<PAGE>
As filed with the Securities and Exchange Commission on October 9, 1997
Registration No. 333-33731
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
C.H. ROBINSON WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
________________
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 4731 41-1883630
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
C.H. ROBINSON WORLDWIDE, INC.
8100 MITCHELL ROAD
EDEN PRAIRIE, MINNESOTA 55344-2248
(612) 937-8500
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
D.R. VERDOORN, CHIEF EXECUTIVE OFFICER
C.H. ROBINSON WORLDWIDE, INC.
8100 MITCHELL ROAD
EDEN PRAIRIE, MINNESOTA 55344-2248
(612) 937-8500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
___________________
WILLIAM B. PAYNE COPIES TO: RICHARD C. TILGHMAN, JR.
DORSEY & WHITNEY LLP PIPER & MARBURY L.L.P.
220 SOUTH SIXTH STREET 36 SOUTH CHARLES STREET
MINNEAPOLIS, MINNESOTA 55402-1498 BALTIMORE, MARYLAND 21201
(612) 340-2722 (410) 539-2530
FAX: (612) 340-2868 FAX: (410) 539-0489
___________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
___________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
10,578,396 Shares OCTOBER 9, 1997
LOGO
Common Stock
--------
All of the 10,578,396 shares of Common Stock (the "Common Stock") of C. H.
Robinson Worldwide, Inc. ("Robinson" or the "Company") offered hereby are being
sold by certain stockholders of the Company (the "Selling Stockholders"). See
"Principal and Selling Stockholders." The Company will not receive any proceeds
from the sale of shares by the Selling Stockholders, but has agreed to bear the
expenses of registration of such shares under federal and state securities
laws. Prior to this offering, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price will be
between $15.00 and $17.00 per share. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price. The
Company's Common Stock has been approved for listing on the Nasdaq National
Market under the symbol "CHRW."
--------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGE 7 HEREOF.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS STOCKHOLDERS
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Per share........................ $ $ $
- -----------------------------------------------------------------------
Total(1)......................... $ $ $
- -----------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) The Selling Stockholders have granted the Underwriters a 30-day option to
purchase up to 1,586,759 additional shares of Common Stock solely to cover
over-allotments, if any. To the extent that the option is exercised, the
Underwriters will offer the additional shares to the public at the Price to
Public shown above. If the option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to the Selling
Stockholders will be $ , $ and $ , respectively.
See "Underwriting."
--------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject
to the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares will be made at the offices of BT Alex.
Brown Incorporated, Baltimore, Maryland, on or about , 1997.
BT ALEX. BROWN
MORGAN STANLEY DEAN WITTER
PIPER JAFFRAY INC.
THE DATE OF THIS PROSPECTUS IS OCTOBER , 1997.
<PAGE>
[INTERNATIONAL LOCATIONS]
[Map of Robinson branch offices]
[ . C.H. Robinson office]
[ [_] FOREIGN AGENT office]
The Company intends to distribute to its stockholders annual reports
containing financial statements audited by its independent public accountants
and will make available copies of quarterly reports for the first three
quarters of each fiscal year containing unaudited financial statements.
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THIS OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE>
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is qualified in
its entirety by, the more detailed information and the consolidated financial
statements of the Company and notes thereto included elsewhere in this
Prospectus. Unless the context otherwise indicates, "Company" or "Robinson"
refers to C.H. Robinson Worldwide, Inc. (including its predecessors in
interest) and its wholly owned subsidiaries. Unless otherwise indicated herein,
all information in this Prospectus (i) has been adjusted to give effect to the
Company's reincorporation in Delaware upon consummation of this offering,
providing for, among other things, an increase in the authorized shares of
capital stock of the Company and the conversion of Class A Common Stock and
Class B Common Stock into Common Stock, and (ii) assumes no exercise of the
Underwriters' over-allotment option.
THE COMPANY
Founded in 1905, the Company is the largest third-party logistics company in
North America with 1996 gross revenues of $1.6 billion. The Company is a global
provider of multimodal transportation services and logistics solutions through
a network of 116 offices in 38 states and Canada, Mexico, Belgium, the United
Kingdom, France, Spain, Italy, Singapore and South Africa. Through contracts
with over 14,000 motor carriers, the Company maintains the single largest
network of motor carrier capacity in North America and is one of the largest
third-party providers of intermodal services in the United States. In addition,
the Company regularly provides air, ocean and customs services. As an integral
part of the Company's transportation services, the Company provides a wide
range of value-added logistics services, such as raw materials sourcing,
freight consolidation, cross-docking and contract warehousing. During 1996, the
Company handled over 935,000 shipments for more than 8,600 customers, ranging
from Fortune 100 companies to small businesses in a wide variety of industries.
During the past five years, the Company has increased net revenues at a
compound annual growth rate of 18.6 percent.
The Company has developed global multimodal transportation and distribution
networks to provide seamless logistics services worldwide. As a result, the
Company has the capability of managing all aspects of the supply chain on
behalf of its customers. As a non-asset based transportation provider, the
Company can focus on optimizing the transportation solution for its customer
rather than its own asset utilization, using established relationships with
motor carriers, railroads (primarily intermodal service providers), air freight
carriers and ocean carriers. Through its motor carrier contracts, the Company
maintains access to more than 370,000 dry vans, 128,000 temperature-controlled
vans and containers and 96,000 flatbed trailers. The Company also has
intermodal marketing contracts with 11 railroads, including all of the major
North American railroads, which give the Company access to more than 150,000
additional trailers and containers.
Throughout its 90-year history, the Company has been in the business of
sourcing fresh produce. Much of the Company's logistics expertise can be traced
to its significant experience in handling perishable commodities. Due to the
time-sensitive nature and quality requirements of the shipments, fresh produce
represents a unique logistics challenge, and the distribution and
transportation costs are significant compared with, and may exceed, the cost of
the produce being shipped. The Company has developed a network of produce
sources and maintains access to specialized equipment and transportation modes
designed to ensure timely delivery of uniform quality produce. In response to
demand from large grocery retailers and food service distributors, the Company
has developed its own brand of produce, The Fresh 1(R), which is sourced
through various relationships and packed to order through contract packing
agreements. The Company has also leveraged its food sourcing and logistics
expertise into the sourcing of food ingredients on behalf of food
manufacturers.
3
<PAGE>
The Company's unique business philosophy has accounted for its strong
historical results and has positioned the Company for continued growth. The
Company's principal competitive advantage is its large decentralized branch
network, staffed by nearly 1,300 salespersons who are employees rather than
agents. These branch employees are in close proximity to both customers and
carriers which facilitates quick responses to customers' changing needs. Branch
employees act as a team in both marketing the Company's services and providing
these services to individual customers. The Company compensates its branch
employees principally on the basis of their branch's profitability, which in
the Company's opinion produces a more service-oriented, focused and creative
sales force. The Company is substantially owned by more than 700 of its
employees, and, following this offering, these employees will continue to own
more than 75% of the Company's Common Stock. The Company's recently adopted
Stock Incentive Plan and Stock Purchase Plan will allow for even broader equity
participation by employees following this offering.
Growth within the logistics industry is being driven by the continuing trend
of companies outsourcing their logistics needs in order to focus on their core
businesses, better manage just-in-time inventory systems and reduce costs.
According to a leading industry consultant, the available domestic market for
third-party logistics providers was $421 billion in 1996, only 5.9%, or $25
billion, of which was actually generated by third-party logistics providers.
This same consultant predicts the market for third-party logistics to double to
$50 billion by the year 2000, representing approximately 10% of the estimated
$474 billion domestic market. The Company believes the international logistics
market is approximately three to four times the domestic market, and both the
domestic and international markets are highly fragmented.
The Company's strategy for future growth is to expand the following:
. Core transportation business. The Company believes there are significant
opportunities to gain more transportation business from both existing
and new customers through its existing branch network. The Company also
believes it can selectively add domestic branches in response to cus-
tomer demand and opportunities to serve new customers in new geographic
areas.
. International markets. The Company intends to open additional interna-
tional branches to serve the local needs of its existing multinational
customer base and gain new customers throughout the world. For example,
after many years of providing logistics services to an international
snack food company in North America, the Company was recently designated
as this customer's international logistics partner. The Company has im-
plemented a comprehensive logistics solution for this customer in Europe
and is currently developing a similar solution in South Africa and South
America.
. Enhanced logistics services. In recent years, the Company has been pro-
viding an expanded range of enhanced logistics services. The Company be-
lieves there are significant opportunities to increase the level of lo-
gistics services it provides to its customers. The Company intends to
offer increasingly sophisticated logistics services to customers in or-
der to provide greater efficiencies and reduce costs throughout the cus-
tomers' supply chains.
The Company was reincorporated in Delaware in 1997 as the successor to a
business existing, in various legal forms, since 1905. The Company's corporate
office is located at 8100 Mitchell Road, Eden Prairie, Minnesota 55344-2248,
and its telephone number is (612) 937-8500. Its web site address is
www.chrobinson.com. The Company has recently put up for sale its consumer
finance business and its results of operations and net assets are now reflected
as discontinued operations in its consolidated financial statements and
consolidated financial data included elsewhere herein. Accordingly, this
Prospectus does not include information on the historical operations of that
business.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Selling 10,578,396 shares
Stockholders.......................
Common Stock outstanding after the 41,264,621 shares(1)
offering...........................
Use of proceeds..................... The Company will not receive any of the
proceeds from the sale of the Common Stock
by the Selling Stockholders.
Proposed Nasdaq National Market sym- CHRW
bol ...............................
</TABLE>
- --------
(1) Excludes (i) 470,417 shares of Common Stock issuable upon exercise of
options granted immediately prior to this offering at an exercise price per
share equal to the public offering price shown on the cover page of this
Prospectus, none of which is currently exercisable, and (ii) an additional
3,529,583 shares of Common Stock reserved for future issuance under the
Company's 1997 Omnibus Stock Plan (the "Stock Incentive Plan") and the 1997
Employee Stock Purchase Plan (the "Stock Purchase Plan"). See "Management--
New Incentive Plans."
DIVIDENDS, STOCK REPURCHASE PROGRAM AND NON-CASH CHARGE
The Company's ability to generate substantial amounts of cash flow from
operations has enabled it to make annual repurchases of its Common Stock and,
for more than 50 years, to pay annual dividends to its stockholders. The
Company anticipates that it will pay regular quarterly dividends beginning in
December 1997, initially at the rate of $0.06 per share per quarter. The
declaration of dividends by the Company is subject to the discretion of the
Board of Directors.
The Company's Board of Directors has authorized a stock repurchase program
under which up to 1,000,000 shares of Common Stock may be repurchased. Shares
repurchased will be used to reduce shares outstanding and may be reissued to
employees pursuant to the recently adopted Stock Incentive Plan. Such purchases
may be made from time to time at prevailing prices in the open market, by block
purchase and in private transactions in compliance with the rules of the
Securities and Exchange Commission (the "Commission"), including Regulation M.
The Company intends to fund repurchases with internally generated funds. See
"Dividends, Stock Repurchase Program and Non-Cash Charge."
Pursuant to Commission rules related to stock issued or sold to employees at
prices below the initial public offering price during the 12 months preceding
the effective date of an initial public offering, the Company will record an
$18.6 million non-recurring, non-cash compensation charge at the effective date
of this offering. This charge relates to 1,237,000 shares sold to employees by
retired employees under the Company's book value stock purchase program and
282,000 shares issued under the Company's existing incentive plans, and
represents the aggregate difference between book value (the amount expensed by
the Company for restricted shares upon issuance or the amount paid by employees
upon purchase of stock) and an assumed estimated public offering price of
$16.00 per share. See "Management--Existing Incentive Plans."
5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997(1)
-------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Gross revenues......... $968,893 $1,095,815 $1,257,946 $1,445,975 $1,605,905 $775,024 $855,152
Net revenues(2)........ 90,408 108,713 135,599 160,094 179,069 86,920 99,156
Selling, general and
administrative
expenses.............. 68,030 81,030 95,088 115,114 129,040 62,571 72,465
Income from operations. 22,378 27,683 40,511 44,980 50,029 24,349 26,691
Net income from
continuing operations. 14,449 17,844 24,141 29,455 32,442 15,685 17,233
Net income from
discontinued
operations(3)......... 1,846 2,411 2,964 2,086 2,158 1,083 900
Net income............. 16,295 20,255 27,105 31,541 34,600 16,768 18,133
Net income from
continuing operations
per share............. $ 0.28 $ 0.36 $ 0.52 $ 0.67 $ 0.78 $ 0.37 $ 0.42
Weighted average number
of shares outstanding
(in thousands)........ 52,125 48,980 46,296 43,934 41,799 42,182 41,306
Dividends per share.... $ 0.073 $ 0.087 $ 0.108 $ 0.130 $ 0.185 $ 0.010 $ 0.020
OPERATING DATA (AT END
OF PERIOD):
Branches............... 75 81 89 99 108 104 113
Employees ............. 1,050 1,183 1,403 1,436 1,665 1,563 1,801
Average net revenues
per branch............ $ 1,247 $ 1,392 $ 1,597 $ 1,683 $ 1,717 $ 856 $ 901
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------
ACTUAL PRO FORMA(4)
-------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $131,264 $ 80,281
Total assets............................................ 361,160 307,944
Total long-term debt.................................... -- --
Stockholder's investment................................ 171,366 120,383
</TABLE>
- --------
(1) Pursuant to Commission rules related to stock issued or sold to employees
at prices below the initial public offering price during the 12 months
preceding the effective date of an initial public offering, the Company
will record an $18.6 million non-recurring, non-cash compensation charge at
the effective date of this offering. This charge relates to 1,237,000
shares sold to employees by retired employees under the Company's book
value stock purchase program and 282,000 shares issued under the Company's
existing incentive plans, and represents the aggregate difference between
book value (the amount expensed by the Company for restricted shares upon
issuance or the amount paid by employees upon purchase of stock) and an
assumed estimated public offering price of $16.00 per share. See
"Management--Existing Incentive Plans." If the $18.6 million non-recurring,
non-cash compensation expense had been recorded in the six month period
ended June 30, 1997, net loss from continuing operations would have been
$425,000, or a $0.01 loss per share.
(2) Net revenues are determined by deducting cost of transportation and
products from gross revenues. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
(3) Discontinued operations include the Company's equipment lease financing
business, which was disposed of in 1994, and the Company's consumer finance
business. In July 1997, the Company approved a plan to sell its consumer
finance business, which the Company sold pursuant to an agreement entered
into in September 1997, the proceeds of which will be deposited into an
escrow account on October 14, 1997, to be closed upon obtaining final
regulatory approval.
(4) Pro forma to give effect to: (i) an anticipated tax benefit of
approximately $36 million resulting from the tax effect of termination, in
connection with this offering, of restrictions on restricted stock issued
to employees, which will be credited to stockholders' investment, (ii) a
dividend of $1.50 per share ($61.9 million in the aggregate), plus a
liquidating distribution of the net proceeds of the sale of the consumer
finance business, which purchasers in this offering will not receive, (iii)
an $18.6 million non-recurring, non-cash compensation charge, and (iv) $1
million of estimated expenses of this offering.
6
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be carefully considered in evaluating an investment in the
Common Stock.
Risks of Adverse Economic Developments and Downturn in Business Cycle. The
transportation industry historically has been cyclical as a result of economic
recession, customers' business cycles, increases in prices charged by third
party carriers, interest rate fluctuations, and other economic factors over
which the Company has no control. Increased operating expenses incurred by
third party carriers can be expected to result in higher transportation costs,
and the Company's net revenues and income from operations would be adversely
affected if it were unable to pass through to its customers the full amount of
increased transportation costs. Economic recession or a downturn in customers'
business cycles, particularly among certain national retailers or in the food,
beverage or printing industries in which the Company has a large number of
customers, also could have a material adverse effect on the Company's
operating results if the volume of freight shipped by those customers were
also reduced. See "Business--Overview and Strategy."
Dependence on Equipment and Services Availability. The Company is dependent
in part on the availability of truck, rail, ocean and air services provided by
independent third parties. There have historically been periods of equipment
shortages in the transportation industry, particularly among truckload
carriers. If the Company were unable to secure sufficient equipment or other
transportation services to meet its customers' needs, its results of
operations could be materially adversely affected, and customers could seek to
have their transportation and logistics needs met by other third parties on a
temporary or permanent basis. See "Business--Relationships with Carriers."
Risks Associated with International Business. An increasing portion of the
Company's business is providing services within and between continents. Doing
business outside of the United States is subject to various risks, including
changing economic and political conditions in the United States and abroad,
major work stoppages, exchange controls, currency fluctuations, armed
conflicts, unexpected changes in United States and foreign laws relating to
tariffs, trade restrictions, transportation regulations, foreign investments
and taxation. Significant expansion in foreign countries will expose the
Company to increased risk of loss from foreign currency fluctuations and
exchange controls as well as longer accounts receivable payment cycles. The
Company has no control over most of these risks and may be unable to
anticipate changes in international economic and political conditions and,
therefore, unable to alter its business practices in time to avoid the adverse
effect of any such changes. See "Business--Overview and Strategy."
Risks Associated with Managing a Growing Business. The Company's continued
success depends upon its ability to attract and retain a large group of
motivated salespersons and other logistics professionals. If the Company were
unable to recruit and retain a sufficient number of personnel, it would be
forced to limit its growth. There can be no assurance that the Company will be
able to continue to hire and retain a sufficient number of qualified
personnel. The Company's rapid expansion of operations has placed demands on
its management and operating systems. Continued expansion will depend in large
part on the Company's ability to develop successful salespersons into managers
and to implement enhancements to its information systems and adapt those
systems to the changes in its business and the requirements of its customers.
See "Business--Organization" and "--Communications and Information Systems."
Competition. The transportation services industry is highly competitive and
fragmented. The Company competes against other non-asset based logistics
companies as well as asset-based logistics companies, third-party freight
brokers and carriers offering logistics services. The Company also competes
against carriers' internal sales forces and shippers' transportation
departments. It also buys and sells transportation services from and to many
companies with which it competes. Historically, competition
7
<PAGE>
has created downward pressure on freight rates, and continuation of this rate
pressure may adversely affect the Company's net revenues and income from
operations. See "Business--Competition."
Seasonality. In the transportation industry generally, results of operations
show a seasonal pattern as customers reduce shipments during and after the
winter holiday season. In recent years, the Company's operating income and
earnings have been higher in the second and third quarters than in the first
and fourth quarters. Although seasonality in the transportation industry has
not had a significant impact on the Company's cash flow or results of
operations in recent years, the Company expects this seasonality to continue
and cannot fully predict the impact it may have in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Availability and Pricing of Produce. The Company's sourcing business is
dependent upon the availability and price of fresh produce, which is affected
by government food safety regulation, growing conditions, such as drought,
insects and disease, and other conditions over which the Company has no
control. Sourcing of fresh produce accounted for approximately 20%, 20% and
20% of the Company's net revenues in 1994, 1995 and 1996, respectively.
Shortages or overproduction of fresh produce affect the pricing of fresh
produce, and prices are often highly volatile. See "Business--Sourcing."
Risks Associated with Fresh Produce. The Company sources and resells fresh
produce. Agricultural chemicals used on agricultural commodities intended for
human consumption are subject to various approvals, and the commodities
themselves are subject to regulations on cleanliness and contamination.
Concern about particular chemicals and alleged contamination has led to
recalls of products, and tort claims have been brought by consumers of
allegedly affected produce. Because the Company is a seller of produce, it may
have legal responsibility arising from sale. While the Company carries product
liability coverage of $75 million, settlement of class action claims is often
costly, and the Company cannot assure that its liability coverage will be
adequate and will continue to be available. In addition, in connection with
any recall, the Company may be required to bear the cost of repurchasing,
transporting and destroying any allegedly contaminated product, for which it
is not insured. Any recall or allegation of contamination could affect the
Company's reputation, particularly of its The Fresh 1(R) brand. Loss due to
spoilage (including the need for disposal) is also a routine part of the
sourcing business. See "Business--Risk Management and Insurance."
Government Regulation. The Company is licensed by the Department of
Transportation (the "DOT") as a broker in arranging for the transportation of
general commodities by motor vehicle. The DOT prescribes qualifications for
acting in this capacity, including certain insurance and surety bond
requirements. The Company is also licensed by the Federal Maritime Commission
as an ocean freight forwarder and maintains a non-vessel operating common
carrier bond, and is licensed by the United States Customs Service of the
Department of the Treasury. The Company sources fresh produce under a license
issued by the Department of Agriculture. The Company's failure to comply with
the laws and regulations applicable to entities holding these licenses could
have a material adverse effect on the Company's results of operations or
financial condition. The transportation industry is subject to legislative or
regulatory changes that can affect the economics of the industry by requiring
changes in operating practices or influencing the demand for, and the cost of
providing, transportation services. See "Business--Regulation."
Importance of Major Clients. The Company derives a significant portion of
its gross revenues from its largest clients. The Company's 10, 20 and 50
largest clients accounted for approximately 15%, 20% and 29% of the Company's
gross revenues, respectively, in 1996. The sudden loss of a number of the
Company's major clients could have a material adverse effect on the Company.
See "Business--Customers and Marketing."
Change in Corporate Culture. For many years, employees have broadly
participated in the ownership of the Company, and more than 700 employees and
a few retired employees currently own substantially
8
<PAGE>
all of its outstanding Common Stock. Consequently, employees consider
themselves the owners of the Company. Upon completion of this offering and
lapse of restrictions on employees' ability to resell their shares of Common
Stock, a larger portion of the Common Stock will be in the hands of the
public, and the Company's employees will have significant liquid assets. This
change in structure and liquidity may adversely affect employee motivation.
The Company has also issued restricted stock as an incentive, and employees
owning Common Stock have profited from the growth in the book value of the
Common Stock. The Company intends to replace its current stock program with
new stock-based programs, but is unable to predict whether the substitution of
the new plans will be perceived as being a less valuable form of compensation,
thereby adversely affecting employee performance. If the Company finds that it
must initiate new incentive programs, its results of operations could be
adversely affected. See "Management--Existing Incentive Plans" and "--New
Incentive Plans."
Dependence on Management. The Company is highly dependent upon the continued
services of its senior management team, none of whom has an employment
agreement with the Company. The sudden loss of the services of several members
of senior management, as opposed to one or two individuals, could have a
material adverse effect on the Company. See "Business--Management," for
information on the senior management team.
Certain Charter, Bylaw and Statutory Anti-Takeover Provisions. The Company's
Certificate of Incorporation and Bylaws provide for a classified Board of
Directors, restrict the ability of stockholders to call special meetings or
take stockholder action by written consent and contain advance notice
requirements for stockholder proposals and nominations and special voting
requirements for the amendment of the Company's Certificate of Incorporation
and Bylaws. These provisions could delay or hinder the removal of incumbent
directors and could discourage or make more difficult a proposed merger,
tender offer or proxy contest involving the Company or may otherwise have an
adverse effect on the market price of the Common Stock. The Company also will
be subject to provisions of Delaware corporate law that will restrict the
Company from engaging in certain business combinations with an interested
stockholder, unless certain conditions are met or the business combination is
approved by the Board of Directors and/or the Company's stockholders in a
prescribed manner. These provisions also could render more difficult or
discourage a merger, tender offer or other similar transaction. See
"Description of Capital Stock."
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, any preferred stock that may be issued in the future.
The issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions, financings and other corporate
transactions, could have the effect of discouraging, or making more difficult,
a third party's acquisition of a majority of the Company's outstanding voting
stock. The Company has no present plans to issue any shares of preferred
stock. See "Description of Capital Stock--Preferred Stock."
One preferred share purchase right (a "Right") is attached to each share of
Common Stock outstanding, including the Common Stock offered hereby. The
Rights will have certain anti-takeover effects. If triggered, the Rights would
cause substantial dilution to a person or group of persons that acquires more
than 15% of the Common Stock on terms not approved in advance by the Board.
The Rights are intended to discourage or make more difficult a merger, tender
offer or other similar transactions not approved by the Board, regardless of
whether the stockholders favor any such transactions. See "Description of
Capital Stock--Stockholder Rights Plan."
Shares Eligible for Future Sale. Sales of a substantial number of shares of
Common Stock or their availability for sale in the public market following
this offering may adversely affect prevailing market prices for the Common
Stock. Upon consummation of this offering, the Company will have 41,264,621
shares of Common Stock outstanding. All of the 10,578,396 shares of Common
Stock offered hereby will be freely tradeable without restriction or further
registration unless acquired by "affiliates" of the
9
<PAGE>
Company as defined in Rule 144 under the Securities Act. In connection with
this offering, the Company and its officers, directors and other Selling
Stockholders, who will beneficially own an aggregate of 18,513,775 shares of
Common Stock after this offering, have agreed not to sell or otherwise dispose
of any shares, directly or indirectly, for one year from the date of this
Prospectus without the prior written consent of BT Alex. Brown Incorporated.
In addition, all other current stockholders, who beneficially own an aggregate
of 12,172,450 shares of outstanding Common Stock, will be prohibited, pursuant
to transactions resulting in the Company's reincorporation in Delaware upon
consummation of this offering, for a period of six months from transferring
Common Stock they currently hold except upon death or to family members or
trusts that take subject to the same restrictions. See "Shares Eligible for
Future Sale."
No Prior Public Market; Determination of Offering Price; Stock Price
Volatility. Prior to this offering, there has been no public market for the
Common Stock, and there can be no assurance that an active trading market will
develop or be sustained after this offering. The initial public offering price
was determined through negotiations among the Company, the Selling
Stockholders and the Representatives of the Underwriters and may bear no
relationship to the price at which the Common Stock will trade after this
offering. See "Underwriting" for a discussion of the factors that were
considered in determining the initial offering price. The market price of the
Common Stock may be volatile and be significantly affected by factors such as
actual or anticipated fluctuations in the Company's operating results,
announcements of new services by the Company or its competitors, developments
with respect to conditions and trends in the logistics or transportation
industries served by the Company, changes in governmental regulation, changes
in estimates by securities analysts of the Company's future financial
performance, general market conditions and other factors. In addition, the
stock markets have from time to time experienced significant price and volume
fluctuations that have adversely affected the market prices of securities of
companies for reasons often unrelated to their operating performance.
Immediate and Substantial Dilution. The initial public offering price is
substantially higher than the pro forma net tangible book value per share of
Common Stock. Purchasers of shares of Common Stock in this offering will incur
immediate and substantial dilution of $13.25 in the pro forma net tangible
book value per share of the Common Stock, assuming an initial public offering
price of $16.00 per share. See "Dilution."
10
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Common
Stock by the Selling Stockholders.
DIVIDENDS, STOCK REPURCHASE PROGRAM AND NON-CASH CHARGE
The Company's ability to generate substantial amounts of cash flow from
operations has enabled it to make annual repurchases of its Common Stock and,
for more than 50 years, to pay annual dividends to its stockholders. For 1995
and 1996, the Company paid aggregate annual dividends of $0.13 per share and
$0.185 per share, respectively. The Board of Directors has declared an
extraordinary cash dividend of $1.50 per share ($61.9 million in the
aggregate) and a liquidating distribution of the net proceeds of the sale of
the Company's consumer finance business, payable to stockholders of record
immediately prior to this offering. Purchasers of Common Stock in this
offering will not receive these dividends.
The Company anticipates that it will pay regular quarterly dividends,
beginning in December 1997, initially at the rate of $0.06 per share per
quarter. The declaration of dividends by the Company is subject to the
discretion of the Board of Directors. Any determination as to the payment of
dividends will depend upon the results of operations, capital requirements and
financial condition of the Company, and such other factors as the Board of
Directors may deem relevant. Accordingly, there can be no assurance that the
Board of Directors will declare or continue to pay dividends on the shares of
Common Stock in the future.
In order to provide a source of Common Stock for issuance in the near future
pursuant to the recently adopted Stock Incentive Plan and Stock Purchase Plan,
the Company's Board of Directors has authorized a stock repurchase program
under which up to 1,000,000 shares of Common Stock may be repurchased. Such
purchases may be made from time to time at prevailing prices in the open
market, by block purchase and in private transactions in compliance with the
rules of the Commission, including Regulation M. The Company intends to fund
repurchases with internally generated funds.
Pursuant to Commission rules related to stock issued or sold to employees at
prices below the initial public offering price during the 12 months preceding
the effective date of an initial public offering, the Company will record an
$18.6 million non-recurring, non-cash compensation charge at the effective
date of this offering. This charge relates to 1,237,000 shares sold to
employees by retired employees under the Company's book value stock purchase
program and 282,000 shares issued under the Company's existing incentive
plans, and represents the aggregate difference between book value (the amount
expensed by the Company for restricted shares upon issuance or the amount paid
by employees upon purchase of stock) and an assumed estimated public offering
price of $16.00 per share. See "Management--Existing Incentive Plans."
11
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1997, on an actual basis and pro forma to give effect to (i) an
anticipated tax benefit of approximately $36 million resulting from the tax
effect of termination, in connection with this offering, of restrictions on
restricted stock issued to employees, which will be credited to stockholders'
investment, (ii) a dividend of $1.50 per share ($61.9 million in the
aggregate) and a liquidating distribution of the net proceeds of the sale of
the Company's consumer finance business, which purchasers in this offering
will not receive, (iii) an $18.6 million non-recurring, non-cash compensation
charge and (iv) $1 million of estimated expenses of the offering:
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
----------------------
ACTUAL PRO FORMA
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Total debt............................................... $ -- $ --
Stockholders' investment:
Preferred stock, $.10 par value; 20,000,000 shares
authorized; none outstanding........................... -- --
Common stock, $.10 par value; 130,000,000 shares
authorized; 41,264,621 shares issued and outstanding
actual and pro forma (1)............................... 4,126 4,126
Additional paid-in capital (2).......................... -- 54,558
Foreign currency translation adjustment................. (346) (346)
Retained earnings (3)................................... 167,586 62,045
--------- ---------
Total stockholders' investment......................... $ 171,366 $ 120,383
========= =========
</TABLE>
- --------
(1) Excludes (i) 470,417 shares of Common Stock issuable upon exercise of
options granted immediately prior to this offering at an exercise price
per share equal to the public offering price shown on the cover page of
this Prospectus, none of which is presently exercisable, and (ii) an
additional 3,529,583 shares of Common Stock reserved for issuance under
the Company's Stock Incentive Plan and Stock Purchase Plan. See
"Management--New Incentive Plans."
(2) The increase in pro forma additional paid-in capital is a result of (i)
the anticipated $36 million tax benefit resulting from the termination of
restrictions on restricted stock in connection with this offering and (ii)
the effect of an $18.6 million non-recurring, non-cash compensation
charge.
(3) The decrease in pro forma retained earnings is the net result of (i) a
decrease for the dividend of $1.50 per share ($61.9 million in the
aggregate), (ii) a decrease for the liquidating distribution of the net
proceeds of the sale of the Company's consumer finance business of
approximately $38.7 million, (iii) an increase for the gain, net of tax,
from the sale of the Company's consumer finance business of approximately
$14.6 million, (iv) a decrease for the effect of an $18.6 million non-
recurring, non-cash compensation charge and (v) a decrease for the
estimated expenses of $1.0 million for this offering.
DILUTION
The pro forma net tangible book value of the Company as of June 30, 1997 was
$113.6 million or $2.75 per share of Common Stock. Pro forma net tangible book
value is the Company's total tangible assets (total assets less intangible
assets) less total liabilities at June 30, 1997, with certain adjustments
arising from this offering. See "Capitalization." Pro forma tangible net worth
per share is determined by dividing the pro forma net tangible book value by
the number of outstanding shares of Common Stock. Pro forma net tangible book
value dilution per share represents the difference between the amount per
share paid by purchasers of Common Stock in this offering and the pro forma
net tangible book value per share of Common Stock. The following table
illustrates the per share dilution:
<TABLE>
<S> <C>
Assumed initial public offering price per share................... $16.00
Pro forma net tangible book value per share....................... 2.75
------
Pro forma net tangible book value dilution per share.............. $13.25
======
</TABLE>
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The selected consolidated financial data for the Company for the years ended
December 31, 1992 through 1996 have been derived from the Company's
consolidated financial statements, which have been audited by Arthur Andersen
LLP, independent public accountants. The data for the six months ended June
30, 1996 and June 30, 1997 have been derived from the Company's unaudited
consolidated financial statements which, in the opinion of the Company's
management, contain all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the financial condition and
results of operations for these periods. The results of operations for the six
months ended June 30, 1997 are not necessarily indicative of the results that
may be expected for the entire year. The selected historical consolidated
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and notes thereto all included elsewhere
herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997(1)
-------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Gross revenues......... $968,893 $1,095,815 $1,257,946 $1,445,975 $1,605,905 $775,024 $855,152
Cost of transportation
and products.......... 878,485 987,102 1,122,347 1,285,881 1,426,836 688,104 755,996
-------- ---------- ---------- ---------- ---------- -------- --------
Net revenues (2) ...... 90,408 108,713 135,599 160,094 179,069 86,920 99,156
Selling, general and
administrative
expenses.............. 68,030 81,030 95,088 115,114 129,040 62,571 72,465
-------- ---------- ---------- ---------- ---------- -------- --------
Income from operations. 22,378 27,683 40,511 44,980 50,029 24,349 26,691
Investment and other
income (loss)......... 1,181 2,144 (109) 2,925 3,095 1,391 1,881
-------- ---------- ---------- ---------- ---------- -------- --------
Income from continuing
operations before
provision for income
taxes................. 23,559 29,827 40,402 47,905 53,124 25,740 28,572
Provision for income
taxes................. 9,110 11,983 16,261 18,450 20,682 10,055 11,339
-------- ---------- ---------- ---------- ---------- -------- --------
Net income from
continuing operations. 14,449 17,844 24,141 29,455 32,442 15,685 17,233
Net income from
discontinued
operations (3)........ 1,846 2,411 2,964 2,086 2,158 1,083 900
-------- ---------- ---------- ---------- ---------- -------- --------
Net income............. $ 16,295 $ 20,255 $ 27,105 $ 31,541 $ 34,600 $ 16,768 $ 18,133
======== ========== ========== ========== ========== ======== ========
Per share data:
Net income from
continuing operations. $ 0.28 $ 0.36 $ 0.52 $ 0.67 $ 0.78 $ 0.37 $ 0.42
Net income from
discontinued
operations............ 0.03 0.05 0.07 0.05 0.05 0.03 0.02
-------- ---------- ---------- ---------- ---------- -------- --------
Net income............. $ 0.31 $ 0.41 $ 0.59 $ 0.72 $ 0.83 $ 0.40 $ 0.44
======== ========== ========== ========== ========== ======== ========
Weighted average number
of shares outstanding
(in thousands)........ 52,125 48,980 46,296 43,934 41,799 42,182 41,306
Dividends per share.... $ 0.073 $ 0.087 $ 0.108 $ 0.130 $ 0.185 $ 0.010 $ 0.020
OPERATING DATA (AT END
OF PERIOD):
Branches............... 75 81 89 99 108 104 113
Employees.............. 1,050 1,183 1,403 1,436 1,665 1,563 1,801
Average net revenues
per branch............ $ 1,247 $ 1,392 $ 1,597 $ 1,683 $ 1,717 $ 856 $ 901
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital........ $ 61,875 $ 64,600 $ 86,122 $ 97,144 $ 114,070 $107,452 $131,264
Total assets........... 167,926 202,282 246,528 285,517 320,780 312,643 361,160
Total long-term debt... -- -- -- -- -- -- --
Stockholders'
investment............ 84,664 95,899 112,784 133,339 154,428 143,502 171,366
</TABLE>
(Footnotes on following page)
13
<PAGE>
- --------
(1) Pursuant to Commission rules related to stock issued or sold to employees
at prices below the initial public offering price during the 12 months
preceding the effective date of an initial public offering, the Company
will record an $18.6 million non-recurring, non-cash compensation charge
at the effective date of this offering. This charge relates to 1,237,000
shares sold to employees by retired employees under the Company's book
value stock purchase program and 282,000 shares issued under the Company's
existing incentive plans, and represents the aggregate difference between
book value (the amount expensed by the Company for restricted shares upon
issuance or the amount paid by employees upon purchase of stock) and an
assumed estimated public offering price of $16.00 per share. See
"Management--Existing Incentive Plans." If the $18.6 million non-
recurring, non-cash compensation charge had been recorded in the six month
period ended June 30, 1997, net loss from continuing operations would have
been $425,000, or a $0.01 loss per share.
(2) Net revenues are determined by deducting cost of transportation and
products from gross revenues. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
(3) Discontinued operations include the Company's equipment lease financing
business, which was disposed of in 1994, and the Company's consumer
finance business. In July 1997, the Company approved a plan to sell its
consumer finance business, which the Company sold pursuant to an agreement
entered into in September 1997, the proceeds of which will be deposited
into an escrow account on October 14, 1997, to be closed upon obtaining
final regulatory approval.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The selected consolidated financial and operating data of the Company set
forth certain information with respect to the Company's financial position and
results of operations that should be read in conjunction with the following
discussion and analysis. The following does not include an analysis of the
Company's consumer finance business, which is now accounted for as a
discontinued operation as a result of the Company's decision in July 1997 to
sell this business.
INTRODUCTION
Gross revenues represent the total amount of services and goods sold by the
Company to its customers. Costs of transportation and products include direct
costs of transportation contracted by the Company, including motor carrier,
intermodal, ocean, air, and other costs, and the purchase price of products
sourced by the Company. The Company acts principally as a service provider to
add value and expertise in the execution and procurement of these services for
its customers. The net revenues of the Company (gross revenues less costs of
transportation and products) are the primary indicator of the Company's
ability to source, add value and resell services and products that are
provided by third parties, and are considered by management to be the primary
measurement of growth for the Company. Accordingly, the discussion of results
of operations below focuses on the changes in the Company's net revenues.
