) If within nine months after termination of this Agreement, the
Company shall enter into any agreement relating to, or consummate, an
Acquisition Proposal with a Person other than the Parent or the Buyer, then
immediately upon entering into such agreement, the Company shall pay to the
Parent upon demand the Termination Fee, payable in same-day funds, as
liquidated damages and not as a penalty, to reimburse the Parent for its
time, expense and lost opportunity costs of pursuing the Merger; provided
that no such amount shall be payable if the Termination Fee shall have
become payable or have been paid in accordance with Section 8.2(b) of this
Agreement or if this Agreement shall have been terminated by the Company in
accordance with clause (ii) of Section 8.1(g).
(d) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to the Parent any amounts
due under this Section 8.2, the Company shall pay the costs and expenses
(including reasonable legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee or
obligation at the publicly announced prime rate of Citibank, N.A. in effect
from time to time from the date such fee or obligation was required to be
paid.
Section 8.3. Amendments. This Agreement may not be amended except by
action taken or authorized by the board of directors of each of the parties
hereto set forth in an instrument in writing signed on behalf of each of the
parties hereto; provided, however, that after approval of the Merger by the
Company Stockholders, no amendment may be made without the further approval of
the Company Stockholders if such further approval is required by Law or the
rules of any relevant stock exchange or other trading system.
Section 8.4. Waiver. At any time prior to the Effective Time, whether
before or after the Stockholders' Meeting, any party hereto, by action taken by
its board of directors, may (i) extend the time for the performance of any of
the covenants, obligations or other acts of any other party hereto or (ii) waive
any inaccuracy of any representations or warranties or compliance with any of
the agreements, covenants or conditions of any other party or with any
conditions to its own obligations. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party by its duly authorized
officer. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
The waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
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ARTICLE IX
GENERAL PROVISIONS
Section 9.1. No Third Party Beneficiaries. Other than the provisions of
Sections 6.7 hereof, nothing in this Agreement shall confer any rights or
remedies upon any Person other than the parties hereto.
Section 9.2. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire Agreement among the parties with respect to the
subject matter hereof and supersedes any prior understandings, agreements or
representations by or among the parties, written or oral, with respect to the
subject matter hereof.
Section 9.3. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors. No party may assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other parties; provided, however, that the Buyer may freely assign its rights to
another wholly owned subsidiary of the Parent without such prior written
approval but no such assignment shall relieve the Buyer of any of its
obligations hereunder.
Section 9.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 9.5. Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law thereof.
Section 9.7. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
Section 9.8. Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
Section 9.9. Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 9.10. Non-Survival of Representations and Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that (i) the agreements set
forth in Articles II and IX and Sections 6.11, 6.6 and 6.7 shall survive the
Effective Time and (ii) the agreements set forth in Sections 6.6 and 8.2 and in
Article IX shall survive the termination of this Agreement.
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Section 9.11. Fees and Expenses. Subject to Sections 8.2(b), (c) and (d),
each party hereto shall pay its own costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby, except that costs
and expenses incurred in connection with the filing, printing and mailing of the
Form S-4 and the Proxy Statement/Prospectus (including SEC filing fees) and the
filing fees for the premerger notification and report forms under the HSR Act
shall be shared equally by the Parent and the Company.
Section 9.12. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in Person, by UPS Next
Day Air or 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 in a notice given in accordance
with this Section 9.12:
If to the Parent or the Buyer
United Parcel Service, Inc.
55 Glenlake Parkway, N.E.
Atlanta, Georgia 30328
Attention: Thomas W. Delbrook
with a copy to:
United Parcel Service, Inc.
55 Glenlake Parkway, N.E.
Atlanta, Georgia 30328
Attention: Cathy A. Harper
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attention: Bruce N. Hawthorne, Esq.
If to the Company:
Fritz Companies, Inc.
706 Mission Street
San Francisco, California 94103
Attention: Lynn C. Fritz
with a copy to:
Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, California 94111
Attention: John F. Seegal, Esq.
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IN WITNESS WHEREOF, the Company, the Parent and the Buyer have caused this
Agreement to be executed as of the date first written above by their respective
duly authorized officers.
FRITZ COMPANIES, INC.
By: /s/ LYNN C. FRITZ
------------------------------------
Name: Lynn C. Fritz
Title: President
UNITED PARCEL SERVICE, INC.
By: /s/ THOMAS W. DELBROOK
------------------------------------
Name: Thomas W. Delbrook
Title: Assistant Treasurer
VND MERGER SUB, INC.
By: /s/ THOMAS W. DELBROOK
------------------------------------
Name: Thomas W. Delbrook
Title: Assistant Treasurer
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ANNEX B
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of January 10, 2001 (the "Agreement"),
by and between Fritz Companies, Inc., a Delaware corporation ("Issuer"), and
United Parcel Service, Inc., a Delaware corporation ("Grantee").
WITNESSETH THAT:
WHEREAS, Issuer and Grantee have entered into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement"; defined terms used but not defined herein have the
meanings set forth in the Merger Agreement), providing for, among other things,
the merger of a subsidiary of Grantee with and into Issuer, with Issuer being
the surviving corporation in the Merger as a direct and wholly owned subsidiary
of Grantee; and
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer
has agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 3,707,609 (as adjusted as set forth herein) shares (the "Option Shares")
of Common Stock, par value $.01 per share ("Issuer Common Stock"), of Issuer at
a purchase price per Option Share (the "Purchase Price") equal to the lower of
(1) 0.2 multiplied by the average (rounded to the nearest 1/10,000) of the
volume weighted averages (rounded to the nearest 1/10,000) of the trading prices
of Grantee Class B common stock, par value $0.01 per share, on the New York
Stock Exchange, as reported by Bloomberg Financial Markets (or such other source
as the parties shall agree in writing), for the 10 trading days immediately
preceding the Notice Date (as defined below) and (2) the average closing price
per share of Issuer Common Stock (as determined under Section 6(c)) for the 10
trading day period ending on the date that is two trading days prior to the
first date on which an Acquisition Proposal shall have been publicly made or
shall have otherwise become publicly known or any person shall have publicly
announced an intention to make an Acquisition Proposal (as adjusted as set forth
herein).
2. Exercise of Option. (a) Grantee may exercise the Option, in whole but
not in part, at any time, subject to the provisions of Section 2(c), after the
occurrence of any event as a result of which Grantee is entitled to receive the
Termination Fee pursuant to Section 8.2(b) or (c) of the Merger Agreement (a
"Purchase Event"); provided, however, that (i) except as provided in the last
sentence of this Section 2(a), the Option will terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time, (B) nine
months after the first occurrence of a Purchase Event and (C) termination of the
Merger Agreement in accordance with its terms prior to the occurrence of a
Purchase Event, unless, in the case of clause (C), Grantee may receive a
Termination Fee in connection with or following such termination upon the
occurrence of certain events, in which case the Option will not terminate until
the later of (x) nine months following the time such Termination Fee becomes
payable and (y) the expiration of the period in which Grantee has such right to
receive a Termination Fee, and (ii) any purchase of Option Shares upon exercise
of the Option will be subject to compliance with the HSR Act and the obtaining
or making of any other consents, approvals, orders, notifications, filings or
authorizations, the failure of which to have obtained or made would have the
effect of making the issuance of Option Shares to Grantee illegal (the
"Regulatory Approvals"). Notwithstanding the termination of the Option, Grantee
will be entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option and such
termination of the Option will not affect any rights hereunder which by their
terms do not terminate or expire prior to or as of such date. Issuer agrees to
use its commercially reasonable efforts to obtain all necessary Regulatory
Approvals in order to permit the purchase of the Option Shares.
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(b) If Grantee is entitled to and wishes to exercise the Option, it
will send to Issuer a written notice (an "Exercise Notice"; the date of
which being herein referred to as the "Notice Date") to that effect which
Exercise Notice also specifies the number of Option Shares, if any, Grantee
wishes to purchase pursuant to this Section 2(b), the number of Option
Shares, if any, with respect to which Grantee wishes to exercise its
Cash-Out Right (as defined herein) pursuant to Section 6(c), the
denominations of the certificate or certificates evidencing the Option
Shares which Grantee wishes to purchase pursuant to this Section 2(b) and a
date (the "Option Closing Date"), subject to the following sentence, not
earlier than seven trading days nor later than 20 trading days from the
Notice Date for the closing of such purchase (the "Option Closing"). The
Option Closing will be at such location and time in Atlanta, Georgia as the
Grantee shall specify on the Option Closing Date or at such later date as
may be necessary as provided in Section 2(c).