Historically, the Company had a deferred compensation plan which provided
for the issuance of restricted stock to certain employees. Further, Robinson
had stock repurchase agreements in place with all employee-owners which
allowed active employees to purchase the shares when other stockholders'
employment with the Company ceased. Such arrangements allowed for broad-based
employee ownership and the orderly exit of stockholder/employees under a net
book value based system. In connection with this offering, the Company is
terminating these plans and replacing them with stock-based incentive plans
more typical of a publicly held company and will receive a tax benefit
estimated at $36 million. At the effective date of this offering, the Company
will record a non-recurring, non-cash compensation expense totaling $18.6
million to conform with Commission requirements to account for the restricted
stock issued to employees under existing incentive plans and the purchase of
outstanding stock by certain employees from retiring employees at prices below
the initial public offering price during the 12 months preceding the date of
this offering ("cheap stock").
In the transportation industry generally, results of operations show a
seasonal pattern as customers reduce shipments during and after the winter
holiday season. In recent years, the Company's operating income and earnings
have been higher in the second and third quarters than in the first and fourth
quarters. Although seasonality in the transportation industry has not had a
significant impact on the Company's cash flow or results of operations in
recent years, the Company expects this seasonality to continue and cannot
fully predict the impact it may have in the future. Inflation has not
materially affected the Company's operations due to the very short-term,
transactional basis of its business.
RESULTS OF OPERATIONS
Interim Operating Results
Revenues. Net revenues for July and August 1997 were $35.8 million, an
increase of 17.4% over net revenues of $30.5 million for the same period in
1996, resulting from an increase in net revenues from transportation services
of 21.3% to $27.6 million and an increase in net revenues from sourcing of
2.1% to $6.7 million. Information services net revenue increased by 29.8% to
$1.5 million.
Net Income From Continuing Operations. Net income from continuing operations
was $6.9 million for July and August 1997, an increase of 15.0% over $6.0
million for the same period in 1996. Net income from continuing operations per
share increased by 6.7% to $0.16 per share in July and August of 1997 compared
to $0.15 per share in July and August of 1996.
15
<PAGE>
The following table represents certain income statement data shown as
percentages of the Company's gross revenues:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
------------------- ------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Gross revenues.............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of transportation and products......... 89.2 88.9 88.9 88.8 88.4
----- ----- ----- ----- -----
Net revenues................................ 10.8 11.1 11.1 11.2 11.6
Selling, general and administrative
expenses................................... 7.6 8.0 8.0 8.1 8.5
----- ----- ----- ----- -----
Income from operations...................... 3.2 3.1 3.1 3.1 3.1
Investment and other income (loss).......... -- 0.2 0.2 0.2 0.2
----- ----- ----- ----- -----
Income from continuing operations before
provision for income taxes................. 3.2 3.3 3.3 3.3 3.3
Provision for income taxes.................. 1.3 1.3 1.3 1.3 1.3
----- ----- ----- ----- -----
Net income from continuing operations....... 1.9 2.0 2.0 2.0 2.0
Net income from discontinued operations..... 0.2 0.2 0.1 0.1 0.1
----- ----- ----- ----- -----
Net income.................................. 2.1% 2.2% 2.1% 2.1% 2.1%
===== ===== ===== ===== =====
</TABLE>
The following table summarizes net revenue and transactions by service line:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------- -----------------------------
1994 1995 CHANGE 1996 CHANGE 1996 1997 CHANGE
-------- -------- ------ -------- ------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue
(in thousands):
Transportation........ $ 99,287 $117,021 17.9% $133,246 13.9% $ 62,593 $ 75,682 20.9%
Sourcing.............. 32,447 38,207 17.8 39,252 2.7 21,382 19,662 (8.0)
Information services.. 3,865 4,866 25.9 6,571 35.0 2,945 3,812 29.4
-------- -------- -------- --------- ---------
Total............... $135,599 $160,094 18.1 $179,069 11.9 $ 86,920 $ 99,156 14.1
======== ======== ======== ========= =========
Transactions
(in thousands):
Transportation........ 610 675 10.7 830 23.0 394 473 20.1
Sourcing.............. 81 99 22.2 105 6.1 54 54 --
Information services.. 2,854 3,861 35.3 5,647 46.3 2,699 3,623 34.2
Net revenue per
transaction:
Transportation........ $ 162.77 $ 173.36 6.5 $ 160.54 (7.4) $ 158.87 $ 160.00 0.7
Sourcing.............. 400.58 385.93 (3.7) 373.83 (3.1) 395.96 364.11 (8.0)
Information services.. 1.35 1.26 (6.7) 1.16 (7.9) 1.09 1.05 (3.7)
</TABLE>
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Revenues. Gross revenues for the six months ended June 30, 1997, were $855.2
million, an increase of 10.3% over gross revenues of $775.0 million for the
six months ended June 30, 1996. Net revenues for the six months ended June 30,
1997 were $99.2 million, an increase of 14.1% over net revenues of $86.9
million for the six months ended June 30, 1996, resulting from an increase in
net revenues from
16
<PAGE>
transportation services of 20.9% to $75.7 million, offset by a decrease in net
revenues from sourcing of 8.0% to $19.7 million. Information services net
revenues increased by 29.4% to $3.8 million.
The increase in transportation net revenues was due to a 20.1% increase in
transaction volume from a significant expansion of business with current
domestic and international customers, particularly larger accounts, and from
new domestic and international customers. The Company opened seven new U.S.
and two new international branches between June 30, 1996 and June 30, 1997.
Sourcing net revenues decreased primarily due to the elimination in December
1996 of a program at a large branch to source and distribute various seafood
and other products, which was partially offset by net revenue growth from a
branch that sources produce for the Company's large retail chain customers.
Information services net revenues increased because of significant increases
in the number of transactions for all services. Because the number of lower-
priced electronic transactions increased faster than the number of manual
transactions, there was a 3.7% decrease in net revenues per transaction.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $72.5 million for the six months ended June 30,
1997, an increase of 15.8% over $62.6 million for the six months ended June
30, 1996. Selling, general and administrative expenses as a percent of gross
revenue increased from 8.1% for the six months ended June 30, 1996 to 8.5% for
the six months ended June 30, 1997, due primarily to higher personnel costs
from additional staffing and new warehouse expenses to support the Company's
growth.
Income from Operations. Income from operations was $26.7 million for the six
months ended June 30, 1997, an increase of 9.6% over $24.3 million for the six
months ended June 30, 1996.
Investment and Other Income (Loss). Investment and other income (loss) was
$1.9 million for the six months ended June 30, 1997, an increase of 35.2% over
$1.4 million for the six months ended June 30, 1996, due to a combination of
higher average levels of cash and other liquid investments and higher overall
rates of return on such funds.
Provision for Income Taxes. The effective income tax rates for continuing
operations were 39.7% and 39.1% for the six months ended June 30, 1997 and
1996, respectively. The effective income tax rate for both periods is greater
than the statutory federal income tax rate primarily due to state income
taxes, net of the federal benefit.
Net Income from Continuing Operations. Net income from continuing operations
was $17.2 million for the six months ended June 30, 1997, an increase of 9.9%
over $15.7 million in the first half of 1996. Net income from continuing
operations per share increased by 13.5% to $0.42 per share in the first half
of 1997 compared to $0.37 per share in the first half of 1996, primarily due
to an increase in net income and partly as a result of a decrease in shares
outstanding due to the Company's share repurchase program.
1996 Compared to 1995
Revenues. Gross revenues for 1996 were $1.6 billion, an 11.1% increase over
gross revenues of $1.4 billion for 1995. Net revenues for 1996 were $179.1
million, an 11.9% increase over net revenues of $160.1 million for 1995.
Transportation net revenues were $133.2 million, an increase of 13.9% over net
revenues in 1995 of $117.0 million. Sourcing net revenues were $39.3 million,
an increase of 2.7% over net revenues in 1995 of $38.2 million. Information
services net revenues were $6.6 million, an increase of 35.0% over net
revenues in 1995 of $4.9 million.
The transportation net revenue increase resulted primarily from a 23.0%
increase in the number of transactions, including a 27.5% transaction volume
increase in motor carrier transportation. The volume increase came from both
existing customers (particularly large accounts) and new customers. This
volume
17
<PAGE>
increase was offset by a 7.4% reduction in average net revenue of $12.82 per
transaction. Net revenues per transaction in 1995 had been unusually high due
to motor carrier overcapacity resulting in lower costs of purchased
transportation.
The increase in net revenues from sourcing primarily resulted from a 6.1%
increase in the number of transactions, partially offset by a 3.1% decline in
net revenues per transaction. Net revenues per transaction were adversely
affected by a write-off of approximately $1.0 million in connection with the
elimination of a sourcing and distribution program for seafood and other
products that had been initiated in early 1996.
Information service net revenues increased primarily due to a 46.3% increase
in transaction volume for all services. An increasingly higher percentage of
lower-priced electronic transactions resulted in a 7.9% decrease in net
revenues per transaction.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $129.0 million for 1996, an increase of 12.1%
over 1995. The increase was due primarily to higher personnel costs from
additional staffing and new warehouse expenses to support the Company's
growth. Selling, general and administrative expenses as a percent of gross
revenues remained constant at 8.0%.
Income from Operations. Income from operations was $50.0 million for 1996,
an increase of 11.2% over $45.0 million for 1995.
Investment and Other Income (Loss). Investment and other income (loss) was
$3.1 million for 1996, an increase of 5.8% over 1995, as the average amount of
funds available for short-term investment increased in 1996.
Provision for Income Taxes. The effective income tax rates for continuing
operations were 38.9% in 1996 and 38.5% in 1995. The adjusted effective income
tax rate for 1996 and the effective income tax rate for 1995 are higher than
the statutory federal income tax rate primarily due to state income taxes, net
of the federal benefit.
Net Income from Continuing Operations. Net income from continuing operations
for 1996 was $32.4 million, an increase of 10.1% from $29.5 million in 1995.
Net income from continuing operations per share for 1996 was $0.78 per share
versus $0.67 per share for 1995.
1995 Compared to 1994
Revenues. Gross revenues for 1995 were $1.4 billion, an increase of 14.9%
over gross revenues of $1.3 billion for 1994. Net revenues for 1995 were
$160.1 million, an increase of 18.1% over net revenues of $135.6 million for
1994. Transportation net revenues were $117.0 million, an increase of 17.9%
over 1994 net revenues of $99.3 million. Sourcing net revenues were $38.2
million, an increase of 17.8% over 1994 net revenues of $32.4 million.
Information services net revenues were $4.9 million, an increase of 25.9% over
1994 net revenues of $3.9 million.
An increase of 10.7% in transportation transaction volume and a 6.5%
increase in the average net revenues per transaction resulted in the 17.9%
overall increase in transportation net revenues. Transaction volume increases
came from both existing customers and new customers. The net revenue per
transaction increase resulted from favorable market conditions for the
purchasing of transportation services due to motor carrier overcapacity.
The sourcing net revenue increase resulted from a significant volume
increase from a new sourcing program for a large grocery retailer. In
addition, one branch's sourcing revenues from two large retailers increased
approximately 90% to $2.3 million.
18
<PAGE>
Information service net revenues increased primarily due to a 35.3% increase
in transaction volume. An increasingly higher percentage of lower-priced
electronic transactions resulted in a 6.7% decrease in net revenues per
transaction.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $115.1 million for 1995, an increase of 21.1%
over 1994. Selling, general and administrative expenses increased as a percent
of gross revenues from 7.6% in 1994 to 8.0% in 1995 primarily due to
additional warehouse expenses to support the Company's expanded services.
Income from Operations. Income from operations was $45.0 million for 1995,
an increase of 11.0% over $40.5 million for 1994.
Investment and Other Income (Loss). Investment and other income (loss) was
$2.9 million for 1995, versus a $100,000 loss in 1994. During 1994, a loss of
approximately $1.9 million was incurred on an investment, which was
subsequently liquidated.
Provision for Income Taxes. The effective income tax rate on continuing
operations was 38.5% and 40.2% for 1995 and 1994, respectively. The effective
income tax rate for both periods was higher than the statutory federal income
tax rate due primarily to state income taxes, net of the federal benefit.
Net Income from Continuing Operations. Net income from continuing operations
for 1995 was $29.5 million, an increase of 22.0% over $24.1 million in 1994.
Net income from continuing operations per share for 1995 was $0.67 per share,
an increase of 28.8% compared with $0.52 per share for 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated substantial cash from operations
which has enabled it to fund its growth while paying cash dividends and
repurchasing stock from retiring employees. Cash and cash equivalents at June
30, 1997, totaled $40.3 million compared to $42.6 million at December 31,
1996. Available-for-sale securities were $50.2 million at June 30, 1997,
compared to $42.7 million at December 31, 1996. Working capital at June 30,
1997 totaled $131.3 million. The Company has had no long-term debt for the
last five years.
The shares offered hereby will be sold by current stockholders of the
Company. Accordingly, the Company will receive no proceeds from the sale of
these shares. Certain transactions associated with the sale of shares will
have an effect on the liquidity and capitalization of the Company.
The Company has entered into a definitive agreement to sell its consumer
finance business in excess of the recorded carrying value of the net assets of
discontinued operations of $12.5 million. The Company also will receive an
estimated $36 million tax benefit from removing restrictions on shares
previously awarded to employees. In addition the Company has declared a
special cash dividend of $1.50 per share ($61.9 million in total) and a
liquidating distribution of the net proceeds arising from the sale of its
consumer finance business of approximately $0.94 per share ($38.7 million in
total) on all shares outstanding immediately prior to consummation of this
offering.
Management believes that the Company's available cash, together with
expected future cash generated from operations, are expected to be sufficient
to satisfy its anticipated needs for working capital, capital expenditures,
cash dividends and stock repurchases. In addition, the Company has $17.5
million available under its two existing lines of credit at interest rates of
6.69% and 6.63%, respectively, as of June 30, 1997. The lines of credit do not
restrict the payment of dividends.
Operating Activities. Cash provided by operations totaled $33.0 million,
$38.2 million and $35.4 million for 1994, 1995 and 1996, respectively. Cash
provided by operations for the six months ended June 30, 1996 and six months
ended June 30, 1997, totaled $10.6 million and $12.3 million, respectively.
Cash provided by operations in 1995 was higher than 1994 and 1996 primarily
due to the timing of accounts receivable collections and the payment of
accounts payable.
19
<PAGE>
Investing Activities. Cash provided by (used for) investing activities was
$9.5 million, ($35.5) million and ($12.7) million for 1994, 1995 and 1996,
respectively. Cash provided by (used for) investing activities for the six
months ended June 30, 1996 and six months ended June 30, 1997, was $2.0
million and ($12.5) million, respectively. The Company's primary use of cash
for investing activities during 1994, 1995 and 1996 and for the six months
ended June 30, 1996 and six months ended June 30, 1997 related to the purchase
of marketable securities, as well as additions to equipment. The Company
regularly invests its cash primarily in investment grade fixed-income
securities in order to obtain a higher rate of return on available funds.
During the periods presented, significant fluctuations in cash flows from
investing activities have occurred due to purchases and sales of securities
available for sale.
Financing Activities. Cash used for financing activities totaled $15.3
million, $13.5 million and $14.5 million for 1994, 1995 and 1996,
respectively. Cash used for financing activities for the six months ended June
30, 1996 and six months ended June 30, 1997, totaled $7.2 million and $2.1
million, respectively. Cash used for financing activities for all periods
primarily consists of repurchases of stock under the Company's book value
repurchase plan and cash dividends paid to stockholders.
20
<PAGE>
INDUSTRY OVERVIEW
Logistics can generally be defined as the management and transportation of
materials and inventory throughout the supply chain. According to a leading
industry consultant, the available domestic market for third-party logistics
providers was $421 billion in 1996, only 5.9%, or $25 billion, of which was
actually generated by third-party logistics providers. This same consultant
predicts the market for third-party logistics to double to $50 billion by the
year 2000, representing approximately 10% of the estimated $474 billion
domestic market. The international logistics market is estimated to be three
to four times the size of the domestic market, and both markets are highly
fragmented.
The logistics industry has evolved over the past 20 years as increasing
global competition has led to manufacturing automation, production flexibility
and just-in-time inventory management systems. Historically, logistics
decisions, such as the mode of transport, carrier selection and inventory
placement, were performed by production-focused traffic managers, typically
with minimal analysis. Carrier selection was often based solely on price or
the effectiveness of a carriers' sales program. These factors led to the
evolution of high-cost private fleets, poor transportation mode and carrier
selections, suboptimal warehouse location, inefficient loading patterns and
higher-than-necessary inventory levels. As companies' logistics decisions
involve greater emphasis on cost efficiency and increased focus on core
competencies, many companies are increasingly reevaluating their in-house
transportation function.
Many of these companies are finding it advantageous to outsource their
logistics management as the most efficient way to manage the entire supply
chain and reduce costs. At the same time, major domestic and international
shippers are seeking to utilize fewer firms to service their transportation
and logistics needs. The key advantages of logistics outsourcing include:
. Capitalizing on broader logistics knowledge. Outsourcing permits a shipper
to take advantage of the third-party logistics provider's greater knowledge
gained through experience with numerous customers, multiple transportation
modes, regional, national and international markets and other logistics
issues.
. Leveraging network economies of scale. Third-party logistics firms can
lower logistics costs through purchasing economies gained by access to
greater transportation capacity and their ability to select the level of
service and transportation mode best suited to a customer's individual
needs. For example, by pooling less-than-truckload and less-than-
containerload freight to form truckloads and/or containerloads, freight can
be shipped at greatly reduced costs. Through logistics programs, inventory
can be reduced or kept in motion, warehouses can be by-passed or in some
cases eliminated, and a private fleet's empty miles can be reduced.
. Accessing transportation information systems. Information systems are
critical to providing seamless logistics service across multiple carriers
and modes of transportation. These systems must be capable of managing the
flow of information through Electronic Data Interchange ("EDI") and other
electronic means while providing shippers instant access to shipment data.
Quality third-party logistics providers have developed these systems and
make them available to their customers.
. Transforming fixed costs to variable costs. Third-party logistics services
turn many of a shipper's fixed logistics costs into variable costs.
As a result of increasingly global markets, international freight
transportation is one of the fastest growing sectors of the freight
transportation industry. For international shipments, shippers must rely on
international providers to originate or complete a shipment. Managing the
movement of goods within and between continents has become increasingly
complex, and, therefore, multinational companies are seeking global logistics
solutions. Only a few third-party domestic logistics providers, such as the
Company, have developed the global capabilities to provide customers with
logistics services on a worldwide basis.
21
<PAGE>
BUSINESS
OVERVIEW AND STRATEGY
Founded in 1905, the Company is the largest third-party logistics company in
North America with 1996 gross revenues of $1.6 billion. The Company is a
global provider of multimodal transportation services and logistics solutions
through a network of 116 offices in 38 states and Canada, Mexico, Belgium, the
United Kingdom, France, Spain, Italy, Singapore and South Africa. Through
contracts with over 14,000 motor carriers, the Company maintains the single
largest network of motor carrier capacity in North America and is one of the
largest third-party providers of intermodal services in the United States. In
addition, the Company regularly provides air, ocean and customs services. As
an integral part of the Company's transportation services, the Company
provides a wide range of value-added logistics services, such as raw materials
sourcing, freight consolidation, cross-docking and contract warehousing.
During 1996, the Company handled over 935,000 shipments for more than 8,600
customers, ranging from Fortune 100 companies to small businesses in a wide
variety of industries. During the past five years, the Company has increased
net revenues at a compound annual growth rate of 18.6 percent.
The Company has developed global multimodal transportation and distribution
networks to provide seamless logistics services worldwide. As a result, the
Company has the capability of managing all aspects of the supply chain on
behalf of its customers. As a non-asset based transportation provider, the
Company can focus on optimizing the transportation solution for its customer
rather than on its own asset utilization, using established relationships with
motor carriers, railroads (primarily intermodal service providers), air
freight carriers and ocean carriers. Through its motor carrier contracts, the
Company maintains access to more than 370,000 dry vans, 128,000 temperature-
controlled vans and containers and 96,000 flatbed trailers. The Company also
has intermodal marketing contracts with 11 railroads, including all of the
major North American railroads, which give the Company access to more than
150,000 additional trailers and containers.
Throughout its 90-year history, the Company has been in the business of
sourcing fresh produce. Much of the Company's logistics expertise can be
traced to its significant experience in handling perishable commodities. Due
to the time-sensitive nature and quality requirements of the shipments, fresh
produce represents a unique logistics challenge, and the distribution and
transportation costs are significant compared with, and may exceed, the cost
of the produce being shipped. The Company has developed a network of produce
sources and maintains access to specialized equipment and transportation modes
designed to ensure timely delivery of uniform quality produce. In response to
demand from large grocery retailers and food service distributors, the Company
has developed its own brand of produce, The Fresh 1(R), which is sourced
through various relationships and packed to order through contract packing
agreements. The Company has also leveraged its food sourcing and logistics
expertise into the sourcing of food ingredients on behalf of food
manufacturers.
The Company's unique business philosophy has accounted for its strong
historical results and has positioned the Company for continued growth. The
Company's principal competitive advantage is its large decentralized branch
network, staffed by nearly 1,300 salespersons who are employees rather than
agents. These branch employees are in close proximity to both customers and
carriers which facilitates quick responses to customers' changing needs.
Branch employees act as a team in both marketing the Company's services and
providing these services to individual customers. The Company compensates its
branch employees principally on the basis of their branch's profitability,
which in the Company's opinion produces a more service-oriented, focused and
creative sales force. The Company is substantially owned by more than 700 of
its employees, and, following this offering, these employees will continue to
own more than 75% of the Company's Common Stock. The Company's recently
adopted Stock Incentive Plan and Stock Purchase Plan will allow for even
broader equity participation by employees following this offering.
Growth within the logistics industry is being driven by the continuing trend
of companies outsourcing their logistics needs in order to focus on their core
businesses, better manage just-in-time
22
<PAGE>
inventory systems and reduce costs. According to a leading industry
consultant, the available domestic market for third-party logistics providers
was $421 billion in 1996, only 5.9%, or $25 billion, of which was actually
generated by third-party logistics providers. This same consultant predicts
the market for third-party logistics to double to $50 billion by the year
2000, representing approximately 10% of the estimated $474 billion domestic
market. The Company believes the international logistics market is
approximately three to four times the domestic market, and both the domestic
and international markets are highly fragmented.
The Company's strategy for future growth is to expand the following:
. Core transportation business. The Company believes there are significant
opportunities to gain more transportation business from both existing
and new customers through its existing branch network. The Company also
believes it can selectively add domestic branches in response to cus-
tomer demand and opportunities to serve new customers in new geographic
areas.
. International markets. The Company intends to open additional interna-
tional branches to serve the local needs of its existing multinational
customer base and gain new customers throughout the world. For example,
after many years of providing logistics services to an international
snack food company in North America, the Company was recently designated
as this customer's international logistics partner. The Company has im-
plemented a comprehensive logistics solution for this customer in Europe
and is currently developing a similar solution in South Africa and South
America.
. Enhanced logistics services. In recent years, the Company has been pro-
viding an expanded range of enhanced logistics services. The Company be-
lieves there are significant opportunities to increase the level of lo-
gistics services it provides to its customers. The Company intends to
offer increasingly sophisticated logistics services to customers in or-
der to provide greater efficiencies and reduce costs throughout the cus-
tomers' supply chains.
LOGISTICS SERVICES
As a global, third-party logistics company, the Company provides multimodal
transportation and related logistics services, sourcing and fee-based
information services.
The Company seeks to establish long-term relationships with its customers in
order to provide logistics solutions that reduce or eliminate inefficiencies
in customers' supply chains. Whenever appropriate, the Company analyzes the
customer's current transportation rate structures, modes of shipping and
carrier selection. The Company may also examine the customer's warehousing,
picking procedures, loading, unloading and dock scheduling procedures, as well
as packaging and pallet configuration procedures. The Company then evaluates
how these procedures interact with shipping, manufacturing and customer
service. Upon completion of an initial analysis, the Company proposes
solutions which allow the customer to streamline operating procedures and
contain costs, while improving the management of its supply chain. Robinson
branch employees remain involved with the customer throughout the analysis and
implementation of the proposed solution. In the course of providing day-to-day
transportation services, branch employees offer further logistics analysis and
solutions as the employees become more familiar with the customer's daily
operations and the nuances of its supply chain. The Company's ultimate goal is
to assist the customer in managing its entire supply chain while being the
customer's key provider of individual transportation services.
MULTIMODAL TRANSPORTATION SERVICES
On a day-to-day basis, customers communicate their freight needs, typically
on a load-by-load basis, to the Company by means of a telephone call, fax
transmission, e-mail or EDI message to the branch office salesperson
responsible for the particular customer. That salesperson enters all
appropriate information about each load into the Company's computer based
Customer Oriented Shipment Management Operating System ("COSMOS"), determines
the appropriate mode of transportation for the load and selects a carrier
23
<PAGE>
or carriers, based upon the salesperson's knowledge of the carrier's service
capability, equipment availability, freight rates and other relevant factors.
The salesperson then communicates with the carrier's dispatch office to
confirm a price for the transportation and the carrier's commitment to provide
the transportation. At this point, the salesperson provides the carrier
information to the customer, together with the Company's sales price, which is
intended to provide a profit to the Company for the totality of services
performed for the customer. By accepting the customer's order, the Company
becomes legally responsible for transportation of the load from origin to
destination, rather than being a mere freight broker. The carrier's contract
is with the Company, not the customer, and the Company is responsible for
prompt payment of carrier charges. The Company is also responsible to its
customer for any claims for damage to freight while in transit or performance.
In most cases, the Company receives reimbursement from the carrier for these
claims.
As a result of the Company's logistics capabilities, many customers now look
to Robinson to handle all, or a substantial portion, of their freight
transportation requirements to or from a particular manufacturing facility or
distribution center. In a number of instances, the Company has contracts with
the customer whereby the Company agrees to handle a specified number of loads
usually to specified destinations, such as from the customer's plant to a
distribution center, at specific rates, but subject to seasonal variation.
Most of the Company's rate commitments are for periods of one year or less. To
meet its obligations under these customer contracts, Robinson may obtain
advance commitments from one or more carriers to transport all, or a
significant portion, of the contracted loads, again at specific rates, for the
length of Robinson's customer contract.
As part of its customer focus, Robinson offers a wide range of logistics
services on a worldwide basis to assure timely, efficient and cost effective
delivery through the use of one or more transportation modes. These logistics
services include: transportation management (price and modal comparisons and
selection; shipment consolidation and optimization; improvement of operating
and shipping procedures and claims management); minimization of storage
(through cross-docking and other flow-through operations); logistics network
and nodal location analysis to optimize the entire supply chain; tracking and
tracing; reverse logistics and other special needs; management information;
and analysis of a customer's risk and claims management practices. Robinson
will evaluate a customer's core carrier program by reviewing such factors as
carriers' insurance certificates, safety ratings and financial stability as
well as establishing a program to measure and monitor key quality standards
for those core carriers. These services are bundled with underlying
transportation services and are not typically separately priced, but instead
are reflected as a part of the cost of transportation services provided by the
Company on a transactional basis pursuant to continuing customer
relationships. Incident to these transportation services, the Company may
supply sourcing, contract warehousing, consulting and other services, for
which it is separately compensated.
The Company is capable of arranging all modes of transportation services on
a worldwide basis:
. Truck--Through its contracts with over 14,000 motor carriers, the
Company maintains access to more than 370,000 dry vans, 128,000
temperature-controlled units and 96,000 flatbeds. It offers both time-
definite and expedited truck transportation. In many instances,
particularly in connection with its sourcing business, the Company will
consolidate partial loads for several customers into full truckloads.
. Intermodal--Intermodal transportation involves the shipment of trailers
or containers by a combination of truck, rail and/or ship in a
coordinated manner. The Company provides intermodal service by both rail
and ship, arranges local pickup and delivery (known as drayage) through
local motor carriers and provides temperature-controlled double and
triple-stacked intermodal containers. The Company currently owns or
leases 370 intermodal containers. The Company also has intermodal
marketing contracts with 11 railroads, which give the Company access to
more than 150,000 additional trailers and containers.
. Ocean--As an indirect ocean carrier and freight forwarder, the Company
consolidates shipments, determines routing, selects ocean carriers, con-
tracts for ocean shipments, provides for local
24
<PAGE>
pickup and delivery of shipments and arranges for customs clearance of
shipments, including the payment of duties.
. Air--The Company provides door-to-door service as a full-service air
freight forwarder, both domestically and internationally.
The table below shows the Company's net revenue by transportation mode for
the periods indicated:
TRANSPORTATION SERVICES NET REVENUE
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Truck.............. $55,826 $63,549 $81,122 $ 97,636 $110,460 $ 51,884 $ 63,073
Intermodal......... 3,876 4,411 7,828 6,864 8,014 3,865 5,045
Ocean.............. 1,903 6,278 6,865 7,212 8,121 4,079 4,369
Air................ 298 323 550 1,402 1,687 795 769
Miscellaneous (1).. 2,381 2,686 2,922 3,907 4,964 1,970 2,426
------- ------- ------- -------- -------- -------- --------
Total............ $64,284 $77,247 $99,287 $117,021 $133,246 $ 62,593 $ 75,682
======= ======= ======= ======== ======== ======== ========
</TABLE>
- --------
(1) Consists of customs clearance (Automated Brokerage Interface (ABI) and
Automated Clearing House (ACH) capabilities with the U.S. Customs Service)
and warehousing.
As the Company has emphasized integrated logistics solutions, its
relationships with many customers have become broader, with the Company
becoming a business partner responsible for a greater portion of supply chain
management. Customers may be served by specially created Robinson teams and
over several branches. Examples include:
. For an international snack food company, the Company redesigned the
sourcing program for raw commodities to more efficiently serve multiple
plant sites and designed special containers for the transportation of
these commodities. Through its services, the Company assures more timely
delivery of higher quality commodities, minimizes factory downtime, and
improves flexibility to respond to emergency situations.
. For a national retailer with an overburdened distribution center network
and a need for enhanced inventory control, the Company implemented a
flow-through cross-docking program keeping inventory in motion while
consolidating less than truckload freight deliveries from seven states
into truckload deliveries to ten distribution centers. Direct vendor
communication improved control of inbound inventory by giving
distribution centers the ability to plan delivery and scheduling of
inventory. The Company also opened two distribution centers on a
contract basis, began receiving product within days and commenced
distribution of products to retail stores within two weeks of initiating
the program.
. To address a national dairy cooperative's peak-season volatility, the
Company's on-site team is solely responsible for selecting and dispatch-
ing all carriers, including the cooperatives's private fleet. The Com-
pany consolidates customer orders, schedules pick-ups and manages rout-
ing, tracking and tracing, delivery appointments and pallet returns for
all of the cooperative's finished dairy products from 25 facilities.
. For the beverage division of a national food company, the Company
implemented a transition from product specific transportation management
to a regionally focused, decentralized approach for 41 plants which
distribute to over 1,000 customers. The Company now consolidates
customer orders which enables the Company to streamline production
scheduling to eliminate manufacturing downtime. The Company manages the
core carrier program and is responsible for carrier selection and on-
time performance.
25
<PAGE>
SOURCING
Throughout its 90-year history, Robinson has been in the business of
sourcing fresh produce. Much of the Company's logistics expertise can be
traced to the Company's significant experience in handling perishable
commodities. Because of its perishable nature, produce must be quickly
packaged, transported within tight timetables in temperature controlled
equipment and distributed quickly to replenish high turnover inventories
maintained by wholesalers, food service companies and retailers. In most
instances, the Company consolidates individual customers' produce orders into
truckload quantities at the point of origin and arranges for transportation of
the truckloads, often to multiple destinations. Approximately one-half of the
Company's sourcing customers are produce wholesalers, who purchase produce in
relatively large quantities through the Company and resell the produce to
grocery retailers, restaurants and other resellers of food. More than one-
third of Robinson's sourcing customers are grocery store chains and other
multistore retailers, and most of the Company's remaining customers are food
service companies that distribute a range of food products to retailers,
restaurants and institutions.
During the past five years, the Company has actively sought to expand its
food sourcing customer base by focusing on the larger multistore retailers. As
these retailers have expanded through store openings and industry
consolidation, their traditional methods of produce sourcing and store-level
distribution, which relied principally on regional or even local purchases
from wholesalers, have become inefficient. The Company's logistics and
perishable commodities sourcing expertise can greatly improve the retailers'
produce purchasing as well as assure uniform quality from region to region and
store to store. The Company introduced its proprietary The Fresh 1(R) brand of
produce in 1989, which includes a wide range of uniform quality, top grade
fruits and vegetables purchased from various domestic and international
growers.
Examples of perishable commodities sourcing and logistics services provided
by the Company for major retail chains include:
. The Company has improved the quality of produce offered by a major
grocery retailer through the use of Robinson's packed-to-order The Fresh
1(R) label. The Company is responsible for sourcing produce, assisting
in management of inventory levels, transporting to the customer's nine
distribution centers and, when required, delivering to each retail
store. Payment is electronic.
. For another major retailer, the Company is responsible for providing
produce to the customer's seven distribution centers, emphasizing The
Fresh 1(R) labeled produce. These distribution centers currently serve
approximately 350 individual stores. The Company receives point of sale
produce sales information directly through EDI from the customer and is
implementing a program where it is responsible for inventory control and
reordering as well as management of transportation to the customer's
distribution centers. Invoicing is electronic.
The Company has also sought to leverage its food sourcing and logistics
expertise into the food ingredients market and has focused on the major food
manufacturers that utilize significant quantities of various ingredients in
producing food products. Examples of ingredients sourced for food processors
include fruit juice concentrates, dehydrated onions, chocolate and natural
food colors.
Sourcing accounted for approximately 24%, 24% and 22% of the Company's net
revenues in 1994, 1995 and 1996, respectively.
INFORMATION SERVICES
A subsidiary of the Company, T-Chek Systems, Inc. provides motor carrier
customers with funds transfer and driver payroll services, fuel management
services, fuel and use tax reporting as well as on-line access to custom-
tailored information management reports, all through the use of its
proprietary automated system. This system enables motor carriers to track
equipment, manage fleets and dictate
26
<PAGE>
where and when their drivers purchase fuel. For several companies and truck
stop chains, T-Chek captures sales and fuel cost data, applies the margin
agreed between seller and purchaser, reprices the sale, invoices the carrier
and provides management information to the seller. T-Chek is also seeking to
market other tracking, tracing and communications services and products,
primarily to motor carriers.
Through its subsidiary, Payment and Logistics, Inc., the Company provides
freight payment services to shippers using a proprietary system, often linked
to the carriers by EDI, with the ability to process freight payments by
electronic funds transfer. This paperless system also enables the Company to
automatically audit the customer's freight rates, eliminate duplicate payments
to carriers and produce reports containing information about such matters as
shipping patterns, freight volumes and overall transportation costs. The
Company and the customer use these data to better manage the customer's supply
chain.
The Company's information services accounted for approximately 3%, 3% and 4%
of the Company's net revenues in 1994, 1995 and 1996, respectively.
ORGANIZATION
To allow the Company to stay close to customers and markets, the Company has
created and continues to expand a network of 116 offices, supported by
executives and services in a central office.
BRANCH NETWORK
Branch salespersons are responsible for developing new business, receiving
and processing orders from specific customers located in the area served by
the branch and contracting with carriers to provide the transportation
requested. In addition to routine transportation, salespersons are often
called upon to handle customers' unusual, seasonal and emergency needs.
Shipments to be transported by truck are almost always contracted at the
branch level. Some branches may rely on expertise in other branches when
contracting intermodal, international and air shipments.
Salespersons in the branches both sell and service their customers rather
than rely exclusively on a central office or dedicated sales staff. Sales
opportunities are identified through the Company's database, industry
directories, referrals by existing customers and leads generated by branch
office personnel through knowledge of their local and regional markets. Each
branch is also responsible for locating and contracting with carriers to serve
the branch's customers.
The table below shows certain information about the Company's branches for
the periods indicated:
BRANCH DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------- -----------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Average employees per branch.... 14.0 14.6 15.8 14.6 15.4 15.0 15.9
Average net revenues per branch. $1,247 $1,392 $1,597 $1,683 $1,717 $ 856 $ 901
Average net revenues per
employee....................... $ 93 $ 98 $ 105 $ 113 $ 115 $ 58 $ 57
</TABLE>
As of June 30, 1997, the Company's 1,365 branch salespersons represented
approximately 70% of the Company's total workforce and all branch employees,
including support staff, represented over 90% of the Company's workforce. At
June 30, 1997, the number of salespersons per Company branch ranged from three
to 54.
27
<PAGE>
Branch Expansion. The Company expects to continue to add branch offices as
management determines that a new branch may contribute to continued growth and
as branch salespersons develop the capability to manage a new branch. The
Company intends to focus particularly on opening overseas branches as
opportunities arise to serve the local needs of multinational customers.
Additional branches are often opened within a territory previously served by
another branch, such as within major cities, as the volume of business in a
particular area warrants opening a separate branch. Capital required to open a
new branch is modest, involving a lease for a small amount of office space,
communication links and often employee compensation guaranties for a short
time.
Unique Branch Network. For almost two decades, new branch salespersons have
been hired through a sophisticated profiling system using standardized tests
to measure an applicant against the traits determined by the Company to be
those of successful Robinson employees. These common traits facilitate
cooperative efforts necessary for the success of each office. Applicants are
recruited nationally from across the United States and Canada, typically have
college degrees and some have business experience, not necessarily within the
transportation industry. The Company is highly selective in determining to
whom it offers employment.
Newly hired branch employees receive extensive on-the-job training at the
branch level, which ranges from six months to a year and emphasizes
development of the necessary skills and attitude to become productive members
of a branch team. The Company believes most salespersons become productive
employees in a matter of weeks. After gaining a year of experience, each
salesperson attends a Company-sponsored national meeting to receive additional
training and foster relationships between branches.