(c) Notwithstanding anything to the contrary contained herein, any
exercise of the Option and purchase of Option Shares shall be subject to
compliance with applicable laws and regulations, which may prohibit the
purchase of all the Option Shares specified in the Exercise Notice without
first obtaining or making certain Regulatory Approvals. In such event, if
the Option is otherwise exercisable and Grantee wishes to exercise the
Option, the Option may be exercised in accordance with Section 2(b) and
Grantee shall acquire the maximum number of Option Shares specified in the
Exercise Notice that Grantee is then permitted to acquire under the
applicable laws and regulations, and if Grantee thereafter obtains the
Regulatory Approvals to acquire the remaining balance of the Option Shares
specified in the Exercise Notice, then Grantee shall be entitled to acquire
such remaining balance.
If (i) Grantee receives official notice that a Regulatory Approval
required for the purchase of any Option Shares will not be issued or
granted or (ii) such Regulatory Approval has not been issued or granted
within six months of the date of the Exercise Notice, Grantee shall have
the right to exercise its Cash-Out Right pursuant to Section 6(c) with
respect to the Option Shares for which such Regulatory Approval will not be
issued or granted or has not been issued or granted.
3. Payment and Delivery of Certificates. (a) At the Option Closing,
Grantee will pay to Issuer in immediately available funds by wire transfer to a
bank account designated in writing by Issuer an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased at the Option
Closing plus the amount of any transfer, stamp or other similar taxes or charges
imposed in connection therewith.
(b) At the Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer will
deliver to Grantee a certificate or certificates representing the Option
Shares to be purchased at the Option Closing, which Option Shares will be
free and clear of all liens, claims, charges and encumbrances of any kind
whatsoever, except for any encumbrances arising hereunder.
(c) Certificates for the Option Shares delivered at the Option Closing
will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF
JANUARY , 2001, A COPY OF WHICH MAY BE OBTAINED FROM THE
SECRETARY OF FRITZ COMPANIES, INC. AT ITS PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising
under the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, such Option Shares have
been sold in reliance on and in accordance with Rule 144 under the
Securities Act or Grantee has delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel in form and substance
reasonably
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satisfactory to Issuer and its counsel, to the effect that such legend is
not required for purposes of the Securities Act and (ii) the reference to
restrictions pursuant to this Agreement in the above legend will be removed
by delivery of substitute certificate(s) without such reference if the
Option Shares evidenced by certificate(s) containing such reference have
been sold or transferred in compliance with the provisions of this
Agreement under circumstances that do not require the retention of such
reference.
4. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Authorized Stock. Issuer has taken all necessary corporate and
other action to authorize and reserve and, subject to the expiration or
termination of any required waiting period under the HSR Act, to permit it
to issue, and, at all times from the date hereof until the obligation to
deliver Option Shares upon the exercise of the Option terminates, shall
have reserved for issuance, upon exercise of the Option, shares of Issuer
Common Stock necessary for Grantee to exercise the Option, and Issuer will
take all necessary corporate action to authorize and reserve for issuance
all additional shares of Issuer Common Stock or other securities which may
be issued pursuant to Section 6 upon exercise of the Option. The shares of
Issuer Common Stock to be issued upon due exercise of the Option, including
all additional shares of Issuer Common Stock or other securities which may
be issuable upon exercise of the Option or any other securities which may
be issued pursuant to Section 6, upon issuance pursuant hereto, will be
duly and validly issued, fully paid and nonassessable, and will be
delivered free and clear of all liens, claims, charges and encumbrances of
any kind or nature whatsoever, (except for any encumbrances arising
hereunder), including without limitation any preemptive rights of any
stockholder of Issuer.
5. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that any Option Shares or other securities acquired by
Grantee upon exercise of the Option will not be transferred or otherwise
disposed of except in a transaction registered, or exempt from registration,
under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In the event of any
change in Issuer Common Stock by reason of a stock dividend, split-up, merger,
recapitalization, combination, exchange of shares, or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price thereof, will be adjusted appropriately, and proper provision will be made
in the agreements governing such transaction, so that Grantee will receive upon
exercise of the Option the number and class of shares or other securities or
property that Grantee would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event or the record date
therefor, as applicable. Without limiting the parties' relative rights and
obligations under the Merger Agreement, if the number of outstanding shares of
Issuer Common Stock increases or decreases after the date of this Agreement
(other than pursuant to an event described in the first sentence of this Section
6(a)), the number of shares of Issuer Common Stock subject to the Option will be
adjusted so that it equals 10.1% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, if Issuer enters into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer will not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any person,
other than Grantee or one of its subsidiaries, to merge into Issuer and
Issuer will be the continuing or surviving corporation, but in connection
with such merger, the shares of Issuer Common Stock outstanding immediately
prior to the consummation of such merger will be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property, or the shares of Issuer Common Stock outstanding
immediately prior to the consummation of such merger will, after such
merger, represent less than 90% of the outstanding voting securities of the
merged company, or (iii) to sell or otherwise transfer all or substantially
all of its assets to any person, other than Grantee or one of its
subsidiaries, then, and in each such case, the agreement governing such
transaction will make proper provision so that the Option will, upon the
consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option with identical
terms appropriately adjusted to acquire the number and class of shares or
other
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securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised immediately prior to
such consolidation, merger, sale, or transfer, or the record date therefor,
as applicable and make any other necessary adjustments to preserve the full
value of the Option.
(c) If, at any time during the period commencing on a Purchase Event
and ending on the termination of the Option in accordance with Section 2,
Grantee sends to Issuer an Exercise Notice indicating Grantee's election to
exercise its right (the "Cash-Out Right") pursuant to this Section 6(c),
then Issuer shall pay to Grantee, on the Option Closing Date, in exchange
for the cancellation of the Option with respect to such number of Option
Shares as Grantee specifies in the Exercise Notice, an amount in cash equal
to such number of Option Shares multiplied by the difference between (i)
the average closing price, for the 10 trading days commencing on the 12th
trading day immediately preceding the Option Closing Date, per share of
Issuer Common Stock as reported on The New York Stock Exchange, Inc. (or,
if not listed on The New York Stock Exchange, as reported on any other
national securities exchange or national securities quotation system on
which the Issuer Common Stock is listed or quoted, as reported in The Wall
Street Journal (Northeast edition), or, if not reported thereby, any other
authoritative source) (the "Closing Price") and (ii) the Purchase Price.
Notwithstanding the termination of the Option, Grantee will be entitled to
exercise its rights under this Section 6(c) if it has exercised such rights
in accordance with the terms hereof prior to the termination of the Option.
7. Registration Rights. (a) Issuer will, if requested by Grantee in
writing at any time and from time to time within two years of the exercise of
the Option, promptly prepare and file one registration statement under the
Securities Act if such registration is necessary in order to permit the sale or
other disposition of any or all shares or securities that have been acquired by
or are issuable to Grantee upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Grantee, including a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer will use its reasonable best efforts to qualify
such shares or other securities under any applicable state securities laws.
Issuer will use commercially reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor, and to keep such registration statement
effective for such period not in excess of 120 calendar days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of Issuer hereunder to
file a registration statement and to maintain its effectiveness may be suspended
for up to 90 calendar days in the aggregate if the Board of Directors of Issuer
shall have determined that the filing of such registration statement or the
maintenance of its effectiveness would require premature disclosure of material
nonpublic information that would materially and adversely affect Issuer or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of Issuer or any other material transaction involving Issuer. Any
registration statement prepared and filed under this Section 7, and any sale
covered thereby, will be at Issuer's expense except for underwriting discounts
or commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee will provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If, during the time periods referred to in the first sentence of this
Section 7, Issuer effects a registration under the Securities Act of Issuer
Common Stock for its own account or for any other stockholders of Issuer (other
than on Form S-4 or Form S-8, or any successor form), it will allow Grantee the
right to participate in such registration, and such participation will not
affect the obligation of Issuer to effect demand registration statements for
Grantee under this Section 7; provided that, if the managing underwriters of
such offering advise Issuer in writing that in their opinion the number of
shares of Issuer Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering, Issuer will first reduce
the shares requested to be included therein by Grantee before reducing any other
shares intended to be included therein by Issuer. In connection with any
registration pursuant to this Section 7, Issuer and Grantee will provide each
other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification, and contribution in connection with such
registration.