Employees at the branch level form a team, which is enhanced by the
Company's unique incentive compensation system under which a significant part
of the compensation of most branch managers and salespersons is dependent on
the profitability of the particular branch. For any calendar year, branch
managers and salespersons who have been employed for at least one complete
year participate in the branch's earnings for that calendar year, based on a
system of "points" awarded to the employees on the basis of their productivity
and contribution. Most of a branch manager's compensation is provided by this
compensation program. For 1996, incentive-based compensation averaged 31% of
branch salespersons' total compensation, 64% of branch managers' total
compensation and 61% of officers' total compensation. Branch employees also
participate in the Company's Profit Sharing Plan, contributions to which
depend on overall Company profitability. See "Management--Existing Incentive
Plans--Profit Sharing Plan." Branch managers of larger branches also
participate in a separate incentive program based on overall Company profits.
See "Management--Existing Incentive Plans--Restricted Stock Programs." In
connection with establishing new branches and other special circumstances, the
Company may guaranty a level of compensation to the branch manager and key
salespersons.
Following this offering, all managers throughout the Company who have
significant responsibilities will be eligible to participate in the Company's
Stock Incentive Plan. Employees at all levels, after a qualifying period of
employment, will be eligible to participate in the Company's Stock Purchase
Plan. See "Management--New Incentive Plans."
Individual salespersons benefit through the growth and profitability of
individual branches and are motivated by the opportunity to become branch
managers, assistant managers or department managers. All branch salespersons
are full time employees.
EXECUTIVES
Under the Company's decentralized operating system, branch managers report
directly to, and receive guidance and support from, a small group of executive
officers at the Company's central office. Customers, carriers, managers and
employees have direct access to the Company's Chief Executive Officer, D.R.
Verdoorn, and all other executive officers. These executives provide training
and education concerning logistics, develop new services and applications to
be offered to customers and provide broad market analysis.
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<PAGE>
EMPLOYEES
As of June 30, 1997, the Company had a total of 1,801 employees,
substantially all of whom are full-time employees, 1,641 of which were located
in the Company's branch offices. Corporate services such as accounting,
information systems, legal, credit support and claims support are provided
centrally. The Company believes that its compensation and benefit plans are
among the most competitive in the industry and that its relationship with
employees is excellent.
CUSTOMERS AND MARKETING
The Company seeks to establish long-term relationships with its customers
and to increase the amount of business done with each customer by seeking to
provide the customer with a full range of logistic services. In 1996, the
Company served approximately 8,600 customers, ranging from Fortune 100
companies to small businesses in a wide variety of industries. During 1996, no
customer accounted for more than 4% of gross revenues, and the Company's 10,
20 and 50 largest customers represented approximately 15%, 20% and 29% of
gross revenues, respectively. In recent years, revenue growth has been
achieved through the growth and consolidation of customers, expansion of the
services provided by the Company and an increase in the number of customers
served. In the first half of 1997, net revenues attributable to the Company's
50 largest transporation customers increased 36.7% over net revenues from the
Company's 50 largest transportation customers in the same period in 1996.
While the Company has increased the level of business with its larger
customers in recent years, the Company has experienced growth in its total
customer base as well.
The Company believes that decentralization allows salespersons to better
serve the Company's customers by fostering the development of a broad
knowledge of logistics and local and regional market conditions as well as the
specific logistics issues facing individual customers. With the guidance of
experienced branch managers (who have an average tenure of 13 years with the
Company), branches are given significant latitude in pursuing opportunities
and committing the Company's resources to serve customers.
Branches seek additional business from existing customers and pursue new
customers, based on their knowledge of local markets and the range and value
of logistics services that the Company is capable of providing. The Company
has begun placing increased emphasis on national sales and marketing support
to enhance branch capabilities. Increasingly, branches call on central office
executives, a national sales staff and a central logistics group to support
them in the pursuit of multinational corporations and other companies with
more complex logistics requirements.
RELATIONSHIPS WITH CARRIERS
The Company seeks to establish long-term relationships with carriers in
order to assure dependable services, favorable pricing and carrier
availability during peak shipping periods and periods of undercapacity. To
strengthen and maintain these relationships, Company salespersons regularly
communicate with carriers serving their region and seek to assist carriers
with equipment utilization, reduction of empty miles and equipment
repositioning. The Company has a policy of prompt payment and provides
centralized claims management on behalf of various shippers. Many smaller
carriers effectively consider Robinson as their sales and marketing
department.
As of June 30, 1997, the Company had contracts with 14,125 motor carriers
(representing approximately 128,000 temperature controlled vans, 370,000 dry
vans and 96,000 flatbeds). Those carriers include owner-operators of a single
truck, small and mid-size fleets, private fleets and the largest national
trucking companies. Consequently, the Company is not dependent on any one
carrier. As of June 30, 1997, the Company also had intermodal marketing
contracts with 11 railroads, including all of the major North American
railroads, giving the Company access to more than 150,000 additional trailers
and containers.
29
<PAGE>
The Company qualifies each motor carrier to assure that it is properly
licensed and insured and has the resources to provide the necessary level of
service on a dependable basis. The Company's motor carrier contracts require
that the carrier commit to a minimum number of shipments, issue invoices only
to, and accept payment solely from, Robinson and permit Robinson to withhold
payment to satisfy previous claims or shortages. Carrier contracts also
establish transportation rates which can be modified by issuance of an
individual load confirmation. The Company's contracts with railroads govern
the transportation services and payment terms by which the Company's
intermodal shipments are transported by rail. Intermodal transportation rates
are typically negotiated between the Company and the railroad on a customer-
specific basis.
COMPETITION
The transportation services industry is highly competitive and fragmented.
The Company competes primarily against a large number of other non-asset based
logistics companies, as well as asset-based logistics companies, third-party
freight brokers, carriers offering logistics services and freight forwarders.
The Company also competes against carriers' internal sales forces and
shippers' own transportation departments. It also buys and sells
transportation services from and to companies with which it competes.
The Company believes that its most significant competitive advantages are:
(i) its large decentralized branch network, staffed by salespersons who are
employees rather than agents, which enables the Company's salespersons to gain
significant knowledge about individual customers and the local and regional
markets they serve, (ii) its ability to provide a broad range of logistics
services, and (iii) its ability to provide services on a worldwide basis.
COMMUNICATIONS AND INFORMATION SYSTEMS
To handle the large number of daily transactions and to accommodate its
decentralized branch system, the Company has designed an extensive
communications and information system. Employees are linked with each other
and with customers and carriers by telephone, facsimile, e-mail and/or EDI to
communicate requirements and availability, to confirm and bill orders and,
through the Company's Internet home page, to trace shipments. The Company has
developed its own proprietary computer based system, COSMOS. The most recent
enhancements help salespersons service customer orders, select the optimal
modes of transportation, build and consolidate loads and selects routes, all
based on customer-specific service parameters. COSMOS makes load data visible
to the entire branch sales team, enabling the salespersons to select carriers
and track loads in progress, and automatically provides visible alerts to any
arising problems. The Company's internally developed proprietary decision
support system ("BSMART") uses data captured from daily transactions to
generate various management reports which are available to the Company's large
logistics customers to provide information on traffic patterns, product mix
and production schedules. BSMART enables customers to analyze their own
customer base, transportation expenditure trends and the impact on out-of-
route and out-of-stock costs.
GOVERNMENT REGULATION
The transportation industry has been subject to legislative and regulatory
changes that have affected the economics of the industry by requiring changes
in operating practices or influencing the demand for, and cost of providing,
transportation services. The Company cannot predict the effect, if any, that
future legislative and regulatory changes may have on the transportation
industry.
The Company is subject to licensing and regulation as a transportation
provider. The Company is licensed by the DOT as a broker in arranging for the
transportation of property by motor vehicle. The DOT prescribes qualifications
for acting in this capacity, including certain surety bonding requirements.
The Company provides motor carrier transportation services that require
registration with the DOT and compliance with certain economic regulations
administered by the DOT, including a requirement to
30
<PAGE>
maintain insurance coverage in minimum prescribed amounts. The Company is
subject to regulation by the Federal Maritime Commission as an ocean freight
forwarder and maintains a non-vessel operating common carrier bond. The
Company operates as an indirect air cargo carrier subject to economic
regulation by the DOT. The Company provides customs brokerage services as a
customs broker under a license issued by the U.S. Customs Service of the
Department of Treasury. The Company sources fresh produce under a license
issued by the U.S. Department of Agriculture. Other sourcing and distribution
activities may be subject to various federal and state food and drug statutes
and regulations. Although Congress enacted legislation in 1994 that
substantially preempts the authority of states to exercise economic regulation
of motor carriers and brokers of freight, the Company and several of its
subsidiaries continue to be subject to a variety of vehicle registration and
licensing requirements. The Company and the carriers that the Company relies
on in arranging transportation services for its customers are also subject to
a variety of federal and state safety and environmental regulations. Although
compliance with the regulations governing licensees in these areas has not had
a materially adverse effect on the Company's operations or financial condition
in the past, there can be no assurance that such regulations or changes
thereto will not adversely impact the Company's operations in the future.
Violation of these regulations could also subject the Company to fines or, in
the event of serious violation, suspension or revocation of operating
authority as well as increased claims liability.
LITIGATION
In 1995, the U.S. Customs Service began an investigation of possible duties
owed on imports of certain juice concentrates by a subsidiary of the Company.
The Company has been advised by the United States Attorney for the Eastern
District of New York that its subsidiary was not the target or the subject of
a criminal investigation, although the United States Attorney is not bound by
such statements. The Company believes, however, that the U.S. Customs Service
will seek additional duties of approximately $4.0 million and may seek civil
monetary penalties against the subsidiary of the Company. The Company believes
the disposition of this matter will not have a material adverse effect on the
business, financial condition or results of operations of the Company,
although there can be no assurance that the duties and penalties sought
against the subsidiary will not exceed the Company's reserves for this matter.
The Company is currently not otherwise subject to any pending or threatened
litigation other than routine litigation arising in the ordinary course of
business, none of which is expected to have a material adverse effect on the
business, financial condition or results of operations of the Company.
PROPERTIES
Principally all of the Company's branch offices and its central office are
leased from third parties under leases with initial terms ranging from three
to ten years. The Company considers its current offices adequate for its
current level of operations. The Company has not had difficulty in obtaining
sufficient office space and believes it can renew existing leases or relocate
branches to new offices as leases expire.
RISK MANAGEMENT AND INSURANCE
In its truck and intermodal operations, the Company assumes full value cargo
risk to its customers. The Company subrogates its losses against the motor or
rail carrier with the transportation responsibilities. The Company requires
all motor carriers participating in its contract program to carry at least
$750,000 in general liability insurance and $25,000 in cargo insurance. Many
carriers carry insurance limits exceeding these minimums. Railroads, which are
generally self-insured, provide limited common carrier liability protection,
generally up to $250,000 per shipment. For both truck and rail transportation,
higher coverage is available to the customer on a load-by-load basis at an
additional price.
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<PAGE>
In its international freight forwarding, ocean transportation and air
freight businesses, the Company does not assume cargo liability to its
customers above minimum industry standards. The Company offers its customers
the option to purchase ocean marine cargo coverage to insure goods in transit.
When the Company agrees to store goods for its customers for longer terms, it
provides limited warehouseman's coverage to its customers and contracts for
warehousing services from companies which provide the Company the same degree
of coverage.
The Company maintains a broad cargo liability policy to protect it against
catastrophic losses that may not be recovered from the responsible carrier
with a deductible of $100,000 per incident. Total claims paid by the Company
in 1996 and uncollectible from carriers were less than $200,000. The Company
also carries various liability policies, including auto and general liability,
with a $75 million umbrella.
Agricultural chemicals used on agricultural commodities intended for human
consumption are subject to various approvals, and the commodities themselves
are subject to regulations on cleanliness and contamination. Concern about
particular chemicals and alleged contamination has led to recalls of products,
and tort claims have been brought by consumers of allegedly affected produce.
Because the Company is a seller of produce, it may have legal responsibility
arising from sales of produce. While the Company carries product liability
coverage of $75 million, settlement of class action claims is often costly,
and the Company cannot assure that its liability coverage will be adequate and
will continue to be available. In addition, in connection with any recall, the
Company may be required to bear the cost of repurchasing, transporting and
destroying any allegedly contaminated product, for which it is not insured.
Any recall or allegation of contamination could affect the Company's
reputation, particularly of its The Fresh 1(R) brand. Loss due to spoilage
(including the need for disposal) is also a routine part of the sourcing
business.
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<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The Company's executive officers and directors are:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
D.R. Verdoorn............... 58 President, Chief Executive Officer and Director
Looe Baker III.............. 47 Vice President and Director
Barry W. Butzow............. 50 Vice President and Director
Gregory D. Goven............ 46 Vice President
Bernard M. Madej............ 54 Vice President, Logistics
Robert S. Ingram............ 57 Vice President, Transportation
Michael T. Rempe............ 43 Vice President, Produce
Thomas M. Jostes............ 37 Vice President, Transportation
Thomas D. Perdue............ 47 Vice President, Intermodal
Dale S. Hanson.............. 58 Vice President, Finance, Chief Financial
Officer and Director
Owen P. Gleason............. 46 Vice President, General Counsel,
Secretary and Director
Jennifer T. Amys............ 46 Vice President, Chief Information Officer
John P. Wiehoff............. 36 Corporate Controller and Treasurer
Robert Ezrilov.............. 52 Director
Gerald A. Schwalbach........ 52 Director
</TABLE>
D.R. Verdoorn has been the President and Chief Executive Officer of the
Company and its predecessor since 1977 and a director since 1975. He has been
with the Company since 1963. He has served on the Boards of Directors for
United Fresh Fruit and Vegetable Association and the Produce Marketing
Association. Mr. Verdoorn attended Central College in Pella, Iowa.
Looe Baker III has been a Vice President since 1979 and a director since
1984. Mr. Baker began his career with the Company in 1971. Mr. Baker has
served on the Board of Directors for the Produce Marketing Association. He is
a director of Orval Kent Holding Co. He holds a Bachelor of Science degree
from Drake University.
Barry W. Butzow has been a Vice President since 1984 and a director since
1986. He began employment with the Company in 1969. He holds a Bachelor of
Arts degree from Moorhead State University.
Gregory D. Goven has been a Vice President since 1988. Mr. Goven joined the
Company in 1973. Mr. Goven holds a Bachelor of Science degree from North
Dakota State University. Mr. Goven's wife is the first cousin of Mr. Verdoorn.
Bernard M. Madej has been Vice President, Logistics since 1995. Prior to
that, he had held the position of Vice President, Transportation since 1986.
Prior to joining the Company, he held other senior positions with various
logistics companies. He has served on the Executive Committee of the Council
of Logistics Management and is a past president of the Transportation
Intermediaries Association, Midwest Division. He holds a Bachelor of Science
degree from the University of St. Thomas.
Robert S. Ingram has been Vice President, Transportation since 1996 and
prior to that was Vice President of Intermodal from 1992. Prior to joining the
Company, Mr. Ingram held several executive positions with the Burlington
Northern Railway, the Soo Line Railroad, Sealand Service and several regional
railroads. He holds a Bachelor of Science degree from the University of
Pennsylvania.
Michael T. Rempe has been Vice President, Produce since 1994, after starting
with the Company in 1989 as Director of Produce Merchandising. Prior to that,
he held several senior positions in the retail grocery industry. Mr. Rempe is
currently on the Board of Directors of the Produce Marketing Association and
Produce for Better Health. Mr. Rempe attended Indiana University Purdue
University in Indianapolis.
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<PAGE>
Thomas M. Jostes has served as Vice President, Transportation since 1995 and
has been employed by the Company since 1984. Mr. Jostes holds a Bachelor of
Arts degree from Iowa State University.
Thomas D. Perdue has been Vice President, Intermodal since 1995. From 1992
through 1995, he was Assistant Vice President of Intermodal Operations for the
Burlington Northern Railway, and prior thereto, he held various transportation
operations positions with Conrail. Mr. Perdue holds a Bachelor of Science
degree from Indiana University.
Dale S. Hanson has been Vice President, Finance and Chief Financial Officer
since 1990 and a director since 1988. Prior to joining the Company, Mr. Hanson
held various executive positions with First Bank System, Inc. (now U.S.
Bancorp), including Executive Vice President of First Bank System, Inc.,
President of FBS Merchant Banking Group and President of First Bank of St.
Paul. Mr. Hanson holds a Bachelor of Arts degree from Carleton College.
Owen P. Gleason has been Vice President and General Counsel since 1990 and
served as corporate counsel since 1978. Mr. Gleason has been a director since
1986. Mr. Gleason holds a law degree from Oklahoma City University and a
Bachelor's Degree from Ripon College.
Jennifer T. Amys has been Vice President and Chief Information Officer since
1994. From 1989 through 1993, she was Director of Systems Development and
Support for The Quaker Oats Company and prior to that held other senior MIS
positions for several transportation and food companies. She has a Masters of
Business Administration degree from the University of Minnesota and a Bachelor
of Science degree from the University of Taiwan.
John P. Wiehoff has been Treasurer since May 1997 and Corporate Controller
since 1992. Prior to that, he was employed as an audit manager by Arthur
Andersen LLP. He holds a Bachelor of Science degree from St. John's
University.
Robert Ezrilov has been a director of the Company since 1995. Mr. Ezrilov
has been self-employed as a business consultant since April 1995. Prior to
that, he was a partner with Arthur Andersen LLP, which he joined in 1966
subsequent to his obtaining a BSB degree at the University of Minnesota. Mr.
Ezrilov also serves on the Board of Directors of Zomax Optical Media, Inc., (a
turnkey provider of CDs and cassettes) and as an advisory board member to
Holiday Companies (a group of related companies engaged in retailing and
wholesaling grocery, general merchandise and petroleum products) and L&M
Radiator (a replaceable core radiator manufacturer).
Gerald A. Schwalbach has been a director of the Company since 1997. He is
currently an officer and director of Two S Properties, Inc. and Superior
Storage, LLC, both of which are engaged in the business of operating self-
storage and office warehouses. From 1985 to June 1996, Mr. Schwalbach served
as Executive Vice President of Jacobs Management, Inc., a management
corporation, and from 1996 to March 1997, as Executive Vice President of IMR
General, Inc., an affiliate of Jacobs Management, Inc. Prior to joining Jacobs
Management, Inc., Mr. Schwalbach was a tax partner with Arthur Andersen LLP.
Since 1988, he has been a director of Delta Beverage Group, Inc., a beverage
bottler and distributor. He graduated from Mankato State University in 1966
with a Bachelor of Science degree.
CLASSES OF DIRECTORS
Following this offering, the Board of Directors will be divided into three
classes, each of whose members will serve for a staggered three-year term.
Messrs. Verdoorn and Butzow will serve in the class whose term expires in
1998; Messrs. Baker, Ezrilov and Gleason will serve in the class whose term
expires in 1999; and Messrs. Schwalbach and Hanson will serve in the class
whose term expires in 2000. Upon the expiration of the term of a class of
directors, directors in such class will be elected for three-year terms at the
annual meeting of stockholders in the year in which such term expires.
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<PAGE>
BOARD COMMITTEES
The Board of Directors has a Compensation Committee that until the closing
of this offering will continue to be comprised of Messrs. Verdoorn, Ezrilov
and Schwalbach and after the closing will be comprised of Messrs. Ezrilov and
Schwalbach. There are no Compensation Committee interlocks which are required
to be disclosed by the rules promulgated by the Commission under the
Securities Act. The Board of Directors has established an Audit Committee,
effective upon closing of this offering, comprised of Messrs. Ezrilov and
Schwalbach.
DIRECTOR COMPENSATION
Directors who are not employees of the Company will receive $1,500 for each
Board meeting attended, $750 for each committee meeting attended and $6,000
annually. The Company may pay such fees in Common Stock.
Each non-employee director has been granted a nonqualified stock option to
purchase 3,000 shares of Common Stock at a price equal to the initial public
offering price under the Stock Incentive Plan. The Company intends to make
annual grants of nonqualified stock options at fair market value to its non-
employee directors in the future.
EXECUTIVE OFFICERS
Executive officers are elected by the Board of Directors annually and serve
at the pleasure of the Board of Directors.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded, paid or accrued by
the Company for services rendered to the Company in all capacities for each of
the five most highly compensated executive officers of the Company (the "Named
Executive Officers") for the year ended December 31, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------- ------------
RESTRICTED ALL OTHER
SALARY(1) BONUS(2) OTHER(3) STOCK AWARDS COMPENSATION(4)
--------- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
D.R. Verdoorn
Chief Executive
Officer................ $164,276 $271,452 $1,606 $197,271 $ --
Looe Baker III
Vice President......... 111,900 173,764 -- 65,757 12,000
Barry W. Butzow
Vice President......... 98,823 179,839 -- 65,757 12,000
Bernard M. Madej
Vice President,
Logistics.............. 97,924 179,839 -- 57,535 12,000
Gregory D. Goven
Vice President......... 97,924 164,839 -- 57,535 12,000
</TABLE>
- --------
(1) Base salary plus amount paid as an automobile allowance.
(2) See "Existing Incentive Plans--Cash-Based Programs."
(3) Consists of unreimbursed personal travel expenses.
(4) Contributions to the Profit Sharing Plan.
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<PAGE>
OPTION GRANTS
The Company adopted a Stock Incentive Plan in August 1997. See "New
Incentive Plans--Stock Incentive Plan." On the date of this Prospectus, the
Company is granting options for an aggregate of 470,417 of Common Stock to 249
employees, including the Named Executive Officers, at an exercise price equal
to the initial public offering price of the Common Stock offered hereby, as
follows: Mr. Verdoorn, 13,109 shares, Mr. Baker, 13,109 shares, Mr. Butzow,
13,109 shares, Mr. Madej, 13,109 shares and Mr. Goven, 13,109 shares.
INDEBTEDNESS OF MANAGEMENT
The Company has made loans to its officers from time to time. All such loans
require that the officer pay interest on an annual basis at the prime rate.
The following table shows for certain of the Company's executive officers and
members of their immediate families the name of such person, the person's
relationship to the Company, the largest aggregate amount of indebtedness
outstanding during the period from January 1, 1996, through July 31, 1997, and
the amount outstanding on July 31, 1997. The interest rate charged on such
loans has varied from 8.25% to 8.50% over the period from January 1, 1996
through July 31, 1997 and was 8.50% at July 31, 1997.
<TABLE>
<CAPTION>
MAXIMUM OUTSTANDING
NAME RELATIONSHIP OUTSTANDING AT JULY 31, 1997
---- ------------ ----------- ----------------
<S> <C> <C> <C>
D.R. Verdoorn Executive Officer $ 55,166 $ --
Barry W. Butzow Executive Officer 185,000 160,000
Gregory D. Goven Executive Officer 112,880 55,000
Bernard M. Madej Executive Officer 13,330 10,330
Michael T. Rempe Executive Officer 89,786 84,639
Thomas M. Jostes Executive Officer 100,000 100,000
Thomas D. Perdue Executive Officer 45,000 30,000
Dale S. Hanson Executive Officer 150,000 100,000
Owen P. Gleason Executive Officer 187,401 187,401
Jennifer T. Amys Executive Officer 50,000 50,000
John P. Wiehoff Executive Officer 40,000 40,000
Suzanne M. Jostes Immediate family(1) 18,000 12,000
</TABLE>
- --------
(1) Ms. Jostes is the sister of Thomas M. Jostes and is an employee of the
Company.
EXISTING INCENTIVE PLANS
The Company believes that its cash and stock-based incentive plans have been
significant motivational factors for its executives and other employees for
many years.
Book Value Stock Purchases
Certain employees selected by the Board of Directors have made annual
purchases of Common Stock at book value from retiring employees. Upon an
employee's retirement, the Company has the right to purchase at then current
book value all outstanding Common Stock held by the employee or to designate a
purchaser of the Common Stock. In some cases, a retiring employee has the
right to require the Company to purchase the Common Stock at then book value.
Because of the growth in the book value of the Common Stock, employees have
achieved significant returns on their investments.
At June 30, 1997, 740 employees, former employees and directors held an
aggregate of 35,295,720 shares of Common Stock in addition to stock held under
the three restricted stock programs described below. Upon the closing of this
offering, the Company's right to repurchase Common Stock will lapse and all
such Common Stock will become freely tradeable, except for restrictions on
resale applicable for six months (as to all employees) and for 12 months (as
to all Selling Stockholders). See "Shares Eligible
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<PAGE>
for Future Sale." Employees will no longer have the opportunity to purchase
Common Stock at book value from retiring employees. The Company has
established a Stock Purchase Plan by which employees may purchase stock at a
small discount from fair market value after this offering. See "--New
Incentive Plans--Stock Purchase Plan."
Restricted Stock Programs
Under the Central Office Management Incentive Program, executives have been
awarded restricted stock, without any additional payment, the amount of which
depends upon the achievement of certain growth objectives for the Company.
Participants and their percentage participation have been selected prior to
the beginning of a fiscal year for participation for the next three fiscal
years. A pool, based on growth in net profits before taxes and profit sharing,
with certain other adjustments, over the prior year, has been established for
each year. Each participant has a percentage participation in the pool. The
value of the pool, as of the end of a year, is paid out in Common Stock in the
following year to participants in the pool, based on the book value of the
Common Stock at year-end and their respective participations. The Common Stock
awarded under the Program has been restricted and forfeited unless the
employee remains employed by the Company to age 65, except in the case of
death or disability, as determined by the Company's Compensation Committee.
Certain employees have the right to retire early, with the consent of the
Company, and to receive the book value of the restricted Common Stock that
would otherwise be forfeited, payable over a period of five to ten years,
conditioned upon not being a competitor of the Company. For 1996, $710,973 was
earned by 20 employees, including 13 executive officers, under this Program,
which was paid out in 1997 in the form of 188,088 shares of Common Stock. Upon
the closing of this offering, this Program will be modified to provide that
participants for 1997 will receive cash rather than Common Stock based on the
value of the pool.
Under the Profit Center Incentive Program, managers of larger profit centers
who have been selected to participate in the Program have been awarded
restricted stock, without any additional payment, the value of which depends
upon the achievement of certain growth objectives for the Company.
Participants and their percentage participation has been selected annually
prior to the beginning of a fiscal year. A pool, based on growth in net
profits before taxes and profit sharing, with certain other adjustments, over
the prior year, was established for each year. The value of the pool, as of
the end of a year, was paid out in Common Stock in the following year to
participants in the pool, based on the book value of the Common Stock at year
end and their relative participations. The Common Stock awarded under the
Program has been restricted and will be forfeited unless the employee remains
employed by the Company to age 65, except in the case of death or disability
as determined by the Company's Compensation Committee. Certain employees have
the right to retire early, with the consent of the Company, and to receive the
book value of the restricted stock that would otherwise be forfeited, payable
over a period of five to ten years, conditioned upon not being a competitor of
the Company. For 1996, $349,264 was earned by 35 profit center managers under
this Program, which was paid out in 1997 in the form of 92,398 shares of
Common Stock. Upon the closing of this offering, this Program will be modified
to provide that participants for 1997 will receive cash rather than Common
Stock based on the value of the pool.
Under the Employee Incentive Program, Common Stock has been awarded to key
employees, without any additional payment. The Common Stock awarded under the
Program has been restricted and will be forfeited unless the employee remains
employed by the Company until five years after the end of the calendar year in
which such award was made, except in the case of death or disability. Certain
employees have the right to retire early, with the consent of the Company, and
to receive the book value of the restricted stock that would otherwise be
forfeited, over a period of five to ten years. In 1997, 1,600 shares of Common
Stock having a book value of $3.78 were awarded to two employees under this
Program. Upon the closing of this offering, this Program will be terminated.
The Company intends to use its newly created Stock Incentive Plan as an
alternative to this program. See "--New Incentive Plans."
37
<PAGE>
At June 30, 1997, 87 employees held an aggregate of 5,968,901 shares of
Common Stock under the three Programs described above. Of such shares, 87% are
being sold in this offering. Prior to the closing of this offering, all
restrictions described above will be removed.
The Central Office Management Incentive Program and the Profit Center
Incentive Program, unlike the Employee Incentive Program, will continue after
this offering for the remainder of 1997, on a cash basis. For 1998 and later
years, the Company intends to either substitute an alternative program or use
its Stock Incentive Plan as an alternative.
Cash-Based Programs
In addition to these stock-based plans, the Company pays bonuses to
executives who achieve certain objectives established on an annual basis,
dependent upon the Company's achieving one or more ranges of earnings from
operations. Branch-level employees participate in the profits of their
respective branches.
Profit Sharing Plan
The Company maintains one tax-qualified retirement plan, the Robinson
Companies Retirement and Savings Plan, established in 1953. Generally,
employees of the Company and all of its subsidiaries are eligible to
participate in the plan after completing one year of service.
The plan permits each participating employee to make before-tax elective
contributions, which are generally limited to 8% of regular compensation.
These elective contributions are not matched by any employer contribution. The
plan also allows the employer to make discretionary profit sharing
contributions, generally in an annual amount not to exceed 15% of the
aggregate compensation of all participating employees. These profit sharing
contributions are made on a profit center basis and allocated to the accounts
of participants employed in that profit center pro rata with each
participant's compensation. Employee contributions are immediately vested.
Employer contributions vest after five years of service. For the 1996 plan
year, the Company contributed $3.6 million to the plan.
Participants may direct the investment of their accounts into any of several
mutual funds. The plan generally distributes the vested accounts to
participants (or their beneficiaries) after termination of employment or
death.
NEW INCENTIVE PLANS
Stock Incentive Plan
The Board of Directors adopted the Stock Incentive Plan on July 30, 1997,
and the stockholders approved it on August 14, 1997. Pursuant to the Stock
Incentive Plan, officers, other employees, consultants and eligible
independent contractors of the Company may receive options to purchase Common
Stock. The Stock Incentive Plan provides for the grant both of incentive stock
options intended to qualify for preferential tax treatment under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonqualified stock options that do not qualify for such treatment. The
exercise price of incentive stock options must equal or exceed the fair market
value of the Common Stock on the date of grant. The Stock Incentive Plan also
permits grants of stock appreciation rights, restricted stock and restricted
stock unit awards, performance awards, dividend equivalents and other stock
grants or other stock-based awards.
The Compensation Committee administers the Stock Incentive Plan and approves
awards thereunder. A total of 2,000,000 shares of Common Stock has been
reserved for issuance under the Stock Incentive Plan. Incentive stock options
may only be granted under the Stock Incentive Plan to full or part-time
employees of the Company (including officers and directors who are also
employees) and of its present and future subsidiaries. Full or part-time
employees, consultants and independent contractors to the Company or its
subsidiaries or affiliates are eligible to receive options which do not
qualify as incentive stock options, as well as other awards. In determining
the persons to whom options and awards may be granted and the number of shares
subject to each, the Board of Directors may take into account the nature
38
<PAGE>
of services rendered by the respective employees or consultants, their present
and potential contributions to the success of the Company, and such other
factors as the Board of Directors in its discretion may deem relevant.
Under the Stock Incentive Plan, non-employee directors may be granted a
nonqualified stock option to purchase shares of Common Stock on an annual
basis. The exercise price of such nonqualified stock options will be equal to
the fair market value of the Common Stock on the date of grant.
The Board of Directors may amend or discontinue the Stock Incentive Plan at
any time, but may not make any revisions or amendments to the Stock Incentive
Plan, absent stockholder approval, that would cause Rule 16b-3 under the
Securities Exchange Act of 1934 or Section 162(m) of the Code to become
unavailable with respect to the Stock Incentive Plan, would violate the rules
or regulations of the Nasdaq National Market (or any other securities exchange
that are applicable to the Company), or would cause the Company to be unable,
under the Code, to grant incentive stock options under the Stock Incentive
Plan. The Board of Directors may not alter or impair any award granted under
the Stock Incentive Plan without the consent of the holder of the award. The
Stock Incentive Plan will expire in 2007.
Stock Purchase Plan
The Company's Stock Purchase Plan will become effective upon consummation of
this offering and will commence on January 1, 1998, and is intended to qualify
as an employee stock purchase plan within the meaning of Section 423 of the
Code. The Stock Purchase Plan covers an aggregate of 2,000,000 shares of
Common Stock. In order to participate in the Stock Purchase Plan, employees
must meet certain eligibility requirements. Participating employees will be
able to direct the Company to make payroll deductions of up to 10% of their
compensation during a quarterly purchase period for the purchase of shares of
Common Stock. The Stock Purchase Plan will provide participating employees
with the right, subject to certain limitations, to purchase the Company's
Common Stock at a price equal to 85% of fair market value on the last business
day of the applicable purchase period. The Stock Purchase Plan will terminate
on such date as the Board of Directors may determine, or automatically as of
the date on which all of the shares of Common Stock the Company has reserved
for purchase under the Stock Purchase Plan have been sold.
CERTAIN TRANSACTIONS
In December 1996, the Company invested $4,323,000 in a real estate venture.
Gerald A. Schwalbach, a director of the Company, has a substantial interest in
the venture. In August 1997, the investment was sold to Mr. Schwalbach and an
unrelated individual on terms that the Company believes were no less favorable
than what the Company could have received from an unaffiliated third party.
The Company's income on the investment was $595,000.
On June 30, 1997, the Company sold 25,000 shares of Common Stock to Gerald
A. Schwalbach, a director of the Company, for cash in the amount of $103,000
($4.12 per share, the book value of the stock at May 31, 1997).
39
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The table below sets forth, as of the date of this Prospectus, the number
and percentage of outstanding shares of Common Stock beneficially owned by (i)
each Named Executive Officer, (ii) each director of the Company, (iii) all
directors and executive officers of the Company as a group, (iv) each other
person known by the Company to own beneficially (directly or together with
affiliates) more than 5% of the Common Stock and (iv) the Selling
Stockholders. The Company believes that each individual named has sole
investment and voting power with respect to shares of Common Stock indicated
as beneficially owned by him or her, except as otherwise noted. The shares
being offered hereby represent 87% of the shares of Common Stock previously
awarded to employees under the Company's restricted stock programs and 87% of
the shares of Common Stock owned by former employees. The Selling Stockholders
have granted the Underwriters a 30-day over-allotment option to purchase the
remaining 13% of such shares.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED PRIOR NUMBER OF SHARES BENEFICIALLY
TO OFFERING NUMBER OF SHARES OWNED AFTER OFFERING
--------------- SHARES PURCHASED --------------------
NAME NUMBER % OFFERED IN OFFERING NUMBER %
---- ---------- ---- --------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE
OFFICERS:
D. R. Verdoorn (1)..... 5,048,802 12.2 1,564,774 -- 3,484,028 8.4
Looe Baker III (2)..... 2,657,828 6.4 712,452 -- 1,945,376 4.7
Barry W. Butzow........ 1,309,592 3.2 465,597 1,000 844,995 2.0
Dale S. Hanson......... 920,037 2.2 205,343 -- 714,694 1.7
Owen P. Gleason........ 888,025 2.2 337,090 -- 550,935 1.3
Gregory D. Goven....... 816,685 2.0 219,114 750 598,321 1.5
Bernard M. Madej....... 766,054 1.9 278,770 -- 487,284 1.2
Jennifer T. Amys....... 290,353 * 30,742 3,000 262,611 *
Robert S. Ingram....... 247,051 * 45,199 -- 201,852 *
Thomas M. Jostes....... 172,671 * 20,324 2,777 155,124 *
John P. Wiehoff........ 123,317 * 27,719 2,222 97,820 *
Michael T. Rempe....... 115,983 * 63,403 16,666 69,246 *
Robert Ezrilov......... 55,000 * -- -- 55,000 *
Thomas D. Perdue....... 38,114 * 4,447 -- 33,667 *
Gerald A. Schwalbach... 25,000 * -- -- 25,000 *
All directors and
executive officers as a
group (15 persons)..... 13,474,512 32.7 3,974,974 26,415 9,525,953 23.1
SELLING STOCKHOLDERS WHO
ARE RETIRED EMPLOYEES:
Donald Lerner (3)...... 2,141,460 5.2 1,862,140 4,000 283,320 *
John R. Taylor......... 833,610 2.0 724,879 -- 108,731 *
Roger Lowe............. 825,702 2.0 718,003 1,000 108,699 *
Robert A. Fair......... 583,224 1.4 507,152 -- 76,072 *
Duane L. McConkey...... 493,349 1.2 429,000 -- 64,349 *
Stanley Schoenfeld..... 312,300 * 271,565 -- 40,735 *
D.G. MacDonald......... 283,200 * 246,261 -- 36,939 *
Ted J. Copeland........ 261,282 * 227,202 -- 34,080 *
Kenneth S. Machado..... 261,102 * 227,045 -- 34,057 *
Raymond W. Tobias...... 202,500 * 176,087 -- 26,413 *
William T. Fairbanks... 171,168 * 148,842 1,000 23,326 *
Jeffrey Langenfeld..... 18,030 * 15,678 -- 2,352 *
David R. Shell......... 16,665 * 14,491 -- 2,174 *
Brent O. Ward.......... 1,035 * 900 -- 135 *
Travis D. Palena....... 396 * 344 -- 52 *
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED PRIOR NUMBER OF SHARES BENEFICIALLY
TO OFFERING NUMBER OF SHARES OWNED AFTER OFFERING
--------------- SHARES PURCHASED --------------------
NAME NUMBER % OFFERED IN OFFERING NUMBER %
---- ---------- ---- --------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
SELLING STOCKHOLDERS WHO
ARE CURRENT EMPLOYEES:
Vincent C. Immordino... 1,066,382 2.6 370,092 1,000 697,290 1.7
Elliot E. Hansen....... 488,272 1.2 4,376 882 484,778 1.2
Raymond Sobieck........ 439,191 1.1 2,836 2,250 438,605 1.1
Gary D. Joseph......... 410,307 * 11,189 2,250 401,368 *
Oliver John McDonald... 409,354 * 7,678 1,000 402,676 *
J. Scott Wessel........ 302,637 * 11,189 2,250 293,698 *
Leann Peterson......... 290,832 * 2,087 1,000 289,745 *
Roger Kerber........... 288,367 * 90,173 1,000 199,194 *
Joseph J. Mulvehill.... 282,415 * 18,923 4,000 267,492 *
John M. Salpietra...... 261,655 * 18,140 5,000 248,515 *
Gary Niedorkorn........ 260,072 * 34,720 2,500 227,852 *
Richard J. Myers....... 255,574 * 7,678 2,500 250,396 *
David J. Florenzano.... 237,035 * 20,227 2,500 219,308 *
Christine Hellekson.... 220,374 * 1,043 2,000 221,331 *
James E. Butts......... 216,014 * 11,282 3,000 207,732 *
Darryl L. Harper....... 210,914 * 10,243 2,500 203,171 *
James N. Schulte....... 183,228 * 3,913 1,500 180,815 *
David M. Barros........ 180,840 * 14,097 1,444 168,187 *
Jeanne M. Landures..... 159,996 * 1,304 -- 158,692 *
Mark A. Walker......... 158,911 * 76,474 -- 82,437 *
Jeffrey J. Begin....... 116,607 * 7,206 1,500 110,901 *
James P. Cummings...... 114,832 * 7,678 2,000 109,154 *
Bruce E. Morris........ 110,937 * 17,455 3,000 96,482 *
Lee A. Stassen......... 110,640 * 1,043 2,000 111,597 *
Leo C. Johnson Jr...... 104,342 * 5,591 1,500 100,251 *
John B. Evans.......... 103,240 * 7,826 4,000 99,414 *
Jeffrey Jorgenson...... 100,920 * 10,238 4,000 94,682 *
Colleen J. Zwach....... 96,602 * 20,141 3,000 79,461 *
Gary G. Kouba.......... 92,100 * 1,304 -- 90,796 *
Charles D. Johnson..... 91,134 * 7,457 2,500 86,177 *
Robert W. Hall......... 90,103 * 23,281 500 67,322 *
Maurice F. Ayers III... 88,926 * 1,565 1,000 88,361 *
Thomas J. Sandstrom.... 86,443 * 23,281 -- 63,162 *
James K. Cypher........ 82,998 * 1,565 1,000 82,433 *
Robert W. Hubert....... 77,856 * 1,565 3,000 79,291 *
David H. Goldberg...... 73,040 * 1,826 3,000 74,214 *
Michael Migoski........ 72,644 * 9,717 2,500 65,427 *
John D. Lenzmeier...... 68,730 * 2,087 1,500 68,143 *
Lewis D. Canouse....... 68,318 * 1,565 1,750 68,503 *
Charles J. Taylor...... 63,577 * 945 1,250 63,882 *
Michael J. Sherlock.... 63,270 * 10,962 -- 52,308 *
William E. Valentine... 60,930 * 6,261 2,500 57,169 *
Peter B. Coster........ 60,457 * 2,461 3,000 60,996 *
James P. Lemke......... 60,189 * 12,130 3,000 51,059 *
Gregory Ritter......... 57,586 * 1,417 555 56,724 *
Daniel D. Smith........ 50,113 * 15,368 1,000 35,745 *
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED PRIOR NUMBER OF SHARES BENEFICIALLY
TO OFFERING NUMBER OF SHARES OWNED AFTER OFFERING
--------------- SHARES PURCHASED --------------------
NAME NUMBER % OFFERED IN OFFERING NUMBER %
---- ---------- ---- --------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Haack......... 46,814 * 8,151 1,000 39,663 *
Christopher Kramer..... 46,400 * 24,226 500 22,674 *
Jeffery W. Skokan...... 42,640 * 783 1,000 42,857 *
Jean M. Hairston....... 41,967 * 1,043 1,500 42,424 *
Arthur A. Mollica...... 40,609 * 23,281 94 17,422 *
Robert V. Pierson...... 40,116 * 8,501 3,000 34,615 *
Steven J. Nelson....... 37,934 * 8,151 1,111 30,894 *
James A. Griffith...... 35,718 * 1,565 1,500 35,653 *
David C. Swarts........ 32,430 * 1,565 283 31,148 *
James Burke III........ 29,440 * 1,043 3,000 31,397 *
Darryl A. Solem........ 29,332 * 870 555 29,017 *
Steven J. Battaglia.... 29,100 * 1,304 2,500 30,296 *
Conrad Johnson III..... 28,440 * 1,565 2,250 29,125 *
Douglas L. Tannehill... 27,438 * 8,353 2,500 21,585 *
Richard J. Heimerl..... 25,800 * 1,565 -- 24,235 *
Michael C. Borowiec.... 24,986 * 5,543 3,500 22,943 *
Kevin C. Wilner........ 24,893 * 3,195 555 22,253 *
James Z. Burgess Jr.... 23,332 * 1,043 666 22,955 *
Todd L. Ortman......... 19,230 * 1,565 1,388 19,053 *
William E. Farrell..... 18,527 * 945 2,000 19,582 *
Mark S. Prizer......... 17,114 * 1,890 -- 15,224 *
Michael A. Ciofalo..... 16,830 * 1,304 1,115 16,641 *
Kent R. Stuart......... 16,230 * 522 -- 15,708 *
Terry G. Schreifels.... 11,580 * 2,348 2,000 11,232 *
Steven M. Weiby........ 8,900 * 2,348 555 7,107 *
Eric D. Halverson...... 4,932 * 1,043 666 4,555 *
Charles J. Busby....... 3,000 * 522 -- 2,478 *
</TABLE>
- --------
* Less than one percent
(1) Mr. Verdoorn's address is 8100 Mitchell Road, Eden Prairie, Minnesota
55344-2248.
(2) Mr. Baker's address is 8100 Mitchell Road, Eden Prairie, Minnesota 55344-
2248.
(3) Mr. Lerner's address is 1 Capri Court, Palm Coast, Florida 32137.
42
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 130,000,000 shares
of Common Stock, $0.10 par value, and 20,000,000 shares of preferred stock,
$0.10 par value (the "Preferred Stock"). The following description of the
capital stock of the Company is an accurate summary of the material provisions
of, and is qualified in its entirety by reference to, the Company's
Certificate of Incorporation (the "Certificate") and Bylaws.
PREFERRED STOCK
The Certificate authorizes the issuance of 20,000,000 shares of Preferred
Stock, par value $0.10 per share, none of which is outstanding. The Preferred
Stock may be issued by resolution of the Company's Board of Directors from
time to time without any action of the stockholders. The Preferred Stock may
be issued in one or more series and the Board of Directors may fix the
designation and relative powers, including voting powers, preferences, rights,
qualifications, limitations and restrictions of each series, so authorized.
The issuance of any such series may have an adverse effect on the rights of
holders of Common Stock or impede the completion of a merger, tender offer or
other takeover attempt. The Company has no present intention to issue shares
of any series of Preferred Stock.
COMMON STOCK
The Certificate provides for the authorization of 130,000,000 shares of
Common Stock, par value $0.10 per share. Subject to the prior rights of any
series of Preferred Stock which may from time to time be authorized and
outstanding, holders of Common Stock are entitled to receive dividends out of
funds legally available therefor when, as and if declared by the Board of
Directors and to receive pro rata the net assets of the Company legally
available for distribution upon liquidation or dissolution.
Holders of Common Stock are entitled to one vote for each share of Common
Stock held on each matter to be voted on by the holders of Common Stock,
including the election of directors. Holders of Common Stock are not entitled
to cumulative voting, which means that the holders of more than 50% of the
outstanding Common Stock can elect all of the directors of any class if they
choose to do so. The stockholders do not have preemptive rights. All
outstanding shares of Common Stock are fully paid and nonassessable.
DIRECTORS' LIABILITY
As authorized by the Delaware General Corporation Law (the "DGCL"), the
Certificate provides that no director of the Company shall be liable to the
Company 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 Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) in respect of certain unlawful dividend payments or stock
redemptions or purchases or (iv) for any transaction from which the director
derived an improper personal benefit. The effect of the provision in the
Certificate is to eliminate the rights of the Company and its stockholders to
recover monetary damages against a director for breach of fiduciary duty as a
director except in the situations described in clauses (i) through (iv) above.
This provision does not limit or eliminate the rights of the Company or any
stockholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's fiduciary duty. In addition, the
Certificate provides that if the DGCL is amended to authorize the further
elimination or limitation of the liability of a director, then the liability
of the directors shall be eliminated or limited to the fullest extent
permitted by the DGCL, as so amended. These provisions do not alter the
liability of directors under federal securities laws.
The Certificate also contains provisions requiring the indemnification of
the Company's directors and officers to the fullest extent permitted by the
DGCL, including circumstances in which indemnification is
43
<PAGE>
otherwise discretionary. The Company also has the power to maintain insurance,
on terms and conditions the Board deems acceptable, on behalf of officers and
directors against any expense, liability or loss arising out of such person's
status as an officer or director. The Company believes that these provisions
and agreements are necessary to attract and retain qualified persons as
directors and officers.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to the provisions of Section 203 of the DGCL. That
section provides, with certain exceptions, that a Delaware corporation may not
engage in any of a broad range of business combinations with a person or
affiliate or associate of such person who is an "interested stockholder" for a
period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person's becoming an
interested stockholder, or the business combination, is approved by the board
of directors of the corporation before the person becomes an interested
stockholder, (ii) upon consummation of the transaction that resulted in the
interested stockholder's becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares owned by
persons who are both officers and directors of the corporation, and shares
held by certain employee stock ownership plans); or (iii) on or after the date
the person becomes an interested stockholder, the business combination is
approved by the corporation's board of directors and by the holders of at
least 66 2/3% of the corporation's outstanding voting stock at an annual or
special meeting, excluding shares owned by the interested stockholder. An
"interested stockholder" is defined as any person (other than the corporation
or any direct or indirect majority owned subsidiary of the corporation) that
is (i) the owner of 15% or more of the outstanding voting stock of the
corporation or (ii) an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within the three-year period immediately prior to the date on which it is
sought to be determined whether such person is an interested stockholder.
STOCKHOLDER RIGHTS PLAN
On August 14, 1997, the Board of Directors of the Company declared a
dividend of one preferred share purchase right (a "Right") for each
outstanding share of Common Stock outstanding on the business day immediately
preceding the date of this Prospectus (the "Record Date") to the stockholders
of record on that date. Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $0.10 per share (the "Preferred Shares"), of the
Company, at a price of $100.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between
the Company and Norwest Bank Minnesota, National Association, as Rights Agent
(the "Rights Agent"), a copy of the form of which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
Initially the Rights will be evidenced by the Common Stock then outstanding
and no separate Right Certificates will be distributed. The Rights will
separate from the Common Stock, and a Distribution Date for the Rights will
occur, upon the earlier of: (i) the first date of public announcement that a
person or group of affiliated or associated persons has become an "Acquiring
Person" (i.e., has become the beneficial owner of 15% or more of the
outstanding Common Stock (other than as a result of a Permitted Offer and
subject to certain exceptions)) and (ii) the close of business on the 10th day
(or such later date as may be determined by the Board of Directors prior to
such time as any Person becomes an Acquiring Person) following the
commencement or public announcement of a tender offer or exchange offer, the
consummation of which would result in a person or group of affiliated or
associated persons becoming an Acquiring Person.
A "Permitted Offer" is a tender offer or an exchange offer for all
outstanding Common Stock of the Company determined by the Board of Directors
of the Company, after receiving such advice as it deems necessary and giving
due consideration to all relevant factors, to be in the best interests of the
Company and its stockholders.
44
<PAGE>
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock and will be transferred with and only with the Common Stock, (ii) any
Common Stock certificates issued after the Record Date upon transfer or new
issuance of the Common Stock will contain a notation incorporating the Rights
Agreement by reference, and (iii) the surrender for transfer of any Common
Stock certificate will also constitute the transfer of the Rights associated
with the Common Stock.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on the date that is ten years after the Record Date, unless extended or
earlier redeemed or exchanged by the Company as described below. No fraction
of a Preferred Share (other than fractions in integral multiples of one one-
hundredth of a share) will be issued and, in lieu thereof, an adjustment in
cash will be made based on the closing price on the last trading date prior to
the date of exercise.
The Purchase Price payable and the number of Preferred Shares issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution: (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Shares, (ii) upon the grant
to holders of the Preferred Shares of certain rights, options or warrants to
subscribe for or purchase Preferred Shares or convertible securities at less
than the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends or dividends payable in
Preferred Shares) or of subscription rights or warrants (other than those
described in clause (ii) of this paragraph). With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1% in the Purchase Price. The number of
outstanding Rights and the number of Preferred Shares issuable upon exercise
of the Rights are also subject to adjustment in the event of a stock split of
the Common Stock or a stock dividend on the Common Stock payable in Common
Stock or subdivisions, consolidations or combinations of the Common Stock
occurring, in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of Common
Stock. In the event of liquidation, the holders of the Preferred Shares will
be entitled to a minimum preferential liquidation payment of $100.00 per share
but will be entitled to an aggregate payment of 100 times the payment made per
share of Common Stock. Each Preferred Share will have 100 votes, voting
together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which Common Stock is exchanged, each
Preferred Share will be entitled to receive 100 times the amount received per
share of Common Stock. These rights are subject to adjustment in the event of
a stock dividend on the Common Stock or a subdivision, combination or
consolidation of the Common Stock.
In the event any Person becomes an Acquiring Person, each holder of a Right
shall thereafter have a right to receive, upon exercise thereof at the then
current aggregate exercise price, in lieu of Preferred Shares, such number of
shares of Common Stock of the Company having a current aggregate market price
equal to twice the current aggregate exercise price. In the event that at any
time after there is an Acquiring Person, the Company is acquired in certain
mergers or other business combination transactions or 50% or more of the
assets or earning power of the Company and its subsidiaries (taken as a whole)
are sold, holders of the Rights will thereafter have the Right to receive,
upon exercise thereof at the then current aggregate exercise price, such
number of shares of Common Stock of the acquiring company (or, in certain
cases, one of its affiliates) having a current aggregate market price equal to
twice the current aggregate exercise price.
At any time after a Person becomes an Acquiring Person (subject to certain
exceptions), and prior to the acquisition by a Person of 50% or more of the
outstanding Common Stock, the Board of Directors of
45
<PAGE>
the Company may exchange all or part of the Rights for Common Stock at an
exchange ratio of one share of Common Stock per right, subject to adjustment.
At any time before a Person has become an Acquiring Person, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right, subject to adjustment. The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including without limitation, the right to
vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
pursuant to an offer that is not a Permitted Offer unless the Rights have been
redeemed. However, the Rights should not interfere with any tender offer or
merger approved by the Board because the Rights may be redeemed (or an offer
designated as a Permitted Offer) by the Board of Directors at any time prior
to such time as any entity becomes an Acquiring Person.
ANTITAKEOVER EFFECTS OF PROVISIONS OF THE COMPANY'S CERTIFICATE OF
INCORPORATION AND BYLAWS
Certain provisions of the Certificate and the Bylaws could discourage
potential takeover attempts and could delay or prevent a change in control of
the Company. See "--Certificate of Incorporation" and "--Bylaws." These
provisions are intended to enhance the likelihood of continuity and stability
in the composition of the Board of Directors of the Company and in the
policies formulated by the Board of Directors and to discourage certain types
of transactions that may involve an actual or threatened change of control of
the Company. The provisions are designed to reduce the vulnerability of the
Company to an unsolicited proposal for a takeover of the Company. The
provisions are also intended to discourage certain tactics that may be used in
proxy fights. However, such provisions could have the effect of discouraging
others from making tender offers for the Company's shares and, as a
consequence, they may also inhibit fluctuations in the market price of the
Common Stock that often result from actual or rumored takeover attempts. Such
provisions may also have the effect of preventing changes in the management of
the Company.
CERTIFICATE OF INCORPORATION
Classified Board of Directors. There shall not be less than six nor more
than nine directors. The Company presently has seven directors. The
Certificate provides for the classification of the Board of Directors into
three classes, each class to consist as nearly as possible of one-third of the
directors. The term of office of the first class of directors will expire at
the 1998 Annual Meeting of Stockholders; the term of the second class of
directors will expire at the 1999 Annual Meeting of Stockholders; and the term
of the third class of directors will expire at the 2000 Annual Meeting of
Stockholders. At each annual meeting, the class of directors to be elected at
such meeting will be elected for a three-year term and the directors in the
other two classes will continue in office.
The Certificate also permits the Board of Directors to create new
directorships and to elect new directors to serve for the full term of the
class of directors in which the new directorship was created. The Board of
Directors (or its remaining members, even though less than a quorum) is also
empowered to fill vacancies on the Board of Directors occurring for any reason
for the remainder of the term of the class of director in which the vacancy
occurred.
Stockholder Action. The Certificate provides that all stockholder actions
must be effected at a duly called annual or special meeting and not by a
written consent.
Special Voting Requirements for Certain Transactions. The Certificate
provides that without the affirmative vote of the holders of at least 66 2/3%
of the outstanding shares of Common Stock, together with
46
<PAGE>
the affirmative vote of at least 66 2/3% of the members of the Board of
Directors of the Company, (i) the Company may not consolidate or merge with
any other entity, (ii) the Company may not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets,
(iii) the Company may not amend the Certificate to permit the removal of
directors without cause or (iv) the Company may not amend the Certificate.
These voting requirements will make it more difficult for stockholders to make
changes in the Certificate which would be designed to facilitate the exercise
of control over the Company. In addition, the requirement for approval by at
least a 66 2/3% stockholder vote will enable the holders of a minority of the
Common Stock of the Company to prevent the holders of less than 66 2/3% from
amending the Certificate.
BYLAWS
Special Super-Majority Provisions. The Bylaws provide that without the
approval of 66 2/3% of all disinterested directors, the Company shall not and
shall not permit any wholly owned subsidiary to (i) acquire, consolidate with
or merge with another entity if the aggregate consideration exceeds $50
million, (ii) convey, transfer, lease or otherwise dispose of assets or
properties of the Company or any of its subsidiaries if the aggregate
consideration for such transaction exceeds $50 million, (iii) make any
recommendation to the stockholders with respect to a pending tender offer,
(iv) issue any shares of Common Stock, subject to certain specified
exceptions, (v) increase the size of the Board of Directors or (vi) amend the
Bylaws to permit the Corporation to take any of the foregoing actions without
such super-majority approval. For the purposes of these provisions, a
disinterested director is any director that does not have a financial interest
in the outcome of such vote (other than as a stockholder of the Company)
except that directors who are employees of the Company ("Management
Directors") may vote on certain transactions, notwithstanding a financial
interest therein, if the transaction is a merger or acquisition of the Company
or any subsidiary with or by any person or entity not affiliated with such
Management Director, and such Management Director has not initiated
discussions concerning such acquisition or merger with such person or entity,
and such person or entity has not entered into management equity or employment
arrangements with such Management Director.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws establish an advance notice procedure for the
nomination of candidates for election as directors and for stockholder
proposals to be considered at stockholders' meetings.
Notice of stockholder proposals and director nominations must be timely
given in writing to the Secretary of the Company prior to the meeting at which
the matters are to be acted upon or directors are to be elected. To be timely,
notice of director nominations must be received (i) with respect to an
election to be held or a stockholder proposal to be considered at an annual
meeting of stockholders, 90 days prior to the anniversary date of the
immediately preceding annual meeting, and (ii) with respect to an election to
be held at a special meeting of stockholders for the election of directors,
the close of business on the tenth day following the date on which notice of
such meeting is first given to stockholders. Notice to the Company from a
stockholder must contain certain information.
The purpose of requiring advance notice is to afford the Board of Directors
an opportunity to consider the qualifications of the proposed nominees or the
merits of other stockholder proposals and, to the extent deemed necessary or
desirable by the Board of Directors, to inform stockholders about those
matters.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Norwest Bank
Minnesota, National Association.
47
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the Common
Stock. The effect, if any, of public sales of shares or the availability of
shares for sale at prevailing market prices cannot be predicted. Nevertheless,
sales of substantial amounts of shares in the public market could adversely
affect prevailing market prices.
Upon consummation of this offering, the Company will continue to have
41,264,621 shares of Common Stock outstanding. All of the shares of Common
Stock offered hereby will be freely tradeable without restriction or further
registration under the Securities Act unless acquired by "affiliates" of the
Company as defined in Rule 144 under the Securities Act. In connection with
this offering, the Company and its officers, directors and other Selling
Stockholders, who will beneficially own an aggregate of 18,513,775 shares of
outstanding Common Stock after this offering, have agreed not to sell or
otherwise dispose of any shares, directly or indirectly, for one year from the
date of this Prospectus without the prior written consent of BT Alex. Brown
Incorporated (the "Underwriters' Lock-Up"). In addition, all other current
stockholders, who beneficially own an aggregate of 12,172,450 shares of
outstanding Common Stock, will be prohibited, pursuant to transactions
resulting in the Company's reincorporation in Delaware upon consummation of
this offering, for a period of six months from transferring Common Stock
currently held except upon death or to family members or trusts that take
subject to the same restrictions.
Shares currently outstanding but not being sold in this offering may not be
sold in the absence of registration under the Securities Act unless an
exemption from registration is available, including the exemption contained in
Rule 144 under the Securities Act. In general, under Rule 144, beginning 90
days after the date of this Prospectus, a person (or persons whose shares are
aggregated) who has beneficially owned restricted shares for at least one
year, including an "affiliate" as that term is defined in Rule 144, will be
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of (1) the average weekly trading volume during the
four calendar weeks preceding the filing of a notice of sale with the
Commission or, if no such notice is required, the sale date or (2) 1% of the
then outstanding shares of Common Stock (approximately 413,000 shares
immediately following completion of this offering). Sales under Rule 144 are
also subject to certain requirements as to the manner of sale, notice and
availability of current public information about the Company. A person who is
deemed not to have been an affiliate of the Company at any time during the 90
days preceding a sale by such person and who has beneficially owned shares for
at least two years is entitled to sell those shares under Rule 144(k) without
regard to the volume limitation, provisions concerning manner of sale or
notice requirements of Rule 144. Shares of Common Stock eligible for sale
under Rule 144 may also be sold pursuant to any other exemption from
registration that might be available without compliance with the requirements
of Rule 144.
Any employee, officer or director of or consultant to the Company who, prior
to this offering, purchased his or her shares pursuant to a written
compensatory plan or contract is entitled to rely on the resale provisions of
Rule 701, which permits non-affiliates to sell their Rule 701 shares without
complying with the public information, holding period, volume limitation or
notice provisions of Rule 144 and which permits affiliates to sell their Rule
701 shares without complying with the Rule 144 holding period restrictions, in
each case commencing 90 days after the date of this Prospectus. After this
offering, 1,586,759 shares will be eligible for sale under Rule 701, assuming
that the Underwriters' over-allotment option is not exercised.
The Company believes that beginning six months from the date of this
Prospectus, all outstanding shares of Common Stock other than those held by
affiliates or subject to the one-year Underwriters' Lock-Up will be eligible
for resale without restriction under Rule 144.
48
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), through their representatives,
BT Alex. Brown Incorporated, Morgan Stanley & Co. Incorporated and Piper
Jaffray Inc. (together the "Representatives"), have severally agreed to
purchase from the Selling Stockholders the following respective numbers of
shares of Common Stock at the public offering price less the underwriting
discounts and commissions shown on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ----------
<S> <C>
BT Alex. Brown Incorporated...................................
Morgan Stanley & Co. Incorporated.............................
Piper Jaffray Inc.............................................
----------
Total..................................................... 10,578,396
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase the total number of shares of Common Stock offered hereby if any of
such shares are purchased.
The Company and the Selling Stockholders have been advised by the
Representatives that the Underwriters propose to offer the shares of Common
Stock to the public at the initial public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $ per share. The Underwriters may allow,
and such dealers may re-allow, a concession not in excess of $ per share to
certain other dealers. After commencement of the initial public offering, this
offering price and other selling terms may be changed by the Representatives.
The Selling Stockholders have granted to the Underwriters an option,
exercisable not later than 30 days after the date of this Prospectus, to
purchase up to 1,586,759 additional shares of Common Stock at the initial
public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus. To the extent that the
Underwriters exercise such option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage thereof that the
number of shares of Common Stock to be purchased by it shown in the above
table bears to 10,578,396 and the Selling Stockholders will be obligated,
pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
49
<PAGE>
connection with the sale of the 10,578,396 shares of Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on
the same terms as those on which the 10,578,396 shares are being offered.
To facilitate this offering of the Common Stock, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price
of the Common Stock. Specifically, the Underwriters may over-allot shares of
the Common Stock in connection with this offering, thereby creating a short
position in the Underwriters' syndicate account. Additionally, to cover such
over-allotments or to stabilize the market price of the Common Stock, the
Underwriters may bid for, and purchase, shares of Common Stock in the open
market. Any of these activities may maintain the market price of the Common
Stock at a level above that which might otherwise prevail in the open market.
The Underwriters are not required to engage in these activities, and, if
commenced, any such activities may be discontinued at any time. The
Representatives, on behalf of the Underwriters, also may reclaim selling
concessions allowed to an Underwriter or dealer, if the syndicate repurchases
shares distributed by that Underwriter or dealer.
The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters, the Company and the Selling Stockholders regarding
certain liabilities, including liabilities under the Securities Act.
The Selling Stockholders (including the Company's officers) and directors,
who following this offering will beneficially own 18,513,775 shares of Common
Stock, and the Company, have agreed not to offer, sell or otherwise dispose of
any shares of Common Stock for a period of one year from the date of this
Prospectus without the prior written consent of BT Alex. Brown Incorporated.
In addition, all other current stockholders, who beneficially own an aggregate
of 12,172,450 shares of outstanding Common Stock, will be prohibited, pursuant
to transactions resulting in the Company's reincorporation in Delaware upon
consummation of this offering, for a period of six months from transferring
Common Stock they currently hold except upon death or to family members or
trusts that take subject to the same restrictions.
The Representatives have advised the Company and the Selling Stockholders
that the Underwriters do not intend to confirm sales to any account over which
they exercise discretionary authority.
Prior to this offering, there has been no public market for the Common
Stock. Consequently the initial public offering price for the Common Stock was
determined by negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors considered in such negotiations were
prevailing market conditions, the results of operations of the Company in
recent periods, the market capitalizations and stages of development of other
companies which the Company and the Representatives of the Underwriters
believe to be comparable to the Company, estimates of the business potential
of the Company, the state of the Company's development and other factors
deemed relevant.
Piper Jaffray Inc., one of the Representatives, is acting as a financial
advisor to the Company with regard to the Company's sale of its consumer
finance business. Piper Jaffray Inc. will be separately compensated by the
Company for the provision of these services.
LEGAL MATTERS
The validity of the shares of Common Stock being offered hereby and certain
other legal matters will be passed upon for the Company and the Selling
Stockholders by Dorsey & Whitney LLP, Minneapolis, Minnesota. Certain legal
matters will be passed upon for the Underwriters by Piper & Marbury L.L.P.,
Baltimore, Maryland.
50
<PAGE>
EXPERTS
The financial statements and schedules of the Company as of December 31,
1995 and 1996 and for each of the three years in the period ended December 31,
1996 in this Prospectus and elsewhere in the Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Commission a registration statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to
the shares of Common Stock offered hereby. For the purposes hereof, the term
"Registration Statement" means the original Registration Statement and any and
all amendments thereto. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and
such Common Stock, reference is hereby made to the Registration Statement,
exhibits and schedules, which may be inspected and copied at the public
reference facilities maintained by the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
at certain regional offices of the Commission located at Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at
13th Floor, Seven World Trade Center, New York, New York 10048. Copies of the
Registration Statement can be obtained at prescribed rates from the Public
Reference Section of the Commission at its principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. In addition,
the Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Web site's address is
http://www.sec.gov.
Statements contained in this Prospectus as to the material provisions of any
contract or other document, although accurate, are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
51
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996 and June 30,
1997 (unaudited)......................................................... F-3
</TABLE>
<TABLE>
<S> <C>
Consolidated Statements of Operations for the Years Ended December 31,
1994, 1995 and 1996 and the Six Months Ended June 30, 1996 and 1997
(unaudited).............................................................. F-4
</TABLE>
<TABLE>
<S> <C>
Consolidated Statements of Stockholders' Investment for the Years Ended
December 31, 1994, 1995 and 1996 and the Six Months Ended June 30, 1997
(unaudited)............................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1994, 1995 and 1996 and the Six Months Ended June 30, 1996 and 1997
(unaudited)............................................................. F-6
Notes to Consolidated Financial Statements............................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To C.H. Robinson Worldwide, Inc.:
We have audited the accompanying consolidated balance sheets of C.H.
Robinson Worldwide, Inc. (a Delaware corporation) and Subsidiaries as of
December 31, 1995 and 1996, and the related consolidated statements of
operations, stockholders' investment and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C.H. Robinson Worldwide,
Inc. and Subsidiaries as of December 31, 1995 and 1996, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted
accounting principles.
Minneapolis, Minnesota,
February 10, 1997 (except with respect Arthur Andersen LLP
to matters discussed in Note 6, as to which
the date is July 30, 1997 and Note 7
as to which the date is October 9, 1997)
F-2
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
------------------ -----------
1995 1996 1997
ASSETS -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................... $ 34,452 $ 42,567 $ 40,288
Available-for-sale securities................ 37,112 42,711 50,225
Receivables, net of allowance for doubtful
accounts of $8,033, $10,079 and $11,130..... 148,916 170,935 204,311
Inventories.................................. 7,326 5,276 5,018
Deferred tax benefit......................... 5,230 6,698 7,073
Prepaid expenses and other................... 2,432 2,088 1,664
Net assets of discontinued operations (Note
6).......................................... 13,854 10,147 12,479
-------- -------- --------
Total current assets..................... 249,322 280,422 321,058
-------- -------- --------
PROPERTY AND EQUIPMENT:
Land, building and improvements.............. 2,823 2,773 2,773
Furniture, fixtures and equipment............ 30,151 33,835 36,185
Accumulated depreciation and amortization.... (9,742) (13,561) (15,821)
-------- -------- --------
Net property and equipment............... 23,232 23,047 23,137
INTANGIBLE ASSETS, net of accumulated
amortization of $8,091, $10,331 and $11,893... 9,624 7,811 6,855
OTHER ASSETS................................... 3,339 9,500 10,110
-------- -------- --------
$285,517 $320,780 $361,160
======== ======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable............................. $125,894 $140,376 $165,769
Accrued expenses--
Compensation and profit-sharing
contribution.............................. 17,940 17,991 11,637
Income taxes and other..................... 8,344 7,985 12,388
-------- -------- --------
Total current liabilities................ 152,178 166,352 189,794
-------- -------- --------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 5)
STOCKHOLDERS' INVESTMENT:
Preferred stock, $0.10 par value, 20,000
shares authorized; none outstanding......... -- -- --
Common stock, $0.10 par value; 130,000 shares
authorized, 43,407, 41,375, and 41,265
shares issued and outstanding............... 4,340 4,137 4,126
Additional paid-in capital................... 704 -- --
Foreign currency translation adjustment...... (305) (346) (346)
Retained earnings............................ 128,600 150,637 167,586
-------- -------- --------
Total stockholders' investment........... 133,339 154,428 171,366
-------- -------- --------
$285,517 $320,780 $361,160
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, FOR THE SIX MONTHS ENDED
--------------------------------- -------------------------
JUNE 30, JUNE 30,
1994 1995 1996 1996 1997
---------- ---------- ---------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
GROSS REVENUES.......... $1,257,946 $1,445,975 $1,605,905 $ 775,024 $ 855,152
COST OF TRANSPORTATION
AND PRODUCTS........... 1,122,347 1,285,881 1,426,836 688,104 755,996
---------- ---------- ---------- ------------ ------------
NET REVENUES............ 135,599 160,094 179,069 86,920 99,156
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES............... 95,088 115,114 129,040 62,571 72,465
---------- ---------- ---------- ------------ ------------
INCOME FROM OPERATIONS.. 40,511 44,980 50,029 24,349 26,691
INVESTMENT AND OTHER
INCOME (LOSS).......... (109) 2,925 3,095 1,391 1,881
---------- ---------- ---------- ------------ ------------
INCOME FROM CONTINUING
OPERATIONS BEFORE
PROVISION FOR INCOME
TAXES.................. 40,402 47,905 53,124 25,740 28,572
PROVISION FOR INCOME
TAXES.................. 16,261 18,450 20,682 10,055 11,339
---------- ---------- ---------- ------------ ------------
NET INCOME FROM
CONTINUING OPERATIONS.. 24,141 29,455 32,442 15,685 17,233
NET INCOME FROM
DISCONTINUED
OPERATIONS, net of
taxes of $1,983,
$1,395, $1,451, $737
and $630............... 2,964 2,086 2,158 1,083 900
---------- ---------- ---------- ------------ ------------
NET INCOME.............. $ 27,105 $ 31,541 $ 34,600 $ 16,768 $ 18,133
========== ========== ========== ============ ============
NET INCOME PER SHARE:
Net income from
continuing
operations........... $ 0.52 $ 0.67 $ 0.78 $ 0.37 $ 0.42
Net income from
discontinued
operations........... 0.07 0.05 0.05 0.03 0.02
---------- ---------- ---------- ------------ ------------
Net income............ $ 0.59 $ 0.72 $ 0.83 $ 0.40 $ 0.44
========== ========== ========== ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING............ 46,296 43,934 41,799 42,182 41,306
========== ========== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
$0.10 PAR VALUE FOREIGN
---------------- ADDITIONAL CURRENCY TOTAL
SHARES PAID-IN TRANSLATION RETAINED STOCKHOLDERS'
ISSUED AMOUNT CAPITAL ADJUSTMENT EARNINGS INVESTMENT
------- ------- ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1993................... 48,371 $ 4,837 $10,716 $(206) $ 80,552 $ 95,899
Net income............ -- -- -- -- 27,105 27,105
Foreign currency
translation
adjustment........... -- -- -- (151) -- (151)
Cash dividends, $.108
per share............ -- -- -- -- (4,954) (4,954)
Incentive shares of
common stock issued,
net.................. 504 50 1,157 -- -- 1,207
Repurchase of common
stock................ (3,185) (319) (6,003) -- -- (6,322)
------- ------- ------- ----- -------- --------
BALANCE, December 31,
1994................... 45,690 4,568 5,870 (357) 102,703 112,784
Net income............ -- -- -- -- 31,541 31,541
Foreign currency
translation
adjustment........... -- -- -- 52 -- 52
Cash dividends, $.13
per share............ -- -- -- -- (5,644) (5,644)
Incentive shares of
common stock issued,
net.................. 878 88 2,387 -- -- 2,475
Repurchase of common
stock................ (3,161) (316) (7,553) -- -- (7,869)
------- ------- ------- ----- -------- --------
BALANCE, December 31,
1995................... 43,407 4,340 704 (305) 128,600 133,339
Net income............ -- -- -- -- 34,600 34,600
Foreign currency
translation
adjustment........... -- -- -- (41) -- (41)
Cash dividends, $.185
per share............ -- -- -- -- (7,655) (7,655)
Incentive shares of
common stock issued,
net.................. 200 20 1,031 -- -- 1,051
Repurchase of common
stock................ (2,232) (223) (1,735) -- (4,908) (6,866)
------- ------- ------- ----- -------- --------
BALANCE, December 31,
1996................... 41,375 4,137 -- (346) 150,637 154,428
Net income
(unaudited).......... -- -- -- -- 18,133 18,133
Cash dividends, $.02
per share
(unaudited).......... -- -- -- -- (825) (825)
Incentive shares of
common stock issued,
net (unaudited)...... 239 24 919 -- -- 943
Sale of common stock
(unaudited).......... 25 3 100 -- -- 103
Repurchase of common
stock (unaudited).... (374) (38) (1,019) -- (359) (1,416)
------- ------- ------- ----- -------- --------
BALANCE, June 30, 1997
(unaudited)............ 41,265 $ 4,126 $ -- $(346) $167,586 $171,366
======= ======= ======= ===== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
FOR THE YEARS ENDED SIX MONTHS ENDED
DECEMBER 31 JUNE 30
---------------------------- ------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............. $ 27,105 $ 31,541 $ 34,600 $ 16,768 $ 18,133
Adjustments to
reconcile net income
to net cash provided
by continuing
operations--
Depreciation and
amortization........ 6,091 5,998 7,604 3,700 4,073
Incentive stock
expense............. 2,475 1,051 943 560 --
Deferred income tax
benefit............. (1,770) (2,293) (2,464) (2,972) (1,662)
Loss (gain) on sale
of assets........... 1,793 (190) 10 8 75
Changes in operating
elements--
Receivables........ (32,902) (13,175) (22,019) (31,736) (33,376)
Inventories........ 250 (3,925) 2,050 802 258
Prepaid expenses
and other current
assets............ (22) (648) 344 466 424
Accounts payable... 29,645 15,729 14,482 26,181 25,393
Accrued
compensation and
profit sharing.... 2,140 1,007 159 (6,099) (5,411)
Accrued income
taxes and other... (1,853) 3,121 (359) 2,947 4,403
-------- -------- -------- -------- --------
Net cash provided by
operating
activities.......... 32,952 38,216 35,350 10,625 12,310
-------- -------- -------- -------- --------
INVESTING ACTIVITIES:
Additions of property
and equipment......... (4,326) (14,448) (4,784) (2,772) (2,807)
Disposals of property
and equipment......... 1,508 2,486 80 41 26
Cash paid for
acquisitions, net..... (4,247) (2,908) -- -- --
Sales of long-term
investments........... 3,825 508 115 115 --
Purchases of long-term
investments........... (33) (33) (5,267) (1,012) --
Sales of available-
for-sale securities... 2,330 17,971 33,719 21,526 34,362
Purchases of
available-for-sale
securities............ (6,419) (35,827) (39,318) (18,076) (41,876)
Cash provided by (used
for) discontinued
operations............ 18,076 (2,600) 3,707 2,062 (2,332)
Other assets, net...... (1,211) (692) (966) 147 176
-------- -------- -------- -------- --------
Net cash provided by
(used for) investing
activities.......... 9,503 (35,543) (12,714) 2,031 (12,451)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES:
Repayments under lines
of credit............. (4,000) -- -- -- --
Sales of common stock.. -- -- -- -- 103
Repurchases of common
stock................. (6,322) (7,869) (6,866) (6,817) (1,416)
Cash dividends......... (4,954) (5,644) (7,655) (414) (825)
-------- -------- -------- -------- --------
Net cash used for
financing
activities.......... (15,276) (13,513) (14,521) (7,231) (2,138)
-------- -------- -------- -------- --------
Net increase
(decrease) in cash.. 27,179 (10,840) 8,115 5,425 (2,279)
CASH AND CASH
EQUIVALENTS, beginning
of period.............. 18,113 45,292 34,452 34,452 42,567
-------- -------- -------- -------- --------
CASH AND CASH
EQUIVALENTS, end of
period................. $ 45,292 $ 34,452 $ 42,567 $ 39,877 $ 40,288
======== ======== ======== ======== ========
CASH PAID FOR INCOME
TAXES.................. $ 17,718 $ 21,525 $ 22,662 $ 9,059 $ 8,184
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Consolidation
C.H. Robinson Worldwide, Inc. and Subsidiaries (the Company) is a global
provider of multimodal transportation services and logistics solutions through
a network of 113 branch offices in 38 states throughout the United States,
along with offices in Canada, Mexico and Europe. The consolidated financial
statements include the accounts of C.H. Robinson Worldwide, Inc. and its
majority owned and controlled subsidiaries. The Company's financial services
segment is presented in the accompanying consolidated statements of operations
as discontinued operations (See Note 6). Minority interests in subsidiaries
are not significant. All significant intercompany transactions and balances
have been eliminated in the consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Ultimate results could differ from those estimates.