If a requested registration pursuant to this Section 7(a) involves an
underwritten offering, the underwriter or underwriters thereof shall be a
nationally recognized firm or firms selected by Grantee, and reasonably
acceptable to Issuer.
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(b) Notwithstanding Section 7(a), if Issuer receives a written request
(the "Registration Notice") from Grantee requesting that Issuer register
any or all shares or securities that have been acquired by Grantee upon
exercise of the Option (the "Registrable Securities"), Issuer will
thereupon have the option exercisable by written notice delivered to
Grantee within ten trading days after receipt of the Registration Notice,
to purchase all or any part of the Registrable Securities for cash at a
price (the "Section 7b Price") equal to the product of (i) the number of
Registrable Securities so purchased and (ii) the per share average of the
closing sale prices of Issuer Common Stock on The New York Stock Exchange
(or any other national securities exchange or national securities quotation
system on which the shares of Issuer Common Stock are then listed or
quoted) for the twenty trading days immediately preceding the date of the
Registration Notice. Any such purchase of Registrable Securities by Issuer
hereunder will take place at a closing to be held at the principal
executive offices of Issuer or its counsel at any reasonable date and time
designated by Issuer in such notice within ten trading days after delivery
of such notice. At the time of such closing, Issuer shall deliver to
Grantee an amount equal to the Section 7b Price in immediately available
funds as consideration for the purchase of the applicable Registrable
Securities.
8. Quotation. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then quoted on The New York Stock
Exchange (or any other national securities exchange or national securities
quotation system), Issuer, upon the request of Grantee, will promptly file an
application to have the shares of Issuer Common Stock or other securities to be
acquired upon exercise of the Option quoted on The New York Stock Exchange (and
any such other national securities exchange or national securities quotation
system) and will use reasonable efforts to obtain approval of such quotation as
promptly as practicable.
9. Loss or Mutilation. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancelation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered will constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed, or mutilated shall at any time be
enforceable by anyone.
10. Miscellaneous. (a) Expenses. Except as provided in Section 7, each of
the parties hereto will bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own counsel, accountants, investment bankers, experts
and consultants incurred in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby.
(b) Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
(c) Extension; Waiver; Consent. The parties hereto may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations contained herein or in any document
delivered pursuant hereto and (iii) waive compliance with or give a consent
under any of the agreements or conditions contained herein. Any agreement
on the part of a party hereto to any such extension, waiver or consent
shall be valid only if set forth in a written instrument signed on behalf
of such party in its sole discretion. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement,
the Merger Agreement (including the documents and instruments attached
thereto as exhibits or schedules or delivered in connection therewith) and
the Confidentiality Agreement (i) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof, and (ii) are
not intended to and shall not confer upon any Person other than the parties
hereto any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
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(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of conflict of
laws thereof.
(f) Notices. All notices and other communications hereunder shall be
sent in the manner and to the addresses set forth in the Merger Agreement.
(g) Assignment. Neither this Agreement, the Option nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of law or
otherwise), without the prior written consent of the other party and any
attempt to make any such assignment without such consent shall be null and
void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(h) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents
and instruments and take all other actions that may be reasonably necessary
in order to consummate the transactions provided for by such exercise.
(i) Enforcement. The parties agree that irreparable damage would
occur and that the parties would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the
parties will be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or
in equity.
(j) Submission to Jurisdiction; Waivers. Each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any Delaware
state court or any Federal court located in the State of Delaware in the
event any dispute arises out of or under or relates to this Agreement or
any of the transactions contemplated hereby, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring
any action, suit or proceeding arising out of or under or relating to this
Agreement or any of the transactions contemplated hereby, in any court
other than any Delaware state court or any Federal court located in the
State of Delaware and (d) waives any right to trial by jury with respect to
any action, suit or proceeding arising out of or under or relating to this
Agreement or any of the transactions contemplated hereby. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of or
under or relating to this Agreement or any of the transactions contemplated
hereby in any Delaware state court or any Federal court located in the
State of Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
(k) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the fullest extent.
(l) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
(m) Limitation on Profit. (i) Notwithstanding any other provision
hereof, in no event shall the Grantee's Total Profit (as defined herein)
exceed in the aggregate $22.5 million (the "Maximum Amount") and, if it
otherwise would exceed such amount, the Grantee, at its sole election,
shall either: (A) reduce the number of shares of Issuer Common Stock
subject to this Option; (B) deliver to the
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Issuer for cancellation Option Shares (or other securities into which such
Option Shares are converted or exchanged) previously purchased by Grantee;
(C) pay cash to the Issuer; or (D) any combination thereof, so that
Grantee's actually realized Total Profit shall not exceed the Maximum
Amount taking into account the foregoing actions.
(ii) Notwithstanding any other provision hereof, this Option may
not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) which
would exceed the Maximum Amount and, if exercise of the Option otherwise
would result in the Notional Total Profit exceeding such amount,
Grantee, at its discretion, may (in addition to any of the actions
specified in Section 10(m)(i) above) (A) reduce the number of Shares
subject to the Option or (B) increase the Purchase Price for that number
of Option Shares for which the Option is being exercised so that the
Notional Total Profit shall not exceed the Maximum Amount; provided,
that nothing in this sentence shall restrict any exercise of the Option
permitted hereby on any subsequent date.
(iii) As used herein, the term "Total Profit" shall mean (A) the
aggregate amount (before taxes) of the following: (w) any amounts
received by Grantee pursuant to exercise of its Cash-Out Right, plus (x)
any Section 7b Price received by Grantee pursuant to Section 7(b) hereof
with respect to Registrable Securities, less the Grantee's Purchase
Price for such Registrable Securities, plus (y) the net cash amounts or
fair market value of any property received by Grantee pursuant to the
sale of Option Shares (or any other securities into which such Option
Shares are converted or exchanged) to any unaffiliated party, less the
Grantee's Purchase Price for such Option Shares, plus (z) any
Termination Fee paid by Issuer and received by Grantee pursuant to
Section 8.2(b) or (c) of the Merger Agreement, minus (B) the amount of
any cash previously paid by Grantee to Issuer pursuant to this Section
10 plus the value of the Option Shares (or other securities into which
such Option Shares are converted or exchanged) previously delivered by
Grantee to Issuer for cancellation pursuant to this Section 10(m).
(iv) As used herein, the term "Notional Total Profit" with respect
to any number of shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of such
proposal assuming that this Option were exercised on such date for such
number of shares and assuming that such shares, together with all other
Option Shares held by Grantee and its affiliates as of such date, were
sold for cash at the closing market price (less customary brokerage
commissions) for shares of Issuer Common Stock as of the close of
business of the preceding trading day on The New York Stock Exchange (or
any other national securities exchange or national securities quotation
system on which the shares of Issuer Common Stock are then listed or
quoted).
(v) Notwithstanding any other provision of this Agreement, nothing
in this Agreement shall affect the ability of Grantee to receive, nor
relieve Issuer's obligation to pay, any Termination Fee provided for in
Section 8.2(b) or (c) of the Merger Agreement; provided that if and to
the extent the Total Profit received by Grantee would exceed the Maximum
Amount following receipt of such payment, Grantee shall be obligated to
promptly comply with the terms of this Section 10(m).
(vi) For purposes of Section 10(m)(i) and clause (A) of Section
10(m)(iii), the value of any Option Shares (or other securities into
which such Option Shares are converted or exchanged) delivered by
Grantee to Issuer shall be the Closing Price of such Option Shares.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
FRITZ COMPANIES, INC.
By: /s/ LYNN C. FRITZ
------------------------------------
Name: Lynn C. Fritz
Title: President
UNITED PARCEL SERVICE, INC.
By: /s/ THOMAS W. DELBROOK
------------------------------------
Name: Thomas W. Delbrook
Title: Assistant Treasurer
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ANNEX C
FORM OF STOCKHOLDER OPTION AGREEMENT
This STOCKHOLDER OPTION AGREEMENT (this "Agreement"), dated January 10,
2001, by and among United Parcel Service, Inc., a Delaware corporation
("Holder"), and (the "Stockholder").