Revenue Recognition
Gross revenues consist of the total amount of goods and services purchased
by customers. The Company acts principally as the service provider for these
transactions and recognizes revenue as these services are rendered and goods
are delivered.
Foreign Currency
All balance sheet accounts of foreign subsidiaries are translated at the
current exchange rate as of the end of the year. Statement of operations items
are translated at average exchange rates during the year. The resulting
translation adjustment is recorded as a separate component of stockholders'
investment.
The Company provides products and services to numerous international
customers. At times, the Company enters into forward contracts to hedge
against foreign currency exposure related to these transactions. Upon
settlement, resultant gains or losses on such contracts offset the impact of
foreign currency rates on cash collected from accounts receivable. There are
no open contracts at June 30, 1997.
Cash and Cash Equivalents
Cash and cash equivalents consists primarily of highly liquid investments
with an original maturity of three months or less. The carrying amount
approximates fair value due to the short maturity of the instruments.
Available-For-Sale Securities
Available-for-sale securities consists of various debt and equity
securities. The fair value of the Company's available-for-sale securities
equals the quoted market price where available or quoted market prices for
similar securities, if a quoted market price is not available.
F-7
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Inventories
Inventories consist primarily of produce, fruit concentrates and related
products held for resale and are stated at the lower of cost or market.
Property and Equipment
Property and equipment additions are recorded at cost. Maintenance and
repair expenditures are charged to expense as incurred. Depreciation is
computed using straight-line and accelerated methods over the following
estimated lives of the assets:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Building and improvements........................................... 3-37
Furniture, fixtures and equipment................................... 5-10
</TABLE>
Amortization of leasehold improvements is computed over the shorter of the
lease term or the estimated useful lives of the improvements.
Intangible Assets
Intangible assets consist of customer lists, trade names, contracts,
noncompete agreements, software and goodwill. Intangible assets are being
amortized over their estimated economic lives, ranging from 3 to 20 years. The
Company periodically evaluates whether events and circumstances have occurred
that indicate the remaining balance of intangible assets may not be
recoverable.
Income Per Share
Primary and fully diluted income per common share are determined by dividing
net income by the weighted average number of common shares outstanding during
each period. There were no differences between primary and fully diluted
weighted average shares outstanding.
Recently Issued Accounting Pronouncement
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128) in February
1997. SFAS No. 128 establishes accounting standards for computing and
presenting earnings per share and is effective for reporting periods ending
after December 15, 1997. The adoption of SFAS No. 128 will not have a material
impact on the Company's calculation of income per share.
Interim Financial Information (Unaudited)
The accompanying consolidated balance sheet as of June 30, 1997, the
consolidated statements of operations and cash flows for the six-month periods
ended June 30, 1996 and 1997, and the consolidated statement of stockholders'
investment for the six-month period ended June 30, 1997 are unaudited.
However, in the opinion of management, these financial statements include all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of results for these interim periods. The results of operations
for the six months ended June 30, 1996 and 1997 are not necessarily indicative
of results to be expected for the entire year.
F-8
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. MARKETABLE SECURITIES:
The Company has classified all of its marketable securities as available-
for-sale as of December 31, 1995 and 1996 and June 30, 1997. Available-for-
sale securities are carried at fair value, with the unrealized gains and
losses reported net of tax as a separate component of stockholders' investment
when material. The unrealized gains and losses are immaterial as the fair
value approximates amortized cost. The gross realized gains and losses on
sales of available-for-sale securities were not material for the years ended
December 31, 1995 and 1996 and for the six months ended June 30, 1997.
The following is a summary of marketable securities (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
---------------- -------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
U.S. government and government agency
obligations................................. $ 6,648 $ 1,033 $ 2,523
State and local agency obligations........... 22,029 27,373 35,333
Corporate bonds.............................. 30,067 40,858 35,788
Other debt securities........................ 1,300 700 700
Equity securities............................ 82 87 97
------- ------- -------
Total...................................... 60,126 70,051 74,441
Less--Cash equivalents....................... (23,014) (27,340) (24,216)
------- ------- -------
Available-for-sale securities................ $37,112 $42,711 $50,225
======= ======= =======
</TABLE>
The fair value of marketable securities by contractual maturity are stated
below (in thousands).
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ --------
<S> <C> <C>
Debt securities:
Due within one year............................... $20,596 $13,628
Due after one year through five years............. 8,506 21,128
Due after five years.............................. 13,522 15,372
------- -------
$42,624 $50,128
======= =======
</TABLE>
3. LINES OF CREDIT:
The Company has unsecured lines of credit with banks which provide for
borrowings of up to $17,500,000 and expire on May 1, 1998. Interest on
borrowings under the lines is at 1% above the banks' cost of funds (6.69% and
6.63% as of June 30, 1997). There were no borrowings under the lines of credit
during 1994, 1995, 1996 or for the six months ended June 30, 1997.
The Company's credit agreements contain certain financial covenants. The
Company was in compliance with such covenants at December 31, 1996 and June
30, 1997.
4. INCOME TAXES:
C.H. Robinson Worldwide, Inc. and its 80% (or more) owned U.S. subsidiaries
file a consolidated federal income tax return. The Company files unitary or
separate state returns based on state filing
F-9
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
requirements. The components of the provision for income taxes consisted of
the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Tax provision:.................................
Federal...................................... $14,339 $17,367 $19,060
State........................................ 3,465 2,956 3,423
Foreign...................................... 227 420 663
------- ------- -------
18,031 20,743 23,146
Deferred benefit............................... (1,770) (2,293) (2,464)
------- ------- -------
Total provision.............................. $16,261 $18,450 $20,682
======= ======= =======
</TABLE>
A reconciliation from the provision for income taxes using the statutory
federal income tax rate to the Company's effective income tax rate is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate.................................. 35.0% 35.0% 35.0%
State income taxes, net of federal benefit.............. 4.3 3.8 3.9
Other................................................... 0.9 (0.3) --
---- ---- ----
40.2% 38.5% 38.9%
==== ==== ====
</TABLE>
Deferred tax assets (liabilities) are comprised of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31
----------------
1995 1996
------- -------
<S> <C> <C>
Deferred income tax assets:
Receivables........................................... $ 3,749 $ 5,305
Accrued expenses...................................... 1,463 1,353
Amortization.......................................... 908 1,518
Other................................................. 1,663 1,092
Accrued compensation.................................. 2,365 3,581
Deferred income tax liabilities:
Long-lived assets..................................... (2,034) (2,279)
Other................................................. (77) (56)
------- -------
Net deferred income tax asset....................... $ 8,037 $10,514
======= =======
</TABLE>
5. COMMITMENTS AND CONTINGENCIES:
Employee Benefit Plans
The Company participates in a defined contribution profit-sharing plan and a
savings plan which qualifies under section 401(k) of the Internal Revenue Code
and covers all full-time employees with one or more years of continuous
service. Annual profit-sharing contributions are determined by each company's
board of directors, in accordance with the provisions of the plan. Profit-
sharing plan expense aggregated approximately $3,408,000 in 1994, $3,608,000
in 1995, and $3,611,000 in 1996 and $1,947,000 and $2,470,000 for the six
months ended June 30, 1996 and 1997. The Company can elect to make
contributions to the 401(k) plan at the discretion of the Company's board of
directors. There were no Company contributions during 1994, 1995, 1996 or for
the six months ended June 30, 1997.
F-10
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Lease Commitments
The Company leases certain facilities, equipment and automobiles under
operating leases. Lease expense was $4,775,000 for 1994, $7,088,000 for 1995,
and $8,318,000 for 1996 and $4,030,000 and $6,276,000 for the six months ended
June 30, 1996 and 1997.
Minimum future lease commitments under noncancelable lease agreements in
excess of one year as of December 31, 1996 are as follows (in thousands):
<TABLE>
<S> <C>
1997...................................... $ 6,981
1998...................................... 6,216
1999...................................... 4,699
2000...................................... 2,002
2001...................................... 1,520
Thereafter................................ 2,754
-------
$24,172
=======
</TABLE>
Litigation
In 1995, the United States Customs Service began an investigation of
possible duties owed on imports of certain juice concentrates by a subsidiary
of the Company. The Company has been advised by the United States Attorney for
the Eastern District of New York that its subsidiary was not the target or the
subject of a criminal investigation, although the United States Attorney is
not bound by such statements. The Company believes, however, that the U.S.
Customs Service will seek additional duties of approximately $4,000,000 and
may seek civil monetary penalties against the subsidiary of the Company. The
Company believes the disposition of this matter will not have a material
adverse effect on the financial condition or results of operations of the
Company, although there can be no assurance that the duties and penalties
sought against the subsidiary will not exceed the Company's reserves for this
matter.
The Company is currently not otherwise subject to any pending or threatened
litigation, other than routine litigation arising in the ordinary course of
business, none of which is expected to have a material adverse effect on the
financial condition or results of operations of the Company.
6. DISCONTINUED OPERATIONS:
On July 30, 1997, the Company approved a plan to sell its finance
businesses. This segment is expected to be sold prior to the end of 1997.
Accordingly, these operations are reported as discontinued operations in the
accompanying consolidated financial statements. CHR Equipment Financing, Inc.
(EFI) is included in the results of discontinued operations. The majority of
EFI assets were disposed of in 1994. Summary condensed financial information
for the discontinued segment is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
----------------------- -------------
1994 1995 1996 1996 1997
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Revenues............................ $13,216 $12,117 $12,870 $6,406 $6,606
Expenses............................ 8,269 8,636 9,238 4,575 5,035
Income from operations.............. 4,947 3,481 3,632 1,831 1,571
</TABLE>
F-11
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
--------------- -------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Cash and investments............................. $ 6,790 $ 6,885 $ 7,045
Finance receivables.............................. 53,492 46,213 48,686
Other assets..................................... 2,429 2,650 2,149
------- ------- -------
Total assets................................... $62,711 $55,748 $57,880
======= ======= =======
Thrift deposits.................................. $32,649 $33,457 $31,038
Long-term debt................................... 13,101 7,635 9,156
Accounts payable and accrued expenses............ 3,107 4,509 5,207
------- ------- -------
Total liabilities.............................. $48,857 $45,601 $45,401
======= ======= =======
Net assets of discontinued operations.......... $13,854 $10,147 $12,479
======= ======= =======
</TABLE>
7. CAPITAL STOCK
The Company had two classes of common stock. In connection with the offering
of common stock (see Note 8), the Company converted the Class A and Class B
common stock into one class of common stock and all stock repurchase
agreements were terminated. The Class A common stock was nonvoting but had the
same dividend rights as the Class B voting common stock. Both classes were
subject to stock repurchase agreements under which the Company had the option
to designate a buyer or to purchase the common stock at book value if a
stockholder's employment with the Company ceased. Additionally, Class A common
stock was redeemable at book value at the option of either the Company or
stockholder. Common stock repurchased by the Company under such arrangements
totaled 3,185,000, 3,161,000, 2,232,000, and 374,000 shares in 1994, 1995 1996
and the six months ended June 30, 1997. Certain of the shares subject to
repurchase in a given year are offered to certain active employees of the
Company. Such shares are acquired by the employees directly from the selling
stockholder at the then net book value per share of the Company's common
stock.
The Company also had incentive plans which awarded shares of common stock to
certain employees based upon the annual operating performance of the Company.
The net book value of such shares was charged to expense in the year the award
was earned. Compensation expense associated with such plans totaled
approximately $2,475,000, $1,051,000, $943,000, $560,000, and $548,000 for
1994, 1995, 1996 and the six months ended June 30, 1996 and 1997. Such plans
were terminated effective October , 1997, and any amounts due for 1997 will
be paid in cash.
Pursuant to Securities Exchange Commission rules related to stock issued or
sold to employees at prices below the initial public offering price for the
twelve months preceding the date that the initial offering becomes effective
("cheap stock"), the Company will record an $18,558,000 charge to expense at
the effective date of the Offering. This future charge relates to
approximately 1,237,000 shares sold to employees under the book value stock
purchase plan and approximately 282,000 shares issued under the incentive
plans discussed above and represents the difference between the book value of
shares sold and issued to employees and the offering price per share.
In connection with the Offering discussed in note 8, the Company was
reorganized as a Delaware corporation.
8. OFFERING OF COMMON STOCK, STOCK OPTIONS, STOCK PURCHASE PLAN AND SPECIAL
DIVIDEND:
The Company is registering its common stock to allow certain stockholders to
sell 12,165,155 shares of the Company's stock to the Public. The proceeds of
the offering will accrue entirely to selling stockholders.
F-12
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In August 1997, the Company adopted stock option and stock purchase plans
which the Company expects will be approved by the Company's stockholders prior
to the effective date of the offering. Under the plans, options to purchase an
aggregate of not more than 2,000,000 shares of common stock may be granted
from time to time to key employees, officers and directors of the Company.
Immediately prior to the consummation of the offering, the Company intends to
grant 470,417 stock options under these plans at a grant price equivalent to
that of the offering price per share.
In August 1997, the Company declared a $1.50 dividend on the Company's
common stock to stockholders of record immediately prior to the offering of
common stock. Also, the Company will generate an approximate $36.0 million tax
benefit from the removal of restrictions on the shares to be sold in the
Offering.
9. SUPPLEMENTARY DATA (UNAUDITED):
The Company's results of operations for each of the quarters in the years
ended December 31, 1995 and 1996 and the six months ended June 30, 1997 are
summarized below (in thousands, except per share data).
<TABLE>
<CAPTION>
QUARTERS ENDED (UNAUDITED)
------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
1995
Gross revenues...................... $331,214 $379,275 $370,870 $364,616
Cost of transportation and products. 293,994 337,112 330,034 324,741
Net revenues........................ 37,220 42,163 40,836 39,875
Income from operations.............. 9,332 13,440 12,449 9,759
Net income from continuing
operations......................... 6,238 8,567 8,131 6,519
Net income from discontinued
operations......................... 451 515 549 571
-------- -------- -------- --------
Net income.......................... $ 6,689 $ 9,082 $ 8,680 $ 7,090
======== ======== ======== ========
Net income per share from continuing
operations......................... $ 0.14 $ 0.20 $ 0.19 $ 0.15
Net income per share from
discontinued operations............ 0.01 0.01 0.01 0.01
-------- -------- -------- --------
Net income per share................ $ 0.15 $ 0.21 $ 0.20 $ 0.16
======== ======== ======== ========
Weighted average shares outstanding. 45,179 43,565 43,518 43,473
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED (UNAUDITED)
------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
1996
Gross revenues...................... $361,936 $413,088 $413,585 $417,296
Cost of transportation and products. 320,100 368,004 368,474 370,258
Net revenues........................ 41,836 45,084 45,111 47,038
Income from operations.............. 10,474 13,875 13,509 12,171
Net income from continuing
operations......................... 6,719 8,966 8,673 8,084
Net income from discontinued
operations......................... 543 540 566 509
-------- -------- -------- --------
Net income.......................... $ 7,262 $ 9,506 $ 9,239 $ 8,593
======== ======== ======== ========
Net income per share from continuing
operations......................... $ 0.16 $ 0.22 $ 0.21 $ 0.20
Net income per share from
discontinued operations............ 0.01 0.01 0.01 0.01
-------- -------- -------- --------
Net income per share................ $ 0.17 $ 0.23 $ 0.22 $ 0.21
======== ======== ======== ========
Weighted average shares outstanding. 42,929 41,434 41,425 41,406
======== ======== ======== ========
</TABLE>
F-13
<PAGE>
C.H. ROBINSON WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
<TABLE>
<CAPTION>
QUARTER ENDED
(UNAUDITED)
-----------------
MARCH 31 JUNE 30
-------- --------
<S> <C> <C>
1997
Gross revenues............................................... $403,705 $451,447
Cost of transportation and products.......................... 356,819 399,177
Net revenues................................................. 46,886 52,270
Income from operations....................................... 11,415 15,276
Net income from continuing operations........................ 7,426 9,807
Net income from discontinued operations...................... 439 461
-------- --------
Net income................................................... $ 7,865 $ 10,268
======== ========
Net income per share from continuing operations.............. $ 0.18 $ 0.24
Net income per share from discontinued operations............ 0.01 0.01
-------- --------
Net income per share......................................... $ 0.19 $ 0.25
-------- --------
Weighted average shares outstanding.......................... 41,359 41,253
======== ========
</TABLE>
F-14
<PAGE>
[INSIDE BACK COVER]
[PHOTO OF COMPANY SALESPERSONS]
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 11
Dividends, Stock Repurchase Program and Non-Cash Charge................... 11
Capitalization............................................................ 12
Dilution.................................................................. 12
Selected Consolidated Financial Data...................................... 13
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 15
Industry Overview......................................................... 21
Business.................................................................. 22
Management................................................................ 33
Certain Transactions...................................................... 39
Principal and Selling Stockholders........................................ 40
Description of Capital Stock.............................................. 43
Shares Eligible for Future Sale........................................... 48
Underwriting.............................................................. 49
Legal Matters............................................................. 50
Experts................................................................... 51
Additional Information.................................................... 51
Index to Consolidated Financial Statements................................ F-1
</TABLE>
------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICI-
PATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS RE-
QUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
10,578,396 Shares
LOGO
Common Stock
------------
PROSPECTUS
------------
BT ALEX. BROWN
MORGAN STANLEY DEAN WITTER
PIPER JAFFRAY INC.
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following fees and expenses (which do not include underwriting
commissions and discounts) will be paid by the Company in connection with the
issuance and distribution of the securities registered hereby. All such
expenses, except for the SEC, NASD and Nasdaq fees, are estimated.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee.......................... $ 62,669
NASD filing fee............................... 21,181
Nasdaq Stock Market listing fee............... 50,000
Legal fees and expenses....................... 305,000
Accounting fees and expenses.................. 200,000
Transfer Agent's and Registrar's fees......... 13,000
Printing and engraving expenses............... 76,300
Miscellaneous................................. 271,850
----------
Total....................................... $1,000,000
==========
</TABLE>
__________
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Company provides that a director of
the Company shall not be personally liable to the Company 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 Company 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 any
improper personal benefit.
The Certificate of Incorporation of the Company provides that to the full
extent permitted by law the Company shall indemnify and advance expenses to any
person who is or was a director or officer of the Company, and may, but shall
not be obligated to, indemnify and advance expenses to any employee or agent of
the Company, and shall or may, as applicable, indemnify any person serving at
the request of the Company as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
against liabilities which may be incurred by such person by reason of (or
arising in part from) such capacity.
Section 145 of the DGCL authorizes the indemnification of directors and
officers against liability incurred by reason of being a director or officer and
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with any action,
suit, or proceeding seeking to establish such liability, in the case of third-
party claims, if the officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and in the case of actions by or in the right of the corporation,
if the officer or director acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and if
such officer or director shall not have been adjudged liable to the corporation,
unless, despite the adjudication of liability, a court otherwise determines.
Indemnification also is authorized with
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<PAGE>
respect to any criminal action or proceeding where, in addition to the above,
the officer or director has no reasonable cause to believe his conduct was
unlawful.
The above discussion of the Company's Certificate of Incorporation, Bylaws
and Section 145 of the DGCL is only a summary and is qualified in its entirety
by the full text of each of the foregoing.
Reference is made to the Underwriting Agreement, the proposed form of which
is filed as Exhibit 1.1 hereto, in which each Underwriter agrees, under certain
circumstances, to indemnify the directors and officers of the Company and
certain other persons against certain civil liabilities.
The Company intends to purchase insurance against certain losses arising from
claims which may be asserted against its directors and officers, including
claims under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On February 28, 1995, the Company issued an aggregate of 879,612 restricted
shares of Common Stock to 70 employees under its Central Office Management
Incentive, Employee Incentive and Profit Center Incentive Programs (the
"Programs") related to incentive compensation earned for the year ended December
31, 1994 (and determined after the end of the year). The number of shares issued
was based on book value per share of Common Stock on December 31, 1994. Such
issuances were exempt from registration under the Securities Act of 1933, as
amended ("Securities Act"), pursuant to Section 3(b) and Rule 701 thereunder
inasmuch as (1) the Company was not subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act") and was not an investment company registered or required to be
registered under the Investment Company Act of 1940, as amended ("Investment
Company Act") at the time of issuance, (2) the conditions of Rule 701(b)(1) and
(3) were satisfied in that each such issuance was made to pursuant to a written
contract with each such employee, which was furnished to the employee, and (3)
the conditions of Rule 701(b)(5) were satisfied in that the aggregate amount of
securities offered and sold (879,612 shares valued at $2,190,234) (x) did not
exceed $5,000,000 and (y) did not exceed the greater of (i) $500,000, (ii)
$44,699,100 (15% of the total assets of the Company at December 31, 1994) or
(iii) 6,535,986 shares (15% of the number of shares outstanding as of February
28, 1995, giving effect to such sales).
On February 28, 1996, the Company issued an aggregate of 369,498 restricted
shares of Common Stock to 56 employees under the Programs related to
incentive compensation earned for the year ended December 31, 1995 (and
determined after the end of the year). The number of shares issued was based on
book value per share of Common Stock on December 31, 1995. Such issuances were
exempt from registration under the Securities Act pursuant to Section 3(b) and
Rule 701 thereunder inasmuch as (1) the Company was not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act and was not an
investment company registered or required to be registered under the Investment
Company Act at the time of issuance, (2) the conditions of Rule 701(b)(1) and
(3) were satisfied in that each such issuance was made to pursuant to a written
contract with each such employee, which was furnished to the employee, and (3)
the conditions of Rule 701(b)(5) were satisfied in that the aggregate amount of
securities offered and sold (369,498 shares valued at $1,147,291) (x) did not
exceed $5,000,000 and (y) did not exceed the greater of (i) $500,000, (ii)
$50,316,150 (15% of the total assets of the Company at December 31, 1995) or
(iii) 6,212,975 shares (15% of the number of shares outstanding as of February
28, 1996, giving effect to such sales).
On February 28, 1997, the Company issued an aggregate of 282,086 restricted
shares of Common Stock to 57 employees under the Programs related to
incentive compensation earned for the year ended December 31, 1996 (and
determined after the end of the year). The number of shares issued was based on
book value per share of Common Stock on December 31, 1996. Such
II-2
<PAGE>
issuances were exempt from registration under the Securities Act pursuant to
Section 3(b) and Rule 701 thereunder inasmuch as (1) the Company was not subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act and was
not an investment company registered or required to be registered under the
Investment Company Act at the time of issuance, (2) the conditions of Rule
701(b)(1) and (3) were satisfied in that each such issuance was made to pursuant
to a written contract with each such employee, which was furnished to the
employee, and (3) the conditions of Rule 701(b)(5) were satisfied in that the
aggregate amount of securities offered and sold (282,086 shares valued at
$1,066,285) (x) did not exceed $5,000,000 and (y) did not exceed the greater of
(i) $500,000, (ii) $48,117,000 (15% of the total assets of the Company at
December 31, 1996) or (iii) 6,185,288 shares (15% of the number of shares
outstanding as of February 28, 1997, giving effect to such sales).
On June 30, 1997, the Company sold 25,000 shares of Common Stock to Gerald A.
Schwalbach, a director of the Company, for cash in the amount of $103,000, the
book value of the stock at May 31, 1997. Such stock was purchased for investment
and not with a view to distribution, and the sale thereof was exempt from
registration under the Securities Act pursuant to Section 4(2) thereof.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
Number Description
-------- -----------
1.1 Underwriting Agreement
**3.1 Certificate of Incorporation of the Company
**3.2 Bylaws of the Company
3.3 Certificate of Designations of Series A Junior
Participating Preferred Stock of the Company
4.1 Form of Certificate for Common Stock
4.2 Form of Rights Agreement between the Company and
Norwest Bank Minnesota, National Association
5.1 Opinion of Dorsey & Whitney LLP
**10.1 Form of Central Office Management Incentive Program,
including Deferred Compensation Agreement
**10.2 Operational Executive Compensation Program
**10.3 Employee Incentive Program
10.4 1997 Omnibus Stock Plan
**10.5 Form of Management-Employee Agreement between the Company
and each of by D.R. Verdoorn, Looe Baker III and Barry
Butzow
**10.6 Form of Management-Employee Agreement entered into by
Gregory Goven, Dale Hanson, Thomas Jostes, Bernard Madej and
Michael Rempe
**10.7 Form of Management-Employee Agreement between the Company
and by Thomas Perdue
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<PAGE>
**10.8 Amended and Restated Promissory Note, due on demand or June
30, 1998, payable by C.H. Robinson Company to the order of
First Bank National Association, up to an aggregate
principal amount of $10,000,000
**10.9 Guaranty, dated as of November 30, 1992, by C.H. Robinson,
Inc. for the benefit of First Bank National Association
**10.10 Master Equipment Lease Agreement, dated August 19, 1994,
between Wagonmaster Transportation Company and AT&T
Commercial Finance Corporation
**10.11 Keep-Well Agreement, dated August 19, 1994, between C.H.
Robinson, Inc., Wagonmaster Transportation Company and
AT&T Commerical Finance Corporation
**10.12 Master Equipment Lease Agreement, dated ______, 1994,
between Wagonmaster Transportation Company and Metlife
Capital, Limited Partnership
**10.13 Keep-Well Agreement, dated April ______, 1994, between C.H.
Robinson, Inc., Wagonmaster Transportation Company and
Metlife Capital Limited Partnership
**10.14 Support Agreement, dated as of October 23, 1995, among C.H.
Robinson, Inc., Clipper Receivables Corporation, State
Street Boston Capital Corporation and Norwest Bank
Minnesota, N.A.
**10.15 Receivables Purchase Agreement, dated as of October 23,
1995, among Cityside Finance Corporation I, Cityside
Financial Services of Wisconsin, Inc., Clipper Receivables
Corporation, State Street Boston Capital Corporation and
Norwest Bank Minnesota, N.A.
**10.16 First Amendment to Receivables Purchase Agreement and
Support Agreement, dated as of April 1, 1996, among Cityside
Finance Corporation I, Cityside Financial Services of
Wisconsin, Inc., Clipper Receivables Corporation, State
Street Boston Capital Corporation, Norwest Bank Minnesota,
N.A. and C.H. Robinson, Inc.
**10.17 Second Amendment to Receivables Purchase Agreement and
Support Agreement, dated as of December 11, 1996, among
Cityside Finance Corporation I, Cityside Financial Services
of Wisconsin, Inc., Clipper
II-4
<PAGE>
Receivables Corporation, State Street Boston Capital
Corporation, Norwest Bank Minnesota, N.A. and C.H. Robinson,
Inc.
**10.18 Letter of Undertaking, dated April 7, 1995, by C.H.
Robinson, Inc. to First Bank National Association, Norwest
Bank Minnesota, N.A., The Daiwa Bank, Limited and American
Bank National Association, in support of Cityside Financial
Services of Wisconsin, Inc.
**10.19 Subordination Agreement, as amended April 7, 1995, by C.H.
Robinson, Inc. in favor of First Bank National Association,
Norwest Bank Minnesota, N.A., The Daiwa Bank, Limited and
American Bank National Association
**10.20 Form of Selling Shareholder Authorization Letter.
10.21 Form of Management Confidentiality and Noncompetition
Agreement
10.22 Form of Stock Option Agreement
21.1 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Dorsey & Whitney LLP (included in
Exhibit 5.1)
**24.1 Powers of Attorney (included on signature page previously
filed with this Registration Statement)
**27.1 Financial Data Schedule
______________________
** Previously filed.
(b) Financial Statement Schedules
Schedule II. Valuation and Qualifying Accounts.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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 Act and will be governed by the final adjudication of
such issue.
The undersigned registrant further undertakes that:
(1) It will provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to each
purchaser.
(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and this offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement on Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Eden Prairie, State of Minnesota, on October 9, 1997.
C.H. ROBINSON WORLDWIDE, INC.
By: /s/ Owen P. Gleason
-------------------------------------
Owen P. Gleason
Vice President, General Counsel and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement on Form S-1 has been signed by the following persons
in the capacities indicated on October 9, 1997.
SIGNATURE TITLE
--------- -----
D. R. Verdoorn* President, Chief Executive Officer and Director
(Principal Executive Officer)
Dale S. Hanson* Vice President Finance, Chief Financial Officer
and Director (Principal Financial Officer)
John P. Wiehoff* Corporate Controller and Treasurer
(Principal Accounting Officer)
Looe Baker III* Vice President and Director
Barry W. Butzow* Vice President and Director
/s/ Owen P. Gleason Vice President, General Counsel, Secretary
---------------------- and Director
Owen P. Gleason
Robert Ezrilov* Director
Gerald A. Schwalbach* Director
* Executed pursuant to a power of attorney previously filed with this
Registration Statement.
By: /s/ Owen P. Gleason
-----------------------
Owen P. Gleason
Attorney-in-fact
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<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To C.H. Robinson Worldwide, Inc.:
Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in the
index to consolidated financial statements is presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Minneapolis, Minnesota,
February 10, 1997 (except with respect ARTHUR ANDERSEN LLP
to matters discussed in Note 6, as to which
the date is July 30, 1997 and Note 7 as to
which the date is October 9, 1997)
S-1
<PAGE>
C.H. Robinson Worldwide, Inc.
Schedule II. Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
The transactions in the allowance for doubtful accounts for the years ended
December 31, 1994, and 1995 and 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31, December 31, December 31,
1994 1995 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of
Year $3,885 $ 5,719 $ 8,033
- --------------------------------------------------------------------------------
Provision 2,679 4,583 5,139
- --------------------------------------------------------------------------------
Write-off's (845) (2,269) (3,093)
- --------------------------------------------------------------------------------
Balance, end of year $5,719 $ 8,033 $10,079
- --------------------------------------------------------------------------------
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
Number Description Page
- ------- ----------- ----
1.1 Underwriting Agreement
**3.1 Certificate of Incorporation of the Company
**3.2 Bylaws of the Company
3.3 Certificate of Designations of Series A Junior Participating
Preferred Stock of the Company
4.1 Form of Certificate for Common Stock
4.2 Form of Rights Agreement between the Company and Norwest Bank
Minnesota, National Association
5.1 Opinion of Dorsey & Whitney LLP
**10.1 Form of Central Office Management Incentive Program,
including Deferred Compensation Agreement
**10.2 Operational Executive Compensation Program
**10.3 Employee Incentive Program
10.4 1997 Omnibus Stock Plan
**10.5 Form of Management-Employee Agreement between the Company
and each of by D.R. Verdoorn, Looe Baker III and Barry Butzow
**10.6 Form of Management-Employee Agreement entered into by
Gregory Goven, Dale Hanson, Thomas Jostes, Bernard Madej
and Michael Rempe
**10.7 Form of Management-Employee Agreement between the Company
and by Thomas Perdue
**10.8 Amended and Restated Promissory Note, due on demand or
June 30, 1998, payable by C.H. Robinson Company to the
order of First Bank National Association, up to an aggregate
principal amount of $10,000,000
**10.9 Guaranty, dated as of November 30, 1992, by C.H. Robinson,
Inc. for the benefit of First Bank National Association
**10.10 Master Equipment Lease Agreement, dated August 19, 1994,
between Wagonmaster Transportation Company and
AT&T Commercial Finance Corporation
**10.11 Keep-Well Agreement, dated August 19, 1994, between
C.H. Robinson, Inc., Wagonmaster Transportation Company
and AT&T Commercial Finance Corporation
<PAGE>
**10.12 Master Equipment Lease Agreement, dated _______, 1994,
between Wagonmaster Transportation Company and Metlife Capital,
Limited Partnership
**10.13 Keep-Well Agreement, dated April ___, 1994, between
C.H. Robinson, Inc., Wagonmaster Transportation Company
and Metlife Capital Limited Partnership
**10.14 Support Agreement, dated as of October 23, 1995, among
C.H. Robinson, Inc., Clipper Receivables Corporation,
State Street Boston Capital Corporation and Norwest Bank
Minnesota, N.A.
**10.15 Receivables Purchase Agreement, dated as of October 23, 1995,
among Cityside Finance Corporation I, Cityside Financial
Services of Wisconsin, Inc., Clipper Receivables Corporation,
State Street Boston Capital Corporation and Norwest Bank
Minnesota, N.A.
**10.16 First Amendment to Receivables Purchase Agreement and
Support Agreement, dated as of April 1, 1996, among
Cityside Finance Corporation I, Cityside Financial Services
of Wisconsin, Inc., Clipper Receivables Corporation,
State Street Boston Capital Corporation, Norwest Bank Minnesota,
N.A. and C.H. Robinson, Inc.
**10.17 Second Amendment to Receivables Purchase Agreement and
Support Agreement, dated as of December 11, 1996, among
Cityside Finance Corporation I, Cityside Financial Services
of Wisconsin, Inc., Clipper Receivables Corporation,
State Street Boston Capital Corporation, Norwest Bank
Minnesota, N.A. and C.H. Robinson, Inc.
**10.18 Letter of Undertaking, dated April 7, 1995, by C.H. Robinson,
Inc. to First Bank National Association, Norwest Bank
Minnesota, N.A., The Daiwa Bank, Limited and American Bank
National Association, in support of Cityside Financial
Services of Wisconsin, Inc.
**10.19 Subordination Agreement, as amended April 7, 1995, by C.H.
Robinson, Inc. in favor of First Bank National Association,
Norwest Bank Minnesota, N.A., The Daiwa Bank, Limited and
American Bank National Association
**10.20 Form of Selling Shareholder Authorization Letter
10.21 Form of Management Confidentiality and Noncompetition Agreement
10.22 Form of Stock Option Agreement
21.1 Subsidiaries of the Company
<PAGE>
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
**24.1 Powers of Attorney (included on signature page of this Registration
Statement)
**27.1 Financial Data Schedule
_____________________
** Previously filed.
<PAGE>
Exhibit 1.1
10,578,396 Shares
C.H. ROBINSON WORLDWIDE, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
_______________, 1997
BT Alex. Brown Incorporated
Morgan Stanley & Co. Incorporated
Piper Jaffray Inc.
As Representatives of the
Several Underwriters
c/o BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202
Gentlemen:
Certain stockholders (the "Selling Stockholders") of C.H. Robinson
Worldwide, Inc., a Delaware corporation (the "Company"), propose to sell to the
several underwriters (the "Underwriters") named in Schedule I hereto for whom
you are acting as representatives (the "Representatives") an aggregate of
10,578,396 shares of the Company's Common Stock, $.10 par value (the "Firm
Shares"). The respective amounts of the Firm Shares to be so purchased by the
several Underwriters are set forth opposite their names in Schedule I hereto,
and the respective amounts to be sold by the Selling Stockholders are set forth
opposite their names in Schedule II hereto. The Selling Stockholders also
propose to sell at the Underwriters' option an aggregate of up to 1,586,759
additional shares of the Company's Common Stock (the "Option Shares") as set
forth below.
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to
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<PAGE>
exercise the over-allotment option in whole or in part for the accounts of the
several Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the
"Shares."
The representations, warranties and covenants contained in this Agreement
give effect to the merger of C.H. Robinson, Inc., a Minnesota corporation, with
and into the Company on the Closing Date (as hereinafter defined).
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company and the Selling
-------------------------------------------------------------
Stockholders.
------------
(a) The Company represents and warrants to each of the Underwriters
as follows:
(i) A registration statement on Form S-1 (File No. 333-33731) with
respect to the Shares has been carefully prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"),
and the Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder and has been filed with
the Commission. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements of
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, together with
any registration statement filed by the Company pursuant to Rule 462(b) of
the Act, herein referred to as the "Registration Statement," which shall be
deemed to include all information omitted therefrom in reliance upon Rule 430A
and contained in the Prospectus referred to below, has become effective under
the Act and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement. "Prospectus" means (a) the form of
prospectus first filed with the Commission pursuant to Rule 424(b) or (b) the
last preliminary prospectus included in the Registration Statement filed prior
to the time it becomes effective or filed pursuant to Rule 424(a) under the
Act that is delivered by the Company to the Underwriters for delivery to
purchasers of the Shares, together with the term sheet or abbreviated term
sheet filed with the Commission pursuant to Rule 424(b)(7) under the Act. Each
preliminary prospectus included in the Registration Statement prior to the
time it becomes effective is herein referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate
-2-
<PAGE>
power and authority to own or lease its properties and conduct its business as
described in the Registration Statement. Each of the subsidiaries of the
Company listed in Exhibit A hereto (collectively, the "Subsidiaries") has been
duly organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as described
in the Registration Statement. The Company and each of the Subsidiaries are
duly qualified to transact business in all jurisdictions in which the conduct
of their business requires such qualification other than where the failure to
be so qualified would not have a material adverse effect on the business of
the Company and its subsidiaries, taken as a whole. The outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by the Company
or another Subsidiary free and clear of all liens, encumbrances and equities
and claims; and no options, warrants or other rights to purchase, agreements
or other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiaries are
outstanding.
(iii) The outstanding shares of Common Stock of the Company, including all
shares to be sold by the Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; and no preemptive rights
of stockholders exist with respect to any of the Shares or the issue and sale
thereof. Neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or relating to the
registration of any shares of Common Stock.
(iv) The information set forth under the caption "Capitalization" in the
Prospectus is true and correct. All of the Shares conform to the description
thereof contained in the Registration Statement.
(v) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Shares nor, to
the Company's knowledge, instituted proceedings for that purpose. The
Registration Statement contains, and the Prospectus and any amendments or
supplements thereto will contain, all statements which are required to be stated
therein by, and will conform to, the requirements of the Act and the Rules and
Regulations. The Registration Statement and any amendment thereto do not
contain, and will not contain, any untrue statement of a material fact and do
not omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and will
not contain, any untrue statement of material fact and do not omit, and will not
omit, to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or
-3-
<PAGE>
omitted from the Registration Statement or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter
through the Representatives, specifically for use in the preparation thereof.
(vi) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of the Company and the consolidated Subsidiaries, at
the indicated dates and for the indicated periods. Such financial statements
and related schedules have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods involved,
except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included in the Registration Statement presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company. The pro forma financial information included in the Registration
Statement and the Prospectus present fairly the information shown therein, and,
in the opinion of the Company, the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give effect
to the transactions or circumstances referred to therein.
(vii) Arthur Andersen LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement, are
independent public accountants as required by the Act and the Rules and
Regulations.
(viii) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise which if
determined adversely to the Company or any of its Subsidiaries might result in
any material adverse change in the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and of the Subsidiaries taken as a whole or to prevent the
consummation of the transactions contemplated hereby, except as set forth in the
Registration Statement.
(ix) The Company and the Subsidiaries have good and marketable title to
all of the properties and assets reflected in the financial statements (or as
described in the Registration Statement) hereinabove described, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except those reflected
in such financial statements (or as described in the Registration Statement) or
which are not material in amount. The Company and the Subsidiaries occupy their
leased properties under valid and binding leases conforming in all material
respects to the description thereof set forth in the Registration Statement.
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(x) The Company and the Subsidiaries have filed all Federal, State, local
and foreign income tax returns which have been required to be filed and have
paid or are contesting in good faith all taxes indicated by said returns and all
assessments received by them or any of them to the extent that such taxes have
become due. All tax liabilities have been adequately provided for in the
financial statements of the Company.
(xi) Since the respective dates as of which information is given in the
Registration Statement, as it may be amended or supplemented, there has not been
any material adverse change or any development involving a prospective material
adverse change in or affecting the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise), or prospects of
the Company and its Subsidiaries taken as a whole, whether or not occurring in
the ordinary course of business, and there has not been any material transaction
entered into or any material transaction that is probable of being entered into
by the Company or the Subsidiaries, other than transactions in the ordinary
course of business and changes and transactions described in the Registration
Statement, as it may be amended or supplemented. The Company and the
Subsidiaries have no material contingent obligations which are not disclosed in
the Company's financial statements which are included in the Registration
Statement.
(xii) Neither the Company nor any of the Subsidiaries is or with the
giving of notice or lapse of time or both, would be, in violation of or in
default under their respective charter or by-laws or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a party or
by which it, or any of its properties, is bound and which default is of material
significance in respect of the condition, financial or otherwise of the Company
and its Subsidiaries taken as a whole or the business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and the Subsidiaries taken as a whole. The execution and delivery
of this Agreement and the consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any Subsidiary is a party, or of the Charter or by-laws of the
Company or any order, rule or regulation applicable to the Company or any
Subsidiary of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public
offering by the Underwriters under state securities or Blue Sky laws) has been
obtained or
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<PAGE>
made and is in full force and effect.
(xiv) The Company and each of the Subsidiaries hold all material licenses,
certificates and permits from governmental authorities which are necessary to
the conduct of their businesses; and neither the Company nor any of the
Subsidiaries has infringed any patents, patent rights, trade names, trademarks
or copyrights, which infringement is material to the business of the Company and
the Subsidiaries taken as a whole. The Company knows of no material
infringement by others of patents, patent rights, trade names, trademarks or
copyrights owned by or licensed to the Company.
(xv) Neither the Company, nor to the Company's best knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
shares of Common Stock to facilitate the sale or resale of the Shares. The
Company acknowledges that the Underwriters may engage in passive market making
transactions in the Shares on The Nasdaq Stock Market in accordance with Rule
103 of Regulation M under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(xvi) Neither the Company nor any Subsidiary is an "investment company"
within the meaning of such term under the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder.
(xvii) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xviii) The Company and each of its Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar industries.
(xix) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension
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plan" (as defined in ERISA) for which the Company would have any liability; the
Company has not incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(xx) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act
Relating to Disclosure of Doing Business with Cuba, and the Company further
agrees that if it commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or with the
Florida Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported in the Prospectus, if any, concerning the
Company's business with Cuba or with any person or affiliate located in Cuba
changes in any material way, the Company will provide the Department notice of
such business or change, as appropriate, in a form acceptable to the Department.
(b) Each of the Selling Stockholders severally represents and warrants as
follows:
(i) Such Selling Stockholder now is and at the Closing Date and the Option
Closing Date, as the case may be (as such dates are hereinafter defined), will
be the registered owner of the Firm Shares and the Option Shares to be sold by
such Selling Stockholder, free and clear of any liens, encumbrances, equities
and claims, and full right, power and authority to effect the sale and delivery
of such Firm Shares and Option Shares; and upon the delivery of, against payment
for, such Firm Shares and Option Shares pursuant to this Agreement, the
Underwriters will be entitled to register the transfer thereof free of adverse
claims.
(ii) Such Selling Stockholder has full right, power and authority to
execute and deliver this Agreement, the Selling Shareholder Authorization and to
perform its obligations under such Agreements. The execution and delivery of
this Agreement and the consummation by such Selling Stockholder of the
transactions herein contemplated and the fulfillment by such Selling Stockholder
of the terms hereof will not require any consent, approval, authorization, or
other order of any court, regulatory body, administrative agency or other
governmental body (except as may be required under the Act, state securities
laws or Blue Sky laws) and will not result in a breach of any of the
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terms and provisions of, or constitute a default under, organizational documents
of such Selling Stockholder, if not an individual, or any indenture, mortgage,
deed of trust or other agreement or instrument to which such Selling Stockholder
is a party, or of any order, rule or regulation applicable to such Selling
Stockholder of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction.
(iii) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to, or which has constituted, or which might
reasonably be expected to cause or result in the stabilization or manipulation
of the price of the Common Stock of the Company and, other than as permitted by
the Act, the Selling Stockholder will not distribute any prospectus or other
offering material in connection with the offering of the Shares.
(iv) The information pertaining to such Selling Stockholder under the
caption "Selling Stockholders" in the Prospectus is complete and accurate in all
material respects.
2. Purchase, Sale and Delivery of the Firm Shares.
----------------------------------------------
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Selling
Stockholders agree to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $_____ per share, the
number of Firm Shares set forth opposite the name of each Underwriter in
Schedule I hereof, subject to adjustments in accordance with Section 9 hereof.
The number of Firm Shares to be purchased by each Underwriter from each
Selling Stockholder shall be as nearly as practicable in the same proportion
to the total number of Firm Shares being sold by each Selling Stockholder as
the number of Firm Shares being purchased by each Underwriter bears to the
total number of Firm Shares to be sold hereunder. The obligations of each of
the Selling Stockholders shall be several and not joint.
(b) Each Selling Stockholder has issued instructions to the Company
as to the transfer of the Firm Shares and the Option Shares to the
Underwriters upon the direction of the Attorneys-In-Fact. Each of the Selling
Stockholders specifically agrees that the Firm Shares and Option Shares are
subject to the interests of the Underwriters hereunder and that the
obligations of the Selling Stockholders hereunder shall not be terminable by
any act or deed of the Selling Stockholders (or by any other person, firm or
corporation including the Company, the Attorneys-In-Fact or the Underwriters)
or by operation of law (including the death of an individual Selling
Stockholder) or by the occurrence of any other event or events, except as set
forth in the Selling Shareholder Authorization. If any such event should occur
prior to the delivery to the Underwriters of the Firm Shares or the Option
Shares hereunder, certificates for the Firm Shares or the
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<PAGE>
Options Shares, as the case may be, shall be transferred to the Underwriters in
accordance with the terms and conditions of this Agreement as if such event has
not occurred.
(c) Payment for the Firm Shares to be sold hereunder is to be made in
immediately available funds by wire transfer to a bank designated by the
Attorneys-In-Fact, in each case against registration of transfer of the Firm
Shares to the Representatives for the several accounts of the Underwriters.
Such payment and delivery of evidence of registration of transfer shall be made
at the offices of BT Alex. Brown Incorporated, One South Street, Baltimore,
Maryland, at 10:00 a.m., Baltimore time, on the third business day after the
date of this Agreement or at such other time and date not later than five
business days thereafter as you and the Company shall agree upon, such time and
date being herein referred to as the "Closing Date." (As used herein, "business
day" means a day on which the New York Stock Exchange is open for trading and on
which banks in New York are open for business and not permitted by law or
executive order to be closed.)
(d) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Selling
Stockholders hereby grant an option to the several Underwriters to purchase the
Option Shares at the price per share as set forth in the first paragraph of this
Section 2. The maximum number of Option Shares to be sold by each Selling
Stockholder is set forth opposite their respective names on Schedule II hereto.
The option granted hereby may be exercised in whole or in part by giving written
notice (i) at any time before the Closing Date and (ii) only once thereafter
within 30 days after the date of this Agreement, by you, as Representatives of
the several Underwriters, to the Attorneys-in-Fact setting forth the number of
Option Shares as to which the several Underwriters are exercising the option and
the time and date at which payment therefor is to be made. If the option
granted hereby is exercised in part, the respective number of Option Shares to
be sold by each of the Selling Stockholders shall be determined on a pro rata
basis in accordance with the maximum number of option shares to be sold by each
Selling Stockholder set forth opposite their names on Schedule II hereto,
adjusted by you in such manner as to avoid fractional shares. The time and date
at which Option Shares are to be transferred shall be determined by the
Representatives but shall not be earlier than three nor later than 10 full
business days after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days before the
Closing Date, the notice of exercise shall set the Closing Date as the Option
Closing Date. The number of Option Shares to be purchased by each Underwriter
shall be in the same proportion to the total number of Option Shares being
purchased as the number of Firm Shares being purchased by such Underwriter bears
to the total number of Firm Shares, adjusted by you in such manner as to avoid
fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the Firm
Shares by the
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Underwriters. You, as Representatives of the several Underwriters, may cancel
such option at any time prior to its expiration by giving written notice of
such cancellation to the Company and the Attorney-in-Fact. To the extent, if
any, that the option is exercised, payment for the Option Shares shall be made
on the Option Closing Date in immediately available funds by wire transfer to
a bank designated by the Attorneys-In-Fact against registration of transfer at
the offices of BT Alex. Brown Incorporated, One South Street, Baltimore,
Maryland.
(e) The Company acknowledges receipt of, and agrees to be bound by,
instructions as to the transfer of the Firm Shares and the Option Shares to the
Underwriters upon the direction of the Attorneys-In-Fact. Until the termination
of this Agreement, the Company agrees that, with respect to the registration of
transfer of the Firm Shares and the Option Shares, it will recognize only the
direction of the Attorneys-In-Fact.
3. Offering by the Underwriters.
----------------------------
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. Covenants of the Company and the Selling Stockholders.
-----------------------------------------------------
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a
form approved by the Representatives containing information previously omitted
at the time of effectiveness of the Registration Statement in reliance on Rule
430A of the Rules and Regulations and (B) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a
copy or to which the Representatives shall have reasonably objected in writing
or which is not in compliance with the Rules and Regulations.
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(ii) The Company will advise the Representatives promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission, (C)
of any request of the Commission for amendment of the Registration Statement
or for supplement to the Prospectus or for any additional information, and (D)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for that purpose. The Company will use its
best efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction where it is not now
so qualified or required to file such a consent. The Company will, from time
to time, prepare and file such statements, reports, and other documents, as
are or may be required to continue such qualifications in effect for so long a
period as the Representatives may reasonably request for distribution of the
Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may reasonably request. The Company will deliver to the
Representatives at or before the Closing Date, four signed copies of the
Registration Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Representatives such number of copies of
the Registration Statement (including such number of copies of the exhibits
filed therewith that may reasonably be requested), and of all amendments
thereto, as the Representatives may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of
the Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
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Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later
than 15 months after the effective date of the Registration Statement, an
earning statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earning statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so
made available.
(vii) The Company will, for a period of five years from the
Closing Date, deliver to the Representatives copies of annual reports and
copies of all other documents, reports and information furnished by the
Company to its stockholders or filed with any securities exchange pursuant to
the requirements of such exchange or with the Commission pursuant to the Act
or the Exchange Act. The Company will deliver to the Representatives similar
reports with respect to significant subsidiaries, as that term is defined in
the Rules and Regulations, which are not consolidated in the Company's
financial statements.
(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of Common
Stock (or agreement for such) will be made for a period of one year after the
date of this Agreement, directly or indirectly, by the Company otherwise than
hereunder or pursuant to the Company's Omnibus Stock Plan or Employee Stock
Purchase Plan or with the prior written consent of BT Alex. Brown
Incorporated.
(ix) The Company will use its best efforts to list the Common
Stock on The Nasdaq Stock Market.
(x) The Company has caused each outside director to furnish to
you, on or prior to the date of this agreement, a letter or letters, in form
and substance satisfactory to the Underwriters, pursuant to which each such
person shall agree not to offer, sell, sell short or otherwise dispose of any
shares of Common Stock of the Company or other capital stock of the Company,
or any other securities convertible, exchangeable or exercisable for Common
Stock or derivative of Common Stock owned by such person or
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request the registration for the offer or sale of any of the foregoing (or as
to which such person has the right to direct the disposition of) for a period of
one year after the date of this Agreement, directly or indirectly, except with
the prior written consent of BT Alex. Brown Incorporated ("Lockup Agreements")
and except upon death of a Selling Stockholder or upon transfer to members of
his or her family or to trusts for him, her or their benefit, that are subject
to the same restrictions.
(xi) The Company will maintain a transfer agent for the Common
Stock.
(xii) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
(b) Each of the Selling Stockholders covenants and agrees with the several
Underwriters that:
(i) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other capital stock of the Company or
other securities convertible, exchangeable or exercisable for Common Stock or
derivative of Common Stock owned by the Selling Stockholder or request the
registration for the offer or sale of any of the foregoing (or as to which the
Selling Stockholder has the right to direct the disposition of) will be made
for a period of one year after the date of this Agreement, directly or
indirectly, by such Selling Stockholder otherwise than hereunder or with the
prior written consent of BT Alex. Brown Incorporated and except upon death of
a Selling Stockholder or upon transfer to members of his or her family or to
trusts for him, her or their benefit that take subject to the same
restrictions.
(ii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of
1983 with respect to the transactions herein contemplated, each of the Selling
Stockholders has delivered a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement specified
by Treasury Department regulations in lieu thereof).
(iii) Such Selling Stockholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any securities of the Company.
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5. Costs and Expenses.
------------------
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company and the Selling Stockholders under
this Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of
counsel for the Company and the Selling Stockholders; the cost of printing and
delivering to, or as requested by, the Underwriters copies of the Registration
Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the Listing
Application, the Blue Sky Survey and any supplements or amendments thereto; the
filing fees of the Commission; the filing fees and expenses (including legal
fees and disbursements) incident to securing any required review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Shares; the listing fee of The Nasdaq Stock Market; and the expenses,
including the fees and disbursements of counsel for the Underwriters, incurred
in connection with the qualification of the Shares under state securities or
Blue Sky laws. To the extent, if at all, that any of the Selling Stockholders
engage special legal counsel to represent them in connection with this offering,
the fees and expenses of such counsel shall be borne by such Selling
Stockholder. Any transfer taxes imposed on the sale of the Shares to the
several Underwriters will be paid by the Selling Stockholders pro rata. The
Company and the Selling Stockholders shall not, however, be required to pay for
any of the Underwriters expenses (other than those related to qualification
under NASD regulation) except that, if this Agreement shall not be consummated
because the conditions in Section 6 hereof are not satisfied, or because this
Agreement is terminated by the Representatives pursuant to Section 11(b)(i)
hereof, or by reason of any failure, refusal or inability on the part of the
Company or the Selling Stockholders to perform any undertaking or satisfy any
condition of this Agreement or to comply with any of the terms hereof on their
part to be performed, unless such failure to satisfy said condition or to comply
with said terms be due to the default or omission of any Underwriter, then the
Company shall reimburse the several Underwriters for reasonable out-of-pocket
expenses, including fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company and
the Selling Stockholders shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by them of the Shares.
6. Conditions of Obligations of the Underwriters.
---------------------------------------------
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the Option
Closing Date, as the case may be, of the representations and warranties of the
Company and the Selling Stockholders contained herein, and to the performance
by the Company and the Selling Stockholders of their
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covenants and obligations hereunder and to the following additional
conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made, and any
request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the knowledge of the Company or the Selling
Stockholders, shall be contemplated by the Commission and no injunction,
restraining order, or order of any nature by a Federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Dorsey &
Whitney LLP, counsel for the Company and the Selling Stockholders, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power to own or lease its properties and conduct its
business as described in the Registration Statement; each of the Subsidiaries
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with
corporate power to own or lease its properties and conduct its business as
described in the Registration Statement.
(ii) The Company has authorized capital stock as set forth
under the caption "Capitalization" in the Prospectus; and the authorized
shares of the Company's Common Stock have been duly authorized; the outstanding
shares of the Company's Common Stock, including the Shares to be sold by the
Selling Stockholders, to the extent set forth under the caption
"Capitalization" in the Prospectus, have been duly authorized and validly
issued and are fully paid and non-assessable; all of the Shares conform to the
description thereof contained in the Prospectus.
(iii) The Registration Statement has become effective under
the Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act.
(iv) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects
with the
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requirements of the Act and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and related schedules therein).
(v) The statements under the captions "Business-Legal
Proceedings," "Management-Executive Compensation," "Management-New Incentive
Plans," "Certain Transactions," "Description of Capital Stock" and "Shares
Eligible for Future Sale" in the Prospectus, insofar as such statements
constitute a summary of documents referred to therein or matters of law,
fairly summarize in all material respects the information called for with
respect to such documents and matters.
(vi) Such counsel does not know of any contracts or
documents required to be filed as exhibits to in the Registration Statement or
described in the Registration Statement or the Prospectus which are not so
filed or described as required, and such contracts and documents as are
summarized in the Registration Statement or the Prospectus are fairly
summarized in all material respects.
(vii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or any of
the Subsidiaries except as set forth in the Prospectus.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Charter or by-laws of the Company, or any
agreement or instrument filed as an exhibit to the Registration Statement.
(ix) This Agreement has been duly authorized, executed and
delivered by the Company.
(x) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery
of this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by State securities
and Blue Sky laws as to which such counsel need express no opinion) except
such as have been obtained or made, specifying the same.
(xi) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement, and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
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<PAGE>
(xii) This Agreement has been duly executed and delivered on
behalf of the Selling Stockholders.
(xiii) The Selling Shareholder Authorization executed and
delivered by each Selling Stockholder is valid and binding.
(xiv) The Underwriters (assuming that they are protected
purchasers within the meaning of the Uniform Commercial Code) have acquired
all the rights of each Selling Stockholder in the Shares free of any adverse
claim, and the Company is required to register transfer to the Underwriters on
the Closing Date, and the Option Closing Date, as the case may be.
In rendering such opinion Dorsey & Whitney LLP may rely as to matters
governed by the laws of states other than Minnesota and Delaware or Federal laws
on local counsel in such jurisdictions and as to the matters set forth in
subparagraph (i) on opinions of other counsel representing the respective
Subsidiary, provided that in each case Dorsey & Whitney LLP shall state that
they believe that they and the Underwriters are justified in relying on such
other counsel. In addition to the matters set forth above, such opinion shall
also include a statement to the effect that nothing has come to the attention of
such counsel which leads them to believe that (i) the Registration Statement, at
the time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) and as
of the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and (ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to
such statement, Dorsey & Whitney LLP may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
(c) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Owen P. Gleason, General
Counsel of the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters (and stating that it may be
relied upon by counsel to the Underwriters) to the effect that:
(i) The Company and each of the Subsidiaries are duly
qualified to transact business in all jurisdictions in which the conduct of
their business requires such
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<PAGE>
qualification, or in which the failure to qualify would have a materially
adverse effect upon the business of the Company and the Subsidiaries taken as a
whole; and the outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued and are fully paid and non-
assessable and are registered in the name of the Company or a Subsidiary; and,
to the best of such counsel's knowledge, the outstanding shares of capital stock
of each of the Subsidiaries is owned free and clear of all liens, encumbrances
and equities and claims, and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into any shares of capital stock or of ownership interests in the
Subsidiaries are outstanding.
(ii) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or
any securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock; and except as described in
the Prospectus, to the knowledge of such counsel, no holder of any securities
of the Company or any other person has the right, contractual or otherwise,
which has not been satisfied or effectively waived, to cause the Company to
sell or otherwise issue to them, or to permit them to underwrite the sale of,
any of the Shares or the right to have any Common Shares or other securities
of the Company included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require registration
under the Act of any shares of Common Stock or other securities of the
Company.
(d) The Representatives shall have received from Piper & Marbury L.L.P.,
counsel for the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, substantially to the effect specified in
subparagraphs (ii), (iii), (ix) and (xii) of Paragraph (b) of this Section 6,
and that the Company is a duly organized and validly existing corporation under
the laws of the State of Delaware. In rendering such opinion Piper & Marbury
L.L.P. may rely as to all matters governed other than by the laws of states
other than Maryland and Delaware or Federal laws on the opinion of counsel
referred to in Paragraph (b) of this Section 6. In addition to the matters set
forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to believe
that (i) the Registration Statement, or any amendment thereto, as of the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) as of the Closing Date
or the Option Closing Date, as the case may be, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Prospectus,
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<PAGE>
or any supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact, necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Piper &
Marbury L.L.P. may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(e) You shall have received, on each of the date hereof, the Closing Date
and the Option Closing Date, as the case may be, a letter dated the date hereof,
the Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to you, of Arthur Andersen LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the case may
be, each of them severally represents as follows:
(i) The Registration Statement has become effective under
the Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been taken
or are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or
the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to
Rules 424 or 430A under the Act have been made;
(iv) He or she has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration
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<PAGE>
Statement, the statements contained in the Registration Statement were true
and correct, and such Registration Statement and Prospectus did not omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and since the effective date of
the Registration Statement, no event has occurred which should have been set
forth in a supplement to or an amendment of the Prospectus which has not been
so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business.
(g) The Company and the Selling Stockholders shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(h) The Common Stock has been approved for listing on The Nasdaq Stock
Market.
(i) The Lockup Agreements described in Section 4(x) are in full force and
effect.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to Piper & Marbury L.L.P.,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company and the Selling Stockholders of such
termination in writing or by telegram at or prior to the Closing Date or the
Option Closing Date, as the case may be.
In such event, the Selling Stockholders, the Company and the Underwriters
shall not be under any obligation to each other (except to the extent provided
in Sections 5 and 8 hereof).
7. Conditions of the Obligations of the Selling Stockholders.
---------------------------------------------------------
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<PAGE>
The obligations of the Selling Stockholders to sell and deliver the
portion of the Shares required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the Option
Closing Date, as the case may be, no stop order suspending the effectiveness
of the Registration Statement shall have been issued and in effect or
proceedings therefor initiated or threatened.
8. Indemnification.
---------------
(a) The Company and, to the extent that indemnification from the Company
is not available or is inadequate, the Selling Stockholders, severally and not
jointly, agree to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of the Act, against any
losses, claims, damages or liabilities to which such Underwriter or any such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each Underwriter and each such
controlling person upon demand for any legal or other expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Shares, whether or not such Underwriter or controlling person is
a party to any action or proceeding; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement, or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for use
in the preparation thereof. In no event, however, shall the liability of any
Selling Stockholder for indemnification under this Section 8(a) exceed the
lesser of (i) the proceeds received by such Selling Stockholder from the
Underwriters in the offering or (ii) the proportion of the total proceeds equal
to the proportion of the total shares sold by such Selling Stockholder. This
indemnity agreement will be in addition to any liability which the Company or
the Selling Stockholders may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Stockholders, and each person, if
any, who controls the Company or the Selling Stockholders within the meaning of
the Act, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, Selling
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<PAGE>
Stockholder or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, Selling
Stockholder or controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that each Underwriter will be liable in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission has been made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for
use in the preparation thereof. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing,
the indemnifying party shall pay as incurred (or within 30 days of presentation)
the fees and expenses of the counsel retained by the indemnified party in the
event (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel, (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be
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<PAGE>
inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and
employ counsel acceptable to the indemnified party within a reasonable period
of time after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) and by the Company and the Selling Stockholders in
the case of parties indemnified pursuant to Section 8(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify
the indemnified party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action or proceeding of which indemnification may be sought hereunder (whether
or not any indemnified party is an actual or potential party to such claim,
action or proceeding) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising
out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Stockholders on
the one hand and the Underwriters on the other from the offering of the Shares.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be
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<PAGE>
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Selling Stockholders on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation, and (iii) no Selling Stockholder
shall be required to contribute any amount in excess of the lesser of (A) that
proportion of the total of such losses, claims, damages or liabilities
indemnified or contributed against equal to the proportion of the total Shares
sold hereunder which is being sold by such Selling Stockholder, or (B) the
proceeds received by such Selling Stockholder from the Underwriters in the
offering. The Underwriters' obligations in this Section 8(d) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set
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<PAGE>
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any persons controlling the Company, (ii) acceptance of any Shares and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, or to the Company, its directors or officers, or
any person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 8.
9. Default by Underwriters.
-----------------------
If on the Closing Date or the Option Closing Date, as the case may be, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company or a Selling Stockholder),
you, as Representatives of the Underwriters, shall use your reasonable efforts
to procure within 36 hours thereafter one or more of the other Underwriters, or
any others, to purchase from the Company and the Selling Stockholders such
amounts as may be agreed upon and upon the terms set forth herein, the Firm
Shares or Option Shares, as the case may be, which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as such
Representatives, shall not have procured such other Underwriters, or any others,
to purchase the Firm Shares or Option Shares, as the case may be, agreed to be
purchased by the defaulting Underwriter or Underwriters, then (a) if the
aggregate number of shares with respect to which such default shall occur does
not exceed 10% of the Firm Shares or Option Shares, as the case may be, covered
hereby, the other Underwriters shall be obligated, severally, in proportion to
the respective numbers of Firm Shares or Option Shares, as the case may be,
which they are obligated to purchase hereunder, to purchase the Firm Shares or
Option Shares, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of shares of
Firm Shares or Option Shares, as the case may be, with respect to which such
default shall occur exceeds 10% of the Firm Shares or Option Shares, as the case
may be, covered hereby, the Company and the Selling Stockholders or you as the
Representatives of the Underwriters will have the right, by written notice given
within the next 36-hour period to the parties to this Agreement, to terminate
this Agreement without liability on the part of the non-defaulting Underwriters
or of the Company or of the Selling Stockholders except to the extent provided
in Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 9, the Closing Date or Option Closing
Date, as the case may be, may be postponed for such period, not exceeding seven
days, as you, as Representatives, may determine in order that the required
changes in the Registration Statement or in the Prospectus or in any other
documents or arrangements may be effected. The term "Underwriter" includes any
person substituted for a defaulting
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<PAGE>
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. Notices.
-------
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to BT Alex.
Brown Incorporated, One South Street, Baltimore, Maryland 21202, Attention:
Mr. William M. Legg; with a copy to BT Alex. Brown Incorporated, One South
Street, Baltimore, Maryland 21202. Attention: General Counsel; if to the
Company or the Selling Stockholders, to C.H. Robinson Worldwide, Inc., 8100
Mitchell Road, Eden Prairie, Minnesota 55444-2248, Attention: Owen P. Gleason;
with a copy to Dorsey & Whitney LLP, Pillsbury Center South, 220 South Sixth
Street, Minneapolis, Minnesota 55402-1498, Attention: William B. Payne.
11. Termination.
-----------
This Agreement may be terminated by you by notice to the Company and the
Attorneys-In-Fact as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m. on
the first business day of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change in financial
markets would, in your judgment, make it impracticable to market the Shares or
to enforce contracts for the sale of the Shares, (iii) suspension of trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or The Nasdaq Stock Market or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities thereon, (iv) the enactment,
publication, decree or other promulgation of any statute, regulation, rule or
order of any court or other governmental authority which in your opinion
materially and
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adversely affects or may materially and adversely affect the business or
operations of the Company, (v) declaration of a banking moratorium by United
States or New York State authorities, (vi) the suspension of trading of the
Company's Common Stock on the Nasdaq Stock Market or (vii) the taking of any
action by any governmental body or agency in respect of its monetary or fiscal
affairs which in your reasonable opinion makes it impracticable to market the
Shares or to enforce contracts for the sale of the Shares; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. Successors.
----------
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. Information Provided by Underwriters.
------------------------------------
The Company, the Selling Stockholders and the Underwriters
acknowledge and agree that the only information furnished or to be furnished
by any Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
14. Miscellaneous.
-------------
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants
in this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof, or by or on behalf of the
Company or its directors or officers and (c) delivery of and payment for the
Shares under this Agreement.
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.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland; provided, however, that any matter
within the scope of Article 8 of the Uniform Commercial Code shall be governed
by the laws of the State of
-27-
<PAGE>
Delaware.
If the foregoing letter is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Stockholders,
the Company and the several Underwriters in accordance with its terms.
-28-
<PAGE>
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
C.H. ROBINSON WORLDWIDE, INC.
By _________________________________
D.R. Verdoorn, President
Selling Stockholders listed on Schedule II
By __________________________________
Attorney-in-Fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
BT ALEX. BROWN INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
PIPER JAFFRAY INC.
As Representatives of the several
Underwriters listed on Schedule I
By: BT Alex. Brown Incorporated
By: _________________________________
Authorized Officer
-29-
<PAGE>
SCHEDULE I
Schedule of Underwriters
Number of Firm Shares
Underwriter to be Purchased
----------- --------------------------
BT Alex. Brown Incorporated
Morgan Stanley & Co. Incorporated
Piper & Jaffray Inc.
__________
Total 10,578,396
==========
-30-
<PAGE>
SCHEDULE II
Schedule of Selling Stockholders
<TABLE>
<CAPTION>
Number of Firm Number of Option
Selling Stockholder Shares Shares
- ----------------------- -------------- ----------------
<S> <C> <C>
D.R. Verdoorn 1,564,774 234,716
Donald Lerner 1,862,140 279,320
John R. Taylor 724,879 108,731
Roger Lowe 718,003 107,699
Looe Baker III 712,452 106,868
Robert A. Fair 507,152 76,072
Barry Butzow 465,597 69,839
Duane L. McConkey 429,000 64,349
Owen Gleason 415,350 50,563
Vincent C. Immordino 370,092 55,514
Bernard Madej 278,770 41,815
Stanley Schoenfeld 271,565 40,735
D.G. MacDonald 246,261 36,939
Ted J. Copeland 227,202 34,080
Kenneth S. Machado 227,045 34,057
Gregory Goven 219,114 32,867
Raymond W. Tobias 176,087 26,413
William T. Fairbanks 148,842 22,326
Dale Hanson 127,083 30,802
Roger Kerber 90,173 13,526
Mark A. Walker 76,474 11,471
Michael Rempe 63,403 9,510
Robert Ingram 45,199 6,780
Gary Niedorkorn 34,720 5,208
Jennifer T. Amys 30,742 4,611
John P. Wiehoff 27,719 4,158
Christopher Kramer 24,226 3,634
Robert W. Hall 23,281 3,492
Thomas J. Sandstrom 23,281 3,492
Arthur A. Mollica 23,281 3,492
Thomas Jostes 20,324 3,049
David J. Florenzano 20,227 3,034
Coleen J. Zwach 20,141 3,021
Joseph J. Mulvehill 18,923 2,838
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
Number of Firm Number of Option
Selling Stockholder Shares Shares
- ----------------------- -------------- ----------------
<S> <C> <C>
John M. Salpietra 18,140 2,721
Bruce E. Morris 17,455 2,618
Jeffrey Langenfeld 15,678 2,352
Daniel D. Smith 15,368 2,305
David R. Shell 14,491 2,174
David M. Barros 14,097 2,115
James P. Lemke 12,130 1,819
Gary D. Joseph 11,189 1,678
J. Scott Wessel 11,189 1,678
James E. Butts 11,282 1,692
Michael J. Sherlock 10,962 1,644
Darryl L. Harper 10,243 1,537
Jeffrey Jorgenson 10,238 1,536
Michael Migoski 9,717 1,457
Robert V. Pierson 8,501 1,275
Douglas L. Tannehill 8,353 1,253
Roger A. Haack 8,151 1,223
Steven J. Nelson 8,151 1,223
John B. Evans 7,826 1,174
Oliver John McDonald 7,678 1,152
Richard J. Myers 7,678 1,152
James P. Cummings 7,678 1,152
Charles D. Johnson 7,457 1,119
Jeffrey J. Begin 7,206 1,081
William E. Valentine 6,261 939
Leo C. Johnson Jr. 5,591 839
Michael C. Borowiec 5,543 831
Thomas Perdue 4,447 667
Elliot E. Hansen 4,376 656
James N. Schulte 3,913 587
Kevin C. Wilner 3,195 479
Raymond Sobieck 2,836 425
Peter B. Coster 2,461 369
Terry G. Schreifels 2,348 352
Steven M Weiby 2,348 352
Leann Peterson 2,087 313
John D. Lenzmeier 2,087 313
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
Number of Firm Number of Option
Selling Stockholder Shares Shares
- ----------------------- -------------- ----------------
<S> <C> <C>
Mark S. Prizer 1,890 284
David H.Goldberg 1,826 274
Maurice F. Ayers III 1,565 235
James K. Cypher 1,565 235
Robert W. Hubert 1,565 235
Lewis D. Canouse 1,565 235
James A. Griffith 1,565 235
Conrad Johnson III 1,565 235
Richard J. Heimerl 1,565 235
Todd L. Ortman 1,565 235
David C. Swarts 1,565 235
Gregory Ritter 1,417 213
Jeanne M. Landures 1,304 196
Steven J. Battaglia 1,304 196
Michael A. Ciofalo 1,304 196
Gary G. Kouba 1,304 196
Christine Hellekson 1,043 157
Lee A. Stassen 1,043 157
Jean M. Hairston 1,043 157
James Burke III 1,043 157
James Z. Burgess Jr. 1,043 157
Eric D. Halverson 1,043 157
Charles J. Taylor 945 142
William E. Farrell 945 142
Brent O. Ward 900 135
Darryl A. Solem 870 130
Jeffrey W. Skokan 783 117
Kent R. Stuart 522 78
Charles J. Busby 522 78
Travis D. Pelena 344 52
---------- ---------
Total 10,578,396 1,586,759
========== =========
</TABLE>
-33-
<PAGE>
EXHIBIT A
CHRW Holdings, Inc.
C.H. Robinson Company
C.H. Robinson Company (Canada) Ltd.
C.H. Robinson International, Inc.
C.H. Robinson de Mexico, S.A. de C.V.
CHR Aviation, Inc.
Brown-Robinson Ingredient, Inc.
Payment & Logistics Services, LLC
T-Chek Systems, LLC
-34-
<PAGE>
Exhibit 3.3
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
C.H. ROBINSON WORLDWIDE, INC.
The undersigned hereby certifies that the Board of Directors of C.H.
Robinson Worldwide, Inc. (the "Corporation"), a corporation organized and
existing under the Delaware General Corporation Law, duly adopted the following
resolution on August 14, 1997:
RESOLVED, that a series of preferred stock of the Corporation is hereby
created, and the designation and amount thereof and the relative rights and
preferences of the shares of such series, are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Preferred
Shares") and the number of shares constituting the Preferred Shares shall be
1,300,000. Such, number of shares may be increased or decreased by resolution of
the Board of Directors and any necessary stockholder approval; provided,
however, that no decrease shall reduce the number of shares of Preferred Shares
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Preferred Shares.