WITNESSETH THAT:
WHEREAS, the Stockholder owns of record shares of common
stock (the "Common Stock"), $.01 par value, of Fritz Companies, Inc., a Delaware
corporation ("Company") (all of such shares being referred to herein, and giving
effect to Section 14 hereof, as the "Shares"); and
WHEREAS, concurrently herewith Holder, VND Merger Sub, Inc., a Delaware
corporation and wholly owned subsidiary of Holder ("Newco"), and Company are
entering into a Plan and Agreement of Merger (the "Merger Agreement") pursuant
to which Newco would, subject to the terms and conditions set forth therein,
merge with and into Company (the "Merger"); and
WHEREAS, the transaction is expected to be structured as a tax-free
reorganization for shares of Holder capital stock; and
WHEREAS, the Stockholder desires to induce Holder to proceed with the
Merger and enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, Holder's willingness to enter into the Merger Agreement and the
sum of $100, and such other valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Stockholder hereby grants to Holder an irrevocable
and continuing option (the "Option") to purchase all of the Shares owned by him
for a per share price equal to an amount of cash equal to 0.2 multiplied by the
average (rounded to the nearest 1/10,000) of the volume weighted averages
(rounded to the nearest 1/10,000) of the trading prices of Holder Class B common
stock, par value $0.01 per share, on the New York Stock Exchange, as reported by
Bloomberg Financial Markets (or such other source as the parties shall agree in
writing), for the 10 trading days immediately preceding the Notice (as defined
below) (the "Purchase Price"). As additional consideration, Holder shall pay to
the Stockholder, promptly following the sale or other disposition of any Shares
(or any other securities into which such Shares are converted or exchanged)
within 6 months following the Closing (as defined below), any property or cash
amounts received therefor by Holder in excess of the Purchase Price.
2. Exercise of Option. Holder may exercise the Option, in whole but not in
part, at any time following the occurrence of a First Date for Exercise (as
defined below) by delivering a written notice to the Stockholder with a copy to
Bank of America, N.A., (or if Bank of America, N.A. is unwilling or unable to
act upon commercially reasonable terms, any other bank or trust company
reasonably acceptable to Holder and Stockholder), as escrow agent (the "Escrow
Agent") under an Escrow Agreement, to be entered into within five days of the
date hereof upon commercially reasonable terms among Holder, the Stockholder and
the Escrow Agent (the "Escrow Agreement") of its intention to exercise the
Option (the "Notice"), specifying a time, place and date for the closing (the
"Closing"), which shall occur as soon as practicable, but not later than three
(3) business days from the date of the Notice; provided, however, that (a) if
any approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or otherwise shall be required with respect to such
exercise, then the Closing shall be the later of the date specified in the
Notice or the next business day following the date on which such approvals shall
have been obtained, and (b) there shall not be in effect any preliminary or
final injunction or other order issued by any court or governmental,
administrative or regulatory agency or authority or legislative body or
commission prohibiting
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the exercise of the Option pursuant to this Agreement. As used herein, the
"First Date for Exercise" shall mean the earliest to occur of any of the
following events:
(i) any person shall have commenced (as such term is defined in Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), or shall have filed a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to, a tender
offer or exchange offer to purchase any shares of Common Stock such that,
upon consummation of such offer, such person would own or control 20% or
more of the then outstanding Common Stock;
(ii) Company, without having received Holder's prior written consent,
shall (A) have authorized, recommended, proposed or publicly announced an
intention to authorize, recommend or propose, or shall have entered into or
publicly announced an intention to enter into, an agreement with any person
(other than Holder, Newco or any other subsidiary of Holder) to (1) effect
a merger, consolidation, combination, reorganization, share exchange, joint
venture involving an "equity control event" (as defined below) or similar
transaction involving Company, (2) directly or indirectly sell, lease or
otherwise transfer or dispose of, or agree to sell, lease or otherwise
transfer or dispose of, assets of Company or its subsidiaries representing
20% or more of the consolidated assets of Company and its subsidiaries or
(3) directly or indirectly issue, sell or otherwise transfer or dispose of
or agree to issue, sell or otherwise transfer or dispose of (including,
without limitation, by way of merger, consolidation, reorganization, share
exchange, dividend, distribution or any similar transaction) securities
representing 20% or more of the voting power of Company (any of the
foregoing an "Acquisition Transaction"), or (B) directly or indirectly have
otherwise taken any action including, without limitation, responding to, or
entering into discussions or negotiations, in respect of an Acquisition
Transaction or an Acquisition Proposal (as defined in the Merger Agreement)
made by any party other than Holder; provided that such action violates
Section 6.9 of the Merger Agreement;
(iii) any person or group (as such term is defined under the Exchange
Act) shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) or the right to acquire beneficial
ownership of, or any group shall have been formed which beneficially owns
or has the right to acquire beneficial ownership of, 15% or more of the
then outstanding Common Stock (other than any person or group that, at the
date hereof, beneficially owns or has the right to acquire beneficial
ownership of 15% or more of the outstanding shares of Common Stock) (an
"equity control event"); or
(iv) any person other than Holder shall have made an Acquisition
Proposal to Company and such proposal shall have been publicly announced
(the events described in the preceding clauses (i), (ii), (iii) and (iv)
are collectively and individually hereinafter referred to as an
"Acquisition Event").
3. Payment and Delivery of Certificates. Concurrent with the execution of
this Agreement, the Stockholder shall deliver to the Escrow Agent the
certificates representing the Shares, duly endorsed in blank for transfer, or
accompanied by duly executed stock powers in blank, in each case with signatures
guaranteed by a national bank or trust company or a member firm of the New York
Stock Exchange, Inc. At the Closing hereunder, the Escrow Agent shall promptly
deliver to Holder the Shares and, simultaneously with the proper surrender by
Escrow Agent to Holder of the Shares to be purchased by Holder, Holder shall
deliver to the Escrow Agent a wire transfer of immediately available funds equal
to the product of (x) the Purchase Price multiplied by (y) the number of Shares.
4. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants (such representations and warranties being deemed
repeated at the Closing) to Holder that:
4.1 Ownership of Shares. The Stockholder has good and marketable
title to and is the sole record owner of the Shares; except as set forth on
Schedule 4.1 hereto, the Stockholder does not own beneficially or of record
any other capital stock of Company; such Shares are validly issued, fully
paid and nonassessable, with no personal liability attaching to the
ownership thereof; and such Shares are owned by the Stockholder free and
clear of any pledges, liens, security interests, adverse claims,
assessments, proxies, participations, options, equities, charges or
encumbrances of any nature whatsoever with respect
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to the ownership of or right to vote or dispose of such Shares, except for
any encumbrances arising hereunder.
4.2 Transfer of Title. The sale by the Stockholder of his Shares and
the delivery by Escrow Agent of the certificates representing such Shares
to Holder pursuant hereto will transfer to Holder good and valid title to
such Shares free and clear of all pledges, liens, security interests,
adverse claims, assessments, options, equities, charges and encumbrances of
any nature whatsoever, and with no proxies or restrictions on the voting
rights or other incident of record or beneficial ownership pertaining
thereto (other than the proxy being granted pursuant to Section 6 of this
Agreement).
4.3 Authority; Due Execution; Enforceability. The Stockholder has the
full right, power, capacity and authority to enter into this Agreement and
has sole voting power and sole power of disposition with respect to the
Shares with no restrictions on the Stockholder's voting rights or rights of
disposition pertaining thereto (other than the proxy being granted pursuant
to Section 6 of this Agreement); and this Agreement has been duly and
validly executed and delivered by the Stockholder and constitutes a legal,
valid and binding obligation of the Stockholder enforceable against him in
accordance with its terms, except that such enforceability may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights.
4.4 No Conflicts. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby will not,
with or without giving of notice or the passage of time, (a) violate any
judgment, award, decree, injunction or order of any court, arbitrator or
governmental agency applicable to the Stockholder or the Stockholder's
property or assets or any federal or state law, statute or regulation, or
(b) conflict with, result in the breach of any provision of or constitute a
violation of or default under any agreement or instrument to which the
Stockholder is a party or by which the Stockholder or the Stockholder's
property or assets may be bound.
5. Covenants of the Stockholder. The Stockholder hereby covenants and
agrees that:
5.1 Bring-Down of Representations. During the term hereof the
Stockholder will not enter into any transaction, take any action or by
inaction permit any event to occur, that would result in any of the
representations or warranties of the Stockholder herein contained not being
true and correct at and as of (a) the time immediately after the occurrence
of such transaction, action or event or (b) the date of the Closing of the
purchase of Shares. Without limiting the generality of the foregoing, the
Stockholder covenants and agrees that the Stockholder will not sell,
transfer, pledge, hypothecate, assign or otherwise convey or dispose of, or
enter into any contract, option, agreement or other arrangement or
understanding with respect to the sale, transfer, pledge, assignment,
conveyance or other disposition of, any Shares, other than to or in favor
of Holder or Holder's assignee, or in connection with the Merger or an
Acquisition Transaction between Company and Holder, Newco or another
subsidiary of Holder (a "Holder Acquisition Transaction").
5.2 Surrender of Shares. Concurrent with the execution of this
Agreement, the Stockholder will execute an Escrow Agreement authorizing the
Escrow Agent to take the actions contemplated by this Agreement on behalf
of the Stockholder and will surrender the certificates representing his
Shares to the Escrow Agent to be held pursuant to the Escrow Agreement. The
Stockholder agrees that Company may instruct the transfer agent for the
Common Stock to place a stop transfer order against any attempt to transfer
the Shares except in accordance with the Escrow Agreement and this
Agreement.
6. Irrevocable Proxy and Release; Agreement to Vote Shares.
(a) The Stockholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Shares and hereby irrevocably appoints Holder, during the
term of this Agreement, as proxy, with full power of substitution, for the
Stockholder to vote (or refrain from voting) in any manner as Holder, in
its sole discretion, may see fit, all of the Shares of the Stockholder for
the Stockholder and in the Stockholder's name, place and stead, at any
annual, special or other meeting or action of the stockholders of Company
or at any adjournment thereof or pursuant to any consent of the
stockholders of Company in lieu of a meeting or otherwise, with respect to
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any issue brought before stockholders of Company. The parties acknowledge
and agree that, except as specifically provided for in Section 6(c) hereof,
neither Holder, nor Holder's successors, assigns, subsidiaries, divisions,
employees, officers, directors, stockholders, agents and affiliates shall
owe any duty to, whether in law or otherwise, or incur any liability of any
kind whatsoever, including without limitation, with respect to any and all
claims, losses, demands, causes of action, costs, expenses (including
reasonable attorney's fees) and compensation of any kind or nature
whatsoever to the Stockholder in connection with, as a result of or
otherwise relating to any vote (or refrain from voting) by Holder of the
Shares subject to the irrevocable proxy hereby granted to Holder at any
annual, special or other meeting or action or the execution of any consent
of the stockholders of Company. If the issue on which Holder is voting
pursuant to the irrevocable proxy is the proposal to approve the Merger and
the Merger Agreement, Holder shall vote for such proposal or give its
consent, as applicable.
(b) Notwithstanding the foregoing grant to Holder of the irrevocable
proxy, in the event Holder elects not to exercise its rights to vote the
Shares pursuant to the irrevocable proxy, upon the request of Holder the
Stockholder agrees to vote all of his Shares during the term of this
Agreement: (i) if the issue on which the Stockholder is requested to vote
is a proposal to approve the Merger and the Merger Agreement, in favor of
or give its consent to, as applicable, the Merger and the Merger Agreement
or (ii) otherwise in the manner directed by Holder at any annual, special
or other meeting or action of the stockholders of Company in lieu of a
meeting or otherwise with respect to any issue brought before the
stockholders of Company.
(c) If Holder (i) exercises its right to vote the Shares pursuant to
the irrevocable proxy as provided in Section 6(a) other than with respect
to the approval of the Merger, or (ii) instructs the Stockholder how to
vote pursuant to Section 6(b)(ii), other than with respect to the approval
of the Merger, and such Stockholder votes his Shares in accordance with
such instruction, Holder agrees to indemnify and hold harmless such
Stockholder from any and all claims, liabilities, losses, demands, causes
of action, expenses (including reasonable attorneys' fees) that arise from
or occur by reason of such actions.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the Stockholder shall be free to act in his capacity as a member
of the Board of Directors of the Company and to discharge his fiduciary
duty as such.
7. Survival. All rights and authority granted herein by the Stockholder
shall survive the death or incapacity of the Stockholder. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective spouses, heirs, personal representatives, successors and assigns.
Holder may, without the consent of the Stockholder, assign its rights (but not
its obligations) hereunder to any wholly owned subsidiary of Holder, but
otherwise the consent of the Stockholder shall be required to assign the rights
of Holder hereunder. The consent of Holder shall be required to assign the
rights of the Stockholder hereunder.
8. Further Assurances. The Stockholder shall cooperate with Holder and
execute and deliver any additional documents necessary, in the reasonable
opinion of Holder or its counsel, to (i) obtain any third party approvals
necessary to consummation of the exercise of the Option, including, without
limitation, approvals under the HSR Act, if applicable, (ii) complete the sale
and transfer of the Shares with respect to which the Option is exercised and the
vesting of title to such Shares in Holder and (iii) evidence the irrevocable
proxy granted herein with respect to the Shares.
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9. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, postage prepaid, addressed to the
respective party at the following addresses:
To Holder:
United Parcel Service, Inc.
55 Glenlake Parkway, N.E.
Atlanta, Georgia 30328
Attn: Thomas W. Delbrook
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attn: Bruce N. Hawthorne, Esq.
Facsimile No.: (404) 572-5146
To the Stockholder:
------------------------------------
------------------------------------
------------------------
with a copy to:
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111
Attn: John F. Seegal, Esq.
Facsimile No.: (415) 773-5759
10. Termination. Except as provided in the following sentence, this
Agreement and the Option, other than the provisions of Section 6(c), shall
terminate on the earlier of: (i) the delivery by Holder to the Stockholder of
written notice of Holder's determination to terminate this Agreement and (ii)
the termination of the Merger Agreement in accordance with the terms thereof
(the "Termination Date"). Notwithstanding anything to the contrary in this
Agreement or any other agreement, if during the term of this Agreement an
Acquisition Event shall occur or if the Merger Agreement shall have been
terminated by Holder in accordance with Section 8.1(d) or 8.1(f)(ii) of the
Merger Agreement (the date of the earlier of the occurrence or termination being
the "Trigger Date"), this Agreement and the Option shall remain in full force
and effect and the Termination Date of this Agreement shall automatically extend
to the date which occurs 9 months from the Trigger Date.
11. Remedies. Each of the parties hereto recognizes and acknowledges that
a breach by it of any covenants or agreements contained in this Agreement will
cause the other party to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore each of the parties hereto agrees
that in the event of any such breach the aggrieved party shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
12. Commissions. Each of the parties hereto represents and warrants that
there are no agreements or claims for brokerage commissions or finders' fees in
connection with the transactions contemplated by this Agreement, and the
Stockholder and Holder will respectively pay or discharge and will indemnify
each other for brokerage commissions or finders' fees incurred by reason of any
action taken by such indemnifying party.
13. Survival of Representations. Notwithstanding any provision of this
Agreement to the contrary, all representations and warranties made by the
Stockholder in this Agreement and the covenants set forth in Sections 6(c), 12
and 19 hereof shall survive (i) any exercise of the Option by Holder, (ii) any
vote by Holder
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of the Shares pursuant to the irrevocable proxy or (iii) any vote by the
Stockholder in accordance with Section 6(b); provided, however, that all
representations and warranties shall not survive and shall terminate upon
termination of this Agreement pursuant to Section 10 hereof.
14. Changes in Capitalization. For all purposes of this Agreement, the
Shares shall include any securities for cash or other property issued or
exchanged with respect to such Shares upon any recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, dividend in cash or stock or other property, split-up or
combination of the securities of Company, or any other change in its capital
structure and shall also include all Shares of Common Stock issued to the
Stockholder after the date hereof pursuant to the exercise by the Stockholder of
stock options.
15. Compliance with Securities Laws. The parties agree that any transfer
of the Shares effected hereunder shall be effected so as to comply with all
applicable federal and state securities laws.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the
conflicts of laws principles thereof.
17. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute a single agreement.
18. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any current or future law, and if the
rights or obligations of the parties under this Agreement would not be
materially and adversely affected thereby, such provision shall be fully
separable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom. In lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement, a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible, and the parties hereto
request the court or any arbitrator to whom disputes relating to this Agreement
are submitted to reform the otherwise illegal, invalid or unenforceable
provision in accordance with this Section 18.