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any series of
preferred stock (or any similar stock) ranking prior and superior to the
Preferred Shares with respect to dividends, the holders of Preferred Shares, in
preference to the holders of Common Stock, par value $.10 (the "Common Stock"),
of the Corporation, and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Preferred Shares, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) $1.00 or (ii) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the
<PAGE>
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Preferred Shares. In the
event the Corporation shall at any time after the business day prior to the
Company's initial public offering ("Record Date"), declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of shares of
Preferred Shares were entitled immediately prior to such event under clause (ii)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(b) The Corporation shall declare a dividend or distribution on the
Preferred Shares as provided in paragraph (a) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Preferred Shares shall nevertheless be
payable, out of funds legally available for such purpose, on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Preferred Shares from their date of issue. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Preferred
Shares in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a share-by-
share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of Preferred
Shares entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights.
(a) Subject to the provision for adjustment hereinafter set forth, each
Preferred Share shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Record Date, declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each
<PAGE>
such case the number of votes per share to which holders of shares of Preferred
Shares were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of
Preferred Shares and the holders of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein or required by law, holders of Preferred
Shares shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Preferred Shares as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Preferred Shares outstanding shall have been paid
in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Shares;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Shares, except
dividends paid ratably on the Preferred Shares and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Shares; provided,
however, that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Preferred Shares; or
<PAGE>
(iv) redeem or purchase or otherwise acquire for consideration any
Preferred Shares, or any stock ranking on a parity with the Preferred
Shares, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Preferred Shares purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock and
may be reissued as part of a new series of preferred stock subject to the
conditions and restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other certificate of designation creating a series of
preferred stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Shares unless, prior
thereto, the holders of Preferred Shares shall have received the greater of (i)
$100 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(ii) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of Common Stock, or (2) to the holders of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Preferred Shares, except distributions made ratably on the Preferred
Shares and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time after the Record Date
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Preferred Shares were entitled
immediately prior to such event under clause (1)(ii) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
<PAGE>
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Preferred Shares shall at the same time be similarly exchanged or changed into
an amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Record Date declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Preferred Shares
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The Preferred Shares shall not be redeemable.
Section 9. Rank. The Preferred Shares shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all other series
of any other class of the Corporation's Preferred Stock.
Section 10. Fractional Shares. Preferred Shares may be issued in fractions
of a share which are integral multiples of one one-hundredth of a share which
shall entitle the holder, in proportion to such holder's fractional shares, to
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Preferred Shares.
Section 11. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or rights of the Preferred Shares so as to affect them
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Preferred Shares, voting together as a single class.
IN WITNESS WHEREOF, I have subscribed my name this 6th day of October,
1997.
C.H. ROBINSON WORLDWIDE, INC.
By /s/ Owen P. Gleason
------------------------------
Owen P. Gleason, Vice President,
Secretary and General Counsel
<PAGE>
Exhibit 4.1
[Logo]
Number Shares
Common Stock Common Stock
C.H. ROBINSON
WORLDWIDE, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 12541W 10 0
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $.10 PER
SHARE, OF
C.H. ROBINSON WORLDWIDE, INC.
transferable on the books of the Corporation by the holder hereof in person, or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed. This certificate and the shares represented hereby are issued and
shall be subject to all the provisions of the Certificate of Incorporation and
Bylaws of the Corporation and the amendments from time to time made thereto,
copies of which are on file at the principal office of the Corporation, and the
laws of the State of Delaware, as amended from time to time, to all of which the
holder of this certificate by acceptance hereof assents. This certificate is not
valid unless countersigned by the Transfer Agent.
Witness the facsimile signatures of its duly authorized officers.
Dated:
/s/ Owen P. Gleason /s/Daryl R. Verdoorn
VICE PRESIDENT, GENERAL COUNSEL PRESIDENT
AND SECRETARY
COUNTERSIGNED AND REGISTERED:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
C.H. ROBINSON WORLDWIDE, INC.
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN C.H. ROBINSON WORLDWIDE, INC.
AND NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, DATED AS OF OCTOBER 1, 1997
(THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF C.H.
ROBINSON WORLDWIDE, INC. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. C.H. ROBINSON WORLDWIDE, INC. WILL
MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT
CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO ANY PERSON
WHO BECOMES AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE THEREOF (AS DEFINED
IN THE RIGHTS AGREEMENT), OR CERTAIN TRANSFEREES OF SUCH PERSON, MAY BECOME NULL
AND VOID.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF THE
CORPORATION, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE CORPORATION OR THE
TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -- _________ Custodian __________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to Minors
right of survivorship and Act___________________________
not as tenants in common (State)
UNIF TRF MIN ACT -- ____ Custodian (until age ____)
(Cust)
____________ under Uniform Transfers
(Minor)
to Minors Act _____________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, _____________ hereby sells, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
( )
( )
( )
------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
of the Common Stock represented by the within certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________ Attorney to transfer the said
stock on the books of the within named Corporation with full power of
substitution in the premises.
<PAGE>
Dated
-----------------------------
X
---------------------------------
X
---------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By
------------------------------
NOTICE: THE SIGNATURE(S) SHOULD
BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C.
RULE 17Ad-15.
<PAGE>
Exhibit 4.2
- --------------------------------------------------------------------------------
C.H. ROBINSON WORLDWIDE, INC.
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF OCTOBER 1, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 1. Certain Definitions............................................ 1
Section 2. Appointment of Rights Agent.................................... 4
Section 3. Issue of Right Certificates.................................... 4
Section 4. Form of Right Certificates..................................... 6
Section 5. Countersignature and Registration.............................. 6
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates...................................... 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.. 7
Section 8. Cancellation of Right Certificates............................. 9
Section 9. Availability of Preferred Shares............................... 9
Section 10. Preferred Shares Record Date.................................. 10
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights.............................................. 10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.... 18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power................................................. 18
Section 14. Fractional Rights and Fractional Shares....................... 21
Section 15. Rights of Action.............................................. 22
Section 16. Agreement of Right Holders.................................... 23
Section 17. Right Certificate Holder Not Deemed a Stockholder............. 23
Section 18. Concerning the Rights Agent................................... 24
Section 19. Merger or Consolidation or Change of Name of Rights Agent..... 24
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 20. Duties of Rights Agent........................................ 25
Section 21. Change of Rights Agent........................................ 27
Section 22. Issuance of New Right Certificates............................ 28
Section 23. Redemption.................................................... 28
Section 24. Exchange...................................................... 29
Section 25. Notice of Certain Events...................................... 30
Section 26. Notices....................................................... 31
Section 27. Supplements and Amendments.................................... 32
Section 28. Successors.................................................... 32
Section 29. Benefits of this Agreement.................................... 32
Section 30. Severability.................................................. 32
Section 31. Governing Law................................................. 32
Section 32. Counterparts.................................................. 32
Section 33. Descriptive Headings.......................................... 33
Signatures................................................................. 34
</TABLE>
Exhibit A -- Certificate of Designations of Series A Junior Participating
Preferred Stock
Exhibit B -- Form of Right Certificates
Exhibit C -- Summary of Rights to Purchase Preferred Shares
ii
<PAGE>
RIGHTS AGREEMENT
----------------
AGREEMENT, dated as of October 1, 1997, between C.H. Robinson Worldwide,
Inc., a Delaware corporation (the "Company"), and Norwest Bank Minnesota,
National Association (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
of the Company outstanding at the Close of Business on the business day prior to
the Company's initial public offering (the "Record Date"), each Right
representing the right to purchase one one-hundredth of a Preferred Share, upon
the terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial
Owner of the Threshold Percentage or more of the Common Shares then
outstanding other than as a result of a Permitted Offer, but shall not
include any Exempt Person. Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" as the result of an acquisition of Common
Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned by such Person to the Threshold Percentage or more of the Common
Shares of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of the Threshold Percentage or
more of the Common Shares of the Company then outstanding by reason of
share purchases by the Company and shall, after such share purchases by
the Company, increase the number of Common Shares of the Company
beneficially owned by such Person above the number of Common Shares of
the Company beneficially owned by such Person at the time of the last
such share purchase by the Company, then such Person shall be deemed to be
an "Acquiring Person." Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person", as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an
<PAGE>
"Acquiring Person", as defined pursuant to the foregoing provisions of this
paragraph, then such Person shall not be deemed to be an "Acquiring Person" for
any purposes of this Agreement.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act. A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, including
without limitation securities with respect to which such Person or
any such Person's Affiliates or Associates has "beneficial
ownership" pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this
Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon
the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent
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contemplated by the proviso to clause(ii)(B) above) or disposing of
any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to
a Person's Beneficial Ownership of securities of the Company, shall mean
the number of such securities then issued and outstanding together with
the number of such securities not then actually issued and outstanding
which such Person would be deemed to own beneficially hereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in the State of Minnesota are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 P.M.,
prevailing Minneapolis time, on such date; provided, however, that if
such date is not a Business Day, it shall mean 5:00 P.M., prevailing
Minneapolis time, on the next succeeding Business Day.
"Common Shares," when used with reference to the Company, shall mean
the shares of Common Stock, par value $.10 per share, of the Company.
"Common Shares," when used with reference to any Person other than the
Company, shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of any other Person, the Person or Persons which ultimately
control such first mentioned Person.
"Distribution Date" shall have the meaning set forth in Section 3.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Date" shall have the meaning set forth in Section 7.
"Exempt Person" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, and any Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan.
"Final Expiration Date" shall have the meaning set forth in
Section 7.
"Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
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"Permitted Offer" shall mean a tender offer or an exchange offer for
all outstanding Common Shares of the Company determined by the Board of
Directors of the Company, after receiving such advice as it deems
necessary and giving due consideration to all relevant factors, to be in
the best interests of the Company and its stockholders.
"Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.10, of the Company having the
rights and preferences set forth in the form of Certificate of
Designations attached to this Agreement as Exhibit A.
"Redemption Date" shall have the meaning set forth in Section 7.
"Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or any Person that a Person has become an
Acquiring Person.
"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
"Threshold Percentage" shall mean 15%.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3, shall prior to the Distribution Date also be the
holders of the Common Shares) in accordance with the terms and conditions of
this Agreement, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Shares Acquisition Date or (ii) the tenth
day (or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempt Person) of, or of the first
public announcement of the intention of any Person (other than an Exempt Person)
to commence, a tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (the earlier of such dates being
referred to herein as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b)) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates shall
also be deemed to be Right Certificates) and not by separate Right Certificates,
and (y) the right to receive Right Certificates will be transferable only in
connection with the transfer of Common
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<PAGE>
Shares. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B (a "Right Certificate"), evidencing one
Right for each Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) As soon as practicable after the Record Date, the Company will send a
copy of a Summary of Rights to Purchase Preferred Shares, in substantially the
form of Exhibit C (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the Close of
Business on the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date if occurring
prior to the Distribution Date), the surrender for transfer of any certificate
for Common Shares outstanding on the Record Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement between C.H. Robinson
Worldwide, Inc. and Norwest Bank Minnesota, National Association, dated
as of October 1, 1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at
the principal executive office of C.H. Robinson Worldwide, Inc. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. C.H. Robinson Worldwide, Inc. will mail to
the holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights issued to any
Person who becomes an Acquiring Person or an Associate or Affiliate
thereof (as defined in the Rights Agreement), or certain transferees of
such Person, may become null and void.
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<PAGE>
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
(d) Reference in this Agreement to certificates for Common Shares include
uncertificated Common Shares, and any uncertificated Common Share shall also
represent the associated right. Any legend required to be placed on any
certificate for Common Shares may instead be included on any book entry
confirmation or notification to the holder of such Common Shares.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotations system on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents or its
Treasurer either manually or by facsimile signature and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent for purposes of authorization only and shall not be valid for
any purpose unless countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the Person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the
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<PAGE>
execution of such Right Certificate, shall be a proper officer of the Company
to sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such Person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the earlier of
the Redemption Date or the Final Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights that have become
void pursuant to Section 11(a)(ii)) may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a Preferred
Share as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will issue, execute and deliver
a new Right Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights
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<PAGE>
Agent at the office or offices of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one one-
hundredth of a Preferred Share as to which the Rights are exercised, at or
prior to the earliest of (i) the Close of Business on October 1, 2007 (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 (the "Redemption Date") or (iii) the time at which such
Rights are exchanged as provided in Section 24 (the "Exchange Date").
(b) The Purchase Price for each one one-hundredth of a Preferred Share
purchasable pursuant to the exercise of a Right shall initially be $100.00,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the aggregate Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 by certified check, cashier's check or
money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent for the Preferred
Shares (or make available, if the Rights Agent is the transfer agent for the
Preferred Shares) certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit with a depository agent the total number of Preferred Shares issuable
upon exercise of the Rights hereunder, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder, and (iv) when appropriate, after
receipt, deliver such cash to or upon the order of the registered holder of such
Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all of the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section unless such registered holder shall have (i) duly
completed and
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<PAGE>
executed the form of election to purchase set forth on the reverse side of the
Right Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of such Right Certificate or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company.
Section 9. Availability of Preferred Shares.
(a) The Company will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares, or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) At such time, if any, as the Preferred Shares issuable upon the
exercise of Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable (but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company will prepare and file, as soon as practicable after the
Distribution Date, a registration statement under the Securities Act of 1933, as
amended (the "Act"), with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and use its best efforts to
cause such registration statement to (i) become effective as soon as practicable
after such filing, and (ii) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities or (B) the Final
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed 90 days after the
date the registration statement is filed, the exercisability of the Rights in
order to permit the registration statement to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily
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suspended, as well as a public announcement at such time as the suspension is
no longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained or
the exercise thereof is not permitted under applicable law.
(d) The Company will take all such action as may be necessary to ensure
that all Preferred Shares delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such Preferred Shares (subject to payment of
the Purchase Price and any applicable transfer taxes), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or the issuance or delivery of certificates
or depositary receipts for the Preferred Shares in a name other than that of the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise, or to issue or to deliver any certificates or depositary receipts for
Preferred Shares upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the transfer books of the Company for the Preferred Shares are closed,
such Person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
such transfer books are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11:
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(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares
transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one Right. If
an event occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, unless the event by which such Person
became an Acquiring Person is a transaction described in Section 13(a),
each holder of a Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common Shares
of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable and dividing that
product by (y) 50% of the then current per share market price of the
Company's Common Shares (determined pursuant to Section 11(d)) on the
date that such Person becomes an Acquiring Person. In the event that any
Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would eliminate
or diminish the benefits intended to be afforded by the Rights.
From and after the date that such Person becomes an Acquiring
Person, any Rights that are or were acquired or beneficially owned by any
Acquiring Person (or any Associate or Affiliate of such Acquiring Person)
shall be void and any holder of such Rights shall thereafter have no
right to exercise such Rights under any provision of this Agreement. No
Right Certificate shall be
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issued pursuant to Section 3 that represents Rights beneficially owned by
an Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof; no Right Certificate
shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose
Rights would be void pursuant to the preceding sentence shall be
canceled.
(iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon
exercise of the Rights. In the event the Company shall, after good faith
effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute,
for each Common Share that would otherwise be issuable upon exercise of a
Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such
number or fraction is equal to the current per share market price of one
Common Share as of the date of issuance of such Preferred Shares or
fraction thereof.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling
them to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares (such
shares are herein called "preferred share equivalents")) or securities
convertible into Preferred Shares or preferred share equivalents at a
price per Preferred Share or preferred share equivalent (or having a
conversion price per share, if a security convertible into Preferred
Shares or preferred share equivalents) less than the then current per
share market price (as such term is defined in Section 11(d)) of the
Preferred Shares on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares outstanding on
such record date plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares and/or preferred
share equivalents so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall
be the number of Preferred Shares outstanding on such record date plus
the number of additional Preferred Shares and/or preferred share
equivalents to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible);
provided, however, that in no event shall
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the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may
be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be determined in good
faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Preferred
Shares held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in
the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share
market price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Preferred Share, and the denominator of which
shall be such current per share market price of the Preferred Shares;
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of
one Right. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of
this Section 11(d)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the 30
consecutive Trading Days immediately prior to such date; provided,
however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities
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<PAGE>
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share
market price shall be appropriately adjusted to reflect the current
market price per share equivalent of such Security. The closing price for
each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. If on any such day no
market maker is making a market in the Common Shares, the fair value of
such share on such day as determined in good faith by the Board of
Directors of the Company shall be used in lieu of the closing price for
such day. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted
to trading is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current per
share market price" of the Preferred Shares shall mean the fair value per
share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with
the Rights Agent.
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<PAGE>
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest one one-millionth of a Preferred Share or one ten-
thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of
(i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise
any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
and 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares contained in
Section 11(a) through (c), inclusive, and the provisions of Sections 7,
9, 10, 13 and 14 with respect to the Preferred Shares shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one one-
hundredths of a Preferred Share purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), subject to the provisions of Sections 11(a) and 13,
upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a Preferred Share (calculated to the
nearest one one-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for
any adjustment in the number of one one-hundredths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding
after
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<PAGE>
such adjustment of the number of Rights shall be exercisable for the
number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment
of the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount
of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten days later than the
date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record
date Right Certificates evidencing, subject to Section 14, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein, may bear, at the option of the Company, the adjusted
Purchase Price, and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a Preferred Share issuable upon
the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the
number of one one-hundredths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any,
of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Preferred Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right exercised
after such record date of
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<PAGE>
the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11,
as and to the extent that in their sole discretion the Board of Directors
of the Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Shares, (ii) issuance
wholly for cash of any Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred
Shares, (iv) dividends on Preferred Shares payable in Preferred Shares or
(v) issuance of rights, options or warrants referred to hereinabove in
Section 11(b), hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(n) The Company shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), (ii) merge
with or into any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o)), or (iii) sell or
transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its subsidiaries in one or more
transaction each of which complies with Section 11(o)), if (x) at the
time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such consolidation, merger
or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) shall
have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.
(o) The Company, after the Distribution Date, will not, except as
permitted by Section 23, 24 or 27, take (or permit any Subsidiary of the
Company to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
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<PAGE>
(p) Anything in this Agreement or the Rights to the contrary
notwithstanding, in the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Shares payable in Common Shares
or (ii) effect a subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common Shares, then in
any such case (i) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a Preferred
Share so purchasable immediately prior to such event by a fraction, the
numerator of which is the number of Common Shares outstanding immediately
before such event and the denominator of which is the number of Common
Shares outstanding immediately after such event, and (ii) each Common
Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected. If an event occurs which would
require an adjustment under Section 11(a)(ii) and this Section 11(p), the
adjustments provided for in this Section 11(p) shall be in addition and
prior to any adjustment required pursuant to Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares or the Preferred
Shares a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 25.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event, directly or indirectly, at any time after there is an
Acquiring Person,
(w) the Company shall consolidate with, or merge with and into, any
other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger,
(x) any Person shall consolidate with, or merge with and into, the
Company, the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation
or merger, all or part of the Common Shares shall be changed into or
exchanged
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<PAGE>
for stock or other securities of any other Person (or the Company) or
cash or any other property,
(y) the Company shall effect a statutory share exchange with the
outstanding Common Shares of the Company being exchanged for stock or other
securities of any other Person, cash or property, or
(z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person other than the Company or one or more of its
wholly owned Subsidiaries,
then, and in each such case, except as contemplated by Section 13(e), proper
provision shall be made so that (i) each holder of a Right (except as otherwise
provided in this Agreement) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a Right is
then exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Principal Party, not
subject to any liens, encumbrances, rights of first refusal or adverse claims,
as shall be equal to the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right is, immediately prior to such consolidation, merger, statutory
share exchange, sale or transfer, exercisable and (y) dividing that product by
50% of the current per share market price of the Common Shares of such Principal
Party (determined pursuant to Section 11(d)) on the date of consummation of such
consolidation, merger, statutory share exchange, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such merger, consolidation, statutory share exchange, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and
(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of its Common Shares to permit the
exercise of all outstanding Rights) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions of this
Agreement shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (w), (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which Common Shares of the Company are converted
in such merger,
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<PAGE>
consolidation or exchange, or if no securities are so issued, the Person
that is the other party to such merger, consolidation or exchange; and
(ii) in the case of any transaction described in clause(z) of the
first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant
to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Shares of such
Person are not at such time or have not been continuously over the preceding 12-
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Shares of which are
and have been so registered, "Principal Party" shall refer to such other Person,
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger, share
exchange, sale or transfer unless the Principal Party shall have a sufficient
number of authorized, unreserved Common Shares which have not been issued or are
held in treasury to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any such
consolidation, merger, share exchange, sale or transfer, the Principal Party
will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the
Rights, on an appropriate form, and use its best efforts to cause such
registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the earlier of (1) the
date as of which the Rights are no longer exercisable for such securities
or (2) the Final Expiration Date;
(ii) take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10
under the Exchange Act.
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<PAGE>
(d) The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. Without limiting the generality of the preceding
sentence, in case the Principal Party which is to be a party to a transaction of
the kind referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate of incorporation or bylaws or other instrument
governing its corporate affairs, which provision would have the effect of
(i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction of the kind referred to in
this Section 13, Common Shares of such Principal Party at less than the then
current per share market price (determined pursuant to Section 11(d)) or
securities exercisable for or convertible into Common Shares of such Principal
Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of Common Shares of
such Principal Party pursuant to the provisions of Section 13, then, in such
event, the Company shall not consummate any such transaction unless prior
thereto the provision in question of such Principal Party shall have been
canceled, waived or amended so as to avoid any of the effects referred to in
clauses (i) and (ii) of this paragraph, or the authorized securities shall have
been redeemed, so that the applicable provision will have no effect in
connection with, or as a consequence of, the consummation of the proposed
transaction.
(e) Notwithstanding anything in this Agreement to the contrary, Section13
shall not be applicable to a transaction described in clauses (w), (x) or (y) of
Section 13(a) if (i)such transaction is consummated with a Person or Persons
who acquired Common Shares pursuant to a Permitted Offer (or a wholly owned
Subsidiary of any such Person or Persons), (ii) the price per Common Share
offered in such transaction is not less than the price per Common Share paid to
all holders of Common Shares whose shares were purchased pursuant to such tender
offer or exchange offer and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this Section 13(e),
all Rights hereunder shall expire.
(f) The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, statutory share exchanges or sale or other transfers.
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Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, however, that if the Company issues depositary
receipts pursuant to any such agreement, such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the
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closing price of a Preferred Share (as determined pursuant to Section 11(d))
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
such holder's right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the
contrary.
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Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions of
this Agreement.
Section 18. Concerning the Rights Agent.
(a) The Company will pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company will indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, or expense,
incurred without negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares (or for depositary receipts evidencing
fractional interests in Preferred Shares) or Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the
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execution or filing of any paper or any further act on the part of any of the
parties to this Agreement, provided that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section
21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed
by any one of the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
of this Agreement (except the due execution of this Agreement by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to Section 11(a)(ii)) or any adjustment
in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining
of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of actual notice from the Company
stating that a change or adjustment is required and specifying the manner
and amount thereof); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of
any Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the President, any Vice President,
the Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.
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<PAGE>
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with
or lend money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting
from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of
its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail, and
to the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or of the State of Minnesota or New York (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the State of Minnesota or New York),
in good standing, having an office in the State of Minnesota or New York, which
is authorized under
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<PAGE>
such laws to exercise corporate trust or stock transfer powers and is subject
to supervision or examination by federal or state authority and which has or
is a subsidiary of a corporation which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million, or (b) an
affiliate of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares and Preferred Shares. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares after the Distribution Date, the
Company shall, with respect to Common Shares issued upon the exercise,
conversion or exchange of securities hereinafter issued by the Company and
outstanding on the Distribution Date, issue Rights Certificates representing the
appropriate number of rights in connection with such issuance; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, at any time
prior to such time as any Person becomes an Acquiring Person, redeem all but not
less than all of the then outstanding Rights at a redemption price of $0.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of this Agreement (such redemption
price being hereinafter referred to as the "Redemption Price"). The redemption
of the Rights by the Board of Directors may be made effective at such time and
on such basis and with such conditions as the Board of Directors in its sole
discretion may establish.
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(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23, and without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give
public notice of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption. Within ten days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24, and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii)) for Common Shares
at an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date of this Agreement (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than an Exempt Person) together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Shares
then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of
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exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of outstanding and exercisable Rights (other than
Rights which have become void pursuant to the provisions of Section 11(a)(ii))
held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued and unreserved to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights. In the event the
Company shall, after good faith effort, be unable to take all such action as may
be necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exchange
of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which evidence fractional Common Shares. In lieu
of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose at any time after the Distribution
Date (i) to pay any dividend payable in stock of any class to the holders of its
Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect any
statutory share exchange with the outstanding Common Shares of the
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Company being exchanged for stock or other securities of any other corporation
or cash or other property, (vi) to effect the liquidation, dissolution or
winding up of the Company or (vii) to declare or pay any dividend on the
Common Shares payable in Common Shares or to effect a subdivision, combination
or consolidation of the Common Shares (by reclassification or otherwise than
by payment of dividends in Common Shares), then, in each such case, the
Company shall give to each holder of a Right Certificate, in accordance with
Section 26, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) of this
paragraph at least ten days prior to the record date for determining holders
of the Preferred Shares for purposes of such action, and in the case of any
such other action, at least ten days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) shall occur, then the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26, a notice of the occurrence of such
event, which notice shall describe such event and the consequences of such event
to holders of Rights under Section 11(a)(ii).
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
C.H. Robinson Worldwide, Inc.
8100 South Mitchell Road
Suite 200
Eden Prairie, MN 55344-2248
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Norwest Bank Minnesota, National Association
Attention: Shareholder Services
161 North Concord Exchange
South St. Paul, MN 55075-0738
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<PAGE>
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order (i) to extend the Final Expiration Date or, provided that
at the time of such amendment no Person has become an Acquiring Person, the
period during which the Rights may be redeemed, (ii) to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions of this Agreement, (iii) prior to the
time that any Person becomes an Acquiring Person, to otherwise change or
supplement any provision in this Agreement in any manner which the Company may
deem necessary or desirable, or (iv) subject to clause (i) of this Section 27,
from and after the time that any Person becomes an Acquiring Person, to
otherwise change or supplement any provision in this Agreement in any manner
which the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
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Section 32. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
Section 34. Effectiveness. This Agreement is intended to give effect to
and to be effective upon the merger of C.H. Robinson, Inc., a Minnesota
corporation, with and into the Company. If such merger has not become effective
by the close of business on December 31, 1997, this Agreement shall be null and
void.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
C.H. ROBINSON WORLDWIDE, INC.
By /s/Owen P. Gleason
----------------------------
Its Vice President
------------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/Beatrice L. Huston
----------------------------
Its Vice President
------------------------
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Exhibit A
---------
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
C.H. ROBINSON WORLDWIDE, INC.
The undersigned hereby certifies that the Board of Directors of C.H.
Robinson Worldwide, Inc. (the "Corporation"), a corporation organized and
existing under the Delaware General Corporation Law, duly adopted the following
resolution on August 14, 1997:
RESOLVED, that a series of preferred stock of the Corporation is hereby
created, and the designation and amount thereof and the relative rights and
preferences of the shares of such series, are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Preferred
Shares") and the number of shares constituting the Preferred Shares shall be
1,300,000. Such, number of shares may be increased or decreased by resolution
of the Board of Directors and any necessary stockholder approval; provided,
however, that no decrease shall reduce the number of shares of Preferred Shares
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Preferred Shares.
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any series of
preferred stock (or any similar stock) ranking prior and superior to the
Preferred Shares with respect to dividends, the holders of Preferred Shares, in
preference to the holders of Common Stock, par value $.10 (the "Common Stock"),
of the Corporation, and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Preferred Shares, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) $1.00 or (ii) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share
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<PAGE>
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Preferred Shares. In the event the Corporation shall at any time after the
business day prior to the Company's initial public offering ("Record Date"),
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Preferred Shares were entitled
immediately prior to such event under clause (ii) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Preferred Shares as provided in paragraph (a) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Preferred Shares shall nevertheless be
payable, out of funds legally available for such purpose, on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Preferred Shares from their date of issue. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Preferred Shares in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of Preferred Shares entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights.
(a) Subject to the provision for adjustment hereinafter set forth, each
Preferred Share shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Record Date, declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or
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consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Preferred Shares were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of Preferred
Shares and the holders of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein or required by law, holders of Preferred
Shares shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Preferred Shares as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Preferred Shares outstanding shall have been paid
in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Shares;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Shares, except
dividends paid ratably on the Preferred Shares and all such parity stock
on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Shares;
provided, however, that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Preferred Shares; or
A-3
<PAGE>
(iv) redeem or purchase or otherwise acquire for consideration any
Preferred Shares, or any stock ranking on a parity with the Preferred
Shares, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Preferred Shares purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock and
may be reissued as part of a new series of preferred stock subject to the
conditions and restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other certificate of designation creating a series of
preferred stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Shares unless, prior
thereto, the holders of Preferred Shares shall have received the greater of (i)
$100 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(ii) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of Common Stock, or (2) to the holders of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Preferred Shares, except distributions made ratably on the Preferred
Shares and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time after the Record
Date declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Preferred Shares were entitled
immediately prior to such event under clause (1)(ii) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
A-4
<PAGE>
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Preferred Shares shall at the same time be similarly exchanged or changed into
an amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Record Date declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Preferred Shares
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The Preferred Shares shall not be redeemable.
Section 9. Rank. The Preferred Shares shall rank, with respect to the
payment of dividends and the distribution of assets, junior to any other class
of the Corporation's Preferred Stock.
Section 10. Fractional Shares. Preferred Shares may be issued in
fractions of a share which are integral multiples of one one-hundredth of a
share which shall entitle the holder, in proportion to such holder's fractional
shares, to receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Preferred Shares.
Section 11. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or rights of the Preferred Shares so as to affect
them adversely without the affirmative vote of the holders of at least two-
thirds of the outstanding shares of Preferred Shares, voting together as a
single class.
A-5
<PAGE>
IN WITNESS WHEREOF, I have subscribed my name this _________ day of
___________, 1997.
C.H. ROBINSON WORLDWIDE, INC.
By
--------------------------
[Name and Title]
A-6
<PAGE>
Exhibit B
FORM OF RIGHT CERTIFICATES
--------------------------
Certificate No. R-___ __________Rights
NOT EXERCISABLE AFTER OCTOBER 1, 2007 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT (SUBJECT TO
ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY A PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND SUBSEQUENT HOLDERS OF SUCH RIGHTS MAY BECOME NULL AND
VOID.
RIGHT CERTIFICATE
C.H. ROBINSON WORLDWIDE, INC.
This certifies that ______________________________ or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of October 1, 1997 (the "Rights Agreement"),
between C.H. Robinson Worldwide, Inc., a Delaware corporation (the "Company"),
and Norwest Bank Minnesota, National Association (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., Minneapolis time, on
October 1, 2007, at the office or offices of the Rights Agent designated for
such purpose, or of its successor as Rights Agent, one one-hundredth of a fully
paid non-assessable share of Series A Junior Participating Preferred Stock, par
value $1.00 per share (the "Preferred Shares"), of the Company, at a purchase
price of $100.00 (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one one-
hundredths of a Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of the [insert appropriate date], based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one one-hundredths of a Preferred Share which may be
purchased upon the exercise of the Rights evidenced
B-1
<PAGE>
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the office or offices of the Rights Agent and will be mailed without
charge by the Company or the Rights Agent to the holder of this certificate
promptly following receipt by the Company or the Rights Agent of a written
request therefor.
From and after the date that any Person becomes an Acquiring Person, any
Rights that are or were acquired or beneficially owned by any Acquiring Person
(or any Associate or Affiliate of such Acquiring Person) (as such terms are
defined in the Rights Agreement) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Agreement.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this certificate (i) may, but are not required to, be redeemed by the Company at
a redemption price of $0.01 per Right, subject to adjustment as provided in the
Rights Agreement, and (ii) may, but are not required to, be exchanged by the
Company in whole or in part for Common Shares.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be
B-2
<PAGE>
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the manual or facsimile signature of the proper officer of the
Company.
Dated:
C.H. ROBINSON WORLDWIDE, INC.
By
--------------------------
[Name and Title]
Countersigned for purposes
of authentication only:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By
-------------------------------
Authorized Signature
B-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED, ____________ hereby sells, assigns and transfers unto
______________(print name of transferee) _________________(print address of
transferee) this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
_____________ Attorney, to transfer the within Right Certificate on the books
of the within-named Company, with full power of substitution.
Please insert social security
number taxpayer identification
number or other identifying number: _______________________________
Dated: _______________________
----------------------------
Signature
Signature Guaranteed: ____________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-4
<PAGE>
Form of Reverse Side of Right Certificate--continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To: C.H. Robinson Worldwide, Inc.
The undersigned hereby irrevocably elects to exercise_________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security
number, taxpayer identification
number or other identifying number:
------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security,
taxpayer identification
or other identifying number:
---------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated:
----------------------
-------------------------------
Signature
Signature Guaranteed:
----------------------------------------------------------
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-5
<PAGE>
Exhibit C
C.H. ROBINSON WORLDWIDE, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Board of Directors of C.H. Robinson Worldwide, Inc. (the "Company"),
declared a dividend of one preferred share purchase right (a "Right") per share
for each outstanding share of Common Stock, par value $.10 (the "Common
Shares"), of the Company. The dividend is payable to stockholders of record on
[insert appropriate date] (the "Record Date").
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $1.00 (the "Preferred Shares"), of the Company at a price of $100.00 per
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement"), dated as of October 1, 1997, between the
Company and Norwest Bank Minnesota, National Association, as Rights Agent (the
"Rights Agent").
Initially, the Rights will be evidenced by the certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares, and a
Distribution Date for the Rights will occur, upon the earlier of: (i) the first
date of public announcement that a person or group of affiliated or associated
persons has become an "Acquiring Person" (i.e., has become the beneficial owner
of 15% or more of the outstanding Common Shares (other than as a result of a
Permitted Offer and subject to certain exceptions)) and (ii) the close of
business on the 10th day following the commencement or public announcement of a
tender offer or exchange offer, the consummation of which would result in a
person or group of affiliated or associated persons becoming an Acquiring
Person.
A "Permitted Offer" is a tender offer or an exchange offer for all
outstanding Common Shares of the Company determined by the Board of Directors of
the Company, after receiving such advice as it deems necessary and giving due
consideration to all relevant factors, to be in the best interests of the
Company and its stockholders.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Share certificates and will be transferred with and only with the Common Shares,
(ii) new Common Share certificates issued after the Record Date upon transfer or
new issuance of the Common Shares will contain a notation incorporating the
Rights Agreement by reference, and (iii) the surrender for transfer of any
Common
C-1
<PAGE>
Share certificate, even without such notation or a copy of this Summary
of Rights attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on October 1, 2007, unless extended or earlier redeemed or exchanged
by the Company as described below. No fraction of a Preferred Share (other than
fractions in integral multiples of one one-hundredth of a share) will be issued
and, in lieu thereof, an adjustment in cash will be made based on the closing
price on the last trading date prior to the date of exercise.
The Purchase Price payable and the number of Preferred Shares issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution: (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Shares, (ii) upon the grant to holders of
the Preferred Shares of certain rights, options or warrants to subscribe for or
purchase Preferred Shares or convertible securities at less than the then
current market price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those described in
clause (ii) of this paragraph). With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in the Purchase Price. The number of outstanding
Rights and the number of Preferred Shares issuable upon exercise of the Rights
are also subject to adjustment in the event of a stock split of the Common
Shares or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $100.00 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
subject to
C-2
<PAGE>
adjustment in the event of a stock dividend on the Common Shares or a
subdivision, combination or consolidation of the Common Shares.
In the event any Person becomes an Acquiring Person, each holder of a Right
shall thereafter have a right to receive, upon exercise thereof at the then
current aggregate exercise price, in lieu of Preferred Shares, such number of
Common Shares of the Company having a current aggregate market price equal to
twice the current aggregate exercise price. In the event that at any time after
there is an Acquiring Person the Company is acquired in certain mergers or other
business combination transactions or 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) are sold, holders of the
Rights will thereafter have the Right to receive, upon exercise thereof at the
then current aggregate exercise price, such number of Common Shares of the
acquiring company (or, in certain cases, one of its affiliates) having a current
aggregate market price equal to twice the current aggregate exercise price.
At any time after a Person becomes an Acquiring Person (subject to certain
exceptions), and prior to the acquisition by a Person of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
all or part of the Rights for Common Shares at an exchange ratio of one Common
Share per right, subject to adjustment.
At any time before a Person has become an Acquiring Person, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right (the "Redemption Price"), subject to adjustment. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement is available free of charge from the Company
by contacting the Secretary, C.H. Robinson Worldwide, Inc., 8100 South
Mitchell Road, Suite 200, Eden Prairie, MN 55344-2248. This summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is hereby incorporated herein by
reference.
C-3
<PAGE>
Exhibit 5.1
DORSEY & WHITNEY LLP
MINNEAPOLIS NEW YORK
WASHINGTON, D.C. PILLSBURY CENTER SOUTH DENVER
LONDON 220 SOUTH SIXTH STREET SEATTLE
BRUSSELS MINNEAPOLIS, MINNESOTA 55402-1498 FARGO
HONG KONG Telephone: (612) 340-2600 BILLINGS
DES MOINES Fax: (612) 340-2868 MISSOULA
ROCHESTER GREAT FALLS
COSTA MESA
October 9, 1997
C.H. Robinson Worldwide, Inc.
8100 South Mitchell Road
Suite 200
Eden Prairie, MN 55344-2248
Re: Registration Statement on Form S-1
File No. 333-33731
Ladies and Gentlemen:
We have acted as counsel to C.H. Robinson Worldwide, Inc., a Delaware
corporation (the "Company"), in connection with a Registration Statement on Form
S-1 (the "Registration Statement") relating to the sale by the Company of up to
12,165,155 shares of common stock of the Company, par value $.10 per share (the
"Common Stock"), and the associated Preferred Share Purchase Rights (the
"Rights").
We have examined such documents and have reviewed such questions of
law as we have considered necessary and appropriate for the purposes of our
opinions set forth below. In rendering our opinions set forth below, we have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures and the conformity to authentic originals of all
documents submitted to us as copies. We have also assumed the legal capacity
for all purposes relevant hereto of all natural persons and, with respect to all
parties to agreements or instruments relevant hereto other than the Company,
that such parties had the requisite power and authority (corporate or otherwise)
to execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinions, we have relied
upon certificates of officers of the Company and of public officials.
<PAGE>
C.H. Robinson Worldwide, Inc.
Page 2
October 9, 1997
Based on the foregoing, we are of the opinion that the Common Stock
and the Rights have been duly authorized by all requisite corporate action, and
upon issuance, delivery and payment therefor as described in the Registration
Statement, will be, in the case of the Common Stock, validly issued, fully paid
and nonassessable and, in the case of the Rights, valid and legally binding
obligations of the Company.
Our opinions expressed above are limited to the Delaware General
Corporation Law and the laws of Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the caption
"Legal Matters" in the Prospectus constituting part of the Registration
Statement.
Very truly yours,
/s/ Dorsey & Whitney LLP
WBP/law
<PAGE>
Exhibit 10.4
C.H. ROBINSON WORLDWIDE, INC.
1997 OMNIBUS STOCK PLAN
Section 1. Purpose.
- -------------------
The purpose of the Plan is to promote the interests of the Company and
its stockholders by aiding the Company in attracting, retaining and
incentivizing employees, officers, consultants, independent contractors and non-
employee directors.
Section 2. Definitions.
- -----------------------
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company and
(ii) any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent,
Other Stock Grant or Other Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean either the Board of Directors of the
Company or a committee of the Board of Directors appointed by the Board of
Directors to administer the Plan. The Company expects to have the Plan
administered in accordance with the requirements for the award of "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code.
(f) "Company" shall mean C.H. Robinson Worldwide, Inc., a Delaware
corporation, and any successor corporation.
(g) "Dividend Equivalent" shall mean any right granted under Section
6(e) of the Plan.
<PAGE>
(h) "Eligible Person" shall mean any employee, officer, consultant,
independent contractor or director providing services to the Company or any
Affiliate whom the Committee determines to be an Eligible Person.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee. Notwithstanding the foregoing,
unless otherwise determined by the Committee, the Fair Market Value of Shares on
a given date for purposes of the Plan shall not be less than (i)the closing
price as reported for composite transactions, if the Shares are then listed on a
national securities exchange, (ii)the last sale price, if the Shares are then
quoted on the Nasdaq National Market or (iii)the average of the closing
representative bid and asked prices of the Shares in all other cases, on the
date as of which fair market value is being determined. If on a given date the
Shares are not traded in an established securities market, the Committee shall
make a good faith attempt to satisfy the requirements of this clause and in
connection therewith shall take such action as it deems necessary or advisable.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code or any successor provision.
(k) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(l) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option, and shall include Reload Options.
(m) "Other Stock Grant" shall mean any right granted under Section
6(f) of the Plan.
(n) "Other Stock-Based Award" shall mean any right granted under
Section 6(g) of the Plan.
(o) "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.
(p) "Performance Award" shall mean any right granted under Section
6(d) of the Plan.
(q) "Person" shall mean any individual, corporation, partnership,
association or trust.
-2-
<PAGE>
(r) "Plan" shall mean the C.H. RobinsonWorldwide, Inc. 1997 Omnibus
Stock Plan, as amended from time to time.
(s) "Reload Option" shall mean any Option granted under Section
6(a)(iv) of the Plan.
(t) "Restricted Stock" shall mean any Shares granted under Section
6(c) of the Plan.
(u) "Restricted Stock Unit" shall mean any unit granted under Section
6(c) of the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date.
(v) "Shares" shall mean shares of Common Stock, $0.10 par value, of
the Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
(w) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
Section 3. Administration.
- --------------------------
(a) Power and Authority of the Committee. The Plan shall be
administered by the Committee. Subject to the express provisions of the Plan and
to applicable law, the Committee shall have full power and authority to: (i)
designate Participants; (ii)determine the type or types of Awards to be granted
to each Participant under the Plan; (iii) determine the number of Shares to be
covered by (or with respect to which payments, rights or other matters are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v)amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock, Restricted Stock Units
or other Awards; (vi)determine whether, to what extent and under what
circumstances Awards may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (vii) determine
whether, to what extent and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award under the Plan shall be deferred either automatically or at the
election of the holder thereof or the Committee; (viii)interpret and administer
the Plan and any instrument or agreement relating to, or Award made under, the
Plan; (ix) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (x) make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with
-3-
<PAGE>
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon any Participant, any holder or beneficiary of any Award.
(b) Delegation. The Committee may delegate its powers and duties
under the Plan to one or more officers of the Company or any Affiliate or a
committee of such officers, subject to such terms, conditions and limitations as
the Committee may establish in its sole discretion.
Section 4. Shares Available for Awards.
- ---------------------------------------
(a) Shares Available. Subject to adjustment as provided in Section
4(c), the aggregate number of Shares that may be issued under all Awards under
the Plan shall be 2,000,000. Shares to be issued under the Plan may be either
Shares held in treasury or newly issued. If any Shares covered by an Award or to
which an Award relates are not purchased or are forfeited, or if an Award
otherwise terminates without delivery of any Shares, then the number of Shares
counted against the aggregate number of Shares available under the Plan with
respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan. Notwithstanding the
foregoing, the number of Shares available for granting Incentive Stock Options
under the Plan shall not exceed 2,000,000, subject to adjustment as provided in
the Plan and Section 422 or 424 of the Code or any successor provision.
(b) Accounting for Awards. For purposes of this Section 4, if an
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.
(c) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or other property) that thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Awards and (iii) the purchase or exercise price
with respect to any
-4-
<PAGE>
Award; provided, however, that the number of Shares covered by any Award or to
which such Award relates shall always be a whole number.
(d) Award Limitations Under the Plan. No Eligible Person may be
granted any Award or Awards under the Plan, the value of which Awards is based
solely on an increase in the value of the Shares after the date of grant of such
Awards, for more than 500,000 Shares (subject to adjustment as provided for in
Section 4(c)), in the aggregate in any calendar year. The foregoing annual
limitation specifically includes the grant of any Awards representing "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Code.
Section 5. Eligibility.
- -----------------------
Any Eligible Person of the Company or any Affiliate, shall be eligible
to be designated a Participant. In determining which Eligible Persons shall
receive an Award and the terms of any Award, the Committee may take into account
the nature of the services rendered by the respective Eligible Persons, their
present and potential contributions to the success of the Company or such other
factors as the Committee, in its discretion, shall deem relevant.
Notwithstanding the foregoing, an Incentive Stock Option may only be granted to
full or part-time employees (which term as used herein includes, without
limitation, officers and directors who are also employees), and an Incentive
Stock Option shall not be granted to an employee of an Affiliate unless such
Affiliate is also a "subsidiary corporation" of the Company within the meaning
of Section 424(f) of the Code or any successor provision.
Section 6. Awards.
- ------------------
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under
an Option shall be determined by the Committee; provided, however, that the
purchase price of an Incentive Stock Option shall not be less than 100% of
the Fair Market Value of a Share on the date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee.
(iii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, other securities, other Awards or other
-5-
<PAGE>
property, or any combination thereof, having a Fair Market Value on the
exercise date equal to the relevant exercise price) in which, payment of
the exercise price with respect thereto may be made or deemed to have been
made.
(iv) Reload Options. The Committee may grant Reload Options,
separately or together with another Option, pursuant to which, subject to
the terms and conditions established by the Committee, the Participant
would be granted a new Option when the payment of the exercise price of a
previously granted option is made by the delivery of Shares owned by the
Participant pursuant to Section 6(a)(iii) hereof or the relevant provisions
of another plan of the Company, and/or when Shares are tendered or
forfeited as payment of the amount to be withheld under applicable income
tax laws in connection with the exercise of an Option, which new Option
would be an Option to purchase the number of Shares not exceeding the sum
of (A) the number of Shares so provided as consideration upon the exercise
of the previously granted option to which such Reload Option relates and
(B) the number of Shares, if any, tendered or withheld as payment of the
amount to be withheld under applicable tax laws in connection with the
exercise of the option to which such Reload Option relates pursuant to the
relevant provisions of the plan or agreement relating to such option.
Reload Options may be granted with respect to Options previously granted
under the Plan or any other stock option plan of the Company, and may be
granted in connection with any Option granted under the Plan or any other
stock option plan of the Company at the time of such grant. Such Reload
Options shall have a per share exercise price equal to the Fair Market
Value as of the date of grant of the new Option. Any Reload Option shall be
subject to availability of sufficient Shares for grant under the Plan.
Shares surrendered as part or all of the exercise price of the Option to
which it relates that have been owned by the optionee less than six months
will not be counted for purposes of determining the number of Shares that
may be purchased pursuant to a Reload Option.
(b) Stock Appreciation Rights. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants subject to the terms of the Plan
and any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the date of exercise
(or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less
than 100% of the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined
-6-
<PAGE>
by the Committee. The Committee may impose such conditions or restrictions on
the exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is
hereby authorized to grant Restricted Stock and Restricted Stock Units to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, a waiver by the Participant of the right to
vote or to receive any dividend or other right or property with respect
thereto), which restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise as the Committee may deem
appropriate.
(ii) Stock Certificates. Any Restricted Stock shall be registered in
the name of the Participant and shall bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such Restricted
Stock. In the case of Restricted Stock Units, no Shares shall be issued at
the time such Awards are granted.
(iii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment (as determined under criteria established by
the Committee) during the applicable restriction period, all Shares of
Restricted Stock and all Restricted Stock Units at such time subject to
restriction shall be forfeited and reacquired by the Company; provided,
however, that the Committee may, when it finds that a waiver would be in
the best interest of the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of Restricted Stock or
Restricted Stock Units. Upon the lapse or waiver of restrictions and the
restricted period relating to Restricted Stock Units evidencing the right
to receive Shares, such Shares shall be issued and delivered to the holders
of the Restricted Stock Units.
(d) Performance Awards. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i)may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock and Restricted Stock Units), other securities, other Awards or
other property and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject to the
terms of the Plan and any applicable Award Agreement, the performance goals to
be achieved
-7-
<PAGE>
during any performance period, the length of any performance period, the amount
of any Performance Award granted, the amount of any payment or transfer to be
made pursuant to any Performance Award and any other terms and conditions of any
Performance Award shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is hereby authorized to grant
Dividend Equivalents to Participants, subject to the terms of the Plan and any
applicable Award Agreement, under which such Participants shall be entitled to
receive payments (in cash, Shares, other securities, other Awards or other
property as determined in the discretion of the Committee) equivalent to the
amount of cash dividends paid by the Company to holders of Shares with respect
to a number of Shares determined by the Committee.
(f) Other Stock Grants. The Committee is hereby authorized, subject
to the terms of the Plan and any applicable Award Agreement, to grant to
Participants Shares without restrictions thereon as are deemed by the Committee
to be consistent with the purpose of the Plan.
(g) Other Stock-Based Awards. The Committee is hereby authorized to
grant to Participants subject to the terms of the Plan and any applicable Award
Agreement, such other Awards that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purpose of the Plan. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(g) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including, without limitation,
cash, Shares, other securities, other Awards or other property or any
combination thereof), as the Committee shall determine.
(h) General.
(i) No Cash Consideration for Awards. Awards shall be granted for no
cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
-8-
<PAGE>
(iii) Forms of Payment under Awards. Subject to the terms of the Plan
and of any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise or payment of an Award
may be made in such form or forms as the Committee shall determine
(including, without limitation, cash, Shares, other securities, other
Awards or other property or any combination thereof), and may be made in a
single payment or transfer, in installments or on a deferred basis, in each
case in accordance with rules and procedures established by the Committee.
Such rules and procedures may include, without limitation, provisions for
the payment or crediting of reasonable interest on installment or deferred
payments or the grant or crediting of Dividend Equivalents with respect to
installment or deferred payments.
(iv) Limits on Transfer of Awards. No Award (other than Other Stock
Grants) and no right under any such Award shall be transferable by a
Participant otherwise than by will or by the laws of descent and
distribution; provided, however, that, if so determined by the Committee, a
Participant may, in the manner established by the Committee, transfer
Options (other than Incentive Stock Options) or designate a beneficiary or
beneficiaries to exercise the rights of the Participant and receive any
property distributable with respect to any Award upon the death of the
Participant. Each Award or right under any Award shall be exercisable
during the Participant's lifetime only by the Participant or, if
permissible under applicable law, by the Participant's guardian or legal
representative. No Award or right under any such Award may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
(v) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee.
(vi) Restrictions; Securities Exchange Listing. All Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such restrictions as the Committee may deem
advisable under the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may cause appropriate entries to
be made or legends to be affixed to reflect such restrictions. If the
Shares or other securities are listed on a securities exchange, the Company
shall not be required to deliver any Shares or other securities covered by
an Award until such Shares or other securities have been listed on such
securities exchange.
Section 7. Amendment and Termination; Adjustments.
- --------------------------------------------------
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
-9-
<PAGE>
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan.
(b) Amendments to Awards. The Committee may waive any conditions of
or rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
herein provided or in the Award Agreement.
(c) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
Section 8. Income Tax Withholding; Tax Bonuses.
- -----------------------------------------------
(a) Withholding. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant are withheld or collected from such Participant.
In order to assist a Participant in paying all or a portion of the federal and
state taxes to be withheld or collected upon exercise or receipt of (or the
lapse of restrictions relating to) an Award, the Committee, in its discretion
and subject to such additional terms and conditions as it may adopt, may permit
the Participant to satisfy such tax obligation by (i) electing to have the
Company withhold a portion of the Shares otherwise to be delivered upon exercise
or receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes or (ii) delivering to the Company
Shares other than Shares issuable upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes. The election, if any, must be made on or before the date
that the amount of tax to be withheld is determined.
(b) Tax Bonuses. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes due
as a result of such exercise or receipt (or the lapse of such restrictions).
The Committee shall have full authority in its discretion to determine the
amount of any such tax bonus.
-10-
<PAGE>
Section 9. General Provisions.
- ------------------------------
(a) No Rights to Awards. No Eligible Person, Participant or other
Person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.
(b) Award Agreements. No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company and, if requested by the Company, signed
by the Participant.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate, nor will it affect in any way the right of the Company
or an Affiliate to terminate such employment at any time, with or without cause.
In addition, the Company or an Affiliate may at any time dismiss a Participant
from employment free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.
(e) Governing Law. The validity, construction and effect of the Plan
or any Award, and any rules and regulations relating to the Plan or any Award,
shall be determined in accordance with the laws of the State of Minnesota.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments
-11-
<PAGE>
from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
(j) Other Benefits. No compensation or benefit awarded to or realized
by any Participant under the Plan shall be included for the purpose of computing
such Participant's compensation under any compensation-based retirement,
disability, or similar plan of the Company unless required by law or otherwise
provided by such other plan.
Section 10. Effective Date of the Plan.
- ---------------------------------------
The Plan shall be effective as of August 14, 1997. The Plan
contemplates the merger of C.H. Robinson, Inc. into C.H. Robinson Worldwide,
Inc. If the Company's shareholders do not approve the Plan and the merger at a
special meeting of shareholders scheduled for August 14, 1997, the Plan shall be
null and void.
Section 11. Term of the Plan.
- -----------------------------
Awards shall only be granted under the Plan during a 10-year period
beginning on the effective date of the Plan. However, unless otherwise
expressly provided in the Plan or in an applicable Award Agreement, any Award
theretofore granted may extend beyond the end of such 10-year period, and the
authority of the Committee provided for hereunder with respect to the Plan and
any Awards, and the authority of the Board of Directors of the Company to amend
the Plan, shall extend beyond the termination of the Plan.
-12-
<PAGE>
Exhibit 10.21
CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
This Confidentiality Agreement and Noncompetition Agreement is made and
entered into this _____ day of __________, by and between C. H. Robinson
Worldwide, Inc. and _______________, an individual and resident of the State of
Minnesota (hereinafter referred to as "Employee" or "I").
I.
RECITALS
--------
A. I have been employed by the Company in a significant executive capacity
and I wish to continue such employment.
B. I have previously entered into a Management-Employee Agreement dated
__________, in which I agreed to retain the confidentiality of the Company's
confidential information and not to compete with the Company during and
subsequent to my employment.
C. The Company has had in place for a number of years a book value stock
purchase program pursuant to which certain employees of the Company have had the
opportunity to purchase shares of the Company's common stock ("common stock") at
book value from departing employees, subject to a restriction that upon
termination of employment the employee would sell such common stock at book
value. All outstanding common stock is presently subject to repurchase by the
Company or its designee at book value. Stock purchased through this program is
referred to as "book value stock." Approximately 700 employees of the Company
own book value stock. Through the Company's book value stock purchase program,
I have had the opportunity to purchase, and have made substantial purchases of,
common stock at book value. On the date hereof, I (or accounts or trusts for
the benefit of me, my spouse or my family) hold __________ shares of book value
stock.
D. The Company has had in place for a number of years programs pursuant to
which certain employees of the Company were awarded common stock subject to
certain forfeiture provisions ("restricted stock"). Approximately 80 employees
of the Company own restricted stock. Through the Company's restricted stock
programs, in particular the Central Office Management Incentive Program, I have
received awards of significant amounts of restricted stock. Under this program
I automatically forfeit all rights to such restricted stock or to certain
repurchase payments if I were to compete with the Company. On the date hereof,
I hold __________ shares of restricted stock.
E. The Company is planning an initial public offering in which
restrictions on restricted stock held by employees and former employees of the
<PAGE>
Company would lapse, and such stock would be offered to the public. In
connection with the offering, restrictions on the book value stock would also
lapse. It is anticipated that the initial public offering price for the
restricted stock will be approximately four times book value, and it is hoped
that the trading price of the common stock will trade at an even greater
multiple to book value in the future. Accordingly, the public offering will
provide a great financial benefit to employees of the Company holding restricted
stock and book value stock.
F. The Company is willing to proceed with the public offering only if all
executive officers of the Company enter into an agreement by which a portion of
the book value stock retained by them is subjected to restrictions similar to
those imposed on the restricted stock held by them. I acknowledge that the
purchasers of stock in the initial public offering will rely on the existence of
these restrictions in making their purchase of stock and that the public
offering will have a substantial economic benefits to me and to other employees
of the Company. I am willing to subject __________ shares of my book value
stock to such a restriction.
G. The lapse of restrictions on my restricted stock, the lapse of
restrictions on my book value stock (other than those imposed by this
Agreement), the benefit to all employees of the Company of the public offering,
the reliance by purchasers of the stock in the public offering on this Agreement
and my continued employment are adequate and sufficient consideration for this
Agreement.
II.
DEFINITIONS
-----------
A. "Confidential information" shall mean:
1. All information, written or oral, not generally known, or
proprietary to the Company, about the Company's transportation, logistics,
contracting brokerage, marketing, accounting, merchandising, and information
gathering techniques and methods, and all accumulated data, listings, or
similar recorded matter used or useful in produce and transportation
operations, including, but not limited to the insurance and carrier
information file, business forms, and marketing aids.
2. All information disclosed to me, or to which I have access during
the period of my employment, for which there is any reasonable basis to be
believed is, or which appears to be treated by the Company as Confidential
Information.
<PAGE>
B. "Competing business" shall mean any person, business, firm,
undertaking, company or organization of any kind other than the Company, which:
1. Is engaged in, or is about to become engaged in, the produce or
transportation industries or engaged in the produce distribution or
transportation contracting business; or
2. Regardless of the nature of its business, either competes directly
or indirectly with Company in the purchase, sale and distribution of produce
and/or in contracting, arranging, providing, procuring, furnishing or
soliciting transportation services; or
3. Has employed or potentially could employ the Company's services in
produce distribution or transportation contracting matters.
C. "Customer" shall mean any person, business, firm, undertaking, company
or organization of any kind engaged in the produce or transportation industries
as a shipper, receiver or carrier.
III.
NATURE OF EMPLOYEE'S ACTIVITIES
-------------------------------
A. I am aware and acknowledge that the Company has developed a special
competence in the produce and transportation industry and has accumulated
confidential and/or proprietary information, not generally known to others, more
and better information about growers, shippers, truckers, trucking equipment,
customers, purchasing agents and similar matters which are of unique value in
the conduct and growth of the Company's business. This Confidential Information
has enabled the Company to conduct its business with unusual success and thus
afforded unusual employment opportunities to its employees.
B. In the course of my employment, I have been and wish to continue to be
employed in a position or positions with the Company in which I may receive or
contribute to Confidential Information as defined above. It is my desire to
continue progressing in the Company in sales and/or management capacities and I
recognize that my optimum progression and specialization cannot take place
unless Confidential Information is entrusted to me.
C. I acknowledge that in the course of carrying out, performing and
fulfilling my responsibilities to the Company, I have access to and have been
entrusted with Confidential Information and I recognize that disclosure of such
Confidential Information to the competitors of the Company or to the general
public would be highly detrimental to the Company. I further acknowledge that
in
<PAGE>
the course of performing obligations to the Company, I will be a
representative of the Company to many of the Company's customers and in some
instances practically the Company's sole and exclusive contact with the
customer and as such will be significantly responsible for maintaining or
enhancing the business and/or good will of the Company with such customers.
IV.
AGREEMENT TO MAINTAIN CONFIDENTIAL INFORMATION
----------------------------------------------
A. Except as may be required in the performance of my employment duties
with the Company I will not, during or after the term of my employment, disclose
Confidential Information to any other person or entity or use confidential
information for my own benefit or for the benefit of another, unless the Company
expressly directs me to do so.
B. Upon termination of my employment with the Company, I will deliver
within 24 hours to the Company, all Company property, including but not limited
to originals and copies of drawings, specifications, reports, client, supplier,
customer and carrier lists, financial information, computer hard drive or
diskettes, computer software, and all other material in my possession or
control, regardless of its form.
V.
NONCOMPETITION AGREEMENT
------------------------
A. During my employment with the Company, I will devote my full time and
energies to furthering the Company's business and I will not pursue any other
business activity without the Company's prior written consent.
B. I will not, during the term of my employment and for a period of two
years following the termination of my employment, whether voluntary or
involuntary, directly or indirectly solicit, sell or render services to or with
any customer or prospective customer of the Company with whom I have had contact
or on whose account I have worked, at any time during my employment with the
Company on my own behalf or for the benefit of any competing entity.
C. I will not, during the term of my employment and for a period of two
years following the termination of my employment, whether voluntary or
involuntary, directly or indirectly solicit any of the Company's employees or
independent contractors for the purpose of hiring them or inducing them to leave
their employment with the Company.
D. I will not during the term of my employment and for a period of two
years following the termination of my employment whether voluntary or
involuntary, directly or indirectly solicit, cause, or attempt to cause any
customer
<PAGE>
of the Company to divert, terminate, limit or in any manner modify or fail to
enter into any actual or potential business relationship with the Company.
VI.
REMEDIES
--------
A. If I violate any terms of this Agreement, I agree that the Company
shall be entitled to liquidated damages in the amount of __________ shares of
common stock (the "Restricted Stock"). Accordingly, I agree that the Restricted
Stock will continue to be in uncertificated form on the books of the Company,
that such Restricted Stock will be part of a segregated account, that any advice
by the Company with respect to such Restricted Stock (or any certificate
representing the Restricted Stock) shall contain an appropriate legend of the
liquidated damages provision contained herein and that the Company is authorized
and directed upon any violation of any term of this Agreement to transfer the
Restricted Stock into its own name on the books of the Company.
B. In addition to, and not to the exclusion of liquidated damages, if I
violate any term of this Agreement, I agree that the Company shall be entitled
to injunctive relief and/or any other remedy allowed by law or equity and
collect from me reasonable attorneys' fees and costs incurred in bringing any
action against me or otherwise enforcing the terms of this Agreement.
VII.
GENERAL
-------
A. I understand that this Agreement constitutes the entire agreement
between the Company and me regarding confidentiality and noncompetition and that
it supersedes all prior agreements, if any, relating to this subject matter.
This Agreement may be amended or altered only by written agreement between the
Company and me.
B. I understand that this Agreement and the rights and obligations
thereunder shall not be assignable in whole or in part by either party without
the prior written consent of the other party.
C. I understand that to the extent that any provision of this Agreement
shall be determined to be invalid or unenforceable, such provision shall be
deleted from the Agreement and the validity and enforceability of the remainder
of such a provision of this Agreement shall remain unaffected.
D. I understand that this Agreement is not intended nor does it alter the
at will nature of the employment relationship otherwise enjoyed by the Company
and me.
<PAGE>
E. I understand that this Agreement shall be interpreted according to the
laws of the State of Minnesota.
_________________________
Employee
Subscribed and sworn to before me
this _____ day of __________, 1997.
_________________________
Notary Public
C. H. ROBINSON WORLDWIDE, INC.
By _____________________
Its _____________________
Subscribed and sworn to before me
this _____ day of __________, 1997.
_________________________
Notary Public
<PAGE>
Exhibit 10.22
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement"), made on the date set forth below, by
and between C.H. ROBINSON WORLDWIDE, INC., a Delaware corporation (the
"Company"), and the undersigned ("Employee"), pursuant to the Company's 1997
Omnibus Stock Plan (the "Plan").
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and Employee hereby agree as follows:
1. Grant of Option
---------------
The Company hereby grants to Employee, on the date set forth below, the
right and option (hereinafter called the "Option") to purchase all or any part
of an aggregate of the number of shares of Common Stock, par value $0.10 per
share (the "Common Stock"), set forth below at the price per share set forth
below on the terms and conditions set forth in this Agreement and in the Plan.
This Option is intended to be an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The
Option shall terminate at the close of business ten years from the date hereof,
or such shorter period as is prescribed herein. Employee shall not have any of
the rights of a stockholder with respect to the shares subject to the Option
until such shares shall be issued to Employee upon the proper exercise of the
Option.
2. Duration and Exercisability
---------------------------
(a) Subject to the terms and conditions set forth herein, this Option
shall not be exercisable for 24 months from the date set forth below. Beginning
24 months from the date set forth below, Employee may exercise 25% of the Option
and on each subsequent annual anniversary date Employee may exercise an
additional 25% of the Option on a cumulative basis.
(b) During the lifetime of Employee, the Option shall be exercisable
only by Employee and shall not be assignable or transferable by Employee, other
than by will or the laws of descent and distribution.
(c) Notwithstanding Section 2(a), the vesting of this Option shall be
accelerated, and this Option may be exercised as to all shares of Common Stock
remaining subject to this Option, on the date of (i) a public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Securities Exchange Act of 1934,
as amended ("Exchange Act") is made by the Company or any Person that such
Person beneficially owns more than 50% of the Common Stock outstanding, (ii) the
Company consummates a merger, consolidation or statutory share exchange with any
other Person in which the surviving entity would not have as its directors at
least 60% of the Continuing Directors and would not have at least 60% of its
common stock owned by the common stockholders of the Company prior to such
merger, consolidation or statutory share exchange, (iii) a majority of the Board
of Directors is not comprised of Continuing Directors or (iv) a sale or
disposition of all or substantially all of the assets of the Company or the
dissolution of the Company. A Continuing Director is a current director of the
Company, a director elected by the Board of Directors, a majority of whose
members are Continuing Directors, or a director elected by stockholders upon the
recommendation of the Board of Directors, a majority of whose members are
Continuing Directors. "Person" means any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(d) Employee understands that to the extent that the aggregate fair
market value (determined at the time the Option was granted) of the shares of
Common Stock with respect to which all incentive stock options within the
meaning of Section 422 of the Code are exercisable for the first time by
Employee during any calendar year exceed $100,000, in accordance with Section
422(d) of the Code such options shall be treated as options that do not qualify
as incentive stock options.
3. Effect of Termination of Employment
-----------------------------------
(a) In the event that Employee shall cease to be employed by the
Company or its subsidiaries, if any, for any reason other than termination for
cause or Employee's death or disability (as such term is defined in Section 3(c)
hereof), Employee shall have the right to exercise the Option at any time within
three months after such termination of employment to the extent of the full
number of shares Employee was entitled to purchase under the Option on the date
of termination; provided, however, that if and only if Employee continues to
abide by the Obligation as defined in Section 5 hereof, the Option,
notwithstanding such a termination of employment, will continue to be
exercisable in accordance with Sections 2(a) and 2(c) hereof during the term of
the covenant not to compete contained in the Obligation following termination of
employment; provided further, however, that this Option shall not be exercisable
after the expiration of the term of the Option or the term of the covenant not
to compete. Employee understands that if the Option or any portion of the Option
is exercised later than three months from the date of termination of employment,
the Option or such portion of the Option may not qualify for treatment as an
incentive stock option within the meaning of Section 422 of the Code.
(b) In the event that Employee shall cease to be employed by the
Company or its subsidiaries, if any, upon termination for cause, the Option
shall be terminated as of the date of the act giving rise to such termination.
Termination for cause shall mean termination of the Employee's employment with
the Company for the following acts: dishonesty, fraud, conviction or confession
of a felony or of a crime involving moral turpitude, destruction or theft of the
Company's property, physical attack on a fellow employee, willful malfeasance or
gross negligence, refusal or failure to perform job duties (other than failure
resulting from disability), misconduct materially injurious to the Company,
participation in fraud against the Company, entering into competition against
the Company, and/or a material breach or threatened material breach of any
agreements with the Company, including, but not limited to, Sales-Employee
Agreement, Management-Employee Agreement and Data Security Agreement, as the
same may be amended from time to time.
(c) If Employee shall die while this Option is still exercisable
according to its terms, or if employment is terminated because Employee has
become disabled (within the meaning of Code Section 22(e)(3)) while in the
employ of the Company or a subsidiary, if any, and Employee shall not have fully
<PAGE>
exercised the Option, such Option may be exercised at any time within 12
months after Employee's death or date of termination of employment for
disability by Employee, personal representatives or administrators, or
guardians of Employee, as applicable, or by any person or persons to whom the
Option is transferred by will or the applicable laws of descent and
distribution, to the extent of the full number of shares Employee was entitled
to purchase under the Option on the date of death, termination of employment,
if earlier, or date of termination for such disability and subject to the
condition that no Option shall be exercisable after the expiration of the term
of the Option.
4. Manner of Exercise
------------------
(a) The Option may be exercised only by Employee or other proper party
by delivering within the Option period written notice to the Company at its
principal office. The notice shall state the number of shares as to which the
Option is being exercised and be accompanied by payment in full of the Option
price for all shares designated in the notice.
(b) Employee may pay the Option price in cash, by check (bank check,
certified check or personal check), by money order, or with the approval of the
Company (i) by delivering to the Company for cancellation shares of Common Stock
of the Company with a fair market value as of the date of exercise equal to the
Option price, (ii) by delivering to the Company the Option price in a
combination of cash and Employee's full recourse liability promissory note with
a principal amount not to exceed 80% of the Option price and a term not to
exceed five years, which promissory note shall provide for interest on the
unpaid balance thereof which at all times is not less than the minimum rate
required to avoid the imputation of income, original issue discount or a below-
market rate loan pursuant to Sections 483, 1274 or 7872 of the Code or any
successor provisions thereto or (iii) by delivering to the Company a combination
of cash, Employee's promissory note and shares of Common Stock of the Company
with an aggregate fair market value and a principal amount equal to the Option
price. For these purposes, the fair market value of the Company's shares of
Common Stock of the Company as of any date shall be as reasonably determined by
the Company pursuant to the Plan.
5. The Obligation.
--------------
Employee and the Company have entered into a Confidentiality and
Noncompetition Agreement dated _____, 1997 (the "Obligation"). Any shares of
Common Stock of the Company acquired by Employee pursuant to the Option shall
become Restricted Stock within the meaning thereof and shall be forfeited to the
Company, in full, as provided in the Obligation.
6. Miscellaneous
-------------
(a) This Option is issued pursuant to the Company's 1997 Omnibus Stock
Plan and is subject to its terms. The terms of the Plan are available for
inspection during business hours at the principal offices of the Company.
(b) This Agreement shall not confer on Employee any right with respect
to continuance of employment by the Company or any of its subsidiaries, nor will
it interfere in any way with the right of the Company to terminate such
employment at any time. Employee shall have none of the rights of a stockholder
with respect to shares subject to this Option until such shares shall have been
issued to Employee upon exercise of this Option.
(c) The exercise of all or any parts of this Option shall only be
effective at such time that the sale of Common Stock pursuant to such exercise
will not violate any state or federal securities or other laws.
(d) If there shall be any change in the shares of Common Stock of the
Company through merger, consolidation, reorganization, recapitalization,
dividend in the form of stock (of whatever amount), stock split or other change
in the corporate structure of the Company, and all or any portion of the Option
shall then be unexercised and not yet expired, appropriate adjustments in the
outstanding Option shall be made by the Company, in order to prevent dilution or
enlargement of Option rights. Such adjustments shall include, where appropriate,
changes in the number of shares of Common Stock and the price per share subject
to the outstanding Option.
(e) The Company shall at all times during the term of the Option
reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.
(f) If Employee shall dispose of any of the shares of Common Stock of
the Company acquired by Employee pursuant to the exercise of the Option within
two years from the date the Option was granted or within one year after the
transfer of any such shares to Employee upon exercise of the Option, in order to
provide the Company with the opportunity to claim the benefit of any income tax
deduction which may be available to it under the circumstances, Employee shall
promptly notify the Company of the dates of acquisition and disposition of such
shares, the number of shares so disposed of and the consideration, if any,
received for such shares. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to insure (i) notice to the Company of any disposition of the
Common Stock of the Company within the time periods described above and (ii)
that, if necessary, all applicable federal or state payroll, withholding, income
or other taxes are withheld or collected from Employee.
(g) In order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it upon the
exercise of the Option when the Option does not qualify as an incentive stock
option within the meaning of Section 422 of the Code and in order to comply with
all applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, withholding, income or other taxes are
withheld or collected from Employee. Employee may elect to satisfy his federal
and state income tax withholding obligations upon exercise of this option by (i)
having the Company withhold a portion of the shares of Common Stock otherwise to
be delivered upon exercise of such option having a fair market value equal to
the amount of federal and state income tax required to be withheld upon such
exercise, in accordance with such rules as the Company may from time to time
establish, or (ii) delivering to the Company shares of its Common Stock other
than the shares issuable upon exercise of such option with a fair market value
equal to such taxes, in accordance with such rules.
<PAGE>
(h) In accordance with Section 6(a)(iv) of the Plan, upon exercise of
the Option when payment of the exercise price is made by delivery of shares of
Common Stock of the Company owned by Employee and/or when shares of Common
Stock of the Company are tendered by Employee or forfeited as payment of the
amount to be withheld under applicable income tax laws in connection with the
exercise of the Option, the Company shall grant Employee a Reload Option,
which shall be a Non-Qualified Stock Option and otherwise be subject to terms
and conditions which are the same as the Option, except that such Reload
Option shall be immediately exercisable in full.
No. of Shares Subject to Option: _________ C.H. ROBINSON WORLDWIDE, INC.
Exercise Price per Share: $_________
Date of Grant: _________ By:________________________________
Its:_____________________________
___________________________________
[Name of Employee]
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF C.H. ROBINSON WORLDWIDE, INC.
The Company's consolidated subsidiaries are shown below together with the
percentage of voting securities owned and the state or jurisdiction of
organization of each subsidiary. The names have been omitted for subsidiaries
which, if considered in the aggregate as a single subsidiary, do not constitute
a significant subsidiary. Subsidiaries of subsidiaries are indented in the
following table:
<TABLE>
<CAPTION>
Percentage of
Outstanding Voting
Subsidiaries Securities Owned
- ------------- ------------------
<S> <C>
CHRW Holdings, Inc. 100%
(Minnesota)
C.H. Robinson International, Inc. 100%
(Minnesota)
CHR Greene International Company 100%
(Minnesota)
C.H. Robinson Venezuela, C.A. 51%
(Venezuela)
C.H. Robinson de Mexico, S.A. de C.V. 100%
(Mexico)
CHR Aviation, Inc. 100%
(Minnesota)
C.H. Robinson Company (Canada) Ltd. 100%
(Ontario, Canada)
Combined Transport Group, Inc. 100%
(Minnesota)
C.H. Robinson Company 100%
(Delaware)
Daystar-Robinson, Inc. 100%
(Delaware)
CTSI Robinson, Inc. 100%
(Georgia)
Fresh 1 Marketing, Inc. 100%
(Minnesota)
Wagonmaster Transportation Co. 100%
(Minnesota)
Brown-Robinson Ingredient, Inc. 100%
(Minnesota)
Robinson Europe, S.A. 100%
(France)
Transeco S.A. 100%
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(France)
Robinson Italia SRL 95%
(Italy)
C.H. Robinson (UK) Limited 100%
(United Kingdom)
Payment & Logistics Services, LLC 100%
(Minnesota)
T-Chek Systems, LLC 100%
(Minnesota)
Cityside Holding Company LLC/1/ 100%
(Minnesota)
CHR Equipment Financing, Inc. 100%
(Minnesota)
</TABLE>
- ---------------------
/1/In July 1997, the Company approved a plan to sell its consumer finance
subsidiaries of Cityside Holding Company LLC (Cityside Insurance Company Ltd.,
Cityside Financial Services of Wisconsin, Inc., Cityside Finance Corporation I
and Cityside Savings & Financial Services Co.). That sale will close on
October 14, 1997. Accordingly, those subsidiaries are not shown above.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm included in or made a part of
Registration Statement File No. 333-33731.
/s/ ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
October 9, 1997