19. Agreements to Notify.
(a) The Stockholder and Holder agree to notify promptly the Escrow
Agent of the termination of this Agreement and agree to deliver to the
Escrow Agent any written instructions that may reasonably be requested by
the Escrow Agent relating to the release of the Shares upon the termination
of this Agreement.
(b) The Stockholder agrees to notify Holder promptly, and in any
event, without limiting the foregoing undertaking, prior to any exercise of
the Option by Holder, of any commencement or threatened commencement known
to the Stockholder by any person, entity or governmental authority or
agency of any suit, action or legal proceedings with respect to the Option.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed as of the date first above written.
[NAME OF STOCKHOLDER]
By:
--------------------------------------
UNITED PARCEL SERVICE, INC.
By:
--------------------------------------
Name: Thomas W. Delbrook
Title: Assistant Treasurer
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ANNEX D
OPINION OF MORGAN STANLEY & CO. INCORPORATED
January 9, 2001
Board of Directors
Fritz Companies, Inc.
706 Mission Street
San Francisco, CA 94103
Members of the Board:
We understand that Fritz Companies, Inc. (the "Company"), United Parcel
Service, Inc. ("UPS" or "Buyer") and VND Merger Sub, Inc., a wholly owned
subsidiary of UPS ("Acquisition Sub"), propose to enter into an Agreement and
Plan of Merger, substantially in the form of the draft dated January 9, 2001
(the "Merger Agreement"), which provides, among other things, for the merger
(the "Merger") of Acquisition Sub with and into the Company. Pursuant to the
Merger, the Company will become a wholly owned subsidiary of UPS, and each
outstanding share of common stock, par value $.01 per share (the "Company Common
Stock"), of the Company, other than shares held in the Company's treasury or
owned by UPS or Acquisition Sub will be converted into the right to receive 0.2
of a share (the "Exchange Ratio") of Class B common stock, par value $.01 per
share (the "UPS Class B Common Stock"), of UPS. The terms and conditions of the
Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the holders of
shares of Company Common Stock.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
other information of the Company and UPS, respectively;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared by
the management of the Company;
(iii) analyzed certain financial projections prepared by the
management of the Company;
(iv) reviewed certain financial projections for UPS contained in
certain publicly available securities analysts' research
reports;
(v) discussed the past and current operations and financial
condition and the prospects of the Company and UPS with senior
executives of the Company and UPS, respectively;
(vi) reviewed the reported prices and trading activity for the
Company Common Stock and UPS Class B Common Stock, respectively;
(vii) compared the financial performance of the Company and UPS and
the prices and trading activity of the Company Common Stock and
UPS Class B Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(viii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(ix) participated in discussions and negotiations among
representatives of the Company and UPS and their financial and
legal advisors;
(x) reviewed the draft Merger Agreement and certain related
documents; and
(xi) performed such other analyses and considered such other factors
as we have deemed appropriate.
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We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company. As you are aware, we were not provided with projections or forecasts of
future financial performance of UPS. Instead, for the purposes of our analysis,
we have relied with your consent on the estimates of certain publicly available
securities analysts' research reports. We have not made any independent
valuation or appraisal of the assets or liabilities of the Company, nor have we
been furnished with any such appraisals. We have assumed that the Merger will be
consummated in accordance with the terms set forth in the Merger Agreement. Our
opinion is necessarily based on financial, economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof.
In arriving at our opinion, we were not authorized to negotiate with any of
the parties, other than UPS, which expressed interest to Morgan Stanley & Co.
Incorporated in the possible acquisition of the Company or certain of its
constituent businesses.
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. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and UPS and have
received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company only and may not be used for any other purpose without
our prior written consent. In addition, this opinion does not in any manner
address the prices at which the UPS Class B Common Stock will trade following
consummation of the Merger and Morgan Stanley expresses no opinion or
recommendation as to how the stockholders of the Company should vote at the
shareholders' meeting held in connection with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to the holders of shares of Company Common Stock.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ MARK D. EICHORN
------------------------------------
Mark D. Eichorn
Managing Director
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") generally
provides that all directors and officers (as well as other employees and
individuals) may be indemnified against expenses (including attorney's fees)
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with certain specified actions, suits or proceedings, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation -- a "derivative action"), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification extends only to expenses (including attorneys' fees)
actually and reasonably incurred in connection with defense or settlement of an
action and the DGCL requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. Section 145 of the DGCL also provides that the rights
conferred thereby are not exclusive of any other right which any person may be
entitled to under any bylaw, agreement, vote of shareowners or disinterested
directors or otherwise, and permits a corporation to advance expenses to or on
behalf of a person to be indemnified upon receipt of an undertaking to repay the
amounts advanced if it is determined that the person is not entitled to be
indemnified.
UPS's bylaws provide that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding by reason of the fact that he is or was a director or officer of the
Company (or is or was serving at the request of the Company as director,
officer, employee or agent of another entity), shall be indemnified and held
harmless by the Company to the fullest extent authorized by the DGCL, as in
effect (or to the extent that indemnification is broadened, as it may be
amended), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith. Except with respect to actions initiated by an officer or director
against the Company to recover the amount of an unpaid claim, the Company is
required to indemnify an officer or director in connection with an action, suit
or proceeding initiated by such person only if such action, suit or proceeding
was authorized by the board of directors of the Company. The bylaws further
provide that an officer or director may (thirty days after a written claim has
been received by the Company) bring suit against the Company to recover an
unpaid claim and, if such suit is successful, the expense of bringing such suit.
While it is a defense to such suit that the claimant has not met the applicable
standards of conduct which make indemnification permissible under the DGCL,
neither the failure of the board of directors to have made a determination that
indemnification is proper, nor an actual determination that the claimant has not
met the applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct. The bylaws also provide that the rights conferred thereby are contract
rights, that they are not exclusive of any other rights which an officer or
director may have or hereafter acquire under any statute, any other provision of
the certificate of incorporation, bylaw, agreement, vote of shareowners or
disinterested directors or otherwise, and that they include the right to be paid
by the Company the expenses incurred in defending any specified action, suit or
proceeding in advance of its final disposition provided that, if the DGCL so
requires, such payment shall only be made upon delivery to the Company by the
officer or director of an undertaking to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under the bylaws or otherwise.
UPS's certificate of incorporation provides that a director of the
Corporation shall not be
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personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
or (iv) for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this provision shall be prospective only,
and shall not adversely affect any elimination or limitation of the personal
liability of a director of the Corporation existing at the time of such repeal
or modification.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION
2.1 Agreement and Plan of Merger, dated as of January 10, 2001, by
and among United Parcel Service, Inc. ("Registrant"), VND
Merger Sub, Inc. and Fritz Companies, Inc. (reference is made
to Annex A of the Proxy Statement/Prospectus included as a
part of this Registration Statement).
3.1 Form of Restated Certificate of Incorporation of Registrant
(incorporated by reference to Registrant's Registration
Statement on Form S-4, as amended, filed on July 21, 1999,
File No. 333-83349, and by reference to Exhibit 3 to
Registrant's Form 10-Q for the Quarter Ended June 30, 2000).
3.2 Form of Bylaws of Registrant (incorporated by reference to
Exhibit 3.2 to Registrant's Registration Statement on Form
S-4, as amended, filed on July 21, 1999, File No. 333-83349).
4.1 Form of Class A Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to Registrant's Registration
Statement on Form S-4, as amended, filed on July 21, 1999,
File No. 333-83349).
4.2 Form of Class B Common Stock Certificate (incorporated by
reference to Exhibit 4.2 to Registrant's Registration
Statement on Form S-4, as amended, filed on July 21, 1999,
File No. 333-83349).
4.3 Specimen Certificate of 8 3/8% Debentures due April 1, 2020
(incorporated by reference to Exhibit 4(c) to Registrant's
Registration Statement No. 33-32481, filed on December 7,
1989).
4.4 Indenture relating to 8 3/8% Debentures due April 1, 2020
(incorporated by reference to Exhibit 4(c) to Registrant's
Registration Statement No. 33-32481, filed on December 7,
1989).
4.5 Specimen Certificate of 8 3/8% Debentures due April 1, 2030
(incorporated by reference to Exhibit T-3C to Registrant's
Form T-3 filed on December 18, 1997).
4.6 Indenture relating to 8 3/8% Debentures due April 1, 2030
(incorporated by reference to Exhibit T-3C to Registrant's
Form T-3 filed on December 18, 1997).
4.7 Specimen Certificate of Registrant's 6.625% Euro Notes due
April 25, 2001 (available to the Commission upon request).
4.8 Program Agreement relating to Registrant's 6.625% Euro Notes
due April 25, 2001 (available to the Commission upon request).
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4.9 Indenture relating to $2,000,000,000 of debt securities
(incorporated by reference to Exhibit 4.1 to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form
S-3, filed on January 26, 1999, File No. 333-08369).
4.10 Form of Supplemental Indenture relating to $2,000,000,000 of
debt securities (incorporated by reference to Exhibit 4.2 to
Post-Effective Amendment No. 1 to Registrant's Registration
Statement on Form S-3, filed on March 15, 2000, File No.
333-08490-01).
4.11 Underwriting Agreement relating to 1.75% Cash-Settled
Convertible Senior Notes due September 27, 2007 (incorporated
by reference to Exhibit 1 to Registrant's Form 10-Q for the
Quarter Ended September 30, 2000).
4.12 Selling Agent Agreement relating to UPS Notes with maturities
of 9 months or more from date of issue (incorporated by
reference to Exhibit 1.1 to Registrant's Form 8-K filed on
January 29, 2001) and Form of Note (incorporated by reference
to Exhibit 4.1 to Registrant's Form 8-K filed on January 29,
2001).
*5.1 Opinion of King & Spalding, counsel to Registrant, as
to the legality of the securities being registered.
*8.1 Opinion of King & Spalding regarding certain tax
aspects of the merger.
10.1 Registrant's Thrift Plan, as Amended and Restated January 1,
1976, including Amendment Nos. 1 and 2 (incorporated by
reference to Exhibit 10(a) to Registrant's 1980 Annual Report
on Form 10-K).
(1) Amendment No. 3 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 20(b) to
Registrant's 1980 Annual Report on Form 10-K).
(2) Amendment No. 4 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 20(b) to
Registrant's 1981 Annual Report on Form 10-K).
(3) Amendment No. 5 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 19(b) to
Registrant's 1983 Annual Report on Form 10-K).
(4) Amendment No. 6 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(4) to
Registrant's 1985 Annual Report on Form 10-K).
(5) Amendment No. 7 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(5) to
Registrant's 1985 Annual Report on Form 10-K).
(6) Amendment No. 8 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(6) to
Registrant's 1987 Annual Report on Form 10-K).
(7) Amendment No. 9 to Registrant's Thrift Plan
(incorporated by Reference to Exhibit 10(a)(7) to
Registrant's 1987 Annual Report on Form 10-K).
(8) Amendment No. 10 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(8) to
Registrant's 1990 Annual Report on Form 10-K).
(9) Amendment No. 11 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(9) to
Registrant's 1991 Annual Report on Form 10-K).
(10) Amendment No. 12 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(10) to
Registrant's 1991 Annual Report on Form 10-K).
(11) Amendment No. 13 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(11) to
Registrant's 1991 Annual Report on Form 10-K).
(12) Amendment No. 14 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(12) to
Registrant's 1991 Annual Report on Form 10-K).
(13) Amendment No. 15 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(13) to
Registrant's 1992 Annual Report on Form 10-K).
(14) Amendment No. 16 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(14) to
Registrant's 1993 Annual Report on Form 10-K).
(15) Amendment No. 17 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(15) to
Registrant's 1993 Annual Report on Form 10-K).
(16) Amendment No. 18 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(16) to
Registrant's 1994 Annual Report on Form 10-K).
(17) Amendment No. 19 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(17) to
Registrant's 1994 Annual Report on Form 10-K).
(18) Amendment No. 20 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(18) to
Registrant's 1995 Annual Report on Form 10-K).
(19) Amendment No. 21 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(19) to
Registrant's 1995 Annual Report on Form 10-K).
(20) Amendment No. 22 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(20) to
Registrant's 1996 Annual Report on Form 10-K).
(21) Amendment No. 23 to Registrant's Thrift Plan
(incorporated by reference to Exhibit 10(a)(21) to
Registrant's 1996 Annual Report on Form 10-K).
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10.2 Registrant's Retirement Plan (including Amendments 1 through
4) (incorporated by reference to Exhibit 9 to Registrant's
1979 Annual Report on Form 10-K).
(1) Amendment No. 5 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 20(a) to
Registrant's 1980 Annual Report on Form 10-K).
(2) Amendment No. 6 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 19(a) to
Registrant's 1983 Annual Report on Form 10-K).
(3) Amendment No. 7 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(3) to
Registrant's 1984 Annual Report on Form 10-K).
(4) Amendment No. 8 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(4) to
Registrant's 1985 Annual Report on Form 10-K).
(5) Amendment No. 9 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(5) to
Registrant's 1985 Annual Report on Form 10-K).
(6) Amendment No. 10 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 19(a) to
Registrant's 1988 Annual Report on Form 10-K).
(7) Amendment No. 11 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 19(b) to
Registrant's 1988 Annual Report on Form 10-K).
(8) Amendment No. 12 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(8) to
Registrant's 1989 Annual Report on Form 10-K).
(9) Amendment No. 13 to Registrant's Retirement Plan
(incorporated by Reference to Exhibit 10(b)(9) to
Registrant's 1989 Annual Report on Form 10-K).
(10) Amendment No. 14 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(10) to
Registrant's 1990 Annual Report on Form 10-K).
(11) Amendment No. 15 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(11) to
Registrant's 1992 Annual Report on Form 10-K).
(12) Amendment No. 16 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(12) to
Registrant's 1994 Annual Report on Form 10-K).
(13) Amendment No. 17 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(13) to
Registrant's 1994 Annual Report on Form 10-K).
(14) Amendment No. 18 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(14) to
Registrant's 1995 Annual Report on Form 10-K).
(15) Amendment No. 19 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(15) to
Registrant's 1995 Annual Report on Form 10-K).
(16) Amendment No. 20 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(16) to
Registrant's 1995 Annual Report on Form 10-K).
(17) Amendment No. 21 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(17) to
Registrant's 1996 Annual Report on Form 10-K).
(18) Amendment No. 22 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(18) to
Registrant's 1997 Annual Report on Form 10-K).
(19) Amendment No. 23 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10(b)(19) to
Registrant's 1998 Annual Report on Form 10-K).
(20) Amendment No. 24 to Registrant's Retirement
Plan (incorporated by reference to Exhibit 10.2(20)
to Registrant's 2000 Annual Report on Form 10-K).
(21) Amendment No. 25 to Registrant's Retirement Plan
(incorporated by reference to Exhibit 10.2(21) to
Registrant's 2000 Annual Report on Form 10-K).
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10.3 Registrant's Savings Plan, as Amended and Restated, including
Amendment Nos. 1 through 5 (incorporated by reference to
Exhibit 10(x) to Registrant's 1990 Annual Report on Form
10-K).
(1) Amendment No. 6 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(1) to
Registrant's 1990 Annual Report on Form 10-K).
(2) Amendment No. 7 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(2) to
Registrant's 1991 Annual Report on Form 10-K).
(3) Amendment No. 8 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(3) to
Registrant's 1992 Annual Report on Form 10-K).
(4) Amendment No. 9 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(4) to
Registrant's 1992 Annual Report on Form 10-K).
(5) Amendment No. 10 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(5) to
Registrant's 1992 Annual Report on Form 10-K).
(6) Amendment No. 11 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(6) to
Registrant's 1994 Annual Report on Form 10-K).
(7) Amendment No. 12 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(7) to
Registrant's 1994 Annual Report on Form 10-K).
(8) Amendment No. 13 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(8) to
Registrant's 1994 Annual Report on Form 10-K).
(9) Amendment No. 14 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(9) to
Registrant's 1994 Annual Report on Form 10-K).
(10) Amendment No. 15 to Registrant's Savings Plan
(incorporated by reference to Exhibit 10(x)(10) to
Registrant's 1994 Annual Report on Form 10-K).
(11) Restatement Amendment No. 1 to Registrant's Savings
Plan (incorporated by reference to Exhibit 10(x)(11)
to Registrant's 1996 Annual Report on Form 10-K).
(12) Restatement Amendment No. 2 to Registrant's Savings
Plan (incorporated by reference to Exhibit 10(x)(12)
to Registrant's 1995 Annual Report on Form 10-K).
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(13) Restatement Amendment No. 3 to Registrant's Savings
Plan (incorporated by reference to Exhibit 10(o)(13)
to Registrant's 1996 Annual Report on Form 10-K).
(14) Restatement Amendment No. 4 to Registrant's Savings
Plan (incorporated by reference to Exhibit 10(o)(14)
to Registrant's 1996 Annual Report on Form 10-K).
(15) Restatement Amendment No. 5 to Registrant's Savings
Plan (incorporated by reference to Exhibit 10(o)(15)
to Registrant's 1996 Annual Report on Form 10-K).
(16) Restatement Amendment No. 6 to Registrant's Savings
Plan (incorporated by reference to Exhibit 10(o)(16)
to Registrant's 1997 Annual Report on Form 10-K).
10.4 Credit Agreement (364-Day Facility), as amended and restated,
dated April 27, 2000, among United Parcel Service of America,
Inc., the initial lenders named therein, Salomon Smith Barney
and Banc of America Securities LLC, as Co-Arrangers, Bank of
America, N.A., as Agent, and Citibank, N.A., as Agent
(incorporated by reference to Exhibit 10(a) to Registrant's
Form 10-Q for the Quarter Ended March 31, 2000).
10.5 Credit Agreement (Five-Year Facility), as amended and
restated, dated April 27, 2000, among United Parcel Service of
America, Inc., the initial lenders named therein, Salomon
Smith Barney Inc. and Banc of America Securities LLC, as Co-
Arrangers, Bank of America N.A., as Agent, and Citibank, N.A.,
as Agent (incorporated by reference to Exhibit 10(b) to
Registrant's Form 10-Q for the Quarter Ended March 31, 2000).
10.6 Registrant's Excess Coordinating Benefit Plan (incorporated by
reference to Exhibit 10(s) to Registrant's 1997 Annual Report
on Form 10-K).
10.7 Registrant's 1996 Stock Option Plan, as amended and restated
(incorporated by reference to Exhibit 10(a) to Registrant's
Form 10-Q for the Quarter Ended September 30, 1997).
10.8 Registrant's Qualified Stock Ownership Plan and Trust Agreement
(incorporated by reference to Exhibit 4.1 to Registrant's
Registration Statement No. 333-67479, filed on November 18,
1998).
(1) Amendment No. 1 to Registrant's Qualified Stock
Ownership Plan and Trust Agreement (incorporated by
reference to Exhibit 10.19(1) to Registrant's 1999
Annual Report on Form 10-K).
(2) Amendment No. 2 to Registrant's Qualified Stock
Ownership Plan and Trust Agreement (incorporated by
reference to Exhibit 10.19(2) to Registrant's 1999
Annual Report on Form 10-K).
(3) Amendment No. 3 to Registrant's Qualified Stock
Ownership Plan and Trust Agreement (incorporated by
reference to Exhibit 10.19(3) to Registrant's 1999
Annual Report on Form 10-K).
(4) Amendment No. 4 to Registrant's Qualified Stock
Ownership Plan and Trust Agreement (incorporated by
reference to Exhibit 10.8(4) to Registrant's 2000
Annual Report on Form 10-K).
10.9 Form of Registrant's Incentive Compensation Plan (incorporated
by reference to Registrant's Registration Statement on (Form
S-4, as amended, filed on July 21, 1999, File No. 333-83349).
10.10 Registrant's Deferred Compensation Plan (incorporated by
reference to Exhibit 10.10 to Registrant's 2000 Annual Report
on Form 10-K).
10.11 Registrant's Nonqualified Employee Stock Purchase Plan
(incorporation by reference to Registrant's Registration
Statement on Form S-4, filed on April 5, 2000, File No.
333-34054).
*15.1 Acknowledgment Letter of KPMG LLP as to incorporation of their
reports related to unaudited interim financial information.
21.1 Registrant's Subsidiaries (incorporated by reference to Exhibit
21 to Registrant's 2000 Annual Report on Form 10-K).
23.1 Consent of Morgan Stanley & Co. Incorporated.
*23.2 Consent of KPMG LLP.
*23.3 Consent of Deloitte & Touche LLP.
23.4 Consent of King & Spalding (included in Exhibit 5.1).
23.5 Consent of King & Spalding (included in Exhibit 8.1).
24.1 Power of Attorney (included on page II-8).
99.1 Joint Press Release of Registrant and Fritz Companies, Inc.,
dated January 10, 2001 (incorporated by reference to
Registrant's Form 425, filed on January 10, 2001, File No.
0-20548).
*99.2 Form of Proxy to be used by Fritz Companies, Inc.
99.3 Fairness Opinion of Morgan Stanley & Co. Incorporated
(reference is made to Annex D of the Proxy Statement/Prospectus
included as a part of this Registration Statement).
99.4 Stock Option Agreement, dated as of January 10, 2001, by and
between Registrant and Fritz Companies, Inc. (reference is made
to Annex B of the Proxy Statement/Prospectus included as a part
of this Registration Statement).
*99.5 Stockholder Option Agreement, dated as of January 10, 2001, by
and between Lynn C. Fritz and Registrant.
*99.6 Amendment No. 1 to the Stockholder Option Agreement, effective
as of April 9, 2001, by and between Lynn C. Fritz and
Registrant.
*99.7 Stockholder Option Agreement, dated as of January 10, 2001, by
and between Tamara Fritz and Registrant.
*99.8 Amendment No. 1 to the Stockholder Option Agreement, effective
as of April 9, 2001, by and between Tamara Fritz and
Registrant.
*99.9 Stockholder Option Agreement, dated as of January 10, 2001, by
and between the Lynn C. Fritz 1999 Grantor Retained Annuity
Trust and Registrant.
*99.10 Amendment No. 1 to the Stockholder Option Agreement, effective
as of April 9, 2001, by and between the Lynn C. Fritz 1999
Grantor Retained Annuity Trust and Registrant.
*99.11 Stockholder Option Agreement, dated as of January 10, 2001, by
and between the Tamara Fritz 1999 Grantor Retained Annuity
Trust and Registrant.
*99.12 Amendment No. 1 to the Stockholder Option Agreement, effective
as of April 9, 2001, by and between the Tamara Fritz 1999
Grantor Retained Annuity Trust and Registrant.
---------------
* Filed herewith.
ITEM 22. UNDERTAKINGS.
(a) (1) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933 (as
amended and the rules and regulations thereunder, the "Securities
6
139
Act"), each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (as amended and the
rules and regulations thereunder, the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(2) The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) promulgated pursuant to
the Securities Act, the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be
deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(3) The registrant undertakes that every prospectus (i) that
is filed pursuant to paragraph (2) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities
Act and is used in connection with an offering of securities subject to
Rule 415 promulgated pursuant to the Securities Act, will be filed as a
part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(4) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions of this Item 22, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act, and is therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(b) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
7
140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 1 to the Registration Statement
on Form S-4 to be signed on its behalf by the undersigned, thereunto, duly
authorized, in the City of Atlanta, State of Georgia, on April 24, 2001.
UNITED PARCEL SERVICE, INC.
By: /s/ James P. Kelly
----------------------------------------
James P. Kelly
Chairman, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the date indicated below.
SIGNATURE TITLE DATE
--------- ----- ----
Director
-----------------------------
William H. Brown, III
* Senior Vice President April 24, 2001
----------------------------- Chief Financial Officer and Treasurer
D. Scott Davis (Principal Financial and
Accounting Officer)
* Senior Vice President and Director April 24, 2001
-----------------------------
Calvin Darden
* Vice Chairman, Executive Vice President April 24, 2001
----------------------------- and Director
Michael L. Eskew
* Chairman of the Board, Chief Executive April 24, 2001
----------------------------- Officer and Director
James P. Kelly (Principal Executive Officer)
Director
-----------------------------
Ann M. Livermore
Director
-----------------------------
Gary E. MacDougal
Senior Vice President,
* Secretary April 24, 2001
----------------------------- and Director
Joseph R. Moderow
Director
-----------------------------
Kent C. Nelson
141
Signature Title Date
--------- ----- ----
Director
-----------------------
Victor A. Pelson
* Senior Vice President and Director April 24, 2001
-----------------------
Lea N. Soupata
Director
------------------------
Robert M. Teeter
Director
------------------------
John W. Thompson
* Senior Vice President, Chief April 24, 2001
------------------------ Operating Officer and Director
Thomas H. Weidemeyer
*By: /s/ James P. Kelly
--------------------
James P. Kelly
Attorney-In-Fact